1
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1997-3
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller,
ADVANTA MORTGAGE CORP., USA,
LONG BEACH MORTGAGE COMPANY AND
OPTION ONE MORTGAGE CORPORATION,
as Servicers
and
THE BANK OF NEW YORK,
as Trustee
Dated as of September 1, 1997
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CONTENTS
PAGE
CONVEYANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Lower-Tier Interest B-1A Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Lower-Tier Interest B-1F Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Lower-Tier Interest B-2F Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Lower-Tier Interest M-1A Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Lower-Tier Interest M-1F Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Lower-Tier Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 1.02 Use of Words and Phrases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 1.03 Captions; Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 1.04 Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.01 Establishment of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.02 Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.03 Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.04 Appointment of the Trustee; Declaration of Trust . . . . . . . . . . . . . . . . . . . . . 51
Section 2.05 Expenses of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.06 Ownership of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 2.07 Situs of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 2.08 Miscellaneous REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR,
THE SERVICERS AND THE SELLER;COVENANT OF SELLER TO
CONVEY MORTGAGE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.01 Representations and Warranties of the Depositor . . . . . . . . . . . . . . . . . . . . . . 55
Section 3.02 Representations and Warranties of the Servicers . . . . . . . . . . . . . . . . . . . . . . 57
Section 3.03 Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . 58
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the Mortgage Loans In Certain
Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage Loans and Qualified
Replacement Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification by Trustee . 66
Section 3.07 Conveyance of the Subsequent Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 4.01 Issuance of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 4.02 Sale of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 5.01 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 5.02 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 5.03 Execution, Authentication and Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 5.04 Registration and Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . . . . . . 74
Section 5.06 Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.07 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 5.08 Limitation on Transfer of Ownership Rights . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 5.09 Assignment of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE VI
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 6.01 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 6.02 Money for Distributions to be Held in Trust; Withholding . . . . . . . . . . . . . . . . . 77
Section 6.03 Protection of Trust Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 6.04 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 6.05 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 6.06 No Other Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 6.07 Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 6.08 Unconditional Rights of Owners to Receive Distributions . . . . . . . . . . . . . . . . . . 80
Section 6.09 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.10 Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.11 Control by Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 6.12 Access to Owners of Certificates' Names and Addresses . . . . . . . . . . . . . . . . . . . 81
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.01 Collection of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.02 Establishment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.03 Flow of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 7.04 Pre-Funding Account and Capitalized Interest Account . . . . . . . . . . . . . . . . . . . 91
Section 7.05 Investment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.06 Reserved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 7.07 Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 7.08 Accounting and Directions by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 7.09 Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 7.10 Additional Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
ARTICLE VIII
SERVICING AND ADMINISTRATION OF MORTGAGE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 8.01 Servicers and Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Section 8.02 Collection of Certain Mortgage Loan Payments . . . . . . . . . . . . . . . . . . . . . . . 100
Section 8.03 Subservicing Agreements Between Servicer and Subservicer . . . . . . . . . . . . . . . . . 101
Section 8.04 Successor Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
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Section 8.05 Liability of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 8.06 No Contractual Relationship Between Subservicer and Trustee or
the Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 8.07 Assumption or Termination of Subservicing Agreement by Trustee . . . . . . . . . . . . . . 101
Section 8.08 Principal and Interest Accounts; Escrow Accounts . . . . . . . . . . . . . . . . . . . . . 102
Section 8.09 Delinquency Advances and Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 8.10 Compensating Interest; Purchase of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . 105
Section 8.11 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements . . . . . . . . . . . . . . . . 106
Section 8.13 Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.14 Trustee and Custodian to Cooperate; Release of Files . . . . . . . . . . . . . . . . . . . 108
Section 8.15 Servicing Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 8.16 Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Section 8.17 Annual Independent Certified Public Accountants' Reports . . . . . . . . . . . . . . . . . 110
Section 8.18 Access to Certain Documentation and Information Regarding the Mortgage Loans 110
Section 8.19 Assignment of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 8.20 Events of Servicing Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Section 8.21 Resignation of a Servicer and Appointment of Successor . . . . . . . . . . . . . . . . . . 113
Section 8.22 Waiver of Past Events of Servicing Termination . . . . . . . . . . . . . . . . . . . . . . 115
Section 8.23 Assumption or Termination of Subservicing Agreement By the Trustee . . . . . . . . . . . . 115
Section 8.24 Powers and Duties of the Trustee as Successor Servicer . . . . . . . . . . . . . . . . . . 116
Section 8.25 Liability of the Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions Insurance . . . . . . . . . . . . . 117
Section 8.27 Merger, Conversion, Consolidation or Succession to Business
of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 8.28 Notices of Material Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Section 8.29 Monthly Servicing Report and Servicing Certificate . . . . . . . . . . . . . . . . . . . . 118
Section 8.30 Indemnification by the Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 8.31 Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 8.32 Servicing Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Section 8.33 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
ARTICLE IX
TERMINATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 9.01 Termination of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 9.02 Auction Call; Servicer Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Section 9.03 Termination Upon Loss of REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Section 9.04 Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
ARTICLE X
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 10.01 Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Section 10.02 Removal of Trustee for Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Section 10.03 Certain Rights of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Section 10.04 Not Responsible for Recitals or Issuance of Certificates . . . . . . . . . . . . . . . . . 129
Section 10.05 May Hold Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Section 10.06 Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
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Section 10.07 Compensation and Reimbursement; No Lien for Fees. . . . . . . . . . . . . . . . . . . . . . 129
Section 10.08 Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Section 10.09 Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 130
Section 10.10 Acceptance of Appointment by Successor Trustee . . . . . . . . . . . . . . . . . . . . . . 131
Section 10.11 Merger, Conversion, Consolidation or Succession to Business
of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Section 10.12 Reporting; Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 10.13 Liability of the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Section 10.14 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . 133
Section 10.15 Appointment of Custodians . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Section 11.01 Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Section 11.02 Form of Documents Delivered to the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 135
Section 11.03 Acts of Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Section 11.04 Notices, etc. to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136
Section 11.05 Notices and Reports to Owners; Waiver of Notices . . . . . . . . . . . . . . . . . . . . . 137
Section 11.06 Rules by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Section 11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Section 11.08 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Section 11.09 Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Section 11.10 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Section 11.11 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . 138
Section 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Section 11.13 Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Section 11.14 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Section 11.15 Paying Agent; Appointment and Acceptance of Duties . . . . . . . . . . . . . . . . . . . . 140
Section 11.16 REMIC Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Section 11.17 Additional Limitation on Action and Imposition of Tax . . . . . . . . . . . . . . . . . . . 142
Section 11.18 Appointment of Tax Matters Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Section 11.19 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Section 11.20 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II SCHEDULE OF ADVANTA LOANS
SCHEDULE III LIST OF TRANSFER AGREEMENTS
SCHEDULE IV LIST OF ORIGINATORS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
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EXHIBIT A-9 FORM OF CLASS A-9 CERTIFICATE
EXHIBIT A-10 FORM OF CLASS A-10 CERTIFICATE
EXHIBIT B-1 FORM OF CLASS M-1F CERTIFICATE
EXHIBIT B-2 FORM OF CLASS M-1A CERTIFICATE
EXHIBIT B-3 FORM OF CLASS M-2F CERTIFICATE
EXHIBIT B-4 FORM OF CLASS M-2A CERTIFICATE
EXHIBIT B-5 FORM OF CLASS B-1F CERTIFICATE
EXHIBIT B-6 FORM OF CLASS B-1A CERTIFICATE
EXHIBIT B-7 FORM OF CLASS B-2F CERTIFICATE
EXHIBIT B-8 FORM OF CLASS C-FIO CERTIFICATE
EXHIBIT B-9 FORM OF CLASS C-AIO CERTIFICATE
EXHIBIT B-10 FORM OF CLASS D CERTIFICATE
EXHIBIT B-11 FORM OF CLASS R CERTIFICATE
EXHIBIT B-12 FORM OF CLASS S CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L FORM OF CUSTODIAL AGREEMENT
EXHIBIT M AUCTION SALE BID PROCEDURES
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POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 1997-3, dated as of September 1,
1997, by and among AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware
corporation, in its capacity as Depositor (the "Depositor"), AMRESCO
RESIDENTIAL CAPITAL MARKETS, INC., a Delaware corporation, in its capacity as
the Seller (the "Seller"), ADVANTA MORTGAGE CORP. USA, LONG BEACH MORTGAGE
COMPANY and OPTION ONE MORTGAGE CORPORATION as the Servicers (collectively, the
"Servicers") and THE BANK OF NEW YORK, a New York banking corporation, in its
capacity as the Trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a portion of the
Mortgage Loans, respectively, which constitute the principal assets of the
Trust Estate;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee valid instruments, and to
make this Agreement a valid agreement, in accordance with their and its terms,
have been done;
WHEREAS, The Bank of New York is willing to serve in the capacity of
the Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, each Servicer and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of
the covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns, and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to any
and all benefits accruing to them from (a) the Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date or
Subsequent Cut-Off Date in the case of Subsequent Mortgage Loans) listed in
Schedules I-A and I-B to this Agreement (or Schedules I-A and I-B to any
Subsequent Transfer Agreement) which the Seller is causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Custodian on
behalf of the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04, 3.05 and 3.06), together with the related Mortgage Loan documents
and the Seller's and the Depositor's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the
Trustee in the Certificate Account, the Pre-Funding Account, the Capitalized
Interest Account, the Upper- Tier Group I Distribution Account and the
Upper-Tier Group II Distribution Account together with investment earnings on
such amounts and such amounts as may be held in the name of the Trustee in the
Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided herein), whether in the form of cash,
instruments, securities or other properties (including any Eligible Investments
held by the Servicers); (c) proceeds of all the foregoing (including, but not
by way of limitation, all proceeds of any mortgage insurance, hazard insurance
and title insurance policy relating to the Mortgage Loans, cash proceeds,
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accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part
of or are included in the proceeds of any of the foregoing) to pay the
Certificates as specified herein; and (d) certain rights of the Seller under
the Transfer Agreements that are being assigned to the Trust hereunder ((a)-(d)
above shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein
to the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Group I Certificates and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs; a "calendar month" shall be deemed to be 30 days. With
respect to the Group II Certificates and any Payment Date, the period
commencing on the preceding Payment Date (or on the Closing Date in the case of
the first Payment Date) and ending on the day immediately preceding the current
Payment Date. All calculations of interest on the Group I Certificates will be
made on the basis of a 360-day year assumed to consist of twelve 30 day months
and calculations of interest on the Group II Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period and a
year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust for inclusion in Group I or Group II pursuant to
Section 3.07 hereof, notice given in accordance with Section 3.07(b)(i)
regarding the Depositor's designation of Subsequent Mortgage Loans to be sold
to the Trust for inclusion in Group I or Group II and the aggregate Loan
Balance of such Subsequent Mortgage Loans with respect to each such Group.
"Advanta": Advanta Mortgage Corp. USA, a Delaware corporation.
"Advanta Loans": The Mortgage Loans serviced by Advanta.
"Advisor": As defined in Section 9.02(a) hereof.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be
amended from time to time, including the Exhibits and Schedules hereto.
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"Ameriquest": Ameriquest Mortgage Company, a Delaware corporation.
"Ameriquest Subservicing Agreement": That certain Sub-Servicing
Agreement dated April 28, 1997 by and between Long Beach and Ameriquest.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof and as to the related Mortgage Loan Servicing Group, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the Realized Losses that occurred in such Mortgage Loan Servicing Group during
the twelve immediately preceding Remittance Periods and the denominator of
which is the Loan Balances of the Mortgage Loans in the related Mortgage Loan
Servicing Group as of the last day of each of the twelve Remittance Periods
preceding such date.
"Applied Realized Loss Amount": The Group I Applied Realized Loss
Amount or the Group II Applied Realized Loss Amount, as applicable.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, if such
sales price is less than such appraised value.
"ARMC": AMRESCO Residential Mortgage Corporation, a Delaware
corporation.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the
Closing; with respect to the Trustee, any Vice President, Assistant Vice
President, Trust Officer or any Officer of the Trustee located at the Corporate
Trust Office.
"Balloon Loan": A Mortgage Loan with respect to which the principal
balance by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to
a Balloon Loan.
"Business Day": Any day that is not a Saturday, Sunday or other day
on which commercial banking institutions in the States of California and
Pennsylvania, The City of New York, or in the city in which the Corporate Trust
Office is located, are authorized or obligated by law or executive order to be
closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(b) hereof and maintained by the
Trustee. Funds on deposit in the Capitalized Interest Account shall be
invested in a trust deposit with the Trustee from the day following the Startup
Day until the end of each Funding Period.
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B-1 Certificates, the Class B-2F Certificates, the
Class C-IO Certificates, the Class D Certificates, the Class S Certificates or
the Class R Certificates, each representing the interests and the rights
described in this Agreement.
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"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $31,500,000
Class A-2 Certificates - $36,000,000
Class A-3 Certificates - $41,800,000
Class A-4 Certificates - $29,100,000
Class A-5 Certificates - $14,600,000
Class A-6 Certificates - $14,200,000
Class A-7 Certificates - $15,300,000
Class A-8 Certificates - $19,790,000
Class A-9 Certificates - $22,480,000
Class A-10 Certificates - $554,040,000
Class M-1F Certificates - $14,630,000
Class M-1A Certificates - $54,720,000
Class M-2F Certificates - $11,970,000
Class M-2A Certificates - $41,040,000
Class B-1F Certificates - $10,640,000
Class B-1A Certificates - $34,200,000
Class B-2F Certificates - $ 3,990,000
The Class S Certificates, the Class C-IO Certificates, the Class D
Certificates and the Class R Certificates do not have a Certificate Principal
Balance.
"Class": Any Class of the Class A Certificates, any Class of the
Mezzanine Certificates, any class of the Class B-1 Certificates, the Class B-2F
Certificates, the Class S Certificates, either class of the Class C-IO
Certificates, the Class D Certificates, or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class
A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates, Class A-8
Certificates, Class A-9 Certificates and Class A-10 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less any amounts actually distributed on such Class A
Certificates with respect to the Class A Principal Distribution Amount pursuant
to Section 7.03(f) and 7.03(g) hereof with respect to principal thereon on all
prior Payment Dates plus any Preference Amount previously distributed with
respect to principal.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount, the Class A-8
Distribution Amount, the Class A-9 Distribution Amount and the Class A-10
Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1, authenticated and delivered by the
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Trustee, representing the right to distributions as set forth herein and each
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC created hereunder for purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed to the Owners of
the Class X- 0 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-1 Certificates with respect to principal.
"Class A-1 Certificate Termination Date": The Payment Date on which
the Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-1 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-1 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-1 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-1 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-1 Pass-Through Rate.
"Class A-1 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.75% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-2 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed to the Owners of
the Class A-2 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-2 Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which
the Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-2 Certificates as it relates to interest previously paid on the
Class A-2 Certificates.
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"Class A-2 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of Class A-2 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-2 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-2 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-2 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-2 Pass-Through Rate.
"Class A-2 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.61% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-3 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed to the Owners of
the Class A-3 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-3 Certificates with respect to principal.
"Class A-3 Certificate Termination Date": The Payment Date on which
the Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-3 Certificates as it relates to interest previously paid on the
Class A-3 Certificates.
"Class A-3 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-3 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-3 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-3 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-3 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-3 Pass-Through Rate.
"Class A-3 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.60% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-4 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4, authenticated and delivered by the
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Trustee, representing the right to distributions as set forth herein and each
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC created hereunder for purposes of the REMIC Provisions.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed to the Owners of
the Class A-4 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-4 Certificates with respect to principal.
"Class A-4 Certificate Termination Date": The Payment Date on which
the Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-4 Certificates as it relates to interest previously paid on the
Class A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-4 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-4 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-4 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-4 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-4 Pass-Through Rate.
"Class A-4 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.68% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-5 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed to the Owners of
the Class A-5 Certificates pursuant to Section 7.03(f) hereof thereon on all
prior Payment Dates plus any Preference Amount previously distributed to the
Owners of Class A-5 Certificates with respect to principal.
"Class A-5 Certificate Termination Date": The Payment Date on which
the Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-5 Certificates as it relates to interest previously paid on the
Class A-5 Certificates.
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"Class A-5 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-5 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-5 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-5 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-5 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-5 Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.88% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-6 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed to the Owners of
the Class A-6 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-6 Certificates with respect to principal.
"Class A-6 Certificate Termination Date": The Payment Date on which
the Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-6 Current Interest, (y) the Class A-6 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-6 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-6 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-6 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-6 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-6 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-6 Pass-Through Rate.
"Class A-6 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.98% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-7 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7, authenticated and delivered by the
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Trustee, representing the right to distributions as set forth herein and each
evidencing an interest designated as a "regular interest" in the Upper-Tier
REMIC created hereunder for purposes of the REMIC Provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed to the Owners of
the Class A-7 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-7 Certificates with respect to principal.
"Class A-7 Certificate Termination Date": The Payment Date on which
the Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-7 Certificates as it relates to interest previously paid on the
Class A-7 Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-7 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-7 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-7 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-7 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-7 Pass-Through Rate.
"Class A-7 Pass-Through Rate": On any Payment Date, the lesser of (x)
7.14% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-8 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed to the Owners of
the Class A-8 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-8 Certificates with respect to principal.
"Class A-8 Certificate Termination Date": The Payment Date on which
the Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-8 Certificates as it relates to interest previously paid on the
Class A-8 Certificates.
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"Class A-8 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-8 Current Interest, (y) the Class A-8 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount
payable to the Owners of the Class A-8 Certificates pursuant to Section 7.03(f)
hereof.
"Class A-8 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-8 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-8 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-8 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-8 Pass-Through Rate.
"Class A-8 Pass-Through Rate": On any Payment Date (i) on or prior to
the Group I Step Up Date, the lesser of (x) 7.68% per annum and (y) the Group I
Net Weighted Average Coupon Rate, and (ii) after the Group I Step Up Date, the
lesser of (x) 8.43% per annum and (y) the Group I Net Weighted Average Coupon
Rate.
"Class A-9 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-9 Certificate, substantially in the form annexed
hereto as Exhibit A-9, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class A-9 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-9 Certificates less any amounts actually distributed to the Owners of
the Class A-9 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-9 Certificates with respect to principal.
"Class A-9 Certificate Termination Date": The Payment Date on which
the Class A-9 Certificate Principal Balance is reduced to zero.
"Class A-9 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class X- 0 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class X- 0 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-9 Certificates as it relates to interest previously paid on the
Class A-9 Certificates.
"Class A-9 Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class A-9 Current Interest, (x) the Class A-9 Interest Carry
Forward Amount, (y) the Class A-9 Lockout Distribution Amount payable to the
Owners of the Class A-9 Certificates pursuant to Section 7.03(f) and (z) the
Group I Class A Principal Distribution Amount payable to the Owners of the
Class A-9 Certificates pursuant to Section 7.03(f) hereof.
"Class A-9 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-9 Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class A-9 Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class A-9 Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class A-9 Pass-Through Rate.
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"Class A-9 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-9 Lockout Percentage for such Payment
Date and (ii) the Class A-9 Lockout Pro Rata Distribution Amount for such
Payment Date.
"Class A-9 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-9
---------
Payment Dates Lockout Percentage
------------- ------------------
October 1997 - September 2000 0%
October 2000 - September 2002 45%
October 2002 - September 2003 80%
October 2003 - September 2004 100%
October 2004 and thereafter 300%
"Class A-9 Lockout Pro Rata Distribution Amount": For any Payment
Date, an amount equal to the product of (x) a fraction, the numerator of which
is the Class A-9 Certificate Principal Balance immediately prior to such
Payment Date and the denominator of which is the aggregate Certificate
Principal Balance of the Class A Certificates relating to Group I immediately
prior to such Payment Date and (y) the Group I Class A Principal Distribution
Amount for such Payment Date.
"Class A-9 Pass-Through Rate": On any Payment Date, the lesser of (x)
6.96% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-10 Certificate": Any one of the Certificates designated on
the face thereof as a Class A-10 Certificate, substantially in the form annexed
hereto as Exhibit A-10, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposed of the REMIC provisions.
"Class A-10 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-10 Certificates less any amounts actually distributed to the Owners of
the Class X- 00 Certificate pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners
of the Class A-10 Certificates with respect to principal.
"Class A-10 Certificate Termination Date": The Payment Date on which
the Class A-10 Certificate Principal Balance is reduced to zero.
"Class A-10 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-10 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-10 Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class A-10 Certificates as it relates to interest previously paid on the
Class A-10 Certificates.
"Class A-10 Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class A-10 Current Interest, (y) the Class A-10 Interest
Carry Forward Amount and (z) the Group II Class A Principal Distribution Amount
payable to the Owners of the Class A-10 Certificates pursuant to Section
7.03(g) hereof.
"Class A-10 Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class A-10 Current Interest as of the immediately
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preceding Payment Date and (B) any unpaid Class A-10 Interest Carry Forward
Amount from all previous Payment Dates exceeds (ii) the amount of the actual
distribution with respect to interest made to the Owners of the Class A-10
Certificates on such immediately preceding Payment Date and (y) 30 days'
interest on such amount at the Class A-10 Pass- Through Rate.
"Class A-10 Pass-Through Rate": With respect to the Payment Date in
October 1997, 5.84625% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.19% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus 0.38% per annum and (y) the Group II Available Funds Cap
Rate.
"Class B Certificate": Any one of the Class B-1F Certificates, Class
B-1A Certificates, or Class B-2F Certificates.
"Class B-1A Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class B-1A Certificate Principal Balance (after taking
into account the distribution of the Group II Principal Distribution Amount on
such Payment Date, but prior to the application of the Class B-1A Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the Group II
Applied Realized Loss Amount as of such Payment Date.
"Class B-1A Certificate": Any one of the Certificates designated on
the face thereof as a Class B-1A Certificate, substantially in the form annexed
hereto as Exhibit B-6, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1A
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1A Certificates with
respect to principal.
"Class B-1A Certificate Termination Date": The Payment Date on which
the Class B-1A Certificate Principal Balance is reduced to zero.
"Class B-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1A Certificates as it relates to interest previously paid on the
Class B-1A Certificates.
"Class B-1A Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class B-1A Current Interest, (x) the Class B-1A Principal
Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward Amount,
if any, and (z) the Class B-1A Realized Loss Amortization Amount, if any.
"Class B-1A Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class B-1A Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class B-1A Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners
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of the Class B-1A Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class B-1A Pass-Through Rate.
"Class B-1A Pass-Through Rate": With respect to the Payment Date in
October 1997, 6.62625% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.97% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus 1.455% per annum and (y) the Group II Available Funds Cap
Rate.
"Class B-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Group II Certificates (after taking into account the payment of the Group
II Class A Principal Distribution Amount, the Class M-1A Principal Distribution
Amount and the Class M-2A Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) 95.20% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $3,420,000.
"Class B-1A Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to the Class
B-1A Certificates as of such Payment Date and (y) the excess of (i) the Group
II Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra
Principal Distribution Amount, the Class M-1A Realized Loss Amortization
Amount, the Class M-2A Realized Loss Amortization Amount, the Class M-1A
Interest Carry Forward Amount, the Class M-2A Interest Carry Forward Amount and
the Class B-1A Interest Carry Forward Amount, in each case for such Payment
Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class B-1F Certificate Principal Balance (after taking
into account the distribution of the Group I Principal Distribution Amount on
such Payment Date, but prior to the application of the Class B-1F Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the excess of (i)
the Group I Applied Realized Loss Amount as of such Payment Date over (ii) the
Class B-2F Applied Realized Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates designated on
the face thereof as a Class B-1F Certificate, substantially in the form annexed
hereto as Exhibit B-5, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class B-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Certificates less the sum of (x) any amounts actually distributed
to the Owners of the Class B-1F Certificates pursuant to Section 7.03(f) hereof
on all prior Payment Dates, (y) the aggregate, cumulative amount of the Class
B-1F Applied Realized Loss Amounts on all prior Payment Dates and (z) any
Preference Amount previously distributed to the Owners of the Class B-1F
Certificates with respect to principal.
"Class B-1F Certificate Termination Date": The Payment Date on which
the Class B-1F Certificate Principal Balance is reduced to zero.
"Class B-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1F Certificate Principal Balance
immediately prior to such Payment Date during the related
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Accrual Period at the Class B-1F Pass-Through Rate plus the Preference Amount
owed to the Owners of the Class B-1F Certificates as it relates to interest
previously paid on the Class B-1F Certificates.
"Class B-1F Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class B-1F Current Interest, (x) the Class B-1F Principal
Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward Amount,
if any, and (z) the Class B-1F Realized Loss Amortization Amount, if any.
"Class B-1F Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class B-1F Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class B-1F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class B-1F Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class B-1F Pass-Through Rate.
"Class B-1F Pass-Through Rate": On any Payment Date, the lesser of
(x) 7.77% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-1F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Group I Certificates (after taking into account the payment of the Group I
Class A Principal Distribution Amount, the Class M-1F Principal Distribution
Amount and the Class M-2F Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) 95.40% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group I as of the last day of the related Remittance
Period minus $1,330,000 .
"Class B-1F Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to the Class
B-1F Certificates as of such Payment Date and (y) the excess of (i) the Group I
Monthly Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount, the Class M-1F Realized Loss Amortization Amount, the
Class M-2F Realized Loss Amortization Amount, the Class M-1F Interest Carry
Forward Amount, the Class M-2F Interest Carry Forward Amount and the Class B-1F
Interest Carry Forward Amount, in each case for such Payment Date.
"Class B-2F Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class B-2F Certificate Principal Balance (after taking
into account the distribution of the Group I Principal Distribution Amount on
such Payment Date, but prior to the application of the Class B-2F Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the Group I Applied
Realized Loss Amount as of such Payment Date.
"Class B-2F Certificate": Any one of the Certificates designated on
the face thereof as a Class B-2F Certificate, substantially in the form annexed
hereto as Exhibit B-7, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class B-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-2F Certificates less the sum of (x) any amounts actually distributed
to the Owners of the Class B-2F Certificates pursuant to Section 7.03(f) hereof
on all prior Payment Dates, (y) the aggregate, cumulative amount of the Class
B-2F Applied Realized Loss Amounts on all prior Payment Dates and (z) any
Preference Amount previously distributed to the Owners of the Class B-2F
Certificates with respect to principal.
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"Class B-2F Certificate Termination Date": The Payment Date on which
the Class B-2F Certificate Principal Balance is reduced to zero.
"Class B-2F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-2F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-2F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-2F Certificates as it relates to interest previously paid on the
Class B-2F Certificates.
"Class B-2F Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class B-2F Current Interest, (x) the Class B-2F Principal
Distribution Amount, if any, (y) the Class B-2F Interest Carry Forward Amount,
if any, and (z) the Class B-2F Realized Loss Amortization Amount, if any.
"Class B-2F Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class B-2F Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class B-2F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class B-2F Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class B-2F Pass-Through Rate.
"Class B-2F Pass-Through Rate": On any Payment Date, the lesser of
(x) 9.25% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-2F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Group I Certificates (after taking into account the payment of the Group I
Class A Principal Distribution Amount, the Class M-1F Principal Distribution
Amount, the Class M-2F Principal Distribution Amount and the Class B-1F
Principal Distribution Amount on such Payment Date) over (y) the lesser of (A)
the product of (i) 98.40% and (ii) the outstanding aggregate Loan Balance of
the Mortgage Loans in Group I as of the last day of the related Remittance
Period and (B) the aggregate outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period minus $1,330,000.
"Class B-2F Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to the Class
B-2F Certificates as of such Payment Date and (y) the excess of (i) the Group I
Monthly Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount, the Class M-1F Realized Loss Amortization Amount, the
Class M-2F Realized Loss Amortization Amount, the Class B-1F Realized Loss
Amortization Amount, the Class M-1F Interest Carry Forward Amount, the Class
M-2F Interest Carry Forward Amount, the Class B-1F Interest Carry Forward
Amount and the Class B-2F Interest Carry Forward Amount, in each case for such
Payment Date.
"Class C-AIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-AIO Certificate, substantially in the form
annexed hereto as Exhibit B-9, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposes of the REMIC Provisions.
"Class C-AIO Certificate Termination Date": September 27, 1999.
"Class C-AIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-AIO Notional Principal Amount
immediately prior to such Payment Date during the related
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Accrual Period at the Class C-AIO Pass-Through Rate plus the Preference Amount
owed to the Owners of the Class C-AIO Certificates as it relates to interest
previously paid on the Class C-AIO Certificates.
"Class C-AIO Distribution Amount": With respect to any payment date,
the sum of (x) the Class C-AIO Current Interest and (y) the Class C-AIO
Interest Carry Forward Amount, if any.
"Class C-AIO Interest Carry Forward Amount": With respect to any
Payment Date the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class C-AIO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class C-AIO Interest Carry Forward Amount from all previous
payment dates exceeds (ii) the amount of the actual distribution made to Owners
of the Class C-AIO Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class C-AIO Pass-Through Rate.
"Class C-AIO Notional Principal Amount": Until the Payment Date
occurring in September 1999, the sum of (x) the Lower-Tier Balance of the
Lower-Tier Interest M-2A and (y) the Lower-Tier Balance of the Lower-Tier
Interest B-1A; thereafter, zero.
"Class C-AIO Pass-Through Rate": On any Payment Date, 6.82% per annum.
"Class C-FIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-FIO Certificate, substantially in the form
annexed hereto as Exhibit B-8, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposes of the REMIC Provisions.
"Class C-FIO Certificate Termination Date": September 27, 1999.
"Class C-FIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-FIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C- FIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-FIO Certificates as it relates to interest previously paid on the
Class C-FIO Certificates.
"Class C-FIO Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class C-FIO Current Interest and (y) the Class C-FIO Carry
Forward Amount, if any.
"Class C-FIO Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class C-FIO Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class C-FIO Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class C-FIO Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class C-FIO Pass-Through Rate.
"Class C-FIO Notional Principal Amount": Until the Payment Date
occurring in September 1999, the sum of (x) the Lower-Tier Balance of the
Lower-Tier Interest M-1F and (y) the Lower-Tier Balance of the Lower-Tier
Interest M-2F; thereafter, zero.
"Class C-FIO Pass-Through Rate": On any Payment Date, 15.00% per
annum.
"Class C-IO Certificate": Any one of the Class C-AIO Certificates or
Class C-FIO Certificates.
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"Class D Carry Forward Amount": With respect to any Payment Date the
amount, if any, by which (x) the Class D Distribution Amount as of the
immediately preceding Payment Date exceeds (y) the amount of the actual
distribution made to Owners of the Class D Certificates on such immediately
preceding Payment Date.
"Class D Certificate": Any one of the Certificates designated on the
face thereof as a Class D Certificate, substantially in the form annexed hereto
as Exhibit B-10, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class D Distribution Amount": With respect to any Payment Date
beginning in October 1999, the sum of:
(1) with respect to Mortgage Loans in Group I, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess, if greater than zero, of (I) the weighted average of the
Coupon Rates of such Mortgage Loans over (II) the sum of the following
payments allocable to Group I on or in respect of the related Payment
Date (in each case expressed as an annual rate based on such aggregate
outstanding Loan Balance): (A) the Servicing Fee (calculated at the
initial Servicing Fee Rate), (B) the Trustee Fee and (C) the Class
B-2F Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess, if greater than zero, of (I) the weighted average of the
Coupon Rates of such Mortgage Loans on such immediately preceding
Payment Date (weighted on the basis of the Loan Balances as of such
Payment Date) over (II) the sum of the following payments allocable to
Group II on or in respect of the related Payment Date (in each case
expressed as an annual rate based on such aggregate outstanding Loan
Balance): (A) the Servicing Fee (calculated at the initial Servicing
Fee Rate), (B) the Trustee Fee and (C) the Class B-1A Pass-Through
Rate; and
(3) the Class D Carry Forward Amount, if any.
"Class M-1 Certificate": Any one of the Class M-1F Certificates or
the Class M-1A Certificates.
"Class M-1A Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-1A Certificate Principal Balance (after taking
into account the distribution of the Group II Principal Distribution Amount on
such Payment Date, but prior to the application of the Class M-1A Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the excess of (i)
the Group II Applied Realized Loss Amount as of such Payment Date over (ii) the
sum of the Class M-2A Applied Realized Loss Amount and the Class B-1A Applied
Realized Loss Amount, in each case as of such Payment Date.
"Class M-1A Certificate": Any one of the Certificates designated on
the face thereof as a Class M-1A Certificate, substantially in the form annexed
hereto as Exhibit B-2, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class M-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1A Certificates less the sum of (x) any amounts distributed to the
Owners of the Class M-1A Certificates pursuant to Section 7.03(g) hereof on all
prior Payment Dates, (y) the aggregate, cumulative amount of Class M-1A Applied
Realized Loss Amounts on
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all prior Payment Dates and (z) any Preference Amount previously distributed to
the Owners of the Class M-1A Certificates with respect to principal.
"Class M-1A Certificate Termination Date": The Payment Date on which
the Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1A Certificates as it relates to interest previously paid on the
Class M-1A Certificates.
"Class M-1A Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-1A Current Interest, (x) the Class M-1A Principal
Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward Amount,
if any, and (z) the Class M-1A Realized Loss Amortization Amount, if any.
"Class M-1A Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-1A Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class M-1A Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class M-1A Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class M-1A Pass-Through Rate.
"Class M-1A Pass-Through Rate": With respect to the Payment Date in
October 1997, 6.02625% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.37% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus 0.555% per annum and (y) the Group II Available Funds Cap
Rate.
"Class M-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-10 Certificate
Principal Balance (after taking into account the payment of the Group II Class
A Principal Distribution Amount on such Payment Date) and (ii) the Class M-1A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (A) the product of (i) 73.20% and (ii) the outstanding Loan
Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the
Mortgage Loans in Group II as of the last day of the related Remittance Period
minus $3,420,000.
"Class M-1A Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to the Class
M-1A Certificates as of such Payment Date and (y) the excess of (i) the Group
II Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra
Principal Distribution Amount and the Class M-1A Interest Carry Forward Amount,
in each case for such Payment Date.
"Class M-1F Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-1F Certificate Principal Balance (after taking
into account the distribution of the Group I Principal Distribution Amount on
such Payment Date, but prior to the application of the Class M-1F Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the excess of (i)
the Group I Applied Realized Loss Amount as of such Payment Date over (ii) the
sum of the Class M-2F Applied Realized Loss
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Amount, the Class B-1F Applied Realized Loss Amount and the Class B-2F Applied
Realized Loss Amount, in each case as of such Payment Date.
"Class M-1F Certificate": Any one of the Certificates designated on
the face thereof as a Class M-1F Certificate, substantially in the form annexed
hereto as Exhibit B-1, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class M-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, and (y) the aggregate, cumulative amount of Class M-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class M-1F Certificates with
respect to principal.
