1
Exhibit 4.1
Pooling and Servicing Agreement
2
BA MORTGAGE SECURITIES, INC.,
Depositor,
BANK OF AMERICA, FEDERAL SAVINGS BANK
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Master Servicers,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1997
Mortgage Pass-Through Certificates
Series 1997-1
3
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Page
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Adjusted Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Aggregate FSA Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Amount Held for Future Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Appraised Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Available Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bankruptcy Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Book-Entry Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Buydown Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cash Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Account Deposit Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificate Register and Certificate Registrar . . . . . . . . . . . . . . . . . . . . . . . . 7
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-3 Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-6 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Class A-7 Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-7 Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
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Page
Class A-7 Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-7 Priority Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-8 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-9 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-10 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-11 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-12 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class A-13 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class B-1 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class B-2 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class B-3 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class B-4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class B-5 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class M Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class PO Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class PO Fraction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class PO Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class R-I Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class R-II Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class X Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Class X Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compensating Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Credit Support Depletion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Curtailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Custodial Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cut-off Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Cut-off Date Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Debt Service Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Deceased Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Deficient Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Definitive Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Depository Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Disqualified Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Due Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Due Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Eligible Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Excess Bankruptcy Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Excess Fraud Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Excess Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Extraordinary Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Extraordinary Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FDIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FNMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Final Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Financial Security Contact Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Financial Security Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Foreclosure Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Fraud Loss Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Fraud Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
FSA Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Guaranteed Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Independent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Individual Insured Certificate: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Initial Certificate Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Late Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
LIBOR Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liquidated Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liquidation Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Living Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Loan-to-Value Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Master Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Xxxxx'x . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage File . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Loan Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Loan Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mortgage Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Mortgagor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Mortgage Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Non-Primary Residence Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Non-United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Nonrecoverable Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Nonrecoverable Subservicer Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Nonsubserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Notice of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Notional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Outstanding Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ownership Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Payoff Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Policy Payments Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Pool Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Premium Rate Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Prepayment Interest Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Primary Mortgage Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Primary Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal Payment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal Prepayment Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Principal Prepayment in Full . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Prior Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Qualified Substitute Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Random Lot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Rating Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Realized Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Regular Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REMIC Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REMIC Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REO Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REO Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REO Imputed Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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REO Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
REO Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Request for Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Required Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Reserve Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Residual Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Senior Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Senior Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Senior Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Senior Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Senior Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Senior Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Servicing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Hazard Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Special Hazard Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Stated Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Step Down Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Stripped Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subordinate Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subordinate Liquidation Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Subordinate Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subordinate Prepayment Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subordinate Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subserviced Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subservicer Servicing Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subservicing Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Subservicing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Tier I Regular Interest N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest Q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest R . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Tier I Regular Interest V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tier I Regular Interest W . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tier I Regular Interest X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tier I Regular Interest Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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Page
Tier I Regular Interest Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tier I Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Tier II Regular Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transferee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Transferor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Uninsured Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
United States Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Unpaid Accrued Certificate Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.03. Representations, Warranties and Covenants of the Master Servicers . . . . . . . . 42
Section 2.04. Representations and Warranties of Sellers . . . . . . . . . . . . . . . . . . . . 43
Section 2.05. Issuance of Certificates Evidencing Interests in the Trust Fund . . . . . . . . . 45
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.02. Subservicing Agreements Between Master Servicers and Subservicers;
Enforcement of Subservicers' and Sellers' Obligations;
Special Servicing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 3.03. Successor Subservicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.04. Liability of the Master Servicers . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.05. No Contractual Relationship Between Subservicer and Trustee
or Certificateholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 3.06. Assumption or Termination of Subservicing Agreements by Trustee . . . . . . . . . 49
Section 3.07. Collection of Certain Mortgage Loan Payments; Deposits to Custodial Accounts . . . 49
Section 3.08. Subservicing Accounts; Servicing Accounts . . . . . . . . . . . . . . . . . . . . 52
Section 3.09. Access to Certain Documentation and Information Regarding the Mortgage Loans . . . 53
Section 3.10. Permitted Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.11. Maintenance of the Primary Insurance Policies; Collections Thereunder . . . . . . 56
Section 3.12. Maintenance of Fire Insurance and Omissions and Fidelity Coverage . . . . . . . . 57
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Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and Modification
Agreements; Certain Assignments . . . . . . 58
Section 3.14. Realization Upon Defaulted Mortgage Loans . . . . . . . . . . . . . . . . . . . . 60
Section 3.15. Trustee to Cooperate; Release of Mortgage Files . . . . . . . . . . . . . . . . . 62
Section 3.16. Servicing and Other Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.17. Annual Statement as to Compliance . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 3.18. Annual Independent Public Accountants' Servicing Report . . . . . . . . . . . . . 65
Section 3.19. Rights of the Depositor in Respect of the Master Servicers . . . . . . . . . . . . 65
Section 3.20. Administration of Buydown Funds . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 4.02. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 4.03. Statements to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 4.04. Distribution of Reports to the Trustee and the Depositor; Advances
by the Master Servicers . . . . . . . . . . . . . . 75
Section 4.05. Allocation of Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged Property . . . . . . . . . . 78
Section 4.07. Compliance with Withholding Requirements . . . . . . . . . . . . . . . . . . . . . 78
Section 4.08. REMIC I Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 4.09. Principal Distributions on the Class A-5 Certificates. . . . . . . . . . . . . . . 79
Section 4.10. Policy Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 5.02. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . 88
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . . 93
Section 5.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 5.05. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the Master Servicer . . . . . . . . . 95
Section 6.02. Merger or Consolidation of the Depositor or the Master Servicers;
Assignment of Rights and Delegation of Duties by Master
Servicers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 6.03. Limitation on Liability of the Depositor, the Master Servicers and Others. . . . . 96
Section 6.04. Depositor and Master Servicers Not to Resign . . . . . . . . . . . . . . . . . . . 97
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ARTICLE VII
DEFAULT
Section 7.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 7.02. Trustee to Act; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . 99
Section 7.03. Notification to Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . 100
Section 7.04. Waiver of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 8.02. Certain Matters Affecting the Trustee . . . . . . . . . . . . . . . . . . . . . . 103
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans . . . . . . . . . . . . . . 105
Section 8.04. Trustee May Own Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses; Indemnification . . . . . . . 105
Section 8.06. Eligibility Requirements for Trustee . . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.07. Resignation and Removal of the Trustee . . . . . . . . . . . . . . . . . . . . . . 107
Section 8.08. Successor Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Section 8.09. Merger or Consolidation of Trustee . . . . . . . . . . . . . . . . . . . . . . . . 109
Section 8.10. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . . 109
Section 8.11. Appointment of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . 110
ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or Liquidation of All Mortgage Loans 111
Section 9.02. Additional Termination Requirements . . . . . . . . . . . . . . . . . . . . . . . 113
ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Section 10.02. Master Servicer and Trustee Indemnification . . . . . . . . . . . . . . . . . . . . . 118
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
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Section 11.02. Recordation of Agreement; Counterparts . . . . . . . . . . . . . . . . . . . . . . 122
Section 11.03. Limitation on Rights of Certificateholders . . . . . . . . . . . . . . . . . . . . 122
Section 11.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Section 11.05. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Section 11.06. Notices to Rating Agency and Financial Security . . . . . . . . . . . . . . . . . 124
Section 11.07. Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
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EXHIBITS
Exhibit A: Form of Class A, Class X and Class PO Certificate
Exhibit B: Form of Class M Certificate
Exhibit C: Form of Class B Certificate
Exhibit D: Forms of Residual Certificate
Exhibit E-1: Bank of America National Trust and Savings
Association Mortgage Loan Schedule
Exhibit E-2: Bank of America, Federal Savings Bank
Mortgage Loan Schedule
Exhibit F-1: Mortgage Loans Serviced by Bank of America
National Trust and Savings Association
Exhibit F-2: Mortgage Loans Serviced by Bank of America,
Federal Savings Bank
Exhibit G: Form of Mortgage Loan Purchase Agreement
Exhibit H: Form of Request for Release
Exhibit I-1: Form of Transfer Affidavit and Agreement
Exhibit I-2: Form of Transferor Certificate
Exhibit J: Form of Investor Representation Letter
Exhibit K: Form of Transferor Representation Letter
Exhibit L: Form of Rule 144A Investment Representation Letter
Exhibit M: Form of Lender Certification for Assignment of Mortgage Loan
Exhibit N: Form of Special Servicing Agreement
Exhibit O: Schedule of Mortgage Loan Exceptions
Exhibit P: Information Available for Reports to Certificateholders
Exhibit Q: Form of Financial Guaranty Insurance Policy
Exhibit R: Form of Trustee's Certification
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This is a Pooling and Servicing Agreement, effective as of August 1,
1997, among BA MORTGAGE SECURITIES, INC., as the depositor (together with its
permitted successors and assigns, the "Depositor"), BANK OF AMERICA, FEDERAL
SAVINGS BANK and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
master servicers (each together with their respective permitted successors and
assigns, a "Master Servicer" and together, the "Master Servicers"), and BANKERS
TRUST COMPANY OF CALIFORNIA, N.A., as Trustee (together with its permitted
successors and assigns, the "Trustee").
PRELIMINARY STATEMENT
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest
in the Trust Fund, the assets of which will consist primarily of the Mortgage
Loans.
As provided herein, Bank of America, Federal Savings Bank, as Master
Servicer, will make an election to treat the assets consisting of the Mortgage
Loans and certain other related assets described herein as a "real estate
mortgage investment conduit" for federal income tax purposes and such pool of
assets will be designated as the "REMIC I." Tier I Regular Interests will be
the "regular interests" in REMIC I and the Class R-I Certificates will be the
sole class of "residual interest" in REMIC I for federal income tax purposes.
Bank of America, Federal Savings Bank, as Master Servicer, will make
an election to treat the pool of assets consisting of the Tier I Regular
Interests as a "real estate mortgage investment conduit" for federal income tax
purposes and such pool of assets will be designated as the "REMIC II."
The Class A, Class X, Class PO, Class M, Class B Certificates will
represent "regular interests" in REMIC II and the Class R-II Certificate will
represent the sole class of "residual interest" in REMIC II for federal income
tax purposes.
The following table sets forth the designation, type, initial
Pass-Through Rate, aggregate Initial Certificate Principal Balance, Maturity
Date and initial ratings for each Class of Certificates comprising the
interests in the Trust Fund created hereunder.
1
14
Aggregate
Initial
Initial Certificate Initial Ratings
Pass-Through Principal Maturity ----------------
Designation Type Rate Balance Date DCR Xxxxx'x
----------- ---- -------------- ------------ ---------- --- -------
Class A-1 Regular 7.250% $5,249,000 July 25, 2026 AAA Aaa
Class A-2 Regular (2) $118,268,273 July 25, 2026 AAA Aaa
Class A-3 Regular (3) $ - July 25, 2026 AAA Aaa
Class A-4 Regular 7.350% $21,567,000 July 25, 2026 AAA Aaa
Class A-5 Regular 7.250% $24,683,000 July 25, 2026 AAA Aaa
Class A-6 Regular 0.0000%(4) $8,253,400 July 25, 2026 AAA Aaa
Class A-7 Regular 7.500% $125,377,420 July 25, 2026 AAA Aaa
Class A-8 Regular 7.100% $245,698,788 July 25, 2026 AAA Aaa
Class A-9 Regular 6.950% $5,369,967 July 25, 2026 AAA Aaa
Class A-10 Regular 7.100% $25,000,000 July 25, 2026 AAA Aaa
Class A-11 Regular 7.100% $17,100,894 July 25, 2026 AAA Aaa
Class A-12 Regular 7.250% 32,267,000 July 25, 2026 AAA Aaa
Class A-13 Regular 7.625%(5) $ - July 25, 2026 AAA Aaa
Class X Regular 7.500%(6) $ _ July 25, 2026 AAA Aaa
Class PO Regular 0.0000%(4) $17,313,492 July 25, 2026 AAA Aaa
Class M Regular 7.500% $15,144,101 July 25, 2026 AA -
Class B-1 Regular 7.500% $5,048,033 July 25, 2026 A -
Class B-2 Regular 7.500% $2,355,749 July 25, 2026 BBB -
Class B-3 Regular 7.500% $1,682,677 July 25, 2026 BB -
Class B-4 Regular 7.500% $1,346,142 July 25, 2026 B -
Class B-5 Regular 7.500% $1,346,146 July 25, 2026 - -
Class R-I Residual 7.625% $50 July 25, 2026 AAA Aaa
Class R-II Residual 7.625% $50 July 25, 2026 AAA Aaa
-------------
(1) Interest distributed to the Offered Certificates on each Distribution
Date will have accrued during the preceding calendar month, except for
(i) the LIBOR Certificates which will accrue interest during the
period from the 25th of the month prior to each Distribution Date to
the 24th of the month of such Distribution Date (except for the first
Distribution Date on which they will receive interest from August 14th
through September 24th) and (ii) the Class A-6 and Class PO
Certificates which will not be entitled to receive interest.
(2) The initial Pass-Through Rate for the Class A-2 Certificates will be
6.1875% per annum. Thereafter, the Class A-2 Certificates will accrue
interest at a per annum rate equal to LIBOR (as defined herein) plus
0.500%, subject to a minimum and maximum Pass-Through Rate of 0.500%
and 9.000% per annum, respectively.
(3) The initial Pass-Through Rate for the Class A-3 Certificates will be
2.8125% per annum. Thereafter, the Class A-3 Certificates will accrue
interest at a per annum rate equal to 8.500% minus LIBOR, subject to a
minimum and maximum Pass-Through Rate of 0.000% and 8.500% per annum,
respectively. The Class A-3 Certificates will not receive
distributions of principal and will accrue interest on the Class A-3
Notional Amount which will equal the Class A-2 Principal Balance at
the time of determination.
(4) The Class A-6 and Class PO Certificates are Principal Only
Certificates and will not bear interest.
(5) The Class A-13 Certificates will not receive distributions of
principal and will accrue interest on the Class A-13 Notional Amount.
(6) The Class X Certificates will not receive distributions of principal
and will accrue interest on the Class X Notional Amount.
2
15
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicers and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in
this Article.
Accrued Certificate Interest: With respect to each Distribution Date,
(except for the first Distribution Date with respect to the Class A-2
Certificates and the Class A-3 Certificates on which they will receive accrued
interest from August 14th through September 24th) as to any Class of
Certificates, one month's interest accrued at the related Pass-Through Rate on
the Certificate Principal Balance or Notional Amount thereof immediately prior
to such Distribution Date. Accrued Certificate Interest will be calculated on
the basis of a 360-day year consisting of twelve 30-day months. In each case,
Accrued Certificate Interest on any Class of Certificates will be reduced by
the amount of (i) Prepayment Interest Shortfalls (to the extent not offset by
the Master Servicer with a payment of Compensating Interest as provided in
Section 4.01), (ii) the interest portion (adjusted to the Net Mortgage Rate) of
Realized Losses (including Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses and Extraordinary Losses) not allocated solely to one
or more specific Classes of Certificates pursuant to Section 4.05, (iii) the
interest portion of Advances previously made with respect to a Mortgage Loan or
REO Property which remained unreimbursed following the Cash Liquidation or REO
Disposition of such Mortgage Loan or REO Property that were made with respect
to delinquencies that were ultimately determined to be Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary Losses
and (iv) any other interest shortfalls not covered by the subordination
provided by the Subordinate Certificates, including interest that is not
collectible from the Mortgagor pursuant to the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended, or similar legislation or regulations as in
effect from time to time, with all such reductions allocated among all of the
Certificates in proportion to their respective amounts of Accrued Certificate
Interest payable on such Distribution Date which would have resulted absent
such reductions. In addition to that portion of the reductions described in
the preceding sentence that are allocated to any Class of Subordinate
Certificates, Accrued Certificate Interest on such Class of Subordinate
Certificates will be reduced by the interest portion (adjusted to the Net
Mortgage Rate) of Realized Losses that are allocated solely to such Class of
Subordinate Certificates pursuant to Section 4.05.
Advance: As to any Mortgage Loan, any advance made by the Master
Servicer of such Mortgage Loan, pursuant to Section 4.04.
3
16
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For the purposes
of this definition, "control" means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Aggregate FSA Premium: On any Distribution Date, the sum of (a) the
FSA Premium for such Distribution Date and (b) the amount of any FSA Premium
which was not distributed to Financial Security on any prior Distribution Date.
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Custodial Accounts at the close of business on
the preceding Determination Date on account of (i) Liquidation Proceeds,
Insurance Proceeds, Principal Prepayments, Mortgage Loan purchases made
pursuant to Sections 2.02 or 2.04 and Mortgage Loan substitutions made pursuant
to Sections 2.03 or 2.04 received or made in the month of such Distribution
Date (other than such Liquidation Proceeds, Insurance Proceeds and purchases of
Mortgage Loans that the Master Servicers have deemed to have been received in
the preceding month in accordance with Section 3.07(b)) and (ii) payments which
represent early receipt of scheduled payments of principal and interest due on
a date or dates subsequent to the related Due Date.
Appraised Value: As to any Mortgaged Property, the lesser of (i) the
appraised value of such Mortgaged Property based upon the appraisal made at the
time of the origination of the related Mortgage Loan, and (ii) the sales price
of the Mortgaged Property at such time of origination, except in the case of a
Mortgaged Property securing a refinanced Mortgage Loan as to which it is the
appraised value determined in an appraisal at the time of refinancing.
Assignment: An assignment of the Mortgage, notice of transfer or
equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage Loan to the Trustee for the benefit of
Certificateholders, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
Available Distribution Amount: As to any Distribution Date, an amount
equal to (a) the sum of (i) the amount relating to the Mortgage Loans on
deposit in the Custodial Accounts as of the close of business on the
immediately preceding Determination Date and amounts deposited in the Custodial
Accounts in connection with the substitution of Qualified Substitute Mortgage
Loans, (ii) the amount of any Advance made on the immediately preceding
Certificate Account Deposit Date, (iii) any amount deposited in the Custodial
Accounts pursuant to Section 3.12(a), and (iv) solely with respect to the Class
A-5 Certificates, (x) any amount withdrawn from the Reserve Fund and deposited
in the Certificate Account on or prior to the immediately preceding Certificate
Account Deposit
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Date pursuant to Section 3.10(d)(i) and (y) any amount withdrawn from the
Policy Payments Account and deposited into the Certificate Account on or prior
to the immediately preceding Certificate Account Deposit Date pursuant to
Section 4.10(c), reduced by (b) the sum as of the close of business on the
immediately preceding Determination Date of (w) aggregate Foreclosure Profits,
(x) the Amount Held for Future Distribution, and (y) amounts permitted to be
withdrawn by each Master Servicer from the Custodial Accounts in respect of the
Mortgage Loans it services pursuant to clauses (i)-(xi), inclusive, of Section
3.10(a). In addition, with respect to the first Distribution Date, solely with
respect to the Class A-2 and Class A-3 Certificates, the amount withdrawn from
the LIBOR Reserve Fund and deposited into the Certificate Account pursuant to
Section 3.10(e).
Bankruptcy Amount: As to any Determination Date, $100,000 less the
sum of any amounts allocated solely to one or more specific Classes of
Certificates in accordance with Section 4.05 prior to such Determination Date.
Bankruptcy Code: The United States Bankruptcy Code of 1978, as
amended, or any successor thereto.
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that neither a
Deficient Valuation nor a Debt Service Reduction shall be deemed a Bankruptcy
Loss hereunder so long as the Master Servicer of such Mortgage Loan has
notified the Trustee in writing that such Master Servicer is diligently
pursuing any remedies that may exist in connection with the representations and
warranties made regarding the related Mortgage Loan and either (A) the related
Mortgage Loan is not in default with regard to payments due thereunder or (B)
delinquent payments of principal and interest under the related Mortgage Loan
are being advanced as an Advance and any premiums on any applicable primary
hazard insurance policy and any related escrow payments in respect of such
Mortgage Loan are being advanced as a Servicing Advance on a current basis by
the Master Servicer or a Subservicer, in either case without giving effect to
any Debt Service Reduction.
Book-Entry Certificate: Any Certificate registered in the name of the
Depository or its nominee.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of California or State of New
York (and such other state or states in which either Custodial Account or the
Certificate Account are at the time located) are required or authorized by law
or executive order to be closed.
Buydown Funds: Any amount contributed by the seller of a Mortgaged
Property, the Depositor or other source in order to enable the Mortgagor to
reduce the payments required to be made from the Mortgagor's funds in the early
years of a Mortgage Loan and held by the related Master Servicer, or the
related Subservicer, as applicable. Buydown Funds are not part of the Trust
Fund prior to deposit into the applicable Custodial or Certificate Account.
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Buydown Mortgage Loan: Any Mortgage Loan as to which a specified
amount of interest is paid out of related Buydown Funds in accordance with a
related buydown agreement.
Cash Liquidation: As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Acquisition occurred, a determination by the
Master Servicer of such Mortgage Loan that it has received all Insurance
Proceeds, Liquidation Proceeds and other payments or cash recoveries which such
Master Servicer reasonably and in good faith expects to be finally recoverable
with respect to such Mortgage Loan.
Certificate: Any of the Senior Certificates, the Class M
Certificates, the Class B or the Residual Certificates.
Certificate Account: The separate account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "Bankers Trust
Company of California, N.A., as Trustee, in trust for the registered holders of
BA Mortgage Securities, Inc., Mortgage Pass- Through Certificates, Series
1997-1" and which must be an Eligible Account.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day prior thereto.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register, except that neither a Disqualified
Organization nor a Non-United States Person shall be a holder of a Residual
Certificate for purposes hereof and, solely for the purpose of giving any
consent or direction pursuant to this Agreement, any Certificate, other than a
Residual Certificate, registered in the name of the Depositor, a Master
Servicer or any Subservicer or any Affiliate thereof shall be deemed not to be
outstanding and the Percentage Interest or Voting Rights evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights necessary to effect any such consent or
direction has been obtained. All references herein to "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners as they may
indirectly exercise such rights through the Depository and participating
members thereof, except as otherwise specified herein; provided, however, that
the Trustee shall be required to recognize as a "Holder" or "Certificateholder"
only the Person in whose name a Certificate is registered in the Certificate
Register.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate, as reflected on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent, if any, and otherwise on the books of a Depository
Participant, if any, and otherwise on the books of the Depository.
Certificate Principal Balance: With respect to each Certificate of
any Class, on any date of determination, an amount equal to (i) the Initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, minus (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance or amount thereof
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pursuant to Section 4.02(a) and (y) the aggregate of all reductions in
Certificate Principal Balance deemed to have occurred in connection with
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.05.
Certificate Register and Certificate Registrar: The register
maintained and the registrar appointed pursuant to Section 5.02.
Class: Collectively, all of the Certificates bearing the same
designation.
Class A Certificates: The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class X- 00, Class A-11,
Class A-12 and Class A-13 Certificates, collectively.
Class A-1 Certificates: The Certificates designated as "Class A-1" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-2 Certificates: The Certificates designated as "Class A-2" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-3 Certificates: The Certificates designated as "Class A-3" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-3 Notional Amount: For any Distribution Date, the Class A-2
Certificate Principal Balance for such Distribution Date prior to giving effect
to any distributions thereon or allocations of Realized Losses thereto on such
Distribution Date.
Class A-4 Certificates: The Certificates designated as "Class A-4" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-5 Certificates: The Certificates designated as "Class A-5" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-5 Rounding Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 2.02 with a depository
institution in the name of the Trustee for the benefit of the
Certificateholders specified in Section 2.02 and designated "Bankers Trust
Company of California, N.A., as Trustee, Rounding Account in trust for
registered holders of BA Mortgage Securities, Inc. Mortgage Pass- Through
Certificates, Series 1997-1, Class A-5." The Class A-5 Rounding Account will
not be part of the Trust Fund and, for all federal income tax purposes, will be
beneficially owned by the Underwriter.
Class A-6 Certificates: The Certificates designated as "Class A-6" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-7 Certificates: The Certificates designated as "Class A-7" on
the face thereof and in substantially the form attached hereto as Exhibit A.
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Class A-7 Liquidation Amount: The aggregate of, for each Mortgage
Loan which became a Liquidated Mortgage Loan during the Prior Period, the
lessor of (i) the Class A-7 Percentage of the principal balance of such
Mortgage Loan (exclusive of the Class PO Fraction thereof, if applicable) and
(ii) the Class A-7 Percentage on any Distribution Date occurring prior to the
fifth anniversary of the first Distribution Date, and the Class A-7 Prepayment
Percentage on any Distribution Date thereafter, in each case, of the
Liquidation Principal with respect to such Mortgage Loan.
Class A-7 Percentage: With respect to any Distribution Date, the
Class A-7 Certificate Principal Balance divided by the aggregate Certificate
Principal Balance of the Certificates (other than the Class PO Certificates),
in each case immediately prior to the Distribution Date.
Class A-7 Prepayment Percentage: With respect to any Distribution
Date, the product of (a) the Class A-7 Percentage for such Distribution Date
and (b) the applicable Step Down Percentage.
Class A-7 Priority Amount: With respect to any Distribution Date, the
sum of (i) the Class A-7 Percentage of the Principal Payment Amount (exclusive
of the portion thereof attributable to the principal distributions to the Class
PO Certificates), (ii) the Class A-7 Prepayment Percentage of the Principal
Prepayment Amount (exclusive of the portion thereof attributable to the
principal distributions to the Class PO Certificates) and (iii) the Class A-7
Liquidation Amount.
Class A-8 Certificates: The Certificates designated as "Class A-8" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-9 Certificates: The Certificates designated as "Class A-9" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-10 Certificates: The Certificates designated as "Class A-10"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-11 Certificates: The Certificates designated as "Class A-11"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-12 Certificates: The Certificates designated as "Class A-12"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class A-13 Certificates: The Certificates designated as "Class A-13"
on the face thereof and in substantially the form attached hereto as Exhibit A.
Class X-00 Xxxxxxxx Xxxxxx: With respect to any Distribution Date,
the sum of (a) 4.9180328% of the Class A-12 Certificate Principal Balance and
(b) 4.3173770% of the Class A-5 Certificate Principal Balance.
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Class B Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
and Class B-5, collectively.
Class B-1 Certificates: The Certificates designated as "Class B-1" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-2 Certificates: The Certificates designated as "Class B-2" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-3 Certificates: The Certificates designated as "Class B-3" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-4 Certificates: The Certificates designated as "Class B-4" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class B-5 Certificates: The Certificates designated as "Class B-5" on
the face thereof and in substantially the form attached hereto as Exhibit C.
Class M Certificates: The Certificates designated as "Class M" on the
face thereof and in substantially the form attached hereto as Exhibit B.
Class PO Certificates: The Certificates designated as "Class PO" on
the face thereof and in substantially the form attached hereto as Exhibit A.
Class PO Fraction: For each Class PO Mortgage Loan, a fraction, the
numerator of which is 7.500% less the Pass-Through Rate on such Class PO
Mortgage Loan and the denominator of which is 7.500%.
Class PO Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate of
less than 7.500% per annum.
Class R-I Certificates: The Certificates designated as "Class R-I" on
the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
I.
Class R-II Certificates: The Certificates designated as "Class R-II"
on the face thereof and in substantially the form attached hereto as Exhibit D,
which shall be designated as the single class of "residual interest" in REMIC
II.
Class X Certificates: The Certificates designated as "Class X" on the
face thereof and in substantially the form attached hereto as Exhibit A.
Class X Notional Amount: With respect to any Distribution Date, the
product of (x) the aggregate scheduled principal balance, as of the second
preceding Due Date, after giving effect to payments scheduled to be received as
of such Due Date, whether or not received, or with respect to the initial
Distribution Date, as of the Cut-off Date, of the
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Premium Rate Mortgage Loans and (y) a fraction, the numerator of which is the
weighted average of the Stripped Interest Rate for the Premium Rate Mortgage
Loans as of such Due Date or Cut-off Date, as the case may be; and the
denominator of which is 7.500%.
Closing Date: August 14, 1997.
Code: The Internal Revenue Code of 1986.
Compensating Interest: With respect to any Distribution Date and
either Master Servicer, an amount equal to the aggregate of the Prepayment
Interest Shortfalls with respect to the Mortgage Loans serviced by such Master
Servicer during the calendar month preceding such Distribution Date, but not
more than the sum of one-twelfth of the annual Master Servicing Fee rate of the
Stated Principal Balance of the Mortgage Loans serviced by such Master Servicer
immediately preceding such Distribution Date; provided that for purposes of
this definition the amount of the Master Servicing Fee will not be reduced
pursuant to Section 7.02 except as may be required pursuant to the second to
last sentence of such Section.
Corporate Trust Office: The principal office of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this instrument is located at 0 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxx
00000, Attention: BA Mortgage Securities, Inc., Series 1997-1.
Corresponding Class: With respect to each Tier I Regular Interest,
the corresponding Class or Classes of Certificates representing interests in
REMIC II set forth for such Tier I Regular Interest below:
Tier I Regular Interest N: Class R-II
Tier I Regular Interest O: Class A-1
Tier I Regular Interest P: Class A-2 and Class A-3
Tier I Regular Interest Q: Class A-4
Tier I Regular Interest R: Class A-5 and Class A-13
Tier I Regular Interest S: Class A-6
Tier I Regular Interest T: Class A-7
Tier I Regular Interest U: Class A-8, Class A-10 and Class A-11
Tier I Regular Interest V: Class A-9
Tier I Regular Interest W: Class A-12 and Class A-13
Tier I Regular Interest X: Class PO
Tier I Regular Interest Y: All Subordinate Classes
Tier I Regular Interest Z: Class X
Credit Support Depletion Date: The first Distribution Date on which
the aggregate of the Certificate Principal Balances of the Subordinate
Certificates has been or will be reduced to zero.
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Curtailment: Any Principal Prepayment made by a Mortgagor which is
not a Principal Prepayment in Full.
Custodial Account: Each of the custodial accounts created and
maintained pursuant to Section 3.07 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by a Master Servicer and for such
Master Servicer, into which the amounts set forth in Section 3.07 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
Cut-off Date: August 1, 1997.
Cut-off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto, whether or not received.
DCR: Duff & Xxxxxx Credit Rating Co., or its successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
Deceased Holder: An Owner of an Insured Certificate who was living at
the time such Insured Certificate was acquired and whose authorized personal
representative, surviving tenant by the entirety, surviving joint tenant or
surviving tenant in common or other person empowered to act on behalf of such
Owner causes to be furnished to the Depository a death certificate of such
Owner and any tax waivers requested by the Trustee.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any
scheduled Monthly Payment that constitutes a permanent forgiveness of
principal, which valuation or reduction results from a proceeding under the
Bankruptcy Code.
Definitive Certificate: Any definitive, fully registered Certificate.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
with a Qualified Substitute Mortgage Loan pursuant to Section 2.04 hereof.
Depository: The Depository Trust Company, or any successor Depository
hereafter named. The nominee of the initial Depository for purposes of
registering those Certificates that are to be Book-Entry Certificates is Cede &
Co. The Depository shall at all times be a "clearing corporation" as defined
in the Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended.
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Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th
day (or if such 15th day is not a Business Day, the Business Day immediately
preceding such 15th day) of the month of the related Distribution Date.
Disqualified Organization: Any organization defined as a
"disqualified organization" under Section 860E(e)(5) of the Code, which
includes any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, any international organization,
or any agency or instrumentality of any of the foregoing, (iii) any
organization (other than certain farmers' cooperatives described in Section 521
of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Section 1381(a)(2)(C) of the Code and (v) any other Person so designated by the
Trustee based upon an Opinion of Counsel that the holding of an Ownership
Interest in a Residual Certificate by such Person may cause the Trust Fund, or
any Person having an Ownership Interest in any Class of Certificates (other
than such Person) to incur a liability for any federal tax imposed under the
Code that would not otherwise be imposed but for the Transfer of an Ownership
Interest in a Certificate to such Person. The terms "United States", "State"
and "international organization" shall have the meanings set forth in Section
7701 of the Code or successor provisions.
Distribution Date: The 25th day of any month beginning in the month
following the month of the initial issuance of the Certificates or, if such
25th day is not a Business Day, the Business Day immediately following such
25th day.
Due Date: With respect to any Distribution Date, the first day of the
month in which such Distribution Date occurs.
Due Period: With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date and ending on the related Due Date.
Eligible Account: An account that is any of the following: (i)
maintained with a depository institution the debt obligations of which have
been rated by each Rating Agency in its highest rating available, or (ii) an
account or accounts in a depository institution in which such accounts are
fully insured to the limits established by the FDIC, provided that any deposits
not so insured shall, to the extent acceptable to each Rating Agency, as
evidenced in writing, be maintained such that (as evidenced by an Opinion of
Counsel delivered to the Trustee and each Rating Agency) the registered Holders
of Certificates have a claim with respect to the funds in such account or a
perfected first security interest against any collateral
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(which shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution with which such account is maintained, or (iii) in the case of the
Certificate Account, a trust account or accounts maintained in the corporate
trust division of Bankers Trust Company of California, N.A., or if Bankers
Trust Company is no longer the Trustee, the trust department of a federal or
state chartered depository institution acceptable to each Rating Agency; (iv)
an account or accounts of a depository institution acceptable to each Rating
Agency (as evidenced in writing by each Rating Agency that use of any such
account as a Custodial Account or the Certificate Account will not reduce the
rating assigned to any Class of Certificates by such Rating Agency below the
lower of the then-current rating or the rating assigned to such Certificates as
of the Closing Date by such Rating Agency).
Event of Default: As defined in Section 7.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
Extraordinary Events: Any of the following conditions with respect to
a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses that are of the type that would be covered by
the fidelity bond and the errors and omissions insurance policy
required to be maintained pursuant to Section 3.12(b) but are in
excess of the coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, and whether
such loss be direct or indirect, proximate or remote or be in whole or
in part caused by, contributed to or aggravated by a peril covered by
the definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combatting or defending against an
actual, impending or expected attack:
1. by any government or sovereign power, de jure
or de facto, or by any authority maintaining or using
military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
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(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in hindering,
combatting or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations, confiscation by
order of any government or public authority; or risks of contraband or
illegal transportation or trade.
Extraordinary Losses: Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.
FDIC: Federal Deposit Insurance Corporation or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of
the Emergency Home Finance Act of 1970, as amended, or any successor thereto.
FNMA: Federal National Mortgage Association, a federally chartered
and privately owned corporation organized and existing under the Federal
National Mortgage Association Charter Act, or any successor thereto.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01 which Final Distribution Date shall in no event be later than the end of
the 90-day liquidation period described in Section 9.02.
Financial Security: Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New
York, or any successor thereto.
Financial Security Contact Person: The officer designated by each
Master Servicer to provide information to Financial Security pursuant to
Section 4.10(i).
Financial Security Default: As defined in Section 4.10(l).
Foreclosure Profits: As to any Mortgage Loan on any date of
determination, the excess, if any, of Liquidation Proceeds, Insurance Proceeds
and REO Proceeds (net of all amounts reimbursable therefrom pursuant to Section
3.10(a)(i)) in respect of each Mortgage Loan or REO Property for which a Cash
Liquidation or REO Disposition occurred in the immediately prior calendar month
over the sum of the unpaid principal balance of such Mortgage Loan or REO
Property (determined, in the case of an REO Disposition, in accordance with
Section 3.14) plus accrued and unpaid interest at the Mortgage Rate on such
unpaid principal balance from the Due Date to which interest was last paid by
the Mortgagor to the first day of the month following the month in which such
Cash Liquidation or REO Disposition occurred.
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Fraud Loss Amount: As of any Determination Date after the Cut-off
Date, an amount equal to (X) prior to the first anniversary of the Cut-off Date
an amount equal to 2% of the aggregate outstanding principal balance of all of
the Mortgage Loans as of the Cut-off Date minus the aggregate amount of Fraud
Losses allocated solely to one or more specific Classes of Certificates in
accordance with Section 4.05 since the Cut-off Date up to such Determination
Date, (Y) from the first through the fifth anniversary of the Cut-off Date, an
amount equal to (1) the lesser of (a) the Fraud Loss Amount as of the most
recent anniversary of the Cut-off Date and (b) 1% of the aggregate principal
balance of all of the Mortgage Loans as of the most recent anniversary of the
Cut-off Date minus (2) the aggregate amount of Fraud Losses allocated solely to
one or more specific Classes of Certificates in accordance with Section 4.05
since the most recent anniversary of the Cut-off Date up to such Determination
Date and (Z) on and after the fifth anniversary of the Cut-off Date, the Fraud
Loss Amount shall be zero.
Fraud Losses: Losses on Mortgage Loans as to which there was fraud in
the origination of such Mortgage Loan.
FSA Premium: With respect to any Distribution Date and the Policy an
amount equal to 1/12th of the product of (i) the Certificate Principal Balance
of the Class A-5 Certificates as of such Distribution Date (prior to giving
effect to any distributions thereon on such Distribution Date) and (ii)
0.0458%.
Guaranteed Distributions: With respect to any Distribution Date, (i)
the Accrued Certificate Interest for the Class A-5 Certificates for such
Distribution Date, (ii) the amount of any Net Prepayment Interest Shortfall
allocated to the Class A-5 Certificates on such Distribution Date that are not
covered by the Reserve Fund, (iii) the Realized Losses not covered by the
Subordinate Certificates (including Excess Special Hazard Losses, Excess Fraud
Losses, Excess Bankruptcy Losses and Extraordinary Losses) allocated to the
Class A-5 Certificates on such Distribution Date, (iv) the Advances previously
made with respect to a Mortgage Loan or REO Property which remained
unreimbursed following the Cash Liquidation or REO Disposition of such Mortgage
Loan or REO Property that were made with respect to delinquencies that were
ultimately determined to be Excess Special Hazard Losses, Excess Fraud Losses,
Excess Bankruptcy Losses or Extraordinary Losses and were allocated to the
Class A-5 Certificates on such Distribution Date and (v) the Certificate
Principal Balance of the Class A-5 Certificates, to the extent unpaid on the
Final Distribution Date. The Policy will not provide payment for interest
shortfalls allocable to the Class A-5 Certificates which are attributable to
application of the Soldier and Sailors Civil Relief Act of 1940, as amended.
Independent: When used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Depositor, the Master
Servicers and the Trustee, or any Affiliate thereof, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Depositor, the Master Servicers or the Trustee or in an Affiliate thereof, and
(iii) is not connected with the Depositor, the Master Servicers or the Trustee
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
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Individual Insured Certificate: A Class A-5 Certificate that
evidences $1,000 initial Certificate Principal Balance.
Initial Certificate Principal Balance: With respect to each Class of
Certificates, the Certificate Principal Balance of such Class of Certificates
as of the Cut-off Date as set forth in the Preliminary Statement hereto.
Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Mortgage Insurance Policy or any other related
insurance policy, other than the Policy, covering a Mortgage Loan, to the
extent such proceeds are payable to the mortgagee under the Mortgage, any
Subservicer, the Master Servicer of such Mortgage Loan or the Trustee and are
not applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the procedures that such Master Servicer would
follow in servicing mortgage loans held for its own account.
Insurer: Any named insurer under any Primary Mortgage Insurance
Policy or any successor thereto or the named insurer in any replacement policy.
Late Collections: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIBOR: With respect to each Distribution Date, the London Interbank
Offered Rate for one-month United States dollar-denominated deposits determined
by the Trustee on the basis of quotations as of approximately 11:00 a.m.
(London time) appearing the display designated as page 3750 on the Telerate
Service (or such other page as may replace that page on that service for the
purpose of displaying London interbank offered rates of major banks). In the
event that such rate does not appear on such page (or such other page as may
replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be selected
by the Trustee after consultation with the Master Servicers), the rate will be
the Reference Bank Rate. The "Reference Bank Rate" will be determined on the
basis of the rates at which deposits in U.S. Dollars are offered by the
reference banks (which shall be three major banks that are engaged in
transactions in the London interbank market, selected by the Trustee after
consultation with the Master Servicers) as of 11:00 a.m., London time, on the
LIBOR Rate Adjustment Date to prime banks in the London interbank market for a
period of one month in amounts approximately equal to the aggregate Certificate
Principal Balance of the LIBOR Certificates then outstanding. The Trustee will
request the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations. If on such date fewer than two
quotations are provided as requested, the rate will be the arithmetic means of
the rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Master Servicer, as of 11:00 a.m., New York
City time, on such date for loans in U.S. Dollars to leading European banks for
a period of one month in amounts approximately equal to the aggregate
Certificate Principal Balance of the LIBOR Certificates
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then outstanding. If no such quotations can be obtained, the rate will be
LIBOR for the prior Distribution Date.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
LIBOR Certificates: The Class A-2 and Class A-3 Certificates.
LIBOR Reserve Fund: The separate Eligible Account created and
maintained by the Trustee, pursuant to Section 2.02 with a depository institute
in the name of the Trustee for the benefit of the Certificateholders specified
in Section 2.02 and designated "Bankers Trust Company of California, N.A., as
Trustee, LIBOR Reserve Fund, in trust for registered holders of BA Mortgage
Securities, Inc. Mortgage Pass-Through Certificates, Series 1997-1, Class A-2
and Class A-3." The LIBOR Reserve Fund will not be part of the Trust Fund and,
for all federal income tax purposes, will be beneficially owned by the
Underwriter. Amounts on deposit in the LIBOR Reserve Fund shall not be
invested.
LIBOR Reserve Fund Amount: $354,804.82
Liquidated Mortgage Loan: A Mortgage Loan as to which the related
Master Servicer or any applicable Subservicer has determined in accordance with
its customary servicing practices that all amounts which it expects to recover
from or on account of such Mortgage Loan, whether from Insurance Proceeds,
Liquidation Proceeds or otherwise have been recovered. For purposes of this
definition, acquisition of a Mortgaged Property by the Trust Fund shall not
constitute final liquidation of the related Mortgage Loan.
Liquidation Principal: The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Mortgage
Loan (but not in excess of the principal balance thereof) during the Prior
Period, exclusive of the portion thereof attributable to the principal
distributions to the Class PO Certificates.
Liquidation Proceeds: Amounts (other than Insurance Proceeds)
received by a Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation
or in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than REO Proceeds.
Living Holder: An Owner of an Insured Certificate other than a
Deceased Holder.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
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Master Servicing Fee: With respect to any Mortgage Loan, the fee
payable monthly to the Master Servicer of such Mortgage Loan in respect of
master servicing compensation that accrues at an annual rate designated on the
Mortgage Loan Schedule for such Mortgage Loan, as may be adjusted with respect
to successor Master Servicers as provided in Section 7.02. In addition, the
Master Servicing Fee shall include any increase in payments of interest on any
Mortgage Loan following an increase in the Mortgage Rate on such Mortgage Loan
as a result of (i) the termination of the Mortgagor's employment by either of
the Sellers or any of their Affiliates or (ii) the Mortgagor's discontinuation
of electronic debiting for payments of the related Mortgage Loan.
Maturity Date: The latest possible maturity date, solely for purposes
of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, by which the
Certificate Principal Balance of each Class of Certificates representing a
regular interest in REMIC II and the principal balance of each Tier I Regular
Interest would be reduced to zero, which is July 25, 2026, the Distribution
Date immediately following the latest scheduled maturity date of any Mortgage
Loan.
Monthly Payment: With respect to any Mortgage Loan (including any REO
Property) and any Due Date, the payment of principal and interest due thereon
in accordance with the amortization schedule at the time applicable thereto
(after adjustment, if any, for curtailments and for Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule by reason of any bankruptcy, other than a Deficient Valuation, or
similar proceeding or any moratorium or similar waiver or grace period).
Moody's: Xxxxx'x Investors Service, Inc., or its successor in
interest.
Mortgage: The mortgage, deed of trust or other comparable instrument
creating a first lien on an estate in fee simple or leasehold interest in real
property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Purchase Agreement: A Mortgage Loan Purchase Agreement
between a Seller and the Depositor, dated August 14, 1997, substantially in the
form attached hereto as Exhibit F.
Mortgage Loan Schedule: The list of the Mortgage Loans attached
hereto as Exhibit E-1 and Exhibit E-2 (as amended from time to time to reflect
the removal of Deleted Mortgage Loans and the addition of Qualified Substitute
Mortgage Loans), which list shall set forth at a minimum the following
information as to each Mortgage Loan:
(i) the name of the Mortgager;
(ii) the Mortgage Loan identifying number;
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(iii) the street address of the Mortgaged Property including state
and zip code;
(iv) the maturity date of the Mortgage Note;
(v) the Mortgage Rate;
(vi) the Net Mortgage Rate;
(vii) the initial scheduled monthly payment of principal, if any,
and interest;
(viii) the principal balance of the Mortgage Loan at origination;
(ix) the Cut-off Date Principal Balance;
(x) the Loan-to-Value Ratio at origination;
(xi) the rate at which the Master Servicing Fee accrues;
(xii) a code indicating that the Mortgage Loan is secured by a
second or vacation residence;
(xiii) a code indicating that the Mortgage Loan is secured by a
non-owner occupied residence;
(xiv) a code indicating whether or not a Primary Mortgage Policy
exists for the Mortgage Loan; and
Such schedule may consist of multiple reports that collectively set forth all
of the information requested.
Mortgage Loans: Such of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.01 as from time to time are held or deemed
to be held as part of the Trust Fund, the Mortgage Loans originally so held
being identified in the initial Mortgage Loan Schedule, and Qualified
Substitute Mortgage Loans held or deemed held as part of the Trust Fund
including, without limitation, each related Mortgage Note, Mortgage and
Mortgage File and all rights appertaining thereto.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with any modification thereto.
Mortgage Rate: As to any Mortgage Loan, the interest rate borne by
the related Mortgage Note, or any modification thereto.
Mortgaged Property: The underlying real property securing a Mortgage
Loan.
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Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate borne by the related Mortgage Note less the
per annum rate at which the related Master Servicing Fee accrues.
Net Prepayment Interest Shortfall: As to any Distribution Date, the
Prepayment Interest Shortfall for such Distribution Date not funded by the
applicable Master Servicer as Compensating Interest.
Non-Primary Residence Loans: The Mortgage Loans designated as secured
by second or vacation residences, or by non-owner occupied residences, on the
Mortgage Loan Schedule.
Non-United States Person: Any Person other than a United States
Person.
Nonrecoverable Advance: Any Advance or Servicing Advance previously
made or proposed to be made by a Master Servicer in respect of a Mortgage Loan
(other than a Deleted Mortgage Loan) which, in the good faith judgment of such
Master Servicer, will not, or, in the case of a proposed Advance or Servicing
Advance, would not, be ultimately recoverable by such Master Servicer from
related Late Collections, Insurance Proceeds, Liquidation Proceeds, REO
Proceeds or amounts reimbursable to such Master Servicer pursuant to Section
4.02(a) hereof.
Nonrecoverable Subservicer Advance: Any Subservicer Servicing Advance
previously made or proposed to be made by a Subservicer in respect of a
Mortgage Loan (other than a Deleted Mortgage Loan) which, in the good faith
judgment of Subservicer, will not, or, in the case of a proposed Subservicer
Servicing Advance, would not, be ultimately recoverable by such Subservicer
from related Late Collections, Insurance Proceeds, Liquidation Proceeds, or REO
Proceeds.
Nonsubserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is not subject to a Subservicing Agreement.
Notice of Claim: The notice to be delivered by the Trustee to
Financial Security with respect to any Distribution Date, pursuant to Section
4.10(a), which notice shall be in the form attached to the applicable Policy.
Notional Amount: With respect to the Class A-3 Certificates, the
Class A-3 Notional Amount; with respect to the Class X Certificates, the Class
X Notional Amount.
Officers' Certificate: A certificate signed by (i) the Chairman of
the Board, the President or a Vice President or Assistant Vice President, or a
Director or Managing Director, and by the Treasurer, the Secretary, or one of
the Assistant Treasurers or Assistant Secretaries of a Seller or the Depositor,
as the case may be, or (ii) a Servicing Officer of a Master Servicer, and
delivered to the Trustee, as required by this Agreement.
