EXECUTION
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SALE AND SERVICING AGREEMENT
among
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5,
as Issuer
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
FIRSTPLUS FINANCIAL, INC.,
as Transferor and Servicer
and
U.S. BANK NATIONAL ASSOCIATION,
as Indenture Trustee and Co-Owner Trustee
Dated as of August 1, 1998
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
Asset Backed Securities, Series 1998-5
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. .............................................1
Section 1.02. Other Definitional Provisions. ..........................25
Section 1.03. Interest Calculation. ...................................25
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Initial Home Loans. ...................25
Section 2.02. Conveyance of Subsequent Home Loans. ....................26
Section 2.03. Ownership and Possession of Home Loan Files. ............28
Section 2.04. Books and Records........................................28
Section 2.05. Delivery of Home Loan Documents..........................29
Section 2.06. Acceptance by Indenture Trustee of the
Home Loans; Initial Certification by
Custodian. ..............................................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Seller. ...........32
Section 3.02. Representations, Warranties and Covenants of
the Servicer and Transferor. ............................34
Section 3.03. Individual Home Loans ...................................36
Section 3.04. Subsequent Home Loans. ..................................42
Section 3.05. Purchase and Substitution. ..............................43
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Duties of the Servicer. .................................45
Section 4.02. Liquidation of Home Loans. ..............................47
Section 4.03. Fidelity Bond; Errors and Omission Insurance. ...........48
Section 4.04. Title, Management and Disposition of Foreclosure
Property.................................................49
Section 4.05. Access to Certain Documentation and Information
Regarding the Home Loans. ...............................49
Section 4.06. Superior Liens. .........................................49
Section 4.07. Subservicing. ...........................................50
Section 4.08. Successor Servicers. ....................................51
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01. Collection Account and Note Payment Account..............51
Section 5.02. Pre-Funding Account. ....................................57
Section 5.03. [Reserved]...............................................58
Section 5.04. [Reserved]...............................................58
Section 5.05. Certificate Distribution Account. .......................58
Section 5.06. Trust Accounts; Trust Account Property. .................60
Section 5.07. Allocation of Losses.....................................65
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01. Statements. .............................................65
Section 6.02. Reports of Foreclosure and Abandonment of
Mortgaged Property.......................................69
Section 6.03. Specification of Certain Tax Matters. ...................69
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01. Assumption Agreements. ..................................69
Section 7.02. Satisfaction of Mortgages and Release of
Home Loan Files..........................................70
Section 7.03. Servicing Compensation. .................................72
Section 7.04. Quarterly Statements as to Compliance. ..................72
Section 7.05. Annual Independent Public Accountants' Servicing Report..72
Section 7.06. Right to Examine Servicer Records. ......................73
Section 7.07. Reports to the Indenture Trustee; Collection
Account Statements.......................................73
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01. Financial Statements. ...................................73
ARTICLE IX
THE SERVICER
Section 9.01. Indemnification; Third Party Claims. ....................74
Section 9.02. Merger or Consolidation of the Servicer. ................75
Section 9.03. Limitation on Liability of the Servicer and Others. .....75
Section 9.04. Servicer Not to Resign; Assignment. .....................75
Section 9.05. Relationship of Servicer to the Issuer and
the Indenture Trustee....................................76
ARTICLE X
DEFAULT
Section 10.01. Events of Default........................................76
Section 10.02. Indenture Trustee to Act; Appointment of Successor.......78
Section 10.03. Waiver of Defaults.......................................80
Section 10.04. Accounting Upon Termination of Servicer. ................80
ARTICLE XI
TERMINATION
Section 11.01. Termination. ............................................80
Section 11.02. Optional Termination by Seller...........................81
Section 11.03. Notice of Termination. ..................................81
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Acts of Securityholders. ................................82
Section 12.02. Amendment. ..............................................82
Section 12.03. Recordation of Agreement. ...............................83
Section 12.04. Duration of Agreement. ..................................83
Section 12.05. Governing Law. ..........................................83
Section 12.06. Notices. ................................................83
Section 12.07. Severability of Provisions. .............................84
Section 12.08. No Partnership. .........................................84
Section 12.09. Counterparts. ...........................................84
Section 12.10. Successors and Assigns. .................................84
Section 12.11. Headings. ...............................................84
Section 12.12. Actions of Securityholders. .............................84
Section 12.13. Reports to Rating Agencies. .............................85
Section 12.14. [Reserved]...............................................85
Section 12.15. No Petition. ............................................85
EXHIBITS
EXHIBIT A Home Loan Schedule
EXHIBIT B Form of Subsequent Transfer Agreement
EXHIBIT C Form of Addition Notice
EXHIBIT D Schedule of Specified Home Loans
EXHIBIT E Form of Lost Note Affidavit
This Sale and Servicing Agreement is entered into effective as of
August 1, among FIRSTPLUS Home Loan Owner Trust 1998-5, a Delaware business
trust (the "Issuer" or the "Trust"), FIRSTPLUS Investment Corporation, a Nevada
corporation, as Seller (the "Seller"), FIRSTPLUS FINANCIAL, INC., a Texas
corporation ("FFI"), as Transferor (in such capacity, the "Transferor") and
Servicer (in such capacity, the "Servicer") and U.S. Bank National Association,
a national banking association, as Indenture Trustee on behalf of the
Noteholders (in such capacity, the "Indenture Trustee") and as Co-Owner Trustee
on behalf of the Certificateholders (in such capacity, the "Co-Owner Trustee").
PRELIMINARY STATEMENT
WHEREAS, the Issuer desires to purchase a pool of Home Loans which were
originated or purchased by the Transferor and sold to the Seller in the ordinary
course of business of the Transferor;
WHEREAS, the Seller is willing to sell such Home Loans to the Issuer;
and
WHEREAS, the Servicer is willing to service such Home Loans in
accordance with the terms of this Agreement on behalf of the Custodian, the
Owner Trustee and the Indenture Trustee;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby 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.
Accrual Period: With respect to each Class of LIBOR Securities, the
period beginning on the Payment Date in the calendar month preceding the month
in which the related Payment Date occurs (or, in the case of the first Payment
Date, beginning on the Closing Date) and ending on the day preceding the related
Payment Date. With respect to the other Classes of Securities, the calendar
month preceding the month in which the related Payment Date occurs (or, in the
case of the first Payment Date, the period from the Closing Date through the end
of August 1998).
Addition Notice: With respect to a sale of Subsequent Home Loans to the
Issuer pursuant to Section 2.02 of this Agreement, a notice from the Seller and
the Issuer substantially in the form of Exhibit C hereto delivered to the
Indenture Trustee and each Rating Agency.
Adjusted Issue Price: With respect to the Class A-1 Notes, as of any
date of determination, an amount equal to (a) the product of (i) $50,000,000 and
(ii) 0.1175036, plus (b) the amount of any original issue discount accrued
thereon, minus (c) any payments previously made in respect of the Class A-1
Notes.
Administration Agreement: The Administration Agreement dated as of
August 1, 1998 among the Issuer, FFI, and U.S. Bank National Association, as
Administrator, as such may be amended or supplemented from time to time.
Administrator: U.S. Bank National Association, or any successor in
interest thereto, in its capacity as Administrator under the Administration
Agreement.
Aggregate Voting Rights: The aggregate of the Voting Rights of all or a
specified Class or Classes of Securities.
Agreement: This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.
Allocable Loss Amount: With respect to each Payment Date after the
Initial Undercollateralization Amount has been reduced to zero, the excess, if
any, of (a) the aggregate of the Class Principal Balances of the Securities
(after giving effect to all payments and distributions on such Payment Date)
over (b) the sum of (i) the Pool Principal Balance as of the immediately
preceding Determination Date and (ii) the amount, if any, on deposit in the
Pre-Funding Account as of the end of the immediately preceding Due Period (net
of investment earnings thereon). With resect to each Payment Date prior to the
Payment Date on which the Initial Undercollateralization Amount is reduced to
zero, zero.
Allocable Loss Amount Priority: With respect to any Payment Date,
sequentially, to the B-2 Component, the Class B-1 Notes, the Class M-2 Notes and
the Class M-1 Notes, in that order, until the respective Class Principal
Balances (or Component Principal Balances) thereof are reduced to zero.
Assignment of Mortgage: With respect to each Home Loan, an assignment,
notice of transfer or equivalent instrument sufficient under the laws of the
jurisdiction where the related Mortgaged Property is located to reflect of
record the assignment of the Mortgage with respect to such Home Loan to the
Indenture Trustee for the benefit of the Securityholders.
Assumed Pool Principal Balance: As of any date of determination, the
sum of (a) the Initial Pool Principal Balance, (b) the Cut-Off Date Principal
Balance of each Subsequent Home Loan and (c) the amount, if any, on deposit in
the Pre-Funding Account as of such date (other than investment earnings).
Available Collection Amount: With respect to each Payment Date, an
amount equal to the sum of (a) all amounts received in respect of the Home Loans
or paid by the Servicer, the Transferor or the Seller (exclusive of amounts not
required to be deposited in the Collection Account) during the related Due
Period (and, in the case of amounts required to be paid by the Transferor in
connection with the purchase or substitution of a Defective Home Loan, deposited
in the Collection Account on or before the related Determination Date), as
reduced by any portion thereof that may not be withdrawn therefrom pursuant to
an order of a United States bankruptcy court of competent jurisdiction imposing
a stay pursuant to Section 362 of the United States Bankruptcy Code, (b) in the
case of the Payment Date following the Due Period in which the Funding Period
ends, amounts, if any, remaining in the Pre-Funding Account at the end of the
Funding Period, (c) with respect to the final Payment Date, or an early
redemption or termination of the Securities pursuant to Section 11.02(b), the
Termination Price, or in the case of an early redemption or termination of the
Securities pursuant to Section 11.02(a), the proceeds from the sale of the Home
Loans; (d) any income or gain from investment of funds on deposit in the
Collection Account and (e) any investment income on amounts in the Pre-Funding
Account.
Available Funds: With respect to any Payment Date, the amount deposited
in the Note Payment Account with respect to such Payment Date less the Servicing
Compensation (net of the Servicing Fees, to the extent previously paid or
withheld) for such Payment Date.
Basic Documents: This Agreement, the Indenture, the Loan Sale
Agreement, the Certificate of Trust, the Trust Agreement, the Administration
Agreement, the Custodial Agreement, the Note Depository Agreement and the
documents and certificates delivered in connection therewith.
B-2 Component Optimal Principal Balance: With respect to any Payment
Date prior to the Overcollateralization Stepdown Date, zero; and with respect to
any other Payment Date, the Pool Principal Balance as of the immediately
preceding Determination Date minus the sum of (a) the aggregate of the Class
Principal Balances of the Notes (after taking into account any payments made on
such Payment Date) and (b) the Required Overcollateralization Amount for such
Payment Date.
B-2 Component's Interest Carry-Forward Amount: With respect to the
initial Payment Date, zero; with respect to each other Payment Date, the excess
(if any) of (a) the B-2 Component's Monthly Interest Distributable Amount for
the immediately preceding Payment Date and any B-2 Component's Interest
Carry-Forward Amount remaining outstanding with respect to prior Payment Dates,
over (b) the amount in respect of interest that was paid on such Component on
such immediately preceding Payment Date.
B-2 Component's Interest Distributable Amount: With respect to any
Payment Date, the sum of the B-2 Component's Monthly Interest Distributable
Amount for such date and the B-2 Component's Interest Carry-Forward Amount for
such date; provided, however, that on the Payment Date, if any, on which the
Component Principal Balance of the B-2 Component is reduced to zero through
application of the Allocable Loss Amount with respect to such Payment Date, the
amount of the B-2 Component's Interest Distributable Amount will be equal to the
B-2 Component's Interest Distributable Amount calculated without giving effect
to this proviso, minus the portion, if any, of such Allocable Loss Amount that
otherwise would be applied to any Class of Notes on such Payment Date in the
absence of this proviso.
B-2 Component's Monthly Interest Distributable Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Component Principal Balance of the B-2 Component
immediately preceding such Payment Date.
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
day on which banking institutions in New York City or in the city in which the
corporate trust office of the Indenture Trustee is located are authorized or
obligated by law or executive order to be closed.
Certificate: The Residual Interest Certificate issued pursuant to the
Trust Agreement.
Certificate Distribution Account: The Account established and
maintained pursuant to Section 5.05.
Certificateholder: The holder of the Residual Interest Certificate.
Class: With respect to the Notes, all Notes bearing the same class
designation.
Class B-1 Noteholders' Interest Carry-Forward Amount: With respect to
the initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (a) the Class B-1 Noteholders' Monthly Interest Distributable
Amount for the immediately preceding Payment Date and any Class B-1 Noteholders'
Interest Carry-Forward Amount remaining outstanding with respect to prior
Payment Dates, over (b) the amount in respect of interest that was paid on such
Notes on such immediately preceding Payment Date.
Class B-1 Noteholders' Interest Payable Amount: With respect to any
Payment Date, the sum of the Class B-1 Noteholders' Monthly Interest Payable
Amount for such date and the Class B-1 Noteholders' Interest Carry-Forward
Amount for such date.
Class B-1 Noteholders' Monthly Interest Payable Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Class Principal Balance of the Class B-1 Notes
immediately preceding such Payment Date.
Class B-1 Optimal Principal Balance: With respect to any Payment Date
prior to the
Overcollateralization Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the immediately preceding Determination
Date minus the sum of (a) the aggregate of the Class Principal Balances of the
Senior Notes, the Class M-1 Notes and the Class M-2 Notes (after taking into
account payments made on such Payment Date) and (b) the greater of (i) 5.05% of
the Pool Principal Balance as of the immediately preceding Determination Date
plus the Required Overcollateralization Amount for such Payment Date (calculated
without giving effect to the proviso in the definition thereof) and (ii) 0.50%
of the Assumed Pool Principal Balance.
Class M-1 Noteholders' Interest Carry-Forward Amount: With respect to
the initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (a) the Class M-1 Noteholders' Monthly Interest Payment
Amount for the immediately preceding Payment Date and any Class M-1 Noteholders'
Interest Carry-Forward Amount remaining outstanding with respect to prior
Payment Dates, over (b) the amount in respect of interest that was paid on such
Notes on such immediately preceding Payment Date.
Class M-1 Noteholders' Interest Payment Amount: With respect to any
Payment Date, the sum of the Class M-1 Noteholders' Monthly Interest Payment
Amount for such date and the Class M-1 Noteholders' Interest Carry-Forward
Amount for such date.
Class M-1 Noteholders' Monthly Interest Payment Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Class Principal Balance of the Class M-1 Notes
immediately preceding such Payment Date.
Class M-1 Optimal Principal Balance: With respect to any Payment Date
prior to the
Overcollateralization Stepdown Date, zero; and with respect to any other Payment
Date, the Pool Principal Balance as of the immediately preceding Determination
Date minus the sum of (a) the aggregate of the Class Principal Balances of the
Senior Notes (after taking into account payments made on such Payment Date and
(b) the greater of (i) 26.765% of the Pool Principal Balance as of the
immediately preceding Determination Date plus the Required Overcollateralization
Amount for such Payment Date (calculated without giving effect to the proviso in
the definition thereof) and (ii) 0.50% of the Assumed Pool Principal Balance.
Class M-2 Noteholders' Interest Carry-Forward Amount: With respect to
the initial Payment Date, zero; with respect to each other Payment Date, the
excess (if any) of (a) the Class M-2 Noteholders' Monthly Interest Payment
Amount for the immediately preceding Payment Date and any Class M-2 Noteholders'
Interest Carry-Forward Amount remaining outstanding with respect to prior
Payment Dates, over (b) the amount in respect of interest that was paid on such
Notes on such immediately preceding Payment Date.
Class M-2 Noteholders' Interest Payment Amount: With respect to any
Payment Date, the sum of the Class M-2 Noteholders' Monthly Interest Payment
Amount for such date and the Class M-2 Noteholders' Interest Carry-Forward
Amount for such date.
Class M-2 Noteholders' Monthly Interest Payment Amount: With respect to
any Payment Date, interest accrued for the related Accrual Period at the
applicable Interest Rate on the Class Principal Balance of the Class M-2 Notes
immediately preceding such Payment Date.
Class M-2 Optimal Principal Balance: With respect to any Payment Date
prior to the Overcollateralization Stepdown Date, zero; and with respect to any
other Payment Date, the Pool Principal Balance as of the immediately preceding
Determination Date minus the sum of (a) the aggregate of the Class Principal
Balances of the Senior Notes and the Class M-1 Notes (after taking into account
any payments made on such Payment Date) and (b) the greater of (i) 14.l4% of the
Pool Principal Balance as of the immediately preceding Determination Date plus
the Required Overcollateralization Amount for such Payment Date (calculated
without giving effect to the proviso in the definition thereof) and (ii) 0.50%
of the Assumed Pool Principal Balance.
Class Notional Balance: With respect to the Class A-1 Notes,
$50,000,000.00 on or prior to the Payment Date occurring in October 2000 and $0
thereafter.
Class Pool Factor: With respect to each Class of Securities and any
Payment Date, the Class Principal Balance thereof (giving effect to payments
thereon on such Payment Date) divided by the Original Class Principal Balance of
such Class.
Class Principal Balance: With respect to each Class of Securities
(other than the Class A-1 Notes) and any date of determination, the Original
Class Principal Balance thereof as reduced by (a) all amounts previously paid in
respect of such Class in reduction of the Class Principal Balance thereof and
(b) in the case of the Subordinate Securities, any Allocable Loss Amounts
previously applied thereto.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
Closing Date: August 25, 1998.
Code: The Internal Revenue Code of 1986, as amended from time to time,
and Treasury Regulations promulgated thereunder.
Collection Account: An account established and maintained by the
Servicer in accordance with Section 5.01(a)(1).
Combination Loan: A loan, the proceeds of which were used by the
related Obligor in combination to finance property improvements, debt
consolidation, cash-out, or other consumer purposes.
Component: Any of the components of the Residual Interest Certificate
having the designations, initial Component Principal Balances and Component
Interest Rates as follows:
Original Component
Designation Interest Rate Principal Balance
B-2 Component 8.50%(1) $15,150,000.00
Excess Component (2) (3)
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(1) The Interest Rate applicable to the B-2 Component, if the Residual
Certificate remains outstanding, will be increased by 0.50% with
respect to each Payment Date occurring after the date on which the
Seller is first permitted to exercise its option to redeem or terminate
the Securities pursuant to Section 11.02(b).
(2) The Excess Component will not have an interest rate.
(3) The Excess Component will not have a principal balance.
Component Principal Balance: With respect to each Component, and any
date of determination, the Original Component Principal Balance thereof as
reduced by (a) all amounts previously paid in respect of such Component in
reduction of the Component Principal Balance thereof and (b) any Allocable Loss
Amounts previously applied thereto.
Control: The meaning specified in Section 8-106 of the New York UCC.
Co-Owner Trustee: U.S. Bank National Association, a national banking
association, in its capacity as the Co-Owner Trustee under the Trust Agreement
acting on behalf of the Certificateholders, or any successor co-owner trustee
under the Trust Agreement.
Credit Score: With respect to the obligor on a home loan (including the
Obligor on a Home Loan), a numerical assessment of default risk with respect to
such obligor, determined based on a methodology developed by Fair, Isaac and
Company.
Custodial Agreement: The custodial agreement dated as of August 1, 1998
by and among the Seller, FFI, as the Transferor and the Servicer, the Indenture
Trustee, and Bank One, Texas, National Association, as the Custodian, and any
subsequent custodial agreement, in similar form and substance, providing for the
retention of the Home Loan Files by the Custodian on behalf of the Indenture
Trustee.
Custodian: Any custodian appointed by the Indenture Trustee pursuant to
the Custodial Agreement, which shall not be affiliated with the Servicer, the
Transferor, any Subservicer, or the Seller. Bank One, Texas, National
Association, shall be the initial Custodian pursuant to the terms of the
Custodial Agreement.
Cut-Off Date: With respect to the Initial Home Loans, the close of
business on July 31, 1998, and with respect to each Subsequent Home Loan, the
close of business on the date specified as such in the applicable Subsequent
Transfer Agreement.
DCR: Duff & Phelps Credit Rating Co., or any successor thereto.
Debt Consolidation Loan: A loan, the proceeds of which were primarily
used by the related Obligor for debt consolidation purposes or purposes other
than to finance property improvements.
Debt Instrument: With respect to any Home Loan, the note or other
evidence of indebtedness evidencing the indebtedness of an Obligor under such
Home Loan.
Defective Home Loan: As defined in Section 3.05 hereof.
Deferred Amount: As of any Payment Date and as to each Class of
Subordinate Securities (or the B-2 Component), the amount of Allocable Loss
Amounts previously applied in reduction of the Class Principal Balance (or
Component Principal Balance) thereof, to the extent not previously reimbursed,
plus interest accrued thereon at the applicable Interest Rate from the date when
so applied through the end of the Due Period immediately preceding such Payment
Date.
Delinquency Event: With respect to any Payment Date, a Delinquency
Event will have occurred and be continuing if the Net Delinquency Calculation
Amount for such date exceeds the Required Overcollateralization Amount for such
date.
Deleted Home Loan: A Home Loan replaced by or to be replaced by a
Qualified Substitute Home Loan pursuant to Section 3.05 hereof.
Determination Date: With respect to a Payment Date in a given month,
the day of such month that is three (3) Business Days prior to such Payment
Date.
DTC: The Depository Trust Company.
Due Date: With respect to any Home Loan, the day of the month on which
the related Monthly Payment is due.
Due Period: With respect to each Payment Date, the calendar month
immediately preceding the month in which such Payment Date occurs, with the
first Due Period commencing on August 1, 1998.
Eligible Account: At any time, an account which is any of the
following: (i) an account maintained with a depository institution (A) the
long-term debt obligations of which are at such time rated by each Rating Agency
in one of their two highest long-term rating categories, or (B) the short-term
debt obligations of which are then rated by each Rating Agency in their highest
short-term rating category; (ii) an account or accounts the deposits in which
are fully insured by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC; (iii) a trust account (which shall be a "segregated
trust account") maintained with the corporate trust department of a federal or
state chartered depository institution or trust company with trust powers and
acting in its fiduciary capacity for the benefit of the Indenture Trustee and
the Issuer, which depository institution or trust company shall have capital and
surplus of not less than $50,000,000; or (iv) an account that will not cause any
Rating Agency to downgrade or withdraw its then-current rating(s) assigned to
the Securities, as evidenced in writing by such Rating Agency.
Eligible Servicer: A Person that is qualified to act as Servicer of the
Home Loans under applicable federal and state laws and regulations and who
satisfies the criteria of Section 9.04(b) hereof.
Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the
New York UCC.
Entitlement Order: The meaning specified in Section 8-102(a)(8) of the
New York UCC (i.e., generally, orders directing the transfer or redemption of
any Financial Asset).
Event of Default: As specified in Section 10.01 hereof.
Excess Spread: With respect to any Payment Date, the excess of (a) the
Available Funds with respect to such Payment Date over (b) the Regular Payment
Amount with respect to such Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
Fidelity Bond: As described in Section 4.03 hereof.
Financial Asset: The meaning specified in Section 8-102(a)(9) of the
New York UCC.
Fitch: Fitch IBCA, Inc., or any successor thereto.
FNMA: The Federal National Mortgage Association and any successor
thereto.
Foreclosure Property: Any real or personal property securing a Home
Loan that has been acquired by the Servicer through foreclosure, deed in lieu of
foreclosure or similar proceedings in respect of such Home Loan.
Funding Period: The period beginning on the Closing Date and ending on
the earlier of (a) the date on which the amount on deposit in the Pre-Funding
Account is reduced to $50,000 or less and the Transferor directs that the
Funding Period end, and (b) the close of business on October 23, 1998; provided,
however, that the Funding Period shall end upon the occurrence of an Event of
Default hereunder or under the Indenture.
HUD: The United States Department of Housing and Urban Development and
any successor thereto.
Home Improvement Loan: A loan, the net proceeds of which were or will
be used by the Obligor to finance property improvements.
Home Loan: A Home Improvement Loan, Debt Consolidation Loan, or
Combination Loan that is included in the Home Loan Pool. As applicable, "Home
Loan" shall be deemed to refer to the related Debt Instrument, Mortgage, and any
related Foreclosure Property.
Home Loan File: As defined in Section 2.05.
Home Loan Interest Rate: With respect to any Home Loan, the fixed
annual rate of interest borne by the related Debt Instrument, as shown on the
Home Loan Schedule, as such rate of interest may be modified from time to time
by the Servicer in accordance with Section 4.01(c) hereof.
Home Loan Pool: Initially, the Initial Home Loans, and thereafter, as
of any date, all of the Home Loans that are subject to the lien of the Indenture
as of such date, as identified in the Home Loan Schedule.
Home Loan Schedule: The schedule of Initial Home Loans attached hereto
as Exhibit A, as amended from time to time pursuant to the terms of this
Agreement, such schedule identifying each Home Loan by address of the related
Mortgaged Property, if any, and the name(s) of each Obligor and setting forth as
to each Home Loan the following information: (i) the Principal Balance as of the
applicable Cut-Off Date, (ii) the account number, (iii) the original principal
amount, (iv) the Due Date, (v) the Home Loan Interest Rate, (vi) the first date
on which a Monthly Payment is due under the related Debt Instrument, (vii) the
Monthly Payment, (viii) the maturity date of the related Debt Instrument, (ix)
the remaining number of months to maturity as of the applicable Cut-Off Date and
(x) the product type.
Indenture: The Indenture dated as of August 1, 1998 between the Issuer
and the Indenture Trustee, as such may be amended or supplemented from time to
time.
Indenture Event of Default: Any event of default specified in Section
5.1 of the Indenture.
Indenture Trustee: U.S. Bank National Association, a national banking
association, as Indenture Trustee under the Indenture, or any successor
indenture trustee under the Indenture.
Indenture Trustee Fee: The annual fee payable to the Indenture Trustee,
calculated and payable monthly on each Payment Date, equal to $416.67, except
that with respect to the first Payment Date such monthly amount shall be pro
rated for the first Due Period.
Indenture Trustee's Home Loan File: As defined in Section 2.05(d).
Initial Home Loan: An individual Home Loan that is conveyed to the
Issuer pursuant to this Agreement on the Closing Date, together with the rights
and obligations of a holder thereof and payments thereon and proceeds therefrom
received after the Cut-Off Date, less 80.00% of amounts attributable to interest
collected during the initial Due Period. The Initial Home Loans subject to this
Agreement are identified on the Home Loan Schedule annexed hereto as Exhibit A.
Initial Overcollateralization Amount: Zero.
Initial Pool Principal Balance: $499,988,110.54.
Initial Undercollateralization Amount: With respect to any Payment
Date, an amount (not less than zero) equal to the excess, if any, of (a) the
aggregate of the Class Principal Balances of all Classes of Securities, after
giving effect to payments and distributions in respect of the Securities on such
Payment Date, over (b) the sum of (i) the Pool Principal Balance as of the end
of the preceding Due Period and (ii) the amount, if any, on deposit in the
Pre-Funding Account as of the end of such Due Period (net of investment earnings
thereon). Notwithstanding the foregoing, on any date after the Payment Date on
which the Initial Undercollateralization Amount is first reduced to zero, such
amount shall be deemed to be zero.
Insurance Proceeds: With respect to each Payment Date, an amount equal
to, with respect to any Home Loan, the proceeds paid during the immediately
preceding Due Period to the Indenture Trustee or the Servicer by any insurer
pursuant to any insurance policy covering a Home Loan, Mortgaged Property or REO
Property or any other insurance policy that relates to a Home Loan, net of any
expenses incurred by the Indenture Trustee or the Servicer in connection with
the collection of such proceeds and not otherwise reimbursed, but excluding the
proceeds of any insurance policy that are to be applied to the restoration or
repair of the Mortgaged Property or released to the borrower in accordance with
customary loan servicing procedures.
Interest Rate: With respect to each Class of Securities, the per annum
rate of interest applicable to Securities of such Class, as specified below:
Class Interest Rate(1)
----- -------------
A-1 6.00%(2)
A-2 (3)
A-3 6.06%
A-4 6.25%
A-5 6.35%
A-6 6.42%
A-7 6.67%
A-8 6.82%
A-9 7.01%
M-1 6.92%
M-2 7.31%
B-1 8.50%
Residual Interest Certificate (4)
(1) The Interest Rate applicable to each Class of Notes (other than the
Class A-1 Notes) remaining outstanding will be increased by 0.50% with
respect to each Payment Date occurring after the date on which the
Seller is first permitted to exercise its option to redeem or terminate
the Securities pursuant to Section 11.02(b).
