EXHIBIT 4.1
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WMC SECURED ASSETS CORP.
Company,
[NAME OF MASTER SERVICER]
Master Servicer,
and
[NAME OF TRUSTEE],
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of ____________ 1, 199_
Mortgage Pass-Through Certificates
Series 199_-____
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[TPW: NY01:500007.1] 18305-00002 11/24/97 01:09PM
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms
Accrued Certificate Interest................................3
Advance ...............................................3
Agreement ...............................................3
Anniversary ...............................................4
Assignment ...............................................4
Assignment Agreement........................................4
Available Distribution Amount...............................4
Bankruptcy Amount...........................................4
Bankruptcy Code.............................................4
Bankruptcy Loss.............................................4
Business Day ...............................................5
Cash Liquidation............................................5
Certificate ...............................................5
Certificate Account.........................................5
Certificate Account Deposit Date............................5
Certificateholder" or "Holder...............................5
Certificate Owner...........................................5
Certificate Principal Balance...............................6
Certificate Register........................................6
Class ...............................................6
Class A Certificate.........................................6
Class B Certificate.........................................6
Class B Percentage..........................................6
Class R Certificate.........................................6
Closing Date ...............................................6
Code ...............................................6
Collateral Value............................................6
Company ...............................................7
Corporate Trust Office......................................7
Credit Support Depletion Date...............................7
Custodial Account...........................................7
Cut-off Date ...............................................7
Debt Service Reduction......................................7
Default Loss ...............................................7
Deficient Valuation.........................................7
Definitive Certificate......................................7
Deleted Mortgage Loan.......................................7
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Determination Date..........................................8
Disqualified Organization...................................8
Distribution Date...........................................8
Due Date ...............................................8
Due Period ...............................................8
Duff & Xxxxxx...............................................8
Eligible Account............................................8
Event of Default............................................9
Excess Bankruptcy Loss......................................9
Excess Fraud Loss...........................................9
Excess Special Hazard Loss..................................9
Extraordinary Events........................................9
Extraordinary Losses.......................................10
FDIC ..............................................10
FHLMC ..............................................10
FNMA ..............................................10
Fraud Losses ..............................................10
Fraud Loss Amount..........................................10
Funding Date ..............................................11
Initial Certificate Principal Balance......................11
Insurance Policy...........................................11
Insurance Proceeds.........................................11
Late Collections...........................................11
Loan-to-Value Ratio........................................11
Master Servicer............................................11
Monthly Payment............................................11
Xxxxx'x ..............................................11
Mortgage ..............................................12
Mortgage File..............................................12
Mortgage Loan..............................................12
Mortgage Loan Schedule.....................................12
Mortgage Note..............................................13
Mortgage Rate..............................................13
Mortgaged Property.........................................13
Mortgagor ..............................................13
Net Mortgage Rate..........................................13
Nonrecoverable Advance.....................................13
Non-United States Person...................................13
Notional Amount............................................13
Officers' Certificate......................................14
Opinion of Counsel.........................................14
Optimal Percentage.........................................14
Optimal Principal Distribution Amount......................14
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Original Senior Percentage.................................14
OTS ..............................................14
Outstanding Mortgage Loan..................................14
Ownership Interest.........................................14
Pass-Through Rate..........................................14
Percentage Interest........................................15
Permitted Instruments......................................15
Permitted Transferee.......................................16
Person ..............................................16
Prepayment Assumption......................................16
Prepayment Period..........................................17
Primary Hazard Insurance Policy............................17
Primary Mortgage Insurance Policy..........................17
Principal Prepayment.......................................17
Purchase Price.............................................17
Qualified Insurer..........................................17
Qualified Substitute Mortgage Loan.........................17
Rating Agency..............................................18
Realized Loss..............................................18
Record Date ..............................................19
Regular Certificate........................................19
Relief Act ..............................................19
Relief Act Interest Shortfall..............................19
REMIC ..............................................19
REMIC Provisions...........................................19
Remittance Report..........................................19
REO Acquisition............................................19
REO Disposition............................................19
REO Imputed Interest.......................................19
REO Proceeds ..............................................19
REO Property ..............................................19
Request for Release........................................20
Required Insurance Policy..................................20
Residual Certificate.......................................20
Responsible Officer........................................20
Seller ..............................................20
Seller's Warranty Certificate..............................20
Senior Accelerated Distribution Percentage.................20
Senior Percentage..........................................21
Senior Principal Distribution Amount.......................21
Servicing Account..........................................21
Servicing Advances.........................................21
Servicing Fee..............................................21
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Servicing Fee Rate.........................................22
Servicing Officer..........................................22
Single Certificate.........................................22
Special Hazard Amount......................................22
Special Hazard Percentage..................................22
Standard & Poor's..........................................22
Startup Day ..............................................22
Stated Principal Balance...................................22
Subordinate Principal Distribution Amount..................23
Sub-Servicer ..............................................23
Sub-Servicer Remittance Date...............................23
Sub-Servicing Account......................................23
Sub-Servicing Agreement....................................23
Tax Returns ..............................................23
Transfer ..............................................23
Transferor ..............................................23
Trust Fund ..............................................23
Trustee ..............................................24
Trustee's Fee..............................................24
Uninsured Cause............................................24
United States Person.......................................24
Voting Rights..............................................24
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of Mortgage Loans........................25
2.02. Acceptance of the Trust Fund by the
Trustee.............................................28
2.03. Representations, Warranties and Covenants of
the Master Servicer and the Company.................29
2.04. Representations and Warranties of the Seller;
Repurchase and Substitution.........................31
2.05. Issuance of Certificates Evidencing Interests
in the Trust Fund...................................33
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Master Servicer to Act as Master Servicer...........34
3.02. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers..........................35
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3.03. Successor Sub-Servicers.............................36
3.04. Liability of the Master Servicer....................36
3.05. No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders...................36
3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee...............................37
3.07. Collection of Certain Mortgage Loan Payments........37
3.08. Sub-Servicing Accounts..............................37
3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts...........................38
3.10. Custodial Account...................................38
3.11. Permitted Withdrawals From the Custodial Account....40
3.12. Permitted Instruments...............................41
3.13. Maintenance of Primary Mortgage Insurance and
Primary Hazard Insurance............................41
3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements..........................................43
3.15. Realization Upon Defaulted Mortgage Loans...........44
3.16. Trustee to Cooperate; Release of Mortgage Files.....45
3.17. Servicing Compensation..............................46
3.18. Maintenance of Certain Servicing Policies...........46
3.19. Annual Statement as to Compliance...................47
3.20. Annual Independent Public Accountants' Servicing
Statement...........................................47
3.21. Access to Certain Documentation.....................47
3.22. Title, Conservation and Disposition of REO
Property............................................48
3.23. Additional Obligations of the Master Servicer.......50
3.24. Additional Obligations of the Company...............50
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Certificate Account; Distributions..................52
4.02. Statements to Certificateholders....................55
4.03. Remittance Reports; Advances by the Master
Servicer............................................57
4.04. Allocation of Realized Losses.......................59
4.05. Information Reports to be Filed by the Master
Servicer............................................59
4.06. Compliance with Withholding Requirements............60
ARTICLE V
THE CERTIFICATES
5.01 The Certificates....................................61
5.02. Registration of Transfer and Exchange
of Certificate......................................62
5.03. Mutilated, Destroyed, Lost or Stolen Certificates...65
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5.04. Persons Deemed Owners...............................66
ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
6.01. Liability of the Company and the Master
Servicer............................................67
6.02. Merger, Consolidation or Conversion of the
Company or the Master Servicer......................67
6.03. Limitation on Liability of the Company, the
Master Servicer and Others..........................67
6.04. Limitation on Resignation of the Master
Servicer............................................68
ARTICLE VII
DEFAULT
7.01. Events of Default...................................69
7.02. Trustee to Act; Appointment of Successor............70
7.03. Notification to Certificateholders..................71
7.04. Waiver of Events of Default.........................71
ARTICLE VIII
CONCERNING THE TRUSTEE
8.01. Duties of Trustee...................................73
8.02. Certain Matters Affecting the Trustee...............74
8.03. Trustee Not Liable for Certificates or
Mortgage Loans......................................75
8.04. Trustee May Own Certificates........................75
8.05. Payment of Trustee's Fees...........................75
8.06. Eligibility Requirements for Trustee................76
8.07. Resignation and Removal of the Trustee..............76
8.08. Successor Trustee...................................77
8.09. Merger or Consolidation of Trustee..................78
8.10. Appointment of Co-Trustee or Separate
Trustee.............................................78
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquidation
of All Mortgage Loans...............................80
9.02. Additional Termination Requirements.................81
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ARTICLE X
REMIC PROVISIONS
10.01. REMIC Administration................................83
10.02. Prohibited Transactions and Activities..............85
10.03. Master Servicer and Trustee
Indemnification.....................................86
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment...........................................87
11.02. Recordation of Agreement; Counterparts..............88
11.03. Limitation on Rights of Certificateholders..........88
11.04. Governing Law.......................................89
11.05. Notices.............................................89
11.06. Severability of Provisions..........................90
11.07. Successors and Assigns; Third Party Beneficiary.....90
11.08. Article and Section Headings........................90
11.09. Notice to Rating Agencies and Certificateholder.....90
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Signatures
Acknowledgments
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class B Certificate
Exhibit B Form of Class R Certificate
Exhibit C Form of Trustee Initial Certification
Exhibit D Form of Trustee Final Certification
Exhibit E Form of Remittance Report
Exhibit F-1 Request for Release
Exhibit F-2 Request for Release for Mortgage Loans Paid in Full
Exhibit G-1 Form of Investor Representation Letter
Exhibit G-2 Form of Transferor Representation Letter
Exhibit G-3 Transferor Affidavit and Agreement in connection with
transfer of Residual
Certificates
Exhibit G-4 Transferee Affidavit and Agreement in connection with
transfer of Residual Certificates
Exhibit G-5 Form of Investor Representation Letter for Insurance
Companies
Exhibit H Mortgage Loan Schedule
Exhibit I Seller's Warranty Certificate
Exhibit J Form of Notice Under Section 3.24
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This Pooling and Servicing Agreement, effective as of
__________ 1, 199_, among WMC SECURED ASSETS CORP., as the company (together
with its permitted successors and assigns, the "Company"), [NAME OF MASTER
SERVICER], as master servicer (together with its permitted successors and
assigns, the "Master Servicer"), and [NAME OF TRUSTEE], as trustee (together
with its permitted successors and assigns, the "Trustee"),
PRELIMINARY STATEMENT:
The Company intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes
(each, a "Class"), which in the aggregate will evidence the entire beneficial
ownership interest in the Mortgage Loans (as defined herein). As provided
herein, the Master Servicer will make an election to treat the segregated pool
of assets described in the definition of Trust Fund (as defined herein), and
subject to this Agreement (including the Mortgage Loans but excluding the
Initial Monthly Payment Deposit), as a real estate mortgage investment conduit
(a "REMIC") for federal income tax purposes, and such segregated pool of assets
will be designated as the "Trust Fund." The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7 and Class B Certificates will
represent ownership of "regular interests" in the Trust Fund, and the Class R
Certificates will be the sole class of "residual interests" therein, for
purposes of the REMIC Provisions (as defined herein) under federal income tax
law.
The following table sets forth the designation, type,
Pass-Through Rate, aggregate Initial Certificate Principal Balance, initial
ratings and certain features for each Class of Certificates comprising the
interests in the Trust Fund created hereunder.
AGGREGATE
INITIAL
PASS- CERTIFICATE
THROUGH PRINCIPAL
DESIGNATION TYPE RATE BALANCE FEATURES INITIAL RATINGS
----------------------------- ---------- --------------------------------- -----------------------
[ ] [ ]
Class A-1 Senior ____% $____________ Senior ____ ____
Class A-2 Senior ____% $____________ Senior ____ ____
Class A-3 Senior ____% $____________ Senior ____ ____
Class A-4 Senior ____% $____________ Senior ____ ____
Class A-5 Senior/Fixed ____% $____________ Senior/Interest ____ ____
Strip Only
Class A-6 Senior ____% $____________ Senior ____ ____
Class A-7 Senior/Variable Variable $____________ Senior/Interest ____ ____
Strip Rate Only
Class R Residual ____% $____________ Residual ____ ____
Class B Subordinate ____% $____________ Subordinate ____ ____
The Mortgage Loans have an aggregate Stated Principal Balance
as of the Cut-off Date equal to $______________. The Mortgage Loans are fixed
rate mortgage loans having terms to maturity at origination or modification of
not more than 30 years.
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In consideration of the mutual agreements herein contained,
the Company, the Master Servicer and the Trustee agree as follows:
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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 meanings
specified in this Article.
"Accrued Certificate Interest": With respect to each
Distribution Date, as to any Class A Certificate (other than the Class A-5
Certificates and Class A-7 Certificates) or any Class B Certificate, one month's
interest accrued at the then applicable Pass-Through Rate on the Certificate
Principal Balance thereof immediately prior to such Distribution Date. With
respect to each Distribution Date, as to the Class A-5 Certificates and Class
A-7 Certificates, one month's interest accrued at the then applicable
Pass-Through Rate on the 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, if any, which are not covered by payments
by the Master Servicer pursuant to Section 3.23 with respect to such
Distribution Date, (ii) the interest portion (adjusted to the related Net
Mortgage Rate) of any 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 4.04 (which, with respect to the pro rata portion thereof allocated to
the Class A-1, Class A-5 and Class A-6 Certificates will be allocated first to
the Class A-6 Certificates and second to the Class A-1 and Class A-5
Certificates on a pro rata basis to the extent such Realized Losses are Default
Losses), (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 was
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 Class B Certificates pursuant to Section 4.04,
including interest that is not collectible from the Mortgagor pursuant to the
Relief Act or similar legislation or regulations as in effect from time to time;
with all such reductions allocated among the Classes of Certificates, in
proportion to their respective amounts of Accrued Certificate Interest which
would have resulted absent such reductions. In addition to that portion of the
reductions described in the preceding sentence, Accrued Certificate Interest on
the Class B Certificates will be reduced by the interest portion (adjusted to
the related Net Mortgage Rate) of Realized Losses that are allocated solely to
the Class B Certificates pursuant to Section 4.04.
"Advance": As to any Mortgage Loan, any advance made by the
Master Servicer on any Distribution Date pursuant to Section 4.03.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof.
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"Anniversary": Each anniversary of ___________ 1, 19__.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage, 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.
"Assignment Agreement": The Assignment and Assumption
Agreement, dated as of ____________, 199_, between and the Company relating to
the transfer and assignment of the Mortgage Loans.
"Available Distribution Amount": With respect to each
Distribution Date, the Available Distribution Amount will be an amount equal to
(a) the sum of (i) the balance on deposit in the Custodial Account as of the
close of business on the related Determination Date and (ii) the aggregate
amount of any Advances made, all required amounts pursuant to Section 3.22 and
all amounts required to be paid by the Master Servicer pursuant to Sections 3.13
and 3.23 by deposits into the Certificate Account on the immediately preceding
Certificate Account Deposit Date, reduced by (b) the sum, as of the close of
business on the related Determination Date of (i) Monthly Payments collected but
due during a Due Period subsequent to the Due Period ending on the first day of
the month of the related Distribution Date, (ii) all interest or other income
earned on deposits in the Custodial Account, (iii) any other amounts
reimbursable or payable to the Master Servicer or any other Person pursuant to
Section 3.11, (iv) Insurance Proceeds, Liquidation Proceeds, Principal
Prepayments, REO Proceeds and the proceeds of Mortgage Loan purchases (or
amounts received in connection with substitutions) made pursuant to Section 2.02
and 2.04, in each case received or made in the month of such Distribution Date
and (v) the Trustee's Fee.
"Bankruptcy Amount": As of any date of determination, an
amount, equal to the excess, if any, of (A) $_______, over (B) the aggregate
amount of Bankruptcy Losses allocated solely to one or more specific Classes of
Certificates in accordance with Section 4.04.
The Bankruptcy Amount may be further reduced by the Master
Servicer (including accelerating the manner in which such coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written confirmation from each Rating Agency that such reduction shall 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 and (ii) provide a
copy of such written confirmation to the Trustee.
"Bankruptcy Code": The United States Bankruptcy Code of 1978,
as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Deficient Valuation or Debt Service Reduction; provided, however, that a
Deficient Valuation or a Debt Service
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Reduction shall not be deemed a Bankruptcy Loss hereunder so long as the Master
Servicer has notified the Trustee in writing that the Master Servicer is
diligently pursuing any remedies that may exist in connection with 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 and any related escrow payments in
respect of such Mortgage Loan are being advanced on a current basis by the
Master Servicer, in either case without giving effect to any Deficient Valuation
or Debt Service Reduction.
"Business Day": Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of __________ or the
State of ________ (and such other state or states in which the Custodial Account
or the Certificate Account are at the time located) are required or authorized
by law or executive order to be closed.
"Cash Liquidation": As to any defaulted Mortgage Loan other
than a Mortgage Loan as to which an REO Acquisition occurred, the final receipt
by or on behalf of the Master Servicer of all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
"Certificate": Any Class A, Class B or Class R Certificate.
"Certificate Account": The account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled
"________________________________, as trustee, in trust for the registered
holders of WMC Secured Assets Corp., Mortgage Pass-Through Certificates, Series
199_-___" and which must be an Eligible Account.
"Certificate Account Deposit Date": The 20th day (or if such
20th day is not a Business Day, the Business Day immediately preceding such 20th
day) of the month.
"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
Class R Certificate for any purposes hereof and, solely for the purposes of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Company or the Master Servicer or any affiliate thereof shall be
deemed not to be outstanding and the Voting Rights to which it is entitled shall
not be taken into account in determining whether the requisite percentage of
Voting Rights necessary to effect any such consent has been obtained, except as
otherwise provided in Section 11.01. The Trustee shall be entitled to rely upon
a certification of the Company or the Master Servicer in determining if any
Certificates are registered in the name of a respective affiliate.
"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 Company
Participant acts as agent, if any, and otherwise on the books of a Company
Participant, if any, and otherwise on the books of the Company.
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"Certificate Principal Balance": With respect to each Class A
Certificate (other than a Class A-5 Certificate or Class A-7 Certificate), 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 thereof pursuant to Section 4.02(b) 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 4.04.
With respect to the Class B Certificates, on any date of determination, an
amount equal to the Percentage Interest evidenced by such Certificate times the
excess, if any, of (A) the then aggregate Stated Principal Balance of the
Mortgage Loans over (B) the then aggregate Certificate Principal Balance of all
other Classes of Certificates then outstanding. The Class A-5 Certificates,
Class A-7 Certificates and Class R Certificates have no Certificate Principal
Balance.
"Certificate Register": The register maintained pursuant to
Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same designation.
"Class A Certificate": Any one of the Class X-0, Xxxxx X-0,
Class A-3, Class A-4, Class A-5, Class A-6 or Class A-7 Certificates, executed
by the Trustee and authenticated by the Certificate Registrar substantially in
the form annexed hereto as Exhibit A-1, each such Certificate evidencing an
interest designated as a "regular interest" in the Trust Fund for purposes of
the REMIC Provisions.
"Class B Certificate": The Class B Certificates executed by
the Trustee and authenticated by the Certificate Registrar substantially in the
form annexed hereto as Exhibit A-2 and evidencing an interest designated as a
"regular interest" in the Trust Fund for purposes of the REMIC Provisions.
"Class B Percentage": With respect to any Distribution Date,
the lesser of (i) 100% minus the Senior Percentage and (ii) a fraction,
expressed as a percentage, the numerator of which is the aggregate Certificate
Principal Balance of the Class B Certificates immediately prior to such date and
the denominator of which is the aggregate Stated Principal Balance of all of the
Mortgage Loans (or related REO Properties) immediately prior to such
Distribution Date.
"Class R Certificate": Any one of the Class R Certificates
executed and delivered by the Trustee substantially in the form annexed hereto
as Exhibit B and evidencing an interest designated as a "residual interest" in
the REMIC for purposes of the REMIC Provisions.
"Closing Date": _______ __, 19__.
"Code": The Internal Revenue Code of 1986.
"Collateral Value": The appraised value of a Mortgaged
Property based upon the lesser of (i) the appraisal made at the time of the
origination of the related Mortgage Loan, or (ii)
6
the sales price of such Mortgaged Property at such time of origination. With
respect to a Mortgage Loan the proceeds of which were used to refinance an
existing mortgage loan, the appraised value of the Mortgaged Property based upon
the appraisal (as reviewed and approved by the Seller) obtained at the time of
refinancing.
"Company": WMC Secured Assets Corp., or its successor in
interest.
"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 __________________
_______________________________________________, Attention:
_______________________ Series 199_-__.
"Credit Support Depletion Date": The first Distribution Date
on which the Senior Percentage equals 100%.
"Custodial Account": The custodial account or accounts created
and maintained pursuant to Section 3.10 in 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 the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.10 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
"Cut-off Date": __________ 1, 199_.
"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.
"Default Loss": Any Realized Loss that is attributable to the
related Mortgagor's failure to make any payment of principal or interest as
required under the Mortgage Note, excluding Special Hazard Losses (or any other
loss resulting from damage to a Mortgaged Property), Bankruptcy Losses, Fraud
Losses, or other losses of a type not covered by the subordination provided by
the Class B Certificates pursuant to Section 4.04.
"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,
which valuation results from a proceeding initiated by the Mortgagor 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.
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"Determination 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 of the following: (i) the
United States, any State or any 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 any such governmental unit), (ii) a foreign
government, international organization or any agency or instrumentality of
either the foregoing, (iii) an organization (except certain farmers'
cooperatives described in Section 521 of the Code) which is exempt from tax
imposed by Chapter 1 of the Code (unless such organization is subject to the tax
imposed by Section 511 of the Code on unrelated business taxable income), (iv)
rural electric and telephone cooperatives described in Section 1381 of the Code
or (v) any other Person so designated by the Trustee based on an Opinion of
Counsel obtained by the Trustee, at the expense of the Trust Fund, (which
opinion shall be sought only if the Trustee has actual knowledge that the
holding of an Ownership Interest in a Class R 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 Class R 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, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day commencing on ________ 25, 19__.
"Due Date": The first day of the month of the related
Distribution Date.
"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 (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.
["Duff & Xxxxxx": Xxxx & Xxxxxx Credit Rating Company or its
successor in interest.]
"Eligible Account": An account maintained with a federal or
state chartered depository institution (i) the short-term obligations of which
are rated by each of the Rating Agencies in its highest rating at the time of
any deposit therein, or (ii) insured by the FDIC (to the limits established by
such Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by and at the expense
of the Person requesting that the account be held pursuant to this clause (ii))
delivered to the Trustee prior to the establishment of such account, the
Certificateholders will have a claim with respect to the funds in such account
and a perfected first priority security interest against any collateral (which
shall be limited to Permitted Instruments, each of which shall mature not later
than the
8
Business Day immediately preceding the Distribution Date next following the date
of investment in such collateral or the Distribution Date if such Permitted
Instrument is an obligation of the institution that maintains the Certificate
Account or Custodial Account) securing such funds that is superior to claims of
any other depositors or general creditors of the depository institution with
which such account is maintained or (iii) a trust account or accounts maintained
with a federal or state chartered depository institution or trust company with
trust powers acting in its fiduciary capacity or (iv) an account or accounts of
a depository institution acceptable to the Rating Agencies (as evidenced in
writing by the Rating Agencies that use of any such account as the Custodial
Account or the Certificate Account will not have an adverse effect on the
then-current ratings assigned to the Classes of the Certificates then rated by
the Rating Agencies). Eligible Accounts may bear interest.
"Event of Default": One or more of the events described 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 a type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.18 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;
9
(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.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor.
["Fitch": Fitch Investors Service, Inc., or its successor in
interest.]
"FNMA": Federal National Mortgage Association or any
successor.
"Fraud Losses": Any Realized Loss sustained by reason of a
default arising from fraud, dishonesty or misrepresentation in connection with
the related Mortgage Loan.
"Fraud Loss Amount": As of any date of determination after the
Cut-off Date, an amount equal to: (X) up to and including the [first]
anniversary of the Cut-off Date an amount equal to ____% 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 to the Class B
Certificates in accordance with Section 4.04 since the Cut-off Date up to such
date of determination, (Y) from the [first] to 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) ____% of the
aggregate outstanding principal balance of all of the Mortgage Loans as of the
most recent anniversary of the Cut-off Date minus (2) the Fraud Losses allocated
solely to the Class B Certificates in accordance with Section 4.04 since the
most recent anniversary of the Cut-off Date up to such date of determination. On
and after the fifth anniversary of the Cut-off Date the Fraud Loss Amount shall
be zero.
The Fraud Loss Amount may be further reduced by the Master
Servicer (including accelerating the manner in which such coverage is reduced)
provided that prior to any such reduction, the Master Servicer shall (i) obtain
written confirmation from each Rating Agency that such reduction shall 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 and (ii) provide a
copy of such written confirmation to the Trustee.
10
"Funding Date": With respect to each Mortgage Loan, the date
on which funds were advanced by or on behalf of the Seller and interest began to
accrue thereunder.
"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 Policy": With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
"Insurance Proceeds": Proceeds paid by any insurer pursuant to
the Primary Mortgage Insurance Policy and any other insurance policy covering a
Mortgage Loan to the extent such proceeds are not applied to the restoration of
the related Mortgaged Property or released to the Mortgagor in accordance with
the procedures that the Master Servicer would follow in servicing mortgage loans
held for its own account.
"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.
"Liquidation Proceeds": Amounts (other than Insurance
Proceeds) received by the 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 amounts
received in respect of REO Property.
"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 Collateral Value of the related Mortgaged Property.
"Master Servicer": [Name of Master Servicer], or any successor
master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor from time to time under the related Mortgage Note as
originally executed (after adjustment, if any, for Principal Prepayments and for
Deficient Valuations occurring prior to such Due Date, and after any adjustment
by reason of any bankruptcy or similar proceeding or any moratorium or similar
waiver or grace period).
["Moody's": Xxxxx'x Investors Service, Inc. or its successor
in interest.]
11
"Mortgage": The mortgage, deed of trust or any other
instrument securing the Mortgage Loan.
"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; provided, that
whenever the term "Mortgage File" is used to refer to documents actually
received by the Trustee, such term shall not be deemed to include such
additional documents required to be added unless they are actually so added.
"Mortgage Loan": Each of the mortgage loans, transferred and
assigned to the Trustee pursuant to Section 2.01 or Section 2.03 and from time
to time held in the Trust Fund, the Mortgage Loans originally so transferred,
assigned and held being identified in the Mortgage Loan Schedule attached hereto
as Exhibit H (and any Qualified Substitute Mortgage Loans). As used herein, the
term "Mortgage Loan" includes the related Mortgage Note and Mortgage.
"Mortgage Loan Schedule": As of any date of determination, the
schedule of Mortgage Loans included in the Trust Fund. The initial schedule of
Mortgage Loans with accompanying information transferred on the Closing Date to
the Trustee as part of the Trust Fund for the Certificates, attached hereto as
Exhibit H (as amended from time to time to reflect the addition of Qualified
Substitute Mortgage Loans) (and, for purposes of the Trustee's review of the
Mortgage Files pursuant to Section 2.02, in computer-readable form as delivered
to the Trustee), which list shall set forth the following information, if
applicable, with respect to each Mortgage Loan:
(i) the loan number and name of the Mortgagor;
(ii) xxx xxxxxx xxxxxxx, xxxx, xxxxx and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Cut-off Date;
(ix) the principal balance as of the Cut-off Date;
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
12
(xii) the Collateral Value of the Mortgaged Property;
(xiii) the original term to maturity;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Loan-to-Value Ratio; and
(xvi) whether or not the Mortgage Loan was underwritten
pursuant to a limited documentation program.
