EXHIBIT 4.1
Execution Copy
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DELTA FUNDING CORPORATION,
as Seller and Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of August 31, 1998
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Home Equity Loan Asset-Backed Certificates
Series 1998-3
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
Section 1.01. Definitions...................................... 1
Section 1.02. Interest Calculations............................ 36
ARTICLE II
Conveyance of Initial Mortgage Loans; Original Issuance of
Certificate Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans............. 37
Section 2.02. Acceptance by Trustee............................ 41
Section 2.03. Representations and Warranties Regarding the
Seller and the Servicer.......................... 43
Section 2.04. Representations and Warranties of the Seller
Regarding the Mortgage Loans..................... 46
Section 2.05. Substitution of Mortgage Loans................... 56
Section 2.06. Execution and Authentication of Certificates..... 57
Section 2.07. Designation of Interests in REMIC................ 57
Section 2.08. Designation of Startup Day of REMIC.............. 62
Section 2.09. REMIC Certificate Maturity Date.................. 62
Section 2.10. Tax Returns and Reports to Certificateholders.... 62
Section 2.11. Tax Matters Person............................... 63
Section 2.12. REMIC Related Covenants.......................... 63
Section 2.13. Subsequent Transfers............................. 68
Section 2.14. The Custodian.................................... 71
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer..................................... 71
Section 3.02. Collection of Certain Mortgage Loan Payments..... 74
Section 3.03. Withdrawals from the Collection Account.......... 76
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses.............................. 77
Section 3.05. Maintenance of Mortgage Impairment Insurance
Policy........................................... 78
Section 3.06. Management and Realization Upon Defaulted
Mortgage Loans................................... 78
Section 3.07. Trustee to Cooperate............................. 80
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Page
Section 3.08. Servicing Compensation; Payment of Certain
Expenses by Servicer............................. 81
Section 3.09. Annual Statement as to Compliance................ 82
Section 3.10. Annual Servicing................................. 82
Section 3.11. Access to Certain Documentation and
Information Regarding the Mortgage Loans......... 82
Section 3.12. Maintenance of Certain Servicing Insurance
Policies......................................... 83
Section 3.13. Reports to the Securities and Exchange
Commission....................................... 83
Section 3.14. Reports of Foreclosures and Abandonments of
Mortgaged Properties, Returns Relating to
Mortgage Interest Received from Individuals
and Returns Relating to Cancellation of
Indebtedness..................................... 83
Section 3.15. Advances by the Servicer......................... 84
Section 3.16. Optional Purchase of Defaulted Mortgage
Loans............................................ 84
Section 3.17. Superior Liens................................... 85
Section 3.18. Assumption Agreements............................ 86
Section 3.19. Payment of Taxes, Insurance and Other Charges.... 86
ARTICLE IV
Initial Interest Coverage Account
Section 4.01. Certificate Insurance............................ 87
Section 4.02. Initial Interest Coverage Account and
Pre-Funding Account.............................. 88
Section 4.03. Claims Upon the Certificate Insurance Policy..... 89
ARTICLE V
Payments and Statements to Certificateholders; Rights of
Certificateholders
Section 5.01. Distributions................................... 90
Section 5.02. Compensating Interest........................... 93
Section 5.03. Statements...................................... 93
Section 5.04. Distribution Account............................ 97
Section 5.05. Investment of Accounts.......................... 98
ARTICLE VI
The Certificates
Section 6.01. The Certificates................................ 99
Section 6.02. Registration of Transfer and Exchange
of Certificates................................. 100
Section 6.03. Mutilated, Destroyed, Lost or Stolen
Certificates.................................... 106
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Page
Section 6.04. Persons Deemed Owners.......................... 106
Section 6.05. Appointment of Paying Agent.................... 106
ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer........ 107
Section 7.02. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller or the Servicer.. 107
Section 7.03. Limitation on Liability of the Servicer and
Others.......................................... 107
Section 7.04. Servicer Not to Resign.......................... 108
Section 7.05. Delegation of Duties............................ 109
Section 7.06. Indemnification of the Trust by the Servicer.... 109
Section 7.07. Inspection...................................... 110
ARTICLE VIII
Default
Section 8.01. Events of Default............................... 110
Section 8.02. Trustee to Act; Appointment of Successor........ 112
Section 8.03. Waiver of Defaults.............................. 113
Section 8.08. Notification to Certificateholders.............. 114
Section 8.05. Rights of the Certificate Insurer to Exercise
Rights of Certificateholders.................... 114
Section 8.05. Trustee to Act Solely with Consent of the
Certificate Insurer............................. 115
Section 8.07. Mortgage Loans, Trust and Accounts Held for
Benefit of the Certificate Insurer.............. 115
Section 8.08. Certificate Insurer Default..................... 116
Section 8.09. Notification to Certificateholders.............. 116
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee............................... 116
Section 9.02. Certain Matters Affecting the Trustee........... 118
Section 9.03. Trustee Not Liable for Certificates or
Mortgage Loans.................................. 120
Section 9.04. Trustee May Own Certificates.................... 121
Section 9.05. Servicer to Pay Trustee Fees and Expenses....... 121
Section 9.06. Eligibility Requirements for Trustee............ 122
Section 9.07. Resignation or Removal of Trustee............... 122
Section 9.08. Successor Trustee............................... 124
Section 9.09. Merger or Consolidation of Trustee.............. 124
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Page
Section 9.10. Appointment of Co-Trustee or Separate Trustee... 124
Section 9.11. Limitation of Liability......................... 126
Section 9.12. Trustee May Enforce Claims Without Possession
of Certificates; Inspection..................... 126
Section 9.13. Suits for Enforcement........................... 127
ARTICLE X
Termination
Section 10.01. Termination..................................... 128
Section 10.02. Additional Termination Requirements............. 130
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment....................................... 131
Section 11.02. Recordation of Agreement........................ 133
Section 11.03. Limitation on Rights of Certificateholders...... 133
Section 11.04. Governing Law................................... 134
Section 11.05. Notices......................................... 134
Section 11.06. Severability of Provisions...................... 136
Section 11.07. Assignment...................................... 136
Section 11.08. Certificates Nonassessable and Fully Paid....... 136
Section 11.09. Third-Party Beneficiaries....................... 136
Section 11.10. Counterparts.................................... 136
Section 11.11. Effect of Headings and Table of Contents........ 137
Section 11.12. Insurance Agreement............................. 137
Section 11.13. Effect of Payments by the Certificate
Insurer; Subrogation............................ 137
Section 11.14. Notices to the Certificate Insurer.............. 137
EXHIBIT A - FORMS OF OFFERED CERTIFICATES................... A-1
EXHIBIT B - FORM OF CLASS BIO CERTIFICATES.................. B-1
EXHIBIT B-1- FORM OF CLASS R CERTIFICATES....................B-1-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE.......................... C-1
EXHIBIT D - FORM OF SUBSEQUENT TRANSFER AGREEMENT........... D-1
EXHIBIT E - FORM OF MORTGAGE NOTE........................... E-1
EXHIBIT F - FORM OF MORTGAGE................................ F-1
EXHIBIT G - TRANSFER AFFIDAVITS............................. G-1
EXHIBIT H - LETTER OF REPRESENTATIONS....................... H-1
EXHIBIT I - FORM OF REQUEST FOR RELEASE..................... I-1
EXHIBIT J - SPECIMEN OF CERTIFICATE INSURANCE POLICY........ J-1
EXHIBIT K - FORM OF CUSTODIAL AGREEMENT..................... K-1
EXHIBIT L - DELINQUENCY AND LOSS INFORMATION................ L-1
EXHIBIT M - FORM OF TRANSFEROR CERTIFICATE.................. M-1
EXHIBIT N-1- FORM OF INVESTMENT LETTER [NON-RULE 144A].......N-1-1
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Page
EXHIBIT N-2- FORM OF RULE 144A LETTER........................N-2-1
EXHIBIT O - FORM OF INITIAL CERTIFICATION................... O-1
EXHIBIT P - FORM OF TRUSTEE FINAL CERTIFICATION............. P-1
EXHIBIT Q - SUBSEQUENT FUNDING PARAMETERS................... Q-1
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This Pooling and Servicing Agreement, dated as of August 31, 1998, among
Delta Funding Corporation, as Seller and Servicer (the "Seller" and the
"Servicer", respectively), and Bankers Trust Company of California, N.A., as
Trustee (the "Trustee").
W I T N E S S E T H T H A T:
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In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.
Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.
Addition Notice: The notice given pursuant to Section 2.13 with respect to
the transfer of Subsequent Mortgage Loans to the Trust pursuant to such
Section.
Adjustable Rate Certificates: Class A-1A Certificates.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Allocated Pre-Funded Amount: As to either Certificate Group and any date of
determination, the portion, if any, of the Pre-Funded Amount allocable to such
Certificate Group and on deposit in the Pre-Funding Account.
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan.
Assignment of Mortgage: With respect to any Mortgage, an assignment, notice
of transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction in which the related Mortgaged Property is located to
reflect the sale of the Mortgage to the Trustee.
Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
and holidays.
Available Funds: As to either Loan Group and any Distribution Date, the
sum, without duplication of the following amounts with respect to the Mortgage
Loans in such Loan Group and the immediately preceding Due Period: (i) scheduled
and unscheduled payments of principal and interest on the Mortgage Loans
received by the Servicer (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for related Monthly Advances and
Servicing Advances); (ii) Net Liquidation Proceeds and Insurance Proceeds with
respect to the Mortgage Loans (net of amounts applied to the restoration or
repair of a Mortgaged Property); (iii) the Purchase Price for repurchased
Defective Mortgage Loans with respect to such Loan Group and any related
Substitution Adjustment Amounts; (iv) payments from the Servicer in connection
with (a) Monthly Advances, (b) Compensating Interest and (c) the termination of
the Trust with respect to the Mortgage Loans as provided in this Agreement; (v)
on the Distribution Dates during and immediately following the Funding Period,
amounts from the Initial Interest Coverage Account in respect of the Capitalized
Interest Requirement for the related Classes of Offered Certificates; and (vi)
on the Distribution Date at or immediately following the end of the Funding
Period, any related Excess Funding Amount.
Solely for purposes of calculating the Deficiency Amount, the Available
Funds for a Loan Group and any Distribution Date shall be net of the related
Trustee Fee and Premium Amount for such Distribution Date.
Available Funds Cap: As to either Loan Group and any Distribution Date, (A)
in the case of Loan Group F and Certificate Group F, a rate equal to (i) the
weighted average Net Loan Rate of the Mortgage Loans in Loan Group F minus (ii)
the product of (x) the Certificate Rate on the Notional Amount Certificates and
(y) a fraction, the numerator of which is the Notional Amount of such Notional
Amount Certificates immediately prior to such Distribution Date, and the
denominator of which is the Loan Group Balance of Loan Group F as of the first
day of the related Due Period and (B) in the case of Loan Group A and
Certificate Group A, the weighted average Net Loan Rate of the Mortgage Loans in
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Loan Group A minus for each Distribution Date on and after the 13th Distribution
Date, 0.50% per annum.
Balloon Loan: Any Mortgage Loan that provided on the date of origination
for scheduled monthly payment in level amounts substantially lower than the
amount of the final scheduled payment.
Base Specified Overcollateralization Amount: As to either Loan Group, the
product of the applicable Target Percentage and the Original Loan Group Balance,
in each case, for such Loan Group.
Basic Principal Amount: As to either Loan Group and any Distribution Date,
an amount equal to the sum of the following amounts (without duplication) with
respect to the Mortgage Loans in such Loan Group and the immediately preceding
Due Period: (i) each payment of principal on a Mortgage Loan received by the
Servicer during such Due Period, including all full and partial principal
prepayments; (ii) the Principal Balance of each Mortgage Loan that became a
Liquidated Mortgage Loan for the first time during such Due Period; (iii) the
portion of the Purchase Price allocable to principal of all repurchased
Defective Mortgage Loans with respect to such Due Period; (iv) any Substitution
Adjustment Amounts received on or prior to the previous Determination Date and
not yet distributed; and (v) any related Excess Funding Amount.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificate: Any Regular Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City or the city in which the corporate trust
office of the Trustee under this Agreement or the executive office of the
Certificate Insurer is
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located are authorized or obligated by law or executive order to close.
Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date and either Certificate Group, (A) the sum of (i) the amount of
interest accruing during the related Interest Period for the Classes of Offered
Certificates in such Certificate Group (other than the Notional Amount
Certificates) at the weighted average Certificate Rate thereof on the related
Allocated Pre-Funded Amount as of the first day of the related Due Period, (ii)
interest at the Certificate Rate for the Notional Amount Certificates on an
amount equal to the product of (x) the applicable Allocated Pre-Funded Amount
and (y) a fraction the numerator of which is the Notional Amount of the Notional
Amount Certificates and the denominator of which is the Loan Group Balance of
Loan Group F as of the first day of the related Due Period and (iii) product of
1/12 of the Premium Rate and the related Allocated Pre-Funded Amount minus (B)
30 days' interest on each Subsequent Mortgage Loan with a Due Date on or before
November 1, 1998.
Certificate: Any Offered Certificate or Residual Certificate.
Certificate Group: Either Certificate Group A or Certificate Group F, as
the context requires.
Certificate Group A: The Class A-1A Certificates.
Certificate Group F: The Class A-1F, Class X-0X, Xxxxx X- 0X, Xxxxx X-0X,
Class A-5F, Class A-6F and Class IOF Certificates.
Certificate Group Balance: As to either Certificate Group and any date of
determination, the aggregate of the Class Principal Balances of the Classes of
Certificates in such Certificate Group.
Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the display designated
as page 3750 on Bridge Telerate (or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks). If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Trustee after consultation with the Servicer), the rate will be
the Reference Bank Rate. If no such
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quotations can be obtained and no Reference Bank Rate is available, the
Certificate Index will be the Certificate Index applicable to the preceding
Distribution Date. On the second LIBOR Business Day immediately preceding each
Distribution Date, the Trustee shall determine the Certificate Index for the
Interest Period commencing on such Distribution Date and inform the Servicer of
such rate.
Certificate Insurance Policy: The Certificate Guaranty Insurance
Policy (No. 27640) with respect to the Offered Certificates, and all
endorsements thereto dated, the Closing Date, issued by the Certificate Insurer
for the benefit of the Holders of each Class of Offered Certificates, a copy of
which is attached hereto as Exhibit J.
Certificate Insurer: MBIA Insurance Corporation, a stock insurance
company organized and created under the laws of the State of New York, or 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
the Certificate Insurance Policy in accordance with its terms; or
(b) the entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States federal
or state bankruptcy, insolvency, rehabilitation, reorganization or other
similar law or (ii) a decree or order adjudging the Certificate Insurer a
bankrupt or insolvent or approving as properly filed a petition seeking
reorganization, rehabilitation, arrangement, adjustment or composition of
or in respect of the Certificate Insurer under any applicable United States
federal or state law, or appointing a custodian, receiver, liquidator,
rehabilitator, assignee, trustee, sequestrator or other similar official of
the Certificate Insurer or of any substantial part of its property, or
ordering the winding-up or liquidation of its affairs, and the continuance
of any such decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(c) the commencement by the Certificate Insurer of a voluntary case
or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or the
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consent by the Certificate Insurer to the entry of a decree or order for
relief in respect of the Certificate Insurer in an involuntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against the Certificate
Insurer, or the filing by the Certificate Insurer of a petition or answer
or consent seeking reorganization or relief under any applicable United
States federal or state law, or the consent by the Certificate Insurer to
the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Certificate Insurer or of any
substantial part of its property, or the making by the Certificate Insurer
of an assignment for the benefit of its creditors, or the failure by the
Certificate Insurer to pay debts generally as they become due, or the
admission by the Certificate Insurer in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Certificate Insurer in furtherance of any such action.
Certificate Margins: As to the Adjustable Rate Certificates, the applicable
amount set forth below:
Certificate Margin
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Class (1) (2)
----- --- ---
A-1A 0.28% 0.56%
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(1) Prior to or on the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: The Person who is the beneficial owner of a Book-Entry
Certificate.
Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1F 6.20%
A-2F 5.86%(1)
A-3F 5.96%(1)
A-4F 6.22%(1)
A-5F 6.41%(1)
A-6F 5.93%(1)
IOF 6.00%
A-1A (2)
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(1) As to any Distribution Date, the lesser of (x) the fixed rate set forth and
(y) the applicable Available Funds Cap.
(2) As to any Distribution Date, a per annum rate equal to the least of (x) the
sum of the Certificate Index and the applicable Certificate Margin (y) 14% and
(z) the applicable Available Funds Cap.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Seller or such Affiliate is acting as trustee or nominee for a Person who is not
an Affiliate of such Seller and who makes the voting decision with respect to
such Offered Certificates or (ii) the Seller or such Affiliate is the
Certificate Owner or Holder of all the Certificates of a Class, but only with
respect to the Class as to which the Seller or such Affiliate owns all the
Certificates) and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution Date,
for any Mortgage Loan as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Due Period as a result
of the application of the Civil Relief Act, the amount by which (i) interest
collectible on such Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Loan Rate
for such Mortgage Loan before giving effect to the application of the Civil
Relief Act.
Class: All Certificates having the same designation.
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Class A-1A Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit B-1 and designated
as a Class A-1A Certificate pursuant to Section 6.01.
Class A-1F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-1F Certificate pursuant to Section 6.01.
Class A-2F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-2F Certificate pursuant to Section 6.01.
Class A-3F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-3F Certificate pursuant to Section 6.01.
Class A-4F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-4F Certificate pursuant to Section 6.01.
Class A-5F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-5F Certificate pursuant to Section 6.01.
Class A-6F Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-1 and designated
as a Class A-6F Certificate pursuant to Section 6.01.
Class A-6F Percentage: As to any Distribution Date, the applicable
percentage set forth below:
Distribution Dates Percentages
------------------ -----------
October 1998 - September 2001 0%
October 2001 - September 2003 45%
October 2003 - September 2004 80%
October 2004 - September 2005 100%
October 2005 and thereafter 300%
Class A-6F Principal Distribution: As to any Distribution Date, the product
of (i) the applicable Class A-6F Percentage and (ii) the product of (x) the
related Principal Distribution Amount and (y) a fraction, the numerator of which
is the Class Principal
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Balance of the Class A-6F Certificates immediately prior to such Distribution
Date, and the denominator of which is the aggregate Class Principal Balance of
the Certificates in Group F immediately prior to such Distribution Date.
Class BIO Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit B and designated as
a Class BIO Certificate pursuant to Section 6.01.
Class BIO Distribution Amount: As to any Distribution Date, the amount
distributable on the Class BIO Certificates as provided in Section 2.07 hereof.
Class Interest Carryover Shortfall: As to any Class of Regular Certificates
and any Distribution Date, an amount equal to the sum of (i) the excess of the
related Class Monthly Interest Amount for the preceding Distribution Date and
any outstanding Class Interest Carryover Shortfall with respect to such Class on
such preceding Distribution Date, over the amount in respect of interest that is
actually distributed to the Holders of such Class on such preceding Distribution
Date plus (ii) one month's interest on such excess, to the extent permitted by
law, at the related Certificate Rate.
Class Interest Distribution: As to any Class of Regular Certificates and
Distribution Date, an amount equal to the sum of (a) the related Class Monthly
Interest Amount and (b) any Class Interest Carryover Shortfall for such Class of
Certificates for such Distribution Date.
Class IOF Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A-4 and designated
as a Class IOF Certificate pursuant to Section 6.01.
Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest (i) for the related Interest Period at the
related Certificate Rate on the related Class Principal Balance or Notional
Amount minus (ii) such Class' pro rata portion of any Civil Relief Act Interest
Shortfall experienced by the related Loan Group during the related Due Period
based on the amount of interest to which each such Class would otherwise be
entitled in the absence of such shortfall.
Solely for purposes of calculating the Deficiency Amount, clause (i) of
this definition shall not be reduced by clause (ii) thereof.
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Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Notional Amount Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous Distribution Dates.
Class R-1 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form set forth in Exhibit B-4
hereto.
Class R-2 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-4.
Class R-3 Certificate: Any Certificate designated as such and executed and
authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-4.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: September 29, 1998.
Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan,
the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the related First Lien, if any, as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount calculated
pursuant to Section 5.02.
Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
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Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal office of the Trustee at which at any
particular time its corporate business shall be administered, which office on
the Closing Date is located at Xxxxx Xxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000 Attention: Delta-1998-3.
Corresponding Class: As indicated in Section 2.07 hereof.
Cumulative Net Losses: As to either Certificate Group and as of any date of
determination, the aggregate of the Liquidation Loan Losses for such Certificate
Group incurred from the Cut-Off Date through the end of the calendar month
preceding such date of determination.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
Custodial Agreement: The Custodial Agreement, as amended and supplemented
from time to time, dated as of August 31, 1998, by and among the Trustee, Delta,
and the Custodian in the form set forth as Exhibit K hereto.
Custodian: Bankers Trust Company of California, N.A.
Cut-Off Date: The close of business on August 31, 1998, except that the
Cut-Off Date for any Mortgage Loan originated after August 31, 1998, will be the
date of origination of such Mortgage Loan.
Cut-Off Date Pool Principal Balance: $394,265,000.83.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date
- 11 -
(or as of the applicable date of substitution with respect to an Eligible
Substitute Mortgage Loan pursuant to Section 2.02 or 2.04).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
Deficiency Amount: As defined in the Certificate Insurance Policy as
modified by the definitions of Available Funds and Class Monthly Interest Amount
herein.
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Amount: As to each Loan Group, the product of (i) the Three
Month Delinquency Rate and (ii) the sum of the related Loan Group Balance and
the related Pre-Funded Amount.
Delinquency Loss Factor: As to any Determination Date, the sum of the
following calculations as of the last day of the related Due Period: (i) 10.75%
of the aggregate Principal Balance of all Mortgage Loans 30-59 days delinquent;
(ii) 21.50% of the aggregate Principal Balance of Mortgage Loans 60-89 days
delinquent; and (iii) 43% of the aggregate Principal Balance of all Mortgage
Loans 90 or more days delinquent.
Delta: Delta Funding Corporation, a New York corporation, or any successor
thereto.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of the Regular
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the fourth
Business Day prior to such Distribution Date.
Distribution Account: The account established and maintained by the Trustee
pursuant to Section 5.04. The Distribution Account shall be an Eligible Account.
Distribution Date: The fifteenth day of each month, or, if such day is not
a Business Day, then the next Business Day, beginning in October 1998.
- 12 -
Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
Due Period: With respect to the first Distribution Date for collections of
principal and interest the period from and including September 1, 1998 through
and including October 1, 1998. With respect to each Distribution Date thereafter
for collections of both interest and principal, the period from and including
the second day of the month preceding the month of such Distribution Date to and
including the first day of the month of such Distribution Date.
Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Servicer.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies and whose
accounts are insured to the maximum extent provided by either the Savings
Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation established by such fund with a minimum
long-term unsecured debt rating of A by S&P and A2 by Moody's, and which is any
of (A) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (C) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (D) a principal
subsidiary of a bank holding company; (ii) a segregated trust account maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity; (iii) maintained at Bankers Trust
Company of California, N.A.; or (iv) otherwise acceptable to each Rating Agency
and the Certificate Insurer as evidenced by a letter from each Rating Agency and
the Certificate Insurer to the Trustee, without reduction or withdrawal of the
then current ratings of the Certificates, without regard to the Certificate
Insurance Policy.
Eligible Investments: One or more of the following (excluding any callable
investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
- 13 -
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition thereof,
provided that the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is "A-1+"
for S&P, and "P-1" for Moody's, and "F1+" for Fitch;
(iii) certificates of deposit, time deposits and bankers' acceptances
(which, if Xxxxx'x is a Rating Agency, shall each have an original maturity
of not more than 90 days) of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof and subject to supervision and examination by federal and/or state
banking authorities, provided that the unsecured short-term debt
obligations of such depository institution or trust company at the date of
acquisition thereof have been rated by S&P, Fitch and Moody's, in their
respective highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of not more than 90
days) of any corporation incorporated under the laws of the United States
or any state thereof which on the date of acquisition has been rated by
S&P, Fitch, and Moody's in their respective highest short-term rating
categories;
(v) short term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by S&P, Fitch, and Moody's if rated by Moody's, in their
respective highest rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time as the
interest is held in such fund has a rating of either "AAA" by S&P, "AAA" by
Fitch, and "Aaa" by Moody's; and
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Certificate Insurer as an Eligible Investment
hereunder and will not result in a reduction in the then current rating of
the Certificates without regard to the Certificate Insurance Policy, as
evidenced by a letter to such effect from such Rating Agency and the
Certificate Insurer and with respect to which the Servicer has received
confirmation that, for tax purposes,
- 14 -
the investment complies with the last clause of this definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; provided, further, 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 its stated maturity; and provided further, that if S&P is rating
any of the Certificates, an instrument described hereunder shall be rated the
applicable rating of S&P set forth above.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i)have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii)have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii)if such Defective
Mortgage Loan is in Loan Group A, have a Loan Rate based on the same Loan Index
with adjustments to such Loan Rate made on the same interval between Interest
Rate Adjustment Dates as that of the Defective Mortgage Loan and have a Margin
that is not less than the Margin of the Defective Mortgage Loan and not more
than 100 basis points higher than the Margin for the Defective Mortgage Loan;
(iv) have a Mortgage of the same or higher level of priority as the Mortgage
relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (v) have a remaining term to maturity not more than
six months earlier and not later than the remaining term to maturity of the
Defective Mortgage Loan; (vi) comply with each representation and warranty set
forth in Section 2.04 (deemed to be made as of the date of substitution); (vii)
have an original Combined Loan-to-Value Ratio not greater than that of the
Defective Mortgage Loan; (viii) if such Defective Mortgage Loan is in Loan Group
A, have a Lifetime Rate Cap and a Periodic Rate Cap no lower than the Lifetime
Rate Cap and Periodic Rate Cap, respectively, applicable to such Defective
Mortgage Loan; (ix) have a credit risk not less than the credit risk of the
Defective Mortgage Loan; and (x) be of the same type of Mortgaged Property as
the Defective Mortgage Loan or a detached single
- 15 -
family residence. More than one Eligible Substitute Mortgage Loan may be
substituted for a Defective Mortgage Loan if such Eligible Substitute Mortgage
Loans meet the foregoing attributes in the aggregate and such substitution is
approved in writing in advance by the Certificate Insurer.
ERISA Restricted Certificate: Each Class BIO Certificate and each
Residual Certificate.
Event of Default As defined in Section 8.01.
Excess Funding Amount: As to either Certificate Group the related Allocated
Pre-Funded Amount remaining on deposit in the Pre-Funding Account at the end
of the Funding Period.
Excess Interest: As to either Loan Group and any Distribution Date the
excess, if any, of (x) the Interest Remittance Amount for such Loan Group over
(y) the sum of (i) the Class Interest Distributions for the related Offered
Certificates and (ii) the Trustee Fee and Premium Amount for such Loan Group.
Excess Overcollateralization Amount: As to either Certificate Group and any
Distribution Date, the lesser of (i) the related Basic Principal Amount for such
Distribution Date and (ii) the excess, if any, of (x) the related
Overcollateralization Amount (assuming 100% of the applicable Basic Principal
Amount is distributed on the related Offered Certificates) over (y) the related
Required Overcollateralization Amount.
Expense Fee Rate: 0.6178 % per annum.
Xxxxxx Mae: The Federal National Mortgage Association.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:
Final Scheduled
Class Distribution Date
A-1F January 15, 2015
A-2F February 15, 2022
X-0X Xxxxxxx 00, 0000
X-0X September 15, 2027
X-0X Xxxxxxxx 00, 0000
X-0X December 15, 2030
- 16 -
IOF September 15, 2001
BIO December 15, 2030
A-1A December 15, 2030
First Lien: With respect to any Mortgage Loan which is a second priority
lien, the mortgage loan relating to the corresponding Mortgaged Property having
a first priority lien.
Fiscal Agent: As defined in the Certificate Insurance Policy.
Fitch: Fitch IBCA, Inc., or its successor in interest.
Fixed Rate Certificates: All Classes of Offered Certificates other than the
Adjustable Rate Certificates.
Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Liquidation Proceeds) of such Liquidated
Mortgage Loan immediately prior to the final recovery of its Liquidation
Proceeds.
Xxxxxxx Mac: The Federal Home Loan Mortgage Corporation.
Funding Period: The period from the Closing Date until the earliest of (i)
the date on which the amount on deposit in the Pre-Funding Account is less than
$100,000, (ii) the date on which an Event of Default occurs under the Agreement
or (iii) the close of business on October 29, 1998.
Group A Certificates: The Class A-1A Certificates.
Group F Certificates: The Class A-1F, Class X-0X, Xxxxx X- 0X, Xxxxx X-0X,
Class A-5F, Class A-6F and Class IOF Certificates.
Guaranteed Principal Amount: With respect to any Distribution Date, (a) the
amount, if any, by which the Certificate Group Balance of each Certificate Group
exceeds the related Loan Group Balance at the end of the related Due Period
(after giving effect to all distributions of principal on the related Offered
Certificates on such Distribution Date) and (b) with respect to Certificate
Group F and Certificate Group A on the Distribution Date in December 2030 (after
giving effect to all other distributions of principal), an amount equal to the
applicable Certificate Group Balance.
- 17 -
Initial Interest Coverage Account: The Initial Interest Coverage Account
established pursuant to Section 4.02.
Initial Interest Deposit: An amount equal to 30 days' interest at the
weighted average initial Certificate Rate of the Group A Certificates or the
Group F Certificates (including the Notional Amount Certificates) on the
original Principal Balance of each Initial Mortgage Loan in the related Loan
Group with a first Due Date after the initial Due Period, plus the applicable
Premium Amount, i.e., $312,029.58, consisting of $305,256.10 for Certificate
Group F and $6,773.48 for Certificate Group A.
Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
Initial Mortgage Loans: The Initial Mortgage Loans transferred to the Trust
pursuant to Section 2.01, as set forth in Exhibit C hereto.
Insurance Agreement: The Insurance Agreement dated as of August 31, 1998
among the Servicer, the Seller, the Trustee and the Certificate Insurer,
including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Mortgage Loan
or Mortgaged Property, or amounts required to be paid by the Servicer pursuant
to Section 3.05, net of any component thereof (i) covering any expenses incurred
by or on behalf of the Servicer in connection with obtaining such proceeds, (ii)
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.
Insured Payments: As to any Distribution Date, amounts actually paid under
the Certificate Insurance Policy.
Interest Period: For the Fixed Rate Certificates, the calendar month
preceding the month of the applicable Distribution Date, calculated on the basis
of a 360-day year comprised of twelve 30-day months. For the Adjustable Rate
Certificates, the period from the prior Distribution Date (or, in the case of
the first Distribution Date, from the Closing Date) through the day preceding
the current Distribution Date, calculated on the basis of a 360-day year and the
actual number of days elapsed in such period; provided, however, that interest
accrued on any Class of Certificates at the applicable Available Funds Cap,
shall be
- 18 -
calculated on the basis of a 360-day year comprised of twelve 30- day
months.
Interest Rate Adjustment Date: With respect to each Mortgage Loan in Loan
Group A, the date or dates on which the Loan Rate is subject to adjustment in
accordance with the related Mortgage Note.
Interest Remittance Amount: As to either Loan Group and any Distribution
Date, the portion of the Available Funds for such Loan Group that constitutes
amounts in respect of interest.