"Class M-1F Certificate Termination Date": The Payment Date on which
the Class M-1F Certificate Principal Balance is reduced to zero.
"Class M-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1F Certificates as it relates to interest previously paid on the
Class M-1F Certificates.
"Class M-1F Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-1F Current Interest, (x) the Class M-1F Principal
Distribution Amount, if any, (y) the Class M-1F Interest Carry Forward Amount,
if any, and (z) the Class M-1F Realized Loss Amortization Amount, if any.
"Class M-1F Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-1F Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class M-1F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class M-1F Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class M-1F Pass-Through Rate.
"Class M-1F Pass-Through Rate": On any Payment Date, the lesser of
(x) 7.24% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-1F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates related to Group I (after taking
into account the payment of the Group I Class A Principal Distribution Amount
on such Payment Date) and (ii) the Class M-1F Certificate Principal Balance
immediately prior to such Payment Date over (y) the lesser of (A) the product
of (i) 78.40% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $1,330,000.
"Class M-1F Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-1F
as of such Payment Date and (y) the excess of (i)
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the Group I Monthly Excess Cashflow Amount over (ii) the sum of the Group I
Extra Principal Distribution Amount and the Class M-1F Interest Carry Forward
Amount, in each case for such Payment Date.
"Class M-2 Certificate": Any one of the Class M-2F Certificates or
the Class M-2A Certificates.
"Class M-2A Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-2A Certificate Principal Balance (after taking
into account the distribution of the Group II Principal Distribution Amount on
such Payment Date, but prior to the application of the Class M-2A Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the excess of (i)
the Group II Applied Realized Loss Amount as of such Payment Date over (ii) the
Class B-1A Applied Realized Loss Amount as of such Payment Date.
"Class M-2A Certificate": Any one of the Certificates designated on
the face thereof as a Class M-2A Certificate, substantially in the form annexed
hereto as Exhibit B-4, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates, pursuant to Section 7.03(g) hereof
on all prior Payment Dates, (y) the aggregate, cumulative amount of Class M-2A
Applied Realized Loss Amounts on all prior Payment Dates, and (z) any
Preference Amount previously distributed to the Owners of the Class M-2A
Certificates with respect to principal.
"Class M-2A Certificate Termination Date": The Payment Date on which
the Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2A Certificates as it relates to interest previously paid on the
Class M-2A Certificates.
"Class M-2A Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-2A Current Interest, (x) the Class M-2A Principal
Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward Amount,
if any, and (z) the Class M-2A Realized Loss Amortization Amount, if any.
"Class M-2A Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-2A Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class M-2A Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class M-2A Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class M-2A Pass-Through Rate.
"Class M-2A Pass-Through Rate": With respect to the Payment Date in
October 1997, 6.22625% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus 0.57% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and
on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus 0.855% per annum and (y) the Group II Available Funds Cap
Rate.
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"Class M-2A Principal Distribution Amount": As of any Payment Date
on or after the Group II Stepdown Date and as long as a Group II Trigger Event
is not in effect, the excess of (x) the sum of (i) the Class A-10 Certificate
Principal Balance (after taking into account the payment of the Group II Class
A Principal Distribution Amount on such Payment Date), (ii) the Class M-1A
Certificate Principal Balance (after taking into account the payment of the
Class M- 1A Principal Distribution Amount on such Payment Date) and (iii) the
Class M-2A Certificate Principal Balance immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) 85.20% and (ii) the outstanding
Loan Balance of the Mortgage Loans in Group II as of the last day of the
related Remittance Period and (B) the aggregate outstanding Loan Balance of the
Mortgage Loans in Group II as of the last day of the related Remittance Period
minus $3,420,000.
"Class M-2A Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to the Class
M-2A Certificates as of such Payment Date and (y) the excess of (i) the Group
II Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra
Principal Distribution Amount, the Class M-1A Realized Loss Amortization
Amount, the Class M-1A Interest Carry Forward Amount and the Class M-2A
Interest Carry Forward Amount, in each case for such Payment Date.
"Class M-2F Applied Realized Loss Amount": As to any Payment Date,
the lesser of (x) the Class M-2F Certificate Principal Balance (after taking
into account the distribution of the Group I Principal Distribution Amount on
such Payment Date, but prior to the application of the Class M-2F Applied
Realized Loss Amount, if any, on such Payment Date) and (y) the excess of (i)
the Group I Applied Realized Loss Amount as of such Payment Date over (ii) the
Class B-1F Applied Realized Loss Amount as of such Payment Date.
"Class M-2F Certificate": Any one of the Certificates designated on
the face thereof as a Class M-2F Certificate, substantially in the form annexed
hereto as Exhibit B-3, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder
for purposes of the REMIC Provisions.
"Class M-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates and (y) the aggregate, cumulative amount of Class M-2F
Applied Realized Loss Amounts on all prior Payment Dates plus any Preference
Amount previously distributed to the Owners of the Class M-2F Certificates with
respect to principal.
"Class M-2F Certificate Termination Date": The Payment Date on which
the Class M-2F Certificate Principal Balance is reduced to zero.
"Class M-2F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2F Certificates as it relates to interest previously paid on the
Class M-2F Certificates.
"Class M-2F Distribution Amount": With respect to any Payment Date,
the sum of (w) the Class M-2F Current Interest, (x) the Class M-2F Principal
Distribution Amount, if any, (y) the Class M-2F Interest Carry Forward Amount,
if any, and (z) the Class M-2F Realized Loss Amortization Amount, if any.
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"Class M-2F Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A)
the Class M-2F Current Interest as of the immediately preceding Payment Date
and (B) any unpaid Class M-2F Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect
to interest made to the Owners of the Class M-2F Certificates on such
immediately preceding Payment Date and (y) 30 days' interest on such amount at
the Class M-2F Pass-Through Rate.
"Class M-2F Pass-Through Rate": On any Payment Date, the lesser of
(x) 7.47% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-2F Principal Distribution Amount": As of any Payment Date
on or after the Group I Stepdown Date and as long as a Group I Trigger Event is
not in effect, the excess of (x) the sum of (i) the aggregate Certificate
Principal Balance of the Class A Certificates related to Group I (after taking
into account the payment of the Group I Class A Principal Distribution Amount
on such Payment Date), (ii) the Class M-1F Certificate Principal Balance (after
taking into account the payment of the Class M-1F Principal Distribution Amount
on such Payment Date) and (iii) the Class M-2F Certificate Principal Balance
immediately prior to such Payment Date over (y) the lesser of (A) the product
of (i) 87.40% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
aggregate outstanding Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $1,330,000.
"Class M-2F Realized Loss Amortization Amount": As of any Payment
Date, the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-2F
as of such Payment Date and (y) the excess of (i) the Group I Monthly Excess
Cashflow Amount over (ii) the sum of the Group I Extra Principal Distribution
Amount, the Class M-1F Realized Loss Amortization Amount, the Class M-1F
Interest Carry Forward Amount and the Class M-2F Interest Carry Forward Amount,
in each case for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit B-11, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Upper-Tier REMIC for the purposes
of the REMIC Provisions.
"Class S Certificate": Any one of the Certificates designated on the
face thereof as a Class S Certificate, substantially in the form annexed hereto
as Exhibit B-12, authenticated and delivered by the Trustee representing the
right to distributions as set forth herein. The Class S Certificates are a
"regular interest" in the Lower-Tier REMIC for the purposes of the REMIC
Provisions.
"Class S Distribution Amount": With respect to any Payment Date, the
sum of (a) the product of (x) the outstanding Loan Balance of each Advanta Loan
as of such Payment Date and (y) one-twelfth of the difference between the
Aggregate Servicing Fee Rate and the Servicing Fee Rate for such Mortgage
Loans, and (b) any unpaid Preference Amount, if any, for the Class S
Certificates. The Class S Distribution Amount shall be calculated on a
loan-by-loan basis.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
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"Corporate Trust Office": The principal corporate trust office of the
Trustee at The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attn.: Structured Finance/MBS or any other address that the Trustee advises the
parties hereto is its principal corporate trust office.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination
thereof, the Cumulative Realized Losses as a percentage of the Maximum
Collateral Amount (and with respect to the Servicer Loss Test the aggregate
portion thereof applicable to the related Servicer as set forth in the
definition of Maximum Collateral Amount).
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans in the
related Group (and with respect to the Servicer Loss Test with respect to the
Mortgage Loans in the related Mortgage Loan Servicing Group) since the Cut-Off
Date.
"Current Interest": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest, the Class A-9 Current Interest, the Class A-10
Current Interest, the Class M-1F Current Interest, the Class M-1A Current
Interest, the Class M-2F Current Interest, the Class M-2A Current Interest, the
Class B-1F Current Interest, the Class B-1A Current Interest, the Class B-2F
Current Interest, the Class C-AIO Current Interest, the Class C-FIO Current
Interest, and the Class S Distribution Amount for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of September
1, 1997 among the Custodian, the Trustee, the Depositor, the Seller and the
Servicers.
"Custodian": Bankers Trust Company of California, N.A.
"Cut-Off Date": As of the close of business on September 1, 1997.
"DCR": Duff & Xxxxxx Credit Ratings Co.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the corresponding day such
payment is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month) then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit
G hereto and delivered by the Seller to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
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"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, 0 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each Principal
and Interest Account, a trust account maintained by The Bank of New York, as
long as it remains the Trustee, or by the trust department of a federal or
state chartered depository institution acting in its fiduciary capacity, having
combined capital and surplus of at least $50,000,000; provided, however, that
if a Principal and Interest Account is not maintained with the Trustee, (i)
such institution shall have a long-term debt rating of at least "A" by Standard
& Poor's and "A2" by Xxxxx'x and, if rated by Fitch or DCR, at least "A" by
Fitch and DCR and (ii) the Servicers shall provide the Trustee and the Owners
with a statement identifying the location of the related Principal and Interest
Account when moved.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time
in the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Mortgage
Loan and any additional documents required to be added to the File pursuant to
this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of the Offered
Certificates is as set out in Section 2.08(a).
"Fitch": Fitch Investors Service, L.P.
"Formula Certificates": With respect to any Payment Date, each Class
of Group II Certificates that has a Formula Rate less than the Group II
Weighted Average Coupon Rate.
"Formula Rate": With respect to any Payment Date and a Class of Group
II Certificates, the rate determined in accordance with clause (x) of the
definition of "Pass-Through Rate" for such Class.
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"Funding Period": With respect to each of Group I and Group II, the
respective period commencing on the Startup Day and ending on the earliest to
occur of (i) the date on which the amount on deposit in the Pre-Funding Account
with respect to such Group (exclusive of any investment earnings) is less than
$100,000 and (ii) October 31, 1997.
"Group I": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group I in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group I Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group I
Certificates on such Payment Date, after taking into account the distribution
of the Group I Principal Distribution Amount on such Payment Date but prior to
the application of the Group I Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group I as of the last day of the related Remittance Period.
"Group I Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate outstanding Certificate Principal Balance of the Group I
Certificates has declined to less than $26,600,000.
"Group I Capitalized Interest Requirement": With respect to the
Payment Date in October 1997 and the Pre- Funding Payment Date, the excess, if
any, of (x) the interest on the Group I Certificates on such Payment Date
calculated at the Group I Weighted Average Pass-Through Rate over (y) the sum
of (i) one-month's interest on the aggregate Loan Balances of the Mortgage
Loans in Group I as of the close of business on the last day of the immediately
preceding Remittance Period calculated at a rate equal to 1/12 of the weighted
average of the Coupon Rates of the Mortgage Loans in Group I less the
applicable Servicing Fee Rate as of such Payment Date (or Pre-Funding Payment
Date) and (ii) any Group I Pre-Funding Account Earnings to be transferred to
the Capitalized Interest Account on such Payment Date (or Pre-Funding Payment
Date) pursuant to Section 7.04(d) hereof.
"Group I Certificates": The Class A Certificates (other than the
Class A-10 Certificates), the Class M-1F Certificates, the Class M-2F
Certificates, the Class B-1F Certificates, the Class B-2F Certificates and the
Class C-FIO Certificates.
"Group I Class A Principal Distribution Amount": As of any Payment
Date (a) prior to the Group I Stepdown Date or with respect to which a Group I
Trigger Event is in effect, 100% of the Group I Principal Distribution Amount
and (b) on or after the Group I Stepdown Date or as to which a Group I Trigger
Event is not in effect, the excess of (x) the aggregate Certificate Principal
Balance of the Class A Certificates relating to Group I immediately prior to
such Payment Date over (y) the lesser of (A) the product of (i) 67.40% and (ii)
the outstanding Loan Balance of the Mortgage Loans in Group I as of the last
day of the related Remittance Period and (B) the outstanding aggregate Loan
Balance of the Mortgage Loans in Group I as of the last day of the related
Remittance Period minus $1,330,000.
"Group I Extra Principal Distribution Amount": As of any Payment
Date, the lesser of (x) the Group I Monthly Excess Interest Amount for such
Payment Date and (y) the Group I Overcollateralization Deficiency for such
Payment Date.
"Group I Interest Amount Available": As of any Payment Date, the
Group I Interest Remittance Amount less the portion of the Trustee Fee related
to Group I.
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"Group I Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required
to be advanced with respect to the related Remittance Period with respect to
the Mortgage Loans in Group I (less the Servicing Fee with respect to such
Mortgage Loans), (ii) all Compensating Interest paid by the Servicers on such
Monthly Remittance Date with respect to Mortgage Loans in Group I, (iii) the
portion of the Substitution Amount relating to interest on the Mortgage Loans
in Group I, (iv) any amounts related to Group I required to be transferred from
the Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group I.
"Group I Monthly Excess Cashflow Amount": For any Payment Date, the
sum of (x) the Group I Monthly Excess Interest Amount (plus any interest on the
Group I Overcollateralization Amount) and (y) the Group I Overcollateralization
Release Amount for such Payment Date.
"Group I Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group I Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group I Certificates on such Payment Date and (y) the Interest Carry Forward
Amount with respect to the Class A Certificates related to Group I.
"Group I Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group I (weighted by the Loan Balances of the Mortgage Loans in Group I), less
0.50% per annum.
"Group I Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group I as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group I and
(y) the aggregate Certificate Principal Balance of the Group I Certificates
(after taking into account all distributions of principal on such Group I
Certificates as of such Payment Date).
"Group I Overcollateralization Deficiency": As of any Payment Date,
the excess, if any, of (x) the Group I Targeted Overcollateralization Amount
for such Payment Date over (y) the Group I Overcollateralization Amount for
such Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance
of the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group I Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group I
Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any Payment
Date, the lesser of (x) the Group I Principal Remittance Amount for such
Payment Date and (y) the excess, if any, of (i) the Group I
Overcollateralization Amount for such Payment Date, assuming that 100% of the
Group I Principal Remittance Amount is applied on such Payment Date to the
payment of principal on the Group I Certificates and (ii) the Group I Targeted
Overcollateralization Amount for such Payment Date, provided that if a Group I
Subordinated Trigger Event is in effect, the Group I Overcollateralization
Release Amount shall be zero.
"Group I Pre-Funding Account Earnings": With respect to the October
27, 1997 Payment Date, the actual investment earnings earned during the period
from the Startup Day through October 26, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof and, with respect
to the Pre-Funding Payment Date, the actual investment earnings earned during
the period from October 27, 1997 through
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November 7, 1997 (inclusive) on the portion of the Pre-Funded Amount remaining
and allocable to Group I during such period as calculated by the Trustee
pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group I Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group I Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group I Overcollateralization Release
Amount, if any) and (ii) the Group I Extra Principal Distribution Amount, if
any.
"Group I Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal collected or required
to be advanced by the Servicers with respect to Mortgage Loans in Group I with
respect to the related Remittance Period, (ii) the Loan Balance of each
Mortgage Loan in Group I that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such Loan Balance was actually
deposited in the Principal and Interest Account, (iii) any Substitution Amounts
relating to principal delivered to the Trust in connection with a substitution
of a Mortgage Loan in Group I to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, and (iv) all Net Liquidation Proceeds actually
collected by the Servicers with respect to the Mortgage Loans in Group I during
the related Remittance Period (to the extent such Net Liquidation Proceeds
related to principal).
"Group I Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group I and (ii)
the Group I Overcollateralization Amount, in each case after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, by (y) the Loan Balance of the Mortgage Loans in Group I as of
the last day of the related Remittance Period.
"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means 32.60%.
"Group I Servicer Clean-Up Call Date": The First Monthly Remittance
Date on which the outstanding Certificate Principal Balance of the Group I
Certificates has declined to $13,300,000.
"Group I Stepdown Date": The later to occur of (x) the Payment Date
in October 2000 and (y) the first Group I Payment Date on which the Group I
Senior Enhancement Percentage (after taking into account distributions of
principal with respect to Group I on such Payment Date) is equal to or greater
than the Group I Senior Specified Enhancement Percentage.
"Group I Step Up Date": provided that the auction sale described in
Section 9.02(a) hereof with respect to Group I has not occurred, the date that
is 90 days after the Group II Auction Sale Bid Date.
"Group I Subordinated Trigger Event": A Group I Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following
tests are failed on such Payment Date:
A Group I Cumulative Loss Test is failed with respect to a Payment
Date if the amount of the Cumulative Loss Percentage with respect to Group I
equals or exceeds the percentage set out for the corresponding Payment Date
below:
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Payment Dates Cumulative Loss Percentage
------------- --------------------------
October 1997 - September 1999 1.26%
October 1999 - September 2000 1.50%
October 2000 - September 2001 2.60%
October 2001 - September 2002 3.30%
October 2002 - September 2005 3.50%
A Group I Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group I as a percentage
of the aggregate outstanding Loan Balance of Group I equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquent Percentage
------------- ------------------------------
October 1999 - September 2001 4.00%
October 2001 - September 2003 5.50%
October 2003 - September 2005 8.00%
"Group I Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group I Stepdown Date, 0.80% of the aggregate Certificate
Principal Balance of the Group I Certificates as of the Startup Day and (y) on
or after the Group I Stepdown Date, the greater of (A) 1.60% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period and (B) $1,330,000.
"Group I Trigger Event": A Group I Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the immediately preceding Remittance Period equals or exceeds 50% of the Group
I Senior Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group I Weighted Average Pass-Through Rate": As to any Payment Date,
the weighted average of the Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate, the
Class A-7 Pass-Through Rate, the Class A-8 Pass- Through Rate, the Class A-9
Pass-Through Rate, the Class M-1F Pass-Through Rate, the Class M-2F
Pass-Through Rate, the Class B-1F Pass-Through Rate and the Class B-2F
Pass-Through Rate (such rate calculated for this purpose on the basis of
360-day year assumed to consist of twelve 30 day months) weighted by the
respective Certificate Principal Balance of the related Class as of such
Payment Date before taking into account any distributions to be made on such
Payment Date.
"Group II": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group II in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group II Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group II
Certificates on such Payment Date, after taking into account the distribution
of the Group II Principal Distribution Amount on such Payment Date but prior to
the application of the Group II Applied Realized Loss Amount, if any, on such
Payment Date over (y) the
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aggregate outstanding Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period.
"Group II Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate Certificate Principal Balance of the Group II Certificates
has declined to less than $68,400,000.
"Group II Available Escalation Amount": With respect to any Payment
Date, an amount (but not less than zero) equal to the sum of, with respect to
each Class of Formula Certificates, the product of (i) a rate equal to the
Group II Net Weighted Average Coupon Rate minus the Formula Rate for such Class
and (ii) the Certificate Principal Balance of such Class.
"Group II Available Funds Cap Rate": With respect to Group II, on any
Payment Date, a rate equal to the sum of (i) the Group II Net Weighted Average
Coupon Rate and (ii) the percentage equivalent of a fraction, the numerator of
which is the Group II Available Escalation Amount and the denominator of which
is the sum of the Certificate Principal Balances for each Class of the Group II
Capped Certificates.
"Group II Available Funds Cap Shortfall Amortization Amount": As of
any Payment Date, any amount distributed from the Group II Available Funds Cap
Shortfall Amount Account on such Payment Date.
"Group II Available Funds Cap Shortfall Amount": As of any Payment
Date, the excess, if any, of (x) the excess, if any, of (a) the aggregate
amount of interest due on the Group II Capped Certificates on all prior Payment
Dates, calculated at the related Formula Rate applicable to each such Payment
Date over (b) the aggregate amount of interest due on the Group II Capped
Certificates on all prior Payment Dates, calculated at the related Pass-Through
Rates applicable to each such Payment Date over (y) all Group II Available
Funds Cap Shortfall Amortization Amounts actually funded on all prior Payment
Dates.
"Group II Capped Certificates": With respect to any Payment Date,
each Class of Group II Certificates that has a Formula Rate greater than the
Group II Net Weighted Average Coupon Rate.
"Group II Capitalized Interest Requirement": With respect to the
Payment Date in October 1997 and the Pre- Funding Payment Date, the excess, if
any, of (x) the interest on the Group II Certificates on such Payment Date
calculated at the Group II Weighted Average Pass-Through Rate over (y) the sum
of (i) one-month's interest on the aggregate Loan Balances of the Mortgage
Loans in Group II as of the close of business on the last day of the
immediately preceding Remittance Period calculated at a rate equal to 1/12 of
the weighted average of the Coupon Rates of the Mortgage Loans in Group II less
the applicable Servicing Fee Rate as of such Payment Date (or the Pre-Funding
Payment Date) and (ii) any Group II Pre-Funding Account Earnings to be
transferred to the Capitalized Interest Account on such Payment Date (or the
Pre-Funding Payment Date) pursuant to Section 7.04(d) hereof.
"Group II Certificates": The Class A-10 Certificates, the Class M-1A
Certificates, the Class M-2A Certificates, the Class B-1A Certificates and the
Class C-AIO Certificates.
"Group II Class A Principal Distribution Amount": As of any Payment
Date (a) prior to the Group II Stepdown Date or with respect to which a Group
II Trigger Event is in effect, 100% of the Group II Principal Distribution
Amount and (b) on or after the Group II Stepdown Date or as to which a Group II
Trigger Event is not in effect, the excess of (x) the aggregate Certificate
Principal Balance of the Class A-10 Certificates immediately prior to such
Payment Date over (y) the lesser of (A) the product of (i) 57.20% and (ii) the
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day
of the related
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Remittance Period and (B) the outstanding aggregate Loan Balance of the
Mortgage Loans in Group II as of the last day of the related Remittance Period
minus $3,420,000.
"Group II Extra Principal Distribution Amount": As of any Payment
Date, the lesser of (x) the Group II Monthly Excess Interest Amount for such
Payment Date and (y) the Group II Overcollateralization Deficiency for such
Payment Date; provided, that in the case of the application of the
cross-collateralization provisions of Section 7.03(h)(12), the Group II Extra
Principal Distribution Amount shall be the lesser of (x) the sum of the Group I
Monthly Excess Cashflow Amount than remaining for such Payment Date and the
Group II Monthly Excess Interest Amount for such Payment Date over (y) the
Group II Overcollateralization Deficiency for such Payment Date.
"Group II Interest Amount Available": As of any Payment Date, the
Group II Interest Remittance Amount less the portion of the Trustee Fee related
to Group II.
"Group II Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required
to be advanced with respect to the related Remittance Period with respect to
the Mortgage Loans in Group II (less the Servicing Fee with respect to such
Mortgage Loans), (ii) all Compensating Interest paid by the Servicers on such
Monthly Remittance Date with respect to Mortgage Loans in Group II, (iii) the
portion of the Substitution Amount relating to interest on the Mortgage Loans
in Group II, (iv) any amounts related to Group II required to be transferred
from the Capitalized Interest Account to the Certificate Account pursuant to
Section 7.04(e) hereof on the related Payment Date and (v) all Net Liquidation
Proceeds relating to interest not previously advanced with respect to the
Mortgage Loans in Group II.
"Group II Monthly Excess Cashflow Amount": For any Payment Date, the
sum of (x) the Group II Monthly Excess Interest Amount (plus any interest on
the Group II Overcollateralization Amount) and (y) the Group II
Overcollateralization Release Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any
Payment Date, the excess, if any, of (i) the Group II Interest Amount Available
for the related Remittance Period over (ii) the sum of (x) the Current Interest
on the Group II Certificates on such Payment Date and (y) the Class A-10
Interest Carry Forward Amount.
"Group II Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group II (weighted by the Loan Balances of the Mortgage Loans in Group II),
less 0.50% per annum.
"Group II Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group II as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group II and
(y) the aggregate Certificate Principal Balance of the Group II Certificates
(after taking into account all distributions of principal on such Group II
Certificates as of such Payment Date).
"Group II Overcollateralization Deficiency": As of any Payment Date,
the excess, if any, of (x) the Group II Targeted Overcollateralization Amount
for such Payment Date over (y) the Group II Overcollateralization Amount for
such Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance
of the Group II Certificates resulting from the distribution of the Group II
Principal Remittance Amount (but not the Group II Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group II
Applied Realized Loss Amount on such Payment Date.
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"Group II Overcollateralization Release Amount": As of any Payment
Date, the lesser of (x) the Group II Principal Remittance Amount for such
Payment Date and (y) the excess, if any, of (i) the Group II
Overcollateralization Amount for such Payment Date, assuming that 100% of the
Group II Principal Remittance Amount is applied on such Payment Date to the
payment of principal on the Group II Certificates over (ii) the Group II
Targeted Overcollateralization Amount for such Payment Date; provided, that if
a Group II Subordinated Trigger Event is in effect, the Group II
Overcollateralization Release Amount shall be zero.
"Group II Pre-Funding Account Earnings": With respect to the October
31, 1997 Payment Date, the actual investment earnings earned during the period
from the Startup Day through October 31, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof and, with respect
to the Pre-Funding Payment Date, the actual investment earnings earned during
the period from October 27, 1997 through November 7, 1997 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group II during
such period as calculated by the Trustee pursuant to Section 3.07(d) hereto.
"Group II Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group II Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group II Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group II Overcollateralization Release
Amount, if any) and (ii) the Group II Extra Principal Distribution Amount, if
any.
"Group II Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal collected or required
to be advanced by the Servicers with respect to Mortgage Loans in Group II with
respect to the related Remittance Period, (ii) the Loan Balance of each
Mortgage Loan in Group II that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such Loan Balance was actually
deposited in the Principal and Interest Account, (iii) any Substitution Amounts
relating to principal delivered to the Trust in connection with a substitution
of a Mortgage Loan in Group II to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, and (iv) all Net Liquidation Proceeds actually
collected by the Servicers with respect to the Mortgage Loans in Group II
during the related Remittance Period (to the extent such Net Liquidation
Proceeds related to principal).
"Group II Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group II and (ii)
the Group II Overcollateralization Amount, in each case after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as of
the last day of the related Remittance Period.
"Group II Senior Specified Enhancement Percentage": On any date of
determination thereof means 42.80%.
"Group II Servicer Clean-Up Call Date": The first Monthly Remittance
Date on which the outstanding Certificate Principal Balance of the Group II
Certificates has declined to $34,200,000.
"Group II Stepdown Date": The later to occur of (x) the Payment Date
in October 2000 and (y) the first Group II Payment Date on which the Group II
Senior Enhancement Percentage (after taking into account distributions of
principal with respect to Group II on such Payment Date) is equal to or greater
than the Group II Senior Specified Enhancement Percentage.
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"Group II Step Up Date": Provided that the auction sale described in
Section 9.02(a) hereof with respect to Group II has not occurred, the date that
is 90 days after the Group II Auction Sale Bid Date.
"Group II Subordinated Trigger Event": A Group II Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following
tests are failed on such Payment Date:
A Group II Cumulative Loss Test is failed with respect to a Payment
Date if the Cumulative Loss Percentage with respect to Group II equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
October 1997 - September 1999 1.75%
October 1999 - September 2000 2.10%
October 2000 - September 2001 3.50%
October 2001 - September 2002 4.40%
October 2002 - September 2003 4.80%
October 2003 - September 2004 5.20%
October 2004 - September 2005 5.60%
A Group II Delinquency Test is failed with respect to a Payment Date
if the amount of 60+ Day Delinquent Loans, with respect to Group II as a
percentage of the aggregate outstanding Loan Balance of Group II equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquency Percentage
------------- ------------------------------
October 1999 - September 2001 4.00%
October 2001 - September 2003 5.50%
October 2003 - September 2005 8.00%
"Group II Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group II Stepdown Date, 1.60% of the aggregate Certificate
Principal Balance of the Group II Certificates as of the Startup Day and (y) on
or after the Group II Stepdown Date, the greater of (A) 2.40% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day
of the related Remittance Period and (B) $3,420,000.
"Group II Trigger Event": A Group II Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day
of the immediately preceding Remittance Period equals or exceeds 40% of the
Group II Senior Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any Payment
Date, the weighted average of the Class A-10 Pass-Through Rate, the Class M-1A
Pass-Through Rate, the Class M-2A Pass-Through Rate, and the Class B-1A
Pass-Through Rate weighted by the respective Certificate Principal Balance of
the related Class as of such Payment Date before taking into account any
distributions to be made on such Payment Date.
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"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the
Trust by the Depositor on the Startup Day.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan, provided that any amount remitted
under Section 8.11 hereof shall be considered a payment under an Insurance
Policy.
"Interest Remittance Amount": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by a Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses and accrued but unpaid Servicing Fees, and any unreimbursed
Servicing Advances expended by that Servicer pursuant to Section 8.09(b) with
respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by a
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan and as of any date
of determination, the outstanding principal balance thereof, on the Cut-Off
Date with respect to the Initial Mortgage Loans or relevant Subsequent Cut-Off
Date with respect to the Subsequent Mortgage Loans, less the sum of (i) any
principal payments relating to such Mortgage Loan (whether received from the
related Mortgagor or advanced by the related Servicer) included in previous
Monthly Remittance Amounts, and (ii) any Cram Down Losses relating to such
Mortgage Loan; provided, however, that the Loan Balance for any Mortgage Loan
that has become a Liquidated Loan shall be zero as of the first day of the
Remittance Period following the Remittance Period in which such Mortgage Loan
becomes a Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased
from the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04,
3.05, 3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance
of such Mortgage Loan as of the date of purchase (assuming that the related
Delinquency Advance has already been remitted), plus one month's interest on
the Loan Balance thereof as of the beginning of the related Remittance Period
computed at the then applicable Coupon Rate, together with (without
duplication) the aggregate amounts of (i) all unreimbursed Delinquency Advances
and Servicing Advances theretofore made with respect to such Mortgage Loan,
(ii) the interest portion of any Delinquency Advances which the related
Servicer has theretofore failed to remit with respect to such Mortgage Loan as
required by this Agreement and (iii) all reimbursed Delinquency Advances to the
extent that reimbursement is not made from the Mortgagor or from Liquidation
Proceeds from the respective Mortgage Loan.
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"Loan-to-Value Ratio": As of any particular date, the percentage
obtained by dividing the Appraised Value into the original principal balance of
the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Long Beach": Long Beach Mortgage Company, a Delaware corporation.
"Long Beach Loans": The Mortgage Loans serviced by Long Beach.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
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"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-9 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-9 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-9 Pass-Through Rate.
"Lower-Tier A-9 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-10 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-10 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-10 Pass-Through Rate.
"Lower-Tier A-10 Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier B-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1A immediately prior to such Payment Date during the related Accrual
Period of the Lower-Tier B-1A Pass-Through Rate.
"Lower-Tier B-1A Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier B-1F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier B-1F Pass-Through Rate.
"Lower-Tier B-1F Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier B-2F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-2F immediately prior to such Payment Date during the related Accrual
Period of the Lower-Tier Pass-Through Rate.
"Lower-Tier B-2F Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
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"Lower-Tier Balance": As to each Class of Lower-Tier Interests and
any Payment Date, the Initial Lower-Tier Balance as set forth in Section
2.08(a) minus all amounts distributed as principal of such Class on previous
Payments Dates pursuant to Section 7.03(c).
"Lower-Tier Group I Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2
Monthly Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4
Monthly Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6
Monthly Interest, the Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8
Monthly Interest, the Lower-Tier A-9 Monthly Interest, the Lower-Tier B-1F
Monthly Interest, the Lower-Tier B-2F Monthly Interest, the Lower-Tier M-1F
Monthly Interest, the Lower-Tier M-2F Monthly Interest, the Class A Group I
Principal Distribution Amount, the Class M-1F Principal Distribution Amount,
the Class M-2F Principal Distribution Amount, the Class B-1F Principal
Distribution Amount and the Class B-2F Principal Distribution Amount. Such
Group I Class A Principal Distribution Amount is allocated as follows: (a) to
the Lower-Tier Interest A-9 an amount equal to the Class A-9 Lockout
Distribution Amount and (b) as a distribution on the Lower-Tier Interest A-1
until the Lower-Tier Interest A-1 Termination Date, the Class A-1 Principal
Distribution Amount; as a distribution on the Lower-Tier Interest A-2 until the
Lower-Tier Interest A-2 Termination Date, the Class A-2 Distribution Amount; as
a distribution on the Lower-Tier Interest A-3 until the Lower-Tier Interest A-3
Termination Date, the Class A-3 Distribution Amount; as a distribution on the
Lower-Tier Interest A-4 until the Lower-Tier Interest A-4 Termination Date, the
Class A-4 Distribution Amount; as a distribution on the Lower-Tier Interest A-5
until the Lower-Tier Interest A-5 Termination Date, the Class A-5 Distribution
Amount; as a distribution on the Lower-Tier Interest A-6 until the Lower-Tier
Interest A-6 Termination Date, the Class A-6 Distribution Amount; as a
distribution on the Lower-Tier Interest A-7 until the Lower-Tier Interest A-7
Termination Date, the Class A-7 Distribution Amount; as a distribution on the
Lower-Tier Interest A-8 until the Lower-Tier Interest A-8 Termination Date, the
Class A-8 Distribution Amount; and as a distribution on the Lower-Tier Interest
A-9 until the Lower-Tier Interest A-9 Termination Date, the Class A-9
Distribution Amount.
"Lower-Tier Group II Distribution Amount": With respect to any
Payment Date, the sum of the Lower-Tier A-10 Monthly Interest, the Lower-Tier
M-1A Monthly Interest, the Lower-Tier M-2A Monthly Interest, the Lower-Tier
B-1A Monthly Interest, the Class A Group II Principal Distribution Amount, the
Lower-Tier M-1A Principal Distribution Amount, the Class M-2A Principal
Distribution Amount and the Class B-1A Principal Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-9": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-10": The interest of that name established
pursuant to Section 2.08(a) hereof.
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"Lower-Tier Interest B-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-1F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-2F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-1 on such Payment
Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-2 on such Payment
Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-3 on such Payment
Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-4 on such Payment
Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-5 on such Payment
Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-6 on such Payment
Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-7 on such Payment
Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-8 on such Payment
Date.
