EXHIBIT 4.1
EXECUTION COPY
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DELTA FUNDING CORPORATION,
as Seller and Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of November 30, 1997
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Home Equity Loan Asset-Backed Certificates
Series 1997-4
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TABLE OF CONTENTS
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ARTICLE I Definitions...................................................1
Section 1.01. Definitions...................................................1
Section 1.02. Interest Calculations........................................35
ARTICLE II Conveyance of Initial Mortgage Loans; Original
Issuance of Certificate Tax Treatment........................35
Section 2.01. Conveyance of Initial Mortgage Loans.........................35
Section 2.02. Acceptance by Trustee........................................39
Section 2.03. Representations and Warranties Regarding
the Seller and the Servicer..................................41
Section 2.04. Representations and Warranties of the Seller
Regarding the Mortgage Loans.................................44
Section 2.05. Substitution of Mortgage Loans...............................53
Section 2.06. Execution and Authentication of Certificates.................55
Section 2.07 Designation of Interests in REMIC............................55
Section 2.08. Designation of Startup Day of REMIC..........................57
Section 2.09. REMIC Certificate Maturity Date..............................57
Section 2.10. Tax Returns and Reports to Certificateholders................57
Section 2.11. Tax Matters Person...........................................58
Section 2.12. REMIC Related Covenants......................................58
Section 2.13. Subsequent Transfers.........................................63
ARTICLE III Administration and Servicing of Mortgage Loans...............65
Section 3.01. The Servicer.................................................65
Section 3.02. Collection of Certain Mortgage Loan Payments.................69
Section 3.03. Withdrawals from the Collection Account......................70
Section 3.04. Maintenance of Hazard Insurance; Property
Protection Expenses..........................................71
Section 3.05. Maintenance of Mortgage Impairment Insurance
Policy.......................................................72
Section 3.06. Management and Realization Upon Defaulted Mortgage
Loans........................................................73
Section 3.07. Trustee to Cooperate.........................................75
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Section 3.08. Servicing Compensation; Payment of Certain Expenses
by Servicer..................................................76
Section 3.09. Annual Statement as to Compliance............................76
Section 3.10. Annual Servicing.............................................76
Section 3.11. Access to Certain Documentation and Information
Regarding the Mortgage Loans.................................77
Section 3.12. Maintenance of Certain Servicing Insurance Policies..........77
Section 3.13. Reports to the Securities and Exchange Commission............77
Section 3.14. Reports of Foreclosures and Abandonments of
Mortgaged Properties, Returns Relating to Mortgage
Interest Received from Individuals and Returns
Relating to Cancellation of Indebtedness.....................77
Section 3.15. Advances by the Servicer.....................................78
Section 3.16. Optional Purchase of Defaulted Mortgage Loans................78
Section 3.17. Superior Liens...............................................79
Section 3.18. Assumption Agreements........................................79
Section 3.19. Payment of Taxes, Insurance and Other Charges................80
ARTICLE IV Initial Interest Coverage Account
Section 4.01. [Reserved]...................................................81
Section 4.02. Initial Interest Coverage Account and Pre-Funding
Account......................................................81
ARTICLE V Payments and Statements to Certificateholders;
Rights of Certificateholders.................................82
Section 5.01. Distributions................................................82
Section 5.02. Compensating Interest........................................87
Section 5.03. Statements...................................................88
Section 5.04. Distribution Account.........................................91
Section 5.05. Investment of Accounts.......................................92
ARTICLE VI .............................................................93
The Certificates............................................................93
Section 6.01. The Certificates.............................................93
Section 6.02. Registration of Transfer and Exchange of
Certificates.................................................94
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates...........100
Section 6.04. Persons Deemed Owners.......................................100
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Section 6.05. Appointment of Paying Agent.................................101
ARTICLE VII ............................................................101
The Seller and the Servicer................................................101
Section 7.01. Liability of the Seller and the Servicer....................101
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller or the Servicer..................101
Section 7.03. Limitation on Liability of the Servicer
and Others..................................................102
Section 7.04. Servicer Not to Resign......................................103
Section 7.05. Delegation of Duties........................................103
Section 7.06. Indemnification of the Trust by the Servicer................104
ARTICLE VIII ............................................................104
Default
Section 8.01. Events of Default...........................................104
Section 8.02. Trustee to Act; Appointment of Successor....................106
Section 8.03. Waiver of Defaults..........................................108
Section 8.08. Notification to Certificateholders..........................108
ARTICLE IX ............................................................108
The Trustee ............................................................108
Section 9.01. Duties of Trustee...........................................108
Section 9.02. Certain Matters Affecting the Trustee.......................110
Section 9.03. Trustee Not Liable for Certificates or Mortgage
Loans.......................................................112
Section 9.04. Trustee May Own Certificates................................113
Section 9.05. Servicer to Pay Trustee Fees and Expenses...................113
Section 9.06. Eligibility Requirements for Trustee........................114
Section 9.07. Resignation or Removal of Trustee...........................114
Section 9.08. Successor Trustee...........................................115
Section 9.09. Merger or Consolidation of Trustee..........................116
Section 9.10. Appointment of Co-Trustee or Separate Trustee...............116
Section 9.11. Limitation of Liability.....................................117
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection....................................118
Section 9.13. Suits for Enforcement.......................................118
ARTICLE X ............................................................119
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Termination ............................................................119
Section 10.01. Termination.................................................119
Section 10.02. Additional Termination Requirements.........................120
ARTICLE XI ............................................................121
Miscellaneous Provisions...................................................121
Section 11.01. Amendment...................................................121
Section 11.02. Recordation of Agreement....................................123
Section 11.03. Limitation on Rights of Certificateholders..................123
Section 11.04. Governing Law...............................................124
Section 11.05. Notices.....................................................124
Section 11.06. Severability of Provisions..................................126
Section 11.07. Assignment 126
Section 11.08. Certificates Nonassessable and Fully Paid...................126
Section 11.09. Third-Party Beneficiaries...................................127
Section 11.10. Counterparts................................................127
Section 11.11. Effect of Headings and Table of Contents....................127
EXHIBIT A - FORM OF FIXED RATE CERTIFICATES.............................A-1
EXHIBIT A-1- FORM OF CLASS A CERTIFICATES..............................A-1-1
EXHIBIT A-2- FORM OF CLASS M CERTIFICATES..............................A-2-1
EXHIBIT A-3- FORM OF CLASS B CERTIFICATES..............................A-3-1
EXHIBIT A-4- FORM OF CLASS A-5IO CERTIFICATES..........................A-4-1
EXHIBIT B - FORM OF ADJUSTABLE RATE CERTIFICATES........................B-1
EXHIBIT B-1- FORM OF CLASS A CERTIFICATES..............................B-1-1
EXHIBIT B-2- FORM OF CLASS M CERTIFICATES..............................B-2-1
EXHIBIT B-3- FORM OF CLASS B CERTIFICATES .............................B-3-1
EXHIBIT B-4- FORM OF CLASS R CERTIFICATE...............................B-4-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE......................................C-1
EXHIBIT D - FORM OF SUBSEQUENT TRANSFER AGREEMENT.......................D-1
EXHIBIT E - FORM OF MORTGAGE NOTE.......................................E-1
EXHIBIT F - FORM OF MORTGAGE............................................F-1
EXHIBIT G - TRANSFER AFFIDAVITS.........................................G-1
EXHIBIT H - LETTER OF REPRESENTATIONS...................................H-1
EXHIBIT I - FORM OF REQUEST FOR RELEASE.................................I-1
EXHIBIT J - [RESERVED]
EXHIBIT K - [RESERVED]
EXHIBIT L - DELINQUENCY AND LOSS INFORMATION........................... L-1
EXHIBIT M - FORM OF TRANSFEROR CERTIFICATE .............................M-1
EXHIBIT N-1- FORM OF INVESTMENT LETTER [NON-RULE 144A].................N-1-1
EXHIBIT N-2- FORM OF RULE 144A LETTER .................................N-2-1
EXHIBIT O - FORM OF INITIAL CERTIFICATION...............................O-1
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EXHIBIT P - FORM OF TRUSTEE FINAL CERTIFICATION.........................P-1
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This Pooling and Servicing Agreement, dated as of November 30, 1997,
among Delta Funding Corporation, as Seller and Servicer (the "Seller" and the
"Servicer", respectively), and Bankers Trust Company of California, N.A., as
Trustee (the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.
Addition Notice: The notice given pursuant to Section 2.13 with respect
to the transfer of Subsequent Mortgage Loans to the Trust pursuant to such
Section.
Adjustable Rate Certificates: Class A-1F Certificates and Group A
Certificates.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Allocated Pre-Funded Amount: As to either Certificate Group and any
date of determination, the portion, if any, of the Pre-Funded Amount allocable
to such Certificate Group and on deposit in the Pre-Funding Account.
Applied Realized Loss Amounts: As to any Distribution Date and
Certificate Group, an amount equal to the excess, if any, of (i) the aggregate
of the Class Principal Balances of the Offered
Certificates in such Certificate Group, after giving effect to all distributions
on such Distribution Date over (ii) the related Loan Group Balance as of the
last day of the relate Due Period.
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee.
Authorized Newspaper: A newspaper of general circulation in the Borough
of Manhattan, The City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
Available Funds: As to either Loan Group and any Distribution Date, the
sum, without duplication of the following amounts with respect to the Mortgage
Loans in such Loan Group: (i) scheduled and unscheduled payments of principal
and interest on the Mortgage Loans received by the Servicer (net of amounts
representing the Servicing Fee with respect to each Mortgage Loan and
reimbursement for related Monthly Advances and Servicing Advances); (ii) Net
Liquidation Proceeds and Insurance Proceeds with respect to the Mortgage Loans
(net of amounts applied to the restoration or repair of a Mortgaged Property);
(iii) the Purchase Price for repurchased Defective Mortgage Loans with respect
to the Mortgage Loans and any related Substitution Adjustment Amounts; (iv)
payments from the Servicer in connection with (a) Monthly Advances, (b)
Compensating Interest and (c) the termination of the Trust with respect to the
Mortgage Loans as provided in the Agreement; (v) on the Distribution Dates
during and immediately following the Funding Period, amounts from the Initial
Interest Coverage Account for the payment of interest on the related Classes of
Offered Certificate; and (vi) on the Distribution Date at or immediately
following the end of the Funding Period, any related Excess Funding Amount.
Balloon Loan: Any Mortgage Loan that provided on the date of
origination for scheduled monthly payment in level amounts substantially lower
than the amount of the final scheduled payment.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or, if at any time after the execution of this Agreement the Bank Insurance Fund
is not
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existing and performing duties now assigned to it, the body performing such
duties on such date.
Basic Principal Amount: As to either Loan Group and any Distribution
Date, an amount equal to the sum of the following amounts (without duplication)
with respect to the Mortgage Loans in such Loan Group and the immediately
preceding Due Period: (i) each payment of principal on a Mortgage Loan received
by the Servicer during such Due Period, including all full and partial principal
prepayments; (ii) the Net Liquidation Proceeds in respect of principal received
during the immediately preceding Due Period; (iii) the portion of the Purchase
Price allocable to principal of all repurchased Defective Mortgage Loans with
respect to such Due Period; and (iv) any Substitution Adjustment Amounts
received on or prior to the previous Determination Date and not yet distributed.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificate: Any Regular Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City or the city in which the corporate trust
office of the Trustee under this Agreement is located are authorized or
obligated by law or executive order to close.
Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date: (a) as to the Certificate Group F Certificates, the amount of
interest accruing during the related Interest Period for the Classes of Offered
Certificates in such Certificate Group at the weighted average Certificate Rate
thereof on the related Allocated Pre-Funded Amount as of the first day of the
related Due Period; provided, however, that for this purpose, the Certificate
Rate for the Class A-5F Certificates shall equal the sum of the Certificate
Rates for the Class A-5F and Class A-5IO Certificates and (b) as to the
Certificate Group A Certificates, the amount of interest accruing during the
related Interest Period for the Offered Certificates in such Certificate Group
at the weighted average Certificate Rate thereof on the related Allocated
Pre-Funded Amount as of the last day of the related Due Period.
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Certificate: Any Offered Certificate or Residual Certificate.
Certificate Group: Either Certificate Group A or Certificate Group F,
as the context requires.
Certificate Group A: The Class A-1A, Class M-1A, Class M-2A and Class
B-1A Certificates.
Certificate Group F: The Class A-1F, Class A-2F, Class X-0X, Xxxxx
X-0X, Xxxxx X-0X, Class A-5IO, Class M-1F, Class M-2F and Class B-1F
Certificates.
Certificate Group Balance: As to either Certificate Group and any date
of determination, the aggregate of the Class Principal Balances of the Classes
of Certificates in such Certificate Group.
Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the display designated
as page 3750 on the Telerate Service (or such other page as may replace page
3750 on that service for the purpose of displaying London interbank offered
rates of major banks). If such rate does not appear on such page (or such other
page as may replace that page on that service, or if such service is no longer
offered, such other service for displaying LIBOR or comparable rates as may be
reasonably selected by the Trustee after consultation with the Servicer), the
rate will be the Reference Bank Rate. If no such quotations can be obtained and
no Reference Bank Rate is available, the Certificate Index will be the
Certificate Index applicable to the preceding Distribution Date. On the second
LIBOR Business Day immediately preceding each Distribution Date, the Trustee
shall determine the Certificate Index for the Interest Period commencing on such
Distribution Date and inform the Servicer of such rate.
Certificate Margins: As to such Class of Group A Certificates, the
applicable amount set forth below:
Certificate Margin
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Class (1) (2)
----- ----- ------
A-1A 0.22% 0.440%
M-1A 0.48% 0.720%
M-2A 0.68% 1.020%
B-1A 1.15% 1.725%
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(1) Prior to or on the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1F (1)
A-2F 6.670%
A-3F 6.710%
A-4F 7.070%
A-5F 6.670%(2)
A-5IO 6.500%
M-1F 6.970%(2)
M-2F 7.170%(2)
B-1F 7.510%(2)
A-1A (3)
M-1A (3)
M-2A (3)
B-1A (3)
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(1) As to any Distribution Date, a per annum rate equal to the lesser of
(x) the sum of the Certificate Index and 0.15% and (y) the Group F Maximum Rate.
(2) As to any Distribution Date, the lesser of (x) the fixed rate set
forth and (y) the Group F Maximum Rate.
(3) As to any Distribution Date, a per annum rate equal to the lesser of
(x) the sum of the Certificate Index and the applicable Certificate Margin and
(y) the Group A Available Funds Cap.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be
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outstanding (unless to the knowledge of a Responsible Officer (i) the Seller or
such Affiliate is acting as trustee or nominee for a Person who is not an
Affiliate of such Seller and who makes the voting decision with respect to such
Offered Certificates or (ii) the Seller or such Affiliate is the Certificate
Owner or Holder of all the Certificates of a Class, but only with respect to the
Class as to which the Seller or such Affiliate owns all the Certificates) and
the Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
effect any such consent, direction, waiver or request has been obtained.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount by which
(i)interest collectible on such Mortgage Loan during such Due Period is less
than (ii)one month's interest on the Principal Balance of such Mortgage Loan at
the Loan Rate for such Mortgage Loan before giving effect to the application of
the Civil Relief Act.
Class: All Certificates having the same designation.
Class A-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B-1 and
designated as a Class A-1A Certificate pursuant to Section 6.01.
Class A-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-1 and
designated as a Class A-1F Certificate pursuant to Section 6.01.
Class A-2F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-1 and
designated as a Class A-2F Certificate pursuant to Section 6.01.
Class A-3F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-1 and
designated as a Class A-3F Certificate pursuant to Section 6.01.
Class A-4F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached
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hereto as Exhibit A-1 and designated as a Class A-4F Certificate pursuant to
Section 6.01.
Class A-5F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-1 and
designated as a Class A-5F Certificate pursuant to Section 6.01.
Class A-5F Percentage: As to any Distribution Date, the applicable
percentage set forth below:
Distribution Dates Percentages
------------------ -----------
January 1998-December 2000 0%
January 2001 - December 2002 45%
January 2003 - December 2003 80%
January 2004- December 2004 100%
January 2005 and thereafter 300%
Class A-5F Principal Distribution: As to any Distribution Date, the
product of (i) the applicable Class A-5F Percentage and (ii) the product of (x)
the related Senior Principal Distribution Amount and (y) a fraction, the
numerator of which is the Class Principal Balance of the Class A-5F Certificates
immediately prior to such Distribution Date, and the denominator of which is the
aggregate Class Principal Balance of the Senior Certificates in Group F
immediately prior to such Distribution Date.
Class A-5IO Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-4 and
designated as a Class A-5IO Certificate pursuant to Section 6.01.
Class B-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B-3 and
designated as a Class B-1A Certificate pursuant to Section 6.01.
Class B-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-3 and
designated as a Class B-1F Certificate pursuant to Section 6.01.
Class Interest Carryover Shortfall: As to any Class of Regular
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess of the related Class Monthly Interest Amount for the preceding
Distribution Date and any outstanding Class Interest Carryover Shortfall with
respect to such Class
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on such preceding Distribution Date, over the amount in respect of interest that
is actually distributed to the Holders of such Class on such preceding
Distribution Date plus (ii) one month's interest on such excess, to the extent
permitted by law, at the related Certificate Rate.
Class Interest Distribution: As to any Class of Regular Certificates
and Distribution Date, an amount equal to the sum of (a) the related Class
Monthly Interest Amount and (b) any Class Interest Carryover Shortfall for such
Class of Certificates for such Distribution Date.
Class M-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B-2 and
designated as a Class M-1A Certificate pursuant to Section 6.01.
Class M-2A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B-2 and
designated as a Class M-2A Certificate pursuant to Section 6.01.
Class M-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-2 and
designated as a Class M-1F Certificate pursuant to Section 6.01.
Class M-2F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A-2 and
designated as a Class M-2F Certificate pursuant to Section 6.01.
Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest for the related Interest Period at the related
Certificate Rate on the related Class Principal Balance or Notional Amount.
Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Class A-5IO Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous Distribution Dates
and, in the case of any Class of Subordinate Certificate, reduced by any Applied
Realized Loss Amounts allocated to such Class on prior Distribution Dates.
Class Principal Distribution Amount: As to any Class of Subordinate
Certificates in a Certificate Group and (a) any Distribution Date prior to the
related Stepdown Date, zero, and (b) any Distribution Date on or after the
related Stepdown Date, the excess of (i) an amount equal to the sum of (x) the
Class
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Principal Balance (after giving effect to distributions of the related
Principal Distribution Amount on such Distribution Date) of each Class of
Certificates in such Certificate Group with a higher payment priority and (y)
the Class Principal Balance of such Class of Subordinated Certificates
immediately prior to such Distribution Date over (ii) the applicable Pro Rata
Principal Distribution Amount for such Distribution Date.
Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) sum of (x)
the amount of the reduction in the Class Principal Balance of such Class of
Subordinate Certificates on such Distribution Date and (y) the amount of such
reductions on prior Distribution Dates over (ii) the amount distributed in
respect thereof on prior Distribution Dates.
Class R-1 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form set forth in Exhibit
B-4 hereto.
Class R-2 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-4.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: December 11, 1997.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the First Lien, if any, as of the date of
origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount
calculated pursuant to Section 5.02.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation
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must qualify as a Cooperative Housing Corporation under Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single family dwelling located in a Cooperative
Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
on the Closing Date is located at Xxxxx Xxxx Xxxxx, Xxxxxxxxx Xxxxx, Xxxxxx,
Xxxxxxxxxx 00000, Attention: Delta-1997-4.
Corresponding Class: As indicated in Section 2.07 hereof.
Cumulative Loss Event: For either Certificate Group and any
Distribution Date in the applicable period below, Cumulative Net Losses for such
Certificate Group exceed the applicable percentage of the aggregate Original
Class Principal Balances of the Offered Certificates in such Certificate Group:
Number of Distribution Dates Certificate Group F Certificate Group A
---------------------------- ------------------- -------------------
0-36 1.20% 1.70%
37-48 2.10% 2.80%
49-60 2.60% 3.50%
61-72 3.00% 4.00%
73-84 3.20% 4.30%
85 and thereafter 3.40% 4.50%
Cumulative Net Losses: As to either Certificate Group and as of any
date of determination, the aggregate of the Liquidation Loan Losses for such
Certificate Group incurred from the Cut-Off Date through the end of the calendar
month preceding such date of determination.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that
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is in excess of the amount of the Monthly Payment due for such Due Period and
which is not intended to satisfy the Mortgage Loan in full, nor is intended to
cure a delinquency.
Cut-Off Date: The close of business on November 30, 1997, except that
the Cut-Off Date for any Mortgage Loan originated after November 30, 1997, will
be the date of origination of such Mortgage Loan.
Cut-Off Date Pool Principal Balance: $312,819,282.88.
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the applicable
date of substitution with respect to an Eligible Substitute Mortgage Loan
pursuant to Section 2.02 or 2.04).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Amount: As to either Certificate Group and any date of
determination, the sum of (i) 50% of the aggregate Principal Balance of the
Mortgage Loans in the related Loan Group that are 60-89 days delinquent, (ii)
75% of the aggregate Principal Balance of the Mortgage Loans in the related Loan
Group that are 90 to 119 days delinquent (excluding Mortgage Loans in
foreclosure and REO Properties) and (iii) 100% of the aggregate Principal
Balance of the Mortgage Loans in the related Loan Group that are 120 or more
days delinquent or in foreclosure and REO Properties.