Late Payment Rate: For any Distribution Date, the lesser of (i) the rate of
interest, as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime rate (any change in such prime rate of
interest to be effective on the date such change is announced by Citibank,
N.A.), plus 2% and (ii) the maximum rate permissible under any applicable law
limiting interest rates. The Late Payment Rate shall be computed on the basis of
a 365-day year and the actual number of days elapsed.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York or in the city of
London, England are required or authorized by law to be closed.
LIBOR Carryover: As to the Adjustable Rate Certificates and any
Distribution Date, the sum of (i) the excess, if any, of (A) the related Class
Monthly Interest Amount calculated on the basis of the lesser of (x) 14% and (y)
the Certificate Index plus the applicable Certificate Margin over (B) the
related Class Monthly Interest Amount for such Distribution Date (ii) any LIBOR
Carryover remaining unpaid from prior Distribution Dates and (iii) 30 days'
interest on the amount in clause (ii) calculated on the basis of the lesser of
(x) 14% and (y) the Certificate Index plus the applicable Certificate Margin.
Lifetime Rate Cap: With respect to each Mortgage Loan in Loan Group A, the
maximum Loan Rate permitted over the life of such Mortgage Loan, as provided by
the terms of the related Mortgage Note.
Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan with
respect to which the Servicer has determined, in accordance with the servicing
procedures specified herein as of the end of the preceding Due Period, that all
Liquidation Proceeds which it expects to recover with respect to such Mortgage
Loan (including the disposition of the related REO Property) have been received.
- 19 -
Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount, if
any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon plus unreimbursed Servicing Advances is in excess of the Net Liquidation
Proceeds realized thereon.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in
connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Group Balance: Either the Loan Group F Balance or the Loan Group A
Balance, as applicable.
Loan Group: Either Loan Group F or Loan Group A, as the context requires.
Loan Group A: The pool of Mortgage Loans identified in the related Mortgage
Loan Schedule as having been assigned to Loan Group A.
Loan Group A Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group A as of such date.
Loan Group F: The pool of Mortgage Loans identified in the related Mortgage
Loan Schedule as having been assigned to Loan Group F.
Loan Group F Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group F as of such date.
Loan Index: With respect to each Interest Rate Adjustment Date for each
Mortgage Loan in Loan Group A that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.
Loan Rate: With respect to any Mortgage Loan as of any day, the per annum
rate of interest applicable under the related Mortgage Note to the calculation
of interest for such day on the Principal Balance.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
- 20 -
Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.
Margin: As to any Mortgage Loan in Loan Group A, the percentage set forth
as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Maximum Overcollateralization Amount: As to Loan Group F, the product of
3.40% and the related Original Loan Group Balance. As to Loan Group A, the
product of 5.75% and the related Original Loan Group Balance.
Monthly Advance: An advance made by the Servicer pursuant to Section 3.15.
Monthly Payment: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
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
Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage
Loans constituting assets of the Trust, which list shall consist of the Initial
Mortgage Loan Schedule, together with each Subsequent Mortgage Loan Schedule
reflecting the Subsequent Mortgage Loans transferred to the Trust on the related
Subsequent Transfer Date. The Initial Mortgage Loan Schedule is the schedule set
forth herein as Exhibit C, which schedule sets forth as to each Initial Mortgage
Loan: (i) the CutOff Date Principal Balance, (ii) the account number, (iii) the
original principal amount, (iv) the CLTV as of the date of the origination of
the related Initial Mortgage Loan, (v) the Due Date, (vi) the Loan Rate as of
the Cut-Off Date, (vii) the first date on which a Monthly Payment is or was due
under the Mortgage Note, (viii) the original stated maturity date of the
Mortgage Note and if the Mortgage Loan is a Balloon Loan, the amortization
terms, (ix) the remaining number of months to maturity as of the Cut-Off Date,
(x) the state in which the related Mortgaged Property is situated, (xi) the type
of property and (xii) the lien status, (xii) the
- 21 -
applicable Loan Group and (xiii) with respect to each Mortgage Loan in Loan
Group A, (a) the Periodic Rate Cap, (b) the Margin, (c) the Lifetime Rate Cap
and (d) the next Interest Rate Adjustment Date after the Cut-Off Date. The
Seller shall indicate to the Trustee which Mortgage Loans, if any, are
Cooperative Loans. The Mortgage Loan Schedule will be amended from time to
time to reflect the substitution of an Eligible Substitute Mortgage Loan for a
Defective Mortgage Loan from time to time hereunder. Each Subsequent Mortgage
Loan Schedule shall provide the same categories of information with respect to
the related Subsequent Mortgage Loans as of the applicable Subsequent Cut-Off
Date, as with respect to the Initial Mortgage Loans on the Initial Mortgage
Loan Schedule.
Mortgage Loans: The mortgage loans that are transferred and assigned to the
Trustee pursuant to Sections 2.01, 2.06 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held by the Custodian on behalf of the Trustee
as a part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to which
the related mortgagor agrees to pay the indebtedness evidenced thereby which is
secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property and
improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances
and Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Mortgage Loan as to any day, the Loan
Rate less the Expense Fee Rate.
Ninety Day Delinquency Rate: As to any Due Period, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are 90 or more days delinquent as of the
last day of such Due Period (including REO Property and Mortgage Loans in
foreclosure or in
- 22 -
bankruptcy) and the denominator of which is the sum of the Loan Group Balances
as of the last day of such Due Period.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i)any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller, the Certificate Insurer and the Trustee no later than
the Business Day following such determination, would not be ultimately
recoverable pursuant to Sections 3.03(ii) or (vi).
Notional Amount: The Notional Amount of the Class IOF Certificates for any
Distribution Date prior to the 37th Distribution Date will equal the lesser of
(i) the Loan Group Balance of Loan Group F as of the end of the second preceding
Due Period and (ii) the amount set forth below for the applicable Distribution
Date.
Distribution Date Notional Amount
----------------- ---------------
1 through 12 $113,104,000
13 through 18 $ 92,708,000
19 through 30 $ 57,479,000
31 through 36 $ 38,938,000
On and after the 37th Distribution Date, the Notional Amount of the Class IOF
Certificates will be zero.
Notional Amount Certificates: The Class IOF Certificates.
Offered Certificates: All Certificates other than the Class R-1, Class
R-2, Class R-3 and Class BIO Certificates.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a First Vice President, a Vice
President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Trustee or the Custodian.
Opinion of Counsel: A written opinion of counsel reasonably acceptable to
the Trustee, who may be in-house counsel for the Servicer or the Seller (except
that any opinion relating to the qualification of the Trust as a REMIC or
compliance with the REMIC Provisions must be an opinion of independent outside
counsel) and who, in the case of opinions delivered to the Certificate Insurer
and each Rating Agency, is reasonably acceptable to it.
- 23 -
Optional Termination Date: The Distribution Date following the Due Period
at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-Off Date and the
amount deposited in the Pre-Funding Account on the Closing Date.
Original Allocated Pre-Funded Amount: As to Certificate Group F,
$78,326,957.55. As to Certificate Group A, $2,408,041.62.
Original Capitalized Interest Deposit: $421,138.14, inclusive of the
applicable Premium Amount (of which $417,512.60 relates to Certificate Group F,
$3,625.54 relates to Certificate Group A).
Original Class Principal Balance: As to any Class, the respective amount
set forth below opposite such Class:
Original Class
Class Principal Balance
----- -----------------
Class A-1F $145,872,000
Class A-2F $ 94,886,000
Class A-3F $ 58,921,000
Class A-4F $ 68,805,000
Class A-5F $ 32,016,000
Class A-6F $ 44,500,000
Class IOF (1)
Class A-1A $ 30,000,000
Total $475,000,000
-----------
----------
(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.
Original Loan Group Balance: As to either Loan Group, the sum of (i) the
aggregate Cut-Off Date Principal Balance of the Mortgage Loans in such Loan
Group as of the Closing Date and (ii) the aggregate unpaid principal balances as
of the related Subsequent Cut-Off Date of the Subsequent Mortgage Loans added to
such Loan Group after the Closing Date.
Original Pool Balance: The sum of the Original Loan Group Balances.
Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.
- 24 -
Overcollateralization Amount: As to either Certificate Group and any
Distribution Date, the excess, if any, of (i) the sum of (x) the related Loan
Group Balance as of the end of the related Due Period and (y) the related
Allocated Pre-Funded Amount over (ii) the aggregate Class Principal Balance of
the Certificates in such Certificate Group after giving effect to the
distribution of principal on such Distribution Date.
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%.
Periodic Rate Cap: With respect to each Mortgage Loan in Loan Group A with
respect to which the related Mortgage Note provides for a periodic rate cap, the
maximum percentage increase or decrease in the Loan Rate permitted for such
Mortgage Loan over the Loan Rate in effect as of an Interest Rate Adjustment
Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States or any
State or any political subdivision thereof or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, international organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
which is exempt from tax imposed by Chapter 1 of the Code (including the tax
imposed by section 511 of the Code on unrelated business taxable income) (except
certain farmers' cooperatives describe in Code section 521) on any excess
inclusions (as defined in Section 860E(c)(1)) with respect to any Residual
Certificate; (iv) rural electric and telephone cooperatives described in Code
section 1381(a)(2)(C); (v) a Person that is not (a) a citizen or resident of the
United States, (b) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (c) an estate whose income from sources without the United States is
includible
- 25 -
in gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States or
(d) a trust if a court within the United States is able to exercise primary
supervision of the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial decisions of the
trust; or (vi) any other Person so designated by the Trustee based on an Opinion
of Counsel to the effect that any transfer to such Person may cause the Trust to
fail to qualify as a REMIC at any time the Certificates are outstanding. The
terms "United States", "State" and "international organization" shall have the
meanings set forth in Code section 7701 or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof if all of its activities are subject to tax,
and, with the exception of the Xxxxxxx Mac, a majority of its board of directors
is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of
the Principal Balances of all Mortgage Loans as of such date.
Preference Amount: Any amount previously distributed to a Certificate
Owner 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.
Preference Claim: As defined in Section 4.03.
Pre-Funded Amount: As of the Closing Date, the sum of the
Original Allocated Pre-Funded Amount for each Certificate Group.
As of any date thereafter, the amount on deposit in the Pre-
Funding Account, excluding any Pre-Funding Earnings included
therein.
Pre-Funding Account: The Pre-Funding Account established
pursuant to Section 4.02.
Pre-Funding Distribution Date: Each Distribution Date
during the Funding Period and the Distribution Date in the month
following the end of the Funding Period.
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Pre-Funding Earnings: As of any date of determination, the
amount of investment earnings or income, net of any losses from
such investments, on deposit in the Pre-Funding Account.
Premium Amount: As to any Distribution Date and Certificate Group, the
product of the Premium Percentage and the Certificate Group Balance of such
Certificate Group after giving effect to distributions to be made on such
Distribution Date.
Premium Percentage: As defined in the Insurance Agreement.
Prepayment Assumption: With respect to the Group F Certificates, a
conditional rate of prepayment equal to 4.0% per annum in the first month of the
life of the mortgage loans and an additional amount of approximately 1.454546%
(precisely 16/11 percent per annum) in each month thereafter until the twelfth
month; beginning in the twelfth month and in each month thereafter during the
life of the mortgage loans, a conditional prepayment rate of 20% per annum each
month is assumed. With respect to the Group A Certificates, a constant
conditional rate of prepayment equal to 30% per annum each month is assumed.
Prepayment Interest Shortfall: With respect to any Distribution Date, for
each Mortgage Loan that was the subject during the related Due Period of a
Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Net Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act) over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment.
Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation Proceeds and
a Principal Balance of zero thereafter.
Principal Distribution Amount: As to either Certificate Group and any
Distribution Date, the sum of (i) the related Basic Principal Amount minus the
related Excess Overcollateralization Amount and (ii) the related Subordination
Increase Amount.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
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Proprietary Lease: With respect to any Cooperative Unit, a
lease or occupancy agreement between a Cooperative Corporation
and a holder of related Cooperative Shares.
Prospectus: The base prospectus of the Seller dated
September 24, 1998.
Prospectus Supplement: The prospectus supplement dated
September 24, 1998, relating to the offering of the Offered
Certificates.
Purchase Price: As to any Mortgage Loan repurchased on any date pursuant
to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the unpaid
Principal Balance thereof, (ii) the greater of (a) all unpaid accrued interest
thereon to the end of the Due Period preceding the Distribution Date on which
such Purchase Price is included in Available Funds and (b) 30 days' interest
thereon, computed at the applicable Loan Rate; provided, however, that if at the
time of repurchase the Seller is the Servicer, the amount described in clause
(ii) shall be computed at the Loan Rate net of the Servicing Fee Rate, (iii) (x)
if the Servicer is not the Seller, any unreimbursed Servicing Advances with
respect to such Mortgage Loan and (y) expenses reasonably incurred or to be
incurred by the Servicer, the Trust or the Trustee in respect of the breach or
defect giving rise to the purchase obligation and (iv) the amount of any
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses incurred by or imposed on the Trustee or the
Trust or with respect to which any of them are liable arising from a breach by
the Seller of its representations and warranties in Section 2.04.
Rating Agency: Any statistical credit rating agency, or its successor, that
rated the Offered Certificates at the request of the Seller at the time of the
initial issuance of the Certificates. If such agency or a successor is no longer
in existence, "Rating Agency" shall be such statistical credit rating agency, or
other comparable Person, designated by the Seller, notice of which designation
shall be given to the Trustee and the Certificate Insurer. References herein to
the highest short term unsecured rating category of a Rating Agency shall mean
"A-1" or better in the case of S&P, and "P-1" or better in the case of Xxxxx'x
and in the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "AAA" in the case of S&P and "Aaa" in the case of Xxxxx'x and in the
case of any other Rating Agency, such equivalent rating.
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Recognition Agreement: With respect to any Cooperative Loan, an agreement
between the Cooperative Corporation and the originator of such Mortgage Loan,
which establishes the rights of such originator in the Cooperative Property.
Record Date: With respect to (i) the Fixed Rate Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs and (ii) the Adjustable Rate Certificates, the Business
Day immediately preceding such Distribution Date; provided, however, that if any
Adjustable Rate Certificate becomes a Definitive Certificate, the record date
for such Adjustable Rate Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
Reference Bank Rate: As to any Interest Period relating to the Adjustable
Rate Certificates as follows: the arithmetic mean (rounded upwards, if
necessary, to the nearest one sixteenth of a percent) of the offered rates for
United States dollar deposits for one month which are offered by the Reference
Banks as of 11:00 A.M., London time, on the second LIBOR Business Day prior to
the first day of such Interest Period to prime banks in the London interbank
market for a period of one month in amounts approximately equal to the aggregate
Class Principal Balance of the Adjustable Rate Certificates; provided that at
least two such Reference Banks provide such rate. If fewer than two offered
rates appear, the Reference Bank Rate will be the arithmetic mean of the rates
quoted by one or more major banks in New York City, selected by the Trustee
after consultation with the Servicer, as of 11:00 A.M., New York City time, on
such date for loans in U.S. Dollars to leading European Banks for a period of
one month in amounts approximately equal to the aggregate Class Principal
Balance of the Adjustable Rate Certificates. If no such quotations can be
obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable to
the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.
Regular Certificates: The Offered Certificates and the Class BIO
Certificates.
Reimbursement Amount: As of any Distribution Date, the sum of (x) (i)
Insured Payments previously received by the Trustee and not previously repaid to
the Certificate Insurer pursuant to Sections 5.01(a)4. And 5.01(a)8. plus (ii)
interest accrued on such Insured Payment not previously repaid calculated at the
Late Payment Rate from the date the Trustee received such Insured Payments and
(y) (i) the amount of any Premium Amount not paid on
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the date due plus (ii) interest on such amount at the Late Payment Rate and
(z)(i) any other amounts then owing to the Certificate Insurer under the
Insurance Agreement plus (ii) interest on such amounts at the Late Payment Rate.
The Certificate Insurer shall notify the Trustee and the Seller of the amount of
any Reimbursement Amount.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage servicing standards
the Servicer would use in servicing mortgage loans for its own account and this
Agreement.
REMIC: A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the REMIC II Interests, the Initial
Interest Coverage Account and the Pre-Funding Account.
REMIC I Interest: As defined in Section 2.07.
REMIC I Regular Interest: As defined in Section 2.07.
REMIC II: The segregated pool of assets consisting of the
REMIC I Regular Interests.
REMIC II Interest: As defined in Section 2.07.
REMIC II Regular Interest: As defined in Section 2.07.
REMIC III: The segregated pool of assets consisting of the
REMIC II Regular Interests.
REMIC III Interest: As defined in Section 2.07.
REMIC Certificate Maturity Date: The "latest possible
maturity date" as that term is defined in Section 2.09.
REMIC Change of Law: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to any REMIC and the REMIC Provisions issued after the Closing Date.
- 30 -
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trustee in foreclosure or by deed in lieu of foreclosure.
Required Overcollateralization Amount: As to either
Certificate Group:
A. For any Distribution Date occurring during the
period commencing on the Closing Date and ending
on the later of the 30th Distribution Date and the
date upon which principal equal to one-half of the
aggregate Original Class Principal Balance of the
Offered Certificates in such Certificate Group has
been received by the Holders thereof, the lesser
of (x) the related Maximum Overcollateralization
Amount and (y) the greater of:
1. the related Base Specified
Overcollateralization Amount; and
2. the product of the Delinquency Amount for the related Loan
Group and 58% in the case of Loan Group F or 86% in the case
of Loan Group A;
B. for either Certificate Group and any Distribution Date occurring
after the end of the applicable period in clause (A) above, the
lesser of (x) the related Maximum Overcollateralization Amount
and (y) the greatest of:
1. the product of the Delinquency Amount for the related Loan
Group and 58% in the case of Loan Group F and 86% in the
case of Loan Group A;
2. the product of (x) two times the related Target Percentage
and (y) the Loan Group Balance of the related Loan Group as
of the last day of the related Due Period;
3. an amount equal to the product of 0.75% and the aggregate
Original Class Principal
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Balance of the Offered Certificates in such Certificate
Group; and
4. an amount equal to the sum of the Principal Balances of the
three Mortgage Loans in the related Loan Group with the
largest Principal Balances as of the last day of the related
Due Period.
C. Notwithstanding clause B. above, for either
Certificate Group and any Distribution Date
occurring after the end of the applicable period
in clause (A) above, if the Delinquency Percentage
for the related Loan Group exceeds 8% for Loan
Group F or 10% for Loan Group A, the Required
Overcollateralization Amount for the applicable
Certificate Group shall be no less than the
Required Overcollateralization Amount for such
Certificate Group as of the previous Distribution
Date.
Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
Cooperative or a mobile home treated as real property under local law.
Residual Certificates: The Class R-1, Class R-2 and Class R-
3 Certificates collectively.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer 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. When used with respect to the Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
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Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Delta Funding Corporation, a New York corporation,
or any successor thereto.
Servicer: Delta Funding Corporation, a New York
corporation, or any successor thereto or any successor hereunder.
Servicer Termination Test: The Servicer Termination Test is
failed if
i) Cumulative Net Losses for both Loan Groups equal or
exceed 3.75% of the Original Pool Balance,
ii) cumulative Liquidation Loan Losses for both Loan Groups over any one
twelve-month period exceed 1.25% of the Original Pool Balance,
iii) the Three Month Delinquency Rate exceeds 15%, or
iv) the Total Expected Losses for the first 5 years equal or exceed 5.00%
of the Original Pool Balance or thereafter 7.50% of the Original Pool
Balance.
Servicing Advances: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.06 or 3.19 and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the Servicer
to the extent provided in Sections 3.03(ii) and (vi) and 3.06.
Servicing Certificate: A certificate completed and executed
by a Servicing Officer on behalf of the Servicer.
Servicing Compensation: The Servicing Fee and other amounts
to which the Servicer is entitled pursuant to Section 3.08.
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Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
annual fee payable to the Servicer, which subject to Section 3.02 is calculated
as an amount equal to the product of the Servicing Fee Rate and the Principal
Balance thereof at the beginning of the related Due Period.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee and the Certificate Insurer by the Servicer, as such list may be amended
from time to time.
S&P: Standard & Poor's Ratings Services, a Division of the
XxXxxx-Xxxx Companies, Inc.
Startup Day: The day designated as such pursuant to Section
2.08.
Subordination Deficiency: As to either Certificate Group and any
Distribution Date, the excess, if any, of (i) the applicable Required
Overcollateralization Amount for such Distribution Date over (ii) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Basic Principal Amount on such Distribution
Date.
Subordination Increase Amount: As to either Certificate
Group and any Distribution Date, the lesser of (i) the related
Subordination Deficiency and (ii) the related Excess Interest.
Subsequent Cut-Off Date: As to any Subsequent Mortgage Loan and related
Subsequent Transfer Date, the close of business on the first day of the month of
such Subsequent Transfer Date; provided, however, that if a Subsequent Mortgage
Loan was originated during the month of such Subsequent Transfer Date, the
Subsequent Cut-Off Date therefor shall be the date of the related Mortgage Note.
Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loans: The Mortgage Loans identified on
the Subsequent Mortgage Loan Schedule.
Subsequent Transfer Agreement: Each Subsequent Transfer
Agreement entered into between the Seller and the Trustee,
substantially in the form attached as Exhibit D.
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Subsequent Transfer Date: Each date during the Funding
Period on which Subsequent Mortgage Loans are sold to the Trust.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and the Certificate Insurer.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i)the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate (or the Loan Rate net of the Servicing Fee Rate if the
Seller is the Servicer) and (c) if the Servicer is not the Seller, the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amount referred to in clause (iv) of the
definition of Purchase Price in respect of such Defective Mortgage Loan.
Target Percentage: As to Loan Group F, 2.90%. As to Loan
Group A, 5.20%.
Tax Matters Person: As defined in Section 2.11.
Tax Matters Person Residual Interest: A 0.000001% interest in each of the
Class R-1, Class R-2 Certificates and Class R-3 Certificates, which shall be
issued to and held by the Tax Matters Person.
Three Month Delinquency Rate: As to any Determination Date the arithmetic
average of the Ninety Day Delinquency Rates for the three Due Periods preceding
such Determination Date.
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Total Expected Losses: As of any Determination Date, the sum of (i)
Cumulative Net Losses for both Loan Groups as of the last day of the related Due
Period and (ii) the Delinquency Loss Factor.
Trust: The trust created by this Agreement, the corpus of which consists
of the Mortgage Loans, such assets as shall from time to time be deposited in
the Collection Account, the Initial Interest Coverage Account, the Pre-Funding
Account and the Distribution Account in accordance with this Agreement, property
that secured a Mortgage Loan and that has become REO Property, the Certificate
Insurance Policy, certain hazard insurance policies maintained by the Mortgagors
or the Servicer in respect of the Mortgage Loans and all proceeds of each of the
foregoing.
Trustee: Bankers Trust Company of California, N.A., or any successor
Trustee appointed in accordance with this Agreement that has accepted such
appointment in accordance with this Agreement.
Trustee Fee: The fee owed to the Trustee pursuant to a
letter agreement between the Servicer and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee
Fee is calculated.
Voting Rights: The right to vote evidenced by a Certificate as follows: the
Class BIO Certificates, in the aggregate, shall evidence Voting Rights equal to
the percentage equivalent of a fraction, the numerator of which is the sum of
the Required Overcollateralization Amounts and the denominator of which is the
Pool Balance; the Certificates, in the aggregate, shall evidence Voting Rights
equal to 100% minus the Voting Rights evidenced by the Class BIO Certificates.
The Voting Rights allocated to the Certificates, other than the Class BIO
Certificates, shall be allocated 1% to the Notional Amount Certificates and 1%
to the Residual Certificates, in the aggregate and the remainder among the other
Classes of Offered Certificates in proportion to their respective Class
Principal Balances. Voting Rights allocated to a Class of Certificates shall be
allocated among the Certificates of such Class in proportion to their respective
Percentage Interests. The Certificate Insurer shall be entitled to exercise all
of the Voting Rights of the Offered Certificates so long as no Certificate
Insurer Default has occurred and is continuing.
Section 1.02. Interest Calculations. All calculations of interest that are
made in respect of the Principal Balance of a simple interest Mortgage Loan
shall be made on the basis of a 365-day year and the actual number of days
elapsed. All calculations of interest that are made in respect of the Principal
Balance of an actuarial Mortgage Loan shall be made on the basis of a 360-day
year consisting of twelve 30-day months. The Certificate Rate for the Adjustable
Rate Certificates shall be calculated on the basis of a 360-day year and the
actual number of days elapsed except that if an Available Funds Cap is used to
calculate the Certificate Rate for any Class of Certificates, interest thereon
shall be calculated on the basis of a 360-day year consisting of twelve 30 day
months. The Certificate Rate for the Fixed Rate Certificates shall be calculated
on the basis
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of a 360-day year consisting of twelve 30- day months. The calculation of the
Servicing Fee and the Trustee Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest xxxxx with one-half of one xxxxx being rounded
down.
ARTICLE II
Conveyance of Initial Mortgage Loans
Original Issuance of Certificates
Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans (a) The Seller,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in
and to each Initial Mortgage Loan, including the Cut-Off Date Principal Balance
and all collections in respect of interest and principal received after the
Cut-Off Date (other than payments in respect of accrued interest due before
September 1, 1998); (ii) property which secured such Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest
in any insurance policies in respect of the Initial Mortgage Loans; (iv) such
amounts as may be deposited into and held by the Trustee in the Pre-Funding
Account and the Initial Interest Coverage Account, together with all investment
earnings on such amounts; (v) the Initial Interest Deposit; and (vi) all
proceeds of any of the foregoing. In addition, on or prior to the Closing Date,
the Seller shall cause the Certificate Insurer to deliver the Certificate
Insurance Policy to the Trustee.
In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee or the Custodian on behalf of
the Trustee, on or before the Closing Date, the following documents or
instruments with respect to each Initial Mortgage Loan (the "Related Documents")
and the related Mortgage Loan Schedule in computer readable format and the
Seller, in connection with the Subsequent Transfer, shall deliver to, and
deposit with, the Trustee or the Custodian on behalf of the Trustee, on or
before the Closing Date, the Related Documents and
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the related Mortgage Loan Schedule in computer readable format with respect to
each Subsequent Mortgage Loan:
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the originator
of the Mortgage Loan to the Person so endorsing the Mortgage Loan to the
Trustee, endorsed by such Person "Pay to the order of Bankers Trust Company
of California, N.A., as Trustee for Delta Funding Home Equity Loan Trust
1998-3 without recourse" and signed, by facsimile or manual signature, in
the name of the Seller by a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of attorney,
if any, with evidence of recording thereon, (2) a copy of the Mortgage and
related power of attorney, if any, certified as a true copy of the original
Mortgage or power of attorney by a Responsible Officer of the Seller by
facsimile or manual signature or by the closing attorney or by an officer
of the title insurer or agent of the title insurer that issued the related
title insurance policy, in each case, if the original has been transmitted
for recording until such time as the original is returned by the public
recording office or (3) a copy of the original recorded Mortgage and
related power of attorney, if any, certified by the public recording
office;
(iii) The original Assignment of Mortgage in recordable form, from the
Seller in blank, or to "Bankers Trust Company of California, N.A., as
Trustee for Delta Funding Home Equity Loan Trust 1998-3";
(iv) The original lender's policy of title insurance or a true copy
thereof or, if such original lender's title insurance policy has been lost,
a copy thereof certified by the appropriate title insurer to be true and
complete or, if such lender's title insurance policy has not been issued as
of the Closing Date, a marked up commitment (binder) to issue such policy;
(v) All intervening assignments, if any, showing a complete chain of
assignments from the originator to the Seller, including any recorded
warehousing assignments, with evidence of recording thereon, or a copy
thereof certified by a Responsible Officer of the Seller by facsimile or
manual signature, or by the closing attorney or by an officer of the title
insurer or agent of the title insurer that issued the related title
insurance policy, as a true copy of the original of such intervening
assignments if the original has been transmitted for recording until such
time as the
- 38 -
original is returned by the public recording office or a copy
of the original recorded intervening assignments certified by the public
recording office;
(vi) Originals of all assumption, written assurance, substitution and
modification agreements, if any; and
(vii) In the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Cooperative Shares, together with a
stock power in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition
Agreement;
(f) The executed UCC-1 financing statement with evidence of
recording thereon which have been filed in all places required to
perfect the Seller's interest in the Cooperative Shares and the
Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by state law,
evidencing a complete and unbroken line from the mortgagee to the
Trustee with evidence of recording thereon (or in a form suitable
for recordation).
In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee or the Custodian on behalf of the Trustee promptly upon receipt thereof
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has caused the portions
of the Electronic Ledger relating to the Mortgage Loans to be clearly and
unambiguously marked, and has made the appropriate entries in its general
accounting records, to indicate that such Mortgage Loans have been transferred
to the Trustee and constitute part of the Trust in accordance with the terms of
the trust created hereunder.
- 39 -
(b) The parties hereto intend that the transaction set forth herein be a
sale by the Seller to the Trust of all the Seller's right, title and interest in
and to the Mortgage Loans and other property described above. In the event the
transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Trust a security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other property described above;
and this Agreement shall constitute a security agreement under applicable law.
The Seller, the Servicer and the Trustee shall, to the extent consistent with
this Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage Loans, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law and will be maintained as such throughout the term
of the Agreement.
Except as may otherwise expressly be provided herein, neither the Seller,
the Servicer nor the Trustee shall (and the Servicer shall ensure that no
Subservicer shall) assign, sell, dispose of or transfer any interest in the
Trust or any portion thereof, or permit the Trust or any portion thereof to be
subject to any lien, claim, mortgage, security interest, pledge or other
encumbrance of, any other Person.
In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.
(c) Within 30 days of the Closing Date, the Seller, at its own expense,
shall prepare and send for recording the Assignments of Mortgage in favor of the
Trustee in the appropriate real property or other records; provided, however,
that the Seller shall not be required to record Assignments of Mortgage if the
related Mortgaged Property is located in a jurisdiction in which the recording
thereof is not necessary to protect the interests of the Trustee or
Certificateholders in the related Mortgage as evidenced by an Opinion of
Counsel, in form and substance satisfactory to the Rating Agencies and the
Certificate Insurer, delivered to the Trustee, the Certificate Insurer and the
Rating Agencies. With respect to any Assignment of Mortgage as to which the
related recording information is unavailable within 30 days following the
Closing Date, such Assignment of Mortgage shall be submitted for recording
within 30 days after receipt of such information but in no event later than one
year after the Closing Date. The Trustee or the Custodian on behalf of the
Trustee shall be required to retain a copy of each Assignment of Mortgage
submitted for recording. In the event that any such Assignment of
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Mortgage is lost or returned unrecorded because of a defect therein, the Seller
shall promptly prepare a substitute Assignment of Mortgage or cure such defect,
as the case may be, and thereafter the Seller shall be required to submit each
such Assignment of Mortgage for recording. Any failure of the Seller to comply
with this Section 2.01(c) shall result in the obligation of the Seller to
purchase or substitute for the related Mortgage Loans pursuant to the provisions
of Section 2.02.