"Lower-Tier Interest A-9 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-9 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-9 on such Payment
Date.
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"Lower-Tier Interest A-10 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-10 is reduced to zero through
the distribution made in respect of Lower-Tier Interest A-10 on such Payment
Date.
"Lower-Tier Interest B-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1A on such Payment
Date.
"Lower-Tier Interest B-1F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1F is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1F on such Payment
Date.
"Lower-Tier Interest B-2F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-2F is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-2F on such Payment
Date.
"Lower-Tier Interest M-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-1A on such Payment
Date.
"Lower-Tier Interest M-1F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1F is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-1F on such Payment
Date.
"Lower-Tier Interest M-2A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-2A on such Payment
Date.
"Lower-Tier Interest M-2F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2F is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-2F on such Payment
Date.
"Lower-Tier M-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1A Pass-Through Rate.
"Lower-Tier M-1A Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier M-1F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1F Pass-Through Rate.
"Lower-Tier M-1F Pass-Through Rate": For any Payment Date, the Group
I Net Weighted Average Coupon Rate.
"Lower-Tier M-2A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2A Pass-Through Rate.
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"Lower-Tier M-2A Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier M-2F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2F Pass-Through Rate.
"Lower-Tier M-2F Pass-Through Rate": For any Payment Date, the Group
II Net Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective
Lower-Tier Interests, the applicable "Lower-Tier Pass-Through Rate" set forth
in Section 2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Group I Distribution Account and the
Upper-Tier Group II Distribution Account which are assets of the Upper-Tier
REMIC.
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999%
to the Seller and 0.001% to The Bank of New York, as Tax Matters Person. Such
interests shall be non-transferrable, except that The Bank of New York may
assign such interest to another person who accepts such assignment and the
designation as Tax Matters Person pursuant to Section 11.18 hereof. The
Lower-Tier REMIC Residual Class is entitled only to any amounts at any time
held in the Certificate Account and not required to be paid to the Upper-Tier
REMIC, which is expected to be zero at all times during the term of this
Agreement.
"Maximum Collateral Amount": As to Group I, $266,000,000; and as to
Group II, $684,000,000; provided that for purposes of calculating the Servicer
Loss Test with respect to each Servicer and each Mortgage Loan Group, the
Seller will provide the related Maximum Collateral Amounts per Servicer and
Mortgage Loan Group to the Trustee, each Servicer and the Depositor within 10
days after the end of the Funding Period for such Mortgage Loan Group.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates
and the Class M-2 Certificates.
"Monthly Remittance Amount": The sum of the Interest Remittance
Amount and the Principal Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if such day
is not a Business Day, the Business Day succeeding such day, commencing in
October 1997.
"Monthly Servicing Report": Any report provided by a Servicer
pursuant to Section 8.29 hereof.
"Moody's": Xxxxx'x Investors Service Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on an estate in fee simple interest in real property securing a
Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case
may be. References herein to the related Class of Offered Certificates, when
used with respect to a Mortgage Loan Group, shall mean
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(A) in the case of Group I, the Group I Certificates and (B) in the case of
Group II, the Group II Certificates.
"Mortgage Loan Servicing Group": Advanta Loans, Long Beach Loans or
Option One Loans, as applicable.
"Mortgage Loans": Such of the mortgage loans (including Initial
Mortgage Loans and Subsequent Mortgage Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedules of Mortgage
Loans. The term "Mortgage Loan" includes any Mortgage Loan which is
Delinquent, which relates to a foreclosure or which relates to a Property which
is REO Property prior to such Property's disposition by the Trust. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the Depositor,
in fact was not transferred and assigned to the Trust for any reason
whatsoever, including, without limitation, the incorrectness of the statement
in a Transfer Agreement concerning the transfer of title to the transferee with
respect to such mortgage loan, shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses, unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued Servicing Fees relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, the Mortgage Loan related to each REO Property and each Mortgage Loan
with respect to which any portion of a Scheduled Payment is, as of the last day
of the prior Remittance Period, 90 days or more Delinquent (including any
Mortgage Loans which have gone into foreclosure or have been discharged by
reason of bankruptcy).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to
each Mortgage Loan Servicing Group and any date of determination thereof, the
average of the percentage equivalents of the fractions determined for each of
the three immediately preceding Remittance Periods the numerator of each of
which is equal to the aggregate Loan Balance of 90+ Day Delinquent Loans in the
related Mortgage Loan Servicing Group as of such date of determination and the
denominator of which is the aggregate Loan Balance of all of the Mortgage Loans
in the related Mortgage Loan Servicing Group as of such date of determination.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B-1 Certificates.
"Officer's Certificate": A certificate signed by any Authorized
Officer of any Person delivering such certificate and delivered to the Trustee.
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"One-Month LIBOR": With respect to any Accrual Period for the Group
II Certificates, the rate determined by the Trustee on the related One-Month
LIBOR Determination Date on the basis of the offered rate for one-month U.S.
dollar deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on such date; provided that if such rate does not appear on
Telerate Page 3750, the rate for such date will be determined on the basis of
the rates at which one-month U.S. dollar deposits are offered by the Reference
Banks at approximately 11:00 a.m. (London time) on such date to prime banks in
the London interbank market. In such event, the Trustee will request the
principal London office of each of the Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%). If fewer than two
quotations are provided as requested, the rate for that date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected
by the Trustee, at approximately 11:00 a.m. (New York City time) on such date
for one-month U.S. dollar loans to leading European banks.
"One-Month LIBOR Determination Date": For the initial Accrual Period
for the Group II Certificates, the second London Business Day prior to the
Closing Date. With respect to any Accrual Period thereafter for the Group II
Certificates, the second London Business Day preceding the commencement of such
Accrual Period.
"Operative Documents": Collectively, this Agreement, the Transfer
Agreements, the Subsequent Transfer Agreements and the Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be
counsel to the Depositor, Seller, any Servicer or the Trustee, which counsel
shall be reasonably acceptable to the Trustee.
"Option One": Option One Mortgage Corporation, a California
corporation.
"Option One Loans": The Mortgage Loans serviced by Option One.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $801,622,679.56.
"Original Group I Pre-Funding Amount": $41,351,314.16.
"Original Group II Pre-Funding Amount": $107,026,006.28.
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $148,377,320.44.
"Originator": Each of the companies identified as an "Originator" on
Schedule IV hereto.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and
final payment of money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent in trust for the Owners
of such Certificates;
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(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Release Amount": For any Payment Date, the sum
of the Group I Overcollateralization Release Amount and the Group II
Overcollateralization Release Amount.
"Overfunded Interest Amount": With respect to each Subsequent
Transfer Date, the sum, if any, of (x) with respect to the Group I
Certificates, the excess of (i) interest that would accrue from the related
Subsequent Cut-Off Date through October 31, 1997 on the aggregate Loan Balances
of the Subsequent Mortgage Loans acquired by the Trust on such Subsequent
Transfer Date, calculated at a rate equal to the sum of (I) the Group I
Weighted Average Pass-Through Rate and (II) the Trustee Fee allocable to Group
I (such fees calculated as an annual rate based on the aggregate Loan Balances
of the Mortgage Loans in Group I), over (ii) interest that would accrue from
the Subsequent Cut-Off Date through October 31, 1997 on the aggregate Loan
Balances of the Subsequent Mortgage Loans related to Group I acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date and
(y) with respect to the Group II Certificates the excess of (i) interest that
would accrue from the related Subsequent Cut-Off Date through October 31, 1997
on the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the
Trust on such Subsequent Transfer Date, calculated at a rate equal to the sum
of (I) the Group II Weighted Average Pass-Through Rate and (II) the Trustee Fee
allocable to Group II (such fees calculated as an annual rate based on the
aggregate Loan Balances of the Mortgage Loans in Group II), over (ii) interest
that would accrue from the Subsequent Cut-Off Date through October 31, 1997 on
the aggregate Loan Balances of the Subsequent Mortgage Loans related to Group
II acquired by the Trust on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by the Seller or any affiliate
thereof, the Seller or such affiliate shall not be considered an Owner.
"PAG": The Seller's "Performance Assumption Groupings" as described
in the Prospectus Supplement.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee
or any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs.
"Percentage Interest": With respect to an Offered Certificate, a
Class B-2F Certificate or a Class C-IO Certificate, a fraction, expressed as a
decimal, the numerator of which is the initial Certificate
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Principal Balance (or, in the case of the Class C-IO Certificates, the related
Notional Principal Amount) represented by such Certificate and the denominator
of which is the aggregate initial Certificate Principal Balance (or, in the
case of the Class C-IO Certificates, the related Notional Principal Amount)
represented by all the Certificates of the same Class. With respect to a Class
S Certificate, a Class D Certificate or a Class R Certificate, the portion of
the Class evidenced thereby, expressed as a percentage, as stated on the face
of such Certificate, all of which shall total 100% with respect to the related
Class.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Offered Certificates and the
Class S Certificates, as the case may be, means, any amounts of Current
Interest and principal included in previous distributions to the Owners of such
Certificates which are recovered from such Owners as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Owners.
"Pre-Funded Amount": With respect to the October 1997 Payment Date
and the Pre-Funding Payment Date, the amount remaining on deposit in the
Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Determination Date": October 31, 1997.
"Pre-Funding Payment Date": November 7, 1997.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the related
Servicer prior to the scheduled due date for such installment, intended by the
Mortgagor as an early payment thereof and not as a Prepayment with respect to
such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by a Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by a Servicer in
connection with a foreclosed Mortgage Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal and Interest Account": Each principal and interest account
established by a Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
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"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated September 5, 1997 constituting
part of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1997-3 Prospectus Supplement dated September 5,
1997 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(4) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a
Coupon Rate not less than and not more than 1% greater than the Coupon Rate of
the Mortgage Loan being replaced, (ii) is of the same property type (i.e.,
single family, condominium, PUD unit, etc.) or is a single family dwelling and
the same occupancy status as the replaced Mortgage Loan or is a primary
residence, (iii) shall mature no later than September 27, 2027, (iv) has a
Loan-to-Value Ratio as of the Subsequent Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (v) shall be of
the same or higher credit quality classification (determined in accordance with
the related Originator's credit underwriting guidelines set forth in the
related Originator's underwriting manual) as the Mortgage Loan which such
Qualified Subsequent Mortgage replaces, (vi) has a Loan Balance as of the
related Subsequent Cut-Off Date not greater than and not substantially less
than the Loan Balance of the replaced Mortgage Loan as of such Subsequent
Cut-Off Date, (vii) shall not provide for a Balloon Payment if the related
Mortgage Loan did not provide for a Balloon Payment (and if such related
Mortgage Loan provided for a Balloon Payment, such Qualified Replacement
Mortgage shall have an original maturity of not less than the original maturity
of such related Mortgage Loan), (viii) shall be a fixed rate Mortgage Loan if
the Mortgage Loan being replaced is a fixed rate Mortgage Loan or an adjustable
rate Mortgage Loan if the Mortgage Loan being replaced is an adjustable rate
Mortgage Loan, (ix) if such Mortgage Loan being replaced is in Group II, (a)
has the index of the replaced Mortgage Loan, (b) has the same amount of time
between rate adjustment dates as the replaced Mortgage Loan and (c) has a
margin no less than the replaced Mortgage Loan and (x) satisfies the criteria
set forth from time to time in the definition thereof at Section 860G(a)(4) of
the Code (or any successor statute thereto) and applicable to the Trust.
"Rating Agencies": Collectively, Moody's, DCR, Standard & Poor's and
Fitch or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which (x) the Loan Balance thereof plus any accrued and unpaid interest thereon
as of the date of liquidation exceeds (y) Net Liquidation Proceeds realized
thereon applied in reduction of such Loan Balance and accrued and unpaid
interest. As to any Mortgage Loan as to which there has been a Cram Down Loss,
the amount of such Cram Down Loss.
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"Record Date": With respect to the Group I Certificates and each
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Group
II Certificates and each Payment Date, the day immediately preceding such
Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant One-Month LIBOR Determination Date
and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance
with Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar
appointed pursuant to Section 5.04 hereof, or any duly appointed and eligible
successor thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-30759), including all amendments thereto and including the Prospectus
Supplement relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing
may be in effect from time to time.
"Remittance Period": The calendar month immediately preceding the
month in which a Monthly Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Reporting Date": The date each Servicer will provide the Monthly
Servicing Report described in Section 8.29 hereof to the Trustee, which day
shall be the 20th day of each calendar month (or if such day is not a Business
Day, the next succeeding Business Day).
"Representation Letter": Letters to, or agreements with, the
Depository to effectuate a book entry system with respect to the Offered
Certificates registered in the Register under the nominee name of the
Depository.
"Retained Certificates": Collectively, the Class D Certificates and
the Class R Certificates.
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"Schedule of Mortgage Loans": Each of the schedules of Mortgage
Loans, segregated by Mortgage Loan Group, with respect to the Initial Mortgage
Loans listing each Initial Mortgage Loan in the related Group to be conveyed on
the Startup Day and with respect to Subsequent Mortgage Loans listing each
Subsequent Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the related Servicer.
Such Schedules of Mortgage Loans shall identify each Mortgage Loan by (1) the
Servicer's loan number, (2) the related Servicing Fee, (3) borrower's name, (4)
address (including the state) of the Property, (5) the lien status thereof, (6)
the Loan-to-Value Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof and (9) the paid- through date for such Mortgage Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or,
in the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Servicers" or "Servicer": Advanta, Long Beach and Option One and
their permitted successors and assigns. Any reference to Servicers or Servicer
shall mean the related Servicer with respect to any Mortgage Loan or Mortgage
Loan Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled by or
under common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Loss Test": The Servicer Loss Test for each Servicer and
with respect to its related Mortgage Loan Servicing Group for any period set
out below is satisfied if the Cumulative Loss Percentage as it relates to such
Mortgage Loan Servicing Group and such period does not exceed the percentage
set out for such period below (provided, that for purposes of the calculation
of the Servicer Loss Test, Realized Losses attributable solely to Cram Down
Losses shall be excluded from the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
--------------------- ---------------
September 2, 1997 - September 1, 1998 0.75%
September 2, 1998 - September 1, 1999 1.25%
September 2, 1999 - September 1, 2000 1.80%
September 2, 2000 - September 1, 2001 2.25%
September 2, 2001 and thereafter 2.75%
"Servicer Termination Event": As defined in Section 8.20(d) hereof.
"Servicer Termination Test": The Servicer Termination Test for each
Servicer and with respect to the related Mortgage Loan Servicing Group is
satisfied for any date of determination thereof, if (x) the 90+ Delinquency
Percentage (Rolling Three Month) with respect to the related Mortgage Loan
Servicing Group is less than 13.0%, (y) the Servicer Loss Test is satisfied and
(z) the Annual Loss Percentage
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(Rolling Twelve Month) as it relates to such Mortgage Loan Servicing Group for
the twelve month period immediately preceding the date of determination thereof
is not greater than 2.25%.
"Servicing Advance": As defined in Section 8.09(b) and Section
8.13(a) hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount
retained by the related Servicer as compensation for servicing and
administration duties relating to such Mortgage Loan pursuant to Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters between the
Seller and the related Servicer, setting forth the Servicing Fee Rate and other
servicing compensation applicable to such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the related
Servicing Fee Letter.
"60+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the prior Remittance
Period, 60 days or more Delinquent (without giving effect to any grace period).
"60+ Day Delinquency Percentage": As of any date of determination
thereof, and as to the related Mortgage Loan Group, a fraction, expressed as a
percentage, the numerator of which is the amount of 60+ Day Delinquent Loans
with respect to such Mortgage Loan Group and the denominator of which is the
outstanding aggregate Loan Balance of the Mortgage Loans in such Mortgage Loan
Group.
"Standard & Poor's": Standard & Poor's Ratings Services, a division
of the XxXxxx-Xxxx Companies.
"Startup Day": September 17, 1997.
"Subordinate Certificate": With respect to either Group, collectively,
the Mezzanine Certificates, the Class B Certificates and the Class C-IO
Certificates related to such Group.
"Subordinated Trigger Event": A Group I Subordinated Trigger Event or
a Group II Subordinated Trigger Event, as the case may be.
"Subsequent Cut-Off Date": The close of business on the first day of
the month in which a Qualified Replacement Mortgage or a Subsequent Mortgage
Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust
after the Startup Day pursuant to a fixed price contract for inclusion in Group
I or Group II pursuant to Section 3.07 hereof, which shall be listed on the
Schedule of Mortgage Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit C hereto, by which
Subsequent Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent Mortgage
Loans, the date specified in each Subsequent Transfer Agreement, and with
respect to a Qualified Replacement Mortgage, the date upon which a conveyance
of such Qualified Replacement Mortgage to the Trust is effective.
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"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and
any Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate, initially issued
to The Bank of New York as the initial Tax Matters Person.
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates, which shall be issued to and held by The Bank of New York
throughout the term hereof unless another Person shall accept an assignment of
such interest and the designation of Tax Matters Person pursuant to Section
11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the
Dow Xxxxx Telerate Capital Markets Report (or such other page as may replace
page 3750 on that report for the purpose of displaying London interbank offered
rates of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of
(a)(i) the Group I Weighted Average Pass- Through Rate in the case of Mortgage
Loans in Group I or (ii) the Group II Weighted Average Pass-Through Rate in the
case of Mortgage Loans in Group II, plus (b) any portion of the Trustee Fee
(calculated as an annual rate based on the outstanding principal amount of the
related Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": As defined in Section 9.02(b) hereof.
"Transfer Agreements": The agreements listed on Schedule III hereto as
such agreements are at any time amended, modified and supplemented and in
effect at such time.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1997-3, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": The Bank of New York, a New York banking corporation, the
Corporate Trust Office of which is located on the date of execution of this
Agreement at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Structured
Finance/MBS, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"Trustee Fee": The fee, if any, set out in a side letter between the
Seller and the Trustee.
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"Underwriters": Xxxxxx Xxxxxxx & Co. Incorporated, Prudential
Securities Incorporated, Credit Suisse First Boston and Xxxxxx Brothers, Inc.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
"Upper-Tier Group I Distribution Account": The Upper-Tier Group I
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier Group II Distribution Account": The Upper-Tier Group II
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Group I Distribution Account and the Upper-Tier
Group II Distribution Account, and the right to receive the distributions
deposited therein with respect to each Lower-Tier Interest.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word
is used. The definitions set forth in Section 1.01 hereof include both the
singular and the plural. Whenever used in this Agreement, any pronoun shall be
deemed to include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby create and
establish, pursuant to the laws of the State of New York and this Agreement,
the Trust, which, for convenience, shall be known as "AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1997-3".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured
Finance/MBS, or at such other address as the Trustee may designate by notice to
the Depositor, the Seller, the Servicers and the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning, holding and disposing of Mortgage Loans and the Trust Estate in
connection therewith; (ii) activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith, including the investment of moneys in accordance with this
Agreement; and (iii) such other activities as may be required in connection
with conservation of the Trust Estate and distributions to the Owners;
provided, however, that nothing contained herein shall permit the Trustee to
take any action which would adversely affect the status of either the
Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee and
(ii) any reasonable expenses of the Trustee that are "unanticipated expenses of
the REMIC" within the meaning of Treasury Regulations Section 1.860G- 1(b)(3),
shall be paid pursuant to Section 7.03(c) and (d). The Seller shall pay
directly the reasonable fees and expenses of counsel to the Trustee pursuant to
a fee letter between the Seller and the Trustee. The reasonable fees and
expenses of the Trustee's counsel in connection with the review and delivery of
this Agreement and related documentation shall be paid by the Seller on the
Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
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Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the situs of the Trust
shall be in the State of New York; provided that it is understood that the
Files may be held by the Custodian on behalf of the Trustee outside the State
of New York.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC
shall be evidenced by the interests having the characteristics and terms as
follows, including for federal income tax purposes the month in which the Final
Scheduled Payment Dates occur:
Lower-Tier Initial Month and Year
Pass-Through Lower-Tier of Final Scheduled
Class Designation Rating Balance Payment Dates
----------------- ------ ------- ------- -----
Lower-Tier Interest A-1 (1) $ 31,500,000 December 2007
Lower-Tier Interest A-2 (1) $ 36,000,000 June 2012
Lower-Tier Interest A-3 (1) $ 41,800,000 January 2018
Lower-Tier Interest A-4 (1) $ 29,100,000 January 2022
Lower-Tier Interest A-5 (1) $ 14,600,000 July 2023
Lower-Tier Interest A-6 (1) $ 14,200,000 November 2024
Lower-Tier Interest A-7 (1) $ 15,300,000 January 2026
Lower-Tier Interest A-8 (1) $ 19,790,000 May 2027
Lower-Tier Interest A-9 (1) $ 22,480,000 March 2027
Lower-Tier Interest A-10 (2) $554,040,000 July 0000
Xxxxx-Xxxx Xxxxxxxx X-0X (1) $ 14,630,000 September 2027
Lower-Tier Interest M-1A (2) $ 54,720,000 September 0000
Xxxxx-Xxxx Xxxxxxxx X-0X (1) $ 11,970,000 September 2027
Lower-Tier Interest M-2A (2) $ 41,040,000 September 0000
Xxxxx-Xxxx Xxxxxxxx X-0X (1) $ 10,640,000 September 2027
Lower-Tier Interest B-1A (2) $ 34,200,000 September 0000
Xxxxx-Xxxx Xxxxxxxx X-0X (1) $ 3,990,000 September 2027
Lower-Tier REMIC Residual Class (3) (3) September 2027
--------------------
(1) On any Payment Date, the Group I Net Weighted Average Coupon Rate.
(2) On any Payment Date, the Group II Net Weighted Average Coupon Rate.
(3) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier
Balance or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests X-0, X-0, X-0, X-0, X-0, X-0, X-0,
X-0, X-0, X-00, X-0X, X-0X, X-0X, X-0X, X- 0X, X-0X and B-2F Certificates
shall be issued as non-certificated interests. The Lower-Tier REMIC Residual
Class shall be issued from the Lower-Tier REMIC as a non-certificated interest.
(c) The Depositor hereby designates Lower-Tier Interest X-0,
Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0,
Xxxxx-Xxxx Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest A-7,
Lower-Tier Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest X-00,
Xxxxx-Xxxx Xxxxxxxx X-0X, Lower-Tier Interest X-0X, Xxxxx-Xxxx Xxxxxxxx X-0X,
Lower-Tier Interest X-0X, Xxxxx-Xxxx Xxxxxxxx X-0X, Lower-Tier Interest B-2A,
and Lower-Tier Interest B-2F as "regular interests" and the Lower-Tier REMIC
Residual Class as the single class of "residual interests" in the Lower-Tier
REMIC for purposes of the REMIC Provisions.
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(d) The Depositor hereby designates the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9,
Class A-10, Class M-1F, Class M-1A, Class M-2F, Class M-2A, Class B-1F, Class
B-1A, Class B-2F, Class C-FIO, Class C-AIO, Class D and Class S as "regular
interests," and the Class R Certificates as the single class of "residual
interests" in the Upper-Tier REMIC for purposes of the REMIC Provisions. The
Depositor hereby designates the Lower-Tier Interest A-1, the Lower-Tier
Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier Interest A-4, the
Lower-Tier Interest A-5, the Lower-Tier Interest A-6, the Lower-Tier Interest
A-7, the Lower-Tier Interest X-0, Xxxxx-Xxxx Xxxxxxxx X-0, Xxxxx-Xxxx Interest
X-00, Xxxxx-Xxxx Xxxxxxxx X-0X, Lower-Tier Interest X-0X, Xxxxx-Xxxx Xxxxxxxx
X-0X, Lower-Tier Interest M-2A, Lower-Tier Interest X-0X, Xxxxx-Xxxx Xxxxxxxx
X-0X, Xxxxx-Xxxx Xxxxxxxx X-0X, the Upper-Tier Group I Distribution Account and
the Upper-Tier Group II Distribution Account as the only assets of the
Upper-Tier REMIC.
(e) The Startup Day is hereby designated as the "startup day" of
the Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC included therein shall, for federal
income tax purposes, maintain books on a calendar year basis and report income
on an accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the
Lower-Tier REMIC each to elect to be treated as a REMIC under Section 860D of
the Code. Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust shall be resolved in a manner that preserves the
validity of such election to be treated as a REMIC. The Trustee shall report
all expenses of the Trust Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by the Upper-Tier REMIC and amounts, if any, distributed on the
Lower- Tier REMIC Residual Class shall be treated as distributions by the
Lower-Tier REMIC. It is expected that there shall not be any distributions to
the Lower-Tier REMIC Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and
to the person described in Section 860(E)(e)(3) and (6) of the Code the
information described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any
successor regulation thereto with respect to both the Lower-Tier REMIC and the
Upper-Tier REMIC. Such information will be provided in the manner described in
Treasury Regulation Section 1.860E-2(a)(5), or any successor regulation
thereto.
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(k) For federal income tax purposes, the month in which Final
Scheduled Payment Date for each Class of the Offered Certificates is hereby set
to be the Payment Date indicated below:
Month and Year of
Final Scheduled
Class Payment Date
----- ------------
Class A-1 Certificates December 2007
Class A-2 Certificates June 2012
Class A-3 Certificates January 2018
Class A-4 Certificates January 2022
Class A-5 Certificates July 2023
Class A-6 Certificates November 2024
Class A-7 Certificates January 2026
Class A-8 Certificates May 2027
Class A-9 Certificates March 2027
Class A-10 Certificates July 2027
Class M-1F Certificates September 2027
Class M-1A Certificates September 2027
Class M-2F Certificates September 2027
Class M-2A Certificates September 2027
Class B-1F Certificates September 2027
Class B-1A Certificates September 2027
Class C-FIO Certificates September 2027
Class C-AIO Certificates September 2027
Class D Certificates September 2027
Class R Certificates September 2027
Class S Certificates September 2027
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the
Trustee, the Seller, the Servicers and the Owners that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is in good standing as a foreign corporation in each jurisdiction
in which the nature of its business, or the properties owned or leased by it
make such qualification necessary. The Depositor has all requisite corporate
power and authority to own and operate its properties, to carry out its
business as presently conducted and as proposed to be conducted and to enter
into and discharge its obligations under the Operative Documents to which it is
a party.
(b) The execution and delivery by the Depositor and its
performance and compliance with the terms of the Operative Documents to which
it is a party have been duly authorized by all necessary corporate action on
the part of the Depositor and will not violate the Depositor's certificate of
incorporation or bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in a
breach of, any material contract, agreement or other instrument to which the
Depositor is a party or by which the Depositor is bound or violate any statute
or any order, rule or regulation of any court, governmental agency or body or
other tribunal having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party,
assuming due authorization, execution and delivery by the other parties hereto
and thereto, constitutes a valid, legal and binding obligation of the
Depositor, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Depositor or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under the Operative Documents to which the
Depositor is a party.
(e) No litigation is pending with respect to which the Depositor
has received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which the Depositor is a party.
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(f) No certificate of an officer, statement furnished in writing
or report delivered, or to be delivered, pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the
certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are
attributable to the Depositor therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. The Registration
Statement does not contain any untrue statement of a material fact required to
be stated therein or omit to state any material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading. There is no fact known to the Depositor that
materially adversely affects or in the future may (so far as the Depositor can
now reasonably foresee) materially adversely affect the Depositor or the
Mortgage Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable in connection with
the acquisition by the Depositor of the Mortgage Loans, the conveyance by the
Depositor of the Mortgage Loans, the purchase and sale of the Certificates and
the execution, delivery and performance by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by the Operative Documents on the
part of the Depositor and the performance by the Depositor of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(i) The transactions contemplated by the Operative Documents are
in the ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent
by the transfer of the Mortgage Loans, nor is the Depositor aware of any
pending insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties
set forth in this Section 3.01 shall survive delivery of the respective
Mortgage Loans to the Trustee.
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Section 3.02 Representations and Warranties of the Servicers.
(i) Each Servicer hereby represents and warrants to the Trustee,
the Depositor, the Seller and the Owners, as to itself and its Mortgage Loan
Servicing Group only, that as of the Startup Day:
(a) It is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, is in
compliance with the laws of each state in which any Property is located to the
extent necessary to enable it to perform its obligations hereunder and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such
qualification necessary. Such Servicer has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under the Operative Documents to which it is a party.
(b) The execution and delivery of the Operative Documents
to which such Servicer is a party by such Servicer and its performance and
compliance with the terms thereof have been duly authorized by all necessary
corporate action on the part of such Servicer and will not violate such
Servicer's articles or certificate of incorporation or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which such Servicer is a party or by which
such Servicer is bound or violate any statute or any order, rule or regulation
of any court, governmental agency or body or other tribunal having jurisdiction
over such Servicer or any of its properties.
(c) Each Operative Document to which such Servicer is a
party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of such Servicer,
enforceable against it in accordance with the terms thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) Such Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which would materially and adversely
affect the condition (financial or otherwise) or operations of such Servicer or
its properties or would materially and adversely affect its performance
hereunder.
(e) No litigation is pending with respect to which such
Servicer has received service of process or, to the best of such Servicer's
knowledge, threatened against such Servicer which litigation would prohibit its
entering into the Operative Documents to which such Servicer is a party or
would materially and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which such Servicer is a party.
(f) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by such Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(g) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by or
from any federal, state or other governmental authority or agency (other than
any such actions,
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approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which such Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution,
delivery and performance by such Servicer of the Operative Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by such Operative Documents on the part of such Servicer and the
performance by such Servicer of its obligations under such Operative Documents
to which it is a party.
(h) The collection practices used by such Servicer with
respect to the Mortgage Loans serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage servicing
business.
(i) The transactions contemplated by this Agreement are
in the ordinary course of business of such Servicer.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Mortgage Loans to
the Trustee.
(ii) Upon discovery by any of the Seller, a Servicer, the Depositor
or the Trustee (each, for purposes of this paragraph, a "party") of a breach of
any of the representations and warranties set forth in this Section 3.02 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties
(provided that one Servicer need not give such notice to the other Servicers).
Within 60 days of its discovery or its receipt of notice of such breach, the
related Servicer shall (A) cure such breach in all material respects, (B) to
the extent such breach can only be cured through repurchase or substitution of
one or more Mortgage Loans, the Servicer (other than Advanta) may so repurchase
or substitute in the manner set forth in Section 3.04(b), and (C) to the extent
that such breach is not cured in accordance with clause (A) or (B) above, the
related Servicer may thereafter be removed pursuant to Section 8.20(a)(iv)
hereof; provided, however, that if such Servicer can establish to the
reasonable satisfaction of the Seller that it is diligently pursuing remedial
action, then the cure period may be extended with the written approval of the
Seller, which such written approval shall not be unreasonably withheld.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Servicers and the Owners as of the Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing
and in good standing under the laws governing its creation and existence and is
in good standing as a foreign corporation in each jurisdiction in which the
nature of its business, or the properties owned or leased by it make such
qualification necessary. The Seller has all requisite corporate power and
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance
and compliance with the terms of the Operative Documents to which it is a party
have been duly authorized by all necessary corporate action on the part of the
Seller and will not violate the Seller's certificate of incorporation or
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bylaws or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Seller is a party
or by which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party,
assuming due authorization, execution and delivery by the other parties hereto
and thereto, constitutes a valid, legal and binding obligation of the Seller,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Seller or its
properties or the consequences of which would materially and adversely affect
its performance under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative
Documents to which it is a party or that would materially and adversely affect
the condition (financial or otherwise) or operations of the Seller or its
properties or might have consequences that would materially and adversely
affect its performance under the Operative Documents to which the Seller is a
party.
(f) No certificate of an officer, statement furnished in writing
or report delivered or to be delivered pursuant to the terms hereof by the
Seller contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the
certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is
responsible in accordance with the Operative Documents or which are
attributable to the Seller therein are true and correct in all material
respects, and the Registration Statement does not contain any untrue statement
of a material fact with respect to the Seller required to be stated therein or
necessary to make the statements contained therein with respect to the Seller,
in light of the circumstances under which they were made, not misleading.
There is no fact known to the Seller that materially adversely affects or in
the future may (so far as the Seller can now reasonably foresee) materially
adversely affect the Seller or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the related
Note) and other items of the Trust Estate by the Trustee under this Agreement,
the Trust will have good title to such Mortgage Loan (including the related
Note) and such other items of the Trust Estate free and clear of any lien,
charge, mortgage, encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be,
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by or from any federal, state or other governmental authority or agency (other
than any such actions, approvals, etc. under any state securities laws, real
estate syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution, delivery and
performance by the Seller of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within
which any appeal therefrom may be taken or review thereof may be obtained has
expired or no review thereof may be obtained or appeal therefrom taken, and are
adequate to authorize the consummation of the transactions contemplated by the
other Operative Documents on the part of the Seller and the performance by the
Seller of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(j) The transactions contemplated by the Operative Documents are
in the ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Seller aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) The Seller is not aware of a default by an Originator under
any Operative Document or that any Mortgage Loan breaches any representation or
warranty in a Transfer Agreement that as of the Startup Date is not subject to
cure.
It is understood and agreed that the representations and warranties
set forth in this Section 3.03 shall survive delivery of the respective
Mortgage Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the Seller or
the Trustee (each, for purposes of this paragraph, a "party") of a breach of
any of the representations and warranties set forth in this Section 3.03 which
materially and adversely affects the interests of the Owners, the party
discovering such breach shall give prompt written notice to the other parties.
The Seller hereby covenants and agrees that within 60 days of its discovery or
its receipt of notice of breach, it shall cure such breach in all material
respects or, with respect to a breach of clause (h) above, it shall itself, or
if the related Originator or other party to the related Transfer Agreement
causes such breach, such party shall on the Monthly Remittance Date next
succeeding such discovery or receipt of notice (i) within two years of the
Startup Day, substitute in lieu of any Mortgage Loan not in compliance with
clause (h) a Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the applicable Subsequent
Cut-Off Date is less than the Loan Balance of such Mortgage Loan as of such
Subsequent Cut-Off Date, deliver an amount equal to such difference together
with the aggregate amount of (A) all unreimbursed Delinquency Advances and
Servicing Advances theretofore made with respect to such Mortgage Loan and (B)
the interest portion of any Delinquency Advances which the related Servicer has
theretofore failed to remit with respect to such Mortgage Loan (a "Substitution
Amount") to the related Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Mortgage Loan from the Trust at the Loan Purchase
Price, which purchase price shall be delivered to the related Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Mortgage Loan which is not
in default or as to which no default is imminent,
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no repurchase or substitution pursuant hereto shall be made unless the related
Originator or the Seller obtains for the Trustee an opinion of counsel
experienced in federal income tax matters to the effect that such a repurchase
or substitution would not constitute a Prohibited Transaction for the Trust or
any REMIC therein or otherwise subject the Trust or any REMIC therein to tax
and would not jeopardize the status of either the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC (a "REMIC Opinion") addressed to the Servicers and
the Trustee and acceptable to the Servicers and the Trustee. Any Mortgage Loan
as to which repurchase or substitution was delayed pursuant to this Section
because of the inability to deliver a REMIC Opinion shall be repurchased or
substituted for (subject to compliance with Sections 3.03, 3.04 or 3.06, as the
case may be) upon the earlier of (a) the occurrence of a default or imminent
default with respect to such Mortgage Loan and (b) receipt by the Trustee of a
REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with
Respect to the Mortgage Loans In Certain Situations.
