Exhibit 10.1
FORM OF
SALE AND SERVICING AGREEMENT
Dated as of December __, 1997
among
UCFC HOME EQUITY LOAN OWNER TRUST 1997-_,
as Issuer,
UCFC ACCEPTANCE CORPORATION,
as Depositor,
UNITED COMPANIES LENDING CORPORATION (R),
as Servicer
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
TABLE OF CONTENTS
Page
----
PRELIMINARY STATEMENT .......................................................................................................... 1
ARTICLE I DEFINITIONS .......................................................................................................... 1
Section 1.1. Definitions................................................................................................. 1
Section 1.2. Use of Words and Phrases.................................................................................... 1
Section 1.3. Captions; Table of Contents................................................................................. 2
ARTICLE II CONVEYANCE OF HOME EQUITY LOANS...................................................................................... 2
Section 2.1. Conveyance of Home Equity Loans............................................................................. 2
Section 2.2. Acceptance by Indenture Trustee; Certain Substitutions of Home Equity Loans;
Certification by Indenture Trustee..................................................................... 3
Section 2.3. Cooperation Procedures...................................................................................... 4
Section 2.4. Sale and Conveyance of the Additional Loans................................................................. 5
ARTICLE III. REPRESENTATIONS, WARRANTIES AND COVENANTS......................................................................... 6
Section 3.1. Representations and Warranties of the Depositor............................................................. 6
Section 3.2. Representations and Warranties of the Servicer.............................................................. 8
Section 3.3. Covenants of the Depositor.................................................................................. 11
ARTICLE IV. SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS.................................................................. 11
Section 4.1. General Servicing Procedures................................................................................ 11
Section 4.2. Collection of Certain Home Equity Loan Payments............................................................. 13
Section 4.3. Subservicing Agreements Between Servicer and Subservicers................................................... 14
Section 4.4. Successor Subservicers...................................................................................... 14
Section 4.5. Liability of Servicer....................................................................................... 14
Section 4.6. No Contractual Relationship Between Subservicer and the Trustees or the Owners.............................. 14
Section 4.7. Assumption or Termination of Subservicing Agreement by Indenture Trustee.................................... 15
Section 4.8. Collection Accounts......................................................................................... 15
Section 4.9. Delinquency Advances and Servicing Advances................................................................. 19
Section 4.10. Compensating Interest....................................................................................... 20
Section 4.11. Maintenance of Insurance.................................................................................... 20
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements................................................. 21
Section 4.13. Realization Upon Defaulted Home Equity Loans................................................................ 22
Section 4.14. Indenture Trustee to Cooperate; Release of Files............................................................ 23
Section 4.15. Servicing Compensation...................................................................................... 24
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Section 4.16. Annual Statement as to Compliance........................................................................... 24
Section 4.17. Annual Independent Certified Public Accountants' Reports.................................................... 24
Section 4.18. Access to Certain Documentation and Information Regarding the Home Equity Loans............................. 25
Section 4.19. Assignment of Agreement..................................................................................... 25
Section 4.20. ARMs ....................................................................................................... 25
Section 4.21. Inspections by Certificate Insurer and Account Parties; Errors and Omissions Insurance...................... 25
Section 4.22. Financial Statements........................................................................................ 26
Section 4.23. The Designated Depository Institution....................................................................... 26
Section 4.24. Appointment of Custodian.................................................................................... 26
ARTICLE V DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS...................................... 27
Section 5.1. Establishment of Accounts................................................................................... 27
Section 5.2. Flow of Funds............................................................................................... 27
Section 5.3. Investment of Accounts...................................................................................... 31
Section 5.4. Eligible Investments........................................................................................ 31
Section 5.5. Reports by Trustee to Owners and Depositor.................................................................. 32
Section 5.6. Drawings under the Credit Enhancement Instrument and Reports by Trustee..................................... 35
Section 5.7. The Reserve Account......................................................................................... 36
Section 5.8. Calculation of LIBOR........................................................................................ 36
ARTICLE VI THE SERVICER ........................................................................................................ 37
Section 6.1. Respective Liabilities of the Depositor and the Servicer.................................................... 37
Section 6.2. Merger or Consolidation of the Depositor or the Servicer.................................................... 38
Section 6.3. Limitation on Liability of the Depositor, Servicer and Others............................................... 38
ARTICLE VIII REMOVAL OF SERVICER................................................................................................ 39
Section 7.1. Removal of Servicer; Resignation of Servicer................................................................ 39
Section 7.2. Right of the Credit Enhancer to Replace Servicer............................................................ 43
ARTICLE VIII TERMINATION....................................................................................................... 43
Section 8.1. Termination Upon Option of Servicer......................................................................... 43
ARTICLE IX MISCELLANEOUS PROVISIONS............................................................................................. 44
Section 9.1. Amendment................................................................................................... 44
Section 9.2. Notices .................................................................................................... 44
Section 9.3. Limitations on Rights of Others............................................................................. 46
Section 9.4. Severability................................................................................................ 46
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Section 9.5. Separate Counterparts....................................................................................... 46
Section 9.7. Governing Law............................................................................................... 46
Section 9.8. Assignment to Indenture Trustee............................................................................. 47
Section 9.9. Nonpetition Covenant........................................................................................ 47
Section 9.10. Limitation of Liability of Owner Trustee and Trustee........................................................ 47
Section 9.11. Independence of the Servicer................................................................................ 47
Section 9.12. No Joint Venture............................................................................................ 48
Section 9.13. Credit Enhancer............................................................................................. 49
APPENDIX A DEFINITIONS
SCHEDULE I Schedule of Home Equity Loans.............................................................................. S-I-1
[SCHEDULE II Representations and Warranties of the Issuer............................................................. S-II-1]
EXHIBITS
EXHIBIT A FORM OF CERTIFICATION OF INDENTURE TRUSTEE................................................................... A-1
EXHIBIT B FORM OF CERTIFICATION OF PREPAID LOANS....................................................................... B-1
EXHIBIT C FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGEMENT
OF RECEIPT................................................................................................... C-1
EXHIBIT D REPRESENTATIONS, WARRANTIES AND COVENANTS
OF ORIGINATORS............................................................................................... D-1
EXHIBIT E FORM OF SERVICER'S TRUST RECEIPT............................................................................. E-1
EXHIBIT F FORM OF NOTICE OF CHARGE-OFFS................................................................................ F-1
EXHIBIT G FORM OF PARAMETERS FOR ADDITIONAL LOANS...................................................................... G-1
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THIS SALE AND SERVICING AGREEMENT is made and entered into as of December
__, 1997, by and among UCFC Home Equity Loan Owner Trust 1997-_, a statutory
business trust formed under the laws of the State of Delaware, as issuer (the
"Issuer"), UCFC Acceptance Corporation, a Louisiana corporation, as depositor
(the "Depositor"), United Companies Lending Corporation, a Louisiana
corporation, as servicer (the "Servicer") and Bankers Trust Company of
California, N.A., a national banking association corporation (in its capacity as
trustee under the Indenture referred to below, the "Indenture Trustee").
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing asset backed notes and
asset backed certificates backed by single family residential home equity and
home improvement loans. The Issuer has entered into a trust indenture, dated as
of December __, 1997 (the "Indenture"), between the Issuer and the Indenture
Trustee, pursuant to which the Issuer intends to issue its Home Equity Loan
Asset Backed Notes and Home Equity Loan Asset Backed Certificates, Series
1997-_, in the aggregate initial principal amount of $__ (the "Securities").
Pursuant to the Indenture, as security for the indebtedness represented by such
Securities, the Issuer is and will be pledging to the Indenture Trustee, or
granting the Indenture Trustee a security interest in, among other things,
certain Home Equity Loans, its rights under this Agreement, the Payment Account,
the Collection Account and certain Insurance Policies (as each such term is
defined herein).
The parties desire to enter into this Agreement to provide, among other
things, for the servicing of the Home Equity Loans by the Servicer. The Servicer
acknowledges that, in order further to secure the Securities, the Issuer is and
will be granting to the Indenture Trustee a security interest in, among other
things, its rights under this Agreement, and the Servicer agrees that all
covenants and agreements made by the Servicer herein with respect to the Home
Equity Loans shall also be for the benefit and security of the Indenture Trustee
and Holders of the Securities. For its services hereunder, the Servicer will
receive a Servicing Fee (as defined herein) with respect to each Home Equity
Loan serviced hereunder.
ARTICLE I.
Definitions
Section 1.1 Definitions. For all purposes of this Agreement, capitalized
terms used herein shall have the meanings set forth in Appendix A, unless the
context clearly indicates otherwise.
Section 1.2 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 1.1 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 1.3 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.
ARTICLE II.
Conveyance of Home Equity Loans
Section 2.1 Conveyance of Home Equity Loans.
(a) As of the Cut-off Date, the Depositor hereby sells, transfers, assigns,
sets over and conveys, without recourse, to the Issuer for the benefit of the
Noteholders, the Certificateholders and the Credit Enhancer, subject to the
terms of this Agreement, all of the Depositor's right, title and interest in and
to (i) the Home Equity Loans (excluding the Additional Loans) and all principal
collected and interest accrued on each such Home Equity Loan on and after the
Cut-off Date; provided, however, that the Depositor reserves and retains all of
its right, title and interest in and to principal (including Prepayments)
collected and interest accrued on each such Home Equity Loan prior to the
Cut-off Date, (ii) such amounts, including Eligible Investments, as from time to
time may be held by the Indenture Trustee in any related Account, and by the
Servicer in the related Collection Account or otherwise held by the Servicer in
trust for the Noteholders or Certificateholders (except as otherwise provided
herein), (iii) any Property, the ownership of which has been effected in the
name of the Servicer on behalf of the Issuer as a result of foreclosure or
acceptance by the Servicer of a deed in lieu of foreclosure and that has not
been withdrawn from the Issuer and any related REO Proceeds, (iv) the rights, if
any, of the Issuer in any Insurance Policies relating to the Home Equity Loans,
(v) Net Liquidation Proceeds (but only to the extent that such Net Liquidation
Proceeds do not exceed the Loan Balance of the related Home Equity Loan plus
accrued and unpaid interest on such Home Equity Loan) with respect to any
Liquidated Loan, (vi) the Policy and (vii) the Reserve Account. Additionally, in
connection with such transfer and assignment pursuant to Section __ of the Loan
Sale Agreement, the Depositor hereby assigns to the Issuer all of the
Depositor's right, title and interest in its rights and benefits, but none of
its obligations or burdens, under the Loan Sale Agreement, including without
limitation, the Seller's rights under the Loan Purchase Agreement, and the
delivery requirements, representations, warranties and the cure, repurchase or
substitution obligations of the Originators under the Loan Purchase Agreement.
The foregoing sale, transfer, assignment, setover and conveyance to the Issuer
shall be made to the Indenture Trustee, on behalf of the Issuer, and each
reference in this Agreement to such sale, transfer, assignment, set over and
conveyance shall be construed accordingly. The foregoing items referred to
herein as the "Trust Estate."
(b) Pursuant to Section ____ of the Loan Purchase Agreement, each
Originator has agreed to take the actions specified in Part I of Exhibit D
attached hereto.
(c) The Issuer, concurrently with the execution and delivery hereof, and
effective immediately following the transfer of the Home Equity Loans or the
Closing Date to the Indenture Trustee, does hereby assign and reconvey to the
Depositor without recourse all right, title and interest in and to the Retained
Interest.
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(d) The actions required pursuant to Part I of Exhibit D hereto are not,
and shall not be construed to be, conditions subsequent; the parties hereto
declaring that the sale of the Home Equity Loans to be made hereunder on the
Closing Date shall be a completed, absolute and final sale.
Although it is the intent of the parties to this Agreement that the
conveyance of the Depositor's right, title and interest in and to the Home
Equity Loans and other assets in the Trust Estate pursuant to this Agreement
shall constitute a purchase and sale and not a loan, in the event that such
conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Depositor shall be deemed to have granted to the Owner
Trustee for the benefit of the Securityholders a first priority perfected
security interest in all of the Depositor's right, title and interest in, to and
under the Home Equity Loans and other assets in the Trust Estate, and that this
Agreement shall constitute a security agreement under application law.
Section 2.2 Acceptance by Indenture Trustee; Certain Substitutions of Home
Equity Loans; Certification by Indenture Trustee.
(a) The Indenture Trustee agrees to execute and deliver on the Closing Date
and on each Deposit Date an acknowledgment of receipt of the items specified in
Part I of Exhibit D and delivered by or at the direction of the Depositor with
respect to the Issuer in the form attached as Exhibit C hereto, and declares
that it will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of the Trust
Estate and delivered to the Indenture Trustee, as Indenture Trustee in trust for
the Issuer upon and subject to the conditions set forth herein for the benefit
of the Noteholders, the Certificateholders and the Credit Enhancer. The
Indenture Trustee agrees, for the benefit of the Noteholders, the
Certificateholders and the Credit Enhancer, to review such items with respect to
the Issuer delivered to it (i) within 45 days after the Closing Date and (ii)
the first anniversary of the Closing Date (or, with respect to any document
delivered after the Closing Date pursuant to Part I of Exhibit D, within 45 days
of receipt and with respect to any Additional Loan or Eligible Substitute
Mortgage, within 45 days after the related Deposit Cut-off Date or Replacement
Cut-off Date) and to deliver to the Depositor, the Owner Trustee, the
Originators and the Credit Enhancer a certification (the "Certification") in the
form attached hereto as Exhibit A to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans and Schedule of Additional
Loans (other than any Home Equity Loan paid in full or any Home Equity Loan
specifically identified in such Certification as not covered by such
Certification), (i) all documents required to be delivered to it pursuant to
Part I of Exhibit D are in its possession, (ii) such documents have been
reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Home Equity Loan and (iii) based on its
examination and only as to the foregoing documents, the information set forth on
the Schedule of Home Equity Loans and Schedule(s) of Additional Loans as to loan
number, address (including state) of the Primary Parcel, the Original Principal
Balance, the Index, the Gross Margin, the Periodic Rate Cap, the Lifetime Cap,
the Lifetime Floor and the maturity date, accurately reflects the information
set forth in the related File. The Indenture Trustee shall be under no duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, valid,
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recordable, sufficient, suitable, insurable, collectable, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall the Indenture Trustee be under any duty
to determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Home Equity Loan.
(b) If the Indenture Trustee during such 45-day or one-year period finds
any document constituting a part of a File which is not executed, has not been
received, or is unrelated to the Home Equity Loans identified in the Schedule of
Home Equity Loans or Schedule(s) of Additional Loans, as the case may be, or
that any Home Equity Loan does not conform in a material respect to the
description thereof as set forth in the Schedule of Home Equity Loans or
Schedule(s) of Additional Loans, as the case may be, the Indenture Trustee shall
promptly so notify the Depositor, the Owner Trustee, the Originators and the
Credit Enhancer. In the event the Certification delivered after the one-year
period reflects any exceptions, the Indenture Trustee shall deliver
Certifications on each subsequent Payment Date to the Credit Enhancer, the Owner
Trustee, the Depositor, the Servicer and the Originators until all such
exceptions have been cured (or waived by the Credit Enhancer) or the related
Home Equity Loans have been repurchased. In performing any such review, the
Indenture Trustee may conclusively rely on the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
Indenture Trustee's review of the items delivered by or on behalf of the
Depositor pursuant to Part I of Exhibit D is limited solely to confirming that
the documents listed in Part I of Exhibit D have been executed and received,
where required to be original documents are originals, relate to the Files
identified in the Schedule of Home Equity Loans and Schedule(s) of Additional
Loans and conform materially to the description thereof in the Schedule of Home
Equity Loans and Schedule(s) of Additional Loans. The Originators have agreed,
pursuant to the Loan Purchase Agreement, to use reasonable efforts to remedy a
material defect in a document constituting part of a File of which it is so
notified by the Indenture Trustee or the Credit Enhancer. If, however, within 60
days after the Indenture Trustee's or the Credit Enhancer's notice to the
applicable Originator respecting such defect the applicable Originator has not
remedied, or caused to be remedied, the defect and the defect materially and
adversely affects the interest of the Noteholders, the Certificateholders and
the Credit Enhancer in the related Home Equity Loan, the Depositor will (or will
cause the applicable Originator to) on the next succeeding Remittance Date (i)
substitute in lieu of such Home Equity Loan an Eligible Substitute Mortgage and
deliver the Substitution Adjustment Amount applicable thereto to the Servicer
for deposit in the Collection Account or (ii) purchase such Home Equity Loan at
a purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Collection Account. In
connection with any such proposed purchase or substitution, the Eligible
Substitute Mortgage or Mortgages shall be subject to the terms of this Agreement
in all respects, and the Depositor shall be deemed to have made with respect to
such Eligible Substitute Mortgage or Mortgages, as of the date of substitution,
the covenants, representations and warranties set forth in Exhibit D. The
procedures applied by the Depositor in selecting each Eligible Substitute
Mortgage shall not be materially adverse to the interests of the Owner Trustee,
the Indenture Trustee, the Securityholders or the Credit Enhancer.
Section 2.3 Cooperation Procedures. (a) The Depositor shall or shall cause
the applicable Originator, in connection with the delivery of each Eligible
Substitute Mortgage to the Indenture
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Trustee, provide the Indenture Trustee with the information as of the
Replacement Cut-Off Date set forth in the Schedule of Home Equity Loans or
Schedule(s) of Additional Loans, as the case may be, with respect to such
Eligible Substitute Mortgage.
(b) The Depositor, the Servicer and the Indenture Trustee covenant to
provide each other and the Credit Enhancer and the Owner Trustee with all data
and information required to be provided by them hereunder at the times required
hereunder, and additionally covenant reasonably to cooperate with each other and
with the Credit Enhancer and the Owner Trustee in providing any additional
information required by any of them in connection with their respective duties
hereunder. The Depositor covenants to cause the Originators to provide such
information and reasonable cooperation.
Section 2.4 Sale and Conveyance of the Additional Loans. (a) Subject to the
conditions set forth in paragraph (b) below, in consideration of the delivery on
the related Deposit Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the Funding Account, the Depositor shall on
any Deposit Date sell, transfer, convey and assign to the Issuer, without
recourse as to payment and without any representations or warranties express or
implied except those set forth in the Transfer Agreement, all right, title and
interest of the Depositor in and to each Additional Loan listed on the Schedule
of Additional Loans delivered on such Deposit Date, all its right, title and
interest in and to principal collected and interest accrued on and after the
related Deposit Cut-off Date; provided, however, that the Depositor shall
reserve and retain all its right, title and interest in and to principal
(including Prepayments) collected prior to the related Deposit Cut-off Date and
interest accrued on each such Additional Loan prior to the related Deposit
Cut-off Date. The transfer by the Depositor of the Additional Loans set forth on
the Schedule of Additional Loans shall be absolute and shall be intended by all
parties hereto to be treated as a complete, absolute and final sale.
The amount released from a Funding Account shall be one-hundred percent
(100%) of the aggregate principal balances as of the applicable Deposit Cut-off
Date of the Additional Loans so transferred to the Issuer.
(b) Each of the following conditions shall be satisfied on or prior to each
Deposit Date:
(i) the Originators shall have provided the Indenture Trustee and the
Credit Enhancer with a timely Addition Notice and shall have provided any
information reasonably requested by either of the foregoing with respect to
the Additional Loans;
(ii) the Depositor shall have executed and delivered a Transfer
Agreement with all required schedules and exhibits;
(iii) the Originators shall have delivered to the Servicer for deposit
in the Collection Account all collections in respect of the Additional
Loans received on or after the related Deposit Cut-off Date;
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(iv) the Additional Loans shall satisfy the conditions set forth in
Exhibit G hereto;
(v) as of each Deposit Date, none of the related Originator, the
Seller or the Depositor is insolvent nor will any of them have been made
insolvent by such transfer nor is any of them aware of any pending
insolvency;
(vi) such purchase and sale of Additional Loans will not result in a
material adverse tax consequence to the Issuer, the Noteholders or the
Certificateholders;
(vii) the applicable Funding Period shall not have terminated; and
(viii) unless otherwise covered by the opinions delivered on the
Closing Date, the Depositor shall have delivered to the Credit Enhancer,
the Rating Agencies, the Owner Trustee and the Indenture Trustee opinions
of counsel with respect to the transfer of the Additional Loans
substantially in the form of the opinions of counsel delivered to the
Credit Enhancer, the Rating Agencies, the Owner Trustee and the Indenture
Trustee on the Closing Date.
(c) In connection with the transfer and assignment of the Additional Loans,
the Originators have agreed to satisfy the obligations and covenants set forth
in Part I and Part III of Exhibit D with respect to such Additional Loans,
except that references in Part I of Exhibit D to Home Equity Loans, the Closing
Date and the Cut-off Date shall refer to the applicable Additional Loans,
Deposit Date and Deposit Cut-off Date, respectively except that references to
one year from the Closing Date shall remain unchanged.
ARTICLE III.
Representations, Warranties and Covenants
Section 3.1 Representations and Warranties of the Depositor. (a) The
Depositor hereby represents, warrants and covenants to the Servicer, the
Indenture Trustee, the Owner Trustee and the Credit Enhancer as of the Closing
Date and each Deposit Date as follows:
(i) The Depositor is, and as of each Deposit Date will be, a
corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana. 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, to enter
into and discharge its obligations under this Agreement and each Transfer
Agreement. The Depositor is, and as of each Deposit Date will be, duly
qualified to do business and is in good standing in each jurisdiction
necessary to perform its obligations under this Agreement and each Transfer
Agreement.
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(ii) The execution and delivery of this Agreement and each Transfer
Agreement by the Depositor and its performance and compliance with the
terms of this Agreement and each Transfer Agreement have been duly
authorized by all necessary corporate action on the part of the Depositor
and will not violate the Depositor's Articles 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.
(iii) Assuming due authorization, execution and delivery by the other
parties hereto, this Agreement constitutes, and each Transfer Agreement
will constitute, a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof, 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).
(iv) The Depositor is not, and as of each Deposit Date will not be, 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 is likely to have consequences that would materially and
adversely affect the condition (financial or other) or operations of the
Depositor or its properties or is likely to have consequences that would
materially and adversely affect its performance hereunder or under any
Transfer Agreement.
(v) No litigation is pending or, to the best of the Depositor's
knowledge, threatened against the Depositor the consequences of which would
prohibit its entering into this Agreement or any Transfer Agreement or that
would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or the
consequences of which would materially and adversely affect its performance
hereunder or thereunder.
(vi) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required
to be taken, given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than any such
actions, approvals, etc., under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable in connection
with the purchase of the Home Equity Loans and the execution and delivery
by the Depositor of this Agreement and each Transfer Agreement, have been
or will be duly taken, given or obtained, as the case may be, are or will
be in full force and effect on the date hereof or thereof, as the case may
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be, are not subject to any pending proceeding 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 this Agreement and each Transfer Agreement and the performance
by the Depositor of its obligations hereunder or thereunder.
(vii) No certificate of an officer, statement furnished in writing,
report or electronic tape delivered pursuant to the terms hereof or any
Transfer Agreement 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.
(viii) Immediately prior to the transfer and assignment contemplated
by this Agreement and each Transfer Agreement, the Depositor was or will be
the sole owner of each Home Equity Loan, subject to no liens, charges,
mortgages, encumbrances or rights of others except liens which will be
released simultaneously with such transfer or assignment; and immediately
upon the transfer and assignment contemplated by this Agreement and each
Agreement, the Indenture Trustee will hold good and indefeasible title to,
and will be the sole owner of, each Home Equity Loan subject to no liens,
charges, mortgages, encumbrances or rights of others.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the respective Home Equity
Loans to the Indenture Trustee. Upon discovery by the Servicer, the Depositor,
any Subservicer, the Credit Enhancer, the Indenture Trustee or the Owner Trustee
of a breach of any of the representations and warranties set forth in this
Section 3.1 which materially and adversely affects the interests of the
Noteholders, the Certificateholders or of the Credit Enhancer, the party
discovering such breach shall give prompt written notice to the other parties
listed in the preceding sentence.
Section 3.2 Representations and Warranties of the Servicer. (a) The
Servicer hereby represents, warrants and covenants to the Depositor, the
Indenture Trustee, the Owner Trustee and the Credit Enhancer as of the Closing
Date and each Deposit Date that:
(i) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Louisiana, is, and any
Subservicer will be, 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. The Servicer and
each Subservicer has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted
and as proposed to be conducted and to enter into and discharge its
obligations under this Agreement. The Servicer has, on a consolidated basis
with its top-tier parent,
8
United Companies Financial Corporation, equity of at least $15,000,000, as
determined in accordance with generally accepted accounting principles.
(ii) The execution and delivery of this Agreement by the Servicer and
its performance and compliance with the terms of this Agreement have been
duly authorized by all necessary corporate action on the part of the
Servicer and will not violate the Servicer's Articles of Incorporation or
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 the
Servicer is a party or by which the Servicer is bound or violate any
statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over the Servicer or any of
its properties.
(iii) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Servicer, enforceable against it in accordance
with the terms hereof, except as the enforcement hereof 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).
(iv) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which is likely to have
consequences that would materially and adversely affect the condition
(financial or otherwise) or operations of the Servicer or its properties or
is likely to have consequences that would materially and adversely affect
its performance hereunder.
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which litigation is likely to
have consequences that would prohibit its entering into this Agreement or
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Servicer or its properties or is likely to
have consequences that would materially and adversely affect its
performance hereunder.
(vi) No certificate of an officer, statement furnished in writing,
report or electronic tape delivered pursuant to the terms hereof by the
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.
(vii) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65
issued by the Financial Accounting Standards Board. Neither the Servicer
nor any affiliate
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thereof will report on any financial statements any part of the Servicing
Fee as an adjustment to the sales price of the Home Equity Loans.
(viii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any
such actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no such
representation or warranty), that are necessary or advisable in connection
with the execution and delivery by the Servicer of this Agreement, have
been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings
or appeals (administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the performance by the
Servicer of its obligations under this Agreement.