(2) On and after the Payment Date in October 2000, 0.00%.
(3) Interest will accrue on the Class A-2 Notes during each Accrual Period
at a per annum rate equal to LIBOR for the related LIBOR Determination
Date plus 0.06%, subject to a maximum rate equal to the Net Weighted
Average Rate. The Interest Rate applicable to the Class A-2 Notes for
the initial Accrual Period will be 5.70844% per annum.
(4) Interest will accrue on the Residual Interest Certificate during each
Accrual Period at a per annum rate calculated on the basis of the Class
Principal Balance thereof and the aggregate amount of interest accrued
on the B-2 Component during such Accrual Period.
With respect to each Component other than the Excess Component, the per annum
rate of interest applicable thereto is as specified in the definition of
Components.
LIBOR: With respect to each Accrual Period (other than the initial
Accrual Period) and each Class of LIBOR Securities, the rate for United States
dollar deposits for one month that appears on Telerate Screen Page 3750 as of
11:00 a.m., London time, on the second LIBOR Business Day before the first day
of such Accrual Period, as determined by the Indenture Trustee. 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
Indenture Trustee), LIBOR for the applicable Accrual Period will be the
Reference Bank Rate. If no such quotations can be obtained by the Indenture
Trustee and no Reference Bank Rate is available, LIBOR will be LIBOR applicable
to the preceding Accrual Period. LIBOR for the initial Accrual Period will be
5.64844%.
LIBOR Business Day: Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
LIBOR Securities: The Class A-2 Notes.
Liquidated Home Loan: A defaulted Home Loan as to which the Servicer
has determined that all recoverable liquidation and insurance proceeds have been
received, which will be deemed to occur upon the earlier of: (a) the liquidation
of the related Mortgaged Property acquired through foreclosure or similar
proceedings, (b) the Servicer's determination in accordance with customary
servicing practices that no further amounts are collectible from the Home Loan
and any related security, or (c) the 180th day that any portion of a scheduled
monthly payment of principal and interest is past due.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any cash
amounts received in connection with the liquidation of such Liquidated Home
Loan, whether through trustee's sale, foreclosure sale or other disposition, and
any other amounts required to be deposited in the Collection Account pursuant to
Sections 4.02 or 4.04, in each case other than Post-Liquidation Proceeds,
Insurance Proceeds and Released Mortgaged Property Proceeds.
Loan Sale Agreement: Individually or collectively, as the context in
which this term is used may require, any or all of the following: (i) the loan
sale agreement between the Transferor, as seller, and the Seller, as purchaser,
pursuant to which the Seller has acquired any of the Home Loans; and (ii) each
loan sale agreement entered into by the Transferor, as purchaser, pursuant to
which the Transferor has acquired any of the Home Loans and which shall include
all of the rights and benefits of the Transferor thereunder with respect to such
Home Loans, subject to any limitations thereunder regarding assignment by the
Transferor.
Majority Securityholders: (i) Until such time as the sum of the Class
Principal Balances of all Classes of Notes has been reduced to zero and all
amounts due to the Class A-1 Noteholders have been paid, the holder or holders
of in excess of 50% of the Aggregate Voting Rights of all Classes of Notes
(accordingly, the holder of the Residual Interest Certificate shall be excluded
from any rights or actions of the Majority Securityholders during such period);
and (ii) thereafter, the holder of the Residual Interest Certificate.
Monthly Payment: With respect to a Home Loan, the scheduled monthly
payment of principal and/or interest required to be made by the related Obligor
on the related Home Loan, as set forth in the related Debt Instrument.
Moody's: Moody's Investors Service, Inc., or any successor thereto.
Mortgage: The mortgage, deed of trust or other security instrument
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a Home Loan.
Mortgaged Property: The property (real, personal or mixed) encumbered
by the Mortgage which secures the Debt Instrument evidencing a Home Loan.
Mortgaged Property States: Each state in which any Mortgaged Property
securing an Initial Home Loan is located as set forth in the Home Loan Schedule,
and any other state wherein a Mortgaged Property securing any Subsequent Home
Loan may be located as set forth in the applicable Home Loan Schedule.
Net Delinquency Calculation Amount: With respect to any Payment Date,
the excess, if any, of (x) the product of 1.4 and the Rolling Six-Month
Delinquency Average over (y) the aggregate of the amounts of Excess Spread for
the three preceding Payments Dates.
Net Liquidation Proceeds: With respect to each Payment Date, an amount
equal to any cash amounts received during the related Due Period from Liquidated
Home Loans, whether through trustee's sale, foreclosure sale, disposition of REO
Property, whole loan sales or otherwise (other than Insurance Proceeds and
Released Mortgaged Property Proceeds), and any other cash amounts received
during the related Due Period in connection with the management of the Mortgaged
Properties from defaulted Home Loans, in each case, net of any reimbursements to
the Servicer made from such amounts for any unreimbursed Servicing Advances made
and any other fees and expenses paid in connection with the foreclosure,
conservation and liquidation of the related Liquidated Home Loans or Mortgaged
Properties pursuant to Sections 4.02 and 4.04 hereof.
Net Loan Losses: With respect to a Payment Date, the sum of (A) with
respect to the Home Loans that became Liquidated Home Loans during the
immediately preceding Due Period, an amount (but not less than zero) determined
as of the related Determination Date equal to:
(i) the aggregate uncollected Principal Balances of such Liquidated Home
Loans as of the related Determination Date and without the application
of any amounts included in clause (ii) below, minus
(ii) the aggregate amount of any recoveries attributable to principal from
whatever source received during any Due Period, with respect to such Liquidated
Home Loans, including any subsequent Due Period, and including without
limitation any Net Liquidation Proceeds, any Insurance Proceeds, any Released
Mortgaged Property Proceeds, any payments from the related Obligor and any
payments made pursuant to Section 3.05, less the amount of any expenses incurred
in connection with such recoveries; and (B) with respect to any defaulted Home
Loan that is subject to a modification by the Servicer, an amount equal to the
portion of the Principal Balance, if any, released in connection with such
modification.
Net Weighted Average Rate: With respect to any Accrual Period, the per
annum rate equal to the weighted average (by Principal Balance) of the interest
rates of the Home Loans as of the first day of the related Due Period, as
reduced by the Servicing Fee Rate.
New York UCC: The Uniform Commercial Code as in effect in the State of
New York.
Non-Recordation State: Any state with respect to which the Transferor
and the Seller shall have delivered to the Indenture Trustee (and to each Rating
Agency, in the case of any state in which 10% or more by Principal Balance as of
the Cut-Off Date of the Mortgaged Properties are located) on or prior to
September 30, 1998 an opinion, memorandum or other written assurance of counsel
in a form reasonably acceptable to the Indenture Trustee (and, where applicable,
to each Rating Agency), to the effect that, as to any Home Loan with respect to
which the related Mortgaged Property is located in such state, recordation of an
Assignment of Mortgage in such state is not necessary to transfer title to the
related Mortgage Note to the Issuer or to pledge to the Indenture Trustee the
issuer's rights under such Mortgage Note in respect of which the Mortgaged
Property is located in such state.
Note(s): One or more of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes, the Class A-6 Notes,
the Class A-7 Notes, the Class A-8 Notes, the Class A-9 Notes, the Class M-1
Notes, the Class M-2 Notes and the Class B-1 Notes.
Note Payment Account: The account established and maintained pursuant
to Section 5.01(a)(2).
Noteholder: A holder of a Note.
Noteholders' Interest Carry-Forward Amount: With respect to the initial
Payment Date, zero; with respect to each other Payment Date, the excess (if any)
of (A) the Noteholders' Monthly Interest Payment Amount for the immediately
preceding Payment Date and any Noteholders' Interest Carry-Forward Amount
remaining outstanding with respect to prior Payment Dates, over (B) the amount
in respect of interest on the Notes that was paid on the Notes on such
immediately preceding Payment Date.
Noteholders' Interest Payment Amount: With respect to any Payment Date,
the sum of the Noteholders' Monthly Interest Payment Amount for such Payment
Date and the Noteholders' Interest Carry-Forward Amount for such Payment Date.
Noteholders' Monthly Interest Payment Amount: With respect to any
Payment Date, the aggregate of interest accrued for the related Accrual Period
on each Class of Notes at the applicable Interest Rate on the Class Principal
Balance (or Class Notional Balance) thereof immediately preceding such Payment
Date.
Notional Certificate: The Class A-1 Notes.
Obligor: Each obligor on a Debt Instrument.
Officer's Certificate: A certificate delivered to the Indenture Trustee
or the Issuer signed by the President or a Vice President or Assistant Vice
President of the Seller, the Servicer, the Transferor or the Issuer, in each
case, as required by this Agreement.
Original Class Principal Balance: With respect to each Class of
Securities, the original principal balance of such Class, as set forth below:
Original
Class Principal Balance
----- -----------------
A-2 $148,100,000.00
A-3 $ 60,500,000.00
A-4 $ 87,130,000.00
A-5 $ 38,000,000.00
A-6 $ 22,800,000.00
A-7 $ 47,850,000.00
A-8 $ 23,700,000.00
A-9 $ 29,450,000.00
M-1 $ 68,175,000.00
M-2 $ 37,875,000.00
B-1 $ 27,270,000.00
Residual Interest Certificate (1)
(1) The Original Class Principal Balance of the Residual Interest
Certificate is equal to the Original Component Principal Balance of the
B-2 Component, as set forth under the definition of "Component" herein.
The Original Class Principal Balance of the Residual Interest
Certificate is $15,150,000.00.
Overcollateralization Amount: With respect to any Payment Date, an
amount (not less than zero) equal to the excess of (a) the sum of (i) the Pool
Principal Balance as of the immediately preceding Determination Date and (ii)
the amount, if any, on deposit in the Pre-Funding Account (other than investment
earnings) as of the end of such immediately preceding Due Period over (b) the
aggregate of the Class Principal Balances of all Classes of Securities, after
giving effect, unless otherwise specified, to all payments on the Notes and
distributions in respect of the Residual Interest Certificate on such Payment
Date.
Overcollateralization Shortfall: With respect to any Payment Date, the
excess, if any, of the Required Overcollateralization Amount for such Payment
Date over the Overcollateralization Amount before giving effect to payments on
the Notes and distributions in respect of the Residual Interest Certificate to
be made on such Payment Date pursuant to Section 5.01(c)(4).
Overcollateralization Stepdown Date: The first Payment Date occurring
after August 2001 as to which the aggregate of the Class Principal Balances of
the Senior Notes has been reduced to an amount equal to or less than the amount,
if any, by which (a) the Pool Principal Balance as of the immediately preceding
Determination Date exceeds (b) the greater of (i) 49.49% of the Pool Principal
Balance as of such immediately preceding Determination Date plus the greater of
(x) 7.0% of the Pool Principal Balance as of the immediately preceding
Determination Date and (y) the Net Delinquency Calculation Amount for such
Payment Date, and (ii) 0.50% of the Assumed Pool Principal Balance as of such
Payment Date.
Overcollateralization Surplus: With respect to any Payment Date, the
excess, if any, of the Overcollateralization Amount for such Payment Date over
the Required Overcollateralization Amount for such date.
Ownership Interest: As to any Security, any ownership or security
interest in such Security, including any interest in such Security as the holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial, as owner or as pledgee.
Owner Trustee: Wilmington Trust Company, as owner trustee under the
Trust Agreement, and any successor owner trustee under the Trust Agreement.
Owner Trustee Fee: The annual fee of $2,500 payable to the Owner
Trustee on the Payment Date occurring in August each year during the term of
this Agreement commencing in August 1999; provided that the initial Owner
Trustee Fee shall be paid on the Closing Date.
Payment Date: The 10th day of any month or if such 10th day is not a
Business Day, the first Business Day immediately following such day, commencing
in September 1998 and ending upon termination of this Agreement.
Permitted Investments: Each of the following:
(1) obligations of, or guaranteed as to principal and interest by, the
United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(2) a repurchase agreement that satisfies the following criteria: (1) must
be between the Indenture Trustee and either (a) primary dealers on the
Federal Reserve reporting dealer list which are rated in one of the two
highest ratings for short-term unsecured debt obligations by each
Rating Agency, or (b) banks rated in one of the two highest categories
for short-term unsecured debt obligations by each Rating Agency; and
(2) the written repurchase agreement must include the following:
securities which are acceptable for the transfer and are either (I)
direct U.S. governments obligations, or (II) obligations of a Federal
agency that are backed by the full faith and credit of the U.S.
government, or FNMA or FHLMC; (b) a term no greater than 60 days for
any repurchase transaction; (c) the collateral must be delivered to the
Indenture Trustee or a third party custodian acting as agent for the
Indenture Trustee by appropriate book entries and confirmation
statements and must have been delivered before or simultaneous with
payment (i.e., perfection by possession of certificated securities);
and (d) the securities sold thereunder must be valued weekly,
marked-to-market at current market price plus accrued interest and the
value of the collateral must be equal to at least 104% of the amount of
cash transferred by the Indenture Trustee under the repurchase
agreement and if the value of the securities held as collateral
declines to an amount below 104% of the cash transferred by the
Indenture Trustee plus accrued interest (i.e., a margin call), then
additional cash and/or acceptable securities must be transferred to the
Indenture Trustee to satisfy such margin call; provided, however, that
if the securities used as collateral are obligations of FNMA or FHLMC,
then the value of the securities held as collateral must equal at least
105% of the cash transferred by the Indenture Trustee under such
repurchase agreement;
(3) certificates of deposit, time deposits and bankers acceptances of any
United States depository institution or trust company incorporated
under the laws of the United States or any state, including the
Indenture Trustee; provided that the debt obligations of such
depository institution or trust company at the date of the acquisition
thereof have been rated by each Rating Agency in one of its two highest
short-term ratings;
(4) deposits, including deposits with the Indenture Trustee, which are
fully insured by the Bank Insurance Fund or the Savings Association
Insurance Fund of the FDIC, as the case may be;
(5) commercial paper of any corporation incorporated under the laws of the
United States or any state thereof, including corporate affiliates of
the Indenture Trustee, which at the date of acquisition is rated by
each Rating Agency in its highest short-term rating category and which
has an original maturity of not more than 365 days;
(6) debt obligations rated by each Rating Agency at the time at which the
investment is made in its highest short-term rating category (or those
investments specified in (iii) above with depository institutions which
have debt obligations rated by each Rating Agency in one of its two
highest short-term ratings);
(7) money market funds which are rated by each Rating Agency at the time at
which the investment is made in its highest short-term rating category,
any such money market funds which provide for demand withdrawals being
conclusively deemed to satisfy any maturity requirements for Permitted
Investments set forth in this Agreement; or
(8) any other demand, money market or time deposit obligation, security or
investment as may be acceptable to each Rating Agency at the time at
which the investment is made;
provided that no instrument described in the foregoing subparagraphs
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 where the interest and principal payments with respect
to such instrument provide 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 in the foregoing
subparagraphs 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 stated maturity.
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
Pool Principal Balance: As of any Determination Date, the aggregate of
the Principal Balances as of the close of business on the last day of the
immediately preceding Due Period of all Home Loans in the Home Loan Pool as of
the close of such Due Period.
Post-Liquidation Proceeds: As defined in Section 4.02(b).
Pre-Funded Amount: With respect to any Payment Date, the amount then on
deposit in the Pre-Funding Account as of the end of the related Due Period.
Pre-Funding Account: The account established and maintained pursuant to
Section 5.02.
Pre-Funding Account Deposit: An amount equal to $100,011,889.46.
Pre-Funding Termination Payment Date: The first Payment Date following
the Due Period in which the Funding Period ends.
Principal Balance: With respect to any date of determination and with
respect to any Home Loan or related Foreclosure Property, an amount equal to the
Cut-Off Date principal balance of such Home Loan minus all principal reductions
credited against the Principal Balance of such Home Loan since such Cut-Off Date
through the end of the immediately preceding Due Period; provided, however, that
the Principal Balance of a Liquidated Home Loan shall be zero.
Principal Prepayment: With respect to any Home Loan and with respect to
any Due Period, any principal amount received on a Home Loan in excess of the
scheduled principal amount included in the Monthly Payment due on the Due Date
in such Due Period.
Prospectus: The final Prospectus, dated September 10, 1997, as
supplemented by the Prospectus Supplement.
Prospectus Supplement: The Prospectus Supplement dated August 19, 1998,
prepared by the Transferor and the Seller in connection with the issuance and
sale of the Securities.
Purchase Price: As defined in Section 3.05 herein.
Qualified Substitute Home Loan: A home loan or home loans substituted
for a Deleted Home Loan pursuant to Section 3.05, which (i) has or have an
interest rate or rates not more than 0.50% lower than the Home Loan Interest
Rate for the Deleted Home Loan, (ii) matures or mature not more than one year
later than and not more than one year earlier than the Deleted Home Loan, (iii)
has or have a principal balance or principal balances (after application of all
payments received on or prior to the date of substitution) equal to or less than
the Principal Balance of the Deleted Home Loan as of such date, (iv) has or have
a lien priority no lower than the Deleted Home Loan, (v) has a related obligor
with a Credit Score equal to or greater than the Credit Score of the Obligor
with respect to the Deleted Mortgage Loan, and (vi) complies or comply as of the
date of substitution with each representation and warranty set forth in Section
3.03 and is not more than 30 days delinquent as of the date of substitution for
such loan; and (vii) has a related obligor with a Credit Score at origination of
not less than 620. For purposes of determining whether multiple home loans
proposed to be substituted for one or more Deleted Home Loans pursuant to
Section 3.05 are in fact "Qualified Substitute Home Loans" as provided above,
the criteria specified in clauses (i), (ii), (iii), (v) and (vii) above may be
considered on an aggregate or weighted average basis, rather than on a
loan-by-loan basis (e.g., so long as the weighted average Home Loan Interest
Rate of any loans proposed to be substituted is not less than nor more than one
percentage point different from the Home Loan Interest Rate for the designated
Deleted Home Loan or Home Loans and the weighted average Credit Score of any
Qualified Substitute Home Loans cumulatively substituted is equal to the
weighted average Credit Score of the Deleted Home Loans, the requirements of
clauses (i) and (v) above would be deemed satisfied), except that, with respect
to any such substitution, the lowest Credit Score of any home loan substituted
shall not be lower than the lowest Credit Score of the related Deleted Home
Loans.
Rating Agency: Each of DCR, Fitch, Moody's and S&P and their respective
successors; provided, however, that if no such organization or successor is any
longer in existence, "Rating Agency" shall be a nationally recognized
statistical rating organization or other comparable person designated by the
Issuer, notice of which designation shall have been given to the Indenture
Trustee, the Issuer and the Servicer.
Ratings: The ratings initially assigned to the rated Securities by the
Rating Agencies, as evidenced by letters from the Rating Agencies.
Record Date: With respect to each Payment Date, the close of business
on the last Business Day of the calendar month immediately preceding the month
in which such Payment Date occurs.
Reference Bank Rate: With respect to any Accrual Period, 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 that are
offered by the Reference Banks as of 11:00 a.m., New York City time, on the
second LIBOR Business Day prior to the first day of such Accrual Period to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class Principal Balance of the Class A-1
Notes, 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 Indenture Trustee, 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 outstanding Class Principal Balance
of the Class A-1 Notes. If no such quotations can be obtained, the Reference
Bank Rate will be the Reference Bank Rate applicable to the preceding Accrual
Period.
Reference Banks: Three money center banks selected by the Indenture
Trustee.
Regular Payment Amount: With respect to any Payment Date, the lesser of
(a) the Available Funds and (b) the sum of (i) the Noteholders' Interest Payment
Amount, (ii) the B-2 Component's Interest Distributable Amount and (iii) the
Regular Principal Payment Amount.
Regular Principal Payment Amount: With respect to each Payment Date, an
amount equal to the lesser of:
(a) the sum of (i) each scheduled payment of principal collected by the
Servicer in the related Due Period, (ii) all partial and full principal
prepayments applied by the Servicer during such Due Period, (iii) the principal
portion of all Net Liquidation Proceeds, Insurance Proceeds and Released
Mortgaged Property Proceeds received by the Servicer during the related Due
Period in respect of any Home Loan, to the extent received on or prior to the
date on which such Home Loan became a Liquidated Home Loan, (iv) that portion of
the Purchase Price of any repurchased Home Loan which represents principal and
(v) the principal portion of any Substitution Adjustments required to be
deposited in the Collection Account as of the related Determination Date; and
(b) the aggregate of the outstanding principal balances of the
Securities immediately prior to such Payment Date.
Released Mortgaged Property Proceeds: With respect to each Payment
Date, an amount equal to, with respect to any Home Loan, the proceeds received
by the Servicer in connection with (i) a taking of an entire Mortgaged Property
by exercise of the power of eminent domain or condemnation or (ii) any release
of part of the Mortgaged Property from the lien of the related Mortgage, whether
by partial condemnation, sale or otherwise, which in either case are not
released to the borrower in accordance with applicable law, customary mortgage
servicing procedures and this Agreement.
Required Overcollateralization Amount: With respect to any Payment Date
occurring prior to the Overcollateralization Stepdown Date, an amount equal to
the greater of (x) 3.5% of the Assumed Pool Principal Balance as of the end of
the related Due Period and (y) the Net Delinquency Calculation Amount for such
Payment Date; with respect to any other Payment Date, an amount equal to the
greater of (x) 7.0% of the Pool Principal Balance as of the immediately
preceding Determination Date and (y) the Net Delinquency Calculation Amount for
such Payment Date; provided, however, that the Required Overcollateralization
Amount with respect to a Payment Date will in no event be less than 0.5% of the
Assumed Pool Principal Balance as of the end of the related Due Period.
Residual Interest Certificate: The residual interest certificate issued
pursuant to the Trust Agreement which, for purposes of calculating distributions
of interest and principal and of allocating Allocable Loss Amounts, will be
composed of the two payment Components having the designations and, with respect
to the B-2 Component, the Interest Rate and Original Component Principal Balance
as set forth under "Component" herein.
Responsible Officer: When used with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject. When used with respect to the Issuer, the Transferor, the
Seller, or the Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary thereof.
Rolling Six-Month Delinquency Average: With respect to any Payment
Date, the average of the applicable 60-Day Delinquency Amounts for each of the
six immediately preceding Due Periods.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.
Securities Act: The Securities Act of 1933, as amended.
Securities Intermediary: The Person acting as Securities Intermediary
under this Agreement (which is U.S. Bank National Association), its successor in
interest, and any successor Securities Intermediary appointed pursuant to
Section 5.06(d).
Security or Securities: Any Notes or the Residual Interest Certificate,
as applicable.
Security Entitlement: The meaning specified in Section 8-102(a)(17) of
the New York UCC.
Securityholder: A holder of a Note or the Residual Interest
Certificate, as applicable.
Seller: FIRSTPLUS Investment Corporation, a Nevada corporation, and any
successor thereto.
Senior Noteholders' Interest Carry-Forward Amount: With respect to the
initial Payment Date, zero; with respect to each other Payment Date, the excess
(if any) of (A) the Senior Noteholders' Monthly Interest Payment Amount for the
immediately preceding Payment Date and any Senior Noteholders' Interest
Carry-Forward Amount remaining outstanding with respect to prior Payment Dates,
over (B) the amount in respect of interest that was paid on such Notes on such
immediately preceding Payment Date.
Senior Noteholders' Interest Payment Amount: With respect to any
Payment Date, the sum of the Senior Noteholders' Monthly Interest Payment Amount
for such Payment Date and the Senior Noteholders' Interest Carry-Forward Amount
for such Payment Date.
Senior Noteholders' Monthly Interest Payment Amount: With respect to
each Payment Date, the aggregate of interest accrued for the related Accrual
Period on each Class of Senior Notes at the applicable Interest Rates on the
respective Class Principal Balances (or Class Notional Balance) of such Classes
immediately preceding such Payment Date.
Senior Notes: The Class A-1, the Class A-2, the Class A-3, the Class
A-4, the Class A-5, the Class A-6, the Class A-7, the Class A-8 and the Class
A-9 Notes.
Senior Optimal Principal Balance: With respect to any Payment Date
prior to the Overcollateralization Stepdown Date, zero; with respect to any
other Payment Date, an amount equal to the Pool Principal Balance as of the
immediately preceding Determination Date minus the greater of (a) 49.49% of the
Pool Principal Balance as of such immediately preceding Determination Date plus
the Required Overcollateralization Amount for such Payment Date (calculated
without giving effect to the proviso in the definition thereof) and (b) 0.50% of
the Assumed Pool Principal Balance.
Series or Series 1998-5: FIRSTPLUS Asset Backed Securities, Series
1998-5.
Servicer: FFI, in its capacity as the servicer hereunder, or any
successor appointed as herein provided.
Servicer's Fiscal Year: October 1st of each year through September 30th
of the following year.
Servicer's Home Loan Files: In respect of each Home Loan, all documents
customarily included in the servicer's loan file for the related type of Home
Loan in accordance with the servicing standard set forth in Section 4.01.
Servicer's Monthly Statement: As defined in Section 6.01(b).
Servicing Advances: Subject to Section 4.01(b), all reasonable,
customary and necessary "out of pocket" costs and expenses advanced or paid by
the Servicer with respect to the Home Loans in accordance with the performance
by the Servicer of its servicing obligations hereunder, including, but not
limited to, the costs and expenses for (i) the preservation, restoration and
protection of the Mortgaged Property, including without limitation advances in
respect of real estate taxes and assessments, (ii) any collection, enforcement
or judicial proceedings, including without limitation foreclosures, collections
and liquidations pursuant to Section 4.02, (iii) the conservation, management
and sale or other disposition of any Foreclosure Property pursuant to Section
4.04, (iv) the preservation of the security for a Home Loan if any lienholder
under a Superior Lien has accelerated or intends to accelerate the obligations
secured by such Superior Lien pursuant to Section 4.06; provided that such
Servicing Advances are reimbursable to the Servicer as provided in Section
5.01(c)(3)(xv) to the extent not previously deducted or retained by the Servicer
in calculating Net Liquidation Proceeds hereunder.
Servicing Advance Reimbursement Amount: As defined in Section
5.01(c)(3)(xv).
Servicing Compensation: With respect to a Payment Date, the Servicing
Fee and other amounts to which the Servicer is entitled pursuant to Sections
5.01(b)(1), 5.01(b)(2), 5.01(c)(1), 7.01 and 7.03.
Servicing Fee: As to each Home Loan (including any Home Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each Payment
Date, which shall be (a) the product of the Servicing Fee Rate and the Principal
Balance of such Home Loan as of the second preceding Determination Date (or, in
the case of the first Payment Date, the Principal Balance as of the July 31,
1998 Cut-Off Date) divided by (b) 12. The Servicing Fee includes any servicing
fees owed or payable to any Subservicer and any custodial fees owed or payable
to the Custodian which fees shall be paid from the Servicing Fee.
Servicing Fee Rate: 0.75% per annum.
Servicing Officer: Any officer of the Servicer or Subservicer involved
in, or responsible for, the administration and servicing of the Home Loans whose
name and specimen signature appears on a list of servicing officers annexed to
an Officer's Certificate furnished by the Servicer or the Subservicer,
respectively, to the Issuer and the Indenture Trustee, on behalf of the
Securityholders, as such list may from time to time be amended.
60-Day Delinquency Amount: With respect to any Due Period, the
aggregate of the Principal Balances of all Home Loans that are 61 or more days
delinquent, in foreclosure or REO Property as of the end of such Due Period,
excluding any Liquidated Home Loan.
Subordinate Security: Any Class M-1 Note, Class M-2 Note, Class B-1
Note or Residual Interest Certificate.
Subsequent Home Loan: An individual Home Loan that is conveyed to the
Issuer and pledged to the Indenture Trustee on a Subsequent Transfer Date,
pursuant to a Subsequent Transfer Agreement, together with the rights and
obligations of a holder thereof and payments thereon and proceeds therefrom,
received on or after the applicable Cut-Off Date, which Subsequent Home Loans
shall be identified on a schedule attached as an exhibit to the related
Subsequent Transfer Agreement.