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Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and the Master Servicers, who may be counsel for a Seller, the
Depositor or a Master Servicer, provided that any opinion of counsel (i)
referred to in the definition of "Permitted Transferee" or (ii) relating to the
qualification of either REMIC I or REMIC II as a REMIC or compliance with the
REMIC Provisions must, unless otherwise specified, be an opinion of Independent
counsel.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in Full, Cash Liquidation or REO Disposition and which was not purchased,
deleted or substituted for prior to such Due Date pursuant to Section 2.02 or
2.04.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
Owner: Each Holder of an Insured Certificate who, on the applicable
Distribution Date, is entitled under the terms of the Class A-5 Certificates to
payment thereunder.
Pass-Through Rate: With respect to any Class of Certificates and any
Distribution Date, the per annum rate set forth or described in the Preliminary
Statement hereto.
Paying Agent: Bankers Trust Company of California, N.A., or any
successor Paying Agent appointed by the Trustee.
Payoff Period: With respect to the first Distribution Date, the
period from the Cut-off Date through September 14, 1997, inclusive; and with
respect to any Distribution Date thereafter, the period from the 15th day of
the Prior Period through the 14th day of the month of such Distribution Date,
inclusive.
Percentage Interest: With respect to any Certificate (other than a
Residual Certificate), the undivided percentage ownership interest in the
related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the Initial Certificate Principal Balance or
Notional Amount thereof divided by the aggregate Initial Certificate Principal
Balance or Notional Amount of all of the Certificates of the same Class. With
respect to a Residual Certificate, the interest in distributions to be made
with respect to such Class evidenced thereby, expressed as a percentage, as
stated on the face of each such Certificate.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof
when such obligations are backed by the full faith and
credit of the United States;
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(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than one month from the date of
acquisition thereof, provided that the unsecured obligations
of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest
short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each
have an original maturity of not more than 90 days and, in
the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days or a remaining
maturity of more than 30 days) denominated in United States
dollars of any U.S. depository institution or trust company
incorporated under the laws of the United States or any
state thereof or of any domestic branch of a foreign
depository institution or trust company; provided that the
debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated
by each Rating Agency in its next to highest short-term
rating available;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the
laws of the United States or any state thereof which on the
date of acquisition has been rated by each Rating Agency in
its highest short-term rating available; provided that such
commercial paper shall have a remaining maturity of not more
than 30 days;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest long-term rating
available; and
(vi) other obligations or securities that are acceptable to each
Rating Agency as a Permitted Investment hereunder and will
not reduce the rating assigned to any Class of Certificates
by such Rating Agency (determined in the case of the Class
A-5 without regard to the effect of the applicable Policy)
below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date by such
Rating Agency, as evidenced in writing;
provided, however, (A) such obligation or security is held for a temporary
period pursuant to Section 1.860G-2(g)(1) of the Treasury regulations and (B)
that no instrument shall be a Permitted Investment if it represents, either (1)
the right to receive only interest payments with respect to the underlying debt
instrument or (2) the right to receive both principal and interest payments
derived from obligations underlying such instrument and the principal and
interest payments with respect to such instrument provide a yield to maturity
greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the next to highest rating available on
unsecured long-term debt shall mean AA in the case of DCR and Aa3 in the case
of Moody's, and references herein to the highest rating available on unsecured
commercial paper and short-term debt obligations shall mean P-1 in the case of
Moody's and D-1 in the case of DCR.
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Permitted Transferee: Any Transferee of a Residual Certificate, other
than a Disqualified Organization or Non-United States Person.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
Policy: The irrevocable Financial Guaranty Insurance Policy, No.
50614-N, including any endorsements thereto, issued by Financial Security with
respect to the Class A-5 Certificates, in the form attached hereto as Exhibit
Q.
Policy Payments Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 4.10(c) in the name of the
Trustee for the benefit of the Class A-5 Certificateholders and designated
"Bankers Trust Company of California, N.A., as Trustee in trust for registered
holders of BA Mortgage Securities, Inc. Mortgage Pass-Through Certificates,
Series 1997-1, Class A-5". Funds in the Policy Payments Account shall be held
in trust for the Class A-5 Certificateholders for the uses and purposes set
forth in this Agreement.
Pool Stated Principal Balance: As to any Determination Date, the
aggregate of the Stated Principal Balances of each Mortgage Loan that was an
Outstanding Mortgage Loan on the Due Date in the month preceding the month of
such date of determination.
Premium Rate Mortgage Loans: Those Mortgage Loans having Net Mortgage
Rates greater than or equal to 7.500% per annum.
Prepayment Assumption: A prepayment assumption of 185% of the
standard prepayment assumption, used for determining the accrual of original
issue discount and market discount and premium on the Certificates for federal
income tax purposes. The standard prepayment assumption assumes a constant
rate of prepayment of mortgage loans of 0.2% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans, increasing by an additional 0.2% per annum in each succeeding
month until the thirtieth month, and a constant 6% per annum rate of prepayment
thereafter for the life of the mortgage loans.
Prepayment Interest Shortfall: As to any Distribution Date and any
Mortgage Loan (other than a Mortgage Loan relating to an REO Property) that was
the subject of (a) a Principal Prepayment in Full during the calendar month
preceding such Distribution Date, an amount equal to the excess of one month's
interest at the Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan over the amount of interest (adjusted to the Net Mortgage Rate)
paid by the Mortgagor for the calendar month preceding such Distribution Date
to the date of such Principal Prepayment in Full or (b) a Curtailment during
the prior calendar month, an amount equal to the excess of one month's interest
at the Net Mortgage Rate on the amount of such Curtailment over the amount of
interest (adjusted to the Net Mortgage Rate) paid by the Mortgagor for the
calendar month preceding such Distribution Date to the date of such
Curtailment.
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Primary Mortgage Insurance Policy: A policy of mortgage guaranty
insurance, if any, or any replacement policy therefor, as evidenced by a policy
or certificate, providing coverage as required by clause (xi) of Exhibit 3 to
each Mortgage Loan Purchase Agreement.
Primary Servicing Fee: As to any Mortgage Loan, that portion of the
Master Servicing Fee that constitutes the fee payable monthly to the related
Subservicer in respect of servicing and other compensation that accrues at an
annual rate as set forth in the applicable Subservicing Agreement.
Principal Payment Amount: With respect to any Distribution Date, the
sum of (i) scheduled principal payments on the Mortgage Loans due on the
related Due Date, (ii) the principal portion of the Purchase Price received
with respect to any Mortgage Loan, which was repurchased as permitted or
required hereunder during the Prior Period, and (iii) any other unscheduled
payments of principal, other than Principal Prepayments or Liquidation
Principal, which were received during the Prior Period.
Principal Prepayment: Any payment of principal or other recovery on a
Mortgage Loan, including a recovery that takes the form of Liquidation Proceeds
or Insurance Proceeds, which is received in advance of its scheduled Due Date
and is not accompanied by an amount as to interest representing scheduled
interest on such payment due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment Amount: With respect to any Distribution Date,
the sum of (i) Curtailments received during the Prior Period and (ii) all
Principal Prepayments in Full received during the Payoff Period.
Principal Prepayment in Full: Any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
Prior Period: The calendar month immediately preceding any
Distribution Date.
Purchase Price: With respect to any Mortgage Loan (or REO Property)
required to be purchased on any date pursuant to Section 2.02 or 2.04, an
amount equal to the sum of (i) 100% of the Stated Principal Balance thereof
plus the principal portion of any related unreimbursed Advances and Servicing
Advances and (ii) unpaid accrued interest at the Mortgage Rate on the Stated
Principal Balance thereof to the first day of the month following the month of
purchase from the Due Date to which interest was last paid by the Mortgagor.
Qualified Substitute Mortgage Loan: A Mortgage Loan substituted by a
Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officers' Certificate delivered to the
Trustee, (i) have an outstanding principal balance, after deduction of the
principal portion of the monthly payment due in the month of substitution (or
in the case of a substitution of more than one Mortgage Loan for a Deleted
Mortgage Loan, an aggregate outstanding principal balance, after such
deduction), not in excess of (and not substantially less than) the Stated
Principal Balance of the Deleted Mortgage Loan (the amount of any shortfall to
be remitted by the applicable Seller to the Master Servicer of such
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Deleted Mortgage Loan for deposit in the applicable Custodial Account in the
month of substitution); (ii) have a Mortgage Rate and a Net Mortgage Rate no
lower than and not more than 1% per annum higher than the Mortgage Rate and Net
Mortgage Rate, respectively, of the Deleted Mortgage Loan as of the date of
substitution; (iii) have a Loan-to-Value Ratio at the time of substitution no
higher than that of the Deleted Mortgage Loan at the time of substitution; (iv)
have a remaining term to stated maturity not greater than (and not more than
one year less than) that of the Deleted Mortgage Loan; (v) comply with each
representation and warranty set forth in Exhibit 3 to the applicable Mortgage
Loan Purchase Agreement.
Random Lot: With respect to any Distribution Date on which a
mandatory distribution is to be made on the Class A-5 Certificates (as
described in Section 4.09), the method by which the Depository will determine
which Class A-5 Certificates will be paid principal, using its established
random lot procedure or, if the Class A-5 Certificates are no longer
represented by a Book-Entry Certificate, using a random lot procedure
established by the Trustee.
Rating Agency: Moody's and DCR. If either agency or a successor is
no longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Master Servicers.
Realized Loss: With respect to each Mortgage Loan (or REO Property)
as to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
(or REO Property) as of the date of Cash Liquidation or REO Disposition, plus
(ii) interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from
the Due Date as to which interest was last paid or advanced to
Certificateholders up to the last day of the month in which the Cash
Liquidation (or REO Disposition) occurred on the Stated Principal Balance of
such Mortgage Loan (or REO Property) outstanding during each Due Period that
such interest was not paid or advanced, minus (iii) the proceeds, if any,
received during the month in which such Cash Liquidation (or REO Disposition)
occurred, to the extent applied as recoveries of interest at the Net Mortgage
Rate and to principal of the Mortgage Loan, net of the portion thereof
reimbursable to the Master Servicer of such Mortgage Loan or any Subservicer
with respect to related Advances, Servicing Advances, Subservicer Servicing
Advances or expenses as to which the Master Servicer of such Mortgage Loan or
any Subservicer is entitled to reimbursement thereunder but which have not been
previously reimbursed. With respect to each Mortgage Loan for which the Master
Servicer of such Mortgage Loan has forgiven the payment of any principal, the
amount of such forgiven principal. With respect to each Mortgage Loan which
has become the subject of a Deficient Valuation, the difference between the
principal balance of the Mortgage Loan outstanding immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced
by the Deficient Valuation. With respect to each Mortgage Loan which has
become the object of a Debt Service Reduction, the amount of such Debt Service
Reduction.
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Record Date: With respect to each Distribution Date, the close of
business on the last Business Day of the month next preceding the month in
which the related Distribution Date occurs.
Regular Certificate: Any of the Certificates other than a Residual
Certificate.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code, including REMIC I and REMIC II.
REMIC Administrator: Bankers Trust Company of California, N.A., or
any successor REMIC Administrator. If Bankers Trust Company of California,
N.A. or any successor REMIC Administrator is found by a court of competent
jurisdiction to no longer be able to fulfill its obligations as REMIC
Administrator under this Agreement, the Depositor shall appoint a successor
REMIC Administrator, subject to assumption of the REMIC Administrator
obligations under this Agreement.
REMIC Provisions: Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary and final regulations (or, to the extent not inconsistent with
such temporary or final regulations, proposed regulations) and published
rulings, notices and announcements promulgated thereunder, as the foregoing may
be in effect from time to time.
REO Acquisition: The acquisition by a Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.14.
REO Disposition: As to any REO Property, a determination by the
related Master Servicer that it has received all Insurance Proceeds,
Liquidation Proceeds, REO Proceeds and other payments and recoveries (including
proceeds of a final sale) which such Master Servicer expects to be finally
recoverable from the sale or other disposition of the REO Property.
REO Imputed Interest: As to any REO Property, for any period, an
amount equivalent to interest (at the Net Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
for such period.
REO Proceeds: Proceeds, net of expenses, received in respect of any
REO Property (including, without limitation, proceeds from the rental of the
related Mortgaged Property) which proceeds are required to be deposited into
the applicable Custodial Account only upon the related REO Disposition.
REO Property: A Mortgaged Property acquired by a Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders through
foreclosure or deed in lieu of foreclosure in connection with a defaulted
Mortgage Loan.
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Request for Release: A request for release, the forms of which are
substantially in the form attached as Exhibit G hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under
this Agreement or any related Subservicing Agreement in respect of such
Mortgage Loan.
Reserve Fund: The separate Eligible Account created and maintained by
the Trustee pursuant to Section 2.02 with a depository institution in the name
of the Trustee for the benefit of the Certificateholders specified in Section
2.02 and designated "Bankers Trust Company of California, N.A., as Trustee,
Reserve Fund in trust for registered holders of BA Mortgage Securities, Inc.
Mortgage Pass-Through Certificates, Series 1997-1, Class A-5". The Reserve
Fund will not be a part of the Trust Fund and, for all federal income tax
purposes, will be beneficially owned by the Underwriter.
Residual Certificates: The Class R-I Certificates and the Class R-II
Certificates, collectively.
Responsible Officer: When used with respect to the Trustee, any
officer of the Corporate Trust Department of the Trustee, including any Senior
Vice President, any Vice President, any Assistant Vice President, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers to whom, with respect to a particular
matter, such matter is referred.
Rounding Amount: With respect to the Class A-5 Rounding Account, the
amount of funds, if any, needed to be withdrawn and used to round the amount of
any distribution in reduction of the aggregate Certificate Principal Balance for
Class A-5 Certificates upward to the next higher integral multiple of $1,000.
Seller: An institution from which the Depositor purchased any
Mortgage Loans pursuant to a Mortgage Loan Purchase Agreement. Bank of America
National Trust and Savings Association is the Seller with respect to the
Mortgage Loans set forth on Exhibit E-1 and Bank of America Federal Savings
Bank is the Seller with respect to the Mortgage Loans set forth on Exhibit E-2.
Senior Certificates: The Class A Certificates, the Class X
Certificates, the Class PO Certificates and the Residual Certificates,
collectively.
Senior Interest Distribution Amount: With respect to any Distribution
Date, the aggregate amount of Accrued Certificate Interest required to be
distributed to the Senior Certificates on such date.
Senior Liquidation Amount: The aggregate of, for each Mortgage Loan
which became a Liquidated Mortgage Loan during the Prior Period, the lesser of:
(i) the Senior Percentage of the Stated Principal Balance of such Mortgage Loan
(exclusive of the Class PO
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Fraction thereof, if applicable) and (ii) the Senior Prepayment Percentage of
the Liquidation Principal with respect to such Mortgage Loan.
Senior Percentage: With respect to any Distribution Date, the sum of
the Certificate Principal Balances of the Senior Certificates (other than the
Class PO Certificates) divided by the aggregate Certificate Principal Balance
of all Classes of Certificates (other than the Class PO Certificates), in each
case, immediately prior to such Distribution Date.
Senior Prepayment Percentage: (i) On any Distribution Date occurring
before the Distribution Date in the month of the fifth anniversary of the first
Distribution Date, 100%; (ii) on any other Distribution Date on which the
Senior Percentage for such Distribution Date exceeds the initial Senior
Percentage as of the Cut-off Date, 100%; and (iii) on any other Distribution
Date in each of the months of the fifth anniversary of the first Distribution
Date and thereafter, 100%, unless:
(a) the mean aggregate Stated Principal Balance of Mortgage Loans which
are 60 or more days delinquent (including loans in foreclosure and
property held by the Trust Fund) for each of the immediately
preceding six calendar months is less than 50% of the aggregate of
the Certificate Principal Balances of the Subordinate Certificates,
and
(b) cumulative Realized Losses on the Mortgage Loans allocated to the
Subordinate Certificates are less than or equal to (1) for any
Distribution Date before the month of the sixth anniversary of the
month of the first Distribution Date, 30% of the sum of the
Certificate Principal Balances of the Subordinate Certificates as
of the Cut-off Date, (2) for any Distribution Date in or after the
month of the sixth anniversary of the month of the first
Distribution Date but before the seventh anniversary of the month
of the first Distribution Date, 35% of the sum of the Certificate
Principal Balances of the Subordinate Certificates as of the
Cut-off Date, (3) for any Distribution Date in or after the month
of the seventh anniversary of the month of the first Distribution
Date but before the eighth anniversary of the month of the first
Distribution Date, 40% of the sum of the Certificate Principal
Balances of the Subordinate Certificates as of the Cut-off Date,
(4) for any Distribution Date in or after the month of the eighth
anniversary of the month of the first Distribution Date but before
the ninth anniversary of the month of the first Distribution Date,
45% of the sum of the Certificate Principal Balances of the
Subordinate Certificates as of the Cut-off Date, and (5) for any
Distribution Date in or after the month of the ninth anniversary of
the month of the first Distribution Date, 50% of the sum of the
Certificate Principal Balances of the Subordinate Certificates as
of the Cut-off Date,
in which case, as follows: (1) for any such Distribution Date in or after the
month of the fifth anniversary of the month of the first Distribution Date but
before the sixth anniversary of the month of the first Distribution Date, the
Senior Percentage for such Distribution Date plus 70% of the Subordinate
Percentage for such Distribution Date; (2) for any such Distribution Date in or
after the month of the sixth anniversary of the month of the first
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Distribution Date but before the seventh anniversary of the month of the first
Distribution Date, the Senior Percentage for such Distribution Date plus 60% of
the Subordinate Percentage for such Distribution Date; (3) for any such
Distribution Date in or after the month of the seventh anniversary of the month
of the first Distribution Date but before the eighth anniversary of the month
of the first Distribution Date, the Senior Percentage for such Distribution
Date plus 40% of the Subordinate Percentage for such Distribution Date; (4) for
any such Distribution Date in or after the month of the eighth anniversary of
the month of the first Distribution Date but before the ninth anniversary of
the month of the first Distribution Date, the Senior Percentage for such
Distribution Date plus 20% of the Subordinate Percentage for such Distribution
Date; and (5) for any such Distribution Date thereafter, the Senior Percentage
for such Distribution Date.
If on any Distribution Date the allocation to the Senior Certificates
(other than the Class PO Certificates) of Principal Prepayments in the
percentage required would reduce the sum of the Certificate Principal Balances
of the Senior Certificates (other than the Class PO Certificates) below zero,
the Senior Prepayment Percentage for such Distribution Date shall be limited to
the percentage necessary to reduce such sum to zero.
Senior Principal Distribution Amount: With respect to any Distribution
Date, the sum of (i) the Senior Percentage of the Principal Payment Amount
(exclusive of the portion thereof attributable to the principal distributions
to the Class PO Certificates), (ii) the Senior Prepayment Percentage of the
Principal Prepayment Amount (exclusive of the portion thereof attributable to
the principal distributions to the Class PO Certificates) and (iii) the Senior
Liquidation Amount.
Servicing Accounts: The account or accounts created and maintained
pursuant to Section 3.08.
Servicing Advances: All customary and reasonable "out of pocket" costs
and expenses incurred in connection with a default, delinquency or other
unanticipated event by a Master Servicer in the performance of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of any REO Property and (iv) compliance with the obligations under
Sections 3.01, 3.08, 3.12(a) and 3.14; and any amount that is stated herein to
be a "Servicing Advance."
Servicing Officer: Any officer of a Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Trustee by such Master Servicer, as such list may from time to time be
amended.
Special Hazard Amount: As of any Distribution Date, an amount equal to
$6,730,712 minus the sum of (i) the aggregate amount of Special Hazard Losses
allocated solely to one or more specific Classes of Certificates in accordance
with Section 4.05 and (ii) the Adjustment Amount (as defined below) as most
recently calculated. For each anniversary of
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the Cut-off Date, the Adjustment Amount shall be equal to the amount, if any,
by which the amount calculated in accordance with the preceding sentence
(without giving effect to the deduction of the Adjustment Amount for such
anniversary) exceeds the greater of (A) 1% (or, if greater than 1%, the highest
percentage of Mortgage Loans, by principal balance, in any California zip code
area) times the aggregate principal balance of all of the Mortgage Loans in the
Mortgage Pool on such anniversary and (ii) twice the principal balance of the
single Mortgage Loan in the Mortgage Pool having the largest principal balance.
Special Hazard Loss: Any Realized Loss not in excess of the cost of the
lesser of repair or replacement of a Mortgaged Property suffered by such
Mortgaged Property on account of direct physical loss, exclusive of (i) any
loss of a type covered by a hazard policy or a flood insurance policy required
to be maintained in respect of such Mortgaged Property pursuant to Section
3.12(a), except to the extent of the portion of such loss not covered as a
result of any coinsurance provision and (ii) any Extraordinary Loss.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the Cut-off Date Principal Balance of the
Mortgage Loan, minus (ii) the sum of (a) the principal portion of the Monthly
Payments due with respect to such Mortgage Loan or REO Property during each Due
Period ending prior to the last succeeding Distribution Date which were
received or with respect to which an Advance was made, and (b) all Principal
Prepayments with respect to such Mortgage Loan or REO Property, and all
Insurance Proceeds, Liquidation Proceeds and REO Proceeds, to the extent
applied by the Master Servicer of such Mortgage Loan as recoveries of principal
in accordance with Section 3.14 with respect to such Mortgage Loan or REO
Property, in each case which were distributed pursuant to Section 4.02 on any
previous Distribution Date, and (c) any Realized Loss allocated to
Certificateholders with respect thereto for any previous Distribution Date.
Step Down Percentage: With respect to any Distribution Date occurring
from September 1997 through August 2002, 0%; with respect to any Distribution
Date occurring from September 2002 through August 2003, 30%; with respect to
any Distribution Date occurring from September 2003 through August 2004, 40%;
with respect to any Distribution Date occurring from September 2004 through
August 2005, 60%; with respect to any Distribution Date occurring from
September 2005 through August 2006, 80%; with respect to any Distribution Date
occurring from and after September 2006, 100%.
Stripped Interest Rate: For each Mortgage Loan, the excess, if any, of
the Net Mortgage Rate for such Mortgage Loan over 7.500%.
Subordinate Certificates: The Class M and the Class B Certificates,
collectively.
Subordinate Liquidation Amount: The excess, if any, of the aggregate of
Liquidation Principal for all Mortgage Loans which became Liquidated Mortgage
Loans during the Prior Period, over the related Senior Liquidation Amount for
such Distribution Date.
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Subordinate Percentage: As of any Distribution Date, 100% minus the
Senior Percentage as of such Distribution Date.
Subordinate Prepayment Percentage: On any Distribution Date, the excess
of 100% over the Senior Prepayment Percentage for such Distribution Date;
provided, however, that if the aggregate of the Certificate Principal Balances
of the Senior Certificates (other than the Class PO Certificates) has been
reduced to zero, then the Subordinate Prepayment Percentage shall equal 100%.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date the sum of (i) the Subordinate Percentage of the Principal
Payment Amount (exclusive of the portion thereof attributable to the principal
distributions to the Class PO Certificates), (ii) the Subordinate Prepayment
Percentage of the Principal Prepayment Amount (exclusive of the portion thereof
attributable to the principal distributions to the Class PO Certificates) and
(iii) the Subordinate Liquidation Amount.
Subordination Level: On any specified date, with respect to any Class
of Class B Certificates, the percentage obtained by dividing the sum of (A) the
Certificate Principal Balance of such Class and (B) the aggregate Certificate
Principal Balance of all Classes of Certificates which are subordinate in right
of payment to such Class by the aggregate Certificate Principal Balance of all
of the Certificates as of such date, prior to giving effect to distributions or
allocations of Realized Losses on the Mortgage Loans on such date.
Subserviced Mortgage Loan: Any Mortgage Loan that, at the time of
reference thereto, is subject to a Subservicing Agreement.
Subservicer: Any Person with whom a Master Servicer has entered into a
Subservicing Agreement.
Subservicer Servicing Advances: All customary and reasonable "out of
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event by a Subservicer in the performance of its
servicing obligations as required by the related Subservicing Agreement,
including, but not limited to, the cost of (i) the preservation, restoration
and protection of a Mortgaged Property, (ii) any enforcement or judicial
proceedings, including foreclosures, and (iii) the management and liquidation
of any REO Property; and any amount that is stated herein to be a "Subservicer
Servicing Advance."
Subservicing Account: An account established by a Subservicer in
accordance with Section 3.08.
Subservicing Agreement: The written contract between a Master Servicer
and any Subservicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q
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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
REMICs due to their classifications as REMICs 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
provisions of federal, state or local tax laws.
Tier I Regular Interest N: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class R-II
Certificates, and which bears interest at 7.625%.
Tier I Regular Interest O: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-1
Certificates, and which bears interest at 7.250%.
Tier I Regular Interest P: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-2
Certificates, and which bears interest at 9.000%.
Tier I Regular Interest Q: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-4
Certificates, and which bears interest at 7.350%.
Tier I Regular Interest R: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-5
Certificates, and which bears interest at 7.250%.
Tier I Regular Interest S: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-6
Certificates, and which bears interest at 0.000%.
Tier I Regular Interest T: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-7
Certificates, and which bears interest at 7.500%.
Tier I Regular Interest U: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate
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Certificate Principal Balance of the Class A-8 Certificates, the Class A-10
Certificates and the Class A-11 Certificates and which bears interest at
7.100%.
Tier I Regular Interest V: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-9
Certificates, and which bears interest at 6.950%.
Tier I Regular Interest W: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class A-12
Certificates, and which bears interest at 7.100%.
Tier I Regular Interest X: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Class PO
Certificates, and which bears interest at 0.000%.
Tier I Regular Interest Y: An uncertificated partial undivided
beneficial ownership interest in REMIC I having an uncertificated principal
balance equal to the aggregate Certificate Principal Balance of the Subordinate
Certificates, and which bears interest at 7.500%.
Tier I Regular Interest Z: An uncertificated partial undivided
beneficial ownership interest in REMIC I having no principal balance and
accruing interest on a notional amount equal to the Class X Notional Amount,
and which bears interest at the weighted average of the Stripped Interest
Rates.
Tier I Regular Interests: Tier I Regular Interest N, Tier I Regular
Interest O, Tier I Regular Interest P, Tier I Regular Interest Q, Tier I
Regular Interest R, Tier I Regular Interest S, Tier I Regular Interest T, Tier
I Regular Interest U, Tier I Regular Interest V, Tier I Regular Interest W,
Tier I Regular Interest X, Tier I Regular Interest Y and Tier I Regular
Interest Z.
Tier II Regular Interests: The Class A Certificates, the Class X
Certificates, the Class PO Certificates, the Class M Certificates and the Class
B Certificates.
REMIC I: The segregated pool of assets, with respect to which a REMIC
election is to be made, consisting of the Mortgage Loans.
REMIC II: The segregated pool of assets consisting of the Tier I
Regular Interests conveyed in trust to the Trustee for the benefit of the
Certificateholders (other than the Class R-I Certificateholders) pursuant to
Section 2.01(a), with respect to which a separate REMIC election is to be made.
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Transfer: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
Transferee: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
Transferor: Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust created by this Agreement
consisting of (A) all of the assets of the REMICs, including:
(i) the Mortgage Loans and the related Mortgage Files,
(ii) all payments on and collections in respect of the Mortgage
Loans due after the Cut-off Date,
(iii) property which secured a Mortgage Loan and which has been
acquired for the benefit of the Certificateholders by
foreclosure or deed in lieu of foreclosure, and
(iv) the hazard insurance policies and Primary Insurance
Policies, if any, and certain proceeds thereof, and
(B) the Policy and the proceeds thereof.
Neither the Reserve Fund, the Class A-5 Rounding Account or the LIBOR
Reserve Fund shall be a part of this Trust Fund.
Underwriter: Xxxxxxxxx, Xxxxxx & Xxxxxxxx, or its successor in
interest.
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies.
United States Person: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
or trust whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.
Unpaid Accrued Certificate Interest: With respect to each
Distribution Date and any Class of interest-bearing Certificates, any portion
of the related Accrued Certificate Interest remaining unpaid from any prior
Distribution Date.
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Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. 99.0% of all of the Voting
Rights shall be allocated among Holders of Certificates, respectively, other
than the Residual Certificates, in proportion to the outstanding Certificate
Principal Balances of their respective Certificates; 1% of all Voting Rights
shall be allocated to the Holders of the Residual Certificates, allocated among
the Certificates of such Class in accordance with their respective Percentage
Interests.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to the Trustee without recourse, all the right,
title and interest of the Depositor in and to the Mortgage Loans, including all
interest and principal received on or with respect to the Mortgage Loans after
the Cut-off Date (other than payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and its rights as purchaser under
the Mortgage Loan Purchase Agreements with each Seller. The Depositor,
concurrently with the execution and delivery hereof, does hereby assign to the
Trustee without recourse, all the right, title and interest of the Depositor in
and to the Tier I Regular Interests for the benefit of the Certificateholders
(other than the Class R-I Certificateholders). In addition, on or prior to the
Closing Date, the Depositor shall cause Financial Security to deliver the
Policy to the Trustee.
(b) In connection with such assignment, except as set forth in
Section 2.01(c) below, the Depositor does hereby deliver to, and deposit with,
the Trustee, the following documents or instruments (or copies thereof as
permitted by this Section):
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank ;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the Mortgage
certified by the public recording office in which such assignment or
intervening assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption
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agreement certified by the public recording office in which such document has
been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title.
(c) In the event that in connection with any Mortgage Loan the
Depositor cannot deliver the Mortgage, any assignment, modification or
assumption agreement (or copy thereof certified by the public recording office)
with evidence of recording thereon concurrently with the execution and delivery
of this Agreement solely because of a delay caused by the public recording
office where such Mortgage, assignment, modification or assumption agreement
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee a true and correct photocopy of such Mortgage,
assignment, modification or assumption agreement.
The Trustee shall promptly complete the endorsement in blank of each
Mortgage Note and stamp each Assignment referred to in Section 2.01(b) as
follows: Bankers Trust Company of California, N.A., as Trustee for the benefit
of the registered holders of BA Mortgage Securities, Inc., Mortgage
Pass-Through Certificates Series 1997-1 and shall return such Assignments to
the Depositor for recordation.
The Depositor shall promptly cause to be recorded in the appropriate
public office for real property records the Assignment referred to in clause
(iii) of Section 2.01(b), except in states where, in the Opinion of Counsel
(which Opinion of Counsel shall be at the expense of the Depositor) acceptable
to the Rating Agencies, the Trustee and the Master Servicer of such Mortgage
Loan, such recording is not required to protect the Trustee's interests in the
Mortgage Loan against the claim of any subsequent transferee or any successor
to or creditor of the Depositor or the originator of such Mortgage Loan. If
any Assignment is lost or returned unrecorded to the Depositor because of any
defect therein, the Depositor shall prepare a substitute Assignment or cure
such defect and cause such Assignment to be recorded in accordance with this
paragraph. The Depositor shall promptly deliver or cause to be delivered to
the Trustee such Mortgage or assignment, as applicable (or copy thereof
certified by the public recording office) with evidence of recording indicated
thereon upon receipt thereof from the public recording office or from the
related Subservicer.
(d) It is the express intent of the parties hereto that the
conveyance of the Mortgage Loans by the Depositor to the Trustee as provided in
this Agreement be construed as a sale of the Mortgage Loans by the Depositor to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event, notwithstanding the intent of the parties, the Mortgage Loans are held
to be property of the Depositor, or if for any reason this Agreement is held or
deemed to create a security interest in the Mortgage Loans, then, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code in effect in the applicable
state; (b) the conveyance provided for in this Agreement shall be deemed to be
a grant by the Depositor to the Trustee of a security interest in and to
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all of the Depositor's right, title, and interest, whether now owned or
hereafter acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to any of the property
described in (w), (x), (y), and (z) below: (w) the Mortgage
Loans, including all Qualified Substitute Mortgage Loans and
including (i) the related Mortgage Note, the Mortgage, any
insurance policies and all other documents in the related
Mortgage File, (ii) all title, hazard and primary mortgage
insurance policies identified on the Mortgage Loan Schedule as
defined herein, and (iii) all distributions with respect
thereto payable on and after the Cut-off Date; (x) the
Certificate Account and the Custodial Accounts, including all
property therein and all income from the investment of funds
therein (including any accrued discount realized on
liquidation of any investment purchased at a discount), the
LIBOR Reserve Fund, the Reserve Fund and the Class A-5
Rounding Account; (y) each Mortgage Loan Purchase Agreement;
and (z) any and all of any Seller's right, title, and
interest, if any, whether now owned or hereafter acquired, in
and to the property described in clauses (w) and (x) above
granted by such Seller to the Depositor pursuant to the
related Mortgage Loan Purchase Agreement;
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(e) It is further the express intent of the parties hereto that
the conveyance of REMIC I Regular Interests to the Trustee by the Depositor as
provided in this Agreement be, and be construed as, an absolute sale of REMIC I
Regular Interests. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of REMIC I Regular Interests by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor. However, in
the event that, notwithstanding the intent of the parties, REMIC I Regular
Interests are held to be the property of the Depositor, or if for any other
reason this Agreement is held or deemed to create a security interest in REMIC
I Regular Interests, then, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code in effect in the applicable state; and (b) the conveyance
provided for in this Agreement shall be deemed to be a grant by the
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Depositor to the Trustee of a security interest in and to all of the
Depositor's right, title, and interest, whether now owned or hereafter
acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to any of the property
described below: the Uncertificated REMIC I Regular Interests,
including without limitation all rights represented thereby in
and to: (a) the Mortgage Loans, including all Qualified
Substitute Mortgage Loans and including (i) the related
Mortgage Note, the Mortgage, any insurance policies and all
other documents in the related Mortgage File, (ii) all title,
hazard and primary mortgage insurance policies identified on
the Mortgage Loan Schedule as defined herein, and (iii) all
distributions with respect thereto payable on and after the
Cut-off Date; (b) the Certificate Account and the Custodial
Accounts, including all property therein and all income from
the investment of funds therein (including any accrued
discount realized on liquidation of any investment purchased
at a discount), the Reserve Fund, the LIBOR Reserve Fund and
the Class A-5 Rounding Account; (c) each Mortgage Loan
Purchase Agreement; (d) any and all of any Seller's right,
title, and interest, if any, whether now owned or hereafter
acquired, in and to the property described in clauses (a) and
(b) above granted by such Seller to the Depositor pursuant to
the related Mortgage Loan Purchase Agreement; (e) all property
or rights arising from or by virtue of the disposition of, or
collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (a) through
(d) above (including any accrued discount realized on
liquidation of any investment purchased at a discount), and
(f) all cash and non-cash proceeds of the collateral described
in (a) through (e) above
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above.
(f) The possession by the Trustee or its designee of the Mortgage
Notes, the Mortgages and such other goods, letters of credit, advices of
credit, instruments, money, documents, chattel paper or certificated securities
shall be deemed to be "possession by the secured party," or possession by a
purchaser or a person designated by him or her, for
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purposes of perfecting the security interest pursuant to the Uniform Commercial
Code (including, without limitation, Sections 9-305, 8-313 or 8-321 thereof) as
in force in the relevant jurisdiction. Notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed to be notifications to, or acknowledgments,
receipts or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee or its designee for the purpose of perfecting such
security interest under applicable law. In connection herewith, the Trustee
shall have all of the rights and remedies of a secured party and creditor under
the Uniform Commercial Code as in force in the relevant jurisdiction.
The Depositor and, at the Depositor's direction, the Sellers and the
Trustee shall, to the extent consistent with this Agreement, take such
reasonable actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, the Tier I Regular
Interests, and the other property described above, such security interest would
be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of this
Agreement. Without limiting the generality of the foregoing, the Depositor
shall prepare and deliver to the Trustee not less than 15 days prior to any
filing date and, the Trustee shall sign and return to the Depositor for filing,
at the expense of the Depositor, all filings necessary to maintain the
effectiveness of any original filings necessary under the Uniform Commercial
Code as in effect in any jurisdiction to perfect the Trustee's security
interest in or lien on the Mortgage Loans, as evidenced by an Officer's
Certificate of the Depositor, including without limitation (x) continuation
statements, and (y) such other statements as may be occasioned by (1) any
change of name of the Depositor or the Trustee (such preparation and filing
shall be at the expense of the Trustee, if occasioned by a change in the
Trustee's name), or (2) any change of location of the place of business or the
chief executive office of the Depositor.
Section 2.02. Acceptance by Trustee.
The Trustee acknowledges receipt of the documents referred to in
Section 2.01(b)(i) through (vi) above and declares that it holds and will hold
such documents and the other documents constituting a part of the Mortgage
Files delivered to it in trust for the use and benefit of all present and
future Certificateholders. Within 45 days following the Closing Date, the
Trustee agrees, for the benefit of the Certificateholders, to review each
Mortgage File delivered to it by the Depositor or Sellers to ascertain that (i)
the documents required to be delivered in the definition of Mortgage File are
in its possession; (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct. If
the Trustee finds any document or documents constituting a part of a Mortgage
File to be missing or defective in any material respect, the Trustee shall
promptly so notify the Depositor. Upon completion of such review, the Trustee
shall promptly deliver to the Depositor a certification in the form of Exhibit
R with respect to the Mortgage Loans on the related Mortgage Loan Schedule,
with any exceptions listed on an attachment thereto. The Trustee shall be
under no duty or obligation to inspect, review or examine said documents,
instruments, certificates or
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other papers to verify (i) the validity, legality, enforceability, sufficiency,
due authorization, recordability or genuineness of any document in any Mortgage
File or of any of the Mortgage Loans or (ii) the collectability, insurability,
effectiveness or suitability of any such Mortgage Loan.
If the Trustee finds any document or documents constituting a part of
a Mortgage File to be missing or defective in any material respect, the Trustee
shall promptly so notify the Master Servicer of such Mortgage Loan and the
Depositor. Such Master Servicer shall promptly notify the related Seller of
such omission or defect and request that such Seller correct or cure such
omission or defect within 60 days from the date such Master Servicer was
notified of such omission or defect and, if such Seller does not correct or
cure such omission or defect within such period, that such Seller purchase such
Mortgage Loan from the Trust Fund at its Purchase Price, in either case within
90 days from the date such Master Servicer was notified of such omission or
defect. The Purchase Price for any such Mortgage Loan shall be deposited or
caused to be deposited by such Master Servicer in the Custodial Account
maintained by it pursuant to Section 3.07 and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
shall release to such Master Servicer the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment prepared
by such Master Servicer, in each case without recourse, as shall be necessary
to vest in the Seller or its designee any Mortgage Loan released pursuant
hereto and thereafter such Mortgage Loan shall not be part of the Trust Fund.
It is understood and agreed that the obligation of the Seller to so cure or
purchase any Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to Certificateholders or the Trustee on behalf of
Certificateholders.
The Trustee hereby acknowledges the receipt by it of the LIBOR Reserve
Fund Amount by wire transfer on the Closing Date representing interest for the
Class A-2 and Class A-3 Certificates from the Closing Date to August 24. The
Trustee shall establish and maintain the LIBOR Reserve Fund Account, which
shall be an Eligible Account, and hold such fund in a segregated account for
the benefit of the Holders of the Class A-2 Certificates and the Class A-3
certificates until withdrawn in accordance with Section 3.10. The Underwriter
will be the beneficial owner of the LIBOR Reserve Fund for all federal income
tax purposes.
The Trustee shall establish and maintain the Reserve Fund, which shall
be an Eligible Account, into which there shall have been deposited the amount
of $2,500 received from the Underwriter by wire transfer on the Closing Date.
No additional funds will be deposited in the Reserve Fund after the Closing
Date. All funds deposited in the Reserve Fund and all interest thereon shall
be held in trust for the benefit of the Holders of the Class A-5 Certificates
until withdrawn in accordance with Section 3.10. The Underwriter will be the
beneficial owner of the Reserve Fund for all federal income tax purposes.
The Trustee shall invest the funds in the Reserve Fund in Permitted
Investments upon written direction of the Underwriter which investments shall
mature not later than one Business Day prior to the Certificate Account Deposit
Date next following the date of such
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investment and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of the Holders of the Class A-5 Certificates until withdrawn in
accordance with Section 3.10. If any losses are incurred in respect of any
such investments, the Trustee shall collect the amount of such losses from the
Underwriter immediately as realized and deposit such amount into the Reserve
Fund.
The Trustee shall establish and maintain the Class A-5 Rounding
Account, which shall be an Eligible Account, into which there shall have been
deposited the amount of $999.99 received from the Underwriter by wire transfer
on the Closing Date. No additional funds will be deposited in the Class A-5
Rounding Account after the Closing Date. All funds deposited in the Class A-5
Rounding Account shall be held in trust for the benefit of the Class A-5
Certificates until withdrawn in accordance with Section 3.10. The Underwriter
will be the beneficial owner of the Class A-5 Rounding Account for all federal
income tax purposes.
The Reserve Fund, the LIBOR Reserve Fund and the Class A-5 Rounding
Account established hereunder, to the extent that any of them constitutes a
"reserve fund" for purposes of the REMIC Provisions, shall be "outside reserve
funds" as defined in Treasury Regulation 1.860G- 2(h), and in that regard (i)
such funds shall be outside reserve funds and not assets of either of the
REMICs, (ii) such funds shall be owned for federal tax purposes by the
Underwriter and the Underwriter shall report all amounts of income, deduction,
gain or loss accruing therefrom, and (iii) amounts transferred by the REMICs to
such funds shall be treated as distributed by the REMICs to the Underwriter.
Section 2.03. Representations, Warranties and Covenants of the
Master Servicers.
Each Master Servicer hereby represents and warrants to the Trustee for
the benefit of Certificateholders, only with respect to itself, that:
(i) Such Master Servicer is a national banking
association or federal savings bank duly organized, validly existing
and in good standing under the laws governing its creation and
existence and is or will be in compliance with the laws of each state
in which any Mortgaged Property serviced by it is located to the
extent necessary to ensure the enforceability of each Mortgage Loan in
accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement
by such Master Servicer and its performance and compliance with the
terms of this Agreement will not violate its Articles of Association
or Bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result
in the breach of, any material contract, agreement or other instrument
to which it is a party or which may be applicable to it or any of its
assets;
(iii) This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a
valid, legal and binding obligation
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of such Master Servicer, enforceable against it in accordance with the
terms hereof subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally or the rights of creditors of banking
institutions the accounts of which are insured by the Federal Deposit
Insurance Corporation or any other instrumentalities of the federal
government, and to general principles of equity, regardless of whether
such enforcement is considered in a proceeding in equity or at law;
(iv) Such Master Servicer is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any Federal, state, municipal or governmental agency,
which default might have consequences that would materially and
adversely affect its condition (financial or other), operations or
properties or might have consequences that would materially adversely
affect its performance hereunder;
(v) No litigation is pending or, to the best of
such Master Servicer's knowledge, threatened against such Master
Servicer which would prohibit its entering into this Agreement or
which would adversely affect the legality and validity of this
Agreement or such Master Servicer's performance of its obligations
under this Agreement;
(vi) Subject to Section 4.04(c) hereof, such
Master Servicer will comply in all material respects in the
performance of this Agreement with all reasonable rules and
requirements of each insurer under each Required Insurance Policy; and
(vii) Such Master Servicer has examined each
existing, and will examine each new, Subservicing Agreement and is or
will be familiar with the terms thereof. The terms of each existing
Subservicing Agreement and each designated Subservicer are acceptable
to the Master Servicer and any new Subservicing Agreements will comply
with the provisions of Section 3.02.
It is understood and agreed that the representations and warranties set forth
in this Section 2.03 shall survive delivery of the respective Mortgage Files to
the Trustee.
Section 2.04. Representations and Warranties of Sellers.
The Depositor hereby assigns to the Trustee for the benefit of
Certificateholders all of its right, title and interest in respect of the
Mortgage Loan Purchase Agreement applicable to each Mortgage Loan. Insofar as
such Seller's Mortgage Loan Purchase Agreement relates to the representations
and warranties made by the related Seller in respect of such Mortgage Loan and
any remedies provided thereunder for any breach of such representations and
warranties, such right, title and interest may be enforced by the Master
Servicer of such Mortgage Loan on behalf of the Trustee and the
Certificateholders or by the Trustee if a Master Servicer is the applicable
Seller. Upon the discovery by the Depositor, the related Master Servicer or
the Trustee of a breach of any of the representations and warranties made
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in a Mortgage Loan Purchase Agreement (which, for purposes hereof, will be
deemed to include any other cause giving rise to a repurchase obligation under
the Mortgage Loan Purchase Agreement) in respect of any Mortgage Loan which
materially and adversely affects the interests of the Certificateholders in
such Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties. The Master Servicer of such Mortgage Loan shall
promptly notify the related Seller of such breach and request that such Seller
either (i) cure such breach in all material respects within 90 days from the
date such Master Servicer was notified of such breach or (ii) purchase such
Mortgage Loan from the Trust Fund at the Purchase Price and in the manner set
forth in Section 2.02; provided that such Seller shall have the option to
substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan
if such substitution occurs within two years following the Closing Date, except
that if the breach would cause the Mortgage Loan to be other than a "qualified
mortgage" as defined in Section 860G(a)(3) of the Code, any such substitution
must occur within 90 days from the date such Master Servicer was notified of
the breach if such 90 day period expires before two years following the Closing
Date. In the event that the applicable Seller elects to substitute a Qualified
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04, such Seller shall deliver to the Trustee for the benefit of the
Certificateholders with respect to such Qualified Substitute Mortgage Loan or
Loans, the original Mortgage Note, the Mortgage, an Assignment of the Mortgage
in recordable form, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed as required by Section 2.01. No
substitution will be made in any calendar month after the Determination Date
for such month. Monthly Payments due with respect to Qualified Substitute
Mortgage Loans in the month of substitution shall not be part of the Trust Fund
and will be retained by the applicable Master Servicer and remitted by such
Master Servicer to the related Seller on the next succeeding Distribution Date.
For the month of substitution, distributions to Certificateholders will include
the Monthly Payment due on a Deleted Mortgage Loan for such month and
thereafter the related Seller shall be entitled to retain all amounts received
in respect of such Deleted Mortgage Loan. The applicable Master Servicer shall
amend or cause to be amended the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Qualified Substitute Mortgage Loan or Loans and such Master
Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee. Upon
such substitution, the Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement and any related Subservicing Agreement
in all respects, the related Seller shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute
Mortgage Loan contained in the related Mortgage Loan Purchase Agreement as of
the date of substitution.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer of such Deleted Mortgage Loans will determine the amount (if any) by
which the aggregate principal balance of all such Qualified Substitute Mortgage
Loans as of the date of substitution is less than the aggregate Stated
Principal Balance of all such Deleted Mortgage Loans (in each case after
application of the principal portion of the Monthly Payments due in the month
of substitution that are to be distributed to Certificateholders in the month
of substitution) and promptly shall collect such amounts from the applicable
Seller. Such Master Servicer shall deposit the
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amount of such shortfall into the applicable Custodial Account on the day of
substitution. Such Master Servicer shall give notice in writing to the Trustee
of such event, which notice shall be accompanied by an Officers' Certificate as
to the calculation of such shortfall and by an Opinion of Counsel to the effect
that such substitution will not cause (a) any federal tax to be imposed on
either REMIC, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the start up date" under Section 860G(d)(1) of the Code or
(b) any portion of either REMIC to fail to qualify as a REMIC at any time that
any Certificate is outstanding.