(ix) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the home equity loan servicing business.
(x) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(b) It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Home Equity Loans to the
Indenture Trustee. Upon discovery by any of the Servicer, the Depositor, the
Credit Enhancer, the Indenture Trustee or the Owner Trustee of a breach of any
of the representations and warranties set forth in this Section 3.2 which
materially and adversely affects the interest of the Noteholders, the
Certificateholders or of the Credit Enhancer, the party discovering such breach
shall give prompt written notice to the other parties. Within 30 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Indenture Trustee pursuant to
Section 7.1 hereof; provided, however, that if the Servicer can demonstrate to
the reasonable satisfaction of the Credit Enhancer that it is diligently
pursuing remedial action, then the cure period shall be extended for up to an
additional 30 days.
Section 3.3 Covenants of the Depositor. (a) Pursuant to Section 2.1 hereof,
the Depositor has conveyed to the Issuer all of the Depositor's right, title and
interest in its rights and benefits, but none of its obligations or burdens,
under the Loan Purchase Agreement and the Loan Sale Agreement, including without
limitation, the benefit of the representations, warranties and covenants and
cure, repurchase or substitution obligations of the Originators under the Loan
Purchase Agreement. The Depositor hereby represents and warrants to the
Indenture Trustee and the Owner Trustee on behalf of the Noteholders, the
Certificateholders and the Credit Enhancer that such assignment is valid,
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enforceable and effective to permit the Trustees to enforce such obligations of
the Originators under the Loan Purchase Agreement. Each Originator has made the
representations and warranties regarding the Home Equity Loans as set forth in
Part II of Exhibit D hereto, and has agreed to certain actions as specified in
Part III of Exhibit D hereto.
(b) It is understood and agreed that the representations and warranties set
forth in Part II of Exhibit D and the covenants set forth in Part III of Exhibit
D shall survive delivery of the respective Home Equity Loans (including Eligible
Substitute Mortgages) to the Indenture Trustee.
(c) None of the Originators, the Seller or any Affiliate has made any
representations or warranties, whether express or implied, to the Depositor or
to the Indenture Trustee as to the collectability of the Home Equity Loans or
the solvency of the Mortgagors, or any guarantor(s), endorser(s), co-maker(s),
assuming party(ies) or the sufficiency or value, as of the date of this
Agreement, of any Property, except as specifically listed in Part II of Exhibit
D.
ARTICLE IV.
Servicing and Administration
of Home Equity Loans
Section 4.1 General Servicing Procedures. (a) Acting directly or through
one or more Subservicers as provided in Section 4.3, the Servicer, as an
independent contract servicer, shall service and administer the Home Equity
Loans in accordance with this Agreement 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 and
consistent with the terms of this Agreement. Notwithstanding any provision to
the contrary elsewhere in this Agreement, the Servicer shall not have any
duties, responsibilities, or fiduciary relationship with the parties hereto
except those expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or shall otherwise exist against the Servicer.
(b) The Servicer may, and is hereby authorized to, perform any of its
servicing responsibilities with respect to all or certain of the Home Equity
Loans through a Subservicer as it may from time to time designate, but no such
designation of a Subservicer shall serve to release the Servicer from any of its
obligations under this Agreement. Such Subservicer shall have all the rights and
powers of the Servicer with respect to such Home Equity Loans under this
Agreement.
(c) Without limiting the generality of the foregoing, but subject to
Sections 4.2, 4.13 and 4.14, the Servicer in its own name or in the name of a
Subservicer hereby is authorized and empowered, which authorization may further
be evidenced, at the reasonable request of the Servicer, by a power of attorney
executed and delivered by the Indenture Trustee, on behalf of itself, the
Issuer, the Owner Trustee, the Noteholders and the Certificateholders or any of
them, (i) to execute and deliver any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the Home Equity Loans and with respect to the
Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu
of
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foreclosure so as to effect ownership of any Property in its own name on behalf
of the Indenture Trustee, and (iii) to hold title in its own name on behalf of
the Indenture Trustee to any Property upon such foreclosure or deed in lieu of
foreclosure on behalf of the Indenture Trustee; provided, however, that to the
extent any instrument described in clause (i) preceding would be delivered by
the Servicer outside of its ordinary procedures for mortgage loans held for its
own account the Servicer shall, prior to executing and delivering such
instrument, obtain the prior written consent of the Credit Enhancer, and
provided further, however, that Section 4.14(a) shall constitute a power of
attorney from the Indenture Trustee to the Servicer to execute an instrument of
satisfaction (or assignment of mortgage without recourse) with respect to any
Home Equity Loan paid in full (or with respect to which payment in full has been
escrowed). Subject to Sections 4.13 and 4.14, the Indenture Trustee shall
furnish the Servicer and any Subservicer with any powers of attorney and other
documents as the Servicer or such Subservicer shall reasonably request to enable
the Servicer and such Subservicer to carry out their respective servicing and
administrative duties hereunder.
(d) The Servicer shall have the right to approve requests of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of Properties subject to Mortgages. No such
request shall be approved by the Servicer unless: (A) (x) the provisions of the
related Mortgage Note and Mortgage have been complied with; (y) the
loan-to-value ratio (which may, for this purpose, be determined at the time of
any such action in a manner reasonably acceptable to the Credit Enhancer) after
any release does not exceed the loan-to-value ratio set forth for such Home
Equity Loan in the Schedule of Home Equity Loans or Schedule of Additional
Loans, as applicable, delivered to the Indenture Trustee; and (z) the lien
priority of the related Mortgage is not affected or (B) the Credit Enhancer
shall have approved the granting of such request.
(e) The Servicer shall give prompt notice to the Indenture Trustee, to the
Owner Trustee and to the Credit Enhancer of any action, of which the Servicer
has actual knowledge, to (i) assert a claim against the Issuer or (ii) assert
jurisdiction over the Issuer.
(f) Servicing Advances incurred by the Servicer or any Subservicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Subservicer to the
extent described in Section 4.9(b) hereof.
(g) The Servicer and any Servicer Affiliate may make loans to and generally
engage in any kind of business with the Mortgagors and/or any other obligors
under the Home Equity Loans as though the Servicer were not a party to this
Agreement. The Servicer may have other existing loans and in the future may make
additional loans to any of the Mortgagors and/or to other obligors under the
Home Equity Loans, which other and/or additional loans may not be sold, or a
loan participation therein granted, to the Issuer. The Servicer shall collect
payments under the Home Equity Loans in the same preference and priority as the
collection and/or enforcement of any other and/or additional loans by the
Servicer or any Servicer Affiliate.
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(h) Each of the Servicer, the Depositor, the Indenturer Trustee, the Owner
Trustee and the Certificate Enhancer shall be entitled to rely, and shall be
fully protected in relying, upon any promissory note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Mortgagor(s)), independent
accountants and other experts selected by the Servicer, the Depositor, the
Indenture Trustee, the Owner Trustee or the Credit Enhancer. The Servicer shall
be fully justified in failing or refusing to take any action under this
Agreement for which it has sought and received instructions from the Noteholders
and the Certificateholders and has been consented to by the Credit Enhancer. The
Servicer shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Home Equity Loans in accordance with an
express written request of the Noteholders and the Certificateholders to which
the Credit Enhancer has consented, and such request and any action taken or
failure to act pursuant thereto shall be binding upon the Servicer, the
Depositor, the Indenture Trustee, the Owner Trustee, the Credit Enhancer and all
Noteholders and the Certificateholders. In the event of any conflicting
instructions or requests, the instructions or requests delivered by the Credit
Enhancer shall prevail, unless such instructions or requests violate the express
terms of this Agreement or violate applicable law.
Section 4.2 Collection of Certain Home Equity Loan Payments. The Servicer
shall generally service the Home Equity Loans in a prudent manner consistent
with its general servicing standards and agrees to make reasonable efforts to
collect all payments called for under the terms and provisions of the Home
Equity Loans, and shall, to the extent such procedures shall be consistent with
this Agreement, follow collection procedures for all Home Equity Loans at least
as rigorous as those the Servicer would ordinarily take in servicing loans and
in collecting payments thereunder for its own account. Consistent with the
foregoing, the Servicer may (i) in its discretion waive or permit to be waived
any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Home Equity Loan or any other
fee or charge which the Servicer would be entitled to retain hereunder as
servicing compensation, (ii) extend the due date for payments due on a Mortgage
Note for a period (with respect to each payment as to which the due date is
extended) not greater than 125 days after the initially scheduled due date for
such payment, (iii) amend any Mortgage Note to reduce the Loan Rate applicable
thereto, provided that such reduced Loan Rate shall always be greater than the
applicable Adjusted Pass-Through Rate, and (iv) amend any Mortgage Note to
extend the maturity thereof, provided that no maturity shall be extended beyond
the maturity date of the Home Equity Loan with the latest maturity date in the
Issuer and that no more than ____% of the Original Aggregate Loan Balance of the
Home Equity Loans shall have a maturity date which has been extended by the
Servicer beyond the maturity date thereof at the Cut-off Date. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Mortgage Note, the Servicer shall nonetheless make payment of any required
Delinquency Advance with respect to the payments so extended to the same extent
as if such installment were due, owing and Delinquent and had not been deferred,
and shall be entitled to reimbursement therefor in accordance with Section
4.9(a) hereof.
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Section 4.3 Subservicing Agreements Between Servicer and Subservicers. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement and (x)(i) has been designated an approved
seller-servicer by FHLMC or FNMA for first and second mortgage loans and (ii)
has equity of at least $15,000,000, as determined in accordance with generally
accepted accounting principles or (y) is a Servicer Affiliate or (z) is approved
by the Credit Enhancer. The Servicer shall give notice to the Depositor, the
Indenture Trustee, the Owner Trustee, the Rating Agencies and the Credit
Enhancer of the appointment of any Subservicer. For purposes of this Agreement,
the Servicer shall be deemed to have received payments on Home Equity Loans when
any Subservicer has received such payments. Any such Subservicing Agreement
shall be consistent with and not violate the provisions of this Agreement.
Section 4.4 Successor Subservicers. The Servicer shall be entitled to
terminate any Subservicing Agreement in accordance with the terms and conditions
of such Subservicing Agreement and to either itself directly service the related
Home Equity Loans or enter into a Subservicing Agreement with a successor
Subservicer which qualifies under Section 4.3.
Section 4.5 Liability of Servicer. (a) The Servicer shall not be relieved
of its obligations under this Agreement notwithstanding any Subservicing
Agreement or any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Subservicer or otherwise, and the
Servicer shall be obligated to the same extent and under the same terms and
conditions as if it alone were servicing and administering the Home Equity
Loans. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer and nothing
contained in such Subservicing Agreement shall be deemed to limit or modify this
Agreement.
(b) The Servicer shall be responsible for the servicing of all of the Home
Equity Loans, including Servicing Transfer Loans. The Servicer shall not be
relieved of its obligations under this Agreement notwithstanding the fact that
the Servicing Transfer Loans may be serviced during the Servicing Transfer
Period by a party other than the Servicer or a Subservicer and the Servicer
shall be obligated to the same extent and under the same terms and conditions as
if it were servicing and administering all of the Home Equity Loans.
(c) It is understood and agreed that if the servicing of any Servicing
Transfer Loan is not transferred to the Servicer prior to the expiration of the
Servicing Transfer Period, the Servicer shall purchase such Servicing Transfer
Loan from the Indenture Trustee on the next Remittance Date.
Section 4.6 No Contractual Relationship Between Subservicer and the
Trustees, the Noteholders or the Certificateholders. Any Subservicing Agreement
and any other transactions or services relating to the Home Equity Loans
involving a Subservicer shall be deemed to be between the Subservicer and the
Servicer alone and the Depositor, the Indenture Trustee, the Owner Trustee, the
Noteholders and the Certificateholders shall not be deemed parties thereto and
shall have no claims,
14
rights, obligations, duties or liabilities with respect to any Subservicer
except as set forth in Section 4.7.
Section 4.7 Assumption or Termination of Subservicing Agreement by
Indenture Trustee. In connection with the assumption of the responsibilities,
duties and liabilities and of the authority, power and rights of the Servicer
hereunder by the Indenture Trustee pursuant to Section 7.1, it is understood and
agreed that the Servicer's rights and obligations under any Subservicing
Agreement then in force between the Servicer and a Subservicer may be assumed or
terminated by the Indenture Trustee at its option without the payment of any fee
(notwithstanding any contrary provision in any Subservicing Agreement).
The Servicer shall, upon request of the Indenture Trustee, but at the
expense of the 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 to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
Section 4.8 Collection Accounts. (a) The Servicer shall establish and
maintain at one or more Designated Depository Institutions a Collection Account
in the name of the Issuer, which shall be a segregated account held in trust for
the benefit of the Noteholders and the Certificateholders.
Subject to Subsections (c), (e) and (g) below, the Servicer and any
Subservicer shall deposit all collections (other than amounts escrowed for taxes
and insurance) related to the Home Equity Loans to the Collection Account on a
daily basis (but no later than the first Business Day after receipt).
On or before the Closing Date, the Servicer shall deposit to the
appropriate Collection Account all collections (other than amounts representing
the Servicing Fee, interest accrued on the Home Equity Loans attributable to
periods prior to the Cut-off Date or amounts escrowed for taxes and insurance)
related to the Home Equity Loans in received on or after the Cut-off Date and
prior to the Closing Date. In addition, with respect to any Home Equity Loan
that did not have a first payment due on the Due Date in the calendar month
preceding the month of a Payment Date, on the Remittance Date in the month of
such Payment Date the Servicer shall deposit in the Collection Account an amount
equal to 30 days' interest at the Loan Rate (net of the Servicing Fee Rate) on
the Original Principal Balance of such Home Equity Loan. Such deposit shall not
be recoverable by the Servicer as a Delinquency Advance except to the extent
that Net Liquidation Proceeds exceed the Loan Principal Balance plus accrued
interest thereon at the related Loan Rate.
(b) All funds in the Collection Account shall be invested in Eligible
Investments maturing not later than the Business Day immediately preceding the
related Remittance Date. The Collection Account shall be held in trust in the
name of the Issuer for the benefit of the related Noteholders and
Certificateholders. Any investment earnings on funds held in the Collection
Account shall be for the account of the Servicer and may only be withdrawn from
the Collection Account by the Servicer immediately following the remittance of
the related Monthly Remittance by the Servicer. Any references herein to amounts
on deposit in the Collection Account shall refer
15
to amounts net of such investment earnings. The amount of any losses on
investments in the Collection Account, to the extent not offset by earnings on
other investments held therein, shall be deposited in the Collection Account by
the Servicer upon the recognition of such net losses.
(c) The Servicer shall deposit to the Collection Account the following
amounts with respect to the Home Equity Loans: all principal and interest
collections on the Home Equity Loans received by the Servicer, including any
Prepayments, REO Proceeds and Net Liquidation Proceeds, other recoveries or
amounts related to the Home Equity Loans received by the Servicer, Compensating
Interest, Delinquency Advances together with any amounts which are reimbursable
to the Collection Account, amounts on account of net investment losses pursuant
to Section 4.8(b), the amount of any Loan Purchase Price received or paid by the
Servicer, the amount of any Substitution Adjustment Amount received by the
Servicer, any condemnation proceeds, the amount, if any, required to be
deposited pursuant to Section 4.11(b) and any proceeds received by the Servicer
in connection with the termination of the Issuer, but net of (i) the Servicing
Fee with respect to each Home Equity Loan and other servicing compensation to
the Servicer as permitted by Section 4.15 hereof, (ii) late collections on a
Home Equity Loan in respect of which the Servicer previously made a Delinquency
Advance which was not yet reimbursed, (iii) Liquidation Proceeds on account of a
Home Equity Loan to the extent necessary to reimburse the Servicer with respect
to any Liquidation Expenses and unreimbursed Servicing Advances or Delinquency
Advances relating to such Home Equity Loan, (iv) Net Liquidation Proceeds to the
extent such Net Liquidation Proceeds exceed the sum of (I) the Loan Balance of
the related Home Equity Loan, plus (II) accrued and unpaid interest on such Home
Equity Loan at the Loan Rate (net of the Servicing Fee) to the date of such
liquidation and (v) Retained Interest. Amounts described in clause (iv) of the
preceding sentence shall be retained by the Servicer as additional servicing
compensation or paid over to the related Mortgagor if required by law.
(d) (i) The Servicer may make withdrawals from the Collection Account only
for the following purposes:
(A) to effect the timely remittance to the Indenture Trustee of the
Monthly Remittances, the Loan Purchase Prices and the
Substitution Adjustment Amounts due on the Remittance Date;
(B) to withdraw investment earnings on amounts on deposit in the
Collection Account;
(C) to withdraw amounts that have been deposited to the Collection
Account in error; and
(D) to clear and terminate the Collection Account.
(ii) On the tenth day of each month, the Servicer shall send to the
Indenture Trustee a report, in the form of a computer tape, detailing the
payments on the Home Equity Loans during the prior Remittance Period. Such
tape shall be in the form and have the specifications as may be agreed to
between the Servicer and the
16
Indenture Trustee from time to time. In addition, on or prior to each
Remittance Date, the Servicer will furnish to the Indenture Trustee and to
the Credit Enhancer the information set forth in Section 5.5(b) as of the
close of business on the last business day of the prior calendar month.
(iii) On each Remittance Date the Servicer shall remit to the
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds; the Monthly Remittances, all Substitution
Adjustment Amounts and any Loan Purchase Prices.
(e) At any time prior to the occurrence of a Credit Enhancer default and in
lieu of the requirement of depositing collections on the Home Equity Loans into
the Collection Account, the Servicer may deliver to the Indenture Trustee a
Servicer LOC. A Servicer LOC must be irrevocable and (i) issued by a commercial
bank rated A or better by S&P and A2 or better by Xxxxx'x and acceptable to the
Credit Enhancer, the Depositor and the Trustees, (ii) be in form and substance
satisfactory to the Credit Enhancer, the Depositor and the Trustees, (iii) may
have a maximum term of not more than one year, (iv) must name the Trustees as
beneficiaries, (v) must be in an amount acceptable to the Credit Enhancer, the
Depositor and the Rating Agencies, and (vi) must provide for drawings thereunder
conditioned only upon presentation of a sight draft accompanied by the
applicable certificate in the form attached thereto.
The Indenture Trustee shall accept any such Servicer LOC only if such
Servicer LOC is accompanied by (i) the written consent of the Depositor and of
the Credit Enhancer, (ii) an opinion of counsel to the issuer thereof
satisfactory to the Credit Enhancer and the Depositor to the effect that (x)
such Servicer LOC has been duly authorized, executed and delivered by the issuer
thereof and constitutes a valid and binding obligation of such issuer, subject
only to laws affecting creditors' rights generally and (y) in the event that the
Person obligated to reimburse the issuer thereof for drawings under such
Servicer LOC should be subject to any proceedings under the U.S. Bankruptcy
Code, drawings under such Servicer LOC would not be recoverable by the estate of
such Person, from the Trustees or any Noteholder or Certificateholder as a
"preference" or otherwise and (iii) an opinion of counsel experienced in federal
income tax matters acceptable to the Credit Enhancer and the Depositor to the
effect that such delivery __________.
Upon receipt of such Servicer LOC, such consents and such opinions by the
Indenture Trustee, and for so long as such Servicer LOC (or any qualifying
replacement thereof) is in effect, the Servicer shall not be required to deposit
collections on the Home Equity Loans to the Collection Account, but may
co-mingle such collections with the Servicer's general funds. Amounts are to be
deposited with the Indenture Trustee on the Business Day preceding such
Remittance Date. Notice of the delivery of any Servicer LOC shall be given to
the Rating Agencies by the Indenture Trustee.
If, as of any date that is 125 Business Days prior to the stated expiration
date of any Servicer LOC, (i) a Servicer LOC (which may be a renewal or
extension of the expiring Servicer LOC) in the same amount as the amount then
available for drawing under the expiring Servicer
17
LOC has not been delivered to the Indenture Trustee or (ii) the Servicer has not
deposited all collections on the Home Equity Loans then held by the Servicer to
the Collection Account and notified the Indenture Trustee that the Servicer will
thenceforth deposit all future collections on the Home Equity Loans in the
Collection Account, then the Indenture Trustee shall, on the next Business Day,
cause to be presented to the issuer of the expiring Servicer LOC a draft in
proper form for payment thereunder and otherwise in conformity with the terms
thereof for the full amount then available to be drawn thereunder, together with
its certificate that such drawing is in accordance with this Section 4.8.
Upon discovery by any of the Depositor, the Credit Enhancer, the Indenture
Trustee or the Owner Trustee that the bank issuing a Servicer LOC has a rating
(x) by S&P of lower than A or by Xxxxx'x of lower than A2 or (y) which is
unacceptable to the Credit Enhancer, the party discovering such rating hereby
covenants and warrants that it shall promptly give notice to the others. If,
within 20 days of such discovery (i) the Indenture Trustee has not received a
substitute Servicer LOC meeting the requirements of this Agreement in
replacement of such Servicer LOC, or (ii) the Servicer has not theretofore
deposited all collections on the Home Equity Loans then held by the Servicer to
the Collection Account and notified the Indenture Trustee that the Servicer will
thenceforth deposit all future collections on the Home Equity Loans to the
Collection Account, then the Indenture Trustee shall cause to be presented to
the issuer of such Servicer LOC a drawing certificate in proper form for payment
thereunder and otherwise in conformity with the terms thereof, and shall draw
the full amount available to be drawn under such Servicer LOC.
In the event that, upon the occurrence of any event described in clauses
(a)(i) or (a)(ii) of Section 7.1 hereof, the Servicer is unable to remit to the
Indenture Trustee any collections on the Home Equity Loans, the Indenture
Trustee shall immediately draw on the Servicer LOC the full amount available to
be drawn thereunder. Upon the occurrence of any event described in clauses
(a)(i) or (a)(ii) of Section 7.1 hereof, the Servicer shall immediately deposit
all collections on the Home Equity Loans then held by the Servicer to the
Collection Account and shall thenceforth deposit all future collections on the
Home Equity Loans to the Collection Account.
The proceeds of any drawing on the Servicer LOC shall be held by the
Indenture Trustee in trust for the benefit of the Noteholders and
Certificateholders in a segregated trust account, and shall be used to fund any
shortfall in the required amount of any Monthly Remittance. Any amounts not so
used by the Indenture Trustee shall be turned over to the Servicer only upon the
written consent of the Credit Enhancer, of the Owner Trustee and of the
Depositor, which consent shall not unreasonably be withheld.
During any period for which a Servicer LOC is in effect, the phrase
"amounts then on deposit in the Collection Account," or words of similar import,
as used in this Agreement, shall mean collections on the Home Equity Loans held
by the Servicer as part of its general funds.
(g) As to each ARM, the Retained Interest shall be payable by the Servicer
to or at the direction of the Depositor from payments of interest on such ARM
actually collected or recovered while such ARM (other than the Retained
Interest) is part of the Trust, shall accrue at the
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Retained Interest Rate and shall be computed on the basis as the same principal
amount and for the same period respecting which any related interest payment due
on such ARM is computed. If any Property securing an ARM becomes an REO
Property, the Retained Interest with respect thereto shall cease to accrue as of
the date of acquisition of such Property on behalf of the Issuer. If any ARM is
removed from the Issuer, the Retained Interest with respect thereto shall cease
to accrue as of the date of removal. Any Person entitled to the Retained
Interest shall be entitled to recover accrued but unpaid Retained Interest in
respect of any ARM out of related Insurance Proceeds and Net Liquidation
Proceeds as provided below, or from any Person acquiring such ARM. Subject to
the foregoing, the Depositor's right to receive the Retained Interest with
respect to each ARM is absolute and unconditional, and shall survive
notwithstanding the termination of the rights and obligations of the Servicer or
the termination of this Agreement. The Servicer shall pay to or at the direction
of the Depositor, on a monthly basis, any amounts collected by the Servicer on
account of Retained Interest on the ARMs or shall otherwise hold and distribute
such amounts in accordance with the terms of any agreement relating to the
Retained Interest to which the Servicer is a party. The Depositor shall have the
right to assert any or all of its right in and to the Retained Interest, without
notice to or the consent of the Indenture Trustee, the Owner Trustee, the Credit
Enhancer or any Noteholder or Certificateholder.
For purposes of determining the Retained Interest recovered from Net
Liquidation Proceeds or Insurance Proceeds, such proceeds shall be allocated
first to accrued but unpaid interest at the Loan Rate and then to principal. If
the amount of such proceeds allocated to accrued but unpaid interest at the Loan
Rate is less than the total amount of such accrued but unpaid interest, the
portion thereof attributable to interest at the Adjusted Pass-Through Rate and
the Retained Interest Rate (if applicable) shall be allocated pro rata in
proportion to the amount that would have been so allocated in the absence of
such shortfall.
Section 4.9 Delinquency Advances and Servicing Advances. (a) If the amount
on deposit in a Collection Account as of any Remittance Date is less than the
related Monthly Remittance for such Remittance Date, the Servicer shall deposit
to such Collection Account a sufficient amount of its own funds to make such
amount equal to the sum of the related Monthly Remittance for such Remittance
Date. Such amounts of the Servicer's own funds so deposited are "Delinquency
Advances".
The Servicer shall be permitted to fund its payment of Delinquency Advances
on any Remittance Date from collections on any Home Equity Loan deposited to the
Collection Account subsequent to the related Remittance Period, and shall
deposit to the Collection Account with respect to Delinquency Advances funded
from amounts on deposit in the Collection Account (i) collections from the
Mortgagor whose Delinquency gave rise to the shortfall which resulted in such
Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account of
the related Home Equity Loan to the extent of the amount of aggregate
Delinquency Advances related thereto. In any event, to the extent the Servicer
uses such funds, the Servicer must reimburse the Collection Account by the next
Remittance Date to the extent necessary to provide for the related Monthly
Remittance to the extent received.