(d) Neither the Trustee nor the Custodian on behalf of the Trustee shall
have any responsibility for reviewing any Mortgage File except as expressly
provided in Section 2.02. Without limiting the effect of the preceding sentence,
in reviewing any Mortgage File pursuant to such subsection, neither the Trustee
nor the Custodian shall have any responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if applicable, to determine if the
Trustee is the assignee or endorsee), 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, but shall not be required to determine whether any Person executing
any document is authorized to do so or whether any signature thereon is genuine.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges its
receipt of the Certificate Insurance Policy and the sale and assignment of the
Mortgage Loans, and, subject to the review provided for in this Section 2.02 and
the period for delivery provided for in Section 2.01, its receipt or that of the
Custodian on behalf of the Trustee of the Mortgage Files, and declares that the
Trustee or the Custodian on behalf of the Trustee holds and will hold such
documents and all amounts received by it thereunder and hereunder in trust, upon
the terms herein set forth, for the use and benefit of all present and future
Certificateholders and the Certificate Insurer. If the Seller is given notice
under this Section 2.02 that a Mortgage File is defective or incomplete and if
the Seller does not correct or cure such omission or defect within the 60-day
period specified in Section 2.02, the Seller shall purchase such Mortgage Loan
from the Trustee (i) on the Determination Date in the month following the month
in which such 60-day period expired at the Purchase Price of such Mortgage Loan
or (ii) upon the expiration of such 60-day period if the omission or defect
would result in the related Mortgage Loan not being a Qualified Mortgage Loan
for purposes of Section 860G(a)(3) of the Code. The Purchase Price for the
purchased Mortgage Loan shall be deposited in the
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Collection Account no later than the applicable Determination Date or the
Business Day preceding the expiration of such 60-day period, as the case may be;
and, upon receipt by the Trustee or the Custodian on behalf of the Trustee of
written notification of such deposit signed by a Responsible Officer of the
Seller, the Trustee or the Custodian on behalf of the Trustee shall release to
the Seller the related Mortgage File and the Trustee shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
shall be necessary to vest in the Seller or its designee any Mortgage Loan
released pursuant hereto. It is understood and agreed that the obligation of the
Seller to purchase any Mortgage Loan as to which a material defect in or
omission of a constituent document exists shall constitute the sole remedy
against the Seller respecting such defect or omission available to the
Certificate Insurer, Certificateholders or the Trustee on behalf of
Certificateholders. An Opinion of Counsel to the effect set forth in Section
2.05(d) shall be delivered to the Trustee and the Certificate Insurer in
connection with any such repurchase.
The Servicer, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section 2.02 or Section 2.05, as the case may be, shall amend the Mortgage
Loan Schedule, appropriately xxxx the Electronic Ledger and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable.
No later than the 30th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall certify to the Certificate Insurer, the
Seller and the Servicer (and the Trustee if the Custodian is so certifying) that
it has reviewed each Mortgage File and that, as to each Mortgage Loan listed in
the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full or
any Mortgage Loan specifically identified in the certification in the form
annexed hereto as Exhibit O as not covered by such certification), (i) all
documents constituting part of such Mortgage File required to be delivered to it
pursuant to paragraphs (i) - (v) of Section 2.01(a) are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing, the information set forth in the Mortgage Loan Schedule which
corresponds to items (ii), (iii), (v) and (vii) of the definition of "Mortgage
Loan Schedule" accurately reflects information set forth in the Mortgage File.
If within such 30-day period the Trustee or the Custodian on behalf of the
Trustee finds any document constituting a part of a Mortgage File not to have
been executed or received or to be unrelated to the Mortgage Loans identified in
said Mortgage
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Loan Schedule or, if in the course of its review, the Trustee or the Custodian
on behalf of the Trustee determines that such Mortgage File is otherwise
defective in any material respect, the Trustee or the Custodian on behalf of the
Trustee shall promptly upon the conclusion of its review notify in the form of
an exception report and the Seller shall have a period of 60 days after such
notice within which to correct or cure any such defect.
On the 360th day following the Closing Date, the Trustee or the Custodian
on behalf of the Trustee shall deliver to the Certificate Insurer, the Seller
and the Servicer an updated exception report showing the documents outstanding
pursuant to Section 2.01(a) along with a final certification annexed hereto as
Exhibit P from the previous certification issued in the form of Exhibit O. The
Trustee or the Custodian on behalf of the Trustee shall also maintain records
adequate to determine the date on which any document required to be delivered to
it after such 360th day following the Closing Date must be delivered to it, and
on each such date, the Trustee or the Custodian on behalf of the Trustee shall
review the related Mortgage File to determine whether such document has, in
fact, been delivered. After the delivery of the final certification, a form of
which is attached hereto as Exhibit P, (i) the Trustee or the Custodian on
behalf of the Trustee shall provide to the Certificate Insurer, the Servicer and
the Seller (and to the Trustee if delivered by the Custodian), no less
frequently than monthly, updated exception reports showing the documents
outstanding pursuant to Section 2.01(a) until all such exceptions have been
eliminated and (ii) the Seller shall provide to the Certificate Insurer, the
Trustee or the Custodian on behalf of the Trustee and the Servicer, no less
frequently than monthly, updated certifications indicating the then current
status of exceptions until all such exceptions have been eliminated; provided
that the delivery of the final certification shall not act as a waiver of any of
the rights the Certificate Insurer or the Certificateholders may have with
respect to such exceptions, and all rights are reserved with respect thereto.
Neither the Trustee nor the Custodian makes any representations as to and
shall not be responsible to verify (i) the validity, sufficiency, legality, due
authorization, recordation or genuineness of any document or (ii) the
collectability, insurability or effectiveness of any of the Mortgage Loans.
Section 2.03. Representations and Warranties Regarding the
Seller and the Servicer. Each of the Seller and the Servicer
represents and warrants as to itself that, as of the Closing
Date:
(i) Each of the Seller and the Servicer is a corporation licensed as
a mortgage banker duly organized,
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validly existing and in good standing under the laws of the state of its
incorporation and has, and had at all relevant times, full corporate power
to originate the Mortgage Loans, to own its property, to carry on its
business as presently conducted and to enter into and perform its
obligations under this Agreement;
(ii) The execution and delivery of this Agreement by the Seller and
the Servicer and the performance by each of them of and compliance with the
terms of this Agreement will not violate the Seller's or 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 or acceleration of, any material contract,
agreement or other instrument to which the Seller or the Servicer is a
party or which may be applicable to the Seller or the Servicer or any of
their respective assets;
(iii) Each of the Seller and the Servicer has the full power and
authority to enter into and consummate all transactions contemplated by
this Agreement to be consummated by it, has duly authorized the execution,
delivery and performance of this Agreement, and has duly executed and
delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a valid,
legal and binding obligation of the Seller and the Servicer, enforceable
against it in accordance with the terms hereof, except as such enforcement
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law);
(iv) Neither the Seller nor the Servicer is in violation of, and the
execution and delivery of this Agreement by the Seller and the Servicer and
the performance by each of them and compliance with the terms of this
Agreement will not constitute a violation with respect to, any order or
decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or the Servicer or any of their respective
properties or materially and adversely affect the performance of any of
their respective duties hereunder;
(v) There are no actions or proceedings against, or investigations
of, the Seller or the Servicer pending or, to
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the knowledge of the Seller or the Servicer, threatened, before any court,
administrative agency or other tribunal (A) that, if determined adversely,
would prohibit its entering into this Agreement, (B) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement
or (C) that, if determined adversely, would prohibit or materially and
adversely affect the performance by the Seller or the Servicer of any of
their respective obligations under, or the validity or enforceability of,
this Agreement;
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller or the Servicer
with, this Agreement, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(vii) The Seller did not sell the Mortgage Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors; and the Seller
will not be rendered insolvent as a result of the sale of the Mortgage
Loans to the Trust;
(viii) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(ix) The collection practices used by the Seller and the Servicer with
respect to the Mortgage Loans have been, in all material respects, legal,
proper, prudent and customary in the non-conforming mortgage servicing
business;
(x) No Officer's Certificate, statement, report or other document
prepared by the Seller or the Servicer and furnished or to be furnished by
it pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact;
(xi) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
(xii) The Servicer believes that the Servicing Fee Rate provides a
reasonable level of base compensation to the Servicer for servicing the
Mortgage Loans on the terms set forth herein;
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(xii) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer; and
(xiv) The Servicer has caused or hereby agrees to 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 the
Mortgage Loans, 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.
The representations and warranties set forth in this Section 2.03 shall survive
the sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders or the Certificate Insurer, the
Person discovering such breach shall give prompt written notice to the other
parties and the Certificate Insurer. Within 60 days of its discovery or its
receipt of notice of such breach, or, with the prior written consent of a
Responsible Officer of the Trustee and the Certificate Insurer, such longer
period specified in such consent, the Seller or the Servicer, as the case may
be, shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller
Regarding the Mortgage Loans. (a) The Seller represents and
warrants to the Trustee on behalf of the Certificateholders as
follows as of the Closing Date:
1. The information set forth on the Mortgage Loan Schedule is
complete, true and correct as of the dates as of which the information
therein is given;
2. The Mortgage Notes and the Mortgages have not been assigned or
pledged by the Seller to any Person other than warehouse lenders, and
immediately prior to the transactions herein contemplated, the Seller had
good and marketable title thereto, and was the sole owner and holder of the
Mortgage Loans free and clear of any and all liens, claims, encumbrances,
participation interests, equities, pledges, charges or security interests
of any nature (collectively, a "Lien"), other than any such Lien released
simultaneously with the sale contemplated herein, and had full right and
authority, subject to no interest or participation of, or agreement with,
any other party, to sell and assign the same pursuant to this Agreement,
and immediately upon the transfer and assignment of each Mortgage Loan as
contemplated by this Agreement, the Trust will be the sole beneficial owner
of, each Mortgage Loan free and clear of any lien, claim,
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participation interest, mortgage, security interest, pledge, charge or
other encumbrance or other interest of any nature;
3. With respect to any Mortgage Loan that is not a Cooperative Loan,
each Mortgage is a valid and existing lien on the property therein
described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet due
and payable, (ii) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of recording
such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related Mortgage
Loan, (iii) other matters to which like properties are commonly subject
which do not materially interfere with the benefits of the security
intended to be provided by such Mortgage; (iv) in the case of a Mortgaged
Property that is a condominium or an individual unit in a planned unit
development, liens for common charges permitted by statute and (v) in the
case of a Mortgage Loan secured by a second lien on the related Mortgaged
Property, the related First Lien. Any security agreement, chattel mortgage
or equivalent document related to the Mortgage and delivered to the Trustee
or the Custodian on behalf of the Trustee establishes in the Seller a valid
and subsisting lien on the property described therein, and the Seller has
full right to sell and assign the same to the Trust;
4. The terms of each Mortgage Note and Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the interests
of the Trust, and which has been delivered to the Trustee or the Custodian
on behalf of the Trustee. The substance of any such alteration or
modification is reflected on the Mortgage Loan Schedule;
5. No instrument of release or waiver has been executed in connection
with any Mortgage 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 or the Custodian on behalf of the Trustee;
6. Except with respect to delinquencies described in clause (12)
hereof, no Mortgagor is in default in complying with the terms of its
Mortgage Note or Mortgage, and the Seller has not waived any default,
breach, violation or event
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of acceleration except that the Seller may have accepted late payments,
and all taxes, governmental assessments, insurance premiums or water,
sewer and municipal charges which previously became due and owing have
been paid, or an escrow of funds has been established in an amount
sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. The Seller has not advanced
funds or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the Mortgage, except for interest accruing from
the date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest;
7. There is no proceeding pending or threatened for the total or
partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring, and such property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or otherwise, so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
8. There are no mechanics' or similar liens or claims which have been
filed for work, labor or material (and no rights are outstanding that under
law could give rise to such lien) affecting any Mortgaged Property which
are, or may be, liens prior or equal to, or coordinate with, the lien of
the Mortgage except those that are stated in the title insurance policy and
for which related losses are affirmatively insured against by such policy;
9. All of the improvements that were included for the purpose of
determining the Appraised Value of each Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon the Mortgaged
Property except those that are stated in the title insurance policy and for
which related losses are affirmatively insured against by such policy;
10. No improvement located on or being part of any Mortgaged Property
is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with
respect to the use and occupancy of the same, including, but not limited
to, certificates of occupancy and fire
- 48 -
underwriting certificates, have been made or obtained from the
appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
11. All parties that have had any interest in any Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in
compliance with any and all licensing requirements of the United States and
of the laws of the state wherein the Mortgaged Property is located that are
applicable to such parties and (2)(A) organized under the laws of such
state or (B) qualified to do business in such state or exempt from such
qualification in a manner so as not to affect adversely the enforceability
of such Mortgage Loan or (C) federal savings and loan associations or
national banks having principal offices in such state or (D) not doing
business in such state;
12. With respect to the Initial Mortgage Loans, as of the Cut-Off
Date, (i) all payments required to be made on each Initial Mortgage Loan
under the terms of the related Mortgage Note have been made except for
approximately 0.51% and 0.30% of the Initial Mortgage Loans in Loan Group F
and Loan Group A respectively (by Cut-Off Date Principal Balance) are up to
59 days Delinquent and (ii) no payment required to be made on any Initial
Mortgage Loan has been more than 59 days Delinquent more than once during
the twelve month period immediately preceding the Cut-Off Date;
13. Each of the documents and instruments included in a Mortgage File
is duly executed and in due and proper form and each such document or
instrument is in a form generally acceptable to prudent institutional
mortgage lenders that regularly originate or purchase mortgage loans;
14. The Mortgage Notes and the related Mortgages are genuine, and
each is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). All parties
to the Mortgage Note and the Mortgage had legal capacity to execute the
Mortgage Note and the Mortgage, and each Mortgage Note and Mortgage have
been duly and properly executed by such parties. The Mortgagor is a natural
person who is a party to the Mortgage Note and the Mortgage in an
individual capacity, and not in the capacity of a trustee or otherwise;
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15. Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity
or disclosure laws, applicable to the origination and servicing of the
Mortgage Loans or otherwise applicable to the Mortgage Loans have been
complied with, and the Seller has and shall maintain in its possession,
available for the Trustee's inspection, and shall deliver to the Trustee
upon demand, evidence of compliance with all such requirements;
16. The proceeds of the Mortgage Loans have been fully disbursed,
there is no requirement for future advances thereunder and 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, closing or recording the
Mortgage Loan have been paid;
17. Each Mortgage Loan is covered by an ALTA mortgage title insurance
policy or such other form of policy acceptable to Xxxxxx Xxx or Xxxxxxx
Mac, issued by and constituting the valid and binding obligation of a title
insurer generally acceptable to prudent mortgage lenders that regularly
originate or purchase mortgage loans comparable to the Mortgage Loans for
sale to prudent investors in the secondary market that invest in mortgage
loans such as the Mortgage Loans and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring the Seller,
its successors and assigns, as to the first priority lien of the Mortgage
in the case of a Mortgage Loan secured by a First Lien on the related
Mortgaged Property and the second priority lien of the Mortgage in the case
of a Mortgage Loan secured by a second lien on the related Mortgaged
Property, in the original principal amount of the Mortgage Loan. The Seller
is the sole named insured of such mortgage title insurance policy, the
assignment to the Purchaser or the Trustee as assignee of the Purchaser of
the Seller's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer or the same has been
obtained, and such mortgage title insurance policy is in full force and
effect and will be in full force and effect and inure to the benefit of the
Trustee upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything that would impair the coverage of
such mortgage title insurance policy;
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18. All improvements upon the Mortgaged Properties are insured by a
generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located pursuant to insurance policies conforming to
the requirements of this Agreement. If a Mortgaged Property was, at the
time of origination of the related Mortgage Loan, in an area identified on
a Flood Hazard Boundary Map or Flood Hazard Rate Map issued by the Federal
Emergency Management Agency as having special flood hazards (and if the
flood insurance policy referenced herein has been made available), a flood
insurance policy is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage described
in this Agreement. All individual insurance policies (collectively, the
"hazard insurance policy") are the valid and binding obligation of the
insurer and contain a standard mortgagee clause naming the Seller, its
successors and assigns, as mortgagee. All premiums thereon have been paid.
The Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
19. No Mortgage Loan is subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of any Mortgage Note or the related Mortgage,
or the exercise of any right thereunder in accordance with the terms
thereof, render either the Mortgage Note or the Mortgage unenforceable, in
whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and no such right
of rescission, set-off, counterclaim or defense has been asserted with
respect thereto;
20. Each Mortgage Loan was originated or purchased and
reunderwritten by the Seller;
21. Except with respect to any Balloon Loan, each Mortgage Loan is
payable in equal monthly installments of principal and interest which would
be sufficient, in the absence of late payments, to fully amortize such loan
within the term thereof, beginning no later than 60 days after disbursement
of the proceeds of the Mortgage Loan. Each Mortgage Loan in Loan Group F
bears a fixed interest rate for the term of the Mortgage Loan. Each Balloon
Loan has an
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original term of not less than fifteen (15) years and provides
for level monthly payments based on a thirty (30) year amortization
schedule and a final Monthly Payment substantially greater than the
preceding Monthly Payments. Each Mortgage Loan in Loan Group A bears an
adjustable interest rate based on the related Loan Index;
22. Each Mortgage contains a customary provision for the acceleration
of the payment of the unpaid principal balance of the Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of
the holder thereunder;
23. No Mortgage Loan is a construction loan;
24. The Mortgage Notes are not and have not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable security
agreement or chattel mortgage referred to in clause 3 above;
25. Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (ii) otherwise by judicial or nonjudicial fore-closure.
There is no homestead or other exemption available to the Mortgagor that
would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
26. 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 Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, which fees
and expenses shall constitute Servicing Advances;
27. Each Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule. No residence or dwelling is a manufactured
dwelling. No Mortgaged Properties are held under a ground lease;
28. The Mortgage Loans were underwritten in accordance with the
Seller's underwriting guidelines described in the
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Prospectus under the heading "The Seller and the Servicer--Underwriting";
29. There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Seller have been capitalized under any
Mortgage or the related Mortgage Note;
30. No Mortgage Loan was originated under a buy-down
plan;
31. Other than as provided by this Agreement, there is no obligation
on the part of the Seller or any other party to make payments in addition
to those made by the Mortgagors;
32. With respect to each Mortgage Loan, the Seller is in possession
of a complete Mortgage File, except those documents delivered to the
Trustee or Custodian on behalf of the Trustee, and there are no custodial
agreements in effect adversely affecting the right or ability of the Seller
to make the document deliveries required hereby;
33. No Mortgage Loan was selected for inclusion under this Agreement
on any basis which was intended to have a material adverse effect on the
Certificateholders or the Certificate Insurer;
34. No Mortgage Loan has a shared appreciation or other contingent
interest feature;
35. With respect to each Mortgage Loan secured by a second lien on
the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is higher than 80%,
either the related First Lien does not provide for a balloon payment
or, if the related First Lien does provide for a balloon payment, the
maturity date of the second lien is prior to the maturity date of the
First Lien;
(b) the related First Lien does not provide for negative
amortization;
(c) either no consent for the Mortgage Loan secured by a
second lien on the related Mortgaged Property is required by the
holder of the related First Lien or such consent has been obtained and
is contained in the Mortgage File; and
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(d) except with respect to no more than 10% of the Initial
Mortgage Loans in Loan Group F which are Mortgage Loans secured by a
second lien on the related Mortgaged Property, measured by outstanding
Principal Balances as of the Cut-Off Date, the related First Lien
is not held by an individual;
36. Each Mortgage Loan conforms, and all the Mortgage Loans in the
aggregate conform, in all material respects to the description thereof set
forth in the Prospectus Supplement;
37. A full appraisal on forms approved by Xxxxxx Mae or Xxxxxxx Mac
was performed in connection with the origination of each Mortgage Loan.
Each appraisal meets guidelines that would be generally acceptable to
prudent mortgage lenders that regularly originate or purchase mortgage
loans comparable to the Mortgage Loans for sale to prudent investors in the
secondary market that invest in mortgage loans such as the Mortgage Loans;
38. To the best of the Seller's knowledge, no Mortgaged Property was,
as of the related Cut-Off Date, located within a one-mile radius of any
site listed in the National Priorities List as defined under the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state list of hazardous waste sites
which are known to contain any hazardous substance or hazardous waste;
39. None of the Mortgage Loans are subject to a bankruptcy
proceeding;
40. No more than 8.52% of the aggregate Principal Balance of all the
Initial Mortgage Loans as of Cut-Off Date relates to Mortgage Loans
originated or purchased under the Seller's limited documentation program
for self-employed borrowers;
41. Each Mortgage Loan constitutes a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the
Code;
42. Each Cooperative Loan is secured by a valid, subsisting and
enforceable perfected first lien and security interest in the related
Mortgaged Property, subject only to (i) the rights of the Cooperative
Corporation to collect Maintenance and assessments from the Mortgagor, (ii)
the lien of the Blanket Mortgage, if any, on the Cooperative Property
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and of real property taxes, water and sewer charges, rents and assessments
on the Cooperative Property not yet due and payable, and (iii) other
matters to which like Cooperative Units are commonly subject which do not
materially interfere with the benefits of the security intended to be
provided by the Security Agreement or the use, enjoyment, value or
marketability of the Cooperative Unit. Each original UCC financing
statement, continuation statement or other governmental filing or
recordation necessary to create or preserve the perfection and priority of
the first priority lien and security interest in the Cooperative Shares and
Proprietary Lease has been timely and properly made. Any security
agreement, chattel mortgage or equivalent document related to the
Cooperative Loan and delivered to the Seller or its designee establishes in
the Seller a valid and subsisting perfected first lien on and security
interest in the property described therein, and the Seller has full right
to sell and assign the same;
43. Each Cooperative Corporation qualifies as a "cooperative housing
corporation" as defined in Section 216 of the Code; and
44. Each Mortgage Loan in Loan Group A is secured by a first lien.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee or the Custodian on behalf of the Trustee and the
termination of the rights and obligations of the Servicer pursuant to Section
7.04 or 8.01. Upon discovery by the Certificate Insurer, the Seller, the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties, which materially and adversely affects
the interests of the Trust, the Certificate Insurer or the Certificateholders in
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties and the Certificate Insurer. Within 60 days
of its discovery or its receipt of notice of breach, the Seller shall use all
reasonable efforts to cure such breach in all material respects or shall
purchase such Mortgage Loan from the Trust or substitute an Eligible Substitute
Mortgage Loan as provided in Section 2.05 for such Mortgage Loan. Any such
purchase by the Seller shall be at the Purchase Price, and in each case shall be
accomplished in the manner set forth in Section 2.02. It is understood and
agreed that the obligation of the Seller to cure, substitute or purchase any
Mortgage Loan as to which such a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to Certificateholders or the Trustee on behalf of
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Certificateholders. An Officer's Certificate and Opinion of Counsel to the
effect set forth in Section 2.05(d) shall be delivered to the Trustee in
connection with any such repurchase.
Section 2.05. Substitution of Mortgage Loans (a) On a Determination Date
within two years following the Closing Date and which is on or before the date
on which the Seller would otherwise be required to repurchase a Mortgage Loan
under Section 2.02 or 2.04, the Seller may deliver to the Trustee or the
Custodian on behalf of the Trustee one or more Eligible Substitute Mortgage
Loans in substitution for any one or more of the Defective Mortgage Loans which
the Seller would otherwise be required to repurchase pursuant to Section 2.02 or
2.04.
(b) The Seller shall notify the Servicer and the Trustee in writing not
less than five Business Days before the related Determination Date which is on
or before the date on which the Seller would otherwise be required to repurchase
such Mortgage Loan pursuant to Section 2.02 or 2.04 of its intention to effect a
substitution under this Section 2.05. On such Determination Date (the
"Substitution Date"), the Seller shall deliver to the Trustee or the Custodian
on behalf of the Trustee (1) the Eligible Substitute Mortgage Loans to be
substituted for the Defective Mortgage Loans, (2) a list of the Defective
Mortgage Loans to be substituted for by such Eligible Substitute Mortgage Loans,
(3) an Officer's Certificate (A) stating that no failure by the Servicer
described in Section 8.01 shall have occurred and be continuing, (B) stating
that the aggregate Principal Balance of all Eligible Substitute Mortgage Loans
(determined with respect to each Eligible Substitute Mortgage Loan as of the
Determination Date on which it was substituted) including the principal balance
of Eligible Substitute Mortgage Loans being substituted on such Determination
Date does not exceed an amount equal to 5% of the aggregate Original Class
Principal Balance as of the Closing Date, (C) stating that all conditions
precedent to such substitution specified in subsection (a) have been satisfied
and attaching as an exhibit a supplemental Mortgage Loan schedule (the
"Supplemental Mortgage Loan Schedule") setting forth the same type of
information as appears on the Mortgage Loan Schedule and representing as to the
accuracy thereof and (D) confirming that the representations and warranties
contained in Section 2.04 are true and correct in all material respects with
respect to the Substitute Mortgage Loans on and as of such Determination Date,
provided that remedies for the inaccuracy of such representations are limited as
set forth in Sections 2.02, 2.04 and this Section 2.05, (4) an Opinion of
Counsel to the effect set forth below and (5) a certificate stating that cash in
the amount of the related Substitution Adjustment, if any, has been deposited to
the Collection Account. Upon receipt of the foregoing, the Trustee or
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the Custodian on behalf of the Trustee shall release such Defective Mortgage
Loans to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee and the Certificate
Insurer an Opinion of Counsel to the effect that such purchase or substitution
will not cause (x) any federal tax to be imposed on the Trust, including,
without limitation, any Federal tax imposed on "prohibited transactions" under
Section 860F(a)(1) of the Code or on "contributions after the start-up day"
under Section 860G(d)(1) of the Code or (y) any portion of any REMIC to fail to
qualify as a REMIC at any time that any Certificate is outstanding. In the event
that such opinion indicates that a repurchase or substitution will result in the
imposition of a prohibited transaction tax, give rise to net taxable income or
be deemed a contribution to a REMIC after its Startup Day, the Seller shall not
be required to repurchase or replace any such Mortgage Loan unless and until the
Servicer has determined there is an actual or imminent default with respect
thereto or that such defect or breach adversely affects the enforceability of
such Mortgage Loan.
Section 2.06. Execution and Authentication of Certificates. The Trustee on
behalf of the Trust shall cause to be executed, authenticated and delivered on
the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.
Section 2.07 Designation of Interests in REMICs.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC III
(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
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administration of this Agreement shall be resolved in a manner that preserves
the validity of such REMIC elections. The assets of REMIC I shall include the
Mortgage Loans, the Accounts (other than the Pre-Funding Account and the Initial
Interest Coverage Account), any REO Property, and any proceeds of the foregoing.
The REMIC I Regular Interests (as defined below) shall constitute the assets of
REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC
III.
(b) REMIC I will be evidenced by (x) the Class IA, Class IB, Class IC,
Class ID, Class IE and Class IF Interests (the "REMIC I Regular Interests"),
which will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in REMIC I and (y) the Class R-1 Certificates, which are
hereby designated as the single "residual interest" in REMIC I (the REMIC I
Regular Interests, together with the Class R-1 Certificates, the "REMIC I
Certificates"). The REMIC I Regular Interests shall be recorded on the records
of REMIC I as being issued to and held by the Trustee on behalf of REMIC II.
The Class IA, Class IB, Class IC, Class ID, Class IE and Class IF
Interests shall have initial principal balances equal to $20,396,000,
$35,229,000, $18,541,000, $38,938,000, $331,896,000 (i.e., the excess of the
initial Loan Group F Balance over $113,104,000) and $30,000,000 (i.e., the
initial Loan Group A Balance), respectively. On each Distribution Date,
principal collections and realized losses on the Mortgage Loans in Loan Group F
shall be allocated sequentially to the Class IE, Class IA, Class IB, Class IC,
and Class ID Interests until the principal balance of each such class is reduced
to zero. All principal collections and realized losses on the Mortgage Loans in
Loan Group A shall be allocated to the Class IF Interest. The Class IA, Class
IB, Class IC, Class ID and Class IE Interests shall each have pass-through rates
equal to the weighted average of the Net Loan Rates of the Mortgage Loans in
Loan Group F. The Class IF Interest shall have a pass-through rate equal to the
weighted average of the Net Loan Rates of the Mortgage Loans in Loan Group A.
The Class R-1 Certificates shall have no principal balance and no pass-through
rate and shall be entitled to only those distributable assets, if any, remaining
in REMIC I on each Distribution Date after all amounts required to be
distributed to the Class IA, Class IB, Class IC, Class ID, Class IE and Class IF
Interests and applicable Trust expenses have been paid. It is expected that
there shall not be any distributions on the Class R- 1 Certificate.
(c) REMIC II will be evidenced by (x) the Class II-A- 1F, Class II-A-2F,
Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, Class II-A-IA, Class
II-A-IO, Class II-M-F and Class II-M-A Interests (the "REMIC II Regular
Interests"), which
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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-II 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 III.
Any Excess Interest up to an amount equal to the Subordination Increase
Amount (the "Turbo Amount") that is payable from interest on the Mortgage Loans
will not be paid as interest to the REMIC II Regular Interests, but instead a
portion of the interest payable with respect to the Class II-M-F Interests which
equals 1% of the Turbo Amount that is applied to Group F Certificates and a
portion of the interest payable with respect to the Class II-M-A Interest which
equals 1% of the Turbo Amount that is applied to the Group A Certificates will
be payable as a reduction of the principal balances of the Class II- X-0X, Xxxxx
XX-X-0X, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F, and Class
II-A-1A Interests in the same manner in which the Turbo Amount is allocated
among the Class X-0X, Xxxxx X- 0X, Xxxxx X-0X, Class A-4F, Class A-5F, Class
A-6F and Class A-1A Certificates, respectively (and will be accrued and added to
principal on the Class II-M-F and Class II-M-A Interests in the same proportion
as interest payable on such Interests is used to reduce principal on other
Interests as just described). Principal payments on Loan Group F shall be
allocated 99% to the Class II-M-F Interest, and 1% to the Class XX-X-0X, Xxxxx
XX-X- 0X, Xxxxx XX-X-0X, Class II-A-4F, Class II-A-5F and Class II-A-6F
Interests until paid in full. The aggregate amount of principal allocated to the
Class II-A-1F, Class II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, and
Class II-A-6F Interests shall be apportioned among such classes in the same
manner as principal on Loan Group F is payable with respect to the Class X-0X,
Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class A-5F and Class A-6F Certificates,
respectively. Notwithstanding the above, principal payments on Loan Group F that
are attributable to the Excess Overcollateralization Amount shall be allocated
to the Class II-M-F Interest. Principal payments on Loan Group A shall be
allocated 99% to the Class II-M-A Interest and 1% to the Class II- A-1A Interest
until paid in full. Notwithstanding the above, the principal payments on Loan
Group A that are attributable to the Excess Overcollateralization Amount shall
be allocated to the Class II-M-A 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 XX-X-0X, Xxxxx XX-X- 0X, Xxxxx XX-X-0X, Class
II-A-4F, Class II-A-5F, Class II-A-6F, and Class II-A-1A Interests are each 1%
of the principal balances of the Class A-1F, Class A-2F, Class X-0X, Xxxxx X-0X,
Xxxxx X-
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0X, Class A-6F and Class A-1A Certificates, respectively; (ii), the principal
balance of the Class II-M-F Interest is equal to the Loan Group F Balance less
an amount equal to the sum of the principal balances of the Class II-A-1F, Class
II-A-2F, Class II- X-0X, Xxxxx XX-X-0X, Class II-A-5F and Class II-A-6F
Interests; and (iii) the principal balance of the Class II-M-A Interest is equal
to the Loan Group A Balance less the principal balance of the Class II-A-1A
Interests. The REMIC II Certificates will have the following designations and
pass-through rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ------- ---------- ----------
II-A-1F $ 1,458,720 (1) (3) (4),(5)
II-A-2F $ 948,860 (1) (3) (4),(5)
II-A-3F $ 589,210 (1) (3) (4),(5)
II-A-4F $ 688,050 (1) (3) (4),(5)
II-A-5F $ 320,160 (1) (3) (4),(5)
II-A-6F $ 445,000 (1) (3) (4),(5)
II-A-1A $ 300,000 (2) (3) (4),(6)
II-M-F $440,550,000 (1) (3) (4),(5)
II-M-A $ 29,700,000 (2) (3) (4),(6)
II-A-IO $0 (1) N/A Class IOF
R-2 $0 0% N/A N/A(7)
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any time
of determination equal the weighted average of: the Class IE pass-through
rate; the excess of the Class IA pass-through rate over (a) 6.0% for the
first 12 Distribution Dates and (b) 0.0% thereafter; the excess of the
Class IB pass-through rate over (a) 6.0% for the first 18 Distribution
Dates and (b) 0.0% thereafter; the excess of the Class IC pass-through rate
over (a) 6.0% for the first 30 Distribution Dates and (b) 0.0% thereafter;
and the excess of the Class ID pass-through rate over (a) 6.0% for the
first 36 Distribution Dates and (b) 0.0% thereafter, respectively. Interest
on the Class II-A-IO will equal 6.0% per annum of the principal balances of
the Class IA, Class IB, Class IC, and Class ID Interests for the first 12,
18, 30, and 36 Distribution Dates, respectively and 0.0% thereafter,
respectively. Each of the four interest strips just described and allocable
to the Class II-A-IO shall constitute four separate components of such
Class II-A-IO, each of which shall be designated as a separate REMIC
regular interest in REMIC II.