It is understood and agreed that the obligation of the applicable
Seller to cure such breach or purchase (or to substitute for) such Mortgage
Loan as to which such a breach has occurred and is continuing shall constitute
the sole remedy respecting such breach available to Certificateholders or the
Trustee on behalf of Certificateholders. If the Master Servicer of such
Mortgage Loan is the related Seller, then the Trustee shall also have the right
to give the notification and require the purchase or substitution provided for
in the second preceding paragraph in the event of such a breach of a
representation or warranty made by the related Seller in the applicable
Mortgage Loan Purchase Agreement. In connection with the purchase of or
substitution for any such Mortgage Loan by the related Seller, the Trustee
shall assign to the related Seller all of the right, title and interest in
respect of the Mortgage Loan Purchase Agreement applicable to such Mortgage
Loan.
Section 2.05. Issuance of Certificates Evidencing Interests in the
Trust Fund.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it, subject to any exceptions noted
in the 45 day review, together with the assignment to it of all other assets
included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such delivery and in exchange therefor, the Trustee, pursuant
to the written request of the Depositor, executed by an officer of the
Depositor, has executed and caused to be authenticated and delivered to or upon
the order of the Depositor the Certificates in authorized denominations which
evidence ownership of the Trust Fund. The rights of the Certificateholders to
receive distributions from the proceeds of the Trust Fund in respect of the
Certificates, and all ownership interests of the Certificateholders in such
distributions, shall be as set forth in this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
Section 3.01. Master Servicers to Act as Servicers.
(a) Each Master Servicer shall service and administer only those
Mortgage Loans for which it is appointed Master Servicer, as indicated by their
inclusion on Exhibit F-1 or Exhibit F-2, as applicable. The Master Servicers
shall service and administer the Mortgage Loans in accordance with the terms of
this Agreement and the respective Mortgage Loans and shall have full power and
authority, acting alone or through Subservicers as provided in Section 3.02, to
do any and all things which it may deem necessary or desirable in connection
with such servicing and administration. Without limiting the generality of the
foregoing, each Master Servicer in its own name or in the name of a Subservicer
is hereby authorized and empowered by the Trustee when such Master Servicer or
Subservicer, as the case may be, believes it appropriate in its best judgment,
to execute and deliver, on behalf of the Certificateholders and the Trustee or
any of them, and only with respect to the Mortgage Loans serviced by such
Master Servicer or Subservicer, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, or of consent to
assumption or modification in connection with a proposed conveyance, or of
assignment of any Mortgage and Mortgage Note in connection with the repurchase
of a Mortgage Loan and all other comparable instruments, or with respect to the
modification or re-recording of a Mortgage for the purpose of correcting the
Mortgage, the subordination of the lien of the Mortgage in favor of a public
utility company or government agency or unit with powers of eminent domain, the
taking of a deed in lieu of foreclosure, the completion of judicial or
non-judicial foreclosure, the conveyance of a Mortgaged Property to an Insurer,
the acquisition of any property acquired by foreclosure or deed in lieu of
foreclosure, or the management, marketing and conveyance of any property
acquired by foreclosure or deed in lieu of foreclosure with respect to the
Mortgage Loans and with respect to the Mortgaged Properties. Notwithstanding
the foregoing, subject to Section 3.07(a), no Master Servicer shall permit any
modification with respect to any Mortgage Loan it services that would both
constitute a sale or exchange of such Mortgage Loan within the meaning of
Section 1001 of the Code and any proposed, temporary or final regulations
promulgated thereunder (other than in connection with a proposed conveyance or
assumption of such Mortgage Loan that is treated as a Principal Prepayment in
Full pursuant to Section 3.13(d) hereof) and cause either REMIC to fail to
qualify as a REMIC under the Code. The Trustee shall furnish a Master Servicer
with any powers of attorney and other documents necessary or appropriate to
enable such Master Servicer to service and administer the Mortgage Loans it
services within five Business Days of receipt of request therefor from such
Master Servicer. The Trustee shall not be liable for any action taken by such
Master Servicer or any Subservicer pursuant to such powers of attorney.
(b) All costs incurred by the Master Servicers or by Subservicers
in effecting the timely payment of taxes and assessments on the properties
subject to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added
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to the amount owing under the related Mortgage Loans, notwithstanding that the
terms of such Mortgage Loan so permit, and such costs shall be treated as
Servicing Advances or Subservicer Servicing Advances and shall be recoverable
to the extent permitted by Section 3.10(a).
Section 3.02. Subservicing Agreements Between Master Servicers and
Subservicers; Enforcement of Subservicers' and
Sellers' Obligations; Special Servicing Agreements.
(a) Each Master Servicer may continue in effect Subservicing
Agreements entered into by Sellers and Subservicers prior to the execution and
delivery of this Agreement, and may enter into new Subservicing Agreements with
Subservicers, for the servicing and administration of all or some of the
Mortgage Loans it services. Each Subservicer of a Mortgage Loan shall be
entitled to receive and retain, as provided in the related Subservicing
Agreement and in Section 3.07, the related Primary Servicing Fee from payments
of interest received on such Mortgage Loan after payment of all amounts
required to be remitted to the related Master Servicer in respect of such
Mortgage Loan. Unless the context otherwise requires, references in this
Agreement to actions taken or to be taken by a Master Servicer in servicing the
Mortgage Loans include actions taken or to be taken by a Subservicer on behalf
of such Master Servicer. Each Subservicing Agreement will be upon such terms
and conditions as are not inconsistent with this Agreement and as the
applicable Master Servicer and the Subservicer have agreed. With the approval
of the applicable Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain
obligated under the related Subservicing Agreement.
(b) As part of its servicing activities hereunder, each Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts with respect to the Mortgage Loans it services to
enforce the obligations of each Subservicer under the related Subservicing
Agreement and of each Seller under the related Mortgage Loan Purchase
Agreement, to the extent that the non-performance of any such obligation would
have a material and adverse effect on a Mortgage Loan, including, without
limitation, the obligation to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a
representation or warranty, as described in Section 2.04. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Subservicing Agreements or Mortgage Loan Purchase Agreements, as appropriate,
and the pursuit of other appropriate remedies, shall be in such form and
carried out to such an extent and at such time as the applicable Master
Servicer would employ in its good faith business judgment and which are normal
and usual in its general mortgage servicing activities. Each Master Servicer
shall pay the costs of such enforcement at its own expense, and shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement to the extent, if any, that such recovery exceeds all amounts due
in respect of the related Mortgage Loan or (ii) from a specific recovery of
costs, expenses or attorneys fees against the party against whom such
enforcement is directed.
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(c) Either Master Servicer may enter into a special servicing
agreement with an unaffiliated Holder of 100% Percentage Interest of a Class of
Class B Certificate or a holder of a class of securities representing a 100%
Percentage Interest in a Class of Class B Certificates, such agreement to be
substantially in the form of Exhibit N hereto or subject to each Rating
Agency's acknowledgment that the ratings of the Certificates in effect
immediately prior to the entering into of such agreement would not be qualified
(except for possible upgrading) as a result of such agreement. Any such
agreement may contain provisions whereby such holder may instruct a Master
Servicer to commence or delay foreclosure proceedings with respect to
delinquent Mortgage Loans and will contain provisions for the deposit of cash
by the Holder that would be available for distribution to Certificateholders if
Liquidation Proceeds are less than they otherwise may have been had the
applicable Master Servicer acted in accordance with its normal procedures.
Section 3.03. Successor Subservicers.
Each Master Servicer shall be entitled to terminate any Subservicing
Agreement to which it is a party and that may exist in accordance with the
terms and conditions of such Subservicing Agreement and without any limitation
by virtue of this Agreement; provided, however, that in the event of
termination of any Subservicing Agreement by a Master Servicer or the
Subservicer, such Master Servicer shall either act as servicer of the related
Mortgage Loan or enter into a Subservicing Agreement with a successor
Subservicer which will be bound by the terms of the related Subservicing
Agreement. If such Master Servicer or any Affiliate of such Master Servicer
acts as servicer, it will not assume liability for the representations and
warranties of the Subservicer which it replaces. If such Master Servicer
enters into a Subservicing Agreement with a successor Subservicer, such Master
Servicer shall use reasonable efforts to have the successor Subservicer assume
liability for the representations and warranties made by the terminated
Subservicer in respect of the related Mortgage Loans and, in the event of any
such assumption by the successor Subservicer, such Master Servicer may, in the
exercise of its business judgment, release the terminated Subservicer from
liability for such representations and warranties.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee without fee, in
accordance with the terms of this Agreement, in the event that the applicable
Master Servicer shall, for any reason, no longer be a Master Servicer hereunder
(including termination due to an Event of Default).
Section 3.04. Liability of the Master Servicers.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between a Master Servicer
or a Subservicer or reference to actions taken through a Subservicer or
otherwise, each Master Servicer shall, for the Mortgage Loans it is servicing,
remain obligated and liable to the Trustee and Certificateholders for the
servicing and administering of such Mortgage Loans in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer or the Depositor and to the same extent
and under the
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same terms and conditions as if such Master Servicer alone were servicing and
administering the Mortgage Loans. Each Master Servicer shall be entitled to
enter into any agreement with a Subservicer for indemnification of such Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05. No Contractual Relationship Between Subservicer and
Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any other
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
such Subservicer and the related Master 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 in its capacity as such except as set forth in Section 3.06.
Section 3.06. Assumption or Termination of Subservicing Agreements
by Trustee.
(a) In the event a Master Servicer shall for any reason no longer
be a master servicer hereunder (including by reason of an Event of Default),
the Trustee, its designee or its successor shall thereupon assume, at its sole
discretion, all of the rights and obligations of such Master Servicer under
each Subservicing Agreement that may have been entered into. If the Trustee
so elects, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of such Master Servicer's interest therein
and to have replaced such Master Servicer as a party to the Subservicing
Agreement to the same extent as if the Subservicing Agreement had been assigned
to the assuming party except that such Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) An outgoing Master Servicer shall promptly, upon request of
the Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to each Subservicing Agreement and the
Mortgage Loans then being serviced by such Master Servicer and an accounting of
amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of each Subservicing Agreement to the
assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments;
Deposits to Custodial Accounts.
(a) Each Master Servicer shall, with respect to the Mortgage Loans
it services, make reasonable efforts to collect all payments called for under
the terms and provisions of such Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement and the terms and provisions
of any related Primary Mortgage Insurance Policy, follow such collection
procedures as it would employ in its good faith business judgment and which are
normal and usual in its general mortgage servicing activities. Consistent with
the foregoing, each Master Servicer may in its discretion, with respect to the
Mortgage Loans it services, (i) waive payments of interest or principal, (ii)
accept a deed in lieu of foreclosure,
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(iii) waive any late payment charge or any prepayment charge or penalty
interest in connection with the prepayment of a Mortgage Loan and (iv) extend
the Due Date for payments due on a Mortgage Loan; provided, however, that such
Master Servicer shall first determine that any such waiver or extension will
not impair the coverage of any related Primary Mortgage Insurance Policy or
materially adversely affect the lien of the related Mortgage. Subject in all
instances to the provisions of Section 4.04(c), the related Master Servicer
must continue to make Advances as set forth herein without regard to any such
waiver or indulgence, in accordance with the original terms of the Mortgage
Loan. Consistent with the terms of this Agreement, a Master Servicer may also,
with respect to the Mortgage Loans it services, waive, modify or vary any term
of a Mortgage Loan or consent to the postponement of strict compliance with any
such term or in any manner grant indulgence to any Mortgagor if in such Master
Servicer's determination such waiver, modification, postponement or indulgence
is not materially adverse to the interests of the Certificateholders; provided,
however, that such Master Servicer may not modify materially or permit any
Subservicer to modify a Mortgage Loan, including without limitation any
modification that would change the Mortgage Rate, forgive the payment of any
principal or interest (unless in connection with the liquidation of the related
Mortgage Loan or except in connection with prepayments to the extent that such
reamortization is not inconsistent with the terms of such Mortgage Loan), or
extend the final maturity date of such Mortgage Loan, unless such Mortgage Loan
is in default or, in the judgment of such Master Servicer, such default is
reasonably foreseeable.
(b) Each Master Servicer shall establish and maintain a Custodial
Account in which such Master Servicer shall deposit or cause to be deposited on
a daily basis, except as otherwise specifically provided herein, the following
payments and collections remitted by Subservicers or received by it in respect
of the Mortgage Loans it services subsequent to the Cut-off Date (other than in
respect of principal and interest on such Mortgage Loans due on or before the
Cut-off Date):
(i) All payments on account of principal,
including Principal Prepayments made by Mortgagors on such Mortgage
Loans and the principal component of any REO Proceeds received in
connection with an REO Property for which an REO Disposition has
occurred;
(ii) All payments on account of interest on such
Mortgage Loans, including Buydown Funds, if any, and the interest
component of any REO Proceeds received in connection with an REO
Property for which an REO Disposition has occurred, less any
applicable Primary Servicing Fee;
(iii) Insurance Proceeds and Liquidation Proceeds
(net of any related expenses of the Subservicer);
(iv) All proceeds of any Mortgage Loans purchased
pursuant to Section 2.02 or 2.04 and all amounts required to be
deposited in connection with the substitution of a Qualified
Substitute Mortgage Loan pursuant to Section 2.04;
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(v) Any amounts required to be deposited pursuant
to Section 3.07(c) or 3.20; and
(vi) All amounts transferred from the Certificate
Account to the applicable Custodial Account in accordance with Section
4.02(a).
The foregoing requirements for deposit in the Custodial Accounts shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments on the Mortgage Loans which are not part of the
Trust Fund (consisting of payments in respect of principal and interest on the
Mortgage Loans due on or before the Cut-off Date) and payments or collections
in the nature of prepayment charges or late payment charges or assumption fees
may but need not be deposited by the Master Servicers in the Custodial
Accounts. In the event any amount not required to be deposited in a Custodial
Account is so deposited by a Master Servicer, such Master Servicer may at any
time withdraw such amount from the applicable Custodial Account, any provision
herein to the contrary notwithstanding. The Custodial Accounts may contain
funds that belong to one or more trust funds created for mortgage pass-through
certificates of other series and may contain other funds respecting payments on
mortgage loans belonging to the Master Servicers or serviced or master serviced
by them on behalf of others. Notwithstanding such commingling of funds, each
Master Servicer shall keep records that accurately reflect the funds on deposit
in the applicable Custodial Account that have been identified by it as being
attributable to the Mortgage Loans it services.
(c) Each Master Servicer may cause the institution maintaining the
related Custodial Account to invest the funds in the Custodial Account
attributable to the Mortgage Loans it services in Permitted Investments which
shall mature not later than the Certificate Account Deposit Date next following
the date of such investment (with the exception of the Amount Held for Future
Distribution) and which shall not be sold or disposed of prior to their
maturities. All income and gain realized from any such investment shall be for
the benefit of such Master Servicer as additional servicing compensation and
shall be subject to its withdrawal or order from time to time. The amount of
any losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in
the applicable Custodial Account by such Master Servicer out of its own funds
immediately as realized, without right of reimbursement.
(d) Each Master Servicer shall give notice to the Trustee and the
Depositor of any change in the location of the Custodial Account established by
it.
Section 3.08. Subservicing Accounts; Servicing Accounts.
(a) In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the related Master Servicer shall
cause the Subservicer, pursuant to the Subservicing Agreement, to establish and
maintain one or more Subservicing Accounts which shall be an Eligible Account
or, if such account is not an Eligible Account, shall be otherwise acceptable
to such Master Servicer and each Rating Agency. The Subservicer will be
required thereby to deposit into the Subservicing Account on a daily basis all
proceeds of
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the Mortgage Loans received by the Subservicer, less its Primary Servicing Fees
and unreimbursed advances and expenses, to the extent permitted hereby and by
the Subservicing Agreement. The related Master Servicer shall be deemed to
have received such monies upon receipt thereof by the Subservicer. The
Subservicer shall not be required to deposit in the Subservicing Account
payments or collections in the nature of prepayment charges or late charges or
assumption fees. On or before the date specified in the Subservicing
Agreement, but in no event later than the Determination Date, the related
Master Servicer shall cause the Subservicer, pursuant to the Subservicing
Agreement, to remit to such Master Servicer for deposit in the applicable
Custodial Account all funds held in the Subservicing Account with respect to
each Mortgage Loan serviced by such Subservicer that are required to be
remitted to such Master Servicer.
(b) In addition to the Custodial Accounts, the Master Servicers
shall for any Nonsubserviced Mortgage Loan, and shall cause the Subservicers
for Subserviced Mortgage Loans to, establish and maintain one or more Servicing
Accounts and deposit and retain therein all collections from the Mortgagors (or
advances from Subservicers) for the payment of taxes, assessments, hazard
insurance premiums, Primary Mortgage Insurance Policy premiums, if applicable,
or comparable items for the account of the Mortgagors. Each Servicing Account
shall satisfy the requirements for a Subservicing Account and, to the extent
acceptable to each Master Servicer, may also function as a Subservicing
Account. Withdrawals of amounts related to the Mortgage Loans from the
Servicing Accounts may be made only to effect timely payment of taxes,
assessments, hazard insurance premiums, Primary Mortgage Insurance Policy
premiums, if applicable, or comparable items, to reimburse the applicable
Master Servicer or Subservicer out of related collections for any payments made
pursuant to Sections 3.11 (with respect to the Primary Mortgage Insurance
Policy) and 3.12(a) (with respect to hazard insurance), 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 Account or to clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01. As part of its servicing duties, the Master
Servicers shall, and the Subservicers will, pursuant to the Subservicing
Agreements, be required to pay to the Mortgagors interest on funds in this
account to the extent required by law.
(c) Subject to the provisions of Section 4.04(c) hereof, each
Master Servicer shall advance as a Servicing Advance the payments for taxes,
premiums or other costs referred to in the preceding subsection for the
Mortgage Loans it services that are not timely paid by the Mortgagors or
advanced by the Subservicers as a Subservicer Servicing Advance to the same
extent as such Master Servicer would advance such payments on loans similar to
the Mortgage Loans that such Master Servicer owns.
Section 3.09. Access to Certain Documentation and Information
Regarding the Mortgage Loans.
In the event that compliance with this Section 3.09 shall make any
Class of Certificates legal for investment by federally insured savings
associations, each Master Servicer shall provide, or cause the Subservicers to
provide, to the Trustee, each Office of
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Thrift Supervision or the FDIC and the supervisory agents and examiners thereof
access to the documentation regarding the Mortgage Loans it services required
by applicable regulations of the Office of Thrift Supervision, such access
being afforded without charge but only upon reasonable request and during
normal business hours at the offices designated by such Master Servicer. Each
Master Servicer shall permit such representatives to photocopy any such
documentation and shall provide equipment for that purpose at a charge
reasonably approximating the cost of such photocopying to such Master Servicer.
Section 3.10. Permitted Withdrawals.
(a) Each Master Servicer may, from time to time as provided
herein, make withdrawals from the Custodial Account established by it of
amounts on deposit therein pursuant to Section 3.07 that are attributable to
the Mortgage Loans it services for the following purposes:
(i) to reimburse itself or the related
Subservicer for previously unreimbursed advances or expenses made
pursuant to Sections 3.01(b), 3.08(c), 3.11, 3.12(a), 3.14 and 4.04 or
otherwise reimbursable pursuant to the terms of this Agreement, such
withdrawal right being limited to amounts received on particular
Mortgage Loans (including, for this purpose, REO Proceeds, Insurance
Proceeds, Liquidation Proceeds and proceeds from the purchase of a
Mortgage Loan pursuant to Section 2.02 or 2.04) which represent (A)
Late Collections of Monthly Payments for which any such advance was
made in the case of Advances pursuant to Section 4.04 and (B) late
recoveries of the payments for which such advances were made in the
case of Servicing Advances;
(ii) to pay to itself the Master Servicing Fee and
to the related Subservicer (if not previously retained by such
Subservicer) the Primary Servicing Fee;
(iii) to remit funds to the Trustee for deposit
into the Certificate Account in the amounts and in the manner provided
for in Section 4.01;
(iv) to pay to itself as additional servicing
compensation any interest or investment income earned on funds
deposited in the Custodial Account that it is entitled to withdraw
pursuant to Section 3.07(c);
(v) to pay to itself as additional servicing
compensation any Foreclosure Profits;
(vi) to pay to itself, a Seller, the Depositor or
any other appropriate Person, as the case may be, with respect to each
Mortgage Loan or property acquired in respect thereof that has been
purchased or otherwise transferred pursuant to Section 2.02, 2.04 or
9.01, all amounts received thereon and not required to be distributed
to Certificateholders as of the date on which the related Stated
Principal Balance or Purchase Price is determined;
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(vii) to reimburse itself or any Subservicer for
any Nonrecoverable Advance or Nonrecoverable Subservicer Advances in
the manner and to the extent provided in subsection (c) below or any
Advance reimbursable to such Master Servicer pursuant to Section
4.02(a);
(viii) to reimburse itself or the Depositor for
expenses incurred by and reimbursable to it or the Depositor pursuant
to Sections 3.13, 3.14(c), 6.03 or 10.01;
(ix) to reimburse itself for amounts expended by
it (a) pursuant to Section 3.14 in good faith in connection with the
restoration of property damaged by an Uninsured Cause, and (b) in
connection with the liquidation of a Mortgage Loan or disposition of
an REO Property to the extent not otherwise reimbursed pursuant to
clause (i) or (viii) above;
(x) to withdraw any amount deposited in such
Custodial Account that was not required to be deposited therein
pursuant to Section 3.07; and
(xi) to clear and terminate the Custodial Account
pursuant to Section 9.01.
(b) Each Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the related Custodial Account pursuant to
clauses (i), (ii), (v) and (vi) above.
(c) Each Master Servicer shall be entitled to reimburse itself or
the related Subservicer for any Advance or Servicing Advance or Subservicer
Servicing Advance made in respect of a Mortgage Loan it services that such
Master Servicer determines in its sole discretion to be a Nonrecoverable
Advance or a Nonrecoverable Subservicer Advance by withdrawal from the related
Custodial Account, prior to any other withdrawals therefrom, of amounts on
deposit therein on any Certificate Account Deposit Date succeeding the date of
such determination.
(d) The Trustee shall from time to time make withdrawals from the
Reserve Fund on behalf of the Trust Fund for the following purposes:
(i) on or prior to each Certificate Account Deposit
Date, to withdraw from the Reserve Fund to the extent funds
are available therein an amount equal to the lesser of (a) any
Net Prepayment Interest Shortfall allocable to the Class A-5
Certificates for the related Distribution Date and (b) the
amount on deposit in the Reserve Fund, and remit such amount
to the Certificate Account for distribution to the Class A-5
Certificateholders on such Distribution Date; and
(ii) on the earlier of (a) the Distribution Date on
which the Certificate Principal Balance of the Class A-5
Certificates is reduced to zero and (b) the
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termination of this Agreement pursuant to Section 9.01, to clear and
terminate the Reserve Fund and to pay all amounts on deposit therein
to the Underwriter at the address supplied by it to the Trustee for
such purpose.
(e) The Trustee shall from time to time make withdrawals from the
LIBOR Reserve Fund on behalf of the Trust Fund for the following
purposes:
(i) on the first Distribution Date, to withdraw
from the LIBOR Reserve Fund an amount equal to the accrued
interest on the Class A-2 Certificates and the Class A-3
Certificates from August 14th through August 24th to the
extent of the amount then remaining in the Reserve LIBOR Fund,
and remit such amount to the Certificate Account for
distributions to the Class A-2 Certificateholders and the
Class A-3 Certificateholders on such Distribution Date; and
(ii) on the first Distribution Date, after the
withdrawal pursuant to clause (e)(i) above, to clear and
terminate the LIBOR Reserve Fund and to pay all amounts on
deposit therein to the Underwriter at the address supplied to
the Trustee by the Underwriter for such purpose.
(f) The Trustee shall from time to time make withdrawals from the
Class A-5 Rounding Account on behalf of the Trust Fund for the
following purposes:
(i) on the first Distribution Date on which
distributions of principal on the Class A-5 Certificates are
made, if the Trustee determines that amounts are available for
distributions of principal on the Class A-5 Certificates, and
the aggregate amount allocable to such distributions of
principal is not an amount equal to an integral multiple of
$1,000, except as provided below, the Trustee shall withdraw
from the Class A-5 Rounding Account, the Rounding Amount, to
the extent funds are available therein, and remit such amount
to the Certificate Account for distribution to the Class A-5
Certificateholders on such Distribution Date; and
(ii) on each succeeding Distribution Date for
which the Trustee determines that amounts are available for
distributions of principal on the Class A-5 Certificates, the
aggregate amount allocable to the Class A-5 Certificates will
be applied first to repay any funds withdrawn from the Class
A-5 Rounding Account on the prior Distribution Dates which
have not been repaid. If the remainder of the aggregate
amount allocable to such distributions of principal is not an
amount equal to an integral multiple of $1,000, except as
provided in Section 4.09(e), the Trustee shall then withdraw
from the Class A-5 Rounding Account, to the extent funds are
available therein for distribution to the Class A-5
Certificateholders on such Distribution Date.
Section 3.11. Maintenance of the Primary Insurance Policies;
Collections Thereunder.
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(a) Subject to Section 4.04(c) hereof, no Master Servicer shall
take, or permit any Subservicer to take, any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of such Master Servicer or Subservicer, would have
been covered thereunder. To the extent coverage is available, each Master
Servicer shall keep or cause to be kept in full force and effect such Primary
Mortgage Insurance Policy for each Mortgage Loan it services until the
principal balance of the related Mortgage Loan secured by a Mortgaged Property
is reduced to 80% or less of the Appraised Value in the case of such a Mortgage
Loan having a Loan-to-Value Ratio at origination in excess of 80%, provided
that such Primary Mortgage Insurance Policy was in place as of the Cut-off Date
and the Depositor had knowledge of such Primary Mortgage Insurance Policy.
Except with respect to the Mortgage Loans listed on Exhibit O, in the event
that the Depositor gains knowledge that as of the Closing Date, a Mortgage Loan
had a Loan-to-Value Ratio at origination in excess of 80% and is not the
subject of a Primary Mortgage Insurance Policy and that such Mortgage Loan has
a current Loan-to-Value Ratio in excess of 80%, then the Master Servicer of
such Mortgage Loan shall or use its reasonable efforts to obtain and maintain a
Primary Mortgage Insurance Policy to the extent that such a policy is
obtainable at a reasonable price. Each Master Servicer shall not cancel or
refuse to renew any such Primary Mortgage Insurance Policy applicable to a
Nonsubserviced Mortgage Loan, or consent to any Subservicer canceling or
refusing to renew any such Primary Mortgage Insurance Policy applicable to a
Mortgage Loan subserviced by it, that is in effect at the date of the initial
issuance of the Certificates and is required to be kept in force hereunder
unless the replacement Primary Mortgage Insurance Policy for such canceled or
non-renewed policy is maintained with an insurer whose claims-paying ability is
acceptable to each Rating Agency for mortgage pass- through certificates having
a rating equal to or better than the lower of the then-current rating or the
rating assigned to the Certificates as of the Closing Date by such Rating
Agency. Any premium on a Primary Mortgage Insurance Policy paid by a Master
Servicer or a Subservicer from its own funds shall constitute a Servicing
Advance or a Subservicer Servicing Advance, as the case may be, hereunder.
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans it services, each Master Servicer agrees to
present or to cause the related Subservicer to present, on behalf of such
Master Servicer, the Subservicer, if any, the Trustee and Certificateholders,
claims to the Insurer under any Primary Insurance Policies, in a timely manner
in accordance with such policies, and, in this regard, to take or cause to be
taken, subject to Section 4.04(c) hereof, such reasonable action as shall be
necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans serviced by such Master Servicer. Pursuant to Section
3.07, any Insurance Proceeds collected by or remitted to a Master Servicer
under any Primary Insurance Policies shall be deposited in the related
Custodial Account, subject to withdrawal pursuant to Section 3.10.
Section 3.12. Maintenance of Fire Insurance and Omissions and
Fidelity Coverage.
(a) Each Master Servicer shall cause to be maintained for each
Mortgage Loan it services fire insurance with extended coverage in an amount
which is equal to the lesser of the principal balance owing on such Mortgage
Loan or 100 percent of the insurable value of
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the improvements; provided, however, that such coverage may not be less than
the minimum amount required to fully compensate for any loss or damage on a
replacement cost basis. To the extent it may do so without breaching the
related Subservicing Agreement, the related Master Servicer shall replace any
Subservicer that does not cause such insurance, to the extent it is available,
to be maintained. Each Master Servicer shall also cause to be maintained on
property acquired upon foreclosure, or deed in lieu of foreclosure, of any
Mortgage Loan it services, fire insurance with extended coverage in an amount
which is at least equal to the amount necessary to avoid the application of any
co-insurance clause contained in the related hazard insurance policy. Pursuant
to Section 3.07, any amounts collected by a Master Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or property thus acquired or amounts released to the
Mortgagor in accordance with the related Master Servicer's normal servicing
procedures) shall be deposited in the applicable Custodial Account, subject to
withdrawal pursuant to Section 3.10. Any cost incurred by a Master Servicer or
any Subservicer in maintaining any insurance described in this Section 3.12(a)
shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit, but shall be
treated as a Servicing Advance or Subservicer Servicing Advance, as applicable.
Such costs shall be recoverable by the Master Servicer out of the Mortgage Loan
or the Subservicer out of related late payments by the Mortgagor or out of
Insurance Proceeds and Liquidation Proceeds to the extent permitted by Section
3.10 and otherwise as permitted by Section 3.10(a). It is understood and
agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any
time be in force and as shall require such additional insurance. When the
improvements securing a Mortgage Loan are located at the time of origination of
such Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer of such Mortgage Loan shall cause flood insurance (to the
extent available) to be maintained in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the amount required to
compensate for any loss or damage to the Mortgaged Property on a replacement
cost basis and (ii) the maximum amount of such insurance available for the
related Mortgaged Property under the national flood insurance program (assuming
that the area in which such Mortgaged Property is located is participating in
such program).
(b) Each Master Servicer shall obtain and maintain at its own
expense and keep in full force and effect throughout the term of this Agreement
a blanket fidelity bond and an errors and omissions insurance policy covering
such Master Servicer's officers and employees and other persons acting on
behalf of such Master Servicer in connection with its activities under this
Agreement. The amount of coverage shall be at least equal to the coverage that
would be required by FNMA or FHLMC, whichever is greater, with respect to such
Master Servicer if such Master Servicer were servicing and administering the
Mortgage Loans for FNMA or FHLMC. In the event that any such bond or policy
ceases to be in effect, such Master Servicer shall obtain a comparable
replacement bond or policy from an issuer or insurer acceptable to the
Depositor. Coverage of a Master Servicer under a policy or bond obtained by an
Affiliate of a Master Servicer and providing the coverage required by this
Section 3.12(b) shall satisfy the requirements of this Section 3.12(b).
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Section 3.13. Enforcement of Due-on-Sale Clauses; Assumption and
Modification Agreements; Certain Assignments.
(a) When any Mortgaged Property is conveyed by the Mortgagor, the
related Master Servicer or Subservicer, to the extent it has knowledge of such
conveyance, shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing:
(i) such Master Servicer shall not be deemed to
be in default under this Section 3.13(a) by reason of any transfer or
assumption which such Master Servicer is restricted by law from
preventing; and
(ii) if such Master Servicer determines that it is
reasonably likely that any Mortgagor will bring, or if any Mortgagor
does bring, legal action to declare invalid or otherwise avoid
enforcement of a due-on-sale clause contained in any Mortgage Note or
Mortgage, such Master Servicer shall not be required to enforce the
due-on-sale clause or to contest such action.
(b) Subject to the Master Servicers' duty to enforce any
due-on-sale clause to the extent set forth in Section 3.13(a), in any case in
which a Mortgaged Property is to be conveyed to a Person by a Mortgagor, and
such Person is to enter into an assumption or modification agreement or
supplement to the Mortgage Note or Mortgage which requires the signature of the
Trustee, or if an instrument of release signed by the Trustee is required
releasing the Mortgagor from liability on the Mortgage Loan, the Master
Servicer of such Mortgage Loan is authorized, subject to the requirements of
the sentence next following, to execute and deliver, on behalf of the Trustee,
the assumption agreement with the Person to whom the Mortgaged Property is to
be conveyed and such modification agreement or supplement to the Mortgage Note
or Mortgage or other instruments as are reasonable or necessary to carry out
the terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person; provided, however, none of such terms and requirements shall
both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or final, temporary or
proposed Treasury Regulations promulgated thereunder) and cause either REMIC to
fail to qualify as a REMIC under the Code. The Master Servicer of such
Mortgage Loan shall execute and deliver such documents only if it reasonably
determines that (i) its execution and delivery thereof will not conflict with
or violate any terms of this Agreement or cause the unpaid balance and interest
on the Mortgage Loan to be uncollectible in whole or in part, (ii) any required
consents of insurers under any Required Insurance Policies have been obtained
and (iii) subsequent to the closing of the transaction involving the assumption
or transfer (A) the Mortgage Loan will continue to be secured by a first
mortgage lien pursuant to the terms of the Mortgage, (B) such transaction will
not adversely affect the coverage under any Required Insurance Policies, (C)
the Mortgage Loan will fully amortize over the remaining term thereof, (D) no
material term of the Mortgage Loan (including the interest rate on the Mortgage
Loan) will be altered nor will the term of
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the Mortgage Loan be changed and (E) if the seller/transferor of the Mortgaged
Property is to be released from liability on the Mortgage Loan, such release
will not (based on the related Master Servicer's or Subservicer's good faith
determination) adversely affect the collectability of the Mortgage Loan. Upon
receipt of appropriate instructions from the Master Servicer of such Mortgage
Loan in accordance with the foregoing, the Trustee shall execute any necessary
instruments for such assumption or substitution of liability as directed by
such Master Servicer. Upon the closing of the transactions contemplated by
such documents, the Master Servicer of such Mortgage Loan shall cause the
originals or true and correct copies of the assumption agreement, the release
(if any), or the modification or supplement to the Mortgage Note or Mortgage to
be delivered to the Trustee and deposited with the Mortgage File for such
Mortgage Loan. Any fee collected by a Master Servicer or such related
Subservicer for entering into an assumption or substitution of liability
agreement will be retained by the Master Servicer or such Subservicer as
additional servicing compensation.
(c) The Master Servicer, with respect to a Mortgage Loan it
services, or the related Subservicer, as the case may be, shall be entitled to
approve a request from a Mortgagor for a partial release of the related
Mortgaged Property, the granting of an easement thereon in favor of another
Person, any alteration or demolition of the related Mortgaged Property or other
similar matters if it has determined, exercising its good faith business
judgment in the same manner as it would if it were the owner of the related
Mortgage Loan, that the security for, and the timely and full collectability
of, such Mortgage Loan would not be adversely affected thereby and that neither
REMIC I nor REMIC II would fail to continue to qualify as a REMIC under the
Code as a result thereof and that no tax on "prohibited transactions" or
"contributions" after the start-up day would be imposed on either REMIC as a
result thereof. Any fee collected by a Master Servicer or the related
Subservicer for processing such a request will be retained by such Master
Servicer or Subservicer as additional servicing compensation.
(d) Subject to any other applicable terms and conditions of this
Agreement, the Trustee, and each Master Servicer with respect to the Mortgage
Loans it services, shall be entitled to approve an assignment in lieu of
satisfaction with respect to a Mortgage Loan, provided the obligee with respect
to such Mortgage Loan following such proposed assignment provides the Trustee
and such Master Servicer with a "Lender Certification for Assignment of
Mortgage Loan" in the form attached hereto as Exhibit M, in form and substance
satisfactory to the Trustee and such Master Servicer, providing the following:
(i) that such Mortgage Loan is secured by Mortgaged Property located in a
jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) that the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and that the form of the transaction is
solely to comply with, or facilitate the transaction under, such local laws;
(iii) that such Mortgage Loan following the proposed assignment will have a
rate of interest at least 0.25 percent below or above the rate of interest on
such Mortgage Loan prior to such proposed assignment; and (iv) that such
assignment is at the request of the borrower under the related Mortgage Loan.
Upon approval of an assignment in lieu of satisfaction with respect to any
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Mortgage Loan it services, the Master Servicer of such Mortgage Loan shall
receive cash in an amount equal to the unpaid principal balance of and accrued
interest on such Mortgage Loan, and such Master Servicer shall treat such
amount as a Principal Prepayment in Full with respect to such Mortgage Loan for
all purposes hereof.
Section 3.14. Realization Upon Defaulted Mortgage Loans.
(a) Each Master Servicer, with respect to the Mortgage Loans it
services, shall foreclose upon or otherwise comparably convert (which may
include an REO Acquisition) the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. In connection with such foreclosure or other
conversion, such Master Servicer shall, consistent with Section 3.11, follow
such practices and procedures as it shall deem necessary or advisable, as shall
be normal and usual in its general mortgage servicing activities; provided that
such Master Servicer shall not be liable in any respect hereunder if such
Master Servicer is acting in connection with any such foreclosure or other
conversion in a manner that is consistent with the provisions of this
Agreement. Such Master Servicer, however, shall not be required to expend its
own funds in connection with any foreclosure, or attempted foreclosure which is
not completed, or towards the restoration of any property unless it shall
determine (i) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan to Holders of Certificates of one
or more Classes after reimbursement to itself for such expenses and (ii) that
such expenses will be recoverable to it through Liquidation Proceeds, Insurance
Proceeds or REO Proceeds (respecting which it shall have priority for purposes
of withdrawals from the applicable Custodial Account pursuant to Section 3.10,
whether or not such expenses are actually recoverable from related Liquidation
Proceeds, Insurance Proceeds or REO Proceeds); any such expenditure shall be
treated as a Servicing Advance hereunder. In the event of a determination by a
Master Servicer pursuant to this Section 3.14(a), such Master Servicer shall be
entitled to reimbursement of its funds so expended pursuant to Section 3.10.
Concurrently with the foregoing, such Master Servicer may pursue any remedies
that may be available in connection with a breach of a representation and
warranty with respect to any such Mortgage Loan in accordance with Section
2.04. Upon the occurrence of a Cash Liquidation or REO Disposition, following
the deposit in the applicable Custodial Account of all Insurance Proceeds,
Liquidation Proceeds and other payments and recoveries referred to in the
definition of "Cash Liquidation" or "REO Disposition," as applicable, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall release to the Master Servicer of the
related Mortgage Loan the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment prepared by such Master
Servicer, in each case without recourse, as shall be necessary to vest in the
designee of such Master Servicer the related Mortgaged Property, and thereafter
such Mortgaged Property shall not be part of the Trust Fund. Notwithstanding
the foregoing or any other provision of this Agreement, in each Master
Servicer's sole discretion with respect to any defaulted Mortgage Loan it
services or REO Property as to either of the following provisions, (i) a Cash
Liquidation or REO Disposition may be deemed to have occurred if substantially
all amounts expected by such Master Servicer to be received in connection with
the related defaulted Mortgage Loan
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or REO Property have been received, and (ii) for purposes of determining the
amount of any Liquidation Proceeds, Insurance Proceeds, REO Proceeds or any
other unscheduled collections or the amount of any Realized Loss, such Master
Servicer may take into account minimal amounts of additional receipts expected
to be received or any estimated additional liquidation expenses expected to be
incurred in connection with the related defaulted Mortgage Loan or REO
Property.
(b) In the event that title to any Mortgaged Property is acquired
by the Trust Fund as an REO Property by foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be issued to the Trustee or
to its nominee on behalf of Certificateholders. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan, such REO
Property shall (except as otherwise expressly provided herein) be considered to
be an Outstanding Mortgage Loan held in the Trust Fund until such time as the
REO Property shall be sold. Consistent with the foregoing for purposes of all
calculations hereunder so long as such REO Property shall be considered to be
an Outstanding Mortgage Loan it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been discharged,
such Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any bankruptcy or
similar proceeding or any moratorium or similar waiver or grace period) remain
in effect.
(c) In the event that the Trust Fund acquires any REO Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Master Servicer of such Mortgage Loan shall dispose of such
REO Property within two years, or such other period permitted by the Code,
after its acquisition by the Trust Fund for purposes of Section 860G(a)(8) of
the Code, or such other period permitted by the Code, unless (i) at the expense
of the Trust Fund, the Master Servicer requests and receives an extension of
such period in which case the Master Servicer shall sell such REO property
within the applicable extension period or (ii) such Master Servicer obtains for
the Trustee an Opinion of Counsel, addressed to the Trustee and such Master
Servicer, to the effect that the holding by the Trust Fund of such REO Property
subsequent to such two-year period will not result in the imposition of taxes
on "prohibited transactions" as defined in Section 860F of the Code or cause
either REMIC to fail to qualify as a REMIC at any time that any Certificates
are outstanding, in which case the Trust Fund may continue to hold such REO
Property (subject to any conditions contained in such Opinion of Counsel). A
Master Servicer shall be entitled to be reimbursed from the applicable
Custodial Account for any costs incurred in obtaining such Opinion of Counsel,
as provided in Section 3.10, and such costs shall be treated as Servicing
Advances hereunder. Notwithstanding any other provision of this Agreement, no
REO Property acquired by the Trust Fund shall be rented (or allowed to continue
to be rented) or otherwise used by or on behalf of the Trust Fund in such a
manner or pursuant to any terms that would (i) cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code or (ii) subject the Trust Fund to the imposition of any federal
income taxes on the income earned from such REO Property, including any taxes
imposed by reason of Section 860G(c) and 860F(a)(2)(B) of the Code.
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(d) The proceeds of any Cash Liquidation, REO Disposition or
purchase or repurchase of any Mortgage Loan pursuant to the terms of this
Agreement, as well as any recovery resulting from a collection of Liquidation
Proceeds, Insurance Proceeds or REO Proceeds, will be applied in the following
order of priority: first, to reimburse the Master Servicer of such Mortgage
Loan or the related Subservicer in accordance with Section 3.10(a)(i); second,
to all Master Servicing Fees and Primary Servicing Fees payable therefrom (and
the Master Servicer of such Mortgage Loan and the Subservicer shall have no
claims for any deficiencies with respect to such fees which result from the
foregoing allocation); third, to the Certificateholders to the extent of
accrued and unpaid interest on the Mortgage Loan, and any related REO Imputed
Interest, at the Net Mortgage Rate to the Due Date prior to the Distribution
Date on which such amounts are to be distributed; fourth, to the
Certificateholders as a recovery of principal on the Mortgage Loan (or REO
Property); and fifth, to Foreclosure Profits.
Section 3.15. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of a Mortgage Loan,
or upon the receipt by a Master Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, the applicable Master
Servicer will immediately notify the Trustee by a certification of a Servicing
Officer (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 applicable Custodial Account pursuant to
Section 3.07 have been or will be so deposited), substantially in one of the
forms attached hereto as Exhibit H requesting delivery to it of the Mortgage
File. Upon receipt of such certification and request, the Trustee shall
promptly release the related Mortgage File to such Master Servicer. Such
Master Servicer is authorized to execute and deliver to the Mortgagor the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage, together with
the Mortgage Note with, as appropriate, written evidence of cancellation
thereon. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to a Custodial Account
or the Certificate Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of a Mortgage Loan, the Master Servicer of such Mortgage Loan shall
deliver to the Trustee a certificate of a Servicing Officer substantially in
one of the forms attached as Exhibit H hereto, requesting that possession of
all, or any document constituting part of, the Mortgage File be released to
such Master Servicer and certifying as to the reason for such release and that
such release will not invalidate any insurance coverage provided in respect of
such Mortgage Loan under any Required Insurance Policy. Upon receipt of the
foregoing, the Trustee shall deliver the Mortgage File or any document therein
to such Master Servicer. Such Master Servicer shall cause each Mortgage File
or any document therein so released to be returned to the Trustee when the need
therefor by such Master Servicer no longer exists, unless (i) the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the applicable Custodial Account or (ii) the Mortgage
File or such document has been delivered directly or through a Subservicer to
an attorney, or to a public trustee or other public official as required by
law, for purposes of initiating or
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pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property either judicially or non-judicially, and such Master Servicer has
delivered directly or through a Subservicer to the Trustee 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. In the event that the Mortgage File or any document therein
is retained for purposes of initiating or pursuing foreclosure of the Mortgage
Property, if such foreclosure proceedings are terminated or the need for the
Mortgage File or other document no longer exists and the Mortgage Loan is still
part of the Trust Fund, the Master Servicer shall cause the Mortgage File or
any document therein to be returned to the Trustee. In the event of the
liquidation of a Mortgage Loan, the Trustee shall deliver the Request for
Release with respect thereto to the Master Servicer of such Mortgage Loan upon
deposit of the related Liquidation Proceeds in the applicable Custodial
Account.
(c) The Trustee, or the applicable Master Servicer on the
Trustee's behalf shall execute and deliver to such Master Servicer, if
necessary, 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 (if signed by the Trustee), the applicable Master
Servicer shall deliver to the 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 Trustee will not invalidate any
insurance coverage under any Required Insurance Policy or 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.
Section 3.16. Servicing and Other Compensation; Compensating
Interest.
(a) Each Master Servicer, as compensation for its activities
hereunder, shall be entitled to retain from collections on the Mortgage Loans
it services the amounts provided for by clauses (ii), (iv), (v) and (vi) of
Section 3.10(a), subject to clause (e) below. The amount of servicing
compensation provided for in such clauses shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis.
(b) Additional servicing compensation in the form of prepayment
charges, assumption fees, late payment charges, investment income on amounts in
the applicable Custodial Account or otherwise shall be retained by the Master
Servicers or the Subservicer to the extent provided herein, subject to clause
(e) below.
(c) The Master Servicers shall be required to pay, or cause to be
paid, all expenses incurred by it in connection with their servicing activities
hereunder (including the fees and expenses of the Trustee) and shall not be
entitled to reimbursement therefor except as specifically provided in Sections
3.10 and 3.14.
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(d) A Master Servicer's right to receive servicing compensation
may not be transferred in whole or in part except in connection with the
transfer of all of its responsibilities and obligations as a Master Servicer
under this Agreement.
(e) Notwithstanding any other provision herein, the amount of
servicing compensation that each Master Servicer shall be entitled to receive
for their activities hereunder for the period ending on each Distribution Date
shall be reduced (but not below zero) by an amount equal to Compensating
Interest (if any) to be paid by such Master Servicer for such Distribution
Date. Such reduction shall be applied during such period in reduction of the
Master Servicing Fee to which the Master Servicers are entitled pursuant to
Section 3.10(a)(ii). Such reduction in the Master Servicing Fee shall be
effectuated by the remittance of Compensating Interest (if any) to the Trustee
for deposit in the Certificate Account pursuant to Section 4.01(a).
Section 3.17. Annual Statement as to Compliance.
Each Master Servicer will deliver to the Depositor and the Trustee not
later than March 31 of each year beginning in 1998, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of such
Master Servicer during the preceding calendar year and of its performance under
the pooling and servicing agreements, including this Agreement, has been made
under such officers' supervision, (ii) to the best of such officers' knowledge,
based on such review, such Master Servicer has fulfilled all of its material
obligations in all material respects throughout such year, or, if there has
been a default in the fulfillment in all material respects of any such
obligation relating to this Agreement, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officers' knowledge, each related Subservicer has fulfilled its material
obligations under its Subservicing Agreement with such Master Servicer in all
material respects, or if there has been a material default in the fulfillment
of such obligations relating to this Agreement, specifying such default known
to such officer and the nature and status thereof.
Section 3.18. Annual Independent Public Accountants' Servicing
Report.