Delta: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Regular Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the fourth
Business Day prior to such Distribution Date.
- 11 -
Distribution Account: The account established and maintained by the
Trustee pursuant to Section 5.04. The Distribution Account shall be an Eligible
Account.
Distribution Date: The twenty-fifth day of each month, or, if such day
is not a Business Day, then the next Business Day, beginning in January 1998.
Distribution Percentage: As to the Senior Certificates in a Certificate
Group: 100% minus the product of (i) 2 and (ii) the sum of the applicable
Original Credit Support Percentage and the applicable Required OC Percentage as
of the Cut-Off Date. As to any Class of Subordinate Certificates in a
Certificate Group, 100% minus the product of (i) 2 and (ii) the sum of the
applicable Original Credit Support Percentage and the applicable Required OC
Percentage as of the Cut-Off Date.
Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
Due Period: With respect to the first Distribution Date for collections
of principal and interest the period from and including December 1, 1997 through
and including January 1, 1998. With respect to each Distribution Date thereafter
for collections of both interest and principal, the period from and including
the second day of the month preceding the month of such Distribution Date to and
including the first day of the month of such Distribution Date.
Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Servicer.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose short-term debt obligations and long-term debt
obligations at the time of any deposit therein and throughout the time the
interest is maintained are rated at least P-1 and A2 by Moody's and if rated by
Fitch, rated at least "F-1" and "A" respectively, and that the deposits in such
account or accounts are fully insured to the maximum extent provided by either
the BIF or the SAIF and which is any of (a) a federal savings and loan
association duly organized, validly existing and in good standing under the
applicable banking laws of any state, (b) an institution duly organized, validly
existing and in good standing under the applicable banking laws of any state,
(c) a national banking association duly organized, validly existing and in good
standing under the federal banking laws or (d) a principal subsidiary of a bank
holding company, (ii) a segregated trust account maintained with the corporate
trust department of a federal or state chartered depository or trust company,
having capital and surplus of not less than $50,000,000,
- 12 -
acting in its fiduciary capacity, or (iii) an account otherwise acceptable to
each Rating Agency as evidenced by a letter from each Rating Agency to the
Trustee, without reduction or withdrawal of the then current ratings of the
Certificates.
Eligible Investments: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided that such obligations
are backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than three months from the date of acquisition
thereof, provided that the short-term unsecured debt obligations of the
party agreeing to repurchase such obligations are at the time rated by
each Rating Agency in its highest short-term rating category (which is
"P-1+" for Moody's and if rated by Fitch, F-1+ for Fitch);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if Xxxxx'x is a Rating Agency, shall each have an
original maturity of not more than 90 days) of any U.S. depository
institution or trust company incorporated under the laws of the United
States or any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the
unsecured short-term debt obligations of such depository institution or
trust company at the date of acquisition thereof have been rated by
Moody's and, if rated by Fitch, in Fitch's highest unsecured short-term
debt rating category;
(iv) commercial paper (having original maturities of not more
than 90 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by Moody's and if rated by Fitch, Fitch's in their highest
short-term rating categories;
(v) short term investment funds ("STIFS") sponsored by any
trust company or national banking association incorporated under the
laws of the United States or any state thereof which on the date of
acquisition has been rated by Moody's and if rated by Fitch, Fitch's in
their respective highest rating category of long term unsecured debt;
- 13 -
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time as
the interest is held in such fund has a rating of either Aaa by
Moody's; and, if rated by Fitch, "AAA" by Fitch; and
(vii) other obligations or securities that are acceptable to
each Rating Agency as an Eligible Investment hereunder and will not
result in a reduction in the then current rating of the Certificates,
as evidenced by a letter to such effect from such Rating Agency and
with respect to which the Servicer has received confirmation that, for
tax purposes, the investment complies with the last clause of this
definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution, (i)have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii)have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii)if such Defective
Mortgage Loan is in Loan Group A, have a Loan Rate based on the same Loan Index
with adjustments to such Loan Rate made on the same interval between Interest
Rate Adjustment Dates as that of the Defective Mortgage Loan and have a Margin
that is not less than the Margin of the Defective Mortgage Loan and not more
than 100 basis points higher than the Margin for the Defective Mortgage Loan;
(iv) have a Mortgage of the same or higher level of priority as the Mortgage
relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (v) have a remaining term to maturity not more than
six months earlier and not later than the remaining term to maturity of the
Defective Mortgage Loan; (vi) comply with each representation and warranty set
forth in Section
- 14 -
2.04 (deemed to be made as of the date of substitution); (vii) have an original
Combined Loan-to-Value Ratio not greater than that of the Defective Mortgage
Loan; (viii) if such Defective Mortgage Loan is in Loan Group A, have a Lifetime
Rate Cap and a Periodic Rate Cap no lower than the Lifetime Rate Cap and
Periodic Rate Cap, respectively, applicable to such Defective Mortgage Loan; and
(ix)be of the same type of Mortgaged Property as the Defective Mortgage Loan or
a detached single family residence. More than one Eligible Substitute Mortgage
Loan may be substituted for a Defective Mortgage Loan if such Eligible
Substitute Mortgage Loans meet the foregoing attributes in the aggregate.
ERISA Restricted Certificate: Each Subordinate Certificate and each
Residual Certificate.
Excess Funding Amount: As to either Certificate Group the related
Allocated Pre-Funded Amount remaining on deposit in the Pre-Funding Account at
the end of the Funding Period.
Event of Default: As defined in Section 8.01.
Excess Delinquency Event: For either Certificate Group and any
Distribution Date in the applicable period below, the Delinquency Amount, the
Modified I Delinquency Amount or the Modified II Delinquency Amount, as
applicable, equals or exceeds 2% for Certificate Group F or 2.50% for
Certificate Group A:
Number of
Distribution Dates
------------------
0-36 Delinquency Amount
37-48 Delinquency Amount
49-60 Modified I Delinquency Amount
61-72 Modified I Delinquency Amount
73-84 Modified II Delinquency Amount
85 and thereafter Modified II Delinquency Amount
Excess Interest: As to either Loan Group and any Distribution Date the
excess, if any, of (x) the Interest Remittance Amount for such Loan Group over
(y) the sum of (i) the Class Interest Distributions for the related Senior
Certificates, (ii) the Class Monthly Interest Amounts for the related
Subordinate Certificates and (iii) the Trustee Fee for such Loan Group.
Excess Overcollateralization Amount: As to either Certificate Group and
any Distribution Date, the lesser of (i) the related Basic Principal Amount for
such Distribution Date and (ii) the excess, if any, of (x) the related
Overcollateralization Amount (assuming 100% of the applicable Basic Principal
Amount is
- 15 -
distributed on the related Offered Certificates) over (y) the related Required
Overcollateralization Amount; provided, however, that if a Subordination Trigger
Event is in effect for such Certificate Group, the related Excess
Overcollaterization Amount shall be zero.
Expense Fee Rate: 0.50625% per annum.
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation.
Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:
Class Month
----- -----
X-0X Xxxx 00, 0000
X-0X June 25, 2024
A-3F February 25, 2026
A-4F January 25, 2028
A-5F January 25, 2028
X-0XX Xxxxxxxx 00, 0000
X-0X January 25, 2028
M-2F January 25, 2028
B-1F January 25, 2028
A-1A January 25, 2028
M-1A January 25, 2028
M-2A January 25, 2028
B-1A January 25, 2028
First Lien: With respect to any Mortgage Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Fitch: Fitch IBCA, Inc., or its successor in interest.
Fixed Rate Certificates: The Group F Certificates, other than the Class
A-1F Certificates.
FNMA: The Federal National Mortgage Association.
Foreclosure Profits: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid through
the date of receipt of the final Liquidation Proceeds) of such Liquidated
- 16 -
Mortgage Loan immediately prior to the final recovery of its Liquidation
Proceeds.
Funding Period: The period from the Closing Date until the earliest of
(i) the date on which the amount on deposit in the Pre-Funding Account is less
than $100,000, (ii) the date on which an Event of Default occurs under the
Agreement or (iii) the close of business on January 10, 1998.
Group A Certificates: The Class A-1A, Class M-1A, Class M-2A and Class
B-1A Certificates.
Group A Available Funds Cap: As to any Distribution Date, the per annum
rate equal to the weighted average of the Net Loan Rates of the Mortgage Loans
in Loan Group A as of the beginning of the related Due Period weighted on the
basis of the Principal Balances of the related Mortgage Loans at the beginning
of such Due Period.
Group F Certificates: The Class A-1F, Class A-2F, Class X-0X, Xxxxx
X-0X, Xxxxx X-0X, Class A-5IO, Class M-1F, Class A-2F and Class B-1F
Certificates.
Group F Maximum Rate: As to any Distribution Date, the per annum rate
equal to the weighted average of the Net Loan Rates of the Mortgage Loans in
Loan Group F as of the first day of the related Due Period minus the product of
6.50% and a fraction, the numerator of which is the Notional Amount of the Class
A-5IO Certificates and the denominator of which is the Loan Group Balance of
Loan Group F as of the first day of the related Due Period.
Initial Interest Coverage Account: The Initial Interest Coverage
Account established pursuant to Section 4.02.
Initial Interest Deposit: $638,716.15
Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
Initial Mortgage Loans: The Initial Mortgage Loans transferred to the
Trust pursuant to Section 2.01, as set forth in Exhibit C hereto.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan or Mortgaged Property, or amounts
required to be paid by the Servicer pursuant to Section 3.05, net of any
component thereof (i) covering any
- 17 -
expenses incurred by or on behalf of the Servicer in connection with obtaining
such proceeds, (ii) applied to the restoration or repair of the related
Mortgaged Property, (iii) released to the Mortgagor in accordance with the
Servicer's normal servicing procedures or (iv) required to be paid to any holder
of a mortgage senior to such Mortgage Loan.
Interest Period: For the Fixed Rate Certificates, the calendar month
preceding the month of the applicable Distribution Date, calculated on the basis
of a 360-day year comprised of twelve 30-day months. For the Adjustable Rate
Certificates, the period from the prior Distribution Date (or, in the case of
the first Distribution Date, from the Closing Date) through the day preceding
the current Distribution Date, calculated on the basis of a 360-day year and the
actual number of days elapsed in such period; provided, however, that interest
accrued on the Group A Certificates at the Group A Available Funds Cap, and
interest accrued on the Class A-1F Certificates at the Group F Maximum Rate,
shall be calculated on the basis of a 360-day year comprised of twelve 30-day
months.
Interest Rate Adjustment Date: With respect to each Mortgage Loan in
Loan Group A, the date or dates on which the Loan Rate is subject to adjustment
in accordance with the related Mortgage Note.
Interest Remittance Amount: As to either Loan Group and any
Distribution Date, the portion of the Available Funds for such Loan Group that
constitutes amounts in respect of interest.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
LIBOR Carryover: As to any Class of Group A Certificates and any
Distribution Date, the sum of (i) the excess, if any, of the related Class
Monthly Interest Amount calculated on the basis of the Certificate Index plus
the applicable Certificate Margin over the related Class Monthly Interest Amount
for such Distribution Date (ii) any LIBOR Carryover remaining unpaid from prior
Distribution Dates and (iii) 30 days interest on the amount in clause (ii)
calculated on the basis of the Certificate Index plus the applicable Certificate
Margin.
Lifetime Rate Cap: With respect to each Mortgage Loan in Loan Group A,
the maximum Loan Rate permitted over the life of such Mortgage Loan, as provided
by the terms of the related Mortgage Note.
- 18 -
Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan
with respect to which the Servicer has determined, in accordance with the
servicing procedures specified herein as of the end of the preceding Due Period,
that all Liquidation Proceeds which it expects to recover with respect to such
Mortgage Loan (including the disposition of the related REO Property) have been
received.
Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon plus unreimbursed Servicing Advances is in excess of the Net Liquidation
Proceeds realized thereon.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received
in connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Group Balance: Either the Loan Group F Balance or the Loan Group A
Balance, as applicable.
Loan Group: Either Loan Group F or Loan Group A, as the context
requires.
Loan Group A: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group A.
Loan Group A Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group A as of such date.
Loan Group F: The pool of Mortgage Loans identified in the related
Mortgage Loan Schedule as having been assigned to Loan Group F.
Loan Group F Balance: As of any date, the aggregate of the Principal
Balances of all Mortgage Loans in Loan Group F as of such date.
Loan Index: With respect to each Interest Rate Adjustment Date for each
Mortgage Loan in Loan Group A that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.
Loan Rate: With respect to any Mortgage Loan as of any day, the per
annum rate of interest applicable under the related
- 19 -
Mortgage Note to the calculation of interest for such day on the Principal
Balance.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.
Margin: As to any Mortgage Loan in Loan Group A, the percentage set
forth as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Mezzanine Certificates: The Class M-1F, Class M-2F, Class M-1A and
Class M-2A Certificates.
Modified I Delinquency Amount: As to either Certificate Group and any
date of determination, the sum of (i) 37.5% of the aggregate Principal Balance
of the Mortgage Loans in the related Loan Group that are 60-89 days delinquent,
(ii) 56.25% of the aggregate Principal Balance of the Mortgage Loans in the
related Loan Group that are 90 to 119 days delinquent (excluding Mortgage Loans
in foreclosure and REO Properties) and (iii) 75% of the aggregate Principal
Balance of the Mortgage Loans in the related Loan Group that are 120 or more
days delinquent or in foreclosure and REO Properties.
Modified II Delinquency Amount: As to either Certificate Group and any
date of determination, the sum of (i) 25% of the aggregate Principal Balance of
the Mortgage Loans in the related Loan Group that are 60-89 days delinquent,
(ii) 37.5% of the aggregate Principal Balance of the Mortgage Loans in the
related Loan Group that are 90 to 119 days delinquent (excluding Mortgage Loans
in foreclosure and REO Properties) and (iii) 50% of the aggregate Principal
Balance of the Mortgage Loans in the related Loan Group that are 120 or more
days delinquent or in foreclosure and REO Properties.
Monthly Advance: An advance made by the Servicer pursuant to Section
3.15.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: Xxxxx'x Investors Service, Inc. or its successor in interest.
- 20 -
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage 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.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans constituting assets of the Trust, which list shall consist of the
Initial Mortgage Loan Schedule, together with each Subsequent Mortgage Loan
Schedule reflecting the Subsequent Mortgage Loans transferred to the Trust on
the related Subsequent Transfer Date. The Initial Mortgage Loan Schedule is the
schedule set forth herein as Exhibit C, which schedule sets forth as to each
Initial Mortgage Loan: (i) the Cut-Off Date Principal Balance, (ii) the account
number, (iii) the original principal amount, (iv) the CLTV as of the date of the
origination of the related Initial Mortgage Loan, (v) the Due Date, (vi) the
Loan Rate as of the Cut-Off Date, (vii) the first date on which a Monthly
Payment is or was due under the Mortgage Note, (viii) the original stated
maturity date of the Mortgage Note and if the Mortgage Loan is a Balloon Loan,
the amortization terms, (ix) the remaining number of months to maturity as of
the Cut-Off Date, (x) the state in which the related Mortgaged Property is
situated, (xi) the type of property and (xii) the lien status, (xii) the
applicable Loan Group and (xiii) with respect to each Mortgage Loan in Loan
Group A, (a) the Periodic Rate Cap, (b) the Margin, (c) the Lifetime Rate Cap
and (d) the next Interest Rate Adjustment Date after the Cut-Off Date. The
Seller shall indicate to the Trustee which Mortgage Loans, if any, are
Cooperative Loans. The Mortgage Loan Schedule will be amended from time to time
to reflect the substitution of an Eligible Substitute Mortgage Loan for a
Defective Mortgage Loan from time to time hereunder. Each Subsequent Mortgage
Loan Schedule shall provide the same categories of information with respect to
the related Subsequent Mortgage Loans as of the applicable Subsequent Cut-Off
Date, as with respect to the Initial Mortgage Loans on the Initial Mortgage Loan
Schedule.
Mortgage Loans: The mortgage loans that are transferred and assigned to
the Trustee pursuant to Sections 2.01, 2.06 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held as a part of the Trust, such mortgage
loans originally so held being identified in the Mortgage Loan Schedule
delivered on the Closing Date.
- 21 -
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Loan Rate less the Servicing Fee Rate.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i)any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller and the Trustee no later than the Business Day following
such determination, would not be ultimately recoverable pursuant to Sections
3.03(ii) or (vi) or 5.01(a)(v)(3) or (4).
Notional Amount: As of any of the first 36 Distribution Dates, an
amount equal to the Class Principal Balance of the Class A-5F Certificates as of
such Distribution Date. As of any Distribution Date thereafter, zero.
OC Floor: As to either Certificate Group, an amount equal to 0.50% of
the aggregate Original Class Principal Balance of the Offered Certificates in
such Certificate Group as of the Closing Date.
Offered Certificates: All Certificates other than the Class R-1 and
Class R-2 Certificates.
Officer's Certificate: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Trustee.
- 22 -
Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Servicer or the Seller
(except that any opinion relating to the qualification of the Trust as a REMIC
or compliance with the REMIC Provisions must be an opinion of independent
outside counsel) and who, in the case of opinions delivered to the Rating
Agencies, is reasonably acceptable to it.
Optional Termination Date: The Distribution Date following the Due
Period at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Mortgage Loans as of the Cut-Off Date and the
amount deposited in the Pre-Funding Account on the Closing Date.
Original Allocated Pre-Funded Amount: As to Certificate Group F,
$70,426,450.45. As to Certificate Group A, $16,754,266.67.
Original Class Principal Balance: As to any Class, the respective
amount set forth below opposite such Class:
Original Class
Class Principal Balance
----- -----------------
Class A-1F $167,800,000
Class A-2F $ 26,800,000
Class A-3F $ 18,000,000
Class A-4F $ 25,225,000
Class A-5F $ 31,500,000
Class A-5IO (1)
Class M-1F $ 19,687,000
Class M-2F $ 14,963,000
Class B-1F $ 11,025,000
Class A-1A $ 67,150,000
Class M-1A $ 7,650,000
Class M-2A $ 5,525,000
Class B-1A $ 4,675,000
Total $400,000,000
----------
(1) This Class has no Class Principal Balance, but will accrue interest
on its Notional Amount.
Original Credit Support Percentage: As to any Class of Senior or
Subordinate Certificates, the applicable percentage set forth below:
Senior Group F Certificates............................ 14.50%
Class M-1F............................................. 8.25%
- 23 -
Class M-2F............................................. 3.50%
Class B-1F............................................. 0%
Class A-1A............................................. 21.00%
Class M-1A............................................. 12.00%
Class M-2A............................................. 5.50%
Class B-1A............................................. 0%
Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.
Overcollateralization Amount: As to either Certificate Group and any
Distribution Date, the excess, if any, of (i) the sum of (x) the related Loan
Group Balance as of the end of the related Due Period and (y) the related
Allocated Pre-Funded Amount over (ii) the aggregate Class Principal Balance of
the Certificates in such Certificate Group after giving effect to the
distribution of principal on such Distribution Date.
Ownership Interest: As to any Certificate 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.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%.
Periodic Rate Cap: With respect to each Mortgage Loan in Loan Group A
with respect to which the related Mortgage Note provides for a periodic rate
cap, the maximum percentage increase or decrease in the Loan Rate permitted for
such Mortgage Loan over the Loan Rate in effect as of an Interest Rate
Adjustment Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
- 24 -
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives describe in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (c) an estate 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 or (d) a trust if a court within the United States is
able to exercise primary supervision of the administration of the trust and one
or more United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the FHLMC, a majority
of its board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.
Pre-Funded Amount: As of the Closing Date, the sum of the Original
Allocated Pre-Funded Amount for each Certificate Group. As of any date
thereafter, the amount on deposit in the Pre-Funding Account, excluding any
Pre-Funding Earnings included therein.
Pre-Funding Account: The Pre-Funding Account established pursuant to
Section 4.02.
Pre-Funding Distribution Date: Each Distribution Date during the
Funding Period and the Distribution Date in the month following the end of the
Funding Period.
- 25 -
Pre-Funding Earnings: As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.
Prepayment Assumption: A conditional rate of prepayment equal to 4.0%
per annum in the first month of the life of the mortgage loans and an additional
1.455 % (precisely 16/11 percent per annum) in each month thereafter until the
twelfth month; beginning in the twelfth month and in each month thereafter
during the life of the mortgage loans, a conditional prepayment rate of 20% per
annum each month is assumed.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
Principal Prepayment in full an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Net Loan
Rate (or at such lower rate as may be in effect for such Mortgage Loan pursuant
to application of the Civil Relief Act) over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment.
Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Principal Balance of any such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related Mortgage
Loan immediately prior to the final recovery of related Liquidation Proceeds and
a Principal Balance of zero thereafter.
Principal Distribution Amount: As to either Certificate Group and any
Distribution Date, the sum of (i) the related Basic Principal Amount minus the
related Excess Overcollateralization Amount and (ii) the related Subordination
Increase Amount.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Pro-Rata Principal Distribution Amount: As to any Distribution Date and
the Senior Certificates in a Certificate Group or any Class of Subordinate
Certificates in a Certificate Group, the lesser of (i) the product of (x) the
applicable Distribution Percentage and (y) the related Loan Group Balance as
- 26 -
of the last day of the related Due Period and (ii) the excess, if any, of (x)
the related Loan Group Balance as of the last day of the related Due Period
over (y) the applicable OC Floor.