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(b) The Servicer will pay all reasonable and customary "out-of-pocket"
costs and expenses (including reasonable legal fees) 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 (including,
without limitation, realtors' commissions) and (iv) advances made for taxes,
insurance and other charges against the Property. Each such expenditure will
constitute a "Servicing Advance". The Servicer may recover Servicing Advances
from the Mortgagors to the extent permitted by the Home Equity Loans or, if not
theretofore recovered from the Mortgagor on whose behalf such Servicing Advance
was made, from Liquidation Proceeds realized upon the liquidation of the related
Home Equity Loan. In no case may the Servicer recover Servicing Advances from
the principal and interest payments on any other Home Equity Loan or from any
amounts relating to any other Home Equity Loan. Delinquency Advances shall be
reimbursed as provided in Section 4.8(c).
Section 4.10 Compensating Interest. A full month's interest at a rate equal
to the applicable Adjusted Pass-Through Rate minus the Servicing Fee Rate, is
due to the Indenture Trustee on the Loan Balance of each Home Equity Loan as of
the Remittance Date occurring in each Remittance Period. If (i) a Prepayment of
a Home Equity Loan occurs during any calendar month or (ii) such Home Equity
Loan or Additional Loan has its first monthly payment due after the Cut-off Date
or the applicable Deposit Cut-off Date, any difference between the interest
collected from the Mortgagor during such calendar month and the full month's
interest at the applicable Adjusted Pass-Through Rate ("Compensating Interest")
shall be deposited prior to the Remittance Date by the Servicer to the
Collection Account and shall be included in the related Monthly Remittance to be
made available to the Indenture Trustee on the next succeeding Remittance Date;
provided, however, that the Servicer shall not be required to deposit
Compensating Interest in respect of Prepayments in an amount that exceeds the
Servicing Fee received for the prior calendar month. The Servicer shall not be
entitled to reimbursement for Compensating Interest payments.
Section 4.11 Maintenance of Insurance. (a) The Servicer shall cause to be
maintained with respect to each Home Equity Loan a hazard insurance policy with
a carrier licensed in the state in which the Property is located that provides
for fire and extended coverage, and which provides for a recovery by the Trust
of insurance proceeds relating to such Home Equity Loan in an amount not less
than the least of (i) the outstanding principal balance of the Home Equity Loan,
(ii) the minimum amount required to compensate for loss or damage on a
replacement cost basis and (iii) the full insurable value of the premises. The
Servicer shall indemnify the Issuer out of the Servicer's own funds for any loss
to the Issuer resulting from the Servicer's failure to maintain the insurance
required by this paragraph.
(b) In the event that the Servicer shall obtain and maintain a blanket
policy insuring against fire and hazards of extended coverage on all of the Home
Equity Loans, then, to the extent such policy names the Servicer as loss payee
and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Home Equity Loans with co-insurance, and otherwise complies with
the requirements of this Section 4.11, the Servicer shall be deemed conclusively
to have satisfied its obligations with respect to fire and hazard insurance
coverage under this Section
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4.11, it being understood and agreed that such blanket policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Property a policy complying with
the preceding paragraph of this Section 4.11, and there shall have been a loss
which would have been covered by such policy, deposit in the Collection Account
from the Servicer's own funds the difference, if any, between the amount that
would have been payable under a policy complying with the preceding paragraph of
this Section 4.11 and the amount paid under such blanket policy. Upon the
request of the Indenture Trustee, the Owner Trustee or the Credit Enhancer, the
Servicer shall cause to be delivered to the Indenture Trustee, the Owner Trustee
or the Credit Enhancer, a certified true copy of such policy.
Section 4.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.
(a) When a Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise its rights to accelerate the maturity of the related Home
Equity Loan under any "due on sale" clause contained in the related Mortgage or
Mortgage Note; provided, however, that the Servicer shall not exercise any such
right if the "due on sale" clause, in the reasonable belief of the Servicer, is
not enforceable under applicable law; and provided, further, that the Servicer
may refrain from exercising any such right if the Credit Enhancer gives its
prior consent to such non-enforcement.
(b) In connection with the proposed assumption of a Home Equity Loan that
is permitted by the terms of the related Mortgage Note, the Servicer will permit
the assumption only to the extent that the credit quality of the proposed
assignee is at least as good as that of the original borrower at the time such
Home Equity Loan was originated. The Home Equity Loan, if assumed, shall conform
in all respects to the requirements, representations and warranties of this
Agreement including Part II of Exhibit D. The Servicer shall notify the
Indenture Trustee that any applicable assumption or substitution agreement has
been completed by forwarding to the Indenture Trustee, the original copy of such
assumption or substitution agreement, which original copy shall be added by the
Indenture 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. The Servicer shall be responsible for
recording any such assumption or substitution agreements. In connection with any
such assumption or substitution agreement, the required monthly payment on the
related Home Equity Loan shall not be changed but shall remain as in effect
immediately prior to the assumption or substitution, the stated maturity or
outstanding principal amount of such Home Equity Loan shall not be changed, the
Loan Rate, except as provided in Section 4.2, or as required on a Change Date
for an ARM or as required with respect to a Convertible ARM, shall not be
changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer or the Subservicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
(c) Notwithstanding the foregoing clauses (a) and (b) or any other
provision of this Agreement, the Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Home Equity Loan by operation of law or
21
any assumption which the Servicer may be restricted by law from preventing, for
any reason whatsoever.
Section 4.13 Realization Upon Defaulted Home Equity Loans. (a) The Servicer
shall foreclose upon or otherwise comparably effect the ownership in the name of
the Servicer on behalf of the Issuer of Properties relating to defaulted Home
Equity Loans as to which no satisfactory arrangements can be made for collection
of Delinquent payments and which the Servicer has not purchased pursuant to
Section 4.13(f), unless the Servicer reasonably believes that Net Liquidation
Proceeds with respect to such Home Equity Loan would not be increased as a
result of such foreclosure or other action, in which case such Home Equity Loan
will be charged-off and will become a Liquidated Loan. The Servicer will give
notice of any such charge-off to the Credit Enhancer substantially in the form
of Exhibit F attached hereto. In connection with such foreclosure or other
conversion, the Servicer shall exercise foreclosure procedures with the same
degree of care and skill in their exercise or use, as it would ordinarily
exercise or use under the circumstances in the conduct of its own affairs. Any
amounts advanced in connection with such foreclosure or other action shall
constitute "Servicing Advances" within the meaning of Section 4.9(b) hereof.
(b) The Servicer shall sell any REO Property within 23 months of its
acquisition by the Trust, unless the Servicer obtains for the Indenture Trustee
an opinion of counsel experienced in federal income tax matters, addressed to
such Indenture Trustee and the Servicer, to the effect that the holding by such
Trust of such REO Property for a greater specified period [will not result in
the imposition of taxes on __________.
(c) Notwithstanding the generality of the foregoing provisions, the
Servicer shall manage, conserve, protect and operate each REO Property for the
related Owners solely for the purpose of its prompt disposition and sale in a
manner which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or __________.
Pursuant to its efforts to sell such REO Property, the Servicer shall either
itself or through an agent selected by the Servicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Noteholders and the
Certificateholders, rent the same, or any part thereof, as the Servicer deems to
be in the best interest of such Noteholders and the Certificateholders for the
period prior to the sale of such REO Property. The net income from the rental or
sale of an REO Property shall be deposited in the Collection Account.
(d) If the Servicer has actual knowledge that a Property which the Servicer
is contemplating acquiring in foreclosure or by deed in lieu of foreclosure
contains environmental or hazardous waste risks known to the Servicer, the
Servicer shall notify the Credit Enhancer and the Indenture Trustee prior to
acquiring the Property. The Servicer is not permitted to take any action with
respect to such a Property without the prior written approval of the Credit
Enhancer.
(e) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts, if
22
any, it expects to recover from or on account of such defaulted Home Equity
Loan, whereupon such Home Equity Loan shall become a "Liquidated Loan."
(f) The Servicer has the right and the option, but not the obligation, to
purchase for its own account any Home Equity Loan (i) which becomes Delinquent,
in whole or in part, as to four consecutive monthly installments or any Home
Equity Loan as to which enforcement proceedings have been brought by the
Servicer pursuant to this Section 4.13 and (ii) (x) with respect to which the
Credit Enhancer has refused to give its consent to the Servicer's non-exercise
of its rights under any "due-on-sale" clause, as described in Section 4.12(a)
and (y) which is in default or as to which a default is imminent. Any such Home
Equity Loan so purchased shall be purchased by the Servicer on a Remittance Date
at a purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be deposited in the Collection Account.
Section 4.14 Indenture Trustee to Cooperate; Release of Files. (a) Upon the
payment in full of any Home Equity Loan (including the repurchase of any Home
Equity Loan or any liquidation of such Home Equity Loan through foreclosure or
otherwise), or the receipt by the Servicer of a notification that payment in
full will be escrowed in a manner customary for such purposes, the Servicer
shall deliver to the Indenture Trustee a Servicer's Trust Receipt. Upon receipt
of such Servicer's Trust Receipt, the Indenture Trustee shall promptly release
the related File, in trust to (i) the Servicer, (ii) an escrow agent or (iii)
any employee, agent or attorney of the Indenture Trustee, in each case pending
its release by the Servicer, such escrow agent or such employee, agent or
attorney of the Indenture 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, the Servicer is authorized to give, as attorney-in-fact for the
Indenture Trustee and the mortgagee under the Mortgage which secured the
Mortgage 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 Collection Account. In lieu of executing any such satisfaction
or assignment, as the case may be, the Servicer may prepare and submit to the
Indenture Trustee, a satisfaction (or assignment without recourse, if requested
by the Person or Persons entitled thereto) in form for execution by the
Indenture Trustee with all requisite information completed by the Servicer; in
such event, the Indenture 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 Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Indenture 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 Indenture Trustee), promptly upon request
of the Servicer and delivery to the Indenture Trustee of a Servicer's Trust
Receipt, release the related File to the 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
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to the Servicer. The Indenture Trustee shall complete in the name of the
Indenture Trustee any endorsement in blank on any Mortgage Note prior to
releasing such Mortgage Note to the Servicer. Such receipt shall obligate the
Servicer to return the File to the Indenture Trustee when the need therefor by
the Servicer no longer exists unless the Home Equity Loan shall be liquidated,
in which case, upon receipt of the liquidation information, in physical or
electronic form, a copy of the Servicer's Trust Receipt shall be released by the
Indenture Trustee to the Servicer.
(c) In all cases where the Servicer needs the Indenture Trustee to sign any
document or to release a File within a particular period of time, the Servicer
shall notify an Authorized Officer of the Indenture Trustee by telephone of such
need and the Indenture Trustee shall thereupon use its best efforts to comply
with the Servicer's needs, but in any event will comply within two Business Days
of such request.
Section 4.15 Servicing Compensation. As compensation for its activities
hereunder, the Servicer shall be entitled to retain the amount of the Servicing
Fee with respect to each Home Equity Loan. Additional servicing compensation in
the form of prepayment charges, release fees, bad check charges, assumption
fees, late payment charges, and any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Collection Account
pursuant to Section 4.8(c)(iii) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer.
Section 4.16 Annual Statement as to Compliance. The Servicer, at its own
expense, will deliver to the Indenture Trustee, the Owner Trustee, the Depositor
and the Credit Enhancer, on or before the last day of April of each year,
commencing in 1998, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of the Servicer during such preceding
calendar year and of performance under this Agreement has been made under such
officer's supervision, and (ii) to the best of such officer's knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officer and the
nature and status thereof including the steps being taken by the Servicer to
remedy such default. Any Subservicer which is not a Servicer Affiliate shall
also deliver an annual statement as to compliance in the form described above or
the Servicer shall cover their performance in their statement. These statements
shall be available to the Noteholders and the Certificateholders upon written
request.
Section 4.17 Annual Independent Certified Public Accountants' Reports. On
or before the last day of April of each year, commencing in 1998, the Servicer,
at its own expense, shall cause to be delivered to the Indenture Trustee, the
Owner Trustee, the Credit Enhancer and the Rating Agencies a letter or letters
of a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Credit Enhancer stating that such firm has, with
respect to the Servicer's overall servicing operations (i) performed applicable
tests in accordance with the compliance testing procedures as set forth in
Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees or (ii) 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. These reports will be made available to the
Noteholders and the Certificateholders upon written request.
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Section 4.18 Access to Certain Documentation and Information Regarding the
Home Equity Loans. The Servicer shall provide to the Indenture Trustee, the
Owner Trustee, the Depositor, the Credit Enhancer, and the supervisory agents
and examiners (as required in the latter case by applicable state and federal
regulations) of each of the foregoing access to the documentation regarding the
Home Equity Loans, such access being afforded without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Indenture Trustee and the Credit Enhancer and in
addition shall provide a copy of such computer tape to the Indenture Trustee and
the Credit Enhancer at such other times as the Indenture Trustee or the Credit
Enhancer may request.
Section 4.19 Assignment of Agreement. The Servicer may not assign its
obligations under this Agreement, in whole or in part, unless (i) it shall have
first obtained the written consent of the Indenture Trustee, the Owner Trustee,
and the Credit Enhancer, and (ii) the Indenture Trustee, the Owner Trustee and
Credit Enhancer shall have received a confirmation letter from the Rating
Agencies confirming the rating of the Offered Certificates as AAA or its
equivalent; provided, however, that any assignee must meet the eligibility
requirements set forth in Section 7.1(f) hereof for a successor servicer.
Section 4.20 ARMs. (a) The Servicer shall enforce each ARM and Convertible
ARM in accordance with its terms and shall timely calculate, record, report and
apply all interest rate adjustments in accordance with the related Mortgage
Note. The Servicer's records shall, at all times, reflect the then Loan Rate and
monthly payment and the Servicer shall timely notify the Mortgagor of any
changes to the Loan Rate or the Mortgagor's monthly payment. If the Servicer
fails to make either a timely or accurate adjustment to the Loan Rate or monthly
payment or to notify the Mortgagor of such adjustments, the Servicer shall pay
from its own funds any shortage. If the Servicer's failure to make a scheduled
change affects the Issuer's rights to make future adjustments under the terms of
the ARM or Convertible ARM, the Servicer shall repurchase the ARM or Convertible
ARM in accordance with the provisions of the last sentence of Section 4.13(f).
Any amounts paid by the Servicer pursuant to this Section shall not be an
advance and shall not be reimbursable from the proceeds of any Home Equity Loan.
(b) The Indenture Trustee, as the holder of the Mortgage Notes, hereby
authorizes and directs the Servicer, on behalf of the Indenture Trustee, to
determine the fixed rates into which Mortgagors having Convertible ARMs may
convert the adjustable rates on their Mortgage Notes upon compliance with the
terms thereof. The Servicer agrees to determine such rates, and otherwise
administer the program as contemplated in the Mortgage Notes for the Convertible
ARMS.
Section 4.21 Inspections by Certificate Insurer and Account Parties; Errors
and Omissions Insurance. (a) At any reasonable time and from time to time upon
reasonable notice, the Credit Enhancer, the Indenture Trustee, the Owner Trustee
or any agents or representatives thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer with
25
any of its officers or directors. The costs and expenses incurred by the
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by the Servicer.
(b) The Servicer agrees to maintain errors and omissions coverage and a
fidelity bond, each at least to the extent required by Section 305 of Part I of
the FNMA Guide or any successor provision thereof.
Section 4.22 Financial Statements. The Servicer understands that, in
connection with the transfer of the Notes and the Certificates, Noteholders and
Certificateholders may request that the Servicer make available to prospective
Noteholders and Certificateholders any quarterly unaudited financial statement
of the Servicer for the then-current fiscal year and annual audited financial
statements of the Servicer for one or more of the most recently completed five
fiscal years for which such statements are available, which request shall not be
unreasonably denied. Such financial statements shall also be supplied to the
Credit Enhancer.
The Servicer also agrees to make available on a reasonable basis to the
Depositor, the Credit Enhancer, any Noteholder or Certificateholder or any
prospective Noteholder or Certificateholder a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and to permit the Depositor, the Credit Enhancer, any Noteholder or
Certificateholder or any prospective Noteholder or Certificateholder to inspect
the Servicer's servicing facilities during normal business hours for the purpose
of satisfying the Depositor, the Credit Enhancer, any Noteholder or
Certificateholder or such prospective Noteholder or Certificateholder that the
Servicer has the ability to service the Home Equity Loans in accordance with
this Agreement.
Section 4.23 The Designated Depository Institution. The Servicer shall give
the Depositor, the Indenture Trustee, the Owner Trustee and the Credit Enhancer
(a) at least thirty days' prior written notice of any anticipated change of the
Designated Depository Institution and (b) written notice of any change in the
ratings of the Designated Depository Institution of which the Servicer is aware,
within two Business Days after discovery.
Section 4.24 Appointment of Custodian. If the Servicer determines that the
Indenture Trustee is unable to deliver Files to the Servicer as required
pursuant to Section 4.14 hereof, the Servicer shall so notify the Depositor, the
Credit Enhancer, the Rating Agencies, the Owner Trustee and the Indenture
Trustee, and make request that a custodian acceptable to the Servicer and the
Credit Enhancer be appointed to retain custody of the Files on behalf of the
Indenture Trustee. The Indenture Trustee and the Depositor agree to co-operate
reasonably with the Servicer in connection with the appointment of such
custodian. The Depositor shall pay all reasonable fees and expenses of such
custodian.
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ARTICLE V.
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
Section 5.1 Establishment of Accounts. (a) The Depositor hereby directs the
Indenture Trustee to create the Payment Account and the Insured Payment Account.
Each such Account shall be maintained as a segregated trust account at a
Designated Depository Institution to be held in the name of the Issuer for the
benefit of the Noteholders and the Credit Enhancer.
(b) The Depositor hereby directs the Indenture Trustee to create the
Funding Account and the Capitalized Interest Account. Each such Account shall be
maintained as a segregated account with the Indenture Trustee to be held for the
benefit of the related Noteholders and Certificateholders as provided herein and
the Credit Enhancer.
(c) The Depositor hereby directs the Indenture Trustee to create the
Reserve Account, including the [Spread Sub-Account], to be maintained as a
segregated account at a Designated Depository Institution to be held for the
benefit of the Noteholders and the Certificateholders.
Section 5.2 Flow of Funds. (a) Upon receipt, the Indenture Trustee shall
deposit (i) the Monthly Remittance remitted by the Servicer pursuant to Section
4.8(d)(iii) hereof, plus any related Substitution Adjustment Amounts and any
related Loan Purchase Prices received by the Indenture Trustee pursuant to the
terms hereof, to the Payment Account [or [to the Owner Trustee for deposit in]
the Certificate Distribution Account, as applicable], (ii) the Reserve Account
Initial Deposit, if any, to the Reserve Account, (iii) the amount of any Insured
Payment (other than Insured Payments in respect of amounts described in clause
(ii) of the definition of Insured Payment) to the Insured Payment Account, (iv)
on the Closing Date, the Original Funded Amount in the Funding Account, and (v)
on the Closing Date, the applicable Original Capitalized Interest Deposit in the
Capitalized Interest Account. Insured Payments in respect of amounts described
in clause (ii) of the definition of Insured Payment shall be paid by the Credit
Enhancer to the Indenture Trustee for distribution to the Noteholders who have
complied with the provisions of [Section 5.2(m)], in the same manner as
distributions with respect to the Securities.
(b) (i) On each Deposit Date, the Indenture Trustee shall withdraw from the
Funding Account any Funding Earnings on the amounts on deposit therein and
deposit such Funding Earnings in the Capitalized Interest Account. On each
Deposit Date, the Indenture Trustee shall withdraw from the Funding Account an
amount equal to 100% of the Original Principal Balance of each Additional Loan
to be included, on such Deposit Date, and, subject to the next succeeding
sentence, pay such amounts to or upon the order of the Depositor. From the
amount withdrawn from the Funding Account, the Indenture Trustee shall (w)
deduct the amount of the related Additional Deposit, if any, [(x) deposit such
Additional Deposit in the Spread Sub-Account,] and (y) pay the remaining amount
withdrawn from the Funding Account to or upon the order of the Depositor. On the
final Funding Payment Date, if any amounts remain in the Funding Account after
the withdrawals specified above in this Section 5.2(b), (A) the Indenture
Trustee shall withdraw such amounts and deposit them in the Payment Account [or
the Certificate Distribution
27
Account, as applicable], (B) if such aggregate amount is less than $100,000, it
will be distributed as a Prepayment and allocated among the [Noteholders and
Certificateholders] as part of the applicable Principal Distribution Amount, and
(C) if such aggregate amount is greater than or equal to $100,000, such amount
will be distributed to the [Noteholders], pro rata on the basis of Security
Balances of all Notes, and the Funding Account shall be closed. The Indenture
Trustee shall maintain records of the amounts in the Funding Account.
(ii) On each Funding Payment Date, the Indenture Trustee shall transfer
from the Capitalized Interest Account to the Payment Account [or the Certificate
Distribution Account, as applicable,] the applicable Capitalized Interest
Requirement for such Funding Payment Date. In addition, on each Deposit Date,
other than as provided in the next sentence, the Servicer shall deliver to the
Indenture Trustee, and the Indenture Trustee shall deposit in the Capitalized
Interest Account, any Underfunded Amount. On the earlier to occur of the Deposit
Date on which the Funding Period ends and the final Funding Payment Date, after
giving effect to the transfers, if any, described in the preceding sentences,
any amounts remaining in the Capitalized Interest Account shall be withdrawn by
the Indenture Trustee and paid to _________, and such Capitalized Interest
Account shall be closed.
(c) If, on any Payment Date, the amount then on deposit in the Payment
Account or the Certificate Distribution Account, as applicable, is insufficient
to pay the full amount of (i) the Premium Payment, the Indenture Trustee's Fee
or the Owner Trustee's Fee on such Payment Date, and (ii) the Total Distribution
Amount, the Indenture Trustee shall withdraw the amount of such insufficiency
from the Reserve Account, to the extent of the amounts, if any, on deposit
therein and deposit such amounts in the applicable Account.
(d) On each Payment Date after the transfers pursuant to clause (c) above
and before any other distributions, the Indenture Trustee shall, from amounts
then on deposit in the appropriate Account (i) pay to the Credit Enhancer the
Premium Payment then due and (ii) pay to the Indenture Trustee and the Owner
Trustee, the Indenture Trustee's Fee and the Owner Trustee's Fee, as applicable,
then due.
(e) On each Payment Date after the transfers and distributions pursuant to
clauses (c) and (d) and before any other distributions, the Indenture Trustee
shall make the following transfers and distributions in the priority indicated
from the Available Funds then on deposit in the appropriate Account, to the
extent of the Total Distribution Amount:
(i) to the Payment Account, from the Total Distribution Amount, the
Noteholders' Interest Distributable Amount;
(ii) to the Payment Account, from the Total Distribution Amount,
remaining after the application of clause (i), the Noteholders' Principal
Distributable Amount;
(iii) if amounts withdrawn from the Funding Account are to be
distributed pursuant to Section 5.2(b)(i)(C), to the Payment Account;
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(iv) to the Credit Enhancer, any unreimbursed Reimbursement
Obligations;
(v) [to the Owner Trustee] for deposit in the Certificate Distribution
Account, from the Total Distribution Amount remaining after the application
of clauses (i) through (iv), the Certificateholders' Interest Distributable
Amount;
(vi) [to the Owner Trustee] for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining after
the application of clauses (i) through (v), the Certificateholders'
Principal Distributable Amount; and
(vii) to the Indenture Trustee for deposit in the Reserve Account,
from the Total Distribution Amount, the amounts remaining after the
application of clauses (i) through (vi) above provided, however, that
following the occurrence of an Event of Default pursuant to [Section
5.1(i), 5.1(ii), 5.1(iv) or 5.1(v)] of the Indenture, an acceleration of
the Notes pursuant to Section 5.02 of the Indenture amounts on deposit in
the Collection Account will be deposited in the Payment Account to the
extent necessary to pay accrued and unpaid interest on the Notes and then,
to the extent funds are available therefore, principal on the Notes until
the principal balance of the Notes has been reduced to zero, before any
amounts are deposited in the Certificate Distribution Account. Following
the payment in full of the Notes, amounts on deposit in the Collection
Account will be deposited in the Certificate Distribution Account to the
extent necessary to pay accrued and unpaid interest on the Certificates and
then, to the extent funds are available therefore, principal on the
Certificates until the principal balance thereof has been reduced to zero.
(f) The Indenture Trustee shall (i) receive as attorney-in-fact of the
Notes any Insured Payment from the Credit Enhancer, (ii) shall deposit the
Insured Payment to the Insured Payment Account and (iii) shall disburse the same
from the Insured Payment Account to the Payment Account and the Noteholders as
set forth in Section 5.2(e) hereof. Insured Payments disbursed by the Indenture
Trustee from proceeds of the Credit Enhancement Instrument shall not be
considered payment by the Issuer with respect to the Notes and the Credit
Enhancer shall become the owner of such unpaid amounts due from the Issuer in
respect of Insured Payments as the deemed assignee of such Notes, as hereinafter
provided. The Indenture Trustee, on behalf of each Noteholder, hereby agrees for
the benefit of the Credit Enhancer that it recognizes that to the extent the
Credit Enhancer pays Insured Payments, either directly or indirectly (as by
paying through the Indenture Trustee), to the Insured Payment Account, the
Credit Enhancer (x) will be surrogated to the rights of the Noteholders, with
respect to such Insured Payment, (y) shall be deemed to the extent of the
payments so made to be an owner of such Notes and (z) shall receive future
distributions of the applicable Distribution Amount until all such Insured
Payments by the Credit Enhancer have been fully reimbursed, as described in the
following paragraph. The Credit Enhancer shall not acquire any voting rights
hereunder as a result of such subrogation, except as otherwise described herein.
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It is understood and agreed that the intention of the parties is that the
Credit Enhancer shall not be entitled to reimbursement on any Payment Date for
amounts previously paid by it unless on such Payment Date the Noteholders shall
also have received the full amount of the related Distribution Amount for such
Payment Date.
