Exhibit 4.1
POOLING AND SERVICING AGREEMENT
Dated as of May 31, 1997
THE CHASE MANHATTAN BANK
(Trustee)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Home Improvement Loan Certificates, Series 1997-II
Class A-1, Class X-0, Xxxxx X-0,
Class M-1, Class M-2, Class B Class
X, Class R-1 and Class R-2
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS....................................................I-1
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND........................II-1
Section 2.01 Sale and Conveyance of Trust Fund; Priority and
Subordination of Ownership Interests.......................II-1
Section 2.02 Possession of Mortgage Files...............................II-1
Section 2.03 Books and Records..........................................II-1
Section 2.04 Delivery of Home Improvement Loan Documents................II-2
Section 2.05 Acceptance by Trustee and Custodian of the Trust
Fund; Certain Substitutions; Certification by
Trustee and Custodian......................................II-4
Section 2.06 Designations under REMIC Provisions; Designation of
Startup Day................................................II-6
Section 2.07 Authentication of Certificates.............................II-7
Section 2.08 Fees and Expenses of the Trustee and Co-Trustee............II-7
Section 2.09 Sale and Conveyance of the Subsequent Home
Improvement Loans..........................................II-8
ARTICLE III REPRESENTATIONS AND WARRANTIES..............................III-1
Section 3.01 Representations of Representative, Servicer, Claims
Administrator and Originators..............................III-1
Section 3.02 Individual Home Improvement Loans..........................III-8
Section 3.03 Purchase and Substitution..................................III-17
ARTICLE IV THE CERTIFICATES.... .........................................IV-1
Section 4.01 The Certificates............................................IV-1
Section 4.02 Registration of Transfer and Exchange of Certificates.......IV-3
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates...........IV-8
Section 4.04 Persons Deemed Owners.......................................IV-10
ARTICLE V ADMINISTRATION AND SERVICING OF HOME IMPROVEMENT LOANS.........V-1
Section 5.01 Duties of the Servicer......................................V-1
Section 5.02 Liquidation of Home Improvement Loans.......................V-5
Section 5.03 Establishment of Principal and Interest Accounts;
Deposits in Principal and Interest Accounts.................V-6
Section 5.04 Permitted Withdrawals From the Principal and Interest
Accounts....................................................V-7
Section 5.05 Payment of Taxes, Insurance and Other Charges...............V-9
Section 5.06 Transfer of Accounts........................................V-10
Section 5.07 Maintenance of Hazard Insurance.............................V-11
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.........V-12
Section 5.09 Fidelity Bond...............................................V-12
Section 5.10 Title, Management and Disposition of REO Property...........V-13
Section 5.11 Certain Tax Information.....................................V-14
Section 5.12 Collection of Certain Home Improvement Loan Payments........V-14
Section 5.13 Access to Certain Documentation and Information
Regarding the Home Improvement Loans........................V-15
Section 5.14 Superior Liens..............................................V-15
Section 5.15 Duties of the Claims Administrator..........................V-15
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS............................VI-1
Section 6.01 Establishment of Certificate Accounts; Deposits in
Certificate Accounts; Permitted Withdrawals from
Certificate Accounts........................................VI-1
Section 6.02 Establishment of Pre-Funding Account and Capitalized
Interest Account; Deposits in Pre-Funding Account and
Capitalized Interest Account; Permitted Withdrawals from
Pre-Funding Account and Capitalized Interest Account........VI-2
Section 6.03 Establishment of Expense Accounts; Deposits in Expense
Accounts; Permitted Withdrawals from Expense Accounts.......VI-4
Section 6.04 Reserved....................................................VI-5
Section 6.05 Reserved....................................................VI-5
Section 6.06 Establishment of FHA Premium Account; Deposits in FHA
Premium Account; Permitted Withdrawals from FHA
Premium Account.............................................VI-5
Section 6.07 Investment of Accounts......................................VI-7
Section 6.08 Priority and Subordination of Distributions.................VI-8
Section 6.09 Available Maximum Subordination Amount; Allocation of
Realized Losses.............................................VI-11
Section 6.10 Statements..................................................VI-12
Section 6.11 Advances by the Servicer....................................VI-16
Section 6.12 Compensating Interest.......................................VI-17
Section 6.13 Reports of Foreclosure and Abandonment of Mortgaged
Property....................................................VI-17
Section 6.14 Reserved....................................................VI-18
Section 6.15 Establishment of Servicing Accounts; Collection of
Taxes, Assessments and Similar Items........................VI-18
ARTICLE VII GENERAL SERVICING PROCEDURE.... .............................VII-1
Section 7.01 Assumption Agreements.......................................VII-1
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.....VII-2
Section 7.03 Servicing Compensation and Contingency Fee..................VII-3
Section 7.04 Annual Statement as to Compliance...........................VII-4
Section 7.05 Annual Independent Public Accountants' Servicing Report.....VII-4
Section 7.06 Trustee's and Co-Trustee's Right to Examine Servicer
Records and Audit Operations................................VII-5
Section 7.07 Reports to the Trustee; Principal and Interest
Account Statements..........................................VII-5
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER.........................VIII-1
Section 8.01 Financial Statements.......................................VIII-1
ARTICLE IX THE SERVICER...................................................IX-1
Section 9.01 Indemnification; Third Party Claims..........................IX-1
Section 9.02 Merger or Consolidation of the Representative, the
Servicer and the Claims Administrator........................IX-2
Section 9.03 Limitation on Liability of the Servicer and Others...........IX-2
Section 9.04 Servicer and Claims Administrator Not to Resign..............IX-2
Section 9.05 Appointment of Assistant Claims Administrator................IX-3
Section 9.06 Right of Certificateholders to Replace Servicer and
Claims Administrator.........................................IX-3
ARTICLE X DEFAULT. .......................................................X-1
Section 10.01 Events of Default...........................................X-1
Section 10.02 Trustee to Act; Appointment of Successor....................X-3
Section 10.03 Waiver of Defaults..........................................X-5
Section 10.04 Transfer of Tax Matters Person Residual Interest............X-5
Section 10.05 Control by Majority Certificateholders......................X-5
ARTICLE XI TERMINATION...................................................XI-1
Section 11.01 Termination................................................XI-1
Section 11.02 Termination Upon Loss of REMIC Status......................XI-2
Section 11.03 Additional Termination Requirements........................XI-3
Section 11.04 Reserved...................................................XI-4
Section 11.05 Accounting Upon Termination of Servicer and Claims
Administrator..............................................XI-4
ARTICLE XII THE TRUSTEE.................................................XII-1
Section 12.01 Duties of Trustee.........................................XII-1
Section 12.02 Certain Matters Affecting the Trustee.....................XII-2
Section 12.03 Trustee Not Liable for Certificates or Home
Improvement Loans.........................................XII-4
Section 12.04 Trustee May Own Certificates..............................XII-4
Section 12.05 Servicer To Pay Trustee's Fees and Expenses...............XII-4
Section 12.06 Eligibility Requirements for Trustee......................XII-5
Section 12.07 Resignation and Removal of the Trustee....................XII-5
Section 12.08 Successor Trustee.........................................XII-6
Section 12.09 Merger or Consolidation of Trustee........................XII-7
Section 12.10 Appointment of Co-Trustee or Separate Trustee.............XII-7
Section 12.11 Authenticating Agent......................................XII-9
Section 12.12 Tax Returns and Reports...................................XII-9
Section 12.13 Appointment of Custodians................................ XII-10
Section 12.14 Protection of Trust Fund..................................XII-11
Section 12.15 Reserved..................................................XII-12
ARTICLE XIII MISCELLANEOUS PROVISIONS..................................XIII-1
Section 13.01 Acts of Certificateholders...............................XIII-1
Section 13.02 Amendment................................................XIII-1
Section 13.03 Recordation of Agreement.................................XIII-2
Section 13.04 Duration of Agreement....................................XIII-2
Section 13.05 Governing Law............................................XIII-2
Section 13.06 Notices..................................................XIII-2
Section 13.07 Severability of Provisions...............................XIII-3
Section 13.08 No Partnership...........................................XIII-3
Section 13.09 Counterparts.............................................XIII-3
Section 13.10 Successors and Assigns...................................XIII-3
Section 13.11 Headings.................................................XIII-3
Section 13.12 Reserved.................................................XIII-3
Section 13.13 Paying Agent.............................................XIII-4
Section 13.14 Notification to Rating Agencies..........................XIII-4
Section 13.15 Reserved.................................................XIII-5
SCHEDULE I Description of Certain Litigation
EXHIBIT A Contents of Mortgage File
EXHIBIT B Forms of Certificates
EXHIBIT C Principal and Interest Account Letter Agreement
EXHIBIT D Resale Certification
EXHIBIT E Assignment
EXHIBIT E(1) Wiring Instructions Form
EXHIBIT F Form of Custodian Initial Certification
EXHIBIT F-1 Form of Custodian Interim Certification
EXHIBIT G Form of Custodian Final Certification
EXHIBIT H Home Improvement Loan Schedule
EXHIBIT I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT J-1 Request for Release Documents of 90 Day Delinquent Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L [OMITTED]
EXHIBIT M Custodial Agreement
EXHIBIT N Form of Liquidation Report
EXHIBIT O Form of Delinquency Report
EXHIBIT P [OMITTED]
EXHIBIT Q [Omitted]
EXHIBIT R Servicer's Monthly Computer Tape Format
EXHIBIT S Subservicing Agreement
EXHIBIT T Low Interest Home Improvement Loan Schedule [OMITTED]
Agreement dated as of May 31, 1997, among The Chase Manhattan Bank, as
trustee (the "Trustee"), the entities listed on Exhibit I hereto (collectively,
the "Originators") and The Money Store Inc., as Representative (the
"Representative"), Servicer (the "Servicer") and Claims Administrator (the
"Claims Administrator"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Home Improvement Loans by
the Servicer, the Representative, the Servicer, the Originators and the Claims
Administrator are entering into this Agreement with the Trustee. The Originators
are selling the Home Improvement Loans and amounts on deposit in the Pre-Funding
Account to the Trustee for the benefit of the Certificateholders, pursuant to
which nine (9) classes of Certificates are being issued, denominated on the face
thereof as The Money Store Home Improvement Loan Certificates, Series 1997-II,
Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B, Class X, Class
R-1 and Class R-2, respectively, representing in the aggregate a 100% undivided
ownership interest in the Home Improvement Loans and amounts on deposit in the
Pre-Funding Account. The Initial Home Improvement Loans have an aggregate
outstanding principal balance of $208,709,421.65 (which gives effect to the
discounts on the Low Interest Home Improvement Loans of $0) as of May 31, 1997,
except for those Initial Home Improvement Loans originated after May 31, 1997
and delivered to the Trustee on the Closing Date as to which the aggregate
outstanding principal balance shall be as of the date of the related Mortgage
Note (the "Cut-Off Date"), after application of payments received by the
Originators on or before such date, and the original Pre-Funded Amount equals
$41,290,578.35. Except for the Low Interest Home Improvement Loans, each Initial
Home Improvement Loan has, and each Subsequent Home Improvement Loan will have,
a Home Improvement Loan Interest Rate in excess of the Adjusted Home Improvement
Loan Remittance Rate of each Class of Certificates. As provided herein, two
separate REMIC elections will be made in connection with the assets constituting
each of REMIC I and REMIC II for federal income tax purposes. On the Startup
Day, all the Classes of REMIC II Regular Certificates will be designated
"regular interests" in REMIC II and the Class R-2 Certificates will be
designated the single class of "residual interests" in such REMIC for purposes
of the REMIC Provisions (as defined herein). On the Startup Day, all the Classes
of Certificates except for the Class R-1 and Class R-2 Certificates will be
designated "regular interests" in REMIC I and the Class R-1 Certificates will be
designated the single class of "residual interests" in such REMIC for purposes
of the REMIC Provisions.
The parties hereto agree as follows:
[Balance of Page Intentionally Left Blank]
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings. This Agreement relates to
a Trust Fund evidenced by The Money Store Home Improvement Loan Certificates,
Series 1997-II, Class A-1, Class X- 0, Class A-3, Class M-1, Class M-2, Class B,
Class X, Class R-1 and Class R-2. Unless otherwise provided, all calculations of
interest pursuant to this Agreement are based on a 360- day year and twelve
30-day months.
ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date, the
lesser of (i) the portion, if any, of the Available Remittance Amount remaining
after payment of amounts set forth in Section 6.08(d)(i) through (ix),
inclusive, and (ii) the Subordinated Deficiency Amount for such Remittance Date.
ACCOUNT: The Certificate Account, Pre-Funding Account, Expense Account,
Capitalized Interest Account or Servicing Account (including any sub-accounts of
any of the foregoing) established and held in trust by the Trustee for the
Certificateholders and the FHA Premium Account established and held in trust by
the Trustee for the benefit of the Certificateholders to reimburse the Servicer
for payments with respect to FHA Insurance Premiums or to make payments with
respect to FHA Insurance Premiums. The obligation to establish and maintain the
Accounts is not delegable.
ADDITION NOTICE: With respect to the transfer of Subsequent Home
Improvement Loans to the Trust Fund pursuant to Section 2.09 herein, notice,
which shall be given not later than five Business Days prior to the related
Subsequent Transfer Date, of the Representative's designation of Subsequent Home
Improvement Loans to be sold to the Trust Fund and the aggregate Principal
Balance of such Subsequent Home Improvement Loans.
ADJUSTED HOME IMPROVEMENT LOAN REMITTANCE RATE: With respect to each Home
Improvement Loan, a percentage per annum, equal to the related Home Improvement
Loan Interest Rate less the per annum rate used in calculating (i) the Annual
Expense Escrow Amount, (ii) the FHA Insurance Premium in connection with FHA
Loans for which the related Mortgagor pays the FHA Insurance Premium as part of
the Home Improvement Loan Interest Rate, (iii) the Servicing Fee, and (iv) the
Contingency Fee.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i) .04%
per annum and (ii) the aggregate Class Principal Balances of the Class A, Class
M and Class B Certificates, which is computed and payable on a monthly basis and
represents the estimated annual Trustee's and Co-Trustee's fees and expenses of
the Trust Fund.
APPLIED REALIZED LOSS AMOUNT: For any Remittance Date an amount equal to
the excess, if any, of (i) the aggregate Class Principal Balances of the Class
A, Class M and Class B Certificates (after taking into account the distribution
of principal (including the Accelerated Principal Distribution Amount) with
respect to the Certificates on such Remittance Date) over (ii) the aggregate
Principal Balance of the Home Improvement Loans as of the end of the prior Due
Period (after taking into account all Realized Losses experienced during such
Due Period).
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Co-Trustee for the benefit of the Certificateholders.
AUTHENTICATING AGENT: Initially, The Chase Manhattan Bank, and thereafter,
any successor appointed pursuant to Section 12.11.
AVAILABLE MAXIMUM SUBORDINATION AMOUNT: With respect to any Remittance
Date, the excess, if any, of (i) the Maximum Subordination Amount over (ii) the
amount of all distributions previously made in respect of Shortfall Amounts.
AVAILABLE REMITTANCE AMOUNT: With respect to any Remittance Date, (i) the
sum of all amounts relating to the Home Improvement Loans of the Trust described
in clauses (i) through (viii), inclusive, of Section 5.03(b) received by the
Servicer or any Subservicer (including any amounts paid by the Servicer and the
Representative and excluding any amounts withdrawn by the Servicer with respect
to the Home Improvement Loans pursuant to Sections 5.04(b), (c), (e) and (f) as
of the related Determination Date and any amounts deposited into the Servicing
Account with respect to the Home Improvement Loans pursuant to Section 5.04(g)
as of the related Determination Date) during the related Due Period or, with
respect to Section 5.03(b)(vi), on the related Determination Date, and deposited
into the Certificate Account as of the Determination Date, plus (ii) the amount
of any Monthly Advances and Compensating Interest payments relating to the Home
Improvement Loans, remitted by the Servicer for such Remittance Date, plus (iii)
amounts to be transferred to the Certificate Account from the Pre- Funding
Account and the Capitalized Interest Account with respect to the Remittance
Dates in July, August and September 1997, less (iv) those amounts withdrawable
from the Certificate Account pursuant to Section 6.01(b)(vi). The "Available
Remittance Amount" does not include (i) funds in the Principal and Interest
Account and available to be withdrawn pursuant to Section 5.04(d)(ii), (ii)
funds in the Certificate Account and available to be withdrawn pursuant to
Section 6.01(b)(v) and (iii) funds in the Certificate Account that cannot be
distributed by the Trustee on such Remittance Date as a result of a proceeding
initiated under the United States Bankruptcy Code, as amended from time to time
(11 U.S.C.).
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of New York or New Jersey are
authorized or obligated by law or executive order to be closed.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to the Remittance Dates in
July, August and September 1997, the excess, if any, of (i) 30 days' interest
calculated at the Weighted Average Remittance Rate on the excess of (a) the
aggregate Class A, Class M and Class B Principal Balances for such Remittance
Date (or, with respect to the first Remittance Date, the Closing Date) over (b)
the aggregate Principal Balances of the Home Improvement Loans as of the
immediately preceding Remittance Date (or, with respect to the first Remittance
Date, the Closing Date) over (ii) any Pre-Funding Earnings to be transferred to
the Certificate Account on such Remittance Date pursuant to Section 6.02(d).
With respect to the Special Remittance Date, 11 days' interest calculated at the
weighted average Class Remittance Rates of the Class A, Class M and Class B
Certificates on the amount to be transferred on the Special Remittance Date from
the Pre-Funding Account to the Certificate Account relating to the Certificates
pursuant to Section 6.02(c).
CERTIFICATE: Any Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2,
Class B, Class X, Class R-1 or Class R-2 Certificate executed by the Servicer
and authenticated by the Trustee or the Authenticating Agent substantially in
the form annexed hereto as Exhibit X-0, X- 0, X-0 or B-4.
CERTIFICATE ACCOUNT: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Representative, the Servicer, the
Claims Administrator, any Subservicer or any Originator, or any affiliate of any
of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. When used with respect to
any Class of Certificates, a Certificateholder or Holder of such Class of
Certificates, as the case may be.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, The Chase Manhattan Bank, and thereafter,
any successor appointed pursuant to Section 4.02.
CLAIM: An insurance claim submitted to the FHA by the Claims Administrator
with respect to a 90 Day Delinquent FHA Loan pursuant to the FHA Regulations.
CLAIMS ADMINISTRATOR: The Servicer, acting in the capacity of Claims
Administrator appointed as herein provided.
CLASS: Collectively, Certificates having the same priority of payment and
bearing the same designation.
CLASS A CERTIFICATE: A Certificate denominated as a Class A-1, Class A-2 or
Class A-3 Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A CREDIT ENHANCEMENT PERCENTAGE: Means, with respect to any
Remittance Date, 100% minus the fraction, expressed as a percentage, determined
by dividing (i) the Class Principal Balances of the Class A Certificates on the
immediately preceding Remittance Date by (ii) the aggregate Principal Balances
of the Home Improvement Loans as of the last day of the second preceding Due
Period.
CLASS A CURRENT INTEREST DISTRIBUTION REQUIREMENT: With respect to any
Remittance Date, the sum of the Current Interest Distribution Requirements for
the Class X- 0, Class A-2 and Class A-3 Certificates.
CLASS ADJUSTED HOME IMPROVEMENT LOAN REMITTANCE RATE: With respect to each
Home Improvement Loan, a percentage per annum, being the sum of (i) the Weighted
Average Remittance Rate, (ii) 0.04% per annum, relating to the Annual Expense
Escrow Amount, and (iii) with respect to FHA Loans for which the FHA Insurance
Premium is paid by the related Mortgagor as part of the Mortgage Interest Rate,
the Insurance Rate.
CLASS A FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date, means the applicable Senior Percentage multiplied by the
Principal Distribution Amount; provided, however, that, with respect to any
Remittance Date, the Class A Formula Principal Distribution Amount shall never
exceed the Class Principal Balance of the Class A Certificates.
CLASS A INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance
Date, the sum of the Interest Shortfall Carryforward Amounts for the Class A-1,
Class A-2 and Class A-3 Certificates.
CLASS A PRINCIPAL BALANCE: The sum of the Class Principal Balances of the
Class A-1, Class A-2 and Class A-3 Certificates.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance Date
means the lesser of (i) the Class A Formula Principal Distribution Amount or
(ii) the Available Remittance Amount remaining after the payment of all Current
Interest Distribution Requirements payable on such Remittance Date.
CLASS A-1 CERTIFICATE: A Certificate denominated as a Class A-1
Certificate.
CLASS A-1 REMITTANCE RATE: The annual rate of interest payable to the Class
A-1 Certificateholders, which shall be equal to 6.36%.
CLASS A-2 CERTIFICATE: A Certificate denominated as a Class A-2
Certificate.
CLASS A-2 REMITTANCE RATE: The annual rate of interest payable to the Class
A-2 Certificateholders, which shall be equal to 6.58%.
CLASS A-3 CERTIFICATE: A Certificate denominated as a Class A-3
Certificate.
CLASS A-3 REMITTANCE RATE: The annual rate of interest payable to the Class
A-3 Certificateholders, which shall be equal to 6.81%.
CLASS B APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class Principal Balance of the Class B Certificates (after
taking into account the distribution of the Class B Principal Distribution
Amount on such Remittance Date, but prior to the application for the Class B
Applied Realized Loss Amount, if any, on such Remittance Date) and (y) the
Applied Realized Loss Amount as of such Remittance Date.
CLASS B CERTIFICATE: A Certificate denominated as a Class B Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B CROSS-OVER DATE: Means the earlier of (a) the Remittance Date on
which the Class Principal Balance of the Class M-2 Certificates is reduced to
zero and (b) the first Remittance Date on or after the Remittance Date occurring
in July 2000 on which the fraction, expressed as a percentage, the numerator of
which is the Class Principal Balance of the Class A and Class M Certificates as
of the immediately preceding Remittance Date and the denominator of which is the
aggregate Principal Balance of the Home Improvement Loans as of the end of the
second preceding Due Period, is less than or equal to 75%.
CLASS B CURRENT INTEREST DISTRIBUTION REQUIREMENT: The sum of the Current
Interest Distribution Requirements for the Class B-1 and Class B-2 Certificates.
CLASS B FORMULA PRINCIPAL DISTRIBUTION AMOUNT: Means (i) prior to the Class
B Cross-over Date, $0 and (ii) on each Remittance Date on or after the Class B
Cross-over Date, the applicable Class B Percentage multiplied by the Principal
Distribution Amount; provided, however, that with respect to any Remittance
Date, the Class B Formula Principal Distribution Amount shall never exceed the
Class Principal Balance of the Class B Certificates.
CLASS B PERCENTAGE: Means (i) until such time as the Class Principal
Balances of the Class A and Class M Certificates have been reduced to zero, 100%
minus the Senior Percentage and (ii) thereafter, 100%.
CLASS B PRINCIPAL BALANCE: The Class Principal Balance of the Class B
Certificates.
CLASS B PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance Date
means the lesser of (i) the Class B Formula Principal Distribution Amount or
(ii) the Available Remittance Amount remaining after the payment of all Current
Interest Distribution Requirements and all Class A and Class M Principal
Distribution Amounts payable on such Remittance Date.
CLASS B REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the lesser
of (x) the Class B Unpaid Realized Loss Amount as of such Remittance Date and
(y) the portion of the Available Remittance Amount for such Remittance Date
remaining after application of amounts set forth in Section 6.08(d)(i)-(xv),
inclusive.
CLASS B REMITTANCE RATE: The annual rate of interest payable to the Class B
Certificateholders, which shall be equal to 7.71%.
CLASS M CERTIFICATE: A Certificate denominated as a Class M-1 or Class M-2
Certificate.
CLASS M CERTIFICATEHOLDER: A Holder of a Class M Certificate.
CLASS M CURRENT INTEREST DISTRIBUTION REQUIREMENT: The sum of the Current
Interest Distribution Requirements for the Class M-1 and Class M-2 Certificates.
CLASS M PRINCIPAL BALANCE: The sum of the Class Principal Balances of the
Class M-1 and Class M-2 Certificates.
CLASS M-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class M-1 Certificates
(after taking into account the distribution of the Class M-1 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class M-1 Applied Realized Loss Amount, if any, on such Remittance Date) and (y)
the excess of (i) the Applied Realized Loss Amount for such Remittance Date over
(ii) the sum of the Class M-2 Applied Realized Loss Amount and the Class B
Applied Realized Amount, in each case for such Remittance Date.
CLASS M-1 CERTIFICATE: A Certificate denominated as a Class M-1
Certificate.
CLASS M-1 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class Principal Balance of the Class A
Certificates has been reduced to zero, means the applicable Senior Percentage
multiplied by the Principal Distribution Amount (less any portion of the
Principal Distribution Amount required to be distributed to the Holders of the
Class A Certificates on such Remittance Date); provided, however, that, with
respect to any Remittance Date, the Class M-1 Formula Principal Distribution
Amount shall never exceed the Class Principal Balance of the Class M-1
Certificates.
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class M-1 Formula Principal Distribution Amount
or (ii) the Available Remittance Amount remaining after the payment of all
Current Interest Distribution Requirements and all Class A Principal
Distribution Amounts payable on such Remittance Date.
CLASS M-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class M-1 Unpaid Realized Loss Amount as of such Remittance
Date and (y) the portion of the Available Remittance Amount for such Remittance
Date remaining after application of amounts set forth in Section 6.08(d)(i)
through (xi), inclusive.
CLASS M-1 REMITTANCE RATE: The annual rate of interest payable to the Class
M-1 Certificateholders, which shall be equal to 7.17%
CLASS M-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class M-2 Certificates
(after taking into account the distribution of the Class M-2 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class M-2 Applied Realized Loss Amount, if any, on such Remittance Date) and (y)
the excess of (i) the Applied Realized Loss Amount for such Remittance Date over
(ii) the sum of the Class B Applied Realized Loss Amount for such Remittance
Date.
CLASS M-2 CERTIFICATE: A Certificate denominated as a Class M-2
Certificate.
CLASS M-2 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class Principal Balance of the Class A and Class
M-1 Certificates have been reduced to zero, means the applicable Senior
Percentage multiplied by the Principal Distribution Amount (less any portion of
the Principal Distribution Amount required to be distributed to the Holders of
the Class A or Class M-1 Certificates on such Remittance Date); provided,
however, that, with respect to any Remittance Date, the Class M-2 Formula
Principal Distribution Amount shall never exceed the Class Principal Balance of
the Class M-2 Certificates.
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date, the lesser of (i) the Class M-2 Formula Principal Distribution Amount or
(ii) the Available Remittance Amount remaining after giving effect to all
payments of Current Interest Distribution Requirements, Class A Principal
Distribution Amounts and Class M-1 Principal Distribution Amounts payable on
such Remittance Date.
CLASS M-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Class M-2 Unpaid Realized Loss Amount as of such Remittance
Date and (y) the portion of the Available Remittance Amount for such Remittance
Date remaining after application of amounts set forth in Section 6.08(d)(i)
through (xiii), inclusive.
CLASS M-2 REMITTANCE RATE: The annual rate of interest payable to the Class
M- 2 Certificateholders, which shall be equal to 7.70%.
CLASS POOL FACTOR: With respect to a Class of Class A, Class M or Class B
Certificates, as of any date of determination, the then Class Principal Balance
for such Class divided by the Original Principal Balance for such Class.
CLASS PRINCIPAL BALANCE: With respect to each Class of Class A, Class M or
Class B Certificates, as of any date of determination, the Original Principal
Balance of such Class less (i) the sum of all amounts (including any FHA
Payments made in respect of principal) previously distributed to the
Certificateholders of such Class in respect of principal pursuant to Section
6.08(d)(v) through (x), inclusive and (ii) the amount, if any, of Applied
Realized Loss Amounts previously allocated to such Class pursuant to Section
6.09. For purposes of determining the Class Principal Balance of each Class of
Class A, Class M or Class B Certificates with respect to any Remittance Date, no
effect shall be given to any principal to be distributed, or Applied Realized
Amounts to be allocated, to each such Class on such Remittance Date.
CLASS R CERTIFICATE: Collectively or singularly, the Class R-1 and/or Class
R-2 Certificates, as applicable.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS R-1 CERTIFICATE: A Certificate denominated as a Class R-1
Certificate.
CLASS R-2 CERTIFICATE: A Certificate denominated as a Class R-2
Certificate.
CLASS REMITTANCE RATE: With respect to a Class of Class A, Class M or Class
B Certificates, the annual rate of interest payable to the Certificateholders of
such Class, which rate is set forth, or determined as provided, under the
definitions of the Class A-1 through Class A-3 Remittance Rates, Class M-1 and
Class M-2 Remittance Rates and Class B Remittance Rate.
CLASS X CERTIFICATE: A Certificate denominated as a Class X Certificate.
CLASS X REMITTANCE AMOUNT: As of any Remittance Date, an amount equal to
the Remaining Amount Available, net of reimbursements to the Servicer or the
Representative of Reimbursable Amounts pursuant to Section 5.04(f).
CLOSING DATE: June 30, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 6.12.
CONTINGENCY FEE: As to each Home Improvement Loan, the annual fee which is,
in addition to the Servicing Fee, payable to the Servicer pursuant to Section
7.03 of this Agreement. Such fee shall be calculated and payable monthly only
from the amounts received in respect of interest on such Home Improvement Loan,
shall accrue at the rate of .25% per annum and shall be computed on the basis of
the same principal amount and for the period respecting which any related
interest payment on a Home Improvement Loan is computed. The Contingency Fee is
payable solely from the interest portion of related (i) Monthly Payments, (ii)
Liquidation Proceeds or (iii) Released Mortgaged Property Proceeds collected by
the Servicer, or as otherwise provided in Section 5.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CONVENTIONAL HOME IMPROVEMENT LOANS: Home Improvement Loans that are not
FHA Loans.
CORRESPONDING CLASS: With respect to the Class II-A-1, Class II-A-2, Class
II-A- 3, Class II-M-1, Class II-M-2 and Class II-B REMIC II Certificates, the
"Corresponding Classes of Certificates" shall be the Class A-1, Class X-0, Xxxxx
X-0, Class M-1, Class M-2 and Class B Certificates, respectively, as set forth
in the chart appearing in Section 4.01(b).
CO-TRUSTEE: Chase Manhattan Bank Delaware, a Delaware banking corporation.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the aggregate
amount of Realized Losses with respect to the Home Improvement Loans since the
Startup Day.
CURRENT INTEREST DISTRIBUTION REQUIREMENT: For each Class of Class A, Class
M and Class B Certificates, and with respect to each Remittance Date, the amount
equal to 30 days' interest at the applicable Remittance Rate on the Class
Principal Balance for such Class outstanding immediately prior to such
Remittance Date. If a principal prepayment is made to a Class of Class A, Class
M and Class B Certificates on the Special Remittance Date, the Current Interest
Requirement for each such Class for the October 1997 Remittance Date will be
equal to 30 days' interest on the Class Principal Balance for such Class on the
Special Remittance Date, after giving effect to such principal prepayment.
CURRENT PRINCIPAL DISTRIBUTION REQUIREMENT: The Class A Principal
Distribution Requirement, the Class M-1 Principal Distribution Requirement, the
Class M-2 Principal Distribution Requirement and the Class B Principal
Distribution Requirement.
CURTAILMENT: With respect to a Home Improvement Loan, any payment of
principal received during a Due Period as part of a payment that is in excess of
five times the amount of the Monthly Payment due for such Due Period and which
is not intended to satisfy the Home Improvement Loan in full, nor is intended to
cure a delinquency.
CUSTODIAL AGREEMENT: Any agreement to be entered into pursuant to Section
12.13 for the retention of each Trustee's Mortgage File, substantially in the
form attached as Exhibit M hereto.
CUSTODIAN: Any custodian appointed pursuant to Section 12.13 herein,
provided that such custodian shall be independent of the Servicer, the
Representative and the Claims Administrator, except in the event the Trustee or
the Co-Trustee shall be the Servicer or the Claims Administrator. The initial
Custodian for the Home Improvement Loans shall be First Trust National
Association, a national banking association headquartered in Minneapolis,
Minnesota.
CUT-OFF DATE: May 31, 1997; provided, however, that for purposes of
determining characteristics of the Initial Home Improvement Loans as of the
Cut-Off Date, the Cut-Off Date for those Initial Home Improvement Loans
originated after May 31, 1997 shall be deemed to be the date of the applicable
Mortgage Note.
DEALER LOANS: Home Improvement Loans in which a dealer-contractor
participates in the financing.
DEFICIENT VALUATION: With respect to any Home Improvement Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then outstanding indebtedness under the Home Improvement Loan, which
valuation results from a proceeding initiated under the United States Bankruptcy
Code, as amended from time to time (11 U.S.C.).
DELETED HOME IMPROVEMENT LOAN: A Home Improvement Loan replaced by a
Qualified Substitute Home Improvement Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short term rating by Moody's, and which is either
(i) a federal savings 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, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i) the
third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial institution
for which the Depository holds Class A, Class M or Class B Certificates from
time to time as a securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due from the
Mortgagor on a Home Improvement Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
EVENT OF DEFAULT: As described in Section 10.01.
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on a
Home Improvement Loan in excess of the Monthly Payment due on the Due Date
relating to such Due Period which does not constitute either a Curtailment or a
Principal Prepayment or payment with respect to an overdue amount. Excess
Payments are payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any Liquidated
Home Improvement Loan, the excess, if any, of (a) the total Net Liquidation
Proceeds, over (b) the Principal Balance of such Home Improvement Loan as of the
date such Home Improvement Loan became a Liquidated Home Improvement Loan plus
30 days interest thereon at the Weighted Average Class Adjusted Home Improvement
Loan Remittance Rate; provided, however, that such excess shall be reduced by
the amount by which interest accrued on the advance, if any, made by the
Servicer pursuant to Section 5.14 at the related Home Improvement Loan Interest
Rate exceeds interest accrued on such advance at the applicable Class Remittance
Rates.
EXPENSE ACCOUNT: The expense account established and maintained by the
Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHA: The Federal Housing Administration, and its successors in interest.
FHA INSURANCE PREMIUM: The premium charged by the FHA pursuant to 24 C.F.R.
ss. 201.31, or any successor regulation, as payment for Title I insurance
coverage for an FHA Loan, which premium shall be the responsibility of the
Servicer, who will be reimbursed from the FHA Premium Account in accordance with
Section 6.06(b)(i) hereof.
FHA LOAN: A Home Improvement Loan that is partially insured by the FHA
under Title I.
FHA PAYMENT: The amount received from the FHA for a Claim filed with
respect to a 90 Day Delinquent FHA Loan.
FHA PREMIUM ACCOUNT: The account established and maintained by the Trustee
in accordance with Section 6.06 hereof.
FHA PREMIUM AMOUNT: With respect to any FHA Loan for any Remittance Date,
(i) if the FHA Insurance Premium is paid by the related Mortgagor as part of the
Home Improvement Loan Interest Rate on an FHA Loan, an amount equal to 1/12 of
the product of the Insurance Rate times the Principal Balance as of the first
day of the immediately preceding Due Period and (ii) if the related Mortgagor
pays the FHA Insurance Premium as a separate amount in addition to Monthly
Payments, any such amount received by the Servicer during the related Due
Period.
FHA REGULATIONS: The regulations of the FHA with respect to Title I home
improvement loans set forth in 24 C.F.R. ss. 201, as the same may be amended
during the term of this Agreement.
FHA RESERVE ACCOUNT: The account of the Co-Trustee maintained by the FHA
with respect to the FHA Loans and certain other mortgage loans in accordance
with Section 5.16 hereof, registered in the name of the Co-Trustee and insured
by the FHA under Title I in accordance with the FHA Regulations.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FNMA: The Federal National Mortgage Association and any successor thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending on the
earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $200,000, (ii) the date on which an Event of
Default occurs and (iii) the close of business on September 25, 1997.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or more in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
HOME IMPROVEMENT LOAN: An individual mortgage loan which is transferred to
the Co-Trustee pursuant to this Agreement, including any Subsequent Home
Improvement Loan, together with the rights and obligations of a holder thereof
and payments thereon and proceeds therefrom, the Home Improvement Loans
originally subject to this Agreement being identified on the Home Improvement
Loan Schedule delivered to the Trustee and the Co-Trustee as Exhibit H. Any
mortgage loan which, although intended by the parties hereto to have been, and
which purportedly was, sold to the Trust Fund by the applicable Originator (as
indicated by Exhibit H), in fact was not sold or otherwise transferred and
assigned to the Trust Fund for any reason whatsoever, including, without
limitation, the incorrectness of the statement set forth in Section 3.02(i)
hereof with respect to such mortgage loan, shall nevertheless be considered a
"Home Improvement Loan" for all purposes of this Agreement.
HOME IMPROVEMENT LOAN INTEREST RATE: The fixed rate of interest borne by a
Mortgage Note, as shown on the Home Improvement Loan Schedule.
HOME IMPROVEMENT LOAN SCHEDULE: The schedule of Home Improvement Loans
delivered to the Trustee and the Co-Trustee as Exhibit H, such schedule
identifying each Home Improvement Loan by address of the Mortgaged Property and
the name of the Mortgagor and setting forth as to each Home Improvement Loan the
following information: (i) the Principal Balance as of the close of business on
the Cut-Off Date, (ii) the account number, (iii) the original principal amount,
(iv) the Due Date, (v) the Home Improvement Loan Interest Rate, (vi) the first
Due Date, (vii) the Monthly Payment, (viii) the maturity date of the Mortgage
Note, and (ix) the remaining number of months to maturity as of the Cut-Off
Date. Also, the Home Improvement Loan Schedule will indicate, based upon loan
number, whether the related Home Improvement Loan is an FHA Loan or a
Conventional Home Improvement Loan.
HUD: The United States Department of Housing and Urban Development, and its
successor in interest.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Class A, Class M or Class B Certificate.
INITIAL HOME IMPROVEMENT LOANS: The Home Improvement Loans listed on
Exhibit H delivered to the Trustee on the Closing Date.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Trustee or the Servicer by any insurer pursuant to any insurance policy covering
a Home Improvement Loan, Mortgaged Property, or REO Property, including but not
limited to title, hazard, life, health and/or accident insurance policies,
and/or (ii) by the Servicer pursuant to Section 5.08, in either case, net of any
expenses which are incurred by the Servicer in connection with the collection of
such proceeds and not otherwise reimbursed to the Servicer.
INSURANCE RATE: As to any FHA Loan with respect to which the FHA Insurance
Premium is paid by the related Mortgagor as part of the Home Improvement Loan
Interest Rate, the rate of 1.0% per annum, which is used to calculate the amount
to be applied to the payment of the related FHA Insurance Premium.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance Date
and with respect to any Class of Certificates, the sum of (i) the amount, if
any, by which (X) the sum of (a) the Current Interest Distribution Requirement
for such Class for such Remittance Date plus (b) the Interest Shortfall
Carryforward Amount for such Class as of the immediately preceding Remittance
Date exceeds (Y) the amount paid to the Certificateholders of such Class on such
Remittance Date pursuant to Sections 6.08(d)(ii), (iii), (iv), (ix), (xi),
(xiii) and (xv) of this Agreement and (ii) one month's interest on the amount
determined pursuant to clause (i) at the applicable Class Remittance Rate.
LIQUIDATED HOME IMPROVEMENT LOAN: (a) Any defaulted Home Improvement Loan
or REO Property as to which the Servicer has determined that all amounts which
it reasonably and in good faith expects to recover have been recovered from or
on account of such Home Improvement Loan (including, with respect to FHA Loans,
FHA Payments) or (b) any 90 Day Delinquent Loan other than a 90 Day Delinquent
FHA Loan for which a Claim is eligible to be filed with the FHA.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of any
REO Disposition, amounts required to be deposited in the Principal and Interest
Account pursuant to Section 5.10 hereof, and any other amounts other than FHA
Payments and Related Payments received in connection with the liquidation of
defaulted Home Improvement Loans, whether through trustee's sale, foreclosure
sale or otherwise.