The Mortgage Loan Schedule shall also set forth the total of
the amounts described under (ix) above for all of the Mortgage Loans. The
Mortgage Loan Schedule may be in the form of more than one schedule,
collectively setting forth all of the information required. With respect to any
Qualified Substitute Mortgage Loan, the item described in clauses (viii) shall
be set forth as the date of substitution.
"Mortgage Note": The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.
"Mortgaged Property": The underlying property securing a
Mortgage Loan.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": As to each Mortgage Loan, a per annum
rate of interest equal to the related Mortgage Rate as in effect from time to
time minus the sum of the Servicing Fee Rate and the rate at which the Trustee's
Fee accrues.
"Nonrecoverable Advance": Any Advance previously made or
proposed to be made in respect of a Mortgage Loan which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed Advance,
would not be ultimately recoverable from related Late Collections, Insurance
Proceeds, Liquidation Proceeds, REO Proceeds or amounts reimbursable to the
Master Servicer pursuant to Section 4.01(b). The determination by the Master
Servicer that it has made a Nonrecoverable Advance or that any proposed Advance
would constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Company and the Trustee.
"Non-United States Person": Any Person other than a United
States Person.
"Notional Amount": As of any Distribution Date, with respect
to the Class A-5 Certificates and the Class A-7 Certificates, an amount equal to
the aggregate Certificate Principal Balance of all Classes of Certificates
immediately prior to such date.
13
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
and by the Treasurer, the Secretary, or one of the assistant treasurers or
assistant secretaries of the Master Servicer or of the Sub-Servicer and
delivered to the Company and Trustee.
"Opinion of Counsel": A written opinion of counsel, who may be
counsel for the Company or the Master Servicer, reasonably acceptable to the
Trustee; except that any opinion of counsel relating to (a) the qualification of
any account required to be maintained pursuant to this Agreement as an Eligible
Account, (b) qualification of the Trust Fund as a REMIC, (c) compliance with the
REMIC Provisions or (d) resignation of the Master Servicer pursuant to Section
6.04 must be an opinion of counsel who (i) is in fact independent of the Company
and the Master Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Company or the Master Servicer or in
an affiliate of either and (iii) is not connected with the Company or the Master
Servicer as an officer, employee, director or person performing similar
functions.
"Optimal Percentage": A fraction, expressed as a percentage,
the numerator of which is the Certificate Principal Balance of the Class A-1
Certificates immediately prior to the applicable Distribution Date and the
denominator of which is the aggregate Certificate Principal Balance of all of
the Class A Certificates immediately prior to such Distribution Date.
"Optimal Principal Distribution Amount": An amount equal to
the product of (i) the then applicable Optimal Percentage and (ii) the Senior
Principal Distribution Amount.
"Original Senior Percentage": _____%, which is the fraction,
expressed as a percentage, the numerator of which is the aggregate Initial
Certificate Principal Balance of the Class A Certificates and the denominator of
which is the aggregate Stated Principal Balance of the Mortgage Loans.
"OTS": Office of Thrift Supervision or any successor.
"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 or substituted for prior to such Due Date pursuant to Sections 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.
"Pass-Through Rate": With respect to the Class A Certificates
(other than the Class A-7 Certificates) and Class B Certificates and any
Distribution Date, the per annum rate set forth in the Preliminary Statement
hereto. With respect to the Class A-7 Certificates and any Distribution Date, a
rate equal to the weighted average, expressed as a percentage, of the Pool Strip
Rates of all Mortgage Loans in the Trust Fund as of the Due Date in the month
immediately
14
preceding the month in which such Distribution Date occurs, weighted on the
basis of the respective Stated Principal Balances of such Mortgage Loans, which
Stated Principal Balances shall be the Stated Principal Balances of such
Mortgage Loans at the close of business on the immediately preceding
Distribution Date after giving effect to the distributions thereon allocable to
principal (or, in the case of the initial Distribution Date, at the close of
business on the Cut-off Date). With respect to the Class A-7 Certificates and
the initial Distribution Date, the Pass- Through Rate is equal to ______% per
annum.
"Percentage Interest": With respect to any Certificate (other
than a Class A-5, Class A-7 or Class R 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 thereof divided by the aggregate Initial Certificate Principal
Balance of all of the Certificates of the same Class. With respect to a Class
A-5 or Class A-7 Certificate), the undivided percentage ownership interest in
the related Class evidenced by such Certificate, which percentage ownership
interest shall be equal to the initial Notional Amount thereof divided by the
aggregate initial Notional Amount of all of the Certificates of the same Class.
With respect to a Class R 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 Instruments": Any one or more of the following:
(i)(a) direct obligations of, or obligations fully guaranteed as to
principal and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States and (b) direct obligations
of, and obligations guaranteed as to timely payment by FHLMC or FNMA
if, at the time of investment, they are assigned the highest credit
rating by the Rating Agencies;
(ii) repurchase obligations (the collateral for which is held by
a third party or the Trustee) with respect to any security described in
clause (i) above, provided that the short-term unsecured obligations of
the party agreeing to repurchase such obligations are at the time rated
by each Rating Agency in one of its two highest long-term rating
categories;
(iii) certificates of deposit, time deposits, demand deposits and
bankers' acceptances of any bank or trust company incorporated under
the laws of the United States or any state thereof or the District of
Columbia, provided that the short-term commercial paper of such bank or
trust company (or, in the case of the principal depository institution
in a depository institution holding company, the long-term unsecured
debt obligations of the depository institution holding company) at the
date of acquisition thereof has been rated by each Rating Agency in its
highest short-term rating;
(iv) commercial paper (having original maturities of not more
than nine months) of any corporation incorporated under the laws of the
United States or any state thereof or
15
the District of Columbia which on the date of acquisition has been
rated by each Rating Agency in its highest short-term rating;
(v) a money market fund or a qualified investment fund rated by
each Rating Agency in its highest rating available; and
(vi) if previously confirmed in writing to the Trustee, any other
obligation or security acceptable to each Rating Agency in respect of
mortgage pass-through certificates rated in each Rating Agency's
highest rating category;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation.
"Permitted Transferee": Any transferee of a Class R
Certificate other than a Disqualified Organization or a Non-United States
Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Strip Rate": With respect to each Mortgage Loan, the
rate per annum equal to the Net Mortgage Rate thereon minus ____% per annum.
"Prepayment Assumption": A prepayment assumption of ___% 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 such mortgage loans.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a partial
Principal Prepayment, a Principal Prepayment in full, or of a Cash Liquidation
or an REO Disposition during the related Prepayment Period, an amount equal to
the amount of interest that would have accrued at the applicable Net Mortgage
Rate (i) in the case of a Principal Prepayment in full, Cash Liquidation or REO
Disposition on the principal balance of such Mortgage Loan immediately prior to
such prepayment (or liquidation), commencing on the date of prepayment (or
liquidation) and ending on the last day of the month of prepayment or
liquidation or (ii) in the case of a partial Principal Prepayment, on the amount
of such prepayment, commencing on the date as of which the prepayment is applied
and ending on the last day of the month of prepayment.
16
"Prepayment Period": As to any Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard
insurance policy required to be maintained pursuant to Section 3.13.
"Primary Mortgage Insurance Policy": Each primary mortgage
insurance policy required to be maintained pursuant to Section 3.13.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
"Purchase Price": With respect to any Mortgage Loan (or REO
Property) required to be purchased pursuant to Section 2.02 or 2.04, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof, (ii)
unpaid accrued interest (or REO Imputed Interest) at the sum of the applicable
Net Mortgage Rate, the rate at which the Trustee's Fee accrues on the Stated
Principal Balance thereof outstanding during each Due Period that such interest
was not paid or advanced, from the date through which interest was last paid by
the Mortgagor or advanced and distributed to Certificateholders together with
unpaid related Servicing Fees from the date through which interest was last paid
by the Mortgagor, in each case to the first day of the month in which such
Purchase Price is to be distributed, plus (iii) the aggregate of all Advances
made in respect thereof that were not previously reimbursed.
"Qualified Insurer": An insurance company duly qualified as
such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact business in such states and to write the insurance provided by the
insurance policy issued by it, approved as an insurer by the Master Servicer, as
a FNMA-approved mortgage insurer and having a claims paying ability rating of at
least "AA" by ____________________ and which is acceptable to _____________. Any
replacement insurer with respect to a Mortgage Loan must have at least as high a
claims paying ability rating by _____________ and ___________________ as the
insurer it replaces had on the Closing Date.
"Qualified Substitute Mortgage Loan": A Mortgage Loan
substituted by the Company 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 the Stated Principal Balance of the Deleted Mortgage Loan (the amount
of any shortfall to be deposited by the Master Servicer, in the 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
17
substitution; (iii) have a remaining term to stated maturity not greater than
(and not more than one year less than) that of the Deleted Mortgage Loan; (iv)
comply with each representation and warranty set forth in Section 2 of the
Seller's Warranty Certificate; (v) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date; and (vi) be covered under a Primary Insurance
Policy if such Qualified Substitute Mortgage Loan has a Loan-to-Value Ratio in
excess of 80%. In the event that one or more mortgage loans are substituted for
one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof
shall be determined on the basis of aggregate principal balances, the Mortgage
Rates described in clause (ii) hereof shall be determined on the basis of
weighted average Mortgage Rates, the Net Mortgage Rates described in clause (ii)
hereof shall be satisfied as to each such mortgage loan, the terms described in
clause (iii) shall be determined on the basis of weighted average remaining
terms to maturity, the Loan-to-Value Ratios described in clause (v) hereof shall
be satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (iv) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
"Rating Agency": [Standard & Poor's] [Xxxxx'x] [Fitch] [Xxxx &
Xxxxxx]. 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 Company, notice of which designation shall be given to
the Trustee and the Master Servicer. References herein to the two highest long
term debt rating categories of a Rating Agency shall mean "AA" or better in the
case of [Standard & Poor's] [Fitch] [Duff & Xxxxxx] and "Aa2" or better in the
case of Xxxxx'x and references herein to the highest short-term debt rating of a
Rating Agency shall mean "D-1" or better in the case of [Duff & Xxxxxx] and
"A-1" in the case of [Standard & Poor's,] and in the case of any other Rating
Agency such references shall mean such rating categories without regard to any
plus or minus.
"Realized Loss": With respect to any Mortgage Loan or related
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 as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the related Net Mortgage Rate
from the Due Date as to which interest was last paid or advanced to
Certificateholders up to the date of the Cash Liquidation or REO Disposition on
the Stated Principal Balance of such Mortgage Loan 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 related Net
Mortgage Rate and to principal of the Mortgage Loan, net of the portion thereof
reimbursable to the Master Servicer or any Sub-Servicer with respect to related
Advances not previously reimbursed. 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
subject of a Debt Service Reduction, the amount of such Debt Service Reduction.
18
"Record Date": The last Business Day of the month immediately
preceding the month of the related Distribution Date.
"Regular Certificate": Any of the Certificates other than the
Class R Certificates.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"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 proposed, temporary and final regulations and published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Master Servicer
providing the information set forth in Exhibit E attached hereto.
"REO Acquisition": The acquisition by the Master Servicer on
behalf of the Trustee for the benefit of the Certificateholders of any REO
Property pursuant to Section 3.15.
"REO Disposition": The receipt by the Master Servicer of
Insurance Proceeds, Liquidation Proceeds and other payments and recoveries
(including proceeds of a final sale) which the 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 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 (as such balance is reduced by any income from the REO Property treated
as a recovery of principal pursuant to Section 3.15).
"REO Proceeds": Proceeds, net of directly related expenses,
received in respect of any REO Property (including, without limitation, proceeds
from the rental of the related Mortgaged Property and of any REO Disposition),
which proceeds are required to be deposited into the Custodial Account as and
when received.
"REO Property": A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
19
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibits F-1 or F-2 attached hereto.
"Required Insurance Policy": With respect to any Mortgage
Loan, any Insurance Policy or any other insurance policy that is required to be
maintained from time to time under this Agreement or pursuant to the provisions
of a Mortgage Loan.
"Residual Certificate": Any of the Class R Certificates.
"Responsible Officer": When used with respect to the Trustee,
the Chairman or Vice Chairman of the Board of Directors or Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Seller": [Name of Seller], and its successors and assigns.
"Seller's Warranty Certificate": The Seller's Warranty
Certificate of the Seller, dated _____ __, 19__, in the form of Exhibit I
attached hereto.
"Senior Accelerated Distribution Percentage": With respect to
any Distribution Date, the percentage indicated below:
DISTRIBUTION DATE SENIOR ACCELERATED DISTRIBUTION
PERCENTAGE
------------------------------------------- ------------------------------------------------
_______ ____ through ____________ ________..........100%
_______ ____ through ____________ ________..........Senior Percentage, plus 70% of the difference
between 100% and the Senior Percentage
_______ ____ through ____________ ________..........Senior Percentage, plus 60% of the difference
between 100% and the Senior Percentage
_______ ____ through ____________ ________..........Senior Percentage, plus 40% of the difference
between 100% and the Senior Percentage
_______ ____ through ____________ ________..........Senior Percentage, plus 20% of the difference
between 100% and the Senior Percentage
_______ ____ and thereafter..........................Senior Percentage;
provided, however, (i) that any scheduled reduction to the Senior Accelerated
Distribution Percentage described above shall not occur as of any Distribution
Date unless either (a)(1) the outstanding principal balance of Mortgage Loans
delinquent [60] days or more averaged over the last six months, as a percentage
of the aggregate outstanding principal balance of all Mortgage
20
Loans averaged over the last [six] months, does not exceed [2%] and (2) Realized
Losses on the Mortgage Loans to date for such Distribution Date if occurring
during the sixth, seventh, eighth, ninth or tenth year (or any year thereafter)
after the Closing Date are less than [30%, 35%, 40%, 45% or 50%], respectively,
of the Initial Certificate Principal Balance of the Class B Certificates or
(b)(1) the outstanding principal balance of the Mortgage Loans delinquent [60]
days or more averaged over the last six months, as a percentage of the aggregate
outstanding principal balance of all Mortgage Loans averaged over the last [six]
months, does not exceed [4%] and (2) Realized Losses on the Mortgage Loans to
date for such Distribution Date are less than [10%] of the Initial Certificate
Principal Balance of the Class B Certificates and (ii) that for any Distribution
Date on which the Senior Percentage is greater than the Original Senior
Percentage, the Senior Accelerated Distribution Percentage for such Distribution
Date shall be 100%. Notwithstanding the foregoing, upon the reduction of the
aggregate Certificate Principal Balance of the Class A Certificates to zero, the
Senior Accelerated Distribution Percentage shall thereafter be 0%.
"Senior Percentage": As of any Distribution Date, the lesser
of 100% and a fraction, expressed as a percentage, the numerator of which is the
aggregate Certificate Principal Balance of the Class A Certificates immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) immediately prior to such Distribution Date.
"Senior Principal Distribution Amount": As to any Distribution
Date, the lesser of (a) the balance of the Available Distribution Amount
remaining after the distribution of all amounts required to be distributed
pursuant to Section 4.02(b)(i) and (b) the sum of the amounts required to be
distributed to the Class A Certificateholders on such Distribution Date pursuant
to Section 4.02(b)(ii) and (vi).
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event by the 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 the second paragraph of Section 3.01 and Section
3.09.
"Servicing Fee": As to each Mortgage Loan, an amount, payable
out of any payment of interest on the Mortgage Loan, equal to interest at the
related Servicing Fee Rate on the Stated Principal Balance of such Mortgage Loan
for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Principal
Prepayment in full made by the Mortgagor, interest for the number of days
covered by such payment of interest).
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"Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate of -----%.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name appears on a list of servicing officers furnished to
the Trustee by the Master Servicer, as such list may from time to time be
amended.
"Single Certificate": A Certificate of any Class evidencing
the minimum denomination for Certificates of such Class as set forth in Section
5.01.
"Special Hazard Amount": As of any Distribution Date, an
amount equal to $________ (the initial "Special Hazard Amount") minus the sum of
(i) the aggregate amount of Special Hazard Losses allocated solely to the Class
B Certificates pursuant to Section 4.04 and (ii) the Adjustment Amount (as
defined below) as most recently calculated. For each anniversary of the Cut-off
Date, the Adjustment Amount shall be calculated and 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) the product of the Special Hazard
Percentage for such anniversary multiplied by the outstanding principal balance
of all of the Mortgage Loans on such anniversary and (B) twice the outstanding
principal balance of the Mortgage Loan which has the largest outstanding
principal balance on such Anniversary.
"Special Hazard Percentage": As of each anniversary of the
Cut-off Date, the greater of (i) 1% and (ii) the largest percentage obtained by
dividing the aggregate outstanding principal balance on such anniversary of the
Mortgage Loans secured by Mortgaged Properties located in a single, five-digit
zip code area in the State of California by the outstanding principal balance of
all the Mortgage Loans on such anniversary.
["Standard & Poor's": Standard & Poor's Ratings Group, a
division of McGraw Hill, Inc. or its successor in interest.]
"Startup Day": The day designated as such pursuant to Article
X hereof.
"Stated Principal Balance": With respect to any Mortgage Loan
or related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut-off Date, after application of principal
payments due on or before such date, whether or not received, 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 most
recent Distribution Date which were received or with respect to which an Advance
was made, (b) all Principal Prepayments with respect to such Mortgage Loan or
REO Property, and all Insurance Proceeds, Liquidation Proceeds and net income
from a REO Property to the extent applied by the Master Servicer as recoveries
of principal in accordance with Section 3.15 with respect to such Mortgage Loan
or REO Property, which were distributed pursuant to Section 4.01 on any previous
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Distribution Date and (c) any Realized Loss with respect thereto allocated
pursuant to Section 4.04 for any previous Distribution Date.
"Subordinate Principal Distribution Amount": With respect to
any Distribution Date and the Class B Certificates, (a) the sum of (i) the
product of (x) the Class B Percentage and (y) the aggregate of the amounts
calculated for such Distribution Date under clauses (1), (2) and (3) of Section
4.01(b)(ii)(A); (ii) the principal collections described in Section
4.01(b)(ii)(B) to the extent such collections are not otherwise distributed to
the Senior Certificates; and (iii) the product of (x) 100% minus the Senior
Accelerated Distribution Percentage and (z) the aggregate of all Principal
Prepayments in Full and Curtailments received in the related Prepayment Period;
provided, however, that such amount shall in no event exceed the outstanding
Certificate Principal Balance of the Class B Certificates immediately prior to
such date.
"Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02.
"Sub-Servicer Remittance Date": The 18th day of each month, or
if such day is not a Business Day, the immediately preceding Business Day.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer. "Sub-Servicing Agreement": The
written contract between the Master Servicer and a Sub-Servicer and any
successor Sub-Servicer 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 thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information, reports
or returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trust Fund": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) the
Mortgage Loans (exclusive of payments of principal and interest due on or before
the Cut-off Date, if any) as from time to time are subject to this
23
Agreement and all payments under and proceeds of the Mortgage Loans, together
with all documents included in the related Mortgage File, subject to Section
2.01; (ii) such funds or assets as from time to time are deposited in the
Custodial Account and the Certificate Account; (iii) any REO Property; (iv) the
Primary Mortgage Insurance Policies, if any, Primary Hazard Insurance Policies
and all other Insurance Policies with respect to the Mortgage Loans; and (v) the
Company's interest in respect of the representations and warranties made by the
Seller in the Seller's Warranty Certificate as assigned to the Trustee pursuant
to Section 2.04 hereof.
"Trustee": [Name of Trustee], or its successor in interest, or
any successor trustee appointed as herein provided.
"Trustee's Fee": As to each Mortgage Loan and as the
Distribution Date, an amount, payable out of any payment of interest on the
Mortgage Loan, equal to interest at ----% per annum on the Stated Principal
Balance of such Mortgage Loan as of the Due Date immediately preceding the month
in which such Distribution Date occurs.
"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 or flood insurance policies
required to be maintained pursuant to Section 3.13.
"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
includable 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. The term "United States" shall have the meaning set forth in
Section 7701 of the Code or successor provisions.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. ___% of all of the
Voting Rights shall be allocated among Holders of the Certificates,
respectively, other than the Class A-5, Class A-7 and Class R Certificates, in
proportion to the outstanding Certificate Principal Balances of their respective
Certificates; and the Holders of the Class A-5, Class A-7 and Class R
Certificates shall be entitled to __%, __% and __% of all of the Voting Rights,
respectively, allocated among the Certificates of each 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.
The Company, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign, transfer, sell, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Company in and to the Mortgage Loans identified on the Mortgage
Loan Schedule and all other assets included or to be included in the Trust Fund
for the benefit of the Certificateholders. Such assignment includes all
principal and interest received by the Master Servicer on or with respect to the
Mortgage Loans (other than payment of principal and interest due on or before
the Cut-off Date).
In connection with such transfer and assignment, the Company
has requested the Seller to deliver to, and deposit with the Trustee, the
following documents or instruments:
(i) the original Mortgage Note, endorsed by the Seller "Pay to
the order of [Name of Trustee], as trustee without recourse" or to "Pay
to the order of [Name of Trustee], as trustee for holders of WMC
Secured Assets Corp., Mortgage Pass-Through Certificates, Series
199_-_, without recourse" with all intervening endorsements showing a
complete chain of endorsements from the originator to the Person
endorsing it to the Trustee;
(ii) the original recorded Mortgage or, if the original Mortgage
has not been returned from the applicable public recording office, a
copy of the Mortgage certified by the Seller to be a true and complete
copy of the original Mortgage submitted to the title insurance company
for recording;
(iii) a duly executed original Assignment of the Mortgage endorsed
by the Seller, without recourse, to "[Name of Trustee], as trustee" or
to "[Name of Trustee], as trustee for holders of WMC Secured Assets
Corp., Mortgage Pass-Through Certificates, Series 199_-_", with
evidence of recording thereon;
(iv) the original recorded Assignment or Assignments of the
Mortgage showing a complete chain of assignment from the originator
thereof to the Person assigning it to the Trustee or, if any such
Assignment has not been returned from the applicable public recording
office, a copy of such Assignment certified by the Seller to be a true
and complete copy of the original Assignment submitted to the title
insurance company for recording;
(v) the original lender's title insurance policy, or, if such
policy has not been issued, any one of an original or a copy of the
preliminary title report, title binder or title
25
commitment on the Mortgaged Property with the original policy of the
insurance to be delivered promptly following the receipt thereof;
(vi) the original of any assumption, modification, extension or
guaranty agreement;
(vii) the original or a copy of the private mortgage insurance
policy or original certificate of private mortgage insurance, if applicable; and
(viii) if any of the documents or instruments referred to above
were executed on behalf of the Mortgagor by another Person, the original power
of attorney or other instrument that authorized and empowered such Person to
sign, or a copy thereof certified by the Seller (or by an officer of the
applicable title insurance or escrow company) to be a true and correct copy of
the original.
The Seller is obligated pursuant to the Seller's Warranty
Certificate to deliver to the Trustee: (a) either the original recorded
Mortgage, or in the event such original cannot be delivered by the Seller, a
copy of such Mortgage certified as true and complete by the appropriate
recording office, in those instances where a copy thereof certified by the
Seller was delivered to the Trustee pursuant to clause (ii) above; and (b)
either the original Assignment or Assignments of the Mortgage, with evidence of
recording thereon, showing a complete chain of assignment from the originator to
the Seller, or in the event such original cannot be delivered by the Seller, a
copy of such Assignment or Assignments certified as true and complete by the
appropriate recording office, in those instances where copies thereof certified
by the Seller were delivered to the Trustee pursuant to clause (iv) above.
Notwithstanding anything to the contrary contained in this Section 2.01, in
those instances where the public recording office retains the original Mortgage
after it has been recorded, the Seller shall be deemed to have satisfied its
obligations hereunder upon delivery to the Trustee of a copy of such Mortgage
certified by the public recording office to be a true and complete copy of the
recorded original thereof.
If any Assignment is lost or returned unrecorded to the
Trustee because of any defect therein, the Seller is required to prepare a
substitute Assignment or cure such defect, as the case may be, and the Trustee
shall cause such Assignment to be recorded in accordance with this paragraph.
The Seller is required, as described in the Seller's Warranty
Certificate, to deliver to the Trustee the original of any documents assigned to
the Trustee pursuant to this Section 2.01 not later than 120 days after the
Closing Date.
All original documents relating to the Mortgage Loans which
are not delivered to the Trustee, to the extent delivered by the Seller to the
Master Servicer, are and shall be held by the Master Servicer in trust for the
benefit of the Trustee on behalf of the Certificateholders.
Except as may otherwise expressly be provided herein, neither
the Company, the Master Servicer nor the Trustee shall (and the Master Servicer
shall ensure that no Sub-Servicer shall) assign, sell, dispose of or transfer
any interest in the Trust Fund or any portion thereof, or
26
permit the Trust Fund or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans by
the Company to the Trustee as provided in this Section be, and be construed as,
a sale of the Mortgage Loans by the Company to the Trustee for the benefit of
the Certificateholders. It is, further, not intended that such conveyance be
deemed a pledge of the Mortgage Loans by the Company to the Trustee to secure a
debt or other obligation of the Company. However, in the event that the Mortgage
Loans are held to be property of the Company, or if for any reason this
Agreement is held or deemed to create a security interest in the Mortgage Loans,
then it is intended that, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be (1) a grant by the Company to the Trustee of a security interest in all of
the Company's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof and (C) all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Certificate Account or the Custodial Account, whether in the form of cash,
instruments, securities or other property and (2) an assignment by the Company
to the Trustee of any security interest in any and all of the Seller's right
(including the power to convey title thereto), title and interest, whether now
owned or hereafter acquired, in and to the property described in the foregoing
clauses (1)(A) through (C) granted by the Seller to the Company pursuant to the
Assignment Agreement; (c) the possession by the Trustee or its agent of Mortgage
Notes and such other items of property as constitute instruments, money,
negotiable documents or chattel paper shall be deemed to be "possession by the
secured party" or possession by a purchaser or a person designated by such
secured party, for purposes of perfecting the security interest pursuant to the
New York Uniform Commercial Code and the Uniform Commercial Code of any other
applicable jurisdiction (including, without limitation, Sections 9-305, 8-313 or
8-321 thereof); and (d) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. The
Company and the Trustee 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 the Mortgage Loans, 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 the
Agreement.
27
SECTION 2.02. Acceptance of the Trust Fund by the Trustee.
The Trustee acknowledges receipt (subject to any exceptions
noted in the Initial Certification described below) of the documents referred to
in Section 2.01 above and all other assets included in the Trust Fund and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets included in the Trust Fund (to the extent delivered or
assigned to the Trustee), in trust for the exclusive use and benefit of all
present and future Certificateholders.