(a) Other than the Seller's right to recapture any premium paid by
it in connection with its purchase of Mortgage Loans, the Seller hereby assigns
to the Depositor, who assigns to the Trustee for the benefit of the Owners all
of its right, title and interest under each Transfer Agreement applicable to
the Mortgage Loans but none of its obligations thereunder. Insofar as such
Transfer Agreement provides for representations and warranties made by the
related Originator or another party who has sold loans to the Seller in respect
of a Mortgage Loan and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
against such Originator directly by the Seller, the Depositor, the related
Servicer or the Trustee on behalf of the Owners; provided, that the Trustee
must enforce such remedies if such other parties do not so enforce such
remedies. Upon the discovery by the Seller, the Depositor, a Servicer or the
Trustee of a breach of any of the representations and warranties made in a
Transfer Agreement in respect of any Mortgage Loan, without regard to any
limitation set forth in such representation or warranty concerning the
knowledge of the related Originator or another party who has sold loans to the
Seller as to the facts stated therein, which materially and adversely affects
the interests of the Owners in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties.
A breach of any representation or warranty (x) relating to
marketability of title sufficient to transfer unencumbered title to a Mortgage
Loan set forth in each Transfer Agreement, (y) relating to enforceability of
the Mortgage Loan against the related Mortgagor or Property set forth in each
Transfer Agreement or (z) the status of such Mortgage Loan as a "qualified
mortgage" under Section 860G(a)(3) of the Code, is a priori the breach of a
representation or warranty which "materially and adversely affects the
interests of the Owners" in such Mortgage Loan; provided that the related
Originator shall nevertheless have the opportunity to cure, substitute or
repurchase in accordance with the applicable Transfer Agreement and this
Agreement.
(b) Upon the earliest to occur of the Seller's discovery, its
receipt of notice of breach of a representation and warranty given by an
Originator from any one of the other parties hereto or such time as a breach of
any representation and warranty materially and adversely affects the interests
of the Owners as set forth above, the Seller hereby covenants and warrants that
it shall promptly request that the related Originator cure such breach in all
material respects or, if such breach is not cured, the Seller shall request
that the related Originator, subject to the further requirements of this
paragraph and within the time period specified in the related Transfer
Agreement (but in any case for a Mortgage Loan that is not a "qualified
mortgage", within 90 days of discovery thereof) (i) within two years of the
Startup Day, substitute in lieu of each Mortgage Loan which has given rise to
the requirement for action a Qualified Replacement Mortgage and deliver the
Substitution Amount applicable thereto, to the related Servicer for deposit in
the
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related Principal and Interest Account or (ii) purchase such Mortgage Loan from
the Trust at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the related Servicer for deposit in the
related Principal and Interest Account by the related Originator. In
connection with any such proposed purchase or substitution, the Seller may
request the Originator at such party's expense to cause to be delivered to the
Trustee or may itself deliver to the related Servicer and the Trustee an
opinion of counsel experienced in federal income tax matters stating whether or
not such a proposed purchase or substitution would constitute a Prohibited
Transaction for the Trust or would jeopardize the status of the Trust as a
REMIC, and the related Originator shall only be required to take either such
action to the extent such action would not constitute a Prohibited Transaction
for the Trust or would not jeopardize the status of the Trust as a REMIC. Any
required purchase or substitution, if delayed by the absence of such opinion,
shall nonetheless occur upon the earlier of (i) the occurrence of a default or
imminent default with respect to the Mortgage Loan or (ii) the delivery of such
opinion by the Seller at the related Originator's expense or by the related
Originator. Any repurchase or substitution shall occur prior to the related
Monthly Remittance Date and the related Originator shall provide the related
Servicer with written notice no less than five Business Days in advance of such
repurchase or substitution. It is understood and agreed that the obligation of
the related Originator to cure the defect, or substitute for or purchase any
Mortgage Loan as to which a representation or warranty is untrue in any
material respect and has not been remedied shall constitute the sole remedy
available to the Owners, the Seller, the Depositor and the Trustee.
(c) In the event that any Qualified Replacement Mortgage is
delivered by an Originator to the Trust pursuant to this Section 3.04 or
Section 3.06 hereof, the Seller shall cause the related Originator to take the
actions described in Section 3.04(b) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the Seller, a Servicer or the
Trustee that the representations and warranties set forth in the related
Transfer Agreement or in Section 3.03 above, are untrue in any material respect
on the date such Qualified Replacement Mortgage is conveyed to the Trust such
that the interests of the Owners in the related Qualified Replacement Mortgage
are materially and adversely affected; provided, however, that for the purposes
of this subsection (c) the representations and warranties in the related
Transfer Agreement or as set forth in Section 3.3 above referring to items "as
of the Cut- Off Date" or "as of the Startup Day" shall be deemed to refer to
such items as of the related Subsequent Cut-Off Date.
(d) Any of the foregoing obligations set forth in subsection (b)
or (c) applicable to any Originator (other than Option One and Long Beach) will
be required to be performed by the Seller if the related Originator defaults in
performing the obligation and such default remains unremedied for 30 days.
(e) It is understood and agreed that the covenants set forth in
this Section 3.04 shall survive delivery of the respective Mortgage Loans
(including Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee and the Servicers (in their capacities as
Servicers) shall have no duty to conduct any affirmative investigation other
than as specifically set forth in this Agreement as to the occurrence of any
condition requiring the repurchase or substitution of any Mortgage Loan
pursuant to this Section or the eligibility of any Mortgage Loan for purposes
of this Agreement.
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Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage
Loans and Qualified Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution
and delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners, all of
their respective right, title and interest in and to the Trust Estate;
provided, however, that the Seller reserves and retains all of its right, title
and interest in and to principal (including Prepayments collected) and interest
due on each Initial Mortgage Loan on or prior to the Cut-Off Date. The
transfer by the Depositor of the Initial Mortgage Loans set forth on the
Schedule of Mortgage Loans to the Trustee is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Initial Mortgage Loans conveying
good title thereto free and clear of any liens and encumbrances from the Seller
to the Depositor and from the Depositor to the Trust and that the Initial
Mortgage Loans not be part of the Depositor's or the Seller's estate in the
event of insolvency. In the event that either such conveyance or a conveyance
of a Qualified Replacement Mortgage or a conveyance pursuant to Section 3.07
and any Subsequent Transfer Agreement is deemed to be a loan, the parties
intend that the Seller shall be deemed to have granted to the Depositor and the
Depositor shall be deemed to have granted to the Trustee a security interest in
the Trust Estate, and that this Agreement shall constitute a security agreement
under applicable law.
In connection with such sale, transfer, assignment, and conveyance
from the Seller to the Depositor, the Seller has filed, in the appropriate
office or offices in the States of Texas and Delaware, a UCC-1 financing
statement executed by the Seller as debtor, naming the Depositor as secured
party and listing the Initial Mortgage Loans and the other property (including
any Qualified Replacement Mortgage) described above as collateral and on or
prior to each Subsequent Transfer Date the Seller will file in such offices a
UCC-1 financing statement listing the Subsequent Mortgage Loans so transferred
as collateral. The characterization of the Seller as a debtor and the
Depositor as the secured party on such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the
Seller's entire right, title and interest in the Trust Estate. In connection
with such filing, the Seller agrees that it shall cause to be filed all
necessary continuation statements thereof and to take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Trustee's and the Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance,
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of Texas and Delaware, a UCC-1 financing
statement executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Initial Mortgage Loans and the other property (including
any Qualified Replacement Mortgage) described above as collateral and on or
prior to each Subsequent Transfer Date the Depositor will file in such offices
a similar UCC-1 financing statement listing the Subsequent Mortgage Loans so
transferred as collateral. The characterization of the Depositor as a debtor
and the Trustee as the secured party in such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the
Depositor's entire right, title and interest in the Trust Estate. In
connection with such filing, the Depositor agrees that it shall cause to be
filed all necessary continuation statements thereof and to take or cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Trustee's and the Owners' interest in the Trust Estate.
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(b) In connection with the transfer and assignment of the Initial
Mortgage Loans and prior to each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgage or Subsequent Mortgage Loan, the Depositor
agrees to:
(i) deliver without recourse to the Custodian, on behalf
of the Trustee, on the Startup Day with respect to each Initial
Mortgage Loan or on each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgage or Subsequent Mortgage Loans, (A) the
original Notes endorsed in blank or to the order of the Trustee, (B)
the original title insurance policy or any one of an original title
binder, an original preliminary title report or an original title
commitment or a copy of any of the foregoing certified by the issuer
of the title insurance policy, or the attorney's opinion of title, (C)
originals or certified copies of all intervening recorded assignments,
showing a complete chain of title from origination to the Trustee, if
any, with evidence of recording thereon, (D) originals of all
assumption, modification, written assurance or substitution
agreements, if any and (E) either: (1) the original Mortgage, with
evidence of recording thereon, (2) a certified copy if such original
Mortgage has not been returned by the applicable recording office, or
(3) a copy of the Mortgage certified by the public recording office in
those instances where the original recorded Mortgage has been lost;
(ii) cause the Custodian on behalf of the Trustee, within
60 days following the Startup Day with respect to the Initial Mortgage
Loans or on each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgages or Subsequent Mortgage Loans to
complete the assignments of the Mortgages to "The Bank of New York, as
Trustee of AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1997-3 under the Pooling and Servicing Agreement dated as of
September 1, 1997" to be submitted to the Seller for recording in the
appropriate jurisdictions (unless the Originator is either Long Beach
or Option One, in which case either Long Beach or Option One shall so
submit such assignments) for recording in the appropriate
jurisdictions; provided, however, that the Depositor shall not be
required to cause the Custodian to complete and cause the related
Originator (if the Originator is either Long Beach or Option One) or
the Seller to record an assignment for any Mortgage with respect to a
Property located in California or with respect to which the original
recording information is lacking;
(iii) if not delivered on the Startup Day, deliver the
title insurance policy or title searches, the original Mortgages and
such recorded assignments, together with originals or duly certified
copies of any and all prior assignments, to the Custodian on behalf of
the Trustee within 15 days of receipt thereof by the Depositor (but in
any event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within one year
after the Startup Day with respect to the Initial Mortgage Loans or on
each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans); and
(iv) furnish to the Trustee at the Depositor's expense, an
opinion of counsel with respect to the sale and perfection of the
Subsequent Mortgage Loans delivered to the Trust, corporate and
enforceability matters and an opinion of counsel as to the tax
consequences to the Trust, if any, resulting from the conveyance of
Subsequent Mortgage Loans, each in form and substance satisfactory to
the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Custodian on behalf of
the Trustee of a copy of such
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Mortgage, such assignment or assignments of Mortgage certified by the public
recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Custodian on behalf
of the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been prepaid
in full after the Cut-Off Date and prior to the Startup Day, the Depositor, in
lieu of the foregoing, will deliver within six (6) days after the Startup Day
to the Trustee a certification of an Authorized Officer in the form set forth
in Exhibit D.
(d) The Seller shall cause the related Originator, to transfer,
assign, set over and otherwise convey without recourse, to the Trustee all
right, title and interest of such party in and to any Qualified Replacement
Mortgage delivered to the Trustee on behalf of the Trust by such party pursuant
to Section 3.03, 3.04 or 3.06 hereof and all such party's right, title and
interest to principal and interest due on such Qualified Replacement Mortgage
after the applicable Subsequent Cut-Off Date; provided, however, that such
party shall reserve and retain all right, title and interest in and to payments
of principal and interest due on such Qualified Replacement Mortgage on or
prior to the applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Subsequent Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such released Mortgage Loan
on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all
prior assignments, to the Trustee within 15 days of receipt thereof by the
Seller (but in any event within 120 days after the date of conveyance of such
Qualified Replacement Mortgage), (iv) deliver the title insurance policy, or
where no such policy is required to be provided under Section 3.05(b)(i)(B),
the other evidence of title in same required in Section 3.05(b)(i)(B) and (v)
originals of all assumption, modification, written assurance or substitution
agreements, if any.
(g) As to each Mortgage Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Trustee shall cause
the Custodian on behalf of the Trustee to deliver on the date of conveyance of
such Qualified Replacement Mortgage to the party providing such Qualified
Replacement Mortgage (i) the original Note relating thereto, endorsed without
recourse or representation, to the Seller, (ii) the original Mortgage so
released and all assignments relating thereto and (iii) such other documents as
constituted the File with respect thereto.
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(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Seller shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and
deliver on the Trustee's behalf on the Startup Day an acknowledgment of
receipt of the items delivered by the Seller or the Depositor in the form
attached as Exhibit E hereto, and declares that it will hold such documents and
any amendments, replacement or supplements thereto, as well as any other assets
included in the definition of Trust Estate and delivered to the Custodian on
behalf of the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners. The Trustee agrees to cause
the Custodian on the Trustee's behalf to review, for the benefit of the Owners,
such items within 45 days after the Startup Day (or, with respect to any
document delivered after the Startup Day, within 45 days of receipt and with
respect to any Subsequent Mortgage Loan or Qualified Replacement Mortgage,
within 45 days after the Subsequent Transfer Date) and to deliver to the
Depositor, the Seller and the related Servicer a certification in the form
attached hereto as Exhibit F (a "Pool Certification") to the effect that, as to
each Mortgage Loan listed in the Schedule of Mortgage Loans (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
Pool Certification as not covered by such Pool Certification), (i) all
documents required to be delivered to it pursuant to Section 3.05(b)(i) of this
Agreement are in its possession, (ii) such documents have been reviewed by it
and have not been mutilated, damaged or torn and relate to such Mortgage Loan
and (iii) based on its examination and only as to the foregoing documents, the
information set forth on items (1), (3) and (4) of the Schedule of Mortgage
Loans accurately reflects the information set forth in the File. Neither the
Trustee nor the Custodian shall have any responsibility for reviewing any File
except as expressly provided in this subsection 3.06(a). Without limiting the
effect of the preceding sentence, in reviewing any File, neither the Trustee
nor the Custodian shall have any responsibility for determining whether any
document is valid and binding, whether the text of any assignment is in proper
form (except to determine if the Trustee is the assignee), whether any document
(other than the assignments) has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Neither the Trustee nor the Custodian shall be under any duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they are other than what they purport to be
on their face, nor shall either the Trustee or the Custodian be under any duty
to determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Mortgage Loan.
(b) If the Trustee or the Custodian on behalf of the Trustee
during such 45-day period finds any document constituting a part of a File
which is not executed, has not been received, or is unrelated to the Mortgage
Loans identified in the Schedule of Mortgage Loans, or that any Mortgage Loan
does not conform to the description thereof as set forth in the Schedule of
Mortgage Loans, the Trustee shall promptly so notify the Depositor, the Seller,
the related Servicer and the related Originator. In performing any such
review, the Trustee and the Custodian on behalf of the Trustee may conclusively
rely on the Seller as to the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Trustee's and the
Custodian's on behalf of the Trustee review of the items delivered by the
Seller pursuant to Section 3.05(b)(i) is limited solely to confirming that the
documents listed in Section 3.05(b)(i) have been executed and received, relate
to the Files identified in the Schedule of Mortgage Loans and conform to the
description thereof in the Schedule of Mortgage Loans. The Seller
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agrees to request that the related Originator use reasonable efforts to remedy
a material defect in a document constituting part of a File of which it is so
notified by the Trustee. If, however, within the time period specified in the
related Transfer Agreement after the Trustee's notice to the related Originator
respecting such defect the related Originator has not remedied the defect and
the defect materially and adversely affects the interest in the related
Mortgage Loan of the Owners, the Seller will request the related Originator to,
within the time period set forth in the related Transfer Agreement, (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage and
deliver the Substitution Amount to the applicable Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Mortgage Loan at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the applicable Servicer for deposit in the related
Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to cause
the Custodian to provide an updated report during the 12th month after the
Startup Day indicating the current status of the exceptions previously
indicated on the Pool Certification (the "Final Certification"). After
delivery of the Final Certification, the Trustee shall provide to the Servicers
no less frequently than monthly updated certifications indicating the then
current status of exceptions, until all such exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in
Section 3.05 and paragraphs (b) and (c) below in consideration of the Trustee's
delivery on the relevant Subsequent Transfer Dates to or upon the order of the
Depositor of all or a portion of the balance of funds in the Pre-Funding
Account, the Depositor shall on each Subsequent Transfer Date sell, transfer,
assign, set over and otherwise convey without recourse, to the Trustee, all of
the Depositor's right, title and interest in and to any and all benefits
accruing to the Depositor from the Subsequent Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the relevant
Subsequent Cut- Off Date) which the Depositor will cause to be delivered to the
Trustee therewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06), together with the related Subsequent Mortgage Loan documents
and the Depositor's interest in any Property and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Mortgage Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing). There shall be no more than
three Subsequent Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on the
Schedule of Mortgage Loans by the Seller to the Depositor and by the Depositor
to the Trust shall be absolute and shall be intended by the Owners and all
parties hereto to be treated as a sale by the Seller to the Depositor and by
the Depositor to the Trust. Any Subsequent Mortgage Loan so transferred will
be included in the related Mortgage Loan Group. The amount released from the
Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
principal balances of the Subsequent Mortgage Loans so transferred. Upon the
transfer by the Depositor of the Subsequent Mortgage Loans hereunder, such
Subsequent Mortgage Loans (and all principal (including Prepayments collected)
and interest due thereon subsequent to the Subsequent Cut-Off Date) and all
other rights and interests with respect to such Subsequent Mortgage Loans
transferred pursuant to a Subsequent Transfer Agreement shall be deemed for all
purposes hereunder to be part of the Trust Estate. The Seller hereby covenants
and agrees to use its best efforts to ensure that a sufficient amount of
Subsequent Mortgage Loans will be transferred to the Depositor during the
Funding Period to enable the Depositor to reduce the Pre-Funded Amount with
respect to each Group to less than $100,000. The Depositor hereby covenants
and agrees to use its best efforts to ensure that a sufficient amount of
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Subsequent Mortgage Loans will be transferred to the Trust during the Funding
Period to reduce the Pre-Funded Amount with respect to each Group to less than
$100,000.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee
with an Addition Notice not less than ten (10) calendar days
prior to the proposed Subsequent Transfer Date (unless the
Trustee agrees to a shorter time period) and shall have
provided any information reasonably requested by any of the
foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the
Trustee a duly executed written assignment (including an
acceptance by the Trustee) in substantially the form of
Exhibit C, which shall include a Schedule of Mortgage Loans,
listing the Subsequent Mortgage Loans and any other exhibits
listed thereon;
(iii) the Depositor shall have deposited in the
applicable Principal and Interest Account all principal
collected and interest accruing in respect of such Subsequent
Mortgage Loans on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, neither
the Depositor nor the Seller was insolvent, nor will either of
them be made insolvent by such transfer, nor is either of them
aware of any pending insolvency;
(v) the Funding Period for the related Group
shall not have ended;
(vi) the Depositor shall have delivered to the
Trustee an Officer's Certificate confirming the satisfaction
of each condition precedent specified in this paragraph (b)
and in the related Subsequent Transfer Agreement; and
(vii) such sale will not result in a materially
adverse tax consequence to the Trust as evidenced by an
Opinion of Counsel delivered to the Trustee by the Depositor
at its own expense.
(c) The obligation of the Trust to purchase Subsequent Mortgage
Loans on a Subsequent Transfer Date is subject to the following requirements,
among others: (i) the ratings on the Offered Certificates shall not have been
downgraded by any Rating Agency; (ii) such Subsequent Mortgage Loan may not be
30 or more days contractually delinquent as of the related Subsequent Cut-Off
Date; (iii) the remaining term to maturity of such Subsequent Mortgage Loan may
not exceed 360 months; and (iv) following the purchase of all of the Subsequent
Mortgage Loans by the Trust, the Subsequent Mortgage Loans, as a whole, (a)
will have a weighted average Loan-to-Value Ratio of not more than 73% for
Group I and 75% for Group II; (b) will have a weighted average gross margin for
Group II that is not more than 25 basis points less than the weighted average
gross margin for Group II as of the Cut-Off Date; (c) will have no more than
16% in the case of Group I and 16% in the case of Group II of such Subsequent
Mortgage Loans with Loan-to-Value Ratios in excess of 80%; (d) will have no
more than 49% in the case of Group I and 44% in the case of Group II with cash
out refinancings; (e) in the case of Group II only, will not be comprised of
more than 84% in the aggregate of 2/28 Loans and 3/27 Loans; (f) will have
weighted average PAG codes of less than 2.5 in the case of the Group I and less
than 2.8 in the case of
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Group II; (g) will include Subsequent Mortgage Loans classified as PAG IV or
PAG V comprising not more than 18% of Group I and 18% of Group II; and (h) will
have not more than 10% of Group I and 8% of Group II that are secured by
non-owner occupied properties.
(d) In connection with each Subsequent Transfer Date and on the
Payment Date occurring in October 1997 and the Pre-Funding Payment Date, the
Trustee shall determine: (i) the amount and correct dispositions of each of the
Group I and Group II Capitalized Interest Requirements, Overfunded Interest
Amounts, Pre-Funding Account Earnings and the Pre- Funded Amount and (ii) any
other necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. In the event that
any amounts are released as a result of an error in calculation to the Owners
or Depositor from the Pre-Funding Account or from the Capitalized Interest
Account, such Owners or the Depositor shall immediately repay such amounts to
the Trustee.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of
an executed Delivery Order in the form set forth as Exhibit G hereto, the
Trustee shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 10 a.m., Pacific time on the Startup Day (the "Closing"), at the
offices of Xxxxx & Xxxxxx, 0 Xxxx Xxxxx, Xxxxxx, Xxxxxxxxxx (or at such other
location acceptable to the Seller), the Seller will sell and convey the Initial
Mortgage Loans and the money, instruments and other property related thereto to
the Depositor and the Depositor will sell and convey the Initial Mortgage Loans
and the money, instruments and other property related thereto to the Trustee,
and the Trustee will deliver (i) to the Underwriters the Offered Certificates
with an aggregate Percentage Interest in each Class equal to 100%, registered
in the name of Cede & Co., or in such other names as the Underwriters shall
direct, against payment of the purchase price thereof by wire transfer of
immediately available funds to the Trustee, (ii) to the initial purchasers
thereof, Class S Certificates with a cumulative Percentage Interest equal to
100%, (iii) to the initial purchasers thereof, Class C-IO Certificates with an
aggregate Percentage Interest in each Class of 100%, and (iv) to the respective
registered owners thereof, a Class D Certificate with a Percentage Interest
equal to 100% and a Class R Certificate with a Percentage Interest equal to
99.999%, registered in the names designated by the Depositor and the Tax
Matters Person Residual Interest to the Trustee. The Depositor shall deliver
to the Trustee on the Startup Day the letters required to be delivered by
transferees of Class C, Class S and Class R Certificates pursuant to Section
5.08(b) and (c) hereof with respect to the initial purchasers of such
Certificates.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates the Depositor shall instruct the Trustee to deposit (a) an
amount equal to the Original Pre-Funded Amount in the Pre-Funding Account and
(b) an amount equal to $683,743 to the Capitalized Interest Account contributed
by the Depositor out of such proceeds or otherwise. The Trustee shall then
remit the entire balance of such net proceeds to the Depositor in accordance
with instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein
with respect to the Certificates as to "principal" and "interest" no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law). The Certificates are
payable solely from payments received on or with respect to the Mortgage Loans
(other than the Servicing Fees), money in the Principal and Interest Account,
except as otherwise provided herein, money in the Pre-Funding Account and the
Capitalized Interest Account, earnings and the proceeds of property held as a
part of the Trust Estate. Each Certificate entitles the Owner thereof to
receive monthly on each Payment Date, in order of priority of distributions
with respect to such Class of Certificates as set forth in Section 7.03, a
specified portion of such payments with respect to the Mortgage Loans, pro rata
in accordance with such Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee any Certificate prior to receiving the final distribution due thereon.
Any such Certificate as to which the Trustee has made the final distribution
thereon shall be deemed cancelled and shall no longer be Outstanding for any
purpose of this Agreement, whether or not such Certificate is ever returned to
the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class A-9 Certificates, the Class A-10 Certificates, the Class M-1F
Certificates, the Class M-1A Certificates, the Class M-2F Certificates, the
Class M-2A Certificates, the Class B-1F Certificates, the Class B-1A
Certificates, the Class B-2F Certificates, the Class C-FIO Certificates, the
Class C-AIO Certificates, the Class D Certificates, the Class R Certificates
and the Class S Certificates shall be in substantially the forms set forth in
Exhibits X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-00, X-0, X-0, X-0, X-0,
X-0, X-0, X-0, X-0, X-0, B-10, B-11 and B-12 hereof, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement or as may in the Depositor's judgment
be necessary, appropriate or convenient to comply, or facilitate compliance,
with applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any applicable securities laws or as may,
consistently herewith, be determined by the Authorized Officer of the Depositor
executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
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The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register")
in which, subject to such reasonable regulations as it may prescribe, the
Trustee shall provide for the registration of Certificates and the registration
of transfer of Certificates. The Trustee is hereby initially appointed
Registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Owners and the Trustee shall have the
right to inspect the Register during the Trustee's normal hours and to obtain
copies thereof, and the Trustee shall have the right to rely upon a certificate
executed on behalf of the Registrar by an Authorized Officer thereof as to the
names and addresses of the Owners of the Certificates and the principal amounts
and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar
by the Owners of a majority of the aggregate Percentage Interests represented
by the Offered Certificates then Outstanding or, if there are no longer any
Offered Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates, the Trustee will give the
Owners prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon
surrender for registration of transfer of any Certificate at the office
designated as the location of the Register, upon the direction of the Registrar
the Depositor shall execute and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of a like Class and in the aggregate principal amount or
Percentage Interest of the Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by
such Owner may be exchanged for other Certificates authorized of like Class and
tenor and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership
interests in the Trust and entitled to the same benefits under this Agreement
as the Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any
registration of transfer or exchange of Certificates, but the Registrar or
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange
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of Certificates; any other expenses in connection with such transfer or
exchange shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so
as to participate in a global book-entry system with the Depository, as set
forth herein. Each Class of Offered Certificates shall, except as otherwise
provided in Subsection (h), be initially issued in the form of a single fully
registered Offered Certificate of such Class. Upon initial issuance, the
ownership of each such Offered Certificate shall be registered in the Register
in the name of Cede & Co., or any successor thereto, as nominee for the
Depository.
On the Startup Day, no Offered Certificates shall be issued in
denominations of less than $1,000 except that one certificate in each class may
be in an amount less than $1,000. The Class D Certificates, the Class R
Certificates and Class S Certificates (other than the Tax Matters Person
Residual Interest) will be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicers, the Seller and the Trustee shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which
the Depository holds Offered Certificates from time to time as a Depository.
Without limiting the immediately preceding sentence, the Depositor, the
Servicers, the Seller and the Trustee shall have no responsibility or
obligation with respect to (i) the accuracy of the records of the Depository,
Cede & Co., or any Direct or Indirect Participant with respect to the ownership
interest in the Offered Certificates, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Owner of a
Offered Certificate as shown in the Register, of any notice with respect to the
Offered Certificates or (iii) the payment to any Direct or Indirect Participant
or any other Person, other than a registered Owner of a Offered Certificate as
shown in the Register, of any amount with respect to any distribution of
principal or interest on the Offered Certificates. No Person other than a
registered Owner of a Offered Certificate as shown in the Register shall
receive a certificate evidencing such Offered Certificate.
Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the registered Owners
of Offered Certificates appearing as registered Owners in the registration
books maintained by the Trustee at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that (i) the Depository or the Depositor advises
the Trustee in writing that the Depository is no longer willing or able to
discharge properly its responsibilities as nominee and depository with respect
to the Offered Certificates and the Depositor or the Trustee is unable to
locate a qualified successor or (ii) the Depositor at its sole option elects to
terminate the book-entry system through the Depository, the Offered
Certificates shall no longer be restricted to being registered in the Register
in the name of Cede & Co. (or a successor nominee) as nominee of the
Depository. At that time, the Depositor may determine that the Offered
Certificates shall be registered in the name of and deposited with a successor
depository operating a global book-entry system, as may be acceptable to the
Depositor and at the Depositor's expense, or such depository's agent or
designee but, if the Depositor does not select such alternative global
book-entry system, then the Offered Certificates may be registered in whatever
name or
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names registered Owners of Offered Certificates transferring Offered
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Offered Certificate is registered in the name of Cede
& Co., as nominee of the Depository, all distributions of principal or interest
on such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the
case of any destroyed, lost or stolen Certificate, there shall be first
delivered to the Trustee such security or indemnity as may be reasonably
required by it to hold the Trustee harmless, then, in the absence of notice to
the Trustee or the Registrar that such Certificate has been acquired by a bona
fide purchaser, the Depositor shall execute and the Trustee shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and aggregate
principal amount, bearing a number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be
entitled to all the benefits of this Agreement equally and proportionately with
any and all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the Owner of such Certificate for the
purpose of receiving distributions with respect to such Certificate and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
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Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or
assignment of an interest in a Class R Certificate or assignment of an interest
in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class
R Certificate or assignment of an interest in the Lower-Tier REMIC Residual
Class (whether pursuant to a purchase, a transfer resulting from a default
under a secured lending agreement or otherwise) to a Disqualified Organization
shall be deemed to be of no legal force or effect whatsoever and such
transferee shall not be deemed to be an Owner for any purpose hereunder,
including, but not limited to, the receipt of distributions on such Class R
Certificate or Lower-Tier REMIC Residual Class. Furthermore, in no event shall
the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit
I. Each holder of a Class R Certificate by his acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of this Section
5.08(a). The Lower-Tier REMIC Residual Class is not transferable except that
the Owner of the Tax Matters Person Residual Interest in the Lower-Tier REMIC
may assign its interest to another Person who accepts such assignment and the
designation as Tax Matters Person pursuant to Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial
ownership of a Class B-2F Certificate, a Class C-IO Certificate, a Class D
Certificate, a Class R Certificate, or a Class S Certificate (collectively, the
"Exempt Certificates") shall be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable state securities laws or is made in
accordance with said Securities Act and laws. In the event such a transfer is
to be made within three years from the Startup Day, (i) the Trustee or the
Depositor shall require a written Opinion of Counsel acceptable to and in form
and substance satisfactory to the Depositor in the event that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Securities Act and laws or is being made pursuant to
said Securities Act and laws, which Opinion of Counsel shall not be an expense
of the Trustee, the Trust Estate or the Servicers and (ii) the Trustee shall
require the transferee to execute an investment letter in substantially the
form of Exhibit J hereto acceptable to and in form and substance satisfactory
to the Seller certifying to the Trustee and the Seller the facts surrounding
such transfer, which investment letter shall not be an expense of the Trustee,
the Trust Estate or the Seller. The Owner of an Exempt Certificate desiring to
effect such transfer shall, and does hereby agree to, indemnify the Trustee,
the Servicers, the Depositor and the Seller against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
(c) No transfer of a Class D Certificate or Class R Certificate
shall be made unless the Trustee shall have received a representation letter in
substantially the form of Exhibit J hereto from the transferee of such Class D
Certificate or Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of Employee Retirement Income
Security Act ("ERISA") nor a plan or other arrangement subject to Section 406
of ERISA nor a plan or other arrangement subject to Section 4975 of the Code
(collectively, a "Plan"), nor is acting on behalf of any Plan nor using the
assets of any Plan to effect such transfer. Notwithstanding anything else to
the contrary herein, any purported transfer of a Class D Certificate or Class R
Certificate to or on behalf of any Plan shall be null and void and of no
effect.
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(d) No sale or other transfer of any Offered Certificate may be
made to the Depositor or the Seller or any Originator. No sale or other
transfer of any Offered Certificate may be made to a Seller affiliate unless
the Trustee shall have been furnished with an Opinion of Counsel acceptable to
the Trustee experienced in federal bankruptcy matters to the effect that such
sale or transfer would not adversely affect the character of the conveyance of
the Mortgage Loans to the Trust as a sale. No sale or other transfer of the
Class R Certificate issued to the Tax Matters Person appointed on the Startup
Day may be transferred or sold to any Person, except to a person who accepts
the appointment of Tax Matters Person pursuant to Section 11.18 hereof.
(e) No transfer of a Class A Certificate or any interest therein
shall be made to any Plan or to any entity using the assets of any Plan to
effect such transfer prior to the time that the balance of the related
Pre-Funding Account is reduced to zero.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part
of its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date
or (ii) if requested by any Owner of (A) an Offered Certificate or Class B-2F
Certificate having an original principal balance of not less than $1,000,000,
(B) a Class C-IO Certificate having a Notional Principal Amount of not less
than $1,000,000, or (C) a Class D, a Class R or Class S Certificate having a
Percentage Interest of not less than 10% in writing not later than five
Business Days prior to the applicable Record Date (which request does not have
to be repeated unless it has been withdrawn), to such Owner by wire transfer to
an account within the United States designated no later than five Business Days
prior to the related Record Date, made on each Payment Date, in each case to
each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account shall be made by and on behalf of the Trustee, and no amounts so
withdrawn from the Certificate Account for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay
to the Trustee all sums held in trust by such Paying Agent, such sums to be
held by the Trustee upon the same trusts as those upon which the sums were held
by such Paying Agent; and upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for
the payment of any amount due with respect to any Offered Certificate and Class
S Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Offered
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent
with respect to such trust money shall thereupon cease;
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provided, however, that the Trustee or such Paying Agent before being required
to make any such payment, may at the expense of the Trust cause to be published
once, in the eastern edition of The Wall Street Journal, notice that such money
remains unclaimed and that, after a date specified therein, which shall be not
fewer than 30 days from the date of such publication, any unclaimed balance of
such money then remaining will be paid to the Owners of the Class R
Certificates. The Trustee shall, at the direction of the Depositor, also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the
benefit of the Owners and, at the request of the Depositor, will from time to
time execute and deliver all such supplements and amendments hereto pursuant to
Section 11.14 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request from the
Depositor, to:
(i) more effectively hold in trust all or any portion of
the Trust Estate;
(ii) perfect, publish notice of, or protect the validity
of any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the interests of the Owners represented
thereby, in such Trust Estate against the contrary claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Depositor to take any action pursuant to this Section 6.03 to the other parties
hereto.