Prospectus: The base prospectus of the Seller dated December 8, 1997.
Prospectus Supplement: The prospectus supplement dated December 8,
1997, relating to the offering of the Offered Certificates.
Purchase Price: As to any Mortgage Loan repurchased on any date
pursuant to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the greater of (a) all unpaid accrued
interest thereon to the end of the Due Period preceding the Distribution Date on
which such Purchase Price is included in Available Funds and (b) 30 days'
interest thereon, computed at the applicable Loan Rate; provided, however, that
if at the time of repurchase the Seller is the Servicer, the amount described in
clause (ii) shall be computed at the Loan Rate net of the Servicing Fee Rate,
(iii) (x) if the Servicer is not the Seller, any unreimbursed Servicing Advances
with respect to such Mortgage Loan and (y) expenses reasonably incurred or to be
incurred by the Servicer, the Trust or the Trustee in respect of the breach or
defect giving rise to the purchase obligation and (iv) the amount of any
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses incurred by or imposed on the Trustee or the
Trust or with respect to which any of them are liable arising from a breach by
the Seller of its representations and warranties in Section 2.04.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Senior Certificates at the request of the Seller at the time of
the initial issuance of the Certificates. If such agency or a successor is no
longer in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "P-1+" or
better in the case of Xxxxx'x and "F-1+" or better in the case of Fitch and in
the case of any other Rating Agency shall mean such equivalent ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean "Aaa" in the case of Xxxxx'x and "AAA" in the case of Fitch and in
the case of any other Rating Agency, such equivalent rating.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the
- 27 -
originator of such Mortgage Loan, which establishes the rights of such
originator in the Cooperative Property.
Record Date: With respect to (i) the Fixed Rate Certificates, the last
Business Day of the month immediately preceding the month in which the related
Distribution Date occurs and (ii) the Adjustable Rate Certificates, the Business
Day immediately preceding such Distribution Date; provided, however, that if any
Adjustable Rate Certificate becomes a Definitive Certificate, the record date
for such Adjustable Rate Certificate will be the last Business Day of the month
immediately preceding the month in which the related Distribution Date occurs.
Reference Bank Rate: As to any Interest Period relating to the
Adjustable Rate Certificates as follows: the arithmetic mean (rounded upwards,
if necessary, to the nearest one sixteenth of a percent) of the offered rates
for United States dollar deposits for one month which are offered by the
Reference Banks as of 11:00 A.M., London time, on the second LIBOR Business Day
prior to the first day of such Interest Period to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
aggregate Class Principal Balance of the Adjustable Rate Certificates; provided
that at least two such Reference Banks provide such rate. If fewer than two
offered rates appear, the Reference Bank Rate will be the arithmetic mean of the
rates quoted by one or more major banks in New York City, selected by the
Trustee after consultation with the Servicer, as of 11:00 A.M., New York City
time, on such date for loans in U.S. Dollars to leading European Banks for a
period of one month in amounts approximately equal to the aggregate Class
Principal Balance of the Adjustable Rate Certificates. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable
to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.
Regular Certificates: The Offered Certificates.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage
- 28 -
servicing standards the Servicer would use in servicing mortgage loans for its
own account and this Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the Initial Interest Coverage Account
and the Pre-Funding Account.
REMIC I Interest: As defined in Section 2.07.
REMIC I Regular Interest: As defined in Section 2.07.
REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests.
REMIC II Interest: As defined in Section 2.07.
REMIC Certificate Maturity Date: The "latest possible maturity date" as
that term is defined in Section 2.10.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to either REMIC and the REMIC Provisions issued after
the Closing Date.
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
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trustee in foreclosure or by deed in lieu of foreclosure.
Required OC Percentage: As to either Certificate Group and any date of
determination, the percentage then applicable in the definition of Required
Overcollateralization Amount (other than the percentage used to calculate the OC
Floor).
Required Overcollateralization Amount: As to either Certificate Group
and any Distribution Date (a) prior to the related Stepdown Date, the product of
(i) 1.25% for Certificate Group F and (ii) 1.00% for Certificate Group A and the
aggregate Original Class Principal Balances of the Offered Certificates in such
Certificate Group as of the Closing Date; and (b) on and after the related
Stepdown Date, the greater of (i) the product of 2.50% (for Certificate Group F)
or 2.00% (for Certificate Group A)
- 29 -
and the related Loan Group Balance as of the end of the related Due Period and
(ii) the applicable OC Floor; provided, however, that on each Distribution Date
during the continuance of a Cumulative Loss Event or a Trigger Event for such
Certificate Group, the Required Overcollateralization Amount will equal the
Required Overcollateralization Amount in effect as of the Distribution Date
immediately preceding the date on which such Cumulative Loss Event or Trigger
Event first occurred.
Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
Cooperative or a mobile home treated as real property under local law.
Residual Certificates: The Class R-1 and Class R-2 Certificates
collectively.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement. When used with respect to the Seller or Servicer, the President or
any Vice President, Assistant Vice President or any Secretary or Assistant
Secretary.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Senior Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A-1F, Class X-0X, Xxxxx X-0X, Xxxxx X-0X, Class A-5F, Class A-1A or Class
A-5IO Certificate pursuant to Section 6.01.
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Senior Certificateholder: The Holder of a Senior Certificate.
Senior Principal Distribution Amount: As to either Certificate Group
and (a) any Distribution Date prior to the related Stepdown Date or during the
continuation of a Trigger Event for such Certificate Group, 100% of the
applicable Principal Distribution Amount and (b) any other Distribution Date, an
amount equal to the excess, if any, of (i) the aggregate Class Principal Balance
of the Senior Certificates in such Certificate Group immediately prior to such
Distribution Date over (ii) the applicable Pro Rata Principal Distribution
Amount.
Servicer: Delta Funding Corporation, a New York corporation, or any
successor thereto or any successor hereunder.
Servicing Advances: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, (iv) compliance with the
obligations under Section 3.04, 3.06 or 3.19 and (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the First Lien pursuant to Section 3.17, all of which reasonable
and customary out-of-pocket costs and expenses are reimbursable to the Servicer
to the extent provided in Sections 3.03(ii) and (vi), 3.06 and 5.01(a)(v).
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 3.08.
Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
annual fee payable to the Servicer, which subject to Section 3.02 is calculated
as an amount equal to the product of the Servicing Fee Rate and the Principal
Balance thereof at the beginning of the related Due Period.
Servicing Fee Rate: 0.50% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and specimen signature appear on a list
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of servicing officers furnished to the Trustee by the Servicer, as such list
may be amended from time to time.
Startup Day: The day designated as such pursuant to Section 2.08.
Stayed Funds: As defined in Section 8.02(b).
Stepdown Date: As to either Certificate Group, the later to occur of
(x) the earlier to occur of (i) the Distribution Date in January 2001 and (ii)
the Distribution Date on which the aggregate Class Principal Balance of the
Senior Certificates is reduced to zero, and (y) the first Distribution Date on
which the related Subordinate Percentage (assuming 100% of the related Basic
Principal Amount is distributed on the Offered Certificates in such Certificate
Group) is at least equal to the product of 2 and (ii) the sum of the Original
Credit Support Percentage for the related Senior Certificates and the applicable
Required OC Percentage as of the Closing Date.
Subordinate Certificates: The Mezzanine Certificates and Class B
Certificates.
Subordinate Percentage: As to either Certificate Group and any
Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the aggregate Class Principal Balance of the Subordinate Certificates
in such Certificate Group after giving effect to the distribution of the related
Principal Distribution Amount on such Distribution Date, and the denominator of
which is the related Loan Group Balance as of the last day of the related Due
Period.
Subordination Deficiency: As to either Certificate Group and any
Distribution Date, the excess, if any, of (i) the applicable Required
Overcollateralization Amount for such Distribution Date over (ii) the related
Overcollateralization Amount for such Distribution Date after giving effect to
the distribution of the related Basic Principal Amount on such Distribution
Date.
Subordination Increase Amount: As to either Certificate Group and any
Distribution Date, the lesser of (i) the related Subordination Deficiency and
(ii) the related Excess Interest.
Subordination Trigger Event: As to either Certificate Group, the
existence and continuation of both a Cumulative Loss Event and an Excess
Delinquency Event for such Certificate Group.
Subsequent Cut-Off Date: As to any Subsequent Mortgage Loan and related
Subsequent Transfer Date, the close of business on the first day of the month of
such Subsequent Transfer Date; provided,
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however, that if a Subsequent Mortgage Loan was originated during the month of
such Subsequent Transfer Date, the Subsequent Cut-Off Date therefor shall be the
date of the related Mortgage Note.
Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loans: The Mortgage Loans identified on the
Subsequent Mortgage Loan Schedule.
Subsequent Transfer Agreement: Each Subsequent Transfer Agreement
entered into between the Seller and the Trustee, substantially in the form
attached as Exhibit D.
Subsequent Transfer Date: Each date during the Funding Period on which
Subsequent Mortgage Loans are sold to the Trust.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i)the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii)the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) 30 days' interest on such excess calculated on a 360-day year in each
case at the Loan Rate (or the Loan Rate net of the Servicing Fee Rate if the
Seller is the Servicer) and (c) if the Servicer is not the Seller, the amount of
any unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amount referred to in clause (iv) of the
definition of Purchase Price in respect of such Defective Mortgage Loan.
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Target Date: The 37th Distribution Date.
Trigger Event: A Trigger Event shall have occurred and be continuing
with respect to a Certificate Group, if at any time, (x) the percentage
equivalent of a fraction, the numerator of which is the Delinquency Amount for
such Certificate Group and the denominator of which is the related Loan Balance
as of the last day of the related Due Period equals or exceeds (y) 50% (in the
case of Loan Group F) or 40% (in the case of Loan Group A) of the product of (i)
2 and and (ii) the sum of the related Subordinate Percentage and the Required OC
Percentage as of the Closing Date.
Tax Matters Person: As defined in Section 2.11.
Tax Matters Person Residual Interest: A 0.000001% interest in each of
the Class R-1 and Class R-2 Certificates, which shall be issued to and held by
the Tax Matters Person.
Trust: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account, the Initial Interest Coverage Account, the
Pre-Funding Account and the Distribution Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO
Property, certain hazard insurance policies maintained by the Mortgagors or the
Servicer in respect of the Mortgage Loans and all proceeds of each of the
foregoing.
Trustee: Bankers Trust Company of California, N.A., or any successor
Trustee appointed in accordance with this Agreement that has accepted such
appointment in accordance with this Agreement.
Trustee Fee: The fee owed to the Trustee pursuant to a letter agreement
between the Servicer and the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
Voting Rights: The right to vote evidenced by a Certificate as follows:
the Residual Certificates, in the aggregate, shall evidence Voting Rights equal
to the percentage equivalent of a fraction, the numerator of which is the sum of
the Required Overcollateralization Amounts and the denominator of which is the
Pool Balance; the Offered Certificates, in the aggregate, shall evidence Voting
Rights equal to 100% minus the Voting Rights evidenced by the Residual
Certificates. The Voting Rights allocated to the Offered Certificates shall be
allocated among the Classes thereof in proportion to their respective Class
Principal Balances. Voting Rights allocated to a Class of Certificates
- 34 -
shall be allocated among the Certificates of such Class in proportion to their
respective Percentage Interests.
Section 1.02. Interest Calculations. All calculations of interest that
are made in respect of the Principal Balance of a simple interest Mortgage Loan
shall be made on the basis of a 365-day year and the actual number of days
elapsed. All calculations of interest that are made in respect of the Principal
Balance of an actuarial Mortgage Loan shall be made on the basis of a 360-day
year consisting of twelve 30-day months. The Certificate Rate for the Adjustable
Rate Certificates shall be calculated on the basis of a 360-day year and the
actual number of days elapsed except that if the Group A Available Funds Cap (or
in the case of the Class A-1F Certificates, the Group F Maximum Rate) is used to
calculate the Certificate Rate for the Adjustable Rate Certificates, interest
thereon shall be calculated on the basis of a 360-day year consisting of twelve
30 day months. The Certificate Rate for the Fixed Rate Certificates shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
The calculation of the Servicing Fee and the Trustee Fee shall be made on the
basis of a 360-day year consisting of twelve 30-day months. All dollar amounts
calculated hereunder shall be rounded to the nearest xxxxx with one-half of one
xxxxx being rounded down.
ARTICLE II
Conveyance of Initial Mortgage Loans
Original Issuance of Certificates
Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans (a) The Seller,
concurrently with the execution and delivery of this Agreement, does hereby
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) (i) all of its right, title and interest in
and to each Initial Mortgage Loan, including the Cut-Off Date Principal Balance
and all collections in respect of interest and principal received after the
Cut-Off Date (other than payments in respect of accrued interest due before
December 1, 1997); (ii) property which secured such Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iii) its interest
in any insurance policies in respect of the Initial Mortgage Loans; (iv) such
amounts as may be deposited into and held by the Trustee in the Pre-Funding
Account and the Initial Interest Coverage Account, together with all investment
earnings on such amounts; and (v) all proceeds of any of the foregoing.
In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee, on or
- 35 -
before the Closing Date, the following documents or instruments with respect to
each Initial Mortgage Loan (the "Related Documents") and the related Mortgage
Loan Schedule in computer readable format and the Seller, in connection with the
Subsequent Transfer, shall deliver to, and deposit with, the Trustee, on or
before the Closing Date, the Related Documents and the related Mortgage Loan
Schedule in computer readable format with respect to each Subsequent Mortgage
Loan:
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the Mortgage
Loan to the Trustee, endorsed by such Person "Pay to the order of
Bankers Trust Company of California, N.A., as Trustee for Delta Funding
Home Equity Loan Trust 1997-4 without recourse" and signed, by
facsimile or manual signature, in the name of the Seller by a
Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of the
Mortgage and related power of attorney, if any, certified as a true
copy of the original Mortgage or power of attorney by a Responsible
Officer of the Seller by facsimile or manual signature or by the
closing attorney or by an officer of the title insurer or agent of the
title insurer that issued the related title insurance policy, in each
case, if the original has been transmitted for recording until such
time as the original is returned by the public recording office or (3)
a copy of the original recorded Mortgage and related power of attorney,
if any, certified by the public recording office;
(iii) The original Assignment of Mortgage in recordable form, from
the Seller to "Bankers Trust Company of California, N.A., as Trustee
for Delta Funding Home Equity Loan Trust 1997-4";
(iv) The original lender's policy of title insurance or a true copy
thereof or, if such original lender's title insurance policy has been
lost, a copy thereof certified by the appropriate title insurer to be
true and complete or, if such lender's title insurance policy has not
been issued as of the Closing Date, a marked up commitment (binder) to
issue such policy;
(v) All intervening assignments, if any, showing a complete
chain of assignments from the originator to the Seller, including any
recorded warehousing assignments, with evidence of recording thereon,
or a copy thereof certified by
- 36 -
a Responsible Officer of the Seller by facsimile or manual signature,
or by the closing attorney or by an officer of the title insurer or
agent of the title insurer that issued the related title insurance
policy, as a true copy of the original of such intervening assignments
if the original has been transmitted for recording until such time as
the original is returned by the public recording office or a copy of
the original recorded intervening assignments certified by the public
recording office;
(vi) Originals of all assumption, written assurance, substitution
and modification agreements, if any; and
(vii) In the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Cooperative Shares, together with a stock power
in blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statement with evidence
of recording thereon which have been filed in all
places required to perfect the Seller's interest in
the Cooperative Shares and the Proprietary Lease; and
(g) Executed UCC-3 financing statements or other
appropriate UCC financing statements required by
state law, evidencing a complete and unbroken line
from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for
recordation).
In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee promptly upon receipt thereof but in no event later than one year after
the Closing Date.
The Seller hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledger relating to the Mortgage
- 37 -
Loans to be clearly and unambiguously marked, and has made the appropriate
entries in its general accounting records, to indicate that such Mortgage Loans
have been transferred to the Trustee and constitute part of the Trust in
accordance with the terms of the trust created hereunder.
(b) The parties hereto intend that the transaction set forth herein be
a sale by the Seller to the Trust of all the Seller's right, title and interest
in and to the Mortgage Loans and other property described above. In the event
the transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Trust a security interest in all of the Seller's right, title and
interest in, to and under the Mortgage Loans and other property described above;
and this Agreement shall constitute a security agreement under applicable law.
The Seller, the Servicer 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.
Except as may otherwise expressly be provided herein, neither the
Seller, the Servicer nor the Trustee shall (and the Servicer shall ensure that
no Subservicer shall) assign, sell, dispose of or transfer any interest in the
Trust or any portion thereof, or permit the Trust or any portion thereof to be
subject to any lien, claim, mortgage, security interest, pledge or other
encumbrance of, any other Person.
In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.
(c) Within 30 days of the Closing Date, the Seller, at its own expense,
shall prepare and send for recording the Assignments of Mortgage in favor of the
Trustee in the appropriate real property or other records; provided, however,
that the Seller shall not be required to record Assignments of Mortgage if the
related Mortgaged Property is located in a jurisdiction in which the recording
thereof is not necessary to protect the interests of the Trustee or
Certificateholders in the related Mortgage as evidenced by an Opinion of
Counsel, in form and substance satisfactory to the Rating Agencies, delivered to
the Trustee and the Rating Agencies. With respect to any Assignment of Mortgage
as to which the related recording information is unavailable within 30 days
following the Closing Date, such Assignment of
- 38 -
Mortgage shall be submitted for recording within 30 days after receipt of such
information but in no event later than one year after the Closing Date. The
Trustee shall be required to retain a copy of each Assignment of Mortgage
submitted for recording. In the event that any such Assignment of Mortgage is
lost or returned unrecorded because of a defect therein, the Seller shall
promptly prepare a substitute Assignment of Mortgage or cure such defect, as the
case may be, and thereafter the Seller shall be required to submit each such
Assignment of Mortgage for recording. Any failure of the Seller to comply with
this Section 2.01(c) shall result in the obligation of the Seller to purchase or
substitute for the related Mortgage Loans pursuant to the provisions of Section
2.02.
(d) The Trustee shall have no responsibility for reviewing any Mortgage
File except as expressly provided in Section 2.02. Without limiting the effect
of the preceding sentence, in reviewing any Mortgage File pursuant to such
subsection, the Trustee shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if applicable, to determine if the
Trustee is the assignee or endorsee), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction, or whether a
blanket assignment is permitted in any applicable jurisdiction, but shall only
be required to determine whether a document has been executed, that it appears
to be what it purports to be, and, where applicable, that it purports to be
recorded, but shall not be required to determine whether any Person executing
any document is authorized to do so or whether any signature thereon is genuine.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
the sale and assignment of the Mortgage Loans, and, subject to the review
provided for in this Section 2.02 and the period for delivery provided for in
Section 2.01, its receipt of the Mortgage Files, and declares that the Trustee
holds and will hold such documents and all amounts received by it thereunder and
hereunder in trust, upon the terms herein set forth, for the use and benefit of
all present and future Certificateholders. If the Seller is given notice under
this Section 2.02 that a Mortgage File is defective or incomplete and if the
Seller does not correct or cure such omission or defect within the 60-day period
specified in Section 2.02, the Seller shall purchase such Mortgage Loan from the
Trustee (i)on the Determination Date in the month following the month in which
such 60-day period expired at the Purchase Price of such Mortgage Loan or
(ii)upon the expiration of such 60-day period if the omission or defect would
result in the related Mortgage Loan not being a Qualified Mortgage Loan for
purposes of Section 860G(a)(3) of the Code. The Purchase Price
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for the purchased Mortgage Loan shall be deposited in the Collection Account no
later than the applicable Determination Date or the Business Day preceding the
expiration of such 60-day period, as the case may be; and, upon receipt by the
Trustee of written notification of such deposit signed by a Responsible Officer
of the Seller, the Trustee shall release to the Seller the related Mortgage File
and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
Seller or its designee any Mortgage Loan released pursuant hereto. It is
understood and agreed that the obligation of the Seller to purchase any Mortgage
Loan as to which a material defect in or omission of a constituent document
exists shall constitute the sole remedy against the Seller respecting such
defect or omission available to the Certificateholders or the Trustee on behalf
of Certificateholders. An Opinion of Counsel to the effect set forth in Section
2.05(d) shall be delivered to the Trustee in connection with any such
repurchase.
The Servicer, promptly following the transfer of (i) a Defective
Mortgage Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust
pursuant to this Section 2.02 or Section 2.05, as the case may be, shall amend
the Mortgage Loan Schedule, appropriately xxxx the Electronic Ledger and make
appropriate entries in its general account records to reflect such transfer and
the addition of any Eligible Substitute Mortgage Loan, if applicable.
No later than the 30th day following the Closing Date, the Trustee
shall certify to the Seller and the Servicer that it has reviewed each Mortgage
File and that, as to each Mortgage Loan listed in the related Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in the certification in the form annexed hereto as
Exhibit O as not covered by such certification), (i) all documents constituting
part of such Mortgage File required to be delivered to it pursuant to paragraphs
(i) - (v) of Section 2.01(a) are in its possession, (ii) such documents have
been reviewed by it and appear regular on their face and relate to such Mortgage
Loan, (iii) based on its examination and only as to the foregoing, the
information set forth in the Mortgage Loan Schedule which corresponds to items
(ii), (iii), (v) and (vii) of the definition of "Mortgage Loan Schedule"
accurately reflects information set forth in the Mortgage File. If within such
30-day period the Trustee finds any document constituting a part of a Mortgage
File not to have been executed or received or to be unrelated to the Mortgage
Loans identified in said Mortgage Loan Schedule or, if in the course of its
review, the Trustee determines that such Mortgage File is otherwise defective in
any material respect, the Trustee shall promptly upon the conclusion
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of its review notify in the form of an exception report and the Seller shall
have a period of 60 days after such notice within which to correct or cure any
such defect.