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(2) The pass-through rate on this REMIC II Regular Interest shall at any time
of determination equal the pass-through rate on the Class IF Interest
issued by REMIC I.
(3) Principal will be allocated to and apportioned among the Class X-0X, Xxxxx
X-0X, Xxxxx X-0X, Class A-4F, Class A-5F, Class A-6F, and Class A-1A
Certificates, in the same proportion as principal from the Mortgage Loans
is payable with respect to such Interests, except that a portion of such
principal in an amount equal to the Excess Overcollateralization Amount
shall first be allocated as a payment of interest to the Class BIO
Certificates, and all principal will be allocated as a payment of interest
to the Class BIO Certificates after the principal balance of the Group F
and Group A Certificates have been reduced to zero.
(4) Except as provided in footnotes (5) and (6), interest will be allocated
among the Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class A-5F, Class
A-6F and Class A-1A Certificates in the same proportion as interest is
payable on such Interests.
(5) Any interest with respect to this REMIC II Certificate in excess of the
product of (i) 100 times the weighted average coupon of the Class II-A-1F,
Class II-A-2F, Class II-A-3F, Class II-A-4F, Class II-A-5F, Class II-A-6F
and Class II-M-F Interests, where each of such classes, other than the
Class II-M-F, is first subject to a cap and floor equal to the Class A-1F,
Class A-2F, Class A-3F, Class A-4F, Class A-5F and Class A-6F pass-through
rates, respectively, and the Class II-M-F 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 F or Group A Certificates but will be
allocated to the Class BIO Certificates. However, the Class BIO
Certificates shall be subordinated to the extent provided in Section 5.01.
(6) Any interest with respect to this REMIC II Certificate in excess of the
product of (i) 100 times the weighted average coupon of the Class II-A-1A
and Class II-M-A Interests, where the Class II-A-1A Interest are first
subject to a cap and floor equal to the Class A-1A pass-through rate, and
the Class II-M-A Interest are subject to a cap equal to 0%, and (ii) the
principal balance of this REMIC II Certificate, shall not be allocated to
the Group F or Group A Certificates, but will be allocated to the Class BIO
Certificates. However, the Class BIO Certificates shall be subordinated to
the extent provided in Section 5.01.
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(7) On each Distribution Date, Available Funds, if any, remaining in REMIC II
after payments of interest and principal, as designated above, will be
distributed to the Class R-2 Certificate. It is expected that there shall
not be any distributions on the Class R-2 Certificates.
(d) The Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class A-4F, Class A-5F, Class
A-6F, Class A-1A, Class IOF and Class BIO Certificates are hereby designated as
"regular interests" with respect to REMIC III (the "REMIC III Regular
Interests") and the Class R-3 Certificate is hereby designated as the single
"residual interest" with respect to REMIC III. On each Distribution Date,
Available Funds, if any, remaining in REMIC III after payments of interest and
principal as designated herein shall be distributed to the Class R-3
Certificates.
Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.
Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in each REMIC is the
Distribution Date in August 2031.
Section 2.10. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the REMICs comprising the Trust
shall have a calendar year and shall maintain its books on the accrual method
of accounting.
(b) The Tax Matters Person shall prepare, or cause to be prepared, execute
and deliver to the Servicer or Certificateholders, as applicable, any income tax
information returns for each taxable year with respect to the Trust containing
such information at the times and in the manner as may be required by the Code
or state or local tax laws, regulations or rules, and shall furnish or cause to
be furnished to the Trust and the Certificateholders the schedules, statements
or information at such times and in such manner as may be required thereby.
Within thirty (30) days of the Closing Date, the Tax Matters Person shall
furnish or cause to be furnished to the Internal Revenue Service, on Form 8811
or as otherwise required by the Code, the name, title, address and telephone
number of the person that Holders of the Certificates may contact for tax
information relating thereto, together with such additional information at the
time or times and in the manner required by the Code. Such federal, state or
local income tax or information returns shall be signed by the Trustee or such
other Person as may be required to sign such returns by the Code or state or
local tax laws, regulations or rules.
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(c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 1998, a REMIC election shall be made with
respect to each of REMIC I, REMIC II and REMIC III for such taxable year and all
succeeding taxable years.
(d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and the fair market value and
adjusted basis of the Trust property and assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information.
(e) The Servicer, upon request, shall promptly furnish the Tax Matters
Person with all such information as may be required in connection with the Tax
Matters Person's REMIC reporting obligations pursuant to this Agreement.
Section 2.11. Tax Matters Person. The tax matters person with respect to
each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which initially is the Seller. The Tax Matters Person
shall at all times hold the Tax Matters Person Residual Interest and shall have
the same duties with respect to the Trust as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. Each holder of a
Residual Certificate shall be deemed to have agreed, by acceptance thereof, to
be bound by this Section 2.11.
Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" in any REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates, the REMIC I Regular
Interests, the REMIC II Regular Interests and the Residual Certificates.
(b) Except as otherwise provided in the Code, the Seller shall not grant
and the Trustee shall not accept property unless (i) substantially all of the
property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the
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Trust after the Startup Day unless such grant would not subject any REMIC to the
100% tax on contributions to a REMIC after its Startup Day imposed by Code
Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or other
compensation for services (other than as otherwise provided herein) and shall
not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion of
the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or 3.16),
unless such sale is pursuant to a "qualified liquidation" as defined in Code
Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Tax Matters Person
shall furnish to the Trustee and, subject to its receipt thereof, the Trustee
shall furnish to the Holders of the Residual Certificates the Form 1066 and each
Form 1066Q for the applicable REMIC and shall respond promptly to written
requests made not more frequently than quarterly by any Holder of Residual
Certificates with respect to the following matters:
(i) The original projected principal and interest cash flows on the
Closing Date on each class of regular and residual interests created
hereunder and on the Mortgage Loans, based on 135% of the Prepayment
Assumption in the case of Loan Group F and 100% of the Prepayment
Assumption in the case of Loan Group A;
(ii) The projected remaining principal and interest cash flows as of
the end of any calendar quarter with respect to each class of regular and
residual interests created hereunder and the Mortgage Loans, based on 135%
of the Prepayment Assumption in the case of Loan Group F and 100% of the
Prepayment Assumption in the case of Loan Group A;
(iii) The applicable percentage of the Prepayment Assumption and any
interest rate assumptions used in determining the projected principal and
interest cash flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end of
such calendar quarter with respect to each class of regular or residual
interests created hereunder and with
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respect to the Mortgage Loans, together with each constant yield to
maturity used in computing the same;
(v) The treatment of losses realized with respect to the Mortgage
Loans or the regular interests created hereunder, including the timing and
amount of any cancellation of indebtedness income of each REMIC with
respect to such regular interests or bad debt deductions claimed with
respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of each REMIC;
and
(vii) Any taxes (including penalties and interest) imposed on each
REMIC, including, without limitation, taxes on "prohibited transactions,"
"contributions" or "net income from foreclosure property" or state or local
income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of the
Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
24874 and 23153 of the California Revenue and Taxation Code) is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Tax Matters Person, if such tax arises out of or results from a breach by the
Tax Matters Person of any of the obligations under this Agreement, (iii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement or (iv) otherwise the Holders of the
applicable Residual Certificates in proportion to their Percentage Interests.
Notwithstanding the previous sentence, any tax imposed on the Trust by Section
23151 or Sections 24874 and 23153 of the California Revenue and Taxation Code
shall be timely paid by the Trustee out of its own funds without right of
reimbursement therefor if such taxes arise solely from the Trustee's presence in
California, and otherwise by the Servicer. To the extent any tax is chargeable
against the Holders of the Residual Certificates, notwithstanding anything to
the contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the applicable Residual
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent
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that the Trustee has not been previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined in
Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller , the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Offered Certificates.
(g) Except as provided below, the Tax Matters Person shall pay out of its
own funds, without any right of reimbursement, any and all tax related expenses
of the Trust (including, but not limited to, tax return preparation and filing
expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.07 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.
(h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters Person,
as applicable, shall do the following:
(i) the Tax Matters Person shall prepare, sign and file, or cause to
be prepared and filed, in a timely manner, a U.S. Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066) and any other Tax Return
required to be filed by each REMIC, using a calendar year as the taxable
year for each REMIC;
(ii) the Tax Matters Person shall make, or cause to be made, an
election, on behalf of each REMIC, to be treated as a REMIC on the federal
tax return of each REMIC for its first taxable year;
(iii) the Tax Matters Person shall prepare and forward, or cause to be
prepared and forwarded, to the Servicer, the Seller, the Trustee (which,
subject to receipt thereof shall
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forward to the Certificateholders) and to the Internal Revenue Service
and any other relevant governmental taxing authority all information
returns or reports as and when required to be provided to them in
accordance with the REMIC Provisions;
(iv) the Trustee and the Servicer shall to the extent that the affairs
of any REMIC are within its control, conduct such affairs of each REMIC at
all times that any Certificates are outstanding so as to maintain the
status of each REMIC as a REMIC under the REMIC Provisions and any other
applicable federal, state and local laws, including, without limitation,
information reports relating to "original issue discount," as defined in
the Code, based upon 120% of the Prepayment Assumption with respect to
Certificate Group F 100% of the Prepayment Assumptions with respect to and
Certificate Group A, respectively and calculated by using the issue price
of the Certificates;
(v) the Trustee, the Servicer and Tax Matters Person shall not
knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC;
(vi) the Trustee shall pay the amount of any and all federal, state
and local taxes, including, without limitation, any minimum tax imposed by
sections 24874 and 23153 of the California Revenue and Taxation Code upon
the Trustee or the Certificateholders in connection with the Trust or the
Mortgage Loans, prohibited transaction taxes as defined in Section 860F of
the Code, other than any amount due as a result of a transfer or attempted
or purported transfer in violation of Section 6.02, imposed on the Trust
when and as the same shall be due and payable (but such obligation shall
not prevent the Trustee or any other appropriate Person from contesting any
such tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings). The Trustee shall be entitled to reimbursement in
accordance with Section 2.12;
(vii) the Trustee and the Tax Matters Person shall ensure that any
such returns or reports filed on behalf of the Trust are properly executed
by the appropriate person;
(viii) the Tax Matters Person shall represent the Trust in any
administrative or judicial proceedings relating to an examination or audit
by any governmental taxing authority, request an administrative adjustment
as to any taxable year of the Trust, enter into settlement agreements with
any
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government taxing agency, extend any statute of limitations relating to
any item of the Trust and otherwise act on behalf of the Trust in relation
to any tax matter involving the Trust;
(ix) the Trustee and the Tax Matters Person shall as provided in
Section 5.12, make available information necessary for the computation of
any tax imposed (1) on transferors of residual interests to transferees
that are not Permitted Transferees or (2) on pass-through entities, any
interest in which is held by an entity which is not a Permitted Transferee.
(x) the Trustee and the Tax Matters Person shall make available to
the Internal Revenue Service and those Persons specified by the REMIC
Provisions all information necessary to compute any tax imposed (A) as a
result of the Transfer of an Ownership Interest in a Residual Certificate
to any Person who is not a Permitted Transferee, including the information
described in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such Residual
Certificate and (B) as a result of any regulated investment company, real
estate investment trust, common trust fund, partnership, trust, estate or
organization described in Section 1381 of the Code that holds an Ownership
Interest in a Residual Certificate having as among its record holders at
any time any Person that is not a Permitted Transferee. Reasonable
compensation for providing such information may be accepted by the Trustee;
and
(xi) the Trustee, the Servicer and the Tax Matters Person shall
cooperate with each other in connection with the foregoing obligations,
including signing any Tax Returns to the extent required by law.
Section 2.13. Subsequent Transfers. (a) Subject to the satisfaction of the
conditions set forth in paragraph (b) below and pursuant to the terms of each
Subsequent Transfer Agreement, in consideration of the Trustee's delivery on the
related Subsequent Transfer Date to or upon the order of the Seller of the
purchase price therefor, the Seller shall on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse to the Trustee,
all right, title and interest of the Seller in and to each Subsequent Mortgage
Loan listed on the related Subsequent Mortgage Loan Schedule delivered by the
Seller on such Subsequent Transfer Date, including (i) the related Principal
Balance as of the related Subsequent Cut-Off Date; (ii) all collections in
respect of interest and principal received after the related Subsequent Cut-Off
Date; (iii) property which secured such Subsequent Mortgage Loan and which has
been
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acquired by foreclosure or deed in lieu of foreclosure; (iv) its interest
in any insurance policies in respect of such Subsequent Mortgage Loan; and (v)
all proceeds of any of the foregoing. The transfer by the Seller of the
Subsequent Mortgage Loans set forth on each Subsequent Mortgage Loan Schedule to
the Trustee shall be absolute and shall be intended by the Seller and all
parties hereto to be treated as a sale by the Seller to the Trust. If the
assignment and transfer of the Mortgage Loans and the other property specified
in this Section 2.13 from the Seller to the Trustee pursuant to this Agreement
is held or deemed not to be a sale or is held or deemed to be a pledge of
security for a loan, the Seller intends that the rights and obligations of the
parties shall be established pursuant to the terms of this Agreement and that,
in such event, (i) the Seller shall be deemed to have granted and does hereby
grant to the Trustee as of such Subsequent Transfer Date a first priority
security interest in the entire right, title and interest of the Seller in and
to the Subsequent Mortgage Loans and all other property conveyed to the Trustee
pursuant to this Section 2.13 and all proceeds thereof and (ii) this Agreement
shall constitute a security agreement under applicable law. The purchase price
shall be one hundred percent (100%) of the Principal Balances of the Subsequent
Mortgage Loans as of the related Subsequent Cut-Off Date.
(b) The Seller shall transfer and deliver to the Trustee or the Custodian
on behalf of the Trustee the Subsequent Mortgage Loans and the other property
and rights related thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to the applicable
Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee, the Certificate
Insurer and the Rating Agencies with an Addition Notice, which notice shall
be given not less than five Business Days prior to the applicable
Subsequent Transfer Date and shall designate the Subsequent Mortgage Loans
to be sold to the Trust and the aggregate Principal Balance of such
Mortgage Loans and the Rating Agencies or the Certificate Insurer shall not
have informed the Seller or the Trustee prior to such Subsequent Transfer
Date that the inclusion of such Subsequent Mortgage Loans would affect the
applicable Required Overcollateralization Amount or result in the downgrade
or withdrawal of the ratings assigned to the Offered Certificates as of the
Closing Date without regard to the Certificate Insurance Policy;
(ii) The Seller shall have delivered to the Trustee a duly executed
Subsequent Transfer Agreement in substantially the form of Exhibit D;
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(iii) The Seller shall have deposited in the Collection Account all
principal collected and interest collected to the extent accrued on or
after the related Subsequent CutOff Date;
(iv) As of each Subsequent Transfer Date, the Seller was not insolvent
nor will the Seller be made insolvent by such transfer nor is the Seller
aware of any pending insolvency;
(v) Such addition will not result in a material adverse tax
consequence to any REMIC or the Holders of the Certificates;
(vi) the Funding Period shall not have terminated;
(vii) The Seller shall have provided the Certificate Insurer and the
Rating Agencies with an Opinion of Counsel relating to the sale (i.e.,
"True Sale Opinion") of the Subsequent Mortgage Loans to the Trustee, the
enforceability of the Subsequent Transfer Agreement and to the effect that
the transfer of such Subsequent Mortgage Loans will not adversely affect
the status of any REMIC as a REMIC unless such matters were covered in the
opinions delivered on the Closing Date; and
(viii) Each Loan Group satisfies the parameters set forth in Exhibit Q
hereto.
(c) The Seller, Custodian and the Trustee shall comply with their
respective obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with
respect to the Subsequent Mortgage Loans delivered on each Subsequent Transfer
Date. References in such Sections to the Initial Mortgage Loans or Mortgage
Loans shall be deemed to refer to the Subsequent Mortgage Loans and references
to the Closing Date shall be deemed to refer to the applicable Subsequent
Transfer Date except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.
(d) Promptly following the end of the Funding Period, the Certificate
Insurer may, in its discretion but after consultation with the Seller, change
either Required Overcollateralization Amount (or any portion of the calculation
thereof) if, on the basis of the same methodology applied to the Mortgage Loans
delivered on the Closing Date, such change is required. Any such change shall
(i) be reflected in a letter delivered to the Seller, the Servicer and the
Trustee, the terms of which shall be deemed to amend this Agreement, (ii) not
require the consent of any Holders and (iii) be furnished to the Rating
Agencies.
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Section 2.14. The Custodian. Notwithstanding anything to the contrary in
this Agreement, the parties hereto acknowledge that the functions of the Trustee
with respect to the acceptance, inspection, custody and release of the Mortgage
Files pursuant to Sections 2.01, 2.02, 2.05 and 2.13 shall be performed by the
Custodian pursuant to the Custodial Agreement. The fees and expenses of the
Custodian will be paid by Delta. The Trustee will not be liable for any acts or
omissions of the Custodian.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Servicer. (a) It is intended that the Trust formed
hereunder shall constitute, and that the affairs of the Trust shall be conducted
so as to qualify each REMIC as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of any REMIC.
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which (i) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (ii)
(x) has been designated an approved Seller-Servicer by Xxxxxxx Mac or Xxxxxx Mae
for first and second mortgage loans and is satisfactory to the Certificate
Insurer, (y) is an affiliate of the Servicer or (z) is otherwise acceptable to
the Certificate Insurer. The Servicer shall give notice to the Trustee of the
appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement. The Servicer
shall be entitled to terminate any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and either itself directly
service the related Mortgage Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.
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(c) Notwithstanding any Subservicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 3.01(e). The Servicer shall be solely liable for all fees owed
by it to any Subservicer irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee approved by the Certificate Insurer shall thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee or designee approved by
the Certificate Insurer elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Trustee does not terminate the Subservicing Agreements, the
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements with regard to events that occurred prior to the date
the Servicer ceased to be the Servicer hereunder. The Servicer, at its expense
and without
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right of reimbursement therefor, shall, upon the request of the Trustee, deliver
to the assuming party all documents and records relating to each Subservicing
Agreement and the Mortgage Loans then being serviced and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreements to the
assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's good faith determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Certificateholders or the Certificate Insurer, provided,
however, that (unless (x) the Mortgagor is in default with respect to the
Mortgage Loan, or such default is, in the judgment of the Servicer, imminent,
(y) such waiver, modification, postponement or indulgence would not cause any
REMIC to be disqualified or otherwise cause a tax to be imposed on any REMIC and
(z) the Certificate Insurer has consented to such modification) the Servicer may
not permit any modification with respect to any Mortgage Loan that would change
the Loan Rate, defer or forgive the payment of any principal or interest (unless
in connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the Trustee
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the Servicer,
in servicing and administering the Mortgage Loans, shall employ or cause to be
employed procedures (including collection, foreclosure and REO Property
management procedures) and exercise the same care that it customarily employs
and exercises in servicing and administering mortgage loans for its own account,
in accordance with accepted mortgage servicing practices of prudent lending
institutions servicing mortgage loans similar to the Mortgage Loans and giving
due consideration to the
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Certificateholders' and the Certificate Insurer's reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of, or
notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 7.04, after
receipt by the Trustee and the Certificate Insurer of the Opinion of Counsel
required pursuant to Section 7.04, the Trustee shall assume all of the rights
and obligations of the Servicer, subject to Section 8.02. The Servicer shall,
upon request of the Trustee but at the expense of the Servicer, deliver to the
Trustee all documents and records relating to the Mortgage Loans and an
accounting of amounts collected and held by the Servicer and otherwise use its
best efforts to effect the orderly and efficient transfer of servicing rights
and obligations to the assuming party.
(h) The Servicer shall deliver a list of Servicing Officers to the Trustee
and the Certificate Insurer on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Servicer may consent
to the placing of a lien senior to that of the Mortgage on the related Mortgaged
Property; provided that such senior lien secures a mortgage loan that refinances
a First Lien and the combined loan-to-value ratio of the related Mortgage Loan
immediately following the refinancing (based on the outstanding principal
balance of the Mortgage Loan and the original principal balance of such
refinanced mortgage loan) is not greater than the Combined Loan-to-Value Ratio
of such Mortgage Loan as of the related Cut-Off Date.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any prepayment penalty or late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan and (ii) arrange with a Mortgagor a schedule for
the payment of interest due and unpaid; provided that such arrangement is
consistent with the Servicer's policies with respect to the mortgage loans it
owns or services; provided, further, that notwithstanding such arrangement such
Mortgage Loans will be included in the monthly information delivered by the
Servicer to the Trustee pursuant to Section 5.03.
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(b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "Bankers Trust Company of California, N.A., as
Trustee, in trust for the registered holders of Delta Funding Home Equity Loan
Asset Backed Certificates, Series 1998-3." The Collection Account shall be an
Eligible Account. The Servicer shall on the Closing Date deposit any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than interest accrued and due
prior to September 1, 1998) and prior to the Closing Date, and thereafter shall
use its best efforts to deposit within one Business Day, and shall in any event
deposit within two Business Days, following receipt thereof the following
payments and collections received or made by it (without duplication):
(i) all payments received after the related Cut-Off Date on account
of principal on the Mortgage Loans and all Principal Prepayments and
Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date on account
of interest on the Mortgage Loans (exclusive of payments in respect of
interest on the Mortgage Loans which have accrued and were due on or prior
to September 1, 1998);
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.02, 2.04, 2.06 and 3.16; and
(vii) any amount required to be deposited in the Collection Account
pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05;
provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances
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related thereto. The foregoing requirements respecting deposits to the
Collection Account are exclusive, it being understood that, without limiting the
generality of the foregoing, the Servicer need not deposit in the Collection
Account amounts representing Servicing Compensation or amounts received by the
Servicer for the accounts of Mortgagors for application toward the payment of
taxes, insurance premiums, assessments and similar items.
The Servicer may cause the institution maintaining the Collection Account
to invest any funds in the Collection Account in Eligible Investments (including
obligations of the Servicer or any of its Affiliates, if such obligations
otherwise qualify as Eligible Investments) pursuant to Section 5.05.
Section 3.03. Withdrawals from the Collection Account. The Servicer shall
withdraw or cause to be withdrawn funds from the Collection Account for the
following purposes:
(i) before 1:00 p.m. (California time) on the Business Day preceding
each Distribution Date, to withdraw the portion of Available Funds then in
the Collection Account and remit such funds to the Trustee for deposit to
the Distribution Account;
(ii) to reimburse the Servicer for any accrued unpaid Servicing
Compensation which the Servicer would not have been required to deposit in
the Collection Account and for unreimbursed Monthly Advances and Servicing
Advances. The Servicer's right to reimbursement for unpaid Servicing Fees
and unreimbursed Servicing Advances shall be limited to late collections
on the related Mortgage Loan, including Liquidation Proceeds, Released
Mortgaged Property Proceeds, Insurance Proceeds and such other amounts as
may be collected by the Servicer from the related Mortgagor or otherwise
relating to the Mortgage Loan in respect of which such reimbursed amounts
are owed. The Servicer's right to reimbursement for unreimbursed Monthly
Advances shall be limited to late collections of interest on any Mortgage
Loan and to Liquidation Proceeds, Released Mortgaged Property Proceeds and
Insurance Proceeds on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein (such
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as Servicing Compensation) or were deposited therein in error and to pay
such funds to the appropriate Person;
(v) to withdraw funds necessary for the conservation and disposition
of REO Property pursuant to Section 3.06 to the extent not advanced by the
Servicer;
(vi) to reimburse the Servicer for Nonrecoverable Advances;
(vii) to pay to the Seller collections received in respect of accrued
interest on the Mortgage Loans due on or before September 1, 1998;
(viii) to pay to the Servicer or the Trustee the portion of any
Purchase Price in respect of clause (iv) of the definition thereof or of
any Substitution Adjustment in respect of clause (b) of the definition
thereof to the extent paid in respect of amounts incurred by or imposed on
the Servicer or the Trustee, as the case may be; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein to
the applicable Class R Certificate holders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Mortgage Loan from
time to time, (ii) the combined principal balance owing on such Mortgage Loan
and any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis. The
Servicer shall also maintain on property acquired upon foreclosure or by deed in
lieu of foreclosure hazard insurance with extended coverage in an amount which
is at least equal to the lesser of (i) the maximum insurable value from time to
time of the improvements which are a part of such property, (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan and (iii) the minimum amount required to compensate for
damage or loss on a replacement cost basis at the time of such foreclosure, fire
and or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Servicing Advances to be incurred in
connection therewith. Amounts collected by the Servicer under any such policies
shall be deposited in the Collection Account to the extent called for by Section
3.02. In cases in which any Mortgaged Property is located
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in a federally designated flood area, the hazard insurance to be maintained for
the related Mortgage Loan shall include flood insurance to the extent such flood
insurance is available and the Servicer has determined such insurance to be
necessary in accordance with accepted mortgage loan servicing standards for
mortgage loans similar to the Mortgage Loans. All such flood insurance shall be
in amounts equal to the least of (A) the amount in clause (i) above, (B) the
amount in clause (ii) above and (C) the maximum amount of insurance available
under the National Flood Insurance Act of 1968, as amended. The Servicer shall
be under no obligation to require that any Mortgagor maintain earthquake or
other additional insurance and shall be under no obligation itself to maintain
any such additional insurance on property acquired in respect of a Mortgage
Loan, other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In the
event that the Servicer shall obtain and maintain a blanket policy with an
insurer either (A) having a General Policy rating of A:VIII or better in Best's
Key Rating Guide or (B) approved by the Certificate Insurer, such approval not
to be withheld unreasonably, insuring against fire and hazards of extended
coverage on all of the Mortgage Loans, then, to the extent such policy names the
Servicer as loss payee and provides coverage in an amount equal to the aggregate
unpaid principal balance on the Mortgage Loans without co-insurance, and
otherwise complies with the requirements of Section 3.04, the Servicer shall be
deemed conclusively to have satisfied its obligations with respect to fire and
hazard insurance coverage under Section 3.04, it being understood and agreed
that such blanket policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with Section 3.04, and there shall
have been a loss which would have been covered by such policy, deposit in the
Collection Account the difference, if any, between the amount that would have
been payable under a policy complying with Section 3.04 and the amount paid
under such blanket policy. Upon the request of the Trustee, the Servicer shall
cause to be delivered to the Certificate Insurer or the Trustee, a certified
true copy of such policy. In connection with its activities as administrator and
servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on
behalf of itself, the Trustee, the Certificate Insurer and Certificateholders,
claims under any such policy in a timely fashion in accordance with the terms of
such policy.
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for
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the purpose of its prudent and prompt disposition and sale. The Servicer shall,
either itself or through an agent selected by the Servicer, manage, conserve,
protect and operate the REO Property in the same manner that it manages,
conserves, protects and operates other foreclosed property for its own account,
and in the same manner that similar property in the same locality as the REO
Property is managed. The Servicer shall attempt to sell the same (and may
temporarily rent the same) on such terms and conditions as the Servicer deems to
be in the best interest of the Certificateholders and the Certificate Insurer.
The Servicer shall cause to be deposited, no later than two Business Days
after the receipt thereof, in the Collection Account, all revenues received with
respect to the related REO Property and shall retain, or cause the Trustee to
withdraw therefrom, funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer for
cash at such price, and upon such terms and conditions, as the Servicer deems to
be in the best interest of the Certificateholders and, as soon as practicable
thereafter, the expenses of such sale shall be paid. The cash proceeds of sale
of the REO Property shall be promptly deposited in the Collection Account, net
of Foreclosure Profits and of any related unreimbursed Servicing Advances,
accrued and unpaid Servicing Fees and unreimbursed Monthly Advances payable to
the Servicer in accordance with Section 3.03, for distribution to the
Certificateholders in accordance with Section 5.01.
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come into
and continue in default either when no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02 subject to the
provisions contained in the last paragraph of this Section 3.06.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of Certificateholders
and the Certificate Insurer.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall (i) dispose of such Mortgaged Property within three years after
the close of the taxable year in which the Mortgaged Property was acquired (the
"grace period") or (ii) prior to the expiration of any extension to such grace
period
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which is requested on behalf of the Trust by the Servicer (at the expense of the
Trust) more than 60 days prior to the end of the grace period and granted by the
Internal Revenue Service, unless the Servicer shall have received an Opinion of
Counsel to the effect that the holding of such Mortgaged Property subsequent to
expiration of the grace period will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause any
REMIC to fail to qualify as a REMIC at any time that any Regular Certificates
are outstanding. Notwithstanding any other provision of this Agreement, (i) no
Mortgaged Property acquired by the Servicer pursuant to this Section 3.06 shall
be rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the Trust and (ii) no construction shall
take place on such Mortgaged Property in such a manner or pursuant to any terms,
in either case, that would cause such Mortgaged 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 the Trust of any "net income from foreclosure property"
which is subject to taxation within the meaning of Sections 860G(c) and
857(b)(4)(B) of the Code. If a period greater than the grace period is permitted
under this Agreement and is necessary to sell any REO Property, the Servicer
shall give appropriate notice to the Trustee and the Certificate Insurer and
shall report monthly to the Trustee and the Certificate Insurer as to the
progress being made in selling such REO Property.
If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee and the Certificate Insurer prior to acquiring the Mortgaged Property
and shall not take any action without the prior written approval of the
Certificate Insurer. Nothing in this Section 3.06 shall affect the Servicer's
right to deem certain advances proposed to be made Nonrecoverable Advances. For
the purpose of this Section 3.06, actual knowledge of the Servicer means actual
knowledge of a Responsible Officer of the Servicer involved in the servicing of
the relevant Mortgage Loan. Actual knowledge of the Servicer does not include
knowledge imputable by virtue of the availability of or accessibility to
information relating to environmental or hazardous waste sites or the locations
thereof.
Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has been recorded as
required hereunder, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
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required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Trustee or Custodian is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee or Custodian shall, upon request
of the Servicer and delivery to the Trustee of a Request for Release, in the
form annexed hereto as Exhibit I, signed by a Servicing Officer, release the
related Mortgage File to the Servicer, and the Trustee or Custodian shall
execute such documents, in the forms provided by the Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions. Such Request for Release shall obligate the Servicer to
return the Mortgage File to the Trustee or the Custodian, as the case may be,
when the need therefor by the Servicer no longer exists unless the Mortgage Loan
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer similar to that hereinabove specified, the Request for Release shall be
released by the Trustee or Custodian to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only) and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Mortgage Loan and deposit or credit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection Account.