(b) The Trustee shall have the power to enforce, and shall enforce
the obligations and rights of the other parties to this Agreement or the
Owners, by action, suit or proceeding at law or equity; provided, however, that
nothing in this Section shall require any action by the Trustee unless the
Trustee shall first (i) have been furnished indemnity satisfactory to it and
(ii) when required by this Agreement, have been requested by the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding or, if there are no longer any Offered Certificates then
Outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to
this Section so long as such instrument does not conflict with this Agreement
or with the Trustee's fiduciary duties, or adversely affect its rights and
immunities hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person
from any of such Person's covenants or obligations under any instrument or
document relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
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The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any
of the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any
Person except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released from any
covenants or obligations with respect to the Trust or to the
Certificates under this Agreement, except as may be expressly
permitted hereby or (B) permit any lien, charge, adverse claim,
security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor and the Trustee of such Owner's intention to
institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding or,
if there are no Offered Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class D Certificates and the Class R Certificates, shall have
made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
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(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Offered Certificates or, if there are no Offered Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class D Certificates and the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any
right in any manner whatever by virtue of, or by availing themselves of, any
provision of this Agreement to affect, disturb or prejudice the rights of any
other Owner of the same Class or to obtain or to seek to obtain priority or
preference over any other Owner of the same Class or to enforce any right under
this Agreement, except in the manner herein provided and for the equal and
ratable benefit of all the Owners of the same Class.
Section 6.08 Unconditional Rights of Owners to Receive
Distributions.
Notwithstanding any other provision in this Agreement, the Owner of
any Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee or to the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Seller or any Owner of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein. Every right
and remedy given by this Article VI or by law to the Trustee or to the Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by
the Offered Certificates then Outstanding or, if there are no longer any
Offered Certificates then Outstanding, by such majority of the Percentage
Interests represented by the Class R Certificates then Outstanding may direct
the time, method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Certificates or exercising any
trust or power conferred on the Trustee with respect to the Certificates or the
Trust Estate, including, but not limited to, those powers set forth in Section
6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
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(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that the Seller or the
Trustee, as the case may be, need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
Section 6.12 Access to Owners of Certificates' Names and
Addresses. (a) If any Owner (for purposes of this Section 6.12, an
"Applicant") applies in writing to the Trustee, and such application states
that the Applicant desires to communicate with other Owners with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicant proposes to transmit, then
the Trustee shall, at the expense of such Applicant, within ten (10) Business
Days after the receipt of such application, furnish or cause to be furnished to
such Applicant a list of the names and addresses of the Owners of record as of
the most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with
the Trustee that the Trustee shall not be held accountable in any way by reason
of the disclosure of any information as to the names and addresses of the
Owners hereunder, regardless of the source from which such information was
derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall
demand payment or delivery of all money and other property payable to or
receivable by the Trustee pursuant to this Agreement, including all payments
due on the Mortgage Loans in accordance with the respective terms and
conditions of such Mortgage Loans and required to be paid over to the Trustee
by the related Servicer or by any Subservicer. The Trustee shall hold all such
money and property received by it, other than pursuant to or as contemplated by
Section 6.02(e) hereof, as part of the Trust Estate and shall apply it as
provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup
Day, and the Trustee shall maintain at the Corporate Trust Office as a
segregated trust account, the Certificate Account, to be held by the Trustee on
behalf of the Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee
shall maintain, at the Corporate Trust Office two segregated trust accounts,
referred to herein as the "Pre-Funding Account" and the "Capitalized Interest
Account" to be held by the Trustee in the name of the Trust for the benefit of
the Owners. For federal income tax purposes, the Depositor shall be the owner
of such accounts.
(c) The Depositor shall cause to be established, and the Trustee
shall maintain, at the Corporate Trust Office , as two segregated trust
accounts, the Upper-Tier Group I Distribution Account and the Upper-Tier Group
II Distribution Account to be held by the Trustee in the name of the Upper-Tier
REMIC for the benefit of the Owners.
Section 7.03 Flow of Funds.
(a) (i) With respect to Group I, the Servicers shall remit
and the Trustee shall deposit to the Certificate Account, without duplication,
(v) the proceeds of any liquidation of the assets of the Trust insofar as such
proceeds relate to Group I, (w) all remittances made to the Trustee pursuant to
Section 8.09 insofar as such remittances relate to Group I, (x) each portion of
the Monthly Remittance Amount relating to Group I remitted by the related
Servicer, (y) on the Payment Date in October 1997 and the Pre-Funding Payment
Date, the Group I Capitalized Interest Requirement and the Group I Pre-Funding
Account Earnings to be transferred on such Payment Date from the Capitalized
Interest Account, pursuant to Section 7.04(e) hereof and (z) on the Payment
Date in October 1997 and the Pre-Funding Payment Date, the amount, if any, to
be transferred on such Payment Date (or Pre-Funding Payment Date) from the Pre-
Funding Account pursuant to Section 7.04(c) hereof.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group I Distribution Amount from the Certificate Account to the
Upper-Tier Group I Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute
from the Certificate Account to the Owners of the Class S Certificates, the
Class S Distribution Amount relating to Group I.
(b) (i) With respect to Group II, the Servicers shall remit
and the Trustee shall deposit to the Certificate Account without duplication,
(v) the proceeds of any liquidation of the assets of the Trust
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insofar as such proceeds relate to Group II, (w) all remittances made to the
Trustee pursuant to Section 8.09 insofar as such remittances relate to Group
II, (x) each portion of the Monthly Remittance Amount relating to Group II
remitted by the related Servicer, (y) on the Payment Date in October 1997 and
the Pre-Funding Payment Date, the Group II Capitalized Interest Requirement and
the Group II Pre-Funding Account Earnings to be transferred on such Payment
Date from the Capitalized Interest Account, pursuant to Section 7.04(e) hereof
and (z) on the Payment Date in October 1997 and the Pre-Funding Payment Date,
the amount, if any, to be transferred on such Payment Date (or Pre-Funding
Payment Date) from the Pre-Funding Account pursuant to Section 7.04(c) hereof.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group II Distribution Amount from the Certificate Account to the
Upper-Tier Group II Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute
from the Certificate Account to the Owners of the Class S Certificates, the
Class S Distribution Amount relating to Group II.
(c) With respect to the Upper-Tier Group I Distribution Account,
on each Payment Date, the Trustee shall make the following disbursements from
the Group I Interest Remittance Amount transferred thereto pursuant to
subsection (a)(ii), in the following order of priority, and each such
disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, reserved;
(ii) Second, to the Owners of the Class A Certificates
related to Group I, the related Class A Current
Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Group I
Interest Amount Available is not sufficient to make a
full distribution of interest with respect to all
Classes of the Class A Certificates related to Group
I, the Group I Interest Amount Available will be
distributed among the outstanding Classes of Class A
Certificates related to Group I pro rata based on the
aggregate amount of interest due on each such Class,
and the amount of the shortfall will be carried
forward;
(iii) Third, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
M-1F Certificates, the Class M-1F Current Interest;
(iv) Fourth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
M-2F Certificates, the Class M-2F Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
B-1F Certificates, the Class B-1F Current Interest;
(vi) Sixth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
B-2F Certificates, the Class B-2F Current Interest;
(vii) Seventh, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
C-FIO Certificates, the Class C-FIO Current Interest;
and
(viii) Eighth, the Group I Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (h) of this Section 7.03.
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(d) With respect to the Upper-Tier Group II Distribution Account
on each Payment Date, the Trustee shall make the following disbursements from
the Group II Interest Remittance Amount transferred thereto pursuant to
subsection (b)(ii), in the following order of priority, and each such
disbursement shall be treated as having occurred only after all preceding
disbursements have occurred:
(i) First, reserved;
(ii) Second, to the Owners of the Class A-10 Certificates,
the Class A-10 Current Interest plus the Class A-10
Interest Carry Forward Amount;
(iii) Third, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-1A Certificates, the Class M-1A Current Interest;
(iv) Fourth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-2A Certificates, the Class M-2A Current Interest;
(v) Fifth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
B-1A Certificates, the Class B-1A Current Interest;
(vi) Sixth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
C-AIO Certificates, the Class C-AIO Current Interest;
and
(vii) Seventh, the Group II Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (i) of this Section 7.03.
(e) Reserved.
(f) With respect to the Upper-Tier Group I Distribution Account on
each Payment Date, the Trustee shall make the following disbursements from
amounts relating to principal transferred thereto, in the following order of
priority and each such disbursement shall be treated as having occurred only
after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group I Stepdown
Date or (b) with respect to which a Group I Trigger
Event is in effect, Owners of the Class A
Certificates related to Group I will be entitled to
receive payment of 100% of the Group I Principal
Distribution Amount as follows: (I) to the Owners of
the Class A-9 Certificates, the Class A-9 Lockout
Distribution Amount and (II) to the Owners of the
Class A Certificates related to Group I, as follows:
first, to the Owners of the Class A-1 Certificates,
until the Class A-1 Certificate Principal Balance is
reduced to zero; second, to the Owners of the Class
A-2 Certificates, until the Class A-2 Certificate
Principal Balance is reduced to zero; third, to the
Owners of the Class A-3 Certificates, until the Class
A-3 Certificate Principal Balance is reduced to zero;
fourth, to the Owners of the Class A-4 Certificates,
until the Class A-4 Certificate Principal Balance is
reduced to zero; fifth, to the Owners of the Class
A-5 Certificates, until the Class A-5 Certificate
Principal Balance is reduced to zero; sixth, to the
Owners of the Class A-6 Certificates, until the Class
A-6 Certificate Principal Balance is reduced to zero;
seventh, to the Owners of the Class A-7 Certificates,
until the Class A-7 Certificate Principal Balance is
reduced to zero; eighth to the Owners of the Class
A-8 Certificates, until the Class A-8 Certificate
Principal Balance is reduced to zero; and ninth to
the Owners of the
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Class A-9 Certificates, until the Class A-9
Certificate Principal Balance is reduced to zero;
provided, however, that on any Payment Date on which
the sum of the Certificate Principal Balance of the
Subordinate Certificates related to Group I and the
Group I Overcollateralization Amount is zero, any
amounts of principal payable to the Owners of the
Class A Certificates related to Group I on such
Payment Date shall be distributed pro rata and not
sequentially.
(ii) Notwithstanding the provisions of Section 7.03(f)(i)
if the Certificate Principal Balance of the Class A
Certificates related to Group I is reduced to zero
and it is prior to the Group I Stepdown Date or
during the continuation of a Group I Trigger Event,
the Owners of the Subordinate Certificates relating
to Group I will be entitled to receive payment of
100% of the Group I Principal Distribution Amount as
follows:
(a) to the Class M-1F Certificates until the
Class M-1F Certificate Termination Date;
(b) to the Class M-2F Certificates until the
Class M-2F Certificate Termination Date;
(c) to the Class B-1F Certificates, until the
Class B-1F Certificate Termination Date; and
(d) to the Class B-2F Certificates, until the
Class B-2F Certificate Termination Date.
(iii) On each Payment Date (a) on or after the Group I
Stepdown Date and (b) as long as a Group I Trigger
Event is not in effect, the Owners of the Group I
Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts
set forth below and to the extent of the Group I
Principal Distribution Amount as follows:
(A) First, the lesser of (x) the Group I
Principal Distribution Amount and (y) the
Group I Class A Principal Distribution Amount
shall be distributed (I) to the Owners of the
Class A-9 Certificates, in an amount equal to
the Class A-9 Lockout Distribution Amount and
(II) the remainder paid to the Owners of the
Class A Certificates related to Group I as
follows: first, to the Owners of the Class
A-1 Certificates, until the Class A-1
Certificate Principal Balance is reduced to
zero; second, to the Owners of the Class A-2
Certificates, until the Class A-2 Certificate
Principal Balance is reduced to zero; third,
to the Owners of the Class A-3 Certificates,
until the Class A-3 Certificate Principal
Balance is reduced to zero; fourth, to the
Owners of the Class A-4 Certificates, until
the Class A-4 Certificate Principal Balance
is reduced to zero; fifth, to the Owners of
the Class A-5 Certificates, until the Class
A-5 Certificate Principal Balance is reduced
to zero; sixth, to the Owners of the Class X-
0 Certificates, until the Class A-6
Certificate Principal Balance is reduced to
zero; seventh, to the Owners of the Class A-7
Certificates, until the Class A-7 Certificate
Principal Balance is reduced to zero; eighth
to the Owners of the Class A-8 Certificates,
until the Class A-8 Certificate Principal
Balance is reduced
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to zero; and ninth to the Owners of the Class
A-9 Certificates, until the Class A-9
Certificate Principal Balance is reduced to
zero; provided, however, that on any Payment
Date on which the sum of the Certificate
Principal Balance of the Subordinate
Certificates related to Group I and the Group
I Overcollateralization Amount is zero, any
amounts of principal payable to the Owners of
the Class A Certificates related to Group I
on such Payment Date shall be distributed pro
rata and not sequentially;
(B) Second, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the amount distributed to the
Owners of the Class A Certificates related to
Group I in clause (A) above and (y) the Class
M-1F Principal Distribution Amount shall be
distributed to the Owners of the Class M-1F
Certificates, until the Class M-1F
Certificate Principal Balance has been
reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates
related to Group I in clause (A) above and
the amount distributed to the Owners of the
Class M-1F Certificates in clause (B) above
and (y) the Class M-2F Principal Distribution
Amount shall be distributed to the Owners of
the Class M-2F Certificates, until the Class
M-2F Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates
related to Group I pursuant to clause (A)
above, the amount distributed to the Owners
of the Class M-1F Certificates pursuant to
clause (B) above and the amount distributed
to the Owners of the Class M-2F Certificates
pursuant to clause (C) above and (y) the
Class B-1F Principal Distribution Amount
shall be delivered to the Owners of the Class
B-1F Certificates, until the Class B-1F
Certificate Principal Balance has been
reduced to zero;
(E) Fifth, the lesser of (x) the excess of the
Group I Principal Distribution Amount over
(ii) the sum of the amount distributed to the
Owners of the Class A Certificates related to
Group I pursuant to clause (A) above, the
amount distributed to the Owners of the Class
M-1F Certificates in clause (B) above, the
amount distributed to the Owners of the Class
M-2F Certificates in clause (C) above, and
the amount distributed to the Owners of the
Class B-1F Certificates in clause (D) above,
and (y) the Class B- 2F Principal
Distribution Amount shall be distributed to
the Owners of the Class B-2F Certificates,
until the Class B-2F Certificate Principal
Balance has been reduced to zero; and
(F) Sixth, any portion of the Group I Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B),
(C), (D) and (E) above shall be distributed
as provided in subsection (h) of this Section
7.03.
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(g) With respect to the Upper-Tier Group II Distribution Account
on each Payment Date, the Trustee shall make the following disbursements from
amounts relating to principal transferred thereto, in the following order of
priority and each such disbursement shall be treated as having occurred only
after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group II Stepdown
Date or (b) with respect to which a Group II Trigger
Event is in effect, Owners of the Class A-10
Certificates will be entitled to receive payment of
100% of the Group II Principal Distribution Amount,
until the Class A-10 Certificate Principal Balance
has been reduced to zero.
(ii) Notwithstanding the provisions of Section 7.03(3)(i)
if the Class A-10 Certificate Principal Balance is
reduced to zero and it is prior to the Group II
Stepdown Date or during the continuation of a Group
II Trigger Event, the Owners of the Subordinate
Certificates relating to Group II will be entitled to
receive payment of 100% of the Group II Principal
Distribution Amount as follows:
(a) to the Class M-1A Certificates until the
Class M-1A Certificate Termination Date;
(b) to the Class M-2A Certificates until the
Class M-2A Certificate Termination Date; and
(c) to the Class B-1A Certificate; until the
Class B-1A Certificate Termination Date.
(iii) On each Payment Date (a) on or after the Group II
Stepdown Date and (b) as long as a Group II Trigger
Event is not in effect, the Owners of the Group II
Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts
set forth below and to the extent of the Group II
Principal Distribution Amount as follows:
(A) First, the lesser of (x) the Group II
Principal Distribution Amount and (y) the
Group II Class A Principal Distribution
Amount shall be distributed to the Owners of
the Class A-10 Certificates, until the Class
A-10 Certificate Principal Balance has been
reduced to zero;
(B) Second, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the amount distributed to the
Owners of the Class A-10 Certificates in
clause (A) above and (y) the Class M-1A
Principal Distribution Amount shall be
distributed to the Owners of the Class M-1A
Certificates, until the Class M-1A
Certificate Principal Balance has been
reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-10 Certificates
in clause (A) above and the amount
distributed to the Owners of the Class M-1A
Certificates in clause (B) above and (y) the
Class M-2A Principal Distribution Amount
shall be distributed to the
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Owners of the Class M-2A Certificates, until
the Class M-2A Certificate Principal Balance
has been reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-10 Certificates
pursuant to clause (A) above, the amount
distributed to the Owners of the Class M-1A
Certificates pursuant to clause (B) above and
the amount distributed to the Owners of the
Class M-2A Certificates pursuant to clause
(C) above and (y) the Class B-1A Principal
Distribution Amount shall be delivered to the
Owners of the Class B-1A Certificates, until
the Class B-1A Certificate Principal Balance
has been reduced to zero; and
(E) Fifth, any portion of the Group II Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B), (C)
and (D) above shall be distributed as
provided in subsection (i) of this Section
7.03.
(h) On any Payment Date, the Group I Monthly Excess Cashflow
Amount is required to be applied in the following order of priority on such
Payment Date:
(1) to fund any remaining Class A Interest Carry Forward
Amount with respect to Group I;
(2) to fund the Group I Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1F Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1F Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2F Interest Carry Forward Amount,
if any;
(6) to fund the Class M-2F Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1F Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1F Realized Loss Amortization
Amount for such Payment Date;
(9) to fund the Class B-2F Interest Carry Forward Amount,
if any;
(10) to fund the Class B-2F Realized Loss Amortization
Amount for such Payment Date;
(11) to fund the Class C-FIO Interest Carry Forward
Amount, if any;
(12) to fund any amounts listed in clauses (1) through (9)
of Section 7.03(i) to the extent such amounts have
not been funded in full through the application of
Group II Monthly Excess Cashflow Amounts; and
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(13) as provided in Section 7.03(j) hereof.
(i) On any Payment Date, the Group II Monthly Excess Cashflow
Amount is required to be applied in the following order of priority on such
Payment Date:
(1) to fund any remaining Class A-10 Interest Carry
Forward Amount;
(2) to fund the Group II Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1A Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1A Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2A Interest Carry Forward Amount,
if any;
(6) to fund the Class M-2A Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1A Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1A Realized Loss Amortization
Amount for such Payment Date;
(9) to fund the Class C-AIO Interest Carry Forward
Amount, if any; and
(10) as provided in Section 7.03(j) hereof.
(j) On any Payment Date, any Group I Monthly Excess Cashflow
Amount remaining after the application of Section 7.03(h)(1)-(12) and any Group
II Monthly Excess Cashflow Amount remaining after the application of Section
7.03(i)(1)-(9) shall be distributed as follows:
(1) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances, including
such Delinquency Advances and Servicing Advances
deemed by the related Servicer to be nonrecoverable;
(2) An amount equal to the lesser of (i) any portion of
the Group II Monthly Excess Cashflow Amount remaining
after the distribution described in clause (1) above
and (ii) the Group II Available Funds Cap Shortfall
Amount for such Payment Date distributed to the
Owners of the related Class or Classes of the Group
II Certificates;
(3) to fund a distribution to Owners of the Class D
Certificates, the lesser of (x) the amount of the sum
of the Group I Monthly Excess Cashflow Amount and the
Group II Monthly Excess Cashflow Amount then
remaining and (y) the sum of (i) the Class D
Distribution Amount and (ii) the
Overcollateralization Release Amount; provided,
however, that if the Overcollateralization Release
Amount is zero solely due to the existence of a
Subordinated Trigger Event for the related Group,
then the amount which otherwise would constitute the
related Overcollateralization Release Amount shall be
distributed as a reduction of the
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Certificate Principal Balance of the Subordinate
Certificates as follows: first, in the case of Group
I, to the Owners of the Class B-2F Certificates until
the Class B-2F Certificate Termination Date; second,
to the Owners of the related Class B-1 Certificates
until the related Class B-1 Certificate Termination
Date; third, to the Owners of the related Class M-2
Certificates, until the related Class M-2 Certificate
Termination Date; and fourth, to the Owners of the
related Class M-1 Certificates until the related
Class M-1 Certificate Termination Date;
(4) to fund a distribution to the Owners of the Class R
Certificates, the remainder.
(k) On each Payment Date, the Trustee shall allocate the Group I
Applied Realized Loss Amount to reduce the Certificate Principal Balances of
the Subordinate Certificates related to Group I in the following order of
priority:
(i) to the Class B-2F Certificates until the
Class B-2F Certificate Principal Balance is reduced to zero;
(ii) to the Class B-1F Certificates until the
Class B-1F Certificate Principal Balance is reduced to zero;
(iii) to the Class M-2F Certificates until the
Class M-2F Certificate Principal Balance is reduced to zero; and
(iv) to the Class M-1F Certificates until the
Class M-1F Certificate Principal Balance is reduced to zero.
(l) On each Payment Date, the Trustee shall allocate the Group II
Applied Realized Loss Amount to reduce the Certificate Principal Balances of
the Subordinate Certificates related to Group II in the following order of
priority:
(i) to the Class B-1A Certificates until the
Class B-1A Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the
Class M-2A Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the
Class M-1A Certificate Principal Balance is reduced to zero.
(m) Notwithstanding the foregoing, in the event that the
Certificate Principal Balances of all of the Class A Certificates relating to a
Group have been reduced to zero, all amounts of principal that would have been
distributed to such Class A Certificates will be distributed to the related
Subordinate Certificates of such Group sequentially in the following order:
Class M-1, Class M-2, Class B-1, and, with respect to Group I, Class B-2F.
Similarly, if the Certificate Principal Balance of the Class M-1 Certificates
has been reduced to zero, all amounts of principal that would have been
distributed to such Class M-1 Certificates will be distributed to the related
Class M-2, Class B-1 Certificates, and, with respect to Group I, Class B-2F, in
that order. Finally, if the Certificate Principal Balance of the Class M-2
Certificates has been reduced to zero, all amounts of principal that would have
been distributed on such Class M-2 Certificates will be distributed to the
related Class B-1 Certificates, and, with respect to Group I, Class X- 0X, xx
xxxx xxxxx.
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(x) Notwithstanding anything above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Certificates on account
of principal pursuant to clauses (f) and (g) shall not exceed the original
Certificate Principal Balance of the related Certificates.
(o) The rights of the Owners to receive distributions from the
proceeds of the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class D Certificates and the Class R Certificates
to receive distributions in respect of the Class D Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class D
Certificates and the Class R Certificates, in and to such distributions, shall
be subject and subordinate to the preferential rights of the Owners of the
Offered Certificates and Class S Certificates to receive distributions thereon
and the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the
Owners of the Class D Certificates and the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until
such amounts are distributed in respect of the Class D Certificates and the
Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the
Owners of the Class D Certificates and the Class R Certificates shall not be
required to refund any amount properly distributed on the Class D Certificates
and the Class R Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Depositor will deposit in the Pre-Funding
Account, on behalf of the Owners of the Offered Certificates, from the proceeds
of the sale of the Offered Certificates, the Original Pre-Funded Amount.
(b) On any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instruction
the Depositor shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Depositor be permitted to instruct the Trustee to release from the Pre-
Funding Account to the Certificate Account with respect to Subsequent Mortgage
Loans to be transferred to a Group an amount in excess of the Original
Pre-Funded Amount with respect to such Group.
(c) If the Pre-Funded Amount with respect to a Mortgage Loan Group
has been reduced to $100,000 or less on or before September 30, 1997, the
Depositor shall instruct the Trustee to withdraw from the Pre-Funding Account
the amount (exclusive of any related Pre-Funding Account Earnings still on
deposit therein) remaining in the Pre-Funding Account with respect to such
Group of Mortgage Loans and deposit such amount to the Certificate Account, on
the October 1997 Monthly Remittance Date. If the Pre-Funded Amount in respect
to a Mortgage Loan Group has not been reduced to $100,000 or less by September
30, 1997, then the Trustee shall withdraw on the Pre-Funding Determination Date
from the Pre-Funding Account the amount (exclusive of any related Pre-Funding
Account Earnings still on deposit therein) remaining in the Pre-Funding Account
and deposit on such date such amount to the Certificate Account, which will be
distributed to the related Owners of the Offered Certificates on the
Pre-Funding Payment Date
(d) On the Payment Date in October 1997 and on the Pre-Funding
Payment Date, the Trustee shall transfer from the Pre-Funding Account to the
Capitalized Interest Account, (i) with respect to Group
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I, the Group I Pre-Funding Account Earnings and (ii) with respect to Group II,
the Group II Pre-Funding Account Earnings, if any, applicable to such Payment
Date (or Pre-Funding Payment Date).
(e) On the Payment Date in October 1997 and on the Pre-Funding
Payment Date, the Trustee shall transfer from the Capitalized Interest Account
to the Certificate Account, for the benefit of the Owners of the related
Certificates, the Group I or Group II Capitalized Interest Requirement for such
Payment Date (or Pre-Funding Payment Date).
(f) On each Subsequent Transfer Date the Trustee shall distribute
the Overfunded Interest Amount (calculated by the Trustee on the day prior to
such Subsequent Transfer Date) from the Capitalized Interest Account to the
Seller and on the Pre-Funding Payment Date, the Trustee shall distribute to the
Seller any amounts remaining in the Capitalized Interest Account after taking
into account the transfers on such Payment Date described in clause (e) above.
The Capitalized Interest Account shall be closed at the end of the Funding
Period. All amounts, if any, remaining in the Capitalized Interest Account on
such day shall be transferred to the Seller.
(g) The Pre-Funding Account and the Capitalized Interest Account
are not an asset of either the Lower-Tier REMIC or the Upper-Tier REMIC.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the
Code, all or a portion of any Account held by the Trustee for the benefit of
the Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in the case of the
Pre-Funding Account and the Capitalized Interest Account and the related
Servicer in the case of the related Principal and Interest Account, in one or
more Eligible Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the related Servicer.
Earnings on the Certificate Account are payable to the Trustee. The bank
serving as Trustee or any affiliate thereof may be the obligor on any
investment which otherwise qualifies as an Eligible Investment. No investment
in any Account shall mature later than the Business Day immediately preceding
the next Payment Date.
If the Depositor shall have failed to give investment directions to
the Trustee then the Trustee shall invest the funds in such Accounts in money
market funds described in Section 7.07(k) to be redeemable without penalty no
later than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the
Trustee resulting from any loss on any Eligible Investment included therein
(except to the extent that the bank serving as Trustee is the obligor thereon).
(c) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt (other
than the Principal and Interest Accounts, which income or other gains shall be
retained by the related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss resulting from such
investments shall be charged to such Account, provided that the related
Servicer and the Trustee shall each contribute funds in an amount equal to such
loss in the case of the Principal and Interest Account and the Certificate
Account, respectively.
Section 7.06 Reserved.
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Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FannieMae senior debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemption;
(b) Federal Housing Administration debentures; provided, that any
such investment shall be rated in one of the two highest ratings categories by
each Rating Agency;
(c) FHLMC participation certificates which guaranty timely payment
of principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FannieMae mortgage-backed securities (other than stripped
mortgage securities which are valued greater than par on the portion of unpaid
principal) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and
bankers' acceptances (having original maturities of not more than 365 days) of
any domestic bank, the short-term debt obligations of which have been rated
F-1+ or better by Fitch, A-1+ or better by Standard & Poor's and P-1 by
Moody's;
(g) Deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB by each
of Standard & Poor's and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by the
FDIC and held up to the limits insured by the FDIC;
(h) Investment agreements provided:
1. The agreement is with a bank or insurance company
which has unsecured, uninsured and unguaranteed senior debt
obligations rated Aa2 or better by Moody's and AA or better by each of
Standard & Poor's and Fitch, or is the lead bank of a parent bank
holding company with an uninsured, unsecured and unguaranteed senior
debt obligation meeting such rating requirements, and
2. Moneys invested thereunder may be withdrawn without
any penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other
obligations of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
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5. The Trustee receives an opinion of counsel (at the
expense of the party requesting the investment) that such agreement is
an enforceable obligation of such insurance company or bank;
(i) Repurchase agreements collateralized by securities described
in (a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation rated
P-1 or Aa2, respectively, or better by Moody's, A-1+ or AA, respectively or
better by Standard & Poor's and A-1+ or AA, respectively, or better by Fitch,
provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by
the Trustee or an independent third party acting solely as agent for
the Trustee, and such third party is (a) a Federal Reserve Bank or (b)
a bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million, and the
Trustee shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent
for the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1
et seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or
less and the Trustee will value the collateral securities no less
frequently than monthly and will liquidate the collateral securities
if any deficiency in the required collateral percentage is not
restored within two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(j) Commercial paper (having original maturities of not more than
270 days) rated in the highest short-term rating categories of each Rating
Agency; and
(k) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act and rated Aaa by Moody's, AAAm or AAAm-G by Standard & Poor's
and AAA, if rated by Fitch;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
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Section 7.08 Accounting and Directions by Trustee.
(a) On or before the Business Day preceding each Payment Date, the
Trustee shall notify (subject to the terms of Section 10.03(j) hereof) the
Depositor and the Seller of the following information with respect to the next
Payment Date (which notification may be given by facsimile, or by telephone
promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes of the Class A Certificates in the
aggregate, on the next Payment Date, the related Class M-1
Distribution Amount, the related Class M-2 Distribution Amount, the
related Class B-1 Distribution Amount, the Class B-2F Distribution
Amount, the Class C-IO Distribution Amount and the Class S
Distribution Amount;
(3) The application of the amounts described in clause (1)
above to the allocation and distribution of the related Class A
Distribution Amount, the related Class M-1 Distribution Amount, the
related Class M-2 Distribution Amount, the related Class B-1
Distribution Amount, the Class B-2F Distribution Amount and the Class
C-IO Distribution Amount, on such Payment Date in accordance with
Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the
Offered Certificates and Class B-2F Certificates, the Notional
Principal Amount for each Class of Class C-IO Certificate the
aggregate amount of the principal of each Class of the Offered
Certificates and Class B-2F Certificates to be paid on such Payment
Date and the remaining Certificate Principal Balance of each Class of
the Offered Certificates and Class B-2F Certificates (or the Notional
Principal Amount for each Class of C-IO Certificates) following any
such payment;
(5) The amount, if any, of any Realized Losses relating to
each Group for the related Remittance Period and the amount of
Cumulative Realized Losses relating to each Group as of the last day
of the related Remittance Period;
(6) For the Payment Date in October 1997, and as to each
Group and in the aggregate (A) the related Pre-Funded Amount
previously used to purchase Subsequent Mortgage Loans, (B) the related
Pre-Funded Amount distributed as part of the related Principal
Distribution Amount, (C) the related Pre-Funding Account Earnings
transferred to the Capitalized Interest Account, and (D) the amounts
transferred from the Capitalized Interest Account to the Certificate
Account and the Overfunded Interest Amount to the Seller, if any;
(7) The amount of the Class D Distribution Amount; and
(8) the amount of 60+ Day Delinquent Loans relating to each
Group.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to
the Depositor (and shall be made available in electronic format), each Owner,
the Underwriters and their designees (designated in writing to the Trustee) and
the Rating Agencies;
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(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) (a) the amount of such Owner's distributions
allocable to principal, separately identifying the aggregate amount of
any Prepayments or other recoveries of principal included therein and
(b) with respect to each Group, any Pre-Funded Amounts distributed as
a Prepayment (based on a Certificate in the original principal amount
of $1,000);
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) the Interest Carry-Forward Amount for each Class;
(v) the principal amount (or notional principal amount)
of each Class of Certificates which will be Outstanding and the
aggregate Loan Balance of each Group and in the aggregate, in each
case after giving effect to any payment of principal on such Payment
Date;
(vi) the aggregate Loan Balance of the Mortgage Loans in
each Group and in the aggregate after giving effect to any payment of
principal on such Payment Date;
(vii) based upon information furnished by the Depositor,
such information as may be required by Section 6049(d)(7)(C) of the
Code and the regulations promulgated thereunder to assist the Owners
in computing their market discount;
(viii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group and in the aggregate;
(ix) the weighted average Coupon Rate of the Mortgage
Loans with respect to each Group and in the aggregate;
(x) the Servicing Fees allocable to each Group and in the
aggregate;
(xi) One-Month LIBOR on the most recent One-Month LIBOR
Determination Date;
(xii) the amount of any Group I Extra Principal
Distribution Amount or any Group II Extra Principal Distribution
Amount;
(xiii) the Group I Senior Enhancement Percentage and the
Group II Senior Enhancement Percentage and whether a Group I Trigger
Event or Group II Trigger Event has occurred as shown by the
percentage of 60+ Day Delinquent Loans;
(xiv) the Group I Overcollateralization Amount, the Group
II Overcollateralization Amount and the Certificate Principal Balance
of each Class of the Offered Certificates then outstanding after
giving effect to any payment of principal on such Payment Date; and
(xv) the amount of any Group I or Group II Applied
Realized Loss Amount, Group I or Group II Realized Loss Amortization
Amount and the Unpaid Realized Loss Amount for each Class of
Subordinated Certificates as of the close of such Payment Date.
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Each Servicer shall provide to the Trustee the information required by
Section 8.29 with respect to the Mortgage Loans serviced by it to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vi), (viii), (ix), (xii), (xiii), (xiv) and (xv) above shall be based solely
upon information contained in the Monthly Servicing Report provided by a
Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, each Owner, the Underwriters and the Rating Agencies, together
with the information described in Subsection (a) preceding, the following
information with respect to each Mortgage Loan Group which information is
hereby required to be prepared in hard copy or tape format by the related
Servicers (other than the information in clause (i)) and furnished to the
Trustee to the extent provided for in Section 8.29 for such purpose on the
Reporting Date:
(i) the related Certificate Principal Balance of
each Class of the Offered Certificates and the Class B-2F
Certificates, as of such Payment Date;
(ii) the number and aggregate principal balances
of Mortgage Loans in each Group (a) 30-59 days Delinquent, (b) 60-89
days Delinquent, and (c) 90 or more days Delinquent, as of the close
of business on the last Business Day of the prior Remittance Period.