Subsequent Purchase Price: With respect to each Subsequent Transfer
Date, as of the applicable Cut-Off Date, the Principal Balance of any Subsequent
Home Loans to be conveyed to the Trust on such Subsequent Transfer Date.
Subsequent Transfer Agreement: With respect to any Subsequent Home
Loan, the agreement pursuant to which Subsequent Home Loans are transferred to
the Trust by the Seller, substantially in the form of Exhibit B hereto.
Subsequent Transfer Date: The date specified in each Subsequent
Transfer Agreement, but no later than October 23, 1998.
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who is an Eligible Servicer and who satisfies any
requirements set forth in Section 4.07(a) in respect of the qualifications of a
Subservicer.
Subservicing Account: An account established by a Subservicer pursuant
to a Subservicing Agreement, which account must be an Eligible Account.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of any or all Home
Loans as provided in Section 4.07(a), copies of which shall be made available,
along with any modifications thereto, to the Issuer and the Indenture Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 3.05, the amount, if any, by which (a) the aggregate of the
Principal Balances after application of principal payments received through the
close of the preceding Due Period of any Qualified Substitute Home Loans plus
any accrued and unpaid interest thereon that is scheduled to be paid during the
Due Period in which such substitution occurs, is less than (b) the aggregate of
the Principal Balances, together with accrued and unpaid interest scheduled to
be paid during the Due Period in which such substitution occurs, of the related
Deleted Home Loans.
Superior Lien: With respect to any Home Loan which is secured by other
than a first priority lien, the mortgage(s) relating to the corresponding
Mortgaged Property having a superior priority lien.
Termination Price: An amount equal to the sum of (i) the then
outstanding aggregate Class Principal Balances of the Securities plus all
accrued and unpaid interest thereon at the applicable Interest Rates, (ii) any
Deferred Amounts, (iii) the Adjusted Issue Price of the Class A-1 Notes, (iv)
any Servicing Compensation due and unpaid, and (v) any unreimbursed Servicing
Advances including such Servicing Advances deemed to be nonrecoverable.
Third-Party Purchaser: As defined in Section 11.02(a).
Total Collection Amount: With respect to each Payment Date, an amount
equal to the sum of the Available Collection Amount and any investment earnings
on amounts in the Note Payment Account and the Certificate Distribution Account
during the related Due Period.
Transferor: FFI, in its capacity as the transferor hereunder.
Trust: The Issuer.
Trust Account Property: The Trust Accounts, the Certificate
Distribution Account, all amounts and investments held from time to time in any
Trust Account or in the Certificate Distribution Account and all proceeds of the
foregoing.
Trust Accounts: The Note Payment Account, the Collection Account and
the Pre-Funding Account.
Trust Agreement: The Trust Agreement dated as of August 1, 1998 among
the Seller as Depositor, the Co-Owner Trustee and the Owner Trustee, as such may
be amended or supplemented from time to time.
Trust Estate: The assets subject to this Agreement and the Indenture
pledged by the Issuer to the Indenture Trustee, which assets consist of (a) all
of the Seller's right, title and interest in and to: (i) such Home Loans as from
time to time are subject to this Agreement and the related Trust Receipts,
including both the Initial Home Loans and any Subsequent Home Loans conveyed to
the Issuer as provided in this Agreement and as listed in the Home Loan
Schedule, as the same may be amended or supplemented from time to time
(including to reflect the removal of Deleted Home Loans and the addition of
Qualified Substitute Home Loans), together with the Servicer's Home Loan Files
and the Indenture Trustee's Home Loan Files relating thereto and all proceeds
thereof, (ii) all payments and proceeds received on or with respect to the Home
Loans after the applicable Cut-Off Dates, less 80.00% of amounts attributable to
interest collected during the initial Due Period, (iii) such assets as from time
to time are identified as Foreclosure Property, (iv) all assets and funds as are
from time to time deposited in any Trust Account, including amounts on deposit
in such accounts which are invested in Permitted Investments, (v) all insurance
policies with respect to the Home Loans and any Insurance Proceeds, (vi) Net
Liquidation Proceeds, Post-Liquidation Proceeds and Released Mortgaged Property
Proceeds, (vii) that certain Loan Sale Agreement under which the Seller acquired
the Initial Home Loans from the Transferor, and (b) all right, title and
interest of the Issuer, as purchaser, under each Subsequent Transfer Agreement.
Trust Receipt: Any one of the trust receipts issued by the Custodian
pursuant to the Custodial Agreement and representing the entire beneficial
interest in the related Home Loans.
Voting Rights: The portion of the voting interests of all the
Securities that is allocated to any Security for purposes of the voting
provisions of the Indenture. Prior to the Payment Date in October 2000, 1% of
all Voting Rights shall be allocated to the Class A-1 Notes, and 99% of all
Voting Rights shall be allocated to the other Classes of Securities while such
Securities remain outstanding. On and after the Payment Date in October 2000,
100% of all Voting Rights shall be allocated to the Classes of Securities other
than the Class A-1 Notes. Voting Rights allocated to such other Classes of
Securities shall be allocated among such Classes in proportion to the Class
Principal Balances thereof. Voting Rights allocated to any Class of Securities
shall be allocated among the Securities of such Class in the same proportion as
the principal balance (or notional balance) of such Securities bears to the
Class Principal Balance (or Class Notional Balance) of such Class.
Withdrawal Date: With respect to a Payment Date, the second Business
Day prior to such Payment Date.
Section 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture and the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
Section 1.03. Interest Calculation. Unless otherwise specified, all
calculations of accrued interest and accrued fees shall be made on the basis of
a 360-day year consisting of twelve 30-day months, except that with respect to
the LIBOR Securities, calculations of accrued interest shall be made on the
basis of a 360-day year and the actual number of days elapsed in each Accrual
Period.
ARTICLE II
CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Initial Home Loans. (a) As of the
Closing Date, in consideration of the Issuer's delivery of the Notes and the
Residual Interest Certificate to the Seller or its designee, upon the order of
the Seller, the Seller, as of the Closing Date and concurrently with the
execution and delivery hereof, does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse, but subject to the other terms
and provisions of this Agreement, all of the right, title and interest of the
Seller in and to the Trust Estate and the Certificate Distribution Account. The
foregoing sale, transfer, assignment, set over and conveyance does not and is
not intended to result in a creation or an assumption by the Issuer of any
obligation of the Seller, the Transferor or any other Person in connection with
the Trust Estate or under any agreement or instrument relating thereto except as
specifically set forth herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it by the Seller of all of the Seller's right, title and interest in and to the
Trust Estate, receipt of which is hereby acknowledged by the Issuer.
Concurrently with such delivery, the Issuer has pledged to the Indenture Trustee
the Trust Estate, and in exchange for the conveyance to it by the Seller of all
of the Seller's right, title and interest in and to the Trust Estate (i) the
Owner Trustee (not in its individual capacity, but solely as Owner Trustee on
behalf of the Issuer) has executed the Notes and (ii) the Issuer has caused the
Indenture Trustee to authenticate and deliver the Notes to the Seller or its
designee, upon the order of the Issuer. In addition, concurrently with the
delivery to the Issuer of all of the Seller's right, title and interest in and
to the Trust Estate and in exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered the Residual Interest Certificate to the Seller or its designee,
upon the order of the Seller.
Section 2.02. Conveyance of Subsequent Home Loans. (a) On or before the
last day of the Funding Period, the Seller shall convey to the Issuer, and the
Issuer shall purchase pursuant to this Section 2.02 the lesser of (calculated by
aggregate principal balance): (i) the Home Loans then in the possession of the
Seller that satisfy the requirements of this Section 2.02 and (ii) the maximum
principal balance of Home Loans that satisfy the requirements of this Section
2.02, with respect to which the aggregate Subsequent Purchase Price does not
exceed the Pre-Funding Account Deposit. Subject to the conditions set forth in
this Section 2.02, in consideration of the Issuer's delivery on the related
Subsequent Transfer Dates to the Seller or its designee, or upon the order of
the Seller, of the Subsequent Purchase Price of the related Subsequent Home
Loans from amounts on deposit in the Pre-Funding Account, the Seller shall, from
time to time, on any Subsequent Transfer Date sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse, but subject to the other
terms and provisions of this Agreement, all of the right, title and interest of
the Seller in and to each Subsequent Home Loan (including all interest and
principal thereon received after the related Cut-Off Date less, in the case of
Subsequent Home Loans with a July 31, 1998 Cut-off Date, 80.00% of interest
received during August 1998) identified on the schedule attached to the related
Subsequent Transfer Agreement and delivered by the Seller on such Subsequent
Transfer Date and all items in the related Indenture Trustee's Home Loan File.
In connection therewith, the Transferor shall amend the Home Loan Schedule to
reflect the inclusion of the applicable Subsequent Home Loans in the Home Loan
Pool. The Transferor shall promptly deliver to the Issuer, the Servicer (if the
Transferor is not then acting as such), and the Indenture Trustee a copy of the
Home Loan Schedule as so amended. The sale, transfer, assignment, set over and
conveyance by the Seller of Subsequent Home Loans to the Issuer does not and is
not intended to result in a creation or an assumption by the Issuer of any
obligation of the Seller, the Transferor or any other Person in connection with
such Subsequent Home Loans or under any agreement or instrument relating thereto
except as specifically set forth herein.
(b) If the Subsequent Purchase Price for the Subsequent Home Loans to
be conveyed to the Trust on any Subsequent Transfer Date is less than the amount
required to obtain the release of the interest of any third party (including any
lienholder therein), then the Transferor or the Seller shall cause the delivery
of immediately available funds equal to such insufficiency to the Issuer in
escrow (which funds shall not be property of the Trust) and the Issuer, in turn,
shall remit such immediately available funds, together with funds from the
Pre-Funding Account equal to the Subsequent Purchase Price, to the third party
designated by the Transferor or the Seller that is releasing its interest in
such Subsequent Home Loans.
On each Subsequent Transfer Date, the Seller shall transfer to the
Issuer the applicable Subsequent Home Loans and the other property and rights
related thereto described in (a) above only upon the satisfaction of each of the
following conditions on or prior (except in the case of clause (iii) below) to
the related Subsequent Transfer Date:
(i) the Subsequent Home Loans to be conveyed on a given
Subsequent Transfer Date must have an aggregate Principal Balance as of
the related Cut-Off Date of not less than $5,000,000, except in the
case of the final Subsequent Transfer Date when no minimum Principal
Balance requirement shall be applicable and (y) no Subsequent Home Loan
shall be 31 or more days delinquent as of the related Cut-Off Date;
(ii) the Transferor and/or Seller shall have provided the
Indenture Trustee, the Issuer and each Rating Agency with such data as
they may reasonably request regarding all Subsequent Home Loans
transferred to the Issuer, delivered at least five Business Days prior
to such Subsequent Transfer Date;
(iii) the Servicer shall deposit in the Collection Account
within two Business Days following the Subsequent Transfer Date all
collections in respect of the Subsequent Home Loans received after the
related Cut-Off Date;
(iv) the Transferor and/or Seller shall have provided the
Issuer, the Indenture Trustee and each Rating Agency with an Addition
Notice at least five Business Days prior to such Subsequent Transfer
Date and shall have provided any information reasonably requested by
the Issuer or the Indenture Trustee with respect to the applicable
Subsequent Home Loans;
(v) the Transferor and the Seller shall certify to the
Indenture Trustee and the Issuer that, as of the Subsequent Transfer
Date, the Transferor and the Seller, respectively, were not insolvent
nor were they made insolvent by such transfer nor were they aware of
any such pending insolvency;
(vi) the Transferor and the Seller shall certify that such
addition of Subsequent Home Loans will not result in a material adverse
tax consequence to the Issuer or the Securityholders;
(vii) the Seller and the Issuer shall have delivered to the
Indenture Trustee a duly executed Subsequent Transfer Agreement,
including all exhibits listed therein;
(viii) the Funding Period shall not have terminated;
(ix) as of such Subsequent Transfer Date, the funds on deposit
in the Pre-Funding Account shall equal or exceed the applicable
Subsequent Transfer Price;
(x) the Transferor and Seller shall have delivered to the
Issuer and the Indenture Trustee an Officer's Certificate confirming
the satisfaction of each condition precedent specified in this Section
2.02 and in the related Subsequent Transfer Agreements; and
(xi) each Rating Agency shall have either (i) notified the
Transferor and/or the Seller in writing that such transfer of
Subsequent Home Loans will not result in a reduction or withdrawal of
the then current rating of any Class of Securities or (ii) not
responded within five Business Days after delivery of the applicable
Addition Notice.
Section 2.03. Ownership and Possession of Home Loan Files. Upon the
issuance of the Securities, with respect to the Initial Home Loans, and upon
payment of the related Subsequent Purchase Price, with respect to the Subsequent
Home Loans, the ownership of each Debt Instrument, the related Mortgage and the
contents of the related Servicer's Home Loan File and the Indenture Trustee's
Home Loan File shall be vested in the Issuer, subject to the lien created by the
Indenture in favor of the Indenture Trustee for the benefit of the
Securityholders, although possession of the Servicer's Home Loan Files (other
than items required to be maintained in the Indenture Trustee's Home Loan Files)
on behalf of the Indenture Trustee and for the benefit of the Securityholders
shall remain with the Servicer, and the Custodian shall take possession of the
Indenture Trustee's Home Loan Files as contemplated in Section 2.06.
Section 2.04. Books and Records. The sale of each Home Loan shall be
reflected on the Seller's balance sheets and other financial statements as a
sale of assets by the Seller to the Issuer under generally accepted accounting
principles ("GAAP"). The Servicer shall be responsible for maintaining, and
shall maintain, a complete set of books and records for each Home Loan which
shall be clearly marked to reflect the record ownership of each Home Loan by the
Issuer, subject to the lien created by the Indenture in favor of the Indenture
Trustee for the benefit of the Securityholders.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the Trust
Estate from the Seller to the Issuer and upon the execution of this Agreement by
the parties hereto, the Trust Estate shall no longer be owned by the Seller. If
the assignment, transfer and conveyance of the Trust Estate to the Issuer
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 to this Agreement shall be established by the
terms of this Agreement and that, in such event, (i) the Seller shall be deemed
to have granted to the Issuer a first priority security interest in the entire
right, title and interest of the Seller in and to the Trust Estate and all
proceeds thereof, and (ii) this Agreement shall constitute a security agreement
under applicable law. Prior to or promptly after the Closing Date, the Seller
shall cause to be filed a UCC-1 financing statement with the Secretary of State
of Delaware naming the Seller as "debtor" and the Issuer as "secured party" and
describing the Trust Estate.
Section 2.05. Delivery of Home Loan Documents.
(a) With respect to each Initial Home Loan, on the Closing Date the
Transferor and the Seller have delivered or caused to be delivered, and with
respect to each Subsequent Home Loan, on the related Subsequent Transfer Dates,
the Transferor and the Seller will deliver or will cause to be delivered, to the
Custodian as the designated agent of the Indenture Trustee each of the following
documents (collectively, the "Home Loan Files"):
(i) The original Debt Instrument, endorsed "Pay to the order
of U.S. Bank National Association, as Indenture Trustee for the
FIRSTPLUS Asset Backed Securities, Series 1998-5, without recourse" and
signed, by facsimile or manual signature, in the name of the Seller by
a Responsible Officer thereof, together with all intervening
endorsements that evidence a complete chain of title from the
originator thereof to the Transferor; provided that any of the
foregoing endorsements may be contained on an allonge which shall be
firmly affixed to such Debt Instrument;
(ii) With respect to each Debt Instrument, either: (A) the
original Mortgage, with evidence of recording thereon, (B) a copy of
the Mortgage certified as a true copy by a Responsible Officer of the
Transferor or by the closing attorney, if the original has been
transmitted for recording but has not, at the time of delivery of this
Agreement, been returned or (C) a copy of the Mortgage certified by the
public recording office in those instances where the original recorded
Mortgage has been lost or has been retained by the public recording
office;
(iii) With respect to each Debt Instrument, either (A) the
original Assignment of Mortgage assigned to "U.S. Bank National
Association, as Indenture Trustee for the FIRSTPLUS Asset Backed
Securities, Series 1998-5" and signed in the name of the Transferor by
a Responsible Officer with evidence of recording thereon, (B) a copy of
the Assignment of Mortgage, certified as a true copy by a Responsible
Officer of the Transferor where the original has been transmitted for
recording but has not, at the time of delivery of this Agreement, been
returned or (C) a copy of the Assignment of Mortgage certified by the
public recording office in those instances where the original recorded
Assignment of Mortgage has been lost or has been retained by the public
recording office (provided, however, that where the original Assignment
of Mortgage is not being delivered to the Custodian, such Responsible
Officer may complete one or more blanket certificates attaching copies
of one or more Assignments of Mortgage relating thereto); provided that
any such Assignments of Mortgage may be made by blanket assignments for
Home Loans secured by Mortgaged Properties located in the same county,
if permitted by applicable law; provided, however, that the recordation
of such Assignment of Mortgage shall not be required in Non-Recordation
States;
(iv) With respect to each Debt Instrument, either: (A)
originals of all intervening assignments of the Mortgage, with evidence
of recording thereon, (B) if the original intervening assignments have
not yet been returned from the recording office, a copy of the
originals of such intervening assignments together with a certificate
of a Responsible Officer of the Transferor or the closing attorney
certifying that the copy is a true copy of the original of such
intervening assignments or (C) a copy of the intervening assignment
certified by the public recording office in those instances where the
original recorded intervening assignment has been lost or has been
retained by the public recording office; provided that the chain of
intervening recorded assignments shall not be required to match the
chain of intervening endorsements of the Debt Instrument, so long as
the chain of intervening recorded assignments, if applicable, evidences
one or more assignments of the Mortgage from the original mortgagee
ultimately to the person who has executed the Assignment of Mortgage
referred to in clause (iii) above; and
(v) Originals of all assumption and modification agreements,
if any, or a copy certified as a true copy by a Responsible Officer of
the Transferor if the original has been transmitted for recording until
such time as the original is returned by the public recording office.
Notwithstanding the foregoing, if the original Debt Instrument with
respect to a Home Loan cannot be located, the Seller and Transferor may
deliver a lost note affidavit substantially in the form attached as
Exhibit E hereto; provided, that the aggregate of Home Loans as to
which lost note affidavits are delivered shall not exceed 1.0% (by
aggregate principal balance) of the Home Loans.
(b) The Seller agrees to deliver or cause to be delivered on or before
the applicable Subsequent Transfer Date to the Custodian each of the documents
identified in paragraphs (i) through (v) of subsection (a) above with respect to
any Subsequent Home Loans.
(c) With respect to each Home Loan, the Transferor shall, within five
Business Days after the receipt thereof, and in any event, within nine (9)
months of the Closing Date (in the case of the Initial Home Loans) or the
related Subsequent Transfer Date (in the case of the Subsequent Home Loans),
deliver or cause to be delivered to the Custodian: (i) the original recorded
Mortgage in those instances where a copy thereof certified by the Transferor was
delivered to the Custodian; (ii) the original recorded Assignment of Mortgage,
except with respect to Non-Recordation States; (iii) any original recorded
intervening assignments of Mortgage in those instances where copies thereof
certified by the Transferor were delivered to the Custodian; and (iv) the
original recorded assumption and modification agreement in those instances in
which a copy was delivered. Notwithstanding anything to the contrary contained
in this Section 2.05, in those instances where the public recording office
retains the original Mortgage or, if applicable, the Assignment of Mortgage, the
intervening assignments of the Mortgage or the original recorded assumption and
modification agreement after it has been recorded, or where any such original
has been lost or destroyed, the Seller and Transferor shall be deemed to have
satisfied their respective obligations hereunder with respect to the delivery of
any such document upon delivery to the Custodian of a copy, as certified by the
public recording office to be a true copy of the recorded original of such
Mortgage or, if applicable, the Assignment of Mortgage, intervening assignments
of Mortgage or assumption and modification agreement, respectively.
The Transferor and the Seller shall not be required to record
Assignments of Mortgages for any Home Loan with respect to which the related
Mortgaged Property is located in a Non-Recordation State, and the delivery of
the Assignments of Mortgages for such Home Loans to the Custodian in recordable
form on the Closing Date or Subsequent Transfer Date, as applicable, shall
constitute full compliance with subsection (a)(iii) above and the Transferor, in
its capacity as Servicer, shall retain record title to such Mortgages on behalf
of the Indenture Trustee and the holders of the Securities. Notwithstanding the
preceding provisions allowing for the non-recordation of Assignments of Mortgage
in the Non-Recordation States, if an Event of Default occurs pursuant to clause
(a) (vii) of Section 10.01 or the Transferor, as the Servicer, is terminated
hereunder, then the Transferor, in its capacity as the Servicer or predecessor
Servicer, shall be required to record all Assignments of Mortgage in
Non-Recordation States.
(d) All Home Loan documents held by the Custodian on behalf of the
Indenture Trustee are referred to herein as the "Indenture Trustee's Home Loan
File." All recordings required pursuant to this Section 2.05 shall be
accomplished by and at the expense of the Transferor.
Section 2.06. Acceptance by Indenture Trustee of the Home Loans;
Initial Certification by Custodian. (a) The Indenture Trustee agrees to cause
the Custodian to execute and deliver on the Closing Date an acknowledgment of
receipt of the Indenture Trustee's Home Loan File for each Initial Home Loan,
and the Indenture Trustee agrees to cause the Custodian to execute and deliver
on any Subsequent Transfer Date an acknowledgment of receipt of the Indenture
Trustee's Home Loan File for each Subsequent Home Loan. The Indenture Trustee
declares that it will cause the Custodian to hold such documents and any
amendments, replacements or supplements thereto, as well as any other assets
included in the Trust Estate and delivered to the Custodian in trust, upon and
subject to the conditions set forth herein for the benefit of the
Securityholders. The Indenture Trustee agrees, for the benefit of the
Securityholders, to cause the Custodian to review each Indenture Trustee's Home
Loan File within 45 days after the Closing Date (or, with respect to any
Qualified Substitute Home Loan or Subsequent Home Loan, within 45 days after the
conveyance of the related Home Loan to the Issuer) and to cause the Custodian to
deliver to the Transferor, the Seller, the Indenture Trustee, the Issuer and the
Servicer an interim certification to the effect that, as to each Home Loan
listed in the Home Loan Schedule and as to each Subsequent Home Loan Listed in a
Subsequent Home Loan Schedule (other than any Home Loan paid in full or any Home
Loan specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to the Indenture
Trustee pursuant to this Agreement are in its possession or in the possession of
the Custodian on its behalf (other than as expressly permitted by Section
2.05(c)) (ii) all documents delivered by the Seller and the Transferor to the
Custodian pursuant to Section 2.05 have been reviewed by the Custodian and have
not been mutilated or damaged and appear regular on their face (handwritten
additions, changes or corrections shall not constitute irregularities if
initialed by the Obligor) and relate to such Home Loan, (iii) based on the
examination of the Custodian on behalf of the Indenture Trustee, and only as to
the foregoing documents, the information set forth on the Home Loan Schedule
accurately reflects the information set forth in the Indenture Trustee's Home
Loan File and (iv) each Debt Instrument has been endorsed as provided in Section
2.05. Neither the Issuer nor the Custodian shall be under any duty or obligation
(i) to inspect, review or examine any such documents, instruments, certificates
or other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they are other than what they purport to be
on their face or (ii) to determine whether any Indenture Trustee's Home Loan
File should include any of the documents specified in Section 2.05(a)(v). Prior
to the first anniversary of the Closing Date, the Indenture Trustee shall cause
the Custodian to deliver to the Transferor, the Seller, the Indenture Trustee,
the Issuer and the Servicer a final certification evidencing the completeness of
the Home Loans in its possession or control.
(b) If the Custodian, during the process of reviewing the Indenture
Trustee's Home Loan Files, finds any document constituting a part of a Indenture
Trustee's Home Loan File which is not executed, has not been received, is
unrelated to any Home Loan identified in the Home Loan Schedule, does not
conform to the requirements of Section 2.05 or does not conform, in all material
respects, to the description thereof as set forth in the Home Loan Schedule,
then the Custodian shall promptly so notify the Transferor, the Servicer, the
Indenture Trustee, the Issuer and the Seller. In performing any such review, the
Custodian may conclusively rely on the Seller and the Transferor as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Custodian's review of the Indenture Trustee's
Home Loan Files is limited solely to confirming that the documents listed in
Section 2.05 have been received and further confirming that any and all
documents delivered pursuant to Section 2.05 have been executed and relate to
the Home Loans identified in the Home Loan Schedule and to the Subsequent Home
Loans listed in the Subsequent Home Loan Schedule. Neither the Issuer nor the
Custodian shall have any responsibility for determining whether any document is
valid and binding, whether the text of any assignment or endorsement is in
proper or recordable form, 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. If a material defect in
a document constituting part of a Indenture Trustee's Home Loan File is
discovered, then the Seller and Transferor shall comply with the cure,
substitution and repurchase provisions of Section 3.05 hereof.
(c) On the Payment Date in December of each year commencing in 1998,
the Issuer shall deliver (or cause the Custodian to deliver) to the Seller, the
Indenture Trustee and the Servicer a certification listing all Indenture
Trustee's Home Loan Files held by the Custodian on behalf of the Indenture
Trustee on such Payment Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby represents, warrants and covenants with and to the Issuer, the Indenture
Trustee, the Servicer and the Securityholders as of the Closing Date:
(a) The Seller is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Nevada and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Seller and perform its obligations as Seller hereunder
except where the failure to be so licensed, qualified or in good standing,
either singularly or in the aggregate, would not have a material adverse effect
on its business or its ability to perform its obligations hereunder; the Seller
has the power and authority to execute and deliver this Agreement and to perform
in accordance herewith; the execution, delivery and performance of this
Agreement (including all instruments of transfer to be delivered pursuant to
this Agreement) by the Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action of the Seller; this Agreement evidences the valid, binding and
enforceable obligation of the Seller; and all requisite action has been taken by
the Seller to make this Agreement valid, binding and enforceable upon the Seller
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium and other, similar laws relating to or affecting
creditors' rights generally or the application of equitable principles in any
proceeding, whether at law or in equity.
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty) that
are necessary in connection with the purchase and sale of the Securities and the
execution and delivery by the Seller of this Agreement and the other related
documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and such other documents on the part of the
Seller and the performance by the Seller of its obligations as Seller under this
Agreement and such other documents to which it is a party. (c) The consummation
of the transactions contemplated by this Agreement will not result in (i) the
breach of any terms or provisions of the Articles of Incorporation or Bylaws of
the Seller, (ii) the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration of any obligation
under, any material agreement, indenture or loan or credit agreement or other
material instrument to which the Seller, or its property is subject, or (iii)
the violation of any law, rule, regulation, order, judgment or decree to which
the Seller or its respective property is subject. (d) Neither this Agreement nor
the Prospectus nor any statement, report or other document prepared by the
Seller and furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading. (e) There is no
action, suit, proceeding or investigation pending or, to the best of the
Seller's knowledge, threatened against the Seller which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of the Seller or
in any material impairment of the right or ability of the Seller to carry on its
business substantially as now conducted, or in any material liability on the
part of the Seller or which would draw into question the validity of this
Agreement or the Home Loans or of any action taken or to be taken in connection
with the obligations of the Seller contemplated herein, or which would be likely
to impair materially the ability of the Seller to perform under the terms of
this Agreement. (f) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or other governmental agency, which default might have consequences
that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder. (g) As of the Closing Date, the Issuer will have good and marketable
title to each Initial Home Loan and such other assets included in the Trust
Estate as of such date free and clear of any lien, mortgage, pledge, charge,
security interest or other encumbrance other than the lien of the Indenture. (h)
As of each Subsequent Transfer Date, the Issuer will have good and marketable
title to each Subsequent Home Loan transferred on such date and such other items
comprising the corpus of the Trust free and clear of any lien, mortgage, pledge,
charge, security interest or other encumbrance. (i) The transfer, assignment and
conveyance of the Home Loans, the Debt Instruments and the Mortgages by the
Seller pursuant to this Agreement or any Subsequent Transfer Agreement are not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction. (j) The Seller shall provide each Rating Agency
with notice and a copy of any amendment to the Articles of Incorporation of the
Seller promptly after the filing thereof.