LOAN-TO-VALUE RATIO: With respect to any Home Improvement Loan, (i) the sum
of (a) the original principal balance of such Home Improvement Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Home Improvement Loan, less (c) that portion of the principal balance equal to
the amount of the premium for credit life insurance collected by the
Originators, divided by (ii) the value of the related Mortgaged Property, based
upon the appraisal (or, in the case of certain Home Improvement Loans with
original principal balances of less than $15,000, such other method of valuation
acceptable to the related Originator) made at the time of origination of the
Home Improvement Loan.
LOW INTEREST HOME IMPROVEMENT LOAN: A Home Improvement Loan having a Home
Improvement Loan Interest Rate below the sum of the Class B Remittance Rate plus
0.54%.
LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or less in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A, Class M and
Class B Certificates evidencing in excess of 50% of the aggregate Class
Principal Balances of the Class A, Class M and Class B Certificates; provided,
however, that with respect to any action or event affecting fewer than all
Classes of Class A, Class M and Class B Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of the Classes of
Class A, Class M or Class B Certificates so affected.
MAXIMUM SUBORDINATION AMOUNT: Means $3,408,000.
MIXED USE BUILDING: A building containing both residential dwelling units
and commercial use units, e.g., retail stores or office space.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section 6.11
hereof.
MONTHLY EXCESS SPREAD: With respect to any Remittance Date, an amount equal
to the excess of (A) the product of (i) the aggregate Principal Balances of the
Home Improvement Loans as of the first day of the immediately preceding Due
Period and (ii) one-twelfth of the weighted average Home Improvement Loan
Remittance Rate as of the first day of the related Due Period over (B) the sum
of the Current Interest Distribution Requirement for such Remittance Date, (iii)
amounts to be deposited into the Expense Account on such Remittance Date
pursuant to Section 6.08(d)(ii), the Servicing Fee and the Contingency Fee with
respect to such Remittance Date and (iv) with respect to those FHA Loans for
which the FHA Insurance Premium is paid by the related Mortgagor as part of the
interest payment, the applicable FHA Insurance Premium. With respect to the
Remittance Dates in July, August and September 1997, the Excess Spread also will
include the sum of (i) all funds to be transferred to the Certificate Account
from the Capitalized Interest Account for such Remittance Date pursuant to
Section 6.02(g) and (ii) the Pre-Funding Earnings for the applicable Remittance
Date.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Home Improvement Loan, as set
forth in the related Mortgage Note.
MOODY'S: Xxxxx'x Investors Service, or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
on the Mortgaged Property.
MORTGAGE FILE: As described in Exhibit A.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 5.08.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Improvement Loan.
MORTGAGED PROPERTY: The underlying property securing a Home Improvement
Loan, consisting of a fee simple estate in a single contiguous parcel of land
improved by a Residential Dwelling.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Home Improvement Loans secured by Multifamily
Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as rental
apartment buildings or projects containing five or more units.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.
1933 ACT: The Securities Act of 1993, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Loan that is an FHA Loan.
90 DAY DELINQUENT LOAN: With respect to any Remittance Date, a Home
Improvement Loan with respect to which four consecutive Monthly Payments have
not been received by the Servicer as of the last day of the related Due Period
unless, on or prior to the last day of the Due Period in which the fourth
Monthly Payment is due, the Servicer has received from the related Mortgagor an
amount at least equal to one unpaid Monthly Payment.
NON-ACKNOWLEDGED FHA LOANS: As defined in Section 3.02(lll) hereof.
OFFICER'S CERTIFICATE: A certificate delivered to the Co-Trustee, signed by
the Chairman of the Board, the President, a Vice President or Assistant Vice
President, the Treasurer, the Secretary, or one of the Assistant Secretaries of
the Representative, an Originator, the Servicer or the Claims Administrator, as
required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative, the Servicer or the Claims
Administrator, reasonably acceptable to the Trustee and experienced in matters
relating thereto; except that any opinion of counsel relating to (a) the
qualification of the Trust Fund as a REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of counsel who (i) is in fact independent of the
Representative, the Servicer or the Claims Administrator, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Representative, the Servicer or the Claims Administrator or in an affiliate
thereof and (iii) is not connected with the Representative, the Servicer or the
Claims Administrator as an officer, employee, director or person performing
similar functions.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01 hereof.
ORIGINAL CLASS A-1 PRINCIPAL BALANCE: $ 94,900,000.
ORIGINAL CLASS A-2 PRINCIPAL BALANCE: $ 61,800,000.
ORIGINAL CLASS A-3 PRINCIPAL BALANCE: $ 27,675,000.
ORIGINAL CLASS M-1 PRINCIPAL BALANCE: $ 33,125,000.
ORIGINAL CLASS M-2 PRINCIPAL BALANCE: $ 18,750,000.
ORIGINAL CLASS B PRINCIPAL BALANCE: $ 13,750,000.
ORIGINAL COLLATERAL AMOUNT: The sum of (i) the aggregate Principal Balances
of the Initial Home Improvement Loans as of the Cut-Off Date and (ii) the
Original Pre-Funded Amount.
ORIGINAL PRE-FUNDED AMOUNT: $41,290,578.35, representing the amount
deposited in the Pre-Funding Account on the Closing Date.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A, Class M
and Class B Certificates, the amount set forth for such Class under the
definitions of Original Class A-1 through Original Class A-3 Principal Balances,
Original Class M-1 and Original Class M-2 Principal Balances and Original Class
B Principal Balances.
ORIGINATOR: Any of the entities listed on Exhibit I hereto, each of which
is a direct or indirect wholly-owned subsidiary of the Representative, and each
of which is a Subservicer as of the date hereof.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer Date
occurring in July 1997, the difference between (i) three-months' interest on the
aggregate Principal Balances of the Subsequent Home Improvement Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the Weighted
Average Remittance Rate and (ii) three-months' interest on the aggregate
Principal Balances of the Subsequent Home Improvement Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in August 1997, the
difference between (i) two-months' interest on the aggregate Principal Balances
of the Subsequent Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the Weighted Average Remittance Rate and (ii) two-months'
interest on the aggregate Principal Balances of the Subsequent Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in September 1997,
the difference between (i) one-month's interest on the aggregate Principal
Balances of the Subsequent Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the Weighted Average Remittance Rate and (ii)
one-month's interest on the aggregate Principal Balances of the Subsequent Loans
acquired by the Trust Fund on such Subsequent Transfer Date, calculated at the
rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which the
related Mortgagor represented at the time of the origination of the Home
Improvement Loan an intent to occupy as such Mortgagor's primary, secondary or
vacation residence.
PAYING AGENT: Initially, the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in Section 13.14 hereof and
is authorized by the Trustee to make payments on the Certificates on behalf of
the Trustee.
PERCENTAGE INTEREST: With respect to a Class A, Class M or Class B
Certificate, the portion of the respective Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the denomination
represented by such Certificate and the denominator of which is the Original
Principal Balance of such Class. With respect to the Class X Certificates, the
portion of the Class evidenced thereby, expressed as a percentage, which shall
equal 100%. With respect to the Class R Certificates, the portion of the Class
evidenced thereby, expressed as a percentage, as stated on the face of such
Certificate, which shall be either 99.99% or, but only with respect to the Class
R Certificates held by the Tax Matters Person, 0.01%. The Class A, Class M and
Class B Certificates are issuable only in the minimum Percentage Interest
corresponding to a minimum denomination of $1,000 and integral multiples of
$1,000 in excess thereof, except that one Class A, Class M and Class B
Certificate of each Class may be issued in a different denomination.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall include
the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or any agency or instrumentality thereof,
provided such obligations are backed by the full faith and credit of the
United States, FHA debentures, FHLMC senior debt obligations, Federal Home
Loan Bank consolidated senior debt obligations, and FNMA senior debt
obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(ii) federal funds, certificates of deposit, time deposits and
banker's acceptances (having original maturities of not more than 365 days)
of any bank or trust company incorporated under the laws of the United
States or any state thereof, provided that the short-term debt obligations
of such bank or trust company at the date of acquisition thereof have been
rated "A-1" or better by S&P and Prime-1 or better by Moody's;
(iii) 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 held only up to the limits insured by the BIF or SAIF
administered by the FDIC, provided that the unsecured long-term debt
obligations of such bank or savings and loan association have been rated
"BBB" or better by S&P and Baa3 or better by Moody's;
(iv) commercial paper (having original maturities of not more than 365
days) rated "A-1" or better by S&P and Prime-1 or better by Moody's;
(v) debt obligations rated "AAA" by S&P and Aaa by Moody's (other than
any such obligations that do not have a fixed par value and/or whose terms
do not promise a fixed dollar amount at maturity or call date);
(vi) investments in money market funds rated "AAA" or better by S&P or
"Aaa" or better by Moody's the assets of which are invested solely in
instruments described in clauses (i)-(v) above;
(vii) guaranteed investment contracts or surety bonds providing for
the investment of funds in an account or insuring a minimum rate of return
on investments of such funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or other corporation
whose debt obligations or insurance financial strength or claims
paying ability are rated "AAA" by S&P and "Aaa" by Moody's; and
(b) provide that the Trustee may exercise all of the rights of the
Representative under such contract or surety bond without the
necessity of the taking of any action by the Representative;
(viii) A repurchase agreement that satisfies the following criteria:
(a) Must be between the Trustee and a dealer bank or securities firm
described in 1. or 2. below:
1. Primary dealers on the Federal Reserve reporting dealer list
which are rated "A" or better by the Rating Agencies, or
2. Banks rated "A" or above by the Rating Agencies;
(b) The written repurchase agreement must include the following:
1. Securities which are acceptable for the transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the full faith and credit of
the U.S. government (and FNMA & FHLMC)
2. the term of the repurchase agreement may be up to 60 days
3. the collateral must be delivered to the Trustee or third
party custodian acting as agent for the Trustee by
appropriate book entries and confirmation statements, must
have been delivered before or simultaneous with payment
(perfection by possession of certificated securities)
4. Valuation of collateral
A. The securities must be valued weekly, marked-to-market at
current market price plus accrued interest
i. The value of the collateral must be equal to at
least 104% of the amount of cash transferred by the
Trustee or custodian for the Trustee to the dealer bank
or security firm under the repurchase agreement plus
accrued interest. If the value of securities held as
collateral slips below 104% of the value of the cash
transferred by the Trustee plus accrued interest, then
additional cash and/or acceptable securities must be
transferred. If, however, the securities used as
collateral are FNMA or FHLMC, then the value of
collateral must equal at least 105%; and
(ix) any other investment acceptable to the Rating Agencies.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Code Section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) a Person other than a "United States Person" as
defined in Code Section 7701(a)(30), unless the Servicer consents in writing to
the Transfer to such Person and (vi) any other Person so designated by the
Servicer based upon an Opinion of Counsel that the transfer of a Percentage
Interest in a Class R Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that the Class A, Class M or Class B
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Code Section
7701 or successor provisions. A corporation will not be treated as an
instrumentality of the United States or of any State or political subdivision
thereof for these purposes if all of its activities are subject to tax and, with
the exception of FHLMC, a majority of its board of directors is not selected by
such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL: The pool of Home Improvement Loans delivered to the Co-Trustee or the
Custodian pursuant hereto.
PRE-FUNDING EARNINGS: With respect to the Remittance Dates in July, August
and September 1997, the actual investment earnings earned during the period from
the Closing Date through the Business Day immediately preceding the
Determination Date in July, August and September 1997 (inclusive) on the
Pre-Funding Account during such period as calculated by the Representative
pursuant to Section 2.09(e) hereof.
PREFERENCE AMOUNT: means any amount previously distributed to a holder of
the Certificates (other than the Trust Fund) 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.
PRE-FUNDED AMOUNT: With respect to any date of determination, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Home Improvement Loan or related REO
Property, at any date of determination, (i) the principal balance of the Home
Improvement Loan outstanding as of the Cut-Off Date or as of the applicable
Subsequent Cut-Off Date relative to Subsequent Home Improvement Loans or as of
the applicable substitution date relative to Qualified Substitute Home
Improvement Loans, after application of principal payments received on or before
such date, minus (ii) the sum of (a) the principal portion of the Monthly
Payments received during each Due Period ending prior to the most recent
Remittance Date, which were distributed pursuant to Section 6.08 on any previous
Remittance Date, and (b) all Principal Prepayments, Curtailments, Excess
Payments, all Insurance Proceeds, Released Mortgaged Property Proceeds, Net
Liquidation Proceeds and net income from an REO Property to the extent applied
by the Servicer as recoveries of principal in accordance with the provisions
hereof, which were distributed pursuant to Section 6.08 on any previous
Remittance Date.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to each Remittance Date, the
excess, if any, of (A) the sum, without duplication, of (i) all payments and
other recoveries of principal of a Home Improvement Loan (net of amounts
reimbursable to the Servicer pursuant to this Agreement) received by the
Servicer or any Subservicer in the related Due Period: (ii) the principal
portion of any Home Improvement Loan actually purchased by the Seller for breach
of a representation and warranty or other defect and actually received by the
Trustee as of the related Determination Date; (iii) any Substitution Adjustments
deposited in the Principal and Interest Account and transferred to the
Certificate Account as of the related Determination Date: (iv) the then
outstanding Principal Balance of any Home Improvement Loan which, during the
related Due Period, has become a Liquidated Home Improvement Loan; and (v) the
amount, if any, released from the Pre-Funding Account on the Remittance Dates
during the Funding Period over (B) the Subordination Reduction Amount for such
Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a Home
Improvement Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Home
Improvement Loan in full.
PRIOR LIEN: With respect to any Home Improvement Loan which is not a first
priority lien, each mortgage loan relating to the corresponding Mortgaged
Property having a higher priority lien.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the meaning set
forth from time to time in the definition thereof at Section 860F(a)(2) of the
Code (or any successor statute thereto).
PUD AND DE MINIMIS PUD: A planned unit development in which individual fee
title is held to the interior and exterior of the units and underlying land and
common areas, recreational facilities and streets are held in undivided common
ownership.
QUALIFIED MORTGAGE: "Qualified mortgage" shall have the meaning set forth
from time to time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto).
QUALIFIED SUBSTITUTE HOME IMPROVEMENT LOAN: A mortgage loan or mortgage
loans substituted for a Deleted Home Improvement Loan pursuant to Section 2.05
or 3.03 hereof, which (i) has or have a mortgage interest rate or rates of not
less than (and not more than two percentage points more than) the Home
Improvement Loan Interest Rate for the Deleted Home Improvement Loan, (ii)
relates or relate to the same type of Residential Dwelling or Multifamily
Property, as the case may be, as the Deleted Home Improvement Loan, (iii)
matures or mature no later than (and not more than one year earlier than) the
Deleted Home Improvement Loan, (vi) has or have a principal balance or principal
balances (after application of all payments received on or prior to the date of
substitution) equal to or less than the Principal Balance (prior to the
occurrence of Realized Losses) of the Deleted Home Improvement Loan as of such
date, (v) with respect to each Deleted Home Improvement Loan that is a first
mortgage loan, is a first mortgage loan, (vi) satisfies or satisfy the criteria
set forth from time to time in the definition of a "qualified replacement
mortgage" at Section 860G(a)(4) of the Code (or any successor statute thereto),
(vii) is an FHA Loan if the Deleted Home Improvement Loan was an FHA Loan or a
Conventional Home Improvement Loan if the Deleted Home Improvement Loan was a
Conventional Home Improvement Loan and (viii) complies or comply as of the date
of substitution with each representation and warranty set forth in Sections
3.01(b) and 3.02.
RATING AGENCIES: Moody's and S&P.
RATING AGENCY CONDITION: Means that each of the Rating Agencies shall have
notified the Servicer and the Trustee, orally or in writing, that the
substitution of the Alternate Credit Enhancement for the Limited Guaranty will
not result in a reduction or withdrawal of the then current rating assigned by
the respective Rating Agencies to each Class of Certificates.
REALIZED LOSS: With respect to each Liquidated Home Improvement Loan
(including a 90 Day Delinquent FHA Loan as to which no Claim is eligible to be
filed with the FHA), an amount (not less than zero or greater than the related
outstanding principal balance as of the date of the final liquidation) equal to
the outstanding principal balance of the Home Improvement Loan as of the date of
such liquidation, minus the Net Liquidation Proceeds relating to such Liquidated
Home Improvement Loan (such Net Liquidation Proceeds to be applied first to the
principal balance of the Liquidated Home Improvement Loan and then to interest
thereon). With respect to each 90 Day Delinquent FHA Loan for which a Claim is
eligible to be filed with the FHA, the Realized Loss, if any, shall be
determined as of the Determination Date following the date the related FHA
Payment is received by the Co-Trustee, and shall be an amount (not less than
zero or greater than the related outstanding principal balance as of the date
the Claim relating to such FHA Loan is filed with the FHA) equal to the
outstanding principal balance of the FHA Loan as of the date of such filing,
minus amounts paid from the Certificate Account relating to such 90 Day
Delinquent FHA Loan (such amounts to be applied first to the principal balance
of such FHA Loan and then to interest thereon). With respect to each Home
Improvement Loan which has become the subject of a Deficient Valuation, the
Realized Loss shall be calculated as the difference between the principal
balance of the Home Improvement Loan immediately prior to such Deficient
Valuation and the principal balance of the Home Improvement Loan as reduced by
the Deficient Valuation. With respect to any Home Improvement Loan made to a
Mortgagor who has filed a petition in bankruptcy under the United States
Bankruptcy Code, as amended from time to time (11 U.S.C.), a Realized Loss shall
be deemed to have occurred whenever a withdrawal is made from the Principal and
Interest Account in respect of such Home Improvement Loan pursuant to Section
5.04(c), and shall be equal to the amount of such withdrawal.
RECORD DATE: With respect to any Remittance Date, the close of business on
the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, August 31, 1997.
REGISTRATION STATEMENT: The registration statement (File No. 333-20817)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Class A, Class M and Class B
Certificates, including the Prospectus dated March 7, 1997 and the Prospectus
Supplement dated June 26, 1997.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable to
the Servicer and/or Representative with respect to (i) the payment of any tax
reimbursable pursuant to Section 5.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (iii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iv) any other amounts reimbursable to the Servicer or
the Representative prior to a distribution to the Class R Certificateholders
pursuant to this Agreement.
RELATED PAYMENTS: As described in Section 5.15(c).
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Home Improvement Loan,
proceeds received by the Servicer in connection with (a) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(b) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise, which are not
released to the Mortgagor in accordance with applicable law, the Servicer's
customary second mortgage servicing procedures and this Agreement.
REMAINING AMOUNT AVAILABLE: As of any Remittance Date the greater of (x)
zero dollars and (y)(i) the Available Remittance Amount minus (ii) payments made
pursuant to Sections 6.08(d)(i) through (xviii).
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to the REMIC and the REMIC Provisions issued after the Closing Date.
REMIC I: The assets constituting the Trust Fund consisting of the REMIC II
Regular Certificates.
REMIC II: The assets constituting the Trust Fund other than the Pre-Funding
Account and the Capitalized Interest Account. Expenses and fees of the Trust
Fund shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class R-2
Certificates.
REMIC II REGULAR CERTIFICATES: As designated in Section 4.1.
REMIC PROVISIONS: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Section 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing July
1997; provided, however, that in no event shall the Remittance Date occur less
than three Business Days following the Determination Date.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATION LETTER: The Letter of Representations executed by the
Representative, the Trustee and the Depository with respect to the Class A,
Class M and Class B Certificates.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of FHA
insurance available with respect to all FHA Loans. The Reserve Amount initially
will equal at least 10% of the aggregate Principal Balance of the FHA Loans as
of the Cut-Off Date and will decline as set forth in 24 C.F.R. ss. 201.32(b).
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single Family
Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller- Servicers' Guide) to the extent that it
constitutes real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee or the
Co-Trustee, any officer assigned to the Corporate Trust Department, in each case
including any Vice President, Assistant Vice President, any Assistant Secretary,
any trust officer or any other officer of the Trustee or Co-Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject and in either case, having direct
responsibility for the administration of this Agreement. When used with respect
to the Representative, an Originator or any other person, any Vice President,
Assistant Vice President, the Treasurer, or any Secretary or Assistant
Secretary.
ROW HOUSE: A single family dwelling unit attached to another dwelling unit
by common walls.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SCHEDULE OF HOME IMPROVEMENT LOANS: The schedule of Home Improvement Loans
attached to the related Subsequent Transfer Agreement.
SENIOR PERCENTAGE: Means (a) as to any Remittance Date prior to the Class B
Cross-over Date, 100%; (b) as to any Remittance Date on or after the Class B
Cross-over Date, and on which the Trigger Event is in effect, 100%; and (c) as
to any Remittance Date on or after the Class B Cross-over Date, and on which the
Trigger Event is not in effect, a fraction, expressed as a percentage, the
numerator of which is the sum of the Class Principal Balances of the Class A and
the Class M Certificates and the denominator of which is the sum of the Class
Principal Balances of the Class A, the Class M and the Class B Certificates.
SERIES: 1997-II.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.10.
SERVICING ACCOUNT: The Servicing Account established and maintained by the
Servicer in accordance with Section 6.15 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Fund and
Certificateholders shall have no rights thereto.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Home Improvement Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Home Improvement Loan Interest Rate, except that any amount of such
interest accrued at a rate in excess of the Weighted Average Remittance Rate
with respect to the Remittance Date on which the Net Liquidation Proceeds will
be distributed shall be reimbursable only from Excess Proceeds.
SERVICING DELINQUENCY TRIGGER: Will be deemed to have occurred on any date
of determination (i) on or prior to June 30, 2002, if the Total Expected Losses
(as defined below) of the Home Improvement Loans exceed 18.5% of the sum of (A)
the aggregate Principal Balances of the Home Improvement Loans as of the Cut-off
Date and (B) the aggregate Principal Balances of the Subsequent Home Improvement
Loans as of the applicable Subsequent Cut-off Date and (ii) after June 30, 2002,
but on or prior to June 30, 2007, if the Total Expected Losses of the Home
Improvement Loans exceed 27.5% of the sum of (A) the aggregate Principal
Balances of the Home Improvement Loans as of the Cut-off Date and (B) the
aggregate Principal Balances of the Subsequent Home Improvement Loans as of the
applicable Subsequent Cut-off Date.
For purposes of the foregoing definition, the "Total Expected Losses" of
the Home Improvement Loans on any date of determination shall equal the sum of
(i) the Cumulative Realized Losses on the Home Improvement Loans from the
Closing Date through and including such date of determination and (ii) the
Delinquency Calculation (as defined below).
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 Improvement Loans 30-59
days delinquent multiplied by 25%;
(ii) the Principal Balance of all Home Improvement Loans 60-89
days delinquent multiplied by 50%; and
(iii) the Principal Balance of all Home Improvement Loans 90 days
or more delinquent multiplied by 100%.
SERVICING FEE: As to each Home Improvement Loan, the annual fee payable to
the Servicer. Such fee shall be calculated and payable monthly only from the
amounts received in respect of interest on such Home Improvement Loan, shall
accrue at the rate of .25% per annum and shall be computed on the basis of the
same principal amount and for the period respecting which any related interest
payment on a Home Improvement Loan is computed. The Servicing Fee is payable
solely from the interest portion of related (i) Monthly Payments, (ii)
Liquidation Proceeds or (iii) Released Mortgaged Property Proceeds collected by
the Servicer, or as otherwise provided in Section 5.04. The Servicing Fee
includes any servicing fees owed or payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer or Claims Administrator
involved in, or responsible for, the administration and servicing of the Home
Improvement Loans whose name and signature appears on a list of servicing
officers furnished to the Trustee or Co-Trustee by the Servicer or Claims
Administrator, as such list may from time to time be amended.
SHORTFALL AMOUNTS: Means, as of any Remittance Date, the sum of (i) the
Interest Shortfall Carryforward Amounts with respect to the Class M-1, Class M-2
and Class B Certificates, and (ii) the Class M-1, Class M-2 and Class B Realized
Loss Amounts.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not attached in
any way to any other unit.
SINGLE FAMILY LOANS: Home Improvement Loans secured by Mortgaged Property
consisting of one-to-four family units.
SIXTY-DAY DELINQUENCY RATIO: Means, as of any Remittance Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding Principal Balances of all Home Improvement Loans that were
delinquent 60 days or more as of the end of the prior Due Period (including Home
Improvement Loans in respect of which the related real estate has been
foreclosed upon but is still in inventory), and the denominator of which is the
sum of the Principal Balances of all the Home Improvement Loans as of the end of
the immediately preceding Due Period.
S&P: Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx
Companies, or any successor thereto.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIAL REMITTANCE DATE: September 26, 1997.
SPECIFIED SUBORDINATED AMOUNT: Means, for any Remittance Date (i) prior to
the Spread Amount Stepdown Date, 7% of the Original Collateral Amount and (ii)
on and after the Spread Amount Stepdown Date, the greater of (A) 14% of the
aggregate Principal Balance of the Home Improvement Loans as of the last day of
the related Due Period and (B) 0.5% of the Original Collateral Amount.
Notwithstanding the foregoing, upon the occurrence and during the continuance of
a Trigger Event, the Specified Subordinated Amount will equal 9.7% of the
Original Collateral Amount; provided, however, that the Specified Subordinated
Amount shall never exceed the then aggregate Class Principal Balance of the
Certificates. Notwithstanding the foregoing, following the Funding Period, the
Specified Subordinated Amount may be revised with the consent of each Rating
Agency.
SPREAD AMOUNT: Means, for any Remittance Date, the excess, if any, of (i)
the aggregate Principal Balances of the Home Improvement Loans as of the last
day of the immediately preceding Due Period and any amounts on deposit in the
Pre-Funding Account over (ii) the aggregate principal balances of the
Certificates (after taking into account all distributions of principal on such
Remittance Date).
SPREAD AMOUNT STEPDOWN DATE: Means the later to occur of (i) the
Distribution Date occurring in January 2000 and (ii) the first Distribution Date
on which the Principal Balance of the Home Improvement Loans as of the last day
of the related Due Period is less than 50% of the Original Collateral Amount.
STARTUP DAY: The day designated as such pursuant to Section 2.06 hereof.
SUBORDINATED DEFICIENCY AMOUNT: Means the excess, if any, of (i) the
Specified Subordinated Amount for such Remittance Date over (ii) the then
current Spread Amount, after giving effect to all payments previously made on
such Remittance Date.
SUBORDINATION REDUCTION AMOUNT: Means for any Remittance Date, the lesser
of (i) the amount set forth in clause (A) of the definition of Principal
Distribution Amount and (ii) the excess, if any, of the then current Spread
Amount over the then current Specified Subordinated Amount.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Home
Improvement Loans which are transferred and assigned to the Trust Fund pursuant
to the related Subsequent Transfer Agreement.
SUBSEQUENT HOME IMPROVEMENT LOANS: The Home Improvement Loans sold to the
Trust Fund pursuant to Section 2.09, which shall be listed on the Schedule of
Home Improvement Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated as
of a Subsequent Transfer Date executed by the Co-Trustee and the Representative,
by which Subsequent Home Improvement Loans are sold and assigned to the Trust
Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Home
Improvement Loans as provided in Section 5.01(b), a copy of which shall be
delivered, along with any modifications thereto, to the Trustee.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the amount (if any) by which the aggregate
principal balances (after application of principal payments received on or
before the date of substitution) of any Qualified Substitute Home Improvement
Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Home Improvement Loans.
TAX MATTERS PERSON: The Person or Persons designated from time to time to
act as the "tax matters person" (within the meaning of the REMIC Provisions) of
the Trust Fund.
TAX MATTERS PERSON RESIDUAL INTEREST: The interest in each Class of Class R
Certificates acquired by the Tax Matters Person pursuant to Section 2.06(d)
hereof.
TAX RETURN: The federal income tax return on Internal Revenue Service Form
1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the Trust Fund due to its classification as a REMIC under the REMIC
Provisions, together with any and all other information reports or returns that
may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one roof.
TITLE I: Section 2 of Title I of the National Housing Act and the rules and
regulations promulgated thereunder.
TRIGGER EVENT: A Trigger Event will be in effect on a Remittance Date if
either (i) the Sixty-Day Delinquency Ratio as of such Remittance Date exceeds
50% of the Class A Credit Enhancement Percentage or (ii) both (A) either (x) the
Weighted Average Five-Month Sixty-Day Delinquency Ratio as of such Remittance
Date exceeds 9% or (y) the Cumulative Realized Losses as of such Remittance Date
exceed $28,500,000; and (B) either (x) the Weighted Average Five-Month Sixty-Day
Delinquency Ratio as of such Remittance Date exceeds 15% or (y) the Cumulative
Realized Losses as of such Remittance Date exceed $9,500,000; or (iii) the
fraction, expressed as a percentage, the numerator of which is the sum of the
Class Principal Balances of the Class A and Class M Certificates as of the
immediately preceding Remittance Date and the denominator of which is the
aggregate outstanding Principal Balance of the Home Improvement Loans as of the
end of the second preceding Due Period is greater than 75%.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Home Improvement Loans as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto and all proceeds thereof, (ii)
such assets (including any Permitted Instruments) as from time to time are
identified as REO Property relating to Home Improvement Loans or are deposited
in or constitute the Certificate Accounts, Principal and Interest Account,
Expense Account, Pre-Funding Account, Capitalized Interest Account and FHA
Premium Account, (iii) the Co-Trustee's rights under all insurance policies with
respect to the Home Improvement Loans required to be maintained pursuant to this
Agreement and any related Insurance Proceeds, (iv) Liquidation Proceeds, and (v)
Released Mortgaged Property Proceeds, including all earnings thereon and
proceeds thereof.
TRUSTEE: The Chase Manhattan Bank, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Custodian pursuant
to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: Means for any Class of the Class M or Class B
Certificates as of any Remittance Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Remittance Dates over (y) the aggregate, cumulative amount
of related Realized Loss Amounts with respect to such Class for all prior
Remittance Dates.
WEIGHTED AVERAGE CLASS ADJUSTED HOME IMPROVEMENT LOAN REMITTANCE RATE: With
respect to each Home Improvement Loan, a percentage per annum, being the sum of
(i) the Weighted Average Remittance Rate, (ii) .04% per annum, relating to the
Annual Expense Escrow Amount, and (iii) with respect to FHA Loans for which the
FHA Insurance Premium is paid by the related Mortgagor as part of the Home
Improvement Loan Interest Rate, the applicable Insurance Rate.
WEIGHTED AVERAGE FIVE-MONTH SIXTY-DAY DELINQUENCY RATIO: Means, as of any
Remittance Date, the average of the Sixty-Day Delinquency Ratios for such
Remittance Date and for each of the four Remittance Dates immediately preceding
such Remittance Date, weighted by the sum of the Principal Balances of the Home
Improvement Loans as of the ends of the related Due Periods.
WEIGHTED AVERAGE REMITTANCE RATE: Means the average of the Class A-1
Remittance Rate, the Class A-2 Remittance Rate, the Class A-3 Remittance Rate,
the Class M-1 Remittance Rate, the Class M-2 Remittance Rate and the Class B
Remittance Rate, weighted by the Class Principal Balances of the Certificates.
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 SALE AND CONVEYANCE OF TRUST FUND; PRIORITY AND SUBORDINATION
OF OWNERSHIP INTERESTS.
(a) The Originators do hereby sell, transfer, assign, set over and convey
to the Co- Trustee without recourse and for the benefit of the
Certificateholders, subject to the terms of this Agreement, all of the right,
title and interest of the Originators in and to the Initial Home Improvement
Loans, all rights under the Reserve Amount relating to the Home Improvement
Loans and all other assets included or to be included in the Trust Fund.
(b) The rights of the Certificateholders to receive payments with respect
to the Home Improvement Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement.
Section 2.02 POSSESSION OF MORTGAGE FILES.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File relating to the
Initial Home Improvement Loans is, and upon each Subsequent Transfer Date the
ownership of each Mortgage Note, the Mortgage and the contents of the related
Mortgage File relating to the applicable Subsequent Home Improvement Loans will
be, vested in the Co-Trustee for the benefit of the Certificateholders of the
related Pool.
(b) Pursuant to Section 2.04, the Originators have delivered or caused to
be delivered each Trustee's Mortgage File relating to the Initial Home
Improvement Loans to the Custodian and on each Subsequent Transfer Date the
Originators will deliver or cause to be delivered each Trustee's Mortgage File
relating to the related Subsequent Home Improvement Loans to the Custodian.
Section 2.03 BOOKS AND RECORDS.
The sale of each Home Improvement Loan shall be reflected on the
Originator's balance sheets and other financial statements as a sale of assets
by each Originator. Nothing in this Agreement, however, shall be deemed to
create a transfer of an FHA Loan in violation of Title I or the FHA Regulations.
The Originators shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Home Improvement Loan which shall be
clearly marked to reflect the ownership of each Home Improvement Loan by the
Trustee for the benefit of the Certificateholders.
Section 2.04 DELIVERY OF HOME IMPROVEMENT LOAN DOCUMENTS.
Each Originator, (i) contemporaneously with the delivery of this Agreement,
has delivered or caused to be delivered to the Custodian each of the following
documents for each Initial Home Improvement Loan and (ii) on each Subsequent
Transfer Date, will deliver or cause to be delivered to the Custodian each of
the following documents for each Subsequent Home Improvement Loan originated by
such Originator:
(a) The original Mortgage Note, endorsed "Pay to the order of holder" or
"Pay to the order of " and signed, by facsimile or manual signature, in the name
of the Person delivering the note by a Responsible Officer, with all prior and
intervening endorsements showing a complete chain of endorsement from the
originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of recording thereon,
(ii) a copy of the Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording until such time as the
original is returned by the public recording office or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(c) Either: (i) the original Assignment of Mortgage from the Person
delivering such Assignment to Chase Manhattan Bank Delaware, as Co-Trustee under
the "Pooling and Servicing Agreement dated as of May 31, 1997, 1997-II," with
evidence of recording thereon (provided, however, that where permitted under the
laws of the jurisdiction wherein the Mortgaged Property is located, the
Assignment of Mortgage may be effected by one or more blanket assignments for
Home Improvement Loans secured by Mortgaged Properties located in the same
county), or (ii) a copy of such Assignment of Mortgage certified as a true copy
by a Responsible Officer where the original has been transmitted for recording
(provided, however, that where the original Assignment of Mortgage is not being
delivered to the Custodian, each such Responsible Officer may complete one or
more blanket certificates attaching copies of one or more Assignments of
Mortgage relating to the Mortgages originated by the related Originator);
(d) (X) Except with respect to the FHA Loans (i) The original policy of
title insurance or, if such policy has not yet been delivered by the insurer,
the commitment or binder to issue same, or if the original principal balance of
the Home Improvement Loan was less than or equal to $15,000 or the Home
Improvement Loan was not originated by the Originators, other evidence of the
status of title, which shall consist of an attorney's opinion of title or
certificate of title, a preliminary title report, a property search, a title
search, a lot book report, a property information report or a report entitled
"prelim" or "PIRT" (property information report), and (ii) proof of hazard
insurance in the form of a hazard insurance policy or hazard insurance policy
endorsement that names the related Originator, its successors and assigns, as a
mortgagee/loss payee, and, if such endorsement does not show the amount insured
by the related hazard insurance policy, some evidence of such amount and (Y)
with respect to the FHA Loans, the written Home Improvement Loan application,
title report, credit reconciliation worksheet, credit investigation receipts and
approval sheet;
(e) Either: (i) originals of all intervening assignments, if any, showing a
complete chain of title from the originator to the Person delivering such
assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments certified by the
public recording office in any instances where the original recorded assignments
have been lost;
(f) Originals of all assumption and modification agreements, if any; and
(g) Except with respect to the FHA Loans and certain Home Improvement Loans
with original principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Home Improvement Loan with
photographs of the subject property and of comparable properties (if available),
constituting evidence sufficient to indicate that the Mortgaged Property relates
to a Residential Dwelling (or, with respect to Multifamily Loans, a Multifamily
Property) and identifying the type thereof.
The Originator shall, within five Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or with respect to the
Subsequent Home Improvement Loans, within one year of the related Subsequent
Transfer Date), deliver or cause to be delivered to the Custodian: (a) the
original recorded Mortgage in those instances where a copy thereof certified by
a Responsible Officer was delivered to the Custodian; (b) the original recorded
Assignment of Mortgage to the Co-Trustee, which, together with any intervening
assignments of Mortgage, evidences a complete chain of title from the originator
to the Co-Trustee in those instances where copies thereof certified by a
Responsible Officer were delivered to the Custodian; and (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer were delivered to the Custodian. Notwithstanding anything to
the contrary contained in this Section 2.04, in those instances where the public
recording office retains the original Mortgage, Assignment of Mortgage or the
intervening assignments of the Mortgage after it has been recorded, the
Originator shall be deemed to have satisfied its obligations hereunder upon
delivery to the Custodian of a copy of such Mortgage, Assignment of Mortgage or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof. From time to time the Originator may
forward or cause to be forwarded to the Custodian additional original documents
evidencing an assumption or modification of a Home Improvement Loan. All Home
Improvement Loan documents held by the Custodian as to each Home Improvement
Loan are referred to herein as the "Trustee's Mortgage File."
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
Section 2.05 ACCEPTANCE BY TRUSTEE AND CUSTODIAN OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE AND CUSTODIAN.
(a) The Custodian, as agent for the Co-Trustee, agrees to execute and
deliver on the Closing Date with respect to the Initial Home Improvement Loans,
and on each Subsequent Transfer Date with respect to the related Subsequent Home
Improvement Loans, an acknowledgment of receipt of, for each Home Improvement
Loan, an Assignment of Mortgage or certified copy thereof, and a Mortgage Note,
in the form attached as Exhibit F 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 Fund and delivered to
the Custodian, as agent for the Co-Trustee, and subject to the conditions set
forth herein for the benefit of the Certificateholders. The Custodian agrees,
for the benefit of the Certificateholders, to review each Trustee's Mortgage
File relating to the Initial Home Improvement Loans delivered to it within 60
days after the Closing Date and each Trustee's Mortgage File relating to the
Subsequent Home Improvement Loans delivered to it within 60 days after the
related Subsequent Transfer Date (or, with respect to any Qualified Substitute
Home Improvement Loan, within 45 days after the assignment thereof) and, on each
such date, to deliver to the Representative and the Servicer a certification in
the form attached hereto as Exhibit F-1 to the effect that, as to each Home
Improvement Loan listed in the Home Improvement Loan Schedule (other than any
Home Improvement Loan paid in full or any Home Improvement Loan specifically
identified in such certification as not covered by such certification), with
such exceptions, if any, as identified therein (i) all documents required to be
delivered to it pursuant to this Agreement are in its possession (other than
items listed in Section 2.04(d)(ii)), (ii) such documents (other than items
listed in Section 2.04(d)(ii)) have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such Home
Improvement Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth on the Home Improvement Loan Schedule
accurately reflects the information set forth in the Trustee's Mortgage File,
and (iv) each Mortgage Note has been endorsed as provided in Section 2.04 of
this Agreement. The Custodian, the Trustee or the Co- 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,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Within 375 days after the Closing
Date, the Custodian shall deliver to the Servicer, the Representative and any
Certificateholder who requests a copy from the Custodian a final certification
in the form attached hereto as Exhibit G evidencing, if such be the case, the
completeness of the Trustee's Mortgage Files (other than items listed in Section
2.04(d)(ii)).
(b) If the Custodian during the process of reviewing the Trustee's Mortgage
Files finds any document constituting a part of a Trustee's Mortgage File which
is not properly executed, has not been received, is unrelated to a Home
Improvement Loan identified in the Home Improvement Loan Schedule, or does not
conform in a material respect to the requirements of Section 2.04 or the
description thereof as set forth in the Home Improvement Loan Schedule, the
Custodian shall promptly so notify the Servicer, the Representative and the
Trustee. In performing any such review, the Custodian may conclusively rely on
the related Originator as to the purported genuineness of any such document and
any signature thereon. It is understood that the scope of the Custodian's review
of the Mortgage Files is limited solely to confirming that the documents listed
in Section 2.04 (other than the items listed in Section 2.04(d)(ii)) appear on
their face to have been executed and received and to relate to the Home
Improvement Loans identified in the Home Improvement Loan Schedule, and to
verify that each Mortgaged Property appears from the information contained in
the Trustee's Mortgage File to be a Residential Dwelling (or, with respect to
the Multifamily Loans, a Multifamily Property). The Representative agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a Mortgage File of which it is so notified by the Custodian. If, however,
within 60 days after the Custodian's notice to it respecting such defect the
Representative has not remedied the defect and the defect materially and
adversely affects the interest of the Certificateholders in the related Home
Improvement Loan, the Representative will (i) substitute in lieu of such Home
Improvement Loan a Qualified Substitute Home Improvement Loan in the manner and
subject to the conditions set forth in Section 3.03 or (ii) purchase such Home
Improvement Loan at a purchase price equal to the Principal Balance of the Home
Improvement Loan as of the date of purchase, before the occurrence of Realized
Losses, if any, plus 30 days' interest on such Principal Balance, computed at
the weighted average Class Adjusted Home Improvement Loan Remittance Rates for
the Class A, Class M and Class B Certificates as of the next succeeding
Determination Date, plus any accrued unpaid Servicing Fees, Contingency Fees,
Monthly Advances and Servicing Advances reimbursable to the Servicer, which
purchase price shall be deposited in the Principal and Interest Account on the
next succeeding Determination Date.