On the 360th day following the Closing Date, the Trustee shall deliver
to the Seller and the Servicer an updated exception report showing the documents
outstanding pursuant to Section 2.01(a) along with a final certification annexed
hereto as Exhibit P from the previous certification issued in the form of
Exhibit O. The Trustee shall also maintain records adequate to determine the
date on which any document required to be delivered to it after such 360th day
following the Closing Date must be delivered to it, and on each such date, the
Trustee shall review the related Mortgage File to determine whether such
document has, in fact, been delivered. After the delivery of the final
certification, a form of which is attached hereto as Exhibit P, (i) the Trustee
shall provide to the Servicer and the Seller, no less frequently than monthly,
updated exception reports showing the documents outstanding pursuant to Section
2.01(a) until all such exceptions have been eliminated and (ii) the Seller shall
provide to the Trustee and the Servicer, no less frequently than monthly,
updated certifications indicating the then current status of exceptions until
all such exceptions have been eliminated; provided that the delivery of the
final certification shall not act as a waiver of any of the rights the
Certificateholders may have with respect to such exceptions, and all rights are
reserved with respect thereto.
The Trustee makes no representations as to and shall not be responsible
to verify (i) the validity, sufficiency, legality, due authorization,
recordation or genuineness of any document or (ii) the collectability,
insurability or effectiveness of any of the Mortgage Loans.
Section 2.03. Representations and Warranties Regarding the Seller and
the Servicer. Each of the Seller and the Servicer represents and warrants as to
itself that, as of the Closing Date:
(i) Each of the Seller and the Servicer is a corporation
licensed as a mortgage banker duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has,
and had at all relevant times, full corporate power to originate the
Mortgage Loans, to own its property, to carry on its business as
presently conducted and to enter into and perform its obligations under
this Agreement;
(ii) The execution and delivery of this Agreement by the Seller and
the Servicer and the performance by each of them of and compliance with
the terms of this Agreement will not violate the Seller's or the
Servicer's articles of
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incorporation or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Seller or the
Servicer is a party or which may be applicable to the Seller or the
Servicer or any of their respective assets;
(iii) Each of the Seller and the Servicer has the full power and
authority to enter into and consummate all transactions contemplated by
this Agreement to be consummated by it, has duly authorized the
execution, delivery and performance of this Agreement, and has duly
executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes a valid, legal and binding obligation of the Seller and the
Servicer, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws relating
to or affecting the rights of creditors generally, and by general
equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(iv) Neither the Seller nor the Servicer is in violation of, and
the execution and delivery of this Agreement by the Seller and the
Servicer and the performance by each of them and compliance with the
terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction,
which violation would materially and adversely affect the condition
(financial or otherwise) or operations of the Seller or the Servicer or
any of their respective properties or materially and adversely affect
the performance of any of their respective duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Seller or the Servicer pending or, to the
knowledge of the Seller or the Servicer, threatened, before any court,
administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement, (B) seeking
to prevent the consummation of any of the transactions contemplated by
this Agreement or (C) that, if determined adversely, would prohibit or
materially and adversely affect the performance by the Seller or the
Servicer of any of their respective obligations under, or the validity
or enforceability of, this Agreement;
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(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller or the
Servicer with, this Agreement, or for the consummation of the
transactions contemplated by this Agreement, except for such consents,
approvals, authorizations and orders, if any, that have been obtained
prior to the Closing Date;
(vii) The Seller did not sell the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors; and the
Seller will not be rendered insolvent as a result of the sale of the
Mortgage Loans to the Trust;
(viii) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(ix) The collection practices used by the Seller and the Servicer
with respect to the Mortgage Loans have been, in all material respects,
legal, proper, prudent and customary in the non-conforming mortgage
servicing business;
(x) No Officer's Certificate, statement, report or other
document prepared by the Seller or the Servicer and furnished or to be
furnished by it pursuant to this Agreement or in connection with the
transactions contemplated hereby contains any untrue statement of
material fact;
(xi) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller pursuant to this Agreement are not
subject to the bulk transfer laws or any similar statutory provisions
in effect in any applicable jurisdiction;
(xii) The Servicer believes that the Servicing Fee Rate provides a
reasonable level of base compensation to the Servicer for servicing the
Mortgage Loans on the terms set forth herein;
(xii) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer; and
(xiv) The Servicer has caused or hereby agrees to cause to be
performed any and all acts required to be performed to preserve the
rights and remedies of the Trustee 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 co-insured, joint loss payee and
mortgagee rights in favor of the Trustee.
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The representations and warranties set forth in this Section 2.03 shall survive
the sale and assignment of the Mortgage Loans to the Trust. Upon discovery of a
breach of any representations and warranties which materially and adversely
affects the interests of the Certificateholders, the Person discovering such
breach shall give prompt written notice to the other parties. Within 60 days of
its discovery or its receipt of notice of such breach, or, with the prior
written consent of a Responsible Officer of the Trustee, such longer period
specified in such consent, the Seller or the Servicer, as the case may be, shall
cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding
the Mortgage Loans. (a) The Seller represents and warrants to the Trustee on
behalf of the Certificateholders as follows as of the Closing Date:
1. The information set forth on the Mortgage Loan Schedule is
complete, true and correct as of the dates as of which the information
therein is given;
2. The Mortgage Notes and the Mortgages have not been assigned
or pledged by the Seller to any Person other than warehouse lenders,
and immediately prior to the transactions herein contemplated, the
Seller had good and marketable title thereto, and was the sole owner
and holder of the Mortgage Loans free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature (collectively, a "Lien"),
other than any such Lien released simultaneously with the sale
contemplated herein, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement, and immediately
upon the transfer and assignment of each Mortgage Loan as contemplated
by this Agreement, the Trust will be the sole beneficial owner of, each
Mortgage Loan free and clear of any lien, claim, participation
interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
3. With respect to any Mortgage Loan that is not a Cooperative
Loan, each Mortgage is a valid and existing lien on the property
therein described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet
due and payable, (ii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording such Mortgage, such exceptions
- 44 -
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, (iii) other matters
to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage; (iv) in the case of a Mortgaged Property that is a
condominium or an individual unit in a planned unit development, liens
for common charges permitted by statute and (v) in the case of a
Mortgage Loan secured by a second lien on the related Mortgaged
Property, the related First Lien. Any security agreement, chattel
mortgage or equivalent document related to the Mortgage and delivered
to the Trustee establishes in the Seller a valid and subsisting lien on
the property described therein, and the Seller has full right to sell
and assign the same to the Trust;
4. The terms of each Mortgage Note and Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Trust, and which has been delivered to the Trustee.
The substance of any such alteration or modification is reflected on
the Mortgage Loan Schedule;
5. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if
any, and which has been delivered to the Trustee;
6. Except with respect to delinquencies described in clause
(12) hereof, no Mortgagor is in default in complying with the terms of
its Mortgage Note or Mortgage, and the Seller has not waived any
default, breach, violation or event of acceleration except that the
Seller may have accepted late payments, and all taxes, governmental
assessments, insurance premiums or water, sewer and municipal charges
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not
yet due and payable. The Seller has not advanced funds or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is more recent, to the day which
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precedes by one month the Due Date of the first installment of
principal and interest;
7. There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and such property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or
otherwise, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
8. There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting any
Mortgaged Property which are, or may be, liens prior or equal to, or
coordinate with, the lien of the Mortgage except those that are stated
in the title insurance policy and for which related losses are
affirmatively insured against by such policy;
9. All of the improvements that were included for the purpose
of determining the Appraised Value of each 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 except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against
by such policy;
10. No improvement located on or being part of any 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 of the same, including, but
not limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and the Mortgaged Property is lawfully occupied under
applicable law;
11. All parties that have had any interest in any Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all licensing requirements of the
United States and of the laws of the state wherein the Mortgaged
Property is located that are applicable to such parties and (2)(A)
organized under the laws of such state or (B) qualified to do business
in such state or exempt from such qualification in a
- 46 -
manner so as not to affect adversely the enforceability of such
Mortgage Loan or (C) federal savings and loan associations or national
banks having principal offices in such state or (D) not doing business
in such state;
12. With respect to the Initial Mortgage Loans, as of the
Cut-Off Date, (i) all payments required to be made on each Initial
Mortgage Loan under the terms of the related Mortgage Note have been
made except for 1.07% and 2.07% of the Initial Mortgage Loans in Loan
Group F and Loan Group A respectively (by Cut-Off Date Principal
Balance) are up to 60 days Delinquent and (ii) no payment required to
be made on any Initial Mortgage Loan has been more than 60 days
Delinquent more than once during the twelve month period immediately
preceding the Cut-Off Date;
13. Each of the documents and instruments included in a
Mortgage File is duly executed and in due and proper form and each such
document or instrument is in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate or purchase
mortgage loans;
14. The Mortgage Notes and the related Mortgages are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law). All parties to the Mortgage Note and the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage, and
each Mortgage Note and Mortgage have been duly and properly executed by
such parties. The Mortgagor is a natural person who is a party to the
Mortgage Note and the Mortgage in an individual capacity, and not in
the capacity of a trustee or otherwise;
15. Any and all requirements of any federal, state or local
law, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the origination and
servicing of the Mortgage Loans or otherwise applicable to the Mortgage
Loans have been complied with, and the Seller has and shall maintain in
its possession, available for the Trustee's inspection, and shall
deliver to the Trustee upon demand, evidence of compliance with all
such requirements;
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16. 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 disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making,
closing or recording the Mortgage Loan have been paid;
17. Each Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other form of policy acceptable to FNMA or
FHLMC, issued by and constituting the valid and binding obligation of a
title insurer generally acceptable to prudent mortgage lenders that
regularly originate or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market
that invest in mortgage loans such as the Mortgage Loans and qualified
to do business in the jurisdiction where the Mortgaged Property is
located, insuring the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the case of a Mortgage Loan
secured by a First Lien on the related Mortgaged Property and the
second priority lien of the Mortgage in the case of a Mortgage Loan
secured by a second lien on the related Mortgaged Property, in the
original principal amount of the Mortgage Loan. The Seller is the sole
named insured of such mortgage title insurance policy, the assignment
to the Purchaser or the Trustee as assignee of the Purchaser of the
Seller's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer or the same has
been obtained, and such mortgage title insurance policy is in full
force and effect and will be in full force and effect and inure to the
benefit of the Trustee upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and no prior holder of the related
Mortgage, including the Seller, has done, by act or omission, anything
that would impair the coverage of such mortgage title insurance policy;
18. All improvements upon the Mortgaged Properties are insured
by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of this Agreement. If a Mortgaged
Property was, at the time of origination of the related Mortgage Loan,
in an area identified on a Flood Hazard Boundary Map or Flood Hazard
Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and if the flood insurance policy referenced
herein has been made available), a flood insurance policy is in effect
with respect to such
- 48 -
Mortgaged Property with a generally acceptable carrier in an amount
representing coverage described in this Agreement. All individual
insurance policies (collectively, the "hazard insurance policy") are
the valid and binding obligation of the insurer and contain a standard
mortgagee clause naming the Seller, its successors and assigns, as
mortgagee. All premiums thereon have 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;
19. No Mortgage Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or the
related Mortgage, or the exercise of any right thereunder in accordance
with the terms thereof, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
20. Each Mortgage Loan was originated or purchased and
reunderwritten by the Seller;
21. Except with respect to any Balloon Loan, each Mortgage
Loan is payable in equal monthly installments of principal and interest
which would be sufficient, in the absence of late payments, to fully
amortize such loan within the term thereof, beginning no later than 60
days after disbursement of the proceeds of the Mortgage Loan. Each
Mortgage Loan in Loan Group F bears a fixed interest rate for the term
of the Mortgage Loan. Each Balloon Loan has an original term of not
less than fifteen (15) years and provides for level monthly payments
based on a thirty (30) year amortization schedule and a final Monthly
Payment substantially greater than the preceding Monthly Payments. Each
Mortgage Loan in Loan Group A bears an adjustable interest rate based
on the related Loan Index;
22. Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the holder thereunder;
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23. No Mortgage Loan is a construction loan;
24. The Mortgage Notes are not and have not been secured by
any collateral, pledged account or other security except the lien of
the corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in clause 3 above;
25. Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial or nonjudicial fore-closure. There is no homestead or other
exemption available to the Mortgagor that would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
26. 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 Trustee or the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
Mortgagor, which fees and expenses shall constitute Servicing Advances;
27. Each Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule. No residence or dwelling is a
manufactured dwelling. No Mortgaged Properties are held under a ground
lease;
28. The Mortgage Loans were underwritten in accordance with
the Seller's underwriting guidelines described in the Prospectus under
the heading "The Seller and the Servicer--Underwriting";
29. 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
deposits or payments of other charges or payments due the Seller have
been capitalized under any Mortgage or the related Mortgage Note;
30. No Mortgage Loan was originated under a buy-down plan;
- 50 -
31. Other than as provided by this Agreement, there is no
obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagors;
32. With respect to each Mortgage Loan, the Seller is in
possession of a complete Mortgage File, except those documents
delivered to the Trustee, and there are no custodial agreements in
effect adversely affecting the right or ability of the Seller to make
the document deliveries required hereby;
33. No Mortgage Loan was selected for inclusion under this
Agreement on any basis which was intended to have a material adverse
effect on the Certificateholders;
34. No Mortgage Loan has a shared appreciation or other
contingent interest feature;
35. With respect to each Mortgage Loan secured by a second
lien on the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is
higher than 80%, either the related First Lien does not
provide for a balloon payment or, if the related First Lien
does provide for a balloon payment, the maturity date of the
second lien is prior to the maturity date of the First Lien;
(b) the related First Lien does not provide
for negative amortization;
(c) either no consent for the Mortgage Loan
secured by a second lien on the related Mortgaged Property is
required by the holder of the related First Lien or such
consent has been obtained and is contained in the Mortgage
File; and
(d) except with respect to no more than 10%
of the Initial Mortgage Loans in Loan Group F which are
Mortgage Loans secured by a second lien on the related
Mortgaged Property, measured by outstanding Principal Balances
as of the Cut-Off Date, the related First Lien is not held by
an individual;
36. Each Mortgage Loan conforms, and all the Mortgage Loans in
the aggregate conform, in all material respects to the description
thereof set forth in the Prospectus Supplement;
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37. A full appraisal on forms approved by FNMA or FHLMC was
performed in connection with the origination of each Mortgage Loan.
Each appraisal meets guidelines that would be generally acceptable to
prudent mortgage lenders that regularly originate or purchase mortgage
loans comparable to the Mortgage Loans for sale to prudent investors in
the secondary market that invest in mortgage loans such as the Mortgage
Loans;
38. To the best of the Seller's knowledge, no Mortgaged
Property was, as of the related Cut-Off Date, located within a one-mile
radius of any site listed in the National Priorities List as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any similar state list of
hazardous waste sites which are known to contain any hazardous
substance or hazardous waste;
39. None of the Mortgage Loans are subject to a bankruptcy
proceeding;
40. No more than 20.0% of the aggregate Principal Balance of
all the Initial Mortgage Loans as of Cut-Off Date relates to Mortgage
Loans originated or purchased under the Seller's limited documentation
program for self-employed borrowers;
41. Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
42. Each Cooperative Loan is secured by a valid, subsisting
and enforceable perfected first lien and security interest in the
related Mortgaged Property, subject only to (i) the rights of the
Cooperative Corporation to collect Maintenance and assessments from the
Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer
charges, rents and assessments on the Cooperative Property not yet due
and payable, and (iii) other matters to which like Cooperative Units
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to
create or preserve the perfection and priority of the first priority
lien and security interest in the Cooperative Shares and Proprietary
Lease has been timely and properly made. Any security agreement,
chattel mortgage or equivalent document
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related to the Cooperative Loan and delivered to the Seller or its
designee establishes in the Seller a valid and subsisting perfected
first lien on and security interest in the property described therein,
and the Seller has full right to sell and assign the same;
43. Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code; and
44. Each Mortgage Loan in Loan Group A is secured by a first
lien.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee and the termination of the rights and obligations of the
Servicer pursuant to Section 7.04 or 8.01. Upon discovery by the Seller, the
Servicer or a Responsible Officer of the Trustee of a breach of any of the
foregoing representations and warranties, which materially and adversely affects
the interests of the Trust or the Certificateholders in the related Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties. Within 60 days of its discovery or its receipt of notice of
breach, the Seller shall use all reasonable efforts to cure such breach in all
material respects or shall purchase such Mortgage Loan from the Trust or
substitute an Eligible Substitute Mortgage Loan as provided in Section 2.05 for
such Mortgage Loan. Any such purchase by the Seller shall be at the Purchase
Price, and in each case shall be accomplished in the manner set forth in Section
2.02. It is understood and agreed that the obligation of the Seller to cure,
substitute or purchase any Mortgage Loan as to which such a breach has occurred
and is continuing shall constitute the sole remedy against the Seller respecting
such breach available to Certificateholders or the Trustee on behalf of
Certificateholders. An Officer's Certificate and Opinion of Counsel to the
effect set forth in Section 2.05(d) shall be delivered to the Trustee in
connection with any such repurchase.
Section 2.05 Substitution of Mortgage Loans (a) On a Determination Date
within two years following the Closing Date and which is on or before the date
on which the Seller would otherwise be required to repurchase a Mortgage Loan
under Section 2.02 or 2.04, the Seller may deliver to the Trustee one or more
Eligible Substitute Mortgage Loans in substitution for any one or more of the
Defective Mortgage Loans which the Seller would otherwise be required to
repurchase pursuant to Section 2.02 or 2.04.
(b) The Seller shall notify the Servicer and the Trustee in writing not
less than five Business Days before the related
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Determination Date which is on or before the date on which the Seller would
otherwise be required to repurchase such Mortgage Loan pursuant to Section 2.02
or 2.04 of its intention to effect a substitution under this Section 2.05. On
such Determination Date (the "Substitution Date"), the Seller shall deliver to
the Trustee (1) the Eligible Substitute Mortgage Loans to be substituted for the
Defective Mortgage Loans, (2) a list of the Defective Mortgage Loans to be
substituted for by such Eligible Substitute Mortgage Loans, (3) an Officer's
Certificate (A) stating that no failure by the Servicer described in Section
8.01 shall have occurred and be continuing, (B) stating that the aggregate
Principal Balance of all Eligible Substitute Mortgage Loans (determined with
respect to each Eligible Substitute Mortgage Loan as of the Determination Date
on which it was substituted) including the principal balance of Eligible
Substitute Mortgage Loans being substituted on such Determination Date does not
exceed an amount equal to 5% of the Aggregate Principal Balance as of the
Closing Date, (C) stating that all conditions precedent to such substitution
specified in subsection (a) have been satisfied and attaching as an exhibit a
supplemental Mortgage Loan schedule (the "Supplemental Mortgage Loan Schedule")
setting forth the same type of information as appears on the Mortgage Loan
Schedule and representing as to the accuracy thereof and (D) confirming that the
representations and warranties contained in Section 2.04 are true and correct in
all material respects with respect to the Substitute Mortgage Loans on and as of
such Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this Section
2.05, (4) an Opinion of Counsel to the effect set forth below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been deposited to the Collection Account. Upon receipt
of the foregoing, the Trustee shall release such Defective Mortgage Loans to the
Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or
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substitution will not cause (x) any federal tax to be imposed on the Trust,
including, without limitation, any Federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the start-up day" under Section 860G(d)(1) of the Code or (y) any portion of
either REMIC to fail to qualify as a REMIC at any time that any Certificate is
outstanding. In the event that such opinion indicates that a repurchase or
substitution will result in the imposition of a prohibited transaction tax, give
rise to net taxable income or be deemed a contribution to a REMIC after its
Startup Day, the Seller shall not be required to repurchase or replace any such
Mortgage Loan unless and until the Servicer has determined there is an actual or
imminent default with respect thereto or that such defect or breach adversely
affects the enforceability of such Mortgage Loan.
Section 2.06. Execution and Authentication of Certificates. The Trustee
on behalf of the Trust shall cause to be executed, authenticated and delivered
on the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.