(iii) the numbers and aggregate Loan Balances of
all Mortgage Loans in each Group as of such Payment Date and the
percentage that each of the amounts represented by clauses (a), (b)
and (c) of paragraph (ii) above represent as a percentage of the
respective amounts in this paragraph (iii);
(iv) the status and the number and dollar amounts
of all Mortgage Loans in each Group in foreclosure proceedings as of
the close of business on the related Determination Date, separately
stating, for this purpose, all Mortgage Loans in each Group with
respect to which foreclosure proceedings were commenced during the
prior Remittance Period;
(v) the number of Mortgagors and the Loan
Balances of Mortgage Loans in each Group of the related Mortgages
involved in bankruptcy proceedings as of the close of business on the
last day of the related Remittance Period;
(vi) the existence and status of any REO
Properties in each Group, as of the close of business on the last day
of the related Remittance Period;
(vii) the book value of any REO Property in each
Group as of the close of business on the last day of the related
Remittance Period;
(viii) the amount of Cumulative Realized Losses for
each Group, each Mortgage Loan Servicing Group and in the aggregate,
the current period Realized Losses and the Annual Loss Percentage for
such Group and each Mortgage Loan Servicing Group and in the
aggregate, in each case as of the last day of the related Remittance
Period; and
(ix) the aggregate Loan Balance of 60+ Day
Delinquent Loans with respect to each Group, the 90+ Delinquency
Percentage and the number and amount by principal balance
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of 90 Day Delinquent Loans in each Group and each Mortgage Loan
Servicing Group, in each case as of the last day of the related
Remittance Period.
(c) Each Servicer shall furnish to the Trustee, during the term of
this Agreement, such periodic, special, or other reports or information not
specifically provided for herein, with respect to Mortgage Loans serviced by
it, as may be necessary, reasonable, or appropriate with respect to the Trustee
or otherwise with respect to the purposes of this Agreement, all such reports
or information to be provided by and in accordance with such applicable
instructions and directions as the Trustee may reasonably require; provided,
that the related Servicer shall be entitled to be reimbursed by the requesting
party, for the fees and actual expenses associated with providing such reports,
if such reports are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
The Trustee shall report to the Depositor, the Seller, the
Underwriters and each Owner, with respect to the amount on deposit in the
Certificate Account, the amount therein relating to each Group and the identity
of the investments included therein, as the Depositor or the Seller may from
time to time request. Without limiting the generality of the foregoing, the
Trustee shall, at the request of the Depositor or the Seller, transmit promptly
to the Depositor and the Seller copies of all accountings of receipts in
respect of the Mortgage Loans furnished to it by the related Servicer and shall
notify the Seller if any Monthly Remittance Amount has not been received by the
Trustee when due.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting directly or
through one or more subservicers as provided in Section 8.03, each Servicer, as
servicer, shall service and administer the Mortgage Loans identified on the
Schedule of Mortgage Loans as being serviced by it as described below and with
reasonable care, and using that degree of skill and attention that such
Servicer exercises with respect to comparable mortgage loans that it services
for itself or others, and shall have full power and authority, acting alone, to
do or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. In performing such
servicing functions such Servicer shall (i) take into account the mortgagor
non-conforming credit quality of the Mortgage Loans, (ii) follow the policies
and procedures that it would apply to similar loans held for its own account,
unless such policies and procedures are not generally in accordance with
standard industry practices, in which case the Servicer shall service the loans
generally in accordance with standard industry practices applicable to
servicing similar loans, (iii) comply with all applicable laws and follow
collection practices with respect to the related Mortgage Loans that are in all
material respects legal, proper and prudent, and (iv) subject to its obligation
to comply with clauses (i), (ii) and (iii): (A) with regard to Advanta and Long
Beach, will not materially change its collection and servicing practices that
are in existence as of the Startup Day without the consent of the Seller (such
consent not to be unreasonably withheld) and (B) with regard to Option One will
comply with reasonable requests of the Seller including accelerated collection
and foreclosure procedures.
(b) The duties of each Servicer shall include the collecting and
posting of all payments, responding to inquiries of Mortgagors or by federal,
state or local government authorities with respect to the Mortgage Loans,
investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections,
furnishing monthly statements to the Trustee and the Seller with respect to
remittances on the Mortgage Loans, advising the Trustee or the Seller of the
amount of Compensating Interest and Delinquency Advances due as of any Monthly
Remittance Date with respect to the Mortgage Loans serviced by it and funding
such Compensating Interest and Delinquency Advances, to the extent set forth in
this Agreement. Each Servicer shall reasonably cooperate with the Trustee and
furnish upon reasonable request to the Trustee with reasonable promptness
information in its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder.
(c) The Seller and the Depositor intend that the Upper-Tier REMIC
and the Lower-Tier REMIC shall each constitute and that the affairs of
Upper-Tier REMIC and the Lower-Tier REMIC shall each be conducted so as to
qualify it as a REMIC. In furtherance of such intention, each Servicer
covenants and agrees that it shall not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of either the Upper-Tier REMIC or the Lower-Tier REMIC or that would
subject either the Upper-Tier REMIC or the Lower-Tier REMIC to tax.
(d) Each Servicer may, and is hereby authorized to, perform any of
its servicing responsibilities with respect to all or certain of the Mortgage
Loans through a subservicer as it may from time to time designate in accordance
with Section 8.03 but no such designation of a subservicer shall serve to
release such Servicer from any of its obligations under this Agreement;
provided that until such time as each Rating Agency confirms in writing that
the failure to service the Long Beach Loans through Ameriquest pursuant to the
Ameriquest Subservicing Agreement would not result in a withdrawal or
downgrading of the Certificates, Long Beach shall perform its servicing
responsibilities with respect to the
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Long Beach Loans through Ameriquest. Such subservicer shall have all the
rights and powers of the relevant Servicer with respect to such Mortgage Loans
under this Agreement.
(e) Without limiting the generality of the foregoing, but subject
to Sections 8.13 and 8.14, each Servicer in its own name or in the name of a
subservicer is hereby authorized and empowered and this subsection shall
constitute a power of attorney to carry out its servicing and administrative
duties hereunder, on behalf of itself, the Owners and the Trust or any of them;
to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so
as to effect ownership of any Property on behalf of the Trust and to hold title
to any Property upon such foreclosure or deed in lieu of foreclosure on behalf
of the Trust; provided, however, that Section 8.14(a) and (c) shall constitute
a power of attorney from the Trustee to each Servicer with respect to the
matters described therein and in accordance with the terms thereof. Subject to
Sections 8.13 and 8.14, the Trustee shall furnish any Servicer or any
Subservicer with any additional powers of attorney and other documents as such
Servicer shall reasonably request to enable such Servicer or any Subservicer to
carry out its respective servicing and administrative duties hereunder.
(f) Each Servicer shall give prompt notice to the Trustee and the
Seller of any action, of which a responsible officer of such Servicer has
actual knowledge, to (i) assert a claim against the Trust or (ii) assert
control over the Trust or the Trust Estate.
(g) Servicing Advances incurred by any Servicer in connection with
the servicing of the Mortgage Loans (including any penalties in connection with
the payment of any taxes and assessments or other charges) on any Property
shall be recoverable by such Servicer to the extent described in Section 8.09
and in Section 7.03(j) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a)
Each Servicer shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any applicable Insurance
Policies, follow such collection procedures as it follows from time to time
with respect to mortgage loans in its servicing portfolio that are comparable
to the Mortgage Loans; provided that such Servicer shall always at least follow
collection procedures that are consistent with Section 8.01(a) hereof.
Consistent with the foregoing, each Servicer may in its discretion (i) waive
any assumption fees, late payment charges, charges for checks returned for
insufficient funds or other fees which may be collected in the ordinary course
of servicing the Mortgage Loans, (ii) if a Mortgagor is in default or about to
be in default because of a Mortgagor's financial condition, arrange with the
Mortgagor a schedule for the payment of delinquent payments due on the related
Mortgage Loan or (iii) modify payments of monthly principal and interest on any
Mortgage Loan becoming subject to the terms of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, in accordance with such Servicer's general
policies with respect to comparable mortgage loans subject to such Act. No
Servicer shall be required to institute or join in litigation with respect to
collection of any payment (whether under a Mortgage, Note or otherwise or
against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that enforcing the provision of the
Mortgage or other instrument pursuant to which such payment is required is
prohibited by applicable law. Consistent with the terms of this Agreement, a
Servicer may waive, modify or vary any term of any Mortgage Loan or consent to
the postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor, provided, however, that (unless the Mortgagor is
in default with respect to the Mortgage Loan, or such default is, in the
judgment of such Servicer, imminent and such Servicer has the consent of the
Seller) such Servicer may not permit any modification with respect to any
Mortgage Loan that would change the Coupon Rate (except for any change made
pursuant to the adjustment provisions of a Note evidencing an Adjustable Rate
Loan), forgive the payment of any principal or interest or prepayment penalties
(unless the Servicer with the written consent of the Seller believes that
forgiving such prepayment penalties will result in a financial benefit to the
Trust), change the outstanding principal amount, require any future advances,
provide for the
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substitution or release of any material portion of the collateral or extend the
final maturity date on such Mortgage Loan; provided further that no such
indulgence shall affect the Servicer's obligation to make Delinquency Advances
pursuant to Section 8.09.
(b) Each Servicer shall deposit into the related Principal and
Interest Account in accordance with Section 8.08(a) all Prepaid Installments
received by it, and shall apply such Prepaid Installments as directed by such
Mortgagor and as set forth in the related Note.
Section 8.03 Subservicing Agreements Between Servicer and
Subservicer. Each Servicer may enter into subservicing agreements for any
servicing and administration of Mortgage Loans with any institution which is
acceptable to the Owners of a majority of the Percentage Interests of the Class
R Certificates, as indicated in writing, and which represents and warrants that
it is in compliance with the laws of each state necessary to enable it to
perform its obligations under such Subservicing Agreement. For this purpose,
subservicing shall not be deemed to include the use of a tax service, or
services for reconveyance, insurance or brokering REO Property. Each Servicer
shall give prior notice to the Seller and the Trustee of the appointment of any
Subservicer and shall furnish to the Seller a copy of such Subservicing
Agreement. For purposes of this Agreement, the relevant Servicer shall be
deemed to have received payments on Mortgage Loans when any Subservicer has
received such payments. Any such Subservicing Agreement shall be consistent
with and not violate the provisions of this Agreement. Each Subservicing
Agreement shall provide that a successor Servicer shall have the option to
terminate such agreement without payment of any fees if the predecessor
Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may terminate
any Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall not be
relieved of their respective obligations under this Agreement notwithstanding
any Subservicing Agreement or any of the provisions of this Agreement relating
to agreements or arrangements between such Servicer and a Subservicer or
otherwise, and such Servicer shall be obligated to the same extent and under
the same terms and conditions as if it alone were servicing and administering
the Mortgage Loans as such terms and conditions may be limited pursuant to the
terms of this Agreement. Each Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of such Servicer by such
Subservicer and nothing contained in such Subservicing Agreement shall be
deemed to limit or modify this Agreement. The Trust shall not indemnify any
Servicer for any losses due to any Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and
Trustee or the Owners. Any Subservicing Agreement and any other transactions
or services relating to the Mortgage Loans involving a Subservicer shall be
deemed to be between the Subservicer and the related Servicer alone and the
Trustee and the Owners shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to any
Subservicer except as set forth in Section 8.07 hereof or in the related
Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement
by Trustee. In connection with the assumption of the responsibilities, duties
and liabilities and of the authority, power and rights of each Servicer
hereunder by the Trustee pursuant to Section 8.20, it is understood and agreed
that such
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Servicer's rights and obligations under any Subservicing Agreement then in
force between such Servicer and a Subservicer may be assumed or terminated by
the Trustee at its option. Each Servicer shall, upon request of the Trustee,
but at the expense of such Servicer, deliver to the Trustee documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by such Servicer and otherwise use its best reasonable
efforts to effect the orderly and efficient transfer of the Subservicing
Agreement to the Trustee.
Section 8.08 Principal and Interest Accounts; Escrow Accounts.
(a) Each Servicer shall establish in its name on behalf of the Trustee for the
benefit of the Owners of the Certificates and maintain or cause to be
maintained at a Designated Depository Institution a Principal and Interest
Account to be held as a trust account. The Principal and Interest Accounts
shall be identified on the records of the Designated Depository Institution as
follows: [Name of Servicer] on behalf of The Bank of New York, as Trustee under
the Pooling and Servicing Agreement relating to the AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1997-3 dated as of September 1,
1997. If the institution at any time holding a Principal and Interest Account
ceases to be eligible as a Designated Depository Institution hereunder, then
the related Servicer in the case of a Principal and Interest Account shall,
within 30 days, be required to name a successor institution meeting the
requirements for a Designated Depository Institution hereunder. If such party
fails to name such a successor institution, then the Trustee shall cause such
Account to be held as a trust account with a qualifying Designated Depository
Institution. The related Servicer shall notify the Trustee, the Seller and the
Depositor if there is a change in the name, account number or institution
holding a Principal and Interest Account. Subject to Subsection (c) below,
each Servicer shall deposit all receipts related to the Mortgage Loans into the
related Principal and Interest Accounts on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Accounts may only be held
(i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments as selected by the related Servicer. The Principal and
Interest Accounts shall be held in trust in the name of the Trustee for the
benefit of the Owners of the Certificates (other than the earnings thereon
which shall be retained by the related Servicer). Any investments of funds in
the Principal and Interest Account shall mature or be withdrawable at par on or
prior to the immediately succeeding Monthly Remittance Date. Any investment
earnings on funds held in a Principal and Interest Account shall be for the
account of the related Servicer and may only be withdrawn from the Principal
and Interest Account by such Servicer immediately following the remittance of
the Monthly Remittance Amount (and the Monthly Excess Interest Amount included
therein) by such Servicer. Any investment losses on funds held in the
Principal and Interest Account shall be for the account of such Servicer and
promptly upon the realization of such loss shall be contributed by such
Servicer to the related Principal and Interest Account. Any references herein
to amounts on deposit in the related Principal and Interest Account shall refer
to amounts net of such investment earnings.
(c) Subject to Section 8.09, each Servicer shall deposit on a daily
basis (except as described below), and in any case not later than two Business
Days following receipt, to the related Principal and Interest Account all
scheduled principal and interest payments on the Mortgage Loans serviced by it
due after the Cut-Off Date or Subsequent Cut-Off Date and all unscheduled
principal and interest collections received after the Cut-Off Date or
Subsequent Cut-Off Date including any Prepayments and Net Liquidation Proceeds,
all Loan Purchase Prices and Substitution Amounts received by such Servicer
with respect to the Mortgage Loans, other recoveries or amounts related to the
Mortgage Loans received by such Servicer after the Cut-Off Date, Compensating
Interest (which shall be deposited into the Certificate Account on or prior to
each Monthly Remittance Date) and Delinquency Advances (which shall be
deposited no later than the related Monthly Remittance Date) but net of (i) the
related Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to such Servicer as permitted by Section 8.15 hereof, (ii)
principal retained by the Depositor (including Prepayments) and due on the
related
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Mortgage Loans on or prior to the Cut-Off Date, (iii) interest retained by the
Depositor and accruing on the related Mortgage Loans on or prior to the Cut-Off
Date or Subsequent Cut-Off Date, and (iv) reimbursements for unreimbursed and
nonrecoverable Delinquency Advances and Servicing Advances pursuant to Section
8.09.
(d) Each Servicer may each make withdrawals from the related
Principal and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the
Monthly Remittance Amount due on each Monthly
Remittance Date and to effect the timely remittance
to the Trustee on each Monthly Remittance Date of any
Compensating Interest;
(B) to reimburse itself pursuant to Section 8.09 hereof
for unreimbursed Delinquency Advances and Servicing
Advances and unrecovered Delinquency Advances and
Servicing Advances determined by it to be
nonrecoverable;
(C) to withdraw investment earnings on amounts on deposit
in its Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the
related Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25; and
(F) to clear and terminate the related Principal and
Interest Accounts following the termination of the
Trust Estate pursuant to Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall remit to the
Trustee by wire transfer in immediately available funds from the related
Principal and Interest Account for deposit to the Certificate Account, the
portion of the Monthly Remittance Amount remaining after the withdrawals
permitted by clauses (B)-(E) of Section 8.08(d) related to the Mortgage Loans
serviced by such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more
custodial accounts (each, an "Escrow Account") and deposit and retain therein
all collections from the Mortgagors, if any, received with respect to the
Mortgage Loans, or advances by such Servicer, for the payment of taxes,
assessments, hazard insurance premiums and primary mortgage insurance policy
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require any Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or primary mortgage insurance policy premiums, condominium or PUD
association dues, or comparable items, to reimburse such Servicer, to refund to
any Mortgagors any sums as may be determined to be overages, to pay interest,
if required, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement. As part of
its servicing duties, such Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as Servicing
Advances) referred to in the preceding paragraph that are not timely paid by
the Mortgagors, including tax penalties, if any; provided,
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however, that such Servicer shall be required to so advance only to the extent
that such advances, in the good faith business judgment of such Servicer, will
be recoverable by such Servicer out of Insurance Proceeds, Liquidation Proceeds
or otherwise from the related Mortgage Loan. Notwithstanding the previous
sentence, a Servicer shall be entitled to be reimbursed as provided in Section
8.09(b) hereof with respect to any Servicing Advances deemed to be
nonrecoverable.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) Each Servicer is required, not later than each Monthly Remittance
Date, to deposit into the related Principal and Interest Account an amount
equal to the sum of the interest (net of the Servicing Fee) and scheduled
principal due (except any Balloon Payment), but not collected, with respect to
Delinquent Mortgage Loans serviced by it during the related Remittance Period
but only if, in its good faith business judgment, such Servicer reasonably
believes that such amount will ultimately be recovered from the related
Mortgage Loan. With respect to each Balloon Loan, the related Servicer shall
be required to advance an amount of principal and interest on an assumed
schedule based on the original principal amortization for the related Balloon
Loan (but only if, in its good faith business judgment, such Servicer
reasonably believes that such amount will ultimately be recovered from the
related Mortgage Loan). Any determination of nonrecoverability shall be
explained in a notice provided by such Servicer to the Trustee and the Seller.
Such amounts are "Delinquency Advances". Each Servicer shall be permitted to
fund its payment of Delinquency Advances from its own funds or from funds on
deposit in the related Principal and Interest Account that are not required to
be distributed on the related Payment Date. To the extent a Servicer uses
funds not required for distribution on a Payment Date to make Delinquency
Advances with respect to such Payment Date, it shall deposit into the related
Principal and Interest Account such amount prior to the next succeeding Monthly
Remittance Date. Each Servicer shall be entitled to reimbursement for
Delinquency Advances from late collections, Liquidation Proceeds or otherwise
with respect to collections on the Mortgage Loan (including Balloon Loans) with
respect to which such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer determines
that the aggregate unreimbursed Delinquency Advances exceed the expected
Liquidation Proceeds on a Mortgage Loan, such Servicer shall not be required to
make any future Delinquency Advances with respect to that Mortgage Loan, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances from amounts in the related Principal and Interest Account. Such
Servicer shall give written notice of such determination of nonrecoverability
to the Trustee and the Seller, and the Trustee shall promptly furnish a copy of
such notice to the Owner of a majority of the Percentage Interests of the Class
R Certificates; provided, further, that such Servicer shall be entitled to
recover any unreimbursed Delinquency Advances from the aforesaid Liquidation
Proceeds prior to the payment of the Liquidation Proceeds to any other party to
this Agreement.
(b) Each Servicer will pay all customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the escrow
expenditures required pursuant to Section 8.08(f) hereof (but is only required
to pay such costs and expenses to the extent such Servicer reasonably believes
that such amounts will ultimately be recovered from the related Mortgage Loan)
and (v) fees and expenses for opinions of counsel pursuant to Section 8.13.
Each such amount so paid will constitute a "Servicing Advance". Each Servicer
may recover Servicing Advances (x) from the Mortgagors to the extent permitted
by the Mortgage Loans, (y) from Liquidation Proceeds realized upon the
liquidation of the related Mortgage Loan, and (z) as provided in Section
7.03(j) hereof. Except as provided in the previous sentence, and in Sections
7.03(j) and 8.13, in no case may a Servicer recover Servicing Advances
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from principal and interest payments on any Mortgage Loan or from any amounts
relating to any other Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans.
(a) On or prior to each Monthly Remittance Date and with respect to Mortgage
Loans serviced by it, each Servicer shall deposit into the related Principal
and Interest Account with respect to any full Prepayment made by the Mortgagor
during the preceding Remittance Period, an amount equal to the excess, if any,
of (x) 30 days' interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first day of the
related Remittance Period over (y) to the extent not previously advanced, the
interest paid by the Mortgagor with respect to the Mortgage Loan for the
related Remittance Period (any such amount, "Compensating Interest"), which
amount shall be included in the Monthly Remittance Amount to be made available
to the Trustee on each Monthly Remittance Date. In respect of any Payment
Date, each Servicer's obligation to deposit Compensating Interest into the
Principal and Interest Account shall not exceed the amount of the Servicing Fee
payable to such Servicer on such Payment Date in respect of all Mortgage Loans
serviced by such Servicer.
(b) Each Servicer with respect to Mortgage Loans serviced by it,
may, but is not obligated to, purchase for its own account (or, during the two
year period beginning on the Startup Day, substitute a Qualified Replacement
Mortgage for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which
enforcement proceedings have been brought by the related Servicer pursuant to
Section 8.13. Any such Mortgage Loan so purchased shall be purchased by such
Servicer on a Monthly Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the related
Principal and Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer shall
cause to be maintained with respect to each Mortgage Loan serviced by it a
hazard insurance policy with a generally acceptable carrier that provides for
fire and extended coverage, and which provides for a recovery by such Servicer
on behalf of the Trust of insurance proceeds relating to such Mortgage Loan in
an amount not less than the least of (i) the outstanding principal balance of
the Mortgage Loan, (ii) the minimum amount required to compensate for damage or
loss on a replacement cost basis and (iii) the full insurable value of the
premises.
(b) If the Mortgage Loan relates to a Property which is located in
an area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, as identified to the related Servicer
by the Originator in the related Mortgage Loan Schedule, and flood insurance
has been made available, the related Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides for a
recovery by such Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act
of 1973.
(c) In the event that a Servicer shall obtain and maintain a
blanket policy insuring against fire, flood and hazards of extended coverage on
all of the Mortgage Loans, then, to the extent such policy names such Servicer
as loss payee and provides coverage in an amount equal to the aggregate unpaid
principal balance on the Mortgage Loans without co-insurance and otherwise
complies with the requirements of this Section 8.11, such Servicer shall be
deemed conclusively to have satisfied its obligations with respect to fire and
hazard insurance coverage under this Section 8.11, it being understood and
agreed that such blanket policy may contain a deductible clause, in which case
such Servicer shall, in the event that there shall not have been maintained on
the related Property a policy complying with the
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preceding paragraphs of this Section 8.11, and there shall have been a loss
which would have been covered by such policy, deposit in the related Principal
and Interest Account from such Servicer's own funds the difference, if any,
between the amount that would have been payable under a policy complying with
the preceding paragraphs of this Section 8.11 and the amount paid under such
blanket policy. Upon the request of the Trustee, such Servicer shall cause to
be delivered an Officer's Certificate to the Trustee to the effect that the
Servicer maintains such policy.
(d) Each Servicer also shall maintain on related REO Property,
fire and hazard insurance with extended coverage in an amount which is at least
equal to the lesser of (i) the maximum insurable value of the improvements
which are a part of such property and (ii) the outstanding principal balance of
the related Mortgage Loan at the time it became an REO Property, liability
insurance and, to the extent required and available under the National Flood
Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, as
amended, flood insurance in an amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be maintained
any insurance required by this Section 8.11, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit in the
related Principal and Interest Account from the Servicer's own funds the
amount, if any, that would have been payable under a policy complying with the
preceding paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the related Servicer shall, to the extent a responsible officer
thereof has actual knowledge of such conveyance or prospective conveyance,
exercise the rights of the Trust to accelerate the maturity of the related
Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage
or Note; provided, however, that such Servicer shall not exercise any such
right if the "due-on-sale" clause, in the reasonable belief of such Servicer,
is not enforceable under applicable law or if such Servicer reasonably believes
in good faith it is not in the best interests of the Trust. In such event,
such Servicer is authorized to enter into an assumption and modification
agreement with the Person to whom such Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable
law, such Servicer is authorized to enter into a substitution of liability
agreement with such person, pursuant to which the original Mortgagor is
released from liability and such Person is substituted as Mortgagor and becomes
liable under the Note; provided, however, that to the extent that any such
substitution of liability agreement would not otherwise have been delivered by
such Servicer in its usual procedures for mortgage loans held in its own
portfolio, such Servicer shall prior to executing and delivering such
agreement, obtain the prior written consent of the Seller. The Trustee shall
execute any agreements required to effectuate the foregoing. The Mortgage
Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The related Servicer of
such Mortgage Loan shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee the
original copy of such assumption or substitution agreement, which copy shall be
added by the Trustee to the related File and which shall, for all purposes, be
considered a part of such File to the same extent as all other documents and
instruments constituting a part thereof. Each Servicer shall be responsible
for recording any such assumption or substitution agreements relating to
Mortgage Loans serviced by it at the expense of the related Servicer. In
connection with any such assumption or substitution agreement, no material term
of the Mortgage Loan, including the required monthly payment on the related
Mortgage Loan shall be changed but all terms thereof shall remain as in effect
as immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Mortgage Loan shall not be changed nor
shall any required monthly payments of principal or interest be deferred or
forgiven. Any fee collected by any Servicer for consenting to any such
conveyance
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or entering into an assumption or substitution agreement shall be retained by
or paid to such Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, no Servicer shall be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which such Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) Each
Servicer, with respect to Mortgage Loans serviced by it, shall foreclose upon
or otherwise comparably convert the ownership on behalf of the Trust of
Properties relating to defaulted Mortgage Loans as to which no satisfactory
arrangements can be made for collection of Delinquent payments and which the
related Servicer has not purchased pursuant to Section 8.10(b). In connection
with such foreclosure or other conversion, the Servicer of such defaulted
Mortgage Loans shall exercise such of the rights and powers vested in it
hereunder, and use the same degree of care and skill in its exercise or use as
prudent mortgage lenders would exercise or use under the circumstances in the
conduct of their own affairs, including, but not limited to, advancing funds
deemed by such Servicer in its good faith business judgment to be recoverable
from the related Mortgage Loan for the payment of taxes, amounts due with
respect to senior liens and insurance premiums. Any amounts so advanced shall
constitute "Servicing Advances" within the meaning of Section 8.09(b) hereof.
Each Servicer shall sell any REO Property managed by it within 23 months of its
acquisition by the Trust, unless such Servicer obtains for the Trustee an
Opinion of Counsel (the cost of which shall be advanced by the related Servicer
as a Servicing Advance) experienced in federal income tax matters and
reasonably acceptable to the Depositor and the Trustee, addressed to the
Trustee and such Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust as defined in Section 860F of the
Code or cause the Trust or any REMIC therein to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are outstanding,
or the related Servicer produces evidence that it has properly requested from
the applicable tax authorities at least 60 days before the day on which the two
year grace period would otherwise expire, an extension of the two year grace
period, in which case such Servicer shall sell any REO Property by the end of
any extended period specified in any such opinion or extension.
Notwithstanding the generality of the foregoing provisions, each
Servicer shall manage, conserve, protect and operate each REO Property managed
by it solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from
foreclosure property" which is subject to taxation under the REMIC Provisions.
Pursuant to its efforts to sell such REO Property, the related Servicer shall
either itself or through an agent selected by such Servicer protect and
conserve such REO Property in the same manner and to such extent as is
customary in the locality where such REO Property is located and may, incident
to its conservation and protection of the interests of the Owners and after
consultation with the holder of a majority in interest of the Class R
Certificates, rent the same, or any part thereof, as such Servicer deems to be
in the best interest of the Owners for the period prior to the sale of such REO
Property.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure,
or exercising control over the Mortgaged Property so that the Trust would be
considered a mortgagee-in-possession, owner or operator of the Mortgaged
Property under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended (42
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U.S.C. Section 9601 et seq.) or a comparable law, in the event any responsible
officer of a Servicer has actual knowledge that a Property is in any way
affected by hazardous or toxic substances or wastes and determines that it may
be reasonable to convert such Property ownership to the Trust, or the holder of
a majority in interest of the Class R Certificates otherwise requests in
writing an environmental inspection to be conducted, such Servicer shall cause
an environmental inspection or review of such Property to be conducted by a
qualified inspector and shall be reimbursed for the amount of such
environmental inspection in the manner described herein for reimbursement of
Servicing Advances in the same manner as set forth in the immediately following
paragraph. Upon completion of the inspection, such Servicer shall promptly
provide the Owner of the majority of the Class R Certificates and the Trustee
with a written report of the environmental inspection. In the absence of such
determination or a written request from the Owner of the majority of the Class
R Certificates for an environmental inspection, neither the related Servicer
nor the Trustee shall be liable for any liability, cost or expense incurred by
the Trust due to the decision of such Servicer not to cause an environmental
inspection of a Property.
After reviewing the environmental inspection report, the Owner of the
majority of the Class R Certificates shall determine how the related Servicer
shall proceed with respect to the Property and shall notify such Servicer
within 15 Business Days of receipt of the inspection report. In the event the
environmental inspection report indicates that the Property is in any way
affected by hazardous or toxic substances or wastes such Servicer shall only
foreclose or comparably convert such Property if the Owner of the majority of
the Class R Certificates directs such Servicer to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure. In the event the Owner of the
majority of the Class R Certificates requires such Servicer to foreclose or
accept a deed-in-lieu of foreclosure pursuant to this Section 8.13(a),(i) such
Servicer (or the Trustee and any other successor Servicer) shall be reimbursed
for any related environmental clean up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse such Servicer (or the Trustee and any other successor Servicer), such
Servicer (or the Trustee and any other successor Servicer) shall be entitled to
be reimbursed from amounts in the related Principal and Interest Account, and
(ii) such Class R Owner hereby indemnifies the Trust, the Trustee and such
Servicer with respect to any costs, liabilities and expenses incurred by any
such party in connection with any such hazardous or toxic substances or wastes
with respect to such foreclosure or comparable conversion. In the event the
Owner of the majority of the Class R Certificates directs such Servicer not to
proceed with foreclosure or acceptance of a deed-in-lieu of foreclosure, such
Servicer (or the Trustee and any other successor Servicer) shall be reimbursed
for all Servicing Advances made with respect to the related Property from such
Principal and Interest Account pursuant to Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each defaulted
Mortgage Loan serviced by it, when it has recovered, whether through trustee's
sale, foreclosure sale or otherwise, all amounts it expects to recover from or
on account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan".
Upon such a determination, the related Servicer shall prepare and
submit to the Seller and the Trustee a Liquidation Report in substantially the
form of Exhibit K hereto.
Section 8.14 Trustee and Custodian to Cooperate; Release of Files.
(a) Upon the payment in full of any Mortgage Loan (including the repurchase of
any Mortgage Loan or any liquidation of such Mortgage Loan through foreclosure
or otherwise) or the receipt by the related Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, such
Servicer shall deliver to the Custodian a Servicer's Trust Receipt in the form
of Exhibit H hereto. Upon receipt of such
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Servicer's Trust Receipt, the Custodian shall promptly release the related
File, in trust to (i) such Servicer, (ii) an escrow agent or (iii) any
employee, agent or attorney of the Trustee, in each case pending its release by
such Servicer, such escrow agent or such employee, agent or attorney of the
Trustee, as the case may be. Upon any such payment in full or the receipt of
such notification that such funds have been placed in escrow, such Servicer is
authorized to give, as attorney-in-fact for the Trustee and the mortgagee under
the Mortgage which secured the Note, an instrument of satisfaction (or
assignment of Mortgage without recourse) regarding the Property relating to
such Mortgage, which instrument of satisfaction or assignment, as the case may
be, shall be delivered to the Person or Persons entitled thereto against
receipt therefor of payment in full, it being understood and agreed that no
expense incurred in connection with such instrument of satisfaction or
assignment, as the case may be, shall be chargeable to the related Principal
and Interest Account. In lieu of executing any such satisfaction or
assignment, as the case may be, such Servicer may prepare and submit to the
Trustee a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by such Servicer; in such event, the
Trustee shall execute and acknowledge such satisfaction or assignment, as the
case may be, and deliver the same with the related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of such Servicer and
delivery to the Custodian of a Servicer's Trust Receipt substantially in the
form of Exhibit H hereto, release the related File to such Servicer and shall
execute such documents as shall be necessary to the prosecution of any such
proceedings, including, without limitation, an assignment without recourse of
the related Mortgage to such Servicer. The Custodian shall complete in the
name of the Trustee any endorsement in blank on any Note prior to releasing
such Note to such Servicer. Such receipt shall obligate such Servicer to
return the File to the Custodian when the need therefor by such Servicer no
longer exists unless the Mortgage Loan shall be liquidated in which case, upon
receipt of the liquidation information, in physical or electronic form, such
Servicer's Trust Receipt shall be released by the Custodian to such Servicer.
(c) Each Servicer shall have the right to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages.
No application for approval shall be considered by any Servicer unless: (x)
the provisions of the related Note and Mortgage have been complied with; (y)
the Originator certifies to such Servicer that the Loan-to-Value Ratio and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting guidelines for a
similar credit grade borrower; and (z) the lien priority of the related
Mortgage is not adversely affected. Upon receipt by the Trustee of an
Officer's Certificate executed on behalf of a Servicer setting forth the action
proposed to be taken in respect of a particular Mortgage Loan and certifying
that the criteria set forth in the immediately preceding sentence have been
satisfied, the Trustee shall execute and deliver to such Servicer the consent
or partial release so requested by such Servicer. A proposed form of consent
or partial release, as the case may be, shall accompany any Officer's
Certificate delivered by such Servicer pursuant to this paragraph.
(d) Costs associated with preparing assignments, satisfactions and
releases described in this Section 8.14 shall not be an expense of the Trust or
the Trustee, but rather shall be borne directly by the related Servicer;
provided, however, that the Custodian shall be liable for the cost associated
with the shipping of documents from the Custodian to the related Servicer
pursuant to this Section 8.14.