The Trustee agrees, for the benefit of the Certificateholders,
to review each Mortgage File on or before the Closing Date to ascertain that all
documents required to be delivered to it are in its possession, and the Trustee
agrees to execute and deliver to the Company and the Master Servicer on the
Closing Date an Initial Certification in the form annexed hereto as Exhibit C to
the effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified in such certification as not covered by such certification), (i) all
documents required to be delivered to it pursuant to this Agreement with respect
to such Mortgage Loan 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) and (xiii) of the definition of the
"Mortgage Loan Schedule" accurately reflects information set forth in the
Mortgage File. Neither the Trustee nor the Master Servicer shall be under any
duty to determine whether any Mortgage File should include any of the documents
specified in clause (vi) of Section 2.01. Neither the Trustee nor the Master
Servicer shall be under any duty or obligation to inspect, review or examine
said documents, instruments, certificates or other papers to determine that the
same are genuine, enforceable or appropriate for the represented purpose or that
they have actually been recorded or that they are other than what they purport
to be on their face.
Within 90 days of the Closing Date the Trustee shall deliver
to the Company and the Master Servicer a Final Certification in the form annexed
hereto as Exhibit D evidencing the completeness of the Mortgage Files, with any
applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and
preparing the certifications referred to above 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 notify the Seller, the Master
Servicer and the Company. The Trustee shall promptly notify the Seller of such
defect and request that the Seller cure any such defect within 60 days from the
date on which the Seller was notified of such defect, and if the Seller does not
cure such defect in all material respects during such period, request that the
Seller purchase such Mortgage Loan from the Trust Fund on behalf of the
Certificateholders at the Purchase Price within 90 days after the date on which
the Seller was notified of such defect. It is understood and agreed that the
obligation of the Seller to cure a material defect in, or purchase any Mortgage
Loan as to which a material defect in a constituent document exists shall
constitute the sole remedy respecting such defect available to
Certificateholders or the Trustee on behalf of Certificateholders. The Purchase
Price for the purchased Mortgage Loan shall be deposited or caused to be
deposited upon receipt by the Master
28
Servicer in the Custodial Account and, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer, the Trustee shall
release or cause to be released to the Seller the related Mortgage File and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as the Seller shall require as necessary to vest in the
Seller ownership of any Mortgage Loan released pursuant hereto and at such time
the Trustee shall have no further responsibility with respect to the related
Mortgage File.
SECTION 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Company.
(a) The Master Servicer hereby represents and warrants to and
covenants with the Company and the Trustee for the benefit of Certificateholders
that:
(i) The Master Servicer is, and throughout the term
hereof shall remain, a __________ duly organized, validly existing and
in good standing under the laws of the State of __________ (except as
otherwise permitted pursuant to Section 6.02), the Master Servicer is,
and shall remain, in compliance with the laws of each state in which
any Mortgaged Property is located to the extent necessary to perform
its obligations under this Agreement, and the Master Servicer is, and
shall remain, approved to sell mortgage loans to and service mortgage
loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the
Master Servicer, and the performance and compliance with the terms of
this Agreement by the Master Servicer, will not violate the Master
Servicer's articles of incorporation or bylaws or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is
applicable to it or any of its assets;
(iii) The Master Servicer has the full power and authority
to enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance
of this Agreement, and has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization,
execution and delivery by the Company and the Trustee, constitutes a
valid, legal and binding obligation of the Master Servicer, enforceable
against the Master Servicer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally, and (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at
law;
(v) The Master Servicer is not in violation of, and its
execution and delivery of this Agreement and its performance and
compliance with the terms of this Agreement will not constitute a
violation of, any law, any order or decree of any court or arbiter, or
any order, regulation or demand of any federal, state or local
governmental or
29
regulatory authority, which violation is likely to affect materially
and adversely either the ability of the Master Servicer to perform its
obligations under this Agreement or the financial condition of the
Master Servicer;
(vi) No litigation is pending or, to the best of the
Master Servicer's knowledge, threatened against the Master Servicer
which would prohibit its entering into this Agreement or performing its
obligations under this Agreement or is likely to affect materially and
adversely either the ability of the Master Servicer to perform its
obligations under this Agreement or the financial condition of the
Master Servicer;
(vii) The Master Servicer will comply in all material
respects in the performance of this Agreement and with all reasonable
rules and requirements of each insurer under each Insurance Instrument;
(viii) The execution of this Agreement and the performance
of the Master Servicer's obligations hereunder do not require any
license, consent or approval of any state or federal court, agency,
regulatory authority or other governmental body having jurisdiction
over the Master Servicer, other than such as have been obtained; and
(ix) No information, certificate of an officer, statement
furnished in writing or report delivered to the Company, any affiliate
of the Company or the Trustee by the Master Servicer will, to the
knowledge of the Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading; and
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.03(a) shall survive the
execution and delivery of this Agreement, and shall inure to the benefit of the
Company, the Trustee and the Certificateholders. Upon discovery by the Company,
the Trustee or the Master Servicer of a breach of any of the foregoing
representations, warranties and covenants that materially and adversely affects
the interests of the Company or the Trustee, the party discovering such breach
shall give prompt written notice to the other parties.
(b) The Company hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of Certificateholders that as of the
Closing Date (or, if otherwise specified below, as of the date so specified):
(i) Immediately prior to the assignment of the Mortgage
Loans to the Trustee, the Company had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any
pledge, lien, encumbrance or security interest (other than
rights to servicing and related compensation) and such
assignment validly transfers ownership of the Mortgage Loans
to the Trustee free and clear of any pledge, lien, encumbrance
or security interest;
30
(ii) No Mortgage Loan is one month or more delinquent in
payment of principal and interest as of the Cut-off Date and
no Mortgage Loan has been so delinquent more than once in the
12-month period prior to the Cut-off Date;
(iii) The information set forth in the Mortgage Loan
Schedule with respect to each Mortgage Loan or the Mortgage
Loans, as the case may be, is true and correct in all material
respects at the date or dates respecting which such
information is furnished;
(iv) The Mortgage Loans are fully-amortizing, fixed-rate
mortgage loans with level Monthly Payments due on the first
day of each month and terms to maturity at origination or
modification of not more than 30 years;
(v) Each Mortgage Loan secured by a Mortgaged Property
with a Loan- to-Value Ratio at origination in excess of 80% is
the subject of a Primary Mortgage Insurance Policy that
insures that portion of the principal balance thereof that
exceeds the amount equal to 75% of the appraised value of the
related Mortgaged Property. Each such Primary Mortgage
Insurance Policy is in full force and effect and the Trustee
is entitled to the benefits thereunder; and
(vi) The representations and warranties of the Seller
with respect to the Mortgage Loans and the remedies therefor
are as set forth in the Seller's Warranty Certificate.
[Other representations and warranties as applicable.]
It is understood and agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the respective Mortgage Files to
the Trustee.
Upon discovery by either the Company, the Master Servicer or
the Trustee of a breach of any representation or warranty set forth in this
Section 2.03 which materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties.
SECTION 2.04. Representations and Warranties of the Seller;
Repurchase and Substitution.
The Company hereby assigns to the Trustee for the benefit of
Certificateholders its interest in respect of the representations and warranties
made by the Seller in the Seller's Warranty Certificate or the exhibits thereto.
Insofar as the Seller's Warranty Certificate relates to such representations and
warranties and any remedies provided thereunder for any breach of such
representations and warranties, such right, title and interest may be enforced
by the Trustee on behalf of the Certificateholders. Upon the discovery by the
Company, the Master Servicer or the Trustee of a breach of any of the
representations and warranties made in the Seller's Warranty
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Certificate 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 Trustee shall promptly notify the Seller of such breach and request that
such Seller shall, within 90 days from the date that the Company, the Seller or
the Trustee was notified of such breach, either (i) cure such breach in all
material respects 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 in the
case of such breach, the 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. Any such substitution must
occur within 90 days from the date the Seller was notified of the breach if such
90 day period expires before two years following the Closing Date. In the event
that the Seller elects to substitute a Qualified Substitute Mortgage Loan or
Loans for a Deleted Mortgage Loan pursuant to this Section 2.04, the 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
Master Servicer and remitted by the Master Servicer to the 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 Seller shall be entitled to retain all
amounts received in respect of such Deleted Mortgage Loan. The Company 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 the Company
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 in all respects, the Seller shall be deemed to
have made the representations and warranties with respect to the Qualified
Substitute Mortgage Loan contained in the Seller's Warranty Certificate as of
the date of substitution, and the Company shall be deemed to have made with
respect to any Qualified Substitute Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 2.03
hereof, and the Seller shall be obligated to repurchase or substitute for any
Qualified Substitute Mortgage Loan as to which a repurchase or substitution
obligation has occurred pursuant to Section 3 of the Seller's Warranty
Certificate.
In connection with the substitution of one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master
Servicer 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). The Seller
shall provide the Master Servicer on the day of substitution for immediate
deposit in to the Custodial Account the amount of such shortfall, without any
reimbursement therefor. The Seller shall give notice in writing to the Trustee
of such event,
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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 the Trust
Fund, including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code or (b) any portion of the
Trust Fund to fail to qualify as a REMIC at any time that any Certificate is
outstanding. The costs of any substitution as described above, including any
related assignments, opinions or other documentation in connection therewith
shall be borne by the Seller.
Except as expressly set forth herein neither the Trustee nor
the Master Servicer is under any obligation to discover any breach of the above
mentioned representations and warranties. It is understood and agreed that the
obligation of the Seller to cure such breach or to so purchase or substitute for
any 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. In addition,
if the first scheduled Monthly Payment is due during the first month after its
closing date (as such term is used in the Seller's Warranties Certificate) and
such Monthly Payment is not received by the Master Servicer within 30 days of
the due date in accordance with the terms of the related Mortgage Note, the
Master Servicer shall promptly notify the Seller and the Trustee and the Seller
shall purchase such Mortgage Loan from the Trust Fund at the Purchase Price or
substitute a Qualified Substitute Mortgage Loan therefor within 15 days from the
date that the Seller was notified.
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 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 Company executed by an officer
of the Company, has executed and caused to be authenticated, and delivered to or
upon the order of the Company, the Certificates in authorized denominations
which evidence ownership of the entire Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage
Loans for the benefit of the Certificateholders, in accordance with this
Agreement and the customary and usual standards of practice of prudent
institutional mortgage lenders servicing comparable mortgage loans for their own
account in the respective states in which the Mortgaged Properties are located.
Subject to the foregoing, the Master Servicer shall have full power and
authority, acting alone and/or through Sub-Servicers as provided in Section
3.02, to do or cause to be done any and all things in connection with such
servicing and administration that it may deem necessary or desirable. Without
limiting the generality of the foregoing, the Master Servicer in its own name or
in the name of a Sub-Servicer is hereby authorized and empowered by the Trustee
when the Master Servicer believes it appropriate in its best judgment, to (i)
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties, (ii) institute foreclosure
pro ceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and (iii) hold or cause to be held title to such
properties, on behalf of the Trustee and Certifi cateholders. The Master
Servicer shall service and administer the Mortgage Loans in accordance with
applicable state and federal law and shall provide to the Mortgagors any reports
required to be provided to them thereby. Subject to Section 3.16, the Trustee
shall furnish to the Master Servicer and any Sub-Servicer any powers of attorney
and other documents necessary or appropriate to enable the Master Servicer and
any Sub-Servicer to carry out their servicing and administrative duties
hereunder. The Trustee shall not be responsible for any action taken by the
Master Servicer or any Sub-Servicer pursuant to the application of such powers
of attorney.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. No costs incurred by the Master Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on the Mortgaged
Properties shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
The Master Servicer shall not (unless the Mortgagor is in
default with respect to the Mortgage Loan or such default is, in the judgment of
the Master Servicer, reasonably foreseeable) make or permit any modification,
waiver or amendment of any term of any Mortgage Loan that would both (i) effect
an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code
(or final, temporary or proposed Treasury regulations promulgated thereunder)
and (ii) cause the Trust Fund to fail to qualify as a REMIC under the Code or
the imposition of
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any tax on "prohibited transactions" or "contributions" after the startup date
under the REMIC Provisions.
The Master Servicer may approve a request for a partial
release of the Mortgaged Property, easement, consent to alteration or demolition
and other similar matters if it has determined, exercising its good faith
business judgement in the same manner as it would if it were the owner of the
related Mortgage Loan, that such approval will not adversely affect the security
for, or the timely and full collectability of, the related Mortgage Loan. Any
fee collected by the Master Servicer for processing such request will be
retained by the Master Servicer as additional servicing compensation.
The relationship of the Master Servicer (and of any successor
to the Master Servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
SECTION 3.02. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements with Sub- Servicers for the servicing and administration of the
Mortgage Loans and for the performance of any and all other activities of the
Master Servicer hereunder. Each Sub-Servicer shall be either (i) an institution
the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in
either case shall be authorized to transact business in the state or states in
which the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Sub-Servicer to perform its
obligations hereunder and under the Sub-Servicing Agreement, and in either case
shall be a FHLMC or FNMA approved mortgage servicer. Each Sub-Servicing
Agreement must impose on the Sub-Servicer requirements conforming to the
provisions set forth in Section 3.08 and provide for servicing of the Mortgage
Loans consistent with the terms of this Agreement. With the consent of the
Trustee, which consent shall not be unreasonably withheld, the Master Servicer
and the Sub-Servicers may enter into Sub-Servicing Agreements and make
amendments to the Sub-Ser vicing Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement, including, without limitation, any obligation to make advances in
respect of delinquent payments as required by a Sub-Servicing Agreement, or to
purchase a Mortgage Loan on account of defective documentation or on account of
a breach of a representation or warranty, as described in Section 2.02. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements 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 Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such
35
enforcement at its own expense, but shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement only to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accor dance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02.
SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a Sub- Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of Section
3.01 without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on Mortgage Loans when the Sub-Servicer has received such
payments. The Master Servicer shall be entitled to enter into any agreement with
a Sub-Servicer for indemnification of the Master Servicer by such Sub-Servicer
and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and Trustee or
Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not as an originator shall be deemed to be between
the Sub-Servicer and the 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 Sub-Servicer
except as set forth in Section 3.06.
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SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of an Event of Default), the
Trustee or its designee shall thereupon assume all of the rights and obligations
of the Master Servicer under each Sub-Servicing Agreement that the Master
Servicer may have entered into, unless the Trustee is then permitted and elects
to terminate any Sub-Servicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Master Servicer's interest therein and to have
replaced the Master Servicer as a party to each Sub- Servicing Agreement to the
same extent as if the Sub-Servicing Agreements had been assigned to the assuming
party, except that the Master Servicer shall not thereby be relieved of any
liability or obligations under the Sub-Servicing Agreements, and the Master
Servicer shall continue to be entitled to any rights or benefits which arose
prior to its termination as master servicer.
The Master Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this Agreement
and the terms and provisions of any related Insurance Policy, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. The Master
Servicer shall not be required to institute or join in litigation with respect
to collection of any payment (whether under a Mortgage, Mortgage Note, Primary
Hazard Insurance Policy, Primary Mortgage Insurance Policy or otherwise or
against any public or governmental authority with respect to a taking or
condemnation) if it reasonably believes that it is prohibited by applicable law
from enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required. Consistent with the foregoing, the Master
Servicer may in its discretion waive any prepayment fees, late payment charge or
other charge, except as otherwise required under applicable law. The Master
Servicer shall be responsible for preparing and distributing all information
statements relating to payments on the Mortgage Loans, in accordance with all
applicable federal and state tax laws and regulations.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in
37
a Sub-Servicing Account shall be held in trust for the Trustee for the benefit
of the Certificateholders. The Sub-Servicer will be required to deposit into the
Sub-Servicing Account no later than the first Business Day after receipt all
proceeds of Mortgage Loans received by the Sub-Servicer, less its servicing
compensation and any unreimbursed expenses and advances, to the extent permitted
by the Sub-Servicing Agreement. On each Sub-Servicer Remittance Date the
Sub-Servicer will be required to remit to the Master Servicer for deposit into
the Custodial Account all funds held in the Sub-Servicing Account with respect
to any Mortgage Loan as of the Sub-Servicer Remittance Date, after deducting
from such remittance an amount equal to the servicing compensation and
unreimbursed expenses and advances to which it is then entitled pursuant to the
related Sub-Servicing Agreement, to the extent not previously paid to or
retained by it. In addition, on each Sub-Servicer Remittance Date the
Sub-Servicer will be required to remit to the Master Servicer any amounts
required to be advanced pursuant to the related Sub- Servicing Agreement. The
Sub-Servicer will also be required to remit to the Master Servicer, within one
Business Day of receipt, the proceeds of any Principal Prepayment made by the
Mortgagor and any Insurance Proceeds or Liquidation Proceeds.
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Master Servicer and the Sub-Servicers shall establish and
maintain one or more accounts (the "Servicing Accounts"), and shall deposit and
retain therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy premiums, and comparable items for the account of the Mortgagors, to the
extent that the Master Servicer customarily escrows for such amounts.
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect payment of taxes, assessments, Primary Hazard Insurance Policy
premiums and comparable items; (ii) reimburse the Master Servicer (or a
Sub-Servicer to the extent provided in the related Sub- Servicing Agreement) out
of related collections for any payments made pursuant to Sections 3.01 (with
respect to taxes and assessments) and 3.13 (with respect to Primary Hazard
Insurance Policies); (iii) refund to Mortgagors any sums as may be determined to
be overages; or (iv) clear and terminate the Servicing Account at the
termination of this Agreement pursuant to Section 9.01. As part of its servicing
duties, the Master Servicer or Sub-Servicers shall, if and to the extent
required by law, pay to the Mortgagors interest on funds in Servicing Accounts
from its or their own funds, without any reimbursement therefor.
SECTION 3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one or
more accounts (collectively, the "Custodial Account") in which the Master
Servicer shall deposit or cause to be deposited no later than the first Business
Day after receipt or as and when received from the Sub- Servicers, the following
payments and collections received or made by or on behalf of it subsequent to
the Cut-off Date, or received by it prior to the Cut-off Date but allocable to a
period subsequent thereto (other than in respect of principal and interest on
the Mortgage Loans due on or before the Cut-off Date):
38
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
not including any portion thereof representing interest on account of
the related Servicing Fee Rate;
(iii) all Insurance Proceeds, other than proceeds that represent
reimbursement of costs and expenses incurred by the Master Servicer in
connection with presenting claims under the related Insurance Policies,
Liquidation Proceeds and REO Proceeds;
(iv) all proceeds of any Mortgage Loan or REO Property repurchased
or purchased in accordance with Sections 2.02, 2.04 or 9.01 and all
amounts required to be deposited in connection with the substitution of
a Qualified Substitute Mortgage Loan pursuant to Section 2.04;
(v) any amounts required to be deposited in the Custodial Account
pursuant to Section 3.12, 3.13 or 3.22; and
(vi) all amounts transferred from the Certificate Account to the
Custodial Account in accordance with Sections 4.01(b).
For purposes of the immediately preceding sentence, the
Cut-off Date with respect to any Qualified Substitute Mortgage Loan shall be
deemed to be the date of substitution.
The foregoing requirements for deposit in the Custodial
Account shall be exclusive. In the event the Master Servicer shall deposit in
the Custodial Account any amount not required to be deposited therein, it may
withdraw such amount from the Custodial Account, any provision herein to the
contrary notwithstanding. The Custodial Account shall be maintained as a
segregated account, separate and apart from trust funds created for mortgage
pass-through certificates of other series, and the other accounts of the Master
Servicer.
(b) Funds in the Custodial Account may be invested in
Permitted Instruments in accordance with the provisions set forth in Section
3.12. The Master Servicer shall give notice to the Trustee and the Company of
the location of the Custodial Account after any change thereof.
(c) Payments in the nature of late payment charges, prepayment
fees, assumption fees and reconveyance fees received on the Mortgage Loans shall
not be deposited in the Custodial Account, but rather shall be received and held
by the Master Servicer as additional servicing compensation.
39
SECTION 3.11. Permitted Withdrawals From the Custodial
Account.
The Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.10 that are attributable to the Mortgage Loans for the
following purposes:
(i) to make deposits into the Certificate Account in
the amounts and in the manner provided for in Section 4.01, such
deposit to include interest collections on the Mortgage Loans at the
Net Mortgage Rate [and net of amounts reimbursed therefrom];
(ii) to pay to itself, the Company, the Seller or any
other appropriate person, as the case may be, with respect to each
Mortgage Loan that has previously been purchased, repurchased or
replaced pursuant to Sections 2.02, 2.04 or 9.01 all amounts received
thereon and not yet distributed as of the date of purchase, repurchase
or substitution;
(iii) to reimburse itself or any Sub-Servicer for
Advances not previously reimbursed, the Master Servicer's or any
Sub-Servicer's right to reimbursement pursuant to this clause (iii)
being limited to amounts received which represent Late Collections (net
of the related Servicing Fees) of Monthly Payments on Mortgage Loans
with respect to which such Advances were made and as further provided
in Section 3.15;
(iv) to reimburse or pay itself, the Trustee or the
Company for expenses incurred by or reimbursable to the Master
Servicer, the Trustee or the Company pursuant to Sections 3.22, 6.03,
8.05, 10.01(c) or 10.01(g), except as otherwise provided in such
Sections;
(v) to reimburse itself or any Sub-Servicer for costs
and expenses incurred by or reimbursable to it relating to the
prosecution of any claims pursuant to Section 3.13 that are in excess
of the amounts so recovered;
(vi) to reimburse itself or any Sub-Servicer for unpaid
Servicing Fees and unreimbursed Servicing Advances, the Master
Servicer's or any Sub-Servicer's right to reimbursement pursuant to
this clause (vi) with respect to any Mortgage Loan being limited to
late recoveries of the payments for which such advances were made
pursuant to Section 3.01 or Section 3.09 and any other related Late
Collections;
(vii) to pay itself as servicing compensation (in
addition to the Servicing Fee), on or after each Distribution Date, any
interest or investment income earned on funds deposited in the
Custodial Account for the period ending on such Distribution Date,
subject to Section 8.05;
(viii) to reimburse itself or any Sub-Servicer for any
Advance previously made which itself has determined to be a
Nonrecoverable Advance, provided that either (a) such Advance was made
with respect to a delinquency that ultimately constituted an
40
Excess Special Hazard Loss, Excess Fraud Loss, Excess Bankruptcy Loss
or Extraordinary Loss, or (b) the Certificate Principal Balances of the
Class B Certificates have been reduced to zero; and
(ix) to clear and terminate the Custodial Account at the
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate
accounting records on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to such clauses
(ii), (iii), (iv), (v), (vi), (vii) and (viii).
In connection with clause (viii) above, the Trustee shall
notify the Master Servicer if and when the Certificate Principal Balances of the
Class B Certificates have been reduced to zero.
SECTION 3.12. Permitted Instruments.
Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Instruments, each of which shall mature not later than the Business Day
immediately preceding the Distribution Date next following the date of such
investment (except that if such Permitted Instrument is an obligation of the
insti tution that maintains such account, then such Permitted Instrument shall
mature not later than such Distribution Date) and shall not be sold or disposed
of prior to its maturity. All income and gain realized from any such investment
as well as any interest earned on deposits in the Custodial Account shall be for
the benefit of the Master Servicer. The Master Servicer shall deposit in the
Custodial Account (with respect to investments made hereunder of funds held
therein) an amount equal to the amount of any loss incurred in respect of any
such investment immediately upon realization of such loss without right of
reimbursement.
SECTION 3.13. Maintenance of Primary Mortgage Insurance and
Primary Hazard Insurance.
(a) The Master Servicer shall not take, or permit any
Sub-servicer 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 the Master Servicer or Sub-servicer, would have been covered
thereunder. To the extent coverage is available, the Master Servicer shall keep
or cause to be kept in full force and effect each such Primary Mortgage
Insurance Policy until the principal balance of the related Mortgage Loan
secured by a Mortgaged Property is reduced to 75% or less of the Collateral
Value in the case of such a Mortgage Loan having a Loan-to-Value Ratio at
origination in excess of 80%. The Master Servicer shall not cancel or refuse to
renew any such Primary Mortgage Insurance Policy, or consent to any Sub-servicer
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 a Qualified Insurer.
41
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans, the Master Servicer agrees to present or to
cause the related Sub-servicer to present, on behalf of the Master Servicer, the
Sub-servicer, if any, the Trustee and Certificateholders, claims to the insurer
under any Primary Mortgage Insurance Policies, in a timely manner in accordance
with such policies, and, in this regard, to take or cause to be taken such
reasonable action as shall be necessary to permit recovery under any Primary
Mortgage Insurance Policies respecting defaulted Mortgage Loans. Pursuant to
Section 3.10, any Insurance Proceeds collected by or remitted to the Master
Servicer under any Primary Mortgage Insurance Policies shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.11.
(c) The Master Servicer shall cause to be maintained for each
Mortgage Loan primary hazard insurance with extended coverage on the related
Mortgaged Property in an amount equal to the lesser of 100% of the replacement
value of the improvements, as determined by the insurance company, on such
Mortgaged Property or the unpaid principal balance of the Mortgage Loan. The
Master Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Pursuant to Section 3.10, any amounts collected by the
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 Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.11. Any cost incurred by
the Master Servicer in maintaining any such insurance 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. 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 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 replacement
value of the improvements, which are part of such 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).
In the event that the Master Servicer shall obtain and
maintain a blanket fire insurance policy with extended coverage insuring against
hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to
have satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first two sentences of this Section 3.13 and there shall have
been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket
42
policy because of such deductible clause. Any such deposit by the Master
Servicer shall be made on the Certificate Account Deposit Date next preceding
the Distribution Date which occurs in the month following the month in which
payments under any such policy would have been deposited in the Custodial
Account. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy.
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.
The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance by any Mortgagor of the Mortgaged
Property (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accele rate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any such
rights if it reasonably believes that it is prohibited by law from doing so or
if such enforcement will adversely affect or jeopardize required coverage under
the Insurance Instruments. If the Master Servicer is unable to enforce such
"due-on-sale" clause (as provided in the previous sentence) or if no
"due-on-sale" clause is applicable, the Master Servicer or the Sub-Servicer will
enter into an assumption and modification agreement with the Person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which such
Person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon; provided, however,
that the Master Servicer shall not enter into any assumption and modification
agreement if the coverage provided under the Primary Insurance Policy, if any,
would be impaired by doing so. The Master Servicer is also authorized to enter
into a substitution of liability agreement with such Person, pursuant to which
the original Mortgagor is released from liability and such Person is substituted
as the Mortgagor and becomes liable under the Mortgage Note, if the Master
Servicer shall have determined in good faith that such substitution will not
adversely affect the collectability of the Mortgage Loan. Any fee collected by
or on behalf of the Master Servicer for entering into an assumption or
substitution of liability agreement will be retained by or on behalf of the
Master Servicer as additional servicing compensation. In connection with any
such assumption, no material term of the Mortgage Note (including but not
limited to the Mortgage Rate, the amount of the Monthly Payment and any other
term affecting the amount or timing of payment on the Mortgage Loan) may be
changed. The Master Servicer shall not enter into any substitution or assumption
if such substitution or assumption would 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 the Trust Fund to fail to qualify as a REMIC under the Code or the
imposition of any tax on "prohibited transactions" or "contributions" after the
Startup Day under the REMIC Provisions. The Master Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original copy of such substitution or assumption
agree ment, which copy shall be added to the related Mortgage File and shall,
for all purposes, be con sidered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof.
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Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or any assumption that the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever. For purposes of this Section 3.14, the term "assumption" is deemed
to also include a sale of a Mortgaged Property that is not accompanied by an
assumption or substitution of liability agreement.