(c) Upon receipt by the Custodian of a certification of a Servicing Officer
of the Servicer of such substitution or purchase and the deposit of the amounts
described above in the Principal and Interest Account (which certification shall
be in the form of Exhibit J hereto), the Custodian shall release to the Servicer
for release to the Representative the related Trustee's Mortgage File and the
Co-Trustee shall execute, without recourse, and deliver such instruments of
transfer necessary to transfer such Home Improvement Loan to the Representative
including, without limitation, for each FHA Loan, an FHA Transfer of Note Report
to be filed with the FHA. All costs of any such transfer shall be borne by the
Servicer.
If requested by either the Representative or the Servicer, on the
Remittance Date in June of each year, commencing 1997, the Custodian shall
deliver to the Representative and the Servicer a certification detailing all
transactions with respect to the Home Improvement Loans for which the Trustee or
the Custodian holds a Trustee's Mortgage File pursuant to this Agreement during
the prior calendar year. Such certification shall list all Trustee's Mortgage
Files which were released by or returned to the Trustee or the Custodian during
the prior calendar year, the date of such release or return, the reason for such
release or return, and the person to whom the Trustee's Mortgage File was
released or the person who returned the Trustee's Mortgage File.
Section 2.06 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF
STARTUP DAY.
(a) As of the Startup Day, all Classes of Certificates except for the Class
R-1 and Class R-2 Certificates are hereby designated as the "regular interests"
in REMIC I and the Class R-1 Certificates are designated the single class of
"residual interests" in REMIC I for the purposes of the REMIC Provisions. As of
the Startup Day, the REMIC II Regular Certificates are hereby designated as the
"regular interests" in REMIC II and the Class R-2 Certificates are designated
the single class of "residual interests" in REMIC II for the purposes of the
REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code. The latest possible
maturity date of the REMIC II Regular Certificates is August 15, 2028.
(c) The latest possible maturity dates of the Class A, Class M and
Class B Certificates are as follows:
Class Latest Possible Maturity Date
Class A-1 July 15, 2008
Class A-2 October 15, 2013
Class A-3 March 15, 2016
Class M-1 February 15, 2020
Class M-2 August 15, 2028
Class B August 15, 2028
(d) The Servicer, at the direction of the Originators, shall acquire and
retain a .01% Percentage Interest in each Class of Class R Certificates so long
as it shall act as Tax Matters Person of the Trust Fund, except that, when the
Trustee is acting as successor Servicer, the Representative will hold the Tax
Matters Person Residual Interest until an entity is appointed to succeed the
Trustee as Servicer.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust Fund shall be resolved in a manner that preserves
the validity of the election that each of REMIC I and REMIC II be treated as a
REMIC.
Section 2.07 AUTHENTICATION OF CERTIFICATES.
The Co-Trustee acknowledges the assignment to it of the Home Improvement
Loans and the delivery to it of the Trustee's Mortgage Files relating to the
Initial Home Improvement Loans and, concurrently with such delivery, the Trustee
has authenticated or caused to be authenticated and delivered to or upon the
order of the Representative on behalf of the Originators, in exchange for the
Initial Home Improvement Loans, the Trustee's Mortgage Files and the other
assets included in the definition of the Trust Fund, Certificates duly
authenticated by the Trustee in authorized denominations evidencing the entire
ownership of the Trust Fund.
Section 2.08 FEES AND EXPENSES OF THE TRUSTEE AND CO-TRUSTEE.
The fees and expenses of the Trustee and Co-Trustee including (i) the
annual fees of the Trustee and Co-Trustee, payable annually in advance, and
subject to rebate to the Servicer as additional servicing compensation hereunder
for any fraction of a year in which this Agreement terminates, (ii) any other
fees and expenses to which the Trustee or Co-Trustee is entitled, and (iii)
reimbursements to the Servicer for any advances made by the Servicer to the
applicable Expense Accounts pursuant to Section 6.03 hereof, shall be paid from
the Expense Accounts in the manner set forth in Section 6.03 hereof; provided,
however, that the Representative shall be liable for any expenses of the Trust
Fund incurred prior to the Closing Date. The Servicer, the Trustee and
Co-Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee, the Co-Trustee
or the Servicer, acting as attorney-in-fact for the Trustee, or Co-Trustee on
behalf of the Trust Fund shall expressly state therein that no Certificateholder
shall be personally liable in its capacity as such in connection with such
contract or agreement. The fees and expenses payable to the Co-Trustee shall
include the fees and expenses payable to the Custodian (which shall be in
addition to the fees and expenses payable to the Co-Trustee).
Section 2.09 SALE AND CONVEYANCE OF THE SUBSEQUENT HOME IMPROVEMENT LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Co-Trustee all right, title and interest of the applicable
Originators in and to each Subsequent Home Improvement Loan listed on the Home
Improvement Loan Schedule delivered by the Representative on such Subsequent
Transfer Date, all their right, title and interest in and to principal collected
and interest accruing on each such Subsequent Home Improvement Loan on and after
the related Subsequent Cut-Off Date and all their right, title and interest in
and to all insurance policies; provided, however, that the Originators reserve
and retain all their right, title and interest in and to principal (including
Principal Prepayments) collected and interest accruing on each such Subsequent
Home Improvement Loan prior to the related Subsequent Cut-Off Date. The transfer
by the Originators of the Subsequent Home Improvement Loans set forth on the
Home Improvement Loan Schedule to the Co-Trustee shall be absolute and shall be
intended by all parties hereto to be treated as a sale by the Originators.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate principal balances as of the related Subsequent
Cut-Off Dates of the Subsequent Home Improvement Loans so transferred.
(b) The Originators shall transfer to the Co-Trustee the Subsequent Home
Improvement Loans and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Representative shall have provided the Trustee and the
Custodian with a timely Addition Notice and shall have provided any
information reasonably requested by any of the foregoing with respect to
the Subsequent Home Improvement Loans;
(ii) the Originators shall have delivered to the Trustee and the
Custodian a duly executed written assignment (including an acceptance by
the Trustee and the Custodian) which shall include Home Improvement Loan
Schedules, listing the Subsequent Home Improvement Loans and any other
exhibits listed thereon;
(iii) the Originators shall have deposited in the Principal and
Interest Account all collections in respect of the Subsequent Home
Improvement Loans received on or after the related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the related
Originator, the Servicer or the Representative was insolvent nor will any
of them have been made insolvent by such transfer nor is any of them aware
of any pending insolvency;
(v) such addition will not result in a material adverse tax
consequence to the Trust Fund or the Holders of the Certificates;
(vi) the Pre-Funding Period shall not have terminated;
(vii) the Representative shall have delivered to the Trustee, an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related Subsequent
Transfer Agreement; and
(viii) the Representative shall have delivered to the Rating Agencies
and the Trustee, Opinions of Counsel with respect to the transfer of the
Subsequent Home Improvement Loans substantially in the form of the Opinions
of Counsel delivered to the Trustee on the Startup Day (bankruptcy,
corporate and tax opinions).
(c) The obligation of the Trust Fund to purchase a Subsequent Home
Improvement Loan on any Subsequent Transfer Date is subject to the requirement,
as evidenced by a certificate from a Responsible Officer of the Representative,
that such Subsequent Home Improvement Loan conforms in all material respects to
the representations and warranties concerning the individual Initial Home
Improvement Loans, set forth in Sections 3.01 and 3.02 (except that any
reference therein to the Cut-Off Date shall be deemed a reference to the
applicable Subsequent Cut-Off Date) and that the inclusion of all Subsequent
Home Improvement Loans being transferred to the Trust Fund on such Subsequent
Transfer Date will not change, in any material respect, the characteristics of
the Initial Home Improvement Loans in the aggregate, set forth in Sections 3.01
and 3.02 or in the Prospectus Supplement dated June 26, 1997 forming a part of
the Registration Statement under the headings "Summary of Terms - The Pool" and
"The Loan Pool - Home Improvement Loans."
(d) In connection with the transfer and assignment of the Subsequent Home
Improvement Loans, the Representative agrees to satisfy the conditions set forth
in Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the Remittance
Dates in July, August and September 1997 and the Special Remittance Date, the
Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirement, the Overfunded Interest Amount, the
Pre-Funding Earnings, the amounts of Pre-Funding Account moneys and (ii) any
other necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. If any amounts are incorrectly
released to the Holders of the Class R Certificates from the Pre-Funding Account
or from the Capitalized Interest Account, such Holders or the Representative
shall immediately repay such amounts to the Trustee.
(f) No later than September 30, 1997, the Representative shall obtain a
letter from an independent accountant stating whether or not the characteristics
of the Subsequent Home improvement Loans conform to the characteristics
described in the Prospectus Supplement dated June 26, 1997 included as part of
the Registration Statement.
(g) Reserved.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS OF REPRESENTATIVE, SERVICER, CLAIMS
ADMINISTRATOR AND ORIGINATORS.
(a) The Representative, the Servicer and the Claims Administrator (for the
purposes of this Section 3.01(a), "The Money Store Inc.") hereby represent and
warrant to the Trustee, the Co-Trustee and the Certificateholders as of the
Closing Date:
(i) The Money Store Inc. is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation and has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good standing in each
jurisdiction in which a Mortgaged Property is located if the laws of such
jurisdiction require licensing or qualification in order to conduct
business of the type conducted by The Money Store Inc. and perform its
obligations hereunder; The Money Store Inc. has corporate power and
authority to execute and deliver this Agreement and each Subservicing
Agreement and to perform in accordance herewith and therewith; the
execution, delivery and performance of this Agreement and each Subservicing
Agreement (including all instruments of transfer to be delivered pursuant
to this Agreement and each Subservicing Agreement) by The Money Store Inc.
and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action;
this Agreement and each Subservicing Agreement evidences the valid, binding
and enforceable obligation of The Money Store Inc.; The Money Store Inc. is
a Permitted Transferee; and all requisite corporate action has been taken
by The Money Store Inc. to make this Agreement and each Subservicing
Agreement valid, binding and enforceable upon The Money Store Inc. in
accordance with the respective terms of each, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity, none
of which will affect the ownership of the Home Improvement Loans by the
Trustee, as trustee;
(ii) 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 Money Store Inc. makes
no such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution
and delivery by The Money Store Inc. of the documents to which it is a
party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and each Subservicing Agreement
and the other documents on the part of The Money Store Inc. and the
performance by The Money Store Inc. of its obligations under this Agreement
and each Subservicing Agreement and such of the other documents to which it
is a party;
(iii) The consummation of the transactions contemplated by this
Agreement and each Subservicing Agreement will not result in the breach of
any terms or provisions of the certificate of incorporation or by-laws of
The Money Store Inc. or result in the breach of any term or provision of,
or conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement, indenture or
loan or credit agreement or other material instrument to which The Money
Store Inc. or its property is subject, or result in the violation of any
law, rule, regulation, order, judgment or decree to which The Money Store
Inc. or its property is subject;
(iv) Neither this Agreement or any Subservicing Agreement nor any
statement, report or other document furnished or to be furnished pursuant
to this Agreement and each Subservicing Agreement or in connection with the
transactions contemplated hereby and thereby contains any untrue statement
of material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading;
(v) The Money Store Inc. does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
(vi) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of The Money Store
Inc.'s knowledge, threatened against The Money Store Inc. which, either in
any one instance or in the aggregate, may result in any material adverse
change in the business, operations, financial condition, properties or
assets of The Money Store Inc. or in any material impairment of the right
or ability of The Money Store Inc. to carry on its business substantially
as now conducted, or in any material liability on the part of The Money
Store Inc. or which would draw into question the validity of this Agreement
and each Subservicing Agreement or the Home Improvement Loans or of any
action taken or to be taken in connection with the obligations of The Money
Store Inc. contemplated herein, or which would be likely to impair
materially the ability of The Money Store Inc. to perform under the terms
of this Agreement and each Subservicing Agreement;
(vii) The Trust Fund will not constitute an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(viii) The Money Store Inc. is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of The Money Store Inc. or its
properties or might have consequences that would materially and adversely
affect its performance hereunder or under any Subservicing Agreement;
(ix) The statements contained in the Registration Statement which
describe The Money Store Inc. or matters or activities for which The Money
Store Inc. is responsible in accordance with the Registration Statement,
this Agreement and all documents referred to therein or delivered in
connection therewith, or which are attributable to The Money Store Inc.
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with
respect to The Money Store Inc. and does not omit to state a material fact
necessary to make the statements contained therein with respect to The
Money Store Inc. not misleading. The Money Store Inc. is not aware that the
Registration Statement contains any untrue statement of a material fact or
omits to state any material fact necessary to make the statements contained
therein not misleading. There is no fact peculiar to The Money Store Inc.
or the Home Improvement Loans and known to The Money Store Inc. that
materially adversely affects or in the future may (so far as The Money
Store Inc. can now reasonably foresee) materially adversely affect The
Money Store Inc. or the Home Improvement Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement;
(x) Each Originator received fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the Initial
Home Improvement Loans, and will receive fair consideration and reasonably
equivalent value in exchange for the sale of the interest in the Subsequent
Home Improvement Loans, evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial Home Improvement
Loan, and no Originator will sell any interest in any Subsequent Home
Improvement Loan, evidenced by the Certificates, as provided in the
Agreements, with any intent to hinder, delay or defraud any of its
respective creditors;
(xii) The Originators are solvent and the Originators will not be
rendered insolvent as a result of the sale of the Home Improvement Loans to
the Trust Fund or the sale of the Certificates; and
(xiii) No Certificateholder is subject to state licensing requirements
solely by virtue of holding the Certificates.
(b) Each Originator hereby represents and warrants to the
Certificateholders, the Trustee and the Co-Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation and, except as set forth below, has all licenses necessary to
carry on its business as now being conducted and is licensed, qualified and
in good standing in each jurisdiction in which a Mortgaged Property is
located if the laws of such jurisdiction require licensing or qualification
in order to conduct business of the type conducted by such Originator and
perform its obligations hereunder; such Originator has corporate power and
authority to execute and deliver this Agreement and the Subservicing
Agreement to which it is a party and to perform in accordance herewith and
therewith; the execution, delivery and performance of this Agreement and
the Subservicing Agreement to which it is a party (including all
instruments of transfer to be delivered pursuant to this Agreement and the
Subservicing Agreement to which it is a party) by such Originator and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action; this
Agreement and the Subservicing Agreement to which it is a party evidences
the valid, binding and enforceable obligation of such Originator; such
Originator is a Permitted Transferee; and all requisite corporate action
has been taken by such Originator to make this Agreement and the
Subservicing Agreement to which it is a party valid, binding and
enforceable upon such Originator in accordance with the respective terms of
each such agreement, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in
any proceeding, whether at law or in equity, none of which will affect the
ownership of the Home Improvement Loans by the Co-Trustee;
(ii) No approval of the transactions contemplated by this Agreement
and the Subservicing Agreement to which it is a party from any state or
federal regulatory authority having jurisdiction over such Originator is
required or, if required, such approval has been or will, prior to the
Closing Date, be obtained;
(iii) The consummation of the transactions contemplated by this
Agreement and the Subservicing Agreement to which it is a party will not
result in the breach of any terms or provisions of the certificate of
incorporation or by-laws of such Originator or result in the breach of any
term or provision of, or conflict with or constitute a default under or
result in the acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material instrument to which
such Originator or its property is subject, or result in the violation of
any law, rule, regulation, order, judgment or decree to which such
Originator or its property is subject;
(iv) Such Originator is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of such Originator or its properties or
might have consequences that would materially and adversely affect its
performance hereunder or under the Subservicing Agreement to which it is a
party;
(v) Except as set forth on Schedule I, there is no action, suit,
proceeding or investigation pending or, to the best of such Originator's
knowledge, threatened against such Originator which, either in any one
instance or in the aggregate, may result in any material adverse change in
the business, operations, condition (financial or other), properties or
assets of such Originator or in any material impairment of the right or
properties or assets of such Originator to carry on its business
substantially as now conducted, or in any material liability on the part of
such Originator or which would draw into question the validity of this
Agreement or the Subservicing Agreement to which it is a party or the Home
Improvement Loans or of any action taken or to be taken in connection with
the obligations of such Originator contemplated herein, or which would be
likely to impair materially the ability of such Originator to perform under
the terms of this Agreement or the Subservicing Agreement to which it is a
party;
(vi) Neither this Agreement or the Subservicing Agreement to which it
is a party nor any statement, report or other document furnished or to be
furnished pursuant to this Agreement or the Subservicing Agreement to which
it is a party or in connection with the transactions contemplated hereby or
thereby contains any untrue statement of a material fact or omits to state
any material fact necessary to make the statements contained herein or
therein not misleading;
(vii) The statements contained in the Registration Statement which
describe such Originator or matters or activities for which such Originator
is responsible in accordance with the Registration Statement, this
Agreement and all documents referred to therein or delivered in connection
therewith, or which are attributable to such Originator therein are true
and correct in all material respects, and the Registration Statement does
not contain any untrue statement of a material fact with respect to such
Originator or the Home Improvement Loans and does not omit to state a
material fact necessary to make the statements contained therein with
respect to such Originator or the Home Improvement Loans not misleading.
Such Originator is not aware that the Registration Statement contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements contained therein not misleading. There is
no fact peculiar to such Originator or the Home Improvement Loans and known
to such Originator that materially and adversely affects or in the future
may (so far as such Originator can now reasonably foresee) materially and
adversely affect such Originator or the Home Improvement Loans or the
ownership interests therein represented by the Certificates that has not
been set forth in the Registration Statement;
(viii) Upon the receipt of each Trustee's Mortgage File by the
Custodian on behalf of the Co-Trustee under this Agreement, the Co-Trustee
will have good and marketable title on behalf of the related Trust Fund to
each Home Improvement Loan and such other items comprising the corpus of
the related Trust Fund free and clear of any lien (other than liens which
will be simultaneously released);
(ix) 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 such Originator makes no
such representation or warranty), that are necessary or advisable in
connection with the purchase and sale of the Certificates and the execution
and delivery by such Originator of the documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full
force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either
the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the Subservicing Agreement
to which it is a party and the other documents on the part of such
Originator and the performance by such Originator of its obligations under
this Agreement and the Subservicing Agreement to which it is a party and
such of the other documents to which it is a party;
(x) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Originators pursuant to this Agreement are not or,
with respect to the Subsequent Home Improvement Loans, will not be, subject
to the bulk transfer laws or any similar statutory provisions in effect in
any applicable jurisdiction;
(xi) The origination and collection practices used by each Originator
and the primary servicer with respect to each Mortgage Note and Mortgage
relating to the Initial Home Improvement Loans have been, and the
origination and collection practices to be used by each Originator and the
primary servicer with respect to each Mortgage Note and Mortgage relating
to the Subsequent Home Improvement Loans will be, in all material respects
legal, proper, prudent and customary in the mortgage origination and
servicing business;
(xii) Each Initial Home Improvement Loan was selected, and each
Subsequent Home Improvement Loan will be selected, from among the existing
Home Improvement Loans in the respective Originator's portfolio at the date
hereof or, in the case of the Subsequent Home Improvement Loans, at the
related Subsequent Cut-off Date, in a manner not designed to adversely
affect the Certificateholders;
(xiii) Such Originator does not believe, nor does it have any reason
or cause to believe, that it cannot perform each and every covenant
contained in this Agreement and the Subservicing Agreement to which it is a
party;
(xiv) Such Originator received fair consideration and reasonably
equivalent value or, in the case of the Subsequent Home Improvement Loans,
will receive fair consideration and reasonably equivalent value, in
exchange for the sale of the interest in the Home Improvement Loans
evidenced by the Certificates;
(xv) Such Originator did not sell or, in the case of the Subsequent
Home Improvement Loans, will not sell, any interest in any Home Improvement
Loan evidenced by the Certificates with any intent to hinder, delay or
defraud any of its respective creditors;
(xvi) Such Originator is solvent, and such Originator will not be
rendered insolvent as a result of the sale of the Home Improvement Loans to
the Trust Fund or the sale of the Certificates;
(xvii) No Certificateholder is subject to state licensing requirements
solely by virtue of holding the Certificates;
(xviii) The Subservicing Agreement to which the Originator is a party
conforms to the requirements for a Subservicing Agreement contained in this
Agreement;
(xix) Each FHA Loan was selected from among the existing FHA-insured
Title I loans in such Originator's portfolio at the date hereof in a manner
not designed to adversely affect the Certificateholders; and
(xx) Each Originator of an FHA Loan is authorized and approved by the
FHA for participation in the FHA Title I loan program and holds a valid
Contract of Insurance from the FHA for such purpose.
Section 3.02 INDIVIDUAL HOME IMPROVEMENT LOANS.
Each Originator hereby represents and warrants to the Trustee, the
Co-Trustee and the Certificateholders, with respect to each Initial Home
Improvement Loan, as of the Closing Date and, with respect to each Subsequent
Home Improvement Loan, as of the related Subsequent Transfer Date:
(a) The information with respect to each Home Improvement Loan set forth in
the Home Improvement Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee or to the Custodian on the Closing Date or, with
respect to the Subsequent Home Improvement Loans, on the related Subsequent
Transfer Date, or as otherwise provided in Section 2.04;
(c) Each Initial Home Improvement Loan being transferred to the Trust Fund
is, and each Subsequent Home Improvement Loan to be transferred will be, a
Qualified Mortgage;
(d) Each Mortgaged Property (other than the Multifamily Properties) is
improved by a Residential Dwelling, which, to the best of the Originator's
knowledge, does not include cooperatives or mobile homes attached to a
foundation or otherwise and does not constitute other than real property under
state law.
(e) Each Initial Home Improvement Loan has been, and each Subsequent Home
Improvement Loan will be, originated and underwritten, or purchased and
re-underwritten, by an Originator in accordance with the Representative's
underwriting criteria set forth in the Registration Statement and the
Underwriting Guidelines dated August 10, 1995 (which Underwriting Guidelines are
consistent with the underwriting criteria set forth in the Registration
Statement) and is being, or with respect to the Subsequent Home Improvement
Loans, will be, serviced by the Servicer or one or more Subservicers and, with
respect to each Initial Home Improvement Loan originated by an Originator, there
is, and with respect to each Subsequent Home Improvement Loan, there will be,
only one originally executed Mortgage Note not stamped as a duplicate copy with
respect to each such Home Improvement Loan;
(f) The Mortgage Note with respect to each Initial Home Improvement Loan
bears, and with respect to each Subsequent Home Improvement Loan will bear, a
fixed Home Improvement Loan Interest Rate, which rate shall at least equal the
sum of (i) the Weighted Average Remittance Rate plus 0.04%, (ii) the rate used
in calculating the Servicing Fee and (iii) the rate used in calculating the
Contingency Fee; provided, however, that (A) up to $0 aggregate principal amount
of the Initial Home Improvement Loans may be Low Interest Home Improvement Loans
and (B) in connection with FHA Loans, if the related Mortgagor pays the FHA
Insurance Premium as a separate amount in addition to the Monthly Payment, such
extra amount shall be sufficient to pay the related FHA Insurance Premium;
(g) Each Mortgage Note relating to the Home Improvement Loans will provide
for a schedule of substantially level and equal Monthly Payments which are, if
timely paid, sufficient to fully amortize the principal balance of such Mortgage
Note on or before its maturity date.
(h) Each Mortgage is, with respect to the Initial Home Improvement Loans,
and will be with respect to the Subsequent Home Improvement Loans, a valid and
subsisting first or second lien of record on the Mortgaged Property (except that
the Mortgages relating to no more than approximately 16% of the Home Improvement
Loans measured by Pool Principal Balances as of the Cut-Off Date may be more
junior liens) subject, in the case of any second or more junior Home Improvement
Loan, only to any applicable Prior Liens on such Mortgaged Property and subject
in all cases to the exceptions to title set forth in the title insurance policy
or the other evidence of title enumerated in Section 2.04(d), with respect to
the related Home Improvement Loan, which exceptions are generally acceptable to
banking institutions in connection with their regular mortgage lending
activities, and such other exceptions to which similar properties are commonly
subject and which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided by such
Mortgage;
(i) Immediately prior to the transfer and assignment herein contemplated,
the Originator held good and indefeasible title to, and was the sole owner of,
each Home Improvement Loan conveyed by the Originator subject to no liens,
charges, mortgages, encumbrances or rights of others except as set forth in
Section 3.02(h) or other liens which will be released simultaneously with such
transfer and assignment; and immediately upon the transfer and assignment herein
contemplated, the Co-Trustee will hold good and indefeasible title, to, and be
the sole owner of, each Home Improvement Loan subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in Section
3.02(h) or other liens which will be released simultaneously with such transfer
and assignment;
(j) As of the Cut-Off Date, no Initial Home Improvement Loan is 59 days or
more delinquent in payment and, except as provided in the next sentence, no
Initial Home Improvement Loan has been delinquent 59 days or more as measured at
the end of any month during the 12 months immediately preceding the Cut-Off
Date. As of the related Subsequent Cut-Off Date, no Subsequent Home Improvement
Loan shall be 59 or more days delinquent;
(k) To the best of the Originator's knowledge, there is no delinquent tax
or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(l) The Home Improvement Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Mortgage Note or the Mortgage, or the
exercise of any right thereunder, render either the Mortgage Note or the
Mortgage unenforceable in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto;
(m) As of the applicable dates of origination, the Weighted Average
Loan-to-Value Ratio of the Home Improvement Loans was no greater than 90.0%;
(n) Each Home Improvement Loan at the time it was made complied in all
material respects with applicable state and federal laws and regulations,
including, without limitation, usury, equal credit opportunity, disclosure and
recording laws;
(p) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is 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), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Home Improvement Loan had full legal capacity to execute all
Home Improvement Loan documents and convey the estate therein purported to be
conveyed;
(s) The Servicer, at the direction of the related 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 Co-Trustee in any insurance policies
applicable to the Home Improvement Loans including, without limitation, any
necessary notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and mortgagee rights
in favor of the Co-Trustee, and the Originator of any FHA Loan has the authority
and power to transfer to the Trustee the FHA Reserve Amount relating to the Home
Improvement Loans;
(t) No more than approximately 2% of the Principal Balances of the Home
Improvement Loans, respectively, are secured by Mortgaged Properties located
within any single zip code area;
(u) Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Originator (or, subject to Section 2.04 hereof, are in the
process of being recorded);
(v) Each Home Improvement Loan conforms, and all such Home Improvement
Loans in the aggregate conform, to the description thereof set forth in the
Registration Statement;
(w) Reserved;
(x) Approximately 20% and 80% of the Initial Home Improvement Loans
(measured by outstanding principal balance as of the Closing Date) were FHA
Loans and Conventional Home Improvement Loans, respectively;
(y) All of the Initial Home Improvement Loans are Single-Family Loans
(provided, however, that no more than approximately 1% of the Initial Home
Improvement Loans, measured by Pool Principal Balances of the Cut-Off Date, may
be Multifamily Loans); and, when measured by outstanding principal balance as of
the Closing Date, no more than approximately 2% of the Initial Home Improvement
Loans are secured by vacation homes, secondary residences, or investment
properties, no more than approximately 2% of the Initial Home Improvement Loans
are secured by individual units in Low-Rise Condominiums, no more than
approximately 2% of the Initial Home Improvement Loans are secured by Two-,
Three- or Four-Family Houses, and none of the Initial Home Improvement Loans are
secured by individual units of other types including High-Rise Condominiums. No
Initial Home Improvement Loan is secured by a mobile home or co-op;
(z) Reserved;
(aa) The terms of the Mortgage Note and the 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
Certificateholders and which has been delivered to the Custodian. The substance
of any such alteration or modification is reflected on the Home Improvement Loan
Schedule and has been approved by the primary mortgage guaranty insurer, if any;
(bb) No instrument of release or waiver has been executed in connection
with the Home Improvement Loan, and no Mortgagor has been released, in whole or
in part, except in connection with an assumption agreement which has been
approved by the primary mortgage guaranty insurer, if any, and which has been
delivered to the Custodian;
(cc) There are no defaults in complying with the terms of the Mortgage, and
all taxes, governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously became
due and owing have been paid, or an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. The Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Home Improvement Loan proceeds,
whichever is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(dd) There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Home Improvement Loan or
the use for which the premises were intended;
(ee) Reserved;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can be
reasonably expected to cause private institutional investors to regard the Home
Improvement Loan as an unacceptable investment, cause the Home Improvement Loan
to become delinquent or adversely affect the value or marketability of the Home
Improvement Loan;
(gg) Reserved;
(hh) The proceeds of the Home Improvement Loan have been fully disbursed,
and there is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Home Improvement Loans were paid;
(ii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(jj) No Initial Home Improvement Loan was, and no Subsequent Home
Improvement Loan will be, originated under a buydown plan;
(kk) Except for the related FHA Premium Account in connection with any FHA
Loan, there is no obligation on the part of the Originator or any other party to
make payments in addition to those made by the Mortgagor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Mortgage File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(mm) The origination and collection practices used by the Originator with
respect to the Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing business
and, in the case of FHA Loans, legal, proper, prudent and customary in the Title
I mortgage lending and servicing business;
(nn) 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 Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(oo) No Initial Home Improvement Loan has, and no Subsequent Home
Improvement Loan will have, a shared appreciation feature, or other contingent
interest feature;
(pp) With respect to each Home Improvement Loan that is not a first
mortgage loan, the related Prior Lien requires equal monthly payments, or if it
bears an adjustable interest rate, the monthly payments for the related Prior
Lien may be adjusted no more frequently than monthly; at the time of the
origination of the Home Improvement Loan, the related Prior Lien was not 30 or
more days delinquent;
(qq) With respect to each Home Improvement Loan that is not a first
mortgage loan, either (i) no consent for the Home Improvement Loan is required
by the holder of the related Prior Lien or (ii) such consent has been obtained
and is contained in the Mortgage File;
(rr) Reserved;
(ss) With respect to each Home Improvement Loan that is not a first
mortgage loan, the maturity date of the Home Improvement Loan is prior to the
maturity date of the related Prior Lien if such Prior Lien provides for a
balloon payment;
(tt) The Mortgaged Property is located in the State identified in the Home
Improvement Loan Schedule and consists of a single parcel of real property with
a Residential Dwelling erected thereon (or, with respect to any Multifamily
Loans, a Multifamily Property erected thereon);
(uu) All parties which have had any interest in the Home Improvement Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged 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;
(vv) The Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Home Improvement Loan in the
event the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(ww) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Home Improvement Loan Schedule. The
consolidated principal amount does not exceed the original principal amount of
the Home Improvement Loan. The Mortgage Note does not permit or obligate the
Servicer to make future advances to the Mortgagor at the option of the
Mortgagor;
(xx) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would materially
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(yy) There is no default, breach, violation or event of acceleration
existing under the 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 Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage have been duly and properly executed by such parties;
(aaa) The Initial Home Improvement Loan was not, and the Subsequent Home
Improvement Loan will not be, selected for inclusion under this Agreement from
its portfolio of comparable loans, including, in the case of FHA Loans,
comparable Title I loans, on any basis which would have a material adverse
effect on a Certificateholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Home Improvement Loans have been deposited and all amounts received
after the Subsequent Cut-off Date with respect to the Subsequent Home
Improvement Loans will be deposited into the applicable Principal and Interest
Account and are, as of the Closing Date with respect to the Initial Home
Improvement Loans, in the applicable Principal and Interest Account;
(ccc) Reserved;
(ddd) At the applicable dates of origination of the Home Improvement Loans,
for each Home Improvement Loan, after giving effect to all improvements to be
made on the related Mortgaged Property with the proceeds of such Home
Improvement Loan, and based upon representations of the related Mortgagor, the
value of the related Mortgaged Property will at least be equal to the amount of
such Home Improvement Loan and the outstanding amount of all other loans secured
by Prior Liens on such Mortgaged Property;
(eee) Reserved;
(fff) At the applicable dates of origination, each Home Improvement Loan
had an original term to maturity of no greater than 25 years;
(ggg) Each Subsequent Home Improvement Loan will comply with the
representations and warranties respecting Subsequent Home Improvement Loans set
forth in Section 3.01(d) of the Insurance Agreement, which representations and
warranties are incorporated herein;
(hhh) Each Initial Home Improvement Loan bears, and each Subsequent Home
Improvement Loan will bear, a fixed rate of interest;
(iii) Reserved;
(jjj) Reserved;
(kkk) Each Initial FHA Loan is, and each Subsequent FHA Loan will be, an
FHA Title I property improvement loan (as defined in the FHA Regulations)
underwritten in accordance with applicable FHA requirements and submitted to the
FHA for insurance;
(lll) Each Initial FHA Loan has been, and each Subsequent FHA Loan will be,
submitted to the FHA for insurance pursuant to the FHA Title I loan program and,
except for no more than 25% of the Initial FHA Loans (measured by outstanding
principal balance as of the Closing Date) (the "Non-Acknowledged FHA Loans"),
each Initial FHA Loan has been acknowledged by the FHA for the FHA Title I loan
program; each Non-Acknowledged FHA Loan will be acknowledged by the FHA within
180 days of the Closing Date and each Subsequent FHA Loan will be acknowledged
by the FHA within 180 days after the Funding Period;
(mmm) The Reserve Amount with respect to each Initial FHA Loan will be
transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Closing Date, the Reserve Amount with respect to each Subsequent FHA Loan will
be transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Funding Period, and the Originators will give the Trustee, the Co-Trustee and
the Rating Agencies prompt notice of their receipt of confirmation of such
transfers;
(nnn) Assuming sufficient coverage remains available in the Reserve Amount,
each Claim filed by the Claims Administrator with respect to a 90 Day Delinquent
FHA Loan will be honored by the FHA in accordance with the FHA Regulations;
(ooo) Substantially all the proceeds of each Home Improvement Loan
(including each Subsequent Home Improvement Loan) have been or will be used to
acquire or to improve or protect an interest in real property that, at the
origination date of such Home Improvement Loan, was the only security for such
Home Improvement Loan;
(ppp) Reserved;
(qqq) A portion of the Home Improvement Loans are governed by the FTC
holder regulation provided in 16 C.F.R. Part 433;
(rrr) All obligations of the seller or subcontractor under each Home
Improvement Loan have been completed in accordance with the terms of such Home
Improvement Loans as of the Closing Date, and no additional goods or services
will be, or are required to be, provided by the seller or subcontractor under
the terms of such Home Improvement Loans after the Closing Date. All
improvements and other goods and services provided under each Home Improvement
Loan shall have been inspected by the Originator within the time period and in
accordance to the applicable Title I regulations and prior to the Closing Date,
and evidence of such inspection shall be included in the Mortgage File;
(sss) With respect to each Home Improvement Loan that is a home improvement
loan or retail installment sales contract for goods or services, no Mortgagor
has or will have a claim, counterclaim, right of rescission, set-off or defense
under any express or implied warranty or otherwise with respect to goods or
services provided under such Home Improvement Loan; and
(ttt) The Mortgage and the Mortgage Note contain the entire agreement of
the parties and all obligations of the seller or subcontractor under the related
Home Improvement Loan, and no other agreement defines, modifies or expands the
obligations of the seller or subcontractor under the Home Improvement Loan.
Section 3.03 PURCHASE AND SUBSTITUTION.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates to
the Certificateholders. Upon discovery by the Representative, the Servicer, any
Subservicer, any Custodian, the Trustee or the Co-Trustee of a breach of any of
such representations and warranties which materially and adversely affects the
value of the Home Improvement Loans or the interest of the Certificateholders,
or which materially and adversely affects the interests of the
Certificateholders in the related Home Improvement Loan in the case of a
representation and warranty relating to a particular Home Improvement Loan
(notwithstanding that such representation and warranty was made to the
Representative's or Originators' best knowledge), the party discovering such
breach shall give prompt written notice to the others. Within 60 days of the
earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, the Representative shall (a) promptly cure such
breach in all material respects, (b) purchase such Home Improvement Loan by
depositing in the Principal and Interest Account, on the next succeeding
Determination Date, an amount in the manner specified in Section 2.05(b), or (c)
remove such Home Improvement Loan from the Trust Fund (in which case it shall
become a Deleted Home Improvement Loan) and substitute one or more Qualified
Substitute Home Improvement Loans, provided such substitution is effected not
later than the date which is two years after the Startup Day or at such later
date, if the Trustee receives an Opinion of Counsel that such substitution would
not constitute a Prohibited Transaction or cause either REMIC I or REMIC II to
fail to qualify as a REMIC at any time any Certificates are outstanding.
As to any Deleted Home Improvement Loan for which the Representative
substitutes a Qualified Substitute Home Improvement Loan or Loans, the Servicer
shall effect such substitution by delivering to the Custodian a certification in
the form attached hereto as Exhibit J, executed by a Servicing Officer and the
documents constituting the Trustee's Mortgage File for such Qualified Substitute
Home Improvement Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest Account
all payments received in connection with such Qualified Substitute Home
Improvement Loan or Loans after the date of such substitution. Monthly Payments
received with respect to Qualified Substitute Home Improvement Loans on or
before the date of substitution will be retained by the Representative on behalf
of the related Originator. The Trust Fund will own all payments received on the
Deleted Home Improvement Loan on or before the date of substitution, and the
Representative on behalf of the Originators shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Home
Improvement Loan. The Servicer shall give written notice to the Trustee and the
Representative that such substitution has taken place and shall amend the
applicable Home Improvement Loan Schedule to reflect the removal of such Deleted
Home Improvement Loan from the terms of this Agreement and the substitution of
the Qualified Substitute Home Improvement Loan. Upon such substitution, such
Qualified Substitute Home Improvement Loan or Loans shall be subject to the
terms of this Agreement in all respects, including Sections 2.04 and 2.05, and
the Representative and the Originator shall be deemed to have made with respect
to such Qualified Substitute Home Improvement Loan or Loans, as of the date of
substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Representative
will remit to the Servicer, and the Servicer will deposit into the applicable
Principal and Interest Account an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in Section
2.05 and this Section 3.03, the Representative shall indemnify and hold harmless
the Trust Fund, the Trustee, the Custodian and the Certificateholders against
any loss, damages, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments and other costs and expenses resulting from any claim,
demand, defense or assertion based on or grounded upon, or resulting from, a
breach of the Representative's or any Originator's representations and
warranties contained in this Agreement. It is understood and agreed that the
obligations of the Representative or any Originator set forth in Sections 2.05
and 3.03 to cure, purchase or substitute for a defective Home Improvement Loan
and to indemnify the Certificateholders, the Trustee, the Co-Trustee and the
Custodian as provided in Sections 2.05 and 3.03 constitute the sole remedies of
the Trustee, the Co-Trustee, the Custodian and the Certificateholders respecting
a breach of the foregoing representations and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 shall accrue as to any Home
Improvement Loan upon (i) discovery of such breach by any party and notice
thereof to the Representative or notice thereof by the Representative to the
Trustee, (ii) failure by the Representative to cure such breach or purchase or
substitute such Home Improvement Loan as specified above, and (iii) demand upon
the Representative by the Co-Trustee for all amounts payable in respect of such
Home Improvement Loan.