(g) Subject to the terms and conditions of the Credit Enhancement
Instrument, the Credit Enhancer will pay any Insured Payment that is a
Preference Amount (as defined below) on the Business Day (as defined in the
Policy) following receipt on a Business Day by the Fiscal Agent of (i) a
certified copy of the order requiring the return of the preference payment, (ii)
an opinion of counsel satisfactory to the Credit Enhancer that such order is
final and not subject to appeal, (iii) an assignment in such form as is
reasonably required by the Credit Enhancer, irrevocably assigning to the Credit
Enhancer all rights and claims of the Noteholder relating to or arising under
the Notes against the debtor which made such preference payment or otherwise
with respect to such preference payment and (iv) appropriate instruments to
effect the appointment of the Credit Enhancer as agent for such Noteholder in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Credit Enhancer, provided that if such documents
are received after 12:00 noon New York City time on such Business Day, they will
be deemed to be received on the following Business Day. Such payments shall be
disbursed to the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Noteholder and not to any
Owner directly unless such Noteholder has returned principal or interest paid on
the Obligations to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Noteholder.
"Preference Amount" means any amount previously distributed to an Owner of
a Note that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time in accordance with a final nonappealable
order of a court having competent jurisdiction.
In no event shall the Credit Enhancer pay more than one Insured Payment in
respect of any Preference Amount. Consequently, a Noteholder shall not be
entitled to reimbursement with respect to any final order relating to the
Noteholder's receipt of funds representing Insured Payments made by the Credit
Enhancer.
Each Noteholder, by its purchase of a Note, the Servicer and the Indenture
Trustee hereby agree that the Credit Enhancer may, after making payment of the
Preference Amounts or acknowledging to Noteholders its obligation to make
payment of any Preference Amounts, at any time thereafter during the
continuation of any proceeding relating to a preference claim direct all matters
relating to such preference claim, including, without limitation, the direction
of any appeal of any order relating to such preference claim and the posting of
any surety, supersedes or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Credit Enhancer, after making
payment of the Preference Amounts, shall be surrogated to the rights of the
Servicer, the Indenture Trustee, the Owner Trustee and each Noteholder [and
Certificateholder] in the conduct of any such preference claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in
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connection with any such preference claim. Any expenses incurred in complying
with the direction of the Credit Enhancer shall be borne solely by the Credit
Enhancer.
Section 5.3 Investment of Accounts. (a) All or a portion of each Account
(other than the Insured Payment Account and the Certificate Distribution
Account) shall be invested and reinvested by the Indenture Trustee in the name
of the Indenture Trustee for the benefit of the related Noteholders and
Certificateholders, as directed in writing (i) by the Depositor, with respect to
the Payment Account, or (ii) by the Servicer with respect to the Reserve
Account, the Funding Account and the Capitalized Interest Account, in one or
more Eligible Investments bearing interest or sold at a discount. Amounts in the
Insured Payment Accounts shall not be invested. [Amounts in the Certificate
Distribution Account shall be invested and reinvested by the [Owner Trustee]].
No investment in any Account shall mature later than the Business Day
immediately preceding the next Payment Date and every investment shall be held
until maturity; provided that Eligible Investments which are obligations of the
Indenture Trustee may mature on the next Payment Date.
(b) Subject to Section ___ of the Indenture, the Indenture Trustee shall
not in any way be held liable by reason of any insufficiency in any Account held
by the Indenture Trustee resulting from any loss on any Eligible Investment
included therein (except to the extent that the bank serving as Indenture
Trustee is the obligor thereon).
(c) If the Servicer or the Depositor, as the case may be, shall have failed
to give investment directions to the Indenture Trustee, then the Indenture
Trustee shall invest the funds in the related Account in commercial paper that
qualifies as an Eligible Investment.
(d) All income or other gain from investments in any Account held by the
Indenture Trustee shall be deposited in such Account immediately on receipt, and
any loss resulting from such investments shall be charged to such Account.
Section 5.4 Eligible Investments. The following are Eligible Investments:
(a) Direct general obligations of the United States or the obligations
of any agency or instrumentality of the United States, the timely payment
or the guarantee of which constitutes a full faith and credit obligation of
the United States.
(b) Federal Housing Administration debentures, but excluding any such
securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption.
(c) FHLMC senior debt obligations, but excluding any such securities
whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(d) Federal Home Loan Banks' consolidated senior debt obligations, but
excluding any such securities whose terms do not provide for payment of a
fixed dollar amount upon maturity or call for redemption.
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(e) FNMA senior debt obligations, but excluding any such securities
whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption.
(f) Federal funds, certificates of deposit, time and demand deposits,
and bankers' acceptances (having original maturities of not more than 365
days) of any domestic bank, the short-term debt obligations of which have
been rated A-1 or better by S&P and P-1 by Xxxxx'x.
(g) Deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of at least $3,000,000
which deposits are not in excess of the applicable limits insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC,
provided that the long-term deposits of such bank or savings and loan
association are rated at least "BBB" by S&P and "Baa3" by Xxxxx'x.
(h) Commercial paper (having original maturities of not more than 270
days) rated A-1 or better by S&P and P-1 by Xxxxx'x.
(i) Investments in money market funds rated AAAm or AAAm-G by S&P and
Aaa by Xxxxx'x.
provided that no instrument described above is permitted to evidence either the
right to receive (a) only interest with respect to 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 no instrument described above may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to stated maturity.
Section 5.5 Reports to Noteholders, Certificateholders and Depositor. (a)
On each Payment Date, the Indenture Trustee shall report in writing to each
Noteholder of record, to each Paying Agent, if any, to the Owner Trustee for the
Owner Trustee to forward to each Certificateholder of record, and to the
Depositor, with a copy to the Credit Enhancer and the Rating Agencies:
(i) the amount of the distribution allocable to principal of the Notes
and to the Certificate Balance of the Certificates;
(ii) the amount of such distribution allocable to interest on or with
respect to the Notes and to the Certificates;
(iii) the amount of such distribution allocable to principal on the
related Home Equity Loans, separately identifying the scheduled payments
and the aggregate amount of any Prepayments or other unscheduled recoveries
of principal included therein;
(iv) the amount of such distributions allocable to interest on the
related Home Equity Loans;
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(v) the aggregate outstanding principal balance of the Notes and the
Note Pool Factor, in each case after giving effect to any payment of
principal on such Payment Date;
(vi) the total of any Substitution Adjustment Amounts and any Loan
Purchase Prices included in such distribution;
(vii) the amount on deposit in the Reserve Account as of such Payment
Date, the Specified Reserve Account Requirement as of such Payment Date,
and the amount of any addition or withdrawal from the Reserve Account since
the last Payment Date;
(viii) the amount of any Insured Payment included in distributions on
the Notes on such Payment Date;
(ix) the amount of the Servicing Fee paid with respect to such Payment
Date;
(x) the total dollar amount of losses realized during the preceding
month, the cumulative losses since the Closing Date and each expressed as a
percentage of the Original Loan Balance;
(xi) as of such Payment Date, the Cumulative Reserve Account
Withdrawals;
(xii) the Pass-Through Rate for the Notes for the Accrual Period
preceding such Payment Date and the Note LIBOR Rate for such Accrual
Period;
(xiii) the Note LIBOR Rate for the Accrual Period beginning on such
Payment Date;
(xiv) the weighted average Loan Rate of the Home Equity Loans as of
the last day of the preceding calendar month; and
(xv) the weighted average of the remaining term of the Home Equity
Loans as of the last day of the preceding calendar month.
The Indenture Trustee shall report in writing to the Certificate Insurer on
each Payment Date, the following information: the Noteholders' Interest
Shortfall Amount, the Noteholders' Principal Shortfall Amount and the
Noteholders' Carry-Forward Amount; provided, however, that the Indenture Trustee
shall not be responsible to recompute, recalculate or verify any information
provided to it by the Servicer. The obligations of the Indenture Trustee under
this Section are conditioned upon such information being received from the
Servicer pursuant to Section 4.8(d)(ii) hereof.
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(b) In addition, on each Payment Date the Indenture Trustee will
disseminate to each Noteholder of record, to each Paying Agent, if any, to the
Owner Trustee for the Owner Trustee to forward to each Certificateholder of
Record, and to the Depositor, with a copy to the Credit Enhancer and the Rating
Agencies, together with the information described in Section 5.5 (a) above, the
following information as of the close of business on the related Record Date,
which is required to be prepared by the Servicer and furnished to the Indenture
Trustee pursuant to Section 4.8(d)(ii) hereof for such purpose on or prior to
the related Remittance Date:
(i) the total number of Home Equity Loans and the aggregate Loan
Balances thereof, together with the number and aggregate principal balances
of Home Equity Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent
and (c) 90 or more days Delinquent;
(ii) the number and aggregate principal balances of all Home Equity
Loans in foreclosure proceedings (and whether any such Home Equity Loans
are also included in any of the statistics described in the foregoing
clause (i));
(iii) the number and aggregate principal balances of all Home Equity
Loans relating to Mortgagors in bankruptcy proceedings (and whether any
such Home Equity Loans are also included in any of the statistics described
in the foregoing clauses (i) and (ii));
(iv) the number and aggregate principal balances of all Home Equity
Loans relating to REO Properties (and whether any such Home Equity Loans
are also included in any of the statistics described in the foregoing
clauses (i), (ii) and (iii));
(v) the number and aggregate Loan Balances of all Home Equity Loans as
to which foreclosure proceedings were commenced during the prior Remittance
Period;
(vi) a schedule regarding cumulative foreclosures since the Cut-off
Date;
(vii) the book value of any REO Property and any income received from
REO Properties during the prior Remittance Period;
(viii) the Pool Principal Balance;
(ix) as of each Remittance Date, Delinquency Advances and Servicing
Advances;
(x) for each Home Equity Loan which is an REO Property, the Loan
Balance of such Home Equity Loan, the value of the Mortgaged Property, the
value
34
established by any new appraisal, the estimated cost of disposing of the
Home Equity Loan and the amount of any unreimbursed Delinquency Advances
and Servicing Advances;
(xi) for each Home Equity Loan which is in foreclosure, the Loan
Balance of such Home Equity Loan, the value of the Mortgaged Property, the
Loan-to-Value Ratio as of the date of origination, the Loan-to-Value Ratio
as of the close of business on the last day of the calendar month next
preceding such Payment Date and the last paid-to date; and
(xii) the number and aggregate Loan Balances of Delinquent Home Equity
Loans purchased by the Servicer during the related Remittance Period
pursuant to Section 4.13(f).
(c) On each Payment Date, the Indenture Trustee shall report in writing to
the Owner Trustee, the Depositor, the Credit Enhancer and the Rating Agencies:
(i) the amount of Cumulative Reserve Account Withdrawals immediately
prior to such Payment Date and immediately after such Payment Date,
(ii) the amount on deposit in the Reserve Account immediately after
such Payment Date; and
(iii) the Specified Reserved Account Requirement immediately prior to
such Payment Date and immediately after such Payment Date.
Section 5.6 Drawings under the Credit Enhancement Instrument and Reports by
Trustee. (a) On each Determination Date, the Indenture Trustee shall determine,
no later than 12:00 noon, California time, on such Determination Date, whether a
Noteholders' Interest Shortfall Amount or a Noteholders' Principal Shortfall
Amount has theretofore occurred and will remain uncured on the following Payment
Date. If the Indenture Trustee determines that a Noteholders' Interest Shortfall
Amount or a Noteholders' Principal Shortfall Amount has theretofore occurred and
will remain uncured or will occur, the Indenture Trustee shall furnish the
Credit Enhancer and the Depositor with a completed Notice in the form set forth
as Exhibit A to the Credit Enhancement Instrument. The Notice shall specify the
amount of Insured Payment and shall constitute a claim for an Insured Payment
pursuant to the Credit Enhancement Instrument.
(b) The Indenture Trustee shall report to the Depositor, the Credit
Enhancer, the Owner Trustee and the Servicer with respect to the amounts then
held in each Account and/or Sub-Account and the identity of the investments
included therein, as the Depositor, the Credit Enhancer, the Owner Trustee or
the Servicer may from time to time request. Without limiting the generality of
the foregoing, the Indenture Trustee shall, at the request of the Depositor, the
Credit Enhancer, the Owner Trustee or the Servicer, transmit promptly to the
Credit Enhancer, the Depositor and the Servicer copies of all accountings of
receipts in respect of the Home Equity Loans furnished to it by the Servicer.
35
(c) From time to time, the Indenture Trustee shall promptly report to the
Depositor and to the Credit Enhancer with respect to its actual knowledge,
without independent investigation, of any inaccuracies of any of the statements
set forth in Part II of Exhibit D hereto.
Section 5.7 The Reserve Account. [(a) On the Closing Date, the Depositor
shall deposit the Reserve Account Initial Deposit into the Reserve Account. In
no circumstances will the Depositor be required to deposit from its own funds
any amounts in the Reserve Account other than the Reserve Account Initial
Deposit to be made on the Closing Date.
(b) If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to any and all deposits and withdrawals therefrom on
such Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, the Servicer shall instruct the Indenture Trustee to
distribute, and the Indenture Trustee shall distribute, the amount of the excess
to the Depositor. Amounts properly distributed to the Depositor pursuant to this
Section 5.6(b) shall be deemed released from the Issuer and the security
interest therein granted to the Indenture Trustee and the Depositor shall in no
event thereafter be required to refund any such distributed amounts.
(c) Upon termination of the Issuer, after payment of all Reimbursement
Obligations due to the Credit Enhancer under the terms hereof, funds in the
Reserve Account shall be distributed as provided in Section __ hereof.]
Section 5.8 Calculation of LIBOR. On each Interest Determination Date,
until the Security Balances of the Notes has been reduced to zero, the Indenture
Trustee will either (i) request each Reference Bank to inform the Indenture
Trustee of the quotation offered by its principal London office for making
one-month United States dollar deposits in leading banks in the London interbank
market as of 11:00 a.m. (London time) on such Interest Determination Date, or
(ii) in lieu of making a request of the Reference Banks, the Indenture Trustee
may rely on the quotations for those Reference Banks that appear at such time on
the Reuters Screen LIBO Page, to the extent available.
LIBOR for the next Accrual Period will be established by the Interest
Trustee on each Interest Determination Date as follows:
(a) If on any Interest Determination Date two or more Reference Banks
provide such offered quotations, LIBOR for the next Accrual Period shall be
the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16%).
(b) If on any Interest Determination Date only one or none of the
Reference Banks provides such offered quotations, LIBOR for the next
Accrual Period shall be whichever is the higher of (i) LIBOR as determined
on the previous Interest Determination Date or (ii) the Reserve Interest
Rate. The "Reserve Interest Rate" shall be the rate per annum which the
Indenture Trustee determines to be either (i) the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 1/16%) of the
one-month United States dollar lending rates that New York City banks
selected by the Indenture Trustee are quoting, on the relevant Interest
Determination Date, to the principal London offices of at least two of the
Reference Banks to which such quotations are, in
36
the opinion of the Indenture Trustee, being so made, or (ii) in the event
that the Indenture Trustee can determine no such arithmetic mean, the
lowest one-month United States dollar lending rate which New York City
banks selected by the Indenture Trustee are quoting on such Interest
Determination Date to leading European banks.
(c) If on the first Interest Determination Date, the Indenture Trustee
is required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (b) above, LIBOR shall be _______%.
Until the Notes are paid in full, the Indenture Trustee will at all times
retain at least four Reference Banks for the purpose of determining LIBOR with
respect to each Interest Determination Date. Each Reference Bank shall (i) be a
leading bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market, (ii) not be an Affiliate of the Depositor and (iii) have an
established place of business in London. If any such Reference Bank should be
unwilling or unable to act as such or if the Indenture Trustee should terminate
the appointment of any such Reference Bank, the Indenture Trustee will promptly
appoint another leading bank meeting the criteria specified above. None of the
Depositor, the Servicer or the Indenture Trustee shall have any liability or
responsibility to any Person for (i) the selection of any Reference Bank for
purposes of determining LIBOR or (ii) any inability to retain at least four
Reference Banks which is caused by circumstances beyond their reasonable
control.
In determining LIBOR and the Pass-Through Rate for the Notes, the Indenture
Trustee may conclusively rely and shall be protected in relying upon the offered
quotations (whether written, oral or on the Reuters Screen) from the Reference
Banks or the New York City banks as to LIBOR or the Reserve Interest Rate, as
appropriate, in effect from time to time. None of the Depositor, the Servicer,
the Credit Enhancer or the Indenture Trustee shall have any liability or
responsibility to any Person for (i) the Indenture Trustee's selection of New
York City banks for purposes of determining any Reserve Interest Rate or (ii)
the Indenture Trustee's inability, following a good-faith reasonable effort, to
obtain such quotations from the Reference Banks or the New York City banks or to
determine such arithmetic mean, all as provided for in this Section 5.8.
The establishment of LIBOR and the Pass-Through Rate for the Notes by the
Indenture Trustee shall (in the absence of manifest error) be final, conclusive
and binding upon each Holder of a Note, the Depositor, the Servicer and the
Credit Enhancer.
ARTICLE VI.
The Depositor; The Servicer
Section 6.1 Respective Liabilities of the Depositor and the Servicer
Each of the Depositor and the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically imposed upon and
undertaken by each of them herein.
37
Section 6.2 Merger or Consolidation of the Depositor or the Servicer
The Depositor and the Servicer will each keep in full effect its existence,
rights and franchises as a corporation under the laws of the United States or
under the laws of one of the states thereof and will each obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, or any of the Home Equity Loans and to perform
its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer meet the qualifications set
forth in Section 7.1(f).
Section 6.3 Limitation on Liability of the Depositor, the Servicer and
Others.
Neither the Depositor, the Servicer nor any of the directors, officers,
employees or agents of the Depositor or the Servicer shall be under any
liability to the Securityholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor, the Servicer or any such Person against any breach of representations
or warranties made by it herein or protect the Depositor, the Servicer or any
such Person from any liability which would otherwise be imposed by reasons of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Depositor, the Servicer and any director, officer, employee or agent of the
Depositor or the Servicer may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Servicer and any director, officer,
employee or agent of the Depositor or the Servicer shall be indemnified by the
Issuer 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,
the Notes or the Certificates, other than any loss, liability or expense related
to any specific Home Equity Loan or Home Equity 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 willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties hereunder. Neither the
Depositor nor the Servicer shall be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its respective duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that the Depositor, or the 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 Indenture Trustee, the Owner Trustee, the Credit Enhancer and the
Securityholders hereunder. In such event, the legal expenses and costs of such
action and any liability
38
resulting therefrom shall be expenses, costs and liabilities of the Issuer, and
the Depositor and the Servicer shall be entitled to be reimbursed therefor out
of the Collection Account.
ARTICLE VII.
Removal of Servicer
Section 7.1 Removal of Servicer; Resignation of Servicer. (a) The Indenture
Trustee, with the consent of the Credit Enhancer and the Owner Trustee or the
Credit Enhancer may remove the Servicer upon the occurrence of any of the
following events (each, an "Event of Default"):
(i) The Servicer shall (I) apply for or consent to the appointment of
a receiver, trustee, liquidator or custodian or similar entity with respect
to itself or its property, (II) admit in writing its inability to pay its
debts generally as they become due, (III) make a general assignment for the
benefit of creditors, (IV) be adjudicated a bankrupt or insolvent, (V)
commence a voluntary case under the federal bankruptcy laws of the United
States of America or 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) cause corporate action to
be taken by it for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the Servicer,
a proceeding shall be instituted in any court of competent jurisdiction,
under any law relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking in respect of the Servicer an order for relief or an
adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or custodian or
similar entity with respect to the Servicer or of all or any substantial
part of its assets, or other like relief in respect thereof under any
bankruptcy or insolvency law, and, if such proceeding is being contested by
the Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B) continue
undismissed or pending and unstayed for any period of seventy-five (75)
consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
obligations hereunder (other than its obligations referenced in clauses
(vi) and (vii) below) and shall continue in default thereof for a period of
thirty (30) days after the earlier to occur of (x) the date on which an
Authorized Officer of the Servicer knows or reasonably should know of such
failure or (y) receipt by the Servicer of a written notice from the
Indenture Trustee, the
39
Owner Trustee, any Securityholder, the Depositor or the Credit Enhancer of
said failure; provided, however, that if the Servicer demonstrates to the
reasonable satisfaction of the Credit Enhancer that it is diligently
pursuing corrective action, the cure period shall be extended for up to an
additional 60 days; or
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 3.2 which materially
and adversely affects the interests of the Noteholders, the
Certificateholders or Credit Enhancer for a period of thirty (30) days
after the earlier of (x) the date on which an Authorized Officer of the
Servicer knows or reasonably should know of such breach or (y) receipt by
the Servicer of a written notice from the Indenture Trustee, the Owner
Trustee, any Noteholder or Certificateholder, the Depositor or the Credit
Enhancer of such breach; provided, however, that if the Servicer
demonstrates to the reasonable satisfaction of the Credit Enhancer that it
is diligently pursuing corrective action, the cure period shall be extended
for up to an additional 30 days; or
(v) If the Credit Enhancer pays out any money under the Credit
Enhancement Instrument, or if the Credit Enhancer otherwise funds any
shortfall with its own money, because the amounts available to the
Indenture Trustee (other than from the Credit Enhancer) are insufficient to
make required distributions on the Notes; provided, however, that the
Servicer may not be removed under this clause (v) if the Servicer can
demonstrate to the reasonable satisfaction of the Indenture Trustee and the
Credit Enhancer that such event was due to circumstances beyond the control
of the Servicer; or
(vi) The failure by the Servicer to make any required Servicing
Advance for a period of 30 days following the earlier of (x) the date on
which an Authorized Officer of the Servicer knows or reasonably should know
of such failure or (y) receipt by the Servicer of a written notice from the
Indenture Trustee, the Owner Trustee, any Securityholder, the Depositor or
the Credit Enhancer of such failure; or
(vii) The failure by the Servicer to make any required Delinquency
Advance, to pay any Compensating Interest or to pay over the Monthly
Remittance, Loan Purchase Prices and Substitution Adjustment Amounts or, so
long as the Servicer is an Affiliate of the Depositor, the failure by any
Originator to pay any required Loan Purchase Price or Substitution
Adjustment Amount;
provided, however, that (x) prior to any removal of the Servicer pursuant to
clauses (ii) through (iv) and (vi) of this Section 7.1(a), any applicable grace
period granted by any such clause shall have
40
expired prior to the time such occurrence shall have been remedied and (y) in
the event of the refusal or inability of the Servicer to comply with its
obligations described in clause (vii) above, such removal shall be effective
(without the requirement of any action on the part of the Depositor, the Credit
Enhancer or of the Trustees) at 4 p.m. on the second Business Day following the
day on which the Indenture Trustee notifies an Authorized Officer of the
Servicer that a required amount described in clause (vii) above has not been
received by the Indenture Trustee, unless the required amount described in
clause (vii) above is paid by the Servicer prior to such time. Upon the
Indenture Trustee's determination that a required amount described in clause
(vii) above has not been made by the Servicer, the Indenture Trustee shall so
notify an Authorized Officer of the Servicer, the Depositor, the Owner Trustee,
and the Credit Enhancer, as soon as is reasonably practical.
(b) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except 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 the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel to
such effect which shall be delivered to the Indenture Trustee, the Owner
Trustee, the Depositor and the Certificate Insurer.
(c) No removal or resignation of the Servicer shall become effective until
the Indenture Trustee or a successor servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(d) Upon removal or resignation of the Servicer, the Servicer also shall
promptly deliver or cause to be delivered to a successor servicer or the
Indenture Trustee all the books and records (including, without limitation,
records kept in electronic form) that the Servicer has maintained for the Home
Equity Loans, including all tax bills, assessment notices, insurance premium
notices and all other documents as well as all original documents then in the
Servicer's possession.
(e) Any collections received by the Servicer after removal or resignation
shall be endorsed by it to the Indenture Trustee and remitted directly and
immediately to the Indenture Trustee or the successor Servicer.
(f) Upon removal or resignation of the Servicer, the Indenture Trustee (x)
may solicit bids for a successor servicer as described below, and (y) pending
the appointment of a successor Servicer as a result of soliciting such bids,
shall serve as Servicer. The Indenture Trustee, if it serves as successor
Servicer, shall be entitled to a Servicing Fee calculated at the applicable
Servicing Fee Rate and payable on a monthly basis. The Indenture Trustee shall,
if it is unable to obtain a qualifying bid and is prevented by law from acting
as Servicer, appoint, or petition a court of competent jurisdiction to appoint,
any housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved seller-servicer by FNMA or
41
FHLMC for first and second mortgage loans and having equity of not less than
$15,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Credit Enhancer as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.8 and 4.15; provided, however, that if the
Indenture Trustee acts as successor Servicer then the Depositor agrees to pay to
the Indenture Trustee at such time that the Indenture Trustee becomes such
successor Servicer a set up fee of twenty-five dollars ($25.00) for each Home
Equity Loan, if any, then included in the Trust. The Indenture Trustee shall be
obligated to serve as successor Servicer whether or not the $25.00 fee described
in the preceding sentence is paid by the Depositor, but shall in any event be
entitled to receive, and to enforce payment of, such fee from the Depositor.
(g) In the event the Indenture Trustee solicits bids as provided above, the
Indenture Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to the full amount of the aggregate
Servicing Fees as servicing compensation, together with the other servicing
compensation in the form of assumption fees, late payment charges or otherwise
as provided in Sections 4.8 and 4.15. Within thirty days after any such public
announcement, the Indenture Trustee shall, with the consent of the Credit
Enhancer, negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid. The Indenture Trustee shall deduct from
any sum received by the Indenture Trustee from the successor to the Servicer in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder. After such deductions, the remainder of
such sum shall be paid by the Trustee to the Servicer at the time of such sale,
transfer and assignment to the Servicer's successor.