Not later than March 31 of each year beginning in 1998, each Master
Servicer at its expense shall cause a firm of Independent public accountants
which is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Depositor and the Trustee to the effect that such
firm has examined certain documents and records relating to the servicing of
the mortgage loans under pooling and servicing agreements (including this
Agreement) substantially similar one to another (such statement to have
attached thereto a schedule setting forth the pooling and servicing agreements
covered thereby, including this Agreement) and that, on the basis of such
examination conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC, such servicing has been conducted in compliance with such
pooling and servicing agreements except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
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serviced for FHLMC requires it to report. In rendering such statement, such
firm may rely, as to matters relating to direct servicing of mortgage loans by
Subservicers, upon comparable statements for examinations conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC
(rendered within one year of such statement) of Independent public accountants
with respect to the related Subservicer. For purposes of such statement, such
firm may conclusively assume that all pooling and servicing agreements among
the Depositor, the related Master Servicer and the Trustee relating to Mortgage
Pass-Through Certificates evidencing an interest in first mortgage loans are
substantially similar one to another except for any such pooling and servicing
agreement which, by its terms, specifically states otherwise.
Section 3.19. Rights of the Depositor in Respect of the Master
Servicers.
Each Master Servicer shall afford the Depositor, upon reasonable
notice, during normal business hours access to all records maintained by such
Master Servicer in respect of its rights and obligations hereunder and access
to officers of such Master Servicer responsible for such obligations. Upon
request, such Master Servicer shall furnish the Depositor with its most recent
financial statements and such other information as such Master Servicer
possesses regarding its business, affairs, property and condition, financial or
otherwise. Each Master Servicer shall also cooperate with all reasonable
requests for information including, but not limited to, notices, tapes and
copies of files, regarding itself, the Mortgage Loans or the Certificates from
any Person or Persons identified by the Depositor or such Master Servicer. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicers hereunder. The Depositor shall not have any responsibility or
liability for any action or failure to act by the Master Servicers and is not
obligated to supervise the performance of the Master Servicers under this
Agreement or otherwise.
Section 3.20. Administration of Buydown Funds.
(a) With respect to any Buydown Mortgage Loan, the Master Servicer
of such Buydown Mortgage Loan or the related Subservicer has deposited Buydown
Funds in an account that satisfies the requirements for a Custodial Account
(the "Buydown Account"). Upon receipt from the Mortgagor of the amount due on
a Due Date for each Buydown Mortgage Loan, the Master Servicer of such Buydown
Mortgage Loan or the related Subservicer, as applicable, will withdraw from the
Buydown Account the predetermined amount that, when added to the amount due on
such date from the Mortgagor, equals the full Monthly Payment and deposit that
amount in the applicable Custodial Account in accordance with the terms hereof
or transmit that amount in accordance with the terms of the Subservicing
Agreement to such Master Servicer, in either case together with the related
payment made by the Mortgagor or advanced by the Subservicer.
(b) If the Mortgagor on a Buydown Mortgage Loan prepays such loan
in its entirety during the period (the "Buydown Period") when Buydown Funds are
required to be applied to such Buydown Mortgage Loan, the Master Servicer of
such Buydown Mortgage Loan or the related Subservicer shall be required to
withdraw from the Buydown Account
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and remit any Buydown Funds remaining in the Buydown Account in accordance with
the related buydown agreement. The amount of Buydown Funds which may be
remitted in accordance with the related buydown agreement may reduce the amount
required to be paid by the Mortgagor to fully prepay the related Mortgage Loan.
If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan
during the Buydown Period and the property securing such Buydown Mortgage Loan
is sold in the liquidation thereof (either by the Master Servicer of such
Buydown Mortgage Loan or the insurer under any related Primary Mortgage
Insurance Policy), the Master Servicer of such Buydown Mortgage Loan or the
related Subservicer shall be required to withdraw from the Buydown Account the
Buydown Funds for such Buydown Mortgage Loan still held in the Buydown Account
and deposit that amount in the applicable Custodial Account in accordance with
the terms hereof or remit the same to the Master Servicer of such Buydown
Mortgage Loan in accordance with the terms of the Subservicing Agreement for
deposit in the applicable Custodial Account, as applicable, or pay to the
insurer under any related Primary Mortgage Insurance Policy if the Mortgaged
Property is transferred to such insurer and such insurer pays all of the loss
incurred in respect of such default. Any amount so remitted pursuant to the
preceding sentence will be deemed to reduce the amount owed on the Mortgage
Loan.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account.
(a) The Trustee shall establish and maintain a Certificate
Account. On or before 11:00 A.M. Los Angeles time on each Certificate Account
Deposit Date each Master Servicer shall remit to the Trustee for deposit into
the Certificate Account, by wire transfer of immediately available funds, an
amount equal to the sum of (i) any Advance for the immediately succeeding
Distribution Date, (ii) any amount required to be remitted to the Trustee for
deposit in the Certificate Account pursuant to Section 3.16(e), (iii) any
amount required to be paid pursuant to Section 9.01 and (iv) all other amounts
constituting the portion the Available Distribution Amount attributable to
collections made or payments owed by such Master Servicer for the immediately
succeeding Distribution Date. The Trustee shall promptly deposit such funds in
the Certificate Account. In addition to the funds remitted by the Master
Servicer as set forth above, the Master Servicer shall include in such
remittance the amount required to be remitted to the Trustee and any co-trustee
pursuant to Section 8.05(a).
(b) The Trustee shall be entitled to all investment earnings on
the funds in the Certificate Account from the receipt of such funds from the
Master Servicers as set forth in Section 4.01(a) until the distribution of such
funds to the Certificateholders as set forth in Section 4.02.
Section 4.02. Distributions.
(a) On each Distribution Date, the Trustee or the Paying Agent shall,
from funds received by the Trustee pursuant to Section 4.01(a) (i) distribute
to a Master Servicer or a Subservicer, by remitting for deposit to the
applicable Custodial Account, to the extent of and in reimbursement for any
Advances previously made by such Master Servicer or Subservicer with respect to
any Mortgage Loan it services or REO Property which remain unreimbursed in
whole or in part following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property as evidenced by an Officer's Certificate received
by the Trustee by the Determination Date; (ii) distribute to Financial Security
the Aggregate FSA Premium; (iii) distribute to the Trustee and any co-trustee
the amounts required to be remitted to the Trustee and any co-trustee pursuant
to Section 8.05(a); and then (iv) distribute to each Certificateholder of
record on the next preceding Record Date (other than as provided in Section
9.01 respecting the final distribution) either in immediately available funds
(by wire transfer or otherwise) to the account of such Certificateholder
holding Certificates in the amount of at least $5,000,000 at a bank or other
entity having appropriate facilities therefor, if such Certificateholder has so
notified the Trustee or the Paying Agent at least five (5) Business Days prior
to the related Record Date, as the case may be, or, if such Certificateholder
has not so notified the Trustee or the Paying Agent at least five (5) Business
Days prior to the related Record Date, by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register such Certificateholder's share
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(based on the aggregate of the Percentage Interests represented by Certificates
of the applicable Class held by such Holder) of the following amounts, in the
following order of priority (subject to the provisions of Section 4.02(b)), to
the extent of the Available Distribution Amount on deposit in the Certificate
Account on the Distribution Date:
(i) first, to the Class PO Certificates, the Class PO
Fraction of all principal received on or in respect of each Class PO
Mortgage Loan;
(ii) second, to the Senior Certificates entitled to
interest, Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(iii) third, to the Senior Certificates entitled to
principal, other than the Class PO Certificates, the Senior Principal
Distribution Amount in the following order:
(A) first, to the Class A-7 Certificates, an
amount, up to the amount of the Class A-7 Priority Amount
(as defined below), until the Class A-7 Certificate
Principal Balance has been reduced to zero;
(B) second, the portion of the Senior Principal
Distribution Amount remaining after the distribution
described above, concurrently:
(a) 1.6393441907% to the Class A-6
Certificates until the Class A-6
Certificate Principal Balance has
been reduced to zero; and
(b) 98.3606558093% sequentially as
follows:
(I) first, to each Class of the
Residual Certificates, pro
rata, according to their
respective Certificate
Principal Balances, until the
Certificate Principal
Balances of the Residual
Certificates have been
reduced to zero;
(II) second, concurrently, until the
Class X-0, Xxxxx X-0, Class
A-9 and A-10 Certificate
Principal Balances have been
reduced to zero:
(0) 0.0000000000% to the Class A-1
Certificates;
(0) 0.0000000000% to the Class A-9
Certificates;
(0) 00.0000000000% to the Class
A-8 Certificates;
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(0) 00.0000000000% sequentially as
follows:
(i) first, to the Class A-11
Certificates, until the Class
A-11 Certificate Principal
Balance has been reduced to
zero; and
(ii) second, to the Class A-10
Certificates, until the Class
A-10 Certificate Principal
Balance has been reduced to
zero; and
(0) 00.0000000000% to the Class
A-2 Certificates;
(III) third, concurrently, until the
Class A-2 and Class A-4
Certificate Principal
Balances have been reduced to
zero:
(0) 00.0000000000% to the Class
A-4 Certificates; and
(0) 00.0000000000% to the Class
A-2 Certificates;
(IV) fourth, to the Class A-5
Certificates, until the Class
A-5 Certificate Principal
Balance has been reduced to
$6,608,000; and
(V) fifth, concurrently, until the
Class A-5 and Class A-12
Certificate Principal
Balances have been reduced to
zero:
(0) 00.0000000000% to the Class
A-5 Certificates; and
(0) 00.0000000000% to the Class
A-12 Certificates; and
(C) third, to the Class A-7 Certificates, the
portion of the Senior Principal Distribution Amount
remaining after the distributions described above, until
the Class A-7 Certificate Principal Balance has been
reduced to zero.
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(iv) fourth, to the Class PO Certificates, to the extent
of amounts otherwise available to pay the Subordinate Principal
Distribution Amount on such Distribution Date, the sum of (a)
principal in an amount equal to the Class PO Fraction of any Realized
Loss on a Class PO Mortgage Loan, other than an Excess Special Hazard
Loss, an Excess Fraud Loss or an Excess Bankruptcy Loss on the Class
PO Mortgage Loans and (b) the sum of amounts, if any, by which the
amount described in clause (a) above on each prior Distribution Date
exceeded the amount actually distributed in respect thereof on such
prior Distribution Dates and not subsequently distributed; provided
that any amounts distributed in respect of losses pursuant to this
clause shall not cause a further reduction in the Class PO Certificate
Principal Balance;
(v) fifth, to the Class M Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(vi) sixth, to the Class M Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(vii) seventh, to the Class B-1 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(viii) eighth, to the Class B-1 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(ix) ninth, to the Class B-2 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(x) tenth, to the Class B-2 Certificates, their pro rata
share of the Subordinate Principal Distribution Amount;
(xi) eleventh, to the Class B-3 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xii) twelfth, to the Class B-3 Certificates, their pro
rata share of the Subordinate Principal Distribution Amount;
(xiii) thirteenth, to the Class B-4 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xiv) fourteenth, to the Class B-4 Certificates, their pro
rata share of the Subordinate Principal Distribution; Amount;
(xv) fifteenth, to the Class B-5 Certificates, Accrued
Certificate Interest and Unpaid Accrued Certificate Interest;
(xvi) sixteenth, to the Class B-5 Certificates, their pro
rata share of the Subordinate Principal Distribution; Amount; and
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(xvii) seventeenth, to the Class R-II Certificates, the
remaining portion, if any, of the Available Distribution Amount for
such Distribution Date.
With respect to the Class B Certificates, notwithstanding the
foregoing, on any Distribution Date on which the Subordination Level for any
Class of Class B Certificates is less than such percentage as of the Cut-off
Date, the portion of the Subordinate Principal Distribution Amount pursuant to
clause (ii) of the definition of Subordinate Principal Distribution Amount
otherwise allocable to such Class will be allocated to the Classes of Class B
Certificates for which the Subordination Level is greater than or equal to such
percentage as of the Cut-off Date, if any, and to the Class M Certificates, pro
rata according to the Certificate Principal Balances of such Classes. On any
Distribution Date, any reduction in funds available for distribution to the
Classes of Subordinate Certificates resulting from a distribution to the Class
PO Certificates as described in clause (iv) above will be allocated to the
Class of Subordinate Certificates with the lowest payment priority, in
reduction of its share of the Subordinate Principal Distribution Amount.
With respect to the Senior Certificates, notwithstanding the
foregoing, on each Distribution Date on or after the Credit Support Depletion
Date, distributions will be made in the order and priority as follows, subject,
in each case, to the extent of the Available Distribution Amount remaining
following prior distributions, if any, on such Distribution Date:
(i) first, to the Class PO Certificates, the Class PO
Fraction of all principal received on or in respect of each Class PO
Mortgage Loan;
(ii) second, to the Senior Certificates entitled to
interest, Accrued Certificate Interest and Unpaid Accrued Certificate
Interest;
(iii) third, to the Senior Certificates entitled to
principal (other than the Class PO Certificates), the Senior Principal
Distribution Amount, pro rata, according to their respective
Certificate Principal Balances; and
(iv) fourth, to the Class R-II Certificates, the remaining
portion, if any, of the Available Distribution Amount for such
Distribution Date.]]
(b) On each Distribution Date, the Trustee shall distribute the
amount withdrawn from the Reserve Fund with respect to such Distribution Date
pursuant to Section 3.10(d), to the extent of funds on deposit in the Reserve
Fund, and shall apply such funds to distributions on the Class A-5 Certificates
as interest thereon, in the amount of the Net Prepayment Interest Shortfall
allocated to the Class A-5 Certificates with respect to such Distribution Date.
(c) In addition to the foregoing distributions, with respect to
any Mortgage Loan that was previously the subject of a Cash Liquidation or an
REO Disposition that resulted in a Realized Loss, in the event that within two
years of the date on which such Realized Loss was determined to have occurred
the Master Servicer of such Mortgage Loan receives
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amounts, which such Master Servicer reasonably believes to represent subsequent
recoveries (net of any related liquidation expenses), or determines that it
holds surplus amounts previously reserved to cover estimated expenses,
specifically related to such Mortgage Loan (including, but not limited to,
recoveries in respect of the representations and warranties made by the related
Seller pursuant to the applicable Mortgage Loan Purchase Agreement) such Master
Servicer shall notify the Trustee of the existence of such amounts by means of
an Officer's Certificate delivered on the related Determination Date and, the
Trustee shall distribute such amounts to the applicable Certificateholders of
the Class or Classes to which such Realized Loss was allocated (with the
amounts to be distributed allocated among such Classes in the same proportions
as such Realized Loss was allocated), subject to the following: No such
distribution shall be in an amount that would result in total distributions on
the Certificates of any such Class in excess of the total amounts of principal
and interest that would have been distributable thereon if such Cash
Liquidation or REO Disposition had occurred but had resulted in a Realized Loss
equal to zero. Any amount to be so distributed with respect to the
Certificates of any Class shall be remitted by the Master Servicer of such
Mortgage Loan to the Trustee for distribution to the Certificateholders of
record as of the Record Date immediately preceding the date of such
distribution, on a pro rata basis based on the Percentage Interest represented
by each Certificate of such Class as of such Record Date. Any amounts to be so
distributed shall not be remitted to or distributed from the Trust Fund, and
shall constitute subsequent recoveries with respect to Mortgage Loans that are
no longer assets of the Trust Fund.
(d) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of
its Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing
funds to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicers shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(e) If either Master Servicer or the Trustee anticipates that a
final distribution with respect to any Class of Certificates will be made on
the next Distribution Date, such Master Servicer, if applicable, shall, no
later than the Determination Date in the month of such final distribution,
notify the Trustee and the Trustee shall, no later than two (2) Business Days
after such Determination Date, mail on such date to each Holder of such Class
of Certificates a notice to the effect that: (i) the Trustee anticipates that
the final distribution with respect to such Class of Certificates will be made
on such Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Trustee or as otherwise specified therein,
and (ii) no interest shall accrue on such Certificates from and after the end
of the prior calendar month. In the event that Certificateholders required to
surrender their Certificates pursuant to Section 9.01(c) do not surrender their
Certificates for final cancellation, the Trustee shall cause funds
distributable with respect to such Certificates to be
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withdrawn from the Certificate Account and credited to a separate escrow
account for the benefit of such Certificateholders as provided in Section
9.01(d).
Section 4.03. Statements to Certificateholders.
(a) No later than two Business Days after the Determination Date
for the immediately succeeding Distribution Date, the Master Servicers shall
deliver to the Trustee a report in computer-readable form as to each Mortgage
Loan serviced by them as of such date such information as the Trustee shall
reasonably require in order to make, or cause its agents to make, distributions
on the Certificates and prepare reports to Certificateholders. The Trustee may
conclusively rely upon the accuracy of and shall be under no duty to
recalculate, verify or recompute the information provided to it by a Master
Servicer.
(b) Concurrently with each distribution charged to the Certificate
Account and with respect to each Distribution Date the Trustee shall forward by
mail to each Holder and the Underwriter, each Master Servicer and the Depositor
a statement setting forth the following information as to each Class of
Certificates to the extent applicable and to the extent the Trustee has
received the Master Servicer tape in a timely manner:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
(ii) the amount of such distribution to Holders of
such Class of Certificates allocable to interest;
(iii) if the distribution to the Holders of such
Class of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds available
therefor, the amount of the shortfall;
(iv) the amount of any Advances by the Master
Servicers pursuant to Section 4.04;
(v) the number and Pool Stated Principal Balance
of the Mortgage Loans after giving effect to the distribution of
principal on such Distribution Date;
(vi) the aggregate Certificate Principal Balance
of each Class of Certificates, after giving effect to the amounts
distributed on such Distribution Date, separately identifying any
reduction thereof due to Realized Losses other than pursuant to an
actual distribution of principal;
(vii) the related Subordinate Principal
Distribution Amount;
(viii) on the basis of the most recent reports
furnished to it by Subservicers, if applicable, the number and
aggregate principal balances of Mortgage Loans (not including REO
Properties) that are delinquent (A) one month, (B) two
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months and (C) three months and the number and aggregate principal
balance of Mortgage Loans (not including REO Properties) that are in
foreclosure;
(ix) the number, aggregate principal balance
and book value of any REO Properties;
(x) the aggregate Accrued Certificate Interest
remaining unpaid, if any, for each Class of Certificates, after giving
effect to the distribution made on such Distribution Date;
(xi) the Special Hazard Amount, Fraud Loss Amount
and Bankruptcy Amount as of the close of business on such Distribution
Date and a description of any change in the calculation of such
amounts;
(xii) the occurrence of the Credit Support
Depletion Date;
(xiii) the Senior Percentage for such Distribution
Date;
(xiv) the aggregate amount of Realized Losses for
such Distribution Date;
(xvi) the aggregate amount of any recoveries on
previously foreclosed loans from Sellers due to a breach of
representation or warranty;
(xvii) the weighted average remaining term to
maturity of the Mortgage Loans after giving effect to the amounts
distributed on such Distribution Date;
(xviii) the weighted average Mortgage Rates of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
(xix) the Guaranteed Distributions for such
Distribution Date and amounts in respect of the Guaranteed
Distributions paid under the Policy;
(xx) the amount of any withdrawal from the Reserve
Fund since the prior Distribution Date;
(xxi) the amount remaining in the Reserve Fund
after taking into account amounts withdrawn from the Reserve Fund for
such Distribution Date;
(xxii) the Senior Prepayment Percentage for such
Distribution Date;
(xxiii) Extraordinary Losses for the Prior Period;
and
(xxiv) the cumulative Realized Losses.
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In the case of information furnished pursuant to clauses (i) and (ii) above,
the amounts shall be expressed as a dollar amount per Certificate with a $1,000
denomination.
(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Certificate other than a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Code.
(d) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and shall
forward to each Person who at any time during the calendar year was the Holder
of a Residual Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Residual Certificate. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code.
(e) Upon the written request of any Certificateholder, the Master
Servicer, as soon as reasonably practicable, shall provide the requesting
Certificateholder with such information as is necessary and appropriate, in the
Master Servicer's sole discretion, for purposes of satisfying applicable
reporting requirements under Rule 144A.
(f) Upon request to the Trustee by any Holder of a Certificate who
is a Holder thereof at the time of making such request (an "Eligible
Certificateholder"), the Trustee shall provide, in the form of a
computer-readable tape or disk, loan by loan data with respect to the payment
experience on the Mortgage Loans containing at least the fields of information
listed on Exhibit P hereto (based on information provided by the Master
Servicer). In addition, upon the written request of any Eligible
Certificateholder, the Trustee shall provide similar loan by loan data with
respect to any prior monthly remittance report to the Certificateholders
pursuant to this Agreement (as and when such information becomes available).
The expense of providing any tape or disk pursuant to this subsection shall be
the expense of the Eligible Certificateholder. The Trustee shall include in
each monthly remittance report pursuant to this Agreement a statement that the
monthly loan by loan information described in this subsection is available upon
the request and at the expense of any Eligible Certificateholder directed to
the Trustee.
Section 4.04. Distribution of Reports to the Trustee and the
Depositor; Advances by the Master Servicers.
(a) Prior to the close of business on the Business Day next
succeeding each Determination Date, each Master Servicer shall furnish a
written (or in such electronic format as the Trustee and the Master Servicer
shall mutually agree) statement to the Trustee,
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any Paying Agent and the Depositor (the information in such statement to be
made available to Certificateholders by each Master Servicer on request)
setting forth (i) the portion of the Available Distribution Amount to be
remitted by such Master Servicer, (ii) the aggregate amount of Special Hazard
Losses, Fraud Losses and Bankruptcy Losses attributable to the Mortgage Loans
serviced by it for such Distribution Date and (iii) the amounts required to be
withdrawn from the applicable Custodial Account and remitted to the Trustee for
deposit into the Certificate Account on the immediately succeeding Certificate
Account Deposit Date pursuant to clause (iii) of Section 4.01(a) and (iv) the
aggregate book value of REO Properties serviced by it. The determination by
each Master Servicer of such amounts shall, in the absence of obvious error, be
presumptively deemed to be correct for all purposes hereunder and the Trustee
shall be protected in relying upon the same without any independent check or
verification.
(b) On or before 11:00 A.M. Los Angeles time on each Certificate
Account Deposit Date, each Master Servicer shall either (i) remit to the
Trustee for deposit in the Certificate Account from its own funds, or funds
received therefor from the Subservicers, an amount equal to the Advances to be
made by such Master Servicer in respect of the related Distribution Date, which
shall be in an aggregate amount equal to the aggregate amount of Monthly
Payments (with each interest portion thereof adjusted to the Net Mortgage
Rate), less the amount of any related Debt Service Reductions or reductions in
the amount of interest collectable from the Mortgagor pursuant to the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended, or similar legislation or
regulations then in effect, on the Outstanding Mortgage Loans serviced by such
Master Servicer as of the related Due Date, which Monthly Payments were
delinquent as of the close of business as of the related Determination Date;
provided that no Advance shall be made if it would be a Nonrecoverable Advance,
(ii) withdraw from amounts on deposit in the applicable Custodial Account and
deposit in the Certificate Account all or a portion of the Amount Held for
Future Distribution in discharge of any such Advance, or (iii) make advances in
the form of any combination of (i) and (ii) aggregating the amount of such
Advance. Any portion of the Amount Held for Future Distribution so used shall
be replaced by such Master Servicer by remittance to the Trustee for deposit in
the Certificate Account on or before 11:00 A.M. Los Angeles time on any future
Certificate Account Deposit Date to the extent that funds attributable to the
Mortgage Loans serviced by such Master Servicer that are available in the
applicable Custodial Account for remittance to the Trustee on such Certificate
Account Deposit Date shall be less than payments to Certificateholders required
to be made on the following Distribution Date.
The determination by a Master Servicer that it has made a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute
a Nonrecoverable Advance, shall be evidenced by a certificate of a Servicing
Officer delivered to the Depositor and the Trustee by 11:00 A.M. Los Angeles
time on the related Determination Date.
In the event that a Master Servicer determines as of the Business Day
preceding any Certificate Account Deposit Date that it will be unable to remit
to the Trustee an amount equal to the Advance required to be made by it for the
immediately succeeding Distribution Date, it shall give written notice to the
Trustee of its inability to advance (such notice may be given by telecopy), not
later than 12:00 P.M. Los Angeles time on such Business Day,
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specifying the portion of such amount that it will be unable to remit. Not
later than 12:00 P.M. Los Angeles time on the Certificate Account Deposit Date
the Trustee shall (a) terminate all of the rights and obligations of such
Master Servicer under this Agreement in accordance with Section 7.01 and (b)
assume the rights and obligations of such Master Servicer hereunder, including
the obligation to advance funds in an amount equal to the Advance required to
be made by such Master Servicer for the immediately succeeding Distribution
Date.
The Trustee shall deposit all funds it receives pursuant to this
Section 4.04 into the Certificate Account.
(c) Notwithstanding any other provision of this Agreement or any
provision of any Subservicing Agreement, (i) a Master Servicer shall not make
any Advance or any Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Advance or Servicing Advance, if
made, would be a Nonrecoverable Advance, (B) a Cash Liquidation or REO
Disposition has occurred with respect to the related Mortgage Loan serviced by
such Master Servicer, or (C) the related Mortgage Loan serviced by such Master
Servicer is a Deleted Mortgage Loan, and (ii) any Subservicer shall not make
any Subservicer Servicing Advance if (A) it determines in its good faith
judgment after reasonable inquiry that such Subservicer Servicing Advance, if
made, would be a Nonrecoverable Subservicer Advance, (B) a Cash Liquidation or
REO Disposition has occurred with respect to the related Mortgage Loan, or (C)
the related Mortgage Loan is a Deleted Mortgage Loan.
Section 4.05. Allocation of Realized Losses.
Prior to each Determination Date, each Master Servicer shall determine
the total amount of Realized Losses with respect to the Mortgage Loans serviced
by it, if any, that resulted from any Cash Liquidation, Debt Service Reduction,
Deficient Valuation or REO Disposition that occurred during the calendar month
preceding such Distribution Date. The amount of each Realized Loss shall be
evidenced by an Officers' Certificate delivered to the Trustee no later than
the Determination Date. All Realized Losses other than Excess Special Hazard
Losses, Extraordinary Losses, Excess Bankruptcy Losses or Excess Fraud Losses,
shall be allocated by the Trustee as follows: first, sequentially to the Class
B-5, Class B-4, Class B-3, Class B-2, Class B-1, Class M, and then to the
Senior Certificates (other than the Class PO Certificates) on a pro rata basis.
The Class PO Fraction of Realized Losses relating to any Class PO Mortgage Loan
shall be allocated solely to the Class PO Certificates. Any Excess Special
Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses and Extraordinary
Losses on the Mortgage Loans (other than the Class PO Fraction of any such
Realized Losses attributable to the Class PO Mortgage Loans) will be allocated
among the Certificates (other than the Class PO Certificates) on a pro rata
basis.
As used herein, an allocation of a Realized Loss on a "pro rata basis"
among two or more specified Classes of Certificates means an allocation on a
pro rata basis, among the various Classes so specified, to each such Class of
Certificates on the basis of their then outstanding Certificate Principal
Balances prior to giving effect to distributions to be made on
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such Distribution Date in the case of the principal portion of a Realized Loss
or based on the Accrued Certificate Interest thereon payable on such
Distribution Date (without regard to any Compensating Interest for such
Distribution Date) in the case of an interest portion of a Realized Loss.
Except as provided in the following sentence, any allocation of the principal
portion of Realized Losses (other than Debt Service Reductions) to a Class of
Certificates shall be made by reducing the Certificate Principal Balance
thereof by the amount so allocated, which allocation shall be deemed to have
occurred on such Distribution Date. Any allocation of the principal portion of
Realized Losses (other than Debt Service Reductions) to the Class B
Certificates then outstanding with the highest numerical designation shall be
made by operation of the definition of "Certificate Principal Balance" and by
operation of the provisions of Section 4.02(a). Allocations of the interest
portions of Realized Losses shall be made by operation of the definition of
"Accrued Certificate Interest" and by operation of the provisions of Section
4.02(a). Allocations of the principal portion of Debt Service Reductions shall
be made by operation of the provisions of Section 4.02(a). All Realized Losses
and all other losses allocated to a Class of Certificates hereunder will be
allocated among the Certificates of such Class in proportion to the Percentage
Interests evidenced thereby.
Section 4.06. Reports of Foreclosures and Abandonment of Mortgaged
Property.
Each Master Servicer, with respect to the Mortgage Loans it services,
or the related Subservicers shall file information returns with respect to the
receipt of mortgage interests received in a trade or business, the reports of
foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050H, 6050J and 6050P, respectively,
of the Code, and deliver to the Trustee an Officers' Certificate on or before
March 31 of each year stating that such reports have been filed. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050H, 6050J and 6050P of the Code.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Master
Servicers shall comply with all federal withholding requirements with respect
to payments to Certificateholders of interest or original issue discount that
the Master Servicer reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for any such withholding.
Without limiting the foregoing, the Master Servicer agrees that it will not
withhold with respect to payments of interest or original issue discount in the
case of a Certificateholder that has furnished or caused to be furnished an
effective Form W-8 or an acceptable substitute form or a successor form and who
is not a "10 percent shareholder" within the meaning of Code Section
871(h)(3)(B) or a "controlled foreign corporation" described in Code Section
881(c)(3)(C) with respect to the Trust Fund or the Depositor. In the event a
Paying Agent withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Paying Agent shall indicate the amount withheld
to such Certificateholder.
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Section 4.08. REMIC I Distributions. On each Distribution Date,
the Trustee shall be deemed to distribute to itself, as holder of the Tier I
Regular Interests, the following amounts in the order set forth below:
(a) to the extent of the Available Distribution Amount (excluding
amounts included therein attributable to withdrawals from any of the Class A-5
Rounding Account, the LIBOR Certificate Reserve Fund or the Reserve Fund or
collections from the Policy), for each Tier I Regular Interest, in the same
priority as the Corresponding Class or Classes of Certificates relating thereto
as provided in Section 4.02(a), an amount equal to the interest accrued on the
aggregate principal balance of such Tier I Regular Interest at the applicable
interest rate for such Tier I Regular Interest (as set forth in the definition
for such Tier I Regular Interest) during the Prior Period (except for the Tier
I Regular Interest P, which will accrue interest during the period from the
Distribution Date in the month prior to each Distribution Date to the day prior
to such Distribution Date), plus any unpaid portion of accrued interest for any
prior period with interest thereon at the applicable interest for such Tier I
Regular Interest, reduced by the amount of any interest shortfalls (including
Prepayment Interest Shortfalls, to the extent not covered by Compensating
Interest) allocable to such Tier I Regular Interest (in the same proportion as
the Corresponding Class or Class of Certificates as provided in Section
4.02(a));
(b) to the extent of the Available Distribution Amount (excluding
amounts included therein attributable to withdrawals from any of the Class A-5
Rounding Account, the LIBOR Certificate Reserve Fund or the Reserve Fund or
collections from the Policy), an amount of principal equal to the Principal
Payment Amount on such Distribution Date in the same priority as the
Corresponding Class or Classes of Certificates as provided in Section 4.02(a);
(c) after the principal balance of each Tier I Regular Interest is
reduced to zero, to the Class R-I Certificate, all other amounts remaining in
REMIC I;
provided, however, that notwithstanding the deemed distributions set forth in
clauses (a), (b) and (c) above, distributions from the Certificate Account
shall only be made to the holders of the Certificates; and provided, further,
that each Realized Loss and interest shortfall (including Prepayment Interest
Shortfalls, to the extent not covered by Compensating Interest), shall be
deemed allocated, and adjustments or distributions as a consequence thereof
shall be deemed made.
Section 4.09. Principal Distributions on the Class A-5
Certificates.
Prior to the Credit Support Depletion Date, distributions in reduction
of the aggregate Certificate Principal Balance for Class A-5 Certificates will
be made in integral multiples of $1,000 at the request of the appropriate
representatives of Deceased Holders of Class A-5 Certificates and at the
request of Living Holders of Class A-5 Certificates or by mandatory
distributions by Random Lot, pursuant to clauses (a) and (d) below. On and
after the Credit Support Depletion Date, distributions in reduction of the
Class A-3 Principal Balance will be made on a pro rata basis pursuant to clause
(e) below.
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(a) On each Distribution Date on which principal
distributions to the Class A-5 Certificates are made, such distributions will
be made in the following priority:
(i) any request by a Deceased Holder, but not exceeding
an aggregate amount of $25,000 for each requesting Deceased Holder;
and
(ii) any request by a Living Holder, but not exceeding an
aggregate amount of $10,000 for each requesting Living Holder.
Thereafter, distributions will be made, with respect to the Class A-5
Certificates, as provided in clauses (i) and (ii) above up to a second $25,000
and $10,000, respectively. This sequence of priorities will be repeated for
each request for principal distributions made by the Holders of the Class A-5
Certificates until all such requests have been honored.
Requests for principal distributions presented on behalf of Deceased
Holders in accordance with the provisions of clause (i) above will be accepted
in order of their receipt by the Depository. Requests for principal
distributions presented in accordance with the provisions of clause (ii) above
will be accepted in the order of their receipt by the Depository; provided,
however, that distributions will be subject to the priorities described in the
preceding paragraph. All requests for principal distributions to Class A-5
Certificates will be accepted in accordance with the provisions set forth in
Section 4.09(c). All requests for principal distributions to Class A-5
Certificates with respect to any Distribution Date must be received by the
Depository and forwarded to, and received by, the Trustee no later than the
close of business on the related Record Date. Requests for distributions that
are received by the Trustee after the related Record Date and requests for
distributions not accepted with respect to any Distribution Date, will be
treated as requests for principal distributions to Class A-5 Certificates on
the next succeeding Distribution Date, and each succeeding Distribution Date
thereafter, until each such request is accepted or is withdrawn as provided in
Section 4.09(c). Such requests as are not so withdrawn shall retain their order
of priority without the need for any further action on the part of the
appropriate Holder of the related Insured Certificate, all in accordance with
the procedures of the Depository and the Trustee. Upon the transfer of
beneficial ownership of any Insured Certificate, any distribution request
previously submitted with respect to such Certificate will be deemed to have
been withdrawn only upon the receipt by the Trustee on or before the Record
Date for such Distribution Date of notification of such withdrawal in the
manner set forth in Section 4.09(c) using a form required by the Depository.
Distributions in reduction of the aggregate Certificate Principal
Balance for Class A-5 Certificates will be applied in an amount equal to the
portion of the Senior Principal Distribution Amount allocable to the Class A-5
Certificates pursuant to Section 4.02, plus any amounts available for
distribution from the Class A-5 Rounding Account established as provided in
Section 3.10, provided that the aggregate distribution of principal to the
Class A-5 Certificates on any Distribution Date shall be made in an integral
multiple of $1,000.
To the extent that the portion of the Senior Principal Distribution
Amount allocable to the Class A-5 Certificates on any Distribution Date exceeds
the aggregate Certificate
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Principal Balance of the Class A-5 Certificates with respect to which
distribution requests, as set forth above, have been received, principal
distributions in reduction of the aggregate Certificate Principal Balance for
Class A-5 Certificates will be made by mandatory distribution pursuant to
Section 4.09(d).
(b) An Insured Certificate shall be deemed to be held by
a Deceased Holder for purposes of this Section 4.09 if the death of the Holder
thereof is deemed to have occurred. Class A-5 Certificates beneficially owned
by tenants by the entirety, joint tenants or tenants in common will be
considered to be beneficially owned by a single owner. The death of a tenant
by the entirety, joint tenant or tenant in common will be deemed to be the
death of the Holder, and the Class A-5 Certificates so beneficially owned will
be eligible for priority with respect to principal distributions, subject to
the limitations stated above. Class A-5 Certificates beneficially owned by a
trust will be considered to be beneficially owned by each beneficiary of the
trust to the extent of such beneficiary's beneficial interest therein, but in
no event will a trust's beneficiaries collectively be deemed to be Holders of a
number of Individual Insured Certificates greater than the number of Individual
Insured Certificates of which such trust is the owner. The death of a
beneficiary of a trust will be deemed to be the death of a Holder of the Class
A-5 Certificates, as applicable, owned by the trust to the extent of such
beneficiary's beneficial interest in such trust. The death of an individual
who was a tenant by the entirety, joint tenant or tenant in common in a tenancy
which is the beneficiary of a trust will be deemed to be the death of the
beneficiary of such trust. The death of a person who, during his or her
lifetime, was entitled to substantially all of the beneficial ownership
interests in Individual Insured Certificates will be deemed to be the death of
the Holder of such Class A-5 Certificates regardless of the registration of
ownership, if such beneficial interest can be established to the satisfaction
of the Trustee. Such beneficial interest will be deemed to exist in typical
cases of street name or nominee ownership, ownership by a trustee, ownership
under the Uniform Gifts to Minors Act and community property or other joint
ownership arrangements between a husband and wife. Certificate interests shall
include the power to sell, transfer or otherwise dispose of an Insured
Certificate and the right to receive the proceeds therefrom, as well as
interest and principal distributions, as applicable, payable with respect
thereto. The Trustee shall not be under any duty to determine independently
the occurrence of the death of any deceased Holder. The Trustee may rely
entirely upon documentation delivered to it pursuant to Section 4.09(c) in
establishing the eligibility of any Holder to receive the priority accorded
Deceased Holders in Section 4.09(a).
(c) Requests for principal distributions to any Insured
Certificate must be made by delivering a written request therefor to the
Participant or Indirect Participant that maintains the account evidencing such
Holder's interest in Class A-5 Certificates. In the case of a request on
behalf of a Deceased Holder, appropriate evidence of death and any tax waivers
are required to be forwarded to the Trustee under separate cover. The
Participant should in turn make the request of the Depository (or, in the case
of an Indirect Participant, such Indirect Participant must notify the related
Participant of such request, which Participant should make the request of the
Depository) on a form required by the Depository and provided to the
Participant. Upon receipt of such request, the Depository will date and time
stamp such request and forward such request to the Trustee. the Depository may
establish
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such procedures as it deems fair and equitable to establish the order of
receipt of requests for such distributions received by it on the same day.
None of the Depositor, the Master Servicers, the Trustee or Financial Security
shall be liable for any delay in delivery of requests for distributions or
withdrawals of such requests by the Depository, a Participant or any Indirect
Participant.
The Trustee shall maintain a list of those Participants representing
the appropriate Holders of Class A-5 Certificates that have submitted requests
for principal distributions, together with the order of receipt and the amounts
of such requests. Subject to the priorities described in Section 4.09(a)
above, the Depository will honor requests for distributions in the order of
their receipt. The Trustee shall notify the Depository as to which requests
should be honored on each Distribution Date at least two Business Days prior to
such Distribution Date based on the report received by the Trustee pursuant to
Section 3.12 and shall notify the Depository as to the portion of the Senior
Principal Distribution Amount to be distributed to the Class A-5 Certificates
by Random Lot pursuant to Section 4.09(d). Requests shall be honored by the
Depository in accordance with the procedures, and subject to the priorities and
limitations, described in this Section 4.09. The exact procedures to be
followed by the Trustee and the Depository for purposes of determining such
priorities and limitations will be those established from time to time by the
Trustee or the Depository, as the case may be. The decisions of the Trustee
and the Depository concerning such matters will be final and binding on all
affected persons.
Individual Insured Certificates that have been accepted for a
distribution shall be due and payable on the applicable Distribution Date.
Such Certificates shall cease to bear interest after the last day of the month
preceding the month in which such Distribution Date occurs, and notwithstanding
anything to the contrary herein, no amounts shall be due from the Financial
Security or otherwise with respect to interest on such Certificates after such
last day of the month.
Any Holder of an Insured Certificate that has requested a
distribution may withdraw its request by so notifying in writing the
Participant or Indirect Participant that maintains such Holder's account. In
the event that such account is maintained by an Indirect Participant, such
Indirect Participant must notify the related Participant which in turn must
forward the withdrawal of such request, on a form required by the Depository,
to the Depository to be forwarded to the Trustee. If such notice of withdrawal
of a request for distribution has not been received by the Depository and
forwarded to the Trustee on or before the Record Date for the next Distribution
Date, the previously made request for distribution will be irrevocable with
respect to the making of principal distributions on such Distribution Date.
In the event any requests for principal distributions are rejected by
the Trustee for failure to comply with the requirements of this Section 4.09,
the Trustee shall return such request to the appropriate Participant with a
copy to the Depository with an explanation as to the reason for such rejection.
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(d) To the extent, if any, that principal distributions to be made
to the Class A-5 Certificateholders on a Distribution Date exceed the
outstanding Certificate Principal Balance of Individual Insured Certificates
with respect to which distribution requests have been received by the related
Record Date, as provided in Section 4.09(a) above, the additional principal
distributions in reduction of the aggregate Certificate Principal Balance for
Class A-5 Certificates will be made by mandatory distributions in reduction
thereof. Such mandatory distributions on Individual Insured Certificates will
be made by Random Lot in accordance with the then-applicable Random Lot
procedures of the Depository, the Participants and the Indirect Participants
representing the Holders. The Trustee shall notify the Depository of the
aggregate amount of the mandatory principal distribution to be made on the next
Distribution Date. the Depository shall then allocate such aggregate amount
among its Participants on a Random Lot basis. Each Participant and, in turn,
each Indirect Participant will then select, in accordance with its own
procedures, Individual Insured Certificates from among those held in its
accounts to receive mandatory principal distributions, such that the total
amount so selected is equal to the aggregate amount of such mandatory
distributions allocated to such Participant by the Depository and to such
Indirect Participant by its related Participant, as the case may be.
Participants and Indirect Participants that hold Insured Certificates selected
for mandatory principal distributions are required to provide notice of such
mandatory distributions to the affected Holders. The Master Servicers agree to
notify the Trustee of the amount of principal distributions to be made on each
Distribution Date in a timely manner such that the Trustee may fulfill its
obligations under the Depositary Agreement.
(e) Notwithstanding any provisions herein to the contrary, on each
Distribution Date on and after the Credit Support Depletion Date, distributions
in reduction of the aggregate Certificate Principal Balance for A-5
Certificates will be made pro rata among the Holders of the Insured
Certificates and will not be made in integral multiples of $1,000 nor pursuant
to requests for distribution as permitted by Section 4.09(a) or mandatory
distributions by Random Lot as provided for by Section 4.09(d).
(f) In the event that Definitive Certificates representing the
Insured Certificates are issued pursuant to Section 5.09, an amendment to this
Agreement, which may be approved without the consent of any Certificateholders,
shall establish procedures relating to the manner in which distributions in
reduction of the aggregate Certificate Principal Balance for A-5 Certificates
are to be made; provided that such procedures shall be consistent, to the
extent practicable and customary for certificates similar to the Class A-5
Certificates, with the provisions of this Section 4.09.
Section 4.10. Policy Matters.
(a) If, on the second Business Day before any Distribution Date, the
Trustee determines (based upon the tape received from the Master Servicer) that
the amount on deposit or to be deposited in the Certificate Account and
distributable to the Class A-5 Certificateholders pursuant to Section 4.02,
together with any amounts that may be distributable to the Class A-5
Certificateholders from the Reserve Fund, will be insufficient to pay the
Guaranteed Distributions on such Distribution Date, the Trustee shall
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determine the amount of any such deficiency and shall give notice to Financial
Security and the appropriate Fiscal Agent (as defined in the Policy), if any,
by telephone or telecopy of the amount of such deficiency, confirmed in writing
by the Notice of Claim by 5:00 p.m., New York City time on such second Business
Day. The Trustee's responsibility for delivering the notice to Financial
Security as provided in the preceding sentence is limited to the availability,
timeliness and accuracy of the information provided by the Master Servicers.
(b) In the event the Trustee receives a certified copy of an order
of the appropriate court that any scheduled payment of principal or interest on
a Class A-5 Certificate has been voided in whole or in part as a preference
payment under applicable bankruptcy law, the Trustee shall (i) promptly notify
Financial Security, as appropriate, and the appropriate Fiscal Agent, if any,
and (ii) comply with the provisions of the Policy to obtain payment by
Financial Security, as appropriate, of such voided scheduled payment. In
addition, the Trustee shall mail notice to all Holders of the Class A-5
Certificates so affected that, in the event that any such Holder's scheduled
payment is so recovered, such Holder will be entitled to payment pursuant to
the terms of the Policy, a copy of which shall be made available to such
Holders by the Trustee. The Trustee shall furnish to Financial Security and
the appropriate Fiscal Agent, if any, its records listing the payments on the
affected Class A-5 Certificates, if any, that have been made by the Trustee and
subsequently recovered from the affected Holders, and the dates on which such
payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes
hereof, the Trustee shall establish a separate special purpose trust account on
behalf of the Trustee for the benefit of Holders of the Class A-5 Certificates
(the "Policy Payments Account") over which the Trustee shall have exclusive
control and sole right of withdrawal. The Policy Payments Account shall be an
Eligible Account. The Trustee shall deposit any amount paid under the Policy
into the Policy Payments Account and distribute such amount only for the
purposes of making the payments to Holders of the Class A-5 Certificates in
respect of the Guaranteed Distributions (or other amounts payable pursuant to
clause (b) above on the Class A-5 Certificates by Financial Security pursuant
to the Policy) for which the related claim was made under the Policy. Such
amounts shall be transferred to the Certificate Account and allocated by the
Trustee to Holders of Class A-5 Certificates affected by such shortfalls in the
same manner as principal and interest payments are to be allocated with respect
to such Certificates pursuant to Section 4.02. It shall not be necessary for
such payments to be made by checks or wire transfers separated from the checks
or wire transfers used to make regular payments hereunder with funds withdrawn
from the Certificate Account. However, any payments made on the Class A-5
Certificates from funds in the Policy Payments Account shall be noted as
provided in subsection (e) below. Funds held in the Policy Payments Account
shall not be invested by the Trustee.
(d) Any funds received from Financial Security for deposit into the
Policy Payments Account pursuant to the Policy in respect of a Distribution
Date or otherwise as a result of any claim under the Policy shall be applied by
the Trustee directly to the payment in full (i) of the Guaranteed Distributions
due on such Distribution Date on the Class A-5 Certificates or (ii) of other
amounts payable under the Policy. Funds received by the Trustee as a result of
any claim under the Policy shall be used solely for payment to the Holders of
the Class
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A-5 Certificates and may not be applied for any other purpose, including,
without limitation, satisfaction of any costs, expenses or liabilities of the
Trustee, the Master Servicers or the Trust Fund. Any funds remaining in the
Policy Payments Account on the first Business Day after each Distribution Date
shall be remitted promptly to Financial Security pursuant to the written
instruction of Financial Security.
(e) The Trustee shall keep complete and accurate records in respect
of (i) all funds remitted to it by Financial Security and deposited into the
Policy Payments Account and (ii) the allocation of such funds to (A) payments
of interest on and principal in respect of any Class A-5 Certificates, (B)
Realized Losses allocated to the Class A-5 Certificates and (C) Net Prepayment
Interest Shortfall allocated to the Class A-5 Certificates. Financial Security
shall have the right to inspect such records at reasonable times during normal
business hours upon three Business Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of a Class A-5
Certificate by its acceptance of such Certificate agrees, that, without the
need for any further action on the part of Financial Security or the Trustee,
to the extent Financial Security makes payments, directly or indirectly, on
account of principal of or interest on any Class A-5 Certificates, Financial
Security will be fully subrogated to the rights of the Holders of such Class
A-5 Certificates to receive such principal and interest from the Trust Fund.
The Class A-5 Certificateholders, by acceptance of such Certificates, assign
their rights as Holders of the Class A-5 Certificates to the extent of
Financial Security's interest with respect to amounts paid under the Policy.
