EXECUTION
AMERICAN RESIDENTIAL EAGLE, INC.
MORTGAGE-BACKED CALLABLE CERTIFICATES
SERIES 1998-1
TERMS AGREEMENT
(to Standard Terms Underwriting Agreement,
dated June 11, 1998
between the Depositor and the Underwriter)
American Residential Eagle, Inc. New York, New York
American Residential Investment Trust Inc. June 11, 1998
000 Xxxxxx Xxxx Xxxxxx
Xxxxx 000
Xxx Xxx, Xxxxxxxxxx 00000
Xxxxxx Brothers Inc. (the "Underwriter") agrees, subject to the
terms and provisions herein and of the captioned Underwriting Agreement (the
"Underwriting Agreement"), to purchase such Classes of Series 1998-1 Mortgage
Backed Callable Certificates ("Series 1998-1 Certificates") specified in
Section 2(a) hereof (the "Offered Certificates"). This letter supplements and
modifies the Underwriting Agreement solely as it relates to the purchase and
sale of the Offered Certificates described below. The Offered Certificates are
registered with the Securities and Exchange Commission by means of an
effective Registration Statement (No. 333-47311). Capitalized terms used and
not defined herein have the meanings given them in the Underwriting Agreement.
Section 1. The Mortgage Pool: The Series 1998-1 Certificates shall
evidence the entire beneficial ownership interest in a Collateralized Mortgage
Bond (the "Underlying Bond") secured by a mortgage pool (the "Mortgage Pool")
of conventional, adjustable rate, fully amortizing one- to four-family
residential mortgage loans (the "Mortgage Loans") having the characteristics
set forth in the Prospectus Supplement, to be dated June 15, 1998, relating to
the issuance, offering and sale of the Offered Certificates (the "Prospectus
Supplement") under the caption "Trust Fund Assets-The Mortgage Pool":
(a) Terms of the Underlying Bond: $456,822,000 initial principal
balance; the calculation of interest, principal amortization, redemption
features and other terms relating to the Underlying Bond are described in
the Prospectus Supplement under the caption "Summary-Description of the
Underlying Bond."
(b) Aggregate Principal Amount of the Mortgage Pool: Approximately
$463,075,880 aggregate principal balance as of the Cut-off Date, subject
to adjustment for removal or substitution of the Mortgage Loan collateral
prior to Closing.
Section 2. The Certificates: The Offered Certificates shall be
issued as follows:
(a) Classes: The Offered Certificates shall be issued with the
following Class designations, interest rates and principal balances:
Class
Principal Interest Class Purchase
Class Balance Rate Price Percentage
----- ------- ---- ----------------
A-1............... $143,970,000 (1) 100%
A-2............... $232,093,000 (2) 100%
M-1............... $ 46,029,000 (3) 100%
----------------------
(1) Interest will accrue on the Class A-1 Certificates with respect to each
Distribution Date at a per annum rate equal to the least of (i) LIBOR (as
defined in the Prospectus Supplement) plus 0.09%(the "Class A-1 Spread"),
(ii) 9.50% and (iii) the Bond Interest Rate (as defined in the Prospectus
Supplement). On each Bond Distribution Date after which the Bond
Principal Balance (as defined herein) is less than 35% of the initial
Bond Principal Balance, the Certificate Interest Rate of the Class A-1
Certificates will be increased as described in the Prospectus Supplement.
The initial Certificate Interest Rate of the Class A-1 Certificates will
be 5.75%.
(2) Interest will accrue on the Class A-2 Certificates with respect to each
Distribution Date at a per annum rate equal to the least of (i) LIBOR
plus 0.21% (the "Class A-2 Spread"), (ii) 9.50% per annum and (iii) the
Bond Interest Rate. On each Bond Distribution Date after which the Bond
Principal Balance is less than 35% of the initial Bond Principal Balance,
the Certificate Interest Rate of the Class-A-2 Certificates will be
increased as described in the Prospectus Supplement. The initial
Certificate Interest Rate of the Class A-2 Certificates will be 5.87%.
(3) Interest will accrue on the Class M-1 Certificates with respect to each
Distribution Date a per annum rate equal to the least of (i) LIBOR plus
0.50% (the "Class M-1 Spread"), (ii) 9.50% per annum and (iii) the Bond
Interest Rate. On each Bond Distribution Date after which the Bond
Principal Balance is less than 35% of the initial Bond Principal Balance,
the Certificate Interest Rate of the class-M-1 Certificates will be
increased as described in the Prospectus Supplement. The initial
Certificate Interest Rate of the class A-2 Certificates will be 6.16%.
(b) The Offered Certificates shall have such other characteristics
as described in the Prospectus Supplement.
Section 3. Terms of Sale of Offered Certificates: The Depositor
agrees to sell to the Underwriter and the Underwriter agrees to purchase from
the Depositor the Offered Certificates in the principal amounts set forth in
Section 2 hereof at a purchase price for each Class of the Offered
Certificates equal to the Class Principal Balance set forth above multiplied
by the Purchase Price Percentage set forth above.
The Underwriter will offer the Offered Certificates to the public
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale.
Section 4. Required Ratings:The Offered Certificates shall have
received the following Required Ratings:
Class A-1/Class A-2: "AAA" by Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Corporation, Inc. and "AAA" by Duff &
Xxxxxx Credit Rating Co. ("DCR").
Class M-1: "AA" by DCR.
Section 5. Tax Treatment: An election will be made to treat the
assets of the Trust Fund as a FASIT for federal income tax purposes.
Section 6. Closing Date: 10:00 a.m., New York time, on or about June
17, 1998. On the Closing Date, the Depositor will deliver the Offered
Certificates to the Underwriter against payment therefor.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the undersigned a counterpart hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Underwriter and the Depositor.
Very truly yours,
XXXXXX BORTHERS INC.
BY:__________________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
AMERICAN RESIDENTIAL EAGLE, INC.
By:__________________________________
Name:
Title:
AMERICAN RESIDENTIAL INVESTMENT TRUST, INC.
By:__________________________________
Name:
Title:
