EXECUTION COPY
MASTER SERVICING AGREEMENT
Dated as of July 1, 1999
among
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2, Issuer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, Master Servicer
and Indenture Trustee
Relating to the Mortgage Loans
Pledged as Collateral for the Issuer's
Collateralized Home Equity Bonds,
in the Aggregate Initial
Principal Amount of $394,100,000
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT
Section 1. Defined Terms.............................................. 1
Section 2. Mortgage Documents......................................... 14
(a) Indenture Trustee to Retain Possession of Documents
through Custodian................................... 14
(b) Indenture Trustee and Custodian to Cooperate;
Release of Indenture Trustee Mortgage Files......... 17
(c) Representations and Warranties of the Master
Servicer, the Seller and the Issuer................. 18
Section 3. General Duties of the Master Servicer...................... 21
(a) Master Servicer to Master Service Mortgage Loans.... 21
(b) Servicing; Enforcement of the Obligations
of Servicers........................................ 21
(c) Successor Servicers................................. 22
(d) Access to Certain Documentation..................... 23
(e) Rights of the Issuer and the Indenture Trustee in
Respect of the Master Servicer...................... 24
(f) Reserved............................................ 24
(g) Collection of Mortgage Loan Payments; Bond Account;
Distribution Account................................ 24
(h) Annual Officer's Certificate as to Compliance....... 27
(i) Master Servicer Fidelity Bond and Master
Servicer Errors and Omissions Insurance Policy...... 28
(j) Periodic Filings with the Securities and Exchange
Commission; Additional Information.................. 28
(k) Optional Purchase of Defaulted Mortgage Loans....... 28
(l) No Solicitation..................................... 29
(m) Servicer Clean-up Call Purchase of Mortgage Loans... 29
(n) Master Servicer Monthly Data........................ 30
Section 4. Advances .................................................. 30
Section 5. Master Servicing Compensation and Expenses................. 30
(a) Master Servicer Compensation........................ 30
(b) Servicer Compensation............................... 31
Section 6. Master Servicer............................................ 31
(a) Liabilities of the Master Servicer.................. 31
(b) Merger or Consolidation of the Master Servicer...... 31
(c) Resignation of Master Servicer...................... 31
(d) Assignment or Delegation of Duties by the
Master Servicer..................................... 32
(e) Limitation on Liability of the Master Servicer
and Others.......................................... 32
Section 7. Master Servicing Default; Termination and Liabilities...... 33
(a) Master Servicing Default............................ 33
(b) Indenture Trustee to Act; Appointment of Successor.. 35
(c) Waivers by FSA...................................... 36
(d) Notification to Bondholders......................... 36
Section 8. Miscellaneous.............................................. 37
(a) Term of Master Servicing Agreement.................. 37
(b) Assignment.......................................... 37
(c) Notices............................................. 37
(d) Governing Law....................................... 39
(e) Amendments.......................................... 39
(f) Severability........................................ 39
(g) No Joint Venture.................................... 39
(h) Execution in Counterparts........................... 39
(i) Limitation of Liability of Wilmington Trust Company. 39
(j) Noncompetition Covenants............................ 40
(k) Third-Party Beneficiary............................. 40
(l) Trust Estate and Accounts Held for Benefit of FSA... 40
SCHEDULE I - Schedule of Mortgage Loans
SCHEDULE II - Representations and Warranties of the Master Servicer
SCHEDULE III - Representations and Warranties as to the Mortgage Loans
SCHEDULE IV - Representations and Warranties of the Issuer
SCHEDULE V - Servicing Agreements
SCHEDULE VI - Purchase and Sale Agreements
MASTER SERVICING AGREEMENT
THIS MASTER SERVICING AGREEMENT is made and entered into as of July 1,
1999, by and among American Residential Eagle Bond Trust 1999-2, a statutory
business trust formed under the laws of the State of Delaware (the "Issuer"),
and Norwest Bank Minnesota, National Association ("Norwest"), a national banking
association (the "Master Servicer" and "Indenture Trustee" under the Indenture
referred to below).
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing Bonds secured by
mortgage collateral. The Issuer has entered into a trust indenture, dated as of
July 1, 1999 (the "Indenture"), between the Issuer and the Indenture Trustee,
pursuant to which the Issuer intends to issue its Bonds, in the aggregate
initial principal amount of $394,100,000 (the "Bonds"). Pursuant to the
Indenture, as security for the indebtedness represented by such Bonds, the
Issuer is and will be pledging to the Indenture Trustee, or granting the
Indenture Trustee a security interest in, among other things, certain Mortgage
Loans, its rights under this Agreement, the Servicing Agreements, the Mortgage
Loan Purchase Agreement, the Bond Account, the Distribution Account and certain
Insurance Policies (as each such term is defined herein).
The parties desire to enter into this Agreement to provide, among other
things, for the master servicing of the Mortgage Loans by the Master Servicer.
The Master Servicer acknowledges that, in order further to secure the Bonds, the
Issuer is and will be granting to the Indenture Trustee a security interest in,
among other things, its rights under this Agreement, and the Master Servicer
agrees that all covenants and agreements made by the Master Servicer herein with
respect to the Mortgage Loans shall also be for the benefit and security of the
Indenture Trustee and Holders of the Bonds and FSA ( as herein defined).
American Residential Investment Trust, Inc. (the "Seller") has entered
into Servicing Agreements (as defined herein) with Servicers (as defined herein)
to perform, as independent contractors, servicing functions with respect to the
Mortgage Loans. For its services under a Servicing Agreement, each Servicer will
receive a Servicing Fee (as provided therein) with respect to each Mortgage Loan
serviced by it thereunder.
In addition, the Issuer will enter into a Management Agreement, dated
as of the date hereof, with the Seller (in such capacity, the "Manager"),
pursuant to which the Manager will conduct certain operations of the Issuer.
Actions by or required of the Issuer hereunder may be performed on its behalf by
the Manager or any sub-manager appointed to act for the Issuer.
1. Defined Terms.
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Agreement, and the definitions of such terms are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms. Capitalized terms that
are used but not defined in this Agreement and which are defined in the
Indenture have the meanings assigned to them therein.
"Adjustable Rate Mortgage Loan" means any Mortgage Loan which provides
for adjustment of the Mortgage Rate payable in respect thereto in accordance
with the Index and other factors set forth in such Note.
"Adjustment Date" means, as to any Mortgage Loan, a date on which the
related Mortgage Rate adjusts pursuant to the terms thereof.
"Advance" means any advance of a payment of principal and interest due
on a Mortgage Loan required to be made by a Servicer with respect to any
Distribution Date pursuant to the related Servicing Agreement.
"Agreement" means this Master Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Appraised Value" means (i) with respect to a Mortgage Loan other than
a Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged
Property based upon the appraisal made at the time of the origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property at the time of
the origination of such Mortgage Loan; or (ii) with respect to a Refinancing
Mortgage Loan, the value of the Mortgaged Property based upon the appraisal made
at the time of the origination of such Refinancing Mortgage Loan.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of
1978, as amended from time to time.
"Bond Account" means, with respect to the Bonds, the separate Eligible
Account created and maintained by the Master Servicer pursuant to Section 3(g)
with a depository institution in the name of the Master Servicer for the benefit
of the Indenture Trustee on behalf of the Bondholders and FSA and designated
"Bond Account - Norwest Bank Minnesota, National Association, in trust for the
registered holders of Bonds, Series 1999-2 and FSA."
"Bondholder" or "Holder" means the Person in whose name a Bond is
registered in the Bond Register (as defined in the Indenture).
"Bonds" mean the Issuer's Bonds, Class A-1 and Class A-2.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the States of Maryland or Minnesota
or The City of New York or the city in which the Corporate Trust Office (as
defined in the Indenture) is located are authorized or obligated by law or
executive order to be closed.
"Calculation Date" means, as to any Distribution Date, the second
Business Day prior to such Distribution Date.
"Closing Date" means August 5, 1999.
"Company" means American Residential Eagle, Inc., a Delaware
corporation, which, as of the Closing Date, owns all of the outstanding
beneficial interests in the Issuer.
"Custodial Agreement" means the agreement between the Indenture
Trustee, the Seller and the Custodian.
"Custodian" means Bankers Trust Company of California, N.A., as
custodian under the Custodial Agreement, or any successor custodian thereunder.
"Cut-off Date" means, with respect to the Mortgage Loans, July 1, 1999.
"Debt Service Reduction" means, with respect to any Mortgage Loan, a
reduction in the Scheduled Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of principal.
"Deficient Valuation" means, with respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
Scheduled Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which is final and
non-appealable in a proceeding under the Bankruptcy Code.
"Deleted Mortgage Loan" has the meaning ascribed thereto in Section
2(c)(iv) hereof.
"Deposit Trust Agreement" means the Deposit Trust Agreement, dated as
of July 1, 1999, between the Company and the Owner Trustee, as such Deposit
Trust Agreement may be amended or supplemented from time to time.
"Distribution Account" means the Eligible Account or Accounts created
and maintained with the Indenture Trustee pursuant to Section 8.02 of the
Indenture, to which shall be remitted from time to time certain of the funds the
Master Servicer has collected and deposited in the Bond Account with respect to
the Mortgage Loans, as required hereunder and under the Indenture.
"Distribution Account Deposit Date" means, as to any Distribution Date,
the Business Day prior to such Distribution Date.
"Distribution Date" means, with respect to the Bonds and the Investor
Certificate, the 25th day of each calendar month after the initial issuance of
the Bonds and the Investor Certificate or, if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in September, 1999.
"Due Date" means, with respect to each Distribution Date, the date on
which the monthly payment of principal and interest on such Mortgage Loan became
due during the period beginning on the second day of the month preceding the
month of such Distribution Date and ending on the first day of the month of such
Distribution Date.
"Eligible Account" means any of (i) a segregated account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the debt obligations of such holding company, but only if
Xxxxx'x is not a Rating Agency) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein and the long
term debt obligations of which shall be rated AA or higher by S&P and Aa or
higher by Moody's, or (ii) a segregated trust account or accounts maintained
with the trust department of a federal or state chartered depository institution
or trust company, acting in its fiduciary capacity acceptable to each Rating
Agency and FSA, having capital and surplus not less than $100,000,000 or (iii)
any other account acceptable to each Rating Agency and FSA. Eligible Accounts
may bear interest, and may include, if otherwise qualified under this
definition, accounts maintained with the Master Servicer or the Indenture
Trustee.
"Escrow Account" means the Eligible Account or Accounts established and
maintained pursuant to the applicable Servicing Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FHLMC" means Xxxxxxx Mac, formerly known as the Federal Home Loan
Mortgage Corporation, a corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
"FNMA" means Xxxxxx Mae, formerly known as the Federal National
Mortgage Association, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
"FSA" means Financial Security Assurance Inc., or any successor
thereto.
"FSA Policy" means the irrevocable financial guaranty insurance policy
(Policy No. 50838-N) issued by FSA with respect to the Bonds.
"Indenture" means the trust indenture, dated as of the date hereof,
between the Issuer and the Indenture Trustee, as such Indenture may be amended
or supplemented from time to time in accordance with its terms.
"Independent Accountants" shall have the meaning ascribed to such term
under the Indenture.
"Indenture Trustee" means Norwest Bank Minnesota, National Association,
a national banking association, and any Person resulting from or surviving any
consolidation or merger to which it may be a party until a successor Person
shall have become the Indenture Trustee pursuant to the applicable provisions of
this Agreement, and thereafter "Indenture Trustee" shall mean such successor
Person."
"Index" means, as to each Adjustable Rate Mortgage Loan, the index from
time to time in effect for the adjustment of the Mortgage Rate set forth as such
on the related Mortgage Note.
"Insurance Policy" means, with respect to any Mortgage Loan, any
primary mortgage guaranty insurance policy or other insurance policy with
respect to the Mortgage Loans, including all riders and endorsements thereto in
effect, including any replacement policy or policies for any insurance policies
(but shall not include the FSA policy).
"Insurance Proceeds" means proceeds paid by an insurer pursuant to any
Insurance Policy, other than any amount included in such Insurance Proceeds in
respect of Insured Expenses.
"Insured Expenses" means amounts applied out of payments made by an
insurer under an Insurance Policy to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the applicable
Servicing Agreement.
"Investor Certificate" shall have the meaning ascribed thereto in the
Deposit Trust Agreement.
"LPMI Insurer" means Radian Guaranty Inc., or any successor thereto.
"LPMI Policy" means the policy of private mortgage insurance relating
to certain of the Mortgage Loans (Policy Lender No. 55468-000)."
"LPMI Premium" means 1.45% per annum of the Stated Principal Balance of
the Mortgage Loans covered by the LPMI Policy, to be paid on a monthly basis by
the Master Servicer to the LPMI Insurer from collections or advances on the
Mortgage Loans.
"LIBOR" means, for each Adjustable Rate Mortgage, the six-month London
Interbank Rate determined as provided in the related Mortgage Note.
"Liquidated Mortgage Loan" means with respect to any Distribution Date,
a defaulted Mortgage Loan (including any REO Property) which was liquidated in
the calendar month preceding the month of such Distribution Date and as to which
the Master Servicer has certified (in accordance with this Agreement) that it
has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
"Liquidation Proceeds" means amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise or
amounts received in connection with any condemnation or partial release of a
Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Servicing Fees, Master Servicer
Advances, Servicing Advances and Advances and net of any other unreimbursed
expenses incurred in connection with liquidation or foreclosure.
"Loan-to-Value Ratio" means, with respect to any Mortgage Loan and as
to any date of determination, the fraction (expressed as a percentage) the
numerator of which is the principal balance of the related Mortgage Loan at such
date of determination and the denominator of which is the Appraised Value of the
related Mortgaged Property.
"Management Agreement" means the management agreement dated as of July
1, 1999, between the Issuer and the Seller, as Manager.
"Margin" means as to each Adjustable Rate Mortgage Loan, the percentage
amount set forth on the related Mortgage Note which is to be added to the Index
in calculating the Mortgage Rate thereon.