Section 3.02. Representations, Warranties and Covenants of the Servicer
and Transferor. The Servicer as such and in its capacity as the Transferor
hereby represents, warrants and covenants with and to the Seller, the Issuer,
the Indenture Trustee and the Securityholders as of the Closing Date:
(a) The Servicer is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Texas and has all licenses
necessary to carry on its business as now being conducted and is licensed,
qualified and in good standing in each Mortgaged Property State if the laws of
such state require licensing or qualification in order to conduct business of
the type conducted by the Servicer and perform its obligations as Servicer
hereunder except where the failure to be so licensed, qualified or in good
standing, either singularly or in the aggregate, would not have a material
adverse effect on its business or its ability to perform its obligations
hereunder; the Servicer has the power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary action of the Servicer; this Agreement evidences the valid,
binding and enforceable obligation of the Servicer; and all requisite action has
been taken by the Servicer to make this Agreement valid, binding and enforceable
upon the Servicer in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium and other, similar laws
relating to or affecting creditors' rights generally or the application of
equitable principles in any proceeding, whether at law or in equity;
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty)
that are necessary in connection with the execution and delivery by the Servicer
of this Agreement and the other related documents to which it is a party, have
been duly taken, given or obtained, as the case may be, are in full force and
effect, are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and such other
documents on the part of the Servicer and the performance by the Servicer of its
obligations as Servicer under this Agreement and such other documents to which
it is a party; (c) The consummation of the transactions contemplated by this
Agreement will not result in (i) the breach of any terms or provisions of the
charter or by-laws of the Servicer, (ii) the breach of any term or provision of,
or conflict with or constitute a default under or result in the acceleration of
any obligation under, any material agreement, indenture or loan or credit
agreement or other material instrument to which the Servicer or its property is
subject, or (iii) the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject; (d) Neither this
Agreement nor the Prospectus nor any statement, report or other document
prepared by the Servicer and furnished or to be furnished pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading; (e)
There is no action, suit, proceeding or investigation pending or, to the best of
the Servicer's knowledge, threatened against the Servicer which, either in any
one instance or in the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or assets of the
Servicer or in any material impairment of the right or ability of the Servicer
to carry on its business substantially as now conducted, or in any material
liability on the part of the Servicer or which would draw into question the
validity of this Agreement or the Home Loans or of any action taken or to be
taken in connection with the obligations of the Servicer contemplated herein, or
which would be likely to impair materially the ability of the Servicer to
perform under the terms of this Agreement; (f) The Servicer is not in default
with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or other governmental agency, which
default might have consequences that would materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or its
properties or might have consequences that would materially and adversely affect
its performance hereunder; (g) So long as FFI is the Servicer of the Home Loans
hereunder, the Servicer's Home Loan Files will be maintained at 1600 Viceroy,
Dallas, Texas 75235, or, if FFI is no longer the Servicer hereunder or if FFI
changes the location of the Servicer's Home Loan Files, the Servicer's Home Loan
Files shall be maintained at such address as may be indicated on an Officer's
Certificate executed by a Servicing Officer and delivered to the Issuer, the
Indenture Trustee and the Seller; (h) The Servicer shall not solicit any
refinancing of any of the Home Loans; provided, that this covenant shall not
prevent or restrict either (1) the Servicer from making general solicitations,
by mail, advertisement or otherwise of the general public or persons on a
targeted list, so long as the list was not generated from the Home Loan Schedule
or (2) any refinancing in connection with an Obligor's unsolicited request for
refinancing; and (i) The Servicer shall not sell, transfer, assign or otherwise
dispose of a customer or similar list comprised of the names of the Obligors
under the Home Loans to any third party.
Section 3.03. Individual Home Loans. The Transferor hereby represents
and warrants to the Seller, the Issuer, the Indenture Trustee and the
Securityholders, with respect to the Initial Home Loans, as of the Closing Date:
(a) Home Loan Information. The information with respect to each Home
Loan set forth in the Home Loan Schedule is true and correct in all material
respects as of the applicable Cut-Off Date.
(b) Delivery of Home Loan Documents. All of the original or certified
documentation required to be delivered to the Indenture Trustee or to the
Custodian on or prior to the Closing Date or the Subsequent Transfer Date, as
applicable, or as otherwise provided in this Agreement has or will be so
delivered.
(c) Payments Current. As of the applicable Cut-Off Date, none of the
Initial Home Loans are more than 30 days contractually delinquent, based on the
terms under which the related Mortgages and Debt Instruments have been made. The
Transferor has not advanced funds, or induced, solicited or knowingly received
any advance of funds from a party other than the related Obligor, directly or
indirectly, for the payment of any amount required by any Home Loan.
(d) No Waiver or Modification. The terms of each Debt Instrument and
Mortgage, have not been impaired, waived, altered or modified in any respect,
except by written instruments reflected in the Indenture Trustee's Home Loan
File and no provision of any Mortgage or Debt Instrument has been "whited out"
or erased unless such modification has been initialed by each of the parties to
the related Home Loan. No instrument of waiver, alteration, modification or
assumption has been executed except for the instruments that are part of the
Indenture Trustee's Home Loan File and the terms of which are reflected in the
Indenture Trustee's Home Loan File.
(e) No Defenses. No Debt Instrument or Mortgage is subject to any
claim, set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Debt Instrument or Mortgage or the
exercise of any right thereunder, render such Debt Instrument or Mortgage
unenforceable, in whole or in part, or subject to any claim, right of
rescission, set-off, counterclaim or defense, including the defense of usury,
and no such claim, right of rescission, set-off, counterclaim or defense has
been asserted in any proceeding or was asserted in any state or federal
bankruptcy or insolvency proceeding at the time the related Home Loan was
originated.
(f) Compliance with Laws; Relief Act Matters. Any and all requirements
of any federal, state or local law applicable to each Home Loan have been
complied with including, without limitation, all licensing, real estate
settlement procedures act, consumer, usury, truth-in-lending, consumer credit
protection, equal credit opportunity or disclosure laws applicable to each Home
Loan. Each Home Loan was originated in compliance with all applicable laws and
no fraud or misrepresentation was committed by any Person in connection
therewith. No relief has been requested by or allowed to an Obligor under the
Soldiers' and Sailors' Civil Relief Act of 1940.
(g) No Satisfaction or Release of Lien. No Mortgage has been satisfied,
canceled, subordinated or rescinded, in whole or in part. No Mortgaged Property
has been released from the lien of the related Mortgage in whole or in part, nor
has any instrument been executed that would effect any such release,
cancellation, subordination or rescission, other than the subordination of the
lien of such Mortgage securing a Home Loan with respect to a Superior Lien on
such Mortgaged Property in connection with the refinancing of the mortgage loan
relating to such Superior Lien.
(h) Valid Lien. With respect to each Debt Instrument, the related
Mortgage is or creates a valid, subsisting and enforceable lien on the related
Mortgaged Property.
(i) Validity of Home Loan Documents; Entire Agreement. Each Debt
Instrument and each Mortgage is genuine and each is the legal, valid and binding
obligation of the Obligor thereof, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights in general and
by general principles of equity. All parties to each Debt Instrument and each
Mortgage had legal capacity at the time to enter into the related Home Loan and
to execute and deliver such Debt Instrument and Mortgage, and such Debt
Instrument and Mortgage have been duly and properly executed by such parties.
The Debt Instrument and the Mortgage contain the entire agreement between the
related Obligor and the lender and all obligations of the lender under the
related Home Loan, and no other agreement defines, modifies, or expands the
obligations of the lender under the Home Loan, except for any assumptions or
modifications included in the Indenture Trustee's Home Loan File pursuant to
Section 2.05(a)(v) or referred to in Section 3.03(m).
(j) Full Disbursement of Proceeds. The proceeds of each Home Loan have
been fully disbursed and there is no requirement for future advances thereunder.
All costs, fees and expenses incurred in making or closing each Home Loan and
the recording of the Mortgage have been disbursed. The Obligor is not entitled
to any refund of any amounts paid or due under the Debt Instrument or any
related Mortgage and any and all requirements set forth in the related Home Loan
documents have been complied with.
(k) Ownership. Immediately prior to the conveyance thereof to the
Seller, the Transferor had good and marketable title to each Home Loan, Debt
Instrument and Mortgage, the Transferor was the sole owner thereof and had full
right to sell each Home Loan, Debt Instrument and Mortgage to the Seller; and
upon the conveyance thereof by the Transferor to the Seller, the Seller became
the sole owner of each Home Loan, Debt Instrument and Mortgage free and clear of
any encumbrance, equity, lien, pledge, charge, claim or security interest.
(l) Ownership of Mortgaged Property. With respect to each Home Loan,
the related Servicer's Home Loan File contains a title document reflecting that
title to the related Mortgaged Property is held at least 50% by the Obligor
under such Home Loan.
(m) No Defaults. There is no default, breach, violation or event of
acceleration existing under any Mortgage or any Debt Instrument and, to the best
of the Transferor's knowledge, there is no event which, with the passage of time
or with notice and/or the expiration of any grace or cure period, would
constitute such a default, breach, violation or event of acceleration and
neither the Transferor nor its predecessors have waived any such default,
breach, violation or event of acceleration, except as set forth in an instrument
of waiver, alteration, modification or assumption that is included in the
Indenture Trustee's Home Loan File.
(n) Consent and Delinquency of Superior Lien. No obligation secured by
a Superior Lien was more than 30 days past due at the time of origination of the
related Home Loan. With respect to each Home Loan that is not a first mortgage
loan, either (i) no consent for the Home Loan is required by the holder of the
related prior lien or (ii) such consent has been obtained and has been delivered
to the Indenture Trustee.
(o) No Condemnation or Damage; Good Repair. To the best of the
Transferor's knowledge, the physical condition of each Mortgaged Property has
not deteriorated since the date of origination of the related Home Loan (normal
wear and tear excepted) and there is no proceeding pending for the total or
partial condemnation of any Mortgaged Property. To the best of the Transferor's
knowledge, the related Mortgaged Property described in each Mortgage is free of
damage and in good repair or will be free of damage and in good repair following
the completion of any improvements or repairs to be financed by the related Home
Loan.
(p) Environmental Compliance. To the best of the Transferor's
knowledge, the Mortgaged Property is free from any and all toxic or hazardous
substances and there exists no violation of any local, state or federal
environmental law, rule or regulation.
(q) Mortgage Remedies Adequate. Each Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security provided thereby, including, (i) in the case of a
Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise,
by judicial foreclosure.
(r) Remedies Against Originators. In the event that any Home Loan was
originated by an entity (such entity, the "Originator") other than the
Transferor and to the extent that the Transferor has failed to fulfill or is not
capable of fulfilling its obligations to cure, substitute or repurchase such
Home Loan as required hereunder, then the Indenture Trustee on behalf of the
Securityholders may enforce any remedies for breach of representations and
warranties made by the Originator with respect to such Home Loan.
(s) Security. No Debt Instrument is, or has been, secured by any
collateral except the lien of the related Mortgage.
(t) Deed of Trust. If a Mortgage for a Home Loan constitutes a deed of
trust, a trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves as such and is named in such
Mortgage, or a valid substitution of trustee has been recorded or may be
recorded and no extraordinary fees or expenses are, or will become, payable by
the Transferor to the trustee under the deed of trust, except in connection with
default proceedings and a trustee's sale after default by the related Obligor.
(u) Use of Proceeds of Combination Loan. With respect to each
Combination Loan the related Obligor has represented to Seller that a portion of
the proceeds of such Combination Loan will be used to finance property
improvements.
(v) Inspections of Improvements; and No Encroachment. To the best of
the Transferor's knowledge, all inspections, licenses and certificates required
to be made, obtained and issued as of the Closing Date with respect to the
improvements and the use and occupancy of all occupied portions of all Mortgaged
Property have been made, obtained or issued as applicable. To the best of the
Transferor's knowledge, all improvements which were considered in determining
the appraised value of the Mortgaged Property lay wholly within the boundaries
and building restrictions lines of the related property and no improvements on
adjoining properties encroach upon such property and no improvement located on
or being a part of such property is in violation of any applicable zoning laws
or regulation.
(w) Flood Insurance. If required by federal or state law, each
Mortgaged Property is covered by flood insurance with a standard mortgagee
clause and extended coverage in an amount which is not less than the value of
such Mortgaged Property. All such insurance policies meet the requirements of
the current guidelines of the Federal Insurance Administration, conform to the
requirements of the FNMA Sellers' Guide and the FNMA Servicers' Guide, and are
of standard type and quality for the locale where the related Mortgaged Property
is located. All acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any such insurance policies have been
performed including, without limitation, any necessary notifications of insurers
and assignments of policies or interests therein.
(x) Underwriting Origination and Servicing Practices. Each Home Loan,
other than (i) the Home Loans identified on Exhibit D hereto and (ii) certain
other Home Loans with respect to which a Responsible Officer of the Transferor
has determined to make an exception to the Transferor's then current
underwriting guidelines, has been underwritten or re-underwritten in accordance
with the Transferor's then-current underwriting guidelines. With respect to the
Home Loans identified on Exhibit D hereto, the Transferor will have received a
representation from the third-party originator of such Home Loans that such Home
Loans have been underwritten in accordance with the Transferor's then-current
underwriting guidelines. The origination practices used by each originator of
the Home Loans and the servicing and collection practices used by the Transferor
with respect to each Home Loan have been in all material respects legal, proper,
prudent and customary with respect to the loan origination and servicing
business as applicable to the respective loan type. No fraud or
misrepresentation was committed by any Person in connection with the origination
or servicing of each Home Loan.
(y) Selection Criteria; No Bulk Transfer. The Home Loans were not
selected by the Transferor for sale to the Seller or the Issuer on any basis
intended to adversely affect the Seller or the Issuer. The sale, transfer,
assignment, conveyance and grant of the Debt Instruments and the Mortgages by
the Transferor to the Seller were not subject to the bulk transfer laws or any
similar statutory provisions in effect in any applicable jurisdiction.
(z) Treasury Regulation ss.301.7701. On the Closing Date, each
Subsequent Transfer Date and each date of substitution of a Qualified Substitute
Home Loan, 55% or more (by aggregate principal balance) of the Home Loans do not
constitute "real estate mortgages" for the purpose of Treasury Regulation
ss.301.7701 under the Code. For this purpose a Home Loan does not constitute a
"real estate mortgage" if:
(i) The Home Loan is not secured by an interest in real
property, or
(ii) The Home Loan is not an "obligation principally secured
by an interest in real property." For this purpose an obligation is
"principally secured by an interest in real property" if it satisfies
either the test set out in paragraph (1) or the test set out in
paragraph (2) below.
(1) The 80-percent test. An obligation is principally
secured by an interest in real property if the fair market
value of the interest in real property securing the
obligation.
(A) was at least equal to 80 percent of the
adjusted issue price of the obligation at the time
the obligation was originated (or, if later, the time
the obligation was significantly modified); or
(B) is at least equal to 80 percent of the
adjusted issue price of the obligation on the
Closing Date or Subsequent Transfer Date, as
applicable.
For purposes of this paragraph (1), the fair market
value of the real property interest must be first reduced by
the amount of any lien on the real property interest that is
senior to the obligation being tested, and must be further
reduced by a proportionate amount of any lien that is in
parity with the obligation being tested, in each case before
the percentages set forth in (1)(A) and (1)(B) are determined.
The adjusted issue price of an obligation is its issue price
plus the amount of accrued original issue discount, if any, as
of the date of determination.
(2) Alternative test. An obligation is principally
secured by an interest in real property if substantially all
of the proceeds of the obligation were used to acquire or to
improve or protect an interest in real property that, at the
origination date, is the only security for the obligation. For
purposes of this test, loan guarantees made by the United
States or any state (or any political subdivision, agency, or
instrumentality of the United States or of any state), or
other third party credit enhancement are not viewed as
additional security for a loan. An obligation is not
considered to be secured by property other than real property
solely because the obligor is personally liable on the
obligation. For this purpose only substantially all of the
proceeds of the obligation means more than 66-2/3% of the
gross proceeds.
(aa) No Fraudulent Conveyance. The Home Loans are not being transferred
with any intent to hinder, delay or defraud any creditors.
(ab) [Reserved].
(ac) Terms of Home Loans and Interest Method. Each Home Loan is a fixed
rate loan. Each Debt Instrument has an original term to maturity of not less
than 24 months nor more than 25 years and three months from the date of
origination. Each Debt Instrument is payable in monthly installments of
principal and interest, with interest payable in arrears, and requires a monthly
payment which is sufficient to amortize the original principal balance over the
original term and to pay interest at the related Home Loan Interest Rate. No
Debt Instrument provides for any extension of the original term. Interest for
each Home Loan is calculated at a rate of interest computed by the simple
interest method or the actuarial method.
(ad) Types of Home Loans; Retail Installment Contracts. Each Home Loan
is either (i) a Home Improvement Loan, (ii) a Debt Consolidation Loan, or (iii)
a Combination Loan. No Home Loan was originated for the express purpose of
purchasing a manufactured home. Some of the Home Loans are retail installment
contracts for goods or services, and some of the Home Loans are home improvement
loans for goods or services, which are either "consumer credit contracts" or
"purchase money loans" as such terms are defined in 16 C.F.R. Part 433.1.
(ae) No Buydown, GPM or Shared Appreciation Loans. No Home Loan
contains any provisions pursuant to which principal and interest payments are
paid or partially paid with funds deposited in any separate account established
by the Transferor, the Obligor or anyone else on behalf of the Obligor, or paid
by any source other than the Obligor. No Home Loan contains any other similar
provision which may constitute a "buydown" provision. No Home Loan is a
graduated payment mortgage loan. No Home Loan has a shared appreciation or other
contingent interest feature.
(af) No Chattel Paper. Each Debt Instrument is comprised of one
original promissory note and each such promissory note constitutes an
"instrument" for purposes of Section 9-105(1)(i) of the Relevant UCC. No Debt
Instrument constitutes or is comprised of "chattel paper" as such term is
defined in Section 9-105(1)(b) of the Relevant UCC. Each Debt Instrument has
been delivered to the Indenture Trustee.
(ag) Description Conforms to Prospectus Supplement. Each Initial Home
Loan conforms, and all Initial Home Loans in the aggregate conform, in all
material respects to the description thereof set forth in the Prospectus
Supplement.
(ah) Review by Transferor. In light of the Transferor's underwriting
guidelines, the Transferor has reviewed all of the documents constituting each
Servicer's Home Loan File and each Indenture Trustee's Home Loan File and has
made such inquiries as it deems reasonable under the circumstances to make and
confirm the accuracy of the representations set forth herein.
(ai) Lack of Intention to Repay. Each Obligor has not commenced, and
will not commence within six months following origination of the related Home
Loan, any bankruptcy or similar insolvency proceeding.
Section 3.04. Subsequent Home Loans. With respect to the Subsequent
Home Loans conveyed by the Transferor to the Seller on a given Subsequent
Transfer Date, the Transferor, as of such Subsequent Transfer Date, represents
and warrants to the Seller, the Issuer, the Indenture Trustee and the
Securityholders that:
(i) No such Subsequent Home Loan is more than 30 days
contractually delinquent as of the related Cut-Off Date;
(ii) The original term to stated maturity of each such
Subsequent Home Loan does not exceed 25 years, and the scheduled
maturity of each such Subsequent Home Loan is not later than October
23, 2023;
(iii) Each such Subsequent Home Loan has a Home Loan Interest
Rate of not less than 9.75%;
(iv) Following the purchase of such Subsequent Home Loans by
the Trust, the Home Loans included in the Home Loan Pool (including the
Subsequent Home Loans) will have a weighted average interest rate as of
each respective Cut-Off Date not more than 0.15% lower than the
weighted average interest rate of the Initial Home Loans included in
the initial Home Loan Pool and a weighted average remaining term to
maturity as of each respective Cut-Off Date comparable to the weighted
average remaining maturity of the Initial Home Loans included in the
initial Home Loan Pool;
(v) To the best of the Transferor's knowledge, the acquisition
of the Subsequent Home Loans as of such Subsequent Transfer Date will
not result in a downgrading in any rating of the Securities;
(vi) The Subsequent Home Loans have not been acquired by the
Issuer for the primary purpose of recognizing gains or decreasing
losses resulting from market value changes in such Subsequent Home
Loans;
(vii) Each of the representations and warranties set forth in
Section 3.03 is true and correct with respect to each of the Subsequent
Home Loans being transferred to the Issuer;
(viii) The weighted average of the Credit Scores of the
Obligors with respect to such Subsequent Home Loans is not less than
684.
Section 3.05. Purchase and Substitution. (a) It is understood and
agreed that the representations and warranties set forth in Sections 3.03 and
3.04 shall survive the conveyance of the Home Loans to the Issuer, the Grant of
the Home Loans to the Indenture Trustee and the delivery of the Securities to
the Securityholders. Upon discovery by the Seller, the Servicer, the Transferor,
the Custodian, the Issuer, the Indenture Trustee or any Securityholder of a
breach of any of such representations and warranties which materially and
adversely affects the value of the Home Loans or the interest of the
Securityholders, or which materially and adversely affects the interests of the
Securityholders in the related Home Loan in the case of a representation and
warranty relating to a particular Home Loan (notwithstanding that such
representation and warranty may have been made to the Transferor's best
knowledge), the party discovering such breach shall give prompt written notice
to the others. The Transferor shall within 60 days of the earlier of its
discovery or its receipt of notice of any breach of a representation or
warranty, or of its discovery or its receipt of notice of a material defect in a
document contained in an Indenture Trustee's Home Loan File as referred to in
the last sentence of Section 2.06(b), promptly cure such breach in all material
respects. If, however, within 60 days after the Seller's discovery of or receipt
of notice of such a breach or defective document, as applicable, such breach or
defective document, as applicable, has not been remedied by the Transferor and
such breach or defective document, as applicable, materially and adversely
affects the interests of the Securityholders generally or in the related Home
Loan (the "Defective Home Loan"), the Seller shall cause the Transferor on or
before the Determination Date next succeeding the end of such 60 day period
either (i) to remove such Defective Home Loan from the Trust Estate (in which
case it shall become a Deleted Home Loan) and substitute one or more Qualified
Substitute Home Loans in the manner and subject to the conditions set forth in
this Section 3.05 or (ii) to purchase such Defective Home Loan at a purchase
price equal to the Purchase Price (as defined below) by depositing such Purchase
Price in the Collection Account. In the event the Seller or the Transferor is
notified that any Mortgaged Property was, as of the Closing Date, not free of
damage or not in good repair, regardless of the Transferor's knowledge, the
Seller shall cause the Transferor to (x) substitute or purchase the related Home
Loan in accordance with clauses (i) and (ii), respectively, above or (y) repair
any such Mortgaged Property such that such Mortgaged Property is free of damage
and in good repair. The Transferor shall provide the Servicer, the Indenture
Trustee and the Issuer with a certification of a Responsible Officer on the
Determination Date next succeeding the end of such 60 day period indicating
whether the Transferor is purchasing the Defective Home Loan or substituting in
lieu of such Defective Home Loan a Qualified Substitute Home Loan. With respect
to the purchase of a Defective Home Loan pursuant to this Section, the "Purchase
Price" shall be equal to the Principal Balance of such Defective Home Loan as of
the date of purchase, plus all accrued and unpaid interest on such Defective
Home Loan to but not including the Due Date in the Due Period in which such
repurchase occurs computed at the applicable Home Loan Interest Rate, plus the
amount of any unreimbursed Servicing Advances made by the Servicer with respect
to such Defective Home Loan, which Purchase Price shall be deposited in the
Collection Account (after deducting therefrom any amounts received in respect of
such repurchased Defective Home Loan and being held in the Collection Account
for future payment to the extent such amounts represent recoveries of principal
not yet applied to reduce the related Principal Balance or interest (net of the
Servicing Fee) for the period from and after the Due Date in the Due Period most
recently ended prior to such Determination Date).
If a loss has been incurred with respect to any Home Loan and such loss
is attributable to the failure of the Seller or the Transferor to deliver to the
Indenture Trustee (or its Custodian) the related original Debt Instrument, the
Seller shall cause the Transferor to (i) remove such Home Loan from the Trust
Estate and substitute one or more Qualified Substitute Home Loans therefor or
(ii) purchase such Home Loan, in each case in accordance with the provisions of
the immediately preceding paragraph.
Any substitution of Home Loans pursuant to this Section 3.05(a) shall
be accompanied by payment by the Transferor of the Substitution Adjustment, if
any, to be deposited in the Collection Account. For purposes of calculating the
Available Collection Amount for any Payment Date, amounts paid by the Transferor
pursuant to this Section 3.05 in connection with the repurchase or substitution
of any Defective Home Loan that are on deposit in the Collection Account as of
the Determination Date for such Payment Date shall be deemed to have been paid
during the related Due Period and shall be transferred to the Note Payment
Account to be retained therein or transferred to the Certificate Distribution
Account pursuant to Section 5.01(c).
As to any Home Loan for which the Transferor substitutes a Qualified
Substitute Home Loan or Loans, the Transferor shall effect such substitution by
delivering (i) to the Issuer a certification executed by a Responsible Officer
of the Transferor to the effect that the Substitution Adjustment has been
credited to the Collection Account, and (ii) to the Custodian on behalf of the
Indenture Trustee, the documents constituting the Indenture Trustee's Loan File
for such Qualified Substitute Home Loan or Loans.
(b) In addition to the preceding repurchase obligations, each of the
Transferor and Servicer shall have the option, exercisable in its sole
discretion at any time, to repurchase from the Issuer any Home Loan that is
delinquent or is in foreclosure or default or as to which default is imminent;
provided that any repurchase pursuant to this paragraph is conducted in the same
manner as the repurchase of a Defective Home Loan pursuant to this Section 3.05.
(c) The Servicer shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Home Loan or Loans on or
after the beginning of the Due Period in which such substitution occurs. All
payments received with respect to Qualified Substitute Home Loans on or before
the beginning of the Due Period in which such substitution occurs will be
retained by the Transferor. The Issuer will be entitled to all payments received
on the Deleted Home Loan on or before the beginning of the Due Period in which
such substitution occurs, and the Transferor shall thereafter be entitled to
retain all amounts subsequently received in respect of such Deleted Home Loan.
The Transferor shall give written notice to the Issuer, the Servicer (if the
Transferor is not then acting as such) and the Indenture Trustee that such
substitution has taken place. Upon such substitution, such Qualified Substitute
Home Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the Transferor shall be deemed to have made with respect to such
Qualified Substitute Home Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Section 3.03. On the date
of such substitution, the Transferor will deposit into the Collection Account an
amount equal to the related Substitution Adjustment, if any. In addition, on the
date of such substitution, (i) the Issuer shall cause such Qualified Substitute
Home Loan to be pledged to the Indenture Trustee under the Indenture as part of
the Trust Estate and (ii) the Indenture Trustee shall (A) release the applicable
Deleted Home Loan from the lien of the Indenture, (B) release (or cause the
Custodian to release) to the Servicer for release to the Seller the Indenture
Trustee's Home Loan File for such Deleted Home Loan and (C) execute, without
recourse, representation or warranty, and deliver such instruments of transfer
and release presented to it by the Servicer as shall be necessary to transfer
such Deleted Home Loan to the Seller and to evidence such release.
(d) It is understood and agreed that the obligations of the Transferor
set forth in this Section 3.05 to cure, purchase or substitute for a Defective
Home Loan constitute the sole remedies of the Issuer, the Indenture Trustee and
the Securityholders hereunder respecting a breach of the representations and
warranties contained in Sections 3.03 and 3.04. Any cause of action against the
Seller relating to or arising out of a material defect in a document contained
in an Indenture Trustee's Home Loan File as contemplated by Section 2.06(b) or
against the Transferor relating to or arising out of a breach of any
representations and warranties made in Sections 3.03 or 3.04 shall accrue as to
any Home Loan upon (i) discovery of such defect or breach by any party and
notice thereof to the Seller or the Transferor, as applicable, or notice thereof
by the Transferor or the Seller, as applicable, to the Issuer, (ii) failure by
the Transferor or the Seller, as applicable, to cure such defect or breach or
purchase or substitute such Home Loan as specified above, and (iii) demand upon
the Transferor or the Seller, as applicable, by the Issuer or the Majority
Securityholders for all amounts payable in respect of such Home Loan.