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts,
consistent with the procedures that the Master Servicer would use in servicing
loans for its own account, to 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, and which are not released from the Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use reasonable
efforts to realize upon such defaulted Mortgage Loans in such manner as will
maximize the receipt of principal and interest by Certificateholders, taking
into account, among other things, the timing of foreclosure proceedings. The
foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master Servicer
shall not be required to expend its own funds toward the restoration of such
property unless it shall determine in (i) that such restoration will increase
the net proceeds of liquidation of the related Mortgage Loan to
Certificateholders after reimbursement to itself for such expenses, and (ii)
that such expenses will be recoverable by the Master Servicer through Insurance
Proceeds or Liquidation Proceeds from the related Mortgaged Property, as
contemplated in Section 3.11. The Master Servicer shall be responsible for all
other costs and expenses incurred by it in any such proceedings; provided,
however, that it shall be entitled to reimbursement thereof from the related
Mortgaged Property, as contemplated in Section 3.11.
The proceeds of any Cash Liquidation or REO Disposition, as
well as any recovery resulting from a partial collection of Insurance Proceeds
or Liquidation Proceeds or any income from an REO Property, will be applied in
the following order of priority: first, to reimburse the Master Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11(vi) or 3.22; second, to accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Rate, to the date of the Cash
Liquidation or REO Disposition, or to the Due Date prior to the Distribution
Date on which such amounts are to be distributed if not in connection with a
Cash Liquidation or REO Disposition; and third, as a recovery of principal of
the Mortgage Loan. If the amount of the recovery so allocated to interest is
less than a full recovery thereof, that amount will be allocated as follows:
first, on a pro rata basis, to unpaid Servicing Fees; and second, to interest at
the related Net Mortgage Rate. The portion of the recovery so allocated to
unpaid Servicing Fees shall be reimbursed to the Master Servicer or any
Sub-Servicer pursuant to Section 3.11(vi). The portions of the recovery so
allocated to interest at the related Net Mortgage Rate and to principal of the
Mortgage Loan shall be applied as follows: first, to reimburse the Trustee for
any unpaid Trustee's Fees, second, to reimburse
44
the Master Servicer or any Sub-Servicer for any related unreimbursed Advances in
accordance with Section 3.11(iii) or 3.22, and third, for distribution in
accordance with the provisions of Section 4.01(b) and 4.01(c).
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Master Servicer will immediately
notify the Trustee by a certification (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 Custodial
Account pursuant to Section 3.10 have been or will be so deposited) of a
Servicing Officer and shall request delivery to it of the Mortgage File in the
form of the Request for Release attached hereto as Exhibit F-2. Upon receipt of
such certification and request, the Trustee shall promptly release the related
Mortgage File to the Master Servicer. Subject to the receipt by the Master
Servicer of the proceeds of such payment in full and the payment of all related
fees and expenses, the Master Servicer shall arrange for the release to the
Mortgagor of the original cancelled Mortgage Note. The Master Servicer shall
provide for preparation of the appropriate instrument of satisfaction covering
any Mortgage Loan which pays in full and the Trustee shall cooperate in the
execution and return of such instrument to provide for its delivery or recording
as may be required. All other documents in the Mortgage File shall be retained
by the Master Servicer to the extent required by applicable law. No expenses
incurred in connection with any instrument of satisfac tion or deed of
reconveyance shall be chargeable to the Custodial Account or the Certificate
Account.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
the Insurance Instruments or any other insurance policy relating to the Mortgage
Loan, the Trustee shall, upon request of the Master Servicer and delivery to the
Trustee of a Request for Release in the form attached hereto as Exhibit F-1,
release the related Mortgage File to the Master Servicer, and the Trustee shall
execute such documents as the Master Servicer shall prepare and request as being
necessary to the prosecution of any such proceedings. Such Request for Release
shall obligate the Master Servicer to return each document previously requested
from the Mortgage File to the Trustee when the need therefor by the Master
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Custodial Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for the
foreclosure of the Mortgaged Property either judicially or non-judicially, and
the Master Servicer has delivered 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. Upon receipt of a certificate of a Servicing Officer stating that such
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation which are required to be deposited into the
Custodial Account have been or will be so deposited, or that such Mortgage Loan
has become an REO Property, the servicing receipt shall be released by the
Trustee to the Master Servicer.
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Upon written request of a Servicing Officer, the Trustee shall
execute and deliver to the Master Servicer any court pleadings, requests for
trustee's sale or other documents prepared by the Master Servicer that are
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. Each such request that such
pleadings or documents be executed by the Trustee shall include a certification
as to the reason such documents or pleadings are required and that the execution
and delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
SECTION 3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain, from deposits to the Custodial Account of
amounts representing payments or recoveries of interest, the Servicing Fees with
respect to each Mortgage Loan (less any portion of such amounts retained by any
Sub-Servicer). In addition, the Master Servicer shall be entitled to recover
unpaid Servicing Fees out of related Late Collections to the extent permitted in
Section 3.11.
The Master Servicer also shall be entitled pursuant to Section
3.11 to receive from the Custodial Account, as additional servicing compensation
interest or other income earned on deposits therein, as well as any prepayment
fees, assumption fees, late payment fees and reconveyance fees. The Master
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (including payment of the premiums for any
Primary Mortgage Insurance Policy or blanket policy insuring against hazard
losses pursuant to Section 3.13, payment of the servicing compensation of the
Sub-Servicer to the extent not retained by it), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.11. The
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Master Servicer's responsibilities and
obligations under this Agreement.
SECTION 3.18. Maintenance of Certain Servicing Policies.
During the term of its service as Master Servicer, the Master
Servicer shall maintain in force (i) a policy or policies of insurance covering
errors and omissions in the performance of its obligations as servicer hereunder
and (ii) a fidelity bond in respect of its officers, employees or agents. Each
such policy or policies and bond shall, together, comply with the requirements
from time to time of FNMA or FHLMC for persons performing servicing for mortgage
loans purchased by such corporation. The Master Servicer shall prepare and
present, on behalf of itself, the Trustee and Certificateholders, claims under
any such errors and omissions policy or policies or fidelity bond in a timely
fashion in accordance with the terms of such policy or bond, and upon the filing
of any claim on any policy or bond described in this Section, the Master
Servicer shall
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promptly notify the Trustee of any such claims and the Trustee shall notify the
Rating Agency of such claim.
SECTION 3.19. Annual Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the
Company on or before _____ __ of each year, beginning with _____ __, 199_, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Master Servicer during the preceding calendar year and
of its performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Master Servicer has fulfilled in all material respects its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officers and the nature and status thereof. Copies of such
certificate shall be provided by the Trustee to any Certificateholder upon
request at the Master Servicer's expense, provided such statement is delivered
by the Master Servicer to the Trustee.
SECTION 3.20. Annual Independent Public Accountants' Servicing
Statement.
On or before March 31 of each year, beginning with March 31,
19__, the Master Servicer at its expense shall furnish to the Company and the
Trustee a statement from a firm of independent certified public accountants
(which is a member of the American Institute of Certified Public Accountants) to
the effect that, based on an examination by such firm conducted substantially in
compliance with the Uniform Single Attestation Program for Mortgage Bankers or
the Audit Program for Mortgages serviced for FHLMC, the servicing of mortgage
loans under agreements (including this Agreement) substantially similar to each
other was conducted in compliance with such agreements except for such
significant exceptions or errors in record that, in the opinion of the firm, the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC requires it to report. In rendering its statement
such firm may rely, as to the matters relating to the direct servicing of
mortgage loans by Sub-servicers, 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 firms of independent
public accountants with respect to those Sub-servicers which also have been the
subject of such an examination. Copies of such statement shall be provided by
the Trustee to any Certificateholder upon request at the Master Servicer's
expense, provided such statement is delivered by the Master Servicer to the
Trustee.
SECTION 3.21. Access to Certain Documentation.
(a) The Master Servicer shall provide to the OTS, the FDIC and
other federal banking regulatory agencies, and their respective examiners,
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS, the FDIC and such other agencies. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices of the Master Servicer designated
47
by it. Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this section.
(b) The Master Servicer shall afford the Company and the
Trustee, upon reasonable notice, during normal business hours access to all
records maintained by the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the Master Servicer responsible
for such obligations. Upon request, the Master Servicer shall furnish the
Company and the Trustee with its most recent financial statements and such other
information as the Master Servicer possesses regarding its business, affairs,
property and condition, financial or otherwise to the extent related to the
servicing of the Mortgage Loans. The Company may, but is not obligated to,
enforce the obligations of the Master Servicer hereunder and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Master Servicer hereunder or exercise the rights of the Master Servicer
hereunder; provided that the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Company or its
designee. The Company shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
SECTION 3.22. Title, Conservation and Disposition of REO
Property.
This Section shall apply only to REO Properties acquired for
the account of the Trust Fund, and shall not apply to any REO Property relating
to a Mortgage Loan which was purchased or repurchased from the Trust Fund
pursuant to any provision hereof. In the event that title to any such REO
Property is acquired, the deed or certificate of sale shall be issued to the
Trustee, or to its nominee, on behalf of the Certificateholders. The Master
Servicer, on behalf of the Trust Fund, shall either sell any REO Property within
two years after the Trust Fund acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code or, at the expense of the Trust Fund,
request an extension of the two-year grace period, more than 60 days before the
day on which the two-year grace period would otherwise expire, unless the Master
Servicer has delivered to the Trustee an Opinion of Counsel, addressed to the
Trustee and the Master Servicer, to the effect that the holding by the Trust
Fund of such REO Property subsequent to two years after its acquisition will not
result in the imposition on the Trust Fund of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause the Trust Fund to fail
to qualify as a REMIC under federal law at any time that any Certificates are
outstanding. The Master Servicer shall manage, conserve, protect and operate
each REO Property for the Certificateholders solely for the purpose of its
prompt disposition and sale in a manner which does not cause such REO Property
to fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) or result in the receipt by the Trust Fund of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code or
any "net income from fore closure property" which is subject to taxation under
the REMIC Provisions. Pursuant to its efforts to sell such REO Property, the
Master Servicer shall either itself or through an agent selected by the Master
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its
48
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Certificateholders for the period prior to the sale of such REO
Property.
The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets. The Master Servicer
shall deposit, or cause to be deposited, on a daily basis in the Custodial
Account all revenues received with respect to the REO Properties, net of any
directly related expenses incurred or withdraw therefrom funds necessary for the
proper operation, management and maintenance of the REO Property.
If as of the date of acquisition of title to any REO Property
there remain outstanding unreimbursed Servicing Advances with respect to such
REO Property or any outstanding Advances allocated thereto the Master Servicer,
upon an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well as
any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15.
Subject to the first paragraph of this Section 3.22, the REO
Disposition shall be carried out by the Master Servicer at such price and upon
such terms and conditions as the Master Servicer shall determine to be in the
best economic interest of the Trust Fund.
Any REO Disposition shall be for cash only (unless changes in
the REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in the
Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01, including any such net proceeds which are in excess of the
applicable Stated Principal Balance plus all unpaid REO Imputed Interest thereon
through the date of the REO Disposition.
Notwithstanding the foregoing provisions of this Section 3.22,
with respect to any Mortgage Loan as to which the Master Servicer has received
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the Mortgaged Property, the Master Servicer shall promptly request
the Trustee and the Company to provide directions and instructions with respect
to such Mortgage Loan and shall act in accordance with any such directions and
instructions jointly provided by the Trustee and the Company. Notwithstanding
the preceding sentence of this Section 3.22, with respect to any Mortgage Loan
described by such sentence, the Master Servicer shall not, on behalf of the
Trustee, either (i) obtain title to the related Mortgaged Property as a result
of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire possession
of, the related Mortgaged Property, unless (i) the Company and the Trustee
jointly direct the Master Servicer to take such action and (ii) either (A) the
Master Servicer has, at least 30 days prior to taking such action, obtained and
delivered to the Company an environmental audit report prepared by a Person who
regularly conducts environmental audits using customary industry standards or
(B) the Company has directed the Master Servicer not to obtain an environmental
49
audit report. If the Trustee and the Company have not jointly provided
directions and instructions to the Master Servicer in connection with any such
Mortgage Loan within 30 days of a request by the Master Servicer for such
directions and instructions, then the Master Servicer shall take such action as
it deems to be in the best economic interest of the Trust Fund (other than
proceeding against the Mortgaged Property) and is hereby authorized at such time
as it deems appropriate to release such Mortgaged Property from the lien of the
related Mortgage.
The cost of the environmental audit report contemplated by
this Section 3.22 shall be advanced by the Master Servicer as an expense of the
Trust Fund, and the Master Servicer shall be reimbursed therefor from the
Custodial Account as provided in Section 3.11, any such right of reimbursement
being prior to the rights of the Certificateholders to receive any amount in the
Custodial Account.
If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property in compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Master Servicer as
an expense of the Trust Fund, and the Master Servicer shall be entitled to be
reimbursed therefor from the Custodial Account as provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Certificateholders
to receive any amount in the Custodial Account.
SECTION 3.23. Additional Obligations of the Master Servicer.
On each Certificate Account Deposit Date, the Master Servicer
shall deliver to the Trustee for deposit in the Certificate Account from its own
funds and without any right of reimbursement therefor, a total amount equal to
the aggregate of the Prepayment Interest Shortfalls for such Distribution Date;
provided that the Master Servicer's obligations under this subsection on any
Distribution Date shall not be more than the total amount of its master
servicing compensation payable in such month.
SECTION 3.24. Additional Obligations of the Company.
The Company agrees that on or prior to the tenth day after the
Closing Date, the Company shall provide the Trustee with a written notification,
substantially in the form of Exhibit J attached hereto, relating to each Class
of Certificates, setting forth (i) in the case of each Class of such
Certificates, (a) if less than 10% of the aggregate Certificate Principal
Balance of such Class of Certificates has been sold as of such date, the value
calculated pursuant to clause (b)(iii) of Exhibit J hereto, or, (b) if 10% or
more of such Class of Certificates has been sold as of such date but no single
price is paid for at least 10% of the aggregate Certificate Principal Balance of
such Class of Certificates, then the weighted average price at which the
Certificates of such Class were sold and the aggregate percentage of
Certificates of such Class sold, (c) the first single price
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at which at least 10% of the aggregate Certificate Principal Balance of such
class of Certificates was sold or, (d) if any Certificates of each Class of
Certificates are retained by the Company or an affiliated corporation, or are
delivered to the Seller, the fair market value of such Certificates as of the
Closing Date, (ii) the prepayment assumption used in pricing the Certificates,
and (iii) such other information as to matters of fact as the Trustee may
reasonably request to enable it to comply with its reporting requirements with
respect to each Class of such Certificates to the extent such information can in
the good faith judgment of the Company be determined by it.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Certificate Account; Distributions.
(a) The Trustee shall establish and maintain a Certificate
Account, in which the Master Servicer shall cause to be deposited on behalf of
the Trustee on or before 3:00 P.M. New York time on each Certificate Account
Deposit Date 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 deposited in the Certificate Account pursuant to
Sections 3.11, 3.13, 3.23 or 4.03(b) and (iii) all other amounts constituting
or, if not otherwise applicable to the payment of the Trustee's Fee, that would
constitute the Available Distribution Amount for the immediately succeeding
Distribution Date. The Trustee shall transfer from the Certificate Account to
itself, the Trustee's Fee on each Certificate Account Deposit Date. Such amounts
do not constitute part of the Available Distribution Amount.
(b) On each Distribution Date the Trustee shall, distribute to
the Master Servicer, in the case of a distribution pursuant to Section
4.01(b)(iii), and 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 at a bank or other entity
having appropriate facilities therefor, if such Certificateholder has so
notified the Trustee at least 5 Business Days prior to the related Record Date
and such Certificateholder is the registered owner of Certificates the aggregate
Initial Certificate Principal Balance of which is not less than $2,500,000 (or,
with respect to the Class A-5 and Class A-7 Certificates, is the registered
owner of an initial Notional Amount of not less than $10,000,000 of each such
class), or otherwise by check mailed to such Certificateholder at the address of
such Holder appearing in the Certificate Register, such Certificateholder's
share (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, in each case to the extent of the
Available Distribution Amount:
(i) to the Class A Certificateholders on a pro rata basis
based on Accrued Certificate Interest payable thereon, Accrued
Certificate Interest on such Classes of Certificates for such
Distribution Date and to the extent not previously paid, for all prior
Distribution Dates;
(ii) to the Class A Certificateholders (other than the Class
A-5 Certificateholders and the Class A-7 Certificateholders), in the
priorities and amounts set forth in Sections 4.01(c) and (d), the sum
of the following (applied to reduce the Certificate Principal Balances
of such Class A Certificates, as applicable):
(A) the Senior Percentage for such Distribution Date
times the sum of the following:
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(1) the principal portion of each Monthly
Payment due during the related Due Period on each
Outstanding Mortgage Loan, whether or not received on
or prior to the related Determination Date, minus the
principal portion of any Debt Service Reduction which
together with other Bankruptcy Losses exceeds the
Bankruptcy Amount;
(2) the Stated Principal Balance of any
Mortgage Loan purchased during the related Prepayment
Period and the amount of any shortfall deposited in
the Custodial Account in connection with the
substitution of a Deleted Mortgage Loan pursuant to
Section 2.04 during the related Prepayment Period;
and
(3) the principal portion of all other
unscheduled collections (other than Principal
Prepayments and amounts received in connection with a
Cash Liquidation or REO Disposition) received during
the related Prepayment Period, including, without
limitation, Insurance Proceeds, Liquidation Proceeds
and REO Proceeds, to the extent applied by the Master
Servicer as recoveries of principal of the related
Mortgage Loan pursuant to Section 3.15;
(B) with respect to each Mortgage Loan for which a
Cash Liquidation or a REO Disposition occurred during the related
Prepayment Period and did not result in any Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses or Extraordinary
Losses, an amount equal to the lesser of (a) the Senior Percentage for
such Distribution Date times the Stated Principal Balance of such
Mortgage Loan and (b) the Senior Accelerated Distribution Percentage
for such Distribution Date times the related unscheduled collections
(including without limitation Insurance Proceeds, Liquidation Proceeds
and REO Proceeds) to the extent applied by the Master Servicer as
recoveries of principal of the related Mortgage Loan pursuant to
Section 3.15;
(C) the Senior Accelerated Distribution Percentage
for such Distribution Date times the aggregate of all Principal
Prepayments in Full and Curtailments received in the related Prepayment
Period; and
(D) any amounts described in clauses (A), (B) and (C)
of this Section 4.01(b)(ii), as determined for any previous
Distribution Date, which remain unpaid after application of amounts
previously distributed pursuant to this clause (D) to the extent that
such amounts are not attributable to Realized Losses which have been
allocated to the Class B Certificates;
(iii) if the Certificate Principal Balances of the Class B
Certificates have not been reduced to zero, to the Master Servicer or a
Subservicer, to the extent of and in reimbursement for any Advances
previously made with respect to any Mortgage Loan 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, minus any
such
53
Advances that were made with respect to delinquencies that ultimately
constituted Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses or Extraordinary Losses;
(iv) to the Holders of the Class B Certificates, the Accrued
Certificate Interest thereon for such Distribution Date, plus any
Accrued Certificate Interest thereon remaining unpaid from any previous
Distribution Date, except as provided below;
(v) to the Holders of the Class B Certificates, an amount equal
to the Subordinate Principal Distribution Amount for such Class of
Certificates for such Distribution Date, applied in reduction of the
Certificate Principal Balance of the Class B Certificates;
(vi) to the Class A Certificateholders (other than the Class A-5
and Class A-7 Certificateholders) in the priority set forth in Section
4.01(c), the portion, if any, of the Available Distribution Amount
remaining after the foregoing distributions, applied to reduce the
Certificate Principal Balances of such Class A Certificates, but in no
event more than the sum of the outstanding Certificate Principal
Balances of the Class A Certificates (other than the Class A-5 and
Class A-7 Certificates) and thereafter applied to reduce the
Certificate Principal Balance of the Class B Certificates, but in no
event more than the outstanding Certificate Principal Balance of the
Class B Certificates; and
(vii) to the Class R Certificateholders, the balance, if any, of
the Available Distribution Amount.
(c) Distributions of principal on the Class A Certificates
(other than the Class A-5 and Class A-7 Certificates) on each Distribution Date
occurring prior to the occurrence of the Credit Support Depletion Date will be
made as follows:
(i) first, to the Class A-1 Certificates and Class A-6
Certificates, with the amount to be distributed allocated as between
such classes on a pro rata basis, until the Certificate Principal
Balance of each such Class has been reduced to zero;
(ii) second, to the Class A-2 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero;
(iii) third, to the Class A-3 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; and
(iv) fourth, to the Class A-4 Certificates, until the
Certificate Principal Balance thereof has been reduced to zero.
(d) On each Distribution Date occurring on or after the Credit
Support Depletion Date, all priorities relating to sequential distributions in
respect of principal among the various classes of Senior Certificates will be
disregarded, and the Senior Principal Distribution
54
Amount will be distributed to all classes of Senior Certificates pro rata in
accordance with their respective outstanding Certificate Principal Balances;
provided, that the aggregate amount distributable to the Class A-1, Class A-5
and Class A-6 Certificates (the "Tiered Certificates") in respect of Accrued
Certificate Interest thereon and in respect of their pro rata portion of the
Senior Principal Distribution Amount shall be distributed among the Tiered
Certificates in the amounts and priority as follows: first, to the Class A-1
Certificates and the Class A-5 Certificates, up to an amount equal to, and pro
rata based on, the Accrued Certificate Interest thereon; second to the Class A-1
Certificates, up to an amount equal to the Optimal Principal Distribution Amount
thereof, in reduction of the Certificate Principal Balances thereof; third to
the Class A-6 Certificates, up to an amount equal to the Accrued Certificate
Interest thereon; and fourth to the Class A-6 Certificates the remainder of the
amount so distributable among the Tiered Certificates.
(e) The Trustee shall, upon written request from the Master
Servicer, invest or cause the institution maintaining the Certificate Account to
invest the funds in the Certificate Account in Permitted Instruments designated
in the name of the Trustee for the benefit of the Certificateholders, which
shall mature not later than the Business Day next preceding the Distribution
Date next following the date of such investment (except that (i) any investment
in obligations of the institution with which the Certificate Account is
maintained may mature on such Distribution Date and (ii) any other investment
may mature on such Distribution Date if the Trustee shall agree to advance funds
on such Distribution Date to the Certificate Account in the amount payable on
such investment on such Distribution Date, pending receipt thereof to the extent
necessary to make distributions on the Certificates) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer 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 shall be deposited in the Certificate Account
by the Master Servicer out of its own funds immediately as realized without
right of reimbursement.
SECTION 4.02. Statements to Certificateholders.
On each Distribution Date the Trustee shall forward or cause
to be forwarded by mail to each Holder of a Certificate and to the Company and
the Master Servicer a statement as to such distribution setting forth the
following information as to each Class of Certificates to the extent applicable:
(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 the Certificateholders
of such Class allocable to interest;
(iii) if the distribution to the Certificateholders of such
Class is less than the full amount that would be distributable to such
Certificateholders if there were sufficient funds available therefor,
the amount of the shortfall;
55
(iv) the amount of any Advance by the Master Servicer pursuant to
Section 4.04;
(v) the number and aggregate 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) the amount of Servicing Fees paid to the Master Servicer;
(ix) on the basis of the most recent reports furnished to it by
Subservicers, the number and aggregate principal balances of Mortgage
Loans that are delinquent (A) one month, (B) two months and (C) three
months, and the number and aggregate principal balance of Mortgage
Loans that are in foreclosure;
(x) the number, aggregate principal balance and book value of any
REO Properties;
(xi) 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;
(xii) 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;
(xiii) the Pass-Through Rate on the Class A-7 Certificates for
such Distribution Date;
(xiv) the occurrence of the Credit Support Depletion Date;
(xv) the Senior Accelerated Distribution Percentage applicable to
such distribution;
(xvi) the Senior and Class B Percentages for such Distribution
Date;
(xvii) the aggregate amount of Realized Losses allocated to the
Certificates on such Distribution Date;
(xviii) the aggregate amount of any recoveries on previously
foreclosed loans from the Seller due to a breach of representation or
warranty;
56
(xix) the weighted average remaining term to maturity of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date; and
(xx) the weighted average Mortgage Rates of the Mortgage Loans
after giving effect to the amounts distributed on such Distribution
Date.
In the case of information furnished pursuant to subclauses
(i) and (ii) above, the amounts shall also be expressed as a dollar amount per
Single Certificate.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare and forward to each Person who at any
time during the calendar year was a Holder of a Certificate, a statement
containing the information set forth in subclauses (i) and (ii) 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 and regulations thereunder as from time to time are in force.
SECTION 4.03. Remittance Reports; Advances by the Master
Servicer.
(a) By 11:00 A.M. New York time the Business Day following
each Determination Date, the Master Servicer shall deliver to the Trustee a
report, prepared as of the close of business on the Determination Date (the
"Determination Date Report"), by telecopy or in a mutually agreeable electronic
format. The Determination Date Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans that
is reasonably available to the Master Servicer and that is required by the
Trustee for purposes of making the calculations referred to in the following
paragraph, as set forth in written specifications or guidelines issued by the
Trustee from time to time. Not later than 2:00 P.M. New York time on the
Certificate Account Deposit Date, the Trustee shall furnish by telecopy to the
Master Servicer a statement (the information in such statement to be made
available to Certificateholders or the Company by the Master Servicer on
request) setting forth (i) the Available Distribution Amount, (ii) the amounts
required to be withdrawn from the Custodial Account and deposited into the
Certificate Account on the immediately succeeding Certificate Account Deposit
Date pursuant to clause (iii) of Section 4.01(a); and (iii) such other
information with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.01 and to prepare the statements to Certificateholders
contemplated by Section 4.02. The determination by the Trustee of such amounts
shall, in the absence of obvious error, be presumptively deemed to be correct
for all purposes hereunder.
(b) Not later than 2:00 P.M. New York time on the Certificate
Account Deposit Date, the Trustee shall notify the Master Servicer of the
aggregate amount of Advances required to be made for the related Distribution
Date, which shall be the aggregate amount of Monthly Payments (with each
interest portion thereof adjusted to be net of the related Servicing Fee Rate),
less the amount of any related Debt Service Reductions or reductions in the
amount of interest collectable from the Mortgagor pursuant to the Relief Act, on
the Outstanding Mortgage Loans
57
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 following
the reduction of the Certificate Principal Balances of the Class B Certificates
to zero no Advance shall be made if it would be a Nonrecoverable Advance. On or
before 3:00 P.M. New York time on each Certificate Account Deposit Date, the
Master Servicer shall either (i) deposit in the Certificate Account from its own
funds, or funds received therefor from the Sub-Servicers, an amount equal to the
Advances to be made by the Master Servicer in respect of the related
Distribution Date, (ii) withdraw from amounts on deposit in the Custodial
Account and deposit in the Certificate Account all or a portion of the amounts
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 amounts held for future distribution so used
shall be replaced by the Master Servicer by deposit in the Custodial Account on
or before 12:00 P.M. New York time on any future Certificate Account Deposit
Date to the extent that funds attributable to the Mortgage Loans that are
available in the Custodial Account for deposit in the Certificate Account on
such Certificate Account Deposit Date shall be less than payments to
Certificateholders required to be made on the following Distribution Date. The
amount of any reimbursement pursuant to Section 4.01(b)(iii) in respect of
outstanding Advances on any Distribution Date shall be allocated to specific
Monthly Payments due but delinquent for previous Due Periods, which allocation
shall be made, to the extent practicable, to Monthly Payments which have been
delinquent for the longest period of time. Such allocations shall be conclusive
for purposes of reimbursement to the Master Servicer from recoveries on the
Mortgage Loans pursuant to Section 3.11. The determination by the 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 Seller and the Trustee. The
Trustee shall deposit all funds it receives pursuant to this Section 4.03 into
the Certificate Account.