"Master Servicer" means Norwest Bank Minnesota, National Association, a
national banking association, and its successors and assigns, in its capacity as
master servicer hereunder.
"Master Servicer Advance" means the payment required to be made by the
Master Servicer with respect to any Distribution Date pursuant to Section 4, the
amount of any such payment being equal to the aggregate of payments of principal
and interest (net of the applicable Servicing Fee, the LPMI Premium and net of
any net income received in the case of any REO Property) on the Mortgage Loans
that were due on the related Due Date and not received (either as collections or
Advances from Servicers) as of the close of business on the related Calculation
Date, less the aggregate amount of any such delinquent payments that the Master
Servicer has determined would constitute a Nonrecoverable Advance if advanced.
"Master Servicer Advance Date" means as to any Distribution Date, the
Distribution Account Deposit Date prior to such Distribution Date.
"Master Servicing Default" means a master servicing default as
described under Section 7(a) of this Agreement.
"Maximum Rate" means as to any Mortgage Loan, the maximum rate set
forth on the related Mortgage Note at which interest can accrue on such Mortgage
Loan.
"Minimum Rate" means as to any Mortgage Loan, the minimum rate set
forth on the related Mortgage Note at which interest can accrue on such Mortgage
Loan.
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereto. If Xxxxx'x is designated as a Rating Agency in the Indenture, for
purposes of Section 9(c) the address for notices to Moody's shall be Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Residential Pass-Through Monitoring, or such other address as Moody's may
hereafter furnish to the Issuer and the Master Servicer.
"Mortgage" means the mortgage, deed of trust or other instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
"Mortgage Documents" mean the mortgage documents pertaining to a
particular Mortgage Loan and delivered to the Custodian pursuant to this
Agreement and the Custodial Agreement.
"Mortgage Loan" means such of the mortgage loans granted by the Issuer
to the Indenture Trustee under the Indenture as security for the Bonds, as from
time to time are held as part of the Trust Estate (including any REO Property),
the Mortgage Loans so held being identified in the Schedule of Mortgage Loans,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property.
"Mortgage Loan Purchase Agreement" means the mortgage loan purchase
agreement dated as of July 1, 1999 among the Seller, the Company and the Issuer.
"Mortgage Note" means the original executed Note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate" means the annual rate of interest borne by a Mortgage
Note from time to time.
"Mortgaged Property" means the underlying property securing a Mortgage
Loan.
"Mortgagor" means the obligor(s) on a Mortgage Note.
"Net Mortgage Rate" means, as to any Mortgage Loan and Distribution
Date, the related Mortgage Rate as of the Due Date in the month of such
Distribution Date reduced by the related Servicing Fee Rate.
"Nonrecoverable Advance" means any portion of an Advance, Servicing
Advance or Master Servicer Advance previously made or proposed to be made by the
related Servicer or the Master Servicer, as the case may be, that, in the good
faith judgment of the related Servicer or such Master Servicer, will not be
ultimately recoverable from the related Mortgagor, related Liquidation Proceeds
or otherwise.
"Officer's Certificate" means a certificate (i) signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President (however denominated), an Assistant Vice President,
the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Master Servicer, or (ii) if provided for in this Agreement,
signed by a Servicing Officer, as the case may be, and delivered to the
Indenture Trustee as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for a Servicer, the Master Servicer or the Issuer, as applicable,
including, in-house counsel, reasonably acceptable to the Indenture Trustee.
Except as specifically provided herein, no Opinion of Counsel shall be at the
expense of the Master Servicer.
"Original Bond Principal Amount" means the Original Bond Principal
Amount which is equal to Class A-1 $332,350,000 plus Class A-2 $61,750,000,
equaling $394,100,000.
"Original Pool Principal Balance" means the Pool Principal Balance as
of the Cut-off Date which is equal to Pool 1 $341,290,854.81 plus Pool 2
$63,032,561.90, equaling $404,323,416.71.
"Outstanding Mortgage Loan" means, as of any Due Date, a Mortgage Loan
with a Stated Principal Balance greater than zero which was not the subject of a
Principal Prepayment in Full prior to such Due Date and which did not become a
Liquidated Mortgage Loan prior to such Due Date.
"Owner Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Deposit Trust Agreement, until a successor Person shall have become the
Owner Trustee pursuant to the applicable provisions of the Deposit Trust
Agreement, and thereafter "Owner Trustee" shall mean such successor Person.
"Periodic Rate Cap" means, as to any Adjustable Rate Mortgage Loan and
any Adjustment Date, the maximum allowable percent increase to the related
Mortgage Rate on any such Adjustment Date, as specified in the related Mortgage
Note.
"Permitted Investments" means, at the time, any one or more of the
following obligations and securities.
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency;
(iii) commercial paper which is then receiving the highest
commercial paper rating of each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long-term unsecured debt obligations of such depository
institution or trust company (or in the case of the principal
depository institution in a holding company system, the commercial
paper or long-term unsecured debt obligations of such holding company,
but only if Xxxxx'x Investors Service, Inc. ("Xxxxx'x") is a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent such
deposits are fully insured by the FDIC;
(vi) repurchase obligations with respect to any security
described in clauses (i) above, in either case entered into with a
depository institution or trust company (acting as principal) described
in clause (iv) above;
(vii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which have the highest rating of each Rating Agency
(except if the Rating Agency is Moody's, such rating shall be the
highest commercial paper rating of Moody's for any such securities);
(viii) interests in any money market fund which invests only
in other Permitted Investments which at the date of acquisition of the
interests in such fund and throughout the time such interests are held
in such fund has the highest applicable rating by each applicable
Rating Agency;
(ix) short term investment funds which invest only in other
Permitted Investments sponsored by any trust company or national
banking association incorporated under the laws of the United States or
any state thereof which are rated by each applicable Rating Agency in
their respective highest applicable rating category;
(x) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to FSA and each
applicable Rating Agency as will not result in a change in the rating
(without regard to the existence of the FSA Policy) then assigned to
the Bonds by each Rating Agency, as evidenced by a signed writing
delivered by each Rating Agency; and
(xi) any mutual fund, money market funds, common trust fund
or other pooled investment vehicle, the assets of which are limited to
instruments that otherwise would constitute Permitted Investments
hereunder, including any fund managed by the Master Servicer or any
affiliate of the Master Servicer or any fund to which the Master
Servicer or any affiliate of the Master Servicer acts as an advisor,
provided that such fund has the highest applicable rating by each
Rating Agency,
provided, that no such instrument shall be a Permitted
Investment if (i) such instrument evidences the right to receive
interest only payments with respect to the obligations underlying such
instrument or (ii) such instrument would require the Issuer to register
as an investment company under the Investment Company Act of 1940, as
amended.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
"Pool Principal Balance" means, with respect to any Distribution Date
and Mortgage Pool, the aggregate of the Stated Principal Balances of the
Mortgage Loans in such Mortgage Pool which were Outstanding Mortgage Loans on
the Due Date in the month preceding the month of such Distribution Date.
"Principal Prepayment" means any payment or other recovery of principal
in respect of a Mortgage Loan that is received in advance of its scheduled Due
Date and is not intended as an advance payment of a Scheduled Payment.
"Principal Prepayment in Full" means any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
"Prospectus Supplement" means the Prospectus Supplement dated July 21,
1999 relating to the Bonds.
"PUD" means Planned Unit Development.
"Purchase Price" means, with respect to the purchase of any Mortgage
Loan from the Issuer an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, and (ii)
accrued interest thereon at the applicable Mortgage Rate from the date through
which interest was last paid by the Mortgagor to the Due Date in the month in
which the Purchase Price is to be distributed to Bondholders.
"Purchase and Sale Agreement" means those agreements identified on
Schedule VI attached hereto.
"Rating Agency" shall mean each of the Rating Agencies specified in the
Indenture. If any such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Issuer and
acceptable to FSA, notice of which designation shall be given to the Indenture
Trustee. References herein to a given rating or rating category of a Rating
Agency shall mean such rating category without giving effect to any modifiers.
"Realized Loss" means, with respect to each Liquidated Mortgage Loan,
an amount (not less than zero or more than the Stated Principal Balance of the
Liquidated Mortgage Loan) as of the date of such liquidation, equal to (i) the
Stated Principal Balance of the Liquidated Mortgage Loan as of the date of such
liquidation, plus (ii) interest at the Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced (and not reimbursed) to Bondholders up
to the Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds, if any, received during
the month in which such liquidation occurred, to the extent applied as
recoveries of interest at the Net Mortgage Rate and to principal of the
Liquidated Mortgage Loan. With respect to each Mortgage Loan which has become
the subject of a Deficient Valuation, if the principal amount due under the
related Mortgage Note has been reduced, the difference between the principal
balance of the Mortgage Loan outstanding immediately prior to such Deficient
Valuation and the principal balance of the Mortgage Loan as reduced by the
Deficient Valuation. With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction and any Distribution Date, the amount, if
any, by which the principal portion of the related Scheduled Payment has been
reduced.
"Refinancing Mortgage Loan" means any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
"Relief Act" means the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"REO Property" means a Mortgaged Property acquired by the Trust Estate
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Replacement Mortgage Loan" means a Mortgage Loan substituted for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for Release, substantially in the form attached to the Custodial
Agreement, (i) have a principal balance, after deduction of the principal
portion of the Scheduled Payment due in the month of substitution, not in excess
of, and not more than 20% less than, the Stated Principal Balance of the Deleted
Mortgage Loan; (ii) be accruing interest at a rate no lower than and not more
than 1.0% per annum higher than, that of the Deleted Mortgage Loan and, if an
Adjustable Rate Mortgage Loan, bear interest based on an Index that is LIBOR;
(iii) have a Loan-to-Value Ratio no higher than that of the Deleted Mortgage
Loan; (iv) have a Mortgage Rate not lower than, and not more than 1.0% per annum
higher than that of the Deleted Mortgage Loan; (v) have a remaining term to
maturity no greater than (and not more than 36 months less than) that of the
Deleted Mortgage Loan; and (vi) comply with each representation and warranty set
forth in Schedule III hereto; and (vii) otherwise be acceptable to FSA.
"Request for Release" means the Request for Release submitted by a
Servicer or the Seller to the Custodian, substantially in one of the forms
attached to the Custodial Agreement, as appropriate.
"S&P" means Standard & Poor's Ratings Services, a division of
XxXxxx-Xxxx Inc. If S&P is designated as a Rating Agency in the Indenture, for
purposes of Section 8(c) the address for notices to S&P shall be Standard &
Poor's Ratings Group, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Mortgage Surveillance Monitoring, or such other address as S&P may
hereafter furnish to the Issuer and the Master Servicer.
"Schedule of Mortgage Loans" means the schedule attached hereto as
Schedule I listing the Mortgage Loans to be master serviced by the Master
Servicer pursuant to this Agreement (as from time to time amended by the Issuer
to reflect the addition of Replacement Mortgage Loans and the deletion of
Deleted Mortgage Loans pursuant to the provisions of this Agreement and Section
8.05 of the Indenture) pledged to the Indenture Trustee as part of the Trust
Estate and from time to time subject to this Agreement and the Indenture,
setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the
Mortgaged Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Original Pool Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Scheduled Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is
either (a) a detached single family dwelling, (b) attached single
family dwelling, (c) a dwelling in a PUD, (d) a condominium unit, or
(e) a two- to four-unit residential property;
(xi) the Mortgage Rate in effect as of the Cut-off Date;
(xii) the Servicing Fee Rate;
(xiii) the Maximum Rate and the Minimum Rate;
(xiv) the Periodic Rate Cap (if any);
(xv) the Adjustment Date (if any);
(xvi) the Margin (if any);
(xvii) the purpose for the Mortgage Loan; and
(xviii) the type of documentation program pursuant to which
the Mortgage Loan was originated.
Such schedule shall also set forth (a) the total of the amounts
described under (iv) and (vii) above and (b) the weighted average, weighted on
the basis of the Original Pool Principal Balance, of the amounts described under
(xi) and (xii) above.
"Scheduled Payment" means the scheduled monthly payment on a Mortgage
Loan due on any Due Date allocable to principal and/or interest on such Mortgage
Loan which, unless otherwise specified herein, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of
the monthly payment due on such Mortgage Loan.
"Seller" means American Residential Investment Trust, Inc., a Maryland
corporation, and its successors and assigns.
"Separate Indenture Trustee" means the Indenture Trustee if it is a
different entity than the Master Servicer at the time.
"Servicer" means any person acting as the Servicer pursuant to a
Servicing Agreement.
"Servicing Advances" means all customary, reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by a Servicer of its
servicing obligations, including, but not limited to, the cost of (i) the
inspection, preservation, restoration and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, and (iii)
the management and liquidation of any REO Property.
"Servicing Agreement" means any agreement entered into by or assigned
to the Seller relating to servicing and/or administration of Mortgage Loans as
provided in Schedule V.
"Servicing Fee" means, as to each Mortgage Loan and any Distribution
Date, an amount equal to one month's interest at the applicable Servicing Fee
Rate on the Stated Principal Balance of such Mortgage Loan.
"Servicing Fee Rate" means, with respect to any Mortgage Loan, a per
annum rate of 0.50%.
"Servicing Officer" means any officer of the Master Servicer or any
Servicer involved in, or responsible for, the administration and servicing of
the Mortgage Loan whose name and facsimile signature appear on a list of
servicing officers furnished to the Indenture Trustee, the Custodian and FSA by
the Master Servicer or any Servicer on the Closing Date pursuant to this
Agreement, as such list may from time to time be amended.
"Stated Principal Balance" means, as to any Mortgage Loan and Due Date,
the unpaid principal balance of such Mortgage Loan as of such Due Date as
specified in the amortization schedule at the time relating thereto (before any
adjustment to such amortization schedule by reason of any moratorium or similar
waiver or grace period) after giving effect to any previous partial Principal
Prepayments and Liquidation Proceeds allocable to principal (other than with
respect to any Liquidated Mortgage Loan) and to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by the related
Mortgagor.
"Substitution Amount" has the meaning ascribed to such term pursuant to
Section 2(c)(iv).