Anything herein to the contrary notwithstanding, solely for purposes of
determining Financial Security's rights, as subrogee for payments distributable
pursuant to Section 4.02, any payment with respect to distributions to the
Class A-5 Certificates which is made with funds received pursuant to the terms
of the Policy, shall not be considered payment of the Class A-5 Certificates
from the Trust Fund and shall not result in the distribution or the provision
for the distribution in reduction of the Certificate Principal Balance of the
Class A-5 Certificates within the meaning of Article IV.
(g) Upon its obtaining actual knowledge or notice of the occurrence
of an Event of Default, the Trustee shall promptly notify Financial Security of
such Event of Default.
(h) The Trustee shall promptly notify Financial Security of either
of the following as to which it has actual knowledge: (A) the commencement of
any proceeding by or against the Depositor commenced under the United States
bankruptcy code or any other applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding") and (B) the making
of any claim in connection with any Insolvency Proceeding seeking the avoidance
as a preferential transfer (a "Preference Claim") of any distribution made with
respect to the Class A-5 Certificates as to which it has actual knowledge.
Each Holder of a Class A-5 Certificate, by its purchase of such Certificates,
and the Trustee hereby agrees that Financial Security (so long as no Financial
Security Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including, without limitation, (i) the direction of any
appeal of any order relating to any Preference Claim and (ii) the posting of
any surety, supersedeas or
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performance bond pending any such appeal. In addition and without limitation
of the foregoing, Financial Security shall be subrogated to the rights of the
Trustee and each Holder of a Class A-5 Certificate in the conduct of any
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
(i) The Master Servicers shall designate a Financial Security
Contact Person who shall be available to Financial Security to provide
reasonable access to information regarding the Mortgage Loans. The initial
Financial Security Contact Person is Xxxxxxx Xxxxxx.
(j) The Trustee shall surrender the Policy to Financial Security for
cancellation upon the expiration of the respective terms of such Policy as
provided in such Policy.
(k) The Trustee shall send to Financial Security the reports
prepared pursuant to Sections 3.17 and 3.18 and the statements prepared
pursuant to Section 4.03, as well as any other statements or communications
sent to Holders of the Class A-5 Certificates, in each case at the same time
such reports, statements and communications are otherwise sent.
(l) For so long as there is no default by Financial Security under
its obligations under the Policy (a "Financial Security Default"), Financial
Security shall be treated by the Depositor and the Trustee as if Financial
Security were the Holder of all of the Class A-5 Certificates for the purpose
(and solely for the purpose) of the giving of any consent, the making of any
direction or the exercise of any voting or other control rights otherwise given
to the Class A-5 Certificateholders hereunder.
(m) With respect to this Section 4.10, (i) the terms "Receipt" and
"Received" shall mean actual delivery to Financial Security and Financial
Security's Fiscal Agent, if any, prior to 5:00 p.m., New York City time, on a
Business Day; delivery either on a day that is not a Business Day or after 5:00
p.m., New York City time, shall be deemed to be Receipt on the next succeeding
Business Day. If any notice or certificate given under the Policy by the
Trustee is not in proper form or is not properly completed, executed or
delivered, it shall be deemed not to have been Received, Financial Security or
its Fiscal Agent, if any, shall promptly so advise the Trustee and the Trustee
may submit an amended notice and (ii) "Business Day" means any day other than
(A) a Saturday or Sunday or (B) a day on which banking institutions in the City
of New York, New York are authorized or obligated by law or executive order to
be closed.
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ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.
(a) The Class A, Class X and Class PO Certificates shall be
substantially in the form set forth in Exhibit A. The Class M, Class B and
Residual Certificates, respectively, shall be substantially in the forms set
forth in Exhibits B, C and D. Each of the foregoing Certificates shall, on
original issue, be executed and delivered by the Trustee to the Certificate
Registrar for authentication and delivery to or upon the order of the Depositor
upon receipt by the Trustee of the documents specified in Section 2.01. The
Certificates, other than the Residual Certificates, shall be issuable in
minimum dollar denominations of $100,000 (or $1,000 in the case of the Class
A-4, Class A-5 and Class A-12 Certificates) and integral multiples of $1 in
excess thereof, except that one Certificate of each of the Class of
Certificates, other than the Residual Certificates, may be issued in a
different denomination.
The Residual Certificates shall be issuable in minimum denominations
of not less than a 99.99% Percentage Interest; provided, however, that one
Class R-I Certificate and one Class R-II Certificate will be issuable to Bank
of America, Federal Savings Bank as "tax matters person" pursuant to Section
10.01(c) and (e) in a minimum denomination representing a Percentage Interest
of not less than 0.01%.
The Certificates shall be executed by manual or facsimile signature on
behalf of an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were at the time of issuance
of such Certificates the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificate or did not
hold such offices at the date of such Certificates. No Certificate shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by the Certificate
Registrar by manual signature, and such certificate upon any Certificate shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated
the date of their authentication.
(b) The Class A, Class X, Class PO, Class M, Class B-1 and Class
B-2 Certificates shall initially be issued as one or more Certificates
registered in the name of the Depository or its nominee and, except as provided
below, registration of such Certificates may not be transferred by the Trustee
except to another Depository that agrees to hold such Certificates for the
respective Certificate Owners with Ownership Interests therein. The
Certificate Owners shall hold their respective Ownership Interests in and to
each of the Book-Entry Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to Definitive
Certificates in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book- Entry
Certificates shall be made in accordance with the procedures established by the
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Depository Participant or brokerage firm representing such Certificate Owner.
Each Depository Participant shall transfer the Ownership Interests only in the
Book-Entry Certificates of Certificate Owners it represents or of brokerage
firms for which it acts as agent in accordance with the Depository's normal
procedures.
The Trustee, the Master Servicers and the Depositor may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Certificates) deal with the Depository as the authorized
representative of the Certificate Owners with respect to the respective Classes
of Book-Entry Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the respective Classes of Book-Entry Certificates shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of any Class of Book-Entry Certificates with respect to any particular
matter shall not be deemed inconsistent if they are made with respect to
different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
If (i)(A) the Depositor advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Depositor is unable to locate a
qualified successor or (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the
Depository or (iii) after an Event of Default, holders of 51% of the Book-Entry
Certificates notify the Trustee that the book-entry system is not in their best
interest. The Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration
of transfer, the Trustee shall issue the Definitive Certificates. Neither the
Depositor, the Master Servicers nor the Trustee shall be liable for any actions
taken by the Depository or its nominee, including, without limitation, any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository in connection with the issuance of the Definitive
Certificates pursuant to this Section 5.01 shall be deemed to be imposed upon
and performed by the Trustee, and the Trustee and the Master Servicers shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
Section 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices or
agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of Certificates and of transfers and exchanges of Certificates as herein
provided. The Trustee is initially appointed Certificate Registrar for the
purpose of
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registering Certificates and transfers and exchanges of Certificates as herein
provided. Upon the request of a Master Servicer, the Certificate Registrar or
the Trustee shall provide such Master Servicer with a certified list of
Certificateholders.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee maintained for such purpose pursuant to
Section 8.11 and, in the case of any Class M, Class B or Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver within five (5)
Business Days, in the name of the designated transferee or transferees, one or
more new Certificates of a like Class and aggregate Percentage Interest.
(c) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class
and aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and the Certificate
Registrar shall authenticate and deliver within five (5) Business Days the
Certificates of such Class which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for transfer
or exchange shall (if so required by the Trustee or the Certificate Registrar)
be duly endorsed by, or be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing.
(d) No transfer, sale, pledge or other disposition of a Class B-3,
Class B-4 or Class B-5 Certificate shall be made unless such transfer, sale,
pledge or other disposition is exempt from the registration requirements of the
Securities Act of 1933, as amended, or is made in accordance with said Act. In
the event that a transfer of a Class B-3, Class B-4 or Class B-5 Certificate is
to be made, either (i)(A) the Trustee shall require a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Trustee and
the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act or is
being made pursuant to said Act, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Master Servicers or (B) the
Trustee shall require the transferee to execute a representation letter,
substantially in the form of Exhibit J hereto, and the Trustee shall require
the transferor to execute a representation letter, substantially in the form of
Exhibit K hereto, certifying to the Depositor and the Trustee the facts
surrounding such transfer, which representation letters shall not be an expense
of the Trustee, the Depositor or the Master Servicers or (ii) the prospective
transferee of such a Certificate shall be required to provide the Trustee, the
Depositor and the Master Servicers with an investment letter substantially in
the form of Exhibit L attached hereto, or such other form as the Depositor in
its sole discretion deems acceptable, which investment letter shall not be an
expense of the Trustee, the Depositor or the Master Servicers, and which
investment letter states that, among other things, such transferee (A) is a
"qualified institutional buyer" as defined under Rule 144A, acting for its own
account or the accounts of other "qualified institutional buyers" as defined
under Rule 144A, and (B) is aware that the proposed transferor intends to rely
on the exemption from registration requirements under the Securities Act of
1933, as amended,
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provided by Rule 144A. The Holder of any such Certificate desiring to effect
any such transfer, sale, pledge or other disposition shall, and does hereby
agree to, indemnify the Trustee, the Depositor, the Master Servicers and the
Certificate Registrar against any liability that may result if the transfer,
sale, pledge or other disposition is not so exempt or is not made in accordance
with the Securities Act of 1933, as amended, or any similar state laws.
(e) In the case of any Class M, Class B or Residual Certificate
presented for registration in the name of any Person, either (i) the Trustee
shall require an Opinion of Counsel acceptable to and in form and substance
satisfactory to the Trustee, the Depositor and the Master Servicer to the
effect that the purchase or holding of such Class M, Class B or Residual
Certificate will not constitute or result in any non-exempt prohibited
transaction under Section 406 of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of the Code (or comparable
provisions of any subsequent enactments), and will not subject the Trustee, the
Depositor or the Master Servicer to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Trustee, the Depositor or the Master Servicer or (ii) the
prospective transferee shall be required to provide the Trustee, the Depositor
and the Master Servicer with a certification to the effect set forth in
paragraph six of Exhibit J (with respect to any Class M or Class B
Certificate), or paragraph five of Exhibit I-1 (with respect to any Residual
Certificate), which the Trustee may rely upon without further inquiry or
investigation, or such other certifications as the Trustee may deem desirable
or necessary in order to establish that such transferee or the Person in whose
name such registration is requested is not an employee benefit plan or other
plan subject to the prohibited transaction provisions of ERISA or Section 4975
of the Code, or any Person (including an investment manager, a named fiduciary
or a trustee of any such plan) who is using "plan assets" of any such plan to
effect such acquisition.
So long as the Class M, Class B-1, or Class B-2 Certificates
are Book-Entry Certificates, any purchaser of a Class M, Class B- 1, or Class
B-2 Certificate will be deemed to have represented by such purchases that
either (a) such purchaser is not an employee benefit plan or other plan subject
to the prohibited transaction provisions of ERISA or Section 4975 of the Code
and is not purchasing such certificates on behalf of or with "plan assets" of
any Plan or (b) the purchase of any such Certificate by or on behalf of or with
"plan assets" of any Plan is permissible under applicable law, will not result
in any non-exempt prohibited transaction under ERISA or Section 4975 of the
Code, and will not subject either Master Services, the Depositor or the Trustee
to any obligation in addition to those under taken in this Agreement.
(f) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all other
things
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necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in
its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall
require delivery to it, and shall not register the Transfer of any
Residual Certificate until its receipt of, (I) an affidavit and
agreement (a "Transfer Affidavit and Agreement," in the form attached
hereto as Exhibit H-1) from the proposed Transferee, representing and
warranting, among other things, that it is a Permitted Transferee,
that it is not acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed Transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee,
that for so long as it retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 5.02(f) and agrees
to be bound by them, and (II) a certificate, in the form attached
hereto as Exhibit H-2, from the Holder wishing to transfer the
Residual Certificate, representing and warranting, among other things,
that no purpose of the proposed Transfer is to impede the assessment
or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Residual
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Certificate shall agree (x) to require a
Transfer Affidavit and Agreement from any other Person to whom such
Person attempts to transfer its Ownership Interest in a Residual
Certificate and (y) not to transfer its Ownership Interest unless it
provides a certificate to the Trustee in the form attached hereto as
Exhibit H-2.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Certificate, by purchasing an Ownership
Interest in such Certificate, agrees to give the Trustee written
notice that it is a "pass-through interest holder" within the meaning
of Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring an Ownership Interest in a Residual
Certificate, if it is, or is holding an Ownership Interest in a
Residual Certificate on behalf of, a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any
Residual Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the form
attached hereto as Exhibit H-2. Transfers of the
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Residual Certificates to Non-United States Persons and Disqualified
Organizations (as defined in Section 860E(e)(5) of the Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become
a holder of a Residual Certificate, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Residual Certificate. If a Non-United States Person shall
become a holder of a Residual Certificate, then the last preceding United
States Person shall be restored, to the extent permitted by law, to all rights
and obligations as Holder thereof retroactive to the date of registration of
such Transfer of such Residual Certificate. If a transfer of a Residual
Certificate is disregarded pursuant to the provisions of Treasury Regulations
Section 1.860E-1 or Section 1.860G-3, then the last preceding Permitted
Transferee shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration of such
Transfer of such Residual Certificate. The Trustee shall be under no liability
to any Person for any registration of Transfer of a Residual Certificate that
is in fact not permitted by this Section 5.02(f) or for making any payments due
on such Certificate to the holder thereof or for taking any other action with
respect to such holder under the provisions of this Agreement.
(B) If any purported Transferee shall become a Holder of
a Residual Certificate in violation of the restrictions in this Section 5.02(f)
and to the extent that the retroactive restoration of the rights of the Holder
of such Residual Certificate as described in clause (iii)(A) above shall be
invalid, illegal or unenforceable, then either Master Servicer shall have the
right, without notice to the holder or any prior holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser selected by such
Master Servicer on such terms as such Master Servicer may choose. Such
purported Transferee shall promptly endorse and deliver each Residual
Certificate in accordance with the instructions of such Master Servicer. Such
purchaser may be a Master Servicer itself or any Affiliate of such Master
Servicer. The proceeds of such sale, net of the commissions (which may include
commissions payable to such Master Servicer or its Affiliates), expenses and
taxes due, if any, will be remitted by such Master Servicer to such purported
Transferee. The terms and conditions of any sale under this clause (iii)(B)
shall be determined in the sole discretion of the Master Servicers, and neither
Master Servicer shall be liable to any Person having an Ownership Interest in a
Residual Certificate as a result of its exercise of such discretion.
(iv) Each Master Servicer, on behalf of the Trustee, shall
make available, upon written request from the Trustee, all information
necessary to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Residual Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a result of
any regulated investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in Section 1381 of
the Code that holds an Ownership Interest in a Residual Certificate having as
among its record holders at any time any Person who is a Disqualified
Organization.
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Reasonable compensation for providing such information may be required by the
Master Servicers from such Person.
(v) The provisions of this Section 5.02(f) set forth
prior to this clause (v) may be modified, added to or eliminated pursuant to
Section 11.01, provided that there shall have also been delivered to the
Trustee the following:
(A) written notification from each Rating Agency to the
effect that the modification, addition to or elimination of such
provisions will not cause such Rating Agency to downgrade its
then-current ratings, if any, of any Class of the Class A, Class X,
Class PO, Class M, Class B or Residual Certificates below the lower of
the then-current rating or the rating assigned to such Certificates
(determined in the case of the Class A-5 Certificates without regard
to the effect of the applicable Policy) as of the Closing Date by such
Rating Agency; and
(B) a certificate of each Master Servicer stating that
such Master Servicer has received an Opinion of Counsel, in form and
substance satisfactory to such Master Servicer, to the effect that
such modification, addition to or absence of such provisions will not
cause REMIC I or REMIC II to cease to qualify as a REMIC and will not
cause (x) REMIC I or REMIC II to be subject to an entity-level tax
caused by the Transfer of any Residual Certificate to a Person that is
a Disqualified Organization or (y) a Certificateholder or another
Person to be subject to a REMIC-related tax caused by the Transfer of
a Residual Certificate to a Person that is not a Permitted Transferee.
(g) No service charge shall be made for any transfer or exchange
of Certificates of any Class, but the Trustee 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.
(h) All Certificates surrendered for transfer and exchange shall
be destroyed by the Certificate Registrar.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receive evidence to
their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) there is delivered to the Trustee and the Certificate Registrar such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of notice to the Trustee or the Certificate Registrar that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor, Class and Percentage Interest but
bearing a number not contemporaneously outstanding. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in relation
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thereto and any other expenses (including the fees and expenses of the Trustee
and the Certificate Registrar) connected therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or
not the lost, stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of
transfer, the Depositor, the Master Servicers, the Financial Security, the
Trustee, the Certificate Registrar and any agent of the Depositor, the Master
Servicers, Financial Security, the Trustee or 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 distributions pursuant to Section
4.02 and for all other purposes whatsoever, and neither the Depositor, the
Master Servicers, Financial Security, the Trustee, the Certificate Registrar
nor any agent of the Depositor, the Master Servicers, Financial Security, the
Trustee or the Certificate Registrar shall be affected by notice to the
contrary except as provided in Section 5.02(f).
Section 5.05. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Section 4.02. In the event of
any such appointment, on or prior to each Distribution Date, the Trustee shall
deposit or cause to be deposited with the Paying Agent a sum sufficient to make
the payments to Certificateholders in the amounts and in the manner provided
for in Section 4.02, such sum to be held in trust for the benefit of
Certificateholders.
The Trustee shall cause each Paying Agent to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee that such Paying Agent will hold all sums held by it for the payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. Any sums so
held by such Paying Agent shall be held only in Eligible Accounts to the extent
such sums are not distributed to the Certificateholders on the date of receipt
by such Paying Agent.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICERS
Section 6.01. Respective Liabilities of the Depositor and the
Master Servicers.
The Depositor and each Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Depositor and such Master
Servicer herein. By way of illustration and not limitation, the Depositor is
not liable for the servicing and administration of the Mortgage Loans, nor is
it obligated by Section 7.01 or Section 10.01 to assume any obligations of the
Master Servicers or to appoint a designee to assume such obligations, nor is it
liable for any other obligation hereunder that it may, but is not obligated to,
assume unless it elects to assume such obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the
Master Servicers; Assignment of Rights and Delegation
of Duties by Master Servicers.
(a) The Depositor and each Master Servicer will each keep in full
effect its existence, rights and franchises as a corporation, national banking
association or federal savings bank, as applicable, under the laws governing
its incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
(b) Any Person into which the Depositor or a Master Servicer may
be merged or consolidated, or any corporation resulting from any merger or
consolidation to which the Depositor or a Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or a Master Servicer,
shall be the successor of the Depositor or the related Master Servicer, as the
case may be, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor or surviving
Person to a Master Servicer shall be qualified to service mortgage loans on
behalf of FNMA or FHLMC; and provided further that each Rating Agency's
ratings, if any, of the Class A, Class M, Class B or Residual Certificates in
effect immediately prior to such merger or consolidation will not be qualified,
reduced or withdrawn as a result thereof (as evidenced by a letter to such
effect from each Rating Agency).
(c) Notwithstanding anything else in this Section 6.02 and Section
6.04 to the contrary, a Master Servicer may assign its rights and delegate its
duties and obligations under this Agreement; provided that the Person accepting
such assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is reasonably satisfactory to the
Trustee and the Depositor, has a minimum net worth of $50,000,000, is willing
to service the Mortgage Loans previously serviced by the Master Servicer
assigning its rights or delegating its duties and obligations under this
Agreement and
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executes and delivers to the Depositor and the Trustee an agreement, in form
and substance reasonably satisfactory to the Depositor and the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by such
Master Servicer under this Agreement; provided further that each Rating
Agency's rating of the Classes of Certificates that have been rated in effect
immediately prior to such assignment and delegation will not be qualified,
reduced or withdrawn as a result of such assignment and delegation (as
evidenced by a letter to such effect from each Rating Agency). In the case of
any such assignment and delegation, the applicable Master Servicer shall be
released from its obligations under this Agreement, except that such Master
Servicer shall remain liable for all liabilities and obligations incurred by it
as a Master Servicer hereunder prior to the satisfaction of the conditions to
such assignment and delegation set forth in the next preceding sentence.
Section 6.03. Limitation on Liability of the Depositor, the Master
Servicers and Others.
Neither the Depositor, the Master Servicers nor any of the directors,
officers, employees or agents of the Depositor or the Master Servicers shall be
under any liability to the Trust Fund or the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicers or any such
Person against any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. The Depositor, the
Master Servicers and any director, officer, employee or agent of the Depositor
or the Master Servicers may rely in good faith on any document of any kind
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Master Servicers and any
director, officer, employee or agent of the Depositor or the Master Servicers
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder.
Neither the Depositor nor the Master Servicers shall be under any
obligation to appear in, prosecute or defend any legal or administrative
action, proceeding, hearing or examination that is not incidental to its
respective duties under this Agreement and which in its opinion may involve it
in any expense or liability; provided, however, that the Depositor or a Master
Servicer may in its discretion undertake any such action, proceeding, hearing
or examination that it may deem necessary or desirable with respect to this
Agreement and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs
of such action, proceeding, hearing or examination and any liability resulting
therefrom shall be expenses, costs and liabilities of the
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Trust Fund, and the Depositor and the Master Servicers shall be entitled to be
reimbursed therefor out of amounts attributable to the Mortgage Loans on
deposit in the applicable Custodial Account as provided by Section 3.10 and, on
the Distribution Date(s) following such reimbursement, the aggregate of such
expenses and costs shall be allocated in reduction of the Accrued Certificate
Interest on each Class entitled thereto in the same manner as if such expenses
and costs constituted a Prepayment Interest Shortfall.
Section 6.04. Depositor and Master Servicers Not to Resign.
Subject to the provisions of Section 6.02, neither the Depositor nor a
Master Servicer shall resign from its respective obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under applicable law. Any such determination permitting the
resignation of the Depositor or a Master Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee. No such
resignation by a Master Servicer shall become effective until the Trustee or a
successor servicer shall have assumed such Master Servicer's responsibilities
and obligations in accordance with Section 7.02.
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ARTICLE VII
DEFAULT
Section 7.01. Events of Default.
Event of Default, wherever used herein with respect to a Master
Servicer, means any one of the following events (whatever reason for such Event
of Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) such Master Servicer shall fail to remit to
the Trustee any remittance required to be made under the terms of this
Agreement, other than any Advances required by Section 4.01, and such
failure shall continue unremedied for a period of 5 days after the
date upon which written notice of such failure, requiring such failure
to be remedied, shall have been given to such Master Servicer by the
Trustee or the Depositor or to such Master Servicer, the Depositor and
the Trustee by the Holders of Certificates of any Class affected
thereby evidencing Percentage Interests aggregating not less than 25%;
or
(ii) such Master Servicer shall fail to observe or
perform in any material respect any other of the covenants or
agreements on the part of such Master Servicer contained in this
Agreement and such failure shall continue unremedied for a period of
30 days (except that such number of days shall be 15 in the case of a
failure to pay the premium for any Required Insurance Policy) after
the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to such Master Servicer by the
Trustee or the Depositor, or to such Master Servicer, the Depositor
and the Trustee by the Holders of Certificates of any Class
evidencing, in the case of any such Class, Percentage Interests
aggregating not less than 25%; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or appointing 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 such Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iv) such Master Servicer 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, such Master
Servicer or of, or relating to, all or substantially all of the
property of such Master Servicer; or
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(v) such Master Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of, or commence a voluntary case under, any
applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) such Master Servicer shall notify the Trustee
pursuant to Section 4.04(b) that it is unable to remit to the Trustee
an amount equal to the Advance it must make or fails to make Advances,
regardless of notice.
If an Event of Default described in clauses (i)-(v) of this Section
shall occur, then, and in each and every such case, so long as such Event of
Default shall not have been remedied, either the Depositor or the Trustee may,
and at the direction of Holders of Certificates entitled to at least 51% of the
Voting Rights, the Trustee shall, by notice in writing to the applicable Master
Servicer (and to the Depositor if given by the Trustee or to the Trustee if
given by the Depositor) (with a copy to Financial Security), terminate all of
the rights and obligations of such Master Servicer under this Agreement, other
than its rights as a Certificateholder hereunder. If an Event of Default
described in clause (vi) hereof shall occur, the Trustee shall, by notice to
the applicable Master Servicer and the Depositor, immediately terminate all of
the rights and obligations of such Master Servicer under this Agreement, other
than its rights as a Certificateholder hereunder as provided in Section
4.04(b). On or after the receipt by such Master Servicer of such written
notice, all authority and power of such Master Servicer under this Agreement,
whether with respect to the Certificates (other than as a Holder thereof) or
the Mortgage Loans serviced by such Master Servicer or otherwise, shall,
subject to Section 7.02, pass to and be vested in the Trustee or the Trustee's
designee appointed pursuant to Section 7.02; and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
such Master Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans serviced by such Master Servicer and related documents, or otherwise.
Each Master Servicer agrees to cooperate with the Trustee in effecting the
termination of such Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to the Trustee or its designee for
administration by it of all cash amounts which shall at the time be credited to
the applicable Custodial Account or thereafter be received with respect to the
Mortgage Loans serviced by such Master Servicer all at such Master Servicer's
cost. No such termination shall release such Master Servicer for any liability
that it would otherwise have hereunder for any act or omission prior to the
effective time of such termination.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the time a Master Servicer receives a notice of
termination pursuant to Section 7.01 or resigns in accordance with Section
6.04, the Trustee or, upon notice to the Depositor and with the Depositor's
consent (which shall not be unreasonably withheld), a designee (which meets the
standards set forth below) of the Trustee, shall be the successor in
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all respects to such Master Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on such Master Servicer (except for the responsibilities, duties and
liabilities contained in Sections 2.02 and 2.03, excluding the duty to notify
related Subservicers or Sellers as set forth in such Sections, and its
obligations to deposit amounts in respect of losses incurred prior to such
termination or resignation on the investment of funds in the applicable
Custodial Account or remit such amounts to the Trustee pursuant to Sections
3.07(c) and 4.01(b), respectively, by the terms and provisions hereof);
provided, however, that any failure to perform such duties or responsibilities
caused by the preceding Master Servicer's failure to provide information
required by Section 4.04 shall not be considered a default by the Trustee
hereunder. As compensation therefor, the Trustee shall be entitled to all
funds relating to the Mortgage Loans serviced by the preceding Master Servicer
which such Master Servicer would have been entitled to charge to the applicable
Custodial Account or the Certificate Account if such Master Servicer had
continued to act hereunder and, in addition, shall be entitled to the income
from any Permitted Investments made with amounts attributable to the Mortgage
Loans serviced by the preceding Master Servicer held in the applicable
Custodial Account or the Certificate Account. If the Trustee has become the
successor to a Master Servicer in accordance with Section 6.04 or Section 7.01,
then notwithstanding the above, the Trustee may, if it shall be unwilling to so
act, or shall, if it is unable to so act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution, which is also a FNMA- or FHLMC-approved mortgage servicing
institution, having a net worth of not less than $10,000,000, as the successor
to such Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of such Master Servicer hereunder.
Pending appointment of a successor to a Master Servicer hereunder, the Trustee
shall become successor to such Master Servicer and 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 Mortgage Loans serviced by the preceding Master Servicer as
it and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the applicable initial Master Servicer
hereunder. The Depositor, the Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to a
Master Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Event of Default,
the Trustee shall transmit by mail to all Holders of Certificates notice of
each such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
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Section 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights affected by
a default or Event of Default hereunder, may waive such default or Event of
Default; provided, however, that (a) a default or Event of Default under clause
(i) of Section 7.01 may be waived only by all of the Holders of Certificates
affected by such default or Event of Default and (b) no waiver pursuant to this
Section 7.04 shall affect the Holders of Certificates in the manner set forth
in Section 11.01(b)(i), (ii) or (iii). Upon any such waiver of a default or
Event of Default by the Holders representing the requisite percentage of Voting
Rights affected by such default or Event of Default, such default or Event of
Default shall cease to exist and shall be deemed to have been remedied for
every purpose hereunder. No such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon except
to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default
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. In case an Event of Default has occurred (which 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 their exercise as a reasonably prudent investor would exercise or use
under the circumstances in the conduct of such investor's own affairs.
(b) 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.
The Trustee shall forward or cause to be forwarded in a timely fashion
the notices, reports and statements required to be forwarded by the Trustee
pursuant to Sections 4.03, 7.03 and 10.01. The Trustee shall furnish in a
timely fashion to the Master Servicers such information as the Master Servicers
may reasonably request from time to time for the Master Servicers to fulfill
their duties as set forth in this Agreement. The Trustee covenants and agrees
that it shall perform its obligations hereunder in a manner so as to maintain
the status of both REMIC I and REMIC II as REMICs under the REMIC Provisions
and to prevent the imposition of any federal, state or local income, prohibited
transaction, contribution or other tax on either REMIC to the extent that
maintaining such status and avoiding such taxes are reasonably within the
control of the Trustee and are reasonably within the scope of its duties under
this Agreement.
(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own grossly negligent action, its own
grossly negligent failure to act or its own willful misfeasance; provided,
however, that:
(i) Prior to the occurrence of an Event of
Default, and after the curing or waiver 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 by
the Depositor or the Master Servicers and which on their face, do not
contradict the requirements of this Agreement;
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(ii) The Trustee (in its individual capacity)
shall not be personally liable for an error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was grossly negligent in
ascertaining the pertinent facts;
(iii) The Trustee (in its individual capacity)
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 Certificateholders of any Class holding Certificates
which evidence, as to such Class, Percentage Interests aggregating not
less than 25% as to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with
knowledge of any default (other than a default in payment to the
Trustee) specified in clauses (i) and (ii) of Section 7.01 or an Event
of Default under clauses (iii), (iv) and (v) of Section 7.01 unless a
Responsible Officer of the Trustee assigned to and working in the
Corporate Trust Office obtains actual knowledge of such failure or
event or the Trustee receives written notice of such failure or event
at its Corporate Trust Office from a Master Servicer, the Depositor or
any Certificateholder; and
(v) Except to the extent provided in Section
7.02, no provision in this Agreement shall require the Trustee to
expend or risk its own funds (including, without limitation, the
making of any Advance as successor Master Servicer) or otherwise incur
any personal financial liability in the performance of any of its
duties as Trustee hereunder, or in the exercise of any of its rights
or powers, if the Trustee shall have reasonable grounds for believing
that repayment of funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) The Trustee shall timely pay, from its own funds, the amount
of any and all federal, state and local taxes imposed on the Trust Fund or its
assets or transactions including, without limitation, (A) "prohibited
transaction" penalty taxes as defined in Section 860F of the Code, if, when and
as the same shall be due and payable, (B) any tax on contributions to a REMIC
after the Closing Date imposed by Section 860G(d) of the Code and (C) any tax
on "net income from foreclosure property" as defined in Section 860G(c) of the
Code, but only if such taxes arise out of a breach by the Trustee of its
obligations hereunder, which breach constitutes gross negligence or willful
misfeasance of the Trustee. If any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code does not arise out of a
breach by the Trustee as set forth above, such tax will be paid as provided in
Section 10.01(g).
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
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(i) The Trustee may request and rely upon 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 any 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 (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 their
exercise as a prudent investor would exercise or use under the
circumstances in the conduct of such investor'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 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 so to do by Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests, aggregating not
less than 50%; 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 so proceeding. The reasonable expense of
every such examination shall be paid by the Master Servicer
responsible for the Event of Default, if an Event of Default shall
have occurred and is continuing, and otherwise by the
Certificateholder requesting the investigation;
(vi) 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; and
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(vii) To the extent authorized under the Code and
the regulations promulgated thereunder, each Holder of a Residual
Certificate hereby irrevocably appoints and authorizes the Trustee to
be its attorney-in-fact for purposes of signing any Tax Returns
required to be filed on behalf of the Trust Fund. The Trustee shall
sign on behalf of the Trust Fund and deliver to REMIC Administrator in
a timely manner any Tax Returns prepared by or on behalf of REMIC
Administrator that the Trustee is required to sign as determined by
REMIC Administrator pursuant to applicable federal, state or local tax
laws, provided that REMIC Administrator shall indemnify the Trustee
for signing any such Tax Returns that contain errors or omissions.
(b) Following the issuance of the Certificates, the Trustee shall
not accept any contribution of assets to the Trust Fund unless it shall have
obtained or been furnished with an Opinion of Counsel to the effect that such
contribution will not (i) cause either REMIC I or REMIC II to fail to qualify
as a REMIC at any time that any Certificates are outstanding or (ii) cause
Trust Fund to be subject to any federal tax as a result of such contribution
(including the imposition of any federal tax on "prohibited transactions"
imposed under Section 860F(a) of the Code).
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other than the
execution of the Certificates and relating to the acceptance and receipt of the
Mortgage Loans) shall be taken as the statements of the Depositor or the Master
Servicers as the case may be, 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 (except that the
Certificates shall be duly and validly executed and authenticated by it as
Certificate Registrar) or of any Mortgage Loan or related document. Except as
otherwise provided herein, the Trustee shall not be accountable for the use or
application by the Depositor or the Master Servicers of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor or the Master Servicers in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Accounts by the Depositor
or the Master Servicers.
Section 8.04. 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.
Section 8.05. Master Servicers to Pay Trustee's Fees and Expenses;
Indemnification.
(a) The Master Servicers jointly and severally covenant and agree
to pay to the Trustee and any co-trustee on a monthly basis, and the Trustee
and any co-trustee shall be entitled to, reasonable compensation pursuant to a
separate letter agreement between Bank of America National Trust and Savings
Association and the Trustee (which shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust) for all
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services rendered by each of them 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 any co-trustee, and the Master Servicers, jointly and
severally, will pay or reimburse the Trustee and any co-trustee upon request
for all reasonable expenses, disbursements and advances incurred or made by the
Trustee or any 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,
and the expenses incurred by the Trustee or any co-trustee in connection with
the appointment of an office or agency pursuant to Section 8.12) except any
such expense, disbursement or advance as may arise from its gross negligence or
bad faith. The compensation paid to the Trustee and any co-trustee by the
Master Servicers as set forth herein shall be made by means of additional funds
remitted to the Trustee by the Master Servicer pursuant to Section 4.01(a).
(b) The Master Servicers jointly and severally agree to indemnify
the Trustee and its officers, directors, agents and employees for, and to hold
the Trustee it and them harmless against, any loss, liability or expense
incurred without negligence or willful misconduct on its or their part, arising
out of, or in connection with, the acceptance and administration of the Trust
Fund, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against any claim in connection with the exercise
or performance of any of its or their powers or duties under this Agreement,
provided that:
(i) with respect to any such claim, the Trustee
shall have given the Master Servicers written notice thereof promptly
after the Trustee shall have actual knowledge thereof;
(ii) while maintaining control over its own
defense, the Trustee shall cooperate and consult fully with the Master
Servicers in preparing such defense; and
(iii) notwithstanding anything in this Agreement to
the contrary, the Master Servicers shall not be liable for settlement
of any claim by the Trustee entered into without the prior consent of
the Master Servicers, which consent shall not be unreasonably
withheld, and, provided further, that in the event the Master
Servicers withhold their consent to any settlement of a claim proposed
by the Trustee, except as to liability for such settlement, the
obligation to indemnify set forth in this Section 8.05 shall continue
in full force and effect.
No termination of this Agreement or the resignation or removal of the Trustee
hereunder shall affect the obligations created by this Section 8.05(b) of the
Master Servicers to indemnify the Trustee under the conditions and to the
extent set forth herein.
Notwithstanding the foregoing, the indemnification provided by the
Master Servicers in this Section 8.05(b) shall not pertain to any loss,
liability or expense of the Trustee, including the costs and expenses of
defending itself against any claim, incurred in connection with any actions
taken by the Trustee at the direction of Certificateholders pursuant to the
terms of this Agreement.
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Section 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association having its principal office in a state and city
acceptable to the Depositor and organized and doing business under the laws of
such state or the United States of America, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or national 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 the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus 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 immediately in the manner and with the effect specified in Section
8.07.
Section 8.07. Resignation and Removal of the Trustee.
(a) The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, 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 Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee. In addition, in
the event that the Depositor determines that the Trustee has failed (i) to
distribute or cause to be distributed to Certificateholders any amount required
to be distributed hereunder, if such amount is held by the Trustee or its
Paying Agent for distribution or (ii) to otherwise observe or perform in any
material respect any of its covenants, agreements or obligations hereunder, and
such failure shall continue unremedied for a period of 5 days (in respect of
clause (i) above) or 30 days (in respect of clause (ii) above) after the date
on which written notice of such failure, requiring that the same be remedied,
shall have been given to the Trustee by the Depositor, then the Depositor may
remove the Trustee and appoint a successor trustee by written instrument
delivered as provided in the preceding sentence. In connection with the
appointment of a successor trustee pursuant to the preceding sentence, the
Depositor shall, on or before the date on which any such appointment becomes
effective, obtain from each Rating Agency written
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confirmation that the appointment of any such successor trustee will not result
in the reduction of the ratings on any class of Certificates below the lesser
of the then current or original ratings on such Certificates.
(c) The Holders of Certificates entitled to at least 51% of the
Voting Rights 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 Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
(d) 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 8.08. As long as any Policy is in effect, the Master
Servicers will send a written notice to the Financial Security of any such
registration, removal or appointment.
Section 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor 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 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 Depositor, the Master
Servicers 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.
(b) 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 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor 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 Depositor 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
Depositor.
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Section 8.09. Merger or Consolidation of Trustee.
Any corporation or national banking association into which the 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 shall be a party, or any
corporation or national banking association succeeding to the business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, 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 Trustee shall mail notice of any such merger or
consolidation to the Certificateholders at their address as shown in the
Certificate Register.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) 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 Master Servicers 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 8.10, such powers, duties, obligations, rights and
trusts as the Master Servicers and the Trustee may consider necessary or
desirable. If the Master Servicers shall not have joined in such appointment
within 15 days after the receipt by it of a request so to do, the Trustee alone
shall have the power to make such appointment, or in case an Event of Default
shall have occurred and be continuing, the Trustee and any non-defaulting
Master Servicer 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 8.06 hereunder and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, 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 a Master 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.
(c) 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
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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
VIII. 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.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign or be
removed, all of its estates, properties, rights, remedies and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
Section 8.11. Appointment of Office or Agency.
The Trustee will maintain an office or agency in the City of New York
where Certificates may be surrendered for registration of transfer or exchange.
The Trustee initially designates its offices located at 0 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 for the purpose of keeping the Certificate Register. The
Trustee will maintain an office at the address stated in Section 11.05(d)
hereof where notices and demands to or upon the Trustee in respect of this
Agreement may be served.
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ARTICLE IX
TERMINATION
Section 9.01. Termination Upon Purchase by a Master Servicer or Liquidation
of All Mortgage Loans.
(a) Subject to Section 9.02, the respective obligations and
responsibilities of the Depositor, the Master Servicers and the Trustee created
hereby in respect of the Certificates (other than the obligation of the Trustee
to make certain payments after the Final Distribution Date to
Certificateholders and the obligation of the Depositor to send certain notices
as hereinafter set forth) shall terminate upon the last action required to be
taken by the Trustee on the Final Distribution Date pursuant to this Article IX
following the earlier of:
(i) the later of the final payment or other
liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, or
(ii) the purchase by Bank of America National
Trust and Savings Association, as Master Servicer hereunder, or if
Bank of America National Trust and Savings Association is removed as
Master Servicer hereunder, then Bank of America, Federal Savings Bank,
as Master Servicer hereunder, of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund
at a price equal to 100% of the Stated Principal Balance of each
Mortgage Loan (other than Mortgage Loans as to which a Cash
Liquidation has occurred) or the fair market value of the related
underlying property of such Mortgage Loan with respect to Mortgage
Loans as to which an REO Acquisition has occurred if such fair market
value is less than such unpaid principal balance (net of any
unreimbursed Advances attributable to principal), in each case less
any Realized Losses that have not previously been allocated to the
Certificates on the day of repurchase plus accrued interest thereon at
the Net Mortgage Rate to, but not including, the first day of the
month in which such repurchase price is distributed, provided,
however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor
of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the
United States to the Court of St. Xxxxx, living on the date hereof.
No purchase pursuant to clause (ii) above is permitted if it could
result in a draw on the Policy unless Financial Security consents to such
purchase.
The right of the Master Servicers to purchase all the assets of the
Trust Fund pursuant to clause (ii) above is conditioned upon the Pool Stated
Principal Balance as of the Final Distribution Date being less than ten percent
of the Cut-off Date Principal Balance of the Mortgage Loans. If such right is
exercised by a Master Servicer, such Master Servicer shall be deemed to have
been reimbursed for the full amount of any unreimbursed Advances theretofore
made by it with respect to the Mortgage Loans it services. In addition, the
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exercising Master Servicer shall provide to the Trustee the certification
required by Section 3.15 and the Trustee shall, promptly following payment of
the purchase price, release to the exercising Master Servicer the Mortgage
Files pertaining to the Mortgage Loans being purchased.
(b) Upon final distribution as a result of the exercise by a
Master Servicer of its right to purchase the assets of the Trust Fund, the
exercising Master Servicer shall give the Trustee not less than 60 days' prior
notice of the Distribution Date on which such Master Servicer anticipates that
the final distribution will be made to Certificateholders. Notice of any
termination, specifying the anticipated Final Distribution Date (which shall be
a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee (if so
required by the terms hereof) for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying:
(i) the anticipated Final Distribution Date upon
which final payment of the Certificates is anticipated to be made upon
presentation and surrender of Certificates at the office or agency of
the Trustee therein designated,
(ii) the amount of any such final payment, if
known, and
(iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable and that payment will be made
only upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified.
If the Trustee is obligated to give notice as aforesaid, it shall give such
notice to the Certificate Registrar at the time such notice is given to
Certificateholders. In the event such notice is given, the exercising Master
Servicer shall remit to the Trustee for deposit in the Certificate Account
before the Final Distribution Date in immediately available funds an amount
equal to the purchase price for the assets of the Trust Fund computed as above
provided.
In the event such notice is given, the Trustee shall cause all funds on deposit
in the Reserve Fund, the Class A-5 Rounding Account and the LIBOR Reserve
Account to be distributed to the Underwriter, the beneficial owner of such
funds, at the addresses supplied by the Underwriter to the Trustee for such
purpose.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders thereof, the Trustee shall distribute to Financial Security
and the Certificateholders (i) the amount otherwise distributable on such
Distribution Date, if not in connection with a Master Servicer's election to
repurchase, or (ii) if a Master Servicer elected to so repurchase, an amount
determined as follows: (A) with respect to each Certificate, the outstanding
Certificate Principal Balance thereof, plus one month's Accrued Certificate
Interest and any previously unpaid Accrued Certificate Interest, subject to the
priority set forth in Section 4.02(a), and (B) with respect to the Residual
Certificates, any excess of the amounts
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available for distribution (including the repurchase price specified in clause
(ii) of subsection (a) of this Section) over the total amount distributed under
the immediately preceding clause (A).
(d) In the event that any Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before the Final
Distribution Date (if so required by the terms hereof), the Trustee shall on
such date cause all funds in the Certificate Account not distributed in final
distribution to Certificateholders to be withdrawn therefrom and credited to
the remaining Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Certificateholders, and the exercising Master
Servicer (if it exercised its right to purchase the assets of the Trust Fund),
or the Trustee (in any other case) shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within six months
after the second notice, any Certificate shall not have been surrendered for
cancellation, the Trustee shall take appropriate steps as directed by such
Master Servicer to contact the remaining Certificateholders concerning
surrender of their Certificates. The costs and expenses of maintaining the
escrow account and of contacting Certificateholders shall be paid out of the
assets which remain in the escrow account. No interest shall accrue or be
payable to any Certificateholder on any amount held in the escrow account as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 9.01.
Section 9.02. Additional Termination Requirements.
(a) REMIC I and REMIC II as the case may be, shall be terminated
in accordance with the following additional requirements, unless the Trustee
and the Master Servicers have received an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee) to the effect that the failure
of REMIC I and REMIC II as the case may be, to comply with the requirements of
this Section 9.02 will not (i) result in the imposition on either REMIC of
taxes on "prohibited transactions," as described in Section 860F of the Code,
or (ii) cause either REMIC I or REMIC II to fail to qualify as a REMIC at any
time that any Certificate is outstanding:
(i) The REMIC Administrator shall establish a
90-day liquidation period for REMIC I and REMIC II as the case may be,
and specify the first day of such period in a statement attached to
such REMIC's final Tax Return pursuant to Treasury regulations Section
1.860F-1. The REMIC Administrator also shall satisfy all of the
requirements of a qualified liquidation for REMIC I and REMIC II as
the case may be, under Section 860F of the Code and regulations
thereunder;
(ii) The REMIC Administrator shall notify the
Trustee at the commencement of such 90-day liquidation period and, at
or prior to the time of making of the final payment on the
Certificates, the Trustee shall sell or otherwise dispose of all of
the remaining assets of the Trust Fund in accordance with the terms
hereof; and
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(iii) If a Master Servicer is exercising its right
to purchase the assets of the Trust Fund, such Master Servicer shall,
during the 90-day liquidation period prior to the Final Distribution
Date, purchase all of the assets of the Trust Fund for cash at the
price set forth in Section 9.01 hereof; provided, however, that in the
event that a calendar quarter ends after the commencement of the
90-day liquidation period but prior to the Final Distribution Date,
such Master Servicer shall not purchase any of the assets of the Trust
Fund prior to the close of that calendar quarter.
(b) Each Holder of a Certificate and the Trustee hereby
irrevocably approves and appoints the REMIC Administrator as its attorney-
in-fact to adopt a plan of complete liquidation for the Trust Fund at the
expense of the Trust Fund in accordance with the terms and conditions of this
Agreement.
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ARTICLE X
REMIC PROVISIONS
Section 10.01. REMIC Administration.
(a) The REMIC Administrator shall make an election to
treat each of REMIC I and REMIC II as a REMIC under the Code and, if necessary,
under applicable state law. Each such election will be made on Form 1066 or
other appropriate federal tax or information return (including Form 8811) or
any appropriate state return for the taxable year ending on the last day of the
calendar year in which the Certificates are issued. For the purposes of REMIC
I election in respect of the Trust Fund, the Tier I Regular Interests shall be
designated as the "regular interests" and the Class R-I Certificates shall be
designated as the sole class of "residual interests" in REMIC I. For the
purposes of REMIC II election in respect of the Trust Fund, the Regular
Certificates shall be designated as the "regular interests" and the Class R-II
Certificates shall be designated as the sole class of "residual interests" in
REMIC II. The REMIC Administrator and the Trustee shall not permit the
creation of any "interests" (within the meaning of Section 860G of the Code) in
REMIC I or REMIC II other than the Tier I Regular Interests and the Class R-I
Certificates and the Regular Certificates and the Class R-II Certificates,
respectively.
(b) The Closing Date is hereby designated as the
"start-up day" of the Trust Fund within the meaning of Section 860G(a)(9) of
the Code.