(c) In the event that the Master Servicer determines on the
Certificate Account Deposit Date that it will be unable to deposit in the
Certificate Account an amount equal to the Advance required to be made for the
immediately succeeding Distribution Date in the amount determined by the Trustee
pursuant to paragraph (b) above, it shall give notice to the Trustee of its
inability to advance (such notice may be given by telecopy), not later than 3:00
P.M., New York time, on such Business Day, specifying the portion of such amount
that it will be unable to deposit. If the Master Servicer shall have determined
that it is not obligated to make the entire Advance because all or a lesser
portion of such Advance would not be recoverable from Insurance Proceeds,
Liquidation Proceeds or otherwise, the Master Servicer shall promptly deliver to
the Trustee for the benefit of the Certificateholders an Officer's Certificate
setting forth the reasons for the Master Servicer's determination. Not later
than 5:00 P.M., New York time, on the Certificate Account Deposit Date, unless
by such time the Master Servicer shall have directly or indirectly deposited in
the Certificate Account the entire amount of the Advances required to be made
for the related Distribution Date, pursuant to Section 7.01, the Trustee shall
(a) terminate all of the rights and obligations of the Master Servicer under
this Agreement in accordance with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder, including the obligation to
deposit in the Certificate Account an amount equal to the Advance for the
immediately succeeding Distribution Date.
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SECTION 4.04. Allocation of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall
determine the total amount of Realized Losses, if any, that resulted from any
Cash Liquidation, Debt Service Reduction, Deficient Valuation or REO Disposition
that occurred during the related Prepayment Period. The amount of each Realized
Loss shall be evidenced by an Officers' Certificate by the Master Servicer.
Realized Losses shall be allocated among the various Classes of Certificates as
determined by the Trustee in accordance with the following provisions. All
Realized Losses, other than Excess Special Hazard Losses, Excess Bankruptcy
Losses, Excess Fraud Losses or Extraordinary Losses shall be allocated as
follows: first, to the Class B Certificates until the Certificate Principal
Balance thereof has been reduced to zero; and second, among all the Class A
Certificates as described below. Any Excess Special Hazard Losses, Excess
Bankruptcy Losses, Excess Fraud Losses and Extraordinary Losses on Mortgage
Loans will be allocated among the Class A and Class B Certificates on a pro rata
basis, as described below. 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, without priority among the various Classes so
specified, to each such Class of Certificates on the basis of the then
outstanding Certificate Principal Balances thereof in the case of the principal
portion of a Realized Loss or based on the Accrued Certificate Interest thereon
in the case of an interest portion of a Realized Loss. Allocations of Realized
Losses which are Default Losses to the Class A Certificates will be made on a
pro rata basis, based on their then outstanding Certificate Principal Balances,
or the Accrued Certificate Interest thereon, as applicable, between the Class
A-1, Class A-5 and Class A-6 Certificates, on the one hand, and the Class A-2,
Class A-3, Class A-4 and Variable Strip Certificates, on the other. Any such
Realized Losses so allocated to the Class A-1, Class A-5 and Class A-6
Certificates will be allocated first to the Class A-6 Certificates until the
Certificate Principal Balance thereof or the Accrued Certificate Interest
thereon, as appropriate, is reduced to zero and then to the Class A-1 and Class
A-5 Certificates on a pro rata basis. Any allocation of the principal portion of
Realized Losses (other than Debt Service Reductions) to a Class A Certificate
shall be made by reducing the Certificate Principal Balance thereof by the
amount so allocated, which allocation shall be deemed to have occurred at the
close of business on such Distribution Date. Any allocation of the principal
portion of Realized Losses (other than Debt Service Reductions) to the Class B
Certificates, shall be made by operation of the definition of "Certificate
Principal Balance" and by operation of the provisions of Section 4.01(b).
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 4.01(b) or 4.01(d), as applicable. Allocations of
the principal portion of Debt Service Reductions shall be made by operation of
the provisions of Section 4.01(b) or 4.01(d), as applicable. All Realized Losses
and all other losses allocated to a Class of Certificates under this Section
4.04 will be allocated among the Certificates of such Class in proportion to the
Percentage Interests evidenced thereby.
SECTION 4.05. Information Reports to be Filed by the Master
Servicer.
The Master Servicer or the Sub-Servicers shall file the
information returns with respect to the receipt of mortgage interest received in
a trade or business, reports of foreclosures and abandonments of any Mortgaged
Property and the information returns relating to cancellation
59
of indebtedness income with respect to any Mortgaged Property required by
Sections 6050H, 6050J and 6050P of the Code, respectively, and deliver to the
Trustee an Officers' Certificate stating that such reports have been filed. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount on the
Mortgage Loans, and payments of interest or discount on amounts invested by the
Trustee as agent for Certificateholders pursuant to an election made under
Section 4.01 hereof, that the Trustee reasonably believes are applicable under
the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trustee withholds any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee shall, together with
its monthly report to such Certificateholders pursuant to Section 4.02 hereof,
indicate such amount withheld.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01 The Certificates.
The Certificates will be substantially in the respective forms
annexed hereto as Exhibits X-0, X-0 and B. The Certificates will be issuable in
registered form only. The Class A Certificates, other than the Class A-5 and
Class A-7 Certificates, shall be issuable in minimum dollar denominations of
$1,000 and integral multiples of $1 in excess thereof, except that one
Certificate of each Class of Class A Certificates may be issued in an amount
such that the denomination of such Certificate and the aggregate denomination of
all other outstanding Certificates of such Class together equal the aggregate
Certificate Principal Balance of such Class. The Class B Certificates shall be
issuable in minimum dollar denominations of $25,000 and integral multiples of $1
in excess thereof, except that one Certificate of such Class may be issued in an
amount such that the denomination of such Certificate and the aggregate
denomination of all other outstanding Certificates of such Class together equal
the aggregate Certificate Principal Balance of such Class. The Class A-5 and
Class A-7 Certificates shall be issuable in minimum Notional Amounts of $1,000
and integral multiples of $1 in excess thereof, except that one Certificate of
each such Class may be issued in an amount such that the denomination of such
Certificate and the aggregate denomination of all other outstanding Certificates
of such Class together equal the aggregate Notional Amount of such Class. The
Class R Certificates will each be issuable in minimum denominations of any
Percentage Interest representing 20% and integral multiples of 0.01% in excess
thereof, provided, however, that one Class R Certificate may be issued to the
"tax matters person" pursuant to Article X, in a minimum denomination
representing a Percentage Interest of not less than 0.01%.
Upon original issue, the Certificates shall, upon the written
request of the Company executed by an officer of the Company, be executed and
delivered by the Trustee, authenticated by the Trustee and delivered to or upon
the order of the Company upon receipt by the Trustee of the documents specified
in Section 2.01. The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee in its capacity as trustee hereunder by a
Responsible Officer. Certificates bearing the manual or facsimile signatures of
individuals who were at any time 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 Certificates
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
Trustee 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 issued on the Closing
Date shall be dated the Closing Date and any Certificates delivered thereafter
shall be dated the date of their authentication.
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SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
The Trustee shall maintain a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certif icates and of transfers and exchanges of
Certificates as herein provided.
No transfer, sale, pledge or other disposition of a Class B or
a Class R 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 (the "Act"), and any applicable state securities laws or is
made in accordance with said Act and laws. In the event that a transfer of a
Class B or Class R Certificate is to be made (i) the Depositor may direct the
Trustee to require a written Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Depositor that such transfer shall
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from said Act and laws or is being made pursuant to said Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee, the
Depositor or the Master Servicer, provided that such Opinion of Counsel will not
be required in connection with the initial transfer of any such Certificate by
the Depositor or any affiliate thereof, to a non-affiliate of the Depositor and
(ii) the Trustee shall require the transferee to execute a representation
letter, substantially in the form of Exhibit G-1 hereto, and the Trustee shall
require the transferor to execute a representation letter, substantially in the
form of Exhibit G-2 hereto, each acceptable to and in form and substance
satisfactory to the Depositor and the Trustee 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 Servicer.
Any such Certificate holder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee, the Depositor and the Master Servicer
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such applicable federal and state laws.
The Trustee shall require a written Opinion of Counsel from a
prospective transferee prior to the transfer of any Class B or Class R
Certificate to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and Xxxxx plans, that is subject to
Section 406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Code (any of the foregoing, a "Plan"), to a
trustee or other Person acting on behalf of any Plan, or to any other person who
is using "plan assets" of any Plan to effect such acquisition (including any
insurance company using funds in its general or separate accounts that may
constitute "plan assets"). Such Opinion of Counsel must establish to the
satisfaction of the Depositor and the Trustee or the Certificate Registrar that
such disposition will not violate the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code. Neither the Depositor, the
Master Servicer nor the Trustee will be required to obtain such Opinion of
Counsel on behalf of any prospective transferee. In the case of any transfer of
the foregoing Certificates to an insurance company, in lieu of such Opinion of
Counsel, the Trustee shall require a certification in the form of Exhibit G-5
hereto substantially to the effect that all funds used by such transferee to
purchase such Certificates will be funds held by it in its general account which
it reasonably believes do not constitute "plan assets" of any Plan (as defined
above). The permission of any transfer in violation of the restriction on
transfer set forth in this paragraph shall not constitute a default or an Event
of Default.
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(i) Each Person who has or who acquires any Ownership Interest
in a Class R 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 necessary in
connection with any such sale. The rights of each Person acquiring any Ownership
Interest in a Class R Certificate are expressly subject to the following
provisions:
(A) Each Person holding or acquiring any Ownership Interest in
a Class R 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 Class R Certificate, the Trustee shall require delivery
to it, and shall not register the transfer of any Class R Certificate
until its receipt of (I) an affidavit and agreement (a "Transfer
Affidavit and Agreement" in the form attached hereto as Exhibit G-3)
from the proposed Transferee, in form and substance satisfactory to the
Master Servicer and the Trustee representing and warranting, among
other things, that it is a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Class R 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 Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed the
provisions of this Section 5.02 and agrees to be bound by them, and
(II) a certificate, in the form attached hereto as Exhibit G-4, from
the Holder wishing to transfer the Class R Certificate, in form and
substance satisfactory to the Master Servicer and the Trustee
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 assigned to this transaction has
actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in
a Class R 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 Class R Certificate and (y) not to
transfer its Ownership Interest unless it provides a certificate to the
Trustee in the form attached hereto as Exhibit G-4.
(E) Each Person holding or acquiring an Ownership Interest in
a Class R 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
63
Temporary Treasury Regulations Section 1.67-3T(a)(2)(i)(A) immediately
upon acquiring an Ownership Interest in a Class R Certificate, if it is
"a pass-through interest holder", or is holding an Ownership Interest
in a Class R Certificate on behalf of a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Class R
Certificate only if it shall have received the Transfer Affidavit and Agreement
in the form attached hereto as Exhibit G-3, a certificate of the holder
requesting such transfer in the form attached hereto as Exhibit G-4 and all of
such other documents as shall have been reasonably required by the Trustee as a
condition to such registration. Transfers of the Class R Certificates to
Non-United States Persons and Disqualified Organizations are prohibited.
(iii) (a) If any Disqualified Organization shall become a
holder of a Class R 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 Class R Certificate. If a Non-United States Person shall become a holder of
a Class R 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
Class R Certificate. If a transfer of a Class R 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 Class R
Certificate. The Trustee shall be under no liability to any Person for any
registration of Transfer of a Class R Certificate that is in fact not permitted
by this Section 5.02 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 Class R Certificate in violation of the restrictions in this Section 5.02
and to the extent that the retroactive restoration of the rights of the holder
of such Class R Certificate as described in clause (iii)(a) above shall be
invalid, illegal or unenforceable, then the Trustee shall have the right,
without notice to the holder or any prior holder of such Class R Certificate, to
sell such Class R Certificate to a purchaser selected by the Trustee on such
terms as the Trustee may choose. Such purported Transferee shall promptly
endorse and deliver each Class R Certificate in accordance with the instructions
of the Trustee. Such purchaser may be the Trustee itself. The proceeds of such
sale, net of the commissions (which may include commissions payable to the
Trustee), expenses and taxes due, if any, will be remitted by the Trustee 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 Trustee, and
the Trustee shall not be liable to any Person having an Ownership Interest in a
Class R Certificate as a result of its exercise of such discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Class R Certificate to any Person who is a Disqualified
Organization, including the information regarding "excess inclusions" of such
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Class R 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 Class R Certificate having as among its record holders at any time
any Person who is a Disqualified Organization. The Trustee may charge and shall
be entitled to reasonable compensation for providing such information as may be
required from those Persons which may have had a tax imposed upon them as
specified in clauses (A) and (B) of this paragraph for providing such
information.
Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate at the office of the Trustee
maintained for such purpose, the Trustee shall execute and the Trustee or the
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class of a like aggregate initial Certificate Principal Balance. Every
Certificate surrendered for transfer shall be accompanied by notification of the
account of the designated transferee or transferees for the purpose of receiving
distributions pursuant to Section 4.01 by wire transfer, if any such transferee
desires and is eligible for distribution by wire transfer.
At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of the same Class
of a like aggregate initial Certificate Principal Balance, upon surrender of the
Certificates to be exchanged at the office of the Certificate Registrar.
Whenever any Certificates are so surrendered for exchange the Trustee shall
execute, authenticate and deliver the Certificates 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 the form satisfactory to the Trustee or the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made to the Certificateholders for
any transfer or exchange of Certificates, 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 Certi ficates.
All Certificates surrendered for transfer and exchange shall
be canceled and retained by the Trustee in accordance with the Trustee's
standard procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate, and (ii) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, the Trustee shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Class and initial
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Certificate Principal Balance. 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 thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement 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.
The Company, the Master Servicer, the Trustee and any agent of
any of them 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 4.01 and for all other purposes whatsoever, and neither the
Company, the Master Servicer, the Trustee nor any agent of any of them shall be
affected by notice to the contrary.
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ARTICLE VI
THE COMPANY AND THE MASTER SERVICER
SECTION 6.01. Liability of the Company and the Master
Servicer.
The Company and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Company and the Master Servicer herein.
SECTION 6.02. Merger, Consolidation or Conversion of the
Company or the Master Servicer.
The Company and the Master Servicer each will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation, and each will 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; and provided further
that the Rating Agencies' ratings of the Class A Certificates 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 the Rating
Agencies).
Any Person into which the Company or the Master Servicer may
be merged, consolidated or converted, or any corporation resulting from any
merger or consolidation to which the Company or the Master Servicer shall be a
party, or any Person succeeding to the business of the Company or the Master
Servicer, shall be the successor of the Company or the 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 the Master Servicer shall be qualified to sell mortgage loans to and
service mortgage loans for FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Company, the
Master Servicer and Others.
Neither the Company, the Master Servicer nor any of the
directors, officers, employees or agents of the Company or the Master Servicer
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 Company or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Company,
the Master Servicer or any such person, against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of
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duties or by reason of reckless disregard of obligations and duties hereunder.
The Company, the Master Servicer and any director, officer, employee or agent of
the Company or the Master Servicer may rely in good faith on any document of any
kind PRIMA FACIE properly executed and submitted by any Person respecting any
matters arising hereunder. The Company, the Master Servicer and any director,
officer, employee or agent of the Company or the Master Servicer shall be
indemnified and held harmless by the Trust Fund 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 Master
Servicer's servicing obligations with respect to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or related to the Master Servicer's
obligations under Section 3.01, or 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 Company nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which 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
Company or the Master Servicer may in its sole discretion undertake any such
action which 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 and any liability resulting therefrom (except any action or
liability related to the Master Servicer's obligations under Section 3.01) shall
be expenses, costs and liabilities of the Trust Fund, and the Company and the
Master Servicer shall be entitled to be reimbursed therefor from the Certificate
Account as provided in Section 3.11, any such right of reimbursement being prior
to the rights of Certificateholders to receive any amount in the Certificate
Account.
SECTION 6.04. Limitation on Resignation of the Master
Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) upon appointment of a successor servicer
reasonably acceptable to the Trustee and upon receipt by the Trustee of a letter
from each Rating Agency that such a resignation and appointment will not, in and
of itself, result in a downgrading of the Certificates or (b) upon determination
that its duties hereunder are no longer permissible under applicable law (any
such determination permitting the resignation of the Master Servicer to be
evidenced by an Opinion of Counsel (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee). No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to remit to the Trustee
for distribution to the Certificateholders any payment (other than an
Advance) required to be made under the terms of the Certificates or
this Agreement which continues unremedied for a period of one day after
the date upon which written notice of such failure, requiring the same
to be remedied, shall have been given to the Master Servicer by the
Company (with a copy to the Trustee) or the Trustee, or to the Master
Servicer, the Company and the Trustee by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants
or agreements on the part of the Master Servicer contained in the
Certificates or in this Agreement (including any breach of the Master
Servicer's representations and warranties pursuant to Section 2.03(a)
which materially and adversely affects the interests of the
Certificateholders) which continues unremedied for a period of 30 days
after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by
the Company (with a copy to the Trustee) or the Trustee, or to the
Master Servicer, the Company and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or the
appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Master Servicer and such
decree or order shall have remained in force undischarged or unstayed
for a period of 60 consecutive days; or
(iv) the 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 the Master Servicer or of or relating to all or
substantially all of its property; or
(v) the 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 otherwise voluntarily commence a case or proceeding
under any applicable bankruptcy, insolvency, reorganization or other
similar statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations; or
69
(vi) the Master Servicer shall fail to deposit in the Certificate
Account on any Certificate Account Deposit Date an amount equal to any
required Advance.
If the Master Servicer shall fail to make any deposit in the Certificate Account
as required by Section 4.01, the Trustee shall give the Master Servicer notice
pursuant to clause (i) not later than the Business Day following the Certificate
Account Deposit Date. 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, the Company or the Trustee may,
and at the direction of the Holders of Certificates entitled to at least 51% of
the Voting Rights, the Trustee shall, by notice to the Master Servicer (and to
the Company if given by the Trustee or to the Trustee if given by the Company)
terminate all of the rights and obligations of the Master Servicer under this
Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder and the Company, terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the Trust
Fund, 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 Master Servicer and the Company, terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the Trust
Fund, other than its rights as a Certificateholder hereunder. On or after the
receipt by the Master Servicer of such notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Certificates
(other than as a holder thereof) or the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section, and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Master Ser vicer, 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 and related documents, or otherwise. The Master Servicer
agrees to cooperate with the Trustee in effecting the termination of the Master
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its appointed agent for administration by it of
all cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial or the Certificate Account or
thereafter be received with respect to the Mortgage Loans. The Trustee shall not
be deemed to have breached any obligation hereunder as a result of a failure to
make or delay in making any distribution as and when required hereunder caused
by the failure of the Master Servicer to remit any amounts received on it or to
deliver any documents held by it with respect to the Mortgage Loans. For
purposes of this Section 7.01, the Trustee shall not be deemed to have knowledge
of an Event of Default unless a Responsible Officer of the Trustee assigned to
and working in the Trustee's Corporate Trust Division has actual knowledge
thereof or unless notice of any event which is in fact such an Event of Default
is received by the Trustee and such notice references the Certificates, the
Trust Fund or this Agreement.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee or its appointed agent shall
be the successor in all respects to the Master Servicer in its capacity as
Master Servicer under this Agreement and the transactions set
70
forth or provided for herein and shall be subject thereafter to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer including the obligation to make Advances which have been or will be
required to be made (except for the responsibilities, duties and liabilities
contained in Section 2.03 and its obligations to deposit amounts in respect of
losses incurred prior to the date of succession pursuant to Section 3.12 and
4.01(e)) by the terms and provisions hereof; and provided further, that any
failure to perform such duties or responsibilities caused by the Master
Servicer's failure to provide information required by Section 4.03 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 which the
Master Servicer would have been entitled to charge to the Custodial Account and
the Certificate Account if the Master Servicer had continued to act hereunder.
Notwithstanding the above, the Trustee may, if it shall be unwilling to so act,
or shall, if it is unable to so act or if the Holders of Certificates entitled
to at least 51% of the Voting Rights so request in writing to the Trustee,
appoint, or petition a court of competent jurisdiction to appoint, any FNMA- or
FHLMC-approved mortgage servicing institution having a net worth of not less
than $10,000,000 as the successor to the Master Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer hereunder. Pending appointment of a successor to the Master
Servicer hereunder, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Master Servicer
hereunder. The Trust ee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession;
provided, however, that such succession shall not reduce the ratings of the
Certificates below the original ratings thereof.
Any successor, including the Trustee, to the Master Servicer
shall maintain in force during its term as master servicer hereunder the
Insurance Policies and fidelity bonds to the same extent as the Master Servicer
is so required pursuant to Sections 3.13 and 3.18.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to
the Master Servicer, the Trustee shall give prompt notice thereof to
Certificateholders.
(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.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of
Certificates affected by a default or Event of Default hereunder, may waive such
default or Event of Default (other than an Event of Default set forth in Section
7.01(vi); 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
71
affect the Holders of Certificates in the manner set forth in the second
paragraph of Section 11.01 or materially adversely affect any non-consenting
Certificateholder. Upon any such waiver of a default or Event of Default by the
Holders representing the requisite percentage of Voting Rights of Certificates
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.
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. If an Event of Default occurs and is continuing, 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
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. Any permissive right of the Trustee enumerated in this Agreement
shall not be construed as a duty.
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 deter mine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take action as it deems appropriate to have the instrument
corrected.
The Trustee shall sign on behalf of the Trust Fund any tax
return that the Trustee is required to sign pursuant to applicable federal,
state or local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of the Trust Fund
as a REMIC under the REMIC Provisions and to prevent the imposition of any
federal, state or local income, prohibited transaction, contribution or other
tax on the Trust Fund 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.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement,
the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the
absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
73
(ii) The Trustee 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 negligent in ascertaining the
pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of
Holders of Certificates entitled to at least 25% of the Voting
Rights relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) 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 reasonably believed by it to be genuine and
to have been signed or presented by the proper party or
parties;
(b) 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
therewith;
(c) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this
Agreement or to make any investigation of matters arising
hereunder 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 man would exercise or use
under the circumstances in the conduct of his own affairs;
(d) 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;
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(e) 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 to do so
by Holders of Certificates entitled to at least 25% of the
Voting Rights; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to
it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of
every such reasonable examination shall be paid by the Master
Servicer or, if paid by the Trustee, shall be repaid by the
Master Servicer upon demand; and
(f) 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.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates, other
than the signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Company or the Master
Servicer, as the case may be, and the Trustee assumes no respons ibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the Certificate of Authentication. The Trustee shall not be
accountable for the use or application by the Company or the Master Servicer of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Seller in respect of the Mortgage Loans
or deposited in or withdrawn from the Custodial Account or the Certificate
Account or any other account by or on behalf of the Company or the Master
Servicer, other than any funds held by or on behalf of the Trustee in accordance
with Section 4.01.
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. Payment of Trustee's Fees.
The Trustee shall withdraw from the Certificate Account on
each Distribution Date and pay to itself the Trustee's Fee. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust Fund and held harmless
against any loss, liability or "unanticipated out-of-pocket" expense incurred or
paid to third parties (which expenses shall not include salaries paid to
employees, or allocable
75
overhead, of the Trustee) in connection with the acceptance or administration of
its trusts hereunder or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or negligence in
the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder all such amounts shall be payable from funds in
the Custodial Account as provided in Section 3.11. The provisions of this
Section 8.05 shall survive the termination of this Agreement.
The Master Servicer shall indemnify the Trustee and any
director, officer, employee or agent of the Trustee against any loss, liability
or expense that may be sustained in connection with this Agreement related to
the willful misfeasance, bad faith or negligence in the performance of its
duties hereunder.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, 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. In addition, the Trustee shall at all times be
acceptable to the Rating Agency rating the Certificates. If such corporation
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. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Seller and its
affiliates or the Master Servicer and its affiliates; provided, however, that
such corporation cannot be an affiliate of the Master Servicer other than the
Trustee in its role as successor to the Master Servicer.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving notice thereof to the Company, the Master
Servicer and to all Certificateholders; provided, that such resignation shall
not be effective until a successor trustee is appointed and accepts appointment
in accordance with the following provisions. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee who meets
the eligibility requirements of Section 8.06 by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Company. If no successor
trustee shall have been so appointed and have accepted appointment within 60
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdic tion for the appointment of a successor
trustee; provided, however, that the resigning Trustee shall
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not resign and be discharged from the trusts hereby created until such time as
the Rating Agency rating the Certificates approves the successor trustee.
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 Company or the Master Servicer, or if at any
time the Trustee shall become incapable of acting, or shall be adjudged bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the rating of the long-term debt obligations of the Trustee
is not acceptable to the Rating Agency in respect of mortgage pass-through
certificates having a rating equal to the then current rating on the
Certificates, then the Company may remove the Trustee and appoint a successor
trustee who meets the eligibility requirements of Section 8.06 by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Company.
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 Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders and the Master Servicer
by the Company.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Master Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the prede cessor 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 Master Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
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Upon acceptance of appointment by a successor trustee as
provided in this Section, the Master Servicer shall mail notice of the
succession of such trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register. If the Master Servicer fails to
mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Master Servicer.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation 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.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be located,
the Company 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 Per sons, 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 Company and the
Trustee may consider necessary or desirable. If the Company shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in case an Event of Default shall have occurred and be continuing,
the Trustee alone shall have the power to make such appointment. No co-trustee
or separate trustee hereunder shall be required to meet the terms of eligibility
as a successor trustee under Section 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.
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 the 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.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this
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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.
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.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
All Mortgage Loans.
Subject to Section 9.02, the respective obligations and
responsibilities of the Company, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer of all Mortgage
Loans and each REO Property in respect thereof remaining in the Trust Fund at a
price equal to (a) 100% of the unpaid principal balance of each Mortgage Loan
(other than one as to which a REO Property was acquired) on the day of
repurchase together with accrued interest on such unpaid principal balance at
the related Net Mortgage Rate to the first day of the month in which the
proceeds of such repurchase are to be distributed, plus (b) the appraised value
of any REO Property less the good faith estimate of the Master Servicer of
liquidation expenses to be incurred in connection with its disposal thereof,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Master Servicer and the Trustee at the expense of the Master Servicer, (but not
more than the unpaid principal balance of the related Mortgage Loan, together
with accrued interest on that balance at the Net Mortgage Rate to the first day
of the month of repurchase), and (ii) 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 REO Property in respect thereof);
provided, however, that in no event shall the trust created hereby continue
beyond 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. In the case of any repurchase
by the Master Servicer pursuant to clause (i), the Master Servicer shall include
in such repurchase price the amount of any Advances that will be reimbursed to
the Master Servicer pursuant to Section 3.11(iii) and the Master Servicer shall
exercise reasonable efforts to cooperate fully with the Trustee in effecting
such repurchase and the transfer of the Mortgage Loans and related Mortgage
Files and related records to the Master Servicer.