Section 2.07 Designation of Interests in REMIC. (a) For Federal tax
purposes, the Trust will consist of REMIC I and REMIC II. REMIC I will be
evidenced by (x) uncertificated and non-transferable interests described below
(the "REMIC I Regular Interests") which are hereby designated as the "regular
interests" in REMIC I, and (y) the Class R-1 Certificates, which are hereby
designated as the single "residual interest" in REMIC I. The Basic Principal
Amount from Loan Group F will be used to pay principal on the class 1 described
below in an amount equal the amount distributed to the Class A-5F Certificates
pursuant to Section 5.01(b) herein and any remaining Basic Principal Amount from
Loan Group F will be used to pay principal on the class 2 described below. The
Basic Principal Amount from Loan Group A will be used to pay principal on the
class 3 described below. The Interest Remittance Amount for Loan Group F will be
used (1) to pay principal on the class 1 in amount equal to the amount allocated
to the Class A-5F Certificates pursuant to Section 5.01(a)A.(iv) (the "A-5F
Turbo"), (2) to pay interest to class 1 and (3) to pay interest to class 2. The
amount of the A-5F Turbo will be added to the principal balance of class 2. The
Interest Remittance Amount from Loan Group A will be used to pay interest on the
class 3. All Realized Losses on Loan Group F will be allocated to class 2 and
all Realized Losses on Loan Group A will be allocated to class 3 The REMIC I
Regular Interests will have the following designations and pass-through rates,
and
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distributions of principal and interest thereon shall be allocated to the
corresponding Classes of Certificates (the "Corresponding Classes") in the
following manner:
Corresponding Class of
Certificates(1)
----------------------------------
Allocation Allocation
REMIC I Pass-Through of of
Regular Interests Initial Balance Rate Principal Interest
----------------- --------------- ------------ --------- --------
1 $ 31,500,000 (2) (3) (4)
2 $283,500,000 (2) (3) (5)
3 $ 85,000,000 (6) (3) (5)
------------------
(1) Except as otherwise indicated, the amount of principal and interest
allocable from a REMIC I Regular Interest to its Corresponding Class of
Certificates on any Distribution Date shall be 100%.
(2) The pass-through rate on this REMIC I Regular Interest for any
Distribution Date shall equal the weighted average of the Loan Rates on
the Mortgage Loans in Loan Group F less the sum of the Servicing Fee
Rate and the Trustee Fee Rate.
(3) Principal will be allocated to the Certificate Group F and Certificate
Group A as described in Article 5.
(4) 650 basis points of the interest on this class will be allocated to the
Class A-5IO Certificate and interest in excess of 650 basis points will
be allocated to the Certificate Group F (other than the Class A-5IO) as
described in Article 5.
(5) Interest will be allocated to the Certificate Group F as described in
Article 5.
(6) The pass-through rate on this REMIC I Regular Interest for any
Distribution Date shall equal the weighted average of the Loan Rates on
the Mortgage Loans in Loan Group A less the sum of the Servicing Fee
Rate and the Trustee Fee Rate.
(b) REMIC II will be evidenced by the Certificates, other than
the Class R-1 Certificates. The Offered Certificates are hereby designated as
the "regular interests," and the Class R-2 Certificates are hereby designated as
the single class of "residual interests," in REMIC II.
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Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.
Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of each REMIC is the Distribution Date in December 2028.
Section 2.10. Tax Returns and Reports to Certificateholders. (a) For
federal income tax purposes, the Trust shall have a calendar year and shall
maintain its books on the accrual method of accounting.
(b) The Tax Matters Person shall prepare, or cause to be prepared,
execute and deliver to the Servicer or Certificateholders, as applicable, any
income tax information returns for each taxable year with respect to the Trust
containing such information at the times and in the manner as may be required by
the Code or state or local tax laws, regulations or rules, and shall furnish or
cause to be furnished to the Trust and the Certificateholders the schedules,
statements or information at such times and in such manner as may be required
thereby. Within thirty (30) days of the Closing Date, the Tax Matters Person
shall furnish or cause to be furnished to the Internal Revenue Service, on Form
8811 or as otherwise required by the Code, the name, title, address and
telephone number of the person that Holders of the Certificates may contact for
tax information relating thereto, together with such additional information at
the time or times and in the manner required by the Code. Such federal, state or
local income tax or information returns shall be signed by the Trustee or such
other Person as may be required to sign such returns by the Code or state or
local tax laws, regulations or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending December 31, 1997, a REMIC election shall be made with
respect to each of REMIC I and REMIC II for such taxable year and all succeeding
taxable years.
(d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and the fair market value and
adjusted basis of the Trust property and assets determined at such intervals as
may be required by the Code, as may be necessary to prepare the foregoing
returns, schedules, statements or information.
(e) The Servicer, upon request, shall promptly furnish the Tax Matters
Person with all such information as may be required in
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connection with the Tax Matters Person's REMIC reporting obligations pursuant
to this Agreement.
Section 2.11. Tax Matters Person. The tax matters person with respect
to each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which initially is the Seller. The Tax Matters Person
shall at all times hold the Tax Matters Person Residual Interest and shall have
the same duties with respect to the Trust as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. Each holder of a
Residual Certificate shall be deemed to have agreed, by acceptance thereof, to
be bound by this Section 2.11.
Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:
(a) The Trustee shall not create, or permit the creation of, any
"interests" in either REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates and the Residual
Certificates.
(b) Except as otherwise provided in the Code, the Seller shall not
grant and the Trustee shall not accept property unless (i) substantially all of
the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
Startup Day unless such grant would not subject any REMIC to the 100% tax on
contributions to a REMIC after its Startup Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion
of the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or
3.16), unless such sale is pursuant to a "qualified liquidation" as defined in
Code Section 860F(a)(4)(A) and in accordance with Article VIII.
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(e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.
(f) Upon filing with the Internal Revenue Service, the Tax Matters
Person shall furnish to the Trustee and, subject to its receipt thereof, the
Trustee shall furnish to the Holders of the Residual Certificates the Form 1066
and each Form 1066Q for the applicable REMIC and shall respond promptly to
written requests made not more frequently than quarterly by any Holder of
Residual Certificates with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on 125% of the
Prepayment Assumption in the case of Loan Group F and 140% of the
Prepayment Assumption in the case of Loan Group A;
(ii) The projected remaining principal and interest cash flows as
of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage
Loans, based on 125% of the Prepayment Assumption in the case of Loan
Group F and 140% of the Prepayment Assumption in the case of Loan Group
A;
(iii) The applicable percentage of the Prepayment Assumption and any
interest rate assumptions used in determining the projected principal
and interest cash flows described above;
(iv) The original issue discount (or, in the case of the Mortgage
Loans, market discount) or premium accrued or amortized through the end
of such calendar quarter with respect to each class of regular or
residual interests created hereunder and with respect to the Mortgage
Loans, together with each constant yield to maturity used in computing
the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of
each REMIC with respect to such regular interests or bad debt
deductions claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of each
REMIC; and
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(vii) Any taxes (including penalties and interest) imposed on each
REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
23151(a) or 23153(a) of the California Revenue and Taxation Code) is imposed,
such tax shall be paid by (i) the Trustee, if such tax arises out of or results
from a breach by the Trustee of any of its obligations under this Agreement,
(ii) the Tax Matters Person, if such tax arises out of or results from a breach
by the Tax Matters Person of any of the obligations under this Agreement, (iii)
the Servicer, if such tax arises out of or results from a breach by the Servicer
of any of its obligations under this Agreement or (iv) otherwise the Holders of
the applicable Residual Certificates in proportion to their Percentage
Interests. Notwithstanding the previous sentence, any tax imposed on the Trust
by Section 23151 or Section 23153 of the California Revenue and Taxation Code
shall be timely paid by the Trustee out of its own funds without right of
reimbursement therefor if such taxes arise solely from the Trustee's presence in
California, and otherwise by the Servicer. To the extent any tax is chargeable
against the Holders of the Residual Certificates, notwithstanding anything to
the contrary contained herein, the Trustee is hereby authorized to retain from
amounts otherwise distributable to the Holders of the applicable Residual
Certificates on any Distribution Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor).
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller , the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Senior Certificates.
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(g) Except as provided below, the Tax Matters Person shall pay out of
its own funds, without any right of reimbursement, any and all tax related
expenses of the Trust (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.07 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.
(h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters
Person, as applicable, shall do the following:
(i) the Tax Matters Person shall prepare, sign and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate
Mortgage Investment Conduit Income Tax Return (Form 1066) and any other
Tax Return required to be filed by each REMIC, using a calendar year as
the taxable year for each REMIC;
(ii) the Tax Matters Person shall make, or cause to be made, an
election, on behalf of each REMIC, to be treated as a REMIC on the
federal tax return of each REMIC for its first taxable year;
(iii) the Tax Matters Person shall prepare and forward, or cause to
be prepared and forwarded, to the Servicer, the Seller, the Trustee
(which, subject to receipt thereof shall forward to the
Certificateholders) and to the Internal Revenue Service and any other
relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with
the REMIC Provisions;
(iv) the Trustee and the Servicer shall to the extent that the
affairs of either REMIC are within its control, conduct such affairs of
each REMIC at all times that any Certificates are outstanding so as to
maintain the status of each REMIC as a REMIC under the REMIC Provisions
and any other applicable federal, state and local laws, including,
without limitation, information reports relating to "original issue
discount," as defined in the Code, based upon 125% of the Prepayment
Assumption with respect to Certificate Group F 140% of the Prepayment
Assumptions with respect to and
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Certificate Group A, respectively and calculated by using the issue
price of the Certificates;
(v) the Trustee, the Servicer and Tax Matters Person shall not
knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of either REMIC;
(vi) the Trustee shall pay the amount of any and all federal, state
and local taxes, including, without limitation, any minimum tax imposed
by Sections 23151(a) and 23153(a) of the California Revenue and
Taxation Code upon the Trustee or the Certificateholders in connection
with the Trust or the Mortgage Loans, prohibited transaction taxes as
defined in Section 860F of the Code, other than any amount due as a
result of a transfer or attempted or purported transfer in violation of
Section 6.02, imposed on the Trust when and as the same shall be due
and payable (but such obligation shall not prevent the Trustee or any
other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment
of such tax, if permitted by law, pending the outcome of such
proceedings). The Trustee shall be entitled to reimbursement in
accordance with Section 2.12;
(vii) the Trustee and the Tax Matters Person shall ensure that any
such returns or reports filed on behalf of the Trust are properly
executed by the appropriate person;
(viii) the Tax Matters Person shall represent the Trust in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of the Trust, enter into settlement
agreements with any government taxing agency, extend any statute of
limitations relating to any item of the Trust and otherwise act on
behalf of the Trust in relation to any tax matter involving the Trust;
(ix) the Trustee and the Tax Matters Person shall as provided in
Section 5.12, make available information necessary for the computation
of any tax imposed (1) on transferors of residual interests to
transferees that are not Permitted Transferees or (2) on pass-through
entities, any interest in which is held by an entity which is not a
Permitted Transferee.
(x) the Trustee and the Tax Matters Person shall make
available to the Internal Revenue Service and those Persons specified
by the REMIC Provisions all information necessary
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to compute any tax imposed (A) as a result of the Transfer of an
Ownership Interest in a Residual Certificate to any Person who is not a
Permitted Transferee, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to
the "excess inclusions" of such Residual Certificate and (B) as a
result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership Interest
in a Residual Certificate having as among its record holders at any
time any Person that is not a Permitted Transferee. Reasonable
compensation for providing such information may be accepted by the
Trustee; and
(xi) the Trustee, the Servicer and the Tax Matters Person shall
cooperate with each other in connection with the foregoing obligations,
including signing any Tax Returns to the extent required by law.
Section 2.13. Subsequent Transfers. (a) Subject to the satisfaction of
the conditions set forth in paragraph (b) below and pursuant to the terms of
each Subsequent Transfer Agreement, in consideration of the Trustee's delivery
on the related Subsequent Transfer Date to or upon the order of the Seller of
the purchase price therefor, the Seller shall on any Subsequent Transfer Date
sell, transfer, assign, set over and otherwise convey without recourse to the
Trustee, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan listed on the related Subsequent Mortgage Loan Schedule delivered
by the Seller on such Subsequent Transfer Date, including (i) the related
Principal Balance as of the related Subsequent Cut-Off Date; (ii) all
collections in respect of interest and principal received after the related
Subsequent Cut-Off Date; (iii) property which secured such Subsequent Mortgage
Loan and which has been acquired by foreclosure or deed in lieu of foreclosure;
(iv) its interest in any insurance policies in respect of such Subsequent
Mortgage Loan; and (v) all proceeds of any of the foregoing. The transfer by the
Seller of the Subsequent Mortgage Loans set forth on each Subsequent Mortgage
Loan Schedule to the Trustee shall be absolute and shall be intended by the
Seller and all parties hereto to be treated as a sale by the Seller to the
Trust. If the assignment and transfer of the Mortgage Loans and the other
property specified in this Section 2.13 from the Seller to the Trustee pursuant
to this Agreement is held or deemed not to be a sale or is held or deemed to be
a pledge of security for a loan, the Seller intends that the rights and
obligations of the parties shall be established pursuant to the terms of this
Agreement and that, in such event, (i) the Seller shall be deemed to have
granted and does hereby grant to the Trustee as of such Subsequent Transfer Date
a first priority security interest in the entire
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right, title and interest of the Seller in and to the Subsequent Mortgage Loans
and all other property conveyed to the Trustee pursuant to this Section 2.13 and
all proceeds thereof and (ii) this Agreement shall constitute a security
agreement under applicable law. The purchase price shall be one hundred percent
(100%) of the Principal Balances of the Subsequent Mortgage Loans as of the
related Subsequent Cut-Off Date.
(b) The Seller shall transfer and deliver to the Trustee the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the applicable Subsequent Transfer Date:
(i) The Seller shall have provided the Trustee and the Rating
Agencies with an Addition Notice, which notice shall be given not less
than five Business Days prior to the applicable Subsequent Transfer
Date and shall designate the Subsequent Mortgage Loans to be sold to
the Trust and the aggregate Principal Balance of such Mortgage Loans
and the Rating Agencies shall not have informed the Seller or the
Trustee prior to such Subsequent Transfer Date that the inclusion of
such Subsequent Mortgage Loans would affect the applicable Required
Overcollateralization Amount or result in the downgrade or withdrawal
of the ratings assigned to the Offered Certificates as of the Closing
Date;
(ii) The Seller shall have delivered to the Trustee a duly executed
Subsequent Transfer Agreement in substantially the form of Exhibit D;
(iii) The Seller shall have deposited in the Collection Account all
principal collected and interest collected to the extent accrued on or
after the related Subsequent Cut-Off Date;
(iv) As of the each Subsequent Transfer Date, the Seller was not
insolvent nor will the Seller be made insolvent by such transfer nor is
the Seller aware of any pending insolvency;
(v) Such addition will not result in a material adverse tax
consequence to any REMIC or the Holders of the Certificates;
(vi) the Funding Period shall not have terminated;
(vii) The Seller shall have provided the Rating Agencies with an
Opinion of Counsel relating to the sale (i.e., "True Sale Opinion") of
the Subsequent Mortgage Loans to the
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Trustee, the enforceability of the Subsequent Transfer Agreement and to
the effect that the transfer of such Subsequent Mortgage Loans will not
adversely affect the status of any REMIC as a REMIC unless such matters
were covered in the opinions delivered on the Closing Date; and
(viii) If such Subsequent Transfer Date is the last Subsequent
Transfer Date, the Seller shall have delivered to the Trustee, with a
copy to each Rating Agency, of an agreed upon procedures letter from
KPMG Peat Marwick to the effect that each Loan Group, after giving
effect to all additions of Subsequent Mortgage Loans satisfies the
description thereof set forth on page S-29 of the Prospectus
Supplement.
(c) The Seller and the Trustee shall comply with their respective
obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with respect to the
Subsequent Mortgage Loans delivered on each Subsequent Transfer Date. References
in such Sections to the Initial Mortgage Loans or Mortgage Loans shall be deemed
to refer to the Subsequent Mortgage Loans and references to the Closing Date
shall be deemed to refer to the applicable Subsequent Transfer Date except that
references to 360 days after the Closing Date shall remain unchanged as shall
representations made with specific reference to the Initial Mortgage Loans.
(d) On the Business Day prior to the Distribution Date in February
1997, the Seller shall deliver to the Trustee for deposit into the Distribution
Account an amount equal to 30 days' interest at the applicable Net Mortgage Rate
on the original Principal Balance of each Subsequent Mortgage Loan that does not
have a first payment due on or before February 1, 1997, but only to the extent
necessary to pay the aggregate Class Monthly Interest Amount on the Offered
Certificates for such Distribution Date.
ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Servicer. (a) It is intended that the Trust formed
hereunder shall constitute, and that the affairs of the Trust shall be conducted
so as to qualify each REMIC as, a "real estate mortgage investment conduit"
("REMIC") as defined in and in accordance with the REMIC Provisions. In
furtherance of such intentions, the Servicer covenants and agrees that it shall
not knowingly or intentionally take any action or omit to take any action that
would cause the termination of the REMIC status of either REMIC.
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(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which (i) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (ii)
(x) has been designated an approved Seller-Servicer by FHLMC or FNMA for first
and second mortgage loans or (y) is an affiliate of the Servicer. The Servicer
shall give notice to the Trustee of the appointment of any Subservicer. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and either itself directly service the related Mortgage Loans or enter
into a Subservicing Agreement with a successor subservicer which qualifies
hereunder.
(c) Notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Mortgage Loans when the Subservicer has received
such payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 3.01(e). The Servicer shall be solely liable for all fees owed
by it to any Subservicer
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irrespective of whether the Servicer's compensation pursuant to this Agreement
is sufficient to pay such fees.
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall thereupon assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, unless the Trustee or designee elects to terminate any Subservicing
Agreement. Any fee payable in connection with such a termination will be payable
by the outgoing Servicer. If the Trustee does not terminate the Subservicing
Agreements, the Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Servicer's interest therein and to
have replaced the Servicer as a party to each Subservicing Agreement to the same
extent as if the Subservicing Agreements had been assigned to the assuming
party, except that the Servicer shall not thereby be relieved of any liability
or obligations under the Subservicing Agreements with regard to events that
occurred prior to the date the Servicer ceased to be the Servicer hereunder. The
Servicer, at its expense and without right of reimbursement therefor, shall,
upon the request of the Trustee, deliver to the assuming party all documents and
records relating to each Subservicing 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 Subservicing Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's good faith determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Servicer, imminent, and (y) such waiver, modification,
postponement or indulgence would not cause any REMIC to be disqualified or
otherwise cause a tax to be imposed on either REMIC) the Servicer may not permit
any modification with respect to any Mortgage Loan that would change the Loan
Rate, defer or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing,
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the Servicer shall continue, and is hereby authorized and empowered to execute
and deliver on behalf of the Trustee and each Certificateholder, all instruments
of satisfaction or cancellation, or of partial or full release, discharge and
all other comparable instruments with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. If reasonably required by the Servicer, the
Trustee shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans similar to the Mortgage Loans and
giving due consideration to the Certificateholders' reliance on the Servicer.
(g) On and after such time as the Trustee receives the resignation of,
or notice of the removal of, the Servicer from its rights and obligations under
this Agreement, and with respect to resignation pursuant to Section 7.04, after
receipt by the Trustee of the Opinion of Counsel required pursuant to Section
7.04, the Trustee shall assume all of the rights and obligations of the
Servicer, subject to Section 8.02. The Servicer shall, upon request of the
Trustee but at the expense of the Servicer, deliver to the Trustee all documents
and records relating to the Mortgage Loans and an accounting of amounts
collected and held by the Servicer and otherwise use its best efforts to effect
the orderly and efficient transfer of servicing rights and obligations to the
assuming party.
(h) The Servicer shall deliver a list of Servicing Officers to the
Trustee on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Servicer may
consent to the placing of a lien senior to that of the Mortgage on the related
Mortgaged Property; provided that such senior lien secures a mortgage loan that
refinances a First Lien and the combined loan-to-value ratio of the related
Mortgage Loan immediately following the refinancing (based on the outstanding
principal balance of the Mortgage Loan and the original principal balance of
such refinanced mortgage loan) is not greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan as of the related Cut-Off Date.
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Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
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, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any prepayment penalty or late payment charge or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan and (ii) arrange with a Mortgagor a schedule for
the payment of interest due and unpaid; provided that such arrangement is
consistent with the Servicer's policies with respect to the mortgage loans it
owns or services; provided, further, that notwithstanding such arrangement such
Mortgage Loans will be included in the monthly information delivered by the
Servicer to the Trustee pursuant to Section 5.03.
(b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "Bankers Trust Company of California, N.A., as
Trustee, in trust for the registered holders of Delta Funding Home Equity Loan
Asset Backed Certificates, Series 1997-4." The Collection Account shall be an
Eligible Account. The Servicer shall on the Closing Date deposit any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than interest accrued and due
prior to December 1, 1997) and prior to the Closing Date, and thereafter shall
use its best efforts to deposit within one Business Day, and shall in any event
deposit within two Business Days, following receipt thereof the following
payments and collections received or made by it (without duplication):
(i) all payments received after the related Cut-Off Date on
account of principal on the Mortgage Loans and all Principal
Prepayments and Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date on
account of interest on the Mortgage Loans (exclusive of payments in
respect of interest on the Mortgage Loans which have accrued and were
due on or prior to December 1, 1997);
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
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(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
Sections 2.02, 2.04, 2.06 and 3.16; and
(vii) any amount required to be deposited in the Collection Account
pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05;
provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances related
thereto. The foregoing requirements respecting deposits to the Collection
Account are exclusive, it being understood that, without limiting the generality
of the foregoing, the Servicer need not deposit in the Collection Account
amounts representing Servicing Compensation or amounts received by the Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.
The Servicer may cause the institution maintaining the Collection
Account to invest any funds in the Collection Account in Eligible Investments
(including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Eligible Investments) pursuant to Section 5.05.