For as long as the Trust Fund shall exist, the Servicer, the Trustee and
the Co-Trustee shall act in accordance herewith to assure continuing treatment
of each of REMIC I and REMIC II as a REMIC. In particular, the Trustee and the
Co-Trustee shall not (a) sell or permit the sale of all or any portion of the
Home Improvement Loans or of any Permitted Instrument unless such sale is as a
result of a repurchase of the Home Improvement Loans pursuant to this Agreement
or the Trustee has received an Opinion of Counsel to the effect that such sale
(i) is in accordance with a qualified liquidation as defined in Section
860F(a)(4) of the Code and as described in Section 11.01 hereof, or (ii) would
not be treated as a prohibited transaction within the meaning of Section
860F(a)(2) of the Code; and (b) accept any contribution to the Trust Fund after
the Startup Day without an Opinion of Counsel that such contribution is included
within the exceptions provided in Section 860G(d)(2) of the Code and therefore
will not be subject to the tax imposed by Section 860G(d)(1) of the Code.
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
(a) The Certificates shall be substantially in the forms annexed hereto as
Exhibits X- 0, X-0, X-0 and B-4 and shall, upon original issue, be executed and
delivered by the Servicer to the Trustee for authentication and redelivery to or
upon the order of the Representative, on behalf of the Originators, upon receipt
by the Custodian of the documents specified in Section 2.04. All Certificates
shall be executed on behalf of the Servicer by its President, one of its
Executive Vice Presidents or Vice Presidents, or by its Treasurer, in the
denominations specified in the definition of Percentage Interest, and shall be
authenticated on behalf of the Trustee by one of its authorized signatories.
Certificates bearing the signatures of individuals who were at the time of the
execution or authentication of the Certificates the proper officers of the
Servicer or an authorized signatory of the Trustee, as the case may be, shall
bind the Servicer or the Trustee, as the case may be, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates issued hereunder shall be dated the date of their
authentication.
(b) The REMIC II will be evidenced by (x) the Class II-A, Class II-A-1,
Class II-A-2, Class II-A-3, Class II-M-1, Class II-M-2, Class H-B and Class II-M
Certificates (the "REMIC II Regular Certificates"), which will be uncertificated
and non-transferable and are hereby designated as the "regular interests" in the
REMIC II and (y) the Class R-2 Certificates, which are hereby designated as the
single "residual interest" in the REMIC II (the REMIC II Regular Certificates,
together with the Class R-2 Certificates, the "REMIC II Certificates").
The Accelerated Principal Distribution applied pursuant to pursuant to
Section 6.08(d)(x) (the "Turbo Amount") that is payable from interest on the
Home Improvement Loans will not be paid to the REMIC II Regular Interests, but a
portion of the interest payable with respect to the Class II-M Certificate which
equals 1% of the Turbo Amount will be payable as a reduction of the principal
balances of the Class II-A-1, Class I-A-2, Class II-A-3, Class II-M-1, Class
II-M-2, Class II-B in the same manner which the Turbo Amount is allocated among
the Class X-0, Xxxxx X-0, Class A-3, Class M-1, Class M-2, and Class B (and will
be accrued and added to principal on the Class II-M Certificate). Principal
payments on the Home Improvement Loans shall be allocated 98% to the Class II-A
Certificate, 1% to the Class II-M Certificate, and 1% to the Class II-A-1, Class
II-A-2, Class II-A-3, Class II-M-1, Class II-M-2, and Class II-B Certificates.
The aggregate amount of principal allocated to the Class II-A-1, Class II-A-2,
Class II-A-3, Class II- M-1, Class II-M-2 and Class II-B shall be apportioned
among such Classes in the same manner in which principal is payable with respect
to the Class X-0, Xxxxx X-0, Class A-3, Class M-1, Class M-2, and Class B
Certificates, respectively. Notwithstanding the above, 98% and 2% of any
principal payments on the Home Improvement Loans that are attributable to a
Subordination Reduction Amount shall be allocated to the Class II-A and Class
II-M Certificates, respectively. Realized Losses with respect to the principal
balance of a Home Improvement Loan will be allocated (i) 98% to the Class II-A,
(ii) an amount equal to the 1% of the Realized Loss allocated to the Class M-1,
Class M-2 and Class B Certificates to the Class II-M-1, Class II-M-2 and Class
II-B respectively and (iii) any remainder to the Class II-M. The REMIC II
Certificates will have the following designations and pass-through rates, and
distributions of principal and interest thereon shall be allocated to the
Certificates other than the R-2 Certificate in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal(1) Interest(1)
II-A $204,535,233.20(7) (2) (3) (4),(5)
II-A-1 $949,000.00 (2) (3) (4),(5)
II-A-2 $618,000.00 (2) (3) (4),(5)
II-A-3 $276,750.00 (2) (3) (4),(5)
II-M-1 $331,250.00 (2) (3) (4),(5)
II-M-2 $187,500.00 (2) (3) (4),(5)
II-B $137,500.00 (2) (3) (4),(5)
II-M $1,674,188.43(7) (2) (3) (4),(5)
R-2 $0 0% N/A N/A(6)
--------------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC II certificate to the Certificates (other than the
Class R-2 Certificate) on any Remittance Date shall be 100%.
(2) The pass-through rate on these REMIC II Regular Interests shall at anytime
of determination equal the weighted average of the Adjusted Home
Improvement Loan Remittance Amount for each of the Home Improvement Loans.
Any shortfalls in interest on the REMIC II Regular Certificates that result
from prepayments of princpal on any Home Improvement Loan during the
related Due Period, after accounting for any Compensating Interest paid
under Section 6.12 shall proportionately reduce the interest accrued on the
REMIC II Regular Interests.
(3) Principal will be allocated to and apportioned among the Class A-1, Class
A-2, Class X- 0, Class M-1, Class M-2, and Class B Certificates in the same
proportion as principal is payable with respect to such Certificates,
except that a portion of such principal in an amount equal to the
Subordination Reduction Amount shall first be allocated to the Class X
Certificates, and all principal will be allocated to the Class X
Certificates after the principal balances of the Certificates have been
reduced to zero.
(4) Except as provided in footnote (5), interest will be allocated among the
Class X-0, Xxxxx X-0, Class A-3, Class M-1, Class M-2 and Class B
Certificates in the same proportion as interest is payable on such
Certificates.
(5) Any interest with respect to this REMIC II Certificate in excess of the
product of (i) two times the weighted average coupon of the Class II-A-1,
Class II-A-2, Class II-A-3, Class II-M-1, Class II-M-2, Class II-B and
Class II-M Certificates, where each of such Classes, other than the Class
II-M Certificate, is first subject to a cap and floor equal to the Class
A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B Remittance Rate,
respectively, and the Class II-M Certificate is subject to a cap equal to
0%, and (ii) the principal balance of this REMIC II Certificate, shall not
be allocated to the Certificates (other than the Class A Certificate) but
will be allocated to the Class X Certificates as a separate component.
(6) On each Distribution Date, available funds, if any, remaining in the REMIC
II after payments of interest and principal, as designated above, as well
as expenses and fees of the Trust Fund, will be distributed to the Class
R-2 Certificate.
(7) The principal balances of the Class II-A and Class II-M Certificates shall
be increased by 98% and 2%, respectively, of the principal balance of each
Subsequent Home Improvement Loan as of the related Subsequent Cut-Off Date.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee shall cause to be kept at its office, or at the office of
its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder. The Chase
Manhattan Bank is initially appointed Certificate Registrar for the purpose of
registering Certificates and transfer and exchanges of Certificates as herein
provided (the "Certificate Registrar").
(b) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A, Class M and Class B Certificates shall initially
be issued in the form of a single fully registered Certificate of such Class.
The Class A, Class M and Class B Certificates shall have an aggregate
denomination equal to the following:
CLASS DENOMINATION
----- ------------
Class A-1 $94,900,000
Class A-2 $61,800,000
Class A-3 $27,675,000
Class M-1 $33,125,000
Class M-2 $18,750,000
Class B $13,750,000
Upon initial issuance, the ownership of such Class A Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
(c) With respect to Class A, Class M or Class R Certificates registered in
the Register in the name of Cede & Co., as nominee of the Depository, the
Representative and the Trustee shall have no responsibility or obligation to
Direct or Indirect Participants or beneficial owners for which the Depository
holds Class A, Class M or Class R Certificates from time to time as a
Depository. Without limiting the immediately preceding sentence, the
Representative and the Trustee shall have no responsibility or obligation with
respect to (a) the accuracy of the records of the Depository, Cede & Co., or any
Direct or Indirect Participant with respect to the ownership interest in the
Class A, Class M or Class R Certificates, (b) the delivery to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class R Certificate or (c) the payment to any Direct or
Indirect Participant or any other Person, other than a registered Holder of a
Class A, Class M or Class R Certificate as shown in the Register, of any amount
with respect to any distribution of principal or interest on the Class A, Class
M or Class R Certificates. No Person other than a registered Holder of a Class
A, Class M or Class R Certificate as shown in the Register shall receive a
certificate evidencing such Class A, Class M or Class R Certificate, as the case
may be.
(d) Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of distributions by the mailing of checks or drafts to the registered Holders of
Class A, Class M and Class B Certificates appearing as registered Owners in the
Certificate Register on a Record Date, the name "Cede & Co." in this Agreement
shall refer to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A, Class M and Class B Certificates and the Representative is unable to
locate a qualified successor or (ii) the Representative at its sole option
elects to terminate the book-entry system through the Depository, the Class A,
Class M and Class B Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Representative may determine that
the Class A, Class M and Class B Certificates shall be registered in the name of
and deposited with a successor depository operating a global book-entry system,
as may be acceptable to the Representative, or such depository's agent or
designee but, if the Representative does not select such alternative global
book-entry system, then the Class A, Class M and Class B Certificates may be
registered in whatever name or names registered Holders of Class A, Class M and
Class B Certificates transferring Class A, Class M and Class B Certificates
shall designate, in accordance with the provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Class A, Class M or Class B Certificates are registered in the
name of Cede & Co., as nominee of the Depository, all distributions of principal
and interest on such Class A, Class M or Class B Certificates, and all notices
with respect to such Class A, Class M and Class B Certificates shall be made and
given, respectively, in the manner provided in the Representation Letter.
(g) The Class R Certificates and Class X Certificates have not been
registered or qualified under the 1933 Act, or any state securities law. No
transfer, sale, pledge or other disposition of any Class R or Class X
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act, the Trustee or the Certificate Registrar may require, in order to assure
compliance with the 1933 Act, that the Class R or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a Class
R or Class X Certificate shall be deemed by the acceptance or acquisition of
such Percentage Interest to have agreed to be bound by the following provisions
and to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R or Class X Certificate are
expressly subject to the following provisions:
(i) Each Person holding or acquiring any Percentage Interest in a
Class R or Class X Certificate shall be a Permitted Transferee and shall
promptly notify the Representative of any change or impending change in its
status as a Permitted Transferee.
(ii) No Percentage Interest in a Class R or Class X Certificate may be
transferred (including the sale to the initial holder) and the Trustee
shall not register the transfer of a Class R or Class X Certificate unless
the Trustee and the Representative shall have been furnished with (A) an
affidavit (a "Transfer Affidavit") of the proposed transferee in the form
attached as Exhibit K (and if required by the Transfer Affidavit, the
opinion of counsel, as therein referenced) (which shall not be at the
expense of the Trustee) and (B) a certificate (a "Transfer Certificate") of
the transferor to the effect that such transferor has no actual knowledge
that the proposed transferee is not a Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage Interest in a
Class R or Class X Certificate shall agree (A) to require a Transfer
Affidavit from any other Person to whom such Person attempts to transfer
its Percentage Interest in a Class R Certificate, (B) to require a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any transfer of a Class R or Class X
Certificate, (C) to deliver a Transfer Certificate to the Trustee and the
Representative in connection with any such attempted transfer and (D) not
to transfer its Percentage Interest in a Class R or Class X Certificate or
to cause the transfer of a Percentage Interest in a Class R or Class X
Certificate to any other Person if it has actual knowledge that such Person
is not a Permitted Transferee.
(iv) Any attempted or purported transfer of any Percentage Interest in
a Class R or Class X Certificate in violation of the provisions of this
Section 4.02 shall be absolutely null and void and shall vest no rights in
the purported transferee. If any purported transferee shall become a Holder
of a Class R or Class X Certificate in violation of the provisions of this
Section 4.02, then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of
registration of transfer of such Class R or Class X Certificate. The
Trustee shall notify the Representative upon knowledge of a Responsible
Officer that the registration of transfer of a Class R or Class X
Certificate was not in fact permitted by this Section 4.02. The Trustee
shall be under no liability to any Person for any registration of transfer
of a Class R or Class X Certificate that is in fact not permitted by this
Section 4.02 or for making any payments due on such Certificate to the
Holder thereof or taking any other action with respect to such Holder under
the provisions of this Agreement so long as the transfer was registered
after receipt of the related Transfer Affidavit and Transfer Certificate.
The Trustee shall be entitled but not obligated to recover from any Holder
of a Class R or Class X Certificate that was in fact not a Permitted
Transferee at the time it became a Holder or, at such subsequent time as it
became other than a Permitted Transferee, all payments made on such Class R
or Class X Certificate at and after either such time. Any such payments so
recovered by the Trustee shall be paid and delivered by the Trustee to the
last preceding Holder of such Certificate.
(v) If any purported transferee shall become a Holder of a Class R or
Class X Certificate in violation of the restrictions in this Section 4.02,
then the Representative or its designee shall, without notice to the Holder
or any prior Holder of such Class R or Class X Certificate, as the case may
be, sell such Class R or Class X Certificate to a purchaser selected by the
Representative or its designee on such reasonable terms as the
Representative or its designee may choose. Such purchaser may be the
Representative itself or any affiliate of the Representative. The proceeds
of such sale, net of commissions, expenses and taxes due, if any, will be
remitted by the Representative to the last preceding purported transferee
of such Class R or Class X Certificate, except that in the event that the
Representative determines that the Holder or any prior Holder of such Class
R or Class X Certificate may be liable for any amount due under this
Section 4.02 or any other provision of this Agreement, the Representative
may withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (v)
shall be determined in the sole discretion of the Representative or its
designee, and it shall not be liable to any Person having a Percentage
Interest in a Class R or Class X Certificate, as applicable, as a result of
its exercise of such discretion.
No Class R or Class X Certificate or Certificates or any interest therein
shall be acquired by or on behalf of a "benefit plan investor" described in or
subject to the plan asset regulations set forth at 29 C.F.R. 2510.3-101, unless
an Opinion of Counsel is provided to the Representative and the Trustee (which
shall not be at the expense of the Trustee) which establishes to their
satisfaction that the transfer and/or the holding of such Class R or Class X
Certificates, as applicable, will not result in the assets of the Trust Fund
being deemed to be "plan assets" within the meaning of Department of Labor
Regulations 2510.3-101; subject the Trustee, the Representative or the
underwriter of the Class A Certificates, or any of their affiliates, to the
prohibited transaction rules under ERISA or excise taxes under Section 4975 of
the Code; or cause the fiduciary investment standards of ERISA to apply to the
assets of the Trust Fund.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at such office, the Representative shall execute in
the name of the designated transferee or transferees, a new Certificate of the
same Class and Percentage Interest and dated the date of authentication by the
Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which may include a letter of indemnity delivered by
an insurance company) as may be required by each of them to save each of them
harmless, then, in the absence of notice to the Servicer, the Trustee and the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the applicable Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Representative, the Trustee and the Certificate Registrar may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving remittances pursuant to Section
6.07 and for all other purposes whatsoever, and the Representative, the
Servicer, the Trustee and the Certificate Registrar shall not be affected by
notice to the contrary.
ARTICLE V
ADMINISTRATION AND SERVICING OF HOME IMPROVEMENT LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) It is intended that each of REMIC I and REMIC II hereunder shall
constitute, and that the affairs of each of REMIC I and REMIC II shall be
conducted so as to qualify as a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of REMIC I and REMIC II
and as Tax Matters Person on behalf of REMIC I and REMIC II, and that in such
capacities it shall: (i) prepare and file, or cause to be prepared and filed, in
a timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and any other Tax Return required to be filed by REMIC I and
REMIC II using a calendar year as the taxable year for each of REMIC I and REMIC
II and using the accrual method of accounting, including, without limitation,
information reports relating to "original issue discount," as defined in the
Code, based upon the Prepayment Assumption and calculated by using the issue
price of the Certificates; (ii) make, or cause to be made, an election, on
behalf of each of REMIC I and REMIC II, to be treated as a REMIC on the federal
tax return of each of REMIC I and REMIC II for their first taxable year; (iii)
prepare and forward, or cause to be prepared and forwarded, to the Trustee, the
Certificateholders and to the Internal Revenue Service and any other relevant
governmental taxing authority all information returns or reports as and when
required to be provided to them in accordance with the REMIC Provisions and any
other provision of federal, state or local income tax laws; (iv) to the extent
that the affairs of REMIC I or REMIC II are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of each of REMIC I and REMIC II as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws; (v) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of either REMIC I or REMIC II or that would
cause the imposition of a prohibited transaction tax or a tax on contributions
to REMIC I or REMIC II; (vi) pay the amount of any and all federal, state, and
local taxes, including, without limitation, prohibited transaction taxes as
defined in Section 860F of the Code imposed on each of REMIC I and REMIC II when
and as the same shall be due and payable (but such obligation shall not prevent
the Servicer or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Servicer from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (vii) ensure that any such returns or reports filed on behalf of
REMIC I and REMIC II are properly executed by the appropriate person; (viii)
represent REMIC I and REMIC II in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of REMIC I and REMIC
II, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of REMIC I or REMIC II and
otherwise act on behalf of REMIC I and REMIC II in relation to any tax matter
involving either REMIC I and REMIC II; (ix) as provided in Section 5.11 hereof,
make available information necessary for the computation of any tax imposed (1)
on transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is held by an
entity which is not a Permitted Transferee; and (x) in connection with any FHA
Loan, timely pay to the FHA the FHA Insurance Premium required to be paid for
each FHA Loan. The Trustee will cooperate with the Servicer in the foregoing
matters and will sign, as Trustee, any and all Tax Returns required to be filed
by the REMIC I and REMIC II. Notwithstanding the foregoing, at such time as the
Trustee becomes the successor Servicer, the Representative shall serve as Tax
Matters Person and as such shall perform the duties described in this Section
5.01(a) until such time as an entity is appointed to succeed the Trustee as
Servicer. The Servicer shall indemnify the Trustee and REMIC I or REMIC II, as
applicable, for any liability it may incur in connection with this Section
5.01(a), which indemnification shall survive the termination of REMIC I and
REMIC II; provided, however, that the Servicer shall not indemnify the Trustee
for its negligence or willful misconduct.
With respect to any Mortgage Note (other than a Mortgage Note relating to
Loan) released by the Trustee to the Servicer or to any Subservicer in
accordance with the terms of this Agreement, other than a release or
satisfaction pursuant to Section 7.02, prior to such release, the Trustee shall
(a) complete all endorsements in blank so that the endorsement reads "Pay to the
order of Chase Manhattan Bank Delaware, as Co-Trustee under the Pooling and
Servicing Agreement dated as of May 31, 1997, 1997-II" and (b) complete a
restrictive endorsement that reads "Chase Manhattan Bank Delaware is the holder
of the mortgage note for the benefit of the Certificateholders under the Pooling
and Servicing Agreement dated as of May 31, 1997, 1997- II" with respect to
those Mortgage Notes currently endorsed "Pay to the order of Holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Home Improvement Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Home Improvement 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)
has (i) been designated an approved Seller-Servicer by FHLMC or FNMA for first
and second mortgage loans and (ii) has a net worth of at least $5,000,000 or (y)
is an Originator or another affiliate of the Servicer. Any such Subservicing
Agreement shall be consistent with and not violate the provisions of this
Agreement. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either itself directly service the related Home Improvement
Loans or enter into a Subservicing Agreement with a successor subservicer which
qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee and the
Certificateholders for the servicing and administering of the Home Improvement
Loans in accordance with the provisions of this Agreement without diminution of
such obligation or liability by virtue of such Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Home Improvement Loans. For purposes of
this Agreement, the Servicer shall be deemed to have received payments on Home
Improvement Loans when any Subservicer has received such payments. The Servicer
shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Home Improvement Loans involving a
Subservicer in its capacity as such and not as an Originator shall be deemed to
be between the Subservicer and the Servicer alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee is then permitted and
elects to terminate any Subservicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements and the Trustee shall not be held liable for any actions
of the Servicer under the Subservicing Agreements except for actions taken by
the Trustee as successor servicer. The Servicer at its expense and without right
of reimbursement therefor, shall, upon request of the Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Home Improvement Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Home Improvement Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Class A, Class M or Class B Certificateholders, provided,
however, that (unless (x) the Mortgagor is in default with respect to the Home
Improvement Loan, or such default is, in the judgment of the Servicer, imminent
and (y) the Servicer determines that any modification would not be considered a
new mortgage loan for federal income tax purposes) the Servicer may not permit
any modification with respect to any Home Improvement Loan that would change the
Home Improvement Loan Interest Rate, defer (subject to Section 5.12), or forgive
the payment of any principal or interest (unless in connection with the
liquidation of the related Home Improvement Loan), or extend the final maturity
date on such Home Improvement Loan. No costs incurred by the Servicer or any
Subservicer in respect of Servicing Advances shall for the purposes of
distributions to Certificateholders be added to the amount owing under the
related Home Improvement Loan. Without limiting the generality of the foregoing,
the Servicer shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of the Trustee and each Certificateholder, all instruments
of satisfaction or cancellation, or of partial or full release, discharge and
all other comparable instruments, with respect to the Home Improvement Loans and
with respect to the Mortgaged Properties. If reasonably required by the
Servicer, the Trustee shall furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
The Servicer, in servicing and administering the Home Improvement Loans,
shall employ or cause to be employed procedures (including collection,
foreclosure and REO Property management procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, in accordance with accepted second mortgage
servicing practices (or, in the case of FHA Loans, in accordance with accepted
Title I servicing practices or, in the case of Multifamily Loans, in accordance
with accepted multifamily loan servicing practices) of prudent lending
institutions and giving due consideration to the Certificateholders' reliance on
the Servicer.
(g) On and after such time as the Trustee and the Co-Trustee receive the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 9.04, after receipt of the Opinion of Counsel required pursuant to
Section 9.04, the Trustee or its designee shall assume all of the rights and
obligations of the Servicer, subject to Section 10.02 hereof. The Servicer
shall, upon request of the Trustee but at the expense of the Servicer, deliver
to the Custodian all documents and records (including computer tapes and
diskettes) relating to the Home Improvement Loans and an accounting of amounts
collected and held by the Servicer and otherwise use its best efforts to effect
the orderly and efficient transfer of servicing rights and obligations to the
assuming party.
(h) In the event that any tax is imposed on REMIC I or REMIC II, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Class R-1 or Class R-2 Certificates, respectively. Notwithstanding anything to
the contrary contained herein, the Servicer is hereby authorized to retain from
the Pool Remaining Amount Available for the respective Pool sufficient funds to
reimburse the Servicer for the payment of such tax (to the extent that the
Servicer has paid any such tax and has not been previously reimbursed or
indemnified therefor). The Servicer agrees to first seek indemnification for any
such tax payment from any indemnifying parties before reimbursing itself from
amounts otherwise distributable to the Holders of the Class R-1 or Class R-2
Certificates.
(i) After the Closing Date, the Servicer shall confirm, or cause to be
confirmed, whether all on-site or off-site improvements on the Mortgaged
Properties relating to FHA Loans have been completed and, if such improvements
have not been completed, to submit the appropriate filings to the FHA.
Section 5.02 LIQUIDATION OF HOME IMPROVEMENT LOANS.
In the event that any payment due under any Home Improvement Loan and not
postponed pursuant to Section 5.01 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Home Improvement Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interests of the Certificateholders. The Servicer shall foreclose
upon or otherwise comparably effect the ownership in the name of the Trustee for
the benefit of the Certificateholders, as the case may be, of Mortgaged
Properties relating to defaulted Home Improvement Loans as to which no
satisfactory arrangements can be made for collection of delinquent payments in
accordance with the provisions of Section 5.10 and, in the case of FHA Loans,
for which a Claim is not required to be submitted to the FHA pursuant to Section
5.15. In connection with such foreclosure or other conversion, the Servicer
shall exercise collection and foreclosure procedures with the same degree of
care and skill in its exercise or use as it would exercise or use under the
circumstances in the conduct of its own affairs. The Servicer shall take into
account the existence of any hazardous substances, hazardous wastes or solid
wastes, as such terms are defined in the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a Mortgaged
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of a Mortgaged Property. Any amounts advanced in
connection with such foreclosure or other action shall constitute "Servicing
Advances."
After a Home Improvement Loan has become a Liquidated Home Improvement
Loan, the Servicer shall promptly prepare and forward to the Trustee and, upon
request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit N, detailing the Liquidation Proceeds received from the
Liquidated Home Improvement Loan, expenses incurred with respect thereto, and
any Realized Loss incurred in connection therewith.
Section 5.03 ESTABLISHMENT OF PRINCIPAL AND INTEREST ACCOUNTS; DEPOSITS IN
PRINCIPAL AND INTEREST ACCOUNTS.
(a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts for the Trust Fund, in one or more Designated
Depository Institutions, in the form of time deposit or demand accounts, which
may be interest-bearing or such accounts may be trust accounts wherein the
moneys therein are invested in Permitted Instruments, titled "The Money Store
Inc., in trust for the registered holders of The Money Store Home Improvement
Certificates, 1997-II, Class A, Class M, Class B, Class X, Class R and various
Mortgagors." Each such Principal and Interest Account shall be insured by the
BIF or SAIF administered by the FDIC to the maximum extent provided by law. The
creation of any Principal and Interest Account shall be evidenced by a letter
agreement in the form of Exhibit C hereto.
A copy of such letter agreement shall be furnished to the Trustee and, upon
request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without duplication
(within 24 hours of receipt thereof) in the applicable Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date on account of
principal on the Home Improvement Loans, including all Excess Payments,
Principal Prepayments and Curtailments received after the Cut-Off Date and
all payments in respect of the applicable FHA Insurance Premium;
(ii) all payments received after the Cut-Off Date on account of
interest on the Home Improvement Loans;
(iii) all Net Liquidation Proceeds received with respect to the Home
Improvement Loans;
(iv) all Insurance Proceeds received with respect to the Home
Improvement Loans (other than amounts to be applied to the restoration or
repair of the related Mortgaged Property, or to be released to the
Mortgagor in accordance with customary second mortgage servicing
procedures);
(v) all Released Mortgaged Property Proceeds received with respect to
the Home Improvement Loans;
(vi) any amounts paid in connection with the purchase of any Home
Improvement Loan and the amount of any Substitution Adjustment received
with respect to the Home Improvement Loans paid pursuant to Sections 2.05
and 3.03;
(vii) any amount required to be deposited in the applicable Principal
and Interest Account pursuant to Section 5.04, 5.08, 5.10 or 5.15(c); and
(viii) the amount of any credit life insurance premium refund which is
not due to the related Mortgagor.
Also, for each Home Improvement Loan delivered to the Custodian on the
Closing Date that was originated after May 31, 1997, the Servicer shall deposit
in the applicable Principal and Interest Account 30 days' interest on the
original principal balance of each such Home Improvement Loan calculated at the
applicable Home Improvement Loan Interest Rate.
(c) The foregoing requirements for deposit in the Principal and Interest
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, the Servicing Fee and the Contingency
Fee with respect to each Home Improvement Loan, and payments in the nature of
prepayment penalties or premiums, late payment charges and assumption fees, to
the extent received and permitted by Sections 7.01 and 7.03, together with the
difference between any Liquidation Proceeds and the related Net Liquidation
Proceeds, need not be deposited by the Servicer in the Principal and Interest
Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the applicable Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Available Remittance Amount to the Trustee. Any reference herein to amounts
on deposit in the Principal and Interest Account shall refer to amounts net of
such investment earnings.
Section 5.04 PERMITTED WITHDRAWALS FROM THE PRINCIPAL AND INTEREST
ACCOUNTS.
The Servicer shall withdraw funds from the Principal and Interest Accounts
for the following purposes: (a) to effect the remittance to the Trustee on each
Determination Date as follows: that portion of the Available Remittance Amount,
that is net of Compensating Interest and Monthly Advances for the related
Remittance Date to the Trustee for deposit in the Certificate rposes of this
Section 5.04(a), the calculation of the Available Remittance Amounts shall be
made without reference to the actual deposit of funds in the respective
Certificate Accounts;
(b) to reimburse itself for any accrued unpaid Servicing Fees, unpaid
Contingency Fees, unreimbursed Monthly Advances and for unreimbursed Servicing
Advances to the extent that funds relating to such amount have been deposited in
the applicable Principal and Interest Account (and not netted from Monthly
Payments received). The Servicer's right to reimbursement for unpaid Servicing
Fees, unpaid Contingency Fees and, except as provided in the following sentence,
Servicing Advances and Monthly Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Home Improvement Loan in respect of which such
unreimbursed amounts are owed. The Servicer's right to reimbursement for
Servicing Advances and Monthly Advances in excess of such amounts shall be
limited to any late collections of interest received on the Home Improvement
Loans, generally, including Liquidation Proceeds, Released Mortgaged Property
Proceeds and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or Class R Certificateholders; provided, however,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the applicable Class A, Class M and Class B
Certificateholders to receive the Shortfall Carryforward Amounts.
(c) to withdraw any amount received from a Mortgagor that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay to
itself, as permitted by Section 5.03(d), interest paid in respect of Permitted
Instruments or by a Designated Depository Institution on funds deposited in the
applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) to pay itself servicing compensation pursuant to Section 7.03 hereof or
interest as permitted under the definition of Excess Proceeds, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing Account
pursuant to Section 6.15(b).
(h) to clear and terminate each Principal and Interest Account upon the
termination of the related Trust Fund.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained as an interest-bearing accounts
meeting the requirements set forth in Section 5.03(a), or the funds held therein
may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store Inc.
in trust for the registered holders of The Money Store Home Improvement Loan
Certificates, Series 1997-II." All interest or other earnings from funds on
deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from either Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
applicable Principal and Interest Account in Permitted Instruments shall be
deposited in the applicable Principal and Interest Account by the Servicer from
its own funds immediately as realized without reimbursement therefor.
Section 5.05 PAYMENT OF TAXES, INSURANCE AND OTHER CHARGES.
With respect to each Home Improvement Loan, the Servicer shall maintain
accurate records reflecting fire and hazard insurance coverage.
With respect to each Home Improvement Loan which is a first Home
Improvement Loan, or as to which the Servicer has advanced the outstanding
principal balance of any Prior Lien pursuant to Section 5.14 or as to which the
Servicer maintains escrow accounts, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and other
charges which are or may become a lien upon the Mortgaged Property and the
status of primary mortgage guaranty insurance premiums, if any, and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in any escrow account which shall have been estimated
and accumulated by the Servicer in amounts sufficient for such purposes, as
allowed under the terms of the Mortgage (provided, however, that to the extent
the Servicer advances its own funds, such advances shall constitute "Servicing
Advances"). To the extent that a Mortgage does not provide for escrow payments,
the Servicer shall determine that any such payments are made by the Mortgagor at
the time they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Home Improvement Loan
that are required to be remitted to the Trust Fund would not be reduced, as a
result of such failure to timely pay, from the amount that would otherwise be
remitted to the Trust Fund; provided further, however, that this provision shall
not have the effect of permitting the Servicer to take, or fail to take, any
action in respect of the payments described herein that would adversely affect
the interest of the Trust Fund in any Mortgaged Property.
Section 5.06 TRANSFER OF ACCOUNTS.
The Servicer may, upon written prior notice to the Trustee, transfer the
Principal and Interest Account to a different Designated Depository Institution.
Section 5.07 MAINTENANCE OF HAZARD INSURANCE.
The Servicer shall cause to be maintained, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Home Improvement Loan and any Prior Lien, (b) the full insurable value of the
premises securing the Home Improvement Loan and (c) the minimum amount required
to compensate for damage or loss on a replacement cost basis. If the Mortgaged
Property is in an area identified in the Federal Register by the Flood Emergency
Management Agency as having special flood hazards (and such flood insurance has
been made available) the Servicer will cause to be purchased a flood insurance
policy with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (i) the outstanding principal balance of the
Home Improvement Loan and any Prior Lien, (ii) the full insurable value of the
Mortgaged Property, or (iii) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. The Servicer shall also
maintain, to the extent such insurance is available, on REO Property, fire and
hazard insurance in the amounts described above, liability insurance and, to the
extent required and available under the National Flood Insurance Act of 1968, as
amended, flood insurance in an amount equal to that required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Mortgagor in accordance with customary second mortgage servicing
procedures) shall be deposited in the applicable Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Mortgagor or maintained on REO Property, other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 MAINTENANCE OF MORTGAGE IMPAIRMENT INSURANCE POLICY.
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
Improvement Loans, then, to the extent such policy names the Trustee on behalf
of the Certificateholders as loss payee and provides coverage in an amount equal
to the aggregate unpaid principal balance on the Home Improvement Loans without
co-insurance, and otherwise complies with the requirements of Section 5.07, the
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under Section 5.07, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property a policy complying with Section
5.07, and there shall have been a loss which would have been covered by such
policy, deposit in the applicable Principal and Interest Account from the
Servicer's own funds the difference, if any, between the amount that would have
been payable under a policy complying with Section 5.07 and the amount paid
under such blanket policy. Upon the request of the Trustee, the Co-Trustee or
any Certificateholder, the Servicer shall cause to be delivered to the Trustee,
the Co-Trustee or such Certificateholder, as the case may be, a certified true
copy of such policy. The current issuer of such policy is Lloyds of London.
Section 5.09 FIDELITY BOND.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the Home
Improvement Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, the Co-Trustee and their respective officers, and employees, against
losses resulting from forgery, theft, embezzlement or fraud, by such Servicer
Employees. The errors and omissions policy shall insure against losses resulting
from the errors, omissions and negligent acts of such Servicer Employees. No
provision of this Section 5.09 requiring such fidelity bond and errors and
omissions insurance shall relieve the Servicer from its duties as set forth in
this Agreement. Upon the request of the Trustee, the Co-Trustee or any
Certificateholder, the Servicer shall cause to be delivered to the Trustee, the
Co-Trustee or such Certificateholder a certified true copy of such fidelity bond
and insurance policy. The current issuer of such fidelity bond and insurance
policy is National Union Fire Insurance Company of Pittsburgh, Pennsylvania.
Section 5.10 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Co-Trustee for the benefit
of the Class A, Class M and Class B Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the Class A,
Class M and Class B Certificateholders, as the case may be.
The Servicer shall cause to be deposited in the applicable Principal and
Interest Account, no later than five Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related REO Property net of funds necessary for the proper operation, management
and maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Class A, Class M and Class B Certificateholders. The
proceeds of sale of the REO Property shall be promptly deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid, the Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees, unpaid Contingency Fees and
unreimbursed Monthly Advances, and the Servicer shall deposit in the Principal
and Interest Account the net cash proceeds of such sale to be distributed to the
Class A, Class M or Class B Certificateholders, as the case may be, in
accordance with Section 6.08 hereof.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Home Improvement Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel to the
effect that the holding of such Mortgaged Property subsequent to two years after
its acquisition will not result in the imposition of taxes on "prohibited
transactions" as defined in section 860F of the Code or cause the Trust Fund to
fail to qualify as a REMIC at any time that any Class A, Class M or Class B
Certificates are outstanding. Notwithstanding any other provision of this
Agreement, no Mortgaged Property acquired by the Servicer pursuant to this
Section shall be rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Trust Fund, and no
construction shall take place on such Mortgaged Property, in such a manner or
pursuant to any terms that would cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Trust Fund of any "income from
non-permitted assets" which is subject to taxation within the meaning of
Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater than two
years is permitted under this Agreement and is necessary to sell any REO
Property, the Servicer shall give appropriate notice to the Co-Trustee and the
Trustee and shall report monthly to the Co-Trustee and the Trustee as to the
progress being made in selling such REO Property.
Section 5.11 CERTAIN TAX INFORMATION.
The Servicer shall furnish (a) any information which may be required under
the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 COLLECTION OF CERTAIN HOME IMPROVEMENT LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Home Improvement Loans, and shall, to
the extent such procedures shall be consistent with this Agreement, comply with
the terms and provisions of any applicable hazard insurance policy. Consistent
with the foregoing, the Servicer may in its discretion waive or permit to be
waived any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Home Improvement Loan or any
other fee or charge which the Servicer would be entitled to retain hereunder as
servicing compensation and 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 provided that the Servicer determines such extension would not be
considered a new mortgage loan for federal income tax purposes. 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
Monthly 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
5.04(b) hereof.
Section 5.13 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
HOME IMPROVEMENT LOANS.
The Servicer shall provide to the Trustee, the Co-Trustee the
Certificateholders, the FDIC, the Office of Thrift Supervision and the
supervisory agents and examiners of each of the foregoing access to the
documentation regarding the Home Improvement Loans required by applicable local,
state and federal regulations, 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.
Section 5.14 SUPERIOR LIENS.
The Servicer shall file of record a request for notice of any action by a
superior lienholder under a Prior Lien for the protection of the Co-Trustee's
interest where permitted by local law and whenever applicable state law does not
require that a junior lienholder be named as a party defendant in foreclosure
proceedings in order to foreclose such junior lienholder's equity of redemption.
The Servicer must also notify any superior lienholder in writing of the
existence of the Home Improvement Loan and request notification of any action
(as described below) to be taken against the Mortgagor or the Mortgaged Property
by the superior lienholder.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by any Prior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and/or to preserve the security of the related Home
Improvement Loan, subject to the application of the REMIC Provisions. The
Servicer shall immediately notify the Co- Trustee of any such action or
circumstances. The Servicer will advance the necessary funds to cure the default
or reinstate the superior lien, if such advance is in the best interests of the
Certificateholders. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 5.15 DUTIES OF THE CLAIMS ADMINISTRATOR.
(a) In connection with each FHA Loan, the Representative, the Servicer, the
Claims Administrator and the Originators will comply at all times with the
provisions of Title I and the rules and regulations promulgated thereunder in
servicing each FHA Loan and making claims for reimbursement with respect to each
FHA Loan, and will at all times hold a valid Contract of Insurance from the FHA
for such purposes (unless such Contract of Insurance is terminated so as not to
affect the obligation of FHA to provide insurance coverage with respect to the
FHA Loans).
(b) If any FHA Loan becomes a 90 Day Delinquent Loan, and if sufficient
coverage is available in the Reserve Amount to make an FHA Payment with respect
to such FHA Loan, the Claims Administrator may, in its sole discretion, during
any subsequent Due Period, determine to file a Claim with the FHA with respect
to such 90 Day Delinquent Loan. If the Claims Administrator determines to file
such a Claim, the Claims Administrator will notify the Co-Trustee and the
Custodian no later than the Determination Date following such determination by
an Officer's Certificate in the form of Exhibit J-1 hereto and shall request
delivery of the related Trustee's Mortgage File. Upon receipt of such
certification and request, the Custodian shall, no later than the related
Remittance Date, release to the Claims Administrator the related Trustee's
Mortgage File and the Co-Trustee and the Custodian shall execute and deliver
such instruments necessary to enable the Claims Administrator to file a Claim
with the FHA on behalf of the Co-Trustee. Within 120 days of its receipt of the
related Trustee's Mortgage File, the Claims Administrator shall, in its sole
discretion, either file a Claim with the FHA for an FHA Payment with respect to
such 90 Day Delinquent Loan or, if the Claims Administrator determines not to
file such a Claim, return to the Custodian on behalf of the Co-Trustee the
related Trustee's Mortgage File.
(c) With respect to any 90 Day Delinquent Loan transferred to the Claims
Administrator pursuant to clause (b) above, the Claims Administrator shall
deposit (or, if the Claims Administrator is not also the Servicer, the Claims
Administrator shall instruct the Servicer to deposit) in the Principal and
Interest Account within 24 hours of receipt the following amounts (such amounts
to be net of any amounts that would be reimbursable to the Servicer under
Section 5.04(b) with respect to amounts in the Principal and Interest Account):
(i) any FHA Payments; (ii) the amount, if any, by which the FHA Payment was
reduced in accordance with FHA Regulations due to the Claims Administrator
enforcing a lien on the Mortgaged Property prior to the lien of the related 90
Day Delinquent Loan; and (iii) any principal and interest payments received with
respect to a 90 Day Delinquent Loan after the Due Period in which the FHA Loan
is transferred to the Claims Administrator and before either the related FHA
Payment is paid or the related Trustee's Mortgage File is returned to the
Custodian on behalf of the Trustee, as the case may be (the amounts referred to
in (ii) and (iii) above are referenced to herein as "Related Payments").