The right of the Master Servicer to repurchase all Mortgage
Loans pursuant to (i) above shall be conditioned upon the aggregate Stated
Principal Balance of such Mortgage Loans at the time of any such repurchase
aggregating an amount equal to or less than __% of the aggregate Stated
Principal Balance of the Mortgage Loans at the Cut-off Date. If such right is
exercised, the Master Servicer upon such repurchase shall provide to the
Trustee, the certification required by Section 3.16.
Notice of any termination, specifying the Distribution Date
upon which the Certificateholders may surrender their Certificates to the
Trustee for payment of the final distri bution and cancellation, shall be given
promptly by the Master Servicer by letter to the Trustee and shall be given
promptly by the Trustee to the Certificateholders mailed (a) in the event such
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notice is given in connection with the Master Servicer's election to repurchase,
not earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office of the Certificate Registrar therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, pay ments being made only upon presentation
and surrender of the Certificates at the office of the Certificate Registrar
therein specified. In the event such notice is given in connection with the
Master Servicer's election to repurchase, the Master Servicer shall deposit in
the Custodial Account pursuant to Section 3.10 on the last day of the related
Prepayment Period an amount equal to the above-described repurchase price
payable out of its own funds. Upon presentation and surrender of the
Certificates by the Certificateholders, the Trustee shall distribute to the
Certificateholders (i) the amount otherwise distributable on such Distribution
Date, if not in connection with the Master Servicer's election to repurchase, or
(ii) if the Master Servicer elected to so repurchase, an amount determined as
follows: with respect to each Class A and Class B Certificate, the outstanding
Certificate Principal Balance thereof, plus one month's interest thereon at the
applicable Pass-Through Rate and any previously unpaid Accrued Certificate
Interest, subject to the priority set forth in Section 4.01(b); and with respect
to each Class R Certificate, the Percentage Interest evidenced thereby
multiplied by the difference, if any, between the above described repurchase
price and the aggregate amount to be distributed to the Class A and Class B
Certificateholders. Upon certification to the Trustee by a Servicing Officer,
following such final deposit, the Trustee shall promptly release the Mortgage
Files as directed by the Master Servicer for the remaining Mortgage Loans, and
the Trustee shall execute all assignments, endorsements and other instruments
required by the Master Servicer as being necessary to effectuate such transfer.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned notice, the Trustee shall give a second 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 all of the Certificates shall not have been
surrendered for cancellation, the Trustee shall take reasonable steps as
directed by the Company, or appoint an agent to take reasonable steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain subject hereto. If, within nine months after the second
notice, all of the Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto.
SECTION 9.02. Additional Termination Requirements.
(a) In the event the Master Servicer repurchases the Mortgage
Loans as provided in Section 9.01, the Trust Fund shall be terminated in
accordance with the following additional requirements, unless the Master
Servicer obtains for the Trustee an Opinion of Counsel to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.02
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will not (i) result in the imposition of taxes on the net income derived from
"prohibited transactions" of the Trust Fund as defined in Section 860F of the
Code or (ii) cause the Trust Fund to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) The Trustee shall establish a 90-day liquidation period and
specify the first day of such period in a statement attached to the
Trust Fund's final Tax Return pursuant to Treasury Regulation
ss.1.860F-1. The Trustee shall satisfy all the requirements of a
qualified liquidation under 860F of the Code and any regulations
thereunder, as evidenced by an Opinion of Counsel obtained at the
expense of the Master Servicer;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Certificates, the Master
Servicer shall sell all of the assets of the Trust Fund for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R Certificates all
remaining cash on hand (other than cash retained to meet claims), and
the Trust Fund shall terminate at that time.
(b) By their acceptance of the Class R Certificates, the
Holders thereof hereby agree to authorize the Trustee to specify the 90-day
liquidation period for the Trust Fund, which authorization shall be binding upon
all successor Class R Certificateholders.
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ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall make an election to treat the Trust Fund
as a REMIC under the Code and, if necessary, under applicable state law. Such
election will be made on Form 1066 or other appropriate federal tax or
information return 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 the REMIC election in respect of the Trust Fund, the Class A and
Class B Certificates shall be designated as the "regular interests" and the
Class R Certificates shall be designated as the sole class of "residual
interest" in the Trust Fund. The Trustee shall not permit the creation of any
"interests" in the Trust Fund (within the meaning of Section 860G of the Code)
other than the Regular Certificates and the Residual Certificates.
(b) The Closing Date is hereby designated as the "startup day"
of the Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall hold a Class R Certificate representing
a 0.01% Percentage interest of all Class R Certificates and shall be designated
as the tax matters person of the Trust Fund in the manner provided under
Treasury regulations section 1.860F-4(d) and temporary Treasury regulations
section 301.6231(a)(7)-1T. The Trustee, as tax matters person, shall (i) act on
behalf of the Trust Fund 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. To the extent authorized under the Code
and the regulations promulgated thereunder, each Holder of a Class R
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 legal expenses and costs of any such action
described in this subsection and any liability resulting therefrom shall
constitute expenses of the Trust Fund and the Trustee shall be entitled to
reimbursement therefor unless such legal expenses and costs are incurred by
reason of the Trustee's willful misfeasance, bad faith or negligence.
(d) Except as provided in Section 4.05, the Trustee shall
prepare or cause to be prepared, sign and file all of the Tax Returns in respect
of the Trust Fund created hereunder. The expenses of preparing and filing such
returns shall be borne by the Trustee without any right of reimbursement
therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, REMIC Provisions or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, as required by the Code, the REMIC Provisions or other such
compliance guidance, the Trustee shall provide (i) to any Transferor of a Class
R Certificate such information as is necessary for the application of any tax
relating to the transfer
83
of a Class R Certificate to any Person who is not a Permitted Transferee, (ii)
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 the Trust Fund. In
addition, the Company shall provide or cause to be provided to the Trustee,
within ten (10) days after the Closing Date, all information or data that the
Trustee reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without limitation,
the price, yield, prepayment assumption and projected cash flow of the
Certificates.
(f) The Trustee shall take such action and shall cause the
Trust Fund created hereunder to take such action as shall be necessary to create
or maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reason ably requested by it). The
Trustee shall not take any action, cause the Trust Fund to take any action or
fail to take (or fail to cause to be taken) any action that, under the REMIC
Provisions, if taken or not taken, as the case may be, could (i) endanger the
status of the Trust Fund as a REMIC or (ii) result in the imposition of a tax
upon the Trust Fund (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 Trustee received an Opinion of
Counsel (at the expense of the party seeking to take such action but in no event
shall such Opinion of Counsel be an expense of the Trustee) to the effect that
the contemplated action will not, with respect to the Trust Fund created
hereunder, endanger such status or result in the imposition of such a tax. The
Master Servicer shall not take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has 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 the Trust Fund or its assets, or causing the Trust Fund to take
any action, which is not expressly permitted under the terms of this Agreement,
the Master Servicer will consult with the Trustee or its designee, in writing,
with respect to whether such action could cause an Adverse REMIC Event to occur
with respect to the Trust Fund, and the Master Servicer shall not take any such
action or cause the Trust Fund to take any such action as to which the Trustee
has advised it in writing that an Adverse REMIC Event could occur. The Trustee
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 permitted by this Agreement
(but in no event shall such cost be an expense of the Trustee). At all times as
may be required by the Code, the Trustee will ensure that substantially all of
the assets of the Trust Fund will consist of "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 the Trust Fund created hereunder as defined in Section
860F(a)(2) of the Code, on "net income from foreclosure property" of the Trust
Fund as defined in Section 860G(c) of the Code, on any contributions to the
Trust Fund after the Startup 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
84
laws, such tax shall be charged (i) to the Trustee pursuant to Section 10.03
hereof, if such tax arises out of or results from the willful misfeasance, bad
faith or negligence in performance by the Trustee of any of its obligations
under this Article X, (ii) to the Master Servicer pursuant to Section 10.03
hereof, if such tax arises out of or results from a breach by the Master
Servicer of any of its obligations under Article III or this Article X, or
otherwise (iii) against amounts on deposit in the Custodial Account and shall be
paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 19__, the Trustee shall deliver to the Master Servicer and each Rating
Agency a Certificate from a Responsible Officer of the Trustee stating the
Trustee's compliance with this Article X.
(i) The Master Servicer and the Trustee shall, for federal
income tax purposes, maintain books and records with respect to the Trust Fund
on a calendar year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to the Trust Fund other than in connection with any
Qualified Substitute Mortgage Loan delivered in accordance with Section 2.04
unless it shall have received an Opinion of Counsel (which such Opinion of
Counsel shall not be an expense of the Trustee) to the effect that the inclusion
of such assets in the Trust Fund will not cause the Trust Fund to fail to
qualify as a REMIC at any time that any Certificates are outstanding or subject
the Trust Fund to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter
into any arrangement by which the Trust Fund 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.
(l) Solely for purposes of satisfying Section
1.860G-1(a)(4)(iii) of the Treasury regulations, and based on certain
assumptions described below, the "latest possible maturity date" by which the
Certificate Principal Balances of the Certificates representing a regular
interest in the Trust Fund would be reduced to zero is _________ 25, 20__, which
is the Distribution Date immediately following the latest scheduled maturity of
any Mortgage Loan as determined assuming that (i) scheduled interest and
principal payments on the Mortgage Loans are received in a timely manner, with
no delinquencies or losses, (ii) there are no principal prepayments, and (iii)
neither the Seller nor the Master Servicer will repurchase any Mortgage Loans.
SECTION 10.02. Prohibited Transactions and Activities.
Neither the Company, the Master Servicer nor the Trustee shall
sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the 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 the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans
85
pursuant to Article II or III of this Agreement) nor acquire any assets for the
Trust Fund, nor sell or dispose of any investments in the Custodial Account or
the Certificate Account for gain, nor accept any contributions to the Trust Fund
after the Closing Date unless it has received an Opinion of Counsel (at the
expense of the party seeking to cause such sale, disposition, substitution or
acquisition but in no event shall such Opinion of Counsel be an expense of the
Trustee) that such sale, disposition, substitution or acquisition will not (a)
affect adversely the status of the Trust Fund as a REMIC or (b) cause the Trust
Fund to be subject to a tax on "prohibited transactions" or "contributions"
pursuant to the REMIC Provisions.
SECTION 10.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Company and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Company or the Master Servicer, as a result of the willful
misfeasance, bad faith or negligence by the Trustee with respect to the
Trustee's covenants set forth in this Article X.
(b) The Master Servicer agrees to indemnify the Trust Fund,
the Company and the Trustee for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust
Fund, the Company or the Trustee, as a result of a breach of the 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 the
Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the
Company, the Master Servicer and the Trustee without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions herein which may be defective or incon sistent with any other
provisions herein or to correct any error, (iii) to change the timing and/or
nature of deposits in the Certificate Account, provided that (a) such change
would not adversely affect in any material respect the interests of any
Certificateholder, as evidenced by an Opinion of Counsel, and (b) such change
would not adversely affect the then-current rating of any rated class of
Certificates, as evidenced by a letter from each applicable Rating Agency, (iv)
to modify, eliminate or add to any of the provisions of the Trust Fund (a) to
such extent as shall be necessary to maintain the qualification of the Trust
Fund as a REMIC or to avoid or minimize the risk of imposition of any tax on the
Trust Fund, provided that the Trustee has received an Opinion of Counsel to the
effect that (1) such action is necessary or desirable to maintain such
qualification or to avoid or minimize such risk, and (2) such action will not
adversely affect in any material respect the interests of any Certificateholder,
or (b) to restrict the transfer of the Class R Certificates, provided that the
Company has determined that the then-current ratings of the Class A Certificates
will not be adversely affected, as evidenced by a letter from each Rating
Agency, and that any such amendment will not give rise to any tax with respect
to the transfer of the Class R Certificates to a non-Permitted Transferee, (v)
to make any other provisions with respect to matters or questions arising this
Agreement which are not materially inconsistent with the provisions thereof,
provided that such action will not adversely affect in any material respect the
interests of any Certificateholder, or (vi) to amend specified provisions that
are not material to holders of any class of Certificates offered hereunder.
This Agreement may also be amended from time to time by the
Company, the Master Servicer and the Trustee with the consent of the Holders of
Certificates entitled to at least 66-2/3% of the Voting Rights allocated to each
Class affected thereby for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received on Mortgage Loans which are required to
be distributed on any Certificate without the consent of the Holder of such
Certificate, or (ii) reduce the aforesaid percentage of Certificates the Holders
of which are required to consent to any such amendment, without the consent of
the Holders of all Certificates then outstanding. Notwithstanding any other
provision of this Agreement, for purposes of the giving or withholding of
consents pursuant to this Section 11.01, Certificates registered in the name of
the Seller or the Master Servicer or any affiliate thereof shall be entitled to
Voting Rights with respect to matters described in clauses (i) and (ii) of this
paragraph.
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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 (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust Fund pursuant to the REMIC Provisions or
cause the Trust Fund to fail to qualify as a REMIC at any time that any of the
Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish a statement describing the 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.
Prior to executing any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel (provided by the
Person requesting such amendment) to the effect that such amendment is
authorized or permitted by this Agreement. The cost of an Opinion of Counsel
delivered pursuant to this Section 11.01 shall be an expense of the party
requesting such amendment, but in any case shall not be an expense of the
Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 11.02. Recordation of Agreement; Counterparts.
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 Master Servicer and at the expense of the Company on direction
by the Trustee, 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.
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 counter parts, 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.
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
88
up of the Trust Fund, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for 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 party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
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 a notice of an Event of
Default, or of a default by the Seller or the Trustee in the performance of any
obligation hereunder, and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of Certificates entitled to at least 25% of the
Voting Rights 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 is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates 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, 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
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, 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 construed in
accordance with the laws of the State of New York and the obligations, rights
and remedies of the parties hereunder shall be determined in accordance with
such laws.
SECTION 11.05. Notices.
All demands, notices and direction hereunder shall be in
writing and shall be deemed effective upon receipt when delivered to (a) in the
case of the Company,_____________, ____________________________________,
Attention: ________________, or such other address as may hereafter be furnished
to the Trustee and the Master Servicer in writing by the Company, (b) in the
case of the Trustee, __________________________________________________________,
Attention: _________________________________, or such other address as may
89
hereafter be furnished to the Master Servicer and the Company in writing by the
Trustee and (c) in the case of the Master Servicer, [Name of Master Servicer]
[Address of Master Servicer] Attention: ________________________ or such other
address as may hereafter be furnished to the Company and the Trustee in writing.
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 Certificate holder receives such notice.
SECTION 11.06. 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.
SECTION 11.07. Successors and Assigns; Third Party
Beneficiary.
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 Trustee and
the Certificateholders. The parties hereto agree that the Seller is the intended
third party beneficiary of Sections 3.07, 3.10 and 3.22 hereof, and that the
Seller may enforce such provisions to the same extent as if the Seller were a
party to this Agreement.
SECTION 11.08. 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 11.09. Notice to Rating Agencies and
Certificateholder.
The Trustee shall use its best efforts to promptly provide
notice to the Rating Agency referred to below with respect to each of the
following of which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not been
cured;
3. The resignation or termination of the Master Servicer or
the Trustee;
4. The repurchase or substitution of Mortgage Loans pursuant
to Section 2.04;
5. The final payment to Certificateholders; and
90
6. Any change in the location of the Custodial Account or the
Certificate Account.
In addition, the Trustee shall promptly furnish to the Rating
Agency copies of the following:
1. Each report to Certificateholders described in Section
4.02;
2. Each annual independent public accountants' servicing
report received as described in Section 3.20; and
3. Each Master Servicer compliance report received as
described in Section 3.19.
Any such notice pursuant to this Section 11.09 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
(i) in the case of [_______________________________________]
____________________________________, Attention: ____________, and (ii) in the
case of [___________________________________________________________________]
or, in each case, such other address as such Rating Agency may designate in
writing to the parties thereto.
91
IN WITNESS WHEREOF, the Company, the Master Servicer and the
Trustee 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.
WMC SECURED ASSETS CORP.,
Company
By: ______________________
[NAME OF MASTER SERVICER],
Master Servicer
By: ______________________
[NAME OF TRUSTEE]
Trustee
By: ______________________
EXHIBIT A-1
FORM OF CLASS A 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.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[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. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES EQUAL TO A STANDARD PREPAYMENT ASSUMPTION OF ___% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT, AND 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 PRINCIPAL AMOUNT COMPUTED USING THE EXACT
METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
-2-
Series 199_-____ Aggregate Initial Certificate
Principal Balance of the
Class A Certificates: $_______________
Pass-Through Rate: _____% Initial Certificate Principal Balance
of this Certificate: $_______________
Date of Pooling and Servicing
Agreement and Cut-off Date:
_____________ 1, 199_
First Distribution Date:
____________ 2, 199_
Issue Date: ____________ __, 199_ Master Servicer: [Name of Master
Servicer]
No. ___________________ Trustee: [Name of Trustee]
CUSIP:
CLASS A MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 199_-____
evidencing a beneficial ownership interest in the Trust Fund
consisting primarily of a pool of residential mortgage loans sold by
WMC SECURED ASSETS CORP.
This certifies that is the registered owner of the Percentage Interest
evidenced by this Certificate in the Trust Fund established under a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among WMC
Secured Assets Corp. (hereinafter called the "Depositor", which term includes
any successor entity under the Agreement), [Name of Master Servicer] (the
"Master Servicer") and [Name of Trustee] (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. The Certificates of
the Series specified above (collectively, the "Certificates") evidence in the
aggregate the entire beneficial ownership interest in a segregated pool of
assets created pursuant to the Agreement (the "Trust Fund") comprised of
conventional one- to four-family residential first mortgage loans (the "Mortgage
Loans"), or interests therein, and certain other assets sold by the Depositor.
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.
-3-
The Trustee shall distribute or cause to be distributed on the 25th
day of each month or, if such 25th day is not a Business Day, the Business Day
immediately following (each, a "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
immediately preceding the month of such distribution (the "Record Date"), from
the Available Distribution Amount an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to the Holders of Class A Certificates on such Distribution Date
pursuant to the Agreement. Reference is hereby made to the further provisions of
this Certificate and the Agreement set forth herein, which further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Certificate is one of a duly authorized issue of Certificates of
the series and class specified on the face hereof (herein called the
"Certificates"). The Certificates in the aggregate represent the entire
beneficial interest in: (i) the Mortgage Loans (exclusive of payments of
principal and interest due on or before the Cut-off Date) as from time to time
are subject to the Agreement and all payments under and proceeds of the Mortgage
Loans, together with all documents included in the related Mortgage File; (ii)
such funds or assets as from time to time are deposited in respect of the
Mortgage Loans in the account established by the Master Servicer for the
collection of payments on the Mortgage Loans (the "Custodial Account"), the
Certificate Account and the Expense Fund and belonging to the Trust Fund; (iii)
any REO Property; (iv) the Pool Insurance Policy, the Special Hazard Insurance
Policy and all other insurance policies with respect to the Mortgage Loans
required to be maintained pursuant to the Agreement and all the proceeds
thereof; and (v) the Depositor's interest in respect of the representations and
warranties made be the Seller in the Seller's Warranty Certificate as assigned
to the Trustee pursuant to Section 2.04 of the Agreement (all of the foregoing
being hereinafter collectively called the "Trust Fund").
All distributions will be made or caused to be made by the Trustee
either in immediately available funds (i) by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register or (ii) by wire transfer to the account of such Person at
the request of the Person entitled thereto if such Person shall have so notified
the Trustee in writing by 5 Business Days prior to the applicable Record Date
and such Certificateholder is the registered holder of Certificates the
aggregate Initial Certificate Principal Balance of which is not less than
$2,500,000. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Master Servicer of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office of the Trustee. The Certificate Principal Balance
hereof will be reduced to the extent of distributions allocable to principal and
any Realized Losses allocable hereto.
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Master Servicer, or the Trustee and are not insured or
guaranteed by any governmental agency or instrumentality. 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.
As provided in the Agreement, withdrawals from the Custodial Account or
Certificate Account may be made by the Master Servicer from time to time for
purposes other than
-4-
distributions to Certificateholders, such purposes including reimbursement to
the Master Servicer of advances made, or certain expenses incurred, by it, or by
the Depositor or Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the Master Servicer and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Master Servicer, and the Trustee
with the consent of the Holders of Certificates entitled to at least 66-2/3% of
the Voting Rights. 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 this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
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 Corporate Trust Office, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
initial Certificate Principal Balance will be issued to the designated
transferee or transferees.
The Certificates are issuable in fully registered form and in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate initial Certificate Principal Balance, 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 that may be imposed in connection with any
transfer or exchange of Certificates.
The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the 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 repurchase by the Master Servicer
of all Mortgage Loans and each REO Property in respect thereof, or (ii) the
final payment on, or other liquidation (or any advance with respect thereto) of,
the last Mortgage Loan remaining in the Trust Fund (or the disposition of all
REO Property in respect thereof). The Agreement permits, but does not require,
the Master Servicer to repurchase
-5-
from the Trust Fund all Mortgage Loans and all property acquired in respect of
any Mortgage Loan at a price determined as provided in the Agreement. The
exercise of such right will effect early retirement of the Certificates;
however, the Master Servicer's right to repurchase is subject to the aggregate
Stated Principal Balance of the Mortgage Loans at the time of repurchase being
less than or equal to 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
The recitals contained herein shall be taken as statements of the
Depositor or the Master Servicer as the case may be.
-6-
IN WITNESS WHEREOF, the Trustee in its capacity as trustee under the
Agreement has caused this Certificate to be duly executed.
Dated: [NAME OF TRUSTEE],
as Trustee
By:_________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
[NAME OF TRUSTEE],
as Trustee
By:________________________________
Authorized Officer
-7-
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ________________________
_______________________________________________________________
_______________________________________________________________
Social Security or other identifying number of assignee:
(Please print or typewrite name and address including postal zip code of
assignee)
the beneficial interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorizes the registration of transfer of such interest
to the above-named assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of a like
denomination and class to the above named assignee and deliver such
Certificate(s) to the following address:
______________________________________________________________________
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
________________________________________
Signature Guaranteed
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
commercial bank or trust company on the continental United States or by a firm
or corporation having membership in any national securities exchange or in the
National Association of Securities Dealers, Inc.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of __________
___________________ and the Master Servicer:
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.
EXHIBIT A-2
FORM OF CLASS B 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 "CODE").
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN (THE "AGREEMENT").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT
PLAN SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED, OR SECTION 4975 OF THE CODE OR PERSON USING "PLAN ASSETS" OF
ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (INCLUDING ANY INSURANCE COMPANY UNDER
THE CIRCUMSTANCES DESCRIBED IN THE AGREEMENT), UNLESS THE TRANSFEREE PROVIDES AN
OPINION OF COUNSEL (OR CERTIFICATION OF FACTS UNDER THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE AGREEMENT) SATISFACTORY TO THE DEPOSITOR AND THE TRUSTEE OR THE
CERTIFICATE REGISTRAR THAT SUCH DISPOSITION WILL NOT VIOLATE THE PROHIBITED
TRANSACTION PROVISIONS OF SECTION 406 OF ERISA AND SECTION 4975 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. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE OF
PREPAYMENT USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES EQUAL TO A STANDARD PREPAYMENT ASSUMPTION OF ___% PER ANNUM (THE
"PREPAYMENT ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT, AND 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 PRINCIPAL BALANCE COMPUTED USING THE EXACT
METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE
BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.]
-1-
Series 199_-____ Aggregate Initial Certificate Principal
Balance of the Class B Certificates:
$_______________
Pass-Through Rate: _____% Initial Certificate Principal Balance
of this Certificate: $_______________
Date of Pooling and Servicing
Agreement and Cut-off Date:
_____________ 1, 199_
First Distribution Date: Master Servicer: [Name of Master Servicer]
____________ __, 199_
Issue Date: _____________ __, 199_ Trustee: [Name of Trustee]
No.___________________
CUSIP: _______________
CLASS B MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 199_-____
evidencing a beneficial ownership interest in the Trust Fund
consisting primarily of a pool of residential mortgage loans sold by
WMC SECURED ASSETS CORP.
This certifies that is the registered owner of the Percentage Interest
evidenced by this Certificate in the Trust Fund established under a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among WMC
Secured Assets Corp. (hereinafter called the "Depositor", which term includes
any successor entity under the Agreement), [Name of Master Servicer] (the
"Master Servicer") and [Name of Trustee] (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. The Certificates of
the Series specified above (collectively, the "Certificates") evidence in the
aggregate the entire beneficial ownership interest in a segregated pool of
assets created pursuant to the Agreement (the "Trust Fund") comprised of
conventional one- to four-family residential first mortgage loans (the "Mortgage
Loans"), or interests therein, and certain other assets sold by the Depositor.
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.
-2-
The Trustee shall distribute or cause to be distributed on the 25th
day of each month or, if such 25th day is not a Business Day, the Business Day
immediately following (each, a "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
immediately preceding the month of such distribution (the "Record Date"), from
the related Group Available Distribution Amount an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to the Holders of Class B Certificates on such Distribution
Date pursuant to the Agreement. Reference is hereby made to the further
provisions of this Certificate and the Agreement set forth herein, which further
provisions shall for all purposes have the same effect as though fully set forth
at this place.
This Certificate is one of a duly authorized issue of Certificates of
the series and class specified on the face hereof (herein called the
"Certificates"). The Certificates in the aggregate represent the entire
beneficial interest in: (i) the Mortgage Loans (exclusive of payments of
principal and interest due on or before the Cut-off Date) as from time to time
are subject to the Agreement and all payments under and proceeds of the Mortgage
Loans, together with all documents included in the related Mortgage File; (ii)
such funds or assets as from time to time are deposited in respect of the
Mortgage Loans in the account established by the Master Servicer for the
collection of payments on the Mortgage Loans (the "Custodial Account"), the
Certificate Account and the Expense Fund and belonging to the Trust Fund; (iii)
any REO Property; (iv) the Pool Insurance Policy, the Special Hazard Insurance
Policy, and all other insurance policies with respect to the Mortgage Loans
required to be maintained pursuant to the Agreement and all the proceeds
thereof; and (v) the Depositor's interest in respect of the representations and
warranties made by the Seller in the Seller's Warranty Certificate as assigned
to the Trustee pursuant to Section 2.04 of the Agreement (all of the foregoing
being hereinafter collectively called the "Trust Fund").
All distributions will be made or caused to be made by the Trustee
either in immediately available funds (i) by check mailed to the address of the
Person entitled thereto, as such name and address shall appear on the
Certificate Register, (ii) by wire transfer to the account of such Person at the
request of the Person entitled thereto if such Person shall have so notified the
Trustee in writing by 5 Business Days prior to the applicable Record Date and
such Certificateholder is the registered holder of Certificates the aggregate
Initial Certificate Principal Balance of which is not less than $2,500,000.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Master Servicer of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Trustee. The Certificate Principal Balance hereof will be reduced
to the extent of distributions allocable to principal and any Realized Losses
allocable hereto.
The Certificates do not represent an obligation of, or an interest in,
the Depositor, the Master Servicer, or the Trustee and are not insured or
guaranteed by any governmental agency or instrumentality. 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.