(c) Bank of America, Federal Savings Bank shall hold a
Class R-I Certificate representing a 0.01% Percentage Interest of the Class R-I
Certificates and a Class R-II Certificate representing a 0.01% Percentage
Interest of the Class R-II Certificates and shall be designated as "the tax
matters person" with respect to REMIC I and REMIC II in the manner provided
under Treasury regulations section 1.860F-4(d) and temporary Treasury
regulations section 301.6231(a)(7)-1T. Bank of America, Federal Savings Bank
shall appoint the REMIC Administrator to serve as attorney-in-fact and agent
for the tax matters person, and as such the Remic Administrator shall (i) act
on behalf of REMIC I and REMIC II in relation to any tax matter or controversy
involving the Trust Fund and (ii) represent the Trust Fund in any
administrative or judicial proceeding relating to an examination or audit by
any governmental taxing authority with respect thereto. The legal expenses,
including without limitation attorneys' or accountants' fees, and costs of any
such proceeding and any liability resulting therefrom shall be expenses of the
Trust Fund and the REMIC Administrator shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans on deposit in the
Custodial Accounts as provided by Section 3.10 unless such legal expenses and
costs are incurred by reason of the REMIC Administrator's willful misfeasance,
bad faith or gross negligence.
(d) The REMIC Administrator shall prepare or cause to be
prepared all of the Tax Returns that it determines are required with respect to
either REMIC I or REMIC II created hereunder and deliver such Tax Returns in a
timely manner to the Trustee and the Trustee shall sign and file such Tax
Returns in a timely manner. The expenses of preparing
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such returns shall be borne by the REMIC Administrator without any right of
reimbursement therefor. The Trustee and the Master Servicers shall promptly
provide the REMIC Administrator with such information as the REMIC
Administrator may from time to time request for the purpose of enabling the
REMIC Administrator to prepare Tax Returns.
(e) The REMIC Administrator shall provide (i) to any
Transferor of a Residual Certificate such information as is necessary for the
application of any tax relating to the transfer of a Class R-I or Class R-II
Certificate to any Person who is not a Permitted Transferee, (ii) to the
Trustee and the Trustee shall forward to the Certificateholders such
information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption) and (iii) to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of each of REMIC I and REMIC II.
(f) The Master Servicers and the REMIC Administrator
shall take such actions and shall cause each of REMIC I and REMIC II created
hereunder to take such actions as are reasonably within the Master Servicers'
or the REMIC Administrator's control and the scope of their duties more
specifically set forth herein as shall be necessary or desirable to maintain
the status thereof as REMICs under the REMIC Provisions (and the Trustee shall
assist the Master Servicers and the REMIC Administrator, to the extent
reasonably requested by the Master Servicers and the REMIC Administrator to do
so). The Master Servicers and the REMIC Administrator shall not knowingly or
intentionally take any action, cause REMIC I or REMIC II to take any action or
fail to take (or fail to cause to be taken) any action reasonably within its
control and the scope of duties more specifically set forth herein, that, under
the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of either REMIC I or REMIC II as a REMIC or (ii) result in
the imposition of a tax upon either REMIC I or REMIC II (including but not
limited to the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on contributions to a REMIC set forth in Section
860G(d) of the Code) (either such event, an "Adverse REMIC Event") unless the
Master Servicers or the REMIC Administrator, as applicable, have received an
Opinion of Counsel (at the expense of the party seeking to take such action or,
if such party fails to pay such expense, and the Master Servicers or the REMIC
Administrator, as applicable, determine that taking such action is in the best
interest of the Trust Fund and the Certificateholders, at the expense of the
Trust Fund, but in no event at the expense of the Master Servicers, the REMIC
Administrator or the Trustee) to the effect that the contemplated action will
not, with respect to each of REMIC I and REMIC II created hereunder, endanger
such status. The Trustee shall not take or fail to take any action (whether or
not authorized hereunder) as to which the Master Servicers or the REMIC
Administrator, as applicable, have advised it in writing that they have
received an Opinion of Counsel to the effect that an Adverse REMIC Event could
occur with respect to such action. In addition, prior to taking any action
with respect to REMIC I or REMIC II or their assets, or causing REMIC I or
REMIC II to take any action, which is not expressly permitted under the terms
of this Agreement, the Trustee will consult with the Master Servicers or the
REMIC Administrator, as applicable, or their designee, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur with respect
to REMIC I or
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REMIC II, and the Trustee shall not take any such action or cause REMIC I or
REMIC II to take any such action as to which the Master Servicers or the REMIC
Administrator, as applicable, have advised it in writing that an Adverse REMIC
Event could occur. The Master Servicers or the REMIC Administrator, as
applicable, may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not expressly
permitted by this Agreement, but in no event at the expense of the Master
Servicers or the REMIC Administrator. At all times as may be required by the
Code, the Master Servicers will to the extent within their control and the
scope of their duties more specifically set forth herein, maintain
substantially all of the assets of REMIC I and REMIC II as "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of REMIC I or REMIC II created hereunder as defined in Section
860F(a)(2) of the Code, on "net income from foreclosure property" of REMIC I or
REMIC II as defined in Section 860G(c) of the Code, on any contributions to
REMIC I or REMIC II after the Start-up Day therefor pursuant to Section 860G(d)
of the Code, or any other tax is imposed by the Code or any applicable
provisions of state or local tax laws, such tax shall be charged (i) to a
Master Servicer, if such tax arises out of or results from a breach by such
Master Servicer of any of its obligations under this Agreement, (ii) to the
Trustee, if such tax arises out of or results from a breach by the Trustee of
any of its obligations under this Article X or (iii) to the REMIC Administrator
if such tax results from a breach by the REMIC Administrator of its obligations
under this Article X, or (iv) otherwise against amounts on deposit in the
Custodial Accounts as provided by Section 3.10 and on the Distribution Date(s)
following such reimbursement the aggregate of such taxes shall be allocated in
reduction of the Accrued Certificate Interest on each Class entitled thereto in
the same manner as if such taxes constituted a Prepayment Interest Shortfall.
(h) The Trustee and the Master Servicers shall, for
federal income tax purposes, maintain books and records with respect to REMIC I
and REMIC II on a calendar year and on an accrual basis or as otherwise may be
required by the REMIC Provisions.
(i) Following the Start-up Day, neither the Master
Servicers nor the Trustee shall accept any contributions of assets to REMIC I
or REMIC II unless the Master Servicers and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in REMIC I or
REMIC II will not cause either REMIC I or REMIC II to fail to qualify as a
REMIC at any time that any Certificates are outstanding or subject REMIC I or
REMIC II to any tax under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(j) Neither the Master Servicers nor the Trustee shall
enter into any arrangement by which REMIC I or REMIC II will receive a fee or
other compensation for services nor permit either such REMIC to receive any
income from assets other than "qualified mortgages" as defined in Section
860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.
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(k) Solely for the purposes of Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" by which Certificate Principal Balance of each Regular Certificate and
the principal balance of each Tier I Regular Interest would be reduced to zero
is July 25, 2026, which is the Distribution Date immediately following the
latest scheduled maturity of any Mortgage Loan.
(l) Within 30 days after the Closing Date, the REMIC
Administrator shall prepare and file with the Internal Revenue Service Form
8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC)
and Issuers of Collateralized Debt Obligations" for REMIC I and REMIC II.
(m) Neither the Trustee nor the Master Servicers shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the default, imminent default or foreclosure of a Mortgage
Loan, including but not limited to, the acquisition or sale of a Mortgaged
Property acquired by deed in lieu of foreclosure, (ii) the bankruptcy of REMIC
I or REMIC II, (iii) the termination of REMIC I or REMIC II pursuant to Article
IX of this Agreement or (iv) a purchase of Mortgage Loans pursuant to Article
II or III of this Agreement) nor acquire any assets for REMIC I or REMIC II,
nor sell or dispose of any investments in the Custodial Accounts or the
Certificate Account for gain nor accept any contributions to REMIC I or REMIC
II after the Closing Date unless it has received an Opinion of Counsel that
such sale, disposition, substitution or acquisition will not (a) affect
adversely the status of REMIC I or REMIC II as REMICs or (b) cause REMIC I or
REMIC II to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
Section 10.02. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor, the REMIC Administrator and the Master Servicers for any taxes and
costs including, without limitation, any reasonable attorneys fees imposed on
or incurred by the Trust Fund, the Depositor or the Master Servicers, as a
result of a breach of the Trustee's covenants set forth in Article VIII or this
Article X.
(b) The REMIC Administrator agrees to indemnify the Trust
Fund, the Depositor and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the REMIC
Administrator's covenants set forth in this Article X with respect to
compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
REMIC Administrator that contain errors or omissions; provided, however, that
such liability will not be imposed to the extent such breach is a result of an
error or omission in information provided to the REMIC Administrator by the
Master Servicers in which case Section 10.02(c) will apply.
(c) Each Master Servicer agrees to indemnify the Trust
Fund, the Depositor, the REMIC Administrator and the Trustee for any taxes and
costs (including,
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without limitation, any reasonable attorneys' fees) imposed on or incurred by
the Trust Fund, the Depositor or the Trustee, as a result of a breach of such
Master Servicer's covenants set forth in this Article X or in Article III with
respect to compliance with the REMIC Provisions, including, without limitation,
any penalties arising from the Trustee's execution of Tax Returns prepared by
such Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
Depositor, the Master Servicers and the Trustee, without the consent of any of
the Certificateholders:
(i) to cure any ambiguity, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then- current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(ii) to correct or supplement any provisions
herein or therein, which may be inconsistent with any other provisions
herein or therein or to correct any error, provided that (A) such
change shall not, as evidenced by an Opinion of Counsel (at the
expense of the Depositor), adversely affect in any material respect
the interest of any Certificateholder, or (B) such change shall not
result in a withdrawal of the rating assigned to any Class of
Certificates or a reduction of such rating below the lower of the
then-current rating or the rating assigned to such Certificates as of
the Closing Date, as evidenced by a letter from each Rating Agency to
such effect;
(iii) to modify, eliminate or add to any of its
provisions to such extent as shall be necessary or desirable to
maintain the qualification of the Trust Fund as a REMIC at all times
that any Certificate is outstanding or to avoid or minimize the risk
of the imposition of any tax on the Trust Fund pursuant to the Code
that would be a claim against the Trust Fund, provided that the
Trustee has received an Opinion of Counsel to the effect that (A) such
action is necessary or desirable to maintain such qualification or to
avoid or minimize the risk of the imposition of any such tax and (B)
such action will not adversely affect in any material respect the
interests of any Certificateholder,
(iv) to change the timing and/or nature of
deposits into the Custodial Accounts or the Certificate Account or to
change the name in which the Custodial Accounts are maintained,
provided that (A) the Certificate Account Deposit Date shall in no
event be later than the related Distribution Date, (B) such change
shall not, as evidenced by an Opinion of Counsel, adversely affect in
any material respect the interests of any Certificateholder and (C)
such change shall not result in a reduction of the rating assigned to
any Class of Certificates below the lower of the then-current rating
or the rating assigned to such Certificates as of the Closing Date, as
evidenced by a letter from each Rating Agency to such effect,
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(v) to modify, eliminate or add to the provisions
of Section 5.02(f) or any other provision hereof restricting transfer
of the Residual Certificates by virtue of their being the "residual
interests" in the Trust Fund, provided that (A) such change shall not
result in reduction of the rating assigned to any such Class of
Certificates below the lower of the then-current rating or the rating
assigned to such Certificates as of the Closing Date, as evidenced by
a letter from each Rating Agency to such effect, and (B) such change
shall not, as evidenced by an Opinion of Counsel (at the expense of
the party seeking so to modify, eliminate or add such provisions),
cause either the Trust Fund or any of the Certificateholders (other
than the transferor) to be subject to a federal tax caused by a
transfer to a Person that is not a Permitted Transferee, or
(vi) to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be
materially inconsistent with the provisions of this Agreement,
provided that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder or Financial Security.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicers and the Trustee with the consent of the Holders
of Certificates evidencing in the aggregate not less than 66% of the Percentage
Interests of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any or of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay
the timing of, payments which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate;
(ii) reduce the aforesaid percentage of
Certificates of any Class the Holders of which are required to consent
to any such amendment, in any such case without the consent of the
Holders of all Certificates of such Class then outstanding; or
(iii) adversely affect in any material respect the
rights and interest of Financial Security without its consent.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (at the expense of the party seeking
such amendment, except if the Trustee requests such amendment, in which case it
shall be at the expense of the Trust Fund) to the effect that such amendment or
the exercise of any power granted to the Master Servicers, the Depositor or the
Trustee in accordance with such amendment will not result in the imposition of
a federal tax on the Trust Fund or cause the Trust Fund to fail to qualify as a
REMIC at any time that any Certificate is outstanding. The placement of an
"original issue
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discount" legend on, or any change required to correct any such legend
previously placed on, a Certificate shall not be deemed an amendment of the
Agreement.
(d) Promptly after the execution of any such amendments, the
Trustee shall furnish written notification of the substance of such amendment
to each Certificateholder. It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders
shall be subject to such reasonable regulations as the Trustee may prescribe.
Section 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all 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 Depositor and at its expense on direction by the Trustee
(pursuant to the request of Holders of Certificates entitled to at least 25% of
the Voting Rights), but only upon direction accompanied by an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of any
of the parties hereto.
(b) No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee
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a written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates of any Class evidencing
in the aggregate not less than 25% of the related Percentage Interests of such
Class, shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit
or proceeding it being understood and intended, and being expressly covenanted
by each Certificateholder with every other Certificateholder and the Trustee,
that no one or more Holders of Certificates of any Class shall have any right
in any manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates of such Class or any other Class, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the common
benefit of Certificateholders of such Class or all Classes, as the case may be.
For the protection and enforcement of the provisions of this Section 11.03,
each and every Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 11.04. Governing Law.
This agreement and the Certificates shall be governed by and construed
in accordance with the laws of the State of California and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws.
Section 11.05. Notices.
All demands and notices hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid (except for notices to the Trustee which shall
be deemed to have been duly given only when received), to (a) in the case of
the Depositor, 345 Xxxxxxxxxx Street, Lower Level #2, Unit #8152, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxx, or such other address as
may hereafter be furnished to the Master Servicers and the Trustee in writing
by the Depositor, (b) in the case of the Master Servicer, Bank of America
National Trust and Savings Association, 0000 Xxxxxxx, Xxxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxxxx Xxxxxx, or at such other address as may hereafter be
furnished to the Depositor, the other Master Servicer and the Trustee by it in
writing, (c) in the case of the other Master Servicer, Bank of America, Federal
Savings Bank, 0000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Xxxx
Xxxxxxxxx or such other address as may be hereafter furnished to the Depositor,
the other Master Servicer and the Trustee by the it in writing, (d) in the case
of the Trustee, 0 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
BA Mortgage Securities, Inc., Series 1997-1 or such other address as may
hereafter be furnished to the Depositor and the Master Servicers in writing by
the Trustee, (e) in the case of Moody's, Xxxxx'x Investors Service, Inc., 00
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage
Monitoring, or such other address as may hereafter be furnished to the
Depositor, the Trustee and the Master Servicers in writing by Moody's, (f) in
the case of
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DCR, Duff & Xxxxxx Credit Rating Co., 00 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxx, XX 00000, Attn: MBS Monitoring, or such other address as may be
hereafter furnished to the Depositor, Trustee, and Master Servicers by DCR and
(g) in the case of the Underwriter, DLJ Mortgage Capital, Inc, 000 Xxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxxx, or such other
address as may hereafter be furnished to the Depositor, the Trustee, and the
Master Servicers by the Underwriter. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice in the case of Financial Security,
Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Senior Vice President, Surveillance Dept., or such other address as
Financial Security may hereafter furnish to the Depositor, the Master Servicers
and the Trustee.
Section 11.06. Notices to Rating Agency and Financial Security.
The Depositor, the Master Servicers or the Trustee, as applicable,
shall notify each Rating Agency, Financial Security and any Subservicers at
such time as it is otherwise required pursuant to this Agreement to give notice
of the occurrence of, any of the events described in clause (a), (b), (c), (d),
(g), (h), (i) or (j) below or provide a copy to each Rating Agency at such time
as otherwise required to be delivered pursuant to this Agreement of any of the
statements described in clauses (e) and (f) below:
(a) a material change or amendment to this Agreement,
(b) the occurrence of an Event of Default,
(c) the termination or appointment of a successor Master
Servicer or Trustee or a change in the majority ownership of the
Trustee,
(d) the filing of any claim under either Master
Servicer's blanket fidelity bond and the errors and omissions insurance
policy required by Section 3.12 or the cancellation or modification of
coverage under any such instrument,
(e) the statement required to be delivered to the Holders
of each Class of Certificates pursuant to Section 4.03,
(f) the statements required to be delivered pursuant to
Section 3.18,
(g) a change in the location of a Custodial Account or
the Certificate Account,
(h) the occurrence of any monthly cash flow shortfall to
the Holders of any Class of Certificates resulting from the failure by
a Master Servicer to make an Advance pursuant to Section 4.04,
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(i) the occurrence of the Final Distribution Date, and
(j) the repurchase of or substitution for any Mortgage
Loan,
provided, however, that with respect to notice of the occurrence of the events
described in clauses (d), (g) or (h) above, the applicable Master Servicer
shall provide prompt written notice to each Rating Agency and Financial
Security and any Subservicers of any such event known to such Master Servicer.
Section 11.07. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement or of the Certificates or the rights of the Holders thereof.
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IN WITNESS WHEREOF, the Depositor, the Master Servicers and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized and their respective seals, duly attested,
to be hereunto affixed, all as of the day and year first above written.
BA MORTGAGE SECURITIES, INC.
[Seal]
By:
-----------------------------------------
Name:
Title:
Attest:
--------------------------
Name:
Title:
BANK OF AMERICA, FEDERAL SAVINGS
BANK, as Master Servicer
[Seal]
By:
-----------------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION, as Master Servicer
[Seal]
By:
-----------------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
139
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
[Seal]
By:
-----------------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
140
STATE OF __________ )
) ss.:
COUNTY OF__________ )
On the ____ day of __________, 19__ before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
______________ of BA Mortgage Securities, 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
[Notarial Seal]
141
STATE OF __________ )
) ss.:
COUNTY OF__________ )
On the _____day of __________, 19__ before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
__________ of Bank of America, Federal Savings Bank, the federal
savings bank 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
[Notarial Seal]
142
STATE OF __________ )
) ss.:
COUNTY OF__________ )
On the _____day of __________, 19__ before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
__________ of Bank of America, Federal Savings Bank, the federal
savings bank 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
[Notarial Seal]
143
STATE OF __________ )
) ss.:
COUNTY OF__________ )
On the _____day of __________, 19__ before me, a notary public in and
for said State, personally appeared _______________, known to me to be a
__________ of Bank of America, Federal Savings Bank, the federal
savings bank 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
[Notarial Seal]
144
EXHIBIT A
FORM OF CLASS A, CLASS X AND CLASS PO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, 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.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO
THIS CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), [AND ASSUMING A
CONSTANT PASS-THROUGH RATE EQUAL TO THE INITIAL PASS-THROUGH RATE,] THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $_____ OF OID PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ___% AND THE
AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN
$_______ PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED USING
THE APPROXIMATE METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE OR AS TO THE CONSTANCY OF THE PASS-THROUGH RATE.]
145
Certificate No. ____ [___%] Pass-Through Rate
Class [ ] Senior [Variable Pass-Through Rate]
[based on a Notional Amount]
Date of Pooling and Servicing
Agreement and Cut-off Date:
August 1, 1997 Aggregate [Initial Certificate
Principal Balance] [Notional Amount]
of the Class [ ] Certificates:
First Distribution Date:
September 25, 1997
Master Servicers: Initial Certificate Principal
Bank of America National Trust and Balance of this
Savings Association Certificate: $_____________]
Bank of America, Federal Savings Bank
Assumed Final
Distribution Date:
July 25, 2026 CUSIP ____________
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1997-1
evidencing a percentage interest in the distributions allocable to the
Class [ ] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _____________________________ is the registered
owner of the Percentage Interest evidenced by this Certificate in certain
distributions with respect to the Trust Fund consisting primarily of an
interest in a pool of conventional one- to four-family fixed interest rate
first mortgage loans (the "Mortgage Loans"), formed and sold by BA Mortgage
A-2
146
Securities, Inc. (hereinafter called the "Depositor," which term includes any
successor entity under the Agreement referred to below). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as specified above
(the "Agreement") among the Depositor, the Master Servicers and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be
made on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount [(of interest
and principal, if any)] required to be distributed to Holders of Class [ ]
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of distributions allocable to principal and any Realized Losses allocable
hereto.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the applicable Master Servicer or the Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
A-3
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As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
A-4
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This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
--------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [ ] Certificates referred to in the
within-mentioned Agreement.
------------------------------,
as Certificate Registrar
By:
--------------------------------------------
Authorized Signatory
A-6
150
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________
____________________ (Please print or typewrite name and address including
postal zip code of assignee) a Percentage Interest evidenced by the within
Mortgage Pass-Through Certificate and hereby authorizes the transfer of
registration of such interest to assignee on the Certificate Register of the
Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
________________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of assignor
------------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________ for
the account of ____________________ account number ____________________, or, if
mailed by check, to ____________________. Applicable statements should be mailed
to ________________________________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
A-7
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EXHIBIT B
FORM OF CLASS M CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICER, THE DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, 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 CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED
ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
152
Certificate No. __ 7.500% Pass-Through Rate
Class M Aggregate Certificate
Principal Balance
of the Class M
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
August 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
September 25, 1997
Master Servicers: CUSIP ______________
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
July 25, 2026
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-1
evidencing a percentage interest in any distributions allocable to the
Class M Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ______________________________ ______________ is
the registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the Certificate Principal Balance of this Certificate by
the aggregate Certificate Principal Balance of all Class M Certificates, both
as specified above) in certain distributions with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and sold by
BA Mortgage Securities, Inc.
B-2
153
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement referred to below). The Trust Fund was created pursuant to
a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, the Master Servicers and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class M
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Master
Servicers acting on behalf of the Trustee or by a Paying Agent appointed by the
Trustee in immediately available funds (by wire transfer or otherwise) to any
Person holding an aggregate Certificate Principal Balance of at least five
million dollars for the account of the Person entitled thereto if such Person
shall have so notified the Master Servicers or such Paying Agent at least five
Business Days prior to the related Record Date, or by check mailed to the
address of the Person entitled thereto, as such name and address shall appear
on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
No transfer of this Class M Certificate will be made unless the Trustee
has received either (i) an opinion of counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer
with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an
B-3
154
insurance company, the source of funds to be used by it to purchase the
Certificate is an "insurance company general account" (within the meaning of
Department of Labor Prohibited Transaction Class Exemption ("PTCE") 95-60), and
the purchase is being made in reliance upon the availability of the exemptive
relief afforded under Sections I and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
B-4
155
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
B-5
156
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
-----------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class M Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:
---------------------------------------
Authorized Signatory
B-6
157
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________ (Please
print or typewrite name and address including postal zip code of assignee) a
Percentage Interest evidenced by the within Mortgage Pass-Through Certificate
and hereby authorizes the transfer of registration of such interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following
address:____________________________________________________________________
____________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________ for
the account of ____________________ account number ____________________, or, if
mailed by check, to ____________________. Applicable statements should be mailed
to ________________________________________________________________.
This information is provided by _____________________________, the
assignee named above, or __________________________________, as its agent.
B-7
158
EXHIBIT C
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE SENIOR CERTIFICATES
AND CLASS M CERTIFICATES AS DESCRIBED IN THE AGREEMENT (AS DEFINED HEREIN).
[FOR CLASS B-3, CLASS B-4 AND CLASS B-5: THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS
REGISTERED PURSUANT TO SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN
TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER
APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 5.02 OF THE AGREEMENT.]
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICERS, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE") AND WILL NOT
SUBJECT THE MASTER SERVICER, THE COMPANY OR THE TRUSTEE TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, 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 CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________, 19__.
ASSUMING THAT THE MORTGAGE LOANS PREPAY AT ____% OF THE STANDARD PREPAYMENT
ASSUMPTION (AS DESCRIBED IN THE PROSPECTUS SUPPLEMENT), THIS CERTIFICATE HAS
BEEN ISSUED WITH NO MORE THAN $___ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF
INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER THE APPROXIMATE METHOD.
NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
159
PREPAY AT A RATE BASED ON THE STANDARD PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]
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160
Certificate No. __ 7.500% Pass-Through Rate
Class B-__ Subordinate Aggregate Certificate
Principal Balance
of the Class B-__
Certificates as of
Date of Pooling and Servicing the Cut-off Date:
Agreement and Cut-off Date: $_______________
August 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
September 25, 1997
Master Servicers: CUSIP _____________
Bank of America National Trust
and Savings Association
Bank of America, Federal Savings Bank
Assumed Final Distribution Date:
July 25, 2026
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-1
evidencing a percentage interest in any distributions allocable to the
Class B-__ Certificates with respect to the Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that ______________________________ ______________ is
the registered owner of the Percentage Interest evidenced by this Certificate
(obtained by dividing the Certificate Principal Balance of this Certificate by
the aggregate Certificate Principal Balance of all Class B-__ Certificates,
both as specified above) in certain distributions with respect to a Trust Fund
consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and sold by
BA Mortgage Securities, Inc.
C-3
161
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement referred to below). The Trust Fund was created pursuant to
a Pooling and Servicing Agreement dated as specified above (the "Agreement")
among the Depositor, the Master Servicers and Bankers Trust Company of
California, N.A., as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing on the
first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month next preceding the month of such distribution (the "Record Date"),
from the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class B-__
Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of the distributions allocable to principal and any Realized Losses allocable
hereto.
[For Class B-3, Class B-4 and Class B-5: No transfer of this Class
B-__ Certificate will be made unless such transfer is exempt from the
registration requirements of the Securities Act of 1933, as amended, or is made
in accordance with said Act. In the event that such a transfer is to be made,
(A)(i) the Trustee shall require an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee and the Depositor that such
transfer is exempt (describing the applicable exemption and the basis therefor)
from or is being made pursuant to the registration requirements of the
Securities Act of 1933, as amended, or (ii) the transferee and the transferor
shall execute investment letters in the forms described by the Agreement, or
(B) the prospective transferee of the Certificate shall provide to the Trustee,
the Depositor and the Master Servicers with an investment letter in the form
described by the Agreement, as required under Section 5.02(d) of the Agreement.
The Holder hereof desiring to effect such transfer shall, and does hereby agree
to, indemnify the Trustee, the Depositor, the Master Servicers and
C-4
162
the Certificate Registrar acting on behalf of the Trustee against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such the Securities Act of 1933, as amended, or any similar state laws.]
No transfer of this Class B-__ Certificate will be made unless the
Trustee has received either (i) an opinion of counsel acceptable to and in form
and substance satisfactory to the Trustee, the Depositor and the Master
Servicer with respect to the permissibility of such transfer under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and Section 4975
of the Internal Revenue Code (the "Code") and stating, among other things, that
the transferee's acquisition of Class M Certificate will not constitute or
result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code or (ii) a representation letter, in the form as
described by the Agreement, either stating that the transferee is not an
employee benefit or other plan subject to the prohibited transaction provisions
of ERISA or Section 4975 of the Code (a "Plan"), or any other person (including
an investment manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate with "plan
assets" of any Plan, or stating that the transferee is an insurance company,
the source of funds to be used by it to purchase the Certificate is an
"insurance company general account" (within the meaning of Department of Labor
Prohibited Transaction Class Exemption ("PTCE") 95-60), and the purchase is
being made in reliance upon the availability of the exemptive relief afforded
under Sections I and III of PTCE 95-60.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor and the Master Servicers of advances made, or certain expenses
incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether
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163
or not notation of such consent is made upon the Certificate. The Agreement
also permits the amendment thereof in certain circumstances without the consent
of the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
evidencing the same Class and aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, either Master
Servicer to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the
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164
Distribution Date upon which the proceeds of any such purchase are distributed
is less than ten percent of the Cut-off Date Principal Balance of the Mortgage
Loans.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
--------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B-__ Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:
-----------------------------------
Authorized Signatory
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166
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________ (Please
print or typewrite name and address including postal zip code of assignee) a
Percentage Interest evidenced by the within Mortgage Pass-Through Certificate
and hereby authorizes the transfer of registration of such interest to
assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address: ____________________________
_______________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________ for the account of
____________________, account number__________, or, if mailed by check,
to ____________________. Applicable statements should be mailed
to ___________________________________________________________________.
This information is provided by ____________________, the assignee
named above, or ____________________, as its agent.
C-9
167
EXHIBIT D
FORM OF RESIDUAL CERTIFICATE
THIS CERTIFICATE MAY NOT BE HELD BY OR TRANSFERRED TO A NON-UNITED STATES
PERSON OR A DISQUALIFIED ORGANIZATION (AS DEFINED BELOW).
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
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 (THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO ANY PERSON, UNLESS THE
TRANSFEREE PROVIDES EITHER A CERTIFICATION PURSUANT TO SECTION 5.02(e) OF THE
AGREEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE MASTER SERVICER, THE
DEPOSITOR AND THE TRUSTEE THAT THE PURCHASE OF THIS CERTIFICATE WILL NOT
CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE MASTER SERVICER, THE
DEPOSITOR OR THE TRUSTEE TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE MAY BE MADE ONLY
IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE MASTER SERVICER
AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT (A) THE UNITED STATES, ANY
STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE
FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED IN SECTION
521 OF THE CODE) WHICH IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF THE CODE
UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B) OR (C) BEING HEREIN
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION, (2) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE ASSESSMENT OR
COLLECTION OF TAX AND (3) SUCH TRANSFEREE SATISFIES CERTAIN ADDITIONAL
CONDITIONS RELATING TO THE FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CERTIFICATE TO A DISQUALIFIED ORGANIZATION OR
AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH REGISTRATION SHALL BE DEEMED TO
BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED
TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
168
CERTIFICATE. EACH HOLDER OF THIS CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
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169
Certificate No. ___ 7.500% Pass-Through Rate
Class [R-I] [R-II] Senior Aggregate Initial Certificate
Principal Balance of the Class
Date of Pooling and Servicing [R-I][R-II] Certificates: $100.00
Agreement and Cut-off Date:
August 1, 1997
Initial Certificate Principal
Balance of this Certificate:
First Distribution Date: $_______________
September 25, 1997
Master Servicers:
Bank of America National Trust Percentage Interest:
and Savings Association _______%
Bank of America, Federal Savings Bank
CUSIP ____________
Assumed Final Distribution Date:
July 25, 2026
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-1
evidencing a percentage interest in any distributions allocable to the
Class [R-I][R-II] Certificates with respect to a Trust Fund consisting
primarily of a pool of conventional one- to four-family fixed interest
rate first mortgage loans formed and sold by BA MORTGAGE SECURITIES,
INC.
This Certificate is payable solely from the assets of the Trust Fund,
and does not represent an obligation of or interest in BA Mortgage Securities,
Inc., the Master Servicers, the Trustee referred to below or any of their
affiliates. Neither this Certificate nor the underlying Mortgage Loans are
guaranteed or insured by any governmental agency or instrumentality or by BA
Mortgage Securities, Inc., the Master Servicers, the Trustee or any of their
affiliates. None of the Depositor, the Master Servicers or any of their
affiliates will have any obligation with respect to any certificate or other
obligation secured by or payable from payments on the Certificates.
This certifies that _________________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the Initial Certificate Principal Balance of this Certificate by the aggregate
Initial Certificate Principal Balance of all Class [R-I][R-II] Certificates,
both as specified above) in certain distributions with respect to the Trust
Fund consisting primarily of a pool of conventional one- to four-family fixed
interest rate first mortgage loans (the "Mortgage Loans"), formed and sold by
BA Mortgage Securities, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement referred to below). The
Trust Fund was created pursuant to a Pooling and Servicing Agreement dated as
specified above (the "Agreement") among the Depositor, the Master
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170
Servicers and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement. This Certificate is issued
under and is subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (the "Distribution Date"), commencing as
described in the Agreement, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount in an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount (of interest
and principal, if any) required to be distributed to Holders of Class
[R-I][R-II] Certificates on such Distribution Date.
Distributions on this Certificate will be made either by the Trustee or
by a Paying Agent appointed by the Trustee in immediately available funds (by
wire transfer or otherwise) to any Person holding an aggregate Certificate
Principal Balance of at least five million dollars for the account of the
Person entitled thereto if such Person shall have so notified the Trustee or
such Paying Agent at least five Business Days prior to the related Record Date,
or by check mailed to the address of the Person entitled thereto, as such name
and address shall appear on the Certificate Register.
Notwithstanding the above, the final distribution on this Certificate
will be made after due notice of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose in the City and State of New York.
The Initial Certificate Principal Balance of this Certificate is set forth
above. The Certificate Principal Balance hereof will be reduced to the extent
of distributions allocable to principal and any Realized Losses allocable
hereto. Notwithstanding the reduction of the Certificate Principal Balance
hereof to zero, this Certificate will remain outstanding under the Agreement
and the Holder hereof may have additional obligations with respect to this
Certificate, including tax liabilities, and may be entitled to certain
additional distributions hereon, in accordance with the terms and provisions of
the Agreement.
Each Holder of this Certificate will be deemed to have agreed to be
bound by the restrictions set forth in the Agreement to the effect that (i)
each person holding or acquiring any Ownership Interest in this Certificate
must be a United States Person and a Permitted Transferee, (ii) the transfer of
any Ownership Interest in this Certificate will be conditioned upon the
delivery to the Trustee of, among other things, an affidavit to the effect that
it is a United States Person and Permitted Transferee, (iii) any attempted or
purported transfer of any Ownership Interest in this Certificate in violation
of such restrictions will be absolutely null and void and will vest no rights
in the purported transferee, and (iv) if any person other than a United States
Person and a Permitted Transferee acquires any Ownership Interest in this
Certificate in violation of such restrictions, then the Master Servicers will
have the right, in their sole discretion and without notice to the Holder of
this Certificate, to sell this Certificate to a purchaser selected by
D-4
171
the Master Servicers, which purchaser may be a Master Servicer, or any
affiliate of the Master Servicers, on such terms and conditions as the Master
Servicers may choose.
This Certificate is one of a duly authorized issue of Certificates
issued in several Classes designated as Mortgage Pass-Through Certificates of
the Series specified hereon (herein collectively called the "Certificates").
The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set
forth herein and in the Agreement. In the event Master Servicer or any
Subservicer funds are advanced with respect to any Mortgage Loan, such advance
is reimbursable to the Master Servicers or the applicable Subservicer, to the
extent provided in the Agreement, from related recoveries on such Mortgage Loan
or from other cash that would have been distributable to Certificateholders.
As provided in the Agreement, withdrawals from the Custodial Accounts
created for the benefit of Certificateholders may be made by the Master
Servicers from time to time for purposes other than distributions to
Certificateholders, such purposes including without limitation reimbursement to
the Depositor, the Subservicers and the Master Servicers of advances made, or
certain expenses incurred, by either of them.
The Agreement permits, with certain exceptions therein provided, the
amendment of the Agreement and the modification of the rights and obligations
of the Depositor, the Master Servicers and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicers and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon the Certificate. The Agreement also
permits the amendment thereof in certain circumstances without the consent of
the Holders of any of the Certificates and, in certain additional
circumstances, without the consent of the Holders of certain Classes of
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies appointed by the Trustee in the City and State of New York,
duly endorsed by, or accompanied by an assignment in the form below or other
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same Class and aggregate Percentage
Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in Classes and in denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of
D-5
172
authorized denominations evidencing the same Class and aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Master Servicers, the Trustee and the Certificate
Registrar and any agent of the Depositor, the Master Servicers, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Master Servicers, the Trustee nor any such agent shall be affected by
notice to the contrary.
This Certificate shall be governed by and construed in accordance with
the laws of the State of California.
The obligations created by the Agreement in respect of the Certificates
and the Trust Fund created thereby shall terminate upon the payment to
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be paid to them pursuant to the Agreement following the earlier of
(i) the maturity or other liquidation of the last Mortgage Loan subject thereto
or the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and (ii) the purchase by a Master Servicer
from the Trust Fund of all remaining Mortgage Loans and all property acquired
in respect of such Mortgage Loans, thereby effecting early retirement of the
Certificates. The Agreement permits, but does not require, one of the Master
Servicers to purchase at a price determined as provided in the Agreement all
remaining Mortgage Loans and all property acquired in respect of any Mortgage
Loan; provided, that such option may only be exercised if the Pool Stated
Principal Balance of the Mortgage Loans as of the Distribution Date upon which
the proceeds of any such purchase are distributed is less than ten percent of
the Cut-off Date Principal Balance of the Mortgage Loans.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purpose
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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173
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:
----------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I][R-II] Certificates referred to in the
within-mentioned Agreement.
______________________________,
as Certificate Registrar
By:
---------------------------------------
Authorized Signatory
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174
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _____________________________________________________ (Please
print or typewrite name and address including postal zip code of assignee) a
Percentage Interest evidenced by the ____________________ within Mortgage
Pass_Through Certificate and hereby authorizes the transfer of registration of
such interest to assignee on the Certificate Register of the Trust Fund.
I (We) further direct the Certificate Registrar to issue a new
Certificate of a like denomination and Class, to the above named assignee and
deliver such Certificate to the following address:
_______________________________________________________________________________
Dated:
---------------------------------------
Signature by or on behalf of assignor
---------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to __________________________________________ for
the account of account number , or, if __________________________________
_____________________________________________ ________________ mailed by check,
to Applicable statements should be mailed to _________________________________
This information is provided by , the assignee named above, or , as its
_____________________________ __________________________________ agent.
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175
EXHIBIT E-1
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
176
EXHIBIT E-2
MORTGAGE LOAN SCHEDULE
BANK OF AMERICA, FEDERAL SAVINGS BANK
177
EXHIBIT F-1
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION
178
EXHIBIT F-2
MORTGAGE LOANS SERVICED BY
BANK OF AMERICA, FEDERAL SAVINGS BANK
179
EXHIBIT G
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
180
--------------------------------------------------------------------------------
BA MORTGAGE SECURITIES, INC.,
DEPOSITOR
AND
[BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL SAVINGS BANK]
MORTGAGE LOAN PURCHASE AGREEMENT
DATED AUGUST 14, 1997
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-1
--------------------------------------------------------------------------------
181
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement ("Agreement"), dated August 14, 1997,
between BA Mortgage Securities, Inc., a Delaware corporation (the "Depositor"),
and [Bank of America National Trust and Savings Association] [Bank of America,
Federal Savings Bank] a [national banking association] [federal savings bank]
(the "Seller").
PRELIMINARY STATEMENT
The Seller intends to sell certain Mortgage Loans (as defined below) to
the Depositor as provided herein. The Depositor intends to deposit such
mortgage loans, together with certain other mortgage loans, into a trust fund
(the "Trust Fund") evidenced by mortgage pass-through certificates (the
"Certificates"). The Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling Agreement") among the Depositor, Bank of
America, Federal Savings Bank and Bank of America National Trust and Savings
Association, as master servicers (together, the "Master Servicers"), and
Bankers Trust Company of California, N.A., as Trustee (the "Trustee") dated as
of August 1, 1997 (the "Cut-off Date"). The Certificates are described more
fully in the related Prospectus Supplement (the "Prospectus Supplement") dated
August 14, 1997. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned in the Pooling Agreement.
In consideration of the mutual agreements herein contained, the
Depositor and the Seller hereby agree as follows:
SECTION 1. Agreement to Purchase. The Seller agrees to sell, and the
Depositor agrees to purchase, the mortgage loans (the "Mortgage Loans"),
identified on the schedule annexed hereto as Exhibit 1 (the "Mortgage Loan
Schedule"). The Mortgage Loans will be conventional fixed rate one- to
four-family residential mortgage loans with original terms to maturity of not
more than 30 years from the date of origination. The Mortgage Loans will have
an aggregate outstanding principal balance as of the close of business on the
Cut-off Date, after giving effect to any payments due on or before such date
whether or not received, of approximately $______________ (plus or minus 2.5%),
or such other amount acceptable to the Depositor as evidenced by the actual
aggregate outstanding principal balance of the Mortgage Loans accepted by the
Depositor for deposit into the Trust Fund. The sale of the Mortgage Loans
shall take place on or prior to August 14, 1997 or such other date as shall be
mutually acceptable to the parties hereto (the "Closing Date"), subject to the
deposit of the Mortgage Loans into the Trust Fund, the issuance of the
Certificates and the sale of the Certificates by the Depositor pursuant to the
Underwriting Agreement (the "Underwriting Agreement") and Purchase Agreement
(the "Purchase Agreement"), each to be entered into between the Depositor and
Donaldson, Lufkin, & Xxxxxxxx Securities Corporation (the "Underwriter"). The
purchase price for the Mortgage Loans (the "Purchase Price") shall be equal to
_____% of the aggregate outstanding principal balances thereof as of the close
of business on the Cut-off Date, together with interest accrued on such
principal balance at a per annum rate equal to ______% from the Cut-off Date to
but not including the Closing Date. The Purchase Price shall be paid to the
Seller by wire transfer in immediately available funds on the Closing Date by
the Depositor, or as otherwise agreed by the Depositor and the Seller.
182
Pursuant to the terms of the Pooling Agreement, the Depositor shall
assign to the Trustee all of its right, title and interest in and to the
Mortgage Loans, and other rights and obligations under this Agreement (except
with respect to its rights to either indemnification or notice) and the Trustee
shall succeed to such right, title and interest and rights and obligations
hereunder of the Depositor.
SECTION 2. Conveyance of Mortgage Loans. The Seller hereby agrees to
transfer, assign, set over and otherwise convey to the Depositor, without
recourse but subject to the terms of this Agreement, on the Closing Date and as
of the Cut-off Date, all the right, title and interest of the Seller in and to
the Mortgage Loans identified on the Mortgage Loan Schedule as of the Closing
Date. The Mortgage Loan Schedule shall conform to the requirements of the
Depositor as set forth in this Agreement and the Pooling Agreement. The
Mortgage Loan Schedule, as amended on the Closing Date if necessary to reflect
the actual Mortgage Loans accepted by the Depositor on the Closing Date in
accordance with Section 3 hereof, shall be used as part of the Mortgage Loan
Schedule under the Pooling Agreement. In connection with such transfer and
assignment, the Seller shall deliver, or cause to be delivered, to the Trustee,
the documents or instruments specified in Section 2.01 of the Pooling Agreement
with respect to each Mortgage Loan (each such set of documents, a "Mortgage
File"). At least two days prior to the Closing Date, each Mortgage File shall
have been delivered by the Seller to the Trustee. All Mortgage Files so
delivered will be held by the Trustee in escrow at all times prior to the
Closing Date.
In the event that any assignment is lost or returned unrecorded because
of a defect therein, the Seller shall prepare a substitute assignment or cure
such defect and deliver such cured or substituted assignment to the Trustee, as
the case may be, and the Trustee shall, at the expense of the Seller, record
and deliver such assignment in accordance with this Section 2. The Seller will
also pay the fees of the Trustee incurred in connection with the removal and
replacement of each assignment of Mortgage delivered for recording, as well as
the fees of the Trustee incurred in connection with the addition of any title
insurance policy or recorded Mortgage to the related Mortgage File.
Upon sale of the Mortgage Loans by the Seller to the Depositor
hereunder, the ownership of each Mortgage Note, the Mortgage and the contents
of the related Mortgage File is vested in the Depositor and the ownership of
all records and documents with respect to the related Mortgage Loan prepared by
or that come into the possession of the Seller shall immediately vest in the
Depositor. The Seller's records shall accurately reflect the sale of each
Mortgage Loan to the Depositor. In the event that any original document held
by the Seller is required pursuant to the terms of this Section to be a part of
a Mortgage File, such document shall be delivered promptly to the Depositor or
its designee.
SECTION 3. Examination of Mortgage Files and Due Diligence Review. On
or before the Closing Date, the Seller shall either, as specified by the
Depositor, deliver to the Depositor, or its designee, in escrow, or make
available, or cause to be made available, for examination during normal
business hours, all credit files, underwriting documentation and Mortgage Files
relating to the Mortgage Loans. The fact that the Depositor has conducted or
has failed to conduct any partial or complete examination of the credit files,
underwriting documentation or Mortgage Files relating to the Mortgage Loans
shall not affect the Depositor's, the Trustee's or
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183
any holder of the Certificates' right to demand repurchase of or substitution
for the Mortgage Loans or other relief as provided under this Agreement or to
be provided under the Pooling Agreement.
In addition to the foregoing examination of the Mortgage Files and
related documents, the Seller agrees to allow the Depositor, or its designee,
any representative of a statistical Rating Agency, or the Underwriter, to
examine and audit all books, records and files pertaining to the Mortgage
Loans, the Seller's underwriting procedures and the Seller's ability to perform
or observe all of the terms, covenants and conditions of this Agreement. Such
examinations and audits shall take place at one or more offices of the Seller
during normal business hours and in the course of such examinations and audits,
the Seller will make available to the Depositor, or its designee, adequate
facilities, as well as the assistance of a sufficient number of knowledgeable
and responsible individuals who are familiar with the Mortgage Loans and the
terms of this Agreement and the Seller shall cooperate fully with any such
review in all respects. The Seller agrees to provide the Depositor, its
designee and any representative of a Rating Agency or the Underwriter with all
material information regarding the Seller (including its financial condition),
and to provide access to knowledgeable financial or accounting officers for the
purpose of answering questions with respect to the Seller's financial
condition, financial statements or other developments affecting the Seller.
The Depositor shall, upon reasonable prior notice, also have the right to
perform such examinations and audits or to obtain such material information
regarding the Seller's financial condition and access to the officers described
above following the Closing Date.
The Seller understands and agrees that any information, including but
not limited to financial information, the Seller's mortgage loan underwriting
standards, information regarding the status of the Seller with respect to any
regulatory body or entity and information as to the loss, foreclosure and
delinquency experience of loans originated or acquired by the Seller, obtained
in the examination and review described in the foregoing paragraph may be
disclosed in the Prospectus Supplement. In addition, the Seller will provide
at its own expense a letter from an independent nationally recognized
accounting firm verifying any financial information referred to in the previous
sentence as is reasonably required to be disclosed in such Prospectus
Supplement. The Depositor assumes no responsibility with respect to
information referred to in this paragraph.
SECTION 4. Representations, Warranties and Covenants of the Seller.
In order to induce the Depositor to enter into this Agreement, the Seller
hereby represents, warrants and covenants to the Depositor, and any assignee of
the Depositor, that as of the date hereof and as of the Closing Date (or such
other date specifically provided herein):
(i) The Seller is duly incorporated and validly existing
as a [national banking association] [federal savings bank] in good standing
under the laws of the United States with full power and authority to carry on
its business as presently conducted by it. The Seller had the full power and
authority and legal right to originate or acquire the Mortgage Loans. The
Seller has the full power and authority and legal right to own the Mortgage
Loans and to transfer and convey the Mortgage Loans to the Depositor and has
the full power and authority and legal right
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to execute and deliver, engage in the transactions contemplated by, and perform
and observe the terms and conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller, all requisite corporate action has been
or will have been taken, and (assuming the due authorization, execution and
delivery hereof by the Depositor) constitutes or will constitute the valid,
legal and binding agreements of the Seller, enforceable in accordance with its
terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity or the rights of creditors of banking institutions the
accounts of which are insured by the Federal Deposit Insurance Corporation or
any other instrumentality of the federal government (regardless of whether such
enforcement is considered in a proceeding in equity or at law) or (iii) public
policy considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification from liabilities under
applicable securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Seller with this Agreement or the
consummation by the Seller of any other transaction contemplated hereby or (b)
such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) Neither the transfer of the Mortgage Loans to the
Depositor, nor the execution, delivery or performance of this Agreement by the
Seller, conflicts or will conflict with, or results or will result in a breach
of, or constitutes or will constitute a default under (a) any term or provision
of the documents governing the Seller's organization, or (b) any term or
provision of any material agreement, contract, instrument or indenture, to
which the Seller is a party or is bound, or (c) any law, rule, regulation,
order, judgment, writ, injunction or decree of any court or governmental
authority having jurisdiction over the Seller, or results or will result in the
creation or imposition of any lien, charge or encumbrance which, in any of the
foregoing cases, would have a material adverse effect upon the Mortgage Loans
or any documents or instruments evidencing or securing the Mortgage Loans.