(h) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Indenture Trustee and any
successor Servicer in effecting the termination of the 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 the Servicer's functions hereunder and
shall promptly also transfer to the Trustee or such successor Servicer, as
applicable, all amounts which then have been or should have been deposited in
the Collection Account by the Servicer or which are thereafter received with
respect to the Home Equity Loans. Neither the Indenture Trustee nor any other
successor Servicer shall be held liable by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof caused by (i)
the failure of the Servicer to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer.
42
(i) The Indenture Trustee or any other successor Servicer, upon assuming
the duties of Servicer hereunder, shall immediately make all Delinquency
Advances and pay all Compensating Interest which the Servicer has theretofore
failed to remit with respect to the Home Equity Loans and shall make all future
Delinquency Advances, Servicing Advances and payments of Compensating Interest
required by this Agreement during the time it is acting as Servicer hereunder;
provided, however, that if the Indenture Trustee is acting as successor
Servicer, the Indenture Trustee shall only be required to make Delinquency
Advances (including the Delinquency Advances described in this clause (i)) if,
in the Indenture Trustee's reasonable good faith judgment, such Delinquency
Advances will ultimately be recoverable from the related Home Equity Loans.
(j) The Servicer which is being removed or is resigning shall give notice
to the Mortgagors and to the Rating Agencies of the transfer of the servicing to
the successor.
(k) Any successor Servicer shall assume all rights and obligations of the
predecessor Servicer under this Agreement, except those arising before
succession (other than the obligation to make Delinquency Advances) and under
Section 3.2.
Section 7.2 Right of the Credit Enhancer to Replace Servicer. From and
after the occurrence of a Servicing Delinquency Trigger, the Credit Enhancer
may, upon written notice to the Indenture Trustee, the Owner Trustee and the
Rating Agencies, replace the Servicer with a successor. No such replacement
shall become effective until a successor has assumed the Servicer's
responsibilities and obligations hereunder.
ARTICLE VIII.
Termination
Section 8.1 Termination Upon Option of Servicer. (a) On any Remittance Date
on or after the Optional Termination Date, the Servicer may determine to
purchase and may cause the purchase from the Issuer of all (but not fewer than
all) Home Equity Loans and all property theretofore acquired in respect of any
Home Equity Loan by foreclosure, deed in lieu of foreclosure, or otherwise then
remaining in the Issuer at a price equal to 100% of the aggregate Loan Balances
of the related Home Equity Loans as of the day of purchase minus amounts
remitted from the Collection Account to the Payment Account and the Certificate
Distribution Account, as applicable, representing collections of principal on
the Home Equity Loans during the current Remittance Period, plus one month's
interest on such amount computed at the weighted average Remittance Rate plus
the unpaid amounts due and owing to the Credit Enhancer for the payment of
certain fees and reimbursement of draws under the Credit Enhancement Instrument
plus the aggregate amount of any related unreimbursed Delinquency Advances and
Servicing Advances which the Servicer has theretofore failed to remit. In
connection with such purchase, the Servicer shall remit to the Indenture Trustee
all amounts then on deposit in the Collection Account for deposit to the Payment
Account and the Certificate Distribution Account, as appropriate, which deposit
shall be deemed to have occurred immediately preceding such purchase. The Notes
and Certificates will be redeemed concurrently therewith.
43
(b) Promptly following any such purchase, the Indenture Trustee will
release the Files for the related Home Equity Loans with appropriate
endorsements and transfer documents, to the Servicer or otherwise upon its
order.
ARTICLE IX.
Miscellaneous Provisions
Section 9.1 Amendment. This Agreement may be amended by the Issuer, the
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee, with the
consent of the Credit Enhancer (which consent may not be unreasonably withheld),
but without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity or defect, to correct or supplement any provisions in this
Agreement or for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions in this Agreement or of modifying in
any manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Indenture Trustee, the Owner Trustee and the Credit Enhancer,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
This Agreement may also be amended from time to time by the Issuer, the
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee, with the
consent of the Credit Enhancer, the consent of the Noteholders evidencing not
less than a majority of the Security Balances of the Notes and the consent of
the Certificateholders evidencing not less than a majority of the Percentage
Interest for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Security Balances of the Notes and
the Percentage Interest of the Certificates, the Holders of which are required
to consent to any such amendment, without the consent of the Holders of all the
outstanding Notes and the Holders of all the outstanding Certificates affected
thereby.
Promptly after its execution of any such amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent to each Rating Agency and each Securityholder.
It shall not be necessary for the consent of the Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Section 9.2 Notices. All notices hereunder shall be given as follows, until
any superseding instructions are given to all other Persons listed below:
The Indenture Trustee: Bankers Trust Company of
California, N.A.
0 Xxxx Xxxxx
00
Xxxxxx, Xxxxxxxxxx 00000
Attention:
UCFC Home Equity Loan Owner Trust 1997-__
Tel: (000) 000-0000
Fax: (000) 000-0000
The Depositor: UCFC Acceptance Corporation
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: X. X. XxXxxx, III
President
Tel: (000) 000-0000
Fax: (000) 000-0000
The Servicer: United Companies Lending Corporation(R)
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: X. Xxxx Quick,
Senior Vice President
Copy to: C. Xxxxx Xxxxxx,
President
Tel: (000) 000-0000
Fax: (000) 000-0000
Credit Enhancer: [ ]
The Owner Trustee: Wilmington Trust Company
[ ]
45
Moody's: Xxxxx'x Investors Service
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Home Equity
Monitoring Department
S & P: Standard & Poor's Ratings Group,
a division of
The XxXxxx-Xxxx Companies, Inc.
00 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Dept.
Fitch: Fitch Investors Service L.P.
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Section 9.3 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the parties hereto, and the Credit
Enhancer, the Certificateholders and the Noteholders, as third-party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 9.4 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 9.5 Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.6 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.7 Assignment to Indenture Trustee. The Depositor hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and
46
interest of the Issuer in, to and under the Home Equity Loans and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
Section 9.8 Nonpetition Covenant. Notwithstanding any prior termination of
this Agreement, the Servicer and the Depositor shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
Section 9.9 Limitation of Liability of Owner Trustee and Indenture Trustee.
(a) Notwithstanding anything contained herein to the contrary, this Agreement
has been countersigned by Wilmington Trust Company, not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall Wilmington Trust Company, in its individual capacity or, except as
expressly provided in the Trust Agreement, as Owner Trustee have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder or under any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement, in the performance
of its duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of [Articles VI, VII and
VIII of the Trust Agreement.]
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Bankers Trust Company of California, N.A.
not in its individual capacity but solely as Indenture Trustee and in no event
shall Bankers Trust Company of California, N.A. have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
Section 9.10 Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
Section 9.11 No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Servicer and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
47
Section 9.12 Credit Enhancer. Any right conferred to the Credit Enhancer
shall not arise until the issuance by the Credit Enhancer of its Credit
Enhancement Instrument and shall be suspended during any period in which the
Credit Enhancer is in default in its payment obligations under such certificate
insurance policy (except that subrogation rights which have previously arisen
shall not be so suspended). During the period of any such suspension, such
rights shall vest in the Noteholders, and may be exercised by the Holders of a
majority of the Security Balances of the Notes then Outstanding.
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
UCFC HOME EQUITY LOAN OWNER TRUST 1997-__
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee on behalf of the Issuer,
By:____________________________________
Name:
Title:
UCFC ACCEPTANCE CORPORATION,
Depositor,
By:____________________________________
Name:
Title:
UNITED COMPANIES LENDING
CORPORATION, (R)
Servicer,
By:____________________________________
Name:
Title:
49
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely as
Indenture Trustee on behalf of the Issuer,
By:____________________________________
Name:
Title:
Acknowledged and Accepted:
WILMINGTON TRUST COMPANY, not
in its individual capacity
but solely as Owner Trustee,
By:___________________________
Name:
Title:
50
APPENDIX A
DEFINITIONS
"Account": Any of the following: the Payment Account, the Certificate
Distribution Account, the Insured Payment Account, the Funding Account, the
Capitalized Interest Account and the Reserve Account.
"Accrual Period": As to any Payment Date and the Securities, the period
beginning on the Payment Date in the month preceding the month of such Payment
Date (or in the case of the first Payment Date, beginning on the Closing Date)
and ending on the preceding such Payment Date.
"Addition Notice": As to any Deposit Date occurring after December __,
1997, written notice to the Indenture Trustee, the Owner Trustee and the
Certificate Insurer from the Originators given at least 10 Business Days prior
to such Deposit Date identifying the Additional Loans and the aggregate Original
Loan Balance thereof and accompanied by an electromagnetic data file for such
Additional Loans.
"Additional Deposit": As to any Deposit Date, an amount equal to the sum of
(i) the product of the percentage used in the definition of Initial Deposit and
the aggregate Principal Balance as of the related Deposit Cut-off Date of the
Additional Loans being transferred on such date, and (ii) the amount, if any,
required to be deposited in the [Reserve Account] with respect to the Additional
Loans transferred and sold on such Deposit Date as provided in Section 5.2 of
the Sale and Servicing Agreement.
"Additional Loans": Those home equity loans sold, transferred and conveyed
on a Deposit Date pursuant to Section ___ of the Sale and Servicing Agreement
and the related Transfer Agreement, which shall be listed in the Schedule of
Additional Loans delivered pursuant to such Transfer Agreement.
"Administration Agreement": The Administration Agreement dated as of
December __, 1997, among the Issuer, the Indenture Trustee and
[_____________________], as Administrator.
"Administrator": [______________], as administrator under the
Administration Agreement or any successor Administrator appointed pursuant to
the terms of the Administration Agreement.
"Adjusted Pass-Through Rate": As to any Remittance Date, a per annum rate
equal to the sum of (x) the Expense Fee Rate and (y) the Pass-Through Rate for
the Notes [and the] Certificates for the Accrual Period related to the Payment
Date in the month of such Remittance Date. As of the Closing Date, the Adjusted
Pass-Through Rates for the Notes [and the Certificates] are ___ and ___%,
respectively.
"Affiliate": As to any Person, any other Person controlling, controlled by
or under common control with such Person. "Control" means the power to direct
the management and policies of a Person, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise. "Controlled" and
"Controlling" have meanings correlative to the foregoing. The Trustees may
conclusively presume that a Person is not an Affiliate of another Person unless
an Authorized Officer of the Trustees has actual knowledge to the contrary.
["Amortized Reserve Account Requirement": As defined in the Insurance
Agreement.]
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of origination of the related Home Equity Loan,
which, with respect to Escrow Loans, may be an appraised value which is subject
to completions of certain improvements to be paid for out of escrowed funds, or
in the case of a Home Equity 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, and as otherwise calculated in accordance with the
credit underwriting guidelines described in the Prospectus.
"ARM": A Home Equity Loan the Coupon Rate of which adjusts on each Change
Date by reference to the applicable Index, subject to the applicable Periodic
Rate Cap, Lifetime Floor and Lifetime Cap.
"Assignment of Mortgage": With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the conveyance of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Home Equity Loans secured by Mortgaged Properties
located in the same jurisdiction.
"Authorized Newspaper": A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays or holidays.
"Authorized Officer": With respect to the Issuer, any officer of the Owner
Trustee who is authorized to act for the Owner Trustee in matters relating to
the Issuer and who is identified on the list of Authorized Officers delivered by
the Owner Trustee to the Indenture Trustee on the Closing Date (as such list may
be modified or supplemented from time to time thereafter) and, so long as the
Administration Agreement is in effect, any Responsible Officer of the
Administrator who is authorized to act for the Administrator in matters relating
to the Issuer and to be acted upon by the Administrator pursuant to the
Administration Agreement and who is identified on the list of Authorized
Officers delivered by the Administrator to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time
thereafter). With respect to the Depositor and the Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
-2-
"Available Funds": As to any Payment Date, the sum, without duplication, of
(a) the amount on deposit in the Payment Account on such Payment Date after the
transfers specified in Section [5.2] of the Sale and Servicing Agreement, plus
(b) any amount transferred from the Reserve Account to the Payment Account on
such Payment Date pursuant to Section [5.2], minus (c) the amount of any
payments made from the Payment Account pursuant to Section [5.2] of the Sale and
Servicing Agreement and prior to making any distributions pursuant to Section
[5.2] of the Sale and Servicing Agreement. The term "Available Funds" does not
include Insured Payments and does not include any amounts that cannot be
distributed to the Noteholders or the Certificateholders of the related Notes
and Certificates by the Indenture Trustee as a result of proceedings under the
United States Bankruptcy Code.
"Balloon Loan": A Home Equity Loan for which the amortization schedule
exceeds the stated maturity date of the related Mortgage Note by a substantial
period of time leaving a payment due on such stated maturity date which exceeds
the regular monthly payment by a substantial amount.
"Basic Documents": The Trust Agreement, the Certificate of Trust, the
Indenture, the Loan Purchase Agreement, the Loan Sale Agreement, the Insurance
Agreement, the Administration Agreement, the Sale and Servicing Agreement and
the other documents and certificates delivered in connection with any of the
above.
"Basic Principal Amount": As to any Payment Date, an amount equal to the
sum, without duplication, of the following amounts received with respect to the
Home Equity Loans: (i) the principal portion of all scheduled and unscheduled
payments received by the Servicer on the Home Equity Loans during the related
Remittance Period, including (a) any Prepayments, (b) Insurance Proceeds, (c)
Net Liquidation Proceeds, (d) REO Proceeds and (e) Released Mortgaged Property
Proceeds, (ii) all Substitution Adjustment Amounts and the principal portion of
all Loan Purchase Prices deposited into the Collection Account on the related
Remittance Date, (iii) the applicable portion of the proceeds received by the
Indenture Trustee in connection with any termination of the Trust pursuant to
Article [ ] of the Sale and Servicing Agreement, to the extent such proceeds
relate to principal, (iv) the Loan Balance of each Home Equity Loan which became
a Liquidated Loan during the related Remittance Period to the extent not
included in the amounts described in the preceding clauses (i), (ii) and (iii)
and (v) if such Payment Date is the last Funding Payment Date, amounts
transferred to the applicable Certificate Distribution Account and Payment
Account from the Funding Account pursuant to Section [5.2] of the Sale and
Servicing Agreement.
"Beneficial Owner": With respect to any Note, the Person who is the
beneficial owner of such Note as reflected on the books of the Depository or on
the books of a Person maintaining an account with such Depository (directly as a
Depository Participant or indirectly through a Depository Participant, in
accordance with the rules of such Depository).
-3-
"Book-Entry Notes": Beneficial interests in the Notes, ownership and
transfers of which shall be made through book entries by the Depository as
described in Section 4.06 of the Indenture.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the State of New York or in the city in
which the principal corporate trust office of the Indenture Trustee or Owner
Trustee or the principal office of the Certificate Insurer is located, are
authorized or obligated by law or executive order to be closed. When used with
respect to an Interest Determination Date, "Business Day" shall also mean a day
on which banks are open for dealing in foreign currency and exchange in London
and New York City.
"Business Trust Statute": Chapter 38 of Title 12 of the Delaware Code, 12
Del. Codess. 3801 et seq., as the same may be amended from time to time.
"Capitalized Interest Account": Each capitalized interest account created
and maintained pursuant to Section 5.2 of the Sale and Servicing Agreement.
["Capitalized Interest Requirement": _______________________________]
"Certificate Distribution Account": The meaning assigned to such term in
Section 5.01 of the Trust Agreement.
"Certificate Distribution Amount": With respect to any Payment Date, the
sum of (x) the amount accrued during the related Interest Period on the
Percentage Interest of the Certificates at the Certificate Rate for such
Interest Period.
"Certificate of Trust": The Certificate of Trust in the form of Exhibit B
attached to the Trust Agreement filed for the Trust pursuant to Section 3810(a)
of the Business Trust Statute.
"Certificate Rate": __________.
"Certificate Register" and "Certificate Registrar": The register mentioned
in and the registrar appointed pursuant to Section 3.04 of the Trust Agreement.
"Certificate": A certificate evidencing the beneficial interest of a
Certificateholder in the Trust, substantially in the form of Exhibit A attached
to the Trust Agreement.
"Certificateholder": The Person in whose name a Certificate is registered
in the Certificate Register except that, any Certificate registered in the name
of the Issuer, the Owner Trustee or the Indenture Trustee or any Affiliate of
any of them shall be deemed not to be outstanding and the registered holder will
not be considered a Certificateholder or a holder for purposes of giving any
request, demand, authorization, direction, notice, consent or waiver under the
Indenture or the Trust Agreement provided that, in determining whether the
Indenture
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Trustee or the Owner Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Certificates that the Indenture Trustee or the Owner Trustee knows to be so
owned shall be so disregarded. Owners of Certificates that have been pledged in
good faith may be regarded as Holders if the pledgee establishes to the
satisfaction of the Indenture Trustee or the Owner Trustee, as the case may be,
the pledgee's right so to act with respect to such Certificates and that the
pledgee is not the Issuer, any other obligor upon the Certificates or any
Affiliate of any of the foregoing Persons.
"Certified Assignment Schedule": A computerized schedule listing each
original intervening assignment a true and correct copy of which is in the
possession of the applicable Originator or the Servicer but the original of
which is unavailable and the loan number and property address of the related
Property.
"Certified Mortgage Schedule": A computerized schedule listing each
original Mortgage a true and correct copy of which is in the possession of the
applicable Originator or the Servicer but the original of which in unavailable
and the loan number and property address of the related Primary Parcel.
"Change Date": The date on which the Coupon Rate of each ARM is subject to
adjustment.
"Clearing Agency Participant": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Closing Date": December __, 1997.
"CMT": The weekly average of the yields on United States treasury
securities adjusted to a constant maturity of one year, as made available by the
Federal Reserve Board as of the date 45 days (as set forth in the related
Mortgage Note) before each Change Date.
"CMT ARM": An ARM for which: the Index is CMT; the Change Date occurs on
the date set forth in the related Mortgage Note and every twelfth month
thereafter; the Periodic Rate Cap for all but ___ of the CMT ARMs is [200] basis
points; the Lifetime Cap is [600] basis points higher than the initial Mortgage
Rate; and the Lifetime Floor is the Gross Margin set forth in the related
Mortgage Note.
"Code": The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
"Collateral": The meaning specified in the Granting Clause of the
Indenture.
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"Collection Account": The account or accounts created and maintained
pursuant to Section 4.8 of the Sale and Servicing Agreement. The Collection
Account shall be an Eligible Account.
"Collection Period": With respect to any Home Equity Loan and Payment Date
other than the first Payment Date, the calendar month preceding any such Payment
Date and with respect to the first Payment Date, the period from December __,
1997 through ___________.
"Compensating Interest": As defined in Section 4.10 of the Sale and
Servicing Agreement.
"Converted ARM": [Not Applicable]
"Convertible ARM": [Not Applicable]
"Corporate Trust Office": With respect to the Owner Trustee, the principal
corporate trust office of the Owner Trustee located at [_____________________],
or at such other address as the Owner Trustee may designate by notice to the
Certificateholders and the Depositor, or the principal corporate trust office of
any successor Owner Trustee at the address designated by such successor Owner
Trustee by notice to the Certificateholders and the Depositor.
"Coupon Rate": As of any date of determination, the rate of interest borne
by each Mortgage Note.
"Credit Enhancement Draw Amount": As defined in Section 3.32 of the
Indenture.
"Credit Enhancement Instrument": The certificated insurance policy, dated
as of the Closing Date, issued by the Credit Enhancer to the Indenture Trustee
for the benefit of the Noteholders.
"Credit Enhancer Default": If the Credit Enhancer fails to make a payment
required under the Credit Enhancement Instrument in accordance with its terms.
"Credit Enhancer": [______________________], a [_______________], any
successor thereto or any replacement credit enhancer substituted pursuant to
Section 3.33 of the Indenture.
"Cumulative Reserve Account Withdrawals": As of any Payment Date, the
cumulative amount transferred from the Reserve Account to the Accounts pursuant
to Section [5.2] of the Sale and Servicing Agreement.
Current Interest: As to any Payment Date and any Note [or Certificate]
interest accrued during the related Accrual Period at the applicable
Pass-Through Rate on the related Security Balance.
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"Cut-off Date": The opening of business on December __, 1997, except that
the Cut-off Date with respect to any Mortgage Note for a Home Equity Loan that
is not an Additional Loan and dated on or after December __, 1997, shall be the
date of such Mortgage Note.
"Default": Any occurrence which is or with notice or the lapse of time or
both would become an Event of Default.
"Definitive Notes": The meaning specified in Section 4.06 of the Indenture.
"Delinquency Advance": As defined in Section 4.9 of the Sale and Servicing
Agreement.
"Delinquent": A Home Equity Loan is "delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Home Equity Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Deposit Cut-Off Date": The opening of business on the first day of the
month in which a Deposit Date occurs as specified in a Transfer Agreement with
respect to those Additional Loans which are being sold pursuant to such Transfer
Agreement.
"Deposit Date": Each Payment Date occurring during the related Funding
Period and the Payment Date occurring in the month (i) following the month in
which such Funding Period ends if such period ends after the Payment Date in a
month or (ii) in which such Funding Period ends, if such period ends prior to
the Payment Date in a month.
"Depositor": UCFC Acceptance Corporation, a Louisiana corporation, and its
successors and permitted assigns.
"Depository or Depository Agency": The Depository Trust Company or a
successor appointed by the Indenture Trustee with the approval of the Depositor.
Any successor to the Depository shall be an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act and the
regulations of the Securities and Exchange Commission thereunder.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
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"Designated Depository Institution": With respect to any Account, an
institution whose deposits are insured by the Bank Insurance Fund or the Savings
Association Insurance Fund of the FDIC, the long-term deposits of which shall be
rated A or better by S&P and A2 or better by Moody's and in one of the two
highest short-term ratings, unless otherwise approved in writing by the Credit
Enhancer with notification to the Rating Agencies, and which is any of the
following: (i) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Credit Enhancer and the Rating Agencies and, in each case acting
or designated by the Servicer as the depository institution for such Account;
provided, however, that any such institution, association or subsidiary shall
have combined capital, surplus and individual profits of at least $100,000,000.
Notwithstanding the foregoing, an Account may be held by an institution
otherwise meeting the preceding requirements except that the only applicable
rating requirement shall be that the unsecured and uncollateralized debt
obligations thereof shall be rated Baa3 or better by Moody's (or the equivalent
rating by any other Rating Agency) if such institution has capital and surplus
of not less than $50,000,000.00 and has trust powers and the Account is held by
such institution in its trust capacity and not in its commercial capacity.
"Determination Date": The Business Day preceding each Payment Date.
"Disqualified Organization": "Disqualified Organization" shall have 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).
"Due Date": With respect to any Home Equity Loan, the day of the month on
which the monthly payment is due, excluding any days of grace.
"Eligible Investments": Those investments so designated pursuant to Section
5.4 of the Sale and Servicing Agreement.
"Eligible Substitute Mortgage": A Home Equity Loan substituted for another
pursuant to this Agreement, which (i) has a current Loan Rate at least equal to,
and not more than 1% greater than, the current Loan Rate of the Home Equity Loan
being replaced, (ii) is of the same or better lien priority, property type and
occupancy status as the replaced Home Equity Loan, (iii) shall mature no later
than the maturity date of the Home Equity Loan being replaced, (iv) has a
Loan-to-Value Ratio no higher than the Loan-to-Value Ratio of the replaced Home
Equity Loan, (v) is not delinquent and is not an Escrow Loan or a Convertible
ARM, (vi) has a Loan Balance as of the related Replacement Cut-off Date equal to
or less than the Loan Balance of the replaced Home Equity Loan as of such
Replacement Cut-off Date, (vii) satisfies the criteria set forth from time to
time in the definition of "qualified replacement mortgage" at Section 860G(a)(4)
of the Code (or any successor statute thereto) and applicable to such
arrangement, (viii) satisfies each representation and warranty set forth in Part
II of Exhibit D as of the applicable Replacement Cut-off Date, (ix) has the same
status under SMMEA as the Home
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Equity Loan being replaced or qualifies under SMMEA, (x) is an ARM and (xi) has
a Gross Margin no less than, a Lifetime Floor no higher than, a Lifetime Cap no
lower than and a Coupon Rate which, after the initial adjustment, adjusts at the
same intervals based on the same Index subject to the same Periodic Rate Cap, as
that of the ARM being replaced. In the event that one or more mortgage loans are
proposed to be substituted for one or more Home Equity Loans, the Certificate
Insurer and the Depositor may allow the foregoing tests to be met on a weighted
average or other aggregate basis acceptable to the Certificate Insurer and the
Depositor, except that the requirements of clauses (iv), (viii), (ix), (x), and
(xi) hereof must be satisfied as to each Eligible Substitute Mortgage.
"ERISA": Employee Retirement Income Security Act of 1974, as amended.
"Escrow Loan": Any Home Equity Loan with respect to which (i) all or a
portion of the proceeds of such Home Equity Loan were originally paid into an
escrow account pending completion of improvements to be made to the related
Property and (ii) the Appraised Value was specifically subject to the completion
of such improvements.
"Event of Default": As defined in Section 7.1 of the Sale and Servicing
Agreement.
"Event of Excess Loss": For any of the time periods set forth below,
cumulative Net Realized Losses since the Closing Date equal or exceed the
specified percentages of the Original Aggregate Loan Balance.
Time Period Percentage
----------- ----------
%
"Exchange Act": The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Expense Fee Rate": A per annum rate equal to the sum of (i) the Servicing
Fee Rate, (ii) the [Indenture Trustee's Fee Rate and the Owner Trustee's Fee
Rate] and (iii) with respect to the Payment Date in January 1997 and each
Payment Date thereafter, the Premium Rate, as defined in the Insurance
Agreement.
"FDIC": The Federal Deposit Insurance Corporation, 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.
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"File": The documents specified in Part I of Exhibit D to the Sale and
Servicing Agreement pertaining to a particular Home Equity Loan pursuant to this
Agreement and any additional documents required to be added to the File pursuant
to this Agreement.