As provided in the Agreement, withdrawals from the Custodial Account or
Certificate Account may be made from time to time for purposes other than
distributions to Certificateholders,
-3-
such purposes including reimbursement to the Master Servicer of advances made,
or certain expenses incurred, by it, or by the Depositor or Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the Master Servicer and the rights of the Certificateholders under
the Agreement at any time by the Depositor, the Master Servicer, and the Trustee
with the consent of the Holders of Certificates entitled to at least 66-2/3% of
the Voting Rights. 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 this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
No transfer of any Class B Certificate shall be made to any employee
benefit plan or other retirement arrangement, including individual retirement
accounts and annuities and Xxxxx plans, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (any of the
foregoing, a "Plan"), to any Person acting on behalf of a Plan, or to any other
Person who is using "plan assets" to effect such acquisition (including any
insurance company using funds in its general or separate accounts that may
constitute "plan assets") unless the prospective transferee of a
Certificateholder desiring to transfer its Certificates provides to the Trustee
or the Certificate Registrar an Opinion of Counsel (or, in the limited
circumstances described in the Agreement, a certification of facts) which
establishes to the satisfaction of the Depositor and the Trustee or the
Certificate Registrar that such disposition will not violate the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code.
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 Corporate Trust Office, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
initial Certificate Principal Balance will be issued to the designated
transferee or transferees.
The Certificates are issuable in fully registered form and in
denominations specified in the Agreement. As provided in the Agreement and
subject to certain limitations therein set forth, the Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same aggregate initial Certificate Principal Balance, 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 that may be imposed in connection with any
transfer or exchange of Certificates.
-4-
The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the 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 repurchase by the Master Servicer
of all Mortgage Loans and each REO Property in respect thereof, or (ii) the
final payment on, or other liquidation (or any advance with respect thereto) of,
the last Mortgage Loan remaining in the Trust Fund (or the disposition of all
REO Property in respect thereof). The Agreement permits, but does not require,
the Master Servicer to repurchase from the Trust Fund all Mortgage Loans and all
property acquired in respect of any Mortgage Loan at a price determined as
provided in the Agreement. The exercise of such right will effect early
retirement of the Certificates; however, the Master Servicer's right to
repurchase is subject to the aggregate Stated Principal Balance of the Mortgage
Loans at the time of repurchase being less than or equal to 5% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
The recitals contained herein shall be taken as statements of the
Depositor or the Master Servicer as the case may be.
-5-
IN WITNESS WHEREOF, the Trustee in its capacity as trustee under the
Agreement has caused this Certificate to be duly executed.
Dated: [NAME OF TRUSTEE],
as Trustee
By: ________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
[NAME OF TRUSTEE],
as Trustee
By: ________________________________
Authorized Officer
-6-
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________
_________________________________________________________________
_________________________________________________________________ Social
Security or other identifying number of assignee:
(Please print or typewrite name and address including postal zip code of
assignee)
the beneficial interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorizes the registration of transfer of such interest
to the above-named assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of a like
denomination and class to the above named assignee and deliver such
Certificate(s) to the following address:
________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
commercial bank or trust company on the continental United States or by a firm
or corporation having membership in any national securities exchange or in the
National Association of Securities Dealers, Inc.
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of
______________ _______________ and the Master Servicer:
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.
EXHIBIT B
FORM OF CLASS R CERTIFICATE
THIS CLASS R CERTIFICATE HAS BEEN DESIGNATED BY THE SELLER REFERRED TO BELOW AS
A "RESIDUAL INTEREST" IN THE REMIC CREATED BY THE POOLING AND SERVICING
AGREEMENT PURSUANT TO THE REMIC PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986
(THE "CODE").
NO TRANSFER OF THIS CERTIFICATE MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN SUBJECT
TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE CODE OR PERSON USING
"PLAN ASSETS" OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION (INCLUDING ANY
INSURANCE COMPANY UNDER THE CIRCUMSTANCES DESCRIBED IN THE AGREEMENT), UNLESS
THE TRANSFEREE PROVIDES AN OPINION OF COUNSEL (OR CERTIFICATION OF FACTS UNDER
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE AGREEMENT) SATISFACTORY TO THE
DEPOSITOR AND THE TRUSTEE OR THE CERTIFICATE REGISTRAR THAT SUCH DISPOSITION
WILL NOT VIOLATE THE PROHIBITIVE TRANSACTION PROVISIONS OF SECTION 406 OF ERISA
AND SECTION 4975 OF THE CODE. [BY ITS ACCEPTANCE OF A CERTIFICATE, EACH
CERTIFICATEHOLDER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT IT IS
NOT SUBJECT TO THE FOREGOING LIMITATION.]
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT MAY BE AMENDED WITHOUT
THE CONSENT OF THE HOLDER HEREOF, AND IN A MANNER THAT MAY ADVERSELY AFFECT THE
INTERESTS OF THE HOLDER HEREOF, IF NECESSARY TO PREVENT THE DISQUALIFICATION OF
THE TRUST FUND AS A REMIC.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES AN AFFIDAVIT TO THE MASTER
SERVICER AND THE TRUSTEE THAT (1) SUCH TRANSFEREE IS NOT EITHER (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 HEREINAFTER
REFERRED TO AS A "DISQUALIFIED ORGANIZATION") OR (D) AN AGENT OF A DISQUALIFIED
ORGANIZATION. NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OR
ANY TRANSFER, SALE OR OTHER DISPOSITION OF THIS CLASS R 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
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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 CERTIFICATE. EACH HOLDER OF A CLASS R CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
IF ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE IS MADE
TO ANY OF CERTAIN "PASS-THROUGH ENTITIES" DESCRIBED IN SECTION 860E(e)(6) OF THE
CODE, AND A DISQUALIFIED ORGANIZATION IS THE RECORD HOLDER OF AN INTEREST IN
SUCH ENTITY, THEN A TAX MAY BE IMPOSED ON SUCH ENTITY.
NO TRANSFER OF THE CERTIFICATE MAY BE MADE TO A NON-UNITED STATES PERSON AS
DEFINED IN THE AGREEMENT.
-3-
Series 199_-____ Aggregate unpaid principal balance of the
Mortgage Loans after deducting payments
due on or before the Cut-off Date:
$____________
Percentage Interest: ___%
Date of Pooling and Servicing Issue Date: ___________ __, 199_
Agreement: _____________ 1, 199_
First Distribution Date: _______ __, 199_
Master Servicer:
[Name of Master Servicer]
Trustee:
[Name of Trustee]
No. __
CLASS R MORTGAGE PASS-THROUGH CERTIFICATE, SERIES 199_-____
evidencing a beneficial ownership interest in the Trust Fund consisting
primarily of a pool of residential mortgage loans sold by
WMC SECURED ASSETS CORP.
This certifies that is the registered owner of the Percentage Interest
evidenced by this Certificate in the Class R residual interests in the Trust
Fund created pursuant to a Pooling and Servicing Agreement, dated as specified
above (the "Agreement"), between WMC Secured Assets Corp. (hereinafter called
the "Depositor", which term includes any successor entity under the Agreement),
[Name of Master Servicer] (the "Master Servicer"), and [Name of 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, distributions 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 (a "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 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 required
to be distributed to the holders of Class R Certificates on such Distribution
Date pursuant to the Agreement.
-4-
All distributions under the Agreement on the Class R Certificates will
be made or caused to be made by the Trustee 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 by the Master Servicer of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office of the Trustee.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Pass-Through Certificates of the series specified on the
face hereof (herein called the "Certificates") and representing the Percentage
Interest specified on the face hereof in the Class R 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. As provided in the
Agreement, withdrawals from the Custodial Account or Certificate Account may be
made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer and the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66-2/3% of the Voting Rights. 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 this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the Holders of any of the 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 Corporate Trust Office, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Trustee duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
No transfer of any Class R Certificate shall be made to any employee
benefit plan or other retirement arrangement, including individual retirement
accounts and annuities and Xxxxx plans, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") (any of the
foregoing, a "Plan") to any Person acting on behalf of a Plan, or to any other
Person who is using "plan assets" to effect such acquisition (including any
insurance company using funds in its general or separate accounts that may
constitute "plan assets"), unless
-5-
the prospective transferee of a Certificateholder desiring to transfer its
Certificates provides to the Trustee or the Certificate Registrar an Opinion of
Counsel (or, in the limited circumstances described in the Agreement, a
certification of facts) which establishes to the satisfaction of the Depositor
and the Trustee or the Certificate Registrar that such disposition will not
violate the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code.
The Class R Certificates are issuable in fully registered form and in
minimum denominations specified in the Agreement. As provided in the Agreement
and subject to certain limitations therein set forth (including limitations on
the total number of Class R Certificates outstanding), Class R Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
evidencing the same 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 that may be imposed in connection with any
transfer or exchange of Certificates.
The Depositor, the Master Servicer and the Trustee and any agent of
the Depositor, the Master Servicer or the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Depositor, the Master Servicer, the Trustee nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the 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 repurchase by the Master Servicer
of all Mortgage Loans and each REO Property in respect thereof or (ii) 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 REO
Property in respect thereof). The Agreement permits, but does not require, the
Master Servicer to purchase from the Trust Fund all Mortgage Loans and all
property acquired in respect of any Mortgage Loan at a price determined as
provided in the Agreement. The exercise of such right will effect early retire
ment of the Certificates; however, such right to purchase is subject to the
aggregate Stated Principal Balance of the Mortgage Loans at the time of purchase
being less than or equal to 5% of the aggregate Stated Principal Balance of the
Mortgage Loans at the Cut-off Date.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
The recitals contained herein shall be taken as the statements of the
Depositor or the Master Servicer, as the case may be.
-6-
IN WITNESS WHEREOF, the Trustee in its capacity as trustee under the
Agreement has caused this Certificate to be duly executed.
Dated: [NAME OF TRUSTEE],
as Trustee
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the
within-mentioned Agreement.
[NAME OF TRUSTEE],
as Trustee
By: _____________________________________
Authorized Officer
-7-
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________
________________________________________________
________________________________________________
Social Security or other identifying number of assignee:
(Please print or typewrite name and address including postal zip code
of assignee)
the Percentage Interest evidenced by the within Class R Mortgage Pass-Through
Certificate and hereby authorizes the registration of transfer of such interest
to the above-named assignee on the
Certificate Register.
I (we) further direct the Trustee to issue a new Class R Certificate
of a like Percentage Interest to the above named assignee and deliver such
Certificate to the following address: __________________________________________
_______________________________________________________
_______________________________________________________
Dated:
______________________________
Signature by or on behalf of assignor
______________________________
Signature Guaranteed
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
commercial bank or trust company on the continental United States or by a firm
or corporation having membership in any national securities exchange or in the
National Association of Securities Dealers, Inc.
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.
EXHIBIT C
TRUSTEE INITIAL CERTIFICATION
_______ __, 199_
[Name of Master Servicer]
[Address of Master Servicer]
WMC Secured Assets Corp.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Re: Pooling and Servicing Agreement dated as of ____________ 1,
199_ among WMC Secured Assets Corp., [Name of Master
Servicer] and [Name of Trustee], Mortgage Pass-THROUGH
CERTIFICATES, SERIES 199_-____
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File and the Mortgage Loan Schedule and has determined that, except as
provided in Exhibit A hereto: (i) all documents required to be included in the
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 examination by it, and only as to such documents, the information set
forth in items (i) - (vi), (viii) and (x) - (xii) of the definition or
description of "Mortgage Loan Schedule" is correct.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan, or (iii)
the existence of any assumption, modification, written assurance or substitution
agreement with respect to any Mortgage File if no such documents appear in the
Mortgage File delivered to the Trustee.
-2-
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[NAME OF TRUSTEE]
By: ____________________________________
Name:
Title:
EXHIBIT D
FORM OF TRUSTEE FINAL CERTIFICATION
[date]
[Name of Master Servicer]
[Address of Master Servicer]
WMC Secured Assets Corp.
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Re: Pooling and Servicing Agreement dated as of ___________ 1, 199_
among WMC Secured Assets Corp., [Name of Master Servicer] and
[Name of Trustee], Mortgage Pass-Through Certificates,
Series 199_-____
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies, except as
provided in Exhibit __ hereto, that as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on
the attachment hereto) it has received the documents set forth in Section 2.01.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Trustee makes no representations as
to: (i) the validity, legality, sufficiency, enforceability or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[NAME OF TRUSTEE]
By: _____________________________________
Name: ___________________________________
Title: __________________________________
EXHIBIT E
FORM OF REMITTANCE REPORT
EXHIBIT F-1
REQUEST FOR RELEASE
(for Trustee)
LOAN INFORMATION
Name of Mortgagor: ___________________________
Master Servicer
Loan No.: ___________________________
TRUSTEE
Name: ___________________________
Address: ___________________________
___________________________
Trustee
Mortgage File No.: ___________________________
REQUEST FOR REQUESTING DOCUMENTS (check one):
1. Mortgage Loan Liquidated.
(The Master Servicer hereby certifies that all proceeds
of foreclosure, insurance or other liquidation have been
finally received and deposited into the Custodial Account
to the extent required pursuant to the Pooling and
Servicing
Agreement.)
2. Mortgage Loan in Foreclosure.
3. Mortgage Loan Repurchased Pursuant to Section 9.01 of the Pooling
and Servicing Agreement.
4. Mortgage Loan Repurchased Pursuant to Article II of the Pooling
and Servicing Agreement.
(The Master Servicer hereby certifies that the repurchase
price has been deposited into the Custodial Account
pursuant to the Pooling and Servicing Agreement.)
-2-
5. Other (explain).
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
The undersigned Master Servicer hereby acknowledges that it has
received from [Name of Trustee], as Trustee for the Holders of Mortgage
Pass-Through Certificates, Series 199_-____, the documents referred to below
(the "Documents"). All capitalized terms not otherwise defined in this Request
for Release shall have the meanings given them in the Pooling and Servicing
Agreement dated as of _____________ 1, 199_, (the "Pooling and Servicing
Agreement") between the Trustee, WMC Secured Assets Corp. and [Name of Master
Servicer].
( ) Promissory Note dated _______________, 19__, in the original principal
sum of $__________, made by _____________________, payable to, or
endorsed to the order of, the Trustee.
( ) Mortgage recorded on _____________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County
Recorder's Office of the County of __________, State of
_______________ in book/reel/docket ____________ of official
records at page/image ____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) _____________________________________________
( ) _____________________________________________
( ) _____________________________________________
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( ) _____________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions
nor shall the Master Servicer assert or seek to assert any claims or
rights of setoff to or against the Documents or any proceeds thereof.
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the
need therefor no longer exists, unless the Mortgage Loan relating to
the Documents has been liquidated and the proceeds thereof have been
remitted to the Custodial Account and except as expressly provided in
the Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the
Master Servicer shall at all times be earmarked for the account of the
Trustee, and the Master Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Master
Servicer's possession, custody or control.
[NAME OF MASTER SERVICER]
By: _____________________________________
Its: ____________________________________
Date: _____________________, 19__
EXHIBIT F-2
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH CERTIFICATES
Series 199_-____
______________________________________ HEREBY CERTIFIES THAT HE/SHE IS AN
OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER
SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER: _______________ BORROWER'S NAME:_____________
COUNTY:_____________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE CUSTODIAL ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
___________ ______________________ DATED:______________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
EXHIBIT G-1
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
___________________, being first duly sworn, deposes, represents and
warrants:
1. That he is [Title of Officer] of [Name of Owner] (the "Owner"),
(record or beneficial owner of the Class R Certificates (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 makes
this affidavit and agreement. This Class R Certificate was issued pursuant to
the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of _____________ 1, 199_ among WMC Secured Assets Corp., as depositor,
[Name of Master Servicer], as master servicer (the "Master Servicer"), and [Name
of Trustee], as trustee (the "Trustee").
2. That the Owner (i) is and will be a "Permitted Transferee" as of
____________, 199_ and (ii) is acquiring the Class R Certificates for its own
account or for the account of another Owner from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any person other than a "disqualified organization" or a
Non-United States Person. For this purpose, a "disqualified organization" means
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 Internal Revenue
Code of 1986 (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 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 Class R 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 Class R 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.
-2-
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of the Class R Certificates to disqualified organizations under the
Code that applies to all transfers of the Class R 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 Transferee, 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 Residual
Certificates may be "noneconomic residual interests" within the meaning of
Treasury regulation section 1.860E-1(c)(2) 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 is to enable the transferor to impede the assessment or
collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding the Class R Certificates if at any time during the taxable year
of the pass-through entity a non-Permitted Transferee 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. That the Owner is aware that the Trustee will not register the
transfer of any Class R Certificates unless the transferee, or the transferee's
agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. 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.
6. 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 Certificates will only be
owned, directly or indirectly, by Owners that are Permitted Transferees.
7. That the Owner's taxpayer identification number is __________.
8. That the Owner has reviewed the restrictions set forth on the face
of the Class R Certificates and the provisions of Section 5.02 of the Pooling
and Servicing Agreement under which the Class R Certificates were issued (and,
in particular, the Owner is aware that such Section authorizes the Trustee to
deliver payments to a person other than the Owner and negotiate a mandatory sale
by the Trustee in the event that the Owner holds such Certificate in violation
of Section 5.02); and that the Owner expressly agrees to be bound by and to
comply with such restrictions and provisions.
9. That the Owner is not acquiring and will not transfer the Class R
Certificates in order to impede the assessment or collection of any tax.
-3-
10. That the Owner anticipates that it will, so long as it holds the
Class R Certificates, have sufficient assets to pay any taxes owed by the holder
of such Class R Certificates.
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
Class R Certificates.
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 from whom it acquired the Class R Certificates
that the Owner intends to pay taxes associated with holding the Class R
Certificates as they become due, fully understanding that it may incur tax
liabilities in excess of any cash flows generated by the Class R Certificates.
13. That the Owner is not acquiring the Class R Certificates with the
intent to transfer the Class R Certificates to any person or entity that will
not have sufficient assets to pay any taxes owed by the holder of such Class R
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class R Certificates remain outstanding.
14. That Owner will, in connection with any transfer that it makes of
the Class R Certificates, obtain from its transferee the representations
required by Section 5.02(d) of the Pooling and Servicing Agreement under which
the Class R Certificates were issued and will not consummate any such transfer
if it knows, or knows facts that should lead it to believe, that any such
representations are false.
15. That Owner will, in connection with any transfer that it makes of
the Class R Certificates, deliver to the Trustee an affidavit, which represents
and warrants that it is not transferring the Class R Certificates to impede the
assessment or collection of any tax and that it has no actual knowledge that the
proposed transferee: (i) has insufficient assets to pay any taxes owed by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remain outstanding and; (iii) is not a "Permitted Transferee".
16. That 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.
-4-
17. The Purchaser is not any employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended, (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such plan or using the assets of any
such plan to effect the acquisition of the Class R Certificate (including any
insurance company using funds in its general or separate accounts that may
constitute "plan assets"), and understands that the registration of transfer of
any Certificate to any employee benefit plan, or to any person acting on behalf
of such plan or using the assets of any such plan, will not be made unless such
employee benefit plan delivers an opinion of its counsel, addressed and
satisfactory to the Trustee, the Company and the Master Servicer, to the effect
that the purchase and holding of a Certificate by or on behalf of such employee
benefit plan would not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the fiduciary responsibility provision of ERISA or
the prohibited transaction provisions of the Code (or comparable provisions of
subsequent enactments), would not constitute or result in a prohibited
transaction under section 406 of ERISA or section 4975 of the Code, and would
not subject the Company, 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 or any other
liability. The Purchaser understands that under current law such an opinion
cannot be rendered. In the case of any transfer of the foregoing Certificates to
an insurance company, in lieu of such opinion of counsel, the transferee may
provide a certification substantially to the effect that all funds used by such
transferee to purchase such Certificates will be funds held by it in its general
account which it reasonably believes do not constitute "plan assets" of any
Plan.
-5-
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, by its [TITLE OF OFFICER], attested by its [Assistant
Secretary], this ___ day of ____________, 199_.
[NAME OF OWNER]
By: _________________________
Name: [NAME OF OFFICER]
Title: [TITLE OF OFFICER]
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 a [TITLE OF OFFICER] of the Owner, and acknowledged to me that he or she
executed the same as his or 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 O ___________________
STATE OF ___________________
My Commission expires the ____ day of
________________, 19__.
EXHIBIT G-2
Form of Transferor Certificate
___________________, 19__
[Depositor]
[Name of Trustee]
[Address of Trustee]
Attention:
Re: MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 199_-____, CLASS R
Dear Sirs:
This letter is delivered to you in connection with the sale by
___________________________ (the "Seller") to _____________________________ (the
"Purchaser") of $_____________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 199_-____, Class R (the "Certificates"),
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of _____________ 1, 199_ among WMC Secured
Assets Corp., as seller (the "Company"), [Name of Master Servicer], as master
servicer, and [Name of Trustee], as trustee (the "Trustee"). All terms used
herein and not otherwise defined shall have the meaning set forth in the Pooling
and Servicing Agreement. The Seller hereby certifies, represents and warrants
to, and covenants with, the Company and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates 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 Servicer a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit G-1. The Seller does
not know or believe that any representation contained therein is false.
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 the Certificates
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.
-2-
4. The Seller has no actual knowledge that the proposed Transferee is
a Disqualified Organization, an agent of a Disqualified Organization or a
Non-United States Person.
Very truly yours,
___________________________
(Seller)
By: _______________________
Name: _____________________
Title: ____________________
-3-
EXHIBIT G-5
FORM OF INVESTOR REPRESENTATION LETTER
[for Insurance Companies]
_____________, 199_
[Depositor]
[Name of Trustee]
[Address of Trustee]
Attention: Corporate Trust
Re: Mortgage Pass-Through Certificate
SERIES 199_-____, CLASS
Dear Sirs:
___________ (the "Purchaser") intends to purchase from __________ (the
"Seller") $__________ Initial Certificate Principal Balance of Mortgage
Pass-Through Certificates, Series 199_-____, Class __ (the "Certificate"),
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as _____________ 1, 199_ among WMC Secured Assets
Corp., as seller (the "Company"), [Name of Master Servicer], as master servicer,
and [Name of Trustee], 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 Company and the Trustee that:
1. The certificates purchased pursuant hereto will not be
transferred to any employee benefit plan or other retirement
arrangement including individual retirement accounts and Xxxxx plans
that is subject to Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or Section 4975 of the Code
(any of the foregoing, a "Plan").
-4-
2. The Purchaser is an insurance company and all funds used by
the Purchaser in connection with the purchase of such certificates are
and will be, funds held by the Purchaser in its general account which
the Purchaser reasonably believes do not constitute "plan assets" as
defined under Section 406 of ERISA or Section 4975 of the Code of any
Plan.
Very truly yours,
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
[
EXHIBIT H
MORTGAGE LOAN SCHEDULE
EXHIBIT I
SELLER'S WARRANTY CERTIFICATE
This Seller's Warranty Certificate, dated _____________ __, 199_, is
executed and delivered by [Name of Seller], a _________ corporation (the
"Seller").
PRELIMINARY STATEMENT
The Seller and WMC Mortgage Corp. ("WMC") are parties to the Standard Terms
and Conditions of Agreement Effective _________ __, 199_ and the Standard Terms
and Conditions of Agreement Effective ________ _, ____ (each a "Standard Terms
Agreement") and to various Mortgage Loan Purchase Agreements entered into
thereunder.
All of the Mortgage Loans have been previously sold by the Seller to WMC in
accordance with the related Standard Terms Agreement and the related Mortgage
Loan Purchase Agreements.
WMC has notified the Seller that WMC intends to assign the Mortgage Loans
to WMC Secured Assets Corp. (the "Depositor"), and that the Depositor intends to
deposit the Mortgage Loans into a trust fund (the "Trust Fund") evidenced by
Mortgage Pass-Through Certificates, Series 199_-____ (the "Certificates"). The
Certificates will be issued pursuant to a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") among the Depositor, [Name of Trustee] as
trustee (in such capacity, the "Trustee"), and [Name of Master Servicer], as
master servicer (the "Master Servicer"), dated as of ____________ 1, 199_ (the
"Cut-off Date"). The Certificates are described more fully in the related
Prospectus Supplement (the "Prospectus Supplement") dated __________ __, 199_,
to the prospectus (the "Prospectus") dated _____________ __, 199_. Capitalized
terms used but not defined herein shall have the respective meanings assigned in
the related Standard Terms Agreements and the Pooling and Servicing Agreement,
as applicable.
Pursuant to the terms of the Pooling and Servicing 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.
Pursuant to the foregoing, the Seller hereby certifies to the following:
SECTION 1. DELIVERY OF MORTGAGE FILES. On or before the date hereof (the
"REMIC Closing Date"), the Seller shall have delivered the documents or
instruments specified below with respect to each Mortgage Loan (each a "Mortgage
File") to [Name of Trustee] (acting in such capacity, the "Custodian"), pursuant
to the [Tri-Party Custody Agreement] dated ________ ______ __, 199_, as amended
(the "Custody Agreement") and the Custodial Agreement, dated ____________ 1,
199_, in each case among WMC, the Seller and the Custodian.
-2-
Each Mortgage File contains the following documents:
(a) the original mortgage note, naming the Seller as the holder/payee
thereof (or, if the Seller is not the original holder/payee thereof,
bearing all endorsements necessary to evidence a complete and unbroken
chain of endorsements from the original holder/payee to the Seller) and
endorsed by the Seller "Pay to the order of [Name of Trustee], as trustee
for holders of WMC Secured Assets Corp., Mortgage Pass-Through
Certificates, without recourse";
(b) the original mortgage or deed of trust ("Mortgage"), naming the
Seller as the "mortgagee" or "beneficiary" thereof (or, if the Seller is
not the original mortgagee/beneficiary thereof, such Mortgage together with
all assignments necessary to evidence the complete and unbroken chain of
intervening assignments from the original mortgagee/beneficiary to the
Seller), and bearing evidence that such instrument has been recorded in the
appropriate jurisdiction where the underlying property securing the
Mortgage Loan (the "Mortgaged Property") is located (or, in lieu of the
original of the recorded Mortgage, a duplicate or conformed copy of the
Mortgage, together with a certificate of an officer of the Seller
certifying that such copy represents a true and correct copy of the
original and that such original has been submitted to the title insurance
company for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located, or a certificate
of receipt from the recording office, certifying that such copy represents
a true and correct copy of the original and that such original has been
submitted for recordation in the appropriate governmental recording office
of the jurisdiction where the Mortgaged Property is located);
(c) an original assignment of the Mortgage executed by the Seller,
without recourse, to "[Name of Trustee], as trustee for holders of WMC
Secured Assets Corp., Mortgage Pass-Through Certificates, without recourse,
with evidence of recording thereon, and the original of any intervening
assignment of the Mortgage, including any warehousing assignment, necessary
to evidence a complete and unbroken chain of assignments from the original
mortgagee/beneficiary to the Seller and bearing evidence that each such
instrument has been recorded in the appropriate jurisdiction where the
Mortgaged Property is located (or, in lieu of any such original recorded
assignment of Mortgage or any such original recorded intervening assignment
of Mortgage, a duplicate or conformed copy of such assignment of Mortgage,
together with a certificate of an officer of the Seller or the Originator
certifying that such copy represents a true and correct copy of the
original and that such original has been submitted to the title insurance
company for recordation in the appropriate governmental recording office of
the jurisdiction where the Mortgaged Property is located, or a certificate
of receipt from the recording office, certifying that such copy represents
a true and correct copy of the original and that such original has been
submitted for recordation in the appropriate governmental recording office
of the juris diction where the Mortgaged Property is located);
-3-
(d) the original lender's title insurance policy, or, if such policy
has not been issued, any one of an original or a copy of the preliminary
title report, title binder or title commitment on the Mortgaged Property
with the original policy of the insurance to be delivered promptly
following the receipt thereof;
(e) the original of any assumption, modification, extension or
guaranty agreement;
(f) the original or a copy of the private mortgage insurance policy or
original certificate of private mortgage insurance, if applicable;
(g) if the mortgage note, the Mortgage, any assignment of Mortgage or
any other related document has been signed by a person on behalf of the
mortgagor, the original power of attorney or other instrument that
authorized and empowered such person to sign, or a duplicate or conformed
copy of the power of attorney or other instrument, together with a
certification of an officer of the Seller or of the applicable title
insurance company or escrow company certifying that such copy represents a
true and correct copy of the original; and
(h) The original or a copy of the Certificate of Pool Insurance issued
by GEMICO, UGI or PMI, if applicable.