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Section 8.15 Servicing Compensation. As compensation for their
activities hereunder, each Servicer shall be entitled to the Servicing Fee for
each Mortgage Loan that it services. Such Servicing Fee shall be payable on a
monthly basis out of interest payments on the related Mortgage Loans and shall
equal one-twelfth of the related Servicing Fee Rate multiplied by the
outstanding principal amount of such Mortgage Loan as of the prior Monthly
Remittance Date. Subject to the related Servicing Fee Letter, additional
servicing compensation in the form of release fees, bad check charges,
assumption fees, late payment charges, any other servicing-related fees, and
similar items may, to the extent collected from Mortgagors, be retained by the
related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each
Servicer, at its own expense, will deliver to the Trustee, the Seller, the
Depositor and the Rating Agencies on or before April 15 of each year,
commencing in 1998, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of such Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, such Servicer has fulfilled all its
obligations under this Agreement for such year, or, if there has been a default
in the fulfillment of all such obligations, specifying each such default known
to such officer and the nature and status thereof including the steps being
taken by such Servicer to remedy such defaults.
(b) Each Servicer shall deliver to the Trustee, the Seller, the
Depositor and the Rating Agencies promptly after a responsible officer of the
Servicer obtains actual knowledge thereof but in no event later than five
Business Days thereafter, written notice by means of an Officer's Certificate
of any event which with the giving of notice or lapse of time, or both, such
officer knows would become an Event of Servicing Termination.
Section 8.17 Annual Independent Certified Public Accountants'
Reports. (a) On or before April 15 of each year, commencing in 1998, each
Servicer shall cause to be delivered to the Trustee and the Rating Agencies a
letter or letters of a firm of independent, nationally- recognized certified
public accountants stating that such firm has, with respect to such Servicer's
overall servicing operations examined such operations in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers,
and stating such firm's conclusions relating thereto.
(b) Each Servicer will deliver to the Seller as soon as available
and in any event within 45 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of such Servicer, an unaudited
consolidated statement of operations and retained earnings and consolidated
statements of changes in financial position of such Servicer for such period
and each Servicer will deliver to the Seller as soon as available and in any
event within 90 days after the end of each fiscal year of such Servicer,
audited consolidated statements of income, retained earnings and changes in
financial position of such Servicer for the preceding fiscal year.
Section 8.18 Access to Certain Documentation and Information
Regarding the Mortgage Loans. Each Servicer shall provide to the Trustee, the
Seller, the FDIC and the supervisory agents and examiners of each of the
foregoing access to the documentation and electronic data regarding the
Mortgage Loans not in the possession of the Trustee, such access being afforded
without charge but only upon prior written reasonable request and during normal
business hours at the offices of such Servicer designated by it.
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Upon any change in the format of the computer tape by any Servicer in
respect of the Mortgage Loans, such Servicer shall deliver a copy of such
computer tape to the Trustee. In addition, each Servicer shall provide a copy
of such computer tape to the Trustee at such other times as the Trustee may
reasonably request upon reasonable notice to such Servicer and upon payment of
all reasonable expenses associated with such request by the Trustee. Nothing
contained herein shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to the Mortgage
Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller and the Trustee, which such consent shall not be unreasonably
withheld; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 8.21(f) hereof for a successor Servicer.
Notice of any such assignment shall be given by such Servicer to the Trustee
and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Trustee
(acting upon the request of the Owners of the majority of the Percentage
Interests of the Offered Certificates then Outstanding as a whole and not on a
Class by Class basis) or the Seller may immediately remove the related Servicer
(including any successor entity serving as the Servicer) upon the occurrence of
any of the following events and the expiration of the related cure period
(provided, that the occurrence of any such events with respect to one Servicer
shall be cause to remove only such Servicer):
(i) Such Servicer shall fail to deliver to the
Trustee any proceeds or required payment (including any Delinquency
Advance or Compensating Interest payment), which failure continues
unremedied for two Business Days following written notice to an
Authorized Officer of such Servicer from the Trustee or from any
Owner;
(ii) Such Servicer shall (I) apply for or consent
to the appointment of a receiver, trustee, liquidator or custodian or
similar entity with respect to itself or its property, (II) admit in
writing its inability to pay its debts generally as they become due,
(III) make a general assignment for the benefit of creditors, (IV) be
adjudicated a bankrupt or insolvent, (V) commence a voluntary case
under the federal bankruptcy laws of the United States of America or
file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate action
for the purpose of effecting any of the foregoing;
(iii) If without the application, approval or
consent of such Servicer, a proceeding shall be instituted in any
court of competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in respect of
such Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment
of a trustee, receiver, liquidator, custodian or similar entity with
respect to such Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy
or insolvency law, and, if such proceeding is being contested by such
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of sixty
(60) consecutive days;
(iv) Such Servicer shall fail to perform any one
or more of its obligations hereunder (other than those specified in
item (i) above) and shall continue in default thereof for a
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period of forty-five (45) days after the earlier of (x) notice by the
Trustee of said failure or (y) actual knowledge of a responsible
officer of such Servicer;
(v) The failure of such Servicer to satisfy the
Servicer Termination Test; or
(vi) (a) In the case of Advanta, Advanta Mortgage
Corp. USA consolidated with Advanta Mortgage Holding Corp. shall fail
to maintain a net worth of at least $20 million; or (b) in the case of
Long Beach, it shall fail to maintain a net worth of $30 million; or
(c) in the case of Option One, it shall fail to maintain a net worth
of at least $20 million.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the related Remittance Period. Upon the
Trustee's determination that the Servicer Termination Test is not satisfied, or
that a payment of Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been made by the
relevant Servicer, the Trustee shall so notify in writing an Authorized Officer
of such Servicer and the Seller as soon as is reasonably practical.
(b) Any party exercising any termination rights under Subsection
(a) above shall give notice in writing to the relevant Servicer (and a copy to
the Trustee) of the termination of all of the rights and obligations of such
Servicer under this Agreement. The Trustee shall mail a copy of any notice
given by it hereunder to the Depositor, the Seller, the Owners and Rating
Agencies. On or after the receipt by such Servicer of such written notice, all
authority and power of such Servicer under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall without further
action pass to and be vested in the Trustee or such successor Servicer as may
be appointed hereunder, and, without limitation, the Trustee is hereby
authorized and empowered (which authority and power are coupled with an
interest and are irrevocable) to execute and deliver, on behalf of the
predecessor 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 or termination,
whether to complete the transfer and endorsement of the Mortgage Loans and
related documents or otherwise. The predecessor Servicer shall cooperate with
the successor Servicer or the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement
including the transfer to the successor Servicer or to the Trustee for
administration by it of all cash accounts that shall at the time be held by the
predecessor Servicer for deposit or shall thereafter be received with respect
to a Mortgage Loan. All reasonable costs and expenses incurred in connection
with delivering the Files to the successor Servicer or the Trustee shall be
paid by the predecessor Servicer.
(c) If any event described in subsection (a)(vi) above occurs and
is continuing, during a 30 day period following receipt of notice, the Trustee,
the affected Servicer and the Seller shall cooperate with each other to
determine if the occurrence of such event is likely to have a material adverse
effect on such Servicer's ability to perform its obligations under this
Agreement. If the Seller, in its reasonable discretion, concludes that the
event is not likely to have a material adverse effect on such Servicer's
ability to perform hereunder, then such Servicer shall be given a period of 90
days from the date of such determination by Seller to cure such default. If
the Seller, in its reasonable discretion, concludes that the event is likely to
have a material adverse effect on such Servicer's ability to perform hereunder,
then such Servicer shall be given a period of 15 days from the date of such
determination by Seller to cure such default. The date of determination by
Seller referenced in the preceding two sentences of this Section 8.20(c) shall
be deemed to be the date upon which a written notice is mailed to the affected
Servicer, first class postage prepaid, at the address of the affected Servicer
set forth in Section 11.20 hereof. If the event is not cured by the end of
the applicable period, no further extension of the cure period is required, and
such Servicer may be terminated as provided in this section.
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(d) The Seller and the Trustee agree to use their best efforts to
inform each other of any materially adverse information regarding each
Servicer's servicing activities that comes to the attention of such party from
time to time.
Section 8.21 Resignation of a Servicer and Appointment of
Successor. (a) Upon any Servicer's receipt of notice of termination pursuant
to Section 8.20 or such Servicer's resignation in accordance with the terms of
this Section 8.21, the predecessor Servicer shall continue to perform its
functions as Servicer under this Agreement, in the case of termination, only
until the date specified in such termination notice or in accordance with
Section 8.20(d), if applicable, or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the earlier of (x) the date 45 days from the delivery to the Seller, the
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying opinion of counsel.
All collections then being held by the predecessor Servicer prior to its
removal and any collections received by such Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer. In the event of any
Servicer's resignation or termination hereunder, the Trustee shall appoint a
successor Servicer and the successor Servicer shall accept its appointment by
execution of a written assumption in form acceptable to the Trustee and the
Seller, with copies of such assumption to the Trustee and the Rating Agencies,
provided that as a condition precedent to the appointment of a successor
Servicer and the execution of the related written assumption, such successor
Servicer shall, if applicable, also execute either (i) a written assumption or
termination of any of the Subservicing Agreements or (ii) appropriate
amendments to each of any Subservicing Agreements.
(b) No Servicer shall resign from the obligations and duties
hereby imposed on it, except (i) upon determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of such Servicer so causing such a conflict being of a type and
nature carried on by such Servicer at the date of this Agreement or (ii) upon
prior written consent of the Seller and the Trustee and confirmation from the
Rating Agencies that the Offered Certificates are not reduced. Any such
determination referred to in clause (i) permitting the resignation of any
Servicer shall be evidenced by an Opinion of Counsel to such effect which shall
be delivered to the Trustee and the Seller.
(c) No removal or resignation of any Servicer shall become
effective until the Trustee or a successor Servicer shall have assumed such
Servicer's responsibilities and obligations in accordance with this Section.
The removal or resignation of one Servicer hereunder, shall have no effect on
the status of any other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such Servicer
also shall promptly deliver or cause to be delivered to the successor Servicer
or the Trustee all the books and records (including, without limitation,
records kept in electronic form) that such Servicer has maintained for the
Mortgage Loans, including all tax bills, assessment notices, insurance premium
notices and all other documents as well as all original documents then in such
Servicer's possession.
(e) Any collections received by any Servicer after removal or
resignation thereof shall be endorsed by it to the Trustee and remitted
directly and immediately to the Trustee or the successor Servicer.
(f) Upon removal or resignation of any Servicer, the Trustee, with
the cooperation of the Seller, (x) shall solicit bids for a successor Servicer
as described below and (y) pending the appointment
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of a successor Servicer as a result of soliciting such bids, shall serve as
Servicer of the Mortgage Loans serviced by such predecessor Servicer. The
Trustee shall, if it is unable to obtain a qualifying bid and is prevented by
law from acting as Servicer, (I) appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has been designated as an approved
servicer by FannieMae or FHLMC for first and second mortgage loans and having
equity of not less than $5,000,000 (or such lower level as may be acceptable to
the Owners of a majority of the Class R Certificates) and is reasonably
acceptable to the Seller and the Owners of the Class R Certificates, as
indicated in writing as the successor to such Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
such Servicer hereunder and (II) give notice thereof to the Seller, the Owners
and the Rating Agencies. The compensation of any successor Servicer
(including, without limitation, the Trustee) so appointed shall be the amount
agreed by the related Servicer and the Seller. Any existing Servicer may bid
to be a successor to any other Servicer. Any reasonable out of pocket set-up
costs or expenses incurred by the Trustee as interim successor Servicer as
specified in subclause (y) of this Section 8.21(f) shall be at the expense of
the Trust and shall be payable pursuant to Section 7.03(j).
(g) In the event that the Trustee is able to solicit bids as
provided above, the Trustee shall solicit, by public announcement, bids from
housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above (including the Trustee
or any affiliate thereof). Such public announcement shall specify that the
successor Servicer shall be entitled to the servicing compensation agreed upon
between the Trustee, the successor Servicer and the Seller; provided, however,
that no such fee shall exceed the related Servicing Fee. Within thirty days
after any such public announcement, the Trustee, with the cooperation of the
Seller, shall negotiate in good faith and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain such servicing. The Trustee upon receipt of the purchase
price shall pay such purchase price to the Servicer being so removed (except in
the case of subsection (h) below, in which case the Trustee shall pay such
purchase price to the Seller), after deducting from any sum received by the
Trustee from the successor to such Servicer in respect of such sale, transfer
and assignment all costs and expenses of any public announcement and of any
sale, transfer and assignment of the servicing rights and responsibilities
reasonably incurred hereunder. After such deductions, the remainder of such
sum shall be paid by the Trustee to such Servicer (other than Advanta) at the
time of such sale.
(h) The Trustee and the successor Servicer shall take such action
consistent with this Agreement as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing if such notification is not done by such predecessor Servicer as
required by subsection (j) below. Each predecessor Servicer agrees to
cooperate with the Trustee and any successor Servicer in effecting the
termination of such Servicer's servicing responsibilities and rights hereunder
and shall promptly provide the Trustee or such successor Servicer, as
applicable, all documents and records reasonably requested by it to enable it
to assume such Servicer's functions hereunder and shall promptly also transfer
to the Trustee or such successor Servicer, as applicable, all amounts which
then have been or should have been deposited in the related Principal and
Interest Account by such Servicer, or which are thereafter received with
respect to the Mortgage Loans. Neither the Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the predecessor Servicer to deliver, or any delay in delivery, cash,
documents or records to it or (ii) restrictions imposed by any regulatory
authority having jurisdiction over such Servicer.
(i) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall as soon as reasonably practicable pay all
Compensating Interest and, if applicable,
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Delinquency Advances which have theretofore not been remitted to the extent
required by this Agreement with respect to the Mortgage Loans; provided,
however, that if the Trustee is acting as successor Servicer, the Trustee shall
only be required to make such Delinquency Advances if, in the Trustee's
reasonable good faith judgment, such Delinquency Advances will ultimately be
recoverable from the related Mortgage Loans. Any Delinquency Advances and
Servicing Advances previously made by the predecessor Servicer and accrued and
unpaid Servicing Fees shall be recoverable by it and paid to it by the
successor Servicer to the extent such Delinquency Advances, Servicing Advances
and accrued and unpaid Servicing Fees would otherwise have been recoverable had
the predecessor Servicer not been terminated.
(j) Any Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be subject to
all the responsibilities, duties and liabilities of the predecessor Servicer
including, but not limited to, the maintenance of the hazard insurance
policy(ies), the fidelity bond and an errors and omissions policy pursuant to
Section 8.26 and shall be entitled to such fees as may be agreed upon between
the Seller and such successor Servicer (such amount not to exceed the Aggregate
Servicing Fee Rate), and all of the rights granted to the predecessor Servicer
by the terms and provisions of this Agreement; provided, that if the Trustee
shall be the successor Servicer, the Trustee shall be entitled to the same fees
as the Servicer was entitled to at the time of succession. The appointment of
a successor Servicer (including the Trustee) shall not affect any liability of
the predecessor Servicer which may have arisen under this Agreement prior to
its termination as Servicer (including, without limitation, any deductible
under an insurance policy) nor shall any successor Servicer (including the
Trustee) be liable for any acts or omissions of the predecessor Servicer or for
any breach by such Servicer of any of its representations or warranties
contained herein or in any related document or agreement.
(l) The Trustee and the Seller shall each give notice to the
Rating Agencies and the Owners or the Seller of the occurrence of any event
specified in Section 8.20 of which a Responsible Officer of the Trustee has
actual knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination.
Subject to the rights of the Trustee, the Owners and the Seller pursuant to
Section 8.20 to terminate all of the rights and obligations of any Servicer
under this Agreement or the Owners of at least 51% of the Percentage Interests
of the Class R Certificates may, on behalf of all Owners of Certificates, waive
any default by such Servicer in the performance of its obligations hereunder
and its consequences. Upon any such waiver of a past default, such default
shall cease to exist, and any Event of Servicing Termination 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 thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement
By the Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of any Servicer
hereunder by the Trustee pursuant to Section 8.21, it is understood and agreed
that such Servicer's rights and obligations under any Subservicing Agreement
then in force between such Servicer and a subservicer shall be assumed
simultaneously by the Trustee without act or deed on part of the Trustee;
provided, however, the Trustee in its sole discretion may terminate any
subservicer notwithstanding the provisions of the related Subservicing
Agreement.
Each Servicer shall, upon the reasonable request of the Trustee, but
at the expense of such Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts (through
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the execution of any documents or otherwise) to effect the orderly and
efficient transfer of the Subservicing Agreements to the assuming party and
shall cooperate with the Trustee in any other manner reasonably requested by
the Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor
Servicer. Following the termination of any Servicer hereunder and pending the
appointment of any other Person as successor Servicer, the Trustee is hereby
empowered to perform the duties of such Servicer hereunder; it being expressly
understood, however, by all parties hereto, and the Owners, that prior to any
termination of such Servicer pursuant to Section 8.21, such Servicer shall
perform such duties. Specifically, and not in limitation of the foregoing, the
Trustee shall upon termination or resignation of any Servicer, and pending the
appointment of any other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter
into assumption and substitution agreements as permitted by Section
8.12 hereof;
(iv) to deliver instruments of satisfaction
pursuant to Section 8.14 hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency
Advances and to pay Compensating Interest (and to be reimbursed
therefor as provided herein).
Section 8.25 Liability of the Servicers. None of the Servicers
nor any of their directors, officers, employees or agents shall be under any
liability on any Certificate or otherwise to the Seller, the Trustee or any
Owner for any action taken or for refraining from the taking of any action in
good faith pursuant to this Agreement or for errors in judgment except as
required hereunder; provided, however, that this provision shall not protect
any Servicer, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Each of the Servicers and any director, officer, employee or agent of each of
the Servicers 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. None of the Servicers shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that each Servicer may in its discretion undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties hereto and interests of the Trustee and
the Owners 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, and such Servicer shall be entitled to be reimbursed
therefor out of the Principal and Interest Account. The Servicers and any
director, officer, employee or agent of each of the Servicers shall be
indemnified by the Trust and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates, other than any loss, liability
or expense related to any specific Mortgage Loan or Mortgage Loans (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement) and any loss, liability or expense incurred by reason of
negligent action, negligent failure to act, willful misconduct in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
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Section 8.26 Inspections by Trustee and Seller; Errors and
Omissions Insurance. (a) At any reasonable time and from time to time (but
unless there is a valid reason to do so, not more than once every six months)
upon prior written and reasonable notice, the Trustee, the Seller or any agents
or representatives thereof may inspect any Servicer's servicing operations and
discuss the servicing operations of such Servicer with a responsible officer
designated by the related Servicer. The reasonable costs and expenses incurred
by such Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that meet the requirements of FannieMae or FHLMC on
all officers, employees or other persons acting in any capacity with regard to
the Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and omissions
insurance shall be in the form of Mortgage Banker's Blanket bond and shall
protect and insure such Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of such persons.
Such fidelity bond shall also protect and insure such Servicer against losses
in connection with the failure to maintain any insurance policies required
pursuant to this Agreement and the release or satisfaction of a Mortgage Loan
without having obtained payment in full of the indebtedness secured thereby.
No provision of this Section 8.26 requiring the fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any
such bond and insurance policy shall be at least equal to the corresponding
amounts required by FannieMae in the FannieMae Servicing Guide or by FHLMC in
the FHLMC Sellers' and Servicers' Guide. Upon the written request of the
Seller, a Servicer shall cause to be delivered to the Seller an Officer's
Certificate as to the maintenance of the fidelity bond and insurance policy
that such fidelity bond and insurance policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to
Business of Servicer. Any corporation into which any Servicer may be merged or
converted or with which it may be consolidated, or corporation resulting from
any merger, conversion or consolidation to which such Servicer shall be a party
or any corporation succeeding to all or substantially all of the business of
such Servicer shall be the successor of such Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set
forth in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any responsible
officer of the Servicer's actual knowledge thereof, such Servicer shall give
prompt notice to the Trustee, the Seller, and the Rating Agencies of the
occurrence of any of the following events:
(a) Any default or any fact or event which such officer knows
results, or which with notice or the passage of time, or both, would result in
the occurrence of a default by such Servicer under any Operative Document or
would constitute a material breach of a representation, warranty or covenant
under any Operative Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against such
Servicer of which it has knowledge, in any federal, state or local court or
before any governmental body or agency or before any arbitration board or any
such proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such Servicer's
ability to perform its obligations under any Operative Document;
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(c) The commencement of any proceedings of which it has knowledge
or has received service of process by or against such Servicer under any
applicable bankruptcy, reorganization, liquidation, insolvency or other similar
law now or hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official shall have been, or may be,
appointed or requested for such Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of such Servicer's business that such
Servicer is to cease and desist, or to undertake any practice, program,
procedure or policy employed by such Servicer in the conduct of the business of
any of them, and such cessation or undertaking will materially and adversely
affect the conduct of such Servicer's business or its ability to perform under
the Operative Documents or materially and adversely affect the financial
affairs of such Servicer.
Section 8.29 Monthly Servicing Report and Servicing Certificate.
(a) Each Servicer with respect to the Mortgage Loans serviced by it shall
deliver not later than the Reporting Date, a Monthly Servicing Report (which
shall be in a format reasonably agreeable to both the Servicer and the Trustee
and, with respect to certain delinquency information, may be delivered by hard
copy), to the Trustee and, upon request, to the Seller. The Monthly Servicing
Report shall state as to the related Remittance Period for the Mortgage Loans
serviced by such Servicer:
(i) (a) scheduled interest due (net of the Servicing
Fee); (b) Compensating Interest paid; (c) scheduled principal due; (d)
Prepayments; (e) Loan Balance of Mortgage Loans repurchased; (f)
Substitution Amounts; and (g) Net Liquidation Proceeds (related to
principal);
(ii) The Servicing Fee withheld by the related Servicer;
(iii) The principal and interest payments remitted by such
Servicer to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the
Mortgage Loans that were not made by the related Mortgagors as of the
last day of the related Remittance Period;
(v) The number and aggregate Loan Balances (computed in
accordance with the terms of the Mortgage Loans) and the percentage of
the total number of Mortgage Loans and of the Loan Balance which they
represent of Delinquent Mortgage Loans, if any, (i) 30 to 59 days,
(iii) 60 to 89 days and (iii) 90 days or more, respectively, as of the
last day of the related Remittance Period;
(vi) The number and aggregate Loan Balances of Mortgage
Loans, if any, in foreclosure and the number and Book Value of any REO
Properties as of the last day of the related Remittance Period;
(vii) The Loan Balances (immediately prior to being
classified as Liquidated Mortgage Loans) of Liquidated Mortgage Loans
as of the last day of the related Remittance Period;
(viii) Liquidation Proceeds received during the related
Remittance Period;
(ix) The amount of any Liquidation Expenses being deducted
from Liquidation Proceeds or otherwise being charged to the Principal
and Interest Account(s) with respect to such Monthly Remittance Date;
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(x) Liquidation Expenses incurred during the related
Remittance Period which are not being deducted from Liquidation
Proceeds or otherwise being charged to the Principal and Interest
Account with respect to such Monthly Remittance Date;
(xi) Net Liquidation Proceeds as of the last day of the
related Remittance Period;
(xii) The scheduled principal balance of each Mortgage Loan
as of the first day of the related Remittance Period and the date
through which interest has been paid as of the last day of the related
Remittance Period;
(xiii) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be repurchased by each
Originator as of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by such
Servicer during the related Remittance Period and any unreimbursed
Delinquency Advances as of such Monthly Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage
Loans;
(xvi) Any additional information reasonably requested by
the Trustee;
(xvii) The number and aggregate Loan Balances of Mortgage
Loans, if any, currently in bankruptcy proceedings as of the last day
of the related Remittance Period and any Preference Amounts to the
extent the related Servicer has knowledge thereof; and
(xviii) The amount of unreimbursed Servicing Advances.
In addition to the reports and certificates described in this Section 8.29 to
be provided by such Servicer, information as the Trustee and such Servicer may
agree upon shall be provided by such Servicer to the Trustee or such other
party as may be requested by the Trustee by electronic transmission or hard
copy.
(b) The Trustee shall, no later than the related Payment Date,
provide to the Underwriters, the Depositor, the Seller and the Rating Agencies
a written report setting forth the information required under Section 7.09(b)
hereof, based solely on information contained in the Monthly Servicing
Certificate.
(c) Each Servicer with respect to the Mortgage Loans in Group II
agrees that, in addition to the reports and certificates described in Section
8.29(a) hereof, it shall upon the reasonable request of the Seller, prepare
reports detailing the Mortgage Loans serviced by it by index and in the
aggregate.
(d) The Depositor shall deliver or cause to be delivered to the
Trustee on the Startup Day in hard copy and on electronic tape in a form
acceptable to the Trustee (the "Tape") detailing the information required to be
set forth on the Schedules of Mortgage Loans as of the close of business on the
Cut-Off Date.
(e) Within two Business Days of receipt thereof, the Trustee shall
review the Monthly Servicing Reports against the information, as updated by the
Trustee on the basis of the current and all previous Monthly Servicing Reports
received by the Trustee. Within one Business Day following a determination by
the Trustee that inconsistencies between the Monthly Servicing Report and such
information are not reconcilable, the Trustee shall notify the related Servicer
and the Seller of any such material inconsistencies and related Servicer shall
rectify them.
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Section 8.30 Indemnification by the Servicer. Each Servicer
agrees to indemnify and hold the Trustee, the Seller and the Depositor harmless
against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, fees and expenses that the
Seller, the Depositor and the Trustee may sustain in any way caused by or
arising out of the negligent failure of such Servicer, or Subservicer appointed
by it, to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement and which, in the case of the Seller or the
Depositor, materially and adversely affects such party. Each Servicer shall
immediately notify the Trustee, the Seller, the Depositor and the Rating
Agencies if a claim is made by a third party with respect to this Agreement,
and the relevant Servicer may assume (with the consent of the Trustee) the
defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Seller, the Trustee and the
Depositor. The Trustee shall reimburse such Servicer from amounts in the
related Principal and Interest Account for all amounts advanced by it pursuant
to the preceding sentence except when the claim relates directly to the failure
of such Servicer to service and administer the Mortgage Loans in compliance
with the terms of this Agreement.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall perform its
servicing functions with respect to the Mortgage Loans in the best interests of
and for the benefit of the Owners subject to the terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that it will
not take any action or permit or cause any action to be taken by any of its
agents and Affiliates, or by any independent contractors or independent
mortgage brokerage companies on such Servicer's behalf, to personally, by
telephone or mail, solicit the borrower or Mortgagor under any Mortgage Loan
for any purpose whatsoever, including to refinance a Mortgage Loan.
Notwithstanding the foregoing, it is understood and agreed that promotions
undertaken by a Servicer or any Affiliate thereof which are directed to the
general public at large, including, without limitation, mass mailing based on
commercially acquired mailing lists, newspaper, radio and television
advertisements shall not constitute solicitation under this paragraph, nor is a
Servicer prohibited from responding to unsolicited requests or inquiries made
by a Mortgagor or an agent of a Mortgagor; provided further, that the Servicer
may solicit any Mortgagor (i) for whom the Servicer has received a request for
verification of mortgage from an originator of mortgage loan products similar
to the Mortgage Loans that indicates that such Mortgagor intends to refinance
his or her Mortgage Loan and (ii) otherwise in accordance with the Seller's
policy, if such policy is delivered to the related Servicer in writing. It is
understood and agreed that all rights and benefits relating to the solicitation
of any Mortgagors and the attendant rights, title and interest in and to the
list of Mortgagors and data relating to their Mortgages shall be retained by
Seller. Notwithstanding the foregoing, each Servicer may, upon written consent
of the Seller, solicit the borrower or Mortgagor of a Mortgage Loan for
insurance products.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates, of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage
Loan in the Trust Estate, (b) the disposition of all property acquired in
respect of any Mortgage Loan remaining in the Trust Estate and (c) at any time
when a Qualified Liquidation of both Mortgage Loan Groups included within the
REMIC Estate is effected as described below. To effect a termination of this
Agreement pursuant to clause (c) above, the Owners of all Certificates then
Outstanding shall (i) unanimously direct the Trustee on behalf of the
Upper-Tier REMIC and the Lower-Tier REMIC to adopt a plan of complete
liquidation for each of the Mortgage Loan Groups, as contemplated by Section
860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Trustee either shall sell the Mortgage Loans and distribute the proceeds of the
liquidation of the Trust Estate, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Xxxxxx X.
Xxxxxxx, the late Ambassador of the United States to the Court of Saint
James's, living on the date hereof. The Trustee shall give written notice of
termination of the Agreement to each Owner in the manner set forth in Section
11.05.
Section 9.02 Auction Call; Servicer Termination.
(a) Within 90 days of the Group I Auction Sale Bid Date and with
90 days of the Group II Auction Sale Bid Date, the Trustee will notify the
investment banking or whole-loan trading firm selected by the Owners of the
majority of the Class R Certificates (such investment bank or trading firm, the
"Advisor") who will solicit on behalf of the Trustee competitive bids for the
purchase of the Mortgage Loans then remaining in such Mortgage Loan Group for
fair market value (such bidders may include the Owners of the Class R
Certificates). Such solicitation shall be conducted substantially in the
manner described in Exhibit M hereto. In the event that satisfactory bids are
received as described below, the proceeds of the sale of such assets shall be
deposited into the Certificate Account. The Trustee will ask the Advisor to
solicit, on behalf of the Trustee, good-faith bids from no fewer than two
prospective purchasers that are considered at the time to be competitive
participants in the home equity market. The Advisor will consult with any
securities brokerage houses as then making a market in the Offered Certificates
to obtain a determination as to whether the fair market value of such assets
has been offered.
If the highest good-faith bid received by the Advisor from a
qualified bidder is, in the judgment of the Advisor, not less than the fair
market value of the Mortgage Loans in such Mortgage Loan Group and if such bid
would equal or exceed the amount set forth in the following sentence, the
Trustee, following consultation with and written direction from the Advisor,
will sell and assign the Mortgage Loans in such Mortgage Loan Group without
representation, warranty or recourse to such highest bidder and will
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redeem the Offered Certificates related to such Mortgage Loan Group. For the
Trustee to consummate the sale, the bid must be at least equal to the
Termination Price set forth in Section 9.02(b) hereof. In addition, the bid
must be in an amount sufficient to pay the fees and expenses of the Trustee
owing hereunder. If such conditions are not met, the Trustee will, following
consultation with the Advisor, decline to consummate such sale. In addition,
the Trustee will decline to consummate such sale unless it receives from the
Advisor an opinion of counsel addressed to it that such sale will not give rise
either to any "prohibited transaction" tax under Section 860F(a)(1) of the Code
or to any tax on contribution to either the Upper-Tier REMIC or the Lower-Tier
REMIC after the Startup Day under Section 860G(d)(1) of the Code. In the event
such sale is not consummated in accordance with the foregoing, the Trustee will
not be under any obligation to solicit any further bids or otherwise to
negotiate any further sale of the Mortgage Loans in such Mortgage Loan Group.
In such event, however, if requested by the Owners of the Class R Certificates
the Trustee may solicit bids from time to time in the future for the purchase
of the Mortgage Loans in such Mortgage Loan Group upon the same terms described
above. The Trustee may consult with the Advisor and the advice of the Advisor
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder.
(b) On any Monthly Remittance Date on or after the Group I
Servicer Clean-Up Call Date and on any Monthly Remittance Date on or after the
Group II Servicer Clean-Up Call Date, the Servicers servicing Mortgage Loans
relating to such Mortgage Loan Group simultaneously may determine to purchase
and may cause the purchase from the Trust of all (but not fewer than all)
Mortgage Loans serviced by the related Servicer with respect to such Mortgage
Loan Group and all property theretofore acquired in respect of any Mortgage
Loan by foreclosure, deed in lieu of foreclosure, or otherwise then remaining
in such Mortgage Loan Group, at a price (such price the "Termination Price")
equal to 100% of the aggregate Loan Balances of the related Mortgage Loans
(including any REO Property) as of the day of purchase minus amounts remitted
from the Principal and Interest Account to the Certificate Account representing
collections of principal on the related Mortgage Loans during the current
Remittance Period, plus one month's interest on such amount computed at the
Termination Date Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the related
Servicer shall remit to the Trustee all amounts then on deposit in the
Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
If on any such Monthly Remittance Date a Servicer does not elect to
purchase the Mortgage Loans it is servicing and one or more of the other
Servicers have so elected, the Servicer(s) having so elected may give the other
Servicer(s) notice (not less than ten days prior to the next succeeding Monthly
Remittance Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans with respect to such Mortgage Loan Group on such
Monthly Remittance Date at the Termination Price. If the other Servicer(s) do
not agree in writing to purchase the Mortgage Loans they are servicing prior to
the fifth day preceding such Monthly Remittance Date, the electing Servicer(s)
may purchase all Mortgage Loans in such Mortgage Loan Group on such Monthly
Remittance Date.
(c) In the event that an auction sale has not occurred with
respect to both Mortgage Loan Groups and the Servicers fail to exercise their
respective options to purchase all of the Mortgage Loans in both Mortgage Loan
Groups, the Owners of the Class R Certificates are required to purchase all of
the Mortgage Loans in both Mortgage Loan Groups on the Monthly Remittance Date
in September 2027.
(d) In connection with any such purchase, such Owners of the Class
R Certificates or Servicers, as applicable, shall unanimously direct the
Trustee to adopt and the Trustee shall adopt, as to the Upper-Tier REMIC and
Lower-Tier REMIC, a plan of complete liquidation for all of the Mortgage
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Loan Groups as contemplated by Section 860F(a)(4) of the Code and shall provide
to the Trustee an Opinion of Counsel experienced in federal income tax matters
acceptable to the Trustee to the effect that such purchase and liquidation
constitutes, as to either the Upper-Tier REMIC or the Lower-Tier REMIC, a
Qualified Liquidation. In addition, such Owners of the Class R Certificates or
such Servicer shall provide to the Trustee an Opinion of Counsel acceptable to
the Trustee to the effect that such purchase and liquidation does not
constitute a preference payment pursuant to the United States Bankruptcy Code.
(e) Promptly following any purchase described in this Section
9.02, the Trustee will release the Files to the Owners of the Class R
Certificates or otherwise upon their order or to the related Servicer, if
applicable, in accordance with Section 8.14 hereof. Upon such release, the
servicing of the Mortgage Loans shall remain with the related Servicer, subject
to the servicing provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue
Service or by a court of competent jurisdiction, in either case from which no
appeal is taken within the permitted time for such appeal, or if any appeal is
taken, following a final determination of such appeal from which no further
appeal can be taken, to the effect that either the Lower-Tier REMIC or the
Upper-Tier REMIC Estate does not and will no longer qualify as a REMIC pursuant
to Section 860D of the Code (the "Final Determination"), at any time on or
after the date which is 30 calendar days following such Final Determination the
Owners of a majority in Percentage Interests represented by the Offered
Certificates then Outstanding may direct the Trustee on behalf of the Trust to
adopt a plan of complete liquidation, as contemplated by Section 860F(a)(4) of
the Code.