(d) If an FHA Loan becomes a 90 Day Delinquent Loan when there is
insufficient coverage in the Reserve Amount, or if the Claims Administrator
determines not to file a Claim with the FHA with respect to such 90 Day
Delinquent Loan, the Claims Admiinistrator shall not request that the Co-Trustee
transfer such FHA Loan to the Claims Administrator, no Claim will be made to the
FHA and the Servicer may take other action, including the commencement of
foreclosure proceedings, on the related Mortgaged Property.
(e) If a Claim is rejected by the FHA and if the Claims Administrator is no
longer The Money Store Inc., the Claims Administrator shall promptly notify the
Servicer and the Representative of such rejection. Further, if a Claim is
rejected by the FHA, other than as a result of depletion of the Reserve Amount,
the related Originator shall be deemed to have breached its representation and
warranty contained in Section 3.02(nnn) and the Representative shall be required
to repurchase the related 90 Day Delinquent Loan by depositing in the Principal
and Interest Account, on the next succeeding Determination Date, an amount and
in the manner specified in Section 2.05(b).
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNTS; DEPOSITS IN CERTIFICATE
ACCOUNTS; PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself in its trust department a trust account, which shall not be
interest-bearing, titled "TMS Home Improvement Certificate Account 1997-II,"
(the "Certificate Account"). The Trustee shall, promptly upon receipt, deposit
in the Certificate Account and retain therein:
(i) the Available Remittance Amount (net of the amount of Monthly
Advances and Compensating Interest deposited pursuant to subclause (ii)
below), remitted by the Servicer;
(ii) the Compensating Interest and the portion of the Monthly Advance
allocable to the Class Adjusted Home Improvement Loan Remittance Rates
remitted to the Trustee by the Servicer;
(iii) Reserved;
(iv) amounts required to be paid by the Servicer pursuant to Section
6.07(e) in connection with losses on investments of amounts in the
Certificate Account; and
(v) amounts transferred from the Pre-Funding Account and the
Capitalized Interest Account on the Special Remittance Date pursuant to
Sections 6.02(c) and (h), respectively.
(b) Amounts on deposit in the Certificate Account shall be withdrawn on
each Remittance Date by the following parties in the following order of
priority:
(i) Reserved;
(ii) by the Trustee, to make deposits in the FHA Premium Account
pursuant to Section 6.06(a)(i);
(iii) by the Trustee, or the Paying Agent on its behalf, to effect the
applicable distributions described in Section 6.08(d);
and also, in no particular order of priority:
(iv) by the Trustee, to invest amounts on deposit in the Certificate
Account in Permitted Instruments pursuant to Section 6.07;
(v) by the Trustee, to pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings realized on
Permitted Instruments;
(vi) by the Trustee, to withdraw any amount not required to be
deposited in the Certificate Account or deposited therein in error; and
(vii) by the Trustee, to clear and terminate the Certificate Account
upon the termination of the Trust Fund in accordance with the terms of
Section 11.01 hereof.
Section 6.02 ESTABLISHMENT OF PRE-FUNDING ACCOUNT AND CAPITALIZED INTEREST
ACCOUNT; DEPOSITS IN PRE-FUNDING ACCOUNT AND CAPITALIZED
INTEREST ACCOUNT; PERMITTED WITHDRAWALS FROM PRE-FUNDING
ACCOUNT AND CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Home Improvement Pre-Funding Account
1997-II" (the "Pre-Funding Account"). The Pre-Funding Account shall constitute
part of the Trust Fund but shall not be an asset of REMIC I or REMIC II. It is
an outside reserve fund, the owners of which are the Class R-1
Certificateholders and for Federal tax purposes, amounts, if any, transferred by
REMIC I to the Pre-Funding Account are treated as distributed by REMIC I to the
Class R-1 Certificateholders. The Trustee shall, promptly upon receipt, deposit
into the Pre-Funding Account and retain therein the Original Pre-Funded Amount
in an amount equal to $41,290,578.35 from the proceeds of the sale of the
Certificates.
(b) On each Subsequent Transfer Date, the Representative shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Home Improvement Loans (or, with
respect to the Low Interest Home Improvement Loans, if any, an amount equal to
the product of the percentage set forth on Exhibit T attached hereto determined
by referring to the columns entitled "Coupon" and "Remaining Term" and the
aggregate Principal Balances of such Subsequent Home Improvement Loans) sold to
the Trust Fund on such Subsequent Transfer Date and pay such amount to or upon
the order of the Representative with respect to such transfer. In no event shall
the Representative be permitted to instruct the Trustee to release from the
Pre-Funding Account with respect to subsequent Home Improvement Loans an amount
in excess of $41,290,578.35.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
in the Certificate Account any Pre- Funded Amount then remaining in the
Pre-Funding Account. However, if at the close of business on September 25, 1997,
amounts still remain in the Pre-Funding Account, the Servicer shall instruct the
Trustee to withdraw from the Pre-Funding Account on the Special Remittance Date
and deposit in the Certificate Account any Pre-Funded Amount then remaining in
the Pre- Funding Account.
(d) On the Remittance Dates occurring in July, August and September 1997,
the Trustee shall transfer from the Pre-Funding Account to the Certificate
Account the Pre-Funding Earnings, if any, applicable to each such Remittance
Date.
(e) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Home Improvement Capitalized Interest
Account 1997-II" (the "Capitalized Interest Account"). The Capitalized Interest
Account shall constitute part of the Trust Fund but shall not be a part of REMIC
I or REMIC II. It is an outside reserve fund, the owners of which are the Class
R-1 Certificateholders and for Federal tax purposes amounts, if any, transferred
by REMIC I to the Capitalized Interest Account are treated as distributed by
REMIC I to the Class R Certificateholders. The Trustee shall, promptly upon
receipt, deposit into the Capitalized Interest Account $486,467.85. If prior to
the end of the Funding Period the funds on deposit in the Pre- Funding Account
are invested in a guaranteed investment contract, repurchase agreement or other
arrangement, that constitutes a Permitted Instrument, the Trustee shall, within
one Business Day of its receipt of written notification from the Servicer,
withdraw from the Capitalized Interest Account and pay to the Owners of the
Class R-1 Certificates the amount set forth in such written notification.
(f) On each Subsequent Transfer Date the Representative may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R-1 Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Representative pursuant to Section 2.09(h) hereof.
(g) On the Remittance Dates occurring in July, August and September 1997,
the Trustee shall transfer from the Capitalized Interest Account to the
Certificate Account the Capitalized Interest Requirement, if any, for such
Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Special Remittance Date. Any amounts remaining in
the Capitalized Interest Account after taking into account such transfer shall
be paid on such Special Remittance Date to the Holders of the Class R-1
Certificates, and the Capitalized Interest Account shall be closed.
Section 6.03 ESTABLISHMENT OF EXPENSE ACCOUNTS; DEPOSITS IN EXPENSE
ACCOUNTS; PERMITTED WITHDRAWALS FROM EXPENSE ACCOUNTS.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department a trust account, which shall not be interest-bearing,
titled "TMS Home Improvement Expense Account 1997-II" (the "Expense Account").
The Trustee shall deposit into the applicable Expense Account:
(i) on each Remittance Date from the amounts on deposit in the
Certificate Account an amount equal to one-twelfth of that portion of the
Annual Expense Escrow Amount relating to the Home Improvement Loans,
subject to the provisions of Section 6.08(d); and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments of
amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense Accounts
shall be insufficient to pay in full the fees and expenses of the Trustee and
the Co-Trustee then due with respect to the Trust Fund, the Trustee shall make
demand on the Servicer to advance the amount of such insufficiency, and the
Servicer shall promptly advance such amount to the Trustee for deposit in the
Expense Account, pro rata in accordance with the amounts then on deposit in each
such Expense Account. Thereafter, the Servicer shall be entitled to
reimbursement from the Expense Account for the amount of any such advance from
any excess funds available pursuant to subclause (c)(ii) below. Without limiting
the obligation of the Servicer to advance such insufficiency, in the event the
Servicer does not advance the full amount of such insufficiency by the Business
Day immediately preceding the Determination Date, the amount of such
insufficiency shall be deposited into the Expense Account for payment to the
Trustee or the Co- Trustee, as the case may be, pursuant to Section 6.08(d)(i),
to the extent of available funds in the Certificate Account.
(b) The Trustee may invest amounts on deposit in the Expense Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the Expense Account to:
(i) pay the Trustee's and Co-Trustee's fees and expenses with respect
to the Trust Fund as described in Section 2.08 hereof;
(ii) pay on a monthly basis to the Servicer as additional servicing
compensation interest paid and earnings realized on Permitted Instruments;
(iii) to withdraw any amounts not required to be deposited in the
Expense Account or deposited therein in error; and
(iv) to clear and terminate the Expense Account upon the termination
of the Trust Fund in accordance with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on each
twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the Expense Account, the
Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the Representative, for reimbursable
advances made pursuant to Section 9.01;
(ii) reimburse the Servicer for advances made by it pursuant to the
last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing compensation any
amounts remaining in the Expense Account after payments made pursuant to
subclauses (b)(i), (b)(ii), (b)(iii), (c)(i) and (c)(ii), above.
Section 6.04 Reserved.
Section 6.05 Reserved.
Section 6.06 ESTABLISHMENT OF FHA PREMIUM ACCOUNT; DEPOSITS
IN FHA PREMIUM ACCOUNT; PERMITTED WITHDRAWALS FROM
FHA PREMIUM ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department a trust account, which shall not be interest bearing,
titled "TMS FHA Premium Account 1997-II" (the "FHA Premium Account"). The FHA
Premium Account shall not be available for payment of Certificates. The Trustee
shall deposit into the FHA Premium Account:
(i) on each Remittance Date, upon receipt an amount equal to the FHA
Premium Amount; and
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on investments of
amounts in the FHA Premium Account.
If the Servicer fails to pay the FHA Insurance Premium with respect to an FHA
Loan in accordance with Section 5.01 hereof, the Trustee shall, upon written
instructions from the Servicer, withdraw an amount from the FHA Premium Account
sufficient to pay in full the FHA Insurance Premium then due. If the amount on
deposit in the FHA Premium Account is insufficient to pay the FHA Insurance
Premium then due, the Trustee shall, pursuant to Section 6.08(d)(xv) hereof,
transfer an amount from the Certificate Account to the FHA Premium Account
sufficient to pay in full the FHA Insurance Premium then due.
(b) The Trustee may invest amounts on deposit in the FHA Premium Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification of payment made to the FHA, funds
requested by the Servicer (including any successor to the Servicer
appointed pursuant to Section 10.02) as reimbursement for the FHA Insurance
Premiums paid by the Servicer or remit to the FHA amounts payable in
respect of FHA Insurance Premiums pursuant to the last paragraph of
subclause (a) above;
(ii) pay on a monthly basis to the Servicer as additional servicing
compensation interest paid and earnings realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited in the FHA Premium
Account or deposited therein in error;
(iv) Reserved; and
(v) clear and terminate the FHA Premium Account upon the termination
of this Agreement in accordance with the terms of Section 11.01 hereof.
Section 6.07 INVESTMENT OF ACCOUNTS.
(a) So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee shall be invested and reinvested by the
Trustee as directed in writing by the Servicer, in one or more Permitted
Instruments bearing interest or sold at a discount. No such investment in the
Certificate Account shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Expense
Account, Pre-Funding Account, Capitalized Interest Account or FHA Premium
Account shall mature later than the Business Day immediately preceding the date
such funds will be needed to pay fees or premiums or be transferred to the
Certificate Account; provided, however, the Trustee or any affiliate thereof may
be the obligor on any investment which otherwise qualifies as a Permitted
Instrument and any investment on which the Trustee is the obligor may mature on
such Remittance Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by the
Trustee to the fullest extent practicable, in such manner as the Servicer shall
from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account, immediately on receipt, and the
Trustee shall notify the Servicer of any loss resulting from such investments.
The Servicer shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment by the next Determination Date
following receipt by the Servicer of such notice.
Section 6.08 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Class X and Class R
Certificateholders to receive distributions in respect of the Class X and Class
R Certificates, respectively, and all ownership interests of the Class X and
Class R Certificateholders in and to such distributions, shall be subject and
subordinate to the preferential rights of the Class A, Class M and Class B
Certificateholders to receive distributions in respect of the Class A, Class M
and Class B Certificates, and the ownership interests of the Class A, Class M
and Class B Certificateholders in such distributions, as described herein. In
accordance with the foregoing, the ownership interests of the Class X and Class
R Certificateholders in amounts deposited in the applicable Principal and
Interest Account or in any Accounts from time to time shall not vest unless and
until such amounts are distributed in respect of the Class X and Class R
Certificates in accordance with the terms of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Class X and Class R
Certificateholders shall not be required to refund any amount properly
distributed on the Class X and Class R Certificates pursuant to Section
6.08(d)(xvii) and (xviii).
(b) Reserved.
(c) Reserved.
(d) On each Remittance Date, the Trustee shall withdraw from the
Certificate Account the sum of (i) the Available Remittance Amount, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 5.04(f), and make distributions thereof in the following
order of priority (based solely upon information provided by the Servicer):
(i) to the Expense Account, an amount equal to one-twelfth of the
Annual Expense Escrow Amount with respect to the Home Improvement Loans,
plus any amount required to be paid to the Trustee or the Co-Trustee
pursuant to Section 6.03(a) resulting from insufficiencies in the Expense
Account;
(ii) after the payment of the amounts specified in clause (i) above,
to pay the Class A Current Interest Distribution Requirement concurrently
to the Holders of the Class A-1, Class A-2 and Class A-3 Certificates, pro
rata to each Class of Class A Certificates in accordance with their
respective Current Interest Distribution Requirements;
(iii) after payment of the amounts specified in clauses (i) and (ii)
above, to pay the Class M Current Interest Distribution Requirement as
follows and in the following order of priority:
(A) the Current Interest Distribution Requirement applicable to
the Class M-1 Certificates to the Class M-1 Certificateholders; and
(B) the Current Interest Distribution Requirement applicable to
the Class M-2 Certificates to the Class M-2 Certificateholders;
(iv) after payment of the amounts specified in clauses (i), (ii) and
(iii) above, to pay the Class B Current Interest Distribution Requirement
to the Class B Certificateholders;
(v) after payment of the amounts specified in clauses (i), (ii), (iii)
and (iv) above, to pay the Class A Principal Distribution Amount
sequentially to the Class A-1 Certificateholders, the Class A-2
Certificateholders and the Class A-3 Certificateholders, in that order of
priority, but in no event will any Class of Class A Certificates be paid
more than is necessary to reduce the Class Principal Balance of such Class
to zero; provided, however, that on each Remittance Date on and after the
Remittance Date on which the Class Principal Balances of the Class M and
Class B Certificates have been reduced to zero, amounts paid to the Class A
Certificateholders pursuant to this clause (v) shall be paid pro rata to
each Class of Class A Certificates based upon the Class Principal Balance
of each such Class of Class A Certificates;
(vi) after payment of the amounts specified in clauses (i) through (v)
above, to pay the Class M-1 Principal Distribution Amount to the Holders of
the Class M-1 Certificates, but in no event more than is necessary to
reduce the Class Principal Balance of the Class M-1 Certificates to zero;
(vii) after payment of the amounts specified in clauses (i) through
(vi) above, to pay the Class M-2 Principal Distribution Amount to the
Holders of the Class M-2 Certificates, but in no event more than is
necessary to reduce the Class Principal Balance of the Class M-2
Certificates to zero;
(viii) after payment of the amounts specified in clauses (i) through
(vii) above, to pay the Class B Principal Distribution Amount to the
Holders of the Class B Certificates, but in no event more than is necessary
to reduce the Class Principal Balance of the Class B Certificates to zero;
(ix) after payment of the amounts specified in clauses (i) through
(viii) above, to pay any Interest Shortfall Carryforward Amounts applicable
to the Class A Certificates concurrently to the Holders of the Class A-1,
Class A-2 and Class A-3 Certificates, pro rata to each Class of Class A
Certificates in accordance with their respective Interest Shortfall
Carryforward Amounts.
(x) after payment of the amounts specified in clauses (i) through (ix)
above, to pay any Accelerated Principal Distribution Amount to the Holders
of the Class A, Class M and Class B Certificates, in the order and priority
that the Principal Distribution Amount is being distributed as set forth in
clauses (v), (vi), (viii) and (vii) above, inclusive;
(xi) after payment of the amounts specified in clauses (i) through (x)
above, to pay the Interest Shortfall Carryforward Amounts applicable to the
Class M-1 Certificates to the Holders of the Class M-1 Certificates;
(xii) after payment of the amounts specified in clauses (i) through
(xi) above, to pay the Class M-1 Realized Loss Amount to the Holders of the
Class M-1 Certificates;
(xiii) after payment of the amounts specified in clauses (i) through
(xii) above, to pay the Interest Shortfall Carryforward Amounts applicable
to the Class M-2 Certificates to the Holders of the Class M-2 Certificates;
(xiv) after payment of the amounts specified in clauses (i) through
(xiii) above, to pay the Class M-2 Realized Loss Amount to the Holders of
the Class M-2 Certificates;
(xv) after payment of the amounts specified in clauses (i) through
(xiv) above, to pay the Interest Shortfall Carryforward Amounts applicable
to the Class B Certificates to the Holders of the Class B Certificates;
(xvi) after payment of the amounts specified in clauses (i) through
(xv) above, to pay the Class B Realized Loss Amount to the Holders of the
Class B Certificates;
(xvii) after payment of the amounts specified in clauses (i) through
(xvi) above, then to the Servicer and/or the Representative, an amount, if
any, equal to the Reimbursable Amounts to the extent the Servicer has not
previously netted such amounts from Monthly Payments;
(xviii) after payment of the amounts specified in clauses (i) through
(xvii) above, then to the FHA Premium Account pursuant to Section 6.06(a)
hereof;
(xix) after payment of the amounts specified in clauses (i) through
(xviii) above, then to the Class X Certificateholders, the lesser of (i)
the Class X Remittance Amount, and (ii) any interest accrued (and yet
unpaid) with respect to the Class X Certificates in accordance with
footnote (3) of Section 4.01(b); and
(xx) after payment of the amounts specified in clauses (i) through
(xix) above, then to the Class R Certificateholders, any remainder.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) and make distributions thereof as follows: (i) from amounts
transferred from the Pre-Funding Account, distributions of principal to the
Classes of Certificates then entitled to receive distributions of principal in
the priority and proportions set forth in this Section 6.08(d) and (ii) from
amounts transferred from the Capitalized Interest Account, distributions of
interest to such Classes of Certificates equal to the applicable Capitalized
Interest Requirement.
(e) All distributions made to the Certificateholders on each Remittance
Date and the Special Remittance Date will be made on a pro rata basis among the
Certificateholders of the respective Class of record on the next preceding
Record Date based on the Percentage Interest represented by their respective
Certificates, and shall, except for the final payment on such Certificates, be
made by wire transfer of immediately available funds to the account of such
Certificateholder as shall appear on the Certificate Register without the
presentation or surrender of the Certificate or the making of any notation
thereon, at a bank or other entity having appropriate facilities therefor, at
the expense of each such Certificateholder unless such Certificateholder shall
own of record Certificates which have original principal amounts aggregating (i)
at least $5,000,000 or (ii) one of the two highest outstanding amounts less than
$5,000,000.
Section 6.09 AVAILABLE MAXIMUM SUBORDINATION AMOUNT; ALLOCATION OF REALIZED
LOSSES .
On and after the Remittance Date on which the Available Maximum
Subordination Amount has been reduced to zero, (i) no further Interest Shortfall
Carryforward Amounts or Class M-1, Class M-2 or Class B Unpaid Realized Loss
Amounts shall be carried forward to succeeding Remittance Dates or be created as
a result of shortfalls in the Available Remittance Amount, and (ii) interest
shall cease to accrue on all Interest Shortfall Carryforward Amounts remaining
outstanding at the time the Available Maximum Subordination Amount became zero.
If on any Remittance Date after taking into account all Realized Losses
experienced during the prior Due Period and after taking into account the
distribution of principal (including the Accelerated Principal Distribution
Amount) with respect to the Certificates on such Remittance Date, the aggregate
Class Principal Balance of the Certificates exceeds the aggregate Principal
Balance of the Home Improvement Loans as of the end of the related Due Period,
then the Class Principal Balance of the Subordinate Certificates will be reduced
(in effect, "written down") such that the level of the Spread Amount is zero,
rather than negative. The resulting Applied Realized Loss Amount will be applied
as a reduction in the Class Principal Balance of the related Subordinate
Certificates in reverse order of seniority, i.e., first against the Class B
Class Principal Balance until it is reduced to zero, then against the Class M-2
Class Principal Balance until it is reduced to zero and then against the Class
M-l Class Principal Balance until it is reduced to zero. In no event shall the
Class Principal Balance of any Class A Certificate be written down as a result
of applying Realized Losses.
Once the Class Principal Balance of a Class of Subordinate Certificates has
been "written down," the amount of such write down will no longer bear interest,
nor will such amount thereafter be "reinstated" or "written up," although the
amount of such write down may, on future Remittance Dates, be paid to Holders of
the Subordinate Certificates which experienced the write down, in direct order
of seniority as distributions on account of the related Class M-1, Class M-2 or
Class B Realized Loss Amounts.
Section 6.10 STATEMENTS.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Servicer shall deliver to the Trustee, by telecopy, for distribution
to the Certificateholders, the receipt and legibility of which shall be
confirmed telephonically, with hard copy thereof and the Servicer's Monthly
Computer Tape in the form attached hereto as Exhibit R (both in hard copy and in
computer tape form) to be delivered on the Business Day following the
Determination Date, a certificate signed by a Servicing Officer (a "Servicer's
Certificate") stating the date (day, month and year), the Series number of the
Certificates, the date of this Agreement, and the following:
(i) the Available Remittance Amounts for the related Remittance Date;
(ii) the Class Principal Balances for each Class of Class A, Class M and
Class B Certificates as reported in the prior Servicer's Certificate pursuant to
subclause (xv) below, or, in the case of the first Determination Date, the
Original Principal Balance for each Class of Class A, Class M and Class B
Certificates;
(iii) the Principal Distribution Amounts for the related Remittance Date,
in the aggregate and listed separately for the portions relating to each Class
of Class A, Class M and Class B Certificates;
(iv) the Interest Shortfall Carryforward Amounts and Realized Loss Amounts
for the related Remittance Date (by Class and in the aggregate);
(v) the Available Maximum Subordination Amount for the related Remittance
Date;
(vi) the number and Principal Balances of all Home Improvement Loans which
were the subject of Principal Prepayments during the Due Period;
(vii) the amount of all Curtailments which were received during the Due
Period;
(viii) the aggregate amount of all Excess Payments and the amounts of
Monthly Payments in respect of principal received during the Due Period;
(ix) the amount of interest received on the Home Improvement Loans;
(x) the amount of the Monthly Advances to be made on the Determination
Date, the portion of the Monthly Advances to be deposited in the Certificate
Account pursuant to Section 6.01(a)(ii), and the Compensating Interest payment
to be made on the Determination Date;
(xi) the delinquency and foreclosure information set forth in the form
attached hereto as Exhibit O;
(xii) the amount of any Realized Losses incurred during the related Due
Period;
(xiii) the Available Remittance Amounts for the Remittance Date, in the
aggregate and by component;
(xiv) the Reimbursable Amounts and the Class X Remittance Amount payable
pursuant to Section 6.08(d)(xiv) and (xvii) with respect to the Remittance Date;
(xv) the Class Principal Balance for each Class of Class A, Class M and
Class B Certificates and the Pool Principal Balance after giving effect to the
distribution to be made on the Remittance Date and after allocation of the
Applied Realized Loss Amount made on such Remittance Date;
(xvi) the calculation of the Trigger Event, including the various
components thereof;
(xvii) the Cumulative Realized Losses, with respect to the Remittance Date;
(xviii) the amount, if any, by which the applicable Formula Distribution
Amount exceeds the applicable Class Distribution Amount for such Remittance
Date;
(xix) the Servicing Fees, the Contingency Fees and amounts to be deposited
to the Expense Account and the FHA Premium Account;
(xx) the amount of all payments and reimbursements to the Servicer pursuant
to Section 5.04(b), (c), (d)(ii), (e) and (f);
(xxi) the Class Factor for each Class determined using the balances in
subclause (xv) above;
(xxii) the weighted average Home Improvement Loan Interest Rate and
Adjusted Home Improvement Loan Interest Rate and the weighted average Class
Adjusted Loan Remittance Rates, in each case for the related Remittance Date,
and the weighted average Home Improvement Loan Interest Rate for the prior three
month period;
(xxiii) the Senior Percentage and the Class B Percentage for the current
Remittance Date;
(xxiv) the Spread Amount and the Specified Subordinated Amount for such
Remittance Date;
(xxv) the amount of any Applied Realized Loss Amount, Realized Loss Amount
and Unpaid Realized Loss Amount for each Class as of the close of such
Remittance Date;
(xxvi) the Accelerated Principal Distribution Amount for such Remittance
Date;
(xxvii) Reserved;
(xxviii) the amount to be deposited into the FHA Premium Account on the
related Remittance Date and the amount reimbursable to the Servicer from the FHA
Premium Account pursuant to Section 6.06(b)(i);
(xxix) the amount of FHA Payments and Related Payments received during the
related Due Period;
(xxx) the Reserve Amount for the related Remittance Date;
(xxxi) claims filed during the Due Period;
(xxxii) claims paid during the Due Period;
(xxxiii) claims denied by the FHA during the Due Period;
(xxxiv) claims pending payment by the FHA during the Due Period; and
(xxxv) Such other information as the Certificateholders may reasonably
require.
The Trustee shall forward such report to the Certificateholders on the
Remittance Date, together with a separate report indicating the amount of funds
deposited in the Certificate Account pursuant to Section 6.01(a)(iv); and the
amounts which are reimbursable to the Servicer or the Representative, as
appropriate, pursuant to Sections 6.03(c)(i), 6.03(c)(ii) and 6.08(d)(iii) (all
reports prepared by the Trustee of such withdrawals and deposits will be based
in whole or in part upon the information provided to the Trustee by the Servicer
or the Claims Administrator).
To the extent that there are inconsistencies between the telecopy of the
Servicer's Certificate and the hard copy thereof, the Trustee shall be entitled
to rely upon the telecopy. In the case of information furnished pursuant to
subclauses (ii), (viii) and (xiii) above, the amounts shall be expressed in a
separate section of the report as a dollar amount for each Class per $1,000
original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based upon
information received from the Servicer, forward to the Certificateholders and
the Rating Agencies, a report setting forth the amount of principal and
interest, if any, being paid to each Class of Class A, Class M and Class B
Certificates on the Special Remittance Date.
(a) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class A, Class M and Class B
Certificateholder such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (ix),
(xiii), (xix) and (xxxv), above, aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the Code as from time to time are in force.
(b) On each Remittance Date and the Special Remittance Date, the Trustee
shall forward to the Class X and Class R Certificateholders a copy of the report
forwarded to the Certificateholders of each Pool in respect of such Remittance
Date or the Special Remittance Date, as the case may be, and a statement setting
forth the amounts actually distributed to the Class X and Class R
Certificateholders, on such Remittance Date together with such other information
as the Servicer provides and deems necessary or appropriate.
(c) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class X or Class R Certificateholder
such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class X or R Certificateholder, as applicable. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code as from time to time in force.
(d) Upon reasonable advance notice in writing, the Servicer will provide to
each Class A, Class M and Class B Certificateholder which is a savings and loan
association, bank or insurance company certain reports and access to information
and documentation regarding the Home Improvement Loans sufficient to permit such
Class A, Class M and Class B Certificateholder to comply with applicable
regulations of the Office of Thrift Supervision or other regulatory authorities
with respect to investment in the Class A, Class M and Class B Certificates.
(e) The Servicer shall furnish to each Certificateholder, during the term
of this Agreement, such periodic, special, or other reports or information,
whether or not provided for herein, as shall be necessary, reasonable, or
appropriate with respect to the Certificateholder, or otherwise with respect to
the purposes of this Agreement, all such reports or information to be provided
by and in accordance with such applicable instructions and directions as the
Certificateholder may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder for the Servicer's actual
expenses incurred in providing such reports if such reports are not producible
in the ordinary course of the Servicer's business.
Section 6.11 ADVANCES BY THE SERVICER.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the Certificate Account an
amount (as indicated in the Servicer's Certificate prepared pursuant to Section
6.10), to be distributed on the related Remittance Date pursuant to Section
6.08, equal to the amount, if any, by which (a) the amount equal to 30 days'
interest at the weighted average Class Adjusted Home Improvement Loan Remittance
Rates on the Pool Principal Balance immediately prior to the related Remittance
Date exceeds (b) the amount received by the Servicer as of the related Record
Date in respect of interest on the Home Improvement Loans (and, with respect to
the Remittance Dates in July, August and September 1997, the sum of (i) all
funds to be transferred to the Certificate Account from the Capitalized Interest
Account for such Remittance Date pursuant to Section 6.02(g) and (ii) the
Pre-Funding Earnings for the applicable Remittance Date). The sum of such excess
is defined herein as the "Monthly Advance." The Servicer may reimburse itself
for Monthly Advances made pursuant to Section 5.04.
Section 6.12 COMPENSATING INTEREST.
The Certificateholders shall be entitled to a full month's interest for
each Home Improvement Loan for any month during which a Principal Prepayment or
Curtailment is received on such Home Improvement Loan. Not later than the close
of business on each Determination Date, with respect to each Home Improvement
Loan for which a Principal Prepayment or Curtailment was received during the
related Due Period, the Servicer shall remit to the Trustee for deposit in the
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.10) equal to the difference between
(a) 30 days' interest at the then weighted average Class Adjusted Home
Improvement Loan Remittance Rates on the Principal Balance of each such Home
Improvement Loan and (b) the amount of interest actually received on each such
Home Improvement Loan for such Due Period as of the beginning of the Due Period
applicable to the Remittance Date on which such amount will be distributed.
Section 6.13 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED PROPERTY.
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Trustee reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust Fund acquires an interest in a Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of
the Home Improvement Loan, or (ii) knows or has reason to know that a Mortgaged
Property has been abandoned. The reports from the Servicer shall be in form and
substance sufficient to enable the Trustee to meet the reporting requirements
imposed by such Section 6050J. The Servicer will deliver to the Trustee an
aggregate summary of all information needed by the Trustee to prepare such
Section 6050J reports.
Section 6.14. Reserved.
Section 6.15 ESTABLISHMENT OF SERVICING ACCOUNTS; COLLECTION OF TAXES,
ASSESSMENTS AND SIMILAR ITEMS.
(a) The Servicer shall establish and maintain, or cause to be established
and maintained, one or more Servicing Accounts. The Servicer will deposit and
retain, or cause to be deposited and retained, therein all collections from the
Mortgagors for the payment of taxes, assessments, insurance premiums, or
comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a Designated
Depository Institution in an account designated as a "Home Improvement Loan
Servicing Account," held in trust by the Servicer or a Subservicer acting on its
own behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Mortgagors any sums as may be determined to be overages,
to pay interest, if required, to Mortgagors on balances in the Servicing
Accounts, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement.
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 ASSUMPTION AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Improvement 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 or if such
enforcement would materially increase the risk of default or delinquency on, or
materially decrease the security for, such Home Improvement Loan. In such event,
the Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Mortgage Note and, unless prohibited
by applicable law or the Mortgage, the Mortgagor remains liable thereon. The
Servicer is also authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable under
the Mortgage Note. The Servicer shall notify the Trustee, the Co-Trustee and the
Custodian that any such substitution or assumption agreement has been completed
by forwarding to the Custodian the original of such substitution or assumption
agreement, which original shall be added by the Custodian to the related
Trustee's Mortgage File and shall, for all purposes, be considered a part of
such Trustee's Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any assumption or
substitution agreement entered into pursuant to this Section 7.01, the Servicer
shall not change the Home Improvement Loan Interest Rate or the Monthly Payment,
defer or forgive the payment of principal or interest, reduce the outstanding
principal amount or extend the final maturity date on such Home Improvement
Loan. Any fee collected by the Servicer for consenting to any such conveyance or
entering into an assumption or substitution agreement shall be retained by or
paid to the Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, (i) 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 Improvement Loan by operation of law or any assumption which the Servicer
may be restricted by law from preventing, for any reason whatsoever; and (ii)
the Servicer shall not take any action which would adversely affect the coverage
of an FHA Loan for insurance by the FHA under Title I.
Section 7.02 SATISFACTION OF MORTGAGES AND RELEASE OF MORTGAGE FILES.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments, subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Home Improvement Loan not
satisfied in accordance with the procedures set forth herein.
Upon the payment in full of any Home Improvement Loan, or the receipt by
the Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
and the Custodian by an Officers' Certificate in the form of Exhibit J attached
hereto (which certification shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the Principal and Interest Account pursuant to
Section 5.03 have been or will be so deposited) of a Servicing Officer and shall
request delivery to it of the Trustee's Mortgage File. Upon receipt of such
certification and request, the Custodian shall promptly release the related
Trustee's Mortgage File to the Servicer. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be payable only
from and to the extent of servicing compensation and shall not be chargeable to
the Principal and Interest Account or the Certificate Accounts. The Co-Trustee
hereby appoints the Servicer to act as its duly appointed attorney-in-fact with
respect to the execution of any satisfaction or release prepared in connection
with a Home Improvement Loan.
From time to time and as appropriate for the servicing or foreclosure of
any Home Improvement Loan, including, for this purpose, collection under any
primary mortgage guaranty insurance policy, the Custodian shall, upon request of
the Servicer and delivery to the Custodian of a certification in the form of
Exhibit J attached hereto signed by a Servicing Officer, release the related
Trustee's Mortgage File to the Servicer, and the Co-Trustee and the Custodian
shall execute such documents as shall be necessary to the prosecution of any
such proceedings. Such servicing receipt shall obligate the Servicer to return
the Mortgage File to the Custodian when the need therefor by the Servicer no
longer exists, unless the Home Improvement Loan has been liquidated and the
Liquidation Proceeds relating to the Home Improvement Loan have been deposited
in the Principal and Interest Account and remitted to the Trustee for deposit in
the Certificate Account or the Mortgage File or such document has been delivered
to an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or pursuing legal action or other proceedings
for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Servicer has delivered to the Custodian a certificate of
a Servicing Officer certifying as to the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes of
such delivery. Upon receipt of a certificate of a Servicing Officer stating that
such Home Improvement Loan was liquidated, the servicing receipt shall be
released by the Custodian to the Servicer.
The Co-Trustee shall execute and deliver to the Servicer any court
pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Mortgagor on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings, the Servicer shall
deliver to the Co- Trustee a certificate of a Servicing Officer requesting that
such pleadings or documents be executed by the Trustee and certifying as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Co-Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale. The Co-Trustee shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to the
Co-Trustee by the Servicer or take any other action requested in such request,
that is, in the opinion of the Servicer as evidenced by such request, required
by any state or other jurisdiction to discharge the lien of a Mortgage upon the
satisfaction thereof and the Co-Trustee will sign and post, but will not
guarantee receipt of, any such documents to the Servicer, or such other party as
the Servicer may direct, within five Business Days of the Co-Trustee's receipt
of such certificate or documents. Such certificate or documents shall establish
to the Co-Trustee's satisfaction that the related Home Improvement Loan has been
paid in full by or on behalf of the Mortgagor and that such payment has been
deposited in the Principal and Interest Account. The Co-Trustee may appoint the
Servicer to act as its duly appointed attorney-in-fact with respect to the
execution of any and all court pleadings, requests for trustee's sale or other
documents necessary to the foreclosure or trustee's sale in respect of a
Mortgaged Property or to any legal action to obtain judgment against any
Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency judgment,
or to enforce any other remedies or rights provided by the Mortgage Note or
Mortgage or otherwise available at law or in equity.
Section 7.03 SERVICING COMPENSATION AND CONTINGENCY FEE.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the Principal and Interest Account or to retain from
interest payments on the Home Improvement Loans the Servicer's Servicing Fee.
Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Section
6.03(c)(iii) and late payment charges shall be retained by or remitted to the
Servicer to the extent not required to be remitted to the Trustee for deposit in
the Certificate Account. The Servicer shall be required to pay all expenses
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for
herein.
(b) The Servicer shall be entitled to withdraw from the Principal and
Interest Account or to retain from interest payments on the Home Improvement
Loans the Contingency Fee. In the event that The Money Store Inc. is terminated
as Servicer pursuant to this Agreement, any duly appointed successor to the
Servicer shall also be entitled to withdraw from the applicable Principal and
Interest Account or to retain from interest payments on the Home Improvement
Loans the successor Servicer's Contingency Fee.
Section 7.04 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Trustee, the Co-Trustee and each of the
Rating Agencies, on or before March 31 of each year beginning March 31, 1998, an
Officers' Certificate stating that (i) the Servicer has fully complied with the
provisions of Articles V and VII and the Claims Administrator has fully complied
with Section 5.15, (ii) a review of the activities of the Servicer and the Claim
Administrator during the preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (iii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof and the action
being taken by the Servicer and the Claims Administrator, as applicable, to cure
such default.
Section 7.05 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before March 31 of each year beginning March 31, 1998, the Servicer,
at its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Trustee to furnish a letter or letters to the Trustee, the
Co-Trustee and the Rating Agencies to the effect that such firm has with respect
to the Servicer's overall servicing operations examined such operations in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 7.06 TRUSTEE'S AND CO-TRUSTEE'S RIGHT TO EXAMINE SERVICER RECORDS
AND AUDIT OPERATIONS.
The Trustee and the Co-Trustee shall have the right upon reasonable prior
notice, during normal business hours and as often as reasonably required, to
examine and audit any and all of the books, records or other information of the
Servicer and the Claims Administrator, whether held by the Servicer or by
another on behalf of the Servicer and the Claims Administrator, which may be
relevant to the performance or observance by the Servicer and the Claims
Administrator of the terms, covenants or conditions of this Agreement. No
amounts payable in respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 REPORTS TO THE TRUSTEE; PRINCIPAL AND INTEREST ACCOUNT
STATEMENTS.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Trustee a statement, certified by a Servicing Officer, setting forth the
status of the Principal and Interest Account as of the close of business on the
preceding Record Date and showing, for the period covered by such statement, the
aggregate of deposits into the Principal and Interest Account for each category
of deposit specified in Section 5.03, the aggregate of withdrawals from the
Principal and Interest Account for each category of withdrawal specified in
Section 5.04, the aggregate amount of permitted withdrawals not made in the
related Due Period, and the amount of any Monthly Advances or payments of
Compensating Interest, in each case, for the related Due Period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 FINANCIAL STATEMENTS.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders 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.