In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured then the assignee for
collection shall promptly reassign such Mortgage Loan to the Trustee and return
it to the place where the related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of prepayment penalties or late payment charges or
other receipts not required to be deposited in the Collection Account,
including, without limitation, Foreclosure Profits and, subject to Section 5.05,
investment income on the Accounts (other
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than the Initial Interest Coverage Account) shall be retained by the Servicer.
The Servicer shall be required to pay all expenses incurred by it in connection
with its activities hereunder (including payment of all other fees and expenses
not expressly stated hereunder to be for the account of the Trust or the
Certificateholders) and shall not be entitled to reimbursement therefor except
as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Certificate Insurer and the Rating Agencies, on or
before the last Business Day of the fifth month following the end of the
Servicer's fiscal year (December 31), beginning in 1999, an Officer's
Certificate stating that (i) a review of the activities of the Servicer during
the preceding fiscal year and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its material
obligations under this Agreement throughout such fiscal year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Servicer
shall promptly notify the Trustee, the Certificate Insurer and each Rating
Agency upon any change in the basis on which its fiscal year is determined.
(b) The Servicer shall deliver to the Trustee, the Certificate Insurer and
each of 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 or both, would become an Event of Default.
Section 3.10. Annual Servicing Review. Not later than the last Business
Day of the fifth month following the end of the Servicer's fiscal year (December
31), beginning in 1999, the Servicer, at its expense, shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants and is reasonably acceptable to the Certificate
Insurer to furnish a letter or letters to the Trustee, the Certificate Insurer
and each Rating Agency to the effect that such firm has, with respect to the
Servicer's overall servicing operations, examined such operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, and stating such firm's conclusions relating thereto.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Trustee, the Custodian,
the Certificate Insurer,
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Certificateholders which are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the SAIF or the BIF),
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer. Nothing in this
Section 3.11 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
3.11 as a result of such obligation shall not constitute a breach of this
Section 3.11.
Section 3.12. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of Xxxxxx
Xxx for persons performing servicing for mortgage loans purchased by Xxxxxx Mae.
Section 3.13. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller and the Servicer shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section 3.13.
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 1998. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trustee acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Mortgage Loan or (ii) knows or has reason to know that any Mortgaged Property
has been abandoned. The reports from the Servicer shall be in form and substance
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sufficient to meet the reporting requirements imposed by Sections 6050J, 6050H
and 6050P of the Code.
Section 3.15. Advances by the Servicer. (a) Not later than 1:00 p.m.
California time on the Business Day preceding each Distribution Date, the
Servicer shall remit to the Trustee for deposit in the Distribution Account an
amount to be distributed on the related Distribution Date pursuant to Section
5.01, equal to the interest accrued on each Mortgage Loan through the related
Due Date, but not received as of the close of business on the last day of the
related Due Period (net of the Servicing Fee) such amount being defined herein
as the "Monthly Advance." With respect to any Balloon Loan that is delinquent on
its maturity date, the Servicer will continue to make Monthly Advances with
respect to such Balloon Loan in an amount equal to one month's interest on the
unpaid principal balance at the applicable Loan Rate (net of the Servicing Fee)
according to the original amortization schedule for such Mortgage Loan. The
obligation to make Monthly Advances with respect to each Mortgage Loan shall
continue until such Mortgage Loan becomes a Liquidated Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, no Servicing Advance
or Monthly Advance shall be required to be made hereunder if the Servicer
determines that such Servicing Advance or Monthly Advance would, if made,
constitute a Nonrecoverable Advance.
Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The Servicer,
in its sole discretion, shall have the right to elect (by written notice sent to
the Trustee) to purchase for its own account from the Trust any Mortgage Loan
which is 90 days or more Delinquent in the manner and at the price specified in
Section 2.02. The Purchase Price for any Mortgage Loan purchased hereunder shall
be deposited in the Collection Account and the Trustee, upon receipt of such
deposit, shall release or cause to be released to the purchaser of such Mortgage
Loan the related Mortgage File and shall execute and deliver such instruments of
transfer or assignment prepared by the purchaser of such Mortgage Loan, in each
case without recourse, as shall be necessary to vest in the purchaser of such
Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser of
such Mortgage Loan shall succeed to all the Trustee's right, title and interest
in and to such Mortgage Loan and all security and documents related thereto.
Such assignment shall be an assignment outright and not for security. The
purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee, the
Certificate Insurer or the Certificateholders with respect thereto.
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Notwithstanding the foregoing, unless the Certificate Insurer consents,
the Servicer may only exercise its option pursuant to this Section 3.16 with
respect to the Mortgage Loan or Mortgage Loans that have been delinquent for the
longest period at the time of such repurchase. Any request by the Servicer to
the Certificate Insurer for consent to repurchase Mortgage Loans that are not
the most delinquent shall be accompanied by a description of the Mortgage Loans
that have been delinquent longer than the Mortgage Loan or Mortgage Loans which
the Servicer proposes to repurchase. If the Certificate Insurer fails to respond
to such request within 10 Business Days after receipt thereof, the Servicer may
repurchase the Mortgage Loan or Mortgage Loans proposed to be repurchased
without the consent of, or any further action by, the Certificate Insurer.
Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
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 secured by the First 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
Certificateholders and the Certificate Insurer and/or to preserve the security
of the related Mortgage Loan, subject to the application of the REMIC Provisions
in accordance with the terms of this Agreement. The Servicer shall immediately
notify the Trustee and the Certificate Insurer of any such action or
circumstances. The Servicer shall advance the necessary funds to cure the
default or reinstate the superior lien, if such advance is in the best interests
of the Certificateholders and the Certificate Insurer in accordance with the
servicing standards in Section 3.01. The Servicer shall not make such an advance
except to the extent that it determines in its reasonable good faith judgment
that the advance would be recoverable from Liquidation Proceeds on the related
Mortgage Loan and in no event in an amount that is greater than the Principal
Balance of the related Mortgage Loan, except with the consent of the Certificate
Insurer The Servicer shall thereafter take such action as is necessary to
recover the amount so advanced.
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Section 3.18. Assumption Agreements. When a Mortgaged Property has been or
is about to be conveyed by the Mortgagor, the Servicer shall, to the extent it
has knowledge of such conveyance or prospective conveyance, exercise its right
to accelerate the maturity of the related Mortgage Loan under any "due-on-sale"
clause contained in the related Mortgage or Mortgage 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. 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 shall become liable under the Mortgage
Note and, unless prohibited by applicable law, the Mortgagor shall remain liable
thereon. The Servicer, in accordance with accepted mortgage loan servicing
standards for mortgage loans similar to the Mortgage Loans, is also authorized
to enter into a substitution of liability whereby such person is substituted as
mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Trustee and the Certificate Insurer that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement which original shall be added by the
Trustee to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any assumption or
substitution agreement entered into pursuant to this Section 3.18, the Servicer
shall not change the Loan Rate or the Monthly Payment, defer or forgive the
payment of principal or interest, reduce the outstanding principal amount or
extend the final maturity date on such Mortgage Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.19. Payment of Taxes, Insurance and Other Charges. With respect
to each Mortgage Loan, the Servicer shall maintain accurate records reflecting
fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage
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and shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or
deficiency, monitor such payments to determine if they are made by the
Mortgagor.
ARTICLE IV
Certificate Insurance Policy and Initial Interest Coverage Account
Section 4.01. Certificate Insurance Policy. As soon as possible, and in no
event later than 3:00 p.m., New York time, on the third Business Day immediately
preceding each Distribution Date, the Trustee shall determine the amount of the
Available Funds for each Loan Group for such Distribution Date minus the amount
of any Premium Amount and any Trustee Fee to be paid on such Distribution Date.
If for any Distribution Date a Deficiency Amount exists, the Trustee shall
complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal Agent
no later than 12:00 noon, New York time, on the second Business Day preceding
such Distribution Date. The Notice shall constitute a claim for an Insured
Payment pursuant to the Certificate Insurance Policy for an amount equal to such
excess. Upon receipt of the Insured Payment, at or prior to the latest time
payments of the Insured Payment are to be made by the Certificate Insurer
pursuant to the Certificate Insurance Policy, on behalf of the Offered
Certificateholders, the Trustee shall deposit such Insured Payments in the
Distribution Account and shall distribute such Insured Payments only in
accordance with Section 5.01(c).
The Trustee shall receive, as attorney-in-fact of each Holder of an
Offered Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of an Offered Certificate in accordance with
the provisions of Article V. Insured Payments disbursed by the Trustee from
proceeds of the Certificate Insurance Policy shall not be considered payment by
the Trust nor shall such payments discharge the obligation of the Trust with
respect to such Offered Certificate, and the Certificate Insurer shall become
the owner of such unpaid amounts
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due from the Trust in respect of such Insured Payments as the deemed assignee of
such Holder and shall be entitled to receive the Reimbursement Amount pursuant
to Sections 5.01(a)4 and 5.01(a)8. The Trustee hereby agrees on behalf of each
Holder of an Offered Certificate for the benefit of the Certificate Insurer that
it and they recognize that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Offered Certificateholders, the Certificate Insurer will be entitled to
receive the Reimbursement Amount pursuant to Sections 5.01(a)4 and 5.01(a)8.
It is understood and agreed that the intention of the parties is that the
Certificate Insurer shall not be entitled to reimbursement on any Distribution
Date for amounts previously paid by it unless on such Distribution Date the
Offered Certificateholders shall also have received the full amount of the
Insured Payment for such Distribution Date.
Section 4.02. Initial Interest Coverage Account and Pre-Funding Account.
(a) The Trustee has heretofore established or caused to be established and shall
hereafter maintain or cause to be maintained a separate account denominated a
Initial Interest Coverage Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "Bankers Trust
Company of California, N.A., as Trustee of the Delta Funding Home Equity Loan
Trust Series 1998-3 Initial Interest Coverage Account". The Initial Interest
Coverage Account shall be treated as an "outside reserve fund" under applicable
Treasury regulations and will not be part of any REMIC. Any investment earnings
on the Initial Interest Coverage Account will be treated as owned by the Seller
and will be taxable to the Seller. The amount on deposit in the Initial Interest
Coverage Account shall be invested in Eligible Investments in accordance with
the provisions of Section 5.05.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated a Pre-Funding Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "Bankers Trust
Company of California, N.A., as Trustee of the Delta Funding Home Equity Loan
Trust Series 1998-3 Pre-Funding Account". The Pre-Funding Account shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC. Any Pre-Funding Earnings will be deposited into
the Initial Interest Coverage Account on each Pre-Funding Distribution Date;
provided, however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date, the Trustee
shall (i) transfer the Excess Funding Amount(s) from the Pre-Funding Account to
the Distribution Account, (ii)
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transfer Pre-Funding Earnings to the Initial Interest Coverage Account and (iii)
close the Pre-Funding Account. The amount on deposit in the Pre-Funding Account
shall be invested in Eligible Investments in accordance with the provisions of
Section 5.05. All investment earnings on funds on deposit in the Initial
Interest Coverage Account and the Pre-Funding Account will be treated as owned
by, and will be taxable to, the Seller.
(b) On the Closing Date, the Seller will cause to be deposited the Initial
Interest Deposit in the Distribution Account and the Original Capitalized
Interest Deposit into the Initial Interest Coverage Account from the sale of the
Offered Certificates. On the Closing Date, the Seller will cause to be deposited
the Pre-Funding Amount in the Pre-Funding Account from the sale of the Offered
Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee shall transfer from
the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date; provided,
however, that on the final Subsequent Transfer Date the Trustee shall (i)
transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance of the funds on deposit in the Initial Interest
Coverage Account to the Seller and (iii) close the Initial Interest Coverage
Account.
(d) On each Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller with respect to such transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw such
amounts from the Pre-Funding Account on the immediately following Distribution
Date and deposit such amounts in the Distribution Account.
(f) The Initial Interest Coverage Account and Pre-Funding Account shall be
closed on the Distribution Date immediately following the end of the Funding
Period. All amounts, if any, remaining in the Initial Interest Coverage Account
on such day shall be paid to the Seller.
Section 4.03. Claims Upon the Certificate Insurance Policy (a) The Trustee
shall comply with the provisions of the Certificate Insurance Policy with
respect to claims upon the Certificate Insurance Policy.
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(b) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Offered Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon [three] Business Day's prior written notice to the Trustee.
(c) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under the Bankruptcy Code (a "Preference Claim") of any distribution
made with respect to the Offered Certificates. Each Certificateholder of Offered
Certificates, by its purchase of Offered Certificates, 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.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw the Available Funds for each Loan Group from the Distribution
Account plus any amounts paid under the Certificate Insurance Policy and apply
such amounts in the following order of priority, in each case, to the extent of
the funds remaining therefor:
1. Concurrently, to the Trustee and the Certificate Issuer, the
Trustee Fee and the Premium Amount for such Loan Group and Distribution
Date.
2. Concurrently, to the Class of Offered Certificates in the related
Certificate Group, the related Class Interest Distribution Amount for such
Distribution Date.
3. To the Class of Offered Certificates in the related Certificate
Group then entitled to distributions of principal as described below, an
amount up to the related
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Principal Distribution Amount (other than the portion thereof constituting
a Subordination Increase Amount).
4. To the Certificate Insurer, the amount owing under the Insurance
Agreement with respect to such Loan Group for prior draws under the
Certificate Insurance Policy with respect to the related Certificate Group.
5. To the Holders of Certificates in the other Certificate Group,
the amount of Available Funds Shortfall for such other Certificate Group.
6. To the Classes of Offered Certificates in the related Certificate
Group then entitled to distributions of principal as described below, an
amount up to the Subordination Increase Amount for such Certificate Group
and Distribution Date.
7. To the Classes of Offered Certificates in the other Certificate
Group then entitled to distributions of principal as described below, the
excess of the Subordination Deficiency for such Certificate Group over the
Subordination Increase Amount distributed pursuant to clause 6 on such
Distribution Date.
8. To the Certificate Insurer, any remaining amounts owing under the
Insurance Agreement with respect to (a) the related Certificate Group or
(b) the other Certificate Group.
9. From Available Funds allocable to Loan Group A, to the Holders of
the Adjustable Rate Certificates, any LIBOR Carryover.
10. To the Class BIO Certificates, the Class BIO Distribution
Amount.
11. To the Residual Certificates, the remainder.
On each Distribution Date, the Class Interest Distribution for each Class
of Offered Certificates in a Certificate Group will be distributed on an equal
priority and any shortfall in the amount required to be distributed as interest
thereon to each such Class will be allocated between such Classes pro rata based
on the amount that would have been distributed on each such Class in the absence
of such shortfall.
Any distributions in respect of principal (including any Subordination
Increase Amounts) of the Offered Certificates on a
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Distribution Date will be applied in the following order of priority:
A. Loan Group F:
(i) to the Class A-6F Certificates, the Class A-6F Principal
Distribution, until the Class Principal Balance
thereof has been reduced to zero; and
(ii) sequentially, to the Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class
A-4F, Class A-5F and Class A-6F Certificates, in that order, until the
respective Class Principal Balances thereof have been reduced to zero;
B. Loan Group A:
(i) to the Class A-1A Certificates until the Class Principal Balance
thereof has been reduced to zero.
Notwithstanding the priorities set forth in clause A above, if a
Certificate Insurer Default has occurred and is continuing, the applicable
Principal Distribution Amount will be distributed concurrently to each Class of
Offered Certificates on a pro rata basis in accordance with their respective
Class Principal Balances.
(c) Distribution of Insured Payments. With respect to any Distribution
Date, in the event of an Insured Payment, the Trustee shall make such payments
from the amount drawn under the Certificate Insurance Policy for such
Distribution Date pursuant to Article V. Any Insured Payment not required to
make distributions pursuant to Article V shall be returned to the Certificate
Insurer.
(d) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Holders of Offered Certificates, by check or
money order mailed to such Certificateholder at the address appearing in the
Certificate Register, or, upon written request by a Holder of an Offered
Certificate delivered to the Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Offered
Certificates aggregating at least $1,000,000 Original Class Principal Balance),
and, in the case of Holders of Notional Amount or Residual Certificates, by wire
transfer. Distributions among Certificateholders shall be made in proportion to
the Percentage
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Interests evidenced by the Certificates held by such Certificateholders.
(e) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Servicer or the Seller shall have any responsibility therefor
except as otherwise provided by applicable law.
Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall remit to the Trustee for deposit to the Collection
Account an amount equal to the lesser of (A) the aggregate of the Prepayment
Interest Shortfalls for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (B) its aggregate Servicing Fee
received in the related Due Period. The Servicer shall not have the right to
reimbursement for any amounts deposited to the Collection Account pursuant to
this Section 5.02.
Section 5.03. Statements. (a) Not later than 1:00 p.m., California time,
on the fifth Business Day prior to each Distribution Date, the Servicer shall
deliver to the Trustee by electronic modem a computer file containing the
information called for by clauses (i) through (xxiii) below as of the end of the
preceding Due Period and such other information as the Trustee shall reasonably
require. Not later than 1:00 p.m., California time, on each Determination Date,
the Trustee shall deliver to the Servicer, the Certificate Insurer and the
Seller by telecopy, with a hard copy thereof to be delivered on the succeeding
Distribution Date, a confirmation of the items in clause (i) below. Not later
than one Business Day prior to each Distribution Date the Trustee shall deliver
a statement (the "Trustee's Remittance Report") containing the information set
forth below with respect to such Distribution Date, which information shall be
based upon the information furnished by the Servicer upon which the Trustee
shall conclusively rely without independent verification or calculation thereof:
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(i) The Available Funds for each Certificate Group and each Class's
Certificate Rate for the related Distribution Date;
(ii) the aggregate amount of the distribution to each Class of
Certificates on such Distribution Date;
(iii) the amount of the distribution set forth in paragraph (i) above
in respect of interest and the amount thereof in respect of any Class
Interest Carryover Shortfall, and the amount of any Class Interest
Carryover Shortfall remaining;
(iv) the amount of the distribution set forth in paragraph (i) above in
respect of principal;
(v) the amount of Excess Interest for each Loan Group paid as
principal;
(vi) the Servicing Fee, the Premium Amount and Reimbursement Amount;
(vii) the Loan Group Balance of each Loan Group and the Pool Balance,
in each case as of the close of business on the last day of the preceding
Due Period;
(viii) the Class Principal Balance of each Class of Certificates after
giving effect to payments allocated to principal above;
(ix) each Overcollateralization Amount and each Required
Overcollateralization Amount as of the close of business on the
Distribution Date, after giving effect to distributions of principal on
such Distribution Date;
(x) the amount of the Insured Payments, if any, to be made on such
Distribution Date;
(xi) The number and Principal Balances of all Mortgage Loans in each
Loan Group that were the subject of Principal Prepayments during the Due
Period;
(xii) The amount of all Curtailments in each Loan Group that were
received during the Due Period;
(xiii) The principal portion of all Monthly Payments in each Loan Group
received during the Due Period;
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(xiv) The interest portion of all Monthly Payments in each Loan Group
received on the Mortgage Loans during the Due Period;
(xv) For each Certificate Group, the amount of the Monthly Advances
and the Compensating Interest payment to be made on the Determination Date;
(xvi) The amount to be distributed to the Class R Certificateholders
for the Distribution Date;
(xvii) The weighted average remaining term to maturity of the Mortgage
Loans in each Loan Group and the weighted average Loan Rate;
(xviii) The amount of all payments or reimbursements to the Servicer
pursuant to Sections 3.03(ii) and (vi);
(xix) The number of Mortgage Loans in each Loan Group outstanding at
the beginning and at the end of the related Due Period;
(xx) For each Certificate Group, the amount of Liquidation Loan
Losses experienced during the preceding Due Period and the Loan Losses and
the Cumulative Net Losses as a percentage of the Cut-Off Date Pool Balance;
(xxi) For each Loan Group, as of the end of the preceding calendar
month, the number and Principal Balance of Mortgage Loans which are 30-59
days delinquent; the number and Principal Balance of Mortgage Loans which
are 60- 89 days delinquent; the number and Principal Balance of Mortgage
Loans which are 90 or more days delinquent (including the number and
Principal Balance of Mortgage Loans which are in foreclosure and the number
and Principal Balance of Mortgage Loans which are REO Property);
(xxii) any LIBOR Carryover distributed and any remaining LIBOR
Carryover;
(xxiii) For each Loan Group, the number and aggregate Principal
Balance of Mortgage Loans, other than Mortgage Loans in default or imminent
default, that were modified by the Servicer during the related Due Period;
and
(xxiv) For each Pre-Funding Distribution Date, the remaining Allocated
Pre-Funded Amount.
The Trustee shall forward such report to the Servicer, the Seller, the
Certificate Insurer, the Certificateholders, the
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Rating Agencies, Bloomberg (at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxx Xxxxxx) and Intex Solutions (at 00 Xxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxx) on the Distribution Date;
provided, however, that the Trustee shall remove from the report the Premium
Amount to be paid to the Certificate Insurer prior to the submission to
Bloomberg and Intex Solutions. The Trustee may fully rely upon and shall have no
liability with respect to information provided by the Servicer. The Servicer
shall calculate all items in clauses (i) - (xxiv) above.
To the extent that there are inconsistencies between the telecopy of the
Trustee's Remittance Report and the hard copy thereof, the Servicer may rely
upon the latter.
In the case of information furnished pursuant to subclauses (ii), (iii),
(iv) and (vi) above, the amounts shall be expressed in a separate section of the
report as a dollar amount for each Class for each $1,000 original dollar amount
as of the related Cut-Off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Regular Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (iii) and
(iv) above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable
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portion thereof during which such Person was a Class R Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be prepared and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
(e) The Servicer and the Trustee shall furnish to each Certificateholder
and to the Certificate Insurer (if requested in writing), during the term of
this Agreement, such periodic, special or other reports or information, whether
or not provided for herein, as shall be necessary, reasonable or appropriate
with respect to the Certificateholder or to the Certificate Insurer or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions (if requested in writing) as the Certificateholder or the Certificate
Insurer may reasonably require; provided that the Servicer and the Trustee shall
be entitled to be reimbursed by such Certificateholder or the Certificate
Insurer for their respective fees and actual expenses associated with providing
such reports, if such reports are not generally produced in the ordinary course
of their respective businesses or readily obtainable.
(f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or for the internal use of the Certificate Insurer and its counsel or to the
Rating Agencies, the Certificate Insurer's reinsurers, parent, regulators,
liquidity providers and auditors, provided that the Certificate Insurer shall
attempt in good faith to cause such additional Persons to acknowledge in writing
the foregoing restrictions, and in connection with the purposes and requirements
of this Agreement. No Person entitled to receive copies of such reports or
diskettes or files or lists of Certificateholders shall use the information
therein for the purpose of soliciting the customers of the Seller or for any
other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
Bankers Trust Company of California, N.A., a separate account (the "Distribution
Account") titled "Bankers Trust Company of California, N.A., as Trustee, in
trust for the registered holders of Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 1998-3." The Distribution Account shall be an Eligible
Account. The Trustee shall deposit any amounts representing payments on and any
collections in respect of the Mortgage Loans received by it immediately
following receipt thereof, including, without limitation, all amounts withdrawn
by
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the Servicer from the Collection Account pursuant to Section 3.03 for deposit
to the Distribution Account. Amounts on deposit in the Distribution Account may
be invested in Eligible Investments pursuant to Section 5.05.
Section 5.05. Investment of Accounts. (a) So long as no Event of Default
shall have occurred and be continuing, and consistent with any requirements of
the Code, all or a portion of any Account held by the Trustee shall be invested
and reinvested by the Trustee, as directed in writing by the Servicer, in one or
more Eligible Investments bearing interest or sold at a discount. If an Event of
Default shall have occurred and be continuing or if the Servicer does not
provide investment directions, the Trustee shall invest all Accounts in Eligible
Investments described in paragraph (vi) of the definition of Eligible
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date (except that (i)
if such Eligible Investment is an obligation of the Trustee, then such Eligible
Investment shall mature not later than such Distribution Date and (ii) any other
date may be approved by the Rating Agencies and the Certificate Insurer).
(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
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct as set forth in Section 5.05(a), but only in one
or more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be continuing,
all net income and gain realized from investment of, and all earnings on, funds
deposited in the Collection Account and the Distribution Account shall be for
the benefit of the Servicer as servicing compensation (in addition to the
Servicing Fee), and shall be subject to withdrawal on or before the first
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Business Day of the month following the month in which such income or gain is
received. The Servicer shall deposit in the Collection Account, the Distribution
Account or the Initial Interest Coverage Account, as the case may be, the amount
of any loss incurred in respect of any Eligible Investment held therein which is
in excess of the income and gain thereon immediately upon realization of such
loss, without any right to reimbursement therefore from its own funds.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Offered Certificates and the
Residual Certificates shall be substantially in the forms set forth in Exhibits
A and B respectively, and shall, on original issue, be executed, authenticated
and delivered by the Trustee to or upon the order of the Seller concurrently
with the sale and assignment to the Trustee of the Trust. Each Class of Offered
Certificates shall be initially evidenced by one or more certificates
representing a fraction of the applicable Original Class Principal Balance or
Notional Amount, as applicable, and shall be held in minimum dollar
denominations of $25,000 and integral multiples of $1,000 in excess thereof,
except that one of each Class of the Offered Certificate may be in a different
denomination so that the sum of the denominations of all outstanding Offered
Certificates shall equal the aggregate Original Class Principal Balance or
Notional Amount, as applicable. The Residual Certificates shall be held in
minimum Percentage Interests of 20%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Offered Certificates shall be Book-Entry
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Certificates. The Residual Certificates shall not be Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates. (a)
The Certificate Registrar shall cause to be kept at the Corporate Trust Office a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Trustee shall initially serve as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates in authorized denominations and the same aggregate Percentage
Interests, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute and authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository as representative of the Certificate Owners of the
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Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representative
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (vi) the Trustee may rely and shall be fully
protected in relying upon information furnished by the Depository with respect
to its Depository Participants and furnished by the Depository Participants with
respect to indirect participating firms and Persons shown on the books of such
indirect participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Seller advises the Trustee in writing
that the Depository is no longer willing or able to discharge properly its
responsibilities as Depository and (y) the Trustee or the Seller is unable to
locate a qualified successor, (ii) the Seller, at its sole option elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, the Certificate Owners of each Class of
Offered Certificates representing Percentage Interests aggregating not less than
51% advises the Trustee and Depository through the Financial Intermediaries and
the Depository Participants in writing that the continuation of a book-entry
system through the Depository to the exclusion of definitive, fully registered
certificates (the "Definitive Certificates") to Certificate Owners is no longer
in the best interests of the Certificate Owners. Upon surrender to the
Certificate Registrar of each Class of Offered Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall at the Seller's expense, execute and authenticate the
Definitive Certificates. Neither the Seller nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent and the Seller shall recognize the
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Holders of the Definitive Certificates as Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Class BIO and
Residual Certificates by the Seller, no transfer, sale, pledge or other
disposition of any Class BIO or Residual Certificate shall be made unless such
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended (the "1933 Act"), and any applicable state securities laws
or is made in accordance with the 1933 Act and laws. In the event of any such
transfer, other than the transfer of the Tax Matters Person Residual Interest to
the Trustee in reliance upon Rule 144A under the 1933 Act, the Trustee and the
Seller shall require either (i) a written Opinion of Counsel (which may be
in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Seller that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Seller or (ii)
the Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit M) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller and the Trustee certifying to the Seller and the
Trustee the facts surrounding such transfer, which investment letter shall not
be an expense of the Trustee or the Seller. The Holder of a Class BIO or
Residual Certificate desiring to effect such transfer shall, and does hereby
agree to, indemnify the Trustee and the Seller against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and
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that the purchase and holding of such Certificates are covered under PTCE 95-60
or (iii) in the case of any such ERISA Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA or a plan
or arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement or using such plan's or
arrangement's assets, an Opinion of Counsel satisfactory to the Trustee, which
Opinion of Counsel shall not be an expense of either the Trustee or the Trust,
addressed to the Trustee, to the effect that the purchase or holding of such
ERISA Restricted Certificate will not result in the assets of the Trust being
deemed to be "plan assets" and subject to the prohibited transaction provisions
of ERISA and the Code and will not subject the Trustee to any obligation in
addition to those expressly undertaken in this Agreement or to any liability.
Notwithstanding anything else to the contrary herein, (i) the representation
required by clause (i) or (ii) above with respect to any ERISA-Restricted
Certificate that is a Book-Entry Certificate shall be deemed to have been made
by the Certificate Owner by virtue of such Certificate Owner's acquisition of
such Certificate and (ii) any purported transfer of an ERISA Restricted
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee
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shall as a condition to registration of the transfer, require delivery to
it, in form and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the proposed
transferee to the effect that such transferee is a Permitted
Transferee and that it is not acquiring its Ownership Interest in the
Residual Certificate that is the subject of the proposed transfer as a
nominee, trustee or agent for any Person who is not a Permitted
Transferee; and
(B) a covenant of the proposed transferee to the effect
that the proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest in
a Residual Certificate in violation of the provisions of this Section 6.02
shall be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall, in violation of the
provisions of this Section 6.02, become a Holder of a Residual Certificate,
then the prior Holder of such Residual Certificate that is a Permitted
Transferee shall, upon discovery that the registration of transfer of such
Residual Certificate was not in fact permitted by this Section 6.02, be
restored to all rights as Holder thereof retroactive to the date of
registration of transfer of such Residual Certificate. The Trustee shall be
under no liability to any Person for any registration of transfer of a
Residual Certificate that is in fact not permitted by this Section 6.02 or
for making any distributions due on such Residual Certificate to the Holder
thereof or taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the documents
specified in clause (iii). The Trustee shall be entitled to recover from
any Holder of a Residual Certificate that was in fact not a Permitted
Transferee at the time such distributions were made all distributions made
on such Residual Certificate. Any such distributions so recovered by the
Trustee shall be distributed and delivered by the Trustee to the prior
Holder of such Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the right
but not the obligation, without notice to the Holder of such Residual
Certificate or any
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other Person having an Ownership Interest therein, to notify the Depositor
to arrange for the sale of such Residual Certificate. The proceeds of such
sale, net of commissions (which may include commissions payable to the
Depositor or its affiliates in connection with such sale), expenses and
taxes due, if any, will be remitted by the Trustee to the previous Holder
of such Residual Certificate that is a Permitted Transferee, except that in
the event that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02 or any
other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim. The
terms and conditions of any sale under this clause (v) shall be determined
in the sole discretion of the Trustee, and it shall not be liable to any
Person having an Ownership Interest in a Residual Certificate as a result
of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on information
provided to the Trustee by the Depositor will provide to the Internal
Revenue Service, and to the persons specified in Sections 860E(e)(3) and
(6) of the Code, information needed to compute the tax imposed under
Section 860E(e)(5) of the Code on transfers of residual interests to
disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC to fail to
qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be registered
in the name of the Trustee.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
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All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee, the
Seller and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Registrar, the Certificate Insurer, any Paying Agent and any
agent of the Servicer, the Seller, the Trustee, any Paying Agent or the
Certificate Registrar may treat the Person, including a Depository, in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Registrar nor any agent of any of them shall be affected by notice
to the contrary; provided, however, that to the extent the Certificate Insurer
makes an Insured Payment with respect to a Certificate it shall be deemed to be
the owner of such Certificate to the extent provided in Section 4.01.