Section 3.03. Withdrawals from the Collection Account. The Servicer
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes:
(i) before 11:00 a.m. (New York City time) on the Business Day
preceding each Distribution Date, to withdraw the portion of Available
Funds then in the Collection Account and remit such funds to the
Trustee for deposit to the Distribution Account;
(ii) to reimburse the Servicer for any accrued unpaid Servicing
Compensation which the Servicer would not have been required to deposit
in the Collection Account and for unreimbursed Monthly Advances and
Servicing Advances. The Servicer's right to reimbursement for unpaid
Servicing Fees and unreimbursed Servicing Advances shall be limited to
late collections on the related Mortgage Loan, including Liquidation
Proceeds, Released Mortgaged Property Proceeds,
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Insurance Proceeds and such other amounts as may be collected by the
Servicer from the related Mortgagor or otherwise relating to the
Mortgage Loan in respect of which such reimbursed amounts are owed. The
Servicer's right to reimbursement for unreimbursed Monthly Advances
shall be limited to late collections of interest on any Mortgage Loan
and to Liquidation Proceeds, Released Mortgaged Property Proceeds and
Insurance Proceeds on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(iv) to withdraw any funds deposited in the Collection Account that
were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error and to pay such funds
to the appropriate Person;
(v) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.06 to the extent not
advanced by the Servicer;
(vi) to reimburse the Servicer for Nonrecoverable Advances;
(vii) to pay to the Seller collections received in respect of
accrued interest on the Mortgage Loans due on or before December 1,
1997;
(viii) to pay to the Servicer or the Trustee the portion of any
Purchase Price in respect of clause (iv) of the definition thereof or
of any Substitution Adjustment in respect of clause (b) of the
definition thereof to the extent paid in respect of amounts incurred by
or imposed on the Servicer or the Trustee, as the case may be; and
(ix) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein
to the applicable Class R Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer as loss payee thereunder providing
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements securing such Mortgage Loan from
time to time, (ii) the combined principal balance owing on
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such Mortgage Loan and any mortgage loan senior to such Mortgage Loan and (iii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis. The Servicer shall also maintain on property acquired upon
foreclosure or by deed in lieu of foreclosure hazard insurance with extended
coverage in an amount which is at least equal to the lesser of (i) the maximum
insurable value from time to time of the improvements which are a part of such
property, (ii) the combined principal balance owing on such Mortgage Loan and
any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis at the
time of such foreclosure, fire and or deed in lieu of foreclosure plus accrued
interest and the good-faith estimate of the Servicer of related Servicing
Advances to be incurred in connection therewith. Amounts collected by the
Servicer under any such policies shall be deposited in the Collection Account to
the extent called for by Section 3.02. In cases in which any Mortgaged Property
is located in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance to the
extent such flood insurance is available and the Servicer has determined such
insurance to be necessary in accordance with accepted mortgage loan servicing
standards for mortgage loans similar to the Mortgage Loans. All such flood
insurance shall be in amounts equal to the least of (A) the amount in clause (i)
above, (B) the amount in clause (ii) above and (C) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended.
The Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance 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.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In
the event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy rating of A:VIII or better in Best's Key Rating
Guide insuring against fire and hazards of extended coverage on all of the
Mortgage Loans, then, to the extent such policy names the Servicer as loss payee
and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance, and otherwise complies with
the requirements of Section 3.04, the Servicer shall be deemed conclusively to
have satisfied its obligations with respect to fire and hazard insurance
coverage under Section 3.04, it being understood and agreed that such blanket
policy may contain a deductible clause, in which case the Servicer shall, in the
event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 3.04, and there shall have been a loss
which would
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have been covered by such policy, deposit in the Collection Account the
difference, if any, between the amount that would have been payable under a
policy complying with Section 3.04 and the amount paid under such blanket
policy. Upon the request of the Trustee, the Servicer shall cause to be
delivered to the Trustee, a certified true copy of such policy. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such policy in a timely fashion in
accordance with the terms of such policy.
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same) on such terms and
conditions as the Servicer deems to be in the best interest of the
Certificateholders.
The Servicer shall cause to be deposited, no later than two Business
Days after the receipt thereof, in the Collection Account, all revenues received
with respect to the related REO Property and shall retain, or cause the Trustee
to withdraw therefrom, funds necessary for the proper operation, management and
maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Certificateholders and, as soon as
practicable thereafter, the expenses of such sale shall be paid. The cash
proceeds of sale of the REO Property shall be promptly deposited in the
Collection Account, net of Foreclosure Profits and of any related unreimbursed
Servicing Advances, accrued and unpaid Servicing Fees and unreimbursed Monthly
Advances payable to the Servicer in accordance with Section 3.03, for
distribution to the Certificateholders in accordance with Section 5.01.
The Servicer shall foreclose upon or otherwise comparably convert to
ownership Mortgaged Properties securing such of the Mortgage Loans as come into
and continue in default either when no satisfactory arrangements can be made for
collection of delinquent
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payments pursuant to Section 3.02 subject to the provisions contained in the
last paragraph of this Section 3.06.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee or to its nominee on behalf of
Certificateholders.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall (i) dispose of such Mortgaged Property within two years after
its acquisition or (ii) prior to the expiration of any extension to such
two-year grace period which is requested on behalf of the Trust by the Servicer
(at the expense of the Trust) more than 60 days prior to the end of such
two-year grace period and granted by the Internal Revenue Service, unless the
Servicer shall have received an Opinion of Counsel to the effect that the
holding of such Mortgaged Property subsequent to two years after its acquisition
will not result in the imposition of taxes on "prohibited transactions" as
defined in Section 860F of the Code or cause any REMIC to fail to qualify as a
REMIC at any time that any Regular Certificates are outstanding. Notwithstanding
any other provision of this Agreement, (i) no Mortgaged Property acquired by the
Servicer pursuant to this Section 3.06 shall be rented (or allowed to continue
to be rented) or otherwise used for the production of income by or on behalf of
the Trust and (ii) no construction shall take place on such Mortgaged Property
in such a manner or pursuant to any terms, in either case, that would cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust
of any "net income from foreclosure property" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period
greater than two years is permitted under this Agreement and is necessary to
sell any REO Property, the Servicer shall give appropriate notice to the Trustee
and shall report monthly to the Trustee as to the progress being made in selling
such REO Property.
If the Servicer has actual knowledge that a Mortgaged Property which
the Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee prior to acquiring the Mortgaged Property. Nothing in this Section 3.06
shall affect the Servicer's right to deem certain advances proposed to be made
Nonrecoverable Advances. For the purpose of this Section 3.06, actual knowledge
of the Servicer means actual knowledge of a Responsible Officer of the Servicer
involved in the servicing of the relevant Mortgage Loan. Actual
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knowledge of the Servicer does not include knowledge imputable by virtue of the
availability of or accessibility to information relating to environmental or
hazardous waste sites or the locations thereof.
Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has been recorded as
required hereunder, an instrument of satisfaction regarding the related
Mortgage, which instrument of satisfaction shall be recorded by the Servicer if
required by applicable law and be delivered to the Person entitled thereto. It
is understood and agreed that no expenses incurred in connection with such
instrument of satisfaction or transfer shall be reimbursed from amounts
deposited in the Collection Account. If the Trustee is holding the Mortgage
Files, from time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, the Trustee shall, upon request of the Servicer and delivery
to the Trustee of a Request for Release, in the form annexed hereto as Exhibit
I, signed by a Servicing Officer, release the related Mortgage File to the
Servicer, and the Trustee shall execute such documents, in the forms provided by
the Servicer, as shall be necessary for the prosecution of any such proceedings
or the taking of other servicing actions. Such Request for Release shall
obligate the Servicer to return the Mortgage File to the Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan shall be
liquidated, in which case, upon receipt of a certificate of a Servicing Officer
similar to that hereinabove specified, the Request for Release shall be released
by the Trustee to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the related Assignment
of Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only) and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Mortgage Loan and deposit or credit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection Account.
In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured then the assignee for
collection shall promptly reassign such Mortgage Loan to the Trustee and return
it to the place where the related Mortgage File was being maintained.
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Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, additional servicing
compensation in the form of prepayment penalties or late payment charges or
other receipts not required to be deposited in the Collection Account,
including, without limitation, Foreclosure Profits and, subject to Section 5.05,
investment income on the Accounts (other than the Initial Interest Coverage
Account) shall be retained by the Servicer. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder
(including payment of all other fees and expenses not expressly stated hereunder
to be for the account of the Trust or the Certificateholders) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee and the Rating Agencies, on or before the last Business
Day of the fifth month following the end of the Servicer's fiscal year (December
31), beginning in 1999, an Officer's Certificate stating that (i) a review of
the activities of the Servicer during the preceding fiscal year and of its
performance under this Agreement has been made under such officer's supervision
and (ii) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its material obligations under this Agreement
throughout such fiscal year, or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and status thereof. The Servicer shall promptly notify the Trustee
and each Rating Agency upon any change in the basis on which its fiscal year is
determined.
(b) The Servicer shall deliver to the Trustee and each of the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which, with the giving of notice or the lapse
of time or both, would become an Event of Default.
Section 3.10. Annual Servicing Review. Not later than the last Business
Day of the fifth month following the end of the Servicer's fiscal year (December
31), beginning in 1999, the Servicer, at its expense, shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a letter or letters to the Trustee and
each Rating Agency to the effect that such firm has, with respect to the
Servicer's overall servicing operations, examined such operations in accordance
with the requirements of
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the Uniform Single Attestation Program for Mortgage Bankers, and stating such
firm's conclusions relating thereto.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Trustee,
Certificateholders which are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the SAIF or the BIF),
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Servicer. Nothing in this
Section 3.11 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
3.11 as a result of such obligation shall not constitute a breach of this
Section 3.11.
Section 3.12. Maintenance of Certain Servicing and Insurance Policies.
The Servicer shall during the term of its service as servicer 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 for
persons performing servicing for mortgage loans purchased by FNMA.
Section 3.13. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Seller and the Servicer shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section 3.13.
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in 1998. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer
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(i) on behalf of the Trustee acquires an interest in any Mortgaged Property
through foreclosure or other comparable conversion in full or partial
satisfaction of a Mortgage Loan or (ii) knows or has reason to know that any
Mortgaged Property has been abandoned. The reports from the Servicer shall be in
form and substance sufficient to meet the reporting requirements imposed by
Sections 6050J, 6050H and 6050P of the Code.
Section 3.15. Advances by the Servicer. (a) Not later than 12:00 noon
California time on the Business Day preceding each Distribution Date, the
Servicer shall remit to the Trustee for deposit in the Distribution Account an
amount to be distributed on the related Distribution Date pursuant to Section
5.01, equal to the interest accrued on each Mortgage Loan through the related
Due Date, but not received as of the close of business on the last day of the
related Due Period (net of the Servicing Fee) such amount being defined herein
as the "Monthly Advance." With respect to any Balloon Loan that is delinquent on
its maturity date, the Servicer will continue to make Monthly Advances with
respect to such Balloon Loan in an amount equal to one month's interest on the
unpaid principal balance at the applicable Loan Rate (net of the Servicing Fee)
according to the original amortization schedule for such Mortgage Loan. The
obligation to make Monthly Advances with respect to each Mortgage Loan shall
continue until such Mortgage Loan becomes a Liquidated Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance.
Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee) to purchase for its own account from the Trust any
Mortgage Loan which is 90 days or more Delinquent in the manner and at the price
specified in Section 2.02. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account and the Trustee, upon
receipt of such deposit, shall release or cause to be released to the purchaser
of such Mortgage Loan the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser of such Mortgage Loan any Mortgage Loan released pursuant hereto
and the purchaser of such Mortgage Loan shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The purchaser of such Mortgage Loan shall thereupon own
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such Mortgage Loan, and all security and documents, free of any further
obligation to the Trustee or the Certificateholders with respect thereto.
Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
Lien for the protection of the Trustee's interest, where permitted by local law
and whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Certificateholders and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Servicer shall immediately notify the Trustee of
any such action or circumstances. The Servicer shall advance the necessary funds
to cure the default or reinstate the superior lien, if such advance is in the
best interests of the Certificateholders in accordance with the servicing
standards in Section 3.01. The Servicer shall not make such an advance except to
the extent that it determines in its reasonable good faith judgment that the
advance would be recoverable from Liquidation Proceeds on the related Mortgage
Loan and in no event in an amount that is greater than the Principal Balance of
the related Mortgage Loan. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 3.18. Assumption Agreements. When a Mortgaged Property has been
or is about to be conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance or prospective conveyance, exercise its
right to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. In such event, the Servicer shall enter into
an assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person shall become
liable under the Mortgage Note and, unless prohibited by applicable law, the
Mortgagor shall remain liable thereon. The Servicer, in accordance with accepted
mortgage loan servicing
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standards for mortgage loans similar to the Mortgage Loans, is also authorized
to enter into a substitution of liability whereby such person is substituted as
mortgagor and becomes liable under the Mortgage Note. The Servicer shall notify
the Trustee that any such substitution or assumption agreement has been
completed by forwarding to the Trustee the original of such substitution or
assumption agreement which original shall be added by the Trustee to the related
Mortgage File and shall, for all purposes, be considered a part of such Mortgage
File to the same extent as all other documents and instruments constituting a
part thereof. In connection with any assumption or substitution agreement
entered into pursuant to this Section 3.18, the Servicer shall not change the
Loan Rate or the Monthly Payment, defer or forgive the payment of principal or
interest, reduce the outstanding principal amount or extend the final maturity
date on such Mortgage Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.19. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or
deficiency, monitor such payments to determine if they are made by the
Mortgagor.
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ARTICLE IV
Initial Interest Coverage Account
Section 4.01. [Reserved.]
Section 4.02. Initial Interest Coverage Account and Pre-Funding
Account. (a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a separate account
denominated a Initial Interest Coverage Account, which is and shall continue to
be an Eligible Account in the name of the Trustee and shall be designated
"Bankers Trust Company of California, N.A., as Trustee of the Delta Funding Home
Equity Loan Trust Series 1997-4 Initial Interest Coverage Account". The Initial
Interest Coverage Account shall be treated as an "outside reserve fund" under
applicable Treasury regulations and will not be part of any REMIC. Any
investment earnings on the Initial Interest Coverage Account will be treated as
owned by the Seller and will be taxable to the Seller. The amount on deposit in
the Initial Interest Coverage Account shall be invested in Eligible Investments
in accordance with the provisions of Section 5.05.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated a Pre-Funding Account, which is and shall continue to be an Eligible
Account in the name of the Trustee and shall be designated "Bankers Trust
Company of California, N.A., as Trustee of the Delta Funding Home Equity Loan
Trust Series 1997-4 Pre-Funding Account". The Pre-Funding Account shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC. Any Pre-Funding Earnings will be deposited into
the Initial Interest Coverage Account on each Pre-Funding Distribution Date;
provided, however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date, the Trustee
shall (i) transfer the Excess Funding Amount(s) from the Pre-Funding Account to
the Distribution Account, (ii) transfer Pre-Funding Earnings to the Initial
Interest Coverage Account and (iii) close the Pre-Funding Account. The amount on
deposit in the Pre-Funding Account shall be invested in Eligible Investments in
accordance with the provisions of Section 5.05. All investment earnings on funds
on deposit in the Initial Interest Coverage Account and the Pre-Funding Account
will be treated as owned by, and will be taxable to, the Seller.
(b) On the Closing Date, the Seller will cause to be deposited the
Initial Interest Deposit in the Initial Interest Coverage Account from the sale
of the Offered Certificates. On
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the Closing Date, the Seller will cause to be deposited the Pre-Funding Amount
in the Pre-Funding Account from the sale of the Offered Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date provided,
however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date the Trustee shall
(i) transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance of the funds on deposit in the Initial Interest
Coverage Account to the Seller and (iii) close the Initial Interest Coverage
Account.
(d) On each Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date and pay to such amount to or upon the order of
the Seller with respect to such transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Distribution Date and
deposit such amounts in the Distribution Account.
(f) The Initial Interest Coverage Account and Pre-Funding Account shall
be closed on the Distribution Date immediately following the end of the Funding
Period. All amounts, if any, remaining in the Initial Interest Coverage Account
on such day shall be paid to the Seller.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions. (a) On each Distribution Date, the Trustee
shall withdraw the Interest Remittance Amount for each Loan Group from the
Distribution Account and apply such amounts in the following order of priority,
in each case, to the extent of the funds remaining therefor:
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A. Loan Group F:
(i) to the Trustee, the Trustee Fee for such Loan Group
and Distribution Date;
(ii) concurrently, to the Classes of Senior Certificates
in Certificate Group F, the related Class Interest
Distribution for such Distribution Date;
(iii) sequentially, to the Class M-1F, Class M-2F and Class
B-1F Certificates, in that order, the related Class
Monthly Interest Amount;
(iv) to fund the Subordination Increase Amount for
Certificate Group F as part of the related Principal
Distribution Amount; and
(v) the remainder pursuant to clause C. below.
B. Loan Group A:
(i) to the Trustee, the Trustee Fee for such Loan Group
and Distribution Date;
(ii) to the Class A-1A Certificates, the Class Interest
Distribution for such Distribution Date;
(iii) sequentially, to the Class M-1A, Class M-2A and Class
B-1A Certificates, in that order, the related Class
Monthly Interest Amount;
(iv) to fund the Subordination Increase Amount for
Certificate Group A as part of the related Principal
Distribution Amount; and
(v) the remainder pursuant to clause D. below.
C. Remaining Interest and Excess Overcollateralization Amount
for Loan Group F:
(i) sequentially, to the Class M-1F, Class M-2F and Class
B-1F Certificates, in that order, an amount equal to
the related Class Interest Carryover Shortfall;
(ii) to fund any amount listed in clause B.(iv) below
which was not fully funded as provided therein;
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(iii) sequentially, to the Class M-1F, Class M-2F and Class
B-1F Certificates, in that order, the related Class
Principal Carryover Shortfall;
(iv) to fund any amount listed in clauses D. (i) and (iii)
below, in that order, which were not fully funded as
provided therein; and
(v) to the Residual Certificates, the remainder,
provided, however, that if the Excess
Overcollateralization Amount for Certificate Group F
is zero solely due to the existence of a
Subordination Trigger Event for such Certificate
Group, the amount that otherwise would constitute
such Excess Overcollateralization Amount shall be
distributed as part of the related Class Principal
Distribution Amount in reduction of the Class
Principal Balances of the related Subordinated
Certificates sequentially to the Class B-1F, Class
M-2F and Class M-1F Certificates, in that order,
until the respective Class Principal Balances thereof
are reduced to zero.
D. Remaining Interest and Excess Overcollateralization Amount
for Loan Group A:
(i) sequentially, to the Class M-1A, Class M-2A and Class
B-1A Certificates, in that order, an amount equal to
the related Class Interest Carryover Shortfall;
(ii) to fund any amount listed in clause A.(iv) above
which was not fully funded as provided therein;
(iii) sequentially, to the Class M-1A, Class M-2A and Class
B-1A Certificates, in that order, the related Class
Principal Carryover Shortfall;
(iv) to fund any amount listed in clauses C. (i) and (iii)
above, in that order, which were not fully funded as
provided therein;
(v) concurrently, to the Class A-1A, Class M-1A, Class
M-2A and Class B-1A Certificates, any related LIBOR
Carryover allocated pro rata among such Classes in
proportion to their respective amounts of LIBOR
Carryover; and
(vi) to the Residual Certificates, the remainder,
provided, however, that if the Excess
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Overcollateralization Amount for Certificate Group A
is zero solely due to the existence of a
Subordination Trigger Event for such Certificate
Group, the amount that otherwise would constitute
such Excess Overcollateralization Amount shall be
distributed as part of the related Class Principal
Distribution Amount in reduction of the Class
Principal Balance of the related Subordinate
Certificates sequentially to the Class B-1A, Class
M-2A and Class M-1A Certificates, in that order,
until the respective Class Principal Balances thereof
are reduced to zero.
On each Distribution Date, the Class Interest Distribution for each
Class of Senior Certificates in Certificate Group F will be distributed on an
equal priority and any shortfall in the amount required to be distributed as
interest thereon to each such Class will be allocated between such Classes pro
rata based on the amount that would have been distributed on each such Class in
the absence of such shortfall.
(b) On each Distribution Date, the Trustee shall withdraw each Basic
Principal Amount and, on the Distribution Date immediately following the end of
the Funding Period, each Excess Funding Amount from the Distribution Account and
shall apply such amount together with the amount, if any, included in the
Principal Distribution Amount pursuant to Section 5.01(a)A.(iv), B.(iv), C.(ii)
or D.(ii) hereof in the following order of priority, in each case, to the extent
of the funds remaining therefor:
A. Loan Group F:
(i) to the Senior Certificates in Certificate Group F,
the related Senior Principal Distribution Amount
plus, the Excess Funding Amount, if any, for
Certificate Group F, allocated in the following order
of priority:
(a) to the Class A-5F Certificates, the Class
A-5F Principal Distribution, until the Class
Principal Balance thereof has been reduced
to zero; and
(b) sequentially, to the Class A-1F, Class A-2F,
Class A-3F, Class A-4F and Class A-5F
Certificates, in that order, until the
respective Class Principal Balances thereof
have been reduced to zero; and
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(ii) on and after the related Stepdown Date and so long as
a Trigger Event for the related Certificate Group is
not in effect, sequentially, to the Class M-1F, Class
M-2F and Class B-1F Certificates, in that order, the
related Class Principal Distribution Amount until the
respective Class Principal Balances thereof have been
reduced to zero; and
(iii) to the Residual Certificates, any remaining
principal.