"Trust Receipt" means, as applicable, either the Initial Trust Receipt
in the form of Exhibit One-A to the Custodial Agreement or the Final Trust
Receipt in the form of Exhibit One-B to the Custodial Agreement.
"Trustee Mortgage File" means, with respect to each Mortgage Loan, the
Mortgage Documents.
2. Mortgage Documents.
(a) Indenture Trustee to Retain Possession of Documents
through Custodian.
(i) Concurrently with the execution and delivery
hereof, the Issuer has pledged, transferred and assigned to
the Indenture Trustee for the benefit of the Bondholders and
FSA, as collateral for the payment of principal and interest
on the Bonds, all right, title and interest of the Issuer in
and to the Trust Estate for the Bonds, including the Mortgage
Loans. Prior to or contemporaneous with the execution of this
Agreement, or within the applicable time periods specified
below, the Issuer shall have delivered or caused to be
delivered to the Custodian, with respect to each Mortgage
Loan, all originals of the Mortgage Documents and any other
instruments relating thereto specified in the Custodial
Agreement, including each item in the Trustee Mortgage File.
In the event that in connection with any Mortgage
Loan the Issuer cannot deliver (A) the original recorded
Mortgage, (B) all interim recorded assignments or (C) the
lender's title policy (together with all riders thereto)
satisfying the requirements set forth in the Custodial
Agreement, concurrently with the execution and delivery
hereof, the Issuer shall promptly deliver to the Custodian, in
accordance with the terms and conditions of the Custodial
Agreement, (x) in the case of (A) or (B) above, such original
Mortgage or such interim assignment, as the case may be, with
evidence of recording indicated thereon upon receipt thereof
from the public recording office, or a copy thereof,
certified, if appropriate, by the relevant recording office,
but in no event shall any such delivery of the original
Mortgage Loan and each such interim assignment or a copy
thereof, certified, if appropriate, by the relevant recording
office, be made later than 90 days following the Closing Date,
or, (y) in the case of (C) above, such title policy, no later
than 90 days following the Closing Date; provided, however,
that in the event the Issuer is unable to deliver by such date
each Mortgage and each such interim assignment by reason of
the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each such
interim assignment, because the related Mortgage has not been
returned by the appropriate recording office, the Issuer shall
deliver such documents to the Custodian as promptly as
possible upon receipt thereof and, in any event, within 180
days following the Closing Date. The Issuer shall forward or
cause to be forwarded to the Custodian (I) from time to time
additional original documents evidencing an assumption or
modification of a Mortgage Loan and (II) any other documents
required to be delivered by the Issuer to the Custodian. In
the event that the original Mortgage is not delivered and in
connection with the payment in full of the related Mortgage
Loan the public recording office requires the presentation of
a "lost instruments affidavit and indemnity" or any equivalent
document, because only a copy of the Mortgage can be delivered
with the instrument of satisfaction or reconveyance, the
Issuer shall execute and deliver or cause to be executed and
delivered such a document to the public recording office. In
the case where a public recording office retains the original
recorded Mortgage or in the case where a Mortgage is lost
after recordation in a public recording office, the Issuer
shall deliver to the Custodian a copy of such Mortgage
certified by such public recording office to be a true and
complete copy of the original recorded Mortgage.
As promptly as practicable subsequent to the Issuer's
pledge, transfer and assignment, and in any event within
thirty (30) days thereafter, the Issuer shall (X) affix the
Indenture Trustee's name to each assignment of Mortgage, as
the assignee thereof, (Y) cause such assignment to be in
proper form for recording in the appropriate public office for
real property records within thirty (30) days after receipt
thereof and (Z) cause to be delivered for recording in the
appropriate public office for real property records the
assignments of the Mortgages to the Indenture Trustee, except
that, with respect to any assignment of a Mortgage as to which
the Issuer has not received the information required to
prepare such assignment in recordable form, the Issuer's
obligation to do so and to deliver the same for such recording
shall be as soon as practicable after receipt of such
information and in any event within thirty (30) days after the
receipt thereof, and the Issuer need not cause to be recorded
any assignment which relates to a Mortgage Loan the Mortgage
Property relating to which is located in any jurisdiction
under the laws of which, as evidenced by an Opinion of Counsel
from local counsel, delivered by the Issuer (at the Issuer's
expense) to the Indenture Trustee and FSA in accordance with
Section 2.11 of the Indenture, the recordation of such
assignment is not necessary to protect the Indenture Trustee's
and the Bondholders' and FSA's interest in the related
Mortgage Loan; provided, however, notwithstanding the delivery
of any legal opinions, each assignment of Mortgage shall be
recorded upon the earliest to occur of (I) the direction by
FSA, (II) a default under the Indenture, or (III) any
bankruptcy, insolvency or foreclosure with respect to the
related Mortgagor.
In the case of Mortgage Loans that have been prepaid
in full as of the Closing Date, the Issuer, in lieu of
delivering the above documents to the Custodian, will deposit
in the Bond Account the portion of such payment that is
required to be deposited in the Bond Account pursuant to
Section 3(g).
Until the Bonds have been paid in full and the Issuer
has otherwise fulfilled its obligations under the Indenture,
the Custodian shall retain possession and custody of each
Trustee Mortgage File in accordance with and subject to the
terms and conditions set forth in the Custodial Agreement, the
Indenture and this Agreement.
(ii) On the Closing Date, the Indenture Trustee shall
receive a Trust Receipt from the Custodian, whereby the
Custodian acknowledges receipt of the documents identified in
the applicable Trust Receipt and declares that it holds and
will hold such documents and the other documents delivered to
it constituting the Trustee Mortgage Files in trust for the
exclusive use and benefit of the Indenture Trustee, as the
holder of the Trust Receipts acting on behalf of all present
and future Bondholders and FSA. The Custodian acknowledges
that it will maintain possession of the Mortgage Notes in the
State provided in the Custodial Agreement, unless otherwise
permitted by the Indenture Trustee, the Rating Agencies and
FSA.
The Custodian has agreed, pursuant to the Custodial
Agreement, to execute and deliver on the Closing Date to the
Issuer, the Master Servicer, the Seller and the Indenture
Trustee a Trust Receipt constituting an initial such receipt
in the form attached to the Custodial Agreement. Based on its
review and examination required by and in accordance with the
Custodial Agreement, and only as to the documents identified
in such initial certification, the Custodian acknowledges that
such documents appear regular on their face and relate to the
specified Mortgage Loan; provided that the Custodian shall be
under no obligation to ascertain that, except as therein
provided, any information set forth in said Trust Receipt is
accurate. Neither the Indenture Trustee nor the Custodian
shall be under any duty or obligation to inspect, review or
examine said documents, instruments, certificates or other
papers to determine that the same are genuine, enforceable or
appropriate for the represented purpose or that they have
actually been recorded in the real estate records or that they
are other than what they purport to be on their face.
Not later than 180 days after the Closing Date, the
Custodian shall deliver to the Indenture Trustee the
applicable Trust Receipt in final form, with any applicable
exceptions noted thereon.
If, in the course of its review, the Custodian finds
any document constituting a part of a Trustee Mortgage File
which does not meet the requirements of the Custodial
Agreement, such Custodian shall list such as an exception in
the Trust Receipt; provided, however, that such Custodian
shall not make any determination as to whether (A) any
endorsement is sufficient to transfer all right, title and
interest of the party so endorsing, as Noteholder or assignee
thereof, in and to that Mortgage Note or (B) that any
assignment is in recordable form or is sufficient to effect
the assignment of and transfer to the assignee thereof under
the mortgage to which the assignment relates. Subject to the
time extensions for certain documents set forth in subclause
(i) above, the Seller shall promptly correct or cure such
defect within 90 days from the date it was so notified of such
defect and, if the Seller does not correct or cure such defect
within such period, the Seller shall either (I) substitute for
the related Mortgage Loan a Replacement Mortgage Loan, which
substitution shall be accomplished in the manner and subject
to the conditions set forth in Section 2(c)(iv), or (II)
purchase such Mortgage Loan from the Indenture Trustee within
90 days from the date the Seller was notified of such defect
in writing at the Purchase Price of such Mortgage Loan. Any
such substitution pursuant to clause (I) above shall not be
effected prior to the delivery to the Custodian of a Request
for Release. The Purchase Price for any such Mortgage Loan
purchased pursuant to clause (II) shall be deposited by the
Seller in the Bond Account on or prior to the applicable
Distribution Account Deposit Date in the month following the
month of purchase and, upon the making of such deposit and the
delivery of related Request for Release, the Custodian shall
release the related Trustee Mortgage File to the Seller and
shall execute and deliver at Issuer's request such instruments
of transfer or assignment prepared by the Issuer and the
Indenture Trustee, in each case without recourse, as shall be
necessary to vest in the Seller, or a designee, the Issuer's
and the Indenture Trustee's interest in any Mortgage Loan
released pursuant hereto.
The Custodian shall retain possession and custody of
each Trustee Mortgage File in accordance with and subject to
the terms and conditions set forth in the Custodial Agreement.
The Issuer or the Indenture Trustee or any Servicers shall
promptly deliver to the Custodian, upon the execution or
receipt thereof, the originals of such other documents or
instruments constituting the Trustee Mortgage File as come
into the possession of the respective Issuer, Indenture
Trustee or any Servicer from time to time.
It is understood and agreed that the obligation of
the Seller to substitute for or to purchase any Mortgage Loan
which does not meet the requirements set forth in the
Custodial Agreement shall constitute the sole remedy
respecting such defect available to the Indenture Trustee and
any Bondholder against the Seller.
(b) Security Interest of the Indenture Trustee; Indenture
Trustee and Custodian to Cooperate; Release of Trustee Mortgage Files.
(i) The Master Servicer hereby acknowledges that
concurrently with the execution of this Agreement, the
Indenture Trustee has acquired and holds a security interest
in the Trustee Mortgage Files and in all Mortgage Loans
represented by such Trustee Mortgage Files and in all funds
now or hereafter held by, or under the control of, the Master
Servicer that are collected by the Master Servicer in
connection with the Mortgage Loans, whether as Scheduled
Payments, as Principal Prepayments, or as Liquidation Proceeds
or Insurance Proceeds, and in all proceeds of the foregoing
and proceeds of proceeds (but excluding any amounts or
reimbursements to which the Master Servicer is entitled under
this Agreement). The Master Servicer agrees that so long as
the Mortgage Loans are assigned to the Indenture Trustee, all
Trustee Mortgage Files (and any documents or instruments
constituting a part of such files), and such funds which come
into the actual possession or custody of, or which are subject
to the actual possession and control of, the Master Servicer
shall be held by the Master Servicer for and on behalf of the
Indenture Trustee as the Indenture Trustee's agent and bailee
for purposes of perfecting the Indenture Trustee's security
interest therein, as provided by Section 9-305 of the Uniform
Commercial Code of the State in which such property is
located, or by other laws, as specified in Section 8.04 of the
Indenture. The Master Servicer hereby accepts such agency and
acknowledges that the Indenture Trustee, as secured party,
will be deemed to have possession at all times of all Trustee
Mortgage Files and any other documents or instruments
constituting a part of such files, such funds and other items
for purposes of Section 9-305 of the Uniform Commercial Code
of the State in which such property may be physically held by
the Master Servicer. Notwithstanding such appointment of the
Master Servicer as agent, the Indenture Trustee agrees to
execute all satisfactions of Mortgages. The Master Servicer
also agrees that it shall not create, incur or subject any
Trustee Mortgage File or other documents relating to a
Mortgage Loans which are in the possession of the Master
Servicer with respect to each Mortgage Loan or any funds that
are deposited in the Distribution Account, the Bond Account,
or any funds that otherwise are or may become due or payable
to the Indenture Trustee for the benefit of the Bondholders,
to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance (other than the claims of the
Bondholders), or assert by legal action or otherwise any claim
or right of set-off against any such Trustee Mortgage File or
any funds collected or held by, or under the control of, the
Master Servicer from time to time in respect of a Mortgage
Loan. The Master Servicer, however, will not be deemed to have
any possession of any Trustee File if any Servicer has
physical possession of the Trustee File.
If the related Servicer at any time seeks to initiate
a foreclosure proceeding in respect of any Mortgaged Property
as authorized by the related Servicing Agreement, the related
Servicer shall deliver or cause to be delivered to the
Indenture Trustee, for signature, as appropriate, any court
pleadings, requests for trustee's sale or other documents
necessary to effectuate such foreclosure or any legal action
brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency
judgment or to enforce any other remedies or rights provided
by the Mortgage Note or the Mortgage or otherwise available at
law or in equity. The Indenture Trustee agrees to cooperate
with the Servicer in such matters.
(c) Representations and Warranties of the Master Servicer, the
Seller and the Issuer.
(i) Norwest Bank Minnesota, National Association, in
its capacity as Master Servicer, hereby makes the
representations and warranties set forth in Schedule II
hereto, and by this reference incorporated herein, to the
Issuer, FSA and the Indenture Trustee, as of the Closing Date,
or if so specified therein, as of the Cut-off Date.
(ii) The Seller has made in the Mortgage Loan
Purchase Agreement the representations and warranties as set
forth in Schedule III hereto, as of the Closing Date, or if so
specified therein, as of the Cut-off Date, and such
representations and warranties, and the obligations associated
therewith, have been assigned to the Issuer, FSA and the
Indenture Trustee;
(iii) The Issuer hereby makes the representations and
warranties set forth in Schedule IV hereto, and by this
reference incorporated herein, to the Indenture Trustee and
the Master Servicer, as of the Closing Date.