(e) Neither the Issuer nor the Indenture Trustee shall have any duty to
conduct any affirmative investigation other than as specifically set forth in
this Agreement as to the occurrence of any condition requiring the repurchase or
substitution of any Home Loan pursuant to this Section or the eligibility of any
Home Loan for purposes of this Agreement.
(f) In connection with a repurchase of or substitution for a Home Loan
pursuant to this Section 3.05, the Transferor shall amend the Home Loan Schedule
to reflect (i) the removal of the applicable Deleted Home Loan from the terms of
this Agreement and (ii) if applicable, the substitution of the applicable
Qualified Substitute Home Loan. The Transferor shall promptly deliver to the
Issuer, the Servicer (if the Transferor is not then acting as such) and the
Indenture Trustee a copy of the Home Loan Schedule as so amended.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 4.01. Duties of the Servicer. (a) Servicing Standard. The
Servicer, as an independent contractor, shall service and administer the Home
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.
Notwithstanding anything to the contrary contained herein, the Servicer, in
servicing and administering the Home Loans, shall employ or cause to be employed
procedures (including collection, foreclosure, liquidation and Foreclosure
Property management and liquidation procedures) and exercise the same care that
it customarily employs and exercises in servicing and administering loans of the
same type as the Home Loans for its own account, all in accordance with accepted
servicing practices of prudent lending institutions and servicers of loans of
the same type as the Home Loans and giving due consideration to the
Securityholders' reliance on the Servicer. The Servicer has and shall maintain
the facilities, procedures and experienced personnel necessary to comply with
the servicing standard set forth in this subsection (a) and the duties of the
Servicer set forth in this Agreement relating to the servicing and
administration of the Home Loans.
(b) Servicing Advances. In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer,
shall make all Servicing Advances in connection with the servicing of each Home
Loan hereunder. Notwithstanding any provision to the contrary herein, neither
the Servicer, nor any Subservicer on behalf of the Servicer, shall have any
obligation to advance its own funds for any delinquent scheduled payments of
principal and interest on any Home Loan or to satisfy or keep current the
indebtedness secured by any Superior Liens on the related Mortgaged Property. No
costs incurred by the Servicer or any Subservicer in respect of Servicing
Advances shall, for the purposes of payments or distributions to
Securityholders, be added to the amount owing under the related Home Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Home Loan, before making any Servicing Advance that
is material in relation to the outstanding principal balance thereof, the
Servicer shall assess the reasonable likelihood of (i) recovering such Servicing
Advance and any prior Servicing Advances for such Home Loan, and (ii) recovering
any amounts attributable to outstanding interest and principal owing on such
Home Loan for the benefit of the Securityholders in excess of the costs,
expenses and other deductions to obtain such recovery, including without
limitation any Servicing Advances therefor and, if applicable, the outstanding
indebtedness secured by all Superior Liens. The Servicer shall only make a
Servicing Advance with respect to a Home Loan to the extent that the Servicer
determines in its reasonable, good faith judgment that such Servicing Advance
would likely be recovered as aforesaid.
(c) Waivers, Modifications and Extensions. Consistent with the terms of
this Agreement, the Servicer may waive, modify or vary any provision of any Home
Loan or consent to the postponement of strict compliance with any such provision
or in any manner grant indulgence to any Obligor if in the Servicer's reasonable
determination such waiver, modification, postponement or indulgence is not
materially adverse to the interests of the Securityholders; provided, however,
unless the Obligor is in default with respect to the Home Loan, or such default
is, in the judgment of the Servicer, reasonably foreseeable, the Servicer may
not permit any modification with respect to any Home Loan that would change the
Home Loan Interest Rate, defer (subject to the following paragraph) or forgive
the payment of any principal or interest (unless in connection with the
liquidation of the related Home Loan) or extend the final maturity date on the
Home Loan. The Servicer may grant a waiver or enter into a subordination
agreement with respect to the refinancing of the indebtedness secured by a
Superior Lien on the related Mortgaged Property, provided that the Obligor is in
a better financial or cash flow position as a result of such refinancing, which
may include a reduction in the Obligor's scheduled monthly payment on the
indebtedness secured by such Superior Lien. The Servicer shall notify the Issuer
and the Indenture Trustee of any modification, waiver or amendment of any
provision of any Home Loan and the date thereof, and shall deliver to the
Custodian for deposit in the related Indenture Trustee's Home Loan File, an
original counterpart of the agreement relating to such modification, waiver or
amendment promptly following the execution thereof. Notwithstanding the
preceding provisions of this subsection (c), the Servicer may modify, vary or
waive any defaulted Home Loan in a manner that in the reasonable judgment of the
Servicer will be likely to maximize the net proceeds realizable from such
defaulted Home Loan under the circumstances, including, without limitation, the
establishment of a forebearance plan with the related Obligor and the deferment
or forgiveness of any principal or interest payments due or to become due
thereon; provided, however, that no such modification, waiver or variation of a
Home Loan pursuant to this subsection (c) shall involve the execution by the
related Obligor of a new Debt Instrument.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of each Home Loan and the related Debt
Instrument and Mortgage. Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge or assumption fee or any other fee or charge which the Servicer would be
entitled to retain hereunder as Servicing Compensation and extend the due date
for payments due on a Debt Instrument for a period. In connection with any
partial prepayment, the Servicer may recalculate the amortization schedule of
the related Home Loan to provide for reduced monthly payments over the remaining
term to maturity.
The Servicer may, in a manner consistent with its servicing practices,
permit an Obligor who is selling his principal residence and purchasing a new
residence to substitute the new Mortgaged Property as collateral for the related
Home Loan. In such circumstances, the Servicer acknowledges that it intends to,
consistent with its servicing practices, generally require such Obligor to make
a partial prepayment in reduction of the principal balance of the Home Loan to
the extent that such Obligor has received proceeds from the sale of the prior
residence that will not be applied to the purchase of the new residence.
(d) Instruments of Satisfaction or Release. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered to
execute and deliver on behalf of the Issuer, the Indenture Trustee, each
Securityholder, all instruments of satisfaction or cancellation, or of partial
or full release, discharge and all other comparable instruments, with respect to
the Home Loans and with respect to the related Mortgaged Properties. If
reasonably required by the Servicer, the Issuer and the Indenture 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.
Section 4.02. Liquidation of Home Loans. (a) In the event that any
payment due under any Home Loan and not postponed pursuant to Section 4.01(c) is
not paid when the same becomes due and payable, or in the event the Obligor
fails to perform any other covenant or obligation under the Home Loan and such
failure continues beyond any applicable grace period, the Servicer shall, in
accordance with the standard of care specified in Section 4.01(a), take such
action as it shall deem to be in the best interest of the Securityholders to
collect or liquidate such Home Loan in default in a manner that in the
reasonable judgment of the Servicer will be likely to maximize the net proceeds
realizable therefrom under the circumstances (including, but without limitation,
the purchase or substitution of such Home Loan pursuant to Section 3.05, or, if
no Superior Liens exist on the related Mortgaged Property, foreclose or
otherwise comparably effect ownership in such Mortgaged Property in the name of
the Indenture Trustee for the benefit of Securityholders). In addition, the
Servicer shall have the power and authority, exercisable in its sole discretion
at any time, to sell any Liquidated Home Loan on behalf of the Indenture Trustee
for the benefit of the Securityholders to one or more third party purchasers in
a manner that, in the reasonable judgment of the Servicer, will be likely to
maximize the net proceeds realizable therefrom. The Servicer shall have the
power and authority, exercisable in its sole discretion at any time, to reach a
negotiated settlement with a borrower. The purchase price paid for any
Liquidated Loan sold to an affiliate of the Servicer shall not be less than the
price that would have been paid for such Liquidated Loan by an unaffiliated
third party. The Servicer shall promptly deposit the Net Liquidation Proceeds or
Post-Liquidation Proceeds, as applicable, from the sale of such Liquidated Home
Loans into the Collection Account in accordance with Section 5.01 of this
Agreement. The Servicer shall give the Indenture Trustee notice of the election
of remedies made pursuant to this Section 4.02. The Servicer shall not be
required to satisfy the indebtedness secured by any Superior Liens on the
related Mortgaged Property or to advance funds to keep the indebtedness secured
by such Superior Liens current. In connection with any collection or liquidation
activities, the Servicer shall exercise collection or liquidation procedures
with the same degree of care and skill as it would exercise or use under the
circumstances in the conduct of its own affairs.
(b) During any Due Period occurring after a Home Loan becomes a
Liquidated Home Loan, the Servicer shall deposit into the Collection Account any
proceeds received by it with respect to such Liquidated Home Loan or the related
Foreclosure Property ("Post-Liquidation Proceeds").
(c) After a Home Loan has become a Liquidated Home Loan, the Servicer
shall promptly prepare and forward to the Issuer, the Indenture Trustee and,
upon request of any Securityholder, to such Securityholder a liquidation report
detailing the following: (i) the Net Liquidation Proceeds, Insurance Proceeds or
Released Mortgaged Property Proceeds received in respect of such Liquidated Home
Loan; (ii) expenses incurred with respect thereto; (iii) any Net Loan Losses
incurred in connection therewith; and (iv) any Post-Liquidation Proceeds.
Section 4.03. Fidelity Bond; Errors and Omission Insurance. The Servicer shall
maintain with a responsible company, and at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy in such amounts as required
by, and satisfying any other requirements of, the FHA and the FHLMC, with broad
coverage on all officers, employees or other persons acting in any capacity
requiring such persons to handle funds, money, documents or papers relating to
the Home Loans ("Servicer Employees"). Any such fidelity bond and errors and
omissions insurance shall protect and insure the Servicer against losses,
including losses resulting from forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts (including acts relating to the origination and
servicing of loans of the same type as the Home Loans) of such Servicer
Employees. Such fidelity bond shall also protect and insure the Servicer against
losses in connection with the release or satisfaction of a Home Loan without
having obtained payment in full of the indebtedness secured thereby. In the
event of any loss of principal or interest on a Home Loan for which
reimbursement is received from the Servicer's fidelity bond or errors and
omissions insurance, the proceeds from any such insurance will be deposited in
the Collection Account. No provision of this Section 4.03 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
the request of the Issuer, the Indenture Trustee, the Servicer shall cause to be
delivered to requesting party a certified true copy of such fidelity bond and
insurance policy. On the Closing Date, such fidelity bond and insurance is
maintained by the Servicer with Reliance Insurance Company of Illinois.
Section 4.04. Title, Management and Disposition of Foreclosure
Property. The deed or certificate of sale in respect of each Foreclosure
Property shall be taken in the name of the Indenture Trustee for the benefit of
the Securityholders.
The Servicer shall manage, conserve, protect and operate each
Foreclosure Property for the Indenture Trustee and the Securityholders 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 Foreclosure Property in the same manner that
it manages, conserves, protects and operates other foreclosure property for its
own account, and in the same manner that similar property in the same locality
as the Foreclosure Property is managed. The Servicer shall attempt to sell the
same (and may temporarily lease the same) on such terms and conditions as the
Servicer deems to be in the best interest of the Securityholders. The
disposition of Foreclosure Property shall be carried out by the Servicer at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interest of the Indenture Trustee and the Securityholders and, as soon as
practicable thereafter, the expenses of such sale shall be paid. The Net
Liquidation Proceeds or Post-Liquidation Proceeds, as applicable, from the
conservation, disposition and sale of the Foreclosure Property shall be promptly
deposited by the Servicer in the Collection Account in accordance with Section
5.01 of this Agreement and the Indenture, which Net Liquidation Proceeds or
Post-Liquidation Proceeds, as applicable, shall equal all cash amounts received
with respect thereto less the amounts retained and withdrawn by the Servicer for
any related unreimbursed Servicing Advances and any other fees and expenses
incurred in connection with such Foreclosure Property.
Section 4.05. Access to Certain Documentation and Information Regarding
the Home Loans. The Servicer shall provide to the Issuer, the Indenture Trustee,
the Securityholders and the supervisory agents and examiners of each of the
foregoing access to the documentation regarding the Home Loans required by
applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Servicer designated by it.
Section 4.06. Superior Liens. (a) The Servicer shall file (or cause to
be filed) of record a request for notice of any action by a lienholder under a
Superior Lien for the protection of the Indenture 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. (b) If the
Servicer is notified that any lienholder under a Superior Lien has accelerated
or intends to accelerate the obligations secured by such Superior Lien, or has
declared or intends to declare a default under the related mortgage or
promissory note secured thereby, or has filed or intends to file an election to
have any Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Issuer and the Indenture Trustee, all reasonable actions that are
necessary to protect the interests of the Securityholders, and/or to preserve
the security of the related Home Loan, including making any Servicing Advances
that are necessary to cure the default or reinstate the Superior Lien. The
Servicer shall immediately notify the Issuer and the Indenture Trustee of any
such action or circumstances. Any Servicing Advances by the Servicer pursuant to
its obligations in this Section 4.06 shall comply with requirements set forth in
Section 4.01(b) hereof.
Section 4.07. Subservicing. (a) The Servicer may, with the prior
written consent of the Indenture Trustee and each Rating Agency, enter into
Subservicing Agreements for any servicing and administration of Home Loans with
any institution which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and is an
Eligible Servicer. The Servicer shall give prior written notice to the Issuer,
the Indenture Trustee of the appointment of any Subservicer. The Servicer shall
be entitled to terminate any Subservicing Agreement in accordance with the terms
and conditions of such Subservicing Agreement and to either directly service the
related Home Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement, 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 to the
Issuer, the Indenture Trustee and Securityholders for the servicing and
administering of the Home Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Home Loans. For purposes
of this Agreement, the Servicer shall be deemed to have received payments on
Home Loans when the Subservicer has actually received such payments and, unless
the context otherwise requires, references in this Agreement to actions taken or
to be taken by the Servicer in servicing the Home Loans include actions taken or
to be taken by a Subservicer on behalf of the Servicer. 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.
(c) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the successor Servicer,
on behalf of the Issuer, the Indenture Trustee, and the Securityholders pursuant
to Section 4.08, 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 successor Servicer elects to terminate any Subservicing
Agreement in accordance with its terms. The successor Servicer 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. The Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the successor Servicer, deliver
to the assuming party all documents and records relating to each Subservicing
Agreement and the Home 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. (d) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Issuer, the Indenture Trustee and the Securityholders, shall
enforce the obligations of each Subservicer under the related Subservicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Servicer, in
its good faith business judgment, would require were it the owner of the related
Home Loans. The Servicer shall pay the costs of such enforcement at its own
expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Home Loan or (ii) from a
specific recovery of costs, expenses or attorneys fees against the party against
whom such enforcement is directed. (e) Any Subservicing Agreement that may be
entered into and any other transactions or services relating to the Home 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 none of the
Issuer, the Indenture Trustee or the Securityholders shall be deemed parties
thereto or shall have any claims, rights, obligations, duties or liabilities
with respect to the Subservicer in its capacity as such except as set forth in
Section 4.07(c) above. Section 4.08. Successor Servicers. In the event that the
Servicer is terminated pursuant to Section 10.01 hereof, or resigns pursuant to
Section 9.04 hereof or otherwise becomes unable to perform its obligations under
this Agreement, the Indenture Trustee will become the successor Servicer or will
appoint a successor Servicer in accordance with the provisions of Section 10.02
hereof; provided that any successor Servicer, including the Indenture Trustee,
shall satisfy the requirements of an Eligible Servicer and shall be approved by
each Rating Agency.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01. Collection Account and Note Payment Account.
(a)(1) Establishment of Collection Account. The Servicer shall cause to
be established and maintained in the name of the Securities Intermediary one or
more Collection Accounts which shall be pledged to the Indenture Trustee for the
benefit of Securityholders, which shall be separate Eligible Accounts, which may
be interest-bearing, entitled "Collection Account, U.S. Bank National
Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset Backed
Securities, Series 1998-5". The Collection Account may be maintained with the
Indenture Trustee or, subject to the following paragraph, any other depository
institution which satisfies the requirements set forth in the definition of
Eligible Account. The creation of any Collection Account other than one
maintained with the Indenture Trustee shall be evidenced by a letter agreement
between the Servicer and the depository institution. A copy of such letter
agreement shall be furnished to the Indenture Trustee and, upon request of any
Securityholder, to such Securityholder. Funds in the Collection Account shall be
invested in accordance with Section 5.06.
As of the Closing Date, the Collection Account shall be established
with the Indenture Trustee, and thereafter upon written notice to the Issuer and
the Indenture Trustee, and the Collection Account may be transferred by the
Servicer to a different depository institution so long as such transfer is to an
Eligible Account.
(a)(2) Establishment of Note Payment Account. No later than the Closing
Date, the Servicer shall cause to be established and maintained in the name of
the Securities Intermediary one or more Note Payment Accounts which shall be
pledged to the Indenture Trustee for the benefit of Securityholders, which shall
be separate Eligible Accounts, which may be interest-bearing and which shall be
entitled "Note Payment Account, U.S. Bank National Association, as Indenture
Trustee, in trust for the "FIRSTPLUS Asset Backed Securities, Series 1998-5."
Funds in the Note Payment Account shall be invested in accordance with Section
5.06.
(b)(1) Deposits to Collection Account. The Servicer shall use its best
efforts to deposit or cause to be deposited (without duplication) within one (1)
Business Day, and shall in any event deposit within two (2) Business Days, of
receipt thereof in the Collection Account (or within two Business Days following
the Closing Date, in the case of amounts received prior to such date) and retain
therein in trust for the benefit of the Securityholders:
(i) all payments on account of principal on each Home Loan
received after its related Cut-Off Date;
(ii) all payments on account of interest on each Home Loan
received after its related Cut-Off Date;
(iii) all Net Liquidation Proceeds and Post-Liquidation
Proceeds pursuant to Sections 4.02 or 4.04;
(iv) all Insurance Proceeds;
(v) all Released Mortgaged Property Proceeds; (vi) any amounts
payable in connection with the repurchase of any Home Loan and the
amount of any Substitution Adjustment pursuant to Section 3.05;
(vii) any amount required to be deposited in the Collection
Account pursuant to the receipt of proceeds from any fidelity bond or
errors and omission insurance under Section 4.03 or the deposit of the
Termination Price and any other proceeds of the sale of the Home Loans
under Section 11.02; and
(viii) interest and gains on funds held in the Collection
Account.
The Servicer shall be entitled to retain and not deposit into the
Collection Account any amounts received with respect to a Home Loan that
constitute additional servicing compensation pursuant to Section 7.03, and such
amounts retained by the Servicer during a Due Period shall be excluded from the
calculation of the Servicing Compensation that is distributable to the Servicer
from the Note Payment Account on the next Payment Date following such Due
Period.
(b)(2) Deposits to Note Payment Account. On the Withdrawal Date with
respect to each Payment Date, the Indenture Trustee (based on information
contained in the Servicer's Monthly Remittance Report for such Payment Date)
shall (i) withdraw the Available Collection Amount with respect to such Payment
Date from the Collection Account, (x) pay the portion thereof representing
80.00% of amounts attributable to interest collected during the initial Due
Period to the Transferor, (y) pay the portion thereof representing income or
gain from investments credited to the Collection Account during the preceding
Due Period to the Servicer as Servicing Compensation with respect to such
Payment Date, and (z) deposit the remainder in the Note Payment Account and (ii)
make withdrawals from the Pre-Funding Account of amounts required to be
deposited in the Note Payment Account from such accounts on such Withdrawal Date
and deposit into the Note Payment Account the amounts so withdrawn.
(c) Withdrawals from Note Payment Account. Subject to Section 5.01(e),
no later than 11:00 a.m. (New York City time) on the second Business Day prior
to each Payment Date, to the extent funds are available in the Note Payment
Account, the Indenture Trustee (based on the information contained in the
Servicer's Monthly Remittance Report for such Payment Date) shall either (1)
retain funds in the Note Payment Account for payment or distribution on such
Payment Date or (2) make withdrawals from the Note Payment Account and deposits
into the other Trust Accounts as indicated, in each case as specified below and
in the following order of priority:
(1) to retain in the Note Payment Account for payment on such
Payment Date pursuant to the Indenture, to the Servicer, an amount equal to the
Servicing Compensation (net of (i) any amounts retained prior to deposit into
the Collection Account pursuant to subsection (b)(1) above, (ii) any amounts
representing income or gain from investments credited to the Collection Account
and paid to the Servicer pursuant to subsection (b)(2) above and (iii) the
Indenture Trustee Fee, which shall be paid to the Indenture Trustee) and all
unpaid Servicing Compensation from prior Due Periods;
(2) to retain in the Note Payment Account for payment pursuant to
the Indenture on such Payment Date and to deposit in the Certificate
Distribution Account for distribution pursuant to Section 5.02, any amount
remaining from the Pre-Funding Account Deposit at the end of the Funding Period,
which will be paid (x) if no Indenture Event of Default has occurred and such
amount remaining is greater than $50,000, in reduction, on a pro rata basis, of
the Class Principal Balances (and Component Principal Balance) of each Class of
Securities (and the B-2 Component) as provided in Section 8.2(a)(ii) of the
Indenture and Section 5.05(c)(i) hereof, (y) if no Indenture Event of Default
has occurred and such amount remaining is less than or equal to $50,000, such
remaining amount will be retained in the Note Payment Account and be paid on the
Pre-Funding Termination Payment Date sequentially to the Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8 and Class A-9 Notes, in
that order, in reduction of the Class Principal Balances thereof, or (z) if an
Indenture Event of Default has occurred, such remaining amount will be retained
in the Note Payment Account and be paid in reduction of the Class Principal
Balances of each Class of Notes, pro rata based on the Class Principal Balances
thereof;
(3) to retain in the Note Payment Account with respect to the
Notes, or to deposit in the Certificate Distribution Account with respect to the
Residual Interest Certificate, as applicable, to the extent of the Regular
Payment Amount for such Payment Date, in the following order of priority:
(i) for payment pursuant to the Indenture to the holders of
the Senior Notes, the Senior Noteholders' Interest Payment Amount for
such Payment Date, allocated to each Class of Senior Notes, pro rata,
based on the amount of interest payable in respect of each such Class
based on the applicable Interest Rate;
(ii) for payment pursuant to the Indenture to the holders of
the Class M-1 Notes, the Class M-1 Noteholders' Interest Payment Amount
for such Payment Date;
(iii) for payment pursuant to the Indenture to the holders of
the Class M-2 Notes, the Class M-2 Noteholders' Interest Payment for
such Payment Date;
(iv) for payment pursuant to the Indenture to the holders of
the Class B-1 Notes, the Class B-1 Noteholders' Interest Payable Amount
for such Payment Date;
(v) for distribution pursuant to Section 5.05 to the holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
B-2 Component's Interest Distributable Amount for such Payment Date;
(vi) for payment pursuant to the Indenture to the holders of
the Class A-2, Class A-3, Class A-4, Class A-5, Class A-6, Class A-7,
Class A-8 and Class A-9 Notes, in that order, until the respective
Class Principal Balances thereof are reduced to zero, the amount
necessary to reduce the aggregate of the Class Principal Balances of
the Senior Notes to the Senior Optimal Principal Balance for such
Payment Date;
(vii) for payment pursuant to the Indenture to the holders of
the Class M-1 Notes, the amount necessary to reduce the Class Principal
Balance thereof to the Class M-1 Optimal Principal Balance for such
Payment Date;
(viii) for payment pursuant to the Indenture to the holders of
the Class M-2 Notes, the amount necessary to reduce the Class Principal
Balance thereof to the Class M-2 Optimal Principal Balance for such
Payment Date;
(ix) for payment pursuant to the Indenture to the holders of
the Class B-1 Notes, the amount necessary to reduce the Class Principal
Balance thereof to the Class B-1 Optimal Principal Balance for such
Payment Date;
(x) for distribution pursuant to Section 5.05 to the holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
amount necessary to reduce the Component Principal Balance thereof to
the B-2 Component Optimal Principal Balance for such Payment Date;
(xi) for payment pursuant to the Indenture to the holders of
the Class M-1 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(xii) for payment pursuant to the Indenture to the holders of
the Class M-2 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(xiii) for payment pursuant to the Indenture to the holders of
the Class B-1 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(xiv) for distribution pursuant to Section 5.05 to the holder
of the Residual Interest Certificate, in respect of the B-2 Component,
the applicable Deferred Amount, if any, until such Deferred Amount has
been paid in full;
(xv) for distribution pursuant to Section 5.05 to the
Servicer, an amount equal to any Servicing Advances previously made by
the Servicer and not previously reimbursed (the "Servicing Advance
Reimbursement Amount"); and
(xvi) to deposit any remaining amount in the Certificate
Distribution Account for distribution pursuant to Section 5.05 to the
holder of the Residual Interest Certificate, in respect of the Excess
Component.
(4) to retain in the Note Payment Account with respect to the
Notes, or to deposit in the Certificate Distribution Account with respect to the
Residual Interest Certificate, as applicable, to the extent of the Excess
Spread, if any, in the following order of priority:
(i) in an amount equal to the Overcollateralization Shortfall,
if any, as follows:
(A) for payment pursuant to the Indenture to
the holders of the Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8 and Class
A-9 Notes, in that order, until the respective Class
Principal Balances thereof are reduced to zero, the
amount necessary to reduce the aggregate of the Class
Principal Balances of the Senior Notes to the Senior
Optimal Principal Balance for such Payment Date;
(B) for payment pursuant to the Indenture to
the holders of the Class M-1 Notes, the amount
necessary to reduce the Class Principal Balance
thereof to the Class M-1 Optimal Principal Balance
for such Payment Date;
(C) for payment pursuant to the Indenture to
the holders of the Class M-2 Notes, the amount
necessary to reduce the Class Principal Balance
thereof to the Class M-2 Optimal Principal Balance
for such Payment Date;
(D) for payment pursuant to the Indenture to
the holders of the Class B-1 Notes, the amount
necessary to reduce the Class Principal Balance
thereof to the Class B-1 Optimal Principal Balance
for such Payment Date, and
(E) for distribution pursuant to Section
5.05 to the holder of the Residual Interest
Certificate, in respect of the B-2 Component, the
amount necessary to reduce the Component Principal
Balance thereof to the B-2 Component Optimal
Principal Balance for such Payment Date;
(ii) for payment pursuant to the Indenture to the holders of
the Class M-1 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(iii) for payment pursuant to the Indenture to the holders of
the Class M-2 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(iv) for payment pursuant to the Indenture to the holders of
the Class B-1 Notes, the applicable Deferred Amount, if any, until such
Deferred Amount has been paid in full;
(v) for distribution pursuant to Section 5.05 to the holder of
the Residual Interest Certificate, in respect of the B-2 Component, the
applicable Deferred Amount, if any, until such Deferred Amount has been
paid in full; and
(vi) for distribution pursuant to Section 5.05 to the holder
of the Residual Interest Certificate, in respect of the Excess
Component, any amount remaining in the Certificate Distribution
Account.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee and the Servicer shall continue to maintain the Collection Account and
the Note Payment Account hereunder until the Class Principal Balance of each
Class of Securities has been reduced to zero.
(d) Additional Withdrawals from Collection Account. The Indenture
Trustee, at the direction of the Servicer, shall also make the following
withdrawals from the Collection Account, in no particular order of priority:
(i) to withdraw and pay as directed by the Servicer any amount
not required to be deposited in the Collection Account, including,
without limitation, any payments on or proceeds from a Home Loan
received on or prior to its related Cut-Off Date, or deposited therein
in error; and
(ii) to clear and terminate the Collection Account in
connection with the termination of this Agreement.
The Servicer shall not retain any cash or investment in the Collection
Account for a period in excess of 12 months and cash therein shall be considered
transferred to the Note Payment Account on a first-in, first-out basis.