Section 6.05. Appointment of Paying Agent. (a)The Paying Agent shall make
distributions to Certificateholders from the Distribution Account pursuant to
Section 5.01 and shall report the amounts of such distributions to the Trustee.
The duties of the Paying Agent may include the obligation (i) to withdraw funds
from the Collection Account pursuant to Section 3.03 and for the purpose of
making the distributions referred to above and (ii) to
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distribute statements and provide information to Certificateholders as required
hereunder. The Paying Agent hereunder shall at all times be a corporation duly
incorporated and validly existing under the laws of the United States of America
or any state thereof, authorized under such laws to exercise corporate trust
powers and subject to supervision or examination by federal or state
authorities. The Paying Agent shall initially be the Trustee. The Trustee may
appoint a successor to act as Paying Agent, which appointment shall be
reasonably satisfactory to the Seller.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of Federal income
taxes due from Certificate Owners and otherwise comply with the provisions of
this Agreement applicable to it.
ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer. The Seller and the
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller or the Servicer. Any corporation into which the Seller or the
Servicer may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Seller or the Servicer shall be
a party, or any corporation succeeding to the business of the Seller or the
Servicer, shall be the successor of the Seller or the Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor Servicer shall satisfy
all the requirements of Section 8.02 with respect to the qualifications of a
successor Servicer.
Section 7.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers
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or employees or agents of the Servicer shall be under any liability to the Trust
or the Certificateholders for any action taken or for refraining from the taking
of any action by the Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of its reckless disregard of
its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Net Liquidation Proceeds realized with respect to the related Mortgage Loan. The
preceding sentence shall not limit the obligations of the Servicer pursuant to
Section 9.05. The Servicer and any director or officer or employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer and any director or officer or employee or agent of the
Servicer shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer may with the consent of the Certificate Insurer undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the reasonable legal expenses and
costs of such action and any liability resulting therefrom shall be expenses,
costs and liabilities of the Trust. The Servicer's right to indemnity or
reimbursement pursuant to this Section 7.03 shall survive any resignation or
termination of the Servicer pursuant to Section 7.04 or 8.01 with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation or
termination). This paragraph shall apply to the Servicer solely in its capacity
as Servicer hereunder and in no other capacities.
Section 7.04. Servicer Not to Resign. Subject to the provisions of Section
7.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in
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material conflict by reason of applicable law with any other activities carried
on by it or its subsidiaries or Affiliates, the other activities of the Servicer
so causing such a conflict being of a type and nature carried on by the Servicer
or its subsidiaries or Affiliates at the date of this Agreement or (ii)upon
satisfaction of each of the following conditions: (a) the Servicer has proposed
a successor servicer to the Trustee in writing and such proposed successor
servicer is reasonably acceptable to the Trustee; (b) each Rating Agency shall
have delivered a letter to the Trustee prior to the appointment of the successor
servicer stating that the proposed appointment of such successor servicer as
Servicer hereunder will not result in the reduction or withdrawal of the then
current ratings of the Offered Certificates without regard to the Certificate
Insurance Policy; and (c) such proposed successor servicer is reasonably
acceptable to the Certificate Insurer and consented to by the Certificate
Insurer in writing; provided, however, that no such resignation by the Servicer
shall become effective until such successor servicer or, in the case of (i)
above, the Trustee shall have assumed the Servicer's responsibilities and
obligations hereunder or the Trustee shall have designated a successor servicer
in accordance with Section 8.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 8.01
and 8.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Certificate Insurer.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04. The Servicer shall provide the Certificate Insurer and the
Trustee with written notice prior to the delegation of any of its duties to any
Person other than any of the Servicer's Affiliates or their respective
successors and assigns.
Section 7.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer's willful misfeasance, bad faith or negligence in the performance
of its activities in servicing or administering the Mortgage Loans pursuant to
this Agreement, including, but not limited to, any judgment, award, settlement,
reasonable attorneys' fees and other
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costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim related to the Servicer's misfeasance,
bad faith or negligence. Any such indemnification shall not be payable from the
assets of the Trust. The provisions of this Section 7.06 shall survive the
termination of this Agreement.
Section 7.07. Inspection. The Servicer shall (and shall require any
Subservicer in the related Subservicing Agreement to) afford the Certificate
Insurer, upon reasonable notice, during normal business hours, access to all
records maintained by the Servicer in respect of its rights and obligations
hereunder and access to officers of the Servicer and each Subservicer
responsible for such obligations. Upon request, the Servicer shall furnish to
the Certificate Insurer the Servicer's most recent publicly available financial
statements and each Subservicer's most recent financial statements (annual or
quarterly statements, as the case may be) and such other information relating to
their capacity to perform their obligations under this Agreement as the Servicer
or such Subservicer possesses.
ARTICLE VIII
Default
Section 8.01. Events of Default (a) If any one of the following events
("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Monthly Advance; or
(B)any other failure by the Servicer to deposit in the Collection Account
or the Distribution Account any deposit required to be made under the terms
of this Agreement which continues unremedied for a period of three Business
Days after the date upon which payment was required to have been made;
(ii) The failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 30 days, or the
failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer as
set forth in this Agreement, which failure continues unremedied for a
period of 30 days, after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by
the Trustee or to the Servicer and the Trustee by any Holder with
Certificates evidencing Voting Interests of at least 25% or the Certificate
Insurer;
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(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 30 consecutive days;
(iv) The Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property, or a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver, liquidator or
similar person in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged,
unbonded or unstayed for a period of 30 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations;
(v) the Servicer Termination Test is failed; or
(vi) Any failure by the Servicer to pay when due any amount payable
by it under the Insurance Agreement which results in a drawing under the
Certificate Insurance Policy;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, (x) with respect solely to clause (i)(A) above, if
such Monthly Advance is not made by 12:00 noon, New York time, on the second
Business Day preceding the applicable Distribution Date, the Trustee, upon
receipt of written notice or discovery by a Responsible Officer of such failure,
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer and to the Certificate Insurer and the Trustee shall terminate all
of the rights and obligations of the Servicer under this Agreement and the
Trustee, or a successor servicer appointed in accordance with Section 8.02,
shall immediately make such Monthly Advance and assume, pursuant
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to Section 8.02, the duties of a successor Servicer and (y) in the case of
(i)(B), (ii), (iii), (iv), (v) and (vi), above, the Trustee shall, at the
direction of the Certificate Insurer or the Holders of each Class of Offered
Certificates evidencing the Voting Rights aggregating not less than 51% (with
the consent of the Certificate Insurer so long as no Certificate Insurer Default
shall have occurred and be continuing) by notice then given in writing to the
Servicer (and to the Trustee if given by Holders of Certificates), terminate all
of the rights and obligations of the Servicer as servicer under this Agreement.
Any such notice to the Servicer shall also be given to each Rating Agency, the
Seller and the Certificate Insurer. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee pursuant to and under this
Section 8.01; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Trustee for the administration by it of all cash
amounts that shall at the time be held by the Servicer and to be deposited by it
in the Collection Account, or that have been deposited by the Servicer in the
Collection Account or thereafter received by the Servicer with respect to the
Mortgage Loans. All reasonable out-of-pocket costs and expenses (including
attorneys' fees) incurred in connection with transferring the Mortgage Files to
the successor Servicer and amending this Agreement to reflect such succession as
Servicer pursuant to this Section 8.01 shall be paid by the predecessor Servicer
(or if the predecessor Servicer is the Trustee, the initial Servicer) upon
presentation of reasonable documentation of such costs and expenses.
Section 8.02. Trustee to Act; Appointment of Successor (a) On and after
the time the Servicer receives a notice of termination pursuant to Section 8.01
or 7.04, the Trustee shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof arising on and after its succession. As compensation therefor, the
Trustee shall be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been
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given. Notwithstanding the above, (i) if the Trustee is unwilling to act as
successor Servicer or (ii) if the Trustee is legally unable so to act, the
Trustee shall appoint or petition a court of competent jurisdiction to appoint,
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$25,000,000 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; provided that any such successor Servicer shall be acceptable to the
Certificate Insurer, as evidenced by the Certificate Insurer's prior written
consent which consent shall not be unreasonably withheld and provided further
that the appointment of any such successor Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Offered
Certificates by the Rating Agencies. Pending appointment of a successor to the
Servicer hereunder, unless the Trustee is prohibited by law from so acting, the
Trustee shall act in such capacity as hereinabove provided. In connection with
such appointment and assumption, the successor shall be entitled to receive
compensation out of payments on the Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.08 (or such lesser compensation as the Trustee and such successor
shall agree). 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 to pay any deductible under an insurance
policy pursuant to Section 3.05 or to indemnify the Trustee pursuant to Section
7.06), 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. The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer (i) continue to service and
administer the Mortgage Loans for the benefit of Certificateholders and the
Certificate Insurer and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.12.
Section 8.03. Waiver of Defaults. The Certificate Insurer or the Majority
Certificateholders with the prior written consent of the Certificate Insurer
may, on behalf of all Certificateholders, waive any events permitting removal of
the
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Servicer as servicer pursuant to this Article VIII, provided, however, that
the Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, the Certificate Insurer and to each Rating Agency.
Section 8.05. Rights of the Certificate Insurer to Exercise Rights of
Certificateholders. By accepting its Certificate, each Certificateholder agrees
that unless a Certificate Insurer Default exists, the Certificate Insurer shall
be deemed to be the Certificateholders for all purposes (other than with respect
to payment on the Certificates) and shall have the right to exercise all rights
of the Certificateholders under this Agreement and under each Class of
Certificates without any further consent of the Certificateholders, including,
without limitation:
(a) the right to require the Seller to repurchase Mortgage Loans pursuant
to Section 2.02 or 2.04;
(b) the right to give notices of breach or to terminate the rights and
obligations of the Servicer as servicer pursuant to Section 8.01 and to consent
to or direct waivers of Servicer defaults pursuant to Section 8.03;
(c) the right to direct the actions of the Trustee during the continuance
of a Servicer default pursuant to Sections 8.01 and 8.02;
(d) the right to institute proceedings against the Servicer pursuant to
Section 8.01;
(e) the right to direct the Trustee to investigate certain matters
pursuant to Section 9.02;
(f) the right to remove the Trustee pursuant to Section 9.07;
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(g) the right to direct foreclosures upon the failure of the Servicer to
do so in accordance with this Agreement; and
(h) any rights or remedies expressly given the Majority Certificateholders.
In addition, each Certificateholder agrees that unless a Certificate Insurer
Default exists, the rights specifically enumerated in this Agreement may be
exercised by the Certificateholders only with the prior written consent of the
Certificate Insurer.
Section 8.05. 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 8.01;
(b) agree to any amendment pursuant to Article XI, provided, however, that
such consent shall not be unreasonably withheld; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.05, 8.06 or 8.07 or any
requirement for the Certificate Insurer's consent for any period of time.
Section 8.07. Mortgage Loans, Trust and Accounts Held for Benefit of the
Certificate Insurer. The Trustee shall hold the Trust and the Mortgage Files for
the benefit of the Certificateholders and the Certificate Insurer and all
references in this Agreement and in the Certificates "on behalf of" or to the
benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer for action to preserve or
enforce the Certificate Insurer's rights or interests under this Agreement and
the Certificates unless, as stated in an Opinion of Counsel addressed to the
Trustee and the Certificate Insurer, such action is adverse to the interests of
the Certificateholders or diminishes the rights of the Certificateholders or
imposes additional burdens or restrictions on the Certificateholders.
The Servicer hereby acknowledges and agrees that it shall service the
Mortgage Loans for the benefit of the Certificateholders and for the benefit of
the Certificate Insurer,
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and all references in this Agreement to the benefit of or actions on behalf of
the Certificateholders shall be deemed to include the Certificate Insurer.
Section 8.08. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders, (b)
restrict the ability of the Certificateholders, the Servicer or the Trustee to
act without the consent or approval of the Certificate Insurer, (c) provide that
a particular act or thing must be acceptable to the Certificate Insurer, (d)
permit the Certificate Insurer to direct (or otherwise to require) the actions
of the Trustee, the Servicer or the Certificateholders, (e) provide that any
action or omission taken with the consent, approval or authorization of the
Certificate Insurer shall be authorized hereunder or shall not subject the party
taking or omitting to take such action to any liability hereunder or (f) which
have a similar effect, shall be of no further force and effect and the Trustee
shall administer the Trust and perform its obligations hereunder solely for the
benefit of the Holders of the Certificates; provided, however, that the
Certificate Insurer's rights shall be immediately reinstated following the cure
of such Certificate Insurer Default. Nothing in the foregoing sentence, nor any
action taken pursuant thereto or in compliance therewith, shall be deemed to
have released the Certificate Insurer from any obligation or liability it may
have to any party or to the Certificateholders hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.
Section 8.09. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, the Certificate Insurer and each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the occurrence
of an Event of Default and after the curing of all Events of Default which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set
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forth in this Agreement. If an Event of Default has occurred (which has not been
cured) of which a Responsible Officer has knowledge, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Servicer, provide notice thereof to the Certificate
Insurer and will, at the expense of the Servicer, which expense shall be
reasonable given the scope and nature of the required action, take such further
action as directed by the Certificate Insurer.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited to,
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
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(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining or
investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of the Certificate Insurer or in
accordance with the direction of the Holders of Offered Certificates
evidencing Percentage Interests aggregating not less than 51% (subject to
the Certificate Insurer's prior written consent) relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising or omitting to exercise any trust or power
conferred upon the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure by
the Servicer to comply with the obligations of the Servicer referred to in
clauses (i) and (ii) of Section 8.01 unless a Responsible Officer of the
Trustee at the Corporate Trust Office obtains actual knowledge of such
failure or the Trustee receives written notice of such failure from the
Servicer, the Certificate Insurer or the Holders of Offered Certificates
evidencing Percentage Interests aggregating not less than 51%. This
paragraph shall not be construed to limit the effect of the first paragraph
of this Section 9.01.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the 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.
Section 9.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 9.01:
(i) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any
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resolution, Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice
or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders or the Certificate
Insurer pursuant to the provisions of this Agreement, unless such
Certificateholders or the Certificate Insurer shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of
any such act; nothing contained herein shall, however, relieve the
Trustee of the obligations, upon the occurrence of an Event of Default
(which has not been cured) of which a Responsible Officer has knowledge,
to exercise such of the rights and powers vested in it by this Agreement,
and to use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct
of his own affairs;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(v) prior to the occurrence of an Event of Default and after the
curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
documents, unless requested in writing to do so by the Certificate Insurer
or by the Holders of
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Certificates evidencing Percentage Interests aggregating not less than
51% (subject to the Certificate Insurer's prior written consent);
provided, however, that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to such
proceeding. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Trustee, shall be reimbursed by
the Servicer upon demand. Nothing in this clause (v) shall derogate from
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Servicer until such time as the Trustee may be required to act as Servicer
pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act.
(b) [reserved]
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the authentication
of the Trustee on the Certificates) shall be taken as the statements of the
Seller, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Agreement or the Insurance Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Servicer or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or
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liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Mortgage Loan, or the perfection and priority of any
Mortgage or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including, without limitation: the existence, condition and ownership of any
Mortgaged Property; the existence and enforceability of any hazard insurance
thereon (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 8.02); the validity of the assignment of any Mortgage Loan
to the Trustee or of any intervening assignment; the completeness of any
Mortgage Loan; the performance or enforcement of any Mortgage Loan (other than
if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02); the compliance by the Seller or the Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any non-compliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or any
loss resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual capacity;
the acts or omissions of any of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02), any Subservicer or
any Mortgagor; any action of the Servicer (other than if the Trustee shall
assume the duties of the Servicer pursuant to Section 8.02) or any Subservicer
taken in the name of the Trustee; the failure of the Servicer or any Subservicer
to act or perform any duties required of it as agent of the Trustee hereunder;
or any action by the Trustee taken at the instruction of the Servicer (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02); provided, however, that the foregoing shall not relieve the Trustee of
its obligation to perform its duties under this Agreement, including, without
limitation, the Trustee's duty to review the Mortgage Files pursuant to Section
2.02. Until such time as the Trustee shall have become the Successor Servicer,
the Trustee shall have no responsibility to perfect or maintain the perfection
of any security interest or lien granted to it hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee and may transact any banking
and trust business with the Seller or the Servicer.
Section 9.05. Servicer to Pay Trustee Fees and Expenses. The Trustee will
be paid the Trustee Fee pursuant to Section 5.01
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and such other amounts as agreed with Delta. The Servicer will pay or reimburse
the Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement or the Insurance Agreement (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders hereunder. In addition, the
Servicer covenants and agrees to indemnify the Trustee and its officers,
directors, employees and agents from, and hold it harmless against, any and all
losses, liabilities, damages, claims or expenses incurred in connection with or
relating to this Agreement or the Insurance Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of obligations
and duties hereunder. This Section 9.05 shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation duly incorporated and validly existing under
the laws of the United States of America or any state thereof, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and a minimum long-term debt rating of "Baa3",
and subject to supervision or examination by federal or state authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 9.06, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time such
Trustee is appointed Trustee to the effect that the Trust will not be a taxable
entity under the laws of such state. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 9.06, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer, the Certificate Insurer and each
Rating Agency. Upon receiving such notice of resignation, the Seller shall
promptly
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appoint a successor Trustee (approved in writing by the Certificate Insurer and
the Servicer, so long as such approval shall not unreasonably be withheld) by
written instrument, in duplicate, copies of which instrument shall be delivered
to the resigning Trustee, the Certificate Insurer and the Successor Trustee;
provided, however, that any such successor Trustee shall be subject to the
prior written approval of the Servicer. If no successor Trustee shall have been
so appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.06 and shall fail to resign after written request
therefor by the Seller or, the Certificate Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Seller, the Certificate Insurer or the Servicer may remove
the Trustee. If the Seller, the Certificate Insurer or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Seller
shall promptly appoint a successor Trustee (approved in writing by the
Certificate Insurer, so long as such approval is not unreasonably withheld) by
written instrument, in duplicate, copies of which instrument shall be delivered
to the Trustee so removed, the Certificate Insurer and to the successor Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over 50%
of all Voting Rights may, with the prior written consent of the Certificate
Insurer, at any time remove the Trustee by written instrument or instruments
delivered to the Servicer, the Seller and the Trustee; and the Seller shall
thereupon use its best efforts to appoint a successor trustee in accordance with
this Section 9.07.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the Trustee may not be removed by the Seller
or the Certificateholders without the prior written consent of the Certificate
Insurer, which consent shall not be unreasonably withheld.
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Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Seller,
the Servicer and to its predecessor Trustee and the Certificate Insurer an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The Seller, the
Servicer and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 9.08, the Servicer shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to each Rating Agency. If the Servicer fails to mail
such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Notwithstanding anything to the contrary contained herein, so long as no
Certificate Insurer Default exists, the appointment of any successor Trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer, which consent shall not be unreasonably
withheld.
Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto other than the prior written consent of
the Certificate Insurer, which consent shall not be unreasonably withheld.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of
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any jurisdiction in which any part of the Trust or any Mortgaged Property may
at the time be located, the Servicer and the Trustee acting jointly and with
the consent of the Certificate Insurer shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and the Certificate Insurer to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders and the Certificate Insurer such
title to the Trust, or any part thereof, and, subject to the other provisions
of this Section 9.10, such powers, duties, obligations, rights and trusts as
the Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the written approval of the
Servicer. 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 an Event of
Default shall have occurred and be continuing, the Trustee alone and with the
consent of the Certificate Insurer shall have the power to make such
appointment. Subject to the Certificate Insurer's written approval, no
co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Servicer shall be responsible for the
fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
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 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;
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(ii) no trustee hereunder shall be held personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee acting jointly and with the consent
of the Certificate Insurer may at any time accept the resignation of or
remove any separate trustee or co-trustee except that following the
occurrence of an Event of Default, the Trustee acting with the consent of
the Certificate Insurer may accept the resignation or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Seller, the Certificate Insurer and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and
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enforced by the Trustee or the Certificate Insurer without the possession of
any of the Certificates or the production thereof in any proceeding relating
thereto, and such proceeding instituted by the Trustee shall be brought in its
own name or in its capacity as Trustee. Any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses, disbursement
and advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Certificateholders or the Certificate Insurer in respect of
which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Servicer, the Certificate
Insurer and each Certificateholder upon reasonable notice during normal business
hours, access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. Upon request, the Trustee shall furnish the Seller, the Servicer, the
Certificate Insurer and any requesting Certificateholder with its most recent
financial statements. The Trustee shall cooperate fully with the Seller, the
Servicer, the Certificate Insurer and such Certificateholder and shall make
available to the Seller, the Servicer, the Certificate Insurer and such
Certificateholder for review and copying such books, documents or records as may
be requested with respect to the Trustee's duties hereunder. The Seller, the
Servicer, the Certificate Insurer and the Certificateholders shall not have any
responsibility or liability for any action or failure to act by the Trustee and
are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case an Event of Default or other
default by the Servicer or the Seller hereunder shall occur and be continuing,
the Trustee may with the consent of the Certificate Insurer and shall at the
direction of the Certificate Insurer proceed to protect and enforce its rights
and the rights of the Certificateholders or the Certificate Insurer under this
Agreement by a suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or in aid of the execution of any power granted in this Agreement
or for the enforcement of any other legal, equitable or other remedy, the
Certificate Insurer or, if a Certificate Insurer Default shall have occurred and
be continuing, as the Trustee, or the Certificate Insurer, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificate Insurer and the Certificateholders and the
Certificate Insurer.
ARTICLE X
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Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Servicer, the Custodian and the Trustee
created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Distribution Date and the
obligation of the Servicer to send certain notices as hereinafter set forth)
shall terminate upon notice to the Trustee of the later of (x) the distribution
to Certificateholders of the final payment or collection with respect to the
last Mortgage Loan (or Monthly Advances of same by the Servicer) and (y) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due under the Agreement and the payment of all amounts
due and payable to the Certificate Insurer and the Trustee. Notwithstanding the
foregoing, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last surviving descendant of Xxxxxx
X. Xxxxxxx, the late ambassador of the United States to the Court of St.
Xxxxx, living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (w) 100% of the aggregate Principal Balance of
the Mortgage Loans plus (x) the lesser of (A) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage loan related to such REO Property
plus (y) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (ii) 30
days' accrued interest thereon at a rate equal to the Loan Rate, in each case
net of the Servicing Fee plus (z) any Reimbursement Amounts due to the
Certificate Insurer and any other amounts due to the Certificate Insurer under
the Insurance Agreement (the "Termination Price").
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Distribution Account all amounts then on
deposit in the Collection Account (less amounts permitted to be withdrawn by the
Servicer pursuant to Section 3.03), which deposit shall be deemed to have
occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the Distribution
Account on the Determination Date before such Distribution Date of the
Termination Price.
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(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Certificate Insurer mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of Certificates at the office or agency of the
Trustee therein designated, (ii) the amount of any such final distribution and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) On the final Distribution Date, the Trustee will withdraw from the
Distribution Account and remit to the Certificate Insurer the lesser of (x)the
amount available for distribution on such final Distribution Date, net of any
portion thereof necessary to pay Certificateholders pursuant to Sections 5.01
and (y) the unpaid amounts due and owing to the Certificate Insurer pursuant to
Section 5.01. Upon presentation and surrender of the Certificates, the Trustee
and the Certificate Insurer shall cause to be distributed to the holders of
Certificates on the Distribution Date for such final distribution, in proportion
to the Percentage Interests of their respective Certificates and to the extent
that funds are available for such purpose, an amount equal to the amount
required to be distributed to Certificateholders pursuant to Section 5.01 for
such Distribution Date.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the Offered
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the
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remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds on deposit in such escrow
account.
Section 10.02. Additional Termination Requirements. (a) In the event that
the Servicer exercises its purchase option as provided in Section 10.01, the
Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee and the Certificate Insurer shall have been
furnished with an Opinion of Counsel to the effect that the failure of the Trust
to comply with the requirements of this Section 10.02 will not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or (ii) cause any REMIC to fail to qualify as a REMIC
at any time that any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the Servicer
shall adopt and the Trustee shall sign a plan of complete liquidation for
each REMIC meeting the requirements of a "Qualified Liquidation" under
Section 860F of the Code and any regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Servicer for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Trustee, as holder of the REMIC I
Regular Interests and REMIC II Regular Interests, the unpaid principal
balance thereof plus accrued interest thereon, (B) to each Class of
Certificates the amounts payable pursuant to Section 5.01 (C) to the
Certificate Insurer, all amounts owing to the Certificate Insurer under
this Agreement and the Insurance Agreement and (D) to the Class R-1
Certificateholders and Class R-2 Certificateholders, all cash on hand after
such payments.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate or upon the written
request of the Certificate Insurer and (ii) to take such other action in
connection therewith as may be reasonably required to carry out such plan of
complete liquidation all in accordance with the terms hereof.
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ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to time
by the Seller, the Servicer and the Trustee subject, in the case of any
amendment or modification which affects any right, benefit, duty or obligation
of the Custodian, to the consent of the Custodian, in each case without the
consent of any of the Certificateholders, but only with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld),(i)to
cure any ambiguity, (ii)to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein or the expectations of Certificateholders, (iii) to add to the
duties of the Servicer, (iv)to add any other provisions with respect to matters
or questions arising under this Agreement or the Certificate Insurance Policy,
as the case may be, which shall not be inconsistent with the provisions of this
Agreement, (v)to add or amend any provisions of this Agreement as required by
any Rating Agency or any other nationally recognized statistical rating agency
in order to maintain or improve any rating of each Class of Offered Certificates
without regard to the Certificate Insurance Policy (it being understood that,
after obtaining the ratings in effect on the Closing Date, neither the Trustee,
the Certificate Insurer, the Seller, nor the Servicer is obligated to obtain,
maintain or improve any such rating) or (vi)to add or amend any provisions of
this Agreement to such extent as shall be necessary to maintain the
qualification of any REMIC as a REMIC; provided, however, that (x) as evidenced
by an Opinion of Counsel (at the expense of the requesting party) in each case
such action shall not adversely affect in any material respect the interest of
any Certificateholder, (y) in each case, such action is necessary or desirable
to maintain the qualification of any REMIC as a REMIC or shall not adversely
affect such qualification and (z) if the opinion called for in clause (x) cannot
be delivered with regard to an amendment pursuant to clause (vi) above, such
amendment is necessary to maintain the qualification of any REMIC as a REMIC;
and provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders and no
Opinion of Counsel to that effect shall be required if the Person requesting the
amendment obtains a letter from each Rating Agency stating that the amendment
would not result in the downgrading or withdrawal of the respective ratings then
assigned to the Offered Certificates without regard to the Certificate Insurance
Policy.
This Agreement also may be amended from time to time by the Seller, the
Servicer and the Trustee, and the Trustee, and the Servicer and the Certificate
Insurer, may from time to time
- 131 -
consent to the amendment of the Certificate Insurance Policy with the consent
of the Holders of each Class of Certificates which is affected by such
amendment, evidencing Voting Rights aggregating not less than 51% of such
Class (or in the case of an amendment which affects all classes, not less than
51% of all of the Voting Rights in the Trust), and in the case of an amendment
to this Agreement, with the consent of the Certificate Insurer, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Certificate Insurance
Policy which are required to be made on any Certificate without the consent of
the Holder of such Certificate or (ii) reduce the aforesaid percentage required
to consent to any such amendment, without the consent of the Holders of all
Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in connection
with any such amendment, the party seeking such amendment shall furnish the
Trustee and the Certificate Insurer with an Opinion of Counsel stating whether
such amendment would adversely affect the qualification of any REMIC as a REMIC
and notice of the conclusion expressed in such Opinion of Counsel shall be
included with any such solicitation. An amendment made with the consent of all
Certificateholders and the Certificate Insurer and executed in accordance with
this Section 11.01 shall be permitted or authorized by this Agreement
notwithstanding that such Opinion of Counsel may conclude that such amendment
would adversely affect the qualification of any REMIC as a REMIC.
Prior to the execution of any such amendment, the Trustee shall furnish
written notification of the substance of such amendment to each Rating Agency.
In addition, promptly after the execution of any such amendment made with the
consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
fully executed counterparts of the instruments effecting such amendment to the
Certificate Insurer.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
- 132 -
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders, or the Certificate
Insurer accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of Certificateholders or the
Certificate Insurer as applicable. The Certificateholders or the Certificate
Insurer, as the case may be, requesting such recordation shall bear all costs
and expenses of such recordation. The Trustee shall have no obligation to
ascertain whether such recordation so affects the interests of the
Certificateholders or the Certificate Insurer.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Sections 8.01, 9.01, 9.02 and 11.01) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Offered Certificates evidencing Voting Rights aggregating not less
than 51% of all the Voting Interests shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall
- 133 -
have neglected or refused to institute any such action, suit or proceeding; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) Delta Financial Corporation, 0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx, XX
00000, (b) in the case of the Trustee, at the Corporate Trust Office, (c) in the
case of the Certificate Insurer, MBIA Insurance Corporation, 000 Xxxx Xxxxxx,
Xxxxxx, Xxx Xxxx 00000, Attention: Insured Portfolio Management - Structured
Finance (IPM-SF), (Delta Funding Home Equity Loan Trust 1998-3), Telecopy
No.(000) 000-0000, Confirmation: (000) 000-0000(in each case in which notice or
other communication to the Certificate Insurer refers to an Event of Default, a
claim on the Certificate Insurance Policy or with respect to which failure on
the part of the Certificate Insurer to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or other communication shall
be marked to indicate "URGENT MATERIAL ENCLOSED"),(d) in the case of S&P, 00
Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage
Group, (e) in the case of Xxxxx'x, 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000 or (f) as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. Any
- 134 -
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter
of courtesy and accommodation and the Trustee shall have no liability for
failure to delivery such notice or document to any Rating Agency.
(b) Notice to S&P and Xxxxx'x. The Trustee and the Servicer shall each be
obligated to use its best efforts promptly to provide notice, at the expense of
the Servicer, to S&P and Xxxxx'x with respect to each of the following of which
a Responsible Officer of the Trustee or Servicer, as the case may be, has actual
knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured or
waived;
(iii) The resignation or termination of the Servicer or the Trustee;
(iv) The final payment to Holders of the Certificates of any Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Trustee to
make advances regarding delinquent Mortgage Loans.
(c) In addition, (i)the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in Section
5.03; and
(B) Each Statement to Certificateholders described in Section
5.03; and
(ii) The Servicer shall promptly furnish to each Rating Agency copies
of the following:
(A) Each annual statement as to compliance described in Section
3.09;
(B) Each annual independent public accountants' servicing report
described in Section 3.10; and
- 135 -
(C) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Servicer has not made a Monthly Advance.
Any such notice pursuant to this Section 11.05 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Certificate Insurer and the Holders of the
Certificates evidencing Percentage Interests aggregating not less than 66%. The
Servicer may assign the right to reimbursement for Servicing Advances and
Monthly Advances without the consent of any Person but with prior notice thereof
to the Certificate Insurer and the Trustee.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Certificateholders, the
Certificate Owners, the Certificate Insurer and their respective successors and
permitted assigns. The Certificate Insurer shall be a third-party beneficiary of
this Agreement, entitled to enforce the provisions hereof as if a party hereto.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be
- 136 -
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
Section 11.11. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 11.12. Insurance Agreement. The Trustee is authorized and
directed to execute and deliver the Insurance Agreement and to perform the
obligations of the Trustee thereunder.