Within five days of the receipt by the Seller of the Assignment of Mortgage
with evidence of recordation thereon, or a copy thereof certified by the
applicable recording office, but in no event later than 120 days after the REMIC
Closing Date, the Seller shall deliver such Assignment of Mortgage to the
Trustee.
In the event that the recorded Assignment of Mortgage, or a certified copy
thereof, is not delivered to the Trustee within 120 days of the REMIC Closing
Date, the Seller shall be obligated to repurchase or substitute the related
Mortgage Loan as provided in Section 3. 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.
Within five days of the Seller's receipt thereof, but in no event later
than 120 days after the REMIC Closing Date, the Seller shall deliver to the
Trustee: (i) the original recorded Mortgage in those instances where an original
was not delivered to the Custodian on or prior to the applicable Purchase Date;
(ii) the original policy of title insurance or a true and correct copy thereof
in those instances where a marked up commitment (binder) to issue such policy or
preliminary policy was delivered to the Custodian; and (iii) any other original
documents constituting a part of a Mortgage File received with respect to any
Mortgage Loan, including, but not limited to, any original documents evidencing
the assumption or modification of any Mortgage Loan.
-4-
Subject to the next succeeding sentence, in the event that the Seller is
not able to deliver with respect to a given Mortgage Loan the documents referred
to in the above paragraph within 120 days of the REMIC Closing Date, such
Mortgage Loan shall be repurchased by the Seller in the manner provided in
Section 3. With respect to any Mortgage Loan, in the event that the Seller is
unable to deliver the original recorded Mortgage, the original recorded
Assignment of Mortgage, any recorded intervening assignments of the Mortgage or
any assumption or modification agreement or the original policy of title
insurance, duplicate policy or a true and correct copy thereof within the
applicable time period and such failure of timely delivery (i) is solely the
result of a delay caused by the recording office, in the case of the Mortgage,
the Assignment of Mortgage, any intervening assignments of Mortgage or any
assumption and modification agreements, or (ii) is solely the result of acts or
omissions on the part of the applicable title insurance company, in the case of
the title insurance policy, then the Seller shall be afforded additional time to
deliver such document or documents; provided that such document or documents
shall be delivered within the time period required by the applicable Pooling and
Servicing Agreement.
The Seller shall deliver to the Master Servicer or its designee all
original documents relating to the Mortgage Loans that are not delivered to the
Depositor or the Trustee, other than original documents required to be held by
the Seller pursuant to applicable mortgage lending laws, rules and regulations
of the jurisdiction in which the Mortgaged Property is located (in lieu of which
the Seller shall deliver photocopies). 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
Trustee.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller hereby
represents and warrants to and for the benefit of the Depositor and its
affiliates and the Trustee that as of the REMIC Closing Date (or such other date
specifically provided herein):
(i) no written information, certificate of an officer, statement
furnished in writing or written report delivered to WMC, any affiliate of
WMC, the Master Servicer or the Trustee and prepared by the Seller will
contain any untrue statement of a material fact or omit to state a material
fact necessary to make the information, certificate, statement or report
not misleading;
(ii) each of the representations and warranties contained in
Exhibits 2-A and 2-B hereto is true and correct. With respect to such
representations and warranties which are made to the best of the Seller's
knowledge, if the Seller discovers or receives written notice, which may
come from the Purchaser, the Servicer, the Custodian or any Interested
Party, that the substance of such representation and warranty is inaccurate
and such inaccuracy materially and adversely affects the interest of the
Purchaser or any Interested Person in the related Mortgage Loan,
notwithstanding the Seller's lack of knowledge with respect to the
substance of such representation of warranty, such inaccuracy shall be
deemed a breach thereof;
[
-5-
(iii) as of the date of the Prospectus Supplement and as of the
REMIC Closing Date, the Seller's Information 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. For purposes hereof and of each of the related Standard
Terms Agreements, the "Seller's Information" shall include all information
included in the Prospectus Supplement under the headings "Summary of
Prospectus Supplement--The Mortgage Pool" and "Description of the Mortgage
Pool", or elsewhere in the Prospectus Supplement with respect to the
matters discussed under such captions, to the extent based upon any
information provided by or approved by the Seller including the information
in the Mortgage Loan Schedules attached hereto as Exhibits 1 and the
Seller's representations and warranties relating to the Mortgage Loans
attached hereto as Exhibits.
SECTION 3. CURE, REPURCHASE, AND INDEMNITY OBLIGATIONS OF THE SELLER. Each
of the representations and warranties contained in or required to be made
pursuant to Section 2 shall survive the transfer of the Mortgage Loans to the
Trustee and shall continue in full force and effect, notwithstanding any
restrictive or qualified endorsement on the mortgage notes and notwithstanding
subsequent termination of the related Standard Terms Agreement, this Certificate
or the Pooling and Servicing Agreement. The representations, warranties and
covenants contained herein shall not be impaired by any review or examination of
the Mortgage Files or other docu ments evidencing or relating to the Mortgage
Loans by the Depositor, its affiliates or agents or any failure on the part of
the Depositor, its affiliates or agents 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 holders
of the Certificates.
Within 90 days of the earlier of discovery by the Seller or receipt of
notice of a breach of any of the representations and warranties of the Seller
set forth in or required to be made pursuant to Section 2 which materially and
adversely affects the interests of the Depositor or the Certificateholders or
any other transferee in any Mortgage Loan, the Seller shall, not later than 90
days after its receipt of notice of such defect, (i) cure such breach in all
material respects, or (ii) repurchase the related Mortgage Loan if such defect
cannot be corrected or cured at a price equal to the sum of (a) 100% of the
outstanding principal balance thereof, (b) unpaid accrued interest thereon from
the due date to which interest was last paid by the mortgagor to the first day
of the month following the month of repurchase at a rate equal to the related
mortgage rate, (c) all amounts advanced by the Master Servicer on the Mortgage
Loan and not reimbursed, and (d) all expenses reasonably incurred or to be
incurred by the Depositor, the Master Servicer or the Trustee in respect of the
breach or defect giving rise to the repurchase obligation, including any
expenses in connection with servicing a Mortgage Loan that has gone into default
and which subsequently is determined to be eligible for repurchase or arising
out of the enforcement of the repurchase obligation (the "Repurchase Price"), or
(iii) substitute a Qualified Substitute Mortgage Loan in place of such Deleted
Mortgage Loan in accordance with Section 2.04 of the Pooling and Servicing
Agreement.
-6-
Upon discovery of any defective document in a Mortgage File relating to a
Mortgage Loan which materially and adversely affects the interests of the
Depositor or the Certificateholders or any other transferee in any Mortgage
Loan, the Trustee shall notify the Seller of such defect and request that the
Seller cure such defect within 60 days from the date the Seller was notified of
such defect. In the event that any such defect cannot be corrected or cured
within such 90-day period, the Seller shall (i) repurchase the related Mortgage
Loan at the Repurchase Price or (ii) substitute a Qualified Substitute Mortgage
Loan for the related Deleted Mortgage Loan as provided for in accordance with
Section 2.04 of the Pooling and Servicing Agreement.
If the first scheduled Monthly Payment with respect to a Mortgage Loan is
not made within 30 days of the due date in accordance with the terms of the
related Mortgage Note, such Mortgage Loan will be substituted or repurchased by
the Seller in the manner provided in this Section 3.
-7-
SECTION 4. PURCHASE OF CERTAIN CONVERTIBLE MORTGAGE LOANS FROM TRUSTEE.
Upon notification that the related Mortgagor intends to exercise the option to
convert a Convertible Mortgage Loan to a fixed interest rate Mortgage Loan the
Seller shall promptly, and in no event after the day on which such Convertible
Mortgage Loan converts to a fixed interest rate, purchase such Convertible
Mortgage Loan from the Trust Fund by depositing into the Custodial Account the
Purchase Price.
IN WITNESS WHEREOF, the Seller has caused this Certificate to be signed by
its duly authorized officer as of the date first above written.
[NAME OF MASTER SERVICER]
By _______________________
Name:
Title:
-8-
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
EXHIBIT 2
GROUP I MORTGAGE LOANS
(ADJUSTABLE RATE MORTGAGE LOANS)
SELLER'S REPRESENTATIONS AND WARRANTIES
The Seller hereby represents and warrants to and for the benefit of the
Depositor and the Trustee, as to each Mortgage Loan, that as of the Closing Date
or as of such other date specifically provided herein:
[Sample representations and warranties:]
(i) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan is true and correct in all material respects
as of the REMIC Closing Date;
(ii) No more than _____% of the Mortgage Loans, based on the
Cut-off Date Principal Balance, are located in any one zip code area;
(iii) No more than _____% of the Mortgaged Properties, based on
the Cutoff Date Pool Principal Balance, were located in the State of
California;
(iv) No more than _____% of the Mortgage Loans, based on the
Cut-off Date Pool Principal Balance, were secured by condominium units; no
more than -----% of the Mortgage Loans, based on the Cut-off Date Pool
Principal Balance, were secured by properties in planned unit developments;
(v) At least _____% of the Mortgage Loans, based on the Cut-off
Date Pool Principal Balance, were secured by a first lien on a parcel of
real property improved by a single family residence; and no more than
_____% of the Mortgage Loans, based on the Cut-off Date Pool Principal
Balance, were secured by a first lien on a parcel of real estate improved
by a two-to four-unit single family residence;
(vi) No Mortgage Loan at origination had a principal balance less
than $________; no more than _____% of the Mortgage Loans, based on the
Cut-off Date Pool Principal Balance, had original principal balances in
excess of $_________; the average Cut-off Date Principal Balance of
Mortgage Loans in the Mortgage Pool was $---------;
(vii) At least _____% of the Mortgage Loans, by Cut-off Date Pool
Principal Balance, were secured by owner-occupied primary residences; less
than __% of the Mortgage Loans, by Cut-off Date Pool Principal Balance,
were secured by second homes or vacation homes of the related Mortgagors;
and no more than _____% of the Mortgage Loans, by Cut-off Date Principal
Balance, were secured by investor-owned properties;
(viii) Each Mortgage Loan in the Mortgage Pool will have a first
payment due date on or after ____________ 1, 199_;
(ix) Each Mortgage Loan will have been originated on or before
_______________, 199_.
(x) The Mortgage Interest Rates borne by the Mortgage Loans in
the Mortgage Pool as of the Cut-off Date range from _____% per annum to
______% per annum and the weighted average Mortgage Interest Rate, based on
the Cut-off Date Pool Principal Balance, was _____% per annum;
(xi) Approximately _____% of the Mortgage Loans, based on the
Cut-off Date Pool Principal Balance, were rate and term refinance Mortgage
Loans; approximately _____% of the Mortgage Loans, based on the Cut-off
Date Pool Principal Balance, were "cash-out refi's" (as defined in the
Seller's Underwriting Guide); and approximately _____% of the Mortgage
Loans, based on the Cut-off Date Pool Principal Balance, were made in order
to purchase the related Mortgaged Properties;
(xii) No Mortgage Loan in the Mortgage Pool shall have had an LTV
at origination in excess of _____% or a CLTV in excess of _____%; the
weighted average LTV, based on the Cut-off Date Pool Principal Balance, was
equal to or less than _____%; no more than _____% of the Mortgage Loans,
based on the Cut-off Date Pool Principal Balance, shall have an LTV in
excess of 80% and each such Mortgage Loan is subject to a policy of primary
mortgage insurance, issued by ___________ insuring the excess balance above
75% until such balance is reduced to 80% of the Appraised Value;
(xiii) No more than _____% of the Mortgage Loans, based on the
Cut-off Date Pool Principal Balance, have financing on the related
Mortgaged Property subordinate to the lien of such Mortgage Loan;
(xiv) The gross margins on the Mortgage Loans range from _____%
to _____%. The weighted average gross margin on the Mortgage Loans is
_____%.
(xv) There is no delinquent tax or assessment lien against any
Mortgaged Property;
(xvi) There is no valid offset, defense or counterclaim to any
Mortgage Note or Mortgage, including the obligation of the Mortgagor to pay
the unpaid principal of or interest on such Mortgage Note, and any
applicable right of rescission has expired;
(xvii) 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 (vii) below;
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(xviii) To the best of the Seller's knowledge each Mortgaged
Property is free of material damage and is in good repair;
(xix) Each Mortgage is a valid and enforceable first lien on the
Mortgaged Property subject only to (1) the lien of nondelinquent current
real property taxes and assessments, (2) 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 made in connection with the
origination of the related Mortgage Loan, and (3) other matters to which
like properties are commonly subject that do not materially interfere with
the benefits of the security intended to be provided by such Mortgage;
(xx) Each Mortgage Loan at origination complied in all material
respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, real estate settlement
procedures, truth-in-lending and disclosure laws and consummation of the
transactions contemplated hereby, including without limitation, the receipt
of interest by the owner of such Mortgage Loan or the holders of
Certificates evidencing an interest therein, will not involve the violation
of any such laws.
(xxi) 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, if
necessary to protect the interests of the owner of such Mortgage Loan or
the holders of Certificates evidencing an interest therein and which has
been delivered to the Trustee); satisfied, canceled or subordinated such
Mortgage in whole or in part; released the applicable Mortgaged Property in
whole or in part from the lien of such Mortgage; or executed any instrument
of release, cancellation or satisfaction with respect thereto;
(xxii) A lender's policy of title insurance insuring the first
lien priority of the Mortgage Loan, together with a condominium endorsement
and extended coverage endorsement, if applicable, and an 8.1 ALTA
environmental endorsement or equivalent endorsement in an amount at least
equal to the original principal balance of each such Mortgage Loan, or a
commitment binder, commitment to issue the same or preliminary policy
affirmatively insuring ingress and egress and insuring against
encroachments by or upon the Mortgaged Property on the standard ALTA form,
was effective on the date of the origination of each Mortgage Loan, each
such policy is valid and remains in full force and effect, and each such
policy was issued by a title insurer qualified to do business in the
jurisdiction where the Mortgaged Property is located and acceptable to FNMA
or FHLMC and in a form acceptable to FNMA or FHLMC, which policy insures
the Seller and successor owners of indebtedness secured by the insured
Mortgage, as to the first priority lien of the Mortgage; to the best of the
Seller's knowledge, no claims have been made under such mortgage title
insurance policy and no prior holder of the applicable Mortgage, including
the Seller, has done, by act or omission, anything which would impair the
coverage of such mortgage title insurance policy;
-3-
(xxiii) Each Mortgage Loan was originated or funded by (a) a
savings and loan association, savings bank, commercial bank, credit union,
insurance company or similar institution which is supervised and examined
by a federal or state authority (or originated by (i) a subsidiary of any
of the foregoing institutions which subsidiary is actually supervised and
examined by applicable regulatory authorities or (ii) a mortgage loan
correspondent of any of the foregoing and that was originated pursuant to
the criteria established by any of the foregoing) or (b) a mortgagee
approved by the Secretary of Housing and Urban Development pursuant to
sections 203 and 211 of the National Housing Act, as amended;
(xxiv) With respect to each Mortgage Loan, the applicable
Mortgage Note provides for an adjustable rate of interest, is payable on
the first day of each month in self- amortizing monthly installments of
principal and interest, with interest payable in arrears, and requires a
payment which is sufficient to fully amortize the outstanding principal
balance of the Mortgage Loan over its remaining term and to pay interest at
the applicable Mortgage Interest Rate. No Mortgage Loan is subject to
negative amortization or has a maximum original term of more than 30 years;
(xxv) All of the improvements which were included for the purpose
of determining the Appraised Value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon the Mortgaged
Property;
(xxvi) No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation. 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 and fire underwriting certificates, have
been made or obtained from the appropriate authorities and the Mortgaged
Property is lawfully occupied under applicable law;
(xxvii) All parties that have had any interest in the Mortgage,
whether as Mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws
of the state wherein the Mortgaged Property is located, and (2)(A)
organized under the laws of such state, or (B) qualified to do business in
such state, or (C) federal savings and loan associations or national banks
having principal offices in such state, or (D) not doing business in such
state;
(xxviii) Each Mortgage Note and the applicable Mortgage are
genuine, and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency, moratorium, receivership and other similar laws
relating to creditors' rights generally or by equitable principles. All
parties to the Mortgage Note and the Mortgage had legal capacity to execute
the Mortgage
-4-
Note and the Mortgage and each Mortgage Note and Mortgage has been duly and
properly executed by such parties.
(xxix) The proceeds of the Mortgage Loans 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 disbursement of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, closing or recording the
Mortgage Loans were paid;
(xxx) Each Mortgage contains customary and enforceable provisions that
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would
interfere with the right to sell the Mortgaged Property at a trustee's sale
or the right to foreclose the Mortgage;
(xxxi) 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;
(xxxii) Each Mortgage Note and each Mortgage is in substantially one
of the forms approved by FNMA and FHLMC.
(xxxiii) Each Mortgaged Property is suitable for year-round occupancy;
(xxxiv) There exist no 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 deficits or payments of
other charges or payments due the Seller have been capitalized under the
Mortgage or the applicable Mortgage Note;
(xxxv) The origination, underwriting and collection practices used by
the Seller or any originator with respect to each Mortgage Loan have been
in all respects legal, proper, prudent and customary in the mortgage
servicing business;
(xxxvi) There is no pledged account or other security other than real
estate securing the Mortgagor's obligations;
(xxxvii) No Mortgage Loan has a shared appreciation feature, or other
contingent interest feature;
(xxxviii) With respect to each Mortgage Loan secured by a leasehold
estate:
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(1) The leasehold created by direct lease of the freehold
estate, the ground lease or memorandum thereof has been recorded,
and by its terms permits the leasehold estate to be mortgaged.
The ground lease grants any leasehold mortgagee standard
protections necessary to protect the security of a leasehold
mortgagee including the right of the leasehold mortgagee to
receive notice of the lessee's default under the ground lease;
the right of the leasehold mortgagee, with adequate time, to cure
such default; and, in the case of incurable defaults of the
lessee, the right of the leasehold mortgagee to enter into a new
ground lease with the lessor on terms financially identical and
otherwise substantially identical to the existing ground lease;
(2) The ground lease was at the origination of the Mortgage
Loan, and is, in full force and effect without any outstanding
defaults, and was and is not subject to liens and encumbrances;
(3) The ground lease has an original term which extends not
less than ten (10) years beyond the term of the Mortgage; and
(4) The fee estate of the lessor under the ground lease is
encumbered by the ground lease, and any lien of any present or
future fee mortgagee is and will be subject to and subordinate to
the ground lease. The foreclosure of the fee mortgage will not
terminate the leasehold estate or the rights of the sub-tenants,
and the fee mortgage is subject to the ground lease;
(xxxix) Each Mortgage Loan contains a customary "due on sale"
clause;
(xl) No Mortgage Loan provides for a prepayment penalty;
(xli) The improvements upon each Mortgaged Property are covered
by a valid and existing hazard insurance policy with a generally acceptable
carrier which policy provides for fire extended coverage and such other
hazards as are customary in the area where the Mortgaged Property is
located representing coverage not less than the minimum amount required to
compensate for damage or loss on a replacement cost basis. All individual
insurance policies contain a standard mortgagee clause naming the Seller or
the original holder of the Mortgage, and its successors in interest, as
mortgagee, and the Seller has received no notice that any premiums due and
payable thereon have not been paid; the Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and upon the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement therefor from the Mortgagor;
(xlii) 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
-6-
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 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;
(xliii) There is no proceeding pending or, to the best of the
Seller's knowledge, threatened for the total or partial condemnation for
any Mortgaged Property, nor is such a proceeding currently occurring, and
such property is undamaged by waste, fire, earthquake or earth movement;
(xliv) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the applicable Mortgage Note;
and the Seller has not waived by default, breach, violation or event of
acceleration;
(xlv) The Mortgaged Properties do not include cooperatives or
mobile homes and do not constitute other than real property under state
law;
(xlvi) Prior to its respective Closing Date, each Mortgage Loan
is being serviced by the Seller;
(xlvii) There is no obligation on the part of the Seller or any
other party to make any payments in addition to the Monthly Payments
required to be made by the applicable Mortgagor;
(xlviii) Any future advances made prior to the applicable Cut-off
Date with respect to any Mortgage Loan have been consolidated with the
outstanding principal amount secured by such Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and single
repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the
Mortgage Loan. The Mortgage Note with respect to any Mortgage Loan does not
permit or obligate the Servicer to make future advances to the Mortgagor at
the option of the Mortgagor;
(xlix) The Seller has caused or will cause to be performed any
and all acts required to preserve the rights and remedies of the Purchaser
and any Interested Person evidencing an interest in the Mortgage Loans in
any insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of coinsured, joint loss
payee and mortgagee rights in favor of the Purchaser;
(l) There are no defaults in complying with the terms of any
Mortgage, and all taxes, governmental assessments, insurance premiums,
water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have
-7-
been paid, or, if required by the terms of the Mortgage Loan, an escrow of
funds has been established in an amount sufficient to pay for every such
item which remains unpaid and which has been assessed, but is not yet due
and payable. Except for (A) payments in the nature of escrow payments, and
(B) interest accruing from the date of the Mortgage Note or date of
disbursement of the Mortgage proceeds, whichever is greater 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, the Servicer has not advanced funds, or induced, solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount required
by the Mortgage;
(li) The Mortgage File contains an appraisal of the applicable
Mortgaged Property signed prior to the approval of the Mortgage Loan by a
qualified appraiser, duly appointed by the originator or the mortgage loan
broker, as the case may be, who had no interest, direct or indirect, in the
Mortgaged Property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Mortgage
Loan; the appraisal is in a form acceptable to FNMA and FHLMC and meets the
requirements of the Office of Thrift Supervision or its predecessor as they
existed at the time of origination;
(lii) None of the Mortgage Loans are graduated payment mortgage
loans or growth equity mortgage loans;
(liii) In selecting the Mortgage Loans for sale pursuant hereto,
no selection procedure was employed by the Seller which was intended to
adversely affect the interest of the Purchaser;
(liv) (a) None of the Mortgage Loans shall be 30 days or more
past due as of the applicable Closing Date and (b) no Mortgage Loan shall
have been contractually delinquent for more than one monthly installment
period during the twelve months preceding the applicable Cut-off Date;
(lv) To the Seller's best knowledge, no material
misrepresentation, fraud or similar occurrence 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;
(lvi) Upon payment of the purchase price for the Mortgage Loan by
the Purchaser, the Seller has transferred to the Purchaser good and
marketable title to each Mortgage Note and Mortgage free and clear of any
and all liens, claims, encumbrances, participation interests, equities,
pledges, charges or security interests of any nature and has full right and
authority, subject to no participation of or agreement with any other
person, to sell and assign the same;
-8-
(lvii) The Seller acquired any right, title and interest in and
to the Mortgage Loans in good faith and without notice of any adverse
claim;
(lviii) The Seller has not assigned any interest or participation
in any Mortgage Loan (or, if, any interest or participation has been
assigned, it has been released); (lix) The Seller knows of nothing
involving any Mortgage File, Mortgaged Property or Mortgagor's credit
standing that could reasonably be expected (1) to cause private
institutional investors seeking to invest in mortgage loans originated in
accordance with underwriting criteria established by the Guide to regard
the Mortgage Loan as an unacceptable investment, (2) to cause the Mortgage
Loan to become delinquent or (3) to affect adversely the value of
marketability of the Mortgage Loan;
(lx) The representations and warranties of the Mortgagor in the
mortgage loan application and in connection with the Mortgage Loan are true
and correct in all material respects (and it shall be deemed that a breach
is material only if the Mortgage Loan would not have been made if the
Mortgagor had not provided true and correct information); and
(lxi) Interest on each Mortgage Loan is calculated on the basis
of a 360-day year consisting of twelve 30-day months.
-9-
EXHIBIT J
Notice Under Section 3.24
___________________, 199_
[Name of Trustee]
[Address of Trustee]
Attention: ____________________________
Re: MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 199_-____
Pursuant to Section 3.24 of the Pooling and Servicing Agreement, dated as
of _____________ 1, 199_, relating to the Certificates* referenced above, the
undersigned does hereby notify you that:
(a) The prepayment assumption used in pricing the Certificates was ___% CPR
or ___% SPA, as applicable.
(b) With respect to each Class of the captioned Certificates, set forth
below is (i), the first price, as a percentage of the Certificate Principal
Balance of each Class of Certificates, at which 10% of the aggregate Certificate
Principal Balance of each such Class of Certificates was first sold at a single
price, if applicable, or (ii) if more than 10% of a Class of Certificates have
been sold but no single price is paid for at least 10% of the aggregate
Certificate Principal Balance of such Class of Certificates, then the weighted
average price at which the Certificates of such Class were sold expressed as a
percentage of the Certificate Principal Balance of such Class of Certificates,
(iii) if less than 10% of the aggregate Certificate Principal Balance of a Class
of Certificates has been sold, the purchase price for each such Class of
Certificates paid by ________________ (the "Underwriter") expressed as a
percentage of the Certificate Principal Balance of such Class of Certificates
calculated by: (1) estimating the fair market value of each such Class of
Certificates as of _______ __, 199_; (2) adding such estimated fair market value
to the aggregate purchase prices of each Class of Certificates described in
clause (i) or (ii) above; (3) dividing each of the fair market values determined
in clause (1) by the sum obtained in clause (2); (4) multiplying the quotient
obtained for each Class of Certificates in clause (3) by the purchase price paid
by the Underwriter for all the Certificates purchased by it; and (5) for each
Class of Certificates, dividing the product obtained from such Class of
Certificates in clause (4) by the -------- * Defined terms used herein and not
otherwise defined herein have the meaning assigned in the Pooling and Servicing
Agreement.
-1-
initial Principal Balance of such Class of Certificates or (iv) the fair market
value (but not less than zero) as of the Closing Date of each Certificate of
each Class of Certificates retained by the
Depositor or an affiliate corporation, or delivered to the Seller:
Class A-1: ____________________
Class A-2: ____________________
Class A-3: ____________________
Class A-4: ____________________
Class A-5: ____________________
Class A-6: ____________________
Class A-7: ____________________
Class B: ____________________
[*less than 10% has been sold to the public]
The prices and values set forth above do not include accrued interest with
respect to periods before the closing.
WMC SECURED ASSETS
CORP.
By ___________________________________
Name:
Title:
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