"Final Scheduled Payment Date": To the extent not previously paid, the
principal balance of the Notes will be due on the Payment Date in ____________
____.
"Fiscal Agent": ______________________, as Fiscal Agent for the Credit
Enhancer or any successor fiscal agent appointed by the Credit Enhancer.
"Fitch": Fitch Investors Service, L.P.
"FNMA": The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time.
"FTC Rule": The regulations in 16 C.F.R. ss.433.1.
"Funding Account": The trust account created and maintained with the
Indenture Trustee pursuant to Section 5.1 of the Sale and Servicing Agreement
and referred to therein as the Funding Account.
"Funded Amount": As to the Closing Date, the applicable Original Funded
Amount. As to any Determination Date, the amount on deposit in the related
Funding Account excluding Funding Earnings.
"Funding Earnings": As to any Deposit Date, the amount of actual net
investment earnings realized on the Funded Amount in the Funding Account during
the period beginning on the Determination Date in the month preceding such
Deposit Date (or in the case of the first Deposit Payment Date, beginning on the
Closing Date) and ending on the Determination Date in the month of such Deposit
Payment Date.
"Funding Period": The period beginning on the Closing Date and ending on
the earliest to occur of (i) the date on which the Funded Amount is less than
$100,000, (ii) an Event of Default and (iii) ____________, 1998.
"Gross Margin": With respect to each ARM, the number of basis points set
forth in the related Note which is added to the Index to determine the Coupon
Rate on the related Change Date, subject to the applicable Periodic Rate Cap,
Lifetime Cap and Lifetime Floor.
"Grant": Mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and xxxxx x xxxx upon and a security
interest in and right of set-off
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against, deposit, set over and confirm pursuant to the Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of such
collateral or other agreement or instrument and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
proceedings in the name of the granting party or otherwise, and generally to do
and receive anything that the granting party is or may be entitled to do or
receive thereunder or with respect thereto.
["Guarantee Agreement": The agreement, dated the Closing Date, between the
Guarantor and the Credit Enhancer pursuant to which the Guarantor agrees to make
certain reimbursements to the Credit Enhancer and is entitled to the Guarantee
Fee.]
["Guarantee Fee": As to any Remittance Date, an amount equal to the product
of __% and the
["Guarantee Fee Rate": As to any ARM, 0% per annum.]
["Guarantee Fee Sub-Account": One of the sub-accounts within the Reserve
Account.]
["Guarantor": ___________, a ___________ corporation and its successors and
assigns.]
"Holder": Any of the Noteholders or Certificateholders.
"Home Equity Loans": The home equity loans sold to the Issuer on the
Closing Date, together with any Eligible Substitute Mortgages substituted
therefor in accordance with this Sale and Servicing Agreement, as from time to
time are held as a part of the Trust Estate, the Home Equity Loans originally so
transferred and assigned being identified in the Schedule of Home Equity Loans.
The term "Home Equity Loan" includes the term "ARM," "Convertible ARM,"
"Converted ARM" and, except where otherwise indicated, "Eligible Substitute
Mortgages" and "Additional Loans." The term "Home Equity Loan" includes any Home
Equity 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
Issuer. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Issuer
established hereby by the Depositor, in fact was not transferred and assigned to
the Issuer for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in clause (10) of Part II of Exhibit D
attached to the Sale and Servicing Agreement with respect to such home equity
loan, shall nevertheless be considered a "Home Equity Loan" for all purposes of
this Agreement.
"Indemnified Parties": The meaning assigned to such term in Section 8.02 of
the Trust Agreement.
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"Indenture": The indenture dated as of December __, 1997 between the Issuer
and the Indenture Trustee, as Indenture Trustee.
"Indenture Trustee": Bankers Trust Company of California, N.A., and its
successors and assigns or any successor indenture trustee appointed pursuant to
the terms of the Indenture.
"Indenture Trustee's Fee": With respect to any Payment Date, the product of
(i) one-twelfth of the Indenture Trustee's Fee Rate and (ii) the aggregate Loan
Balances of all Home Equity Loans as of the last day of the related Remittance
Period.
"Indenture Trustee's Fee Rate": ______% per annum.
"Independent Certificate": A certificate or opinion to be delivered to the
Indenture Trustee under the circumstances described in, and otherwise complying
with, the applicable requirements of Section 11.01 of the Indenture, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Independent": When used with respect to any specified Person, the Person
(i) is in fact independent of the Issuer, any other obligor on the Notes, the
Depositor and any Affiliate of any of the foregoing Persons, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Depositor or any Affiliate of any of the
foregoing Persons and (iii) is not connected with the Issuer, any such other
obligor, the Depositor or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Index": CMT or 6-Month LIBOR.
"Initial Deposit": The product of ________% and $_______________ (i.e.
$__________).
"Initial LIBOR": _______%.
"Insurance Agreement": The insurance and reimbursement agreement dated as
of December __, 1997 among the Servicer, the Depositor, the Issuer, the
Indenture Trustee, the Credit Enhancer [and _________, as representative of the
Underwriters], including any amendments and supplements thereto.
"Insurance Policy": Any hazard or title insurance policy relating to a Home
Equity Loan.
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"Insurance Proceeds": The proceeds of any insurance policy other than the
Credit Enhancement Instrument relating to a Home Equity Loan, a Property or a
REO Property, net of proceeds to be applied to the repair of the Property or
released to the Mortgagor and net of expenses reimbursable therefrom.
"Insured Payment": (i) As of any Payment Date and any Obligations, the sum
of (x) the applicable Noteholders' Interest Shortfall Amount and (y) the
applicable Noteholders' Principal Shortfall Amount, and (ii) any Preference
Amount with respect to which the affected Noteholders' have complied with the
provisions of the Credit Enhancement Instrument and Section [5.2] hereof during
the related Remittance Period.
"Insured Payment Account": Each insured payment account created pursuant to
Section 5.1 of the Sale and Servicing Agreement.
"Interest Determination Date": December __, 1997, for the initial Payment
Date, and thereafter the second Business Day prior to any subsequent Payment
Date while the Notes are outstanding.
"Interest Period": With respect to any Payment Date other than the first
Payment Date, the period beginning on the preceding Payment Date and ending on
the day preceding such Payment Date, and in the case of the first Payment Date,
the period beginning on the Closing Date and ending on the day preceding the
first Payment Date.
"Interest Remittance Amount": For any Remittance Date, the amount equal to
the sum, without duplication, of the following amounts with respect to the Home
Equity Loans in: (i) the aggregate interest portions (calculated at the
applicable Adjusted Pass-Through Rate) of the payments (whether or not
collected) becoming due on the Home Equity Loans during the immediately
preceding Remittance Period, net of the Servicing Fee as authorized in Section
[4.8] and (ii) Compensating Interest (calculated for this purpose, at the
applicable Adjusted Pass-Through Rate) with respect to the Home Equity Loans.
"Issuer Request": A written order or request signed in the name of the
Issuer by any one of its Authorized Officers and delivered to the Indenture
Trustee.
"Letter of Credit": An irrevocable letter of credit (i) issued by a
commercial bank rated A or better by S&P and A2 or better by Xxxxx'x and
acceptable to the Credit Enhancer, (ii) in form and substance acceptable to the
Credit Enhancer and the Trustees, (iii) with a maximum term of one year, (iv)
for the benefit of the Trustees on behalf of the Securityholders and (v)
providing for the amount thereof to be available to the Indenture Trustee on
behalf of the Securityholders in multiple drawings conditioned only upon
presentation of sight drafts accompanied by the applicable certificate in the
form attached to such letter of credit.
"LIBOR": The London interbank offered rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
5.8 of the Sale and Servicing Agreement.
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"LIBOR ARM": An ARM for which: the Index is 6-Month LIBOR; the initial
Change Date occurs on the date set forth in the related Mortgage Note and every
sixth month thereafter; the Periodic Rate Cap is the number of basis points set
forth in the Schedule of Home Equity Loans; the Lifetime Cap is the number of
basis points higher than the initial Coupon Rate as set forth in the Schedule of
Home Equity Loans; and the Lifetime Floor is the initial Coupon Rate.
"Lifetime Cap": The provision in the Note for each ARM which limits the
maximum Coupon Rate over the life of such ARM.
"Lifetime Floor": The provision in the Note for each ARM which limits the
minimum Coupon Rate over the life of such ARM.
"Liquidated Loan": As defined in Section 4.13(e) of the Sale and Servicing
Agreement.
"Liquidation Expenses": Expenses which are incurred by the Servicer in
connection with the liquidation of any defaulted Home Equity Loan, such
expenses, including, without limitation, legal fees and expenses, and any
unreimbursed Servicing Advances expended by the Servicer pursuant to Section
[5.7] with respect to the related Home Equity Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any amounts
(including the proceeds of any Insurance Policy) recovered by the Servicer in
connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": As of any date of calculation and with respect to each Home
Equity Loan, the Original Principal Balance thereof less any Principal
Remittance Amounts relating to such Home Equity Loan included in previous
Monthly Remittances and, if applicable, the Monthly Remittance as of such date.
` "Loan Principal Balance": As of any date, the aggregate Loan Balances of
all of the Home Equity Loans as of the close of business on such date.
"Loan Rate": As to any date of determination, the rate of interest borne by
each Mortgage Note.
"Loan Purchase Agreement": The Loan Purchase Agreement, dated the Closing
Date, among the Seller and the Originators.
"Loan Purchase Price": With respect to any Home Equity Loan purchased from
the Issuer on a Remittance Date pursuant to the Sale and Servicing Agreement, an
amount equal to the Loan Balance of such Home Equity Loan as of the date of
purchase (after giving effect to the applicable Monthly Remittance remitted by
the Servicer on such Remittance Date), less amounts held in the Collection
Account with respect to such Home Equity Loan, plus one
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month's interest on the Loan Balance thereof as of the end of the preceding
Remittance Period computed at the related Remittance Rate, [prior to the
Subordination Termination Date], and thereafter at the applicable Adjusted
Pass-Through Rate, together with the aggregate amounts of (i) all Delinquency
Advances and Servicing Advances theretofore made with respect to such Home
Equity Loan and not subsequently recovered from the related Home Equity Loan,
(ii) all Delinquency Advances and Servicing Advances which the Servicer has
theretofore failed to remit with respect to such Home Equity Loan and (iii) if
the Loan Purchase Price is being paid in connection with the breach of Paragraph
(13) of Part II of Exhibit D to the Sale and Servicing Agreement by virtue of a
violation of the Xxxxxx Act or the FTC Rule, the actual damages and/or expenses,
if any, incurred by the Issuer in connection with or as a result of such
violations (such actual damages and/or expenses to include both statutory
damages under the Xxxxxx Act and the FTC Rule, as applicable, and those due to
any claim, counterclaim, rescission, set off or defense asserted by the related
Mortgagor, including without limitation, costs incurred by the Issuer to obtain
its dismissal from any suit to which it has been made a defendant as a result of
such violation).
"Loan Sale Agreement": The Loan Sale Agreement dated the Closing Date,
between the Depositor and the Seller.
"Loan-to-Value Ratio": As to any Home Equity Loan, a fraction (expressed as
a percentage rounded to two decimal places), the numerator of which is the
principal amount of such Home Equity Loan at origination and, if such Home
Equity Loan is a Second Mortgage Loan, the outstanding principal amount of the
related first mortgage as of such date, and the denominator of which is the
Appraised Value of the Property securing such Home Equity Loan.
"Monthly Remittance": The total of the related Interest Remittance Amount
and the related Principal Remittance Amount required to be remitted to the
Indenture Trustee on each Remittance Date.
"Moody's": Xxxxx'x Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Note.
"Mortgage Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation Proceeds
net of Liquidation Expenses and unreimbursed Delinquency Advances relating to
such Home Equity Loan. In no event shall Net Liquidation Proceeds with respect
to any Liquidated Loan be less than zero.
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"Net Loan Rate": With respect to any Home Equity Loan and any day, the
related Loan Rate less the related Servicing Fee Rate.
"Net Realized Losses": As to any Payment Date, the amount, if any, by which
the sum of the Notes exceeds the Loan Principal Balance on the related
Remittance Date.
"Note Depository Agreement": The Agreement among the Trust, the Indenture
Trustee, the Servicer and the Depository Trust Company, as the initial Clearing
Agency, dated as of one Business Day prior to the Closing Date, relating to the
Notes, as the same may be amended or supplemented from time to time.
"Note Owner": The Beneficial Owner of a Note.
"Note Pool Factor": For the Notes as of the close of business on a Payment
Date means a seven-digit decimal figure equal to the outstanding principal
balance of Notes divided by the original outstanding principal balance of the
Notes. The Note Pool Factor for the Notes will be __________ as of the Cut-off
Date; thereafter, the Note Pool Factor for the Notes will decline to reflect
reductions in the outstanding principal balance of the Notes.
"Note Rate": With respect to any Interest Period, a per annum rate
determined by the Servicer equal to LIBOR as of the second LIBOR Business Day
prior to the first day of such Interest Period and [___]%; provided however,
that in no event shall the Note Rate with respect to any Interest Period exceed
the Maximum Rate for such Interest Period.
"Note Register": The register maintained by the Note Registrar in which the
Note Registrar shall provide for the registration of Notes and of transfers and
exchanges of Notes.
"Note Registrar": The Indenture Trustee, in its capacity as Note Registrar.
"Noteholder": The Person in whose name a Note is registered in the Note
Register, except that, any Note registered in the name of the Depositor, the
Issuer or the Indenture Trustee or any Affiliate of any of them shall be deemed
not to be outstanding and the registered holder will not be considered a
Noteholder or holder for purposes of giving any request, demand, authorization,
direction, notice, consent or waiver under the Indenture or the Trust Agreement
provided that, in determining whether the Indenture Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Notes that the Indenture Trustee or the Owner Trustee
knows to be so owned shall be so disregarded. Owners of Notes that have been
pledged in good faith may be regarded as Holders if the pledgee establishes to
the satisfaction of the Indenture Trustee or the Owner Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes or any Affiliate of any of the
foregoing Persons.
"Noteholders' Distributable Amount": With respect to any Payment Date, the
sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount.
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"Noteholders' Interest Carryover Shortfall": With respect to any Payment
Date, the excess of the Noteholders' Monthly Interest Distributable Amount for
the preceding Payment Date and any outstanding Noteholders' Interest Carryover
Shortfall on such preceding Payment Date, over the amount in respect of interest
that is actually deposited in the Payment Account on such preceding Payment
Date, plus interest on the amount of interest due but not paid to Noteholders on
the preceding Payment Date, to the extent permitted by law, at the Interest Rate
from such preceding Payment Date through the current Payment Date.
"Noteholders' Interest Distributable Amount": With respect to any Payment
Date, the sum of the Noteholders' Monthly Interest Distributable Amount for such
Payment Date and the Noteholders' Interest Carryover Shortfall for such Payment
Date.
"Noteholders' Monthly Interest Distributable Amount": With respect to any
Payment Date, the product of (i) one-twelfth of the Interest Rate (or, in the
case of the first Payment Date, the Interest Rate multiplied by a fraction, the
numerator of which is the number of days elapsed from and including the Closing
Date to but excluding such Payment Date and the denominator of which is 360) and
(ii) the outstanding principal balance of the Notes on the immediately preceding
Payment Date, after giving effect to all distributions of principal to
Noteholders on such Payment Date (or, in the case of the first Payment Date, on
the Closing Date).
"Noteholders' Monthly Principal Distributable Amount": With respect to any
Payment Date, the Noteholders' Percentage of the Principal Distribution Amount.
"Noteholders' Percentage": 100% until the point in time at which the Notes
have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall": As of the close of any
Payment Date, the excess of the Noteholders' Monthly Principal Distributable
Amount and any outstanding Noteholders' Principal Carryover Shortfall from the
preceding Payment Date over the amount in respect of principal that is actually
deposited in the Payment Account.
"Noteholders' Principal Distributable Amount": With respect to any Payment
Date, the sum of the Noteholder's Monthly Principal Distributable Amount for
such Payment Date and the Noteholders' Principal Carryover Shortfall as of the
close of the preceding Payment Date; provided, however, that the Noteholders'
Principal Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, on the Final Scheduled Payment Date of the
Notes, the principal required to be deposited in the Payment Account will
include the amount necessary (after giving effect to the other amounts to be
deposited in the Payment Account on such Payment Date and allocable to
principal) to reduce the Outstanding Amount of such Notes to zero.
"Notes": The Notes designated as the "Notes" in the Indenture.
"Outstanding": With respect to the Notes, as of the date of determination,
all Notes theretofore executed, authenticated and delivered under the Indenture
except":
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(i) Notes in exchange for or in lieu of which other Notes have been
executed, authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a holder in due course;
(ii) Notes theretofore canceled by the Note Registrar or delivered to
the Indenture Trustee for cancellation; and
(iii) Notes theretofore canceled by the Note Registrar or delivered to
the Indenture Trustee for cancellation; and
[provided, however, that for purposes of effectuating the Credit Enhancer's
right of subrogation as set forth in Section 4.14 of the Indenture only, all
Notes that have been paid with funds provided under the Credit Enhancement
Instrument shall be deemed to be Outstanding until the Credit Enhancer has been
reimbursed with respect thereto.]
"Obligations": As defined in the Insurance Agreement.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Indenture Trustee or
the Owner Trustee.
"Optional Termination Date": The Remittance Date on which the Loan
Principal Balance is [10]% or less than the Original Loan Principal Balance.
"Original Aggregate Loan Balance": Prior to the occurrence of a Deposit
Date, the aggregate Loan Balances of all Home Equity Loans (other than
Additional Loans) as of the Cut-off Date, i.e., $______________. On a Deposit
Date, the sum of (i) _______________, (ii) the aggregate Loan Balances as of the
related Deposit Cut-off Date of the Additional Loans being sold, transferred and
conveyed on such Deposit Date and (iii) if applicable, an amount, calculated as
provided in clause (ii) with respect to all Deposit Dates occurring prior to
such Deposit Date.
"Original Capitalized Interest Deposit": $__________.
"Original Loan Principal Balance": $________________ (prior to the
occurrence of a Deposit Date). On a Deposit Date, the sum of (i)
$______________, or (ii) the aggregate Loan Balances as of the Deposit Cut-off
Date of the Additional Loans on such Deposit Date and (iii) if applicable, an
amount, calculated as provided in clause (ii) with respect to all Deposit Dates
occurring prior to such Deposit Date.
"Original Funded Amount": $______________.
"Original Principal Balance": With respect to each Mortgage Note, the
outstanding principal amount of such Mortgage Note as of the Cut-off Date or,
with respect to Mortgage Note for an Additional Loan, as of the applicable
Deposit Cut-off Date.
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"Originators": [United Companies Lending Corporation(R), United Companies
Mortgage of Tennessee, Inc., Southern Mortgage Acquisition, Inc., and UNICOR
Mortgage(R), Inc. and their respective successors and permitted assigns.]
"Overfunded Amount": As to any Deposit Date, the excess, if any, of (x) the
sum of (i) the amount on deposit in the Capitalized Interest Account after the
transfers pursuant to the first sentence of Section [5.2] on such Deposit Date
and (ii) the aggregate Funding Earnings on the remaining amount on deposit in
the Funding Account for the period from the preceding Deposit Payment Date to
the next Deposit Payment Date at ___% per annum, over (y) the sum of the
Capitalized Interest Requirement and the Capitalized Premium Payment for each
succeeding Funding Payment Date.
"Owner": Each Holder of a Note or a Trust Certificate.
"Owner Trust Estate": All right, title and interest of the Trust in and to
the property and rights assigned to the Trust pursuant to the Sale and Servicing
Agreement, all funds on deposit from time to time in the Trust Accounts and the
Certificate Distribution Account and all other property of the Trust from time
to time, including any rights of the Owner Trustee and the Trust pursuant to the
Sale and Servicing Agreement and the Administration Agreement.
"Owner Trustee": Wilmington Trust Company, a Delaware bank and trust
company, not in its individual capacity but solely as owner trustee under the
Trust, and any successor Owner Trustee hereunder.
"Owner Trustee's Fee": With respect to any Payment Date, the product of (i)
one-twelfth of the Owner Trustee's Fee Rate and (ii) the aggregate Loan Balances
of all Home Equity Loans as of the last day of the related Remittance Period.
"Owner Trustee's Fee Rate": ______% per annum.
"Pass-Through Margin": As to any Accrual Period prior to the Optional
Termination Date, __ basis points. As to any Accrual Period thereafter, __ basis
points.
"Paying Agent": With respect to the notes, any paying agent or co-paying
agent appointed pursuant to Section 3.03 of the Indenture, which initially shall
be the Indenture Trustee. Any paying agent or co-paying agent appointed pursuant
to Section 3.09 of the Trust Agreement and shall initially be Bankers Trust
Company of California, N.A.
"Payment Account": The account established by the Indenture Trustee
pursuant to Section 3.03 of the Indenture and Section 5.1 of the Sale and
Servicing Agreement. The Payment Account shall be an Eligible Account.
"Payment Date": The 15th day of each month or, if the 15th is not a
Business Day, on the immediately succeeding Business Day, commencing in the
month following the Closing Date.
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"Percentage Interest": With respect to any Note, the percentage obtained by
dividing the Security Balance of such Note by the aggregate of the Security
Balances of all Notes. With respect to any Trust Certificate, the percentage
interest of ownership in the Trust represented thereby as set forth on the face
thereof.
"Periodic Rate Cap": The provision in the Mortgage Note for each ARM which
limits increases or decreases in the Coupon Rate on each Change Date.
"Person": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Policy": The irrevocable and unconditional limited financial guaranty
insurance policy number [__________], dated as of the Closing Date, issued by
the Credit Enhancer to the Indenture Trustee for the benefit of the Noteholders.
"Pool Principal Balance": As of any date, the aggregate Loan Balances of
all of the Home Equity Loans as of the close of business on such date.
"Preference Amount": As defined in Section 5.2(g) of the Sale and Servicing
Agreement hereof.
"Premium Payment": With respect to the Payment Date in _______, 1998 and
each Payment Date thereafter and Notes, an amount equal to the product of (x)
one-twelfth of the Premium Rate and (y) the sum of the Notes after giving effect
to the distribution of the Note Principal Distribution Amounts.
"Premium Rate": The rate per annum on which the premium is based in
accordance with the Insurance Agreement.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal, and the proceeds of any Insurance Policy which are to be applied
as a payment of principal on the related Home Equity Loan, shall be deemed to be
Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Primary Parcel": With respect to any Property with multiple parcels, the
parcel having the greatest Appraised Value.
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"Principal Distribution Amount": As to any Payment Date, the sum of (i) the
Basic Principal Amount for such Payment Date and (ii) the aggregate Principal
Carry-Forward Amount for the Notes for such Payment Date.
"Principal Remittance Amount": For any Remittance Date, without
duplication, the amount equal to the sum of the following amounts received with
respect to the Home Equity Loans in: (i) the aggregate principal payments
collected by the Servicer on the Home Equity Loans during the immediately
preceding Remittance Period and (ii) any Prepayments, Net Liquidation Proceeds
(but only to the extent that such Net Liquidation Proceeds do not exceed the
Loan Balance of the related Home Equity Loan), REO Proceeds and Released
Mortgage Property Proceeds, in each case and only to the extent collected on the
Home Equity Loans during the preceding Remittance Period.
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"Prohibited Transactions": A prohibited transaction as defined in Section
860F of the Code or a contribution defined in Section 860G(d) of the Code.
"Property": The underlying real property, including the improvements
thereon, securing a Home Equity Loan.
"Prospectus": The Prospectus Supplement dated December __, 1997 together
with the Prospectus dated December __, 1997, relating to the Notes and the
Certificates.
"Purchaser": [Pelican Mortgage Company, Inc., a Delaware corporation].
"Rating Agency": Any nationally recognized statistical credit rating
agency, or its successor, that rates any Notes and Certificates at the request
of the Depositor at the time of the initial issuance of the Notes and
Certificates with the consent of the Credit Enhancer. If such agency or a
successor is no longer in existence, "Rating Agency" shall be such statistical
credit rating agency, or other comparable Person, designated by the Depositor
with the consent of the Credit Enhancer, notice of which designation shall be
given to the Trustees and Servicer. References herein to the highest rating
category of a rating agency shall mean AAA or A-1+, in the case of S&P, and Aaa
or P-1, in the case of Xxxxx'x, and in the case of any other Rating Agency shall
mean such equivalent ratings.
"Realized Loss": As to any Liquidated Loan, the excess, if any, of (i) the
sum of the unpaid principal balance of such Liquidated Loan plus accrued
interest at the Coupon Rate from the date interest was last paid or advanced
through the last day of the month during which the liquidation occurred, plus
any unreimbursed Servicing Advances over (ii) the Net Liquidation Proceeds.
"Record Date": With respect to each Payment Date, the last Business Day of
the calendar month immediately preceding the calendar month in which such
Payment Date occurs.
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"Redemption Date": means in the case of a redemption of the Notes pursuant
to Section 10.1, the Payment Date specified by the Servicer or the Issuer
pursuant to Section 10.1.
"Redemption Price": means in the case of a redemption of the Notes pursuant
to Section 10.1, an amount equal to the unpaid principal amount of the then
outstanding Notes plus accrued and unpaid interest thereon to but excluding the
Redemption Date.
"Reference Banks": Leading banks selected by the Indenture Trustee and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market (i) with an established place of business in London, (ii) whose
quotations appear on the Reuters Screen LIBO Page on the Interest Determination
Date in question, (iii) which have been designated by the Indenture Trustee to
the Depositor, the Servicer and the Credit Enhancer and (iv) which are not
Affiliates of the Depositor.
"Reimbursement Obligations": As defined in the Insurance Agreement.
"Released Mortgaged Property Proceeds": Proceeds received in connection
with a taking of a Property by condemnation or the exercise of eminent domain or
in connection with a release of part of the Property.