Section 11.13. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on the Certificates which is made with moneys received
pursuant to the terms of the Certificate Insurance Policy shall not be
considered payment of the 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 the Certificates within the meaning of Section 5.01. The Seller, the Servicer
and the Trustee acknowledge, and each Holder by its acceptance of a Certificate
agrees, that without the need for any further action on the part of the
Certificate Insurer, the Seller, the Servicer, the Trustee or the Certificate
Registrar, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Certificates to the
Holders of such Certificates, (i) the Certificate Insurer will be fully
subrogated to the rights of such Holders to receive such principal and interest
from the Trust and (ii) 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 Seller 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 Holders as
otherwise set forth herein.
Section 11.14. 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 the Certificateholders shall also be sent
to the Certificate Insurer.
- 137 -
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers all as of
the day and year first above written.
DELTA FUNDING CORPORATION,
as Seller and Servicer
By /s/ Xxxx Xxxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxxx
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A., as Trustee
By /s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Secretary
- 138 -
State of New York )
) ss.:
County of New York )
On the 29th day of September, 1998 before me, a notary public in and
for the State of New York, personally appeared Xxxx Xxxxxxxxx known to me who,
being by me duly sworn, did depose and say that she is the Vice President of
Delta Funding Corporation, a New York corporation, one of the parties that
executed the foregoing instrument; that she knows the seal of said company; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said company; and that she signed
her name thereto by like order.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 29th day of September, 1998 before me, a notary public in and
for the State of New York, Xxxxx X. Xxxxxx, personally appeared, known to me
who, being by me duly did depose and say that he is the Assistant Secretary of
Bankers Trust Company of California, N.A., a national banking association, one
of the parties that executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said association.
-----------------------
Notary Public
[Notarial Seal]
EXHIBIT A
FORMS OF OFFERED CERTIFICATES
X-0
XXXXXXX X-0
FORM OF CLASS F CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : August 31, 1998
First Distribution Date : October 15, 1998
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_F
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates, Series
1998-3
Class A-_F
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Mortgage
Loans")
A-1-1
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate
does not evidence an obligation of, or an interest in, and is not guaranteed by
the Seller or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), and Bankers Trust Company
of California, N.A., as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-1-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 29, 0000
XXXXXXX XXXXX XXXXXXX XX XXXXXXXXXX,X.X.,
as Trustee
By
----------------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-------------------------------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
A-1-3
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates,
Series 1998-3
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1998-3, Home Equity Loan
Asset-Backed Certificates, Series 1998-3 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by MBIA Insurance
Corporation (the Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money
order mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment
A-1-4
and surrender of such Certificate at the office or agency of the Trustee
specified in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller and the Trustee with the consent of the Certificate Insurer
and of the Holders of the requisite percentage of the Voting Rights of each
Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Irvine, California, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the
A-1-5
Seller, the Trustee nor any such agent shall be affected by any notice to the
contrary.
On any Distribution Date following the Period at the end of which the
Pool Principal Balance is less than 10% of the Cut-Off Date Pool Principal
Balances, the Servicer will have the option to repurchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate
Insurer unless the Certificate Insurer shall otherwise consent and (B) the
earliest of (i) the day following the Distribution Date on which the aggregate
Class Principal Balance has been reduced to zero and (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
A-1-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
--------------------------------------------------------------
(Please print or typewrite name and address
including postal zip code of assignee)
the Percentage Interest evidenced by the within
Certificate and hereby authorizes the transfer of registration of such
Percentage Interest to assignee on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
-----------------------------------------
----------------------------------------------------------------------------- .
Dated:
-----------------
----------------------------------------
Signature by or on behalf of assignor
A-1-7
>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to for the account of
----------------------
, account number , or, if mailed by check, to
------------------ -------------
. Applicable statements should be mailed to
----------------------------
.
----------------------------
This information is provided by , the assignee
-----------------------
named above, or , as its agent.
-------------------
X-0-0
XXXXXXX X-0
FORM OF CLASS IO_ CERTIFICATES
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
THIS CLASS IO_ CERTIFICATE HAS NO PRINCIPAL BALANCE
Certificate No. :
Cut-Off Date : August 31, 1998
First Distribution Date : October 15, 1998
Initial Notional Amount
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : IO_
Percentage Interest
Evidenced by this Certificate :
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates, Series
1998-3
Class IO_
A-2-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end fixed rate home equity loans (the "Mortgage
Loans")
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Seller or the Trustee referred to below or any
of their respective affiliates. Neither this Certificate nor the Mortgage Loans
are guaranteed or insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Initial Notional Amount of this Certificate by the initial denominator of all
Private Certificates) in the interest represented by all Certificates of the
Class to which this Certificate belongs in the Trust. The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of the Cut-Off Date
specified above (the "Agreement") among Delta Funding Corporation, as seller
and servicer (in such capacities, the "Seller" or the "Servicer"), and Bankers
Trust Company of California, N.A., as trustee (the "Trustee"). To the extent
not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Class Certificate by virtue of the acceptance hereof assents and
by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-2-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 29, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By:
--------------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
------------------------------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
A-2-3
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates,
Series 1998-3
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1998-3, Home Equity Loan
Asset-Backed Certificates, Series 1998-3 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by MBIA Insurance
Corporation (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money
order mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the
A-2-4
Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller and the Trustee with the consent of the Certificate Insurer
and of the Holders of the requisite percentage of the Voting Rights of each
Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Irvine, California, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
A-2-5
On any Distribution Date following the Period at the end of which the
Pool Principal Balance is less than 10% of the Cut-Off Date Pool Principal
Balances, the Servicer will have the option to repurchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate
Insurer unless the Certificate Insurer shall otherwise consent and (B) the
earliest of (i) the day following the Distribution Date on which the aggregate
Class Principal Balance has been reduced to zero and (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
A-2-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
--------------------------------------------------------------
(Please print or typewrite name and address including postal zip code
of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
-----------------------------------------
-------------------------------------------------.
Dated:
----------------
----------------------------------------
Signature by or on behalf of assignor
A-2-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to for the account of
----------------------
, account number , or, if mailed by check, to
------------------ --------------
. Applicable statements should be mailed to
--------------------------
-----------------------------------------------------------------------------.
This information is provided by , the assignee
------------------------
named above, or , as its agent.
--------------------
X-0-0
XXXXXXX X-0
FORM OF CLASS A CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date : August 31, 1998
First Distribution Date : October 15, 1998
Initial Certificate Principal
Balance of this Certificate
("Denomination") :
Initial Class Principal
Balance :
Certificate Rate :
CUSIP :
Class : A-_A
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates, Series
1998-3
Class A-_A
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting of closed-end adjustable rate home equity loans (the
"Mortgage Loans")
A-3-1
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Principal Balance of this
Certificate at any time may be less than the Initial Certificate Principal
Balance set forth on the face hereof, as described herein. This Certificate
does not evidence an obligation of, or an interest in, and is not guaranteed by
the Seller or the Trustee referred to below or any of their respective
affiliates. Neither this Certificate nor the Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
Denomination of this Certificate by the Class Principal Balance) in certain
monthly distributions with respect to the Trust. The Trust was created pursuant
to a Pooling and Servicing Agreement dated as of the Cut-Off Date specified
above (the "Agreement") among Delta Funding Corporation, as seller and servicer
(in such capacities, the "Seller" or the "Servicer"), and Bankers Trust Company
of California, N.A., as trustee (the "Trustee"). To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized signatory of the Trustee.
A-3-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 29, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By
------------------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
---------------------------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
A-3-3
[Reverse of Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates,
Series 1998-3
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1998-3, Home Equity Loan
Asset-Backed Certificates, Series 1998-3 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by MBIA Insurance
Corporation (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing on the first Distribution Date specified on the face hereof, to the
Person in whose name this Certificate is registered at the close of business on
the applicable Record Date in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Certificates of the Class to which this Certificate
belongs on such Distribution Date pursuant to the Agreement.
Distributions on this Certificate shall be made by check or money
order mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having denominations aggregating at least $1,000,000, by wire
transfer or otherwise, as set forth in the Agreement. The final distribution on
each Certificate will be made in like manner, but only upon presentment and
surrender of such Certificate at the office or agency of the
A-3-4
Trustee specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller and the Trustee with the consent of the Certificate Insurer
and of the Holders of the requisite percentage of the Voting Rights of each
Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register of the Trustee upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Irvine, California, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
A-3-5
On any Distribution Date following the Period at the end of which the
Pool Principal Balance is less than 10% of the Cut-Off Date Pool Principal
Balances, the Servicer will have the option to repurchase, in whole, from the
Trust the Mortgage Loans at a purchase price determined as provided in the
Agreement. In the event that no such optional termination occurs, the
obligations and responsibilities created by the Agreement will terminate upon
the later of (A) payment in full of all amounts owing to the Certificate
Insurer unless the Certificate Insurer shall otherwise consent and (B) the
earliest of (i) the day following the Distribution Date on which the aggregate
Class Principal Balance has been reduced to zero and (ii) the final payment or
other liquidation of the last Mortgage Loan in the Trust. In no event, however,
will the trust created by the Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living at the date
of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
A-3-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
------------------------------------------------------------
(Please print or typewrite name and address including postal zip code
of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
-----------------------------------------
-------------------------------------------------.
Dated:
-----------------
----------------------------------------
Signature by or on behalf of assignor
A-3-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to for the account of
-----------------------
, account number , or, if mailed by check, to
---------------- --------------
. Applicable statements should be mailed to
--------------------------
.
--------------------------
This information is provided by , the assignee
---------------------
named above, or , as its agent.
-----------------
A-3-8
EXHIBIT B
FORM OF CLASS BIO CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS BIO-1 CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST
AND WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO
SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE
TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.
B-1
Certificate No. : [1]
Percentage Interest
evidenced by this
Certificate : [100.0%]
Class : BIO
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates, Series
1998-3
Class BIO
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of pool of closed-end fixed rate and variable
rate home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Seller or the Trustee referred
to below or any of their respective affiliates. Neither this Certificate nor
the Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [DF SPECIAL HOLDINGS CORPORATION] is the
registered owner of the Percentage Interest evidenced by this Certificate
specified above in the interest represented by all Certificates of the Class to
which this Certificate belongs in the Trust. The Trust was created pursuant to
a Pooling and Servicing Agreement dated as of August 31, 1998 (the "Agreement")
among the Delta Funding Corporation, as seller and servicer (in such
capacities, the "Seller" and the "Servicer"), and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"). To the extent not defined herein,
the capitalized terms used herein have the meanings assigned in the Agreement.
This Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Certificate
by virtue of the acceptance hereof assents and by which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
Corporate Trust Office or the office or agency maintained by the Trustee in
Irvine, California.
B-2
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer
is to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except
in the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee of an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee to any obligation in addition to those
undertaken in this Agreement, which Opinion of Counsel shall not
B-3
be an expense of the Trustee. Notwithstanding anything else to the
contrary herein, any purported transfer of a Certificate of this Class to or on
behalf of an employee benefit plan subject to ERISA or to the Code without the
opinion of counsel satisfactory to the Trustee as described above shall be void
and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest
in this Certificate must be a Permitted Transferee, (ii) no Ownership Interest
in this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in
this Certificate must agree to require a transfer affidavit and to deliver a
transfer certificate to the Trustee as required pursuant to the Agreement, (iv)
each person holding or acquiring an Ownership Interest in this Certificate must
agree not to transfer an Ownership Interest in this Certificate if it has
actual knowledge that the proposed transferee is not a Permitted Transferee and
(v) any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
B-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 29, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By
---------------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
----------------------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
B-5
[Reverse of Class BIO Certificate]
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates,
Series 1998-3
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1998-3, Home Equity Loan
Asset-Backed Certificates, Series 1998-3 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in October, 1998, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail to the address of such
Certificateholder appearing in the Certificate Register. The final distribution
on each Certificate will be made in like manner, but only upon presentment and
B-6
surrender of such Certificate at the office or agency of the Trustee specified
in the notice to Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller and the Trustee with the consent of the Certificate Insurer
and of Holders of the requisite percentage of the Percentage Interests of each
Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the
Pool Balance is less than 10% of the Principal Balances of the Mortgage Loans
as of the Cut-Off Date, the Servicer will have the option to repurchase, in
whole, from the Trust the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon the later of (A) payment in full of all amounts owing to the
Certificate Insurer unless the Certificate Insurer shall otherwise consent and
(B) the earlier of (i) the day
B-7
following the Distribution Date on which the aggregate Class Principal Balance
of the Offered Certificates has been reduced to zero and (ii) the final payment
or other liquidation of the last Mortgage Loan in the Trust. In no event,
however, will the trust created by the Agreement continue beyond the expiration
of 21 years from the death of the last survivor of the descendants living at
the date of the Agreement of a certain person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
B-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
-------------------------------------------------------------
(Please print or typewrite name and address including postal zip code
of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
----------------------------------------
------------------------- .
Dated:
----------------------
------------------------------
Signature by or on behalf of assignor
B-9
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to for the account of
-----------------------
, account number , or, if mailed by check, to
--------------- ---------------
. Applicable statements should be mailed to
--------------------------
.
-------------------------
This information is provided by , the assignee
-----------------------
named above, or , as its agent.
-----------------
B-10
EXHIBIT B-1
FORM OF CLASS R CERTIFICATES
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE").
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF CERTAIN DUTIES
SPECIFIED IN THE AGREEMENT.]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS R-_ CERTIFICATE HAS NO PRINCIPAL BALANCE, DOES NOT BEAR INTEREST AND
WILL NOT RECEIVE ANY DISTRIBUTIONS EXCEPT AS PROVIDED HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO
SECTION 4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE
TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE
OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID
AND OF NO EFFECT.
B-1-1
Certificate No. :
Percentage Interest
evidenced by this
Certificate : [99.999999%] [0.000001%]
Class : R-_
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates, Series
1998-3
Class R-_
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust
consisting primarily of pool of closed-end fixed rate and variable
rate home equity loans (the "Mortgage Loans")
This Certificate does not evidence an obligation of, or an interest
in, and is not guaranteed by the Depositor, the Seller or the Trustee referred
to below or any of their respective affiliates. Neither this Certificate nor
the Mortgage Loans are guaranteed or insured by any governmental agency or
instrumentality.
This certifies that [DF SPECIAL HOLDINGS CORPORATION] [DELTA FUNDING
CORPORATION] is the registered owner of the Percentage Interest evidenced by
this Certificate specified above in the interest represented by all
Certificates of the Class to which this Certificate belongs in the Trust. The
Trust was created pursuant to a Pooling and Servicing Agreement dated as of
August 31, 1998 (the "Agreement") among the Delta Funding Corporation, as
seller and servicer (in such capacities, the "Seller" and the "Servicer"), and
Bankers Trust Company of California, N.A., as trustee (the "Trustee"). To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
No distributions are expected to be made on this Certificate. This
Certificate does not have a principal balance or pass-through rate and will be
entitled to distributions only to the extent set forth in the Agreement. In
addition, any distribution of the proceeds of any remaining assets of the Trust
will be made only upon presentment and surrender of this Certificate at the
B-1-2
Corporate Trust Office or the office or agency maintained by the Trustee in
Irvine, California.
No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act
and such laws, in order to assure compliance with the Securities Act and such
laws, the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer
is to be made within three years from the date of the initial issuance of
Certificates pursuant to the Agreement, there shall also be delivered (except
in the case of a transfer pursuant to Rule 144A of the Securities Act) to the
Trustee of an Opinion of Counsel that such transfer may be made pursuant to an
exemption from the Securities Act, which Opinion of Counsel shall not be
obtained at the expense of the Trustee or the Seller. The Holder hereof
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
No transfer of a Certificate of this Class shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan, which representation
letter shall not be an expense of the Trustee, or (ii) if the purchaser is an
insurance company, a representation that the purchaser is an insurance company
which is purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Certificate presented for registration in the name of an employee
benefit plan subject to ERISA, or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), or a trustee of any such plan or any
other person acting on behalf of any such plan, an Opinion of Counsel
satisfactory to the Trustee to the effect that the purchase or holding of such
Certificate will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the
B-1-3
prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee to any obligation in addition to those undertaken in this
Agreement, which Opinion of Counsel shall not be an expense of the Trustee.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate of this Class to or on behalf of an employee benefit plan subject
to ERISA or to the Code without the opinion of counsel satisfactory to the
Trustee as described above shall be void and of no effect.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest
in this Certificate must be a Permitted Transferee, (ii) no Ownership Interest
in this Certificate may be transferred without delivery to the Trustee of (a) a
transfer affidavit of the proposed transferee and (b) a transfer certificate of
the transferor, each of such documents to be in the form described in the
Agreement, (iii) each person holding or acquiring any Ownership Interest in
this Certificate must agree to require a transfer affidavit and to deliver a
transfer certificate to the Trustee as required pursuant to the Agreement, (iv)
each person holding or acquiring an Ownership Interest in this Certificate must
agree not to transfer an Ownership Interest in this Certificate if it has
actual knowledge that the proposed transferee is not a Permitted Transferee and
(v) any attempted or purported transfer of any Ownership Interest in this
Certificate in violation of such restrictions will be absolutely null and void
and will vest no rights in the purported transferee.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by an
authorized officer of the Trustee.
* * *
B-1-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: September 29, 1998
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
By
-------------------------------------------
This is one of the Certificates
referenced in the within-mentioned Agreement
By
-----------------------------------------------------
Authorized Signatory of
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
B-1-5
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Asset-Backed Certificates,
Series 1998-3
This Certificate is one of a duly authorized issue of Certificates
designated as Delta Funding Home Equity Loan Trust 1998-3, Home Equity Loan
Asset-Backed Certificates, Series 1998-3 (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds on deposit in the Distribution Account
for payment hereunder and that the Trustee is not liable to the
Certificateholders for any amount payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement.
This Certificate will have the benefit of an irrevocable and
unconditional certificate guaranty insurance policy issued by MBIA Insurance
Corporation (the "Certificate Insurer").
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced thereby, and the rights,
duties and immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on
the 15th day of each month or, if such 15th day is not a Business Day, then the
first Business Day following such Distribution Date (the "Distribution Date"),
commencing in October, 1998, to the Person in whose name this Certificate is
registered at the close of business on the applicable Record Date in an amount
equal to the product of the Percentage Interest evidenced by this Certificate
and the amount required to be distributed to Holders of Certificates of the
Class to which this Certificate belongs on such Distribution Date pursuant to
the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail
B-1-6
to the address of such Certificateholder appearing in the Certificate
Register. The final distribution on each Certificate will be made in like
manner, but only upon presentment and surrender of such Certificate at the
office or agency of the Trustee specified in the notice to Certificateholders
of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any
time by the Seller and the Trustee with the consent of the Certificate Insurer
and of Holders of the requisite percentage of the Percentage Interests of each
Class of Certificates affected by such amendment, as specified in the
Agreement. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange therefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof,
in certain limited circumstances, without the consent of the Holders of any of
the Certificates.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates
are exchangeable for new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Distribution Date following the Period at the end of which the
Pool Balance is less than 10% of the Principal Balances of the Mortgage Loans
as of the Cut-Off Date, the Servicer will have the option to repurchase, in
whole, from the Trust the Mortgage Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs,
B-1-7
the obligations and responsibilities created by the Agreement will
terminate upon the later of (A) payment in full of all amounts owing to the
Certificate Insurer unless the Certificate Insurer shall otherwise consent and
(B) the earlier of (i) the day following the Distribution Date on which the
aggregate Class Principal Balance of the Offered Certificates has been reduced
to zero and (ii) the final payment or other liquidation of the last Mortgage
Loan in the Trust. In no event, however, will the trust created by the
Agreement continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living at the date of the Agreement of a certain
person named in the Agreement.
Capitalized terms used herein that are defined in the Agreement shall
have the meanings ascribed to them in the Agreement, and nothing herein shall
be deemed inconsistent with that meaning.
B-1-8
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
--------------------------------------------------------------
(Please print or typewrite name and address including postal zip code
of assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
------------------------------------------
------------------------- .
Dated:
-------------------
-------------------------------------
Signature by or on behalf of assignor
B-1-9
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to for the account of
------------------------
, account number , or, if mailed by check, to
----------------- ----------------
. Applicable statements should be mailed to
-------------------------------
.
----------------------------
This information is provided by , the assignee
--------------------
named above, or , as its agent.
------------------
B-1-10
EXHIBIT C
MORTGAGE LOAN SCHEDULE
[DELIVERED TO TRUSTEE AT CLOSING]
C-1
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
SUBSEQUENT TRANSFER AGREEMENT (the "Agreement"), dated as of
October __, 1998, by and among Delta Funding Corporation (the "Seller") and
Delta Funding Home Equity Loan Trust 1998-3 (the "Trust") pursuant to the
Pooling and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, pursuant to a Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of August 31, 1998, between the Seller, as
seller and servicer, and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"), the Seller wishes to convey the Subsequent Mortgage Loans (as
defined below) to the Trust, and the Trust wishes to acquire the same for the
consideration set forth in Section IV below; and
WHEREAS, the Seller shall timely deliver to the Trustee an Addition
Notice related to such conveyance as required by Section 2.13 of the Pooling
and Servicing Agreement;
NOW THEREFORE, the Trust and the Seller hereby agree as follows:
Section I. Capitalized terms used herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement unless otherwise
defined.
"Subsequent Mortgage Loans" shall mean, for purposes of this
Agreement, the Subsequent Mortgage Loans listed in the Subsequent
Mortgage Loan Schedule attached hereto as Schedule I.
"Subsequent Transfer Date" shall mean, with respect to the
Subsequent Mortgage Loans transferred hereby, the date hereof.
Section II. Subsequent Mortgage Loan Schedule. The Subsequent Mortgage
Loan Schedule attached hereto as Schedule I is a supplement to the Initial
Mortgage Loan Schedule attached as Exhibit B to the Pooling and Servicing
Agreement. The Mortgage Loans listed in the Subsequent Mortgage Loan Schedule
constitute the Subsequent Mortgage Loans to be transferred pursuant to this
Agreement on the Subsequent Transfer Date.
D-1
Section III. Transfer of Subsequent Mortgage Loans. As of the related
Subsequent Cut-off Date, subject to and upon the terms and conditions set forth
in Sections 2.01, 2.04 and 2.13 of the Pooling and Servicing Agreement and set
forth in this Agreement and the Purchase Agreement, the Seller hereby
irrevocably sells, transfers, assigns, sets over and otherwise conveys to the
Trust without recourse other than as expressly provided herein and in the
Pooling and Servicing Agreement, all the right, title and interest of the
Seller in and to the (i) Subsequent Mortgage Loans including the related
Principal Balance as of the Subsequent Cut-off Date, all interest accruing
thereon after the Subsequent Cut-off Date, and all collections in respect of
principal received after the related Subsequent Cut-Off Date; (ii) property
which secured a Subsequent Mortgage Loan and which is acquired by foreclosure
or in lieu of foreclosure; (iii) interest of the Seller in any insurance
policies in respect of the Subsequent Mortgage Loans; and (iv) all proceeds of
any of the foregoing.
Section IV. Representations and Warranties of the Seller. (a) The
Seller hereby represents and warrants to the Trust for the benefit of the
Certificateholders that the representations and warranties of the Seller set
forth in Section 2.03 and 2.04(a) of the Pooling and Servicing Agreement are
true and correct with respect to the Seller and the Subsequent Mortgage Loans
as of the Subsequent Transfer Date.
(b) The Seller hereby affirms, as of the Subsequent Transfer Date,
that the Funding Period has not ended.
(c) The Seller hereby represents and warrants that (i) the aggregate
of the Principal Balances of the Subsequent Mortgage Loans listed on the
Subsequent Mortgage Loan Schedule and conveyed to the Trust pursuant to this
Agreement as of the related Subsequent Cut-off Date is $__________ for Loan
Group F and $__________ for Loan Group A, and (ii) the conditions precedent for
the transfer of Subsequent Mortgage Loans set forth in Section 2.13 of the
Pooling and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
(d) The Seller hereby represents and warrants that the Seller is not
(i) insolvent and will not be rendered insolvent by the transfer of Subsequent
Mortgage Loans pursuant to this Agreement or (ii) aware of any pending
insolvency of the Seller.
Section V. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate
D-2
counterparts), each of which shall be an original but all of which
together shall constitute one and the same instrument.
Section VI. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
D-3
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed by their respective officers thereunto authorized as of the date
first written above.
DELTA FUNDING CORPORATION
as Seller
By:
--------------------------------
Name:
Title:
DELTA FUNDING HOME EQUITY LOAN
TRUST 1998-3
By: BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------
Name:
Title:
X-0
XXXXX XX XXX XXXX )
)
XXXXXX XX XXX XXXX )
On the 29th day of September, 1998 before me, a Notary Public in and
for said State, personally appeared Xxxx Xxxxxxxx, known to me to be a Vice
President of DELTA FUNDING CORPORATION, the corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------
Notary Public
STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
On the 29th day of September, 1998 before me, a Notary Public in and
for said State, personally appeared , known to me to be an
-----------------
of BANKERS TRUST COMPANY OF CALIFORNIA, N.A., the
-------------------------
company that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------
Notary Public
D-5
EXHIBIT E
FORM OF MORTGAGE NOTE
[NOT INCLUDED HEREIN]
E-1
EXHIBIT F
FORM OF MORTGAGE
[NOT INCLUDED HEREIN]
F-1
EXHIBIT G
AFFIDAVIT OF TRANSFER OF RESIDUAL CERTIFICATES
PURSUANT TO SECTION 6.02(d)
DELTA FUNDING HOME EQUITY LOAN TRUST 1998-3
Home Equity Loan Pass-Through Certificates,
Series 1998-3
STATE OF )
) ss.:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of
--------------------------------- ,
the proposed Transferee of an Ownership Interest in a Residual Certificate
(the "Certificate") issued pursuant to the Pooling Agreement, (the
"Agreement"), relating to the above-referenced Series, by and between Delta
Funding Corporation, as seller and servicer (in such capacities, the "Seller"
and the "Servicer"), and Bankers Trust Company of California, N.A., as trustee
(the "Trustee"). Capitalized terms used, but not defined herein or in Exhibit 1
hereto, shall have the meanings ascribed to such terms in the Agreement. The
Transferee has authorized the undersigned to make this affidavit on behalf of
the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of the Transfer, a Permitted Transferee. The Transferee is acquiring its
Ownership Interest in the Certificate either (i) for its own account or (ii) as
nominee, trustee or agent for another Person and has attached hereto an
affidavit from such Person in substantially the same form as this affidavit.
The Transferee has no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
will be imposed on Transfers of the Certificate to Persons that are not
Permitted Transferees; (ii) such tax will be imposed on the transferor, or, if
such Transfer is through an agent (which includes a broker, nominee or
middleman) for a Person that is not a Permitted Transferee, on the agent; and
(iii) the Person otherwise liable for the tax shall be relieved of liability
G-1
for the tax if the subsequent Transferee furnished to such Person an affidavit
that such subsequent Transferee is a Permitted Transferee and, at the time of
Transfer, such Person does not have actual knowledge that the affidavit is
false.
4. The Transferee has been advised of, and understands that a tax will
be imposed on a "pass-through entity" holding the Certificate if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that such tax will not be imposed for any period with
respect to which the record holder furnishes to the pass-through entity an
affidavit that such record holder is a Permitted Transferee and the
pass-through entity does not have actual knowledge that such affidavit is
false. (For this purpose, a "pass-through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives and, except as may be
provided in Treasury Regulations, persons holding interests in pass-through
entities as a nominee for another Person.)
5. The Transferee has reviewed the provisions of Section 6.02(d) of
the Agreement (attached hereto as Exhibit 2 and incorporated herein by
reference) and understands the legal consequences of the acquisition of an
Ownership Interest in the Certificate including, without limitation, the
restrictions on subsequent Transfers and the provisions regarding voiding the
Transfer and mandatory sales. The Transferee expressly agrees to be bound by
and to abide by the provisions of Section 6.02(d) of the Agreement and the
restrictions noted on the face of the Certificate. The Transferee understands
and agrees that any breach of any of the representations included herein shall
render the Transfer to the Transferee contemplated hereby null and void.
6. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to Transfer its Ownership Interest in
the Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit H to the Agreement (a "Transferor Certificate") to
the effect that such Transferee has no actual knowledge that the Person to
which the Transfer is to be made is not a Permitted Transferee.
G-2
7. The Transferee does not have the intention to impede the assessment
or collection of any tax legally required to be paid with respect to the
Certificate.
8. The Transferee's taxpayer identification number is
.
--------------------
9. The Transferee is a U.S. Person as defined in Code Section
7701(a)(30).
10. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
11. The Transferee is not an employee benefit plan that is subject to
ERISA or a plan that is subject to Section 4975 of the Code, nor are we acting
on behalf of such a plan.
* * *
G-3
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of , 19 .
-------------- ---
[NAME OF TRANSFEREE]
By:
--------------------------------
Name:
Title:
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named
-----------------------,
known or proved to me to be the same person who executed the foregoing
instrument and to be the of the
--------------------------------------------
Transferee, and acknowledged that he executed the same as his free act
and deed and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 19 .
----- --------- --
------------------------------
NOTARY PUBLIC
My Commission
expires the day
----------------
of , 19 .
-------------------- ---
G-4
EXHIBIT 1 to EXHIBIT G
Certain Definitions
"Ownership Interest": As to any Certificate, any ownership interest in
such Certificate, including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
"Permitted Transferee": Any Person other than (i) the United States,
any State or political subdivision thereof, or any agency or instrumentality of
any of the foregoing, (ii) a foreign government, International Organization or
any agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Code Section 511 on unrelated business taxable income) on any excess inclusions
(as defined in Code Section 860E(c)(1)) with respect to any Residual
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(c), (v) a Person that is not a citizen or resident of the
United States, a corporation, partnership, or other entity created or organized
in or under the laws of the United States or any political subdivision thereof,
or an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States, and (vi) any other Person so designated by the Trustee based
upon an Opinion of Counsel that the Transfer of an Ownership Interest in a
Residual Certificate to such Person may cause the Trust Fund to fail to qualify
as a REMIC at any time that certain Certificates are Outstanding. The terms
"United States," "State" and "International Organization" shall have the
meanings set forth in Code Section 7701 or successor provisions. A corporation
will not be treated as an instrumentality of the United States or of any State
or political subdivision thereof if all of its activities are subject to tax,
and, with the exception of the FHLMC, a majority of its board of directors is
not selected by such governmental unit.
"Person": Any individual, corporation, partnership, joint venture,
bank, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political
subdivision thereof.
G-1-1
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
G-1-2
EXHIBIT 2 to EXHIBIT G
Section 6.02(d) of the Agreement
(d) No transfer, sale, pledge or other disposition of any Residual
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee (i) unless
such transfer is made in reliance upon Rule 144A under the 1933 Act, the
Trustee and the Depositor shall require a written Opinion of Counsel (which may
be in-house counsel) acceptable to and in form and substance reasonably
satisfactory to the Trustee and the Depositor that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the 1933 Act or is being made pursuant to the 1933 Act, which
Opinion of Counsel shall not be an expense of the Trustee or the Depositor or
(ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit M) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit N) acceptable to and in form and substance reasonably
satisfactory to the Depositor and the Trustee certifying to the Depositor and
the Trustee the facts surrounding such transfer, which investment letter shall
not be an expense of the Trustee or the Depositor. The Holder of a Notional
Amount Certificate or Residual Certificate desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee and the Depositor
against any liability that may result if the transfer is not so exempt or is
not made in accordance with such federal and state laws.