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the Co-Trustee
and each Certificateholder harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments, and any
other costs, fees and expenses that the Trustee, the Co- Trustee and any
Certificateholder may sustain in any way related to the failure of the Servicer
and the Claims Administrator to perform its duties and service the Home
Improvement Loans in compliance with the terms of this Agreement. The Servicer
shall immediately notify the Trustee, the Co-Trustee and each Certificateholder
if a claim is made by a third party with respect to this Agreement, and the
Servicer shall assume (with the consent of the Trustee or the Co-Trustee, as the
case may be,) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Claims Administrator, the Trustee, the Co- Trustee and/or Certificateholder in
respect of such claim. The Trustee may reimburse the Servicer from the Expense
Account pursuant to Section 6.03(c)(i), and, if necessary, from amounts
otherwise payable to the Holders of the Class X Certificates from the Remaining
Amount Available for all amounts advanced by it pursuant to the preceding
sentence with respect to the Trust Fund except when the Claim relates directly
to the failure of the Servicer or the Claims Administrator to service and
administer the Mortgages in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Co-Trustee and each Certificateholder harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Trustee, the Co-Trustee and any
Certificateholder may sustain in any way related to the failure of the Servicer,
if it is an affiliate thereof, or the failure of the Representative to perform
their respective duties in compliance with the terms of this Agreement and in
the best interests of the Certificateholders. The Representative shall
immediately notify the Trustee, the Co-Trustee and each Certificateholder if a
claim is made by a third party with respect to this Agreement, and the
Representative shall assume (with the consent of the Trustee or the Co-Trustee,
as the case may be) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Representative, the Trustee, the Co-Trustee and/or
Certificateholder in respect of such claim. The Trustee may reimburse the
Representative from the related Expense Account pursuant to Section 6.03(c)(i),
and, if necessary, from amounts otherwise payable to the Holders of the Class X
Certificates from the Remaining Amount Available for all amounts advanced by it
pursuant to the preceding sentence with respect to the Trust Fund except when
the claim relates directly to the Representative's indemnification pursuant to
Section 2.05 and Section 3.03 or to the failure of the Servicer, if it is an
affiliate of the Representative to perform its obligations to service and
administer the Mortgages in compliance with the terms of this Agreement, or the
failure of the Representative to perform its duties in compliance with the terms
of this Agreement and in the best interest of the Certificateholders.
Section 9.02 MERGER OR CONSOLIDATION OF THE REPRESENTATIVE,
THE SERVICER AND THE CLAIMS ADMINISTRATOR.
The Servicer, the Representative and the Claims Administrator will each
keep in full effect its existence, rights and franchises as a corporation, and
will obtain and preserve its qualification to do business as a foreign
corporation, in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Improvement Loans and to
perform its duties under this Agreement.
Any Person into which the Servicer, the Representative may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer, the Representative or the Claims
Administrator shall be a party, or any Person succeeding to the business of the
Servicer, the Representative or the Claims Administrator, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and a valid Contract of Insurance and shall be the successor of the
Servicer, the Representative or the Claims Administrator, as applicable,
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. The Servicer, the Representative or the Claims Administrator
shall send notice of any such merger or consolidation to the Trustee and the
Co-Trustee.
Section 9.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
The Servicer and the Claims Administrator and any director, officer,
employee or agent of the Servicer and the Claims Administrator may rely on any
document of any kind which it in good faith reasonably believes to be genuine
and to have been adopted or signed by the proper authorities respecting any
matters arising hereunder. Subject to the terms of Section 9.01 herein, the
Servicer and the Claims Administrator shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Home Improvement Loans in accordance with this
Agreement.
Section 9.04 SERVICER AND CLAIMS ADMINISTRATOR NOT TO RESIGN.
The Servicer and the Claims Administrator shall not assign this Agreement
nor resign from the obligations and duties hereby imposed on it except by mutual
consent of the Servicer, the Claims Administrator, the Trustee, the Co-Trustee
and the Majority Certificateholders, or upon the determination that the
Servicer's or Claims Administrator's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer or the
Claims Administrator. Any such determination permitting the resignation of the
Servicer and the Claims Administrator shall be evidenced by a written Opinion of
Counsel (who may be counsel for the Servicer and the Claims Administrator) to
such effect delivered to the Trustee, the Co-Trustee and to each
Certificateholder, which Opinion of Counsel shall be in form and substance
acceptable to the Trustee. No such resignation shall become effective until a
successor has assumed the Servicer's or the Claims Administrator's
responsibilities and obligations hereunder in accordance with Section 10.02.
Section 9.05 APPOINTMENT OF ASSISTANT CLAIMS ADMINISTRATOR.
The Claims Administrator hereby appoints TMS Mortgage Inc., a New Jersey
corporation, as Assistant Claims Administrator and, in such capacity, the
Assistant Claims Administrator shall have all the rights, powers, obligations
and duties of the Claims Administrator in acting in such capacity.
Notwithstanding such appointment, the Claims Administrator shall remain
obligated to the Trustee, the Co-Trustee and the Certificateholders in
accordance with the provisions of this Agreement.
Section 9.06 RIGHT OF CERTIFICATEHOLDERS TO REPLACE SERVICER AND CLAIMS
ADMINISTRATOR.
From and after the occurrence of a Servicing Delinquency Trigger, the
Majority Certificateholders may, upon written notice to the Trustee, the
Co-Trustee and the Rating Agencies, replace the Servicer and/or the Claims
Administrator with a successor. No such replacement shall become effective until
a successor has assumed the Servicer's and/or the Claims Administrator's
responsibilities and obligations hereunder in accordance with Section 10.02.
ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of Default shall occur and
be continuing, that is to say:
(i) (A) Reserved; (B) the failure by the Servicer to make any required
Servicing Advance, to the extent such failure materially and adversely
affects the interests of the Certificateholders; (C) the failure by the
Servicer to make any required Monthly Advance; (D) the failure by the
Servicer to remit any Compensating Interest; (E) the failure by the
Servicer to pay the FHA Insurance Premium relating to any FHA Loan or (F)
any failure by the Servicer or the Claims Administrator to remit to
Certificateholders, or to the Trustee for the benefit of the
Certificateholders, any payment required to be made under the terms of this
Agreement which, except with respect to FHA Payments to which no grace
period shall apply, continues unremedied after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee or to the Servicer and the Trustee by
any Certificateholder; or
(ii) failure by the Servicer, the Claims Administrator or the
Representative duly to observe or perform, in any material respect, any
other covenants, obligations or agreements of the Servicer, the Claims
Administrator or the Representative as set forth in this Agreement, which
failure continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer, the Claims Administrator or the
Representative, as the case may be, by the Trustee or to the Servicer, the
Claims Administrator or the Representative, as the case may be, and the
Trustee by any Certificateholder; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer or
the Claims Administrator and such decree or order shall have remained in
force, undischarged or unstayed for a period of 60 days; or
(iv) the Servicer or the Claims Administrator shall consent to the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or the Claims Administrator or
of or relating to all or substantially all of the Servicer's or the Claims
Administrator's property; or
(v) the Servicer or the Claims Administrator shall admit in writing
its inability to pay its debts as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment
of its obligations;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(C) or, with respect to FHA Payments, clause (i)(F)), if such Event of
Default shall not have been remedied within 30 days after the Servicer or the
Claims Administrator has received notice of such Event of Default, (x) with
respect solely to clause (i)(C) above, if such Monthly Advance is not made
earlier than 4:00 p.m. New York time on the Determination Date, the Trustee
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer or the Claims Administrator, as the case may be, and, unless such
failure is cured, by receipt of payment, by 12:00 Noon New York time on the
following Business Day, the Trustee shall immediately assume, pursuant to
Section 10.02 hereof, the duties of a successor Servicer and the Claims
Administrator; and (y) in the case of clauses (i)(A), (i)(B), (i)(D), (i)(E),
(i)(F), (ii), (iii), (iv) and (v), the Majority Certificateholders, by notice in
writing to the Servicer and the Claims Administrator (with a copy to the
Trustee), may, in addition to whatever rights such Certificateholders may have
at law or equity including damages, injunctive relief and specific performance,
in each case commence termination of all the rights and obligations of the
Servicer and the Claims Administrator under this Agreement and in and to the
Home Improvement Loans and the proceeds thereof, as Servicer and the Claims
Administrator. Upon receipt by the Servicer and the Claims Administrator of a
second written notice from the Majority Certificateholders stating that they or
it intend to terminate the Servicer and the Claims Administrator as a result of
such Event of Default, all authority and power of the Servicer and the Claims
Administrator under this Agreement, whether with respect to the Home Improvement
Loans or otherwise, shall, subject to Section 10.02, pass to and be vested in
the Trustee or its designees is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer and the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Home Improvement Loans and
related documents. The Servicer and the Claims Administrator agree to cooperate
with the Trustee and the Co-Trustee in effecting the termination of the
Servicer's and the Claims Administrator's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to the Principal and Interest Account or thereafter received with
respect to the Home Improvement Loans.
Section 10.02 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the time the Servicer or the Claims Administrator receives a
notice of termination pursuant to Section 10.01 or the Trustee or Co-Trustee
receives the resignation of the Servicer and the Claims Administrator evidenced
by an Opinion of Counsel pursuant to Section 9.04 or the Servicer and the Claims
Administrator are removed as servicer and claims administrator pursuant to this
Article X, the Trustee shall be the successor in all respects to the Servicer in
its capacity as servicer and the Claims Administrator in its capacity as claims
administrator under this Agreement and the transactions set forth or provided
for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer and the Claims Administrator
by the terms and provisions hereof, provided, however, that the Trustee shall
not be liable for any actions of any servicer or claims administrator prior to
it, and that the Trustee shall not be obligated to make advances or payments
pursuant to Sections 6.03, 6.11, 6.12, 5.05, 5.10 or 5.14 but only to the extent
the Trustee determines reasonably and in good faith that such advances would not
be recoverable, such determination to be evidenced with respect to each such
advance by a certification of a Responsible Officer of the Trustee. As
compensation therefor, the Trustee shall be entitled to all funds relating to
the Home Improvement Loans which the Servicer and Claims Administrator would
have been entitled to receive from the Principal and Interest Account pursuant
to Section 5.04 if the Servicer had continued to act as servicer and claims
administrator hereunder, together with other servicing compensation in the form
of assumption fees, late payment charges, the Contingency Fee or otherwise as
provided in Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act or if the Majority Certificateholders
so request in writing to the Trustee, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
that has a net worth of not less than $15,000,000 and which is approved as a
servicer by FNMA and FHLMC (and, in the case of FHA Loans, is a Title I approved
lender pursuant to FHA Regulations) as the successor to the Servicer and the
Claims Administrator hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer and the Claims
Administrator hereunder. Any collections received by the Servicer and the Claims
Administrator after removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. The compensation of any successor servicer
and claims administrator (including, without limitation, the Trustee) so
appointed shall be the aggregate Servicing Fees, together with the Contingency
Fee and other servicing compensation in the form of assumption fees, late
payment charges or otherwise. In the event the Trustee is required to solicit
bids as provided herein, the Trustee shall solicit, by public announcement, bids
from housing and home finance institutions, banks and mortgage servicing
institutions meeting the qualifications set forth above. Such public
announcement shall specify that the successor servicer and claims administrator
shall be entitled to, with respect to the Home Improvement Loans each would be
servicing, the full amount of the aggregate Servicing Fees and Contingency Fee
relating to such Home Improvement Loans as servicing compensation, together with
the other servicing compensation in the form of assumption fees, late payment
charges or otherwise. Within thirty days after any such public announcement, the
Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest qualifying bid. The Trustee shall deduct from any sum
received by the Trustee or from the successor to the Servicer and Claims
Administrator 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 and the amount of any
unreimbursed Servicing Advances and Monthly Advances. After such deductions, the
remainder of such sum shall be paid by the Trustee to the Servicer and Claims
Administrator at the time of such sale, transfer and assignment to the
Servicer's and Claims Administrator's successor. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. The Servicer and Claims Administrator agree to
cooperate with the Trustee and any successor servicer and claims administrator
in effecting the termination of the Servicer's and Claims Administrator'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 and Claims
Administrator's functions hereunder and shall promptly also transfer to the
Trustee or such successor servicer and claims administrator, as applicable, all
amounts which then have been or should have been deposited in the Principal and
Interest Account or Spread Account by the Servicer and Claims Administrator or
which are thereafter received with respect to the Home Improvement Loans.
Neither the Trustee nor any other successor servicer or claims administrator
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 and Claims Administrator 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 and Claims Administrator
hereunder. No appointment of a successor to the Servicer and Claims
Administrator hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the Trustee shall have consented thereto. The Trustee shall not resign as
servicer until a successor servicer has been appointed.
Pending appointment of a successor to the Servicer and the Claims
Administrator hereunder, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Home Improvement Loans as it and such successor shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer and
Claims Administrator pursuant to Section 7.03 or otherwise as provided in this
Agreement. The Servicer, the Claims Administrator, the Trustee, any Custodian
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
Section 10.03 WAIVER OF DEFAULTS.
The Majority Certificateholders may, on behalf of all Certificateholders,
waive any events permitting removal of the Servicer and the Claims Administrator
as servicer pursuant to this Article X, provided, however, that the Majority
Certificateholders may not waive a default in making a required distribution on
a Certificate without the consent of the holder of such Certificate. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 10.04 TRANSFER OF TAX MATTERS PERSON RESIDUAL INTEREST.
Upon any termination of, or appointment of any successor to, the Servicer
hereunder, the Servicer shall promptly upon the request of the Trustee transfer
all of the Tax Matters Person Residual Interest to the Representative, for such
time as the Trustee shall serve as successor Servicer and thereafter the
Representative shall transfer such Tax Matters Person Residual Interest to the
entity that is appointed to succeed the Trustee as Servicer.
Section 10.05 CONTROL BY MAJORITY CERTIFICATEHOLDERS.
The Majority Certificateholders may direct the time, method and place of
conducting any proceeding relating to the Trust Fund or the Certificates or for
any remedy available to the Trustee or the Co-Trustee with respect to the
Certificates or exercising any trust or power conferred on the Trustee or the
Co-Trustee with respect to the Certificates or the Trust Fund provided that:
(i) such direction shall not be in conflict with any rule of law or
with this Agreement;
(ii) the Trustee or the Co-Trustee, as the case may be, shall have
been provided with indemnity satisfactory to it; and
(iii) the Trustee and the Co-Trustee may take any other action deemed
proper by the Trustee and the Co-Trustee which is not inconsistent with
such direction; provided, however, that the Trustee and the Co-Trustee need
not take any action which it determines might involve it in liability or
may be unjustly prejudicial to the Holders not so directing.
ARTICLE XI
TERMINATION
Section 11.01 TERMINATION.
Subject to Section 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the latter of the final payment or other liquidation of
the last Home Improvement Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Home Improvement Loan and the
remittance of all funds due thereunder, or (b) mutual consent of the Servicer,
and all Certificateholders in writing; provided, however, that in no event shall
the Trust established by this Agreement terminate later than twenty-one years
after the death of the last surviving lineal descendant of Xxxxxx X. Xxxxxxx,
late Ambassador of the United States to the Court of St. Xxxxx, alive as of the
date hereof.
Subject to Section 11.03, the Servicer may, at its option, on any date on
which the aggregate Principal Balance of the Home Improvement Loans is less than
ten percent of the sum of (i) the aggregate Principal Balance of the Initial
Home Improvement Loans as of the Cut-Off Date and (ii) the Original Pre-Funded
Amount (such date, the Optional Servicer Termination Date"), purchase on the
next succeeding Remittance Date, all of the Home Improvement Loans and any
related REO Properties at a price equal to the sum of (x) 100% of the Principal
Balances of the Home Improvement Loans before the occurrence of Realized Losses,
and any related REO Property, and including the portion of the principal balance
of each 90 Day Delinquent FHA Loan for which the Certificateholders have not
received payment and for which a Claim was submitted to the FHA and (y) 30 days'
interest thereon at the weighted average Class A-1, Class X-0, Xxxxx X-0, Class
M-1, Class M-2 and Class B Remittance Rates (the "Termination Price").
Notice of any termination, specifying the Remittance Date upon which the
Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer by letter to the
Certificateholders mailed during the month of such final distribution before the
Determination Date in such month, specifying (i) the Remittance Date upon which
final payment of the Certificates will be made upon presentation and surrender
of such Certificates at the office of the Trustee therein designated, (ii) the
amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Remittance Date is not applicable, payments being made only
upon presentation and surrender of such Certificates at the office of the
Trustee therein specified. The Servicer shall give such notice to the Trustee
therein specified. The Servicer shall give such notice to the Trustee at the
time such notice is given to Certificateholders. Any obligation of the Servicer
to pay amounts due to the Trustee shall survive the termination of the Trust
Fund.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to such remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the eastern
edition of The Wall Street Journal notice that such money remains unclaimed. If
within six months after the second notice all of such Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.
Section 11.02 TERMINATION UPON LOSS OF REMIC STATUS.
(a) Following a final determination by the Internal Revenue Service, or by
a court of competent jurisdiction, in either case, from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that either of REMIC I or REMIC II does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination, the Majority Certificateholders may direct
the Trustee and the Co-Trustee on behalf of REMIC I and REMIC II to adopt a
"plan of complete liquidation" (within the meaning of Section 860F(a)(4) of the
Code). Upon receipt of such direction by the Majority Certificateholders, the
Trustee shall notify the Class R Certificateholders of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Holders of a majority of the Percentage Interest of
the Class R Certificates then outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from REMIC II all Home Improvement Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Home Improvement Loan then remaining in REMIC II at a purchase
price equal to the Termination Price for REMIC II.
(b) If, during the Purchase Option Period, the Class R Certificateholders
have not exercised the option described in the immediately preceding paragraph,
then upon the expiration of the Purchase Option Period in the event that the
Majority Certificateholders have given the Trustee and the Co-Trustee the
direction described in clause (a)(i) above, the Co-Trustee shall sell the Home
Improvement Loans and distribute the proceeds of the liquidation of REMIC II in
accordance with the plan of complete liquidation, such that, if so directed, the
liquidation of REMIC II, the distribution of the proceeds of the liquidation and
the termination of this Agreement occur no later than the close of the 60th day,
or such later day as the Class A, Class M and Class B Certificateholders shall
permit or direct in writing, after the expiration of the Purchase Option Period.
In connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Trustee of an opinion of nationally recognized
tax counsel selected by the Holders of the Class R Certificates (which shall not
be an expense of the Trustee) which opinion shall be reasonably satisfactory in
form and substance to the Majority Certificateholders to the effect that the
effect of the Final Determination is to increase substantially the probability
that the gross income of REMIC II will be subject to federal taxation, purchase
from REMIC II all Home Improvement Loans and all property theretofore acquired
by foreclosure, deed in lieu of foreclosure, or otherwise in respect of any Home
Improvement Loan then remaining in REMIC II at a purchase price equal to the
Termination Price for REMIC II. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the Certificate Account, which deposit shall be
deemed to have occurred immediately preceding such purchase. The foregoing
opinion shall be deemed satisfactory unless the Majority Certificateholders give
the Holders of a majority of the Percentage Interest of the Class R Certificates
notice that such opinion is not satisfactory within thirty days after receipt of
such opinion.
Section 11.03 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In the event the Servicer exercises its purchase option as provided in
Section 11.01 or 11.02, each of REMIC I and REMIC II shall be terminated in
accordance with the following additional requirements, unless the Trustee has
been furnished with an Opinion of Counsel (which shall not be an expense of the
Trustee) to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 11.03 will not (i) result in the imposition of
taxes on "prohibited transactions" on REMIC I or REMIC II as defined in Section
860F of the Code, or (ii) cause REMIC I or REMIC II to fail to qualify as a
REMIC at any time that any Class A Certificates are outstanding:
(i) Within 90 days prior to the final Remittance Date, the holders of
the Class R-1 and Class R-2 Certificates shall adopt a plan of complete
liquidation of REMIC I and REMIC II, respectively, meeting the requirements
of a "Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Remittance Date, the Co-Trustee
shall sell for cash all of the assets of REMIC I and REMIC II to the
Servicer; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall (x) deposit into and withdraw from the
Certificate Account the amount of such final payment and shall distribute
or credit, or cause to be distributed or credited, to the
Certificateholders of each Class, the related Class Principal Balance, plus
30 days' interest thereon at the related Class Remittance Rate, and (y) to
the Class R-1 Certificateholders, distribute all cash on hand after such
payment to the respective Class A, Class M and Class B Certificateholders
and REMIC I and REMIC II shall terminate at such time.
(b) By their acceptance of the Class R Certificates the holders thereof
hereby (i) agree to adopt such a plan of complete liquidation upon the written
request of the Servicer and to take such other action in connection therewith as
may be reasonably requested by the Servicer and (ii) appoint the Servicer as
their attorney-in-fact, with full power of substitution, for purposes of
adopting such a plan of complete liquidation.
Section 11.04 Reserved.
Section 11.05 ACCOUNTING UPON TERMINATION OF SERVICER AND CLAIMS
ADMINISTRATOR.
Upon termination of the Servicer and Claims Administrator under Article X
hereof, the Servicer and Claims Administrator shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee the funds in the Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Custodian all Mortgage Files and related documents and statements held by it
hereunder and a Home Improvement Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Home Improvement Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Home Improvement Loans and administering of the Claims to their successor
and to more fully and definitively vest in such successor all rights, powers,
duties, responsibilities, obligations and liabilities of the Servicer and the
Claims Administrator under this Agreement.
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge and after the
curing of all Events of Default which may have occurred, undertakes to perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge has occurred and has not been cured or waived, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Representative, the Claims Administrator or any
Originator hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable in its individual
capacity for an error of judgment made in good faith by officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Class A, Class M and Class B
Certificateholders, relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee, under
this Agreement;
(iv) In the absence of actual knowledge of an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge, the
Trustee shall not be required to take notice or be deemed to have notice or
knowledge of any default or Event of Default unless the Trustee shall be
specifically notified in writing by the Servicer or any of the Class A,
Class M and Class B Certificateholders. In the absence of actual knowledge
or receipt of such notice, the Trustee may conclusively assume that there
is no default or Event of Default; and
(v) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any opinion of counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to institute, conduct or
defend by litigation hereunder or in relation hereto at the request, order
or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use
the same degree of care and skill in its exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge hereunder
and after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing to do so by the Holders of
Class A, Class M and Class B Certificates evidencing Percentage Interests
aggregating not less than 25% of each Class of Class A, Class M and Class B
Certificates; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not reasonably assured to the Trustee by the security afforded
to it by the terms of this Agreement, the Trustee may require reasonable
indemnity against such expense or liability as a condition to taking any
such action. The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be repaid by the Servicer
upon demand from the Servicer's own funds;
(v) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vi) The Trustee shall not be required to give any bond or surety in
respect of the execution of the trust created hereby or the powers granted
hereunder; and
(vii) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
(b) Following the Startup Day, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee shall have received
an Opinion of Counsel to the effect that the inclusion of such assets in the
Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject the Trust Fund to any tax
under the REMIC Provisions or other applicable provisions of federal, New York
State or New York City law or ordinances.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR HOME IMPROVEMENT
LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Home Improvement
Loan or related document. The Trustee shall not be accountable for the use or
application by the Servicer of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Home Improvement Loans or deposited in or withdrawn
from the Principal and Interest Account by the Servicer. The Trustee shall not
be responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 SERVICER TO PAY TRUSTEE'S FEES AND EXPENSES.
The Servicer covenants and agrees to pay to the Trustee and the Co-Trustee
from time to time, and the Trustee and the Co-Trustee shall each be entitled to,
reasonable compensation (which shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust) for all services
rendered by it in the execution of the trusts hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Trustee and the
Co-Trustee, and the Servicer will pay or reimburse the Trustee and the
Co-Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee or the Co-Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith, provided that the Trustee and the
Co-Trustee shall have no lien on the Trust Fund, other than the Expense Account,
for the payment of its fees and expenses. To the extent that actual fees and
expenses of the Trustee or the Co-Trustee exceed the amount available for
payment thereof on deposit in the Expense Account as of the date such fees and
expenses are due and payable (including, the case of the Co-Trustee, the amount
needed to pay the fees and expenses of the Custodian), the Servicer shall
reimburse the Trustee or the Co-Trustee for such shortfall, as the case may be,
out of its own funds without reimbursement therefor, except as provided in
Section 6.03. The Trustee and the Co-Trustee and any director, officer, employee
or agent of the Trustee or the Co-Trustee shall be indemnified by the Servicer
and held harmless against any loss, liability or expense (i) incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder, or (ii)
resulting from any error in any tax or information return prepared by the
Servicer. Anything in this Agreement to the certain notwithstanding in no event
shall the Trustee be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profit) even if
the Trustee or Co-Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action. The obligations of the Servicer
under this Section 12.05 shall survive payment of the Certificates, and shall
extend to any co-trustee appointed pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a banking association organized
and doing business under the laws of any state or the United States of America,
(i) authorized under such laws to exercise corporate trust powers, (ii) having a
combined capital and surplus of at least $30,000,000, (iii) except in the case
of The Chase Manhattan Bank, whose unsecured and unguaranteed long-term debt
obligations shall be rated at least "A" by S&P, and (iv) subject to supervision
or examination by federal or state authority. If such banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section its combined capital and surplus shall be deemed to be
as set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign, upon the request of the Majority
Certificateholders, in the manner and with the effect specified in Section
12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer and to all
Certificateholders. Upon receiving such notice of resignation, the Servicer
shall promptly appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the resigning Trustee and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer. Unless a successor trustee shall have been
so appointed and have accepted appointment within 60 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee. If the
resigning Trustee fails to petition an appropriate court, the Class R-1
Certificateholder may, after such 60 day period, petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 12.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee and appoint a successor trustee by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the
Certificateholders by the Servicer.
The Majority Certificateholders may at any time remove the Trustee and
appoint a successor trustee by written instrument or instruments, in triplicate,
signed by such Holders or their attorneys-in-fact duly authorized, one complete
set of which instruments shall be delivered to the Servicer, one complete set to
the Trustee so removed and one complete set to the successor Trustee so
appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
upon acceptance of appointment by the successor trustee as provided in Section
12.08.
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the Servicer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with the like effect as if originally named as trustee herein. The
predecessor trustee shall deliver to the successor trustee all Mortgage Files
and related documents and statements held by it hereunder, and the Servicer and
the predecessor trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee or Co-Trustee may be merged or converted
or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee or Co-Trustee shall be a party, or any corporation or national banking
association succeeding to the business of the Trustee or Co- Trustee, shall be
the successor of the Trustee or Co-Trustee hereunder, as the case may be,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06 in the case of the Trustee) or Section
12.10 (in the case of the Co-Trustee), without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
12.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. Any co-trustee with respect to the FHA
Loans must at all times have a valid FHA Contract of Insurance.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, all rights, powers, duties and obligations conferred or
imposed upon the trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
The Servicer and the Trustee hereby appoint Chase Manhattan Bank, Delaware
as Co- Trustee with respect to all Home Improvement Loans that constitute, or
may in the future constitute, part of the Trust Fund. Except as otherwise
specifically provided herein, whenever action, consent, approval or delivery to
or from the Trustee is required under this Agreement in connection with a Home
Improvement Loan, such action, consent, approval or delivery to or from shall be
taken or made by the Co-Trustee. Also, any obligations of or benefits,
protection and indemnities provided to, the Trustee with respect to the Home
Improvement Loans shall be obligations of, and benefits, protection and
indemnities provided to, the Co-Trustee with respect to the Home Improvement
Loans.
Notwithstanding any contrary provision contained herein, the Co-Trustee
shall be responsible hereunder solely for the express duties and functions
specified for it herein with respect to the acceptance, ownership, FHA Title I
insurance coverage, substitution, sale, release and discharge of Home
Improvement Loans, and shall not be responsible for, and shall incur no
liability in connection with, the actions, duties and functions of the Trustee.
Section 12.11 AUTHENTICATING AGENT.
Upon the written request of the Servicer, the Trustee shall appoint an
Authenticating Agent, with power to act on the Trustee's behalf and subject to
its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. The Trustee may at any time
terminate the agency of any Authenticating Agent by giving written notice of
termination to such Authenticating Agent and the Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 TAX RETURNS AND REPORTS.
The Trustee, upon written request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of REMIC I and REMIC II and, upon written request
within five (5) Business Days after its receipt thereof, shall (i) sign on
behalf of REMIC I and REMIC II any Tax Return that the Trustee is required to
sign pursuant to applicable federal, state or local tax laws, and (ii) cause
such Tax Return to have been returned to the Servicer for filing.
For Federal income tax purposes, the taxable year of the Trust Fund shall
be a calendar year and the Servicer shall maintain or cause the maintenance of
the books of REMIC I and REMIC II on the accrual method of accounting.
The Servicer shall prepare and file or cause to be filed with the Internal
Revenue Service Federal tax information returns with respect to REMIC I and
REMIC II and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. In connection with
the foregoing, the Servicer shall provide the name, address and telephone number
of the person who can be contacted to obtain information required to be reported
to the holders of regular interests in REMIC I and REMIC II (the "REMIC
Reporting Agent") as required by IRS Form 8811. The Servicer shall indicate the
election to treat each of REMIC I and REMIC II as a REMIC (which election shall
apply to the taxable period ending December 31, 1997 and each calendar year
thereafter) in such manner as the Code or applicable Treasury regulations may
prescribe. The Trustee shall sign all tax information returns filed pursuant to
this Section and any other returns as may be required by the Code, and in doing
so shall rely entirely upon, and shall have no liability for information
provided by, or calculations provided by, the Servicer. The Representative is
hereby designated as the Tax Matters Person (within the meaning of Section
1.860F-4(d) of the Regulations) for each of REMIC I and REMIC II. Any Holder of
a Class R Certificate will by acceptance thereof so appoint the Representative
as agent and attorney-in-fact for the purpose of acting as Tax Matters Person
for the related REMIC. In the event that the Code or applicable Treasury
Regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Representative from acting as Tax Matters Person (as an
agent or otherwise), the Trustee or the Representative shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Class R Certificate to sign such
returns or act as tax matters person. Each Holder of a Class R Certificate shall
be bound by this Section.
The Trustee shall provide upon written request such information as required
in Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any
Person purporting to transfer a Class R Certificate.
Section 12.13 APPOINTMENT OF CUSTODIANS.
The Co-Trustee may with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Co-Trustee by entering into a Custodial Agreement. Subject to this Article
XII, the Co-Trustee agrees to comply with the terms of each Custodial Agreement
and to enforce the terms and provisions thereof against the Custodian for the
benefit of the Certificateholders. The Custodian's fees shall be payable by the
Co-Trustee solely from the fees received by the Co-Trustee pursuant to Section
6.03. Each Custodian (other than First Trust National Association) shall be a
depository institution subject to supervision by federal or state authority,
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage File.
The Co-Trustee and the Servicer hereby appoint First Trust National
Association as Custodian with respect to the Trustee's Mortgage Files relating
to all Home Improvement Loans that constitute, or may in the future constitute,
part of the Trust Fund. The Custodian shall be responsible hereunder solely for
the express duties and functions specified for it herein with respect to the
custody, review and confirmation, safekeeping, substitution and release of the
Trustee's Mortgage Files relating to the Home Improvement Loans.
Section 12.14 PROTECTION OF TRUST FUND.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Holders and, at the written request of the Representative, will from time to
time execute and deliver all such supplements and amendments hereto pursuant to
Section 13.02 hereof and all instruments of further assurance and other
instruments, and will take such other action upon such request as it deems
reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any portion of the Trust
Fund;
(ii) perfect, publish notice of, or protect the validity of any grant
made or to be made by this Agreement;
(iii) enforce any of the Home Improvement Loans; or
(iv) preserve and defend title to the Trust Fund and the rights of the
Trustee, and the ownership interests of the Owners represented thereby, in
the Trust Fund against the claims of all Persons and parties.
The Trustee shall send copies of any request received from the
Representative to take any action pursuant to this Section 12.14 to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement, by action, suit or proceeding at law or equity, and shall also have
the power to enjoin, by action or suit in equity, any acts or occurrences which
may be unlawful or in violation of the rights of the Holders; provided, however,
that nothing in this Section 12.14 shall require any action by the Trustee
unless the Trustee shall first (i) have been furnished indemnity satisfactory to
it and (ii) when required by this Agreement, have been requested to take such
action by the Majority Certificateholders or the Representative in accordance
with the terms of this Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.15 Reserved.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Servicer, the
Trustee and the Co-Trustee by written agreement, without the notice to or
consent of the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions herein, to comply with any changes in the Code, or to
make any other provisions with respect to matters or questions arising under
this Agreement which shall not be inconsistent with the provisions of this
Agreement or any Custodial Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Trustee and the
Co-Trustee, adversely affect the interests of any Certificateholder in any
material respect or any other party and further provided that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Home Improvement Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other party hereto without the consent of such
party.
(b) This Agreement may be amended from time to time by the Originators, the
Representative, the Servicer, the Trustee and the Co-Trustee, with the prior
written consent, the Majority Certificateholders and the Holders of the majority
of the Percentage Interest in each of the Class X, Class R-1 and Class R-2
Certificates 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 Holders; provided, however, that no such amendment
shall be made unless the Trustee and the Co-Trustee receive an Opinion of
Counsel, at the expense of the party requesting the change, that such change
will not adversely affect the status of either REMIC I or REMIC II as a REMIC or
cause a tax to be imposed on REMIC I or REMIC II, and provided further, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
any amounts which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate or reduce the percentage for each
Class the Holders of which are required to consent to any such amendment without
the consent of the Holders of 100% of each Class of Certificates affected
thereby.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
Section 13.03 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Home Improvement Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State
of New York and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws, without giving effect to
principles of conflicts of law.
Section 13.06 NOTICES.
All demands, notices and communications hereunder shall be in writing and
shall be deemed to have been duly given if personally delivered at or mailed by
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer, the Claims Administrator, and each
Originator, The Money Store Inc., 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxxxx 00000,
Attention: Executive Vice President, or such other addresses as may hereafter be
furnished to the Certificateholders in writing by the Representative and the
Servicer, (ii) in the case of the Trustee, The Chase Manhattan Bank, 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, xxx Xxxx 00000, Attention: Structured Finance, (iii) in
the case of the Certificateholders, as set forth in the Certificate Register,
(iv) in the case of Moody's, to Xxxxx'x Investors Service, Home Equity Group, 00
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, (v) in the case of S&P, to
Standard & Poor's Corporation, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Residential Mortgages, and (vi) in the case of the Co-Trustee,
to Chase Manhattan Bank Delaware, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: Trust Department. Any such notices shall be deemed to be
effective with respect to any party hereto upon the receipt of such notice by
such party, except that notices to the Certificateholders shall be effective
upon mailing or personal delivery.
Section 13.07 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Originators, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 HEADINGS.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 Reserved.
Section 13.13 PAYING AGENT.
The Trustee may, subject to the eligibility requirements for the Trustee
set forth in Section 12.06 hereof, other than Section 12.06(iv), appoint one or
more successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.06, that such Paying Agent will:
(i) allocate all sums received for distribution to the Holders of
Certificates of each Class for which it is acting as Paying Agent on
each Remittance Date among such Holders in the proportion specified by
the Trustee; and
(ii) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificateholders by mailing notice thereof to
their addresses appearing on the Certificate Register.
Section 13.14 NOTIFICATION TO RATING AGENCIES.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any appointment of a
Custodian (other than First Trust National Association), (3) any change of the
Trustee or the Servicer, (4) any Event of Default, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Representative shall
give prompt notice to the Rating Agencies if the Representative or any of its
affiliates acquire any Class A, Class M and Class B Certificates.
Section 13.15 Reserved.
IN WITNESS WHEREOF, the Representative, the Servicer, the Claims
Administrator, the Trustee and each Originator have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
THE MONEY STORE INC., as
Representative, Servicer
and Claims Administrator
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Treasurer
THE CHASE MANHATTAN BANK, as Trustee
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Fevola
Title: Second Vice President
The Originators
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Treasurer
ACCEPTANCE OF ASSISTANT CLAIMS ADMINISTRATOR
TMS Mortgage Inc., a New Jersey corporation, hereby accepts its appointment
pursuant to Section 9.05 of the within instrument to serve as Assistant Claims
Administrator. In connection therewith, TMS Mortgage Inc. agrees to be bound by
all applicable provisions of such instrument.
TMS MORTGAGE INC.,
as Assistant Claims Administrator
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Treasurer
ACCEPTANCE OF CO-TRUSTEE
Chase Manhattan Bank Delaware, hereby accepts its appointment pursuant to
Section 12.10 of the within instrument to serve as Co-Trustee with respect to
the Home Improvement Loans. In connection therewith, Chase Manhattan Bank,
Delaware, agrees to be bound by all applicable provisions of such instrument.
CHASE MANHATTAN BANK DELAWARE, as Co-Trustee
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Vice President
ACCEPTANCE OF CUSTODIAN
First Trust National Association hereby accepts its appointment pursuant to
Section 12.13 of the within instrument to serve as Custodian with respect to the
Home Improvement Loans. In connection therewith, First Trust National
Association agrees to be bound by all applicable provisions of such instrument.
FIRST TRUST NATIONAL ASSOCIATION, as Custodian
By: /s/ X. X. Xxxxxxx
Name: X. X. Xxxxxxx
Title: Assistant Vice President
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the 30th day of June 1997 before me, a Notary Public in and for said
State, personally appeared Xxxxx X. Xxxxxx known to me to be an officer of
The Chase Manhattan Bank, a New York banking corporation that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said New York banking corporation, and acknowledged to me that such
New York banking corporation, executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
Notary Public
My Commission expires
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the 30th day of June 1997 before me, a Notary Public in and for the
State of New York, personally appeared Xxxxx Xxxxxxx known to me to be the
Treasurer of The Money Store Inc., one of the corporations that executed the
within instrument and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
STATE OF NEW YORK )
) :ss.
COUNTY OF NEW YORK )
On the 30th day of June 1997 before me, a Notary Public in and for the
State of New York, personally appeared Xxxxx Xxxxxxx known to me to be the
Treasurer of each Originator listed on Exhibit I to the within instrument, and
also known to me to be the person who executed it on behalf of each such
corporation, and acknowledged to me that each such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
EXHIBITS AND SCHEDULES
to
POOLING AND SERVICING AGREEMENT
Dated as of May 31, 1997
The Money Store Home Improvement Loan Certificates, Series 1997-II
Class A-1, Class X-0, Xxxxx X-0,
Class M-1, Class M-2, Class B Class
X, Class R-1 and Class R-2
SCHEDULE I
DESCRIPTION OF CERTAIN LITIGATION
None.
EXHIBIT A
CONTENTS OF MORTGAGE FILE
With respect to each Home Improvement Loan, the Mortgage File shall include
a copy of any of the following items delivered to the Co-Trustee and an original
of any of the other following items, all of which shall be available for
inspection by the Certificateholders:
1. The original Mortgage Note, endorsed "Pay to the order of holder" or
"Pay to the order of ______________" and signed in the name of the
Person delivering the note by a Responsible Officer, with all prior
and intervening endorsements showing a complete chain of endorsement
from the originator to such Person;
2. Either: (i) the original recorded Mortgage, with evidence of recording
thereon, (ii) a copy of the Mortgage certified as a true copy by a
Responsible Officer where the original has been transmitted for
recording until such time as the original is returned by the public
recording office or (iii) a copy of the Mortgage certified by the
public recording office in those instances where the original recorded
Mortgage has been lost.
3. Either (i) the original Assignment of Mortgage from the Person
delivering such Assignment to "Chase Manhattan Bank Delaware, as
Co-Trustee under the Pooling and Servicing Agreement dated as of May
31, 1997, Series 1997-II" with evidence of recording thereon
(provided, however, that where permitted under the laws of the
jurisdiction wherein the Mortgaged Property is located, the Assignment
of Mortgage may be effected by one or more blanket assignments for
Home Improvement Loans secured by Mortgaged Properties located in the
same county) or (ii) a copy of the Assignment of Mortgage certified as
a true copy by a Responsible Officer of the Originator where the
original was transmitted for recording (provided, however, that where
the original Assignment of Mortgage is not being delivered to the
Co-Trustee each such Responsible Officer may complete one or more
blanket certificates attaching copies of one or more of such
Assignments of Mortgage relating to the Mortgages originated by the
related Originator).
4. The original policy of title insurance or, if such policy has not yet
been delivered by the insurer, the commitment or binder to issue same,
or if the original principal balance of the Home Improvement Loan was
less than or equal to $15,000 or the Home Improvement Loan was not
originated by a Originator, other evidence of the status of title,
which shall consist of an attorney's opinion of title or certificate
of title, a preliminary title report, a property search, a title
search, a lot book report, a property information report or a report
entitled "prelim" or "PIRT" (property information report), and (ii)
proof of hazard insurance in the form of a hazard insurance policy or
hazard insurance policy endorsement that names the related Originator,
its successors and assigns, as a mortgagee/loss payee, and, if such
endorsement does not show the amount insured by the related hazard
insurance policy, some evidence of such amount.