(e) Additional Withdrawals from Note Payment Account Following Early
Redemption or Termination. No later than 11:00 a.m. (New York City time) on the
second Business Day prior to the Payment Date on which an early redemption or
termination pursuant to Section 11.02(a) or Section 11.02(b) is to occur, to the
extent funds are available in the Note Payment Account, the Indenture Trustee
(based on the information contained in the Servicer's Monthly Remittance Report
for such Payment Date) shall either (x) retain funds in the Note Payment Account
for payment on such Payment Date or (y) make withdrawals from the Note Payment
Account and deposits into the other Trust Accounts as indicated, in each case as
specified below and in the following order of priority: (1) to deposit in the
Certificate Distribution Account for distribution pursuant to Section 5.05 to
the Servicer, the Servicing Advance Reimbursement Amount, and (2) to retain in
the Note Payment Account or to deposit in the Certificate Distribution Account,
as specified in each succeeding clause: (i) to retain in the Note Payment
Account for payment pursuant to the Indenture to the holders of the Notes, all
accrued and unpaid interest on each Class of Notes and an amount equal to the
aggregate of the then outstanding Class Principal Balances (or, in the case of
the Class A-1 Notes, the Adjusted Issue Price) of each Class of Notes; (ii) to
deposit in the Certificate Distribution Account for distribution pursuant to
Section 5.05 to the Certificateholder, all accrued and unpaid interest on the
Residual Interest Certificate and an amount equal to the aggregate of the then
outstanding Class Principal Balance of the Residual Interest Certificate; (iii)
to retain in the Note Payment Account for payment pursuant to the Indenture to
the holders of the Class M-1, Class M-2 and Class B-1 Notes, in that order, the
applicable Deferred Amounts, if any, until each such Deferred Amount has been
paid in full; (iv) to deposit in the Certificate Distribution Account for
distribution pursuant to Section 5.05 to the Residual Interest Certificate, in
respect of the B-2 Component, in that order, the applicable Deferred Amounts, if
any, until each such Deferred Amount has been paid in full; and (v) to deposit
any remaining amount in the Certificate Distribution Account for distribution
pursuant to Section 5.05 to the Residual Interest Certificate, in respect of the
Excess Component.
Section 5.02. Pre-Funding Account. (a) Establishment and Withdrawals.
No later than the Closing Date, the Servicer shall establish and maintain with
the Indenture Trustee in the name of the Securities Intermediary one or more
separate Eligible Accounts which shall be pledged to the Indenture Trustee for
the benefit of Securityholders, entitled "Pre-Funding Account, U.S. Bank
National Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset
Backed Securities, Series 1998-5." On the Closing Date, the Pre-Funding Account
Deposit shall be deposited into the Pre-Funding Account from the proceeds of the
sale of the Securities. On any Subsequent Transfer Date, the Servicer shall
instruct the Indenture Trustee to withdraw from the Pre-Funding Account an
amount equal to the Subsequent Purchase Price for the Subsequent Home Loans sold
to the Issuer on such Subsequent Transfer Date pursuant to a Subsequent Transfer
Agreement and pay such withdrawn amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in Section 2.02 of this Agreement with
respect to such transfer. Funds in the Pre-Funding Account shall be invested in
accordance with Section 5.06. On each Payment Date, all interest and any other
investment earnings on funds held in the Pre-Funding Account shall be deposited
into the Note Payment Account.
(b) [Reserved]
(c) Remaining Balance. If the Pre-Funding Account has not been reduced
to zero by the close of business on the date on which the Funding Period ends,
the Servicer shall direct the Indenture Trustee to deposit any amounts remaining
in the Pre-Funding Account into the Note Payment Account, on the Withdrawal Date
with respect to the Pre-Funding Termination Payment Date, for payment or
distribution of such remaining amount (net of reinvestment earnings) on the
Pre-Funding Termination Payment Date as follows:
(i) if no Indenture Event of Default has occurred and such
remaining amount is greater than $50,000, to the Securityholders in
reduction of the Class Principal Balances (and Component Principal
Balance) of the Securities (and the B-2 Component), pro rata on the
basis of their respective Class Principal Balances (or Component
Principal Balance);
(ii) if no Indenture Event of Default has occurred and such
remaining amount is less than or equal to $50,000, sequentially to each
Class of Senior Notes in ascending order of their respective Class
designations in reduction of the respective Class Principal Balances
thereof; or (iii) if an Indenture Event of Default has occurred, to the
Noteholders in reduction of the Class Principal Balance of each Class
of Notes, pro rata on the basis of the Class Principal Balance of each
Class of Notes. Section 5.03. [Reserved].
Section 5.04. [Reserved].
Section 5.05. Certificate Distribution Account. (a) Establishment. No
later than the Closing Date, the Servicer, for the benefit of the
Certificateholder, will establish and maintain in the name of the Securities
Intermediary with U.S. Bank National Association for the benefit of the Owner
Trustee or Co-Owner Trustee on behalf of the Certificateholder one or more
separate Eligible Accounts, which while the Co-Owner Trustee holds such Trust
Account shall be entitled "Certificate Distribution Account, U.S. Bank National
Association, as Co-Owner Trustee, in trust for the FIRSTPLUS Asset Backed
Securities, Series 1998-5." Funds in the Certificate Distribution Account shall
be invested in accordance with Section 5.06.
(b) [Reserved].
(c) Distributions. Subject to Section 5.05(f), no later than the second
Business Day before each Payment Date, the Indenture Trustee shall withdraw from
the Note Payment Account all amounts required to be deposited in the Certificate
Distribution Account with respect to the preceding Due Period pursuant to
Section 5.01(c) and remit such amount to the Owner Trustee or the Co-Owner
Trustee for deposit into the Certificate Distribution Account. On each Payment
Date, the Owner Trustee or the Co-Owner Trustee shall distribute all amounts on
deposit in the Certificate Distribution Account to the Certificateholder in
respect of the Residual Interest Certificate to the extent of amounts due and
unpaid on the Residual Interest Certificate for principal and interest and to
the other parties specified below the following amounts:
(i) only to the extent of funds withdrawn from the Pre-Funding
Account attributable to the remaining amount therein and deposited in
the Certificate Distribution Account by the Indenture Trustee pursuant
to Section 5.01(c)(2) to the Residual Interest Certificate, in respect
of the B-2 Component;
(ii) to the Residual Interest Certificate, in respect of the
B-2 Component, the amounts, if any, deposited in the Certificate
Distribution Account pursuant to Sections 5.01(c)(3) and 5.01(c)(4), in
the order of priority provided therein;
(iii) to the Servicer, the amount, if any, in respect of the
Servicing Advance Reimbursement Amount deposited in the Certificate
Distribution Account pursuant to Section 5.01(c)(3)(xv); and
(iv) to the Residual Interest Certificate, in respect of the
Excess Component, the amounts deposited in the Certificate Distribution
Account pursuant to Sections 5.01(c)(3)(xvi) and 5.01(c)(4)(vi).
(d) All distributions made on the Residual Interest Certificate shall
be made by wire transfer of immediately available funds to the account of such
Certificateholder. The final distribution on each Certificate will be made in
like manner, but only upon presentment and surrender of such Certificate at the
location specified in the notice to the Certificateholder of such final
distribution.
(e) Distributions Following Early Redemption or Termination. No later
than the second Business Day before the Payment Date on which an early
redemption or termination pursuant to Section 11.02(a) or 11.02(b) is to occur,
the Indenture Trustee shall withdraw from the Note Payment Account all amounts
required to be deposited in the Certificate Distribution Account with respect to
the preceding Due Period pursuant to Section 5.01(e) and remit such amount to
the Owner Trustee or the Co-Owner Trustee for deposit into the Certificate
Distribution Account. On such Payment Date, the Owner Trustee or the Co-Owner
Trustee shall distribute all amounts on deposit in the Certificate Distribution
Account to the Certificateholder in respect of the Residual Interest Certificate
to the extent of amounts due and unpaid on the Residual Interest Certificate for
principal and interest and to the other parties specified below the following
amounts:
(i) to the Residual Interest Certificate, in respect of the
B-2 Component, an amount equal to the Component Principal Balance of
the B-2 Component and all accrued and unpaid interest thereon;
(ii) to the Residual Interest Certificate, in respect of the
B-2 Component, the amount, if any, deposited in the Certificate
Distribution Account pursuant to Section 5.01(e)(2)(iv); and
(iii) to the Residual Interest Certificate, in respect of the
Excess Component, the amount, if any, deposited in the Certificate
Distribution Account pursuant to Section 5.01(e)(2)(v).
Section 5.06. Trust Accounts; Trust Account Property. (a) Control of
Trust Accounts. Each of the Trust Accounts established hereunder has been
pledged by the Issuer to the Indenture Trustee under the Indenture and shall be
subject to the lien of the Indenture. In addition to the provisions hereunder,
each of the Trust Accounts shall also be established and maintained pursuant to
the Indenture. Amounts paid or distributed from each Trust Account in accordance
with the Indenture and this Agreement shall be released from the lien of the
Indenture upon such payment or distribution thereunder or hereunder. The
Indenture Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Trust Accounts and in all proceeds thereof
(including all income thereon) and all such funds, investments, proceeds and
income shall be part of the Trust Account Property and the Trust Estate. If, at
any time, any Trust Account ceases to be an Eligible Account, the Indenture
Trustee (or the Servicer on its behalf) shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) (i) establish a new Trust Account as an Eligible Account, (ii)
terminate the ineligible Trust Account, and (iii) transfer any cash and
investments from such ineligible Trust Account to such new Trust Account. With
respect to the Trust Accounts, the Indenture Trustee agrees, by its acceptance
hereof, that each such Trust Account shall be subject to the sole and exclusive
custody and control of the Indenture Trustee for the benefit of the
Securityholders and the Issuer, as the case may be, and the Indenture Trustee
shall have sole signature and withdrawal authority with respect thereto.
In addition to this Agreement, the Certificate Distribution Account
established hereunder also shall be subject to and established and maintained in
accordance with the Trust Agreement. The Owner Trustee or Co-Owner Trustee shall
possess all right, title and interest for the benefit of the Certificateholders
in all funds on deposit from time to time in the Certificate Distribution
Account and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust Account
Property. If, at any time, the Certificate Distribution Account ceases to be an
Eligible Account, the Issuer (or the Servicer on its behalf) shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as to
which each Rating Agency may consent) (i) establish a new Certificate
Distribution Account as an Eligible Account, (ii) terminate the ineligible
Certificate Distribution Account, and (iii) transfer any cash and investments
from such ineligible Certificate Distribution Account to such new Certificate
Distribution Account. The Owner Trustee and Co-Owner Trustee agree, by their
acceptance hereof, that such Certificate Distribution Account shall be subject
to the sole and exclusive custody and control of the Owner Trustee and Co-Owner
Trustee for the benefit of the Issuer and the parties entitled to distributions
therefrom, including without limitation, the Certificateholders, and the Owner
Trustee and the Co-Owner Trustee shall have sole signature and withdrawal
authority with respect to the Certificate Distribution Account.
The Servicer shall have the power, revocable by the Indenture Trustee
or by the Owner Trustee or Co-Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee or Owner Trustee or Co-Owner Trustee
to make withdrawals and payments from the Trust Accounts and the Certificate
Distribution Account for the purpose of permitting the Servicer to carry out its
duties hereunder or permitting the Indenture Trustee or Owner Trustee or
Co-Owner Trustee to carry out its duties herein or under the Indenture or the
Trust Agreement, as applicable.
(b) (1) Investment of Funds. So long as no Event of Default shall have
occurred and be continuing, the funds held in any Trust Account or in the
Certificate Distribution Account may be invested (to the extent practicable and
consistent with any requirements of the Code) in Permitted Investments, as
directed by the Servicer, in the case of the Collection Account, or by the
Transferor, in the case of each other Trust Account and the Certificate
Distribution Account, in each case in writing or by telephone or facsimile
transmission confirmed in writing by the Servicer or the Transferor, as
applicable. In any case, funds in any Trust Account or in the Certificate
Distribution Account must be available for withdrawal without penalty, and any
Permitted Investments must mature or otherwise be available for withdrawal, not
later than three (3) Business Days (except with respect to the Note Payment
Account, Pre-Funding Account and Certificate Distribution Account, which shall
be invested on a one (1) Business Day basis) immediately preceding the Payment
Date next following the date of such investment and shall not be sold or
disposed of prior to its maturity subject to Section 5.06(b)(2) below. All
interest and any other investment earnings on amounts or investments held in any
Trust Account or in the Certificate Distribution Account shall be deposited into
such account immediately upon receipt by the Indenture Trustee, or in the case
of the Certificate Distribution Account, the Owner Trustee or Co-Owner Trustee,
as applicable. All Permitted Investments in which funds in any Trust Account are
invested must be held by or registered in the name of "U.S. Bank National
Association, as Indenture Trustee, in trust for the FIRSTPLUS Asset Backed
Securities, Series 1998-5". While the Co-Owner Trustee holds the Certificate
Distribution Account, all Permitted Investments in which funds in the
Certificate Distribution Account are invested shall be held by or registered in
the name of "U.S. Bank National Association, as Co-Owner Trustee, in trust for
the FIRSTPLUS Asset Backed Securities, Series 1998-5".
(b)(2) Insufficiency and Losses in Trust Accounts. If any amounts are
needed for disbursement from any Trust Account or the Certificate Distribution
Account and sufficient uninvested funds are not available to make such
disbursement, the Indenture Trustee, or Owner Trustee or Co-Owner Trustee in the
case of the Certificate Distribution Account, shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
account. The Indenture Trustee, or Owner Trustee or Co-Owner Trustee in the case
of the Certificate Distribution Account, shall not be liable for any investment
loss or other charge resulting therefrom, unless such loss or charge is caused
by the failure of the Indenture Trustee or Owner Trustee or Co-Owner Trustee,
respectively, to perform in accordance with this Section 5.06.
If any losses are realized in connection with any investment
in any Trust Account or in the Certificate Distribution Account pursuant to this
Agreement and the Indenture, then the Servicer, with respect to the Collection
Account, and the Transferor, with respect to each other such account, shall
deposit the amount of such losses (to the extent not offset by income from other
investments in such account) in such account immediately upon the realization of
such loss or, to the extent that the Servicer or the Transferor, as applicable,
fails to deposit any portion of such amount, the Transferor or the Servicer, as
applicable, shall deposit any insufficiency from such failure in such account.
All interest and any other investment earnings on amounts held in any Trust
Account or in the Certificate Distribution Account shall be taxed to the Issuer
and for federal and state income tax purposes the Issuer shall be deemed to be
the owner of each Trust Account and of the Certificate Distribution Account.
(c) Subject to Section 6.1 of the Indenture, the Indenture Trustee
shall not in any way be held liable by reason of any insufficiency in any Trust
Account held by the Indenture Trustee resulting from any investment loss on any
Permitted Investment included therein (except to the extent that the Indenture
Trustee, with respect to such Permitted Investment, is the obligor and has
defaulted thereon).
(d) The Issuer and the Indenture Trustee hereby appoint U.S. Bank
National Association as Securities Intermediary with respect to the Trust
Accounts and the Certificate Distribution Account. The Issuer has, pursuant to
the Indenture, granted to the Indenture Trustee, as collateral agent for the
benefit of the Securityholders, a security interest to secure all amounts due
Noteholders hereunder in and to the Trust Accounts and the Security Entitlements
to all Financial Assets credited to the Trust Accounts, and the Seller hereby
grants to the Issuer, as collateral agent for the benefit of Certificateholders,
a security interest to secure all mounts due Certificateholders hereunder in and
to the Certificate Distribution Account and the Security Entitlements and all
Financial Assets credited to the Certificate Distribution Account, including in
each case without limitation all amounts, securities, investments, Financial
Assets, investment property and other property from time to time deposited in or
credited to such accounts and all proceeds thereof. Amounts held from time to
time in the Trust Accounts will continue to be held by the Securities
Intermediary for the benefit of the Indenture Trustee, as collateral agent, for
the benefit of the Securityholders, and amounts held from time to time in the
Certificate Distribution Account will continue to be held by the Securities
Intermediary for the benefit of the Issuer, as collateral agent, for the benefit
of the Certificateholders. Upon the termination of the Trust or the discharge of
the Indenture, the Indenture Trustee shall inform the Securities Intermediary of
such termination. By acceptance of their Securities or interests therein, the
Securityholders shall be deemed to have appointed U.S. Bank National Association
as Securities Intermediary. U.S. Bank National Association hereby accepts such
appointment as Securities Intermediary.
(1) With respect to the Trust Account Property credited to the
Trust Accounts and the Certificate Distribution Account, the Securities
Intermediary agrees that:
(i) with respect to any Trust Account Property that
is held in deposit accounts, each such deposit account shall
be subject to the exclusive custody and control of the
Securities Intermediary, and the Securities Intermediary shall
have sole signature authority with respect thereto;
(ii) the sole assets permitted in the Trust Accounts
and the Certificate Distribution Account shall be those as the
Securities Intermediary agrees to treat as Financial Assets;
and (iii) any such Trust Account Property that is, or is
treated as, a Financial Asset shall be physically delivered
(accompanied by any required endorsements) to, or credited to
an account in the name of, the Securities Intermediary or
other eligible institution maintaining any Trust Account or
the Certificate Distribution Account in accordance with the
Securities Intermediary's customary procedures such that the
Securities Intermediary or such other institution establishes
a Security Entitlement in favor of the Indenture Trustee (or
the Issuer, in the case of the Certificate Distribution
Account) with respect thereto over which the Securities
Intermediary or such other institution has Control;
(2) The Securities Intermediary hereby confirms that (A) each
Trust Account and the Certificate Distribution Account is an account to
which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the
Indenture Trustee, as collateral agent, as entitled to exercise the
rights that comprise any Financial Asset credited to any Trust Account,
and the Issuer, as collateral agent, as entitled to exercise the rights
that comprise any Financial Asset credited to the Certificate
Distribution Account, (B) all Trust Account Property in respect of any
Trust Account or the Certificate Distribution Account will be promptly
credited by the Securities Intermediary to such account, and (C) all
securities or other property underlying any Financial Assets credited
to any Trust Account or the Certificate Distribution Account shall be
registered in the name of the Securities Intermediary, endorsed to the
Securities Intermediary or in blank or credited to another securities
account maintained in the name of the Securities Intermediary and in no
case (x) will any Financial Asset credited to any Trust Account be
registered in the name of the Seller or the Issuer, payable to the
order of the Seller or the Issuer or specially endorsed to the Seller
or the Issuer, or (y) will any Financial Asset credited to the
Certificate Distribution Account be registered in the name of the
Seller, payable to the order of the Seller or specially endorsed to the
Seller, except to the extent the foregoing have been specially endorsed
to the Securities Intermediary or in blank;
(3) The Securities Intermediary hereby agrees that each item
of property (whether investment property, Financial Asset, security,
instrument or cash) credited to any Trust Account or the Certificate
Distribution Account shall be treated as a Financial Asset;
(4) If at any time the Securities Intermediary shall receive
any order from the Indenture Trustee directing transfer or redemption
of any Financial Asset relating to any Trust Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Seller, the Issuer or any other Person. If at any time
the Indenture Trustee notifies the Securities Intermediary in writing
that the Trust has been terminated or the Indenture discharged in
accordance herewith and with the Trust Agreement or the Indenture, as
applicable, and the security interest granted pursuant to the Indenture
has been released, then thereafter if the Securities Intermediary shall
receive any order from the Seller or the Issuer directing transfer or
redemption of any Financial Asset relating to any Trust Account, the
Securities Intermediary shall comply with such entitlement order
without further consent by the Indenture Trustee or any other Person;
If at any time the Securities Intermediary shall receive any
order from the Issuer directing transfer or redemption of any Financial
Asset relating to the Certificate Distribution Account, the Securities
Intermediary shall comply with such entitlement order without further
consent by the Seller or any other Person. If at any time the Issuer
notifies the Securities Intermediary in writing that the Trust has been
terminated in accordance herewith and with the Trust Agreement and the
security interest granted above has been released, then thereafter if
the Securities Intermediary shall receive any order from the Seller
directing transfer or redemption of any Financial Asset relating to the
Certificate Distribution Account, the Securities Intermediary shall
comply with such entitlement order without further consent by the
Issuer or any other Person;
(5) In the event that the Securities Intermediary has or
subsequently obtains by agreement, operation of law or otherwise a
security interest in any Trust Account or the Certificate Distribution
Account or any Financial Asset credited thereto, the Securities
Intermediary hereby agrees that such security interest shall be
subordinate to the security interest of the Indenture Trustee, in the
case of the Trust Accounts, or of the Issuer, in the case of the
Certificate Distribution Account. The Financial Assets credited to the
Trust Accounts or the Certificate Distribution Account will not be
subject to deduction, set-off, banker's lien, or any other right in
favor of any Person other than the Indenture Trustee, in the case of
the Trust Accounts, or the Issuer, in the case of the Certificate
Distribution Account (except that the Securities Intermediary may set
off (i) all amounts due to it in respect of its customary fees and
expenses for the routine maintenance and operation of the Trust
Accounts and the Certificate Distribution Account, and (ii) the face
amount of any checks which have been credited to any Trust Account or
the Certificate Distribution Account but are subsequently returned
unpaid because of uncollected or insufficient funds);
(6) There are no other agreements entered into between the
Securities Intermediary in such capacity and the Seller or the Issuer
with respect to any Trust Account, or the Seller with respect to the
Certificate Distribution Account. In the event of any conflict between
this Agreement (or any provision of this Agreement) and any other
agreement now existing or hereafter entered into, the terms of this
Agreement shall prevail;
(7) The rights and powers granted under the Indenture and
herein to (x) the Indenture Trustee have been granted in order to
perfect its security interest in the Trust Accounts and the Security
Entitlements to the Financial Assets credited thereto, and (y) the
Issuer have been granted in order to perfect its security interest in
the Certificate Distribution Account and the Security Entitlements to
the Financial Assets credited thereto, and are powers coupled with an
interest and will neither be affected by the bankruptcy of the Seller
(or the Issuer, in the case of the Trust Accounts) nor by the lapse of
time. The obligations of the Securities Intermediary hereunder shall
continue in effect until the security interest of the Indenture Trustee
in the Trust Accounts or of the Issuer in the Certificate Distribution
Account, and in such Security Entitlements, has been terminated
pursuant to the terms of this Agreement and the Indenture Trustee or
the Issuer, as applicable, has notified the Securities Intermediary of
such termination in writing; and
(8) Notwithstanding anything else contained herein, the Seller
and the Issuer agree that the Trust Accounts and the Certificate
Distribution Account will be established only with the Securities
Intermediary or another institution meeting the requirements of this
Section, which by acceptance of its appointment as Securities
Intermediary agrees substantially as follows: (1) it will comply with
Entitlement Orders related to the Trust Accounts issued by the
Indenture Trustee, as collateral agent, without further consent by the
Seller or the Issuer, and with Entitlement Orders related to the
Certificate Distribution Account issued by the Issuer, as collateral
agent, without further consent by the Seller; (2) until termination of
the Trust or discharge of the Indenture, it will not enter into any
other agreement related to such accounts pursuant to which it agrees to
comply with Entitlement Orders of any Person other than the Indenture
Trustee, as collateral agent with respect to the Trust Accounts, or the
Issuer, as collateral agent with respect to the Certificate
Distribution Account; and (3) all assets delivered or credited to it in
connection with such accounts and all investments thereof will be
promptly credited to the applicable account.
(e) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Issuer with the consent of the Indenture Trustee, to instruct
the Indenture Trustee to make withdrawals and payments from the Trust Accounts
for the purpose of permitting the Servicer or the Issuer to carry out its
respective duties hereunder or permitting the Indenture Trustee to carry out its
duties under the Indenture.
Section 5.07. Allocation of Losses. (a) In the event that Net
Liquidation Proceeds, Insurance Proceeds or Released Mortgaged Property Proceeds
on a Liquidated Home Loan are less than the related Principal Balance plus
accrued interest thereon, or any Obligor makes a partial payment of any Monthly
Payment due on a Home Loan, such Net Liquidation Proceeds, Insurance Proceeds,
Released Mortgaged Property Proceeds or partial payment shall be applied to
payment of the related Debt Instrument in respect of principal and interest
first, to payment of delinquent Monthly Payments thereon, in chronological order
by Due Date (and as to each such Monthly Payment, first to accrued interest and
second to principal), second, to interest accrued at the applicable Home Loan
Interest Rate on the remaining unpaid balance of such Home Loan, and third, to
payment of the remaining unpaid principal thereof.
(b) On any Payment Date, any Allocable Loss Amount shall be applied,
after giving effect to all payments and distributions made on such Payment Date,
to the reduction of the Class Principal Balances of the Subordinate Securities
in accordance with the Allocable Loss Amount Priority. Any Allocable Loss Amount
allocated to a Class of Securities pursuant to this Section 5.07(b) shall be
allocated among the Securities of such Class in proportion to their respective
outstanding principal balances.
ARTICLE VI
STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS
Section 6.01. Statements. (a) No later than each Determination Date,
the Servicer shall deliver to the Indenture Trustee a magnetic tape or computer
disk providing such information regarding the Servicer's activities in servicing
the Home Loans during the related Due Period as the Indenture Trustee may
reasonably require.
(b) (1) Subject to the modification of the Servicer's Monthly Statement
by the Servicer with the prior written consent of the Majority Securityholders
and the Indenture Trustee, no later than three (3) Business Days before each
Payment Date, the Servicer shall prepare and the Indenture Trustee shall
distribute a monthly statement (the "Servicer's Monthly Statement", with respect
to such Payment Date) to the Seller, the Securityholders and each Rating Agency,
stating the date of original issuance of the Securities (day, month and year),
the name of the Issuer (i.e., "FIRSTPLUS Home Loan Owner Trust 1998-5"), the
series designation of the Securities (i.e., "Series 1998-5"), the date of this
Agreement and the following information:
(i) the Available Collection Amount, the Regular Payment
Amount and the Excess Spread for the related Payment Date;
(ii) the amount, if any, on deposit in the Pre-Funding Account
on such Payment Date;
(iii) the Class Principal Balance of each Class of Securities
(and the Component Principal Balance, as applicable, of the Components
of the Residual Interest Certificate), and the Pool Principal Balance
as of the first day of the related Due Period and after giving effect
to payments and distributions made to the holders of such Securities on
such Payment Date;
(iv) the Class Pool Factor with respect to each Class of
Securities then outstanding, carried to seven decimal places;
(v) the amount of principal and interest received on the Home
Loans during the related Due Period;
(vi) the amount, if any, of the Overcollateralization Surplus;
(vii) the Servicing Compensation for such Payment Date;
(viii) the Overcollateralization Amount with respect to such
Payment Date, the Required Overcollateralization Amount as of such
Payment Date, the Net Loan Losses incurred during the related Due
Period and the cumulative Net Loan Losses with respect to such Payment
Date;
(ix) the amount, if any, paid on such Payment Date to each
Class of Subordinate Securities in respect of Deferred Amounts;
(x) with respect to each Class of Subordinate Securities and
the B-2 Component of the Residual Interest Certificate, the amount of
any applicable Deferred Amounts remaining unreimbursed after giving
effect to payments made on such Payment Date;
(xi) the weighted average remaining term to maturity of the
Home Loans and the weighted average Home Loan Interest Rate of the Home
Loans each as of such Payment Date;
(xii) certain performance information, including delinquency
and foreclosure information with respect to the Home Loans, as set
forth in the Servicer's Monthly Remittance Report;
(xiii) the amount of any Servicing Advance Reimbursement
Amount to be paid to the Servicer on such Payment Date, and the amount
of any Servicing Advance Reimbursement Amount remaining unpaid
following such payment;
(xiv) the number of and aggregate Principal Balance of all
Home Loans in foreclosure proceedings (other than any Home Loans
described in clause (xvi)) and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all
Home Loans, all as of the close of business on the last day of the
related Due Period;
(xv) the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings (other than any Home Loans
described in clause (xvii)) and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all
Home Loans, all as of the close of business on the last day of the
related Due Period;
(xvi) the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans, the book value of such
Foreclosure Properties and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all
Home Loans, all as of the close of business on the last day of the
related Due Period;
(xvii) during the related Due Period, the aggregate Principal
Balance of Home Loans for each of the following: (A) that became
Liquidated Home Loans and (B) that became Deleted Home Loans pursuant
to Section 3.05 as a result of such Deleted Home Loans being Liquidated
Home Loans or a Home Loan in foreclosure, default or imminent default,
including the foregoing amounts by loan type;
(xviii) from the Closing Date through the most current Due
Period, the cumulative aggregate Principal Balance of Home Loans for
each of the following: (A) that became Liquidated Home Loans, and (B)
that became Deleted Home Loans pursuant to Section 3.05 as a result of
such Deleted Home Loans being in foreclosure, default or imminent
default;
(xix) the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the related
Due Period;
(xx) the number of Home Loans remaining in the Home Loan Pool;
and
(xxi) such other information as may be reasonably requested by
the Indenture Trustee.