(iv) Upon discovery by any of the parties hereto or
FSA, of a breach of a representation or warranty described in
Section 2(c)(ii) (without regard to any limitation regarding
the knowledge of the Seller contained therein) that materially
and adversely affects the value of any Mortgage Loan or the
interests of the Bondholders or FSA in any Mortgage Loan, the
party discovering such breach shall give prompt written notice
thereof to the other parties and FSA. The Seller has
covenanted in the Mortgage Loan Purchase Agreement to comply
with the following: within 90 days of the earlier of its
discovery or its receipt of written notice from any party of a
breach of any representation or warranty (without regard to
any limitation regarding the knowledge of the Seller contained
therein) made pursuant to Section 2(c)(ii) which materially
and adversely affects the value of any Mortgage Loan or the
interests of the Bondholders or FSA, in any Mortgage Loan, the
Seller shall cure such breach in all material respects, and if
such breach is not so cured, shall, (A) remove such Mortgage
Loan (a "Deleted Mortgage Loan") from the Trust Estate and
substitute in its place a Replacement Mortgage Loan, in the
manner and subject to the conditions set forth in this Section
2(c); or (B) purchase the affected Mortgage Loan or Mortgage
Loans from the Issuer (with the Indenture Trustee releasing
its lien thereon) at the Purchase Price in the manner set
forth below; provided, however, that any such substitution
pursuant to (A) above shall not be effected prior to the
delivery to the Indenture Trustee of a Request for Release for
the Deleted Mortgage Loan Trustee Mortgage File, and the
delivery to the Custodian of the Trustee Mortgage File for any
such Replacement Mortgage Loan. The Seller shall promptly
reimburse the Indenture Trustee or FSA for any expenses
reasonably incurred by the Indenture Trustee or FSA in respect
of enforcing the remedies for such breach.
With respect to the representations and warranties
described in this Section 2(c) which are made to the best of
the Seller's knowledge, if it is discovered by either the
Issuer or the Indenture Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of any Mortgage
Loan, or the interests of the Bondholders or FSA therein,
notwithstanding the Seller's lack of knowledge with respect to
the substance of such representation or warranty, such
inaccuracy shall be deemed a breach of the applicable
representation or warranty.
With respect to any Replacement Mortgage Loan or
Loans, the Seller shall deliver to the Custodian for the
benefit of the Bondholders and FSA the Mortgage Note, the
Mortgage, the related assignment of the Mortgage, and such
other documents and agreements as are required by the
Custodial Agreement, with the Mortgage Note endorsed and the
Mortgage assigned as required by Custodial Agreement. No
substitution is permitted to be made in any calendar month
after the Distribution Account Deposit Date for such month.
Scheduled Payments due with respect to Replacement Mortgage
Loans in the month of substitution shall not be part of the
Trust Estate and will be retained by the Seller on the next
succeeding Distribution Date. For the month of substitution,
Available Funds will include the monthly payment due on any
Deleted Mortgage Loans for such month and thereafter the
Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loans.
The Issuer shall amend the Schedule of Mortgage Loans
for the benefit of the Bondholders and FSA to reflect the
removal of such Deleted Mortgage Loans and the substitution of
the Replacement Mortgage Loans and the Issuer shall deliver
the amended Schedule of Mortgage Loans to the Indenture
Trustee and FSA. Upon such substitution, the Replacement
Mortgage Loans shall be subject to the terms of this Agreement
in all respects, and the Seller shall be deemed to have made
with respect to such Replacement Mortgage Loans, as of the
date of substitution, the representations and warranties made
pursuant to Section 2(c)(ii) with respect to such Mortgage
Loans. Upon any such substitution and the deposit to the Bond
Account of the amount required to be deposited therein in
connection with such substitution as described in the
following paragraph, the Indenture Trustee shall release the
Trustee Mortgage File held for the benefit of the Bondholders
and FSA relating to such Deleted Mortgage Loans to the Seller
and shall execute and deliver at the Seller's direction such
instruments of transfer or assignment prepared by the Seller,
in each case without recourse, as shall be necessary to vest
title in the Seller, or its designee, the Indenture Trustee's
interest in any Deleted Mortgage Loan substituted for pursuant
to this Section 2(c).
For any month in which the Seller substitutes one or
more Replacement Mortgage Loans for one or more Deleted
Mortgage Loans, the Seller will determine the amount (if any)
by which the aggregate principal balance of all such
Replacement Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such
Deleted Mortgage Loans (after application of the scheduled
principal portion of the monthly payments due in the month of
substitution). The amount of such shortage (the "Substitution
Amount") shall be deposited into the Bond Account by the
Seller on or before the Distribution Account Deposit Date for
the Distribution Date in the month succeeding the calendar
month during which the related Mortgage Loan became replaced
hereunder.
In the event that the Seller shall have purchased a
Mortgage Loan, the Purchase Price therefor shall be deposited
in the Bond Account pursuant to Section 3(g) and in compliance
with the provisions of Section 8.05 of the Indenture on or
before the Distribution Account Deposit Date for the
Distribution Date in the month following the month during
which the Seller became obligated hereunder to purchase or
replace such Mortgage Loan and upon such deposit of the
Purchase Price and receipt of a Request for Release, the
Indenture Trustee shall release the related Trustee Mortgage
File held for the benefit of the Bondholders to the Seller,
and the Indenture Trustee shall execute and deliver at the
Seller's direction such instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as
shall be necessary to transfer title from the Indenture
Trustee pursuant to Section 8.05 of the Indenture. It is
understood and agreed that the obligation under this Agreement
of the Seller to cure, purchase or replace any Mortgage Loan
as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such
breach available to Bondholders or the Indenture Trustee on
their behalf.
The representations and warranties made pursuant to
this Section 2(c) shall survive delivery of the respective
Trustee Mortgage Files to the Custodian for the Indenture
Trustee for the benefit of the Bondholders and FSA.
3. General Duties of the Master Servicer.
(a) Master Servicer to Master Service Mortgage Loans.
The parties agree that, subject to the provisions of Section 7 hereof,
the Master Servicer shall master service the Mortgage Loans in accordance with
the terms of this Agreement. In that regard, the Master Servicer shall monitor
and oversee the servicing of the Mortgage Loans by each Servicer pursuant to the
terms of its Servicing Agreement, on behalf of the Issuer, FSA and the Indenture
Trustee and for the benefit of the Bondholders, in accordance with this
Agreement and applicable laws and regulations and giving due consideration to
customary and usual standards of practice of prudent mortgage lenders and master
servicers. In addition, the Master Servicer shall (i) oversee and consult with
each Servicer as appropriate from time to time to fulfill the Master Servicer's
obligations hereunder, (ii) receive and review all reports, information and
other data and documents provided to the Master Servicer by each Servicer and
(iii) otherwise exercise its best efforts, as more fully set forth in Section
3(b), to cause each Servicer to perform and observe the covenants, obligations
and conditions required to be performed under its Servicing Agreement.
(b) Servicing; Enforcement of the Obligations of Servicers.
(i) The Seller has entered into or is the assignee of
the Servicing Agreements listed on Schedule V hereto, and on
the Closing Date it assigned all of its right, title and
interest in and to such Servicing Agreements to the Issuer.
The Issuer, the Indenture Trustee and the Bondholders, by
their purchase and acceptance of the Bonds, acknowledge and
agree that the Mortgage Loans shall be serviced by the
Servicers in accordance with the terms and provisions of the
Servicing Agreements and the Issuer authorizes the Master
Servicer to enforce the Servicing Agreements pursuant to the
terms of this Agreement. The Seller has (A) provided to each
Servicer notice of the assignment of the related Servicing
Agreement to the Issuer, in accordance with the provisions of
such Servicing Agreement, and of the appointment of Norwest as
Master Servicer hereunder, and has instructed each Servicer to
remit all amounts required to be paid to the owner of the
related Mortgage Loans under its Servicing Agreement to the
Master Servicer, and (B) has received from each Servicer
acknowledgement of such assignment and appointment and of the
Master Servicer's authority to enforce the related Servicing
Agreement on behalf of the Trust and such Servicer's agreement
to remit all such amounts to the Master Servicer.
(ii) Each Servicing Agreement requires the applicable
Servicer to service the Mortgage Loans in accordance with the
provisions thereof. References in this Agreement to actions
taken or to be taken by the Master Servicer include actions
taken or to be taken by a Servicer on behalf of the Master
Servicer. Any fees and other amounts payable to such Servicers
shall be deducted from amounts remitted to the Master Servicer
by the applicable Servicer and shall not be an obligation of
the Issuer, Master Servicer or the Trust Estate. As part of
its master servicing activities hereunder, the Master
Servicer, for the benefit of the Indenture Trustee, FSA and
the Bondholders, shall use its best reasonable efforts to
enforce the obligations of each Servicer under the related
Servicing Agreement, to the extent that the non-performance of
any such obligation would have material and adverse effect on
a Mortgage Loan. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of
Servicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, in its good
faith business judgment, would require were it the owner of
the related Mortgage Loans; provided, that, the Master
Servicer shall be entitled to be reimbursed for the costs and
expenses associated with any such enforcement (X) from a
general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in
respect of the related Mortgage Loan, (Y) from a specific
recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed, and (Z) if
the amounts described in the preceding clauses (X) and (Y) are
insufficient to reimburse the Master Servicer for all amounts
so advanced, then the outstanding amount of any such advance
shall be reimbursable out of amounts distributable to the
Master Servicer out of the Distribution Accounts pursuant to
Section 8.02(c) of the Indenture.
(iii) Following the occurrence of a Term of Service
Event ( as defined in the related Servicing Agreement) with
respect to a Servicer, neither the Indenture Trustee nor the
Master Servicer shall be required to deliver to such Servicer
an Extension Notice (as defined in the related Servicing
Agreement) with respect to any Term of Service unless the
Indenture Trustee or the Master Servicer shall have received,
no later than two Business Days prior to the expiration of the
then current Term of Service, written instructions from FSA
directing the Indenture Trustee or the Master Servicer to
deliver an Extension Notice to such Servicer.
(c) Successor Servicers.
(i) The Issuer as owner of the Mortgage Loans and the
Indenture Trustee as lienholder with respect thereto, pursuant
to the Servicing Agreements, hereby authorize and appoint the
Master Servicer as their agent to exercise all rights of the
party entitled to exercise ownership rights with respect to
the Mortgage Loans in accordance with the terms of the
Servicing Agreements, including, without limitation, the power
to terminate the Servicing Agreements and the related
Servicers according to the terms and conditions of such
Servicing Agreements, without any limitation by virtue of this
Agreement; provided, however, that in the event of termination
of any Servicing Agreement by the Master Servicer or the
related Servicer, the Master Servicer shall either act as
servicer of the related Mortgage Loans in accordance with the
terms of the related Servicing Agreement (with such
modifications as described in this Agreement) or enter into a
Servicing Agreement with a successor Servicer acceptable to
the Indenture Trustee and FSA which will be bound by the terms
of the related Servicing Agreement in accordance with the
terms of related Servicing Agreement (with such modifications
as described in this Agreement). Notwithstanding the
foregoing, the parties hereto agree that the Master Servicer,
in its capacity as successor Servicer, immediately will assume
all of the obligations of the Servicer to make Monthly
Advances and the Master Servicer will assume the other duties
of the Servicer as soon as practicable, but in no event later
than ninety 90 days after the Master Servicer becomes
successor Servicer pursuant to the preceding sentence. The
Master Servicer, in its capacity as successor Servicer, shall
not be responsible for the missing information and/or
documents that it cannot obtain through reasonable efforts.
(ii) If the Master Servicer acts as Servicer, it will
not assume liability for the representations and warranties of
the Servicer, if any, that it replaces. The Master Servicer
shall use reasonable efforts to have the successor Servicer
assume liability for substantially all the representations and
warranties made by the terminated Servicer in respect of the
related Mortgage Loans (or fewer as consented to by FSA), and
in the event of any such assumption by the successor Servicer,
the Indenture Trustee or the Master Servicer, as applicable,
may, in the exercise of its business judgment, release the
terminated Servicer from liability for such representations
and warranties.
(iii) Notwithstanding the provisions of this Section
3 or of any Servicing Agreement, the Master Servicer shall be
under no obligation, either as Master Servicer or as successor
Servicer under a Servicing Agreement, to purchase any Mortgage
Loan.
(d) Access to Certain Documentation.
The Master Servicer shall afford the Issuer, FSA and the Indenture
Trustee reasonable access to all records and documentation regarding the
Mortgage Loans within the Master Servicer's actual possession and all accounts,
insurance information and other matters relating to this Agreement maintained by
the Master Servicer, such access being afforded without charge, but only upon
reasonable written request and during normal business hours at the office
designated by the Master Servicer. Such access shall be afforded without charge,
but only upon reasonable and prior written request and during normal business
hours at the offices designated by the Master Servicer. Nothing in this Section
3(d) shall limit the obligation of the Master Servicer to observe any applicable
law prohibiting disclosure of information regarding the Mortgagors and the
failure of the Master Servicer to provide access as provided in this Section
3(d) as a result of such obligation shall not constitute a breach of this
Section 3(d).
(e) Rights of the Issuer and the Indenture Trustee in Respect
of the Master Servicer.
The Issuer may, but is not obligated to, enforce the obligations of the
Master Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer hereunder
and in connection with any such defaulted obligation to exercise the related
rights of the Master Servicer hereunder; provided that the Master Servicer shall
not be relieved of any of its obligations hereunder by virtue of such
performance by the Issuer or its designee. Neither the Indenture Trustee nor the
Issuer shall have any responsibility or liability for any action or failure to
act by the Master Servicer nor shall the Indenture Trustee or the Issuer be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
(f) Reserved.
(g) Collection of Mortgage Loan Payments; Bond Account;
Distribution Account.
(i) The Master Servicer shall make reasonable efforts
to collect all payments called for under the terms and
provisions of the Servicing Agreements from the related
Servicers.