B. Loan Group A:
(i) to the Class A-1A Certificates, the related Senior
Principal Distribution Amount plus, the related
Excess Funding Amount, if any;
(ii) on and after the related Stepdown Date and so long as
a Trigger Event for the related Certificate Group is
not in effect sequentially, to the Class M-1A, Class
M-2A and Class B-1A Certificates, in that order, the
related Class Principal Distribution Amount until the
Class Principal Balances thereof have been reduced to
zero; and;
(iii) to the Residual Certificates, any remaining
principal.
Notwithstanding the priority set forth in clause A. (i) above, if the
aggregate Class Principal Balance of the Subordinate Certificates in Certificate
Group F is reduced to zero, the related Senior Principal Distribution Amount
shall be distributed concurrently to each Class of Senior Certificates in
Certificate Group F on a pro rata basis in accordance with their respective
Class Principal Balances.
Notwithstanding the foregoing, in the event that the Class Principal
Balances of all of the Senior Certificates relating to a Certificate Group have
been reduced to zero either prior to the Distribution Date in January 2001 or
thereafter during the continuation of a Trigger Event for such Certificate
Group, all amounts of principal that would have been distributed to such Senior
Certificates will be distributed to the related Subordinate Certificates of such
Certificate Group sequentially in the following order: Class M-1, Class M-2,
Class B-1. Similarly, if the Class Principal Balance of the Class M-1
Certificates has been reduced to zero and a Trigger Event for such Certificate
Group is continuing, all amounts of principal that would have been distributed
to such Class M-1 Certificates
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will be distributed to the related Class M-2 and Class B-1 Certificates.
Finally, if the Class Principal Balance of the Class M-2 Certificates has been
reduced to zero, and a Trigger Event for such Certificate Group is continuing,
all amounts of principal that would have been distributed on such Class M-2
Certificates will be distributed to the related Class B-1 Certificates.
(d) Method of Distribution. The Trustee shall make distributions in
respect of a Distribution Date to each Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution), in the case of Holders of Offered Certificates, by check or
money order mailed to such Certificateholder at the address appearing in the
Certificate Register, or, upon written request by a Holder of an Offered
Certificate delivered to the Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Certificateholder is the
Depository or such Certificateholder owns of record one or more Offered
Certificates aggregating at least $1,000,000 Original Class Certificate
Principal Balance), and, in the case of Holders of Class A-5IO or Residual
Certificates, by wire transfer. Distributions among Certificateholders shall be
made in proportion to the Percentage Interests evidenced by the Certificates
held by such Certificateholders.
(e) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Servicer or the Seller shall have any responsibility therefor
except as otherwise provided by applicable law.
Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall remit to the Trustee for deposit to the Collection
Account an amount equal to the lesser of (A) the aggregate of the Prepayment
Interest Shortfalls for the related Distribution Date resulting from Principal
Prepayments during the related Due Period and (B) its aggregate Servicing Fee
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received in the related Due Period. The Servicer shall not have the right to
reimbursement for any amounts deposited to the Collection Account pursuant to
this Section 5.02.
Section 5.03. Statements. (a) Not later than 12:00 noon, California
time, on the fifth Business Day prior to each Distribution Date, the Servicer
shall deliver to the Trustee by electronic modem a computer file containing the
information called for by clauses (i) through (xxi) below as of the end of the
preceding Due Period and such other information as the Trustee shall reasonably
require. Not later than 12:00 noon, California time, on each Determination Date,
the Trustee shall deliver to the Servicer and the Seller by telecopy, with a
hard copy thereof to be delivered on the succeeding Distribution Date, a
confirmation of the items in clause (i) below. Not later than one Business Day
prior to each Distribution Date the Trustee shall deliver a statement (the
"Trustee's Remittance Report") containing the information set forth below with
respect to such Distribution Date, which information shall be based upon the
information furnished by the Servicer upon which the Trustee shall conclusively
rely without independent verification or calculation thereof:
(i) The Available Funds for each Certificate Group and each
Class's Certificate Rate for the related Distribution Date;
(ii) the aggregate amount of the distribution to each Class of
Certificates on such Distribution Date;
(iii) the amount of the distribution set forth in paragraph (i)
above in respect of interest and the amount thereof in respect of any
Class Interest Carryover Shortfall, and the amount of any Class
Interest Carryover Shortfall remaining;
(iv) the amount of the distribution set forth in paragraph (i)
above in respect of principal and the amount thereof in respect of the
Class Principal Carryover Shortfall, and any remaining Class Principal
Carryover Shortfall;
(v) the amount of Excess Interest for each Loan Group paid as
principal;
(vi) the Servicing Fee;
(vii) the Loan Group Balance of each Loan Group and the Pool
Balance, in each case as of the close of business on the last day of
the preceding Due Period;
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(viii) the Class Principal Balance of each Class of Certificates
after giving effect to payments allocated to principal above;
(ix) each Overcollateralization Amount and each Required
Overcollateralization Amount as of the close of business on the
Distribution Date, after giving effect to distributions of principal on
such Distribution Date;
(x) for each Certificate Group, whether a Trigger Event has
occurred and is continuing;
(xi) The number and Principal Balances of all Mortgage Loans
in each Loan Group that were the subject of Principal Prepayments
during the Due Period;
(xii) The amount of all Curtailments in each Loan Group that were
received during the Due Period;
(xiii) The principal portion of all Monthly Payments in each Loan
Group received during the Due Period;
(xiv) The interest portion of all Monthly Payments in each Loan
Group received on the Mortgage Loans during the Due Period;
(xv) For each Certificate Group, the amount of the Monthly Advances
and the Compensating Interest payment to be made on the Determination
Date;
(xvi) The amount to be distributed to the Class R Certificateholders
for the Distribution Date;
(xvii) The weighted average remaining term to maturity of the
Mortgage Loans in each Loan Group and the weighted average Loan Rate;
(xviii) The amount of all payments or reimbursements to the Servicer
pursuant to Sections 3.03(ii) and (vi);
(xix) The number of Mortgage Loans in each Loan Group outstanding at
the beginning and at the end of the related Due Period;
(xx) For each Certificate Group, the amount of Liquidation Loan
Losses experienced during the preceding Due Period and the Loan Losses
and the Cumulative Net Losses as a percentage of the Cut-Off Date Pool
Balance;
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(xxi) For each Loan Group, as of the end of the preceding calendar
month, the number and Principal Balance of Mortgage Loans which are
30-59 days delinquent; the number and Principal Balance of Mortgage
Loans which are 60-89 days delinquent; the number and Principal Balance
of Mortgage Loans which are 90-119 days delinquent; the number and
Principal Balance of Mortgage Loans which are more than 120 days
delinquent; the number and Principal Balance of Mortgage Loans which
are in foreclosure; and the number and Principal Balance of Mortgage
Loans which are REO Property;
(xxii) For each Certificate Group the calculation of the Trigger
Event and the Subordination Trigger Event; and
(xxiii) For each Pre-Funding Distribution Date, the remaining
Allocated Pre-Funded Amount.
The Trustee shall forward such report to the Servicer, the Seller, the
Certificateholders, the Rating Agencies, Bloomberg (at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx) and Intex Solutions (at 00
xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxx) on
the Distribution Date. The Trustee may fully rely upon and shall have no
liability with respect to information provided by the Servicer.
The Servicer shall calculate all items in clauses (i) - (xxii) above.
To the extent that there are inconsistencies between the telecopy of
the Trustee's Remittance Report and the hard copy thereof, the Servicer may rely
upon the latter.
In the case of information furnished pursuant to subclauses (ii),
(iii), (iv) and (vi) above, the amounts shall be expressed in a separate section
of the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the related Cut-Off Date.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Regular Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (iii) and
(iv) 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 prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
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(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished to Certificateholders by
the Trustee pursuant to any requirements of the Code as from time to time in
force.
(e) The Servicer and the Trustee shall furnish to each
Certificateholder (if requested in writing), during the term of this Agreement,
such periodic, special or other reports or information, whether or not provided
for herein, as shall be necessary, reasonable or appropriate with respect to the
Certificateholder or otherwise with respect to the purposes of this Agreement,
all such reports or information to be provided by and in accordance with such
applicable instructions and directions (if requested in writing) as the
Certificateholder may reasonably require; provided that the Servicer and the
Trustee shall be entitled to be reimbursed by such Certificateholder for their
respective fees and actual expenses associated with providing such reports, if
such reports are not generally produced in the ordinary course of their
respective businesses or readily obtainable.
(f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies. No Person entitled to receive copies of such
reports or diskettes or files or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
Bankers Trust Company of California, N.A., a
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separate account (the "Distribution Account") titled "Bankers Trust Company of
California, N.A., as Trustee, in trust for the registered holders of Delta
Funding Home Equity Loan Asset-Backed Certificates, Series 1997-4." The
Distribution Account shall be an Eligible Account. The Trustee shall deposit any
amounts representing payments on and any collections in respect of the Mortgage
Loans received by it immediately following receipt thereof, including, without
limitation, all amounts withdrawn by the Servicer from the Collection Account
pursuant to Section 3.03 for deposit to the Distribution Account. Amounts on
deposit in the Distribution Account may be invested in Eligible Investments
pursuant to Section 5.05.
Section 5.05. Investment of Accounts. (a) So long as no Event of
Default shall have occurred and be continuing, and consistent with any
requirements of the Code, all or a portion of any Account held by the Trustee
shall be invested and reinvested by the Trustee, as directed in writing by the
Servicer, in one or more Eligible Investments bearing interest or sold at a
discount. If an Event of Default shall have occurred and be continuing or if the
Servicer does not provide investment directions, the Trustee shall invest all
Accounts in Eligible Investments described in paragraph (vi) of the definition
of Eligible Investments. No such investment in any Account shall mature later
than the Business Day immediately preceding the next Distribution Date (except
that (i) if such Eligible Investment is an obligation of the Trustee, then such
Eligible Investment shall mature not later than such Distribution Date and (ii)
any other date may be approved by the Rating Agencies).
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the Servicer
shall from time to time direct as
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set forth in Section 5.05(a), but only in one or more Eligible Investments.
(e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account and the Distribution
Account shall be for the benefit of the Servicer as servicing compensation (in
addition to the Servicing Fee), and shall be subject to withdrawal on or before
the first Business Day of the month following the month in which such income or
gain is received. The Servicer shall deposit in the Collection Account, the
Distribution Account or the Initial Interest Coverage Account, as the case may
be, the amount of any loss incurred in respect of any Eligible Investment held
therein which is in excess of the income and gain thereon immediately upon
realization of such loss, without any right to reimbursement therefore from its
own funds.
Section 5.06. Allocation of Losses. On each Distribution Date, the
Servicer shall determine the total of the Applied Realized Loss Amounts for each
Certificate Group for such Distribution Date. The Applied Realized Loss Amount
for each Certificate Group for any Distribution Date shall be applied by
reducing the Class Principal Balance of each Class of Subordinate Certificates
in such Certificate Group in the following order, Class B, Class M-2 and Class
M-1, in each case until the respective Class Principal Balance thereof is
reduced to zero. Any Applied Realized Loss Amount allocated to a Class of
Certificates shall be allocated among the Certificates of such Class in
proportion to their respective Percentage Interests.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Offered Certificates and
the Residual Certificates shall be substantially in the forms set forth in
Exhibits A and B respectively, and shall, on original issue, be executed,
authenticated and delivered by the Trustee to or upon the order of the Seller
concurrently with the sale and assignment to the Trustee of the Trust. Each
Class of Offered Certificates shall be initially evidenced by one or more
certificates representing a fraction of the applicable Original Class Principal
Balance or Notional Amount, as applicable, and shall be held in minimum dollar
denominations of $25,000 and integral multiples of $1,000 in excess thereof,
except that one of each Class of the Offered Certificate may be in a different
denomination so that the sum of the denominations of all outstanding Offered
Certificates shall equal the aggregate
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Original Class Principal Balance or Notional Amount, as applicable. The Residual
Certificates shall be held in minimum Percentage Interests of 20%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trust, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually authenticated by the
Trustee substantially in the form provided for herein, and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. Subject to Section
6.02(c), the Offered Certificates and the Class A-5IO Certificates shall be
Book-Entry Certificates. The Residual Certificates shall not be Book-Entry
Certificates.
Section 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate Trust
Office a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, the Trustee on behalf of
the Trust shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the
Certificates which the Certificateholder making the exchange is
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entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Trustee or the Certificate
Registrar) be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of such Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository as representative of the Certificate Owners of the Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Seller advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Seller is unable
to locate a qualified
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successor, (ii) the Seller, at its sole option elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of an
Event of Default, the Certificate Owners of each Class of Offered Certificates
representing Percentage Interests aggregating not less than 51% advises the
Trustee and Depository through the Financial Intermediaries and the Depository
Participants in writing that the continuation of a book-entry system through the
Depository to the exclusion of definitive, fully registered certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of each Class of Offered Certificates by the Depository, accompanied by
registration instructions from the Depository for registration, the Trustee
shall at the Seller's expense, execute and authenticate the Definitive
Certificates. Neither the Seller nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates, the Trustee, the Certificate Registrar, the Servicer, any Paying
Agent and the Seller shall recognize the Holders of the Definitive Certificates
as Certificateholders hereunder.
(d) Except with respect to the initial transfer of the Residual
Certificates by the Seller, no transfer, sale, pledge or other disposition of
any Residual Certificate shall be made unless such disposition is exempt from
the registration requirements of the Securities Act of 1933, as amended (the
"1933 Act"), and any applicable state securities laws or is made in accordance
with the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee in reliance
upon Rule 144A under the 1933 Act, the Trustee and the Seller shall require
either (i) a written Opinion of Counsel (which may be in-house counsel)
acceptable to and in form and substance reasonably satisfactory to the Trustee
and the Seller that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the 1933 Act or
is being made pursuant to the 1933 Act, which Opinion of Counsel shall not be an
expense of the Trustee or the Seller or (ii) the Trustee shall require the
transferor to execute a transferor certificate (in substantially the form
attached hereto as Exhibit M) and the transferee to execute an investment letter
(in substantially the form attached hereto as Exhibit N-1 or N-2) acceptable to
and in form and substance reasonably satisfactory to the Seller and the Trustee
certifying to the Seller and the Trustee the facts surrounding such transfer,
which investment letter shall not be an expense of the Trustee or the Seller.
The Holder of a Residual Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee and the Seller against any liability
that may result if
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the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1, Exhibit N-2 or N-3, as appropriate), to the effect that such transferee is
not an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, nor a person acting on behalf of any
such plan or arrangement nor using the assets of any such plan or arrangement to
effect such transfer or (ii) if the purchaser is an insurance company, a
representation that the purchaser is an insurance company which is purchasing
such Certificates with funds contained in an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60") and that the purchase and holding of such
Certificates are covered under PTCE 95-60 or (iii) in the case of any such ERISA
Restricted Certificate presented for registration in the name of an employee
benefit plan subject to ERISA or a plan or arrangement subject to Section 4975
of the Code (or comparable provisions of any subsequent enactments), or a
trustee of any such plan or any other person acting on behalf of any such plan
or arrangement or using such plan's or arrangement's assets, an Opinion of
Counsel satisfactory to the Trustee, which Opinion of Counsel shall not be an
expense of either the Trustee or the Trust, addressed to the Trustee, to the
effect that the purchase or holding of such ERISA Restricted Certificate will
not result in the assets of the Trust being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee to any obligation in addition to those expressly
undertaken in this Agreement or to any liability. Notwithstanding anything else
to the contrary herein, (i) the representation required by clause (i) or (ii)
above with respect to any ERISA-Restricted Certificate that is a Book-Entry
Certificate shall be deemed to have made by the Certificate Owner by virtue of
such Certificate Owner's acquisition of such Certificate and (ii) any purported
transfer of an ERISA Restricted Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the delivery to the Trustee
of an Opinion of Counsel satisfactory to the Trustee as described above shall be
void and of no effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the
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Depositor or its designee as its attorney-in-fact to negotiate the terms of any
mandatory sale under clause (v) below and to execute all instruments of transfer
and to do all other things necessary in connection with any such sale, and the
rights of each Person acquiring any Ownership Interest in a Residual Certificate
are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Residual Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this
Section 6.02 shall be absolutely null and void and shall vest no rights
in the purported transferee. If any purported transferee shall, in
violation of the provisions of this Section 6.02, become a Holder of a
Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual
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Certificate that is in fact not permitted by this Section 6.02 or for
making any distributions due on such Residual Certificate to the Holder
thereof or taking any other action with respect to such Holder under
the provisions of the Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions
so recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Depositor to arrange for the sale of such
Residual Certificate. The proceeds of such sale, net of commissions
(which may include commissions payable to the Depositor or its
affiliates in connection with such sale), expenses and taxes due, if
any, will be remitted by the Trustee to the previous Holder of such
Residual Certificate that is a Permitted Transferee, except that in the
event that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02 or
any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Depositor will provide to
the Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there
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shall have been delivered to the Trustee, in form and substance satisfactory to
the Trustee, (i) written notification from each Rating Agency that the removal
of the restrictions on Transfer set forth in this Section 6.02 will not cause
such Rating Agency to downgrade its rating of the Certificates and (ii) an
Opinion of Counsel to the effect that such removal will not cause any REMIC to
fail to qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Trustee.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be canceled by the Certificate Registrar and disposed of pursuant to its
standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (ii) there is delivered to the Trustee, the
Seller and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar 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 and the
Certificate Registrar) in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Seller, the Trustee,
the Certificate Registrar, any Paying Agent and any agent of the Servicer, the
Seller, the Trustee, any Paying Agent or the Certificate Registrar may treat the
Person, including a Depository, in whose name any Certificate
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is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.01 and for all other purposes whatsoever,
and none of the Servicer, the Seller, the Trustee, the Certificate Registrar nor
any agent of any of them shall be affected by notice to the contrary.
Section 6.05. Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Certificateholders from the Distribution Account pursuant
to Section 5.01 and shall report the amounts of such distributions to the
Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly incorporated
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a successor
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Seller.
(b) The Trustee shall cause the Paying Agent (if other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent shall hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
Federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer. The Seller and
the Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically imposed upon and undertaken by the Seller or Servicer,
as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller or the Servicer. Any corporation into which the
Seller or the Servicer may be merged or
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consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Seller or the Servicer shall be a party, or any
corporation succeeding to the business of the Seller or the Servicer, shall be
the successor of the Seller or the Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor Servicer shall satisfy all the
requirements of Section 8.02 with respect to the qualifications of a successor
Servicer.
Section 7.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action by the Servicer in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Servicer or any such Person against any liability which would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of its reckless disregard of
its obligations and duties of the Servicer hereunder; provided, further, that
this provision shall not be construed to entitle the Servicer to indemnity in
the event that amounts advanced by the Servicer to retire any senior lien exceed
Net Liquidation Proceeds realized with respect to the related Mortgage Loan. The
preceding sentence shall not limit the obligations of the Servicer pursuant to
Section 9.05. The Servicer and any director or officer or employee or agent of
the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Servicer and any director or officer or employee or agent of the
Servicer shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
this Agreement or the Certificates, other than any loss, liability or expense
related to any specific Mortgage Loan or Mortgage Loans (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement) and any loss, liability or expense incurred by reason of its willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of its reckless disregard of obligations and duties hereunder. The
Servicer may undertake any such action which it may deem necessary or desirable
in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, the
reasonable legal expenses and costs of such action and any liability resulting
therefrom shall be expenses, costs and liabilities of the Trust. The Servicer's
right to indemnity or reimbursement pursuant to this Section 7.03
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shall survive any resignation or termination of the Servicer pursuant to Section
7.04 or 8.01 with respect to any losses, expenses, costs or liabilities arising
prior to such resignation or termination (or arising from events that occurred
prior to such resignation or termination). This paragraph shall apply to the
Servicer solely in its capacity as Servicer hereunder and in no other
capacities.
Section 7.04. Servicer Not to Resign. Subject to the provisions of
Section 7.02, the Servicer shall not resign from the obligations and duties
hereby imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii)upon satisfaction of each of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; and (b)
each Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current ratings of the Offered Certificates; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Trustee shall have
assumed the Servicer's responsibilities and obligations hereunder or the Trustee
shall have designated a successor servicer in accordance with Section 8.02. Any
such resignation shall not relieve the Servicer of responsibility for any of the
obligations specified in Sections 8.01 and 8.02 as obligations that survive the
resignation or termination of the Servicer. Any such determination permitting
the resignation of the Servicer pursuant to clause (i) above shall be evidenced
by an Opinion of Counsel to such effect delivered to the Trustee.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04. The Servicer shall provide the Trustee with written notice
prior to the delegation of any of its duties to any Person other than any
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of the Servicer's Affiliates or their respective successors and assigns.
Section 7.06. Indemnification of the Trust by the Servicer. The
Servicer shall indemnify and hold harmless the Trust and the Trustee from and
against any loss, liability, expense, damage or injury suffered or sustained by
reason of the Servicer's willful misfeasance, bad faith or negligence in the
performance of its activities in servicing or administering the Mortgage Loans
pursuant to this Agreement, including, but not limited to, any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim related to the Servicer's misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this Section 7.06 shall survive the termination of this Agreement.