(v) There are no actions or proceedings against, or
investigations of, the Seller pending or, to the Seller's knowledge, threatened
against the Seller before any court, administrative agency or other tribunal,
which would reasonably be expected to adversely affect the transfer of the
Mortgage Loans, the issuance of the Certificates, the execution, delivery or
enforceability of this Agreement or have a material adverse effect on the
financial condition of the Seller.
(vi) The information set forth on the Mortgage Loan
Schedule with respect to each Mortgage Loan was true and correct as of the
Cut-off Date.
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(vii) The Seller represents and warrants that each of the
representations and warranties contained in Exhibit 2 hereto is true and
correct and will be true and correct as of the Closing Date.
(viii) The Seller covenants to (a) provide in a timely
manner all of the information regarding itself and the Mortgage Loans as the
Depositor may reasonably request in connection with the preparation of the
Prospectus Supplement, (b) fully cooperate with, and supply all information
requested by the Rating Agencies to the extent practicable, and (c) dedicate
adequate personnel and resources as may be required to comply with all of the
terms and conditions of this Agreement.
(ix) As of the date of the Prospectus Supplement and as of
the Closing Date, the information contained in the Prospectus Supplement with
respect to the Seller's Information (as defined in Section 9(a)) will be true
and accurate and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they are
made, not misleading.
(x) Other than in connection with solicitations or
promotions directed at the general public, the Seller agrees that it will not
solicit the mortgagor with respect to any Mortgage Loan for the purpose of
refinancing such Mortgage Loan.
SECTION 5. Cure, Repurchase and Indemnity Obligations of the Seller.
Each of the representations, warranties and covenants contained in or required
to be made pursuant to Section 4 of this Agreement shall survive the sale of
the Mortgage Loans and shall continue in full force and effect, notwithstanding
any restrictive or qualified endorsement on the mortgage notes and
notwithstanding subsequent termination of this Agreement or the Pooling
Agreement. The representations, warranties and covenants contained in or
required to be made pursuant to Section 4 of this Agreement shall not be
impaired by any review or examination of the Mortgage Files or other documents
evidencing or relating to the Mortgage Loans or any failure on the part of the
Depositor to review or examine such documents and shall inure to the benefit of
any transferee of the Mortgage Loans from the Depositor including, without
limitation, the Trustee for the benefit of the Certificateholders.
If the Depositor or its assignee finds any document or documents
constituting a part of a Mortgage File not to have been executed or otherwise
defective as set forth in Section 2.02 of the Pooling Agreement or received, or
to be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule,
the Depositor or its assignee shall promptly so notify the Seller. The Seller
hereby covenants and agrees that, if any such defect cannot be corrected or
cured, the Seller shall either (i) repurchase the related Mortgage Loan from
the Depositor or its assignee at the Purchase Price, or (ii) substitute for any
Mortgage Loan to which such defect relates a Qualified Substitute Mortgage
Loan, in either case in accordance with Section 2.04 of the Pooling Agreement.
It is understood and agreed that the representations and warranties
set forth in Exhibit 2 hereto shall survive delivery of the respective Mortgage
Files to the Depositor or its assignee
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and shall continue throughout the term of this Agreement. The Seller hereby
covenants and agrees that if there is a breach of any such representation or
warranty which materially and adversely affects the interests of the Depositor
or its assigns in the related Mortgage Loans, the Seller shall either (i)
repurchase the related Mortgage Loan from the Depositor or its assignee at the
Purchase Price, or (ii) substitute for any Mortgage Loan to which such defect
relates a Qualified Substitute Mortgage Loan, in either case in accordance with
Section 2.04 of the Pooling Agreement. If the aggregate of the principal
balances of the Qualified Substitute Mortgage Loans substituted for a Mortgage
Loan is less than the Stated Principal Balance of such Mortgage Loan, the
Seller shall pay the difference in cash to the Depositor or its assignee, and
such payment by the Seller shall be treated in the same manner as proceeds of
the repurchase by the Seller of a Mortgage Loan. Furthermore, such Qualified
Substitute Mortgage Loan shall otherwise have such characteristics so that the
representations and warranties of the Depositor set forth in Exhibit 2 hereto
would not have been incorrect had such Qualified Substitute Mortgage Loan
originally been a Mortgage Loan. A Qualified Substitute Mortgage Loan may be
substituted for a defective Mortgage Loan whether or not such defective
Mortgage Loan is itself a Qualified Substitute Mortgage Loan.
The Purchase Price for each repurchased Mortgage Loan shall be payable
to the Depositor or its assignee by wire transfer of immediately available
funds to the account specified by the Depositor or its assignee, as applicable,
and, upon receipt by the Depositor or its assignee of written notification of
such deposit signed by an authorized officer, the Depositor or its assignee
shall release to the Seller the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Seller or its designee or
assignee title to any Mortgage Loan released pursuant hereto. The obligation of
the Seller to repurchase or substitute any Mortgage Loan as to which such a
defect in a constituent document exists or a breach of the Seller's
representations with respect to the Mortgage Loans which materially and
adversely affects the interests of the Depositor or the Certificateholders in
any Mortgage Loan shall constitute the sole remedy respecting such defects
available to the Depositor or its assignee on behalf of the Certificateholders;
provided that this limitation shall not in any way limit the Depositor's rights
or remedies upon breach of any representation or warranty herein.
With respect to any Mortgage Loan as to which the Seller delivers to
the Depositor or the Trustee an affidavit certifying that the original Mortgage
Note has been lost or destroyed, if such Mortgage Loan is subsequently in
default and the enforcement thereof or of the related Mortgage is materially
adversely affected by the absence of the original Mortgage Note, the Seller
will be obligated to repurchase or substitute for such Mortgage Loan in the
manner set forth above.
SECTION 6. Representations and Warranties of the Depositor. In order
to induce the Seller to enter into this Agreement, the Depositor hereby
represents and warrants to the Seller that as of the date hereof:
(i) The Depositor is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to carry on its business as presently conducted
by it. The Depositor has the full power and authority and
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legal right to execute and deliver, engage in the transactions contemplated by,
and perform and observe the terms and conditions of, this Agreement.
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, all requisite corporate action has
been or will have been taken, and (assuming the due authorization, execution
and delivery hereof by the Seller) constitutes or will constitute the valid,
legal and binding agreement of the Depositor, enforceable in accordance with
its terms, except as such enforcement may be limited by (i) laws relating to
bankruptcy, insolvency, reorganization, receivership or moratorium, (ii) other
laws relating to or affecting the rights of creditors generally and by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law) or (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this Agreement
which purport to provide indemnification from liabilities under applicable
securities laws.
(iii) Either (a) no consent, approval, authorization or
order of, registration or filing with, or notice to, any governmental authority
or court is required, under federal or state laws, for the execution, delivery
and performance of or compliance by the Depositor with this Agreement, or the
consummation by the Depositor of any other transaction contemplated hereby or
(b) such consent, approval, authorization or order has been obtained, or such
registration, filing or notice has been made.
(iv) The execution, delivery or performance of this
Agreement by the Depositor does not conflict or will not conflict with, or
result or will result in a breach of, or constitute or will constitute a
default under (a) any term or provision of the documents governing the
Depositor's organization, or (b) any term or provision of any material
agreement, contract, instrument or indenture, to which the Depositor is a party
or is bound, or (c) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Depositor.
(v) There are no actions or proceedings against, or
investigations of, the Depositor pending or, to the Depositor's knowledge,
threatened against the Depositor before any court, administrative agency or
other tribunal, which would reasonably be expected to adversely affect the
transfer of the Mortgage Loans, the execution, delivery or enforceability of
this Agreement or have a material adverse effect on the financial condition of
the Depositor.
SECTION 7. Closing. The closing of the sale of the Mortgage Loans
shall be held at the office of Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP at 7:00 a.m.,
San Francisco time, on the Closing Date.
The closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the
Seller and the Depositor shall be true and correct in all material
respects as of the Closing Date;
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(b) All Closing Documents specified in Section 8 of this
Agreement, in such forms as are agreed upon and acceptable to the
Depositor and the Seller, shall be duly executed and delivered by all
signatories as required pursuant to the respective terms thereof;
(c) The Seller shall have delivered and released to the
Depositor or its designee, all documents required to be delivered to
the Depositor pursuant to Section 2 of this Agreement;
(d) The result of the examination and audit performed by
the Depositor pursuant to Section 3 hereof shall be satisfactory to
the Depositor in its sole determination and the parties shall have
agreed to the form and content of the Seller's information (as defined
in Section 9 hereof) to be disclosed in the Prospectus Supplement;
(e) All other terms and conditions of this Agreement
required to be complied with on or before the Closing Date shall have
been complied with and the Seller and the Depositor shall have the
ability to comply with all terms and conditions and perform all duties
and obligations required to be complied with or performed after the
Closing Date; and
(f) All of the terms and conditions of the Underwriting
Agreement and the Purchase Agreement required to be complied with on
or before the Closing Date shall have been complied with.
SECTION 8. Closing Documents. The Closing Documents shall consist of
the following:
(a) The Underwriting Agreement duly executed by the
Depositor and the Underwriter, and all exhibits thereto duly executed
by all applicable signatories;
(b) The Purchase Agreement duly executed by the Depositor
and the Underwriter, and all exhibits thereto duly executed by all
applicable signatories;
(c) This Agreement duly executed by the Depositor and the
Seller;
(d) A cross-receipt dated the Closing Date duly executed
by the Seller and the Depositor; and
(e) A duly executed Xxxx of Sale in the form attached
hereto as Exhibit 3.
SECTION 9. Costs. The Seller shall pay directly all of its own
expenses, including out-of-pocket expenses, the expenses of the preparation and
recording of assignments of Mortgage pursuant to Section 2 hereof and the
delivery of documents required pursuant to Section 2 hereof to the Trustee and
its attorney fees.
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SECTION 10. Servicing. The Mortgage Loans are to be delivered free
and clear of any servicing agreements with third party servicers.
SECTION 11. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or mailed by registered mail, postage prepaid, return
receipt requested, to the following addresses: if to the Depositor, addressed
to the Depositor at 345 Xxxxxxxxxx Street, Lower Level #2, Unit #8152, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxx Xxxxx or to such other address as
the Depositor may designate in writing to the Seller; or if to the Seller,
addressed to the Seller at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx
00000, Attention: ________________, or to such other addresses as the Seller
may designate in writing to the Depositor.
SECTION 12. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
that is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation or warranty of this
Agreement that is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction as to any Mortgage Loan shall not
invalidate or render unenforceable such provision in any other jurisdiction.
To the extent permitted by applicable law, the parties hereto waive any
provision of law which prohibits or renders void or unenforceable any provision
hereof.
SECTION 13. Further Assurances. The Seller and the Depositor each
agree to execute and deliver such instruments and take such actions as the
other may, from time to time, reasonably request in order to effectuate the
purpose and to carry out the terms of this Agreement.
SECTION 14. Survival. The Seller and the Depositor agree that the
representations, warranties and agreements made herein and in any certificate
or other instrument delivered pursuant hereto shall be deemed to be relied upon
by the other party, notwithstanding any investigation heretofore or hereafter
made by such party or on such party's behalf, and that the representations,
warranties and agreements made by the Seller and the Depositor herein or in any
such certificate or other instrument shall survive the delivery of and payment
for the Mortgage Loans.
SECTION 15. Miscellaneous. (a) This Agreement is to be governed by,
and construed in accordance with, the laws of the State of California. The
rights and obligations of the Seller under this Agreement shall not be assigned
by the Seller without the prior written consent of the Depositor. The
Depositor has the right to assign its interest under this Agreement, in whole
or in part, to the Trustee as may be required to effect the purposes of the
Pooling Agreement, by written notice to the Seller, without the consent of
Seller, and the Trustee shall thereupon succeed to the rights and obligations
hereunder of the Depositor. Notwithstanding any such assignment of the
Depositor's interest under this Agreement, the Depositor shall be entitled to
indemnification from the Seller in the circumstances and to the extent
described in Section 9. Notice is hereby given to the Seller by the Depositor
that the representations and warranties
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made by the Seller and contained in Exhibit 2 of this Agreement are or will be
assigned by the Depositor to the Trustee for the benefit of the
Certificateholders, together with such additional representations and
warranties as the Depositor shall specify. The Seller, without any further
action on its part, hereby consents to such assignment. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns. This Agreement
supersedes all prior agreements and understandings relating to the subject
matter hereof. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver, discharge
or termination is sought. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans by the Seller to the Depositor as provided in this Agreement
be, and be construed as, a sale of the Mortgage Loans by Seller to the
Depositor. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans by Seller to the Depositor
to secure a debt or other obligation of Seller. However, in the event,
notwithstanding the intent of the parties, the Mortgage Loans are held to be
property of Seller, or if for any reason this Agreement is held or deemed to
create a security interest in the Mortgage Loans, then, (a) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles
8 and 9 of the Uniform Commercial Code in effect in the applicable state; (b)
the conveyance provided for in this Agreement shall be deemed to be a grant by
Seller to the Depositor of a security interest in and to all of the Seller's
right, title, and interest, whether now owned or hereafter acquired, in and to:
(I) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit and uncertificated securities
consisting of, arising from or relating to the Mortgage Loans,
including all Qualified Substitute Mortgage Loans and
including (i) the Mortgage, the Mortgage Note, any insurance
policies and all other documents in the related Mortgage File,
(ii) all title, hazard and primary mortgage insurance policies
identified on the Mortgage Loan Schedule as defined herein,
and (iii) all distributions with respect thereto payable on
and after the Cut-off Date;
(II) All accounts, contract rights, general
intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of
credit, advices of credit, uncertificated securities, and
other rights arising from or by virtue of the disposition of,
or collections with respect to, or insurance proceeds payable
with respect to, or claims against other persons with respect
to, all or any part of the collateral described in (I) above
(including any accrued discount realized on liquidation of any
investment purchased at a discount); and
(III) All cash and non-cash proceeds of the
collateral described in (I) and (II) above;
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The possession by the Depositor or its assignee of the Mortgage Notes, the
Mortgages and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall
be deemed to be "possession by the secured party," or possession by a purchaser
or a person designated by him or her, for purposes of perfecting the security
interest pursuant to the Uniform Commercial Code (including, without
limitation, Sections 9-305, 8-313 or 8-321 thereof) as in force in the relevant
jurisdiction. Notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Depositor or its assignee for the purpose of perfecting such security
interest under applicable law. In connection herewith, the Depositor (or its
assignee) shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
Any assignment of the interest of the Depositor pursuant to Section 1
hereof shall also be deemed to be an assignment of any security interest
created hereby. The Seller and the Depositor shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in or lien on the
Mortgage Loans, such security interest or lien would be deemed to be a
perfected security interest or lien of first priority under applicable law and
will be maintained as such throughout the term of the Agreement.
SECTION 16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute an original but all of
which, when taken together, shall constitute but one legal instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
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IN WITNESS WHEREOF, the Seller and the Depositor have caused their names
to be signed by their respective officers thereunto duly authorized as of the
date first above written.
[BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION] [BANK OF AMERICA,
FEDERAL SAVINGS BANK],
the Seller
By:
------------------------------------------
Name:
Title:
BA MORTGAGE SECURITIES, INC.,
the Depositor
By:
------------------------------------------
Name:
Title:
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EXHIBIT 1
MORTGAGE LOAN SCHEDULE
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EXHIBIT 2
SELLER REPRESENTATIONS AND WARRANTIES
Seller's Representations to be Assigned by Depositor to Trustee
The Seller hereby represents and warrants to the Depositor, as to each
Mortgage Loan, that as of the Closing Date or as of such other date
specifically provided herein:
(i) The information set forth on the Mortgage Loan Schedule
with respect to each Mortgage Loan is true and correct as of the Closing Date;
(ii) As of the Closing Date, each Mortgage is a valid first
lien on an unencumbered estate in fee simple or leasehold estate in the related
Mortgaged Property subject only to (a) liens for current real property taxes
and special assessments; (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of recording
of such Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal obtained in connection with the origination of the Mortgage Loan; (c)
exceptions set forth in the title insurance policy relating to such Mortgage,
such exceptions being acceptable to mortgage lending institutions generally;
and (d) other matters to which like properties are commonly subject which do
not materially interfere with the benefits of the security intended to be
provided by the Mortgage;
(iii) As of the Closing Date, the Seller had good title to, and
was the sole owner of, each Mortgage Loan free and clear of any encumbrance or
lien, and immediately upon the transfer and assignment herein contemplated, the
Depositor shall have good title to, and will be the sole legal owner of, each
Mortgage Loan, free and clear of any encumbrance or lien (other than any lien
under this Agreement);
(iv) As of the day prior to the Cut-off Date, all payments due
on each Mortgage Loan had been made and no Mortgage Loan had been delinquent
(i.e., was more than 30 days past due) more than once in the preceding 12
months and any such delinquency lasted for no more than 30 days;
(v) As of the Closing Date, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vi) As of the Closing Date, there is no offset, defense or
counterclaim to any Mortgage Note, including the obligation of the Mortgagor to
pay the unpaid principal or interest on such Mortgage Note except as may be
provided under the Soldiers and Sailors Civil Relief Act of 1940, as amended,
and except to the extent that the Buydown Agreement for a Buydown Loan forgives
certain indebtedness of a Mortgagor;
(vii) As of the Closing Date, the Mortgaged Property securing
each Mortgage is undamaged by water, fire, earthquake, earth movement other
than earthquake, windstorm, flood, tornado or similar casualty (excluding
casualty from the presence of hazardous wastes or
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hazardous substances, as to which the Seller makes no representations), so as
to affect adversely the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended;
(viii) Each Mortgage Loan at the time it was made complied with
all applicable state and federal laws, including, without limitation, usury,
equal credit opportunity, disclosure and recording laws;
(ix) Each Mortgage Loan was originated by a savings
association, savings bank, credit union, insurance company, or similar
institution which is supervised and examined by a federal or state authority or
by a mortgagee approved by the FHA;
(x) As of the Closing Date, except for Mortgage Loans for
which the related Mortgaged Properties are located in areas where such policies
are generally not available, each Mortgage Loan is covered by an ALTA form or
CLTA form of mortgagee title insurance policy or other form of policy of
insurance which, as of the Closing Date, is acceptable to FNMA or FHLMC, and
has been issued by, and is the valid and binding obligation of, a title insurer
acceptable to FNMA and FHLMC and qualified to do business in the state in which
the related Mortgaged Property is located. Such policy insures the originator
of the Mortgage Loan, its successors and assigns as to the first priority lien
of the Mortgage in the original principal amount of the Mortgage Loan subject
to the exceptions set forth in such policy. With respect to each Mortgage Loan
for which the related Mortgage Property is located in an area where such
policies are generally not available, an attorney's certificate of title was
obtained at origination. Such policy (or certificate of title) is in full
force and effect and will be in full force and effect and inure to the benefit
of the Certificateholders upon the consummation of the transactions
contemplated by this Agreement and no claims have been made under such policy
(or certificate of title), and no prior holder of the related Mortgage,
including the Seller, has done, by act or omission, anything which would impair
the coverage of such policy (or certificate of title);
(xi) As of the Closing Date, except as specified on the
mortgage Loan Schedule, each Mortgage Loan which had a Loan-to-Value Ratio at
the time of the origination of the Mortgage Loan in excess of 80% was covered
by a Primary Mortgage Insurance Policy or an FHA insurance policy or a VA
guaranty, and such policy or guaranty is valid and remains in full force and
effect, except for any Mortgage Loan for which the outstanding Stated Principal
Balance thereof at any time subsequent to origination was 80% or less of the
value of the related Mortgaged Property (as determined by the original
appraisal or an appraisal obtained subsequent to origination);
(xii) As of the Closing Date, each insurer issuing a Primary
Mortgage Insurance Policy will hold a rating acceptable to the Rating Agency;
(xiii) Each Mortgage was documented by appropriate FNMA/FHLMC
mortgage instruments in effect at the time of origination, or other instruments
approved by the Seller;
G-15
196
(xiv) The Mortgaged Property securing each Mortgage is improved
with a one- to four-family dwelling unit, including units in a duplex,
condominium project, townhouse, a planned unit development or a de minimis
planned unit development;
(xv) Each Mortgage and Mortgage Note is genuine and 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
laws relating to bankruptcy, insolvency, reorganization, receivership or
moratorium, or laws relating to or affecting the enforcement of creditors'
rights generally;
(xvi) As of the date of origination, as to Mortgaged Properties
which are units in condominiums or planned unit developments, all of such units
met FNMA requirements, are located in a condominium or planned unit development
projects which have received FNMA approval, or are approvable by FNMA;
(xvii) No more than __ of the Mortgage Loans are Buydown Loans;
(xviii) As of the Cut-off Date, all but approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which are the primary residences of the
related Mortgagors, based solely on representations of the Mortgagors obtained
at the origination of the related Mortgage Loans and approximately ____% (by
Stated Principal Balance) of the Mortgage Loans will be secured by
owner-occupied Mortgaged Properties which were second or vacation homes of the
Mortgagors, based solely on such representations, and ____% (by Stated
Principal Balance) of the Mortgage Loans will be secured by Mortgaged
Properties which were investor properties of the related Mortgagors, based
solely on such representations;
(xix) Prior to origination or refinancing, an appraisal of each
Mortgaged Property was made by an appraiser on a form satisfactory to FNMA and
FHLMC;
(xx) The Mortgage Loans have been underwritten substantially in
accordance with the underwriting standards of the originator of the Mortgage
Loan as in effect on the date of origination;
(xxi) All of the Mortgage Loans have due-on-sale clauses; by the
terms of the Mortgage Notes, however, the due on sale provisions may not be
exercised at the time of a transfer if prohibited by federal law;
(xxii) The Seller used no adverse selection procedures in
selecting the Mortgage Loans from among the outstanding fixed-rate conventional
mortgage loans originated or purchased by it which were available for inclusion
in the Mortgage Pool and as to which the representations and warranties in this
Exhibit could be made; and
(xxiii) No material misrepresentation or fraud with respect to a
Mortgage Loan has taken place on the part of any person involved in the
origination of the Mortgage Loan or in the application of any insurance in
relation to such Mortgage Loan.
G-16
197
(xxiv) There are no mechanics' liens or claims for work, labor or
material affecting any Mortgaged Property which are or may be a lien prior to,
or equal with, the lien of such Mortgage, except those which are insured
against by the title insurance policy referred to in item (x) above;
(xxv) To the Seller's knowledge, no improvement located on or being
part of the Mortgaged Property is in violation of any applicable zoning law or
regulation. To the Seller's knowledge, all inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy and fire
underwriting certificates, have been made or obtained from the appropriate
authorities, unless the lack thereof would not have a material adverse effect
on the value of such Mortgaged Property, and the Mortgaged Property is lawfully
occupied under applicable law;
(xxvi) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and 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 Mortgage
Loans were paid;
(xxvii) The related Mortgage contains customary and enforceable,
subject to paragraph (xv) above, 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;
(xxviii) 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;
(xxix) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxx) None of the Mortgage Loans provides for a prepayment penalty;
(xxxi) 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 in a form meeting the requirements of
the current guidelines of the Flood Insurance Administration is in effect with
respect to such Mortgaged Property with a generally acceptable carrier in an
amount representing coverage not less than the least of (A) the original
outstanding principal balance of the Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis, or (C)
the maximum amount of insurance that is available under the Flood Disaster
Protection Act of 1973, as amended;
G-17
198
(xxxii) There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a proceeding
currently occurring;
(xxxiii) There is no material monetary default existing under any
Mortgage or the related Mortgage Note that is likely to result in a lien on the
Mortgaged Property with a higher priority than that of the Mortgage or an
impairment of the value of the Mortgaged property and, to the best of the
Seller's knowledge, there is no material 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 under the Mortgage or the
related Mortgage Note; and the Seller has not waived any default, breach,
violation or event of acceleration;
(xxxiv) None of the Mortgage Loans is a graduated payment mortgage
loan or a growing equity mortgage loan;
(xxxv) As of the Closing Date, neither the Seller nor any prior
holder of any Mortgage has modified the Mortgage in any material respect
(except that a Mortgage Loan may have been modified by a written instrument
which has been recorded or submitted for recordation, if necessary, to protect
the interests of the Certificateholders and which has been delivered to the
Trustee); satisfied, cancelled or subordinated such Mortgage in whole or in
part; released the related Mortgaged property in whole or in part from the lien
of such mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto;
(xxxvi) There exist no material deficiencies with respect to
escrow deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow deposits
or payments of other charges or payments due the Seller have been capitalized
under the mortgage or the related Mortgage Note.
(xxxvii) Other than any Buydown Fund with respect to a Buydown
Loan, there is no pledged account or other security other than real estate
securing the Mortgagor's obligations.
(xxxviii) Other than any such obligation relating to a Buydown Loan,
there is no obligation on the part of the Seller or any other party under the
terms of the Mortgage or related Mortgage Note to make payments in addition to
those made by the Mortgagor;
(xxxix) Except for (A) payments in the nature of escrow payments,
(B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is later, to the day which
precedes by one month the Due Date of the first installment of principal and
interest, including without limitation taxes and insurance payments, and (C)
any Buydown Fund with respect to a Buydown Loan, the Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage; and
(xxxx) The Mortgage Loans in the aggregate conform in all
material respects to the descriptions thereof in the Prospectus Supplement.
G-18
199
G-19
200
EXHIBIT 3
XXXX OF SALE
1. PARTIES. The parties to this Xxxx of Sale are the following:
Seller: [Bank of America National Trust and
Savings Association] [Bank of America,
Federal Savings Bank]
Depositor: BA Mortgage Securities, Inc.
2. SALE. For value received, the Seller hereby conveys to the Depositor,
without recourse, all right, title and interest in and to the Mortgage Loans
identified on Exhibit 1 (the "Mortgage Loan Schedule") to the Mortgage Loan
Purchase Agreement, dated as of August 14, 1997 (the "Mortgage Loan Purchase
Agreement"), between the Seller and the Depositor and all of the following
property:
(a) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit and uncertificated securities consisting of, arising
from or relating to the Mortgage Loans, including all Qualified
Substantive Mortgage Loans and including (i) the Mortgage, the
Mortgage Note, any insurance policies and all other documents
in the related Mortgage File, (ii) all title, hazard and
primary mortgage insurance policies identified in the Mortgage
Loan Schedule as defined herein and (iii) all distributions
with respect thereto payable on and after the Cut-off Date;
(b) All accounts, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts,
certificates of deposit, goods, letters of credit, advices of
credit, uncertificated securities, and other rights arising
from or by virtue of the disposition of, or collections with
respect to, or insurance proceeds payable with respect to, or
claims against other persons with respect to, all or any part
of the collateral described in clause (a) above (including any
accrued discount realized on liquidation of any investment
purchased at a discount); and
(c) All cash and non-cash proceeds of the collateral
described in clauses (a) and (b) above.
3. PURCHASE PRICE. $[________].
4. DEFINITIONS. Terms used but not defined herein shall have the meanings
assigned to them in the Mortgage Loan Purchase Agreement.
G-20
201
IN WITNESS WHEREOF, each of the parties hereto has caused this Xxxx of
Sale to be duly executed and delivered on this [ ] day of August, 1997.
SELLER: [BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[BANK OF AMERICA, FEDERAL
SAVINGS BANK]
By:
-----------------------------------
Name:
Title:
DEPOSITOR: BA MORTGAGE SECURITIES, INC.
G-21
202
EXHIBIT H
FORMS OF REQUEST FOR RELEASE
DATE:
TO:
RE: REQUEST FOR RELEASE OF DOCUMENTS
In connection with the administration of the pool of Mortgage Loans held by you
in custody for the referenced pool, the undersigned requests the release of the
mortgage documents described below for the reasons indicated. All documents to
be released to the undersigned shall be held in trust by the undersigned for
the benefit of the applicable securities holders solely for the purpose
indicated below. The issuer shall return the documents to the custodian when
the issuer's need thereof no longer exists, except where the mortgage is paid
in full or otherwise disposed of in accordance with the applicable pooling and
servicing agreement.
BA Mortgage Securities, Inc., Mortgage Pass-through Certificates, Series 1997-1
Pooling and Servicing Agreement Dated: August 1, 1997
Pool/Series#: 1997-1
Loan #
FHA/VA/FHMA#
Investor Loan#
Borrower Name(s):
Reason for Documents Request: (circle one)
1. Mortgage Paid in Full
2. Foreclosure
3. Substitution
4. Other Liquidation
5. Nonliquidation
"We hereby certify that all amounts received or to be received in connection
with such payments which are required to be deposited have been or will be so
deposited as provided in the Pooling and Servicing Agreement."
---------------------------------------
[name of Master Servicer]
Authorized Signature
TO TRUSTEE: Please acknowledge this request, and check off documents being
enclosed with a copy of this form. You should retain this form for your files
in accordance with the terms of the Pooling and Servicing Agreement.
Enclosed Documents: [ ] Promissory Note
[ ] Primary Mortgage Insurance Policy
[ ] Mortgage or Deed of Trust
203
[ ] Assignment(s) of Mortgage or Deed
of Trust
Title Insurance Policy
[ ] Other: ____________
-------------------------------------------------
Name
-------------------------------------------------
Title
-------------------------------------------------
Date
H-2
204
EXHIBIT I-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he/she is [Title of Officer] of [Name of Owner]
(record or beneficial owner of the Mortgage Pass-Through Certificates, Series
1997-1, Class [R-I][R-II] (the "Owner")), a [savings institution] [corporation]
duly organized and existing under the laws of [the State of __________________]
[the United States], on behalf of which he/she makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) will
endeavor to remain other than a disqualified organization for so long as it
retains its ownership interest in the Class [R-I][R-II] Certificates, and (iii)
is acquiring the Class [R-I][R- II] Certificates for its own account or for the
account of another Owner from which it has received an affidavit and agreement
in substantially the same form as this affidavit and agreement. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class [R-I][R-II] Certificates to disqualified
organizations under the Code, that applies to all transfers of Class
[R-I][R-II] Certificates after March 31, 1988; (ii) that such tax would be on
the transferor, or, if such transfer is through an agent (which person includes
a broker, nominee or middleman) for a disqualified organization, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is not a disqualified organization and, at the time of
transfer, such person does not have actual knowledge that the affidavit is
false; and (iv) that the Class [R-I][R-II] Certificates may be "noneconomic
residual interests" within the meaning of Treasury regulations promulgated
pursuant to the Code and that the transferor of a noneconomic residual interest
will remain liable for any taxes due with respect to the income on such
residual interest, unless no significant purpose of the transfer was to impede
the assessment or collection of tax.
205
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class [R-I][R-II] Certificates if at any time
during the taxable year of the pass-through entity a disqualified organization
is the record holder of an interest in such entity. (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.)
5. The Owner is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"), or an investment
manager, named fiduciary or a trustee of any such plan, or any other Person
acting, directly or indirectly, on behalf of or purchasing any Certificate with
"plan assets" of any such plan.
6. That the Owner is aware that the Trustee will not register
the transfer of any Class [R-I][R-II] Certificates unless the transferee, or
the transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it
knows or believes that any of the representations contained in such affidavit
and agreement are false.
7. That the Owner has reviewed the restrictions set forth on
the face of the Class [R-I][R-II] Certificates and the provisions of Section
5.02(f) of the Pooling and Servicing Agreement under which the Class
[R-I][R-II] Certificates were issued (in particular, clause (iii)(A) and
(iii)(B) of Section 5.02(f) which authorize the Trustee to deliver payments to
a person other than the Owner and negotiate a mandatory sale by the Trustee in
the event the Owner holds such Certificates in violation of Section 5.02(f)).
The Owner expressly agrees to be bound by and to comply with such restrictions
and provisions.
8. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to
constitute a reasonable arrangement to ensure that the Class [R-I][R-II]
Certificates will only be owned, directly or indirectly, by an Owner that is
not a disqualified organization.
9. The Owner's Taxpayer Identification Number is _________.
10. This affidavit and agreement relates only to the Class
[R-I][R-II] Certificates held by the Owner and not to any other holder of the
Class [R-I][R-II] Certificates. The Owner understands that the liabilities
described herein relate only to the Class [R-I][R-II] Certificates.
11. That no purpose of the Owner relating to the transfer of
any of the Class [R-I][R-II] Certificates by the Owner is or will be to impede
the assessment or collection of any tax.
12. That the Owner has no present knowledge or
expectation that it will be unable to pay any United States taxes owed by it so
long as any of the Certificates remain outstanding. In this regard, the Owner
hereby represents to and for the benefit of the person
I-1-2
206
from whom it acquired the Class [R-I][R-II] Certificate that the Owner intends
to pay taxes associated with holding such Class [R-I][R-II] Certificate as they
become due, fully understanding that it may incur tax liabilities in excess of
any cash flows generated by the Class [R- I][R-II] Certificate.
13. That the Owner has no present knowledge or
expectation that it will become insolvent or subject to a bankruptcy proceeding
for so long as any of the Class [R-I][R-II] Certificates remain outstanding.
14. The Owner is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
I-1-3
207
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By_________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
-----------------------------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the
foregoing instrument and to be the [Title of Officer] of the Owner, and
acknowledged to me that he/she executed the same as his/her free act and deed
and the free act and deed of the Owner.
Subscribed and sworn before me this ____ day of
________________, 199__.
----------------------------
NOTARY PUBLIC
COUNTY OF____________________
STATE OF_____________________
My Commission expires the ___
day of _______________, 19__.
I-1-4
208
EXHIBIT I-2
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
BA Mortgage Securities, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx #0, Xxxx #0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: BA Mortgage Securities, Inc., Series 1997-1
Re: Mortgage Pass-Through Certificates,
Series 1997-1, Class [R-I][R-II]
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________________ (the "Seller") to
_______________________________ (the "Purchaser") of $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1997-1 Class [R-I][R-II] (the "Certificates"), pursuant to Section 5.02 of the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as August 1, 1997 among BA Mortgage Securities, Inc., as depositor (the
"Depositor"), Bank of America National Trust and Savings Association and Bank
of America, Federal Savings Bank, as master servicers (together, the "Master
Servicers"), and Bankers Trust Company of California, N.A., as trustee (the
"Trustee"). All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
1. No purpose of the Seller relating to the transfer of
the Certificate by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has
delivered to the Trustee and the Master Servicers a transfer affidavit and
agreement in the form attached to the Pooling and Servicing Agreement as
Exhibit I-1. The Seller does not know or believe that any representation
contained therein is false.
209
3. The Seller has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Seller has determined that the Purchaser has
historically paid its debts as they become due and has found no significant
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Seller understands that the transfer of a
Residual Certificate may not be respected for United States income tax purposes
(and the Seller may continue to be liable for United States income taxes
associated therewith) unless the Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours,
________________________________________
(Seller)
By:_____________________________________
Name:___________________________________
Title:__________________________________
I-2-2
210
EXHIBIT J
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
BA Mortgage Securities, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx #0, Xxxx #0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: BA Mortgage Securities, Inc., Series 1997-1
RE: Mortgage Pass-Through Certificates,
Series 1997-1, Class B
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to
purchase from ___________________________ (the "Seller") $_____________ Initial
Certificate Principal Balance of Mortgage Pass-Through Certificates, Series
1997-1, Class __ (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of August
1, 1997 among BA Mortgage Securities, Inc., as depositor (the "Depositor"),
Bank of America National Trust and Savings Association and Bank of America,
Federal Savings Bank, as master servicers (together, the "Master Servicers"),
and Bankers Trust Company of California, N.A., as trustee (the "Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth
in the Pooling and Servicing Agreement. The Purchaser hereby certifies,
represents and warrants to, and covenants with, the Depositor and the Trustee
that:
1. The Purchaser understands that (a) the
Certificates have not been and will not be registered or
qualified under the Securities Act of 1933, as amended (the
"Act") or any state securities law, (b) the Depositor is not
required to so register or qualify the Certificates, (c) the
Certificates may be resold only if registered and qualified
pursuant to the provisions of the Act or any state securities
law, or if an exemption from such registration and
qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to
the foregoing effect.
2. The Purchaser is acquiring the
Certificates for its own account for investment only and not
with a view to or for sale in connection with any
211
distribution thereof in any manner that would violate the Act
or any applicable state securities laws.
3. The Purchaser is (a) a substantial,
sophisticated institutional investor having such knowledge and
experience in financial and business matters, and, in
particular, in such matters related to securities similar to
the Certificates, such that it is capable of evaluating the
merits and risks of investment in the Certificates, (b) able
to bear the economic risks of such an investment and (c) an
"accredited investor" within the meaning of Rule 501(a)
promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and
has had an opportunity to review (a) a copy of the Private
Placement Memorandum, dated August 14, 1997, relating to the
Certificates, (b) a copy of the Pooling and Servicing
Agreement and (c) such other information concerning the
Certificates, the Mortgage Loans and the Depositor as has been
requested by the Purchaser from the Depositor or the Seller
and is relevant to the Purchaser's decision to purchase the
Certificates. The Purchaser has had any questions arising
from such review answered by the Depositor or the Seller to
the satisfaction of the Purchaser. If the Purchaser did not
purchase the Certificates from the Seller in connection with
the initial distribution of the Certificates and was provided
with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original
Sale") of the Certificates by the Depositor, the Purchaser
acknowledges that such Memorandum was provided to it by the
Seller, that the Memorandum was prepared by the Depositor
solely for use in connection with the Original Sale and the
Depositor did not participate in or facilitate in any way the
purchase of the Certificates by the Purchaser from the Seller,
and the Purchaser agrees that it will look solely to the
Seller and not to the Depositor with respect to any damage,
liability, claim or expense arising out of, resulting from or
in connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.
5. The Purchaser has not and will not nor has
it authorized or will it authorize any person to (a) offer,
pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition of other
transfer of any Certificate, any interest in any Certificate
or any other similar security from any person in any manner,
(c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other
similar security with any person in any manner, (d) make any
general solicitation by means of general advertising or in any
other manner or (e) take any other action, that (as to any of
(a) through (e) above) would constitute a distribution of any
Certificate under the Act, that would render the disposition
of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or
qualification pursuant thereto. The Purchaser
J-2
212
will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
6. The Purchaser
(a) is not an employee benefit or other
plan subject to the prohibited transaction provisions of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code") (a Plan"), or any other person
(including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf
of or purchasing any Certificate with "plan assets" of any
Plan within the meaning of the Department of Labor ("DOL")
regulation at 29 C.F.R. Section 2510.3-101; or
(b) is an insurance company, the source
of funds to be used by it to purchase the Certificates is an
"insurance company general account" (within the meaning of DOL
Prohibited Transaction Class Exemption ("PTCE") 95-60), and
the purchase is being made in reliance upon the availability
of the exemptive relief afforded under Sections I and III of
PTCE 95-60.
7. The Purchaser is not a non-United States
person.
Very truly yours,
________________________________________________
By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
J-3
213
EXHIBIT K
FORM OF TRANSFEROR REPRESENTATION LETTER
_________, 19__
BA Mortgage Securities, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx #0, Xxxx #0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Bankers Trust Company of California, N.A.
0 Xxxx Xxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Bank of America National Trust and
Savings Association
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Bank of America, Federal Savings Bank
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: BA Mortgage Securities, Inc., Series 1997-1
Re: Mortgage Pass-Through Certificates,
Series 1997-1, Class B
Ladies and Gentlemen:
In connection with the sale by _____________(the "Seller") to
__________________ (the "Purchaser") of $___________ Initial Certificate
Principal Balance of Mortgage Pass-Through Certificates, Series 1997-1, Class _
(the "Certificates"), issued pursuant to the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of August 1, 1997 among BA
Mortgage Securities, Inc., as depositor (the "Depositor"), Bank of America
National Trust and Savings Association and Bank of America, Federal Savings
Bank, as master servicers (together, the "Master Servicers"), and Bankers Trust
Company of California, N.A., as trustee (the "Trustee"). The Seller hereby
certifies, represents and warrants to, and covenants with, the Depositor and
the Trustee that:
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Neither the Seller nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Certificate,
any interest in any Certificate or any other similar security to any person in
any manner, (b) has solicited any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
has otherwise approached or negotiated with respect to any Certificate, any
interest in any Certificate or any other similar security with any person in
any manner, (d) has made any general solicitation by means of general
advertising or in any other manner, or (e) has taken any other action, that (as
to any of (a) through (e) above) would constitute a distribution of the
Certificates under the Securities Act of 1933 (the "Act"), that would render
the disposition of any Certificate a violation of Section 5 of the Act or any
state securities law, or that would require registration or qualification
pursuant thereto. The Seller will not act, in any manner set forth in the
foregoing sentence with respect to any Certificate. The Seller has not and
will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
Very truly yours,
_______________________________________
(Seller)
By:_____________________________________
Name:___________________________________
Title:__________________________________
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EXHIBIT L
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
The undersigned seller, as registered holder (the "Seller"),
intends to transfer the Rule 144A Securities described above to the undersigned
buyer (the "Buyer").
1. In connection with such transfer and in accordance with
the agreements pursuant to which the Rule 144A Securities were issued, the
Seller hereby certifies the following facts: Neither the Seller nor anyone
acting on its behalf has offered, transferred, pledged, sold or otherwise
disposed of the Rule 144A Securities, any interest in the Rule 144A Securities
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any interest
in the Rule 144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any interest
in the Rule 144A Securities 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, that would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or that would render the disposition of the Rule 144A
Securities a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, and that the Seller has not offered the Rule 144A Securities
to any person other than the Buyer or another "qualified institutional buyer"
as defined in Rule 144A under the 0000 Xxx.
2. The Buyer warrants and represents to, and covenants with,
the Depositor, the Trustee and the Master Servicer pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of August 1, 1997 among BA
Mortgage Securities I, Inc., as Depositor, Bank of America National Trust and
Savings Association and Bank of America, Federal Savings Bank, as Master
Servicers and Bankers Trust Company of California, N.A., as Trustee, as
follows:
a. The Buyer understands that the Rule 144A
Securities have not been registered under the 1933 Act or the
securities laws of any state.
b. The Buyer 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 Rule 144A
Securities.
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c. The Buyer has been furnished with all information
regarding the Rule 144A Securities that it has requested from the
Seller, the Trustee or the Master Servicer.
d. Neither the Buyer nor anyone acting on its behalf
has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any
other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security
from, or otherwise approached or negotiated with respect to the Rule
144A Securities, any interest in the Rule 144A Securities 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, that would constitute a distribution of the
Rule 144A Securities under the 1933 Act or that would render the
disposition of the Rule 144A Securities 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 Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as
that term is defined in Rule 144A under the 1933 Act and has completed
either of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale to it is being
made in reliance on Rule 144A. The Buyer is acquiring the Rule 144A
Securities for its own account or the accounts of other qualified
institutional buyers, understands that such Rule 144A Securities may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the 1933 Act.
3. The Buyer warrants and represents to, and covenants with,
the Seller, the Trustee, Master Servicers and the Depositor that either (1) the
Buyer is (A) not an employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
or a plan (within the meaning of Section 4975(e)(1) of the Internal Revenue
Code of 1986 ("Code")), which (in either case) is subject to ERISA or Section
4975 of the Code (both a "Plan"), and (B) is not directly or indirectly
purchasing the Rule 144A Securities on behalf of, as investment manager of, as
named fiduciary of, as trustee of, or with "plan assets" of a Plan, or (2) the
Buyer understands that registration of transfer of any Rule 144A Securities to
any Plan, or to any Person acting on behalf of or purchasing any such
Certificate with "plan assets" of any Plan, may not be made unless such Plan or
Person, including the Buyer, delivers an opinion of its counsel, addressed and
satisfactory to the Trustee, the Depositor and the Master Servicer, to the
effect that the purchase and holding of the Rule 144A Securities by, on behalf
of or with "plan assets" of such Plan is permissible under applicable law, will
not constitute or result in any non-exempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code, and will not subject the Depositor,
the Master Servicer or the Trustee to any obligation or liability (including
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement.
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4. This document 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 document.
IN WITNESS WHEREOF, each of the parties has executed this document as of the
date set forth below.
______________________ ___________________________
Print Name of Seller Print Name of Buyer
By:___________________ By:_______________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.____________________ No.___________________________
Date:__________________ Date:_________________________
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ANNEX 1 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis $______________________ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance with Rule
144A) and (ii) the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings association or similar institution), limited liability
company, Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (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 Association. The Buyer (a) is a savings 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.
___ Broker-Dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer 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
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insurance commissioner or a similar official or agency of a State or
territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act
of 1974.
___ Investment Adviser. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
___ Business Development Company. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.
___ Trust Fund. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees, or (b) employee
benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a trust fund
that includes as participants individual retirement accounts or
H.R. 10 plans.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is
a majority-owned, consolidated subsidiary of another enterprise and the Buyer
is not itself a reporting company under the Securities Exchange Act of 1934.
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5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer
agrees that, in connection with any purchase of securities sold to the Buyer
for the account of a third party (including any separate account) in reliance
on Rule 144A, the Buyer will only purchase for the account of a third party
that at the time is a "qualified institutional buyer" within the meaning of
Rule 144A. In addition, the Buyer agrees that the Buyer will not purchase
securities for a third party unless the Buyer has obtained a current
representation letter from such third party or taken other appropriate steps
contemplated by Rule 144A to conclude that such third party independently meets
the definition of "qualified institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
________________________________________
Print Name of Buyer
By:______________________________
Name:
Title:
Date:___________________________________
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ANNEX 2 TO EXHIBIT L
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with
the Rule 144A Investment Representation to which this Certification is
attached:
1. As indicated below, the undersigned is the President,
Chief Financial Officer or Senior Vice President of the Buyer or, if the Buyer
is a "qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in SEC Rule 144A because (i) the
Buyer is an investment company registered under the Investment Company Act of
1940, and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such
securities was used.
____ The Buyer owned $___________________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other
than the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used
herein means two or more registered investment companies (or series thereof)
that have the same investment adviser or investment advisers that are
affiliated (by virtue of being majority owned subsidiaries of the same parent
or because one investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include
(i) securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
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5. The Buyer is familiar with Rule 144A and understands
that each of the parties to which this certification is made are relying and
will continue to rely on the statements made herein because one or more sales
to the Buyer will be in reliance on Rule 144A. In addition, the Buyer will
only purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to
which this certification is made of any changes in the information and
conclusions herein. Until such notice, the Buyer's purchase of Rule 144A
Securities will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
___________________________________
Print Name of Buyer
By:________________________________
Name:___________________________
Title:__________________________
IF AN ADVISER:
___________________________________
Print Name of Buyer
Date:_____________________________
n
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EXHIBIT M
FORM OF LENDER CERTIFICATION FOR ASSIGNMENT OF MORTGAGE LOAN
__________________, 19____
BA Mortgage Securities, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx #0, Xxxx #0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
______________________________
______________________________
______________________________
Attention: BA Mortgage Securities, Inc., Series 1997-1
Re: Mortgage Pass-Through Certificates, Series 1997-1 Assignment of
Mortgage Loan
Ladies and Gentlemen:
This letter is delivered to you in connection with the
assignment by _________________ (the "Trustee") to _______________________ (the
"Lender") of _______________ (the "Mortgage Loan") pursuant to Section 3.13(d)
of the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"),
dated as of August 1, 1997 among BA Mortgage Securities, Inc., as depositor,
Bank of America National Trust and Savings Association and Bank of America,
Federal Savings Bank, as master servicers (together, the "Master Servicers"),
and Bankers Trust Company of California, N.A., as trustee (the "Trustee"). All
terms used herein and not otherwise defined shall have the meanings set forth
in the Pooling and Servicing Agreement. The Lender hereby certifies,
represents and warrants to, and covenants with, the Master Servicers and the
Trustee that:
(i) the Mortgage Loan is secured by Mortgaged Property located in
a jurisdiction in which an assignment in lieu of satisfaction is required to
preserve lien priority, minimize or avoid mortgage recording taxes or otherwise
comply with, or facilitate a refinancing under, the laws of such jurisdiction;
(ii) the substance of the assignment is, and is intended to be, a
refinancing of such Mortgage Loan and the form of the transaction is solely to
comply with, or facilitate the transaction under, such local laws;
224
(iii) the Mortgage Loan following the proposed assignment will be
modified to have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
(iv) such assignment is at the request of the borrower under the
related Mortgage Loan.