(ii) The Master Servicer shall establish and maintain
a Bond Account in trust for the benefit of the Indenture
Trustee and FSA, which shall be an Eligible Account, into
which the Master Servicer shall deposit or cause to be
deposited on a daily basis, or to the extent same day deposit
is unavailable, within one Business Day of receipt, the
following payments and collections remitted by Servicers or
received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest
due on the Mortgage Loans on or before the Cut-off Date) and
the following amounts required to be deposited hereunder:
(A) all payments on account of principal on
the Mortgage Loans, including Principal Prepayments
and the principal component of any Advance remitted
to it by the Servicers;
(B) all payments on account of interest on
the Mortgage Loans, net of the sum of the related
Servicing Fee, and the interest component of any
Advance remitted to it by the Servicers;
(C) all Insurance Proceeds and
Liquidation Proceeds;
(D) any other payments, collections and
other amounts remitted to it by a Servicer pursuant
to the related Servicing Agreement in respect of the
Mortgage Loans, including Compensating Interest;
(E) any amount required to be deposited by
the Master Servicer in connection with any realized
losses on Permitted Investments pursuant to subclause
(vii) of this Subsection;
(F) all Purchase Prices from the Seller or
any other person and all Substitution Amounts;
(G) all Master Servicing Advances made by
the Master Servicer pursuant to Section 4;
(H) any amount contributed by the Issuer to
be used for payment of principal and/or interest on
the Bonds for any other purpose identified by the
Issuer; and
(I) any other amounts required to be
deposited hereunder.
The foregoing requirements for deposit by the Master
Servicer shall be exclusive, it being understood and agreed
that, without limiting the generality of the foregoing,
payments in the nature of late payment charges or assumption
fees, but excluding prepayment penalties, if collected, need
not be deposited by the Master Servicer. In the event that the
Master Servicer shall deposit any amount not required to be
deposited, it may at any time withdraw or direct the
institution maintaining the Bond Account to withdraw such
amount from the Bond Account, any provision herein to the
contrary notwithstanding. The Master Servicer shall maintain
adequate records with respect to all withdrawals made pursuant
to this subsection. All funds deposited in the Bond Account
shall be held in trust for the Bondholders until withdrawn in
accordance with the subclauses of this subsection.
(iii) The Master Servicer may from time to time make
withdrawals from the Bond Account for the following purposes:
(A) to pay any Servicer the Servicing Fee
and to reimburse the Master Servicer or Servicer, as
applicable, for unreimbursed Master Servicer
Advances, Advances, or Servicing Advances made by it,
such right of reimbursement pursuant to this
subclause being limited to amounts received on the
Mortgage Loan(s) (including Insurance Proceeds and
Liquidation Proceeds) in respect of which any such
Master Servicer Advance, Advance or Servicing Advance
was made;
(B) to reimburse the related Servicer or
Master Servicer for any Nonrecoverable Advance
previously made;
(C) to pay to the purchaser, with respect to
each Mortgage Loan or property acquired in respect
thereof that has been purchased pursuant to any
Section of this Agreement, all amounts received
thereon after the date of such purchase, except as
otherwise herein provided;
(D) to withdraw any amount deposited in the
Bond Account and not required to be deposited
therein;
(E) to withdraw investment earnings payable
to the Master Servicer;
(F) no later than the Distribution Date if
the Master Servicer is the same entity as the
Indenture Trustee, otherwise, on the Distribution
Account Deposit Date, to withdraw the amounts
remitted by the Servicers to the Bond Account,
together with any Master Servicer Advances, net of
any amounts permitted to be withdrawn from the Bond
Account pursuant to any other clause of this
subsection 3(g)(iii), and remit such net amount to
the Distribution Account;
(G) to clear and terminate the Bond Account
upon termination of this Agreement pursuant to
Section 8(a);
(H) to pay the LPMI Premium due on the LPMI
Policy to the LPMI Insurer;
(I) to reimburse itself for expenses, costs
and liabilities to the extent expressly provided in Section
6(e).
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the
purpose of justifying any withdrawal from the Bond Account
pursuant to such subclauses (A), (B) and (D). Prior to making
any withdrawal from the Bond Account pursuant to subclause
(B), the Master Servicer shall deliver to the Indenture
Trustee an Officer's Certificate of a Servicing Officer
indicating the amount of any previous Master Servicer Advance,
Advance, or Servicing Advance determined by the Master
Servicer or the Servicer to be a Nonrecoverable Advance and
identifying the related Mortgage Loan(s).
(vi) With respect to any payments received by the
Master Servicer from a Servicer on or after the second
Business Day following the Business Day on which such payment
was due, AmREIT shall pay to the Master Servicer, to the
extent not paid by the Servicer, interest on any such late
payment at an annual rate equal to the rate of interest as is
publicly announced from time to time at its principal office
by the Chase Manhattan Bank, New York, New York, as its prime
lending rate, adjusted as of the date of each change, plus
three percentage points, but in no event greater than the
maximum amount permitted by applicable law. Such interest
shall be paid by AmREIT to the Master Servicer, to the extent
not paid by the Servicer, on the first Business Day after the
date such late payment is made and shall cover the period
commencing with the day following such second Business Day and
ending with the Business Day on which such payment is made,
both inclusive. The Master Servicer shall promptly notify
AmREIT and the Servicer of any payments due from a Servicer
but not received. The payment by AmREIT of any such interest
shall not be deemed an extension of time for payment or a
waiver of any Event of Default by the Servicers.
(v) Each institution at which the Bond Account is
maintained may invest the funds therein as directed in writing
by the Master Servicer in Permitted Investments, which shall
mature not later than the Distribution Account Deposit Date
with respect to available funds to be withdrawn on that date
and, in each case, shall not be sold or disposed of prior to
its maturity. All such Permitted Investments shall be made in
the name of the Indenture Trustee, for the benefit of the
Bondholders and FSA. All income and gain (net of any losses)
realized from any such investment of funds on deposit in the
Bond Account shall be for the benefit of the Master Servicer
and shall be retained or withdrawn by it monthly as provided
herein. The amount of any realized losses in the Bond Account
incurred in any such account in respect of any such
investments shall promptly be deposited by the Master Servicer
in the Bond Account. The Indenture Trustee in its fiduciary
capacity shall not be liable for the amount of any loss
incurred in respect of any investment or lack of investment of
funds held in the Bond Account and made in accordance with
this subsection. Notwithstanding the foregoing, the Master
Servicer will remit directly to AmREIT all income and gain
(net of any losses) earned from investment of funds in the
Bond Account from August 25, 1999 through September 17, 1999.
The Master Servicer shall retain any income and gain (net of
any losses) earned from investments in the Bond Account from
August 18, 1999 through August 24, 1999.
(vi) The Master Servicer shall give notice to the
Indenture Trustee, FSA, the Issuer and each Rating Agency of
any proposed change of the location of the Bond Account not
later than 30 days and not more than 45 days prior to any
change thereof.
(h) Annual Officer's Certificate as to Compliance.
(i) The Master Servicer shall deliver to the
Indenture Trustee, FSA and the Rating Agencies on or before
June 30 of each year, commencing on June 30, 2000, a Servicing
Officer's Certificate, certifying that with respect to the
period ending on the immediately preceding December 31: (A)
such Servicing Officer has reviewed the activities of such
Master Servicer during the preceding calendar year or portion
thereof and its performance under this Agreement, (B) to the
best of such Servicing Officer's knowledge, based on such
review, such Master Servicer has performed and fulfilled its
duties, responsibilities and obligations under this Agreement
in all material respects throughout such year, or, if there
has been a default in the fulfillment of any such duties,
responsibilities or obligations, specifying each such default
known to such Servicing Officer and the nature and status
thereof, (C) nothing has come to the attention of such
Servicing Officer to lead such Servicing Officer to believe
that any Servicer has failed to perform any of its duties,
responsibilities and obligations under its Servicing Agreement
in all material respects throughout such year, or, if there
has been a material default in the performance or fulfillment
of any such duties, responsibilities or obligations,
specifying each such default known to such Servicing Officer
and the nature and status thereof, and (D) the Master Servicer
has received from each Servicer such Servicer's annual
certificate of compliance and a copy of such Servicer's annual
audit report, in each case to the extent required under the
applicable Servicing Agreement, or, if any such certificate or
report has not been received by the Master Servicer, the
Master Servicer is using its best reasonable efforts to obtain
such certificate or report .
(ii) Copies of such statements shall be provided to
any Bondholder upon request, by the Master Servicer or by the
Indenture Trustee at the Master Servicer's expense if the
Master Servicer failed to provide such copies (unless (A) the
Master Servicer shall have failed to provide the Indenture
Trustee with such statement or (B) the Indenture Trustee shall
be unaware of the Master Servicer's failure to provide such
statement).
(i) Master Servicer Fidelity Bond and Master Servicer
Errors and Omissions Insurance Policy.
The Master Servicer shall obtain and maintain in force (i) a policy or
policies of insurance covering errors and omissions on the performance of its
obligations as Master Servicer hereunder, and (ii) a fidelity Bond in respect of
its officers, employees and agents. In the event that any such policy or Bond
ceases to be in effect, the Master Servicer shall obtain a comparable
replacement policy or Bond. The coverage under each such policy and Bond shall
be in such an amount as is customary therefor for the business of master
servicing residential mortgage loans.
(j) Periodic Filings with the Securities and Exchange
Commission; Additional Information.
The Master Servicer agrees to promptly furnish to the Issuer, from time
to time upon request, such information, reports and its financial statements
within its control related to this Agreement and the Mortgage Loans as the
Issuer reasonably deems appropriate to prepare and file all necessary reports
with the Commission.
(k) Optional Purchase of Defaulted Mortgage Loans.
Any Affiliate of AmREIT, in its sole discretion, shall have the right
to elect (by written notice sent to the Indenture Trustee and the Master
Servicer), but shall not be obligated, to purchase for its own account from the
Trust Estate (or, in the case of the Issuer, to remove from the Lien of the
Indenture) any Mortgage Loan which is 90 days or more Delinquent in the manner
and at the Purchase Price specified in Section 2(c)(iv) with respect to Deleted
Mortgage Loans and subject to the limitations of Section 8.05 of the Indenture;
provided, however, such repurchase rights (i) must first be exercised as to
those Mortgage Loans most Delinquent in payment at the time of repurchase and
(ii) may be exercised, in the aggregate (but excluding those Mortgage Loans
being removed to satisfy the LPMI Insurer's right to purchase Delinquent
Mortgage Loans covered by the LPMI Policy), with respect to no more than three
percent (3.0%) of the Original Pool Principal Balance without FSA's prior
consent. The Purchase Price for any Mortgage Loan purchased hereunder shall be
deposited in the Bond Account and the Custodian, upon notice of receipt by the
Master Servicer of such deposit, shall release to the purchaser of such Mortgage
Loan the related Indenture Trustee's Mortgage File. The Issuer and the Indenture
Trustee (or the Master Servicer as its agent) 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 such Mortgage Loan. The purchaser of such Mortgage Loan shall succeed
to all the Issuer'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 obligation to the Indenture Trustee or the Noteholders with respect thereto.
(l) No Solicitation.
The Master Servicer agrees not to use the Master Servicer's records to
specifically solicit or permit any affiliate to solicit any Mortgagor with
respect to the refinancing of a Mortgage Loan. The Master Servicer agrees that
it will not take, permit or cause any action to be taken, directly or
indirectly, to solicit any Mortgagor to refinance the related written consent of
the Issuer and FSA; provided, however, all promotions of any kind directed to
the general public derived from marketing lists of any nature shall not be
considered solicitation pursuant to this section and shall be permitted provided
such marketing list shall not have been generated from the Master Servicer's
servicing records. Furthermore, the Master Servicer shall not be prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor. The Master
Servicer agrees not to refer a Mortgagor's inquiry to the Master Servicer's
affiliates; provided, however, that the Master Servicer or its affiliates shall
have no liability to the Issuer or FSA if the Mortgagor proceeds directly to the
Master Servicer's affiliates. It is understood and agreed that all rights and
benefits relating to the solicitation of any Mortgagor and the attendant rights,
title and interest in and to the list of Mortgagors and data relating to their
Mortgage Loans shall be retained by the Issuer.
(m) Servicer Clean-up Call Purchase of Mortgage Loans
Any Servicer that has the right to repurchase Mortgage Loans pursuant
to a clean-up call in the related Servicing Agreement may exercise such right at
a price equal to the Purchase Price for the Mortgage Loans. The Purchase Price
for any Mortgage Loans so purchased shall be deposited in the Bond Account and
the Indenture Trustee, upon receipt of a Request for Release, shall cause to be
released to the Servicer the related Trustee Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the Servicer, in
each case without recourse, as shall be necessary to vest in the Servicer any
Mortgage Loans released pursuant hereto and the Servicer of such Mortgage Loans
shall succeed to all the Issuer's and the Indenture Trustee's right, title and
interest in and to such Mortgage Loans and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The Servicer shall thereupon own such Mortgage Loans and all security and
documents, free of any further obligation to the Issuer, the Indenture Trustee
or the Bondholders with respect thereto.
(n) Master Servicer Monthly Data
If at any time there is a Separate Indenture Trustee, each month the
Master Servicer shall (i) prepare and forward to the Indenture Trustee and FSA
the Payment Date Statement or, (ii) if acceptable to the Separate Indenture
Trustee, furnish information (from reports of the Servicers) sufficient to
enable the Separate Indenture Trustee to prepare the Payment Date Statement.
4. Advances.
The Master Servicer shall determine on or before each Master Servicer
Advance Date whether any Servicer has failed to make any Advance of any
Scheduled Payment of principal and interest required to be made by such Servicer
pursuant to the terms of its Servicing Agreement. In the event that a Servicer
fails to make an Advance required to be made by it under the related Servicing
Agreement and such failure is not cured within the cure period provided therein
(a "Defaulted Monthly Advance"), then the Master Servicer shall make a Master
Servicer Advance in the amount of such Defaulted Monthly Advance on the related
Master Servicer Advance Date (by depositing an amount equal to the Defaulted
Monthly Advance in the Bond Account); provided, however, that the Master
Servicer shall not be obligated to make the Master Servicer Advance if it
determines that such advance would constitute a Nonrecoverable Advance; and
provided further, that the Master Servicer shall have no obligation to make any
subsequent Master Servicer Advances under this provision with respect to such
defaulting Servicer unless the Master Servicer shall have assumed all of the
obligations of the Servicer in accordance with the provisions of such Servicing
Agreement (in lieu of FSA directing that a different successor Servicer be
appointed). Notwithstanding the foregoing, if the Servicer is not terminated
pursuant to such Servicing Agreement as a result of such default, and if
thereafter the Servicer fails to make an Advance required to be made under such
Servicing Agreement, then the Master Servicer shall have no obligation to make
any Master Servicer Advance under this Section 4.
The Master Servicer shall deliver to the Indenture Trustee, the Issuer
and FSA on the related Master Servicer Advance Date or at any time thereafter an
Officer's Certificate of a Servicing Officer indicating the amount of any
proposed Master Servicer Advance determined by the Master Servicer to be a
Nonrecoverable Advance.
5. Master Servicing Compensation and Expenses.
(a) Master Servicer Compensation.
As compensation for its activities hereunder, the Master Servicer shall
be entitled to any investment earnings on the Bond Account.
The Master Servicer shall be required to pay all internal costs and
expenses incurred by it in connection with its master servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement.
(b) Servicer Compensation.
As compensation for its activities under its Servicing Agreement, each
Servicer shall be entitled to retain out of each payment of interest on a
Mortgage Loan (or portion thereof) an amount equal to interest at the applicable
Servicing Fee Rate on the Stated Principal Balance of the related Mortgage Loan
for the period covered by such interest payment as provided in the related
Servicing Agreement.
Additional servicing compensation in the form of assumption fees, late
payment charges and such other amounts as may be provided in the Servicing
Agreements shall be retained by the Servicers to the extent provided in the
related Servicing Agreement. Each Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities under its Servicing
Agreement (including payment of any premium for hazard insurance and any primary
mortgage guaranty insurance policy other than the LPMI Policy) and maintenance
of the other forms of insurance coverage required by its Servicing Agreement)
and shall not be entitled to reimbursement therefor except as specifically
provided in its Servicing Agreement and not inconsistent with this Agreement.
6. Master Servicer.
(a) Liabilities of the Master Servicer.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it herein.
(b) Merger or Consolidation of the Master Servicer.
Any Person into which the Master Servicer may be merged or
consolidated, or any Person resulting from any merger, conversion, other change
in form or consolidation to which the Master Servicer shall be a party, or any
Person succeeding to the business of the Master Servicer, shall be the successor
to the Master Servicer hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or resulting
Person to the Master Servicer shall be a Person that shall be qualified to act
as Master Servicer hereunder and shall have a net worth of not less than
$15,000,000 and FSA shall have consented in writing to its assumptions of such
master servicing obligations.
(c) Resignation of Master Servicer.
Except as otherwise provided in subsections (b) and (d) hereof, the
Master Servicer shall not resign from the obligations and duties hereby imposed
on it except (a) upon appointment of a successor servicer acceptable to FSA
(after consultation with the Indenture Trustee) and receipt by the Indenture
Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the Bonds
(without regard to the FSA Policy) and with the prior written consent of FSA, or
(b) upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination under clause (b) permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
to such effect delivered to the Indenture Trustee, the Issuer and FSA, which
Opinion of Counsel shall be reasonably acceptable to the Indenture Trustee, the
Issuer and FSA. No such resignation shall become effective until the Indenture
Trustee (if it is a different entity than the Master Servicer at the time, such
an entity being referred to as a `Separate Indenture Trustee") shall have
assumed, or a successor master servicer shall have been appointed as directed by
FSA (after consultation with the Separate Indenture Trustee) and until such
successor shall have assumed, the Master Servicer's responsibilities and
obligations under this Agreement. Notice of such resignation shall be given
promptly by the Master Servicer to the Indenture Trustee, FSA and the Issuer.
(d) Assignment or Delegation of Duties by the Master Servicer.
Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder; provided, however, that the Master
Servicer shall have the right without the prior written consent of the Indenture
Trustee, the Issuer or the Rating Agencies but with the prior written consent of
FSA to delegate or assign to or subcontract with or authorize or appoint an
Affiliate of the Master Servicer to perform and carry out any duties, covenants
or obligations to be performed and carried out by the Master Servicer hereunder.
In no case, however, shall any such delegation, subcontracting or assignment to
an Affiliate of the Master Servicer relieve the Master Servicer of any liability
hereunder. Notice of such permitted assignment shall be given promptly by the
Master Servicer to the Issuer and the Indenture Trustee. If, pursuant to any
provision hereof, the duties of the Master Servicer are transferred to a
successor master servicer, the entire amount of the Master Servicing Fees and
other compensation payable to the Master Servicer pursuant hereto, including
amounts payable to or permitted to be retained or withdrawn by the Master
Servicer pursuant to provision hereof, shall thereafter be payable to such
successor master servicer.
(e) Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Indenture
Trustee or the Bondholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Master
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Master Servicer and any director, officer,
employee or agent of the Master Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Company (to the extent of funds otherwise
payable to it under the Indenture as holder of the Investor Certificate) and the
Seller hereby agree to, and do hereby indemnify and hold harmless the Master
Servicer and each of its directors, officers, employees and agents, and its and
their respective successors and assigns, as applicable, from and against any and
all losses, liabilities, claims, charges, damages, fines, penalties, judgments,
actions, suits, costs and expenses of any kind or nature whatsoever (including
reasonable attorneys' fees and expenses and reasonable fees and expenses of
experts) imposed on, incurred by, or asserted against the Master Servicer or any
of its directors, officers, employees, agents, or any of their respective
successors or assigns, in any way related to or arising out of this Agreement
other than any such loss, liability or claim resulting solely from the Master
Servicer's willful misfeasance, bad faith or negligence in the performance of
its duties hereunder. This indemnification will survive the termination of the
Master Servicer or this Agreement. The Master Servicer shall be under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to master service the Mortgage Loans in accordance with
this Agreement and that in its opinion may involve it in any expenses or
liability; provided, however, that the Master Servicer may in its sole
discretion undertake any such action that it may deem necessary or desirable in
respect to this Agreement and the rights and duties of the parties hereto and
the interests of the Bondholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Estate and the Master Servicer
shall be entitled to be reimbursed therefor out of the Bond Account as provided
by Section 3(g).
The Master Servicer shall not be liable for any acts or omissions of
any Servicer. In particular, the Master Servicer shall not be liable for any
servicing errors or interruptions resulting from any failure of any Servicer to
maintain computer and other information systems that are year-2000 compliant.
7. Master Servicing Default; Termination and Liabilities.
(a) Master Servicing Default.
Any of the following acts or occurrences shall constitute a Master
Servicing Default by the Master Servicer under this Agreement:
(i) any failure by the Master Servicer to deposit in
the Bond Account or remit to the Indenture Trustee any payment
required to be made under the terms of this Agreement, which
failure shall continue unremedied for three days after the
date upon which written notice of such failure shall have been
given to the Master Servicer by the Indenture Trustee or the
Issuer or to the Master Servicer, or which causes a claim to
be made on the FSA Policy, the Indenture Trustee and the
Issuer by the Holders of Bonds representing more than 50% of
the aggregate Principal Amount of the Bonds; or
(ii) any failure by the Master Servicer to observe or
perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in
this Agreement, which failure shall continue unremedied for a
period of 30 days after the date on which written notice of
such failure shall have been given to the Master Servicer by
the Indenture Trustee, at the direction of FSA, or by FSA or,
with the consent of FSA, the Holders of Bonds representing
more than 50% of the aggregate Principal Amount of the Bonds
provided that such 30 day period shall be extended by an
additional 30 days upon delivery by the Master Servicer to the
Indenture Trustee and the Issuer of written notice of the
steps being taken by the Master Servicer to remedy such
failure; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for
the appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the Master
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days;
or
(iv) the Master Servicer shall consent to the
appointment of a receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or
all or substantially all of the property of the Master
Servicer; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of, or commence a voluntary case
under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) any failure of the Master Servicer to make any
Master Servicer Advance in the manner and at the time required
to be made pursuant to Section 4 which continues unremedied
for a period of one Business Day after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given to the Master Servicer by the
Issuer, the Indenture Trustee or FSA.
If a Master Servicing Default described in clauses (i) to (v) of this
Section 7(a) shall occur, then, and in each and every such case, so long as such
Master Servicing Default shall not have been remedied the Indenture Trustee may
with the prior written consent of FSA, and shall at the direction of FSA or the
Holders of Bonds representing more than 50% of the aggregate Principal Amount of
Bonds with the prior written consent of FSA, by notice in writing to the Master
Servicer (with a copy to each Rating Agency and FSA), and in addition to any
other rights the Indenture Trustee may have on behalf of the Bondholders or FSA
as a result of such Master Servicing Default, terminate all of the rights and
obligations of the Master Servicer thereafter arising under this Agreement and
in and to the Mortgage Loans and the proceeds thereof, other than its rights as
a Bondholder under the Indenture and its obligations which are not assumed by
the Separate Indenture Trustee pursuant to Section 7(b). If a Master Servicing
Default described in clause (vi) shall occur, the Indenture Trustee shall, by
notice in writing to the Master Servicer and the Issuer, terminate all of the
rights and obligations of the Master Servicer under this Agreement and in and to
the Mortgage Loans and the proceeds thereof, other than its rights as a
Bondholder under the Indenture and its obligations which are not assumed by the
Separate Indenture Trustee pursuant to Section 7(b). On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer hereunder, whether with respect to the Mortgage Loans or
otherwise, unless an alternative successor Master Servicer shall have been
appointed by FSA (after consultation with the Separate Indenture Trustee), shall
pass to and be vested in the Separate Indenture Trustee. The Separate Indenture
Trustee shall thereupon make any Master Servicer Advances required under Section
4. The Separate Indenture Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Master Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Separate Indenture Trustee in effecting the
termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Separate Indenture Trustee of
all cash amounts which shall at the time be credited to the Bond Account or
thereafter be received by the Master Servicer with respect to the Mortgage
Loans.
Notwithstanding any termination of the activities of the Master
Servicer hereunder, the Master Servicer shall be entitled to receive, out of any
late collection of a Scheduled Payment on a Mortgage Loan which was due prior to
the notice terminating such Master Servicer's rights and obligations as Master
Servicer hereunder and received after such notice, that portion thereof to which
such Master Servicer would have been entitled pursuant to Section 3(g), and any
other amounts payable to such Master Servicer hereunder the entitlement to which
arose prior to the termination of its activities hereunder.
(b) Separate Indenture Trustee to Act; Appointment of
Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7(a), the Separate Indenture Trustee, if any,
shall, unless an alternative Master Servicer designated by FSA (after
consultation with the Separate Indenture Trustee) has been appointed, be the
successor to the Master Servicer in its capacity as master servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer by the terms and provisions hereof and applicable
law including the obligation to make Master Servicer Advances pursuant to
Section 4. As compensation therefor, the Separate Indenture Trustee shall be
entitled to all funds relating to the Mortgage Loans that the Master Servicer
would have been entitled to hereunder if the Master Servicer had continued to
act hereunder and any additional amounts agreed to by FSA. Notwithstanding the
foregoing, if there is no Separate Indenture Trustee or the Separate Indenture
Trustee shall be unwilling to so act, prohibited by applicable law from making
Master Servicer Advances pursuant to Section 4 or is otherwise unable to so act,
FSA shall appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution acceptable to FSA the
appointment of which does not adversely affect the then current rating of the
Bonds (without regard to the FSA Policy) by each Rating Agency as the successor
to the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder. Any
successor to the Master Servicer shall be an institution which is a FNMA and
FHLMC approved seller/servicer in good standing, which has a net worth of at
least $15,000,000, which is willing to master service the Mortgage Loans and
which executes and delivers to the Issuer and the Separate Indenture Trustee an
agreement accepting such delegation and assignment, containing an assumption by
such Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Master Servicer (other than liabilities of the Master
Servicer under Section 6(e) incurred prior to termination of the Master Servicer
under Section 7(a)), with like effect as if originally named as a party to this
Agreement; provided that each Rating Agency acknowledges that its rating of the
Bonds (without regard to the existence of the FSA Policy) in effect immediately
prior to such assignment and delegation will not be qualified or reduced as a
result of such assignment and delegation. In connection with such appointment
and assumption, FSA may make such arrangements for the compensation of such
successor out of earnings on the accounts as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of the
compensation permitted the Master Servicer hereunder. The Separate Indenture
Trustee or other successor master servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession.
Neither the Separate Indenture Trustee nor any other successor master servicer
shall be deemed to be in default hereunder by reason of any failure to make, or
any delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the preceding Master Servicer
to deliver or provide, or any delay in delivering or providing, any cash,
information, documents or records to it.
Any successor to the Master Servicer as master servicer shall give
notice to the Servicers of such change of master servicer and shall, during the
term of its service as master servicer, maintain in force the policy or policies
that the Master Servicer is required to maintain pursuant to Section 3(i).
(c) Waivers by FSA
FSA (so long as no Bond Insurer default has occurred and is
continuing), may waive any events permitting removal of the Master Servicer
pursuant to this Section 7. Upon any waiver of a past default, such default
shall cease to exist, and any Master Servicing 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.
(d) Notification to Bondholders.
(i) Upon any termination of or appointment of a
successor to the Master Servicer, the Indenture Trustee shall
give prompt written notice thereof to Bondholders, the Issuer,
FSA and each Rating Agency.
(ii) Within 60 days after the occurrence of any
Master Servicing Default, the Indenture Trustee shall transmit
by mail to all Bondholders and the Issuer notice of each such
Master Servicing Default hereunder known to the Indenture
Trustee, unless such Master Servicing Default shall have been
cured or waived.
8. Miscellaneous.
(a) Term of Master Servicing Agreement.
The obligations to be performed by the Master Servicer under this
Agreement shall commence on and as of the date on which the Issuer issues the
Bonds and shall terminate as to each Mortgage Loan upon (i) the payment in full
of all principal and interest due under such Mortgage Loan or other liquidation
of such Mortgage Loan as contemplated by this Agreement, (ii) the termination of
the Master Servicer's rights and powers under this Agreement by the Indenture
Trustee as provided in Section 7(a) of this Agreement, or (iii) the release by
the Indenture Trustee of its security interest in such Mortgage Loan.
(b) Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6(d), this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Indenture Trustee and FSA and
written notice to the Issuer.
(c) Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered at the following
addresses:
The Master
Servicer: Norwest Bank Minnesota, National Association
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Master Servicing Department
(AMREIT 1999-2)
Facsimile No: (000) 000-0000
The Servicers: At the addresses and facsimile numbers
set forth in the Servicing Agreements.