(2) No later than three (3) Business Days before each Payment
Date, the Servicer shall prepare and distribute to the Seller and each Rating
Agency a monthly statement that includes the cumulative aggregate Principal
Balance of Home Loans that became Deleted Home Loans pursuant to Section 3.05(c)
as a result of such Deleted Home Loans being Defective Home Loans, from the
Closing Date through the most current Due Period.
(3) No later than seven days following a repurchase or
substitution pursuant to Sections 2.06, 3.05 or 4.02, the Servicer shall notify
each Rating Agency of the aggregate principal balances of the Home Loans
repurchased or substituted and (if applicable) the relevant Substitution
Adjustment.
All reports prepared by the Servicer of the withdrawals from and
deposits in the Collection Account will be based in whole or in part upon the
information provided to the Indenture Trustee by the Servicer, and the Indenture
Trustee may fully rely upon and shall have no liability with respect to such
information provided by the Servicer.
(c) Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute
to each Person who at any time during the calendar year was a Securityholder,
such information as is reasonably necessary to provide to such Person a
statement containing the information set forth in subclauses (b)(iv) and (v)
above, aggregated for such calendar year or applicable portion thereof during
which such Person was a Securityholder. Such obligation of the Indenture Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer to the Securityholders
pursuant to any requirements of the Code as are in force from time to time.
(d) On each Payment Date, the Indenture Trustee shall forward to DTC
and to the holder of the Residual Interest Certificate a copy of the Servicer's
Monthly Statement in respect of such Payment Date and a statement setting forth
the amounts actually distributed to the holder of the Residual Interest
Certificate on such Payment Date, together with such other information as the
Indenture Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and direct the Indenture Trustee to distribute
to each Person who at any time during the calendar year was the holder of the
Residual Interest Certificate, 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 the holder of the Residual Interest Certificate. Such obligation
of the Indenture Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer to
the holder of the Residual Interest Certificate pursuant to any requirements of
the Code as are in force from time to time.
(f) Upon reasonable advance notice in writing, the Servicer will
provide to each Securityholder which is a savings and loan association, bank or
insurance company access to information and documentation regarding the Home
Loans sufficient to permit such Securityholder to comply with applicable
regulations of the FDIC or other regulatory authorities with respect to
investment in such Securities.
(g) The Servicer or its agent shall furnish to the Indenture Trustee,
who in turn shall forward to each Securityholder, during the term of this
Agreement, such periodic, special, or other reports, including information tax
returns or reports required with respect to the Securities, including Internal
Revenue Service Forms 1099 and (if instructed in writing by the Seller on the
basis of the advice of legal counsel) and other similar reports that are
required to be filed by the Servicer or its agent and the holder of Residual
Interest Certificate, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Securityholders or the holders of
the Residual Interest Certificate, or otherwise with respect to the purposes of
this Agreement, all such reports or information to be provided by and in
accordance with such applicable instructions and directions as the
Securityholders may reasonably require.
(h) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee pursuant to this Agreement shall be deemed confidential and of
proprietary nature, and shall not be copied or distributed except in connection
with the purposes and requirements of this Agreement. No Person entitled to
receive copies of such reports or tapes shall use the information therein for
the purpose of soliciting the customers of the Seller or the Servicer or for any
other purpose except as set forth in this Agreement.
Section 6.02. Reports of Foreclosure and Abandonment of Mortgaged
Property. Each year beginning in 1998 the Servicer, at its expense, shall make
the reports of foreclosures and abandonments of any Mortgaged Property required
by Section 6050J of the Code. The reports from the Servicer shall be in form and
substance sufficient to meet the reporting requirements imposed by such Section
6050J of the Code.
Section 6.03. Specification of Certain Tax Matters. Each Securityholder
shall provide the Indenture Trustee with a completed and executed Form W-9 prior
to purchasing a Security. The Indenture Trustee shall comply with all
requirements of the Code, and applicable state and local law, with respect to
the withholding from any payments or distributions made to any Securityholder of
any applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
ARTICLE VII
GENERAL SERVICING PROCEDURES
Section 7.01. Assumption Agreements. When a Mortgaged Property has been
or is about to be conveyed by the Obligor, the Servicer shall, to the extent it
has knowledge of such conveyance or prospective conveyance, exercise its rights
to accelerate the maturity of the related Home Loan under any "due-on-sale"
clause contained in the related Mortgage or Debt Instrument; 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 or in the event the related Mortgage and Debt Instrument do
not contain a "due-on-sale" clause, the Servicer shall enter into an assumption
and modification agreement with the person to whom such property has been or is
about to be conveyed, pursuant to which such person becomes liable under the
Debt Instrument and, unless prohibited by applicable law or the Home Loan
documents, the Obligor remains liable thereon. The Servicer is also authorized
to enter into a substitution of liability agreement with such person, pursuant
to which the original Obligor is released from liability and such person is
substituted as Obligor and becomes liable under the Debt Instrument. The
Servicer shall notify the Custodian that any such substitution or assumption
agreement has been completed by forwarding to the Custodian the original of such
substitution or assumption agreement, which original shall be added by the
Custodian to the related Indenture Trustee's Home Loan File and shall, for all
purposes, be considered a part of such Indenture Trustee's Home Loan File to the
same extent as all other documents and instruments constituting a part thereof.
In connection with any assumption or substitution agreement entered into
pursuant to this Section 7.01, the Servicer shall not change the Home Loan
Interest Rate or the Monthly Payment, defer or forgive the payment of principal
or interest, reduce the outstanding principal amount or extend the final
maturity date on such Home Loan. Any fee collected by the Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional Servicing
Compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 7.02. Satisfaction of Mortgages and Release of Home Loan Files.
Subject to the provisions of Sections 4.01 and 4.02, the Servicer shall not
grant a satisfaction or release of a Mortgage without having obtained payment in
full of the indebtedness secured by the Mortgage or otherwise prejudice any
right the Securityholders may have under the mortgage instruments. The Servicer
shall maintain the fidelity bond and errors and omissions insurance as provided
for in Section 4.03 insuring the Servicer against any loss it may sustain with
respect to any Home Loan not satisfied in accordance with the procedures set
forth herein.
Upon the payment in full of any Home Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Custodian
by an Officers' Certificate (which certificate shall include a statement to the
effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Collection Account pursuant to
Section 5.01(b) have been or will be so deposited) of a Servicing Officer and
shall request delivery to it of the Indenture Trustee's Home Loan File. Upon
receipt of such certification and request and in accordance with Section 2.9 of
the Indenture, the Custodian shall promptly release the related Indenture
Trustee's Home Loan File to the Servicer. Expenses incurred in connection with
any instrument of satisfaction or deed of reconveyance shall be payable only
from and to the extent of Servicing Compensation and shall not be chargeable to
the Collection Account, the Note Payment Account, or the Certificate
Distribution Account. Upon receipt by the Custodian of the certification of a
Servicing Officer with respect to the release of the Indenture Trustee's Home
Loan File for any Home Loan or any documents included therein, the Custodian
shall release to the Servicer such Indenture Trustee's Home Loan File and shall
deliver such instruments of transfer presented to it by the Servicer as shall be
necessary or appropriate for the release of such Indenture Trustee's Home Loan
File in accordance with such certification of the Servicing Officer. The release
to the Servicer of an Indenture Trustee's Home Loan File pursuant to such
certification shall not require or be subject to the prior approval of the
Indenture Trustee in the case of a release in connection with the following: (1)
the satisfaction or release of a Mortgage upon the payment in full of the Home
Loan or upon such Home Loan becoming a Liquidated Home Loan; (2) a Home Loan in
default for which the Servicer is or will be pursuing foreclosure or another
method of liquidation pursuant to Section 4.02; or (3) the correction of
documentation in the Indenture Trustee's Home Loan File for errors and
ambiguities, provided that such corrections shall be performed and returned to
the Custodian in a prompt manner, and provided further that no more than 100
Indenture Trustee's Home Loan Files shall be released and held by the Servicer
at any one time. In the case of a release of the related Indenture Trustee's
Home Loan File to the Servicer in connection with a substitution or repurchase
of any Home Loan pursuant to Section 3.05 or Section 11.02 or a release for
other servicing reasons, such release of the Indenture Trustee's Home Loan File
by the Custodian shall be subject to the prior approval of the Indenture
Trustee.
The Indenture Trustee shall execute and deliver to the Servicer any
court pleadings, requests for trustee's sale or other documents necessary to the
foreclosure or trustee's sale in respect of a Mortgaged Property or to any legal
action brought to obtain judgment against any Obligor on the Debt Instrument or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Debt Instrument or Mortgage or otherwise available at law
or in equity. Together with such documents or pleadings, the Servicer shall
deliver to the Indenture Trustee a certificate of a Servicing Officer requesting
that such pleadings or documents be executed by the Indenture Trustee and
certifying as to the reason such documents or pleadings are required and that
the execution and delivery thereof by the Indenture Trustee will not invalidate
or otherwise affect the lien of the Mortgage, except for the termination of such
a lien upon completion of the foreclosure or trustee's sale. The Indenture
Trustee shall, upon receipt of a written request from a Servicing Officer,
execute any document provided to the Indenture Trustee by the Servicer or take
any other action requested in such request that is, in the opinion of the
Servicer as evidenced by such request, required by any state or other
jurisdiction to discharge the lien of a Mortgage upon the satisfaction thereof
and the Indenture Trustee will sign and post, but will not guarantee receipt of,
any such documents to the Servicer, or such other party as the Servicer may
direct, within five Business Days, or more promptly if needed, of the Indenture
Trustee's receipt of such certificate or documents. Such certificate or
documents shall establish to the Indenture Trustee's satisfaction that the
related Home Loan has been paid in full by or on behalf of the Obligor and that
such payment has been deposited in the Collection Account.
Subject to any other applicable terms and conditions of this Agreement,
the Indenture Trustee and Servicer shall be entitled to approve an assignment in
lieu of satisfaction with respect to any Home Loan, provided the obligee with
respect to such Home Loan following such proposed assignment provides the
Indenture Trustee and Servicer with a "Certification for Assignment of Home
Loan" in form and substance satisfactory to the Indenture Trustee and Servicer,
providing the following: (i) that the Home Loan is secured by Mortgaged Property
located in a jurisdiction in which an assignment in lieu of satisfaction is
required to preserve lien priority, minimize or avoid mortgage recording taxes
or otherwise comply with or facilitate a refinancing under the laws of such
jurisdiction; (ii) that the substance of the assignment is, and is intended to
be, a refinancing of such Home Loan and that the form of the transaction is
solely to comply with or facilitate the transaction under such local laws; (iii)
that the Home Loan following the proposed assignment will have a rate of
interest not more than 0.25 percent below or above the rate of interest on such
Home Loan prior to such proposed assignment; and (iv) that such assignment is at
the request of the related Obligor. Upon approval of an assignment in lieu of
satisfaction with respect to any Home Loan, the Servicer shall receive cash in
an amount equal to the unpaid principal balance of and accrued interest on such
Home Loan and the Servicer shall treat such amount as a Principal Prepayment
with respect to such Home Loan for all purposes hereof.
Section 7.03. Servicing Compensation. As compensation for its services
hereunder, the Servicer shall be entitled to receive from the Collection
Account, the Servicing Fee out of which the Servicer shall pay any servicing
fees owed or payable to any Subservicer and any custodial fees owed or payable
to the Custodian. Additional servicing compensation in the form of assumption
and other administrative fees, amounts remitted pursuant to Section 7.01,
prepayment penalties and late payment charges shall be part of the Servicing
Compensation payable to the Servicer hereunder and shall be paid either by the
Servicer retaining such additional servicing compensation prior to deposit in
the Collection Account pursuant to Section 5.01(b)(1) or if deposited into the
Collection Account as part of the Servicing Compensation withdrawn from the Note
Payment Account pursuant to Section 8.2(a) of the Indenture.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided for herein. The Servicer
also agrees to pay (i) the Owner Trustee Fee and the Indenture Trustee Fee, and
the fees of the Co-Owner Trustee and the Custodian, (ii) all reasonable costs
and expenses incurred by the Indenture Trustee, the Owner Trustee or the Seller
in investigating the Servicer's activities hereunder when, in the reasonable
opinion of the Indenture Trustee, the Owner Trustee or the Seller, such
investigation is warranted on the basis of adverse information about the
Servicer obtained from a reasonably reliable source, (iii) all reasonable costs
and expenses incurred by any successor servicer or the Indenture Trustee in
replacing the Servicer in the event of a default by the Servicer in the
performance of its duties under the terms and conditions of this Agreement, and
(iv) the annual Rating Agency monitoring fees.
Section 7.04. Quarterly Statements as to Compliance. Not later than the
last day of the second month following the end of each quarter of the Servicer's
Fiscal Year, beginning in November 1998, the Servicer will deliver to the
Indenture Trustee, the Issuer and to each Securityholder, an Officer's
Certificate stating that (i) the Servicer has fully complied with the provisions
of Articles V and VII, (ii) a review of the activities of the Servicer during
the preceding quarter and of performance under this Agreement has been made
under such officer's supervision, and (iii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such quarter, 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 and the action being taken by the
Servicer to cure such default.
Section 7.05. Annual Independent Public Accountants' Servicing Report.
On or before 120 days after the end of each of the Servicer's fiscal years
elapsing during the term of its appointment under this Agreement, beginning with
the first fiscal year ending after the Closing Date, the Servicer, at its
expense, shall furnish to the Seller, the Indenture Trustee, the Issuer, the
Securityholders and the Rating Agencies (i) an opinion by a firm of independent
certified public accountants on the financial position of the Servicer at the
end of the relevant fiscal year and the results of operations and changes in
financial position of the Servicer for such year then ended on the basis of an
examination conducted in accordance with generally accepted auditing standards,
and (ii) if the Servicer is then servicing any Home Loans, a statement from such
independent certified public accountants to the effect that based on an
examination of certain specified documents and records relating to the servicing
of the Servicer's loan portfolio conducted substantially in compliance with the
audit program for mortgages serviced for the United States Department of Housing
and Urban Development Mortgage Audit Standards, or the Uniform Single
Attestation Program for Mortgage Bankers (the "Applicable Accounting
Standards"), such firm is of the opinion that such servicing has been conducted
in compliance with the Applicable Accounting Standards except for (a) such
exceptions as such firm shall believe to be immaterial and (b) such other
exceptions as shall be set forth in such statement. Section 7.06. Right to
Examine Servicer Records. Each Securityholder, the Indenture Trustee, the Issuer
and each of their respective agents shall have the right upon reasonable prior
notice, during normal business hours and as often as reasonably required, to
examine, audit and copy, at the expense of the Person making such examination,
any and all of the books, records or other information of the Servicer
(including without limitation any Subservicer to the extent provided in the
related Subservicing Agreement) whether held by the Servicer or by another on
behalf of the Servicer, which may be relevant to the performance or observance
by the Servicer of the terms, covenants or conditions of this Agreement. Each
Securityholder, the Indenture Trustee and the Issuer agree that any information
obtained pursuant to the terms of this Agreement shall be held confidential.
Section 7.07. Reports to the Indenture Trustee; Collection Account Statements.
If the Collection Account is not maintained with the Indenture Trustee, then not
later than 25 days after each Record Date, the Servicer shall forward to the
Indenture Trustee a statement, certified by a Servicing Officer, setting forth
the status of the Collection Account as of the close of business on the
preceding Record Date and showing, for the period covered by such statement, the
aggregate of deposits into the Collection Account for each category of deposit
specified in Section 5.01(b), the aggregate of withdrawals from the Collection
Account for each category of withdrawal specified in Section 5.01(b)(2) and (d)
and the aggregate amount of permitted withdrawals not made in the related Due
Period in each case, for the related Due Period.
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01. Financial Statements. The Servicer understands that, in
connection with the transfer of the Securities, Securityholders may request that
the Servicer make available to the Securityholders, to prospective
Securityholders annual audited financial statements of the Servicer for one or
more of the most recently completed five fiscal years for which such statements
are available, which request shall not be unreasonably denied.
The Servicer also agrees to make available on a reasonable basis to the
Securityholders, any prospective Securityholder a knowledgeable financial or
accounting officer for the purpose of answering reasonable questions respecting
recent developments affecting the Servicer or the financial statements of the
Servicer and to permit the Securityholders, any prospective Securityholder to
inspect the Servicer's servicing facilities during normal business hours for the
purpose of satisfying the Securityholders and such prospective Securityholder
that the Servicer has the ability to service the Home Loans in accordance with
this Agreement.
ARTICLE IX
THE SERVICER
Section 9.01. Indemnification; Third Party Claims. (a) The Servicer
agrees to indemnify and hold the Indenture Trustee, the Co-Owner Trustee, the
Issuer, the Seller and each Securityholder harmless from and against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Indenture Trustee,
the Issuer, the Seller or any Securityholder may sustain directly resulting from
the negligence or willful misconduct of the Servicer in the performance of its
duties hereunder or in the servicing of the Home Loans in compliance with the
terms of this Agreement. It is the express intention of the parties to this
Agreement that the indemnification and hold harmless obligations of the Servicer
set forth in the preceding sentence shall apply fully to claims, losses, etc.
resulting from acts or omissions that may constitute ordinary negligence on the
part of the Servicer. The Servicer shall not be liable or responsible for any of
the representations, covenants, warranties, responsibilities, duties or
liabilities of any prior Servicer. The Servicer shall immediately notify the
Indenture Trustee, the Issuer, the Seller and each Securityholder if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Indenture Trustee and the Issuer) the defense of
any such claim and advance all expenses in connection therewith, including
reasonable counsel fees, and promptly advance funds to pay, discharge and
satisfy any judgment or decree which may be entered against the Servicer, the
Indenture Trustee, the Issuer, the Seller and/or any Securityholder in respect
of such claim.
(b) The Seller agrees to indemnify and hold the Indenture Trustee, the
Issuer, the Servicer and each Securityholder harmless from and against any and
all claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Indenture Trustee,
the Issuer, the Servicer or any Securityholder may sustain directly resulting
from the negligence or willful misconduct of the Seller in the performance of
its duties hereunder or in compliance with the terms of this Agreement. It is
the express intention of the parties to this Agreement that the indemnification
and hold harmless obligations of the Seller set forth in the preceding sentence
shall apply fully to claims, losses, etc. resulting from acts or omissions that
may constitute ordinary negligence on the part of the Seller. The Seller shall
immediately notify the Indenture Trustee, the Issuer, the Servicer and each
Securityholder if a claim is made by a third party with respect to this
Agreement, and the Seller shall assume (with the consent of the Indenture
Trustee and the Issuer) the defense of any such claim and advance all expenses
in connection therewith, including reasonable counsel fees, and promptly advance
funds to pay, discharge and satisfy any judgment or decree which may be entered
against the Seller, the Servicer, the Indenture Trustee, the Issuer and/or any
Securityholder in respect of such claim.
(c) The Transferor agrees to indemnify and hold the Indenture Trustee,
the Issuer, the Servicer and each Securityholder harmless from and against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments, and any other costs, fees and expenses that the Indenture
Trustee, the Issuer, the Servicer or any Securityholder may sustain directly
resulting from the negligence or willful misconduct of the Transferor in the
performance of its duties hereunder or in compliance with the terms of this
Agreement. It is the express intention of the parties to this Agreement that the
indemnification and hold harmless obligations of the Transferor set forth in the
preceding sentence shall apply fully to claims, losses, etc. resulting from acts
or omissions that may constitute ordinary negligence on the part of the
Transferor. The Transferor shall immediately notify the Indenture Trustee, the
Issuer, the Servicer and each Securityholder if a claim is made by a third party
with respect to this Agreement, and the Transferor shall assume (with the
consent of the Indenture Trustee and the Issuer) the defense of any such claim
and advance all expenses in connection therewith, including reasonable counsel
fees, and promptly advance funds to pay, discharge and satisfy any judgment or
decree which may be entered against the Transferor, the Servicer, the Indenture
Trustee, the Issuer and/or any Securityholder in respect of such claim.
(d) The obligations of the Servicer, the Seller and the Transferor
under this Section 9.01 shall survive the termination of this Agreement. Section
9.02. Merger or Consolidation of the Servicer. The Servicer shall keep in full
effect its existence, rights and franchises as a corporation, and will obtain
and preserve its qualification to do business as a foreign corporation and
maintain such other licenses and permits, in each jurisdiction necessary to
protect the validity and enforceability of this Agreement or any of the Home
Loans and to perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be an Eligible Servicer and shall be the successor of the
Servicer, as applicable hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding. The Servicer shall send notice of any such merger,
conversion, consolidation or succession to the Indenture Trustee and the Issuer.
Section 9.03. Limitation on Liability of the Servicer and Others. The
Servicer and any director, officer, employee or agent of the Servicer may rely
on any document of any kind which it in good faith reasonably believes to be
genuine and to have been adopted or signed by the proper authorities respecting
any matters arising hereunder. Subject to the terms of Section 9.01 herein, the
Servicer shall have no obligation to appear with respect to, prosecute or defend
any legal action which is not incidental to the Servicer's duty to service the
Home Loans in accordance with this Agreement.
Section 9.04. Servicer Not to Resign; Assignment. (a) The Servicer
shall not resign from the obligations and duties hereby imposed on it except by
mutual consent of the Servicer, the Seller, the Indenture Trustee, the Issuer
and the Majority Securityholders, or upon the determination that the Servicer's
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Servicer. Any such determination permitting
the resignation of the Servicer shall be evidenced by a written opinion of
counsel (who may be an employee of the Servicer) to such effect delivered to the
Indenture Trustee, the Issuer and the Seller, which opinion of counsel shall be
in form and substance acceptable to the Indenture Trustee and the Issuer. No
such resignation shall become effective until the Indenture Trustee or a
successor servicer has assumed the Servicer's responsibilities and obligations
hereunder in accordance with Section 10.02. (b) The Servicer shall not assign
this Agreement or any of its obligations, rights and duties hereunder without
the prior written consent of the Seller, the Indenture Trustee, the Issuer and
the Majority Securityholders; provided, however, the Servicer may assign this
Agreement (i) without the prior written consent of the Seller, the Indenture
Trustee and the Issuer, but with the prior written consent of the Majority
Securityholders to the Indenture Trustee or (ii) without the prior written
consent of the Seller, but with the prior written consent of the Indenture
Trustee, the Issuer and the Majority Securityholders, to any Person that (A)
services not less than $25,000,000 in aggregate outstanding principal amount of
loans similar in type to the Home Loans, (B) has a net worth of not less than
$2,500,000, (C) has a blanket fidelity bond and errors and omissions insurance
coverage satisfying the requirements set forth in Section 4.03 and (D) will not
cause any rating of any Class of the Securities in effect immediately prior to
such assignment to be qualified, downgraded or withdrawn, as evidenced by a
letter from each Rating Agency to such effect. Any such assignment to a
successor servicer (other than the Indenture Trustee) shall be effective only
upon delivery to the Indenture Trustee and the Issuer of an agreement, duly
executed by the Servicer and such successor servicer in a form reasonably
satisfactory to the Indenture Trustee and the Issuer, in which such successor
servicer shall assume the due and punctual performance of each covenant and
condition to be performed or observed by the Servicer hereunder.
Section 9.05. Relationship of Servicer to the Issuer and the Indenture
Trustee. The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Issuer and the Indenture Trustee under
this Agreement is intended by the parties hereto to be that of an independent
contractor and not of a joint venturer, agent or partner of the Issuer or the
Indenture Trustee.
ARTICLE X
DEFAULT
Section 10.01. Events of Default. (a) In case one or more of the
following Events of Default by the Servicer shall occur and be continuing, that
is to say:
(i) any failure by the Servicer to deposit in the Collection
Account in accordance with Section 5.01(b) any payments in respect of
the Home Loans received by the Servicer no later than the second
Business Day following the day on which such payments were received; or
(ii) any 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 (other than a covenant,
obligation or agreement, or default in the observance of which, that is
elsewhere in this Section 10.01 specifically dealt with), which failure
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied and
stating that such notice is a "Notice of Default" hereunder, shall have
been given (a) to the Servicer by the Indenture Trustee or the Issuer,
or (b) to the Servicer, the Indenture Trustee or the Issuer by any
Securityholder; or
(iii) (A) the entry by a court or supervisory authority having
jurisdiction of a decree or order for relief in respect of the Servicer
in an involuntary case or proceeding under any applicable federal or
state bankruptcy, insolvency, reorganization, or other similar law or
(B) the appointment a custodian, receiver, liquidator, assignee,
trustee, sequestrator, or other similar official of such member or of
any substantial part of its property, or ordering the winding up or
liquidation of the Servicer's affairs, and the continuance of any such
decree or order for relief or any such other decree or order unstayed
and in effect for a period of 60 consecutive days; or
(iv) the commencement by the Servicer of a voluntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization, or other similar law or of any other case
or proceeding to be adjudicated bankrupt or insolvent or the consent by
the Servicer to the entry of a decree or order for relief in respect of
itself in an involuntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization, or other
similar law or to the commencement of any bankruptcy or insolvency case
or proceeding against the Servicer, or the filing by the Servicer of a
petition or answer or consent seeking reorganization or relief under
any applicable federal or state law, or the consent by the Servicer to
the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator, or similar official of the Servicer or of any substantial
part of its property, or the making by the Servicer of an assignment
for the benefit of creditors, or the Servicer's failure to pay its
debts generally as they become due, or the taking of corporate action
by the Servicer in furtherance of any such action; or
(v) the Servicer shall admit in writing its inability to pay
its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) the Majority Securityholders (A) shall receive notice
from the Servicer that the Servicer is no longer able to discharge its
duties under this Agreement or (B) shall determine, in their reasonable
judgment and based upon published reports (including wire services),
which they reasonably believe in good faith to be reliable, that the
Servicer
(1) has experienced a material adverse change in its
business, assets, liabilities, operations, condition
(financial or otherwise) or prospects,
(2) has defaulted on any of its material obligations,
or
(3) has ceased to conduct its business in the
ordinary course; or
(vii) as of any Determination Date, the total Expected Loan
Loss Percentage (as defined below) exceeds (1) up to the fifth (5th)
anniversary of the July 31, 1998 Cut-Off Date, 20.5%, or (2)
thereafter, 30.75% (where the "Expected Loan Loss Percentage" shall be
the sum of (A) the cumulative Net Loan Losses divided by the Assumed
Pool Principal Balance, plus (B) 25% of the aggregate Principal Balance
of the Home Loans which are then more than 30 but less than 61 days
delinquent divided by the Assumed Pool Principal Balance, plus (C) 50%
of the aggregate Principal Balance of the Home Loans which are then 61
or more but less than 91 days delinquent divided by the Assumed Pool
Principal Balance, plus (D) 100% of the aggregate Principal Balance of
the Home Loans which are then more than 90 days delinquent divided by
the Assumed Pool Principal Balance).
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, the Majority Securityholders, the
Indenture Trustee or the Issuer by notice in writing to the Servicer and each
Rating Agency may, in addition to whatever rights such Person may have at law or
equity to damages, including injunctive relief and specific performance
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Home Loans and the proceeds thereof, as servicer under this
Agreement. Upon receipt by the Servicer of such written notice, all authority
and power of the Servicer under this Agreement, whether with respect to the Home
Loans or otherwise, shall, subject to Section 10.02, pass to and be vested in a
successor servicer acceptable to the Rating Agencies, or the Indenture Trustee
if a successor servicer cannot be retained in a timely manner, and the successor
servicer, or Indenture Trustee, as applicable, 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 do or cause to be
done all other acts or things necessary or appropriate to effect the purposes of
such notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Home Loans and related documents. The Servicer
agrees to cooperate with the successor servicer in effecting the termination of
the Servicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the successor servicer for administration by it of
all amounts which shall at the time be credited by the Servicer to each
Collection Account or thereafter received with respect to the Home Loans.