5. Originals of all assumption and modification agreements, if any.
6. Either: (i) original intervening assignments, if any, showing a
complete chain of title from the originator to the Person delivering
such Assignment, including warehousing assignments, with recording
information thereon, if such assignments were recorded, (ii) copies of
any assignments certified as true copies by a Responsible Officer of
the Originator where the original has been transmitted for recording
until such time as the originals are returned by the public recording
office, or (iii) copies of any assignments certified by the public
recording office in those instances where the original recorded
assignments have been lost.
7. Home Improvement Loan closing statement and any other truth-in-lending
or real estate settlement procedure forms required by law.
8. Residential loan application.
9. Verification of employment and income, and tax returns, if any.
10. Credit report on the mortgagor.
11. Except with respect to certain Home Improvement Loans with original
principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Home Improvement Loan
with photographs of the subject property and of comparable properties
(if available), constituting evidence sufficient to indicate that the
Mortgaged Property relates to a Residential Dwelling and identifying
the type thereof.
12. Copy of any Prior Lien.
13. All other papers and records developed or originated by the Originator
or others, required to document the Home Improvement Loan or to
service the Home Improvement Loan.
14. Evidence of the inspection by the Originator of all improvements and
other goods and services provided under the Home Improvement Loan as
required under Section 3.02(rrr).
EXHIBIT B-1
FORM OF CLASS A-1, CLASS A-2 AND CLASS A-3 CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-II
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN CERTIFICATES
CLASS A-_
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, The Money Store
Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust described herein.)
No.: X-_-0 XXXX 00, 0000
Xxxxxxx Day
$
Original Scheduled Final CUSIP
Principal Amount Distribution
CEDE & CO.
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of a pool (the "Pool") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Mortgage Loans")
and certain related assets. The Certificates are issued pursuant to a Pooling
and Servicing Agreement, dated as of May 31, 1997 (the "Pooling and Servicing
Agreement"), among The Money Store Inc. (the "Representative," "Servicer" and
"Claims Administrator"), certain subsidiaries of the Representative (the
"Originators") and The Chase Manhattan Bank, as trustee (the "Trustee").
The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the
aggregate original principal amount of the Class A-_ Certificates on June 30,
1997 (the "Startup Day"), which aggregate amount on June 30, 1997 was
$__________. The Holder hereof is entitled to principal payments on each
Remittance Date, as hereinafter described, which will fully amortize such
Original Principal Amount over the period from the date of initial delivery
hereof to the final Remittance Date of the Class A-_ Certificates. Therefore,
the actual outstanding principal amount of this Certificate may, on any date
subsequent to the Remittance Date in July 1997 (the first Remittance Date) be
less than the Original Principal Amount set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER THAN THE
FHA LOANS INCLUDED IN THE POOL, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized Certificates
designated as The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class A- _ (the "Class A-_ Certificates"), and issued under
and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Home Improvement Loan Trust 1997-II, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-II, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-II,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class B (the "Class B Certificates"), The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class X (the
"Class X Certificates") and Certificates designated as The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class R-1
and Class R-2 (the "Class R Certificates"). The aforesaid Certificates are
collectively referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Remittance Date"),
commencing July 1997 the Holders of the Class A-_ Certificates as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive that portion of the Available Remittance Amount relating to
such Remittance Date as described in the Agreement. Except for the final
distribution, distributions will be made in immediately available funds to
Holders of the Class A- _ Certificates, by wire transfer or otherwise, to the
account of a Holder at a domestic bank or other entity having appropriate
facilities therefor, if such Holder has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class A-_ Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such Remittance
Date to the Holders of the Class A-_ Certificates. The Percentage Interest of
each Class A-_ Certificate as of any date of determination will be equal to the
percentage obtained by dividing the Original Principal Amount set forth on such
Class A-_ Certificate by $__________.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, The
Money Store Inc. or any of its subsidiaries or affiliates and, other than the
FHA Loans, are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier to occur of (i) the distribution to the
Certificateholders of all amounts required to be distributed to them thereunder
and (ii) at any time when a Qualified Liquidation of the Trust is effected;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of the survivor of the last lineal
descendant of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the
Court of St. Xxxxx, living on the Startup Date.
Written notice of the final distribution to be made with respect to the
Class A-_ Certificates shall be given by the Trustee to the Class A-_
Certificateholders after the Trustee determines that a final distribution is
required to be made, specifying (i) the final Remittance Date upon which final
distribution on the Class A-_ Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
The Holders of a majority of the Percentage Interests represented by the
Class X- 0, Class A-2, Class A-3, Class M-1, Class M-2, Class B Certificates,
upon compliance with the requirements set forth in the Pooling and Servicing
Agreement, have the right to exercise any trust or power set forth in the
Pooling and Servicing Agreement with respect to the Certificates or the Trust
Fund.
As provided in the Pooling and Servicing Agreement, the transfer of this
Certificate is registrable in the Register upon surrender of this Certificate
for registration of transfer at the office designated as the location of the
Register duly endorsed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like aggregate fractional undivided interest in the Trust Fund will be issued to
the designated transferee or transferees.
The Trustee is required to furnish certain information on each Remittance
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-_ Certificates are issuable only as registered Certificates in
the minimum Percentage Interest corresponding to a minimum denomination of
$1,000 original principal amount and integral multiples of $1,000. As provided
in the Pooling and Servicing Agreement, Class A-_ Certificates are exchangeable
for new Class A-_ Certificates of authorized denominations evidencing the same
aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Agreement as of the date of execution
of the policy, without giving effect to any subsequent amendment or modification
to the Agreement unless such amendment or modification has been approved in
writing by the Insurer.
Unless the certificate of authentication hereon has been executed by the
Trustee or an Authenticating Agent, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________
This is one of the Class A-_
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK
as Trustee
By:________________________
Authorized Signatory
Date: June 30, 1997
EXHIBIT B-2
FORM OF CLASS M-1 AND CLASS M-2 CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-II
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN CERTIFICATES
CLASS M
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, The Money Store
Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust described herein.)
No.: M-_-1 JUNE 30, 1997
Startup Day
$
----------------------- -------------------------- ------------
Original Scheduled Final CUSIP
Principal Amount Distribution
CEDE & CO.
-----------
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of a pool (the "Pool") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Mortgage Loans")
and certain related assets. The Certificates are issued pursuant to a Pooling
and Servicing Agreement, dated as of May 31, 1997 (the "Pooling and Servicing
Agreement"), among The Money Store Inc. (the "Representative," "Servicer" and
"Claims Administrator"), certain subsidiaries of the Representative (the
"Originators") and The Chase Manhattan Bank, as trustee (the "Trustee").
The Original Principal Amount set forth above is equal to the product of (i) the
Percentage Interest represented by this Certificate and (ii) the aggregate
original principal amount of the Class M-_ Certificates on June 30, 1997 (the
"Startup Day"), which aggregate amount on June 30, 1997 was $__________. The
Holder hereof is entitled to principal payments on each Remittance Date, as
hereinafter described, which will fully amortize such Original Principal Amount
over the period from the date of initial delivery hereof to the final Remittance
Date of the Class M-_ Certificates. Therefore, the actual outstanding principal
amount of this Certificate may, on any date subsequent to the Remittance Date in
July 1997 (the first Remittance Date) be less than the Original Principal Amount
set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER THAN THE
FHA LOANS INCLUDED IN THE POOL, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized Certificates
designated as The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class A- _ (the "Class A-_ Certificates"), and issued under
and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Home Improvement Loan Trust 1997-II, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-II, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-II,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class B (the "Class B Certificates"), The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class X (the
"Class X Certificates") and Certificates designated as The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class R-1
and Class R-2 (the "Class R Certificates"). The Class A, Class M-1, Class M-2,
Class B, Class X and Class R Certificates are collectively referred to herein as
the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Remittance Date"),
commencing July 1997 the Holders of the Class M-_ Certificates as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive that portion of the Available Remittance Amount relating to
such Remittance Date as described in the Agreement. Except for the final
distribution, distributions will be made in immediately available funds to
Holders of the Class M-_ Certificates, by wire transfer or otherwise, to the
account of a Holder at a domestic bank or other entity having appropriate
facilities therefor, if such Holder has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class M-_ Certificate will be entitled to
receive such Holder's Percentage Interest in the amounts due on such Remittance
Date to the Holders of the Class M-_ Certificates. The Percentage Interest of
each Class M-_ Certificate as of any date of determination will be equal to the
percentage obtained by dividing the Original Principal Amount set forth on such
Class M-_ Certificate by $__________.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, The
Money Store Inc. or any of its subsidiaries or affiliates and, other than the
FHA Loans, are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier to occur of (i) the distribution to the
Certificateholders of all amounts required to be distributed to them thereunder
and (ii) at any time when a Qualified Liquidation of the Trust is effected;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of the survivor of the last lineal
descendant of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the
Court of St. Xxxxx, living on the Startup Date.
Written notice of the final distribution to be made with respect to the
Class M-_ Certificates shall be given by the Trustee to the Class M-_
Certificateholders after the Trustee determines that a final distribution is
required to be made, specifying (i) the final Remittance Date upon which final
distribution on the Class M-_ Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
The Holders of a majority of the Percentage Interests represented by the
Class X- 0, Class A-2, Class A-3, Class M-1, Class M-2, Class B Certificates,
upon compliance with the requirements set forth in the Pooling and Servicing
Agreement, have the right to exercise any trust or power set forth in the
Pooling and Servicing Agreement with respect to the Certificates or the Trust
Fund.
As provided in the Pooling and Servicing Agreement, the transfer of this
Certificate is registrable in the Register upon surrender of this Certificate
for registration of transfer at the office designated as the location of the
Register duly endorsed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like aggregate fractional undivided interest in the Trust Fund will be issued to
the designated transferee or transferees.
The Trustee is required to furnish certain information on each Remittance
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class M-_ Certificates are issuable only as registered Certificates in
the minimum Percentage Interest corresponding to a minimum denomination of
$1,000 original principal amount and integral multiples of $1,000. As provided
in the Pooling and Servicing Agreement, Class M-_ Certificates are exchangeable
for new Class M-_ Certificates of authorized denominations evidencing the same
aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Agreement as of the date of execution
of the policy, without giving effect to any subsequent amendment or modification
to the Agreement unless such amendment or modification has been approved in
writing by the Insurer.
Unless the certificate of authentication hereon has been executed by the
Trustee or an Authenticating Agent, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________
This is one of the Class M-_
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK
as Trustee
By:________________________
Authorized Signatory
Date: June 30, 1997
EXHIBIT B-3
FORM OF CLASS B CERTIFICATES
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-II
[ %] THE MONEY STORE HOME IMPROVEMENT LOAN CERTIFICATES
CLASS B
Representing Certain Interests in a
Trust containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN
INTEREST IN A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment is made to Cede &
Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.
(This Certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, The Money Store
Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust described herein.)
No.: X-0 XXXX 00, 0000
Xxxxxxx Day
$
----------------- --------------- ---------
Original Scheduled Final CUSIP
Principal Amount Distribution
CEDE & CO.
------------
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of a pool (the "Pool") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Mortgage Loans")
and certain related assets. The Certificates are issued pursuant to a Pooling
and Servicing Agreement, dated as of May 31, 1997 (the "Pooling and Servicing
Agreement"), among The Money Store Inc. (the "Representative," "Servicer" and
"Claims Administrator"), certain subsidiaries of the Representative (the
"Originators") and The Chase Manhattan Bank, as trustee (the "Trustee").
The Original Principal Amount set forth above is equal to the product of
(i) the Percentage Interest represented by this Certificate and (ii) the
aggregate original principal amount of the Class B Certificates on June 30, 1997
(the "Startup Day"), which aggregate amount on June 30, 1997 was $__________.
The Holder hereof is entitled to principal payments on each Remittance Date, as
hereinafter described, which will fully amortize such Original Principal Amount
over the period from the date of initial delivery hereof to the final Remittance
Date of the Class B Certificates. Therefore, the actual outstanding principal
amount of this Certificate may, on any date subsequent to the Remittance Date in
July 1997 (the first Remittance Date) be less than the Original Principal Amount
set forth above.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER THAN THE
FHA LOANS INCLUDED IN THE POOL, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized Certificates
designated as The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class A- _ (the "Class A-_ Certificates"), and issued under
and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Home Improvement Loan Trust 1997-II, Home
Improvement Loan Certificates, Class A-_ (the "Class A-_ Certificates"), The
Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class A-_ (the "Class A-_ Certificates"), The Money Store Home
Improvement Trust 1997-II, Home Improvement Loan Certificates, Class M-1 (the
"Class M-1 Certificates"), The Money Store Home Improvement Loan Trust 1997-II,
Home Improvement Loan Certificates, Class M-2 (the "Class M-2 Certificates"),
The Money Store Home Improvement Loan Trust 1997-II, Home Improvement Loan
Certificates, Class B (the "Class B Certificates"), The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class X (the
"Class X Certificates") and Certificates designated as The Money Store Home
Improvement Loan Trust 1997-II, Home Improvement Loan Certificates, Class R-1
and Class R-2 (the "Class R Certificates"). The Class A, Class M-1, Class M-2,
Class B, Class X and Class R Certificates are collectively referred to herein as
the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Remittance Date"),
commencing July 1997 the Holders of the Class B Certificates as of the close of
business on the last day of the calendar month immediately preceding the
calendar month in which such Remittance Date occurs (the "Record Date") will be
entitled to receive that portion of the Available Remittance Amount relating to
such Remittance Date as described in the Agreement. Except for the final
distribution, distributions will be made in immediately available funds to
Holders of the Class B Certificates, by wire transfer or otherwise, to the
account of a Holder at a domestic bank or other entity having appropriate
facilities therefor, if such Holder has so notified the Trustee, or by check
mailed to the address of the person entitled thereto as it appears on the
Register.
Each Holder of record of a Class B Certificate will be entitled to receive
such Holder's Percentage Interest in the amounts due on such Remittance Date to
the Holders of the Class B Certificates. The Percentage Interest of each Class B
Certificate as of any date of determination will be equal to the percentage
obtained by dividing the Original Principal Amount set forth on such Class B
Certificate by $__________.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans insured or guaranteed by, The
Money Store Inc. or any of its subsidiaries or affiliates and, other than the
FHA Loans, are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account, all as more specifically set forth hereinabove and
in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right, which is absolute
and unconditional, to receive distributions to the extent provided in the
Pooling and Servicing Agreement with respect to such Certificate or to institute
suit for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier to occur of (i) the distribution to the
Certificateholders of all amounts required to be distributed to them thereunder
and (ii) at any time when a Qualified Liquidation of the Trust is effected;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of the survivor of the last lineal
descendant of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the
Court of St. Xxxxx, living on the Startup Date.
Written notice of the final distribution to be made with respect to the
Class B Certificates shall be given by the Trustee to the Class B
Certificateholders after the Trustee determines that a final distribution is
required to be made, specifying (i) the final Remittance Date upon which final
distribution on the Class B Certificates will be made upon presentation and
surrender of the Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Remittance Date is not applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
The Holders of a majority of the Percentage Interests represented by the
Class X- 0, Class A-2, Class A-3, Class M-1, Class M-2, Class B Certificates,
upon compliance with the requirements set forth in the Pooling and Servicing
Agreement, have the right to exercise any trust or power set forth in the
Pooling and Servicing Agreement with respect to the Certificates or the Trust
Fund.
As provided in the Pooling and Servicing Agreement, the transfer of this
Certificate is registrable in the Register upon surrender of this Certificate
for registration of transfer at the office designated as the location of the
Register duly endorsed by the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of like Class, tenor and a
like aggregate fractional undivided interest in the Trust Fund will be issued to
the designated transferee or transferees.
The Trustee is required to furnish certain information on each Remittance
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class B Certificates are issuable only as registered Certificates in
the minimum Percentage Interest corresponding to a minimum denomination of
$1,000 original principal amount and integral multiples of $1,000. As provided
in the Pooling and Servicing Agreement, Class B Certificates are exchangeable
for new Class B Certificates of authorized denominations evidencing the same
aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Agreement as of the date of execution
of the policy, without giving effect to any subsequent amendment or modification
to the Agreement unless such amendment or modification has been approved in
writing by the Insurer.
Unless the certificate of authentication hereon has been executed by the
Trustee or an Authenticating Agent, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:________________________
This is one of the Class B
Certificates referred to
in the within-mentioned
Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK
as Trustee
By:________________________
Authorized Signatory
Date: June 30, 1997
EXHIBIT B-4
THE MONEY STORE HOME IMPROVEMENT LOAN TRUST 1997-II
HOME IMPROVEMENT LOAN CERTIFICATE
CLASS R
Representing Certain Interests in a Trust
containing certain Mortgage
Loans formed by
THE MONEY STORE INC.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Mortgage Loans insured or guaranteed by, The Money Store
Inc. or any of its subsidiaries. This Certificate represents a fractional
ownership interest in the Trust Fund described herein.)
No.: R-_ JUNE 30, 1997
Startup Day
[.01%]
[99.99%] Percentage Interest ______________
Final Scheduled
Distribution
----------------------------------
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of a pool (the "Pool") of fixed rate single family residential first,
second and more junior home improvement mortgage loans (the "Mortgage Loans")
and certain related assets. The Certificates are issued pursuant to a Pooling
and Servicing Agreement, dated as of May 31, 1997 (the "Pooling and Servicing
Agreement"), among The Money Store Inc. (the "Representative," "Servicer" and
"Claims Administrator"), certain subsidiaries of the Representative (the
"Originators") and The Chase Manhattan Bank, as trustee (the "Trustee").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS, OTHER THAN THE
FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS AN INTEREST
IN THE ONLY "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G and 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
CODE. SUCH TERM INCLUDES THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION
THEREOF, ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE
INSTRUMENTALITIES), ANY COOPERATIVE ORGANIZATION FURNISHING ELECTRIC ENERGY OR
PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS, OR ANY ORGANIZATION
(OTHER THAN A FARMERS' COOPERATIVE) THAT IS EXEMPT FROM FEDERAL INCOME TAX
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX ON UNRELATED BUSINESS INCOME. NO
TRANSFER OF THIS CLASS R CERTIFICATE WILL BE REGISTERED BY THE CERTIFICATE
REGISTRAR UNLESS THE PROPOSED TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING,
AMONG OTHER THINGS, THAT THE PROPOSED TRANSFEREE IS NOT A DISQUALIFIED
ORGANIZATION AND IS NOT ACQUIRING THE CLASS R CERTIFICATE FOR THE ACCOUNT OF A
DISQUALIFIED ORGANIZATION. A COPY OF THE FORM OF AFFIDAVIT REQUIRED OF EACH
PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO A
SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THRU ENTITY THAT HOLDS THIS CLASS R CERTIFICATE AND
THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD HOLDER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THRU ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THRU" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
IN ADDITION, THE TAX SIMPLIFICATION ACT OF 1991 (H.R. 2777 AND S. 1394),
INTRODUCED ON JUNE 26, 1991, PROVIDES THAT EACH PARTNER IN A "LARGE PARTNERSHIP"
HOLDING A RESIDUAL INTEREST IN A REMIC SHALL BE TREATED AS A DISQUALIFIED
ORGANIZATION FOR PURPOSES OF THE TAX IMPOSED ON PASS-THRU ENTITIES UNDER SECTION
860E(e)(6) OF THE CODE. IF ENACTED, THIS DEFINITION WOULD BE EFFECTIVE FOR A
PASS-THRU ENTITY'S TAXABLE YEARS ENDING ON OR AFTER DECEMBER 31, 1992. NO
PREDICTION CAN BE MADE REGARDING WHETHER SUCH LEGISLATION WILL BE ENACTED OR IF
SO, WHAT THE ULTIMATE EFFECTIVE DATE WILL BE.
This Certificate is one of a Class of duly-authorized Certificates
designated as The Money Store Home Improvement Loan Trust 1997-II, Home
Improvement Certificates, Class R (the "Class R Certificates"), and issued under
and subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement in connection with
the Trust Fund are Certificates designated as The Money Store Home Improvement
Loan Trust 1997-II, Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class
B and Class X Certificates. Such Certificates and the Class R Certificates are
together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Remittance Date"),
commencing in July 1997, the Holders of the Class R Certificates as of the close
of business on the Startup Day with respect to the first Remittance Date and,
with respect to each Remittance Date thereafter, on the last day of the calendar
month immediately preceding the calendar month in which such Remittance Date
occurs (the "Record Date") will be entitled to receive the amounts due on such
Remittance Date to the Holders of the Class R Certificates. Except for the final
distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.
Each Holder of record of a Class R Certificate will be entitled to receive
such Holder's Percentage Interest in the amounts due on such Remittance Date to
the Holders of the Class R Certificates. The amounts due on each Remittance Date
are limited to certain residual amounts remaining after all amounts due to the
Holders of the Class A Certificates have been paid on such Remittance Date.
The Mortgage Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Mortgage Loans. No appointment of any
Subservicer shall release the Servicer from any of its obligations under the
Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Mortgage Loans, other than the FHA Loans,
insured or guaranteed by, The Money Store Inc. or any of its subsidiaries or
affiliates and are not insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, or any other
governmental agency. This Certificate is limited in right of payment to certain
collections and recoveries relating to the Mortgage Loans and amounts on deposit
in the Certificate Account all as more specifically set forth hereinabove and in
the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier to occur of (i) the distribution to the
Certificateholders of all amounts required to be distributed to them thereunder
and (ii) at any time when a Qualified Liquidation of the Trust is effected;
provided, however, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to
the Court of St. Xxxxx, living on the Startup Date.
Written notice of the final distribution to be made with respect to the
Class R Certificates shall be given by the Trustee to the Class R
Certificateholders, mailed promptly after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Remittance Date
upon which final distribution on the Class R Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final distribution and (iii)
that the Record Date otherwise applicable to such Remittance Date is not
applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The Trustee is required to furnish certain information on each Remittance
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Trustee or an Authenticating Agent, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:__________________________
Executive Vice President
This is one of the Class R-_
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE CHASE MANHATTAN BANK,
as Trustee
By: __________________
Authorized Signatory
Date: June 30, 1997
EXHIBIT B-5
THE MONEY STORE HOME IMPROVEMENT TRUST 1997-II
HOME IMPROVEMENT LOAN CERTIFICATE
CLASS X
Representing Certain Interests in a Trust
containing certain Home Improvement
Loans formed by
THE MONEY STORE INC.
THIS CERTIFICATE IS A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
THE CERTIFICATE WAS ISSUED ON JUNE 30, 1997. UNDER TREASURY REGULATIONS
RELATING TO ORIGINAL ISSUE DISCOUNT ("OID"), WHICH TAXPAYERS MAY RELY ON FOR
THIS CERTIFICATE, ALL PAYMENTS ON THE CERTIFICATE MAY BE TREATED AS PART OF THE
STATED REDEMPTION PRICE. IN THAT CASE, ASSUMING THAT EACH HOME IMPROVEMENT LOAN
UNDERLYING THIS CERTIFICATE PREPAYS IN ACCORDANCE WITH 100% PREPAYMENT
ASSUMPTION (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT, AS DEFINED BELOW)
(THE "PRICING ASSUMPTION"), THE FOLLOWING INFORMATION IS APPLICABLE UNDER
TREASURY REGULATION ss. 1.6049-7(g): (I) THE OID IS APPROXIMATELY $______ PER
$1,000 OF THE ORIGINAL NOTIONAL PRINCIPAL AMOUNT OF THIS CERTIFICATE; (II) THE
ANNUAL YIELD TO MATURITY OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING THE
ACCRUAL OF OID IS APPROXIMATELY _____% (COMPOUNDED MONTHLY); (III) THE TOTAL
AMOUNT OF OID ALLOCABLE TO THE FIRST SHORT ACCRUAL PERIOD (________, 1997 TO
________, 1997) IS APPROXIMATELY $____ PER $1,000 OF THE ORIGINAL PRINCIPAL
AMOUNT OF THIS CERTIFICATE; AND (IV) THE METHOD USED TO CALCULATE THE ANNUAL
YIELD TO MATURITY AND THE AMOUNT OF OID ALLOCABLE TO THE FIRST SHORT ACCRUAL
PERIOD IS THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE HOME IMPROVEMENT
LOANS WILL PREPAY AT A RATE BASED ON THE PRICING ASSUMPTION OR AT ANY OTHER
RATE. THE ACTUAL YIELD TO MATURITY ON THIS CERTIFICATE MAY DIFFER FROM THAT SET
FORTH ABOVE, AND THE ACCRUAL OF OID WILL BE ADJUSTED IN ACCORDANCE WITH SECTION
1272(a)(6) OF THE CODE, TO TAKE INTO ACCOUNT EVENTS WHICH HAVE OCCURRED DURING
ANY ACCRUAL PERIOD. THE PRICING ASSUMPTION IS INTENDED TO BE THE PREPAYMENT
ASSUMPTION REFERRED TO IN SECTION 1272(a)(6) OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
(This certificate does not represent an interest in, or an obligation of,
nor are the underlying Home Improvement Loans insured or guaranteed by, The
Money Store Inc. or any of its subsidiaries. This Certificate represents a
fractional ownership interest in the Trust Fund described herein.)
No.: X-1 JUNE 30, 1997
Startup Day
100% Percentage Interest AUGUST 15, 2028
---------------
Final Scheduled
Distribution
THE MONEY STORE INC.
Registered Holder
The registered Holder named above is the registered Holder of a fractional
interest in a trust fund (the "Trust Fund"), the trust estate of which consists
primarily of a pool of fixed rate, single family residential first, second and
more junior home improvement mortgage loans (the "Home Improvement Loans"),
certain of which loans (the "FHA Loans") are partially insured by the Federal
Housing Administration, and certain related assets. The Certificates are issued
pursuant to a Pooling and Servicing Agreement, dated as of May 31, 1997 (the
"Pooling and Servicing Agreement"), among The Money Store Inc. (the
"Representative" and "Servicer"), certain subsidiaries of the Representative
(the "Originators") and The Chase Manhattan Bank, as trustee (the "Trustee").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND, NOTWITHSTANDING
REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY PERSON IS
REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME IMPROVEMENT LOANS, OTHER
THAN THE FHA LOANS, ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
This Certificate is one of a Class of duly-authorized Certificates
designated as The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class X (the "Class X Certificates"), and issued under and
subject to the terms, provisions and conditions of the Pooling and Servicing
Agreement, to which Pooling and Servicing Agreement the Holder of this
Certificate by virtue of acceptance hereof assents and by which such Holder is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class A-1 (the "Class A-1 Certificates"), The Money Store
Home Improvement Trust 1997-II, Home Improvement Loan Certificates, Class A-2
(the "Class A-2 Certificates"), The Money Store Home Improvement Trust 1997-I,
Home Improvement Loan Certificates, Class A-3 (the "Class A-3 Certificates" and
together with the Class A-1 and Class A-2 Certificates, the "Class A
Certificates"), The Money Store Home Improvement Trust 1997-II, Home Improvement
Loan Certificates, Class M-1 (the "Class M-1 Certificates"), The Money Store
Home Improvement Trust 1997-II, Home Improvement Loan Certificates, Class M-2
(the "Class M-2 Certificates" and together with the Class M-1 Certificates, the
"Class M Certificates"), The Money Store Home Improvement Trust 1997-II, Home
Improvement Loan Certificates, Class B (the "Class B Certificates"), The Money
Store Home Improvement Trust 1997-II, Home Improvement Loan Certificates, Class
R-1 (the "Class R-1 Certificates") and The Money Store Home Improvement Trust
1997-II, Home Improvement Loan Certificates, Class R-2 (the "Class R-2
Certificates" and together with the Class R-1 Certificates, the "Class R
Certificates"). The Class A Certificates, Class M Certificates, Class B
Certificates, Class X Certificates and Class R Certificates are together
referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 15th day of each month, or, if such day is not a Business Day, then
the next succeeding Business Day (each such day being a "Remittance Date"),
commencing in July 1997, the Holders of the Class X Certificates as of the close
of business on the Startup Day with respect to the first Remittance Date and,
with respect to each Remittance Date thereafter, on the last day of the calendar
month immediately preceding the calendar month in which such Remittance Date
occurs (the "Record Date") will be entitled to receive the amounts due on such
Remittance Date to the Holders of the Class X Certificates. Except for the final
distribution, distributions will be made in immediately available funds to
Holders of Certificates, by wire transfer or otherwise, to the account of a
Holder at a domestic bank or other entity having appropriate facilities
therefor, if such Holder has so notified the Trustee, or by check mailed to the
address of the person entitled thereto as it appears on the Register.
Each Holder of record of a Class X Certificate will be entitled to receive
such Holder's Percentage Interest in the amounts due on such Remittance Date to
the Holders of the Class X Certificates. The amounts due on each Remittance Date
are limited to certain residual amounts remaining after all amounts due to the
Holders of the Class A Certificates, Class M Certificates and Class B
Certificates have been paid on such Remittance Date.
The Home Improvement Loans will be serviced by The Money Store Inc. (the
"Servicer") pursuant to the Pooling and Servicing Agreement. The Pooling and
Servicing Agreement permits the Servicer to enter into Subservicing Agreements
with certain institutions eligible for appointment as Subservicers for the
servicing and administration of certain Home Improvement Loans. No appointment
of any Subservicer shall release the Servicer from any of its obligations under
the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of, or an
interest in, nor are the underlying Home Improvement Loans insured or guaranteed
by, The Money Store Inc. or any of its subsidiaries or affiliates and, other
than the FHA Loans, are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Government National Mortgage Association, or any
other governmental agency. This Certificate is limited in right of payment to
certain collections and recoveries relating to the Home Improvement Loans and
amounts on deposit in the Certificate Account all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Holder shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Holder of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Holder.
The Pooling and Servicing Agreement provides that the obligations created
thereby will terminate upon the earlier to occur of (i) the distribution to the
Certificateholders of all amounts required to be distributed to them thereunder
and (ii) at any time when a Qualified Liquidation of the Trust is effected;
provided, however, that in no event shall the trust created thereby continue
beyond the expiration of 21 years from the death of the survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to
the Court of St. Xxxxx, living on the Startup Date.
Written notice of the final distribution to be made with respect to the
Class X Certificates shall be given by the Trustee to the Class X
Certificateholders, mailed promptly after the Trustee determines that a final
distribution is required to be made, specifying (i) the final Remittance Date
upon which final distribution on the Class X Certificates will be made upon
presentation and surrender of the Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final distribution and (iii)
that the Record Date otherwise applicable to such Remittance Date is not
applicable.
The final distribution on any Certificate shall only be made upon
presentation of such Certificate to the Trustee.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth and referred to on the face hereof, the transfer
of this Certificate is registrable in the Register upon surrender of this
Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of like Class,
tenor and a like aggregate fractional undivided interest in the Trust Fund will
be issued to the designated transferee or transferees.
The Trustee is required to furnish certain information on each Remittance
Date to the Holder of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class X Certificates are exchangeable for new
Class X Certificates evidencing the same aggregate Percentage Interest.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Trustee or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by the
Trustee or an Authenticating Agent, by manual signature, this Certificate shall
not be entitled to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Servicer has caused this Certificate to be duly
executed on behalf of the Trust Fund.
THE MONEY STORE INC.,
as Servicer
By:_____________________________________
This is one of the Class X
Certificates referred
to in the within-mentioned
Pooling and Servicing Agreement
THE CHASE MANHATTAN BANK,
as Trustee
By:
Authorized Signatory
Date: June ___, 1997
EXHIBIT C
PRINCIPAL AND INTEREST ACCOUNT LETTER AGREEMENT
June __, 1997
To: First Union National Bank of North Carolina
One First Union Center, TW-19
Charlotte, North Carolina. 28288 (the "Depository")
As "Servicer" under the Pooling and Servicing Agreement, dated as of May
31, 1997, The Money Store Home Improvement Loan Certificates, Series 1997-II,
Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class M-2, Class B and Class R (the
"Agreement"), we hereby authorize and request you to establish an account, as a
Principal and Interest Account pursuant to Section 5.03 of the Agreement, to be
designated as "The Money Store Inc., in trust for the registered holders of The
Money Store Home Improvement Loan Certificates, Series 1997-II, Class A-1, Class
X-0, Xxxxx X-0, Class M-1, Class M-2, Class B and Class R, and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. You may refuse any deposit which
would result in violation of the requirement that the account be fully insured
as described below. This letter is submitted to you in duplicate. Please execute
and return one original to us.
The Money Store Inc.
By:_________________________
Name:
Title:
The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number ________________, at the
office of the depository indicated above, and agrees to honor withdrawals on
such account as provided above. The amounts deposited at any time in the account
will be insured to the maximum amount provided by applicable law by the Federal
Deposit Insurance Corporation through the Bank Insurance Fund.
First Union National Bank of
North Carolina
(Name of Depository)
By:___________________________
Name:
Title:
EXHIBIT D
RESALE CERTIFICATION
_______________, 19__
[Representative]
[Servicer]
[Trustee]
[Co-Trustee]
[Certificate Registrar]
Re: Class R Certificate issued under the Pooling and Servicing Agreement,
The Money Store Home Improvement Loan Certificates, Series 1997-II
dated as of May 31, 1997, among The Chase Manhattan Bank, as Trustee,
The Money Store Inc. (the "Representative"), and certain subsidiaries
of the Representative
Dear Sirs:
___________________________________________ ("Seller") intends to transfer
the captioned Certificate to _______________ ("Purchaser"), for registration in
the name of -------------------------.
1. In connection with such transfer, and in accordance with Section 4.02 of
the captioned Agreement, Seller hereby certifies to you the following facts:
Neither the Seller nor anyone acting on its behalf has offered, transferred,
pledged, sold or otherwise disposed of the Certificate, any interest in the
Certificate or any other similar security to, or solicited any offer to buy or
accept a transfer, pledge or other disposition of the Certificate, any interest
in the Certificate or any other similar security with, any person in any manner,
or made any general solicitation by means of general advertising or in any other
manner, or taken any other action which would constitute a distribution of the
Certificate under the Securities Act of 1933, as amended (the "1933 Act"), or
which would render the disposition of the Certificate a violation of Section 5
of the 1933 Act or require registration pursuant thereto.
2. The Purchaser warrants and represents to, and covenants with, the
Seller, the Trustee and the Servicer pursuant to Section 4.02 of the Pooling and
Servicing Agreement that:
a. The Purchaser agrees to be bound, as Certificateholder, by all of the
terms, covenants and conditions of the Pooling and Servicing Agreement, the
Certificate and the Custodial Agreement, and from and after the date hereof, the
Purchaser assumes for the benefit of each of the Servicer and the Seller all of
the Seller's obligations as Certificateholder thereunder;
b. The Purchaser understands that the Certificate has not been registered
under the 1933 Act or the securities laws of any state;
c. The Purchaser is acquiring the Certificate for investment for its own
account or the account of another qualified institutional buyer (within the
meaning of Rule 144A) only and not for any other person;
d. The Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Certificate;
e. The Purchaser has been furnished with all information regarding the
Certificate that it has requested from the Seller, the Trustee or the Servicer;
and
f. Neither the Purchaser nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of the Certificate, any
interest in the Certificate or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificate, any interest in the Certificate or any other similar security from,
or otherwise approached or negotiated with respect to the Certificate, any
interest in the Certificate or any other similar security with, any person
(other than a qualified institutional buyer within the meaning of Rule 144A) in
any manner, or made any general solicitation by means of general advertising or
in any other manner, or taken any other action which would constitute a
distribution of the Certificate under the 1933 Act or which would render the
disposition of the Certificate a violation of Section 5 of the 1933 Act or
require registration pursuant thereto, nor will it act, nor has it authorized or
will it authorize any person to act, in such manner with respect to the
Certificate.
[The following is to be completed if transfer is being made pursuant to
Rule 144A].
3. The Purchaser understands and agrees with the Seller that the Seller is
transferring the Certificate pursuant to the exemption from registration under
the 1933 Act provided by Rule 144A thereunder ("Rule 144A") and the Purchaser
hereby represents and warrants to the Seller, the Trustee and the Servicer that
the Purchaser is a "qualified institutional buyer" as defined in Rule 144A
because (i) the Purchaser owned and/or invested on a discretionary basis
$_________/ in securities (except for the excluded securities referred to below)
as of the end of the Purchaser's most recent fiscal year (such amount being
calculated in accordance with Rule 144A) and (ii) the Purchaser satisfies the
criteria in the category marked below.
--------
1/ The Purchaser must own and/or invest on a discretionary basis at
least $100,000,000 in securities unless Buyer is a dealer, and,
in that case, Buyer must own and/or invest on a discretionary
basis at least $10,000,000 in securities.
|-|
___ CORPORATION, ETC. The Purchaser is a corporation other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
|-|
___ BANK. The Purchaser (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business of
which is substantially confined to banking and is
supervised by the State or territorial banking
commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
|-|
___ SAVINGS AND LOAN. The Purchaser (a) is a savings
and loan association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
state or Federal authority having supervision over any
such institutions or is a foreign savings and loan
association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
|-|
___ BROKER-DEALER. The Purchaser is a dealer registered
pursuant to Section 15 of the Securities Exchange Act
of 1934.
|-|
___ INSURANCE COMPANY. The Purchaser is an insurance
company whose primary and predominant business
activity is the writing of insurance or the reinsuring
of risks underwritten by insurance companies and which
is subject to supervision by the insurance
commissioner or a similar official or agency of a
State, territory or the District of Columbia.
The term "Securities" as used herein does not include (i) securities of
issuers that are affiliated with the Purchaser, (ii) securities that are part of
an unsold allotment to or subscription by the Purchaser (if the Purchaser is a
dealer), (iii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iv) bank deposit notes and certificates of deposit,
(v) loan participation, (vi) repurchase agreements, (vii) securities owned but
subject to a repurchase agreement and (viii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Purchaser, the Purchaser used the cost
of such securities to the Purchaser and did not include any of the securities
referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may have
included securities owned by subsidiaries of the Purchaser, but only if such
subsidiaries are consolidated with the Purchaser in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investment of such subsidiaries are managed under the Purchaser's direction.
However, such securities were not included if the Purchaser is a majority owned,
consolidated subsidiary of another enterprise and the Purchaser is not itself a
reporting company under the Securities Exchange Act of 1934.
The Purchaser acknowledges that it is familiar with Rule 144A and
understands that you are and will continue to rely on the statements made
herein.
The Purchaser agrees to notify you of any changes in the information and
conclusions herein. Until such notice is given to you, the Purchaser's purchase
of the Certificate will constitute a reaffirmation of the foregoing
certifications and acknowledgments as of the date of such purchase.
Further, if the Purchaser is a bank or savings and loan as provided above,
the Purchaser agrees that it will furnish the Seller with updated annual
financial statements promptly after they become available.
4. The Purchaser warrants and represents to, and covenants with, the
Seller, the Servicer, the Trustee and the Representative that:
a. The Purchaser agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement; and
b. Either: (1) the Purchaser is not an employee benefit plan within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), ("Plan") or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code") (also a "Plan"), and
the Purchaser is not directly or indirectly purchasing the Certificates on
behalf of, as investment manager of, as named fiduciary of, as trustee of, or
with assets of a Plan; or (2) Purchaser shall deliver the opinion of counsel
required pursuant to Section 4.02(c) of the Pooling and Servicing Agreement.
5. This Certification may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Resale Certification to be
executed by their duly authorized officers as of the date first above written.
-------------------- -------------------------
Seller Purchaser
By: By:
Its: Its:
Taxpayer Taxpayer
Identification No. Identification No.
EXHIBIT E
ASSIGNMENT
THIS ASSIGNMENT dated as of the ____ day of __________, 19__, by and
between _________________________, ("Assignor") and _________________________
("Assignee"), provides:
That for and in consideration of the sum of TEN DOLLARS ($10.00) and other
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereby agree as follows:
1. Assignor hereby grants, transfers and assigns to Assignee all of the
right, title and interest of Assignor, as Certificateholder, in, to and under
that certain Pooling and Servicing Agreement, The Money Store Home Improvement
Loan Certificates, Series 1997-II, Class A-1, Class X-0, Xxxxx X-0, Class M-1,
Class M-2, Class B, Class X and Class R (the "Pooling and Servicing Agreement"),
dated as of May 31, 1997 by and among The Chase Manhattan Bank, as Trustee
("Trustee"), and The Money Store Inc., as Representative, Servicer and Claims
Administrator, and the Originators, and that certain Certificate, Class R No. __
Series 1997-II (the "Certificate") issued thereunder by the Servicer.