The Issuer: American Residential Eagle Bond Trust (1999-2)
c/o Wilmington Trust Company,
as Owner Trustee
Xxxxxx Square North
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Corporate Trust
Administration
With a copy to:
American Residential Eagle, Inc.
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxx, XX 00000
Attention: Eagle Trust 1999-2 Officer
Seller: American Residential Investment Trust,
Inc.
000 Xxxxxx Xxxx Xxxxxx, Xxxxx 000
Xxx Xxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
The Indenture Norwest Bank Minnesota, National Association
Trustee : 00000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Department
(AMREIT 1999-2)
Facsimile No: (000) 000-0000
FSA: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Transaction Oversight
Re: American Residential Eagle Bond
Trust 1999-2
Confirmation: (000) 000-0000
Facsimile Nos.: (000) 000-0000 or (000) 000-0000
(in each case in which
notice or other
communication to FSA refers
to a Master Servicing
Default, a claim on the
Policy or with respect to
which failure on the part
of FSA to respond shall be
deemed to constitute
consent or acceptance, then
a copy of such notice or
other communication should
also be sent to the
attention of each of the
General Counsel and the
Head--Financial Guaranty
Group and shall be marked
to indicate "URGENT
MATERIAL ENCLOSED.")
Any Rating Agency: The address specified therefor in the
definition corresponding to the name of
such Rating Agency.
Any of the above entities may at any time give notice in writing to the
others of a change of its address for the purpose of this Section 8(c).
(d) Governing Law.
This Agreement shall be construed in accordance with and governed by
the substantive laws of the State of New York applicable to agreements made and
to be performed in the State of New York and the obligations, rights and
remedies of the parties hereto and the Bondholders shall be determined in
accordance with such laws.
(e) Amendments.
This Agreement shall not be amended, changed, modified, terminated or
discharged in whole or in part except (i) by an instrument in writing signed by
all parties hereto, or their respective successors or assigns, (ii) in
compliance with Section 8.08 of the Indenture, and (iii) with the prior written
consent of FSA.
(f) Severability.
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.
(g) No Joint Venture.
The Master Servicer and the Issuer are not partners or joint venturers
with each other and nothing herein shall be construed to make them such partners
or joint venturers or impose any liability as such of either of them.
(h) Execution in Counterparts.
This Agreement may be executed in one or more counterparts, any of
which shall constitute an original as against any party whose signature appears
on it, and all of which shall together constitute a single instrument. This
Agreement shall become binding when one or more counterparts, individually or
taken together, bear the signatures of all parties.
(i) Limitation of Liability of Wilmington Trust Company.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of American Residential
Eagle Bond Trust 1999-2 under the Deposit Trust Agreement, in the exercise of
the powers and authority conferred and vested in it as Owner Trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or the other Operative
Agreements.
(j) Nonpetition Covenants.
Notwithstanding any prior termination of this Agreement, the Master
Servicer and the Indenture Trustee shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the Issuer (or any
assignee) to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(k) Third-Party Beneficiary.
FSA shall be a third-party beneficiary of this Agreement and shall be
entitled to enforce the provisions hereof as if a party hereto; provided,
however, that notwithstanding the foregoing, for so long as a Bond Insurer
Default is continuing with respect to FSA's obligations under the FSA Policy,
the Bondholders shall succeed to FSA's rights hereunder other than any right of
FSA to payments hereunder.
(l) Trust Estate and Accounts Held for Benefit of FSA.
The Master Servicer shall hold any property in its possession that is
included in the Trust Estate, including funds in the Bond Account (but excluding
any Master Servicing Fees and any other amounts or reimbursements to which the
Master Servicer is entitled to deduct under this Agreement) for the benefit of
the Bondholders and FSA and all references in this Agreement and in the Bonds to
the benefit of Holders of the Bonds shall be deemed to include FSA.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Bondholder shall
also be sent to FSA.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, each party has caused this Master Servicing
Agreement to be executed by its duly authorized officer or officers as of the
day and year first above written.
AMERICAN RESIDENTIAL EAGLE BOND
TRUST 1999-2,
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: ___________________________________
Its: __________________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Master Servicer and Indenture
Trustee
By:_______________________________________
Its: ______________________________________
Assistant Vice President
ACKNOWLEDGED AS TO SECTIONS 2(c) and 6(e):
AMERICAN RESIDENTIAL INVESTMENT
TRUST, INC.
By: ____________________________________
Its:____________________________________
SCHEDULE I
Schedule of Mortgage Loans
SCHEDULE II
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2
Bonds
Representations and Warranties of the Master Servicer
Norwest Bank Minnesota, National Association ("Norwest"), hereby makes
the representations and warranties set forth in this Schedule II to the Issuer
and the Indenture Trustee, as of the Closing Date. Capitalized terms used but
not otherwise defined in this Schedule II shall have the meanings ascribed
thereto in the Master Servicing Agreement (the "Master Servicing Agreement")
relating to the above-referenced Bonds, among Norwest, as Master Servicer and
Indenture Trustee and American Residential Eagle Bond Trust 1999-2, as Issuer.
(1) Norwest is duly organized as a national banking
association and is validly existing and in good standing under the laws
of the United States of America and is duly authorized and qualified to
transact any and all business contemplated by the Master Servicing
Agreement to be conducted by Norwest.
(2) Norwest has the full power and authority to master service
the Mortgage Loans, and to execute, deliver and perform its obligations
under, the Master Servicing Agreement and has duly authorized by all
necessary action on the part of Norwest the execution, delivery and
performance of the Master Servicing Agreement; and the Master Servicing
Agreement, and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Norwest, enforceable against Norwest in
accordance with its terms, except that (a) the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Master Servicing
Agreement by Norwest, the master servicing of the Mortgage Loans by
Norwest under the Master Servicing Agreement, the consummation of any
other of the transactions contemplated by the Master Servicing
Agreement, and the fulfillment of or compliance with the terms thereof
will not (A) result in a material breach of any term or provision of
the charter or by-laws of Norwest or (B) materially conflict with,
result in a material breach, violation or acceleration of, or result in
a material default under, the terms of any other material agreement or
instrument to which Norwest is a party or by which it may be bound, or
(C) constitute a material violation of any statute, order or regulation
applicable to Norwest of any court, regulatory body, administrative
agency or governmental body having jurisdiction over Norwest.
(4) No litigation is pending or, to the best of Norwest's
knowledge, threatened against Norwest that would materially and
adversely affect the execution or delivery of the Master Servicing
Agreement by Norwest or enforceability of the Master Servicing
Agreement against Norwest or the ability of Norwest to master service
the Mortgage Loans or to perform any of its other obligations under the
Master Servicing Agreement in accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by Norwest of its obligations under the Master
Servicing Agreement, or if any such consent, approval, authorization or
order is required, Norwest has obtained the same.
SCHEDULE III
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2
Bonds
Representations and Warranties as to the Mortgage Loans
In the Mortgage Loan Purchase Agreement (which has been assigned to the
Indenture Trustee), American Residential Investment Trust, Inc. (the "Seller")
makes the representations and warranties set forth in this Schedule III, as of
the Closing Date, or if so specified herein, as of the Cut-off Date or the
Statistical Cut-off Date (as defined below), as the case may be. Capitalized
terms used but not otherwise defined in this Schedule III shall have the
meanings ascribed thereto in the Master Servicing Agreement (the "Master
Servicing Agreement") relating to the above-referenced Series of Bonds, issued
by American Residential Eagle Bond Trust 1999-2.
(a) General. The information with respect to the Mortgage
Loan set forth in the Mortgage File and the Mortgage Loan Schedule is
true and correct in all material respects, and no Mortgage Loan has
been modified, revised, changed or altered in any manner by AmREIT. The
Mortgage Loan was originated and underwritten in accordance with
Seller's underwriting guidelines, as described in the Prospectus
Supplement for the above-referenced Bonds. Each document in the related
Mortgage File has been or shall be delivered in accordance with the
terms of this agreement.
(b) Payments Current. As of June 30, 1999 (the "Statistical
Cut-off Date"), no more than 0.36% of the Mortgage Loans (by Principal
Balance as of the Statistical Cut-off Date) were 30 but not more than
59 days Delinquent and none of the Mortgage Loans were 60 days or more
Delinquent. First payment due on such Mortgage Loans has been or will
be made on a timely basis.
(c) No Outstanding Charges. There are no defaults in
complying with the terms of the Mortgage Note or the Mortgage, and all
taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or, if required by the Mortgage or
applicable law, 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. Seller has not
advanced funds, or induced, solicited or knowingly received any advance
of funds by a party other than the Mortgagor, directly or indirectly,
for the payment of any amount required under the Mortgage Loan, except
for interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage Loan proceeds, whichever is earlier, to
the day which precedes by one month the Due Date of the first
installment of principal and interest.
(d) Original Terms Unmodified; No Defenses. The terms of
the Mortgage Note and Mortgage have not been impaired, waived, altered
or modified in any respect, and no Mortgagor has been released, in
whole or in part. The Mortgage Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including without
limitation the defense of usury, nor will the operation of any of the
terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, no such right of rescission,
set-off, counterclaim or defense has been asserted with respect
thereto, and no Mortgagor was a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
funded.
(e) Hazard Insurance. All buildings or other improvements
upon the Mortgaged Property are insured by a generally acceptable
insurer against loss by fire, hazards of extended coverage and such
other hazards as are customarily insured against in the broad form of
extended coverage hazard insurance available for properties in the area
where the Mortgaged Property is located in an amount not less than the
least of (i) the outstanding principal balance of the Mortgage Loan
(together, in the case of a subordinate lien Mortgage Loan, with the
outstanding principal balance of the senior mortgage(s), (ii) the
minimum amount required to compensate for damage or loss on a
replacement cost basis or (iii) the full insurable value of the
Mortgaged Property, but in any event in no greater amount as may be
allowed by applicable law. If upon origination of the Mortgage Loan,
the Mortgaged Property was in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special
flood hazards (and such flood insurance was required by federal
regulation and such flood insurance has been made available), a flood
insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect in an amount not less
than the least of (I) the outstanding principal balance of the Mortgage
Loan (together, in the case of a subordinate lien Mortgage Loan, with
the outstanding principal balance of the senior mortgage(s), (II) the
minimum amount required to compensate for damage or loss on a
replacement cost basis or (III) the maximum amount of insurance that is
available under the Flood Disaster Protection Act of 1973. All
individual insurance policies contain a standard mortgagee loss payable
clause and all premiums thereon have been paid. The Mortgage obligates
the Mortgagor thereunder to maintain the hazard insurance policy at the
Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to obtain and maintain such
insurance at such Mortgagor's cost and expense, and to seek
reimbursement therefor from the Mortgagor. Where required by state law
or regulation, the Mortgagor has been given an opportunity to choose
the carrier of the required hazard insurance, provided the policy is
not a "master" or "blanket" hazard insurance policy covering the common
facilities of a planned unit development. Each insurance policy
required hereunder is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and
inure to the benefit of Purchaser upon the consummation of the sale of
the Mortgage Loan to Purchaser pursuant to this Agreement. Seller has
not engaged in, and has no knowledge of the Mortgagor's having engaged
in, any act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the
validity and binding effect of either including, without limitation,
the payment, retention, or realization of any unlawful fee, commission,
kickback, or other unlawful compensation or value of any kind to or by
any attorney, firm or other person or entity, and no such unlawful
items have been received, retained or realized by Seller.
(f) Compliance with Applicable Laws. 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 Mortgage Loan have been complied with, and Seller
shall maintain in its possession, available for Purchaser's inspection,
and shall deliver to Purchaser upon demand, evidence of compliance with
all such requirements, to the extent compliance requires preparation of
one or more documents.
(g) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part,
and the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed
that would effect any such release, cancellation, subordination or
rescission. Seller has not waived the performance by the Mortgagor of
any action, if the Mortgagor's failure to perform such action would
cause the Mortgage Loan to be in default, nor has Seller waived any
default resulting from any action or inaction by the Mortgagor.
(h) Valid Lien. The Mortgage is a valid, subsisting and
enforceable first lien on the Mortgaged Property, of the priority
described in the Mortgage File and the Mortgage Loan Schedule, if any,
including all buildings on the Mortgaged Property and all installations
and mechanical, electrical, plumbing, heating and air conditioning
systems located in or annexed to such buildings, and all additions,
alterations and replacements made at any time with respect to the
foregoing. The lien of the Mortgage is subject only to:
(i) the lien of current real property taxes and
assessments not yet due and payable;
(ii) covenants, conditions and restrictions, rights of
way, easements and other matters of the public record as of the date
of recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged Property set
forth in such appraisal;
(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 the mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property;
and
(iv) any senior liens identified in the Mortgage File if
the Mortgage is identified as a subordinate lien in the Mortgage
File and the Mortgage Loan Schedule, if any.
Any security agreement, chattel Mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting and enforceable lien and
security interest, of the same priority as the Mortgage, on the
property described therein and Seller has full right to sell and assign
the same to Purchaser.
(i) Validity of Mortgage Documents. The Mortgage Note and
the Mortgage and any other agreement executed and delivered by a
Mortgagee in connection with a Mortgage Loan are genuine, and each is
the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All parties to the Mortgage
Note, the Mortgage and any other such related agreements are the
parties described in the Mortgage File and had legal capacity to enter
into the Mortgage Loan and to execute and deliver the Mortgage Note,
the Mortgage and any such agreement. The related Assignment of Mortgage
is in recordable form and is acceptable for recording under the laws of
the jurisdiction in which the Mortgaged Property is located.
(j) Full Disbursement of Proceeds. The proceeds of the
Mortgage Loan have been fully disbursed and there is no requirement for
future advances thereunder. All costs, fees and expenses incurred in
making or closing the Mortgage Loan and the recording of the Mortgage
or closing the Mortgage Loan and the recording of the Mortgage were
paid, and the Mortgagor is not entitled to any refund of any amounts
paid or due under the Mortgage Note or Mortgage.