"Remittance Date": Any date on which the Servicer is required to remit
moneys on deposit in the Collection Account to the Indenture Trustee, which
shall be the 10th day of each month, commencing in the month following the month
of the Closing Date or if such day is not a Business Day the immediately
preceding Business Day.
"Remittance Period": The period (inclusive) beginning on the first day of
the calendar month immediately preceding the calendar month in which a
Remittance Date occurs and ending on the last day of such immediately preceding
calendar month.
"Remittance Rate": As to any Home Equity Loan, a per annum rate equal to
the related Coupon Rate minus the Servicing Fee Rate and the Retained Interest
Rate.
"REO Proceeds": Proceeds, net of expenses, from the rental of any REO
Property pending the disposition thereof.
"REO Property": A Property acquired by the Servicer on behalf of the Trust
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-off Date": With respect to any Eligible Substitute
Mortgage, the first day of the calendar month in which such Eligible Substitute
Mortgage is conveyed to the Indenture Trustee.
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"Reserve Account": The reserve account created pursuant to Section 5.1 of
the Sale and Servicing Agreement.
"Reserve Interest Rate": As defined in Section 5.9 of the Sale and
Servicing Agreement.
"Retained Interest": With respect to each ARM, that portion of any payment
as to interest on such ARM at the Retained Interest Rate payable to or at the
direction of the Depositor, the entitlement to which is reconveyed to the
Depositor pursuant to Section [2.2] of the Sale and Servicing Agreement and the
Depositor's right to which is set forth in Section ___ of the Sale and Servicing
Agreement.
"Retained Interest Rate": [0.0]% per annum.
"Reuters Screen LIBO Page": The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks).
"Xxxxxx Act": The Xxxxxx Community Development and Regulatory Act, 15
U.S.C.S. ss.ss.1601 et seq.
"Sale and Servicing Agreement": The Sale and Servicing Agreement dated as
of December __, 1997, among the Trust, as issuer, UCFC Acceptance Corporation,
as depositor, United Companies Lending Corporation(R), as servicer and Bankers
Trust Company of California, N.A., as indenture trustee, as the same may be
amended or supplemented from time to time.
"Schedule of Home Equity Loans": The schedule of Home Equity Loans conveyed
on the Closing Date by the Depositor to the Indenture Trustee in accordance with
Section 2.2(a) hereof. Such schedule identifies each such Home Equity Loan by
the Servicer's loan number and address (including the state) of the Primary
Parcel and sets forth as to each such Home Equity Loan the lien status thereof;
the loan-to-value ratio thereof calculated, for this purposes, using the
appraised value with respect to the related Property set forth in the appraisal
made at the time of origination of the related Home Equity Loan; the Original
Principal Balance; subject to appraisal; the Coupon Rate thereof as of the
Cut-off Date; the current scheduled monthly payment of principal and interest as
of the Cut-off Date; the maturity of the related Mortgage Note; the escrow
amount; the property type; occupancy status; the paid-to-date; the appraised
value with respect to the related Property set forth in the appraisal made at
the time of origination of the related Home Equity Loan; and a code indicating
whether such Home Equity Loan is an Escrow Loan; a code indicating whether such
Home Equity Loan is an ARM, or a Convertible ARM; a code indicating its status
under SMMEA; and for each ARM, the applicable Index, Periodic Rate Cap, the
Gross Margin, the Lifetime Cap, the Lifetime Floor and the first Change Date
after the Cut-off Date.
"Schedule of Additional Loans": The schedule of Additional Loans listing
each Additional Loan sold on the related Deposit Date and identifying each such
Additional Loan by
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the same categories of information set forth in the definition of Schedule of
Home Equity Loans substituting, where appropriate, information as of the
applicable Deposit Cut-off Date rather than Cut-off Date.
"S&P": Standard & Poor's, a division of The XxXxxx-Xxxx Companies, Inc.
"Secretary of State": The Secretary of State of the State of Delaware.
"Securities Act": The Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"Security Balance": The Principal Balance of the Notes, as the case may be.
"Security": Any of the Certificates or Notes.
"Securityholder or Holder": Any Noteholder or a Certificateholder.
"Seller": [Pelican Mortgage Company, Inc., a Delaware corporation.]
"Servicer": United Companies Lending Corporation(R), a Louisiana
corporation, and its permitted successors and assigns.
"Servicer Affiliate": An Affiliate of the Servicer which is qualified to
service residential mortgage loans.
"Servicer LOC": Any letter of credit, surety bond or similar agreement
obtained by the Servicer pursuant to Section [4.8(e)] of the Sale and Servicing
Agreement.
"Servicer's Trust Receipt": The Servicer's trust receipt in the form set
forth as Exhibit E to the Sale and Servicing Agreement.
"Servicing Advance": As defined in Section 4.9 of the Sale and Servicing
Agreement hereof.
"Servicing Delinquency Trigger": Will be deemed to have occurred on any
date of determination (i) on or prior to the fifth anniversary of the Closing
Date, if the Total Expected Losses (as defined below) equal or exceed ____% of
the Original Aggregate Loan Balance and (ii) after the [fifth] anniversary of
the Closing Date but on or prior to the [tenth] anniversary of the Closing Date,
if the Total Expected Losses (as defined below) exceed ____% of the Original
Aggregate Loan Balance.
For purposes of the foregoing definition, the "Total Expected Losses" on
any date of determination shall equal the sum of (i) the cumulative Net Realized
Losses on all of the Home Equity Loans from the Closing Date through and
including such date of determination and (ii) the Delinquency Calculation (as
defined below).
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For purposes of the foregoing definition, the "Delinquency Calculation" on
any date of determination shall equal the sum of:
(i) the principal balance of all Home Equity Loans 30-59 days
delinquent multiplied by _____%;
(ii) the principal balance of all Home Equity Loans 60-89 days
delinquent multiplied by _____%; and
(iii) the principal balance of all Home Equity Loans 90 days or more
delinquent multiplied by ____%.
"Servicing Fee": With respect to any Home Equity Loan, an amount retained
by the Servicer from interest payments received or advanced thereon as
compensation for servicing and administration duties relating to such Home
Equity Loan pursuant to Section 4.15 of the Sale and Servicing Agreement and
equal to one twelfth of the product of the applicable Servicing Fee Rate and the
then outstanding principal amount of such Home Equity Loan as of the first day
of each calendar month payable on a monthly basis.
"Servicing Fee Rate": ____% per annum.
"Servicing Transfer Loan": Any Home Equity Loan for which the servicing has
not been transferred to the Servicer as of the Closing Date or any Deposit Date,
as the case may be.
"Servicing Transfer Period": With respect to any Servicing Transfer Loan on
the Closing Date or Deposit Date, as the case may be, the period (inclusive)
beginning on the Closing Date or the Deposit Date, as the case may be, and
ending on the later of (i) the calendar day which falls forty-five days after
the Closing Date or the Deposit Date, as the case may be, and (ii) the date
agreed to in writing by the Credit Enhancer.
"6-Month LIBOR": The London interbank offered rate for six-month U.S.
dollar deposits, as quoted either (a) in The Wall Street Journal of the edition,
if any, specified in the related Note, or (b) by FNMA, as specified in the
related Note, prior to each Change Date specified in the related Mortgage Note.
"SMMEA": The Secondary Mortgage Market Enhancement Act of 1984, as amended.
["Specified Reserve Account Requirement": As of any date prior to the
Step-Down Date, the greater of the Base Requirement and the amount computed
pursuant to clause (b) below; as of any date thereafter, the greatest of (a) the
lesser of (I) the Base Requirement and (II) the Amortized Reserve Account
Requirement; provided, however, that for any period during which an Event of
Excess Loss exists, the Specified Reserve Account Requirement for this
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clause (II) shall equal two times the percentage used in the definition of Base
Requirement times the Principal Balance as of the date such Event of Excess Loss
first existed, (b) two times the difference between (i) one-half of the
aggregate Loan Balances of all Home Equity Loans which are 90 or more days
Delinquent (including Properties in REO, Foreclosure and Bankruptcy) and (ii)
the Projected Excess Interest as of such date and (c) an amount equal to the sum
of (x) [0.50]% of the aggregate Original Principal Balance and (y) __% of the
Loan Balance of each Balloon Loan. The Specified Reserve Account Requirement
will not be reduced if an Event of Default exists and is continuing under this
Agreement. The Specified Reserve Account Requirement may be reduced or
eliminated by the Certificate Insurer in its sole discretion. Upon any such
reduction or elimination, the Servicer shall give written notice thereof to each
of Xxxxx'x, Fitch and S&P. On or prior to the last Deposit Payment Date, the
Credit Enhancer may, by delivery of a Credit Enhancer Certificate, increase, to
the extent permitted by Section ____ of the Sale and Servicing Agreement, the
Base Requirement.
The Specified Reserve Account Requirement shall equal the Base Requirement
if any Insured Payment has been made.]
"Spread": As to any Remittance Date ____________________.
"Step-Down Date": The later to occur of (i) the ____ Payment Date and (ii)
the date on which the Loan Principal Balance is equal to 50% of the Original
Loan Principal Balance.
["Subordinated Amount": Initially, an amount equal to the product of __%
and the Original Aggregate Loan Balance. As of any Payment Date, the
Subordinated Amount shall be adjusted by subtracting the Cumulative Reserve
Account Withdrawals since the immediately preceding Payment Date.]
["Subordination Termination Date": The Payment Date on which the
Subordinated Amount is reduced to zero.]
"Subservicer": Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
4.3 of the Sale and Servicing Agreement in respect of the qualification of a
Subservicer.
"Subservicing Agreement": The written contract between the Servicer and any
Subservicer relating to servicing and/or administration of certain Home Equity
Loans as permitted by Section 4.3 of the Sale and Servicing Agreement.
"Substitution Adjustment Amount": As defined in Section ___ of the Loan
Purchase Agreement.
"Title Policy Schedule": A computerized schedule listing for each Home
Equity Loan, the name and address of the title insurance company issuing the
commitment, binder or policy with respect thereto and the commitment, binder or
policy number, as applicable.
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"Transfer Agreement": Each Transfer Agreement dated as of a Deposit Date,
executed and delivered pursuant to the terms hereof and thereof.
"Treasury Regulations": Regulations, including proposed or temporary
Regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust Certificate": A certificate evidencing the beneficial interest of a
Certificateholder in the Trust, substantially in the form of Exhibit A attached
to the Trust Agreement.
"Trust Estate": As to the Trust, collectively, all money, instruments, and
other property to the extent such money, instruments and other property, are
subject or intended to be held in trust for the benefit of the related
Securityholders, including all proceeds thereof.
The Trust Estate shall include, without limitation, the following, as
applicable: (i) the Home Equity Loans, (ii) such amounts, including Eligible
Investments, as from time to time may be held by the Indenture Trustee or the
Owner Trustee in any related Account, and by the Servicer in the Collection
Account or otherwise held by the Servicer in trust for the related
Securityholders (except as otherwise provided herein), (iii) any Property, the
ownership of which has been effected in the name of the Servicer on behalf of
the Issuer as a result of foreclosure or acceptance by the Servicer of a deed in
lieu of foreclosure and that has not been withdrawn from the Trust and any
related REO Proceeds, (iv) the rights, if any, of the Issuer in any Insurance
Policies relating to the Home Equity Loans, (v) Net Liquidation Proceeds (but
only to the extent that such Net Liquidation Proceeds do not exceed the Loan
Balance of the related Home Equity Loan plus accrued and unpaid interest on such
Home Equity Loan) with respect to any Liquidated Loan, (vi) all rights of the
Depositor under the Loan Purchase Agreement and the Loan Sale Agreement
transferred and assigned by the Depositor to the Indenture Trustee pursuant to
the Sale and Servicing Agreement, (vii) Credit Enhancement Instrument and (viii)
the Reserve Account.
"Trustees": Collectively, Bankers Trust Company of California, N.A., not in
its individual capacity but solely as Indenture Trustee and Wilmington Trust
Company, not in its individual capacity but solely as Owner Trustee.
"Trust Indenture Act or TIA": The Trust Indenture Act of 1939, as amended
from time to time, as in effect on any relevant date.
"Trust": The trust established by the Trust Agreement.
"UCC": The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
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"Underfunded Amount": As to any Deposit Date, the excess, if any, of (x)
the Capitalized Interest Requirement for the next Deposit Payment Date over (y)
the sum of (i) the amount on deposit in the Capitalized Interest Account
__________ the transfers pursuant to the first sentence of Section [5.2] of the
Sale and Servicing Agreement on such Deposit Date and (ii) the aggregate Funding
Earnings on the remaining amount on deposit in the Funding Account for the
period from such Deposit Date to the next Deposit Date at ___% per annum.
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SCHEDULE I
Schedule of Home Equity Loans
S-I-1
SCHEDULE II
UCFC Home Equity Loan Owner Trust 1997-_
Asset Backed Notes and Asset Backed Certificates
Series 1997-_
Representations and Warranties of the Issuer
Home Equity Loan Owner Trust 1997-_ (the "Issuer") hereby makes the
representations and warranties set forth in this Schedule II to the Servicer and
the Indenture Trustee, as of the Closing Date.
(1) The Issuer is a statutory business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
possesses all requisite authority, power, licenses, permits and franchises to
conduct any and all business contemplated by the Sale and Servicing Agreement
and to comply with its obligations under the terms of this Agreement, the
performance of which have been duly authorized by all necessary action.
(2) Neither the execution and delivery of the Sale and Servicing Agreement
by the Issuer, nor the performance and compliance with the terms thereof by the
Issuer will (A) result in a material breach of any term or provision of the
instruments creating the Issuer or governing its operations, or (B) materially
conflict with, result in a material breach, violation or acceleration of, or
result in a material default under, the terms of any other material agreement or
instrument to which the Issuer is a party or by which it may be bound, or (C)
constitute a material violation of any statute, order or regulation applicable
to the Issuer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Issuer; and the Issuer is not in
breach or violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over it which breach or violation may materially impair the Issuer's ability to
perform or meet any of its obligations under the Sale and Servicing Agreement.
(3) This Agreement, and all documents and instruments contemplated hereby,
which are executed and delivered by the Issuer, will, assuming due
authorization, execution by and delivery to the other parties hereto and
thereto, constitute valid, legal and binding obligations of the Issuer,
enforceable in accordance with their respective terms, except that (a) the
enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
receivership and other similar laws relating to creditors' rights generally and
(b) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
S-I-1
(4) No litigation is pending or, to the best of the Issuer's knowledge,
threatened against the Issuer that would materially and adversely affect the
execution, delivery or enforceability of the Sale and Servicing Agreement or the
ability of the Issuer to perform its obligations thereunder.
(5) Immediately prior to the transfer and assignment of the Home Equity
Loans to the Indenture Trustee, the Issuer had good title to, and was the sole
owner of, each Home Equity Loan and clear of any liens, charges or encumbrances
or any ownership or participation interests in favor of any other Person.
S-I-2
EXHIBIT A
FORM OF CERTIFICATION OF INDENTURE TRUSTEE
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust Company
of California, N.A., a national banking corporation, acting in its capacity as
indenture trustee (the "Indenture Trustee") of certain home equity and home
improvement loans (the "Home Equity Loans") heretofore conveyed in trust to the
Indenture Trustee, pursuant to that certain Sale and Servicing Agreement dated
as of December __, 1997 (the "Sale and Servicing Agreement") among UCFC Home
Equity Loan Owner Trust 1997-_, a Delaware business trust, as issuer (the
"Issuer"), UCFC Acceptance Corporation, a Louisiana corporation, as depositor
(the "Depositor"), United Companies Lending Corporation(R), a Louisiana
corporation, as servicer (the "Servicer"), and the Indenture Trustee; and
WHEREAS, the Indenture Trustee is required, pursuant to Section 2.2 of the
Sale and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Closing Date and to notify the
Depositor, the Owner Trustee, the Originators and the Credit Enhancer promptly
of any defects with respect to the Home Equity Loans, and the applicable
Originator is required to remedy such defects or take certain other action, all
as set forth in Section 2.2 of the Sale and Servicing Agreement; and
WHEREAS, Section 2.2 of the Sale and Servicing Agreement requires the
Indenture Trustee to deliver this Certification upon the satisfaction of certain
conditions set forth therein.
NOW, THEREFORE, the Indenture Trustee hereby certifies that it has
determined that all required documents (or certified copies of documents listed
in Section 2.2 of the Sale and Servicing Agreement) have been executed or
received, and that such documents relate to the Home Equity Loans identified in
the Schedule of Home Equity Loans pursuant to Section 2.2 of the Sale and
Servicing Agreement or, in the event that such documents have not been executed
and received or do not so relate to such Home Equity Loans, any remedial action
by the Depositor pursuant to Section 2.2 of the Sale and Servicing Agreement has
been completed. The Indenture Trustee makes no representation or certification
hereby, however, (i) that any such document is genuine, valid, recordable,
sufficient, suitable, insurable, collectable, enforceable, or appropriate for
the represented purpose or that they are other than what they purport to be on
their face and (ii) with respect to any intervening assignments or assumption
and modification agreements.
By:__________________________
Title:____________________
Dated: ______________, 199_
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EXHIBIT B
FORM OF CERTIFICATION OF PREPAID LOANS
I, _______________, ________________ of United Companies Lending
Corporation(R), as Servicer, hereby certify that between the "Cut-Off Date" (as
defined in the Sale and Servicing Agreement dated as of December __, 1997 among
UCFC Home Equity Loan Owner Trust 1997-__, as Issuer, United Companies Lending
Corporation(R), as Servicer, UCFC Acceptance Corporation, as Depositor and
Bankers Trust Company of California, N.A., as Indenture Trustee (the "Sale and
Servicing Agreement")), and the Closing Date (as defined in the Sale and
Servicing Agreement) [no/the following schedule of] Home Equity Loans (as
defined in the Sale and Servicing Agreement) have been prepaid in full.
Dated: _______________, 199_
By:_________________________
Name:
Title:
X-0
XXXXXXX X
XXXX XX XXXXXXXXX TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking corporation,
in its capacity as indenture trustee (the "Indenture Trustee") under that
certain Sale and Servicing Agreement dated as of December __, 1997 (the "Sale
and Servicing Agreement") among UCFC Home Equity Loan Owner Trust 1997-_, a
Delaware business trust, as issuer (the "Issuer"), UCFC Acceptance Corporation,
a Louisiana corporation, as depositor (the "Depositor"), United Companies
Lending Corporation(R), a Louisiana corporation, as servicer (the "Servicer"),
and the Indenture Trustee, hereby acknowledges receipt of the items required to
be delivered to it pursuant to Section 2.2 of the Sale and Servicing Agreement
with respect to the Home Equity Loans.
The Schedule of Home Equity Loans is attached to this Receipt.
The Trustee hereby additionally acknowledges that it shall review such
items as required by Section 2.2 of the Sale and Servicing Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Indenture Trustee
By: ________________________
Name:
Title:
Dated:
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EXHIBIT D
Representations, Warranties and Covenants of Originators
Part 1. Delivery Requirements
(a) On or prior to the Closing Date, each Originator shall deliver to the
Indenture Trustee, as designee of the Purchaser, the following documents with
respect to each of the Home Equity Loans sold by it on the Closing Date:
(i) the original Mortgage Note, endorsed without recourse to the order
of Bankers Trust Company of California, N.A., as custodian or trustee under
the applicable custodial agreement or trust agreement;
(ii) the original Mortgage with evidence of recording thereon or, if
the original Mortgage is unavailable, the Certified Mortgage Schedule;
(iii) the Title Policy Schedule; and
(iv) an original of an assignment of the Mortgage in recordable form
(except with respect to recording information for those Mortgages which
have not yet been returned from the applicable recorder's office) to the
IndentureTrustee;
(v) originals of each intervening assignment, with evidence of
recording thereon, showing a complete chain of title from origination to
the Person executing the assignment to the Indenture Trustee or, if the
original of any such intervening assignment is unavailable, the Certified
Assignment Schedule; and
(vi) originals of all assumption and modification agreements, if any;
provided, however, that the documents listed in clauses (ii)-(vi) above may, but
need not be delivered on the Closing Date and if not so delivered shall be
delivered within 30 days after the Closing Date; and provided, further, that
with respect to no more than __ Home Equity Loans, the applicable Originator may
deliver a lost note affidavit in lieu of the Mortgage Note which was lost.
(b) Promptly after the Closing Date, each Originator, at its sole cost and
expense, shall with respect to the Home Equity Loans sold by it on the Closing
Date, cause assignments of the Mortgages previously assigned of record to United
Companies Life Insurance Company from United Companies Lending Corporation(R),
from United Companies Life Insurance Company to United Companies Lending
Corporation(R) and the assignment of all the Mortgages from such Originator to
the Indenture Trustee, as designee of the Purchaser, to be submitted for
recording in
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the appropriate jurisdictions; provided, however, that such Originator shall not
be required to submit for recording an assignment for any Mortgage with respect
to which the original recording information is lacking until promptly following
the receipt of such recording information. Such assignments shall be submitted
for recording within two Business Days after receipt of the necessary recording
information and in any case within one year after the Closing Date.
(c) With respect to the Home Equity Loans sold by it on the Closing Date,
each Originator shall deliver or cause to be delivered the original or copies
(certified by the applicable recorder's office) of the Mortgages, as the case
may be, and recorded assignments or copies (certified by the applicable
recorder's office) thereof, together with originals or copies (certified by the
applicable recorder's office) of any and all prior recorded assignments, and
policy numbers for all title policies to the Indenture Trustee as the designee
of the Purchaser, within 30 days of receipt thereof by such Originator (but in
any event within one year after the Closing Date).
(d) Notwithstanding anything to the contrary contained in this Part I, 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, such Originator shall be deemed to have satisfied
its obligations hereunder upon delivery to the Indenture Trustee, as the
designee of the Purchaser, of a true and correct copy of such Mortgage, such
assignment or assignments of Mortgage, duly certified by the applicable
recorder's office.
(e) Each Originator covenants and agrees with respect to the Home Equity
Loans sold by it on the Closing Date (i) to maintain or cause to be maintained
on microfiche (or other permanent storage media) a copy of each original title
insurance policy and to furnish a copy thereof to the Credit Enhancer upon its
request or to the Indenture Trustee, as designee of the Purchaser, or the
Servicer if necessary in order to present claims under such policy, (ii) to
provide to the Indenture Trustee, as designee of the Purchaser, or the Servicer
a certified copy of any Mortgage or intervening assignment which was not
delivered on the Closing Date and has not been subsequently delivered as
provided in (c) above if necessary to permit the Servicer to take actions with
respect to the related Home Equity Loan and (iii) to take all action necessary
under applicable state law to transfer the benefits of the lien and security
interest in each manufactured or mobile home and the related Property to the
Indenture Trustee, as the designee of the Purchaser, including without
limitation, the filing of UCC-3 assignments, notations on certificates of title
and recordation of the Mortgage assignment within the time frames required by
this Part I.
(f) In the case of Home Equity Loans sold on the Closing Date which have
been prepaid in full after the Cut-off Date and prior to the Closing Date, each
Originator, in lieu of the foregoing, will cause the Servicer to deliver within
15 days after the Closing Date to the Indenture Trustee and the Purchaser a
certification of an Authorized Officer in the form set forth in [Exhibit A] to
the Loan Purchase Agreement.
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(g) At the direction of the Indenture Trustee, as designee of the
Purchaser, each Originator shall (or shall cause an Affiliate to) sell,
transfer, assign, set over and otherwise convey without recourse, to the
Indenture Trustee, as designee of the Purchaser, all right, title and interest
of such Originator (or of such Affiliate) in and to any Eligible Substitute
Mortgage delivered to the Indenture Trustee on behalf of the related Owners by
such Originator (or such Affiliate) pursuant to Section [3.1] or Section [3.2]
of the Loan Purchase Agreement (including Part III of this Exhibit D) and all
its right, title and interest to principal collected and interest accrued on
such Eligible Substitute Mortgage on and after the applicable Replacement
Cut-Off Date; provided, however, that such Originator (or such Affiliate) shall
reserve and retain all right, title and interest in and to payments of principal
collected and interest accrued on such Qualified Replacement Mortgage prior to
the applicable Replacement Cut-Off Date.
(h) As to each Home Equity Loan reconveyed by the Indenture Trustee in
connection with the conveyance of a Eligible Substitute Mortgage therefor, the
Purchaser shall, or shall cause the Indenture Trustee to, sell, transfer,
assign, set over and otherwise convey without recourse, on each Originator's
order, all of its right, title and interest in and to such conveyed Home Equity
Loan and all the Purchaser's or the Indenture Trustee's right, title and
interest to principal collected and interest accrued on such released Home
Equity Loan on and after the applicable Replacement Cut-Off Date; provided,
however, that the Purchaser or the Indenture Trustee on behalf of the
Noteholders and Certificateholders shall reserve and retain all right, title and
interest in and to payments of principal collected and interest accrued on such
conveyed Home Equity Loan prior to the applicable Replacement Cut-Off Date.
(i) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Indenture Trustee, as designee of the Purchaser,
each Originator agrees with respect to each Eligible Substitute Mortgage
transferred and assigned by it to (i) deliver or cause to be delivered without
recourse to the Indenture Trustee as designee of the Purchaser, on the date of
delivery of such Eligible Substitute Mortgage all documents required by Part I
of this Exhibit D, (ii) cause promptly to be recorded an assignment in the
appropriate jurisdiction to the Indenture Trustee, and (iii) deliver or cause to
be delivered the original Qualified Replacement Mortgage and such recorded
assignment or certified copies of each, together with original or duly certified
copies of any and all prior recorded assignments, to the Indenture Trustee, as
designee of the Purchaser, within 30 days of receipt thereof by the related
Originator (but in any event within one year after the date of conveyance of
such Eligible Substitute Mortgage).