2. For the purpose of inducing Assignee to purchase the Certificate from
Assignor, Assignor warrants and represents that:
a. Assignor is the lawful owner of the Certificate with the full right to
transfer the Certificate free from any and all claims and encumbrances
whatsoever;
b. The Assignor has not received notice, and has no knowledge, of any
offsets, counterclaims or other defenses available to the Servicer with respect
to the Pooling and Servicing Agreement or the Certificate; and
c. The Assignor has no knowledge of and has not received notice of any
amendments to the Pooling and Servicing Agreement or the Certificate.
3. By execution hereof Assignee agrees to be bound, as Certificateholder,
by all of the terms, covenants and conditions of the Pooling and Servicing
Agreement, and the Certificate and from and after the date hereof Assignee
assumes for the benefit of each of the Servicer, the Representative, the Trustee
and the Assignor all of Assignor's obligations as Certificateholder thereunder.
4. The Assignee warrants and represents to, and covenants with, the
Assignor, the Representative and the Servicer that:
a. The Assignee agrees to be bound, as Certificateholder, by the
restrictions on transfer contained in the Pooling and Servicing Agreement; and
b. Either: (1) the Assignee is not an employee benefit plan within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), ("Plan") or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986 ("Code") (also a "Plan"), and
the Assignee is not directly or indirectly purchasing the Certificates on behalf
of, as investment manager of, as named fiduciary of, as trustee of, or with
assets of a Plan; or (2) Assignee shall deliver the opinion of counsel required
pursuant to Section 4.02(c) of the Pooling and Servicing Agreement.
5. This Assignment may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
WITNESS the following signatures.
----------------- ------------------
By_______________ By________________
Its_______________ Its________________
Taxpayer Taxpayer
Identification No. Identification No.
----------- -----------
By Its By Its
----------------- -----------------------------
Taxpayer Taxpayer
Identification No. Identification No.
----------- -----------
EXHIBIT E(1)
WIRING INSTRUCTIONS FORM
_______________, 19__
[Paying Agent]
[Trustee]
========================
------------------------
Re: The Money Store Home Improvement Loan Certificates, Series 1997-II
[Class A- 1][Class A-2][Class A-3][Class M-1][Class M-2][Class
B][Class X][Class R], Number ___ Issued by The Money Store Inc., as
Servicer
Dear Sir:
In connection with the sale of the above-captioned Certificate by
___________________________________ to ____________________________________,
("Transferee") you, as Paying Agent with respect to the related Mortgages Loans,
are instructed to make all remittances to Transferee as Certificateholder as of
____________, 19__ by wire transfer. For such wire transfer, the wiring
instructions are as follows:
--------------------------------
--------------------------------
--------------------------------
Transferee
Certificateholder's mailing address:
Name:
Address:
EXHIBIT F
FORM OF CUSTODIAN INITIAL CERTIFICATION
_____________, 1997
The Money Store, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Xxxxxx Brothers Inc., as
representative of the Underwriters
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Pooling and Servicing Agreement The Money Store Home Improvement Loan
Certificates, Series 1997-II, dated as of May 31, 1997 among The Money
Store Inc. as Representative, Servicer and Claims Administrator, the
Originators and The Chase Manhattan Bank, as Trustee
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, if any (the "Loan Exception Report"),
it has received an Assignment of Mortgage, or a certified copy thereof, and a
Mortgage Note with respect to each Initial Home Improvement Loan listed in the
Home Improvement Loan Schedule and the documents contained therein appear to
bear original signatures.
The Custodian has made no independent examination of any such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Custodian makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Home Improvement Loans identified on the Home
Improvement Loan Schedule, or (ii) the collectability, insurability,
effectiveness or suitability of any such Home Improvement Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By: ________________________
Name: ___________________
Title: ____________________
EXHIBIT F-1
FORM OF CUSTODIAN INTERIM CERTIFICATION
_______________, 1997
The Money Store Inc.
0000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
Xxxxxx Brothers Inc., as
representative of the Underwriters
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Re: Pooling and Servicing Agreement The Money Store Home Improvement Loan
Certificates, Series 1997-II, dated as of May 31, 1997 among The Money
Store Inc. as Representative, Servicer and Claims Administrator, the
Originators and The Chase Manhattan Bank, as Trustee Gentlemen:
In accordance with Section 2.05 of the above-referenced Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that as to
each [Initial] [Subsequent] Home Improvement Loan listed in the Home Improvement
Loan Schedule (other than any [Initial] [Subsequent] Home Improvement Loan paid
in full or any [Initial] [Subsequent] Home Improvement Loan listed on the
attachment hereto), it has reviewed the documents delivered to it pursuant to
Section 2.04 (other than items listed in Section 2.04(d)(ii)) of the Pooling and
Servicing Agreement and has determined that (i) all such documents are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged, torn or otherwise physically altered and relate to such Home
Improvement Loan, (iii) based on its examination and only as to the foregoing
documents, the information set forth in the Home Improvement Loan Schedule
respecting such [Initial] [Subsequent] Home Improvement Loan is correct and (iv)
each Mortgage Note has been endorsed as provided in Section 2.04 of the Pooling
and Servicing Agreement. Further, [except for Mortgaged Properties relating to
Home Improvement Loans identified on the Home Improvement Loan Schedule by an
account number beginning with __________ or ________,] each Mortgaged Property
is a Residential Dwelling of the type set forth in the appraisal obtained in
connection with the origination of the related Home Improvement Loan, and for
each Home Improvement Loan with an original principal balance in excess of
$15,000 for which the documents in the possession of the Custodian indicate that
the related Originator conducted a drive-by appraisal pursuant to FHLMC Form 704
or alternative FNMA Form in connection with originating such Home Improvement
Loan, such Home Improvement Loan (A) had an original principal balance not in
excess of $35,000, and (B) has a Loan-to-Value Ratio less than 50% (based solely
on the LTV included on the Home Improvement Loan Schedule) and/or an appraisal
on FNMA/FHLMC Form 1004 was performed by the related Originator within one year
prior to the origination of such Home Improvement Loan. The Custodian has made
no independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Custodian
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Home
Improvement Loans identified on the Home Improvement Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Home
Improvement Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By: ________________________
Name: ___________________
Title: ____________________
EXHIBIT G
FORM OF CUSTODIAN FINAL CERTIFICATION
[date]
[Servicer]
[Certificateholders]
[Representative]
Re: Pooling and Servicing Agreement dated as of May 31, 1997 among The
Money Store Inc. as Representative, Servicer and Claims Administrator,
the Originators and The Chase Manhattan Bank, as Trustee, The Money
Store Home Improvement Loan Certificates, Series 1997-II
Gentlemen:
In accordance with Section 2.05 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Custodian, hereby certifies that,
except as noted on the attachment hereto, as to each Home Improvement Loan
listed in the Home Improvement Loan Schedule (other than any Home Improvement
Loan paid in full or listed on the attachment hereto) it has reviewed the
documents delivered to it pursuant to Section 2.04 (other than items listed in
Section 2.04(d)(ii)) of the Pooling and Servicing Agreement and has determined
that (i) all such documents are in its possession, (ii) such documents have been
reviewed by it and have not been mutilated, damaged, torn or otherwise
physically altered and relate to such Home Improvement Loan, (iii) based on its
examination, and only as to the foregoing documents, the information set forth
in the Home Improvement Loan Schedule respecting such Home Improvement Loan is
correct and (iv) each Mortgage Note has been endorsed as provided in Section
2.04 of the Pooling and Servicing Agreement. Further, [except for Mortgaged
Properties relating to Home Improvement Loans identified on the Home Improvement
Loan Schedule by an account number beginning with _______ or _______,] each
Mortgaged Property is a Residential Dwelling of the type set forth in the
appraisal obtained in connection with the origination of the related Home
Improvement Loan, and for each Home Improvement Loan with an original principal
balance in excess of $15,000 for which the documents in the possession of the
Custodian indicate that the related Originator conducted a drive-by appraisal
pursuant to FHLMC Form 704 or alternative FNMA Form in connection with
originating such Home Improvement Loan, such Home Improvement Loan (A) had an
original principal balance not in excess of $35,000, and (B) has a Loan-to-Value
Ratio less than 50% (based solely on the LTV included on the Home Improvement
Loan Schedule) and/or an appraisal on FNMA/FHLMC Form 1004 was performed by the
related Originator within one year prior to the origination of such Home
Improvement Loan. The Custodian has made no independent examination of such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Custodian makes no representations as to:
(i) the validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Home Improvement Loans identified on the Home
Improvement Loan Schedule, or (ii) the collectabil ity, insurability,
effectiveness or suitability of any such Home Improvement Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By: ________________________
Name: ___________________
Title: ____________________
EXHIBIT H
HOME IMPROVEMENT LOAN SCHEDULE
[To Be Delivered to Co-Trustee]
EXHIBIT I
LIST OF ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
EXHIBIT J
REQUEST FOR RELEASE OF DOCUMENTS
To: [Custodian]
[Trustee]
Re: Pooling and Servicing Agreement, The Money Store Home
Improvement Loan Certificates, Series 1997-II, dated as
of May 31, 1997
In connection with the administration of the pool of Loans held by you as
Custodian for the Certificateholders and agent for the Co-Trustee, we request
the release, and acknowledge receipt, of the (Trustee's Mortgage File/[specify
document]) for the Home Improvement Loan described below, for the reason
indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
HOME IMPROVEMENT LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (CHECK ONE)
____ 1. Home Improvement Loan Paid in Full
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Principal and
Interest Account and remitted to the Trustee for deposit into
the Certificate Account pursuant to the Pooling and Servicing
Agreement.)
____ 2. Home Improvement Loan Liquidated
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been finally received and
credited to the Principal and Interest Account and remitted to
the Trustee for deposit into the Certificate Account pursuant
to the Pooling and Servicing Agreement.)
____ 3. Home Improvement Loan in Foreclosure
_____4. Home Improvement Loan Purchased Pursuant to Section 11.01
of the Pooling and Servicing Agreement.
_____5. Home Improvement Loan Repurchased or Substituted Pursuant to
Article II or III of the Pooling and Servicing Agreement
(Servicer hereby certifies that the repurchase price or
Substitution Adjustment has been credited to the Principal and
Interest Account and remitted to the Trustee for deposit into
the Certificate Account pursuant to the Pooling and Servicing
Agreement.)
____ 6. Other (explain) ____________________________
If box 1 or 2 above is checked, and if all or part of the Trustee's
Mortgage File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your possession
relating to the above specified Home Improvement Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Custodian, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
THE MONEY STORE INC.
By:____________________________
Name:__________________________
Date:__________________________
Documents returned to Custodian:
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
EXHIBIT J-1
REQUEST FOR RELEASE OF DOCUMENTS OF
90 DAY DELINQUENT FHA LOANS
To: [Custodian]
Re: Pooling and Servicing Agreement, The Money Home Improvement Loan
Certificates, Series 1997-II, dated as of May 31, 1997
In connection with the administration of the pool of Home Improvement Loans
held by you as Custodian and agent for the Co-Trustee, we request the release,
and acknowledge receipt, of the (Trustee's Mortgage File/[specify document]) for
the 90 Day Delinquent FHA Loan described below, for the reason indicated.
MORTGAGOR'S NAME, ADDRESS & ZIP CODE:
HOME IMPROVEMENT LOAN NUMBER:
Upon receipt of this request, please execute and deliver such 90 Day Delinquent
FHA Loan to us.
THE MONEY STORE INC.
By:__________________________
Name:________________________
Date:________________________
Documents returned to Custodian:
-------------------------------
Custodian
By:____________________________
Date:__________________________
EXHIBIT K
TRANSFER AFFIDAVIT
STATE OF ____________)
) ss:
COUNTY OF ___________)
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is a of , the proposed transferee (the "Transferee") of
a Percentage Interest in a Class R Certificate (the "Certificate") issued
pursuant to the Pooling and Servicing Agreement, The Money Store Home
Improvement Loan Certificates, Series 1997- II, Class A-1, Class X-0, Xxxxx X-0,
Class M-1, Class M-2, Class B, Class X and Class R, dated as of May 31, 1997,
(the "Agreement"), among The Money Store Inc., as Representative, Servicer (the
"Servicer") and claims administrator ("Claims Administrator"), the Originators
and The Chase Manhattan Bank, as Trustee. Capitalized terms used, but not
defined herein shall have the meanings ascribed to such terms in the Agreement.
The Transferee has authorized the undersigned to make this affidavit on behalf
of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the transfer, a Permitted Transferee. The Transferee is acquiring its Percentage
Interest in the Certificate either (i) for its own account or (ii) as nominee,
trustee or agent for another Person and has attached hereto an affidavit from
such Person in substantially the same form as this affidavit. The Transferee has
no knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax will
be imposed on transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of transfer, such Person
does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is a record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
5. The Transferee has reviewed the provisions of Section 4.02 of the
Agreement (incorporated herein by reference) and understands the legal
consequences of the acquisition of a Percentage Interest in the Certificate
including, without limitation, the restrictions on subsequent Transfers and the
provisions regarding voiding the Transfer and mandatory sales. The Transferee
expressly agrees to be bound by and to abide by the provisions of Section 4.02
of the Agreement and the restrictions noted on the face of the Certificate. The
Transferee understands and agrees that any breach of any of the representations
included herein shall render the transfer to the Transferee contemplated hereby
null and void.
6. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to transfer its Percentage Interest in the
Certificate, and in connection with any transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
transfer its Percentage Interest or cause any Percentage Interest to be
transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate (a "Transfer
Certificate") to the effect that such Transferee has no actual knowledge that
the Person to which the transfer is to be made is not a Permitted Transferee.
7. The Transferee's taxpayer identification number is ___________________.
8. Section references and defined terms not defined herein have the
meanings ascribed thereto in the Agreement.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this day of , 19__.
[NAME OF TRANSFEREE]
By:_____________________________
Name:___________________________
Title:__________________________
[Corporate seal]
ATTEST:
-------------------------
[Assistant] Secretary
Personally appeared before me the above-named , known or proved to me to be
the same person who executed the foregoing instrument and to be the of the
Transferee, and acknowledged that he executed the same as his free act and deed
and the free act and deed of the Transferee.
Subscribed and sworn before me this day of , 19__.
-------------------------
NOTARY PUBLIC
My Commission expires the ____ day of __________, 19__.
EXHIBIT L
[OMITTED]
EXHIBIT M
FORM OF CUSTODIAL AGREEMENT
(The Money Store Home Improvement Loan Certificates,
Series 1997-II)
Dated: June __, 1997
CHASE MANHATTAN BANK DELAWARE, a banking corporation organized under the
laws of the State of Delaware and headquartered in Wilmington, Delaware, as
trustee (the "Trustee"), and FIRST TRUST NATIONAL ASSOCIATION, a national
banking association headquartered in St. Xxxx, Minnesota, as custodian (the
"Custodian"), agree as follows:
WHEREAS, the Trustee, the Originators and The Money Store Inc. ("The Money
Store") have entered into a Pooling and Servicing Agreement dated as of May 31,
1997 (the "Pooling Agreement") relating to The Money Store Home Improvement Loan
Certificates, Series 1997-II, Class A-1, Class X-0, Xxxxx X-0, Class M-1, Class
M-2, Class B, Class X, Class R-1 and Class R-2 (the applicable provisions of
which Pooling Agreement have been accepted and agreed to by the Custodian in
connection with the Mortgage Loans), pursuant to which the Originators
transferred, assigned, set-over and otherwise conveyed to the Co-Trustee,
without recourse, all of the Originator's right, title and interest in and to
the mortgage loans identified in Exhibit H to the Pooling Agreement; and
WHEREAS, the Co-Trustee wishes to appoint the Custodian to hold the
Co-Trustee's Mortgage Files relating to the Mortgage Loans as its custodian:
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the Custodian and the Co-Trustee agree as follows:
1. Appointment as Custodian; Acknowledgment of Receipt. Subject to the
terms and conditions herein, the Co-Trustee hereby appoints the Custodian, and
the Custodian hereby accepts such appointment, as its custodian to maintain
custody of the Co-Trustee's Mortgage Loan Files relating to the Mortgage Loans.
The Custodian hereby acknowledges that it has possession of the Co-Trustee's
Mortgage Files relating to the Mortgage Loans, except as noted on the document
exception listing previously delivered to The Money Store or to be delivered to
The Money Store and the Co-Trustee in accordance with the Pooling Agreement.
2. Custodial Account. The Custodian agrees to open a segregated custody
account in the Co-Trustee's name with itself at its office in St. Xxxx,
Minnesota or at such other of its offices in the State of Minnesota as shall
from time to time be identified to the Co-Trustee upon 30 days' prior written
notice, where the Co-Trustee's Mortgage Files relating to the Mortgage Loans
will be held on behalf of the Co-Trustee.
3. Duties of Custodian. As Custodian, the Custodian shall have and perform
the following powers and duties:
(a) Safekeeping. The Custodian will hold the Co-Trustee's Mortgage Files
relating to the Mortgage Loans on behalf of the Co-Trustee. The Custodian will
promptly report to the Co-Trustee any failure on its part to hold the
Co-Trustee's Mortgage Files relating to the Mortgage Loans as herein provided
and promptly take appropriate action to remedy any such failure.
(b) Access to Co-Trustee's Mortgage Files. The Custodian will, subject to
security requirements of the Custodian applicable to its own employees having
access to similar records held by the Custodian and such regulations as may be
reasonably imposed by the Custodian, permit The Money Store, the Co-Trustee or
the Servicer or any of their duly authorized representatives, attorneys or
auditors to inspect the Co-Trustee's Mortgage Files relating to the Mortgage
Loans at such times as the Co-Trustee may reasonably request.
(c) Release of Documents. The Custodian will release any Mortgage Loan to
the Servicer for servicing by the Servicer or to The Money Store for purchase by
The Money Store, all as provided in the Pooling Agreement.
(d) Administration; Reports. The Custodian will, in general, attend to all
non- discretionary details in connection with maintaining custody of the
Co-Trustee's Mortgage Files relating to the Mortgage Loans on behalf of the
Co-Trustee. In addition, the Custodian shall assist The Money Store, the
Co-Trustee and the Servicer generally in the preparation of routine reports to
Certificateholders or to regulatory bodies, if any, to the extent necessitated
by the Custodian's custody of the Co-Trustee's Mortgage Files relating to the
Mortgage Loans.
4. Instructions; Authority to Act. The Custodian shall be deemed to have
received proper instructions with respect to the Co-Trustee's Mortgage Files
relating to the Mortgage Loans upon its receipt of written instructions signed
by a Responsible Officer of the Co-Trustee. A certified copy of a resolution of
the Board of Directors of the Co-Trustee may be received and accepted by the
Custodian as conclusive evidence of the authority of any such officer to act and
may be considered as in full force and effect until receipt of written notice to
the contrary by the Co-Trustee. Such instructions may be general or specific in
terms.
5. Custodial Fee. For its services under this Agreement, the Custodian
shall be entitled to reasonable compensation from the Servicer pursuant to the
fee proposal signed and accepted by the Servicer.
6. Indemnification by the Custodian. The Custodian agrees to indemnify the
Co-Trustee for any and all liabilities, obligations, losses, damages, payments,
costs or expenses, including attorneys' fees, of any kind whatsoever which may
be imposed on, incurred by or asserted against the Co-Trustee as the result of
any act or omission in any way relating to the maintenance and custody by the
Custodian of the Co-Trustee's Mortgage Files relating to the Mortgage Loans;
provided, however, that the Custodian shall not be liable for consequential
damages of any kind or any portion of any such liabilities, obligations, losses,
damages, payments or costs due to the misconduct of the Co-Trustee.
7. Advice of Counsel. The Custodian and the Co-Trustee further agree that
the Custodian shall be entitled to rely and act upon advice of counsel with
respect to its performance hereunder as Custodian and shall be without liability
for any action reasonably taken pursuant to such advice, provided that such
action is not in violation of applicable Federal or State law.
8. Effective Period, Termination and Amendment, and Interpretive and
Additional Provisions. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, may be amended at any time by mutual agreement of the
parties hereto and may be terminated by the Co-Trustee in a writing delivered or
mailed to the Custodian and The Money Store, postage prepaid, such termination
to take effect no sooner than sixty (60) days after the date of such delivery or
mailing. Concurrently with, or as soon as practicable after any such
termination, the Custodian shall assemble the Trustee's Mortgage Files relating
to the Mortgage Loans and return them to the Co-Trustee at such place as the
Co-Trustee may reasonably designate. In connection with the administration of
this Agreement, the Custodian and the Co-Trustee may agree from time to time
upon the interpretation of the provisions of this Agreement as may in their
joint opinion be consistent with the general tenor and purposes of this
Agreement, any such interpretation to be signed by all parties and annexed
hereto.
9. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Minnesota.
10. Notices. Notices and other writings shall be delivered or mailed,
postage prepaid, to the Co-Trustee at Chase Manhattan Bank Delaware, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000; Attention: Xxxx X. Xxxxxx or to the
Custodian at First Trust National Association, 000 Xxxx Xxxxx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000, Attention: Xxxx Xxxxx, or to such other address as the
Co-Trustee or the Custodian may hereafter specify in writing, shall be
conclusively presumed to have been duly given hereunder to the respective party,
whether or not such party receives such notice.
11. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the Co-Trustee and the Custodian and their respective successors
and assigns. Concurrently with the appointment of a successor Co-Trustee as
provided in the Pooling Agreement, the Co- Trustee and the Custodian shall amend
this Agreement to make said successor Co-Trustee the successor to the Co-Trustee
hereunder.
12. Terms. Capitalized terms not otherwise defined in this Agreement shall
have the respective meanings given to them in the Pooling Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
CHASE MANHATTAN BANK DELAWARE
as Co-Trustee under the Pooling
Agreement referred to above
By:
Its:
By:
Its:
FIRST TRUST NATIONAL ASSOCIATION,
as Custodian under the Pooling
Agreement referred to above
By:
Its:
By:
Its:
EXHIBIT N
FORM OF LIQUIDATION REPORT
Customer Name:
Account number:
Original Principal Balance:
1. Liquidation Proceeds
Principal Prepayment $ ________
Property Sale Proceeds ________
Insurance Proceeds ________
Other (Itemize) ________
Total Proceeds $_______
2. Servicing Advances $ ________
Monthly Advances ________
Total Advances $_______
3. Net Liquidation Proceeds $_______
(Line 1 minus Line 2)
4. Principal Balance of the Mortgage
Loan on date of liquidation $_______
5. Realized (Loss) or Gain $_______
(Line 3 minus Line 4)
EXHIBIT O
FORM OF DELINQUENCY REPORT
DELINQUENCY AND FORECLOSURE INFORMATION
REO FORECLOSURES
OUTSTANDING # # OF # OF OUTSTANDING # OF
OUTSTANDING
INVESTOR DOLLARS ACCT RANGES AMOUNT ACCTS. PCT ACCTS
DOLLARS % ACCTS DOLLARS %
1 TO 29 DAYS
30 TO 59 DAYS
60 TO 89 DAYS
90 AND OVER
TOTALS
EXHIBIT P
[OMITTED]
EXHIBIT Q
[OMITTED]
EXHIBIT R
SERVICER'S MONTHLY COMPUTER TAPE FORMAT
The computer tape to be delivered to the Trustee pursuant to Section 6.10
shall contain the following information for each Home Improvement Loan as of the
related Record Date:
1. Name of the Mortgagor, address of the Mortgaged Property and Account
Number.
2. The LTV as of the origination date of the Home Improvement Loan.
3. The Due Date.
4. The Home Improvement Loan Original Principal Balance.
5. The Mortgage Interest Rate.
6. The Monthly Payment.
7. The date on which the last payment was received and the amount of such
payment segregated into the following categories; (a) total interest
received (including Servicing Fee, Contingency Fee and Excess Spread);
(b) Servicing Fee and Contingency Fee; (c) Excess Spread; (d) The
amount equal to total interest received minus Servicing Fee,
Contingency Fee and Excess Spread; (e) principal and Excess Payments
received; (f) Curtailments received; and (g) Principal Prepayments
received.
8. The Home Improvement Loan Principal Balance.
9. The Mortgage Note maturity date.
10. A "Delinquency Flag" noting that the Home Improvement Loan is current
or delinquent. If delinquent, state the date on which the last payment
was received.
11. A "Foreclosure Flag" noting that the Home Improvement Loan is the
subject of foreclosure proceedings.
12. An "REO Flag" noting that the Home Improvement Loan is an REO
Property.
13. A "Liquidated Home Improvement Loan Flag" noting that the Home
Improvement Loan is a Liquidated Home Improvement Loan and the Net
Liquidation Proceeds received in connection therewith.
18. Any additional information reasonably requested by the Trustee.
EXHIBIT S
SUB-SERVICING AGREEMENT
THIS SUB-SERVICING AGREEMENT is made effective as of the 31st day of March,
1997, by and between The Money Store Inc., a New Jersey corporation (the
"Servicer") whose principal business address is 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx
Xxxxxx 00000, and each of the entities listed on Schedule A hereto (each an
"Originator", and collectively the "Originators").
RECITALS
1. Each Originator is a wholly-owned subsidiary of the Servicer.
2. The Servicer, the Originators and The Chase Manhattan Bank, as trustee
(the "Trustee"), are parties to that certain Pooling and Servicing Agreement
dated and effective as of May 31, 1997 (the "Pooling and Servicing Agreement").
3. Pursuant to the terms of the Pooling and Servicing Agreement, each
Originator has transferred those certain Home Improvement Loans (as defined in
the Pooling and Servicing Agreement) listed next to each Originator's name on
Schedule B hereto to the Co-Trustee, for the benefit of Certificateholders (as
defined in the Pooling and Servicing Agreement).
4. The Originators desire to convey to the Servicer the right to service
the Home Improvement Loans. As authorized by the Pooling and Servicing
Agreement, the Servicer desires to enter into a subservicing agreement with each
Originator so that each Originator will perform subservicing functions for the
Home Improvement Loans transferred by it to the Co- Trustee, such subservicing
functions to be rendered in compliance with the terms of the Pooling and
Servicing Agreement.
5. Each Originator desires to undertake such subservicing and supervision
of the Home Improvement Loans on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the agreements of the parties herein
and other good and valuable consideration, the receipt and sufficiency of which
each party hereby acknowledges, and in order in part to induce the Trustee to
enter into the Pooling and Servicing Agreement and perform its obligations
thereunder, the parties agree as follows:
1. ASSIGNMENT OF SERVICING; SUBSERVICING AGREEMENT. Each Originator hereby
assigns, transfers, conveys and sets over to the Servicer, its successors and
assigns, all of such Originator's right, title and interest to service the Home
Improvement Loans listed next to such Originator's name on the schedule
furnished by each Originator to the Servicer and dated the date hereof, to have
and to hold such rights hereby assigned, conveyed and transferred to the
Servicer, for its own use and benefit, and that of its successors and assigns,
forever. In consideration of the foregoing assignment, the Servicer hereby
appoints each Originator as subservicer with respect to the Home Improvement
Loans conveyed by each such Originator to the Co-Trustee, each such Originator
to service and supervise such Home Improvement Loans as provided for herein,
such subservicing to commence on the effective date of this Agreement and to
terminate as provided for herein. As compensation for such subservicing and
supervision, each Originator shall be entitled to an annual fee for each Home
Improvement Loan serviced, such fee to be computed and paid as set forth on
Schedule B hereto. Each Originator, as contract subservicer, shall service and
administer the Home Improvement Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Originator may deem necessary or desirable; provided,
however, that each Originator shall conduct its servicing activities (i) in
compliance with and pursuant to the servicing requirements set out in the
Pooling and Servicing Agreement, as such requirements relate to subservicing
rendered thereunder, and (ii) to the extent not inconsistent with such
Originator's obligations as an authorized subservicer under the Pooling and
Servicing Agreement, (x) in accordance with the provisions of Section 3 hereof
and (y) otherwise in accordance with the standards and requirements set forth on
Schedule C hereto and subject to applicable Federal, state and local laws and
regulations. On or after the date hereof, each Originator shall deliver such
appropriately executed and authenticated instruments of sale, assignment,
transfer and conveyance to the Servicer, if any, including limited powers of
attorney, as the Servicer or its counsel determine to be reasonable in order to
accomplish the transfer to the Servicer of such Originator's rights with respect
to the servicing.
2. REPRESENTATIONS AND WARRANTIES. Each Originator represents and warrants
as follows:
2.1 Such Originator is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation. Originator is and
at all relevant times has been properly licensed and qualified to transact
business in all appropriate jurisdictions, to conduct all activities performed
with respect to origination and servicing of the Home Improvement Loans and is
in good standing in each jurisdiction in which the failure to be in such good
standing would have a material, adverse effect on the consummation of the
transactions contemplated hereby.
2.2 Originator has all requisite corporate power, authority and capacity to
enter into this Agreement and to perform the obligations required of it
hereunder. The execution and delivery of this Agreement by the Originator, and
the consummation of the transactions contemplated hereby, have each been duly
and validly authorized by all necessary corporate action. This Agreement
constitutes the valid and legally binding agreement of Originator enforceable in
accordance with its terms, and no offset, counterclaim or defense exists to the
full performance of this Agreement, subject to laws respecting bankruptcy,
receivership, insolvency and other laws affecting creditors' rights generally.
2.3 The execution, delivery and performance of this Agreement by
Originator, its compliance with the terms hereof and consummation of the
transactions contemplated will not violate, conflict with, result in a breach
of, constitute a default under, be prohibited by or require any additional
approval under its certificate of incorporation, bylaws, or any instrument or
agreement to which it is a party or by which it is bound or which affects the
servicing conveyed hereunder.
2.4 Such Originator is the lawful owner of the servicing, has the sole
right and authority to transfer the servicing as contemplated hereby, and is not
contractually obligated to sell the servicing to any other party. The transfer,
assignment and delivery of the servicing in accordance with the terms and
conditions of this Agreement shall vest in the Servicer all rights as servicer
free and clear of any and all claims, charges, defenses, offsets and
encumbrances of any kind or nature whatsoever, including but not limited to
those of Originator.
2.5 With respect to each individual Home Improvement Loan for which
servicing rights are assigned hereunder, such Originator makes to the Servicer
those representations and warranties that are contained in Section 3.02 of the
Pooling and Servicing Agreement.
3. ORIGINATOR'S DUTIES. Until the principal, interest and any other amounts
due on each Home Improvement Loan are paid in full, each Originator shall:
A. Proceed diligently to collect all payments due under the
terms of each Home Improvement Loan as they become due.
B. Keep a complete and accurate account of and properly apply
all sums collected by it from the mortgagor on account of each such
Home Improvement Loan for principal and interest, and upon request,
furnish evidence acceptable to the Servicer of all expenditures for
taxes, assessments and other public charges and hazard insurance
premiums. In the event any Mortgagor fails to make a payment to an
Originator required to be made under the terms of any such Home
Improvement Loan, such Originator will notify the Servicer of such fact
within 20 days after the same shall have become due and payable.
C. Deposit all funds received in respect of each Home
Improvement Loan in an account in an institution the accounts of which
are insured by an agency of the United States government. Unless
directed otherwise by the Servicer such account shall be held by a
Originator, which shall maintain or shall cause to be maintained
detailed records to show the respective interest of each individual
mortgagor in the account.
D. Pay into the related Principal and Interest Accounts (as
defined in the Pooling and Servicing Agreement) all amounts of
principal and interest collected under the Home Improvement Loans.
E. Submit to the Servicer at least annually an accounting of
the balances in each such account, if any.
F. Perform such other customary duties, furnish such other
reports and execute such other documents in connection with its duties
hereunder as the Servicer from time to time reasonably may require.
4. ADVANCES BY ORIGINATOR. In the event an Originator, on behalf of the
Servicer, makes any advance of principal and/or interest to the holder of a
mortgage serviced hereunder before such Originator has received the applicable
mortgage payment from any mortgagor, or makes any other advance to protect the
security of a mortgage or otherwise (including but not limited to property
taxes, special assessments, and hazard insurance premiums), except advances
related to foreclosure or real estate owned losses (which are covered by Section
8), then the Servicer, promptly upon being billed therefore, shall, at its
option, either (i) reimburse such Originator the full amount of all such
advances, (ii) credit such amount as a set-off against amounts such Originator
may then owe to the Servicer pursuant to this Agreement, (iii) use a combination
of such reimbursement and crediting to fully discharge such amount or (iv)
forego such reimbursement or crediting with respect to all or a portion of such
amount, in which case the amount not reimbursed or offset shall be deemed
currently due and payable and, until paid to such Originator, shall bear
interest on the average monthly balance thereof at the underlying Home
Improvement Loan Rate.
5. ORIGINATOR'S RECORDS; MONITORING OF PROPERTY. Each Originator will
during regular business hours make all of its records and files relating to Home
Improvement Loans covered by this Agreement available for inspection by the
Servicer and its authorized agents. In addition, an Originator will use ordinary
diligence to ascertain, and will forthwith notify the Servicer of any of the
following which might come to the attention of such Originator:
A. The vacating of or any change in the occupancy of any premises
securing a mortgage.
B. The sale or transfer of any such premises.
C. The death, bankruptcy, insolvency or other disability of a
mortgagor which might impair ability to repay the Home Improvement Loan.
D. Any loss or damage in excess of $10,000 to any such premises, in
which event, in addition to notifying the Servicer, an Originator shall see
to it that the insurance companies concerned are promptly notified. For
losses or damages of $10,000 or less, the Servicer hereby authorizes an
Originator to endorse insurance checks or drafts on behalf of the Servicer.
For losses or damages in excess of $10,000, an Originator shall make a
report to the Servicer and the Servicer retains the right to endorse any
insurance drafts related to such loss or damage.
E. Any lack of repair or any other deterioration or waste suffered or
committed in respect to the premises covered by any mortgage.
It is understood and agreed, however, that no notice need be given to the
Servicer of any facts other than those of which an Originator has actual notice,
or those of which an Originator would, except for its negligence, have had
actual notice.
6. NO WAIVER, RELEASE OR CONSENT BY ORIGINATOR. An Originator will not
waive, modify, release or consent to postponement on the part of the mortgagor
of any term or provision of any Home Improvement Loan without the consent of the
Servicer.
7. HAZARD INSURANCE. An Originator shall cause to be maintained such fire
and hazard insurance as shall be requested by the Servicer pursuant to Sections
5.07 and 5.08 of the Pooling and Servicing Agreement.
8. FORECLOSURE AND REAL ESTATE OWNED. An Originator will assist in the
foreclosure or other acquisition of the property securing any Home Improvement
Loan and the transfer of such property, pursuant to instruction of the Servicer
given under Section 5.10 of the Pooling and Servicing Agreement.
9. TERM; TERMINATION. This Agreement shall commence on the date hereof and
shall, subject to earlier termination pursuant to the provisions of this Section
9, terminate upon the termination of the Pooling and Servicing Agreement. This
Agreement may be canceled and terminated (i) at any time hereunder by the
Servicer on 10 days notice to an Originator, or (ii) by the Co-Trustee on notice
to an Originator, at any time after the Co-Trustee shall have become the
successor servicer with respect to the Home Improvement Loans pursuant to
Sections 10.01 and 10.02 of the Pooling and Servicing Agreement. In addition,
this Agreement may be canceled and terminated by the Servicer, by notice to an
Originator, if:
A. An Originator fails in a material respect to perform its
obligations hereunder and (i) does not cure or rectify such failure within
45 days or, (ii) if the character of such cure or rectification is such
that it cannot reasonably be effected within 45 days, does not commence
such cure or rectification within 45 days and complete the same within a
commercially reasonable time thereafter, given the circumstances.
B. An Originator becomes insolvent or bankrupt or is placed under
conservatorship or receivership.
C. An Originator assigns or attempts to assign its rights and
obligations hereunder, without written consent of the Servicer, provided
that any assignment, transfer or other conveyance of an Originator's rights
and obligations hereunder that occurs as a result of a merger,
consolidation, reorganization, name change or acquisition of or involving
an Originator shall not be construed as an assignment (or attempted
assignment) under the provisions of this Section 9.C.
Upon termination of this Agreement, an Originator will account for and turn over
to the Servicer all funds collected under each Home Improvement Loan for which
said termination is effective, less only the compensation, fees and
reimbursements then due an Originator, and will deliver to the Servicer or its
designee all records and documents relating to each such mortgage.
10. COMPLIANCE WITH LAWS, RULES AND REGULATIONS. Each Originator will
comply with, and will use all reasonable efforts to cause each Mortgagor to
comply with, all applicable state and federal rules and regulations or
requirements including those requiring the giving of notices.
11. FIDELITY, ERRORS AND OMISSIONS INSURANCE, ETC. Each Originator agrees
to be responsible, at no expense to the Servicer, for seeing to it that at all
times, while this Agreement is in force, policies of fidelity, fire, and
extended coverage, theft, forgery, and errors and omissions insurance are
maintained in conformity with the Pooling and Servicing Agreement. Each
Originator will, without demand therefore, provide the Servicer annually, on a
date agreeable to the Servicer, a certificate or binder of insurance delineating
the various types of insurance carried by such Originator.
12. MISCELLANEOUS. This document contains the entire agreement between the
parties hereto and cannot be modified in any respect except by an amendment in
writing signed by each party. The invalidity of any portion of this Agreement
shall in no way affect the balance thereof. Any notice permitted or required
hereunder shall be in writing and shall be deemed given when hand delivered to
an officer or authorized agent of, or when mailed, registered or certified mail,
postage prepaid, to Servicer or an Originator at the address of the Servicer set
forth above. The captions and headings used in this Agreement are for
convenience only, and do not define or limit the terms and provisions of this
Agreement. Notwithstanding any provision in this Agreement to the contrary,
nothing contained herein shall be deemed an attempt to assign or an assignment
of any servicing rights by an Originator to the Servicer if an attempted
assignment of the same without the consent of any agency or instrumentality of
the United States or a state thereof (a "Regulatory Authority") with
jurisdiction over such assignment would constitute a breach of an applicable
regulatory requirement or agreement between an Originator and such Regulatory
Authority unless and until such consent shall have been obtained. In the event
the consent of any Regulatory Authority is required to authorize the conveyance
of any or all of the servicing to be conveyed hereunder and such consent shall
not have been granted prior to the occurrence of an Event of Default under
Section 10.01 of the Pooling and Servicing Agreement, then upon the occurrence
of an Event of Default, each Originator shall enter into an agreement with the
Co-Trustee, which agreement shall be in form and substance satisfactory to the
Co- Trustee and its counsel, which recognizes the Co-Trustee as the successor
servicer of the Home Improvement Loans as provided for by such Section 10.01,
and shall continue to subservice the Home Improvement Loans or shall convey such
subservicing at the election and upon the direction of the Co-Trustee.
IN WITNESS WHEREOF, each party has caused this instrument to be signed in
its corporate name on its behalf by its proper officials duly authorized as of
the day and year first above written.
SERVICER:
ATTEST: The Money Store Inc.
By: ________________________ By: ___________________________
Xxxxxx Xxxx Xxxxx Xxxxxxx
Assistant Secretary
ORIGINATORS:
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
ATTEST:
By: _______________________ By: __________________________
Xxxxxx Xxxx Xxxxx Xxxxxxx
Assistant Secretary Treasurer
SCHEDULE A
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
SCHEDULE B
Each Originator shall receive 25 basis points as compensation for servicing
hereunder as well as other servicing fees as permitted.
ORIGINATORS HOME IMPROVEMENT LOANS
TRANSFERRED
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
SCHEDULE C
1. Make telephone contact with any Mortgagor whose account is either a first
payment default or delinquent 9-29 days.
2. Confirm telephone contacts as necessary.
3. Contact, in writing, each Mortgagor who can not be contacted.
4. Send a "default" letter to any Mortgagor who is 30 days delinquent.
5. Commence foreclosure proceedings after 60 days delinquency.
6. Obtain legal counsel where appropriate including in foreclosure matter
commenced by prior lienholders and bankruptcy matters.
7. Monitor all outside counsel and proceedings.
8. Monitor loans for continuing performance.
EXHIBIT T
LOW INTEREST HOME IMPROVEMENT LOAN SCHEDULE
[OMITTED]
