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POOLING AND SERVICING AGREEMENT
Dated as of _____________1, 199__
by and between
RESIDENTIAL INVESTORS CORPORATION
(Depositor)
and
REMODELERS NATIONAL FUNDING CORP.
(Transferor and Servicer)
and
___________________________________________
(Trustee)
REMODELERS HOME IMPROVEMENT LOAN ASSET-BACKED CERTIFICATES,
SERIES 199__-__
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TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Addition Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Aggregate FHA Insurance Premium Deposit Amount. . . . . . . . . . . . . 1
Aggregate FHA Insurance Proceeds. . . . . . . . . . . . . . . . . . . . 1
Aggregate FHA Premium Requirement . . . . . . . . . . . . . . . . . . . 2
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Amount Available. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Annual FHA Premium Rate . . . . . . . . . . . . . . . . . . . . . . . . 2
Assignment of Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . 2
Assumed Pool Principal Balance. . . . . . . . . . . . . . . . . . . . . 2
Authorized Denominations. . . . . . . . . . . . . . . . . . . . . . . . 2
Available Remittance Amount . . . . . . . . . . . . . . . . . . . . . . 2
Beneficial Owner. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Book-Entry Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capitalized Interest Account. . . . . . . . . . . . . . . . . . . . . . 3
Capitalized Interest Account Deposit. . . . . . . . . . . . . . . . . . 3
Capitalized Interest Account Requirement. . . . . . . . . . . . . . . . 3
Capitalized Interest Amount . . . . . . . . . . . . . . . . . . . . . . 3
Capitalized Interest Excess . . . . . . . . . . . . . . . . . . . . . . 3
Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Account . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Insurer Default . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Insurer Reimbursement Amount. . . . . . . . . . . . . . . . 4
Certificate Insurer Premium . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Interest Rate . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Register. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate Transferor. . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificateholder or Holder . . . . . . . . . . . . . . . . . . . . . . 4
Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A Certificateholder . . . . . . . . . . . . . . . . . . . . . . . 5
Class A Overcollateralization . . . . . . . . . . . . . . . . . . . . . 5
Class A-1 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-2 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-3 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class A-4 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class B Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class B Certificateholder . . . . . . . . . . . . . . . . . . . . . . . 5
Class B Loss Reimbursement Amount . . . . . . . . . . . . . . . . . . . 5
Class Pool Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
- i -
Class Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . 5
Class R Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Class R Certificateholder . . . . . . . . . . . . . . . . . . . . . . . 6
Class R Distribution Trigger. . . . . . . . . . . . . . . . . . . . . . 6
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Collection Account. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Completion Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 6
Conventional Mortgage Loan. . . . . . . . . . . . . . . . . . . . . . . 6
Credit Support Reduction Date . . . . . . . . . . . . . . . . . . . . . 6
Custodial Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Custodian Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cut-Off Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Defaulted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . 6
Deficiency Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Deleted Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . . 7
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Determination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Due Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Due Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Duff & Phelps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Excess FHA Premium Amount . . . . . . . . . . . . . . . . . . . . . . . 8
Excess Spread . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Expected Loan Losses. . . . . . . . . . . . . . . . . . . . . . . . . . 8
FDIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Claim Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Claims Administration Agreement . . . . . . . . . . . . . . . . . . 8
FHA Claims Administrator. . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Insurance Amount. . . . . . . . . . . . . . . . . . . . . . . . . . 8
FHA Insurance Premium Account . . . . . . . . . . . . . . . . . . . . . 9
FHA Insurance Premium Deposit Amount. . . . . . . . . . . . . . . . . . 9
FHA Insurance Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 9
FHA Insurance Transfer Certificate. . . . . . . . . . . . . . . . . . . 9
FHA Premium Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FHA Premium Requirement . . . . . . . . . . . . . . . . . . . . . . . . 9
FHA Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FHA Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FHLMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
FNMA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
- ii -
Funding Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Guaranteed Payment. . . . . . . . . . . . . . . . . . . . . . . . . . .10
Guaranty Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Guaranty Policy Proceeds. . . . . . . . . . . . . . . . . . . . . . . .10
HUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Initial Class A Overcollateralization . . . . . . . . . . . . . . . . .10
Initial FHA Insurance Amount. . . . . . . . . . . . . . . . . . . . . .10
Initial FHA Insurance Premium Account Deposit . . . . . . . . . . . . .10
Initial Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . .10
Initial Pool Principal Balance. . . . . . . . . . . . . . . . . . . . .11
Insurance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .11
Insurance Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . .11
Insured Certificates. . . . . . . . . . . . . . . . . . . . . . . . . .11
Interest Carry-Forward Amount . . . . . . . . . . . . . . . . . . . . .11
Interest Remittance Amount. . . . . . . . . . . . . . . . . . . . . . .11
Interest Shortfall. . . . . . . . . . . . . . . . . . . . . . . . . . .11
Interest Shortfall Rate . . . . . . . . . . . . . . . . . . . . . . . .12
Liquidated Mortgage Loan. . . . . . . . . . . . . . . . . . . . . . . .12
Liquidation Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . .12
Loan Sale Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .12
Majority Certificateholders . . . . . . . . . . . . . . . . . . . . . .12
Modified Mortgage Loan. . . . . . . . . . . . . . . . . . . . . . . . .12
Monthly Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Moody's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Mortgage Loan Interest Rate . . . . . . . . . . . . . . . . . . . . . .13
Mortgage Loan Schedule. . . . . . . . . . . . . . . . . . . . . . . . .13
Mortgage Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Mortgaged Property. . . . . . . . . . . . . . . . . . . . . . . . . . .13
Mortgaged Property States . . . . . . . . . . . . . . . . . . . . . . .13
Net Liquidation Proceeds. . . . . . . . . . . . . . . . . . . . . . . .13
Net Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Non-United States Person. . . . . . . . . . . . . . . . . . . . . . . .14
Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . .14
Original Class Principal Balance. . . . . . . . . . . . . . . . . . . .14
Ownership Interest. . . . . . . . . . . . . . . . . . . . . . . . . . .14
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . .14
Permitted Instruments . . . . . . . . . . . . . . . . . . . . . . . . .15
Permitted Transferee. . . . . . . . . . . . . . . . . . . . . . . . . .16
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Pool Principal Balance. . . . . . . . . . . . . . . . . . . . . . . . .17
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . . . .17
Pre-Funding Account Deposit . . . . . . . . . . . . . . . . . . . . . .17
Pre-Funding Termination Remittance Date . . . . . . . . . . . . . . . .17
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Preference Amount . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Prepayment Assumption . . . . . . . . . . . . . . . . . . . . . . . . .17
Principal Balance . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Principal Carry-Forward Amount. . . . . . . . . . . . . . . . . . . . .17
Principal Prepayment. . . . . . . . . . . . . . . . . . . . . . . . . .18
Principal Remittance Amount . . . . . . . . . . . . . . . . . . . . . .18
Projected Interest Shortfall. . . . . . . . . . . . . . . . . . . . . .18
Qualified Mortgage. . . . . . . . . . . . . . . . . . . . . . . . . . .18
Qualified Substitute Mortgage Loan. . . . . . . . . . . . . . . . . . .18
Rating Agency or Rating Agencies. . . . . . . . . . . . . . . . . . . .19
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Released Mortgaged Property Proceeds. . . . . . . . . . . . . . . . . .19
REMIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
REMIC