Section 10.02. Indenture Trustee to Act; Appointment of Successor. On
and after the date the Servicer receives a notice of termination pursuant to
Section 10.01, or the Indenture Trustee receives the resignation of the Servicer
evidenced by an opinion of counsel or accompanied by the consents required by
Section 9.04, or the Servicer is removed as Servicer pursuant to this Article X,
then, subject to Section 4.08, the Indenture Trustee, with the consent of the
Majority Securityholders, shall appoint a successor Servicer acceptable to the
Rating Agencies to 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; provided, however, that the successor Servicer shall not be liable for
any actions of any Servicer prior to it; provided further, however, that if a
successor Servicer cannot be retained in a timely manner, the Indenture Trustee
shall act as successor Servicer and shall assume the responsibilities of the
Servicer hereunder. In the event that the Indenture Trustee assumed the
responsibilities of Servicer pursuant to this Section 10.02, the Indenture
Trustee will become licensed, qualified and in good standing in each Mortgaged
Property State the laws of which require licensing or qualification, in order to
perform its obligations as Servicer hereunder or, alternatively, shall retain an
agent who is so licensed, qualified and in good standing in any such Mortgaged
Property State. The successor Servicer shall be obligated to make Servicing
Advances hereunder. As compensation therefor, the successor Servicer appointed
pursuant to this Section 10.02, shall be entitled to all Servicing Compensation
as provided in this Agreement. The Servicer shall not be entitled to any
termination fee if it is terminated pursuant to Section 10.01, but shall be
entitled to any accrued and unpaid Servicing Fee to the date of termination. Any
collections received by the prior Servicer after its removal or resignation
shall be endorsed by it to the Indenture Trustee and remitted directly to the
Indenture Trustee or, at the direction of the Indenture Trustee, to the
successor Servicer.
The compensation of any successor Servicer (including, without
limitation, the Indenture Trustee) so appointed shall be the Servicing Fee,
together with other Servicing Compensation provided for herein. In the event the
Indenture Trustee is required to solicit bids to appoint a successor Servicer,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth in Section 9.04(b)(ii) above. Such public
announcement shall specify that the successor Servicer shall be entitled to the
full amount of the Servicing Fee and Servicing Compensation provided for herein.
Within thirty days after any such public announcement, the Indenture Trustee
shall negotiate and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest qualifying bid. The Indenture Trustee shall deduct from any sum received
by the Indenture Trustee from the successor Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder and the amount of any unreimbursed Servicing Advances made by the
Indenture Trustee. After such deductions, the remainder of such sum shall be
paid by the Indenture Trustee to the Servicer at the time of such sale, transfer
and assignment to the successor Servicer.
The Indenture Trustee, the Issuer, any Custodian, the Servicer and any
such successor Servicer shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession of a successor Servicer.
The Servicer agrees to cooperate with the Indenture Trustee and any successor
Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
Trustee or such successor Servicer, as applicable, all documents and records
reasonably requested by the applicable party to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Indenture
Trustee or such successor Servicer, as applicable, all amounts which then have
been or should have been deposited in the Collection Account by the Servicer or
which are thereafter received with respect to the Home Loans. Neither the
Indenture Trustee nor any other successor Servicer shall be held liable by
reason of any failure to make, or any delay in making, any payment hereunder or
any portion thereof caused by (i) the failure of the prior Servicer to deliver,
or any delay in delivering, cash, documents or records to it, or (ii)
restrictions relating to the prior Servicer imposed by any regulatory authority
having jurisdiction over the prior Servicer. No appointment of a successor
Servicer hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Indenture Trustee to each
Securityholder, the Issuer and the Seller and, except in the case of the
appointment of the Indenture Trustee as successor Servicer (when no consent
shall be required), the Seller, the Majority Securityholders and the Issuer
shall have consented thereto.
Pending appointment of a successor Servicer hereunder, the Indenture
Trustee shall act as Servicer hereunder as hereinabove provided. In connection
with such appointment and assumption, the Indenture Trustee may make such
arrangements for the compensation of such successor Servicer as it and such
successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Servicing Compensation in the form of assumption fees,
late payment charges or otherwise as provided in this Agreement.
Section 10.03. Waiver of Defaults. The Majority Securityholders may, on
behalf of all Securityholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article X, provided, however, that the
Majority Securityholders may not waive a default in making a required payment or
distribution on a Security or Residual Interest without the consent of the
related Securityholder or holders of the Residual Interest. Upon any waiver of a
past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto except to the extent expressly so waived.
Section 10.04. Accounting Upon Termination of Servicer. Upon
termination of the Servicer under this Article X, the Servicer shall, at its own
expense:
(a) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee, the funds in any Collection Account;
(b) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee, all of the Servicer's files, documents and statements
relating to the Home Loans held by it hereunder and a Home Loan portfolio
computer tape;
(c) deliver to its successor or, if none shall yet have been appointed,
to the Indenture Trustee, the Issuer and the Securityholders a full accounting
of all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for payments or charges with
respect to the Home Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Home Loans to its successor and to more fully and definitively
vest in such successor all rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer under this Agreement.
ARTICLE XI
TERMINATION
Section 11.01. Termination. (a) This Agreement shall terminate upon any
of the following events: (i) the later of (a) the satisfaction and discharge of
the Indenture pursuant to Section 4.1 of the Indenture and Notice to the
Indenture Trustee of such discharge and (b) the disposition of all funds with
respect to the last Home Loan and the remittance of all funds due hereunder;
(ii) payment of all amounts due and payable to the Securityholders, the
Servicer, the Indenture Trustee, the Owner Trustee, the Co-Owner Trustee and the
Issuer pursuant to this Agreement and the Indenture and written notice to the
Indenture Trustee from the Issuer of the Issuer's intent to terminate this
Agreement; or (iii) mutual written consent of the Servicer, the Seller, the
Transferor and all Securityholders in writing.
(b) Notice of termination of this Agreement pursuant to Section
11.01(a)(i) shall be sent by the Indenture Trustee to the Securityholders in
accordance with Section 2.6(b) of the Indenture. Notice of termination of this
Agreement pursuant to Section 11.01(a)(ii) or (iii) shall be mailed or
transmitted by facsimile by the Indenture Trustee to the Securityholders on the
Business Day immediately following the day on which the Indenture Trustee
receives notice of such termination, and such notice to the Securityholders
shall state that the Securityholders are to surrender their respective
Securities for cancellation and shall specify the place where such Securities
are to be surrendered.
Section 11.02. Optional Termination by Seller.
(a) [Reserved].
(b) The Seller may, at its option, effect an early redemption or
termination of the Securities on or after any Payment Date on which the Pool
Principal Balance declines to 10% or less of the Assumed Pool Principal Balance
as of the Closing Date. The Seller shall effect such early redemption or
termination by providing notice thereof to the Indenture Trustee and Owner
Trustee and by paying into the Collection Account in the manner described below
an amount equal to the Termination Price.
(c) Any early redemption and termination by the Seller pursuant to
Section 11.02(b) shall be accomplished by depositing the Termination Price into
the Collection Account on the Determination Date immediately preceding the
Payment Date on which the early redemption or termination is to occur. The
amount so deposited and any other amounts then on deposit in the Collection
Account (other than any amounts not required to have been deposited therein
pursuant to Section 5.01(b)(1) and any amounts withdrawable therefrom by the
Indenture Trustee pursuant to Section 5.01(d)) shall be transferred to the Note
Payment Account pursuant to Section 5.01(b)(2) for payment or distribution to
Securityholders on the final Payment Date; and any amounts received with respect
to the Home Loans and Foreclosure Properties subsequent to the Due Period
immediately preceding such final Payment Date shall belong to the Seller. For
purposes of calculating the payments and distributions to be made on the final
Payment Date, amounts transferred to the Note Payment Account immediately
preceding such final Payment Date shall in all cases be deemed to have been
received during the related Due Period, and amounts so transferred shall be
applied pursuant to Section 5.01(d).
Section 11.03. Notice of Termination. Notice of termination of this
Agreement or of early redemption and termination of the Securities shall be sent
(i) by the Indenture Trustee to the Noteholders in accordance with Section 10.2
of the Indenture and (ii) by the Owner Trustee to the Certificateholder in
accordance with Section 9.1(d) of the Trust Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Acts of Securityholders. Except as otherwise
specifically provided herein, whenever Securityholder action, consent or
approval is required under this Agreement, such action, consent or approval
shall be deemed to have been taken or given on behalf of, and shall be binding
upon, all Securityholders if the Majority Securityholders agree to take such
action or give such consent or approval.
Section 12.02. Amendment. (a) This Agreement may be amended from time
to time by the Issuer, the Seller, the Servicer, the Transferor and the
Indenture Trustee by written agreement with notice thereof to the
Securityholders, without the consent of any of the Securityholders, to cure any
error or ambiguity, to correct or supplement any provisions hereof which may be
defective or inconsistent with any other provisions hereof, to add any other
provisions with respect to matters or questions arising under this Agreement;
provided, however, that such action will not adversely affect in any material
respect the interests of the Securityholders. An amendment described above shall
be deemed not to adversely affect in any material respect the interests of the
Securityholders if either (i) an opinion of counsel is obtained to such effect,
or (ii) the party requesting the amendment obtains a letter from each of the
Rating Agencies confirming that the amendment, if made, would not result in the
downgrading or withdrawal of the rating then assigned by the respective Rating
Agency to any Class of Securities then outstanding.
(b) This Agreement may also be amended from time to time by the Issuer,
the Seller, the Servicer, the Transferor and the Indenture Trustee by written
agreement, with the prior written consent of the Majority Securityholders, 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 Securityholders; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the timing of, collections of
payments on Home Loans or payments or distributions which are required to be
made on any Security, without the consent of the holders of 100% of each Class
of Securities affected thereby, (ii) adversely affect in any material respect
the interests of the holders of any Class of Securities in any manner other than
as described in (i) , without the consent of the holders of 100% of such Class
of Securities, or (iii) reduce the percentage of any Class of Securities, the
holders of which are required to consent to any such amendment, without the
consent of the holders of 100% of such Class of Securities.
(c) It shall not be necessary for the consent of Securityholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
(d) Prior to the execution of any amendment to this Agreement, the
Issuer shall be entitled to receive and rely upon an opinion of counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Issuer and the Indenture Trustee may, but shall not be obligated
to, enter into any such amendment which affects such Person's own rights, duties
or immunities under this Agreement.
Section 12.03. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions
in which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Securityholders' expense on direction of the
Majority Securityholders, but only when accompanied by an opinion of counsel to
the effect that such recordation materially and beneficially affects the
interests of the Securityholders or is necessary for the administration or
servicing of the Home Loans.
Section 12.04. Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.
Section 12.05. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS, AND, TO THE EXTENT PERMITTED BY LAW, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by overnight mail, certified mail or
registered mail, postage prepaid, to: (i) in the case of the Seller, FIRSTPLUS
Investment Corporation, 3773 Howard Hughes Parkway, Suite 300N, Las Vegas,
Nevada 89109, Attention: Russ Ungerman, or such other addresses as may hereafter
be furnished to the Securityholders and the other parties hereto in writing by
the Seller, (ii) in the case of the Issuer, FIRSTPLUS Home Loan Owner Trust
1998-5, c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration,
or such other address as may hereafter be furnished to the Securityholders and
the other parties hereto, (iii) in the case of the Transferor and the Servicer,
FIRSTPLUS FINANCIAL, INC., 1600 Viceroy, 7th Floor, Dallas, Texas 75235,
Attention: Lee Reddin, or such other address as may hereafter be furnished to
the Securityholders and the other parties hereto in writing by the Servicer or
the Transferor, (iv) in the case of the Indenture Trustee or Co-Owner Trustee,
U.S. Bank National Association, 180 East Fifth Street, St. Paul, Minnesota
55101, Attention: Structured Finance, FIRSTPLUS 1998-5, and (v) in the case of
the Securityholders, as set forth in the applicable Note Register and
Certificate Register. Any such notices shall be deemed to be effective with
respect to any party hereto upon the receipt of such notice by such party,
provided, however, that a facsimile or other form of electronic transmission
shall be deemed to be received by the parties referred to in (i) to (v) above
when transmitted so long as the transmitting machine has provided an electronic
confirmation of such transmission and such facsimile or other form of electronic
transmission is confirmed with a printed paper copy thereof by mail or overnight
courier service; and provided, further, that any delivery of computer readable
format hereunder shall be accompanied or confirmed by the delivery of a printed
paper copy thereof. Notices to the Securityholders shall be effective upon
mailing or personal delivery. Each party may, by notice, designate any further
or different address to which subsequent notices, certificates or other
communications to such party shall be sent.
Section 12.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 12.08. No Partnership. Nothing herein contained shall be deemed
or construed to create any partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor.
Section 12.09. Counterparts. This Agreement may be executed in one or
more counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.
Section 12.10. Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the Servicer, the Transferor, the Seller, the
Issuer and the Securityholders and their respective successors and permitted
assigns.
Section 12.11. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
Section 12.12. Actions of Securityholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders in person or by agent duly appointed in writing; and except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee, the
Seller, the Servicer or the Issuer. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Agreement and conclusive in favor of the Seller, the Servicer and the
Issuer if made in the manner provided in this Section.
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner which the
Seller, the Servicer or the Issuer deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Indenture Trustee, the Seller, the Servicer or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Security.
(d) The Seller, the Servicer or the Issuer may require additional proof
of any matter referred to in this Section 12.12 as it shall deem necessary.
Section 12.13. Reports to Rating Agencies. (a) The Indenture Trustee
shall provide to each Rating Agency copies of statements, reports and notices,
to the extent received by it from the Servicer, the Transferor or the Issuer
hereunder, as follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home
Loans;
(iii) notice of any termination, replacement, succession,
merger or consolidation of either the Servicer, any Custodian or the
Issuer;
(iv) notice of final payment on the Notes and the final
distribution with respect to the Residual Interest Certificate;
(v) notice of the occurrence of any Event of Default;
(vi) copies of the annual independent auditor's report
delivered pursuant to Section 7.05, and copies of any compliance
reports delivered by the Servicer hereunder including Section 7.04; and
(vii) copies of any Servicer's Monthly Statement pursuant to Section
6.02(b); and
(b) With respect to the requirement of the Indenture Trustee to provide
statements, reports and notices to the Rating Agencies such statements, reports
and notices shall be delivered to the Rating Agencies at the following
addresses: (i) if to Moody's, 99 Church Street, 4th Floor, New York, New York
10007, (ii) if to Fitch, One State Street Plaza, New York, New York 10004, (iii)
if to DCR, 55 East Monroe Street, 38th Floor, Chicago, Illinois 60603,
Attention: RMBS Monitoring and (iv) if to S&P, 26 Broadway, 15th Floor, New
York, New York 10004-1064, Attention: Asset-Backed Monitoring Department.
Section 12.14. [Reserved].
Section 12.15. No Petition. Each of the Indenture Trustee, the Seller
and the Servicer by entering into this Agreement, hereby covenants and agrees
that it will not at any time institute against the Issuer, or join in any
institution against the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Securities or any of the Basic Documents.
IN WITNESS WHEREOF, the Servicer, the Transferor, the Issuer and the
Seller have caused their names to be signed by their respective officers
thereunto duly authorized, as of the day and year first above written, to this
Sale and Servicing Agreement.
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5,
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee
By:________________________________________
Name:
Title:
FIRSTPLUS INVESTMENT CORPORATION, as Seller
By:________________________________________
Name: Lee F. Reddin
Title: Vice President
FIRSTPLUS FINANCIAL, INC., as Transferor and
Servicer
By:_________________________________________
Name: Lee F. Reddin
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION, as Indenture
Trustee and Co-Owner Trustee
By:_________________________________________
Name:
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be the
person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of ________,
1998.
______________________________________
Notary Public, State of Texas
My commission expires:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be the
person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS INVESTMENT
CORPORATION, a Nevada corporation, and that he executed the same as the act of
such corporation for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of _________,
1998.
_______________________________
Notary Public, State of Texas
My commission expires:
THE STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS HOME LOAN
OWNER TRUST 1998-5, as Issuer, and that he executed the same as the act of such
association for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of _________,
1998.
________________________________
Notary Public, State of Delaware
My commission expires:
______________________
(printed name)
THE STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said U.S. BANK NATIONAL
ASSOCIATION, as Indenture Trustee, and that she executed the same as the act of
such association for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of ________,
1998.
_________________________________
Notary Public, State of Minnesota
My commission expires:
________________________.
(printed name)
EXHIBIT A
Home Loan Schedule
[Delivered under Separate Cover]
EXHIBIT B
Form Of Subsequent Transfer Agreement
This SUBSEQUENT TRANSFER AGREEMENT dated as of _____________, 199_
(this "Agreement") is entered into between FIRSTPLUS FINANCIAL, INC., as
Transferor and Servicer (the "Transferor" and "Servicer"), FIRSTPLUS Investment
Corporation, as Seller (the "Seller"), and FIRSTPLUS Home Loan Owner Trust
1998-5, as Issuer (the "Issuer") and U.S. Bank National Association, as
Indenture Trustee and Co-Owner Trustee (the "Indenture Trustee" and "Co-Owner
Trustee"), with respect to that certain Loan Sale Agreement dated as of August
_____, 1998 (the "Loan Sale Agreement") by and between the Transferor and the
Seller, and that certain Sale and Servicing Agreement dated as of August 1, 1998
(the "Sale and Servicing Agreement") among the Issuer, the Seller, the
Transferor and Servicer, the Indenture Trustee and the Co-Owner Trustee;
WHEREAS, pursuant to the Loan Sale Agreement and the Sale and Servicing
Agreement, the Transferor, the Seller, the Issuer and the Indenture Trustee
agreed to the sale by the Transferor to the Seller, the sale by the Seller to
the Issuer and the pledge by the Issuer to Indenture Trustee of additional Home
Loans following the Closing Date; and
WHEREAS, the Transferor, the Seller, the Issuer and the Indenture
Trustee desire to enter into this Subsequent Transfer Agreement to reflect the
sale, transfer, assignment, set over, conveyance and grant of certain additional
Home Loans to the Issuer and their pledge to the Indenture Trustee.
NOW, THEREFORE, in consideration of the premises herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are mutually acknowledged, the Transferor, the Seller, the Issuer and the
Indenture Trustee hereby agree as follows:
Subsequent Home Loans. The Transferor, the Seller, the Issuer and the Indenture
Trustee hereby agree to the sale, transfer, assignment, set over, conveyance and
grant by the Transferor to the Seller, the sale, transfer, assignment, set over,
conveyance and grant by the Seller to the Issuer and the Grant by the Issuer to
the Indenture Trustee of the additional home loans as described on Attachment 1
attached hereto (the "Subsequent Home Loans") and the Home Loan Schedule
attached hereto as Attachment 2 (the "Home Loan Schedule"). The Home Loan
Schedule shall supersede any Addition Notices for any Subsequent Transfer
Agreement insofar as the Home Loan Schedule relates to the identification of
Subsequent Home Loans transferred to the Issuer. Capitalized terms used and not
defined herein have the meanings assigned to them in the Sale and Servicing
Agreement.
Section 1. Sale by Transferor to Seller of Subsequent Home Loans. The
Transferor does hereby sell, transfer, assign, set over, convey and Grant to the
Seller:
(i) all of the right, title and interest of the Transferor in
and to each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-Off Date;
(ii) all right, title and interest of the Transferor in the
Mortgages on the properties securing the Subsequent Home Loans, if any,
including any Mortgaged Property acquired by or on behalf of the Seller
or its successor by foreclosure or deed in lieu of foreclosure or
otherwise;
(iii) all right, title and interest of the Transferor in and
to any rights in or proceeds from any insurance policies (including
title insurance policies) covering the Subsequent Home Loans, the
related Mortgaged Properties or the related Obligors and any amounts
recovered from third parties in respect of any Liquidated Home Loans;
and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Transferor has delivered
or caused to be delivered to the Seller, each item set forth in Section 2.02 of
the Sale and Servicing Agreement. The transfer to the Seller by the Transferor
of the Subsequent Home Loans identified on the Mortgage Loan Schedule shall be
absolute and is intended by the Transferor and the Seller to constitute and to
be treated as an absolute conveyance and sale by the Transferor. The expenses
and costs relating to the delivery of the Subsequent Home Loans, this Agreement
and the Sale and Servicing Agreement shall be borne by the Transferor.
Additional terms of the sale, including the purchase price, are set forth on
Attachment 1 attached hereto.
Sale by Seller to Issuer of Subsequent Home Loans. Upon and simultaneous with
the purchase by the Seller from the Transferor of the Subsequent Home Loans, the
Seller does hereby sell, transfer, assign, set over, convey and Grant to the
Issuer:
(i) all of the right, title and interest of the Seller in and
to each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the related Debt Instruments, and all payments on, and
proceeds with respect to, such Subsequent Home Loans received on and
after the applicable Cut-off Date;
(ii) all right, title and interest of the Seller in the
Mortgages on the properties securing the Subsequent Home Loans, if any,
including any Mortgaged Property acquired by or on behalf of the Issuer
by foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Seller in and to
any rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
With respect to each Subsequent Home Loan, the Seller has delivered or
caused to be delivered to the Issuer, each item set forth in Section 2.02 of the
Sale and Servicing Agreement. The transfer to the Issuer by the Seller of the
Subsequent Home Loans identified on the Mortgage Loan Schedule shall be absolute
and is intended by the Seller, the Transferor, the Issuer, the
Certificateholders and the Noteholders to constitute and to be treated as an
absolute conveyance and sale by the Seller. The expenses and costs relating to
the delivery of the Subsequent Home Loans, this Agreement and the Sale and
Servicing Agreement shall be borne by the Seller to the extent that the same are
not paid by the Transferor. Additional terms of the sale, including the purchase
price, are set forth on Attachment 1 attached hereto.
Grant by Issuer to Indenture Trustee of Subsequent Home Loans.
Upon and simultaneous with the purchase by the Seller from the
Transferor of the Subsequent Home Loans and the purchase by the Issuer from the
Seller of the Subsequent Home Loans, and pursuant to the terms of the Indenture,
the Issuer does hereby Grant to the Indenture Trustee:
(i) all of the right, title and interest of the Issuer in and
to each Subsequent Home Loan identified on the Home Loan Schedule,
including without limitation, the Home Loans, the Servicer's Home Loan
Files and the Debt Instruments, and all payments on, and proceeds with
respect to, such Subsequent Home Loans received on and after the
applicable Cut-off Date;
(ii) all right, title and interest of the Issuer in the
Mortgages on the properties securing the Subsequent Home Loans, if any,
including any Mortgaged Property acquired by or on behalf of the Issuer
by foreclosure or deed in lieu of foreclosure or otherwise;
(iii) all right, title and interest of the Issuer in and to
any rights in or proceeds from any insurance policies (including title
insurance policies) covering the Subsequent Home Loans, the related
Mortgaged Properties or the related Obligors and any amounts recovered
from third parties in respect of any Liquidated Home Loans; and
(iv) all the proceeds of each of the foregoing.
Representations and Warranties; Conditions Precedent.
(a) The Transferor hereby makes the representations, warranties and
covenants set forth in Sections 3.02 and 3.04 of the Sale and Servicing
Agreement with respect to the Subsequent Home Loans as of the date hereof and
the applicable Subsequent Transfer Date, and the Transferor hereby confirms that
with respect to the sale by the Transferor to the Seller of the Subsequent Home
Loans each of the conditions set forth in Sections 2.02 of the Sale and
Servicing Agreement for such sale have been satisfied as of the date hereof and
the applicable Subsequent Transfer Date. In addition, the Transferor hereby
reconfirms the accuracy of the representations and warranties set forth in
Section 3.03 of the Sale and Servicing Agreement with respect to the Subsequent
Home Loans as of the date hereof and the applicable Subsequent Transfer Date.
(b) In reliance upon the representations, warranties and covenants made
by the Transferor in the preceding subsection (a) and in the Officer's
Certificate of the Transferor dated as of the date hereof, the Seller hereby
affirms the representations, warranties and covenants set forth in Section 3.01
of the Sale and Servicing Agreement with respect to the Subsequent Home Loans as
of the date hereof and the applicable Subsequent Transfer Date, and the Seller
hereby confirms that each of the conditions set forth in Sections 2.02 and 3.04
of the Sale and Servicing Agreement are satisfied as of the date hereof and the
applicable Subsequent Transfer Date.
(c) All terms and conditions of the Sale and Servicing Agreement are
hereby ratified and confirmed; provided however, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Sale and Servicing Agreement.
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 Mortgaged Properties
are situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Transferor, at its expense, in the event
such recordation materially and beneficially affects the interests of the
Noteholders or the Certificateholders.
Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Transferor, the Seller, the Issuer, the Indenture Trustee and
their respective successors and permitted assigns.
Counterparts. This Agreement may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
IN WITNESS WHEREOF, the Transferor, the Seller, the Issuer and the
Indenture Trustee have caused this SUBSEQUENT TRANSFER AGREEMENT to be signed by
their respective officers thereunto duly authorized, as of the day and year
first above written.
FIRSTPLUS FINANCIAL, INC.,
as Transferor
By:______________________________
Name:
Title:
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
By:______________________________
Name:
Title:
FIRSTPLUS HOME LOAN OWNER TRUST 1998-5
By: Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee
By:________________________________
Name:
Title:
U.S. BANK NATIONAL ASSOCIATION
as Indenture Trustee
By:________________________________
Name:
Title:
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be the
person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS FINANCIAL,
INC., a Texas corporation, and that he executed the same as the act of such
corporation for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________________, 199_.
Notary Public, State of Texas
My commission expires:
______________________
(printed name)
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ____________________________________, known to me to be the
person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS INVESTMENT
CORPORATION, a Nevada corporation, and that he executed the same as the act of
such corporation for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________________, 199_.
Notary Public, State of Texas
My commission expires:
______________________
(printed name)
THE STATE OF DELAWARE )
)
COUNTY OF NEW CASTLE )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said FIRSTPLUS Home Loan
Owner Trust 1998-5, as Issuer, and that he executed the same as the act of such
association for the purposes and consideration therein expressed, and in the
capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
___________________, 199_.
________________________________
Notary Public, State of Delaware
My commission expires:
_______________________
(printed name)
THE STATE OF MINNESOTA )
)
COUNTY OF RAMSEY )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared _______________________________________, known to me to be
the person and officer whose name subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said U.S. BANK NATIONAL
ASSOCIATION, as Indenture Trustee, and that she executed the same as the act of
such association for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
__________________, 199_.
_________________________________
Notary Public, State of Minnesota
My commission expires:
______________________
(printed name)
ATTACHMENT 1
1. Transfer Source of Subsequent Mortgage Loans:___________________
Subsequent Transfer Date: ___________________
Cut-Off Date: ___________________
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans: ___________________
Purchase Price for Subsequent
Mortgage Loans: ___________________
2. Transfer Source of Subsequent Mortgage Loans:___________________
Subsequent Transfer Date: ___________________
Cut-Off Date: ___________________
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans: ___________________
Purchase Price for Subsequent
Mortgage Loans: ___________________
3. Transfer Source of Subsequent Mortgage Loans:___________________
Subsequent Transfer Date: ___________________
Cut-Off Date: ___________________
Aggregate Outstanding Principal Balances
of Subsequent Mortgage Loans: ___________________
Purchase Price for Subsequent
Mortgage Loans: ___________________
ATTACHMENT 2
Home Loan Schedule
EXHIBIT C
Form of Addition Notice
Pursuant to Section 2.02 of the Sale and Servicing Agreement dated as
of August 1, 1998 among FIRSTPLUS Home Loan Owner Trust 1998-5, as Issuer (the
"Issuer"), FIRSTPLUS Investment Corporation, as Seller (the "Seller"), FIRSTPLUS
FINANCIAL, INC., as Servicer and Transferor (the "Transferor" and "Servicer"),
and U.S. Bank National Association, as Indenture Trustee and Co-Owner Trustee
(the "Indenture Trustee" and "Co-Owner Trustee"), the Transferor and the Seller
hereby provide notice to the Issuer and the Indenture Trustee that the
Subsequent Home Loans identified on Attachment 1 attached hereto will be sold to
the Issuer pursuant to a Subsequent Transfer Agreement dated as of
_____________, 199_ (the "Subsequent Transfer Agreement") between the Transferor
and Servicer, the Seller, the Issuer and the Indenture Trustee and Co-Owner
Trustee. The aggregate Principal Balance of such Subsequent Home Loans as of the
applicable Cut-Off Date, set forth on such Attachment 1, with respect to the
source of the Seller is set forth on the Schedules attached hereto as Attachment
2.
FIRSTPLUS INVESTMENT CORPORATION,
as Seller
By:______________________________
Name:
Title:
FIRSTPLUS FINANCIAL, INC.,
as Transferor
By:_______________________________
Name:
Title:
EXHIBIT D
Schedule of Specified Home Loans
EXHIBIT E
Form of Lost Note Affidavit