(j) As to each Home Equity Loan reconveyed by the Purchaser or the
Indenture Trustee in connection with the conveyance of a Eligible Substitute
Mortgage, the Purchaser shall or shall cause the Indenture Trustee to deliver on
the date of conveyance of such Qualified Replacement Mortgage and on the order
of the appropriate Originator (i) the original Mortgage Note relating thereto,
endorsed without recourse, to such Originator (or to such other party as such
Originator directs) (ii) the original Mortgage so released and all recorded
assignments relating thereto, (iii) an assignment from the Indenture Trustee to
such Originator (or to such other party as
D-3
such Originator directs) executed by the Indenture Trustee in the same form as
the assignment referred to in clause (iv) of clause (a) of this Part I and (iv)
such other documents as constituted the File with respect thereto.
(k) 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
appropriate Originator shall prepare a substitute assignment or cure such
defect, as the case may be, and thereafter cause each such assignment to be duly
recorded.
(l) With respect to each Escrow Loan, the Originator of such Escrow Loan,
at the direction of the Purchaser, shall deliver to the Indenture Trustee, as
designee of the Purchaser, within one year after the Closing Date a list (the
"Exception List") identifying any of the following documents which have not been
received for each Escrow Loan: (i) Mortgagor's certification as to completion
and (ii) the appraiser's unqualified certification as to final completion
pursuant to which the appraiser (or, if the original appraiser has since died,
retired or otherwise is unable to perform, a suitable substitute appraiser)
confirms that the Appraised Value of the Property upon completion of the
improvement (disregarding intervening changes, if any, in market value) is at
least equal to such appraiser's Appraised Value which was subject to completion
of improvements out of the escrowed funds (each such document, a "Required
Escrow Document"). No later than the end of the thirteenth month following the
Closing Date, the Indenture Trustee shall deliver a copy of the Exception List
to the Depositor, the Servicer, the Owner Trustee and the Credit Enhancer. If
such report indicates that any Required Escrow Document has not been received,
the related Originator shall be required to take the actions set forth in
Section [3.1(a)] of the Loan Purchase Agreement (including Part III of this
Exhibit D) if the lack of such Required Escrow Document materially and adversely
affects the interest of the Noteholders, the Certificateholders or of the Credit
Enhancer in the related Home Equity Loan.
(m) If the Originator receives notice from the Indenture Trustee, the Owner
Trustee, the Depositor, the Servicer or the Credit Enhancer pursuant to Section
2.2 of the Sale and Servicing Agreement that any required item has not been
received, and such item materially and adversely affects the interest of the
Noteholders, the Certificateholders or of the Credit Enhancer in the related
Home Equity Loan, the applicable Originator agrees to use reasonable efforts to
remedy a material defect in a document constituting part of a File of which it
is so notified. If, however, within 60 days after notice to it respecting such
defect the related Originator has not remedied, or caused to be remedied, the
defect and the defect materially and adversely affects the interest of the
Noteholders, the Certificateholders and the Credit Enhancer in the related Home
Equity Loan, the related Originator will on the next succeeding Remittance Date
(i) substitute in lieu of such Home Equity Loan a Eligible Substitute Mortgage
and deliver the Substitution Adjustment Amount applicable thereto directly to
the Servicer for deposit in the Collection Account or (ii) purchase such Home
Equity Loan at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered directly to the Servicer for deposit in the
Collection Account. In connection with any such proposed purchase or
substitution, the
D-4
Originator shall cause at the related Originator's expense to be delivered to
the Indenture Trustee an opinion of counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute __________________.
Part 2. Representations
Note: Until a Deposit Date occurs, references in this Part II to Home
Equity Loans shall mean the Home Equity Loans sold, transferred, conveyed and
assigned on the Closing Date.
(1) The information with respect to each Home Equity Loan set forth in the
Schedule of Home Equity Loans is true and correct as of the Cut-Off Date;
(2) All of the original or certified documentation set forth in Part I of
this Exhibit D (including all material documents related thereto) with respect
to each Home Equity Loan has been or will be delivered to the Indenture Trustee
on the Closing Date or as otherwise provided in Part I of this Exhibit D;
(3) Each Home Equity Loan being transferred to the Issuer is secured by a
Mortgage that is a Qualified Mortgage and each Note is in a form that is
acceptable to prudent mortgage lenders which make mortgage loans comparable to
the Home Equity Loans;
(4) As of the Closing Date, each Primary Parcel is improved by one or more
single (one- to four-) family residential dwellings, which may include
condominiums, townhouses and manufactured or mobile homes, but only if such
manufactured or mobile home constitutes real property under applicable state
law; provided, however, that no such residential dwelling has been modified for
commercial purposes;
(5) Reserved
(6) As of the Closing Date, each Home Equity Loan is being serviced by the
Servicer, a Servicer Affiliate or a Subservicer described in clause (17) below;
(7) Reserved
(8) As of the Closing Date, each Mortgage is a valid and subsisting first
(as shown in the Schedule of Home Equity Loans) lien of record on the Primary
Parcel of the related Property subject in all cases to the exceptions to title
set forth in the title insurance policy or title opinion with respect to the
related Home Equity Loan, which are exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate, materially
and adversely affect the benefits of the security intended to be provided by
such Mortgage;
D-5
(9) Prior to the transfer and assignment of each Home Equity Loan, each
Originator held good and indefeasible title to, and was the sole owner of, each
Home Equity Loan conveyed by the Originator subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in clauses (9),
(12) and (14) or other liens which will be or were, as the case may be, released
simultaneously with such transfer and assignment; and immediately upon the
transfer and assignment herein contemplated, the Indenture Trustee will hold
good and indefeasible title to, and will be the sole owner of, each Home Equity
Loan subject to no liens, charges, mortgages, encumbrances or rights of others
except as set forth in clauses (9), (12) and (14) or other liens which will be
released simultaneously with such transfer and assignment;
(10) As of the Cut-off Date, no Home Equity Loan is more than 29 days
Delinquent (assuming a 30 day month);
(11) As of the Closing Date, there is no delinquent tax or assessment lien
or mechanic's lien on any Property, except those liens for which funds
sufficient to discharge such liens are held in escrow by the Originator or by an
escrow agent;
(12) As of the Closing Date, there is no claim, offset, right of
rescission, defense or counterclaim to any Mortgage Note or Mortgage, including
the defense of usury;
(13) As of the Closing Date, there is no mechanics' lien or claim for work,
labor or material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage, except those liens for which funds
sufficient to discharge such liens are held in escrow by the Originator or by an
escrow agent;
(14) Each Home Equity Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, the federal Truth-in-Lending Act, the Real Estate Settlement
Procedures Act and other consumer protection laws, usury, equal credit
opportunity, disclosure and recording laws;
(15) With respect to each Home Equity Loan, either (A) a lender's title
insurance policy, issued in standard or American Land Title Association form
(with modifications, if any, approved by the state in which the related Property
is located) by a title insurance company authorized to transact business in the
state in which the related Property is situated, in an amount at least equal to
the Original Principal Amount of such Home Equity Loan insuring the mortgagee's
interest under the related Home Equity Loan as the holder of a valid first
mortgage lien of record on the real property described in the related Mortgage,
subject only to a survey exception and other exceptions of the character
referred to in clauses (9), (12) and (14) above, was effective on the date of
the origination of such Home Equity Loan, and, as of the Closing Date, such
policy will be valid and thereafter such policy shall continue in full force and
effect regardless of the non-delivery thereof to the Indenture Trustee, or (B)
in those jurisdictions in which it is customary to obtain opinions of counsel as
to title matters rather than title insurance,
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an opinion of counsel as to the mortgagee's interest under the related Home
Equity Loan as the holder of a valid first mortgage lien of record on the real
property described in the related Mortgage, was obtained on the date of
origination of such Home Equity Loan.
(16) Each Subservicer, if any, is a qualified servicer as defined in
Section 4.3 of the Sale and Servicing Agreement with respect to the Home Equity
Loans serviced by it;
(17) At the Closing Date, the improvements upon each Property are covered
by a valid and existing hazard insurance policy with a carrier licensed in the
state in which the Property is located that provides for fire and extended
coverage representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan, (B) the minimum amount
required to compensate for loss or damage on a replacement cost basis or (C) the
full insurable value of the Property. All individual insurance policies are the
valid and binding obligation of the insurer and contain a standard mortgage
clause naming the originator, its successors and assigns, as mortgagee. All
premiums then due thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and expense;
(18) Each Mortgage and Mortgage Note is genuine and constitutes the legal,
valid and binding obligation of the maker thereof and is enforceable in
accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each Home Equity Loan had full legal capacity to
execute all documents relating to such Home Equity Loan and to convey the estate
therein purported to be conveyed and each Mortgage and Mortgage Note have been
duly and properly executed by such parties;
(19) Each Originator has caused and will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
Purchaser or the Indenture Trustee, as designee of the Purchaser, in any
Insurance Policies applicable to any of the Home Equity Loans delivered by such
Originator, at the direction of the Purchaser, to the Indenture Trustee
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of co-insured,
joint loss payee and mortgagee rights in favor of the Purchaser or the Indenture
Trustee;
(20) No Home Equity Loan has a Combined Loan-to-Value Ratio in excess of
100.00%;
(21) Each original Mortgage was recorded or is in the process of being
recorded, and all subsequent assignments of the original Mortgage have been
recorded in the appropriate jurisdictions (or are in the process of being
recorded within the time period permitted by Part I of this Exhibit D);
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(22) The terms of each Mortgage Note and each Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the Indenture
Trustee, as designee of the Purchaser and which has been delivered, at the
direction of the Purchaser, to the Indenture Trustee. The substance of any such
alteration or modification made prior to the Cut-off Date is reflected on the
Schedule of Home Equity Loans; any subsequent alteration or modification prior
to the date hereof has been made only as permitted by the Sale and Servicing
Agreement;
(23) The proceeds of each Home Equity Loan have been fully disbursed to the
Mortgagor or into an escrow account pending completion of any improvements to
the related Property, and there is no obligation on the part of the mortgagee to
make future advances thereunder. All costs, fees and expenses incurred in making
or closing or recording such Home Equity Loans were paid;
(24) No Home Equity Loan was originated under a buydown plan;
(25) No Home Equity Loan has a shared appreciation feature, or other
contingent interest feature;
(26) The Primary Parcel of each Property is located in the state identified
in the Schedule of Home Equity Loans; no more than __% of the Original Aggregate
Loan Balance is secured by Mortgaged Properties located within any single postal
zip code area; each Property consists of one or more parcels of real property
with a residential dwelling erected on the Primary Parcel; no Property contains
any commercial property;
(27) Except for ARMs, if any, for which the Index is CMT, each Mortgage
contains a provision for the acceleration of the payment of the unpaid principal
balance of the related Home Equity Loan in the event the related Property is
sold without the prior consent of the mortgagee thereunder;
(28) Any advances made after the date of origination of a Home Equity Loan
but prior to the Cut-off Date have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured principal
amount, as consolidated, bears a single interest rate and single repayment term
reflected on the Schedule of Home Equity Loans as the same may be adjusted in
accordance with the terms of such Home Equity Loan. The consolidated principal
amount does not exceed the original principal amount of the related Home Equity
Loan. No Mortgage Note permits or obligates the Servicer to make future advances
to the related Mortgagor at the option of the Mortgagor;
(29) To the best of the Originator's knowledge, there is no proceeding
pending or threatened for the total or partial condemnation of any Property, nor
is such a proceeding
D-8
currently occurring, and each Property is undamaged by waste, fire, earthquake,
earth movement, windstorm (including a hurricane), flood, tornado or other
casualty;
(30) To the best of the Originator's knowledge, all of the improvements
which were included for the purposes of determining the Appraised Value of any
Property lie wholly within the boundaries and building restriction lines of such
Property, and no improvements on adjoining properties encroach upon such
Property;
(31) To the best of the Originator's knowledge, no improvement located on
or being part of any Property is in violation of any applicable zoning law or
regulation. To the best of the Originator's knowledge, all inspections, licenses
and certificates required to be made or issued with respect to all occupied
portions of each Property and, with respect to the use and occupancy of the
same, have been made or obtained from the appropriate authorities and such
Property is lawfully occupied under the applicable law;
(32) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale after default by the
related Mortgagor;
(33) Each Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the related Property of the benefits of the security,
including (A) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (B) otherwise by judicial foreclosure. There is no homestead
or other exemption available to the related Mortgagor which would materially
interfere with the right to sell the related Property at a trustee's sale or the
right to foreclose the related Mortgage;
(34) To the best of the Originator's knowledge, there is no default,
breach, violation or event of acceleration existing under any Mortgage or the
related Mortgage Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a
default, breach, violation or event of acceleration; and neither the Servicer
nor the applicable Originator has waived any default, breach, violation or event
of acceleration; except that the Servicer or the Originator may have heretofore
waived late payments or granted extensions of payments (none of which extensions
are material);
(35) No instrument of release or waiver has been executed in connection
with any Home Equity Loan, and no Mortgagor has been released, in whole or in
part, except in a manner consistent with the Originator's ordinary practice;
(36) An appraisal, completed by independent fee appraisers, was performed
with respect to each Home Equity Loan;
D-9
(37) As of the Cut-Off Date, no more than __% of the Original Aggregate
Loan Balance is secured by condominiums; no Home Equity Loan relates to a
co-operative;
(38) As of the Cut-Off Date, no more than __% of the Original Aggregate
Loan Balance is secured by investor-owned Properties;
(39) Each Home Equity Loan was, in all material respects, underwritten
according to credit underwriting guidelines which are no less restrictive than
those described in the Prospectus;
(40) If the Property is located in an area identified as flood zone "A" or
flood zone "V" in the Federal Register by the Federal Emergency Management
Agency, a flood insurance policy in a form meeting the requirements of the then
current guidelines of the Flood Insurance Administration is in effect with
respect to such Property with a generally acceptable carrier in an amount
representing coverage not less than the least of (A) the original outstanding
principal balance of the Home Equity Loan, (B) the minimum amount required to
compensate for damage or loss on a replacement cost basis, or (C) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973, as amended. Any such policy contains a standard mortgagee clause naming
the originator, its successors and assigns, as mortgagee. All premiums then due
thereon have been paid. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense;
(41) With respect to any Home Equity Loan which relates to a "rural
property" (as defined in the Prospectus), the Loan-to-Value Ratio with respect
to such Home Equity Loan was calculated as described in the Prospectus;
(42) The Home Equity Loans were not selected for sale to the Purchaser on
any basis intended to adversely affect the Purchaser or the Issuer;
(43) As of the Closing Date, the Originator has no actual knowledge that
there exists on any Property any hazardous substances, hazard wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation. For purposes
of this clause (44), actual knowledge of the Originator means actual knowledge
of an officer of the Originator involved in the servicing of the relevant Home
Equity Loan. Actual knowledge of the Originator does not include knowledge
imputable by virtue of the availability of or accessibility to information
relating to environmental or hazardous waste sites or the locations thereof;
D-10
(44) Except for payments in the nature of escrow payments, including,
without limitation, taxes and insurance payments, the Servicer has not advanced
funds directly or indirectly, for the payment of any amount required by the
Mortgage;
(45) All parties which have had any interest in any Home Equity Loan prior
to their sale on the Closing Date, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed of such
interest, were) (1) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Property is located, and
(2)(A) organized under the laws of such state, or (B) qualified to do business
in such state, or (C) federal savings and loan associations or national banks
having principal offices in such state, or (D) not doing business in such state
so as to require qualification or licensing;
(46) No Home Equity Loan is secured by a leasehold interest and no Home
Equity Loan is secured by an Illinois land trust;
(47) As of the Cut-Off Date, no Home Equity Loan is a bankruptcy loan in
which the Mortgagor is subject to bankruptcy proceedings;
(48) With respect to each Home Equity Loan involving property improved by a
manufactured or mobile home, such manufactured or mobile home constitutes real
property under applicable state law and the Servicer has taken all action
necessary to create a valid and perfected first or second priority lien and
security interest in such manufactured or mobile home and the related Property,
including, without limitation, the filing of UCC financing statements or
notations on certificates of title, if necessary under applicable state law;
(49) Each File contains an appraisal and no appraisal for a Home Equity
Loan was based solely upon a cost approach analysis;
(50) [No ARM is a Convertible ARM];
(51) As of the Cut-off Date, for each ARM and Convertible ARM (if any), the
Lifetime Cap is not lower than ____% per annum, the Lifetime Floor is not lower
than ____% per annum, the Gross Margin is not less than _____ basis points, the
related Mortgage Note does not provide for negative amortization, limits in the
amount of monthly payments, the Coupon Rate is subject to adjustment on each
Change Date to equal the sum of the applicable Index plus the applicable Gross
Margin, subject to rounding, the applicable Periodic Rate Cap, the applicable
Lifetime Floor and the applicable Lifetime Cap, on each Change Date, the
Mortgagor's new monthly payment will be adjusted to an amount equal to the
payment which, when paid in substantially equal installments during the then
remaining term of the ARM or Convertible ARM (if any), would amortize fully the
unpaid principal balance of such ARM or Convertible ARM (if any) at the then
applicable Coupon Rate without extension of the original maturity date which
maturity date is not more than 360 months after the original Due Date therefor;
D-11
(52) Each Home Equity Loan conforms in all material respects and all of the
Home Equity Loans in the aggregate conform in all material respects with the
description thereof set forth in the Prospectus;
(53) With respect to each ARM and Convertible ARM (if any), all of the
terms of the Mortgage and Mortgage Note pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note;
(54) At the end of the applicable Funding Period, each of the Additional
Loans will conform in all material respects and all of such Subsequent Loans in
the aggregate will conform in all material respects with the conditions set
forth in Exhibit G; and
(55) No more than approximately ___% of the ARMs (by Principal Balance as
of the Cut-off Date) are CMT ARMs and the remaining ARMs are LIBOR ARMs.
Part III. Certain Covenants
(a) Upon the discovery by any of the Originators or by the Indenture
Trustee, the Owner Trustee, the Purchaser, the Depositor or the Credit Enhancer
that any statement set forth in Part II of Exhibit D were untrue (disregarding
any qualification with respect to knowledge) as of the Closing Date or the
applicable Deposit Date, as the case may be, with the result that the interests
of the Noteholders, the Certificateholders or the Credit Enhancer are materially
and adversely affected, the party discovering such breach shall give prompt
written notice to the other party or the Credit Enhancer. Upon the earliest to
occur of any Originator's discovery, its receipt of notice of breach, or such
time as a situation resulting from an existing statement which is untrue
materially and adversely affects the interests of the Noteholders, the
Certificateholders or the Credit Enhancer, each Originator hereby covenants and
warrants that it shall promptly cure such breach in all material respects or,
unless otherwise directed by the Indenture Trustee, as designee of the
Purchaser, it shall (or shall cause an Affiliate of the Originator to) on the
second Remittance Date next succeeding such discovery, receipt of notice or such
time (i) substitute in lieu of each Home Equity Loan which has given rise to the
requirement for action by the Originator a Eligible Substitute Mortgage and
deliver the Substitution Adjustment Amount applicable thereto to the Servicer
for deposit in the Collection Account or (ii) purchase such Home Equity Loan
from the Indenture Trustee at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Servicer for deposit in
the Collection Account. It is understood and agreed that (i) a breach of the
statement in clause (13) will be deemed to materially and adversely affect the
interests of the Noteholders, the Certificateholders or the Credit Enhancer if
it is judicially determined that the related Mortgagor is entitled to rescind
such Mortgagor's Home Equity Loan and (ii) the obligation of the Originator so
to cure,
D-12
substitute or purchase any Home Equity Loan as to which such a statement set
forth below is untrue in any material respect and has not been remedied shall
constitute the sole remedy respecting a discovery of any such statement which is
untrue in any material respect in Part II of this Exhibit D available to the
Purchaser or the Indenture Trustee, as designee of the Purchaser.
(b) In the event that any Qualified Replacement Mortgage is delivered by
the Originator to the Trustee pursuant to [Section 2.1, Section 3.1 or Section
3.2] of the Loan Purchase Agreement, the Originator shall be obligated to take
the actions described in clause (a) of Part III of Exhibit D with respect to
such Qualified Replacement Mortgage upon the discovery by any of the
Originators, the Purchaser, the Depositor, the Owner Trustee or the Credit
Enhancer that any statement set forth in Part II of Exhibit D are untrue
(disregarding any qualification with respect to knowledge) on the date such
Qualified Replacement Mortgage is conveyed to the Indenture Trustee such that
the interests of the Noteholders, the Certificateholders or the Credit Enhancer
as in the related Qualified Replacement Mortgage are materially and adversely
affected; provided, however, that for the purposes of this subsection (b) the
statements in Part II of Exhibit D referring to items "as of the Cut-off Date"
or "as of the Closing Date" shall be deemed to refer to such items as of the
date such a Qualified Replacement Mortgage is conveyed to the Indenture Trustee.
(c) On or before the Remittance Date in the month following the month in
which a Convertible ARM becomes a Converted ARM, the applicable Originator shall
repurchase such Converted ARM for an amount equal to the Loan Purchase Price
therefor. The applicable Originator shall cause such Loan Purchase Price to be
delivered to the Servicer for deposit in the applicable Principal and Interest
Account.
(d) As to each Converted ARM reconveyed by the Purchaser or the Indenture
Trustee, the Purchaser shall or shall cause the Indenture Trustee to deliver on
the date of payment of the Loan Purchase Price therefor and on the order of the
appropriate Originator (i) the original Mortgage Note relating thereto, endorsed
without recourse, to such Originator (or to such other party as such Originator
directs), (ii) the original Mortgage so released and all recorded assignments
relating thereto, (iii) an assignment from the Indenture Trustee to such
Originator (or to such other party as such Originator directs) executed by the
Indenture Trustee in the same form as the assignment referred to in clause (iv)
of clause (a) of Part I and (iv) such other documents as constituted the File
with respect thereto.
(e) Notwithstanding that a Convertible ARM becomes a Converted ARM in any
month, such Converted ARM shall remain in the Trust and all payments of
principal and interest in respect thereof shall remain in the Trust unless and
until such Converted ARM is repurchased by the applicable Originator.
(f) The obligations of each Originator provided in Part III(c) shall
terminate without further action upon the bankruptcy or insolvency of such
Originator.
D-13
EXHIBIT E
FORM OF SERVICER'S TRUST RECEIPT
To: Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Trust
Date:
In connection with the administration of the home equity loans serviced by
United Companies Lending Corporation(R) (the "Servicer") pursuant to a Sale and
Servicing Agreement dated as of December __, 1997 (the "Sale and Servicing
Agreement"), among the Servicer, you, as Indenture Trustee, and UCFC Home Equity
Loan Owner Trust 1997-_, as Issuer, UCFC Acceptance Corporation, as Depositor,
the Servicer hereby requests a release of the File held by you as Indenture
Trustee with respect to the following described Home Equity Loan for the reason
indicated below.
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Home Equity Loan paid in full.
(The Servicer hereby certifies that all amounts received in
connection with the loan and required to be remitted to the
Indenture Trustee have been or will be remitted to the
Indenture Trustee pursuant to the Sale and Servicing
Agreement.)
_______ 2. Home Equity Loan repurchased pursuant to Section ______ of the
Sale and Servicing Agreement.
E-1
(The Servicer hereby certifies that the Loan Purchase Price
has been or will be remitted to the Indenture Trustee
pursuant to the Sale and Servicing Agreement.)
_______ 3. Home Equity Loan substituted.
(The Servicer hereby certifies that a Eligible Substitute
Mortgage has been or will be assigned and delivered to you
along with the related File pursuant to the Sale and
Servicing Agreement.)
_______ 4. The Home Equity Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held by the
undersigned in accordance with the provisions of the Sale and Servicing
Agreement and will be returned to you, except if the Home Equity Loan has been
paid in full, or repurchased or substituted for by a Eligible Substitute
Mortgage (in which case the File will be retained by us permanently) and except
if the Home Equity Loan is being foreclosed (in which case the File will be
returned when no longer required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Sale and Servicing Agreement.
UNITED COMPANIES LENDING
CORPORATION(R)
By: _________________________
Name:
Title:
E-2
EXHIBIT F
FORM OF NOTICE OF CHARGE-OFFS
I,_________ , hereby certify that I am the duly elected _________ of United
Companies Lending Corporation(R) (the "Servicer") acting as servicer pursuant to
a Sale and Servicing Agreement dated as of December __, 1997 among the Servicer,
UCFC Home Equity Loan Owner Trust 1997-__, as Issuer, UCFC Acceptance
Corporation, as Depositor, and Bankers Trust Company of California, N.A., as
Indenture Trustee, and further certify, to the best of my knowledge and after
due inquiry that the following is a summary of the facts and circumstances
surrounding the "charge-off" of any Home Equity Loans during the Collection
Period from _____ 1 through 31, 199__;
[Insert the following information for each "charged-off" Home Equity Loan
Loan #
Borrower Name
Property Address
Date of "charge-off"
Original Loan Balance
Outstanding Loan Balance
Interest Rate
Accrued Interest at time of "charge off"
Unreimbursed Servicing Advances at time of "charge off"
Unreimbursed Delinquency Advances at time of "charge off"
# days in default at time of "charge off"
Original appraised value
Current appraised value based upon "drive by"
Amount of outstanding first lien
Estimate of Foreclosure Costs
Broker Fees
Legal Fees
Repair and Miscellaneous Expenses
Projected Marketing Period
Estimate of Loss on Foreclosure and Liquidation]
F-1
Capitalized terms not otherwise defined herein have the meanings set forth
in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal of
the Servicer.
Dated:________________ By:________________
Name:
Title:
F-2
EXHIBIT G
FORM OF PARAMETERS FOR ADDITIONAL LOANS
The obligation of the Indenture Trustee to purchase Additional Loans on a
Deposit Date is subject to (i) each Additional Loan meeting the representations
and warranties set forth in the Sale and Servicing Agreement and (ii) the
characteristics of the Additional Loans at the end of the related Funding Period
not varying materially from the parameters applicable to such Additional Loans
set forth on page S-__ of the Prospectus.
G-1