(k) Ownership. Immediately prior to the sale of the
Mortgage Loan to Purchaser hereunder, Seller has good, indefeasible and
marketable title thereto, and has full right to transfer and sell the
Mortgage Loan to Purchaser free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security
interest, and has full right and authority to subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the Mortgage Loan pursuant to this Agreement, and following the
sale of the Mortgage Loan, Purchaser will own the Mortgage Loan free
and clear of any encumbrance, equity, participation interest, lien,
pledge, charge, claim or security interest. Seller intends to
relinquish all rights to possess, control and monitor the Mortgage
Loan.
(l) Doing Business. All parties which have had any interest
in the Mortgage Loan, whether as a mortgagee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) (i) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located, and (ii) organized under the laws of such state, (iii)
qualified to do business in such state, (iv) federal savings and loan
associations or national banks having principal officers in such state,
or (v) not doing business in such state.
(m) Title Insurance. The Mortgage Loan is covered by either
(i) an attorney's opinion of title and abstract of title, the form and
substance of which is acceptable to prudent mortgage lending
institutions making mortgage loans in the area where the Mortgaged
Property is located or (ii) an ALTA or, if approved in writing by
Purchaser, a CLTA lender's title insurance policy, and each such title
insurance policy is issued by a title insurer qualified to do business
in the jurisdiction where the Mortgaged Property is located, insuring
the mortgagee as to the appropriate priority of the lien of the
Mortgage in the original principal amount of the Mortgage Loan, plus
the outstanding principal balance of any senior mortgage loan in the
case of a subordinate lien Mortgage Loan (or to the extent a Mortgage
Note provides for negative amortization, the maximum amount of negative
amortization in accordance with the Mortgage), subject only to the
exceptions contained in clauses (i), (ii) and (iv) of paragraph (h) of
this Section 7.02, and, in the case of an adjustable rate Mortgage
Loan, against any loss by reason of the invalidity or unenforceability
of the lien resulting from the provisions of the Mortgage providing for
adjustment to the related Mortgage Interest Rate and Monthly Payment.
Where required by state law or regulation, the Mortgagor has been given
the opportunity to choose the carrier of the required mortgage title
insurance. Such lender's title insurance policy is valid and remains in
full force and effect. No claims have been made under such lender's
title insurance policy, and neither Seller, nor to Seller's knowledge,
any prior holder of the Mortgage has done, by act of omission, anything
which would impair the coverage of such lender's title insurance
policy, including without limitation, the payment, retention or
realization of any unlawful fee, commission, kickback or other unlawful
compensation or value of any kind by or to any attorney, firm or other
person or entity, and no such unlawful items have been received,
retained or realized by Seller.
(n) No Defaults. Except as set forth in (b) above, as of
the Statistical Cut-off Date, there is no default, breach, violation or
event of acceleration existing under the Mortgage Note and no event
which, with the passage of time or with notice and the expiration of
any grace or cure period, other than the failure to make, prior to
expiration of the applicable grace period, the Monthly Payment due
immediately prior to the related Closing Date if such Closing Date
occurs prior to the expiration of such grace period, would constitute a
default, breach, violation or event of acceleration and neither AmREIT
nor its predecessors have waived any default, breach, violation or
event of acceleration.
(o) No Mechanics' Liens. There is no mechanic's or similar
lien or claim which has been filed for work, labor or material (and no
rights are outstanding that under the law could give rise to such a
lien) affecting the related Mortgaged Property which is or may be a
lien prior to, or equal or coordinate with, the lien of the related
Mortgage, except to the extent insured against by the related title
insurance policy.
(p) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value
of the Mortgaged Property lie wholly within the boundaries and building
restriction lines of the Mortgaged Property. No improvement located on
or being part of the Mortgaged Property is in violation of any
applicable zoning law or regulation.
(q) Payment Terms. The Mortgage Note is payable in monthly
installments of principal and interest sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term
of not more than thirty years from commencement of amortization, except
for any Mortgage Note relating to a "balloon" Mortgage Loan which
amortizes the principal balance of such Mortgage Note over a thirty
year period but provides for a balloon payment of the outstanding
principal balance no sooner than the fifth year.
(r) Customary Provisions. The Mortgage contains customary
and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including
(i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. Upon
default by the Mortgagor on the Mortgage Loan and foreclosure on, or
trustee's sale of, the Mortgaged Property pursuant to the proper
procedures, the holder of the Mortgage Loan will be able to deliver
good and merchantable title to the Mortgaged Property, subject to one
or more superior mortgages in the case of a subordinate lien Mortgage
Loan. There is no homestead or other exemption available to the
Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage.
(s) Residential Property. The Mortgaged Property is
improved by a one-to-four-family residential dwelling owned by the
related Mortgagor in fee simple; provided, however, that no such
Mortgaged Property consists of a mobile home or cooperative.
(t) Occupancy and Use of the Mortgaged Property. 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 underwriting
certificates, have been made or obtained from the appropriate
authorities.
(u) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and duly qualified under
applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by Purchaser to the trustee under
the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor.
(v) Due-On-Sale. Subject to applicable state law, the
Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Mortgage Loan in the
event that the Mortgaged Property is sold or transferred without the
prior written consent of the mortgagee thereunder.
(w) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions,
and no arrangements have been made, pursuant to which Monthly Payments
are or were paid or partially paid with funds deposited in any separate
account established by Seller, the Mortgagor or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan
and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature.
(x) Consolidation of Future Monthly Advances. Any advances
made after origination of the Mortgage Loan but prior to the Cut-Off
Date have been consolidated with the outstanding principal amount
secured by the Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term.
The lien of the Mortgage securing the consolidated principal amount is
expressly insured in accordance with the requirements of paragraph
(mortgage) of this Section 7.02. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan.
(y) Mortgaged Property Undamaged. To Seller's knowledge,
the Mortgaged Property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty so as to affect
adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended, and each
Mortgaged Property is in good repair. There is no proceeding pending
or, to the knowledge of Seller, threatened for the total or partial
condemnation of the Mortgaged Property. A full appraisal and a review
appraisal of the Mortgaged Property was performed or recertified in
connection with the origination of the Mortgage Loan, each within 120
days of the closing thereof, and each such appraisal was performed in
accordance with the Uniform Standards of Professional Appraisal
Practice and in accordance with the standards commonly employed by
appraisers of similar properties in the same region.
(z) Servicing; Escrow Deposits; Interest Rate Adjustments.
The Mortgage Loan has been serviced in accordance with Accepted
Servicing Practices. With respect to escrow deposits and Escrow
Payments, all such payments have or will be transferred to Purchaser
and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All
Escrow Payments have been collected in full compliance with state and
federal law. If required under the Mortgage and not prohibited by
applicable law, an escrow of funds has been established in an amount
sufficient to pay for every item that remains unpaid and has been
assessed but is not yet due and payable. No escrow deposits or Escrow
Payments or other charges or payments due Seller have been capitalized
under the Mortgage or the Mortgage Note. All Mortgage Interest Rate
adjustments have been made in compliance with state and federal law and
the terms of the related Mortgage Note. Any interest required to be
paid pursuant to state and local law has been properly paid and
credited.
(aa) No Violation of Environmental Laws. There is no
pending action or proceeding directly involving the Mortgaged Property
in which compliance with any environmental law, rule, regulation or
order of any federal, state or other governmental authority is an
issue; and, to Seller's knowledge, the Mortgaged Property is in
compliance with all such laws, rules, regulations and orders.
(bb) Soldiers' and Sailors' Civic Relief Act. The Mortgagor
has not notified Seller of any relief requested by the Mortgagor under
the Soldiers' and Sailors' Civic Relief Act of 1990.
(cc) Leaseholds. If the Mortgage Loan is secured by a
leasehold estate, the lease is valid and in good standing, all rents
and other payments that have become due under the lease have been paid
properly, the lessee is not in default under any provision of the
lease, the lease does not provide for its forfeiture or termination for
any reason except the nonpayment of lease rents, and the maturity date
of the lease is at least five years after the maturity date of the
Mortgage.
(dd) No Misrepresentation. To Seller's knowledge, neither
the Mortgagor nor any other party has made any misrepresentation or
committed any fraud in connection with the origination of the Mortgage
Loan or the sale of the Mortgage Loan to Purchaser.
(ee) Insurance. Seller has caused to be performed any and
all acts required to be performed to preserve the rights and remedies
of Purchaser and its successors and assigns in any Insurance policies
applicable to the Mortgage Loan including any necessary notifications
of insurers, assignments of policies or interest therein, and the
vesting of co-insured, joint loss payee and mortgage rights in favor or
Purchaser and its successors and assigns. If the related Mortgagor
purchased a credit life insurance policy in connection with the closing
of the Mortgage Loan, the premium has been paid over to the insurer.
(ff) No Litigation. The Mortgage Loan has at no time
been the subject of litigation, including but not limited to
foreclosure litigation or bankruptcy proceedings.
(gg) Loan-To-Value. As of the Statistical Cut-off Date, no
Mortgage Loan had a Loan-To-Value Ratio at origination in excess of
100.00% and as of the Statistical Cut-off Date, the weighted average
Loan-To-Value Ratio at origination is 77.01%.
(hh) Status of Originators. Each Mortgage Loan was
originated by a savings and loan association, savings bank, commercial
bank, credit union, insurance company, or similar institution which is
supervised and examined by a federal or state authority, or by a
mortgagee approved by the Secretary of Housing and Urban Development
pursuant to Sections 203 and 211 of the National Housing Act.
(ii) Coverage by LPMI Insurer. Each of the Mortgage Loans
that is identified on Schedule IV hereto is covered by an Insurance
Policy issued by LPMI Insurer. All requirements for the valid transfer
of each Insurance Policy listed in Schedule VI, including any
assignments or notices required, have been satisfied. As of the Closing
Date, with respect to each Mortgage Loan that is subject to an
Insurance Policy, AmREIT has not taken any action, or omitted to take
any action, and has no knowledge of any circumstances that would cause
LPMI Insurer to deny a claim with respect to such Mortgage Loan.
SCHEDULE IV
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2
Bonds
Representations and Warranties of the Issuer
American Residential Eagle Bond Trust 1999-2 (the "Issuer") hereby
makes the representations and warranties set forth in this Schedule IV to the
Master Servicer and the Indenture Trustee, as of the Closing Date. Capitalized
terms used but not otherwise defined in this Schedule IV shall have the meanings
ascribed thereto in the Master Servicing Agreement (the "Master Servicing
Agreement") relating to the above-referenced Series, among Norwest Bank
Minnesota, National Association, as Master Servicer and Indenture Trustee, the
Issuer.
(A) The Issuer is a statutory business trust duly organized,
validly existing and in good standing under the laws of the State of
Delaware, and possesses all requisite authority, power, licenses,
permits and franchises to conduct any and all business contemplated by
the Master Servicing Agreement and to comply with its obligations under
the terms of that Agreement, the performance of which have been duly
authorized by all necessary action.
(B) Neither the execution and delivery of the Master Servicing
Agreement by the Issuer, nor the performance and compliance with the
terms thereof by the Issuer will (A) result in a material breach of any
term or provision of the instruments creating the Issuer or governing
its operations, or (B) materially conflict with, result in a material
breach, violation or acceleration of, or result in a material default
under, the terms of any other material agreement or instrument to which
the Issuer is a party or by which it may be bound, or (C) constitute a
material violation of any statute, order or regulation applicable to
the Issuer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Issuer; and the Issuer
is not in breach or violation of any material indenture or other
material agreement or instrument, or in violation of any statute, order
or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or violation
may materially impair the Issuer's ability to perform or meet any of
its obligations under the Master Servicing Agreement.
(C) The Master Servicing Agreement, and all documents and
instruments contemplated hereby, which are executed and delivered by
the Issuer, will, assuming due authorization, execution by and delivery
to the other parties hereto and thereto, constitute valid, legal and
binding obligations of the Issuer, enforceable in accordance with their
respective terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(D) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that would materially and
adversely affect the execution, delivery or enforceability of the
Master Servicing Agreement or the ability of the Issuer to perform its
obligations thereunder.
(E) Immediately prior to the pledge of the Mortgage Loans to
the Indenture Trustee, the Issuer had good title to, and was the sole
owner of, each Mortgage Loan free and clear of any liens, charges or
encumbrances or any ownership or participation interests in favor of
any other Person.
SCHEDULE V
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2
Bonds
Servicing Agreements
1. Mortgage Loan Purchase and Servicing Agreement, dated as of
May 26, 1999, between Countrywide Home Loans, Inc. and American
Residential Investment Trust, Inc. as amended and supplemented by
Purchase Confirmation, Deal No. 9904-002 and Purchase Confirmation,
Deal No. 9905-005 dated May 27, 1999 and the Purchase Confirmation,
Deal No. 9906-022 dated June 29, 1999 and by the First Amendment to
Mortgage Loan Purchase and Servicing Agreement, dated as of July 1,
1999, between Countrywide Home Loans, Inc. and American Residential
Investment Trust, Inc..
2. Loan Servicing Agreement, dated as of June 1, 1999, between Option One
Mortgage Corporation and American Residential Investment Trust, Inc.,
as amended by the Purchase Price and Terms Letter dated as of June 1,
1999, and as amended and supplemented by the Reconstituted Servicing
Agreement, dated as of July 1, 1999, between Option One Mortgage
Corporation and American Residential Investment Trust, Inc.
SCHEDULE VI
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-2
Bonds
Purchase and Sale Agreements
1. Mortgage Loan Purchase and Servicing Agreement, dated as of
May 26, 1999, between Countrywide Home Loans, Inc. and American
Residential Investment Trust, Inc. as amended and supplemented by
Purchase Confirmation, Deal No. 9904-002 and Purchase Confirmation,
Deal No. 9905-005 dated May 27, 1999 and the Purchase Confirmation,
Deal No. 9906-022 dated June 29, 1999.
2. Master Mortgage Loan Sale and Purchase Agreement, dated June 1, 1999,
as modified and supplemented by the Purchase Price and Terms Letter
dated as of June 1, 1999.