ARTICLE VIII
Default
Section 8.01. Events of Default (a) If any one of the following events
("Events of Default") shall occur and be continuing:
(i) (A) The failure by the Servicer to make any Monthly
Advance; or (B)any other failure by the Servicer to deposit in the
Collection Account or the Distribution Account any deposit required to
be made under the terms of this Agreement which continues unremedied
for a period of three Business Days after the date upon which payment
was required to have been made; or
(ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days, or the failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure 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 Servicer by the Trustee or to the Servicer and the
Trustee by any Holder with Certificates evidencing Voting Interests of
at least 25%;
(iii) The entry against the Servicer of a decree or order
by a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a
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trustee, conservator, receiver or liquidator in any insolvency,
conservatorship, receivership, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding up or
liquidation of its affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 30 consecutive days; or
(iv) The Servicer shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator
or similar person in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of its property,
or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a
conservator, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer and such decree or order shall
have remained in force undischarged, unbonded or unstayed for a period
of 30 days; or the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations;
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, (x) with respect solely to clause (i)(A)
above, if such Monthly Advance is not made by 12:00 noon, New York time, on the
second Business Day preceding the applicable Distribution Date, the Trustee,
upon receipt of written notice or discovery by a Responsible Officer of such
failure, shall give immediate telephonic notice of such failure to a Servicing
Officer of the Servicer and the Trustee shall terminate all of the rights and
obligations of the Servicer under this Agreement and the Trustee, or a successor
servicer appointed in accordance with Section 8.02, shall immediately make such
Monthly Advance and assume, pursuant to Section 8.02, the duties of a successor
Servicer and (y) in the case of (i)(B), (ii), (iii), (iv) and (v), above, the
Trustee shall, at the direction of the Holders of each Class of Offered
Certificates evidencing Voting Rights aggregating not less than 51% by notice
then given in writing to the Servicer (and to the Trustee if given by Holders of
Certificates), terminate all of the rights and obligations of the Servicer as
servicer under this Agreement. Any such notice to the Servicer shall also be
given to each Rating Agency and the Seller. On or after the receipt by the
Servicer of such written
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notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or otherwise, shall pass
to and be vested in the Trustee pursuant to and under this Section 8.01; and,
without limitation, the Trustee is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any
and all documents and other instruments, and to do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan and related documents, or otherwise. The Servicer agrees to cooperate with
the Trustee in effecting the termination of the responsibilities and rights of
the Servicer hereunder, including, without limitation, the transfer to the
Trustee for the administration by it of all cash amounts that shall at the time
be held by the Servicer and to be deposited by it in the Collection Account, or
that have been deposited by the Servicer in the Collection Account or thereafter
received by the Servicer with respect to the Mortgage Loans. All reasonable
out-of-pocket costs and expenses (including attorneys' fees) incurred in
connection with transferring the Mortgage Files to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant to this
Section 8.01 shall be paid by the predecessor Servicer (or if the predecessor
Servicer is the Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
Section 8.02. Trustee to Act; Appointment of Successor (a) On and after
the time the Servicer receives a notice of termination pursuant to Section 8.01
or 7.04, the Trustee shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof arising on and after its succession. As compensation therefor, the
Trustee shall be entitled to such compensation as the Servicer would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Trustee is unwilling to act as successor
Servicer or (ii) if the Trustee is legally unable so to act, the Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other mortgage loan or
home equity loan servicer having a net worth of not less than $25,000,000 as the
successor to the Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer hereunder; provided that
the appointment of any such successor Servicer will not result in the
qualification, reduction or withdrawal of the ratings assigned to the Offered
Certificates by the Rating Agencies. Pending
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appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on the
Mortgage Loans in an amount equal to the compensation which the Servicer would
otherwise have received pursuant to Section 3.08 (or such lesser compensation as
the Trustee and such successor shall agree). The appointment of a successor
Servicer shall not affect any liability of the predecessor Servicer which may
have arisen under this Agreement prior to its termination as Servicer to pay any
deductible under an insurance policy pursuant to Section 3.05 or to indemnify
the Trustee pursuant to Section 7.06), nor shall any successor Servicer be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer (i) continue to service and
administer the Mortgage Loans for the benefit of Certificateholders and (ii)
maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
If an Event of Default of the type described in Section 8.01(a)(i) (for
purposes of this Section 8.02(b), such default shall be termed the failure to
make a "Remittance") occurs because the Servicer is the subject of a proceeding
under the Bankruptcy Code and the making of such Remittance is prohibited by
Section 362 of the Bankruptcy Code, the Trustee shall upon notice of such
prohibition, regardless of whether it has received or given a notice of
termination under Section 8.01, advance, the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trustee shall be obligated to make such advance only if (i) such
advance, in the good faith judgment of the Trustee, can reasonably be expected
to be ultimately recoverable from funds which are in the custody of the
Servicer, a trustee in bankruptcy or a federal bankruptcy court and should have
been the subject of such Remittance absent such prohibition (the "Stayed Funds")
and (ii) the Trustee is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trustee
or the deposit thereof in the Distribution Account by the Servicer, a trustee in
bankruptcy or a federal bankruptcy court, the Trustee
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may recover the amount so advanced, without interest, by withdrawing such amount
from the Distribution Account; however, nothing in this Agreement shall be
deemed to affect the Trustee's rights to recover from the Servicer's own funds
interest on any such Stayed Funds. If the Trustee at any time makes an advance
under this Subsection which it later determines in its good faith judgment will
not be ultimately recoverable from the Stayed Funds with respect to which such
advance was made, the Trustee shall, upon certification of such
nonrecoverability to the Seller, be entitled to reimburse itself (or direct the
successor Servicer to reimburse it) for such advance, without interest, by
withdrawing an amount equal to such advance from the Distribution Account.
Section 8.03. Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VIII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. Notification to Certificateholders. Upon any termination
or appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Default has
occurred (which has not been cured) of which a Responsible Officer has
knowledge, 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.
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The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Servicer, provide notice thereof to the Holders and
will, at the expense of the Servicer, which expense shall be reasonable given
the scope and nature of the required action, take such further action as
directed by the Majority Certificateholders.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited to,
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
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;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in
ascertaining or investigating the facts related thereto;
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(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 consent or direction of the Holders of Offered
Certificates evidencing Percentage Interests aggregating not less than
51% relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising or omitting to
exercise any trust or power conferred upon the Trustee, under this
Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred
to in clauses (i) and (ii) of Section 8.01 unless a Responsible Officer
of the Trustee at the Corporate Trust Office obtains actual knowledge
of such failure or the Trustee receives written notice of such failure
from the Servicer, or the Holders of Offered Certificates evidencing
Percentage Interests aggregating not less than 51%. This paragraph
shall not be construed to limit the effect of the first paragraph of
this Section 9.01.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
Section 9.02 Certain Matters Affecting the Trustee. (a) Except as
otherwise provided in Section 9.01:the Trustee
(i) the Trustee may request and rely upon, and shall be
protected in acting or refraining from acting upon, any resolution,
Officer's 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;
(ii) the Trustee may consult with counsel and any written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in
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respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby; the right of the Trustee to perform
any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any
such act; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of an Event of Default (which
has not been cured) of which a Responsible Officer has knowledge, 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;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default 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 documents, unless requested in writing to do so by Holders of
Certificates evidencing Percentage Interests aggregating not less than
51%; 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 cost, expense or liability as a
condition to such proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand. Nothing in this
clause (v)
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shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of
the Servicer until such time as the Trustee may be required to act as
Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian; and
(viii) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of such act.
(b) [reserved]
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the validity
or sufficiency of this Agreement or of the Certificates (other than the
signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for the
use or application by the Servicer or for the use or application of any funds
paid to the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 8.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the
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Trustee shall assume the duties of the Servicer pursuant to Section 8.02); the
compliance by the Seller or the Servicer with any warranty or representation
made under this Agreement or in any related document or the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any non-compliance therewith or any breach thereof; any investment
of monies by or at the direction of the Servicer or any loss resulting
therefrom, it being understood that the Trustee shall remain responsible for any
Trust property that it may hold in its individual capacity; the acts or
omissions of any of the Servicer (other than if the Trustee shall assume the
duties of the Servicer pursuant to Section 8.02), any Subservicer or any
Mortgagor; any action of the Servicer (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 8.02) or any Subservicer taken in
the name of the Trustee; the failure of the Servicer or any Subservicer to act
or perform any duties required of it as agent of the Trustee hereunder; or any
action by the Trustee taken at the instruction of the Servicer (other than if
the Trustee shall assume the duties of the Servicer pursuant to Section 8.02);
provided, however, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under this Agreement, including, without
limitation, the Trustee's duty to review the Mortgage Files pursuant to Section
2.02. Until such time as the Trustee shall have become the Successor Servicer,
the Trustee shall have no responsibility to perfect or maintain the perfection
of any security interest or lien granted to it hereunder.
Section 9.04. 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 as it would have if it were not Trustee and may transact
any banking and trust business with the Seller or the Servicer.
Section 9.05. Servicer to Pay Trustee Fees and Expenses. The Servicer
will pay or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith or which is the responsibility of
Certificateholders hereunder. In addition, the Servicer covenants and agrees to
indemnify the Trustee and its officers, directors, employees and agents from,
and hold it harmless against, any and all losses, liabilities, damages, claims
or expenses incurred in connection with or relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties
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hereunder or by reason of the Trustee's reckless disregard of obligations and
duties hereunder. This Section 9.05 shall survive termination of this Agreement
or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000 and a minimum long-term debt rating
of "Baa3", and subject to supervision or examination by federal or state
authority. 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 9.06, 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. The
principal office of the Trustee (other than the initial Trustee) shall be in a
state with respect to which an Opinion of Counsel has been delivered to such
Trustee at the time such Trustee is appointed Trustee to the effect that the
Trust will not be a taxable entity under the laws of such state. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 9.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Seller, the Servicer and each Rating Agency. Upon
receiving such notice of resignation, the Seller shall promptly appoint a
successor Trustee (approved in writing by the Servicer, so long as such approval
shall not unreasonably be withheld) by written instrument, in duplicate, copies
of which instrument shall be delivered to the resigning Trustee and the
Successor Trustee; provided, however, that any such successor Trustee shall be
subject to the prior written approval of the Servicer. If no successor Trustee
shall have been so appointed and having accepted appointment within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.06 and shall fail to resign after written
request therefor by the Seller or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
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take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Seller or the
Servicer may remove the Trustee. If the Seller or the Servicer removes the
Trustee under the authority of the immediately preceding sentence, the Seller
shall promptly appoint a successor Trustee by written instrument, in duplicate,
copies of which instrument shall be delivered to the Trustee so removed and to
the successor Trustee.
The Holders of Certificates evidencing Voting Rights aggregating over
50% of all Voting Rights may at any time remove the Trustee by written
instrument or instruments delivered to the Servicer, the Seller and the Trustee;
and the Seller shall thereupon use its best efforts to appoint a successor
trustee in accordance with this Section 9.07.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.07 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the Seller,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Seller, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for 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 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to each Rating Agency. If the Servicer fails to
mail such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
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Section 9.09. 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 that such corporation shall be eligible under the provisions
of Section 9.06, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
Section 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the benefit of the
Certificateholders such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section 9.10, such powers, duties, obligations,
rights and trusts as the Servicer and the Trustee may consider necessary or
desirable. Any such co-trustee or separate trustee shall be subject to the
written approval of the Servicer. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, or, in
the 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 9.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 9.08. The Servicer shall be responsible for the fees of any co-trustee
or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) 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 (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), 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
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the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of an Event of Default, the
Trustee may accept the resignation or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. 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 and a copy thereof given to the
Seller and the Servicer.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal
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undertaking or agreement by the Trustee but is made and intended for the
purpose of binding only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection. (a) All rights of action and claims under this
Agreement or the Certificates may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production thereof in
any proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
(b) The Trustee shall afford the Seller, the Servicer, and each
Certificateholder upon reasonable notice during normal business hours, access to
all records maintained by the Trustee in respect of its duties hereunder and
access to officers of the Trustee responsible for performing such duties. Upon
request, the Trustee shall furnish the Seller, the Servicer and any requesting
Certificateholder with its most recent financial statements. The Trustee shall
cooperate fully with the Seller, the Servicer and such Certificateholder and
shall make available to the Seller, the Servicer, and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's duties hereunder. The Seller, the Servicer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
Section 9.13. Suits for Enforcement. In case an Event of Default or
other default by the Servicer or the Seller hereunder shall occur and be
continuing, the Trustee may proceed to protect and enforce its rights and the
rights of the Certificateholders under this Agreement by a suit, action or
proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee and the Certificateholders.
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ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Seller, the Servicer, and the Trustee created hereby
(other than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee of the later of (x) the distribution to Certificateholders
of the final payment or collection with respect to the last Mortgage Loan (or
Monthly Advances of same by the Servicer) and (y) the disposition of all funds
with respect to the last Mortgage Loan and the remittance of all funds due under
the Agreement and the payment of all amounts due and payable to the Trustee.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last surviving
descendant of Xxxxxx X. Xxxxxxx, the late ambassador of the United States to the
Court of St. Xxxxx, living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
the such Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price equal to the sum of (x) 100% of the aggregate Principal
Balance of the Mortgage Loans plus (y) the lesser of (A) the appraised value of
any REO Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage loan related to such REO Property
plus (z) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (ii) 30
days' accrued interest thereon at a rate equal to the Loan Rate, in each case
net of the Servicing Fee (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deposit in the Distribution Account all amounts
then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.03), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
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(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not earlier than the 15th day and
not later than the 25th day of the month next preceding the month of such final
distribution specifying (i) the Distribution Date upon which final distribution
of the Certificates will be made upon presentation and surrender of Certificates
at the office or agency of the Trustee therein designated, (ii) the amount of
any such final distribution and (iii) that the Record Date otherwise applicable
to such Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office or agency of the
Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the holders of Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Certificates and to the extent that funds are available for
such purpose, an amount equal to the amount required to be distributed to
Certificateholders pursuant to Section 5.01 for such Distribution Date.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the Senior
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
Section 10.02. Additional Termination Requirements. (a) In the event
that the Servicer exercises its purchase option as provided in Section 10.01,
the Trust shall be terminated in
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accordance with the following additional requirements, unless the Trustee shall
have been furnished with an Opinion of Counsel to the effect that the failure of
the Trust to comply with the requirements of this Section 10.02 will not (i)
result in the imposition of taxes on "prohibited transactions" of the Trust as
defined in Section 860F of the Code or (ii) cause any REMIC to fail to qualify
as a REMIC at any time that any Regular Certificates are outstanding:
(i) Within 90 days prior to the final Distribution Date, the
Servicer shall adopt and the Trustee shall sign a plan of complete
liquidation for each REMIC meeting the requirements of a "Qualified
Liquidation" under Section 860F of the Code and any regulations
thereunder;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Servicer 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 (A) to the Trustee, as holder of the REMIC I
Regular Interests, the unpaid principal balance thereof plus accrued
interest thereon, (B) to each Class of Certificates the amounts payable
pursuant to Section 5.01 and (C) to the Class R-1 Certificateholders,
all cash on hand after such payments.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate and (ii) to take
such other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Seller, the Servicer and the Trustee, in each case without the
consent of any of the Certificateholders, (i)to cure any ambiguity, (ii)to
correct any defective provisions or to correct or supplement any provisions
herein that may be inconsistent with any other provisions herein or the
expectations of Certificateholders, (iii) to add to the duties of the Servicer,
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(iv)to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement, (v)to add or amend any provisions of this Agreement as required by
any Rating Agency or any other nationally recognized statistical rating agency
in order to maintain or improve any rating of each Class of Offered Certificates
(it being understood that, after obtaining the ratings in effect on the Closing
Date, neither the Trustee, the Seller, nor the Servicer is obligated to obtain,
maintain or improve any such rating) or (vi)to add or amend any provisions of
this Agreement to such extent as shall be necessary to maintain the
qualification of either REMIC as a REMIC; provided, however, that (x) as
evidenced by an Opinion of Counsel (at the expense of the requesting party) in
each case such action shall not adversely affect in any material respect the
interest of any Certificateholder, (y) in each case, such action is necessary or
desirable to maintain the qualification of any REMIC as a REMIC or shall not
adversely affect such qualification and (z) if the opinion called for in clause
(x) cannot be delivered with regard to an amendment pursuant to clause (vi)
above, such amendment is necessary to maintain the qualification of any REMIC as
a REMIC; and provided, further, that the amendment shall not be deemed to
adversely affect in any material respect the interests of the Certificateholders
and no Opinion of Counsel to that effect shall be required if the Person
requesting the amendment obtains a letter from each Rating Agency stating that
the amendment would not result in the downgrading or withdrawal of the
respective ratings then assigned to the Offered Certificates.
This Agreement also may be amended from time to time by the Seller, the
Servicer and the Trustee, with the consent of the Holders of each Class of
Certificates which is affected by such amendment, evidencing Voting Rights
aggregating not less than 51% of such Class (or in the case of an amendment
which affects all classes, not less than 51% of all of the Voting Rights in the
Trust), 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 Certificateholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments on the Certificates which are required to be made on any Certificate
without the consent of the Holder of such Certificate or (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
consent of the Holders of all Certificates then outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the
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qualification of any REMIC as a REMIC and notice of the conclusion expressed in
such Opinion of Counsel shall be included with any such solicitation. An
amendment made with the consent of all Certificateholders and executed in
accordance with this Section 11.01 shall be permitted or authorized by this
Agreement notwithstanding that such Opinion of Counsel may conclude that such
amendment would adversely affect the qualification of any REMIC as a REMIC.
Prior to the execution of any such amendment, the Trustee shall furnish
written notification of the substance of such amendment to each Rating Agency.
In addition, promptly after the execution of any such amendment made with the
consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment or
consent, 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 requirements as the Trustee may prescribe.
Section 11.02. Recordation of Agreement. 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
Trustee, but only upon direction of Certificateholders accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of Certificateholders. The Certificateholders requesting
such recordation shall bear all costs and expenses of such recordation. The
Trustee shall have no obligation to ascertain whether such recordation so
affects the interests of the Certificateholders.
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, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
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 provided
in Sections 8.01, 9.01, 9.02 and 11.01) or in any manner
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otherwise control the operation and management of the Trust, or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions 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 written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Offered Certificates evidencing Voting Rights aggregating
not less than 51% of all the Voting Interests shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the 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 11.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices. (a) All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by certified mail, return receipt requested,
to (a) Delta Financial Corporation, 0000 Xxxxxxxx Xxxx, Xxxxx 000 Xxxxxxxx,
XX 00000,
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(b) in the case of the Trustee, at the Corporate Trust Office, (c) in the case
of Fitch IBCA, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (d) in the case
of Standard & Poor's, 00 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Residential Mortgage Group, or (e) as to each party, at such other
address as shall be designated by such party in a written notice to each other
party. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Register. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice. Any
notice or other document required to be delivered or mailed by the Trustee to
any Rating Agency shall be given on a best efforts basis and only as a matter of
courtesy and accommodation and the Trustee shall have no liability for failure
to delivery such notice or document to any Rating Agency.
(b) Notice to Xxxxx'x and Fitch. The Trustee and the Servicer shall
each be obligated to use its best efforts promptly to provide notice, at the
expense of the Servicer, to Xxxxx'x and Fitch with respect to each of the
following of which a Responsible Officer of the Trustee or Servicer, as the case
may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been cured
or waived;
(iii) The resignation or termination of the Servicer or the Trustee;
(iv) The final payment to Holders of the Certificates of any Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the Trustee to
make advances regarding Delinquent Mortgage Loans.
(c) In addition, (i)the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders
described in Section 5.03; and
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(B) Each Statement to Certificateholders
described in Section 5.03; and
(ii) The Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) Each annual statement as to compliance
described in Section 3.09;
(B) Each annual independent public accountants'
servicing report described in Section 3.10; and
(C) Each notice delivered pursuant to Section
8.01(b) which relates to the fact that the Servicer has not made a Delinquency
Advance.
Any such notice pursuant to this Section 11.05 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 the
addresses specified above for each such Rating Agency.
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. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Holders of the Certificates evidencing Percentage
Interests aggregating not less than 66%. The Servicer may assign the right to
reimbursement for Servicing Advances and Monthly Advances without the consent of
any Person but with prior notice thereof to the Trustee.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for obligations
of the Trust, that the beneficial ownership interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and that the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 6.02 are
and shall be deemed fully paid.
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Section 11.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, and their respective successors and permitted assigns.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
Section 11.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 11.11. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers all
as of the day and year first above written.
DELTA FUNDING CORPORATION,
as Seller and Servicer
By______________________
Name: Xxxxxxx Xxxxxx
Title: Vice President
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By______________________
Name:
Title:
State of New York )
) ss.:
County of New York )
On the 11th day of December, 1997 before me, a notary public
in and for the State of New York, personally appeared Xxxxxxx Xxxxxx known to me
who, being by me duly sworn, did depose and say that she is the Vice President
of Delta Funding Corporation, a New York corporation, one of the parties that
executed the foregoing instrument; that she knows the seal of said company; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said company; and that she signed
her name thereto by like order.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the 11th day of December, 1997 before me, a notary public
in and for the State of New York, ________________, personally appeared, known
to me who, being by me duly did depose and say that he is the ______________of
Bankers Trust Company of California, N.A., a national banking association, one
of the parties that executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of said association.
-----------------------
Notary Public
[Notarial Seal]