The Trustee shall notify the Servicers and the Owners of the Class R
Certificates of such election to liquidate or such determination to purchase,
as the case may be (the "Termination Notice"). The Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, within 60
days from the date of receipt of the Termination Notice (the "Purchase Option
Period"), at their option, purchase from the Trust all (but not fewer than all)
Mortgage Loans and all property theretofore acquired by foreclosure, deed in
lieu of foreclosure, or otherwise in respect of any Mortgage Loan then
remaining in the Trust Estate at a purchase price equal to the Termination
Price. If, during the Purchase Option Period, the Owners of the Class R
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period in
the event that the Owners of the Offered Certificates have given the Trustee
the direction described in clause (a) above, the Trustee shall sell the
Mortgage Loans and reimburse the Servicer for unreimbursed (including
nonrecoverable) Delinquency Advances, Servicing Advances and Servicing Fees and
distribute the remaining proceeds of the liquidation of the Trust Estate, each
in accordance with the plan of complete liquidation, such that, if so directed,
the liquidation of the Trust Estate, the distribution of the proceeds of the
liquidation and the termination of this Agreement occur no later than the close
of the 60th day, or such later day as the Owners of the Offered Certificates
shall permit or direct in writing, after the expiration of the Purchase Option
Period. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Trustee of an Opinion of Counsel experienced in
federal income tax matters acceptable to the Trustee selected by the Owners of
the Class R Certificates which opinion shall be reasonably satisfactory in form
and substance to the Trustee and the Seller to the effect that the effect of
the Final Determination is to increase substantially the probability that the
gross income of the Trust will be subject to federal taxation, purchase from
the Trust
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all (but not fewer than all) Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect
of any Mortgage Loan then remaining in the Trust Estate at a purchase price
equal to the aggregate Loan Balances of all Mortgage Loans as of the date of
such purchase, plus (a) one month's interest on such amount computed at the
Termination Date Pass-Through Rate, (b) the aggregate amount of unreimbursed
(including nonrecoverable) Delinquency Advances, Servicing Advances and
Servicing Fees and (c) the interest portion of any Delinquency Advances which a
related Servicer has theretofore failed to remit. In connection with such
purchase, the related Servicer shall remit to the Trustee all amounts then on
deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase. The foregoing opinion shall be deemed satisfactory unless the
Seller or the Trustee gives the Owners of a majority of the Percentage Interest
of the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion. In connection with any such
purchase, such Owners shall direct the Trustee to adopt a plan of complete
liquidation as contemplated by Section 860F(a)(4) of the Code and shall provide
to the Trustee an Opinion of Counsel experienced in federal income tax matters
to the effect that such purchase constitutes a Qualified Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and unreimbursed
Delinquency Advances and Servicing Advances and Servicing Fees theretofore
funded by a Servicer from the Servicer's own funds shall be paid by the Trustee
to the Servicer from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee
and (B) shall serve as the Trustee at all times under this Agreement, and (ii)
in the absence of bad faith on its part, may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicers hereunder,
the Trustee is hereby empowered to perform the duties of the Servicers it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicers, the Servicers and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicers, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest (and to be reimbursed therefor as
provided herein).
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Owners of a majority in
Percentage
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Interest of the Certificates of the affected Class or Classes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement relating to such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this
Agreement shall in any event require the Trustee to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicers under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicers in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions
enumerated in this Agreement shall not be construed as a duty and the Trustee
shall not be answerable for other than its own negligence or willful
misconduct.
(g) The Trustee shall be under no obligation to institute any
suit, or to take any remedial proceeding under this Agreement, or to take any
steps in the execution of the trusts hereby created or in the enforcement of
any rights and powers hereunder until it shall be indemnified to its
satisfaction against any and all costs and expenses, outlays and counsel fees
and other reasonable disbursements and against all liability, except liability
which is adjudicated to have resulted from its negligence or willful
misconduct, in connection with any action so taken.
(h) Neither the Servicers, the Seller nor the Trustee knowingly shall
take any action (other than any action expressly required by this Agreement)
that would cause the Class A-10 Certificates or the Class M-1A Certificates to
fail to qualify as "mortgage related securities" within the meaning of the
Securities Exchange Act of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection
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herewith shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and such failure or breach
shall continue or not be cured for a period of 30 days after there
shall have been given, by registered or certified mail, to the Trustee
by the Seller or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Offered
Certificates then Outstanding, or, if there are no Offered Certificates
then Outstanding, by such Percentage Interests represented by the Class
R Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency
is evidenced), generally fail to pay its debts as they come due, file
or consent to the filing of a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Rating Agencies notice of the
occurrence of any such event of which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is continuing,
then and in every such case the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates and Class B-2F
Certificates then Outstanding or if there are no Offered Certificates or Class
B-2F Certificates then Outstanding by such majority of the Percentage Interests
represented by the Class R Certificates, may, whether or not the Trustee
resigns pursuant to Section 10.09(b) hereof, immediately, concurrently with the
giving of notice to the Trustee, and without delaying the 30 days required for
notice therein, appoint a successor Trustee pursuant to the terms of Section
10.09 hereof.
(c) The Servicers shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
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(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Servicers or the Owners of any Class of Certificates mentioned herein shall, at
the request of the Trustee, be in writing;
(c) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice
of such counsel (selected in good faith by the Trustee) shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement at the request or direction
of any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document, but the Trustee in its discretion may make
such further inquiry or investigation into such facts or matters as it may see
fit;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
attorneys or custodian;
(h) the Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be authorized or
within the discretion or the rights or powers conferred upon it under this
Agreement other than as to validity and sufficiency of its authentication of
the Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer is required
to furnish to the Trustee from time to time certain information and make
various calculations which are relevant to the performance of the Trustee's
duties under the Agreement. The Trustee shall be entitled to rely in good
faith on any such information and calculations in the performance of its duties
hereunder, (i) unless and until an Authorized Officer of the Trustee has actual
knowledge, or is advised by any Owner of a Certificate (either in writing or
orally with prompt written or telecopies confirmation), that such information
or calculations is or are incorrect, or (ii) unless there is a manifest error
in any such information; and
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(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The
Trustee shall not be accountable for the use or application by the Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor, the Seller or the Servicer
in respect of the Mortgage Loans or deposited into or withdrawn from the
Principal and Interest Account or the Certificate Account by the Depositor, the
related Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or
lien or to prepare or file any tax returns (except as provided in Section
11.16) or Securities and Exchange Commission filings for the Trust or to record
this Agreement. The Trustee shall not be required to take notice or be deemed
to have notice or knowledge of any default unless an Authorized Officer of the
Trustee shall have received written notice thereof or an Authorized Officer has
actual knowledge thereof. In the absence of receipt of such notice, the
Trustee may conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by
it hereunder except as otherwise agreed with the Seller and except to the
extent of income or other gain on investments which are deposits in or
certificates of deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c) and (d) and Section 7.05
hereof. The Trustee shall have no lien on the Trust Estate for the payment of
such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America and having a deposit
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rating of at least A- by Standard & Poor's (or such lower rating as may be
acceptable to Standard & Poor's), A2 by Moody's (or such lower rating as may be
acceptable to Moody's) and, if rated by Fitch, having a rating of at least A-
from Fitch (or such lower rating as may be acceptable to Fitch). If such
Trustee publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the Seller resign
immediately in the manner and with the effect hereinafter specified in this
Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor trustee pursuant to this Article X shall become effective until
the acceptance of appointment by the successor trustee under Section 10.10
hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed,
may resign at any time by giving written notice of resignation to the Depositor
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Owners at their addresses appearing on the Register; provided, that the
Trustee cannot resign solely for the failure to receive the Trustee Fee. A
copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor trustee or trustees by written instrument, in duplicate,
executed on behalf of the Trust by an Authorized Officer of the Depositor, one
copy of which instrument shall be delivered to the Trustee so resigning and one
copy to the successor trustee or trustees. If no successor trustee shall have
been appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any Owner
may, on behalf of himself and all others similarly situated, petition any such
court for the appointment of a successor trustee. Such court may thereupon,
after such notice, if any, as it may deem proper and appropriate, appoint a
successor trustee.
(c) If at any time the Trustee shall cease to be eligible under
Section 10.08 hereof and shall fail to resign after written request therefor by
the Depositor, the Depositor may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests
represented by the Offered Certificates and Class B-2F Certificates or, if
there are no Offered Certificates or Class B-2F Certificates then Outstanding,
by such majority of the Percentage Interests represented by the Class R
Certificates, may at any time remove the Trustee and appoint a successor
trustee by delivering to the Trustee to be removed, to the successor trustee so
appointed, to the Depositor and to the Servicer, copies of the record of the
act taken by the Owners, as provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with
the terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Seller duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
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(f) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of the Trustee for any
cause, the Seller shall promptly appoint a successor trustee. If within one
year after such resignation, removal or incapability or the occurrence of such
vacancy, a successor trustee shall be appointed by act of the Seller or the
Owners of a majority of the Percentage Interests represented by the Offered
Certificates and Class B-2F Certificates then Outstanding, the successor
trustee so appointed shall forthwith upon its acceptance of such appointment
become the successor trustee and supersede the successor trustee appointed by
the Depositor. If no successor trustee shall have been so appointed by the
Depositor or the Owners and shall have accepted appointment in the manner
hereinafter provided, any Owner may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(g) The Depositor shall give notice of any removal of the Trustee
by mailing notice of such event by first-class mail, postage prepaid, to the
Rating Agencies and the Servicers and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts, duties and obligations of its predecessor
hereunder; but, on request of the Depositor or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
trustee, the Depositor on behalf of the Trust shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating
Agencies. If the Depositor fails to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor trustee shall
cause such notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all
or substantially all of the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto; provided,
however, that such corporation or association shall be otherwise qualified and
eligible under this Article X. In case any Certificates have been executed,
but not delivered, by the Trustee then
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in office, any successor by merger, conversion or consolidation to such Trustee
may adopt such execution and deliver the Certificates so executed with the same
effect as if such successor Trustee had itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal
Revenue Service's Form 1099 and any other statement required by applicable
Treasury regulations as determined by the Tax Matters Person, and shall
withhold, as required by applicable law, federal, state or local taxes, if any,
applicable to distributions to the Owners, including but not limited to backup
withholding under Section 3406 of the Code and the withholding tax on
distributions to foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person
and except as otherwise specifically set forth in subsection (a) above, the
Trustee shall timely file all reports prepared by the Depositor and required to
be filed by the Trust with any federal, state or local governmental authority
having jurisdiction over the Trust, including other reports that must be filed
with the Owners, such as the Internal Revenue Service's Form 1066 and Schedule
Q and the form required under Section 6050J and 6050K of the Code, if
applicable to REMICs. The Trustee shall, upon request of the Tax Matters
Person, collect any forms or reports from the Owners determined by the Tax
Matters Person to be required under applicable federal, state and local tax
laws.
(c) The Depositor covenants and agrees that it shall provide to
the Trustee any information necessary to enable the Trustee to meet its
obligations under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Servicers
or any Owner for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Trustee, its
directors, officers, employees or agents or any such Person against any
liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. In
addition, the Depositor and the Seller covenant and agree to indemnify the
Trustee in its capacity as Trustee and not as successor Servicer (unless
resulting from failure of the related predecessor Servicer to perform in
accordance with this Agreement), from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of the Trustee's duties hereunder other than those resulting from
the negligence or bad faith of the Trustee, and the Depositor shall pay all
amounts not otherwise paid pursuant to Sections 2.05 and 7.06 hereof. The
Trustee and any director, officer, employee or agent of the Trustee may rely
and shall be protected in acting or refraining from acting in good faith on any
certificate, notice or other document of any kind prima facie properly executed
and submitted by the Authorized Officer of any Person respecting any matters
arising hereunder.
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The provisions of this Section 10.13 shall survive the termination of this
Agreement and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all
or any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Depositor and the
Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment. No
co-Trustee or separate Trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 10.08 and no notice to Owner
of the appointment of any co-Trustee or separate Trustee shall be required
under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred
or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co- Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally
liable by reason of any act or omission of any other co-Trustee
hereunder; and
(iii) The Servicers and the Trustee acting jointly may at
any time accept the resignation of or remove any separate Trustee or
co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and
co-Trustees, as effectively as if given to each of them. Every instrument
appointing any separate Trustee or co-Trustee shall refer to this Agreement and
the conditions of this Section 10.14. Each separate Trustee and co-Trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee and a copy thereof given to the Servicers.
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Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a
new or successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement in the form of Exhibit L. Subject to this Article X, the Trustee
agrees to comply with the terms of each Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the
Owners of the Certificates.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Depositor, the Seller or the Owners, as the case may be, shall furnish to
the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any
provision of this Agreement relating to such particular application or request,
no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion
of an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the
Seller or the Servicers, stating that the information with respect to such
factual matters is in the possession of the Depositor, the Seller or such
Servicer, unless such Authorized Officer or counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous. Any Opinion of
Counsel may also be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an Authorized Officer of the
Trustee, stating that the information with respect to such matters is in the
possession of the Trustee, unless such
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counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel may be based on the written opinion of other
counsel, in which event such Opinion of Counsel shall be accompanied by a copy
of such other counsel's opinion and shall include a statement to the effect
that such counsel believes that such counsel and the Trustee may reasonably
rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by the Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement and conclusive in favor of the Trustee and the Trust, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Whenever such execution is by an officer of a corporation or a member
of a partnership on behalf of such corporation or partnership, such certificate
or affidavit shall also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the
Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Owner of any Certificate shall bind the
Owner of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, omitted
or suffered to be done by the Trustee or the Trust in reliance thereon, whether
or not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Seller and the Servicers shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at the Corporate Trust Office.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report.
In any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice of any such
events shall be made by overnight courier, registered mail or telecopy followed
by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and
their successors hereunder, any benefit or any legal or equitable right, remedy
or claim under this Agreement.
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Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or
such other date for the payment of any distribution to any Owner or the mailing
of such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in
many states and outside the United States and the desire to establish with
certainty that this Agreement will be governed by and construed and interpreted
in accordance with the law of a state having a well-developed body of
commercial and financial law relevant to transactions of the type contemplated
herein, THIS AGREEMENT AND EACH CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED THEREIN, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW
PRINCIPLES THEREOF.
(b) The parties hereto hereby irrevocably submit to the
jurisdiction of the United States District Court for the Southern District of
New York and any court in the State of New York located in the City and County
of New York, and any appellate court from any thereof, in any action, suit or
proceeding brought against it or in connection with this Agreement or any of
the related documents or the transactions contemplated hereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York State court
or, to the extent permitted by law, in such federal court. The parties hereto
agree that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. To the extent permitted by applicable
law, the parties hereto hereby waive and agree not to assert by way of motion,
as a defense or otherwise in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such courts, that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that the related documents or
the subject matter thereof may not be litigated in or by such courts.
(c) Nothing contained in this Agreement shall limit or affect the
right of the Depositor, the Seller or the Servicers or other third-party
beneficiary hereunder, as the case may be, to serve process in any other manner
permitted by law or to start legal proceedings relating to any of the Mortgage
Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed
the maximum nonusurious rate of interest allowed by the applicable laws of the
State of New York or any applicable law of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York laws,
which could lawfully be contracted for, charged or received (the "Highest
Lawful Rate"). In the event any payment of interest on any Certificate exceeds
the Highest Lawful Rate, the Trust stipulates that such excess amount will be
deemed to have been paid to the Owner of such Certificate as a result of an
error on the part of the Trustee acting on behalf of the Trust and the Owner
receiving such excess payment shall promptly, upon discovery of such error or
upon notice thereof from the Trustee on behalf of the Trust, refund the amount
of such excess or, at the option of such Owner, apply the excess to the payment
of principal of such Certificate, if any, remaining unpaid. In addition, all
sums paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicers may
at any time and from time to time, and without notice to or the consent of the
Owners, amend this Agreement, subject to the provisions of Section 11.16 and
11.17 and the consent of the Trustee to such amendment shall not be
unreasonably withheld, for the purpose of (i) curing any ambiguity,
typographical error, or mistake, correcting or supplementing any provision
hereof which may be inconsistent with any other provision hereof, or to add
provisions hereto which are not inconsistent with the provisions hereof; or
(ii) upon receipt of an Opinion of Counsel experienced in federal income tax
matters to the effect that no entity-level tax will be imposed on the Trust,
any REMIC therein or upon the transferor of a Class R Certificate as a result
of the ownership of any Class R Certificate by a Disqualified Organization,
removing the restriction on transfer set forth in Section 5.08(b) hereof; or
(iii) complying with the requirements of the Code and the regulations proposed
or promulgated thereunder including any amendments necessary to maintain REMIC
status for either the Upper-Tier REMIC or the Lower-Tier REMIC or (iv) for any
other purpose, provided that in the case of this clause (iv) such amendment
will not adversely affect in any material respect any Owners. Any such
amendment shall be deemed not to adversely affect in any material respect any
Owner if there is delivered to the Trustee written notification from each
Rating Agency that such amendment will not cause such Rating Agency to reduce
its then current rating assigned to any Class of the Certificates. This
Agreement may also be amended by the Trustee, the Depositor, the Seller and the
Servicers at any time and from time to time, with the prior written approval of
a majority of the Percentage Interest represented by each affected Class of
Certificates then Outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Owners hereunder.
Notwithstanding anything to the contrary herein, no such amendment shall (a)
change in any manner the amount of, or change the timing of, payments which are
required to be distributed to any Owner without the consent of the Owner of
such Certificate, (b) reduce the aforesaid percentages of Percentage Interests
which are required to consent to any such amendments, without the consent of
the Owners of all Certificates of the Class or Classes affected then
Outstanding, (c) adversely affect the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC or subject either the Upper- Tier REMIC or the
Lower-Tier REMIC to tax, as evidenced by an Opinion of Counsel satisfactory to
the Trustee at the expense of the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the
Trustee shall furnish written notification of the substance of such amendment
to each Owner in the manner set forth in Section 11.05, and to the Rating
Agencies.
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(c) The Rating Agencies shall be provided with copies of any
amendments to this Agreement, together with copies of any opinions or other
documents or instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent
will:
(a) allocate all sums received for distribution to the
Owners of Certificates of each Class for which it is acting as Paying
Agent on each Payment Date among such Owners in the proportion
specified by the Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any
moneys held by it as Paying Agent to its successor, or if there be no
successor, to the Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Servicers and the Owners by mailing notice
thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall constitute, and that the affairs of the Lower-Tier REMIC
and the Upper-Tier REMIC shall be conducted so as to qualify each as a REMIC in
accordance with the REMIC Provisions. In furtherance of such intention, The
Bank of New York or such other person designated pursuant to Section 11.18
hereof shall act as agent for the Trust and as Tax Matters Person for the Trust
and that in such capacity it shall: (i) prepare or cause to be prepared and
filed, in a timely manner, annual tax returns and any other tax return required
to be filed by the Upper-Tier REMIC and the Upper-Tier REMIC established
hereunder using a calendar year as the taxable year for the Lower-Tier REMIC
and the Upper-Tier REMIC established hereunder; (ii) in the related first such
tax return, make (or cause to be made) an election satisfying the requirements
of the REMIC Provisions, on behalf of the Lower-Tier REMIC and the Upper-
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Tier REMIC for it to be treated as a REMIC; (iii) prepare and forward, or cause
to be prepared and forwarded, to the Owners all information, reports or tax
returns required with respect to the Lower-Tier REMIC and the Upper-Tier REMIC
as, when and in the form required to be provided to the Owners, and to the
Internal Revenue Service and any other relevant governmental taxing authority
in accordance with the REMIC Provisions and any other applicable federal, state
or local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the Lower-Tier REMIC and the Upper-Tier REMIC, except as
provided under this Agreement; (v) represent the Trust, the Lower-Tier REMIC or
the Upper-Tier REMIC in any administrative or judicial proceedings relating to
an examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust, the Lower-Tier
REMIC or the Upper-Tier REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust, the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust, the Lower-Tier REMIC or the Upper-Tier
REMIC therein in relation to any tax matter involving the Trust or any REMIC
therein; (vi) comply with all statutory or regulatory requirements with regard
to its conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and the
Treasury Regulations thereunder; (vii) make available information necessary for
the computation of any tax imposed (A) on transferor of residual interests to
certain Disqualified Organizations or (B) on pass-through entities, any
interest in which is held by a Disqualified Organization; and (viii) acquire
and hold the Tax Matters Person Residual Interest. The obligations of The Bank
of New York or such other designated Tax Matters Person pursuant to this
Section 11.16 shall survive the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each Servicer
covenant and agree for the benefit of the Owners (i) to take no action which
would result in the termination of "REMIC" status for the Lower-Tier REMIC or
the Upper-Tier REMIC, (ii) not to engage in any "prohibited transaction", as
such term is defined in Section 860F(a)(2) of the Code, and (iii) not to engage
in any other action which may result in the imposition on the Trust of any
other taxes under the Code and the Seller in addition covenants to cause each
Servicer not to take or engage in any such action, to the extent the Seller is
aware of any such proposed action by the Servicer.
(c) Each of the Lower-Tier REMIC and the Upper-Tier REMIC shall,
for federal income tax purposes, maintain books on a calendar year basis and
report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to
a plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter
into any arrangement by which the Trustee will receive a fee or other
compensation for services rendered pursuant to this Agreement, other than as
expressly contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the
Trustee or the Seller may engage in any of the transactions prohibited by such
clauses, provided that the Trustee shall have received an Opinion of Counsel
experienced in federal income tax matters acceptable to Trustee and the Seller
to the effect that such transaction does not result in a tax imposed on the
Trust or cause a termination of REMIC
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status for the Lower-Tier REMIC or the Upper-Tier REMIC; provided, however,
that such transaction is otherwise permitted under this Agreement.
(g) The Trustee, each of the Servicers and Tax Matters Person
each agree to indemnify the Trust for any tax imposed on the Trust, the
Lower-Tier or the Upper-Tier REMIC as a result of their own negligence.
Section 11.17 Additional Limitation on Action and Imposition of
Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such transaction does not result in a tax imposed on the Trust, the
Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC status
for the Lower-Tier REMIC or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate (except as specifically provided in this Agreement), (ii) accept
any contribution of assets after the Startup Day in violation of the REMIC
Provisions or (iii) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the
Owners of Class R Certificates and shall distribute such retained amounts to
the Owners of Offered Certificates to the extent they are fully reimbursed and
then to the Owners of the Class R Certificates. If any tax, including interest
penalties or assessments, additional amounts or additions to tax, is imposed on
the Trust, such tax shall be charged against amounts otherwise distributable to
the owners of the Class R Certificates on a pro rata basis. The Trustee is
hereby authorized to and shall retain from amounts otherwise distributable to
the Owners of the Class R Certificates sufficient funds to pay or provide for
the payment of, and to actually pay, such tax as is legally owed by the Trust
(but such authorization shall not prevent the Trustee from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC or the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC or the
Upper-Tier REMIC shall be The Bank of New York as long as it owns a Class R
Certificate. If The Bank of New York does not own a Class R Certificate, the
Tax Matters Person may be any other entity that owns a Class R Certificate and
accepts a designation hereunder as Tax Matters person by delivering an
affidavit in the form of Exhibit I. The Seller shall notify the Trustee in
writing of the name and address of another person who accepts a designation as
Tax Matters Person hereunder.
Section 11.19 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
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Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Structured Finance/MBS
Tel: (000) 000-0000
Fax: (000) 000-0000
The Depositor: AMRESCO Residential Securities Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000, XX #000
Xxxxxx, Xxxxx 00000-0000
Attn: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
The Seller: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
One Lakeshore Centre
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Cott
Tel: (000) 000-0000
Fax: (000) 000-0000
The Servicers: Advanta Mortgage Corp. USA
00000 Xxxx Xxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Senior Vice President - Loan Servicing
Tel: (000) 000-0000
Fax: (000) 000-0000
Long Beach Mortgage Company
0000 Xxxx xxx Xxxxxxx Xxxx
0xx Xxxxx
Xxxxxx, XX 00000
Attn: Servicing Manager
Tel: (000) 000-0000
Fax: (000) 000-0000
Option One Mortgage Corporation
0000 Xxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
142
149
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: The Mortgage Monitoring Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Fitch: Fitch Investors Service, L.P.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
DCR: Duff & Xxxxxx Credit Rating Co.
00 Xxxx Xxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: MBS Monitoring
Tel: (000) 000-0000
Fax: (000) 000-0000
S&P: Standard & Poor's Ratings Services
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Underwriters: Xxxxxx Xxxxxxx Xxxx Xxxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Low
Tel: (000) 000-0000
Fax: (000) 000-0000
143
150
Credit Suisse First Boston
00 X. 00xx Xx.
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxx Brothers, Inc.
200 Xxxxx, 12th Floor
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Attn:
------------------------
Tel:
------------------------
Fax:
------------------------
Owners: As set forth in the Register.
END OF ARTICLE XI
144
151
IN WITNESS WHEREOF, the Depositor, the Seller, each Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By:
--------------------------------------------
Title:
------------------------------------------
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller
By:
--------------------------------------------
Title:
------------------------------------------
ADVANTA MORTGAGE CORP. USA
as Servicer
By:
---------------------------------------------
Title:
------------------------------------------
LONG BEACH MORTGAGE COMPANY
as Servicer
By:
---------------------------------------------
Title:
-----------------------------------------
OPTION ONE MORTGAGE CORPORATION
as Servicer
By:
---------------------------------------------
Title:
------------------------------------------
THE BANK OF NEW YORK,
as Trustee
By:
---------------------------------------------
Title:
------------------------------------------
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ORANGE )
On the _____ day of September, 1997, before me personally came Xxxxxx
X. Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Huntington Beach, California, that she is a Vice President of
AMRESCO Residential Securities Corporation, a Delaware corporation; and that
she signed her name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ORANGE )
On the ____ day of September, 1997, before me personally came Xxxxxx X.
Cott, to me known, who, being by me duly sworn, did depose and say that she
resides at Huntington Beach, California, that she is a Vice President of
AMRESCO Residential Capital Markets, Inc., a Delaware corporation; and that she
signed her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ______________ )
On the ____ day of September, 1997, before me personally came
________________________, to me known, who, being by me duly sworn, did depose
and say that he resides at ___________________, that he is a
______________________ of Advanta Mortgage Corp. USA, a Delaware corporation;
and that he signed his name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ______________ )
On the ____ day of September, 1997, before me personally came
_______________________, to me known, who, being by me duly sworn, did depose
and say that he is a(n) _______________________ of Long Beach Mortgage Company,
a Delaware corporation; and that he signed his name thereto by order of the
Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ______________ )
On the _____ day of September, 1997, before me personally came
____________________, to me known, who, being by me duly sworn, did depose and
say that he resides at _____________________, that he is a
______________________ of Option One Mortgage Corporation, a California
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
000
XXXXX XX XXXXXXXXXX )
) ss:
COUNTY OF ______________ )
On the _____ day of September 1997, before me personally came Xxxxxxxx
Xxxxxx, to me known, who, being by me duly sworn, did depose and say that he
resides at Hoboken, NJ, that he is an Assistant Vice President of The Bank of
New York, a New York banking corporation; and that he signed his name thereto
by order of the Board of Directors of said national banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-------------------------------------
Notary Public
158
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
[BY ORIGINATOR]
159
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
[BY ORIGINATOR]
160
SCHEDULE II
SCHEDULE OF CLASS S MORTGAGE LOANS
161
SCHEDULE III
LIST OF TRANSFER AGREEMENTS
****TO BE CONFIRMED LATER****
1. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated October 1, 1996, between Accredited
Home Lenders, Inc. ("Accredited"), as seller and the Seller,
as buyer and Continuing Loan Purchase Agreement dated October
1, 1996, between Accredited, as seller and the Seller, as
buyer.
2. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated January 30, 1997, between Admiral
Mortgage Company ("Admiral"), as seller and the Seller, as
buyer and Continuing Loan Purchase Agreement dated January
30, 1997, between Admiral, as seller and the Seller, as
buyer.
3. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated January 1, 1997, between AMRESCO
Residential Conduit, Inc. ("ARCI"), as seller and the Seller,
as buyer and Continuing Loan Purchase Agreement dated January
1, 1997, between ARCI, as seller and the Seller, as buyer.
4. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated October 25, 1996, between AMRESCO
Residential Mortgage Corporation ("ARMC"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
October 25, 1996, between ARMC, as seller and the Seller, as
buyer.
5. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated February 27, 1997,
between DLJ Mortgage Capital, Inc. ("DLJ") as seller, BNC
Mortgage, Inc. ("BNC") as originator, and the Seller as buyer
and Assignment, Assumption and Recognition Agreement dated
February 27, 1997, between DLJ as seller, BNC as originator,
and the Seller as buyer.
6. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated January 29, 1997,
between DLJ as seller, BNC as originator, and the Seller as
buyer and Assignment, Assumption and Recognition Agreement
dated January 29, 1997, between DLJ as seller, BNC as
originator, and the Seller as buyer.
7. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated November 22, 1996,
between DLJ as seller, BNC as originator, and the Seller as
buyer and Assignment, Assumption and Recognition Agreement
dated November 22, 1996, between DLJ as seller, BNC as
originator, and the Seller as buyer.
162
8. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated October 25, 1996,
between DLJ as seller, BNC as originator, and the Seller as
buyer and Assignment, Assumption and Recognition Agreement
dated October 25, 1996, between DLJ as seller, BNC as
originator, and the Seller as buyer.
9. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated September 12,
1996, between DLJ as seller, BNC as originator, and the
Seller as buyer and Assignment, Assumption and Recognition
Agreement dated September 12, 1996, between DLJ as seller,
BNC as originator, and the Seller as buyer.
10. Master Mortgage Loan Purchase Agreement dated October 31,
1995 between BNC as seller, and DLJ as buyer, with amendment
dated October 31, 1995.
11. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated August 15, 1996, between First
Colony Financial Group ("First Colony") as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
August 15, 1996, between First Colony, as seller and the
Seller, as buyer .
12. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated December 1, 1996, between First
Deposit National Bank ("First Deposit"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
December 1, 1996, between First Deposit, as seller and the
Seller, as buyer.
13. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated September 1, 1996, between Highland
Federal Bank ("Highland"), as seller and the Seller, as buyer
and Continuing Loan Purchase Agreement dated September 1,
1996, between Highland, as seller and the Seller, as buyer.
14. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated June 8, 1996, between Investaid
Corporation ("Investaid"), as seller and the Seller, as buyer
and Continuing Loan Purchase Agreement dated June 8, 1996,
between Investaid as seller and the Seller, as buyer.
15. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated November 1, 1995, between Long Beach
Mortgage Company, as seller and the Seller, as buyer and
Continuing Loan Purchase Agreement dated November 1, 1995,
between Long Beach Mortgage Company (now known as Long Beach
Mortgage Company), as seller and the Seller, as buyer.
16. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated November 22, 1996, between National
Mortgage Corporation ("National Mortgage"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
November 22, 1996, between National Mortgage, as seller and
the Seller, as buyer.
163
17. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated April 5, 1996, between New Century
Mortgage Corporation ("New Century"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
April 5, 1996, between New Century, as seller and the Seller,
as buyer.
18. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated March 1, 1996, between Option One
Mortgage Corporation ("Option One"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
March 1, 1996, between Option One, as seller and the Seller,
as buyer.
19. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated February 27, 1997, between Pan
American Bank, F.S.B. ("Pan American"), as seller and the
Seller, as buyer and Continuing Loan Purchase Agreement dated
February 27, 1997, between Pan American, as seller and the
Seller, as buyer.
20. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated October 25, 1996, between Quality
Mortgage USA, Inc. ("Quality"), as seller and the Seller, as
buyer and Continuing Loan Purchase Agreement dated October
25, 1996, between Quality, as seller and the Seller, as
buyer.
21. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated October 1, 1996, between Quality, as
seller and the Seller, as buyer and Continuing Loan Purchase
Agreement dated October 1, 1996, between Quality, as seller
and the Seller, as buyer.
22. Supplement dated September 17, 1997, to Assignment,
Assumption & Recognition Agreement dated October 25, 1996,
between DLJ as seller, Quality as originator, and the Seller
as buyer and Assignment Assumption and Recognition Agreement
dated October 25, 1996, between DLJ as seller, Quality as
originator, and the Seller as buyer.
23. Supplement dated September 17, 1997, to Assignment,
Assumption and Recognition Agreement dated September 27,
1996, between DLJ as seller, Quality as originator, and the
Seller as buyer and Assignment, Assumption and Recognition
Agreement dated September 27, 1996, between Quality as
seller, and DLJ, as buyer, with amendment dated October 31,
1995.
24. Master Mortgage Loan Purchase Agreement dated September 29,
1995, between Quality as seller, and DLJ, as buyer, with
amendment dated October 31, 1995.
25. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated November 18, 1996, between United
Lending Group, Inc. ("United"), as seller and the Seller, as
buyer and Continuing Loan Purchase Agreement dated November
18, 1996, between United, as seller and the Seller, as buyer.
164
26. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated May 10, 1996, between Xxxxx
Securities, Inc. ("Xxxxx"), as seller and the Seller, as
buyer and Continuing Loan Purchase Agreement dated May 10,
1996, between Xxxxx, as seller and the Seller, as buyer.
27. Supplement dated September 17, 1997, to Continuing Loan
Purchase Agreement dated October 1,1 996, between WMC
Mortgage Corp., as seller and the Seller, as buyer and
Continuing Loan Purchase Agreement dated October 1, 1996,
between Weyerhaeuser Mortgage Company, now known as WMC
Mortgage Corp., as seller and the Seller, as buyer.
165
SCHEDULE IV
LIST OF ORIGINATORS
****TO BE CONFIRMED LATER****
1. Accredited Home Lenders, Inc.
2. Admiral Mortgage Company
3. AMRESCO Residential Conduit, Inc.
4. AMRESCO Residential Mortgage Corporation
5. BNC Mortgage, Inc.
6. First Colony Financial Group
7. First Deposit National Bank
8. Highland Federal Bank
9. Investaid Corporation
10. Long Beach Mortgage Company
11. National Mortgage Corporation
12. New Century Mortgage Corporation
13. Option One Mortgage Corporation
14. Pan American Bank, F.S.B.
15. Quality Mortgage USA, Inc.
16. United Lending Group
17. Xxxxx Securities, Inc.
18. WMC Mortgage Corp.