No transfer of a Residual Certificate shall be made unless the Trustee
shall have received either (i) a representation from the transferee of such
Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement
to effect such transfer, or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is
G-2-1
purchasing such Certificates with funds contained in an "insurance
company general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60") and that the purchase and
holding of such Certificates are covered under PTCE 95-60 or (iii) in the case
of any such Residual Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, or a plan or arrangement subject to
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan or any other person acting on behalf
of any such plan or arrangement or using such plan's or arrangement's assets,
an Opinion of Counsel satisfactory to the Trustee, which Opinion of Counsel
shall not be an expense of either the Trustee or the Trust, addressed to the
Trustee, to the effect that the purchase or holding of Residual Certificate
will not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code
and will not subject the Trustee to any obligation in addition to those
expressly undertaken in this Agreement or to any liability. Notwithstanding
anything else to the contrary herein, any purported transfer of a Residual
Certificate to or on behalf of an employee benefit plan subject to ERISA or to
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
G-2-2
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition
to such consent, require delivery to it, in form and substance
satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G hereto
from the proposed transferee to the effect that such
transferee is a Permitted Transferee and that it is not
acquiring its Ownership Interest in the Residual Certificate
that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted
Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this
Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section 6.02, become a Holder
of a Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of the Agreement so long as the transfer was not registered
upon the express written consent of the Trustee. The Trustee shall be
entitled to recover from any Holder of a Residual Certificate that was
in fact not a Permitted Transferee at the time such distributions were
made all distributions made on such Residual Certificate. Any such
distributions so recovered by the Trustee shall be distributed and
delivered by the Trustee to the prior Holder of such Residual
Certificate that is a Permitted Transferee.
G-2-3
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Depositor to arrange for the sale of such
Residual Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if
any, will be remitted by the Trustee to the previous Holder of such
Residual Certificate that is a Permitted Transferee, except that in
the event that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02
or any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Depositor will provide to
the Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee,
(i) written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion
of Counsel to the effect that such removal will not cause either REMIC to fail
to qualify as a REMIC.
The Tax Matters Person Residual Interest shall at all times be
registered in the name of the Trustee.
G-2-4
EXHIBIT H
LETTER OF REPRESENTATIONS
H-1
EXHIBIT I
FORM OF REQUEST FOR RELEASE
[DATE]
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Delta Funding Home Equity Loan Trust 1998-3
Home Equity Loan Pass-Through Certificates, Series 1998-3
---------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loans held by
you as Trustee under the Pooling and Servicing Agreement dated as of August 31,
1998, between Delta Funding Corporation, as Seller and Servicer, and you, as
Trustee (the "Agreement"), we hereby request a release of the Mortgage File
held by you as Trustee with respect to the following described Mortgage Loan
for the reason indicated below.
Loan No.:
Reason for requesting file:
_______ . Mortgage Loan paid in full. (The Servicer hereby
certifies that all amounts received in connection
with the payment in full of the Mortgage Loan which
are required to be deposited in the Collection
Account pursuant to Section 3.02 of the Agreement
have been so deposited).
_______ . Retransfer of Mortgage Loan. (The Servicer hereby certifies that
the Purchase Price has been deposited in the Collection Account
pursuant to the Agreement.)
_______ . The Mortgage Loan is being foreclosed.
_______ . The Mortgage Loan is being re-financed by another depository
institution. (The Servicer hereby certifies that all amounts
received in connection with the payment in full of the Mortgage
Loan
I-1
which are required to be deposited in the Collection Account
pursuant to Section 3.02 of the Agreement have been so
deposited).
_______ . Other (Describe).
The undersigned acknowledges that the above Mortgage File will be held
by the undersigned in accordance with the provisions of the Agreement and will
promptly be returned to the Trustee when the need therefor by the Servicer no
longer exists unless the Mortgage Loan has been liquidated.
Capitalized terms used herein shall have the meanings ascribed to them
in the Agreement.
DELTA FUNDING CORPORATION
By:
---------------------------------
Name:
Title: Servicing Officer
I-2
EXHIBIT J
SPECIMEN OF CERTIFICATE INSURANCE POLICY
J-1
EXHIBIT K
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Custodial Agreement"), dated as of August 31, 1998, by and among Bankers Trust
Company of California, N.A., not individually, but solely as Trustee (the
"Trustee"), Delta Funding Corporation ("Delta") and Bankers Trust Company of
California, N.A. (together with any successor in interest or any successor
appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T
WHEREAS, Delta, in its capacity as seller (the "Seller") and as servicer (the
"Servicer") and the Trustee have entered into a Pooling and Servicing Agreement
dated as of August 31, 1998, relating to the issuance of Delta's Home Equity
Loan Asset-Backed Certificates, Series 1998-3 (as amended and supplemented from
time to time, the "Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by Delta under the Agreement, all upon the terms and conditions and
subject to the limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee and the Custodian hereby agree as
follows:
ARTICLE I Definitions
Capitalized terms used in this Custodial Agreement and not defined
herein shall have the meanings assigned in the Agreement, unless otherwise
required by the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. Custodian to Act as Agent; Acceptance of Mortgage Files.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges receipt of the Mortgage Notes, the Related Documents,
the assignments and other documents
K-1
required to be delivered by the Seller to the Custodian pursuant to Section
2.01(b) of the Agreement and relating to the Mortgage Loans identified on
Schedule I hereto and declares that it holds and will hold such Mortgage Notes,
Related Documents, assignments and other documents and any similar documents
received by the Trustee subsequent to the date hereof (the "Mortgage Files") as
agent for the Trustee, in trust, for the benefit of all present and future
Certificateholders. The Custodian agrees to execute the Initial Certification
and the Final Certification described in Sections 2.02 and set forth on
Exhibits O and P of the Agreement.
Section 2.2. Recordation of Assignments.
If any Mortgage File includes one or more assignments to the Trustee
of Related Documents that have not been recorded, within 15 days of the Closing
Date, Delta or the Trustee, at no expense to the Custodian, shall, cause to be
recorded in the appropriate public office for real property records each such
assignment and, upon receipt thereof from such public office, shall return each
such assignment to the Custodian. The Custodian also agrees to perform its
other obligations under the Agreement, including but not limited to, its
obligations under Sections 2.01, 2.02, 2.05, 2.13, 2.14, 3.01, 3.07 and 3.11
thereof.
Section 2.3. Review of Mortgage Files.
The Custodian agrees, for the benefit of the Seller and the
Certificateholders, to review, in accordance with the provisions of Section
2.02 of the Agreement, each Mortgage File. If in performing the reviews
required by this Section 2.3, the Custodian finds any document or documents
constituting a part of a Mortgage File to be unexecuted or missing or, based on
the criteria set forth in Section 2.02 of the Agreement, to be unrelated to the
applicable Mortgage Loan, the Custodian shall promptly so notify Delta and the
Trustee.
In connection with such review, the Custodian makes no representations
as to, and shall not be responsible to verify (A) the validity, legality,
enforceability, due authorization, recordability, sufficiency, or genuiness of
any of the documents contained in any Mortgage File or (B) the collectability,
insurability, effectiveness, or suitability of any Mortgage Loan.
Section 2.4. Notification of Breaches of Representations and Warranties.
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Upon discovery by the Custodian of a breach of any representation or
warranty made by Delta as set forth in Section 2.03 of the Agreement, the
Custodian shall give prompt written notice to Delta and to the Trustee.
Section 2.5. Custodian to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, 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 promptly notify the Custodian
by delivering to the Custodian a Request for Release (Exhibit I to the
Agreement) (which certification shall include a statement to the effect that
all amounts received or to be received in connection with such payment which
are required to be deposited in the Certificate Account pursuant to the
Agreement have been or will be so deposited) executed by a Servicing Officer
and shall request delivery to it of the Mortgage File. The Custodian agrees,
upon receipt of such certification and request, promptly to release the related
Mortgage File to the Servicer.
From time to time as is appropriate for the servicing or foreclosure
of any Mortgage Loan, the Servicer shall deliver to the Custodian a Request for
Release requesting that possession of all, or any document constituting part
of, the Mortgage File be released to the Servicer and certifying as to the
reason for such release. With such Request for Release, the Servicer shall
deliver to the Custodian a receipt signed by a Servicing Officer of the
Servicer on behalf of the Servicer, and upon receipt of the foregoing, the
Custodian shall deliver the Mortgage File or such document to the Servicer and
the Servicer shall hold the Mortgage File or such document in trust for the
benefit of the Seller and the Certificateholders. The Servicer shall cause each
Mortgage File or any document therein so released to be returned to the
Custodian when the need therefor by the Servicer no longer exists, unless (i)
the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Certificate Account to the extent
required by the Agreement or (ii) the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Custodian a certificate
of a Servicing Officer of the Servicer certifying as to the name and address of
the Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery. In the event of the liquidation of a
Mortgage Loan,
K-3
the Custodian shall deliver such receipt with respect thereto to the Servicer
upon deposit of the related Liquidation Proceeds in the Distribution Account to
the extent required by the Agreement.
Section 2.6. Assumption Agreements.
In the event that any assumption agreement or substitution of
liability agreement is entered into with respect to any Mortgage Loan subject
to this Custodial Agreement in accordance with the terms and provisions of the
Agreement, the Servicer shall notify the Custodian that such assumption or
substitution agreement has been completed by forwarding to the Custodian the
original of such assumption or substitution agreement, which copy shall be
added to the related Mortgage File and, for all purposes, shall be considered a
part of such Mortgage File to the same extent as all other documents and
instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Trustee.
With respect to each Mortgage Note, Related Document and other
documents constituting each Mortgage File which are delivered to the Custodian,
the Custodian is exclusively the bailee and agent of the Trustee, holds such
documents for the benefit of the Trust and the Certificateholders and
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. Except upon compliance with the provisions of Section
2.5 of this Custodial Agreement, no Mortgage Note, Related Document or other
document constituting a part of a Mortgage File shall be delivered by the
Custodian to the Servicer or otherwise released from the possession of the
Custodian.
Section 3.2. Indemnification.
Delta hereby agrees to indemnify and hold the Custodian harmless from
and against all claims, liabilities, losses, actions, suits or proceedings at
law or in equity, or any other expenses, fees or charges of any character or
nature, which the Custodian may incur or with which the Custodian may be
threatened by reason of its acting as custodian under this Custodial Agreement,
including indemnification of the Custodian against any and all expenses,
including attorney's fees if counsel for the Custodian has been approved by the
Seller, which approval shall not be unreasonably withheld, and the cost of
defending any action, suit or proceedings or resisting any claim.
K-4
Notwithstanding the foregoing, it is specifically understood and agreed that in
the event any such claim, liability, loss, action, suit or proceeding or other
expense, fees, or charge shall have been caused by reason of any negligent act,
negligent failure to act, or willful misconduct on the part of the Custodian,
or which shall constitute a willful breach of its duties hereunder, the
indemnification provisions of this Custodial Agreement shall not apply. The
indemnification provided by this Section 3.2 shall survive the termination or
assignment of this Custodial Agreement or the resignation or removal of the
Custodian hereunder.
Section 3.3. Custodian May Own Certificates.
The Custodian in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Custodian.
Section 3.4. Custodian's Fees and Expenses.
Delta will pay all fees payable to the Custodian hereunder for all
services rendered by it in the exercise and performance of any of the powers
and duties hereunder of the Custodian, as set forth in a separate letter
agreement. Delta will pay or reimburse the Custodian upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Custodian in accordance with any of the provisions of this Custodial Agreement
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all persons not regularly in its employ), except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
Section 3.5. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may resign from the obligations and duties hereby
imposed upon it as such obligations and duties relate to its acting as
Custodian of the Mortgage Loans upon giving 60 days written notice to the
Trustee. Upon receiving such notice of resignation, the Trustee shall either
take custody of the Mortgage Files itself and give prompt notice thereof to
Delta and the Custodian or promptly appoint a successor Custodian which is able
to satisfy the requirements of Section 3.7 (i) of this Custodial Agreement by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Custodian and one copy to the successor Custodian.
If the Trustee shall not have taken custody of the Mortgage Files and no
successor Custodian shall have been so appointed and have accepted
K-5
resignation, the resigning Custodian may petition any court of competent
jurisdiction for the appointment of a successor Custodian. All fees and
expenses of any successor Custodian shall be the responsibility of Delta.
The Trustee may remove the Custodian at any time for cause, or
otherwise the Trustee may remove the Custodian at any time upon giving 60 days
written notice. In such event, the Trustee shall take custody of the Mortgage
Files itself, or shall appoint, or petition a court of competent jurisdiction
to appoint, a successor Custodian hereunder. Any successor Custodian shall be a
depository institution subject to supervision or examination by federal or
state authority and shall be able to satisfy the other requirements contained
in Section 3.7 (i) of this Custodial Agreement.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.5 shall
become effective only upon acceptance of appointment by the successor Custodian
and subject to the prior approval of Delta. The Trustee shall give prompt
notice to Delta and the Custodian of the appointment of any successor
Custodian.
Section 3.6. Merger or Consolidation of Custodian.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the successor of
the Custodian hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 3.7. Representations of the Custodian.
The Custodian hereby represents and warrants as follows:
(i) It is a national banking association subject to
supervision or examination by a federal authority, has a combined
capital and surplus of at least $100,000,000 and is qualified to do
business in the jurisdiction in which it will hold any Mortgage File;
(ii) It has full power, authority and legal right to execute
and deliver this Custodial Agreement and to perform its obligations
hereunder and has taken all necessary action
K-6
to authorize the execution, delivery and performance by it of this
Custodial Agreement;
(iii) To the best of its knowledge, after reasonable
investigation, the execution and delivery by it of this Custodial
Agreement and the performance by it of its obligations hereunder will
not violate any provision of its Charter or By-Laws or any law or
regulation governing it or any order, writ, judgment or decree of any
court, arbitrator or governmental authority or agency applicable to it
or any of its assets. To the best of its knowledge, after reasonable
investigation, such execution, delivery and performance will not
require the authorization, consent or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action with respect to, any governmental authority or agency
regulating its activities. To the best of its knowledge, after
reasonable investigation, such execution, delivery and performance
will not conflict with, or result in a breach or violation of, any
material indenture, mortgage, deed of trust, lease or other agreement
or instrument to which it is a party or by which it or its properties
are bound;
(iv) This Custodial Agreement has been duly executed and
delivered by it. This Custodial Agreement, when executed and delivered
by the other parties hereto, will constitute its valid, legal and
binding obligation, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by applicable
debtor relief laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at
law.
K-7
ARTICLE IV Miscellaneous Provisions
Section 4.1. Notices.
All notices, requests, consents and demands and other communications
required under this Custodial Agreement or pursuant to any other instrument or
document delivered hereunder shall be in writing and, unless otherwise
specifically provided, may be delivered personally, by telegram or telex, or by
registered or certified mail, postage prepaid, return receipt requested, at the
addresses specified below (unless changed by the particular party whose address
is stated herein by similar notice in writing), in which case the notice will
be deemed delivered when received:
The Trustee: Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mortgage Custody-Delta-1998-3
Telecopy No.:
Confirmation:
The Custodian: Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Mortgage Custody-Delta-1998-3
Telecopy No.:
Confirmation:
Delta: Delta Funding Corporation
0000 Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention:
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
Section 4.2. Amendments.
No modification or amendment of or supplement to this Custodial
Agreement shall be valid or effective unless the same is in writing and signed
by all parties hereto, and the Trustee shall not enter into any amendment
hereof except as permitted by the Agreement. The Trustee shall give prompt
notice to the Custodian of any amendment or supplement to the Agreement and
furnish the Custodian with written copies thereof. Delta and the Trustee agree
to obtain the Custodian's written consent prior to entering into any amendment
or modification of the Agreement
K-8
which affects any right, benefit, duty, or obligation of the Custodian
thereunder.
Section 4.3. Governing Law.
This Custodial Agreement shall be deemed a contract made under the
laws of the State of New York and shall be construed and enforced in accordance
with and governed by the laws of the State of New York.
Section 4.4. Recordation of Agreement.
To the extent permitted by applicable law, this Custodial Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties subject to the Mortgage Loans are situated, and
in any other appropriate public recording office or elsewhere, such recordation
to be effected by Delta and at its expense on direction by the Trustee, but
only upon direction accompanied by an opinion of counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Custodial
Agreement as herein provided and for other purposes, this Custodial Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Custodial Agreement shall be for any reason whatsoever held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Custodial
Agreement and shall in no way affect the validity or enforceability of the
other provisions of this Custodial Agreement or of the Certificates or the
rights of the Holders thereof.
Section 4.6. Waiver of Trial By Jury.
Each party hereto waives the right to trial by jury in any action,
suit, proceeding, or counterclaim of any kind arising out of or related to this
Custodial Agreement. In the event of
K-9
litigation, this Custodial Agreement may be filed as a written consent to a
trial by the court.
Section 4.7. 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 4.8. Reliance of Custodian.
In the absence of bad faith, negligence or willful misconduct on the
part of the Custodian, the Custodian may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or the document furnished to the
Custodian, reasonably believed by the Custodian to be genuine and to have been
signed or presented by the proper party or parties and conforming to the
requirements of this Custodial Agreement; but in the case of any Related
Document or other request, instruction, document or certificate which by any
provision hereof is specifically required to be furnished to the Custodian, the
Custodian shall be under a duty to examine the same to determine whether or not
it conforms to the requirements of this Custodial Agreement.
The Custodian may rely upon the validity of documents delivered to it,
without investigation as to their authenticity or legal effectiveness and Delta
will hold the Custodian harmless from any claims that may arise or be asserted
against the Custodian because of the invalidity of any such documents. Except
as provided herein, no provision of this Custodial Agreement shall require the
Custodian to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, if it should have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Custodian may consult with competent counsel with regard to legal questions
arising out of or in connection with this Custodian Agreement and the informed
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, omitted or suffered by the Custodian
in good faith in accordance herewith.
K-10
Section 4.9. Transmission of Mortgage Files.
Written instructions as to the method of shipment and shipper(s) the
Custodian is directed to utilize in connection with the transmission of
Mortgage Files and Related Documents in the performance of the Custodian's
duties hereunder shall be delivered by the Servicer to the Custodian prior to
any shipment of any Mortgage Files and Related Document hereunder. The Servicer
will arrange for the provision of such services at its sole cost and expense
(or, at the Custodian's option, reimburse the Custodian for all costs and
expenses incurred by the Custodian consistent with such instructions) and will
maintain such insurance against loss or damage to Mortgage Files and Related
Documents as the Servicer deems appropriate. Without limiting the generality of
the provisions of Section 3.2 above, it is expressly agreed that in no event
shall the Custodian have any liability for any losses or damages to any person,
including without limitation, the Servicer, arising out of actions of the
Custodian consistent with instructions of the Servicer. If the Custodian does
not receive written direction, the Custodian is hereby authorized and
indemnified to utilize a nationally recognized courier service.
K-11
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Custodian
By:
----------------------------------
Name:
Title:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A., as Trustee
By:
----------------------------------
Name:
Title:
DELTA FUNDING CORPORATION
By:
----------------------------------
Name:
Title:
K-12
Schedule I
to Custodial Agreement
List of Mortgage Loans
K-I
EXHIBIT L
DELINQUENCY AND LOSS INFORMATION
[NOT INCLUDED HEREIN]
L-1
EXHIBIT M
Bankers Trust Company of
California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Re: Delta Funding Home Equity Loan Asset-Backed
Certificates, Series 1998-3, Class R-1,
Class R-2 and Class R-3
Ladies and Gentlemen:
In connection with our disposition of the above Certificates
we certify that (a) we understand that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "Act"), and are
being disposed by us in a transaction that is exempt from the registration
requirements of the Act, (b) we have not offered or sold any Certificates to,
or solicited offers to buy any Certificates from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action which would result in, a violation
of Section 5 of the Act and (c) with respect to our disposition of the Class
R-1 Certificates, Class R-2 and Class R-3 Certificates, we have no knowledge
that the transferee is not a Permitted Transferee.
Very truly yours,
------------------------
By:
-----------------------------
Authorized Officer
M-1
EXHIBIT N-1
FORM OF INVESTMENT LETTER [NON-RULE 144A]
[DATE]
[Depositor]
[Depositor Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1998-3
Home Equity Loan Pass-Through Certificates,
Series 1998-3, Class [ ]___________________
Ladies and Gentlemen:
In connection with our acquisition of the above-captioned
Certificates, we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we are an "accredited investor," as defined in Regulation D under the Act, and
have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificates and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificates, (d) either (i) we are not an employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended, or a plan that is subject to Section 4975 of the Internal
Revenue Code of 1986, as amended, nor are we acting on behalf of any such plan
or (ii) the purchaser is an insurance company which is purchasing such
certificates with funds contained in an "insurance company general account" (as
such term is defined in Section V(e) of Prohibited Transaction Class Exemption
95-60 ("PTCE 95-60") and that the purchase and holding of such Certificates are
covered under PTCE 95-60, (e) we are acquiring the Certificates for investment
for our own account and not with a view to any distribution of such
Certificates (but without prejudice to our
N-1-1
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (g) below), (f) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the
Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to an effective registration statement under the Act or is exempt from
such registration requirements, and if requested, we will at our expense
provide an opinion of counsel satisfactory to the addressees of this
Certificate that such sale, transfer or other disposition may be made pursuant
to an exemption from the Act, (2) the purchaser or transferee of such
Certificate has executed and delivered to you a certificate to substantially
the same effect as this certificate, and (3) the purchaser or transferee has
otherwise complied with any conditions for transfer set forth in the Pooling
Agreement.
Very truly yours,
[NAME OF TRANSFEREE]
By:
----------------------------------
Authorized Officer
N-1-2
EXHIBIT N-2
FORM OF RULE 144A LETTER
[DATE]
[Depositor]
[Depositor Address]
[Trustee]
[Trustee Address]
Re: Delta Funding Home Equity Loan Trust 1998-3
Home Equity Loan Pass-Through Certificates,
Series 1998-3, Class [ ]____________________
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates
we certify that (a) we understand that the Certificates are not being
registered under the Securities Act of 1933, as amended (the "Act"), or any
state securities laws and are being transferred to us in a transaction that is
exempt from the registration requirements of the Act and any such laws, (b) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (c) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan that is subject to Section 4975 of the Internal Revenue Code
of 1986, as amended, nor are we acting on behalf of any such plan or (ii) the
purchaser is an insurance company which is purchasing such Certificates with
funds obtained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60") and that the purchase and holding of such Certificates are covered
under XXXX 00-00, (x) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other
N-2-1
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Certificates, any interest in the Certificates or
any other similar security from, or otherwise approached or negotiated with
respect to the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates
under the Securities Act or that would render the disposition of the
Certificates a violation of Section 5 of the Securities Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
(e) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act and have completed either of the forms of
certification to that effect attached hereto as Annex 1 or Annex 2. We are
aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge
or transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.
Very truly yours,
[NAME OF TRANSFEREE]
By:
---------------------------------
Authorized Officer
N-2-2
ANNEX 1 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President,
Chief Financial Officer, Senior Vice President or other executive officer of
the Buyer.
(b) In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $ _______________(1) in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance
with Rule 144A and (ii) the Buyer satisfies the criteria in the category marked
below.
___ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
___ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution,
____________
1 Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that
case, Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
N-2-1-1
and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual
financial statements, a copy of which is attached
hereto.
___ Savings and Loan. The Buyer (a) is a savings and
loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
any such institutions or is a foreign savings and
loan association or equivalent institution and (b)
has an audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
___ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934.
___ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of a State,
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act
of 1940.
___ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S.
Small Business Administration under Section 301(c)
or (d) of the Small Business Investment Act of 1958.
N-2-1-2
___ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940.
(c) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participations, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
(d) For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by the Buyer, the
Buyer used the cost of such securities to the Buyer and did not include any of
the securities referred to in the preceding paragraph, except (i) where the
Buyer reports its securities holdings in its financial statements on the basis
of their market value, and (ii) no current information with respect to the cost
of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities owned
by subsidiaries of the Buyer, but only if such subsidiaries are consolidated
with the Buyer in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
(e) The Buyer acknowledges that it is familiar with Rule 144A
and understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule 144A.
(f) Until the date of purchase of the Rule 144A Securities,
the Buyer will notify each of the parties to which this certification is made
of any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a reaffirmation
of this certification as of the date of such purchase. In addition, if the
Buyer is a bank or savings and loan is provided above, the
N-2-1-3
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
Print Name of Buyer
By:
----------------------------------
Name:
Title:
Date:
N-2-1-4
ANNEX 2 TO EXHIBIT N-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to
the parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
(a) As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
(b) In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, as amended and (ii) as marked below, the Buyer alone, or the Buyer's
Family of Investment Companies, owned at least $100,000,000 in securities
(other than the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the Buyer's
Family of Investment Companies reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no current information
with respect to the cost of those securities has been published. If clause (ii)
in the preceding sentence applies, the securities may be valued at market.
N-2-2-1
___ The Buyer owned $ in securities (other than the
excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount
being calculated in accordance with Rule 144A).
___ The Buyer is part of a Family of Investment
Companies which owned in the aggregate $ in
securities (other than the excluded securities
referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in
accordance with Rule 144A).
(c) The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
(d) The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
(e) The Buyer is familiar with Rule 144A and under-stands
that the parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
N-2-2-2
(f) Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the rchase.
Print Name of Buyer or Adviser
By:
---------------------------------
Name:
Title:
IF AN ADVISER:
------------------------------
Print Name of Buyer
Date:
N-2-2-3
EXHIBIT O
FORM OF
INITIAL CERTIFICATION OF TRUSTEE
September __, 1998
Bankers Trust Company of
California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Delta Funding Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
MBIA Insurance Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of August 31,
1998 between Delta Funding Corporation, as Seller and
Servicer, and Bankers Trust Company of California, N.A.,
as Trustee, Home Equity Loan Asset-Backed Certificates,
Series 1998-3.
Ladies and Gentlemen:
In accordance with the provisions of Section 2.02 of the
above-referenced Pooling and Servicing Agreement, the undersigned, as
Custodian, hereby certifies that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified on the attachment hereto), it has
reviewed the documents delivered to it pursuant to Section 2.02 of the Pooling
and Servicing Agreement and has determined that (i) all documents required to
be delivered to it pursuant to the above-referenced Pooling and Servicing
Agreement are in its possession, (ii) such documents have been reviewed by it
and appear regular on their face and have not been mutilated, damaged, torn or
otherwise physically altered and relate to such Mortgage Loans, (iii) based on
its examination and only as to the foregoing documents, the information set
forth in the Mortgage Loan Schedule as to the information set forth in clauses
(ii), (iii), (v) and (vii) of the definition "Mortgage Loan Schedule" set forth
in the Pooling and Servicing Agreement accurately reflects the information set
O-1
forth in the Trustee's Mortgage File and (iv) each Mortgage Note has been
endorsed as provided in Section 2.01 of the Pooling and Servicing Agreement.
The Custodian has made no independent examination of such documents beyond the
review specifically required in the above-referenced Pooling and Servicing
Agreement. The Custodian makes no representations as to: (i) the validity,
legality, enforceability or genuineness of any such documents contained in each
or any of the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii)
the collectibility, insurability, effectiveness or suitability of any such
Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Custodian
By:
-----------------------------------
Name:
Title:
O-2
EXHIBIT P
FORM OF TRUSTEE FINAL CERTIFICATION
__________, 199__
Bankers Trust Company of
California, N.A.
0 Xxxx Xxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Delta Funding Corporation
0000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000-0000
MBIA Insurance Corporation
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Pooling and Servicing Agreement, dated as of
August 31, 1998 relating to Delta Funding
Home Equity Loan Trust 1998-3________________
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed
on the attachment hereto) the Custodian has reviewed the documents delivered to
it pursuant to Section 2.01 (other than items listed in Section 2.01(a)(vii)
and (viii)) of the Pooling and Servicing Agreement and has determined that (i)
all such documents are in its possession, (ii) such documents have been
reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Mortgage Loan, (iii) based on its
examination, and only as to the foregoing documents, the information set forth
in the Mortgage Loan Schedule respecting such Mortgage Loan is correct and (iv)
each Mortgage Note has been endorsed as provided in Section 2.01 of the Pooling
and Servicing Agreement. Further, [except for Mortgaged Properties relating to
P-1
Mortgage Loans identified on the Mortgage Loan Schedule by an account number
beginning with _____ or _____,] each Mortgaged Property is a Residential
dwelling of the type set forth in the appraisal obtained in connection with the
origination of the related Mortgage Loan.
The Custodian has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Custodian makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA,N.A., as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
P-2
EXHIBIT Q
SUBSEQUENT FUNDING PARAMETERS
A. Subsequent Loan Criteria - Loan Group F. Following the addition of the
Subsequent Mortgage Loans, the Loan Group F Mortgage Loans must be in
compliance with the following characteristics:
(a) Each Loan Group F Mortgage Loan shall have a CLTV ratio no
greater than 75%;
(b) The weighted average coupon shall not be less than 10.09%;
(c) The weighted average remaining term to stated maturity shall
be at least 305 months;
(d) Each Loan Group F Mortgage Loan shall have an outstanding
Principal Balance of less than $227,600;
(e) Each Loan Group F Mortgage Loan shall either be a fully
amortizing loan with level payments over 15 or 30 years, or a
loan with a 15-year balloon maturity; with no more than 5% of
Loan Group F being balloon loans;
(f) Single zip code concentrations for Loan Group F shall not
exceed 2.00% of the Original Loan Group Balance;
(g) Single state concentration for New York in Loan Group F shall
not exceed 46% of the Original Loan Group Balance;
(h) Mortgage Loans secured by second liens shall not exceed 3.52%
of the Original Loan Group Balance;
(i) Investor-owned properties shall not exceed 11% of the
Original Loan Group Balance;
(j) Mortgage Loans with a "loan class" of C or D shall not exceed
13% and 3.2%, respectively, of the Original Loan Group
Balance and Mortgage Loans with a "loan class" of A must
constitute no less than 60% of the Original Loan Group
Balance; and
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Subsequent Cut-off Date.
Q-1
B. Subsequent Loan Criteria - Loan Group A. Following the addition of
Subsequent Mortgage Loans, the Loan Group A Mortgage Loans must be in
compliance with the following characteristics:
(a) Each Loan Group A Mortgage Loan shall have a LTV ratio no
greater than 79%;
(b) The weighted average coupon shall not be less than 10.29%;
(c) The weighted average remaining term to stated maturity shall
be at least 355 months;
(d) Each Loan Group A Mortgage Loan must have an outstanding
Principal Balance of less than $400,000;
(e) Each Loan Group A Mortgage Loan must be a first lien fully
amortizing loan with level payments over a maximum of 30
years;
(f) Single zip code concentrations for Loan Group A shall not
exceed 2.2% of the Original Loan Group Balance;
(g) Single state concentration for New Jersey in Loan Group A
shall not exceed 20% of the Original Loan Group Balance;
(h) No high rise condominiums, multi-use or multi-family homes
will be included among the Subsequent Mortgage Loans;
(i) Investor-owned properties shall not exceed 6% of the Original
Loan Group Balance;
(j) Mortgage Loans with a "loan class" of C or D shall not exceed
14.6% and 3.5%, respectively, of the Original Loan Group
Balance and Mortgage Loans with a "loan class" of A must
constitute no less than 60% of the Original Loan Group
Balance; and
(k) No Subsequent Mortgage Loan will be more than thirty days
delinquent as of the related Subsequent Cut-off Date.
Q-2