Very truly yours,
________________________________
(Lender)
By:_____________________________
Name:___________________________
Title:__________________________
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EXHIBIT N
FORM OF SPECIAL SERVICING AGREEMENT
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of ___________, between Bank of America [National
Trust and Savings Association] [, Federal Savings Bank] (the "Bank") and
________________________ (the "Loss Mitigation Advisor").
PRELIMINARY STATEMENT
______________________ is the holder of the entire interest in BA
Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1997-1,
Class _____ (the "Class B Certificates"). The Class B Certificates were issued
pursuant to a Pooling and Servicing Agreement dated as of August 1, 1997 (the
"Pooling Agreement") among BA Mortgage Securities, Inc., as Depositor (the
"Depositor"), Bank of America [National Trust and Savings Association]
[,Federal Savings Bank], as master servicers (together, the "Master Servicers"),
and Bankers Trust Company of California, N.A., as Trustee.
______________________ intends to resell all of the Class B
Certificates directly to ________________________________ (the "Purchaser") on
or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Bank will engage in certain special servicing procedures relating to
foreclosures for the benefit of the Purchaser, and that the Loss Mitigation
Advisor will deposit funds in a collateral fund to cover any losses attributable
to such procedures as well as all advances and costs in connection therewith,
as set forth herein.
In consideration of the mutual agreements herein contained, the receipt
and sufficiency of which are hereby acknowledged, the Bank and the Loss
Mitigation Advisor agree that the following provisions shall become effective
and shall be binding on and enforceable by the Bank and the Loss Mitigation
Advisor:
ARTICLE I
DEFINITIONS
Section 1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
226
Collateral Fund: The fund established and maintained pursuant
to Section 3.01 hereof.
Commencement of Foreclosure: The first official action
required under local law in order to commence foreclosure proceedings or to
schedule a trustee's sale under a deed of trust, including (i) in the case of a
mortgage, any filing or service of process necessary to commence an action to
foreclose, or (ii) in the case of a deed of trust, posting, the publishing,
filing or delivery of a notice of sale, including in either case (x) any notice
of default, notice of intent to foreclose or sell or any other action
prerequisite to the actions specified in (i) or (ii) above, (y) the acceptance
of a deed-in-lieu of foreclosure (whether in connection with a sale of the
related property or otherwise) or (z) initiation and completion of a short
pay-off.
Current Appraisal: With respect to any Mortgage Loan as to
which the Loss Mitigation Advisor has made an Election to Delay Foreclosure, an
appraisal of the related Mortgaged Property obtained by the Loss Mitigation
Advisor at its own expense from an independent appraiser (which shall not be an
affiliate of the Loss Mitigation Advisor) acceptable to the Bank as nearly
contemporaneously as practicable to the time of the Loss Mitigation Advisor's
election, prepared based on the Bank's customary requirements for such
appraisals.
Election to Delay Foreclosure: Any election by the Loss
Mitigation Advisor to delay the Commencement of Foreclosure, made in accordance
with Section 2.02(b).
Election to Foreclose: Any election by the Loss Mitigation
Advisor to proceed with the Commencement of Foreclosure, made in accordance
with Section 2.03(a).
Monthly Advances: Advances and Servicing Advances including
costs and expenses of foreclosure.
Required Collateral Fund Balance: As of any date of
determination, an amount equal to the aggregate of all amounts previously
required to be deposited in the Collateral Fund pursuant to Section 2.02(d)
(after adjustment for all withdrawals and deposits pursuant to Section 2.02(e))
and Section 3.02 to be reduced by all withdrawals therefrom pursuant to Section
2.02(g) and Section 2.03(d).
Section 1.02 Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement
shall have the meanings assigned in the Pooling Agreement.
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ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01 Reports and Notices.
(a) In connection with the performance of its duties
under the Pooling Agreement relating to the realization upon defaulted Mortgage
Loans serviced by it, the Bank as Master Servicer shall provide to the Loss
Mitigation Advisor the following notices and reports:
(i) Upon request by the Loss Mitigation Advisor,
the Trustee shall provide such information as is available to any
Eligible Certificateholder pursuant to Section 4.03(f) of the Pooling
Agreement, at the expense of the Loss Mitigation Advisor.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan serviced by it, the Bank shall
provide the Loss Mitigation Advisor with a notice (sent by telecopier)
of such proposed and imminent foreclosure, stating the loan number and
the aggregate amount owing under the Mortgage Loan. Such notice may
be provided to the Loss Mitigation Advisor in the form of a copy of a
referral letter from the Bank or a Subservicer to an attorney
requesting the institution of foreclosure.
(b) If requested by the Loss Mitigation Advisor, the Bank
shall make its servicing personnel available (during their normal business
hours) to respond to reasonable inquiries, by phone or in writing by facsimile,
electronic, or overnight mail transmission, by the Loss Mitigation Advisor in
connection with any Mortgage Loan identified in a report under subsection
(a)(i)(B), (a)(i)(C), (a)(i)(D), or (a)(ii) which has been given to the Loss
Mitigation Advisor; provided, that (1) the Bank shall only be required to
provide information that is readily accessible to its servicing personnel and
is non-confidential and (2) the Bank shall respond within five Business Days
orally or in writing by facsimile transmission.
(c) In addition to the foregoing, the Bank shall provide
to the Loss Mitigation Advisor such information as the Loss Mitigation Advisor
may reasonably request provided, however, that such information is consistent
with the Bank's normal reporting practices, concerning each Mortgage Loan that
is at least ninety days delinquent and each Mortgage Loan which has become real
estate owned, through the final liquidation thereof; provided, that the Bank
shall only be required to provide information that is readily accessible to its
servicing personnel and is non-confidential and provided, further, that the
Loss Mitigation Advisor will reimburse the Bank for any out of pocket expenses.
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Section 2.02 Loss Mitigation Advisor's Election to Delay
Foreclosure Proceedings.
(a) In the event that the Bank does not receive written
notice of the Loss Mitigation Advisor's election pursuant to subsection (b)
below by overnight courier (with tracking service) within 24 hours (exclusive
of any intervening non-Business Days) of transmission of the notice provided by
the Bank under Section 2.01(a)(ii) subject to extension as set forth in Section
2.02(b), the Loss Mitigation Advisor shall be deemed to direct Bank to proceed
with the Commencement of Foreclosure in respect of such Mortgage Loan in
accordance with its normal foreclosure policies without further notice to the
Loss Mitigation Advisor. Any foreclosure that has been initiated may be
discontinued without notice to the Loss Mitigation Advisor if (i) the Mortgage
Loan has been brought current or if a refinancing or prepayment occurs with
respect to the Mortgage Loan (including by means of a short payoff approved by
the Bank or related Subservicer) or (ii) the Bank or related Subservicer has
reached the terms of a forbearance agreement with the Borrower.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Loss Mitigation
Advisor, the Loss Mitigation Advisor may elect to instruct the Bank to delay
the Commencement of Foreclosure until such time as the Loss Mitigation Advisor
determines that the Bank may proceed with the Commencement of Foreclosure.
Such election must be evidenced by written notice received within 24 hours
(exclusive of any intervening non-Business Days) of transmission of the notice
provided by the Bank under Section 2.01(a)(ii). Such 24 hour period shall be
extended for no longer than an additional four Business Days after the receipt
of the information if the Loss Mitigation Advisor requests additional
information related to such foreclosure; provided, however, that the Loss
Mitigation Advisor will have at least one Business Day to respond to any
requested additional information. Any such additional information shall (i) be
provided only to the extent it is not confidential in nature and (ii) be
obtainable by the Bank from existing reports, certificates or statements or
otherwise be readily accessible to its servicing personnel. The Loss
Mitigation Advisor agrees that it has no right to deal with the Mortgagor
during such period. However, if such servicing activities include acceptance
of a deed-in-lieu of foreclosure or short payoff, the Loss Mitigation Advisor
will be notified and given two Business Days to approve or disapprove, in
writing, of such action. If the Bank does not receive a written approval or
disapproval of the proposed short payoff or deed-in-lieu of foreclosure from
the Loss Mitigation Advisor within two Business Days after sending the notice
of such action the terms of this Agreement will no longer apply to the
Servicing of such Mortgage Loan.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Loss
Mitigation Advisor shall obtain a Current Appraisal as soon as practicable, but
in no event more than seven business days thereafter, and shall provide the
Bank with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to
Delay Foreclosure, the Loss Mitigation Advisor shall remit by wire transfer to
the Bank, for deposit in the Collateral Fund, an amount, as calculated by the
Bank, equal to the sum of
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(i) 125% of the greater of the unpaid principal balance of the Mortgage Loan
and the value shown in the Current Appraisal referred to in subsection (c)
above, and (ii) three months' interest on the Mortgage Loan at the applicable
Mortgage Rate. If any Election to Delay Foreclosure extends for a period in
excess of three months (such excess period being referred to herein as the
"Excess Period"), within two Business Days the Loss Mitigation Advisor shall
remit by wire transfer in advance to the Bank for deposit in the Collateral
Fund the amount of each additional month's interest, as calculated by the Bank,
equal to interest on the Mortgage Loan at the applicable Mortgage Rate for the
Excess Period. The terms of this Agreement will no longer apply to the
servicing of any Mortgage Loan upon the failure of the Loss Mitigation Advisor
to deposit any of the above amounts relating to the Mortgage Loan within two
Business Days of the Election to Delay Foreclosure or within two Business Days
of the commencement of the Excess Period subject to Section 3.01.
(e) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Bank may
withdraw from the Collateral Fund from time to time amounts necessary to
reimburse itself or the related Subservicer for all related Advances, Servicing
Advances and Subservicer Servicing Advances thereafter made by the Bank or a
related Subservicer in accordance with the Pooling Agreement and any related
Subservicing Agreement. To the extent that the amount of any liquidation
expenses with respect to any Mortgage Loan is determined by the Bank based on
estimated costs, and the actual costs are subsequently determined to be higher,
the Bank may withdraw the additional amount from the Collateral Fund. In the
event that the Mortgage Loan is brought current by the Mortgagor and the
foreclosure action is discontinued, the amounts so withdrawn from the
Collateral Fund shall be redeposited therein and to the extent that
reimbursement therefor from amounts paid by the mortgagor is not prohibited
pursuant to the Pooling Agreement, applicable law or the related Mortgage Note.
Except as provided in the preceding sentence, amounts withdrawn from the
Collateral Fund to cover Advances, Servicing Advances and Subservicer Servicing
Advances shall not be redeposited therein or otherwise reimbursed to the Loss
Mitigation Advisor. If and when any such Mortgage Loan is brought current by
the Mortgagor, all amounts remaining in the Collateral Fund in respect of such
Mortgage Loan (after adjustment for all permitted withdrawals and deposits
pursuant to this subsection) shall be released to the Loss Mitigation Advisor.
(f) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Delay Foreclosure, the Bank
shall continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when the Loss Mitigation Advisor shall notify the Bank that it
believes that it is appropriate to do so, the Bank may proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not brought
current by the Mortgagor by the time the loan becomes 6 months delinquent, the
Loss Mitigation Advisor's election shall no longer be effective and at the Loss
Mitigation Advisor's option, either (i) the Loss Mitigation Advisor shall
purchase the Mortgage Loan from the Trust Fund at a purchase price equal to the
fair market value as shown on the Current Appraisal, to be paid by (x) applying
any balance in the Collateral Fund to such purchase price, and (y) to the
extent of any deficiency, by wire transfer if immediately
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available funds from the Loss Mitigation Advisor to the Bank for deposit in the
related Custodial Account; or (ii) the Bank may proceed with the Commencement
of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Delay Foreclosure and as to which the Bank proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Bank shall calculate
the amount, if any, by which the value shown on the Current Appraisal obtained
under subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of liquidation expenses and accrued interest related to
the extended foreclosure period), and the Bank shall withdraw the amount of
such excess from the Collateral Fund, shall remit the same to the Trust Fund
and in its capacity as Master Servicer shall apply such amount as additional
Liquidation Proceeds pursuant to the Pooling Agreement. After making such
withdrawal, all amounts remaining in the Collateral Fund in respect of such
Mortgage Loan (after adjustment for all permitted withdrawals and deposits
pursuant to this Agreement) shall be released to the Loss Mitigation Advisor.
Section 2.03 Loss Mitigation Advisor's Election to Commence
Foreclosure Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Loss Mitigation Advisor may elect to
instruct the Bank to proceed with the Commencement of Foreclosure as soon as
practicable. Such election must be evidenced by written notice received by the
Bank by 2:00 p.m., Los Angeles time, on the third Business Day following the
delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Loss Mitigation Advisor shall remit to the Bank, for deposit in
the Collateral Fund, an amount, as calculated by the Bank, equal to 125% of the
current unpaid principal balance of the Mortgage Loan and three months interest
on the Mortgage Loan at the applicable Mortgage Rate. If and when any such
Mortgage Loan is brought current by the Mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
permitted withdrawals and deposits pursuant to this Agreement) shall be
released to the Loss Mitigation Advisor and to the extent that reimbursement
therefor from amounts paid by the Mortgagor is not prohibited pursuant to the
Pooling Agreement, applicable law or the related Mortgage Note. The terms of
this Agreement will no longer apply to the servicing of any Mortgage Loan upon
the failure of the Loss Mitigation Advisor to deposit the above amounts
relating to the Mortgage Loan within two Business Days of the Election to
Foreclose subject to Section 3.01.
(c) With respect to any Mortgage Loan as to which the
Loss Mitigation Advisor has made an Election to Foreclose, the Bank shall
continue to service the Mortgage Loan in accordance with its customary
procedures (other than Commencement of Foreclose as provided herein). In
connection therewith, the Bank shall have the same rights to make withdrawals
for Advances, Servicing Advances and Subservicer Servicing Advances from the
Collateral Fund as are provided under Section 2.02(e), and the Bank shall make
reimbursements thereto to the limited extent provided under such subsection in
accordance
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with its customary procedures. The Bank shall not proceed with the
Commencement of Foreclosure if (i) the same is stayed as a result of the
mortgagor's bankruptcy or is otherwise barred by applicable law, or to the
extent that all legal conditions precedent thereto have not yet been complied
with, or (ii) the Bank believes there is a breach of representations or
warranties by a Seller, which may result in a repurchase or substitution of
such Mortgage Loan, or (iii) the Bank or related Subservicer reasonably
believes the Mortgaged Property may be contaminated with or affected by
hazardous wastes or hazardous substances (and, without limiting the Bank or
related Subservicer right not to proceed with the Commencement of Foreclosure,
the Bank supplies the Loss Mitigation Advisor with information supporting such
belief). Notwithstanding anything contained in the foregoing sentence, the
Bank shall not be required to make any investigation in addition to its
customary service procedures. Any foreclosure that has been initiated may be
discontinued without notice to the Loss Mitigation Advisor if the Mortgage Loan
has been brought current or if a refinancing or prepayment occurs with respect
to the Mortgage Loan, including by means of a short payoff approved by the Loss
Mitigation Advisor in accordance with the procedures for notice by the Bank and
response by the Loss Mitigation Advisor set forth in paragraph 2.02(b) above.
(d) Upon the occurrence of a liquidation with respect to
any Mortgage Loan as to which the Loss Mitigation Advisor made an Election to
Foreclose and as to which the Bank or related Subservicer proceeded with the
Commencement to Foreclosure in accordance with subsection (c) above, the Bank
shall calculate the amount, if any, by which the unpaid principal balance of
the Mortgage Loan at the time of liquidation (plus all unreimbursed interest,
Servicing Advances and Subservicer Servicing Advances in connection therewith
other than those paid from the Collateral Fund) exceeds the actual sales price
obtained for the related Mortgaged Property, and the Bank shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust Fund and in its capacity as Master Servicer shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c) in
respect of such Mortgage Loan shall be released to the Loss Mitigation Advisor.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans serviced by the
Bank under the Pooling Agreement, the Loss Mitigation Advisor's right to make
any Election to Delay Foreclosure or any Election to Foreclose and the Bank's
obligations under Section 2.01 shall terminate (i) at such time as the Stated
Principal Balance of the Class B Certificates has been reduced to zero,
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(ii) upon any transfer by the Loss Mitigation Advisor of any interest (other
than the minority interest therein, but only if the transferee provides written
acknowledgment to the Bank of the Loss Mitigation Advisor's right hereunder and
that such transferee will have no rights hereunder) in the Class B Certificates
(whether or not such transfer is registered under the Pooling Agreement),
including any such transfer in connection with a termination of the Trust Fund
or (iii) any breach of the terms of this Agreement by the Loss Mitigation
Advisor.
(b) Except as set forth in 2.04(a), this Agreement and
the respective rights, obligations and responsibilities of the Loss Mitigation
Advisor and the Bank hereunder shall terminate upon the final liquidation of
the last Mortgage Loan as to which the Loss Mitigation Advisor made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided herein. The Loss
Mitigation Advisor's right to make an election pursuant to Section 2.02 or
Section 2.03 hereof with respect to a particular Mortgage Loan shall terminate
if the Loss Mitigation Advisor fails to make any deposit required pursuant to
Section 2.02(d) or 2.03(b) or if the Loss Mitigation Advisor fails to make any
other deposit to the Collateral Fund pursuant to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon receipt from the Loss Mitigation Advisor of the initial
amount required to be deposited in the Collateral Fund pursuant to Article II,
the Bank shall establish and maintain with the Bank as a segregated account on
its books and records an Eligible Account (the "Collateral Fund"), entitled
"Bank of America [National Trust and Savings Association] [Federal Savings
Bank], as Master Servicer, for the benefit of registered holders of BA Mortgage
Securities, Inc. Mortgage Pass-Through Certificates, Series 1997-1." Amounts
held in the Collateral Fund shall continue to be the property of the Loss
Mitigation Advisor, subject to the first priority security interest granted
hereunder for the benefit of the Certificateholders, until withdrawn from the
Collateral Fund pursuant to Section 2.02 or 2.03 hereof. The Collateral Fund
shall be an "outside reserve fund" within the meaning of the REMIC Provisions,
beneficially owned by the Loss Mitigation Advisor for federal income tax
purposes. All income, gain, deduction or loss with respect to the Collateral
Fund shall be that of the Loss Mitigation Advisor. All distributions from the
Trust Fund to the Collateral Fund shall be treated as distributed to the Loss
Mitigation Advisor as the beneficial owner thereof.
Upon the termination of this Agreement and the liquidation of
all Mortgage Loans as to which the Loss Mitigation Advisor has made any
Election to Delay Foreclosure or any Election to Foreclose pursuant to Section
2.04 hereof, the Bank shall distribute to the
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Loss Mitigation Advisor all amounts remaining in the Collateral Fund (after
adjustment for all deposits and permitted withdrawals pursuant to this
Agreement) together with any investment earnings thereon. In the event the
Loss Mitigation Advisor has made any Election to Delay Foreclosure or any
Election to Foreclose, prior to any distribution to the Loss Mitigation Advisor
of all amounts remaining in the Collateral Fund, funds in the Collateral Fund
shall be applied consistent with the terms of this Agreement.
Section 3.02. Permitted Investments.
The Bank shall, at the written direction of the Loss
Mitigation Advisor, invest the funds in the Collateral Fund in Permitted
Investments. Such direction shall not be changed more frequently than
quarterly. In the absence of any direction, the Bank shall select such
investments in accordance with the definition of Permitted Investments in its
discretion.
All income and gain realized from any investment as well as
any interest earned on deposits in the Collateral Fund (net of any losses on
such investments) and any payments of principal made in respect of any
Permitted Investment shall be deposited in the Collateral Fund upon receipt.
All costs and realized losses associated with the purchase and sale of
Permitted Investments shall be borne by the Loss Mitigation Advisor and the
amount of net realized losses shall be deposited by the Loss Mitigation Advisor
in the Collateral Fund promptly upon realization. The Bank shall periodically
(but not more frequently than monthly) distribute to the Loss Mitigation
Advisor upon request an amount of cash, to the extent cash is available
therefor in the Collateral Fund, equal to the amount by which the balance of
the Collateral Fund, after giving effect to all other distributions to be made
from the Collateral Fund on such date, exceeds the Required Collateral Fund
Balance. Any amounts so distributed shall be released from the lien and
security interest of this Agreement.
Section 3.03. Grant of Security Interest.
The Loss Mitigation Advisor hereby grants to the Bank for the
benefit of the Certificateholders under the Pooling Agreement a security
interest in and lien on all of the Loss Mitigation Advisor's right, title and
interest, whether now owned or hereafter acquired, in and to: (1) the
Collateral Fund, (2) all amounts deposited in the Collateral Fund and Permitted
Investments in which such amounts are invested (and the distributions and
proceeds of such investments) and (3) all cash and non-cash proceeds of any of
the foregoing, including proceeds of the voluntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Loss Mitigation Advisor acknowledges the lien on the
security interest in the Collateral for the benefit of the Certificateholders.
The Loss Mitigation Advisor shall take all actions requested by the Bank as may
be reasonably necessary to perfect the security interest created under this
Agreement in the Collateral and cause it to be prior to all other security
interests and liens, including the execution and delivery to the Bank for
filing of appropriate financing statements in accordance with applicable law.
The Bank shall file
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appropriate continuation statements, or appoint an agent on its behalf to file
such statements, in accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at
any time are insufficient to cover any withdrawals therefrom that the Bank is
then entitled to make hereunder, the Loss Mitigation Advisor shall be obligated
to pay such amounts to the Bank immediately upon demand. Such obligation shall
constitute a general corporate obligation of the Loss Mitigation Advisor. The
failure to pay such amounts within two Business Days of such demand (except for
amounts to cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and
2.03(b)), shall cause an immediate termination of the Loss Mitigation Advisor's
right to make any Election to Delay Foreclosure or Election to Foreclose and
the Bank's obligations under this Agreement with respect to all Mortgage Loans
to which such insufficiencies relate, without the necessity of any further
notice or demand on the part of the Bank.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Bank
and the Loss Mitigation Advisor by written agreement signed by the Bank and the
Loss Mitigation Advisor.
Section 4.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. Governing Law.
This Agreement shall be construed in accordance with the laws
of the State of California and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in
writing or by telecopy and shall be deemed effective upon receipt to:
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(a) in the case of the Bank,
__________________________________
__________________________________
__________________________________
__________________________________
Attention: _______________________
Phone: _______________________
Fax: _______________________
(b) in the case of the Loss Mitigation Advisor,
__________________________________
__________________________________
__________________________________
__________________________________
Attention: _______________________
Phone: _______________________
Fax: _______________________
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever, including
regulatory, held invalid, then such covenants, agreements, provisions or terms
of this Agreement shall in no way affect the validity or enforceability of the
other provisions of this Agreement.
Section 4.06. Successors and Assigns.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the
Certificateholders; provided, however, that the rights under this Agreement
cannot be assigned by the Loss Mitigation Advisor without the consent of the
Bank.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Confidentiality.
The Loss Mitigation Advisor agrees that all information
supplied by or on behalf of the Bank pursuant to Sections 2.01 or 2.02,
including individual account
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information, is the property of the Bank and the Loss Mitigation Advisor agrees
to hold such information confidential and not to disclose such information.
Each party hereto agrees that neither it, nor any officer,
director, employee, affiliate or independent contractor acting at such party's
direction will disclose the terms of Section 4.09 of this Agreement to any
person or entity other than such party's legal counsel except pursuant to a
final, non-appealable order of court, the pendency of such order the other
party will have received notice of at least five business days prior to the
date thereof, or pursuant to the other party's prior express written consent.
Section 4.09. Indemnification.
The Loss Mitigation Advisor agrees to indemnify and hold
harmless the Bank, the Depositor, and each applicable Subservicer and each
person who controls the Bank, the Depositor, or any applicable Subservicer and
each of their respective officers, directors, affiliates and agents acting at
the Bank's, the Depositor's, or any applicable Subservicer's direction (the
"Indemnified Parties") against any and all losses, claims, damages or
liabilities to which they may be subject, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of, or are
based upon, actions taken by, or actions not taken by, the Bank, the Depositor,
or any applicable Subservicer, or on their behalf, in accordance with the
provisions of this Agreement and (i) which actions conflict with the Bank's,
the Depositor's, or any applicable Subservicer's obligations under the Pooling
Agreement or the related Subservicing Agreement, or (ii) give rise to
securities law liability under federal or state securities laws with respect to
the Certificates. The Loss Mitigation Advisor hereby agrees to reimburse the
Indemnified Parties for the reasonable legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action. The indemnification obligations of the Loss Mitigation
Advisor hereunder shall survive the termination or expiration of this
Agreement.
IN WITNESS WHEREOF, the Bank and the Loss Mitigation Advisor
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
BANK OF AMERICA [NATIONAL
TRUST AND SAVINGS ASSOCIATION]
[FEDERAL SAVINGS BANK]
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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EXHIBIT O
Schedule of Mortgage Loan Exceptions
239
EXHIBIT P
Information Available for Certificateholder Report
Deal Name
Remit Date
Loan Number
City
State
Zip Code
Property Type (SFR, CONDO, etc.)
Occupancy Status (Owner, Investor, etc.)
Loan Purpose (Purchase, Refi, etc.)
Loan Type
Balloon Flag
Loan Status (Current, Foreclosure, REO, Bankrupt)
Original Term of Loan
Amortization Term
First Payment of Loan
Maturity Date
Appraisal Value
Original LTV
Original Principal Balance
Initial Principal Balance
Previous Month's Balance
Current Balance
Prepay Date
Prepay Status (Loan has prepaid, liquidated or repurchased by the servicer)
Original Scheduled P&I
Initial Scheduled P&I
Scheduled P&I
Scheduled Interest Amount
Scheduled Principal Amount
Curtailment
Original Note Rate
Initial Note Rate
Current Note Rate
Next Note Rate
Current Servicing Rate
Next Servicing Rate
Current Pass-Through Rate
Next Pass-Through Rate
Paid to Date
Current Payment Date
Next Payment Date
Index Type
240
Gross Margin
Original Index
Current Index Rate
Next Index Rate
First Rate Adjust
Current Interest Adjust Date
Next Interest Adjust Date
Adjust Frequency Rate
Cap Rate
Maximum Interest Rate
Minimum Interest Rate
First Payment Adjust Date
Current Payment Adjust Date
Next Payment Adjust Date
Adjust Frequency Payment
Cap Payment
P-2
241
EXHIBIT Q
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL FINANCIAL GUARANTY
SECURITY INSURANCE POLICY
ASSURANCE(R)
Trust: As described in Endorsement No. 1 hereto Policy No.: 50614-N
Certificates: $24,683,000 BA Mortgage Securities, Inc., Mortgage
Date of Issuance: 8/13/97
Pass-Through Certificates, Series 1997-1, Class A-5
FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), for
consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY GUARANTEES to
the Trustee for the benefit of each Holder, subject only to the terms of this
Policy (which includes each endorsement hereto), the full and complete payment
of Guaranteed Distributions with respect to the Certificates of the Trust
referred to above.
For the further protection of each Holder, Financial Security
irrevocably and unconditionally guarantees payment of the amount of any
distribution of principal or interest with respect to the Certificates made
during the Term of this Policy to such Holder that is subsequently avoided in
whole or in part as a preference payment under applicable law.
Payment of any amount required to be paid under this Policy will be
made following receipt by Financial Security of notice as described in
Endorsement No. 1 hereto.
Financial Security shall be subrogated to the rights of each Holder to
receive distributions with respect to each Certificate held by such Holder to
the extent of any payment by Financial Security hereunder.
Except to the extent expressly modified by Endorsement No. 1 hereto,
the following terms shall have the meanings specified for all purposes of this
Policy: "Holder" means the registered owner of any Certificate as indicated on
the registration books maintained by or on behalf of the Trustee for such
purpose or, if the Certificate is in bearer form, the holder of the
Certificate. "Trustee", "Guaranteed Distributions" and "Term of this
Policy" shall have the meanings set forth in Endorsement No. 1 hereto.
This Policy sets forth in full the undertaking of Financial Security,
and shall not be modified, altered or affected by any other agreement or
instrument, including any modification or amendment thereto. Except to the
extent expressly modified by an endorsement hereto, the premiums paid in
respect of this Policy are nonrefundable for any reason whatsoever. This
policy may not be canceled or revoked during the Term of this Policy. An
acceleration payment shall not be due under this Policy unless such
acceleration is at the sole option of Financial Security. THIS POLICY IS NOT
COVERED BY THE
242
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
In witness whereof, FINANCIAL SECURITY ASSURANCE INC. has caused this
policy to be executed on its behalf by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By_________________________________________________
AUTHORIZED OFFICER
A subsidiary of Financial Security Assurance Holding Ltd.
000 Xxxx Xxxxxx, Xxx Xxxx, X.X. 00000-0000 (000) 000-0000
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243
ENDORSEMENT NO. 1 TO
FINANCIAL GUARANTY INSURANCE POLICY
FINANCIAL SECURITY ASSURANCE INC.
TRUST: Established pursuant to the Pooling and Servicing Agreement dated as
of August 1, 1997 among BA Mortgage Securities, Inc., as Depositor,
Bank of America, Federal Savings Bank and Bank of America National
Trust and Savings Association, as Master Servicers, and Bankers Trust
Company of California, N.A., as Trustee
POLICY NO.: 50614-N
CERTIFICATES: $24,683,000 BA Mortgage Securities, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-5
DATE OF ISSUANCE: August 14, 1997
1. Definitions. For all purposes of this Policy, the terms
specified below shall have the meanings or constructions provided below.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings provided in the Pooling and Servicing Agreement unless the context
shall otherwise require.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the City of New York, New York, or
the State of California or the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to be
closed.
"Guaranteed Distributions" has the meaning assigned to it in the
Pooling and Servicing Agreement, in accordance with the original terms of the
Class A-5 Certificates without regard to any amendment or modification of the
Securities or the Pooling and Servicing Agreement except amendments or
modifications to which Financial Security has given its prior written consent.
Guaranteed Distributions shall not include, nor shall coverage be provided
under this Policy in respect of, any taxes, withholding or other charge imposed
by any governmental authority due in connection with the payment of any
Guaranteed Distribution to a Holder.
"Policy" means this Financial Guaranty Insurance Policy and includes
each endorsement thereto.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement dated as of August 1, 1997 among BA Mortgage Securities, Inc., Bank
of America, Federal Savings Bank, Bank of America National Trust and Savings
Association and Bankers Trust
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Company of California, N.A., as amended from time to time with the consent of
Financial Security.
"Receipt" and "Received" mean actual delivery to Financial Security
and to the Fiscal Agency (as defined below), if any, at or prior to 5:00 p.m.,
New York City time, on a Business Day; delivery either on a day that is not a
Business Day, or after 5:00 p.m., New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate
given hereunder by the Trustee is not in proper form or is not properly
completed, executed or delivered, it shall be deemed not to have been Received,
and Financial Security or its Fiscal Agent shall promptly so advise the Trustee
and the Trustee may submit an amended notice.
"Term of this Policy" means the period from and including the Date of
Issuance to and including the date on which (i) the principal balance of all
the Guaranteed Certificates is zero, (ii) any period during which any payment
on the Guaranteed Certificates could have been avoided in whole or in part as a
preference payment under applicable bankruptcy, insolvency, receivership or
similar law has expired, and (iii) if any proceedings requisite to avoidance as
a preference payment have been commenced prior to the occurrence of (i) and
(ii), a final and non-appealable order in resolution of each such proceeding
has been entered.
"Trustee" means Bankers Trust Company of California, N.A. in its
capacity as Trustee under the Pooling and Servicing Agreement and any successor
in such capacity.
2. Notices and Conditions to Payment in Respect of Guaranteed
Distributions. Following Receipt by Financial Security of a notice and
certificate from the Trustee in the form attached as Exhibit A to this
Endorsement, Financial Security will pay any amount payable hereunder in
respect of Guaranteed Distributions out of the funds of Financial Security on
the later to occur of (a) 12:00 noon, New York City time, on the second
Business Day following such Receipt; and (b) 12:00 noon, New York City time, on
the Distribution Date to which such claim relates. Payments due hereunder in
respect of Guaranteed Distributions will be disbursed by wire transfer of
immediately available funds to the Policy Payments Account established pursuant
to the Pooling and Servicing Agreement or, if no such Policy Payments Account
has been established, to the Trustee.
Financial Security shall be entitled to pay any amount hereunder in
respect of Guaranteed Distributions whether or not any notice and certificate
shall have been Received by Financial Security as provided above. Financial
Security's obligations hereunder in respect of Guaranteed Distributions shall
be discharged to the extent funds are disbursed by Financial Security as
provided herein whether or not such funds are properly applied by the Trustee.
3. Notices and Conditions to Payment in Respect of Guaranteed
Distributions Avoided as Preference Payments. If any Guaranteed Distribution
is avoided as a preference payment under applicable bankruptcy, insolvency,
receivership or similar law, Financial Security will pay such amount out of the
funds of Financial Security on the later of (a) the date when due to be paid
pursuant to the Order referred to below or (b) the first to occur of
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(i) the fourth Business Day following Receipt by Financial Security from the
Trustee of (A) a certified copy of the order of the court or other governmental
body which exercised jurisdiction to the effect that the relevant Guaranteed
Certificateholder is required to return principal or interest distributed with
respect to the Guaranteed Certificate during the Term of this Policy because
such distributions were avoidable as preference payments under applicable
bankruptcy law (the "Order"), (B) a certificate of the relevant Guaranteed
Certificateholder that the Order has been entered and is not subject to any
stay and (C) an assignment duly executed and delivered by the relevant
Guaranteed Certificateholder, in such form as is reasonably required by
Financial Security and provided to the relevant Guaranteed Certificateholder by
Financial Security, irrevocably assigning to Financial Security all rights and
claims of the relevant Guaranteed Certificateholder relating to or arising
under the Guaranteed Certificate against the debtor which made such preference
payment or otherwise with respect to such preference payment or (ii) the date
of Receipt by Financial Security from the Trustee of the items referred to in
clauses (A), (B) and (C) above if, at least four Business Days prior to such
date of Receipt, Financial Security shall have Received written notice from the
Trustee that such items were to be delivered on such date and such date was
specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trustee or any Guaranteed Certificateholder directly (unless a
Guaranteed Certificateholder has previously paid such amount to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order,
in which case such payment shall be disbursed to the Trustee for distribution
to such Guaranteed Certificateholder upon proof of such payment reasonably
satisfactory to Financial Security). In connection with the foregoing,
Financial Security shall have the rights provided pursuant to Section 4.10(f)
of the Pooling and Servicing Agreement.
4. Governing Law. This Policy shall be governed by and construed
in accordance with the laws of the State of New York, without giving effect to
the conflict of laws principles thereof.
5. Fiscal Agent. At any time during the Term of this Policy,
Financial Security may appoint a fiscal agent (the "Fiscal Agent") for purposes
of this Policy by written notice to the Trustee at the notice address specified
in the Pooling and Servicing Agreement specifying the name and notice address
of the Fiscal Agent. From and after the date of receipt of such notice by the
Trustee, (i) copies of all notices and documents required to be delivered to
Financial Security pursuant to this Policy shall be simultaneously delivered to
the Fiscal Agent and to Financial Security and shall not be deemed Received
until Received by both and (ii) all payments required to be made by Financial
Security under this Policy may be made directly by Financial Security or by the
Fiscal Agent on behalf of Financial Security. The Fiscal Agent is the agent of
Financial Security only and the Fiscal Agent shall in no event be liable to any
Holder for any acts of the Fiscal Agent or any failure of Financial Security to
deposit, or cause to be deposited, sufficient funds to make payments due under
this Policy.
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246
6. Waiver of Defenses. To the fullest extent permitted by
applicable law, Financial Security agrees not to assert, and hereby waives, for
the benefit of each Holder, all rights (whether by counterclaim, setoff or
otherwise) and defenses (including, without limitation, the defense of fraud),
whether acquired by subrogation, assignment or otherwise, to the extent that
such rights and defenses may be available to Financial Security to avoid
payment of its obligations under this Policy in accordance with the express
provisions of this Policy.
7. Notices. All notices to be given hereunder shall be in
writing (except as otherwise specifically provided herein) and shall be mailed
by registered mail or personally delivered or telecopied to Financial Security
as follows:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Senior Vice President
- Surveillance Department
Re: BA Mortgage Securities , Inc., Series 1997-1
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
Financial Security may specify a different address or addresses by writing
mailed or delivered to the Trustee.
8. Priorities. In the event any term or provision of the
face of this Policy is inconsistent with the provisions of this Endorsement,
the provisions of this Endorsement shall take precedence and shall be binding.
9. Exclusions From Insurance Guaranty Funds. This Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article
76 of the New York Insurance Law. This Policy is not covered by the Florida
Insurance Guaranty Association created under Part II of Chapter 631 of the
Florida Insurance Code. In the event Financial Security were to become
insolvent, any claims arising under this Policy are excluded from coverage by
the California Insurance Guaranty Association, established pursuant to Article
14.2 of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.
10. Surrender of Policy. The Trustee shall surrender this
Policy to Financial Security for cancellation upon expiration of the Term of
this Policy.
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IN WITNESS WHEREOF, FINANCIAL SECURITY ASSURANCE INC. has caused this
Endorsement No. 1 to be executed by its Authorized Officer.
FINANCIAL SECURITY ASSURANCE INC.
By:________________________________________________
Authorized Officer
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248
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50614-N dated August 14, 1997 (the "Policy") issued by
Financial Security in respect of the BA Mortgage Securities, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-5 under the Policy that:
(i) The Trustee is the Trustee under the Pooling and
Servicing Agreement for the Holders.
(ii) The sum of all amounts on deposit (or scheduled to be
on deposit) in the Certificate Account (after giving effect to any
application of funds from the Class A-5 Reserve Fund) and available
for distribution to the Holders of the Class A-5 Certificates (the
"Certificates") pursuant to the Pooling and Servicing Agreement will
be $___________ (the "Shortfall") less than the Guaranteed
Distributions with respect to the Distribution Date.
(iii) The Trustee is making a claim under the Policy for
the Shortfall to be applied to distributions of principal or interest
or both with respect to the Certificates.
(iv) The Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Guaranteed Distributions on
the Certificates when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Trustee and (d) maintain an accurate record of such payments with
respect to each Certificate and the corresponding claim on the Policy
and proceeds thereof and, if the Certificate is required to be
surrendered for such payment, shall stamp on each such Certificate the
legend $[insert applicable amount] paid by Financial Security and the
balance hereof has been cancelled and reissued" and then shall deliver
such Certificate to Financial Security.
(v) The Trustee, on behalf of the Class A-5
Certificateholders, hereby assigns to Financial Security the rights of
the Class A-5 Certificateholders with respect to the Trust Fund to the
extent of any payments under the Policy, including, without
limitation, any amounts due to the Class A-5 Certificateholders in
respect of
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securities law violations arising from the offer and sale of the Trust
Fund. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trustee shall take such
action and deliver such instruments as may be reasonably requested or
required by Financial Security to effectuate the purpose or provisions
of this clause (v).
(vi) The Trustee, on its behalf and on behalf of the Class
A-5 Certificateholders, hereby appoints Financial Security as agent
and attorney-in-fact for the Trustee and each such Class A-5
Certificateholder in any legal proceeding with respect to the Trust
Fund. The Trustee hereby agrees that Financial Security may at any
time during the continuation of any proceeding by or against the
Issuer under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law
(an "Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment with
respect to the Trust Fund (a "Preference Claim"), (B) the direction of
any appeal of any order relating to any Preference Claim at the
expense of Financial Security but subject to reimbursement as provided
in the Letter Agreement and (C) the posting of any surety, supersedeas
or performance bond pending any such appeal. In addition, the Trustee
hereby agrees that Financial Security shall be subrogated to, and the
Trustee on its behalf and on behalf of each Class A-5
Certificateholder, hereby delegates and assigns, to the fullest extent
permitted by law, the rights of the Trustee and each Class A-5
Certificateholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in
connection with any such Insolvency Proceeding.
(vii) Payment should be made by wire transfer directed to the
Policy Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
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250
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _______ day of _____________________, _____.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By: __________________________________
Title: __________________________________
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number ___________________________________________
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251
Exhibit A
To Endorsement 1
NOTICE OF CLAIM AND CERTIFICATE
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
The undersigned, a duly authorized officer of Bankers Trust Company of
California, N.A. (the "Trustee"), hereby certifies to Financial Security
Assurance Inc. ("Financial Security"), with reference to Financial Guaranty
Insurance Policy No. 50614-N dated August 14, 1997 (the "Policy") issued by
Financial Security in respect of the BA Mortgage Securities, Inc., Mortgage
Pass-Through Certificates, Series 1997-1, Class A-5 under the Policy that:
(viii) The Trustee is the Trustee under the Pooling and
Servicing Agreement for the Holders.
(ix) The sum of all amounts on deposit (or scheduled to be
on deposit) in the Certificate Account (after giving effect to any
application of funds from the Class A-5 Reserve Fund) and available
for distribution to the Holders of the Class A-5 Certificates (the
"Certificates") pursuant to the Pooling and Servicing Agreement will
be $___________ (the "Shortfall") less than the Guaranteed
Distributions with respect to the Distribution Date.
(x) The Trustee is making a claim under the Policy for
the Shortfall to be applied to distributions of principal or interest
or both with respect to the Certificates.
(xi) The Trustee agrees that, following receipt of funds
from Financial Security, it shall (a) hold such amounts in trust and
apply the same directly to the payment of Guaranteed Distributions on
the Certificates when due; (b) not apply such funds for any other
purpose; (c) not commingle such funds with other funds held by the
Trustee and (d) maintain an accurate record of such payments with
respect to each Certificate and the corresponding claim on the Policy
and proceeds thereof and, if the Certificate is required to be
surrendered for such payment, shall stamp on each such Certificate the
legend $[insert applicable amount] paid by Financial Security and the
balance hereof has been cancelled and reissued" and then shall deliver
such Certificate to Financial Security.
(xii) The Trustee, on behalf of the Class A-5
Certificateholders, hereby assigns to Financial Security the rights of
the Class A-5 Certificateholders with respect to the Trust Fund to the
extent of any payments under the Policy, including, without
limitation, any amounts due to the Class A-5 Certificateholders in
respect of
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252
securities law violations arising from the offer and sale of the Trust
Fund. The foregoing assignment is in addition to, and not in
limitation of, rights of subrogation otherwise available to Financial
Security in respect of such payments. The Trustee shall take such
action and deliver such instruments as may be reasonably requested or
required by Financial Security to effectuate the purpose or provisions
of this clause (v).
(xiii) The Trustee, on its behalf and on behalf of the Class
A-5 Certificateholders, hereby appoints Financial Security as agent
and attorney-in-fact for the Trustee and each such Class A-5
Certificateholder in any legal proceeding with respect to the Trust
Fund. The Trustee hereby agrees that Financial Security may at any
time during the continuation of any proceeding by or against the
Issuer under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law
(an "Insolvency Proceeding") direct all matters relating to such
Insolvency Proceeding, including without limitation, (A) all matters
relating to any claim in connection with an Insolvency Proceeding
seeking the avoidance as a preferential transfer of any payment with
respect to the Trust Fund (a "Preference Claim"), (B) the direction of
any appeal of any order relating to any Preference Claim at the
expense of Financial Security but subject to reimbursement as provided
in the Letter Agreement and (C) the posting of any surety, supersedeas
or performance bond pending any such appeal. In addition, the Trustee
hereby agrees that Financial Security shall be subrogated to, and the
Trustee on its behalf and on behalf of each Class A-5
Certificateholder, hereby delegates and assigns, to the fullest extent
permitted by law, the rights of the Trustee and each Class A-5
Certificateholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
proceeding or action with respect to any court order issued in
connection with any such Insolvency Proceeding.
(xiv) Payment should be made by wire transfer directed to the
Policy Payments Account.
Unless the context otherwise requires, capitalized terms used in this
Notice of Claim and Certificate and not defined herein shall have the meanings
provided in the Policy.
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253
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
of Claim and Certificate as of the _______ day of _____________________, _____.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By: __________________________________
Title: __________________________________
--------------------------------------------------------------------------------
For Financial Security or Fiscal Agent Use Only
Wire transfer sent _____________ by _____________________________________
Confirmation Number ___________________________________________
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254
EXHIBIT R
Trustee's Certification
[ ], 1997
BA Mortgage Securities, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxx #0, Xxxx #0000
Xxx Xxxxxxxxx, XX 00000
Re: Pooling and Servicing Agreement dated August 1, 1997 by and between
Bank of America National Trust and Savings Association,
BA Mortgage Securities, Inc., Bank of America, Federal
Savings Bank, and Bank of America National
Trust and Savings Association
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby certifies that it
has received a mortgage file with respect to each Mortgage Loan listed in the
Mortgage Loan Schedules attached hereto containing with respect to each such
Mortgage Loan, with any exceptions listed on Schedule A attached hereto:
(i) The original Mortgage Note, endorsed in blank
and showing an unbroken chain of endorsements from the originator
thereof to the Person endorsing it in blank, or, in the event of any
Mortgage Note, the original of which was permanently lost or destroyed
and has not been replaced, a copy of a duplicate original of the
Mortgage Note, together with an original lost note affidavit from the
originator of the related Mortgage Loan stating that the original
Mortgage Note was lost, misplaced or destroyed, together with a copy
of the related Mortgage Note;
(ii) The original Mortgage with evidence of
recording indicated thereon or a copy of the Mortgage certified by the
public recording office in which such Mortgage has been recorded;
(iii) An original Assignment of the Mortgage in
blank ;
(iv) The original recorded assignment or
assignments of the Mortgage showing an unbroken chain of title from
the originator thereof to the Person assigning it in blank or a copy
of such intervening assignment or assignments of the
255
Mortgage certified by the public recording office in which such
assignment or intervening assignments have been recorded;
(v) The original of each modification or
assumption agreement, if any, relating to such Mortgage Loan or a copy
of each modification or assumption agreement certified by the public
recording office in which such document has been recorded; and
(vi) The original mortgage title insurance policy,
title commitment, binder or attorney's opinion of title and abstract
title.
With respect to any endorsement described in item (i), the endorsement
may be contained on an allonge.
The Trustee further certifies that it has reviewed each Mortgage File
and the Mortgage Loan Schedules attached hereto and has determined that (i) the
documents required to be delivered in the definition of Mortgage File are in
its possession; (ii) such documents have been reviewed by it and appear regular
on their face and relate to such Mortgage Loan; and (iii) based on its
examination and only as to the foregoing documents, the information set forth
in items (i)-(vi) of the definition of Mortgage Loan Schedule is correct.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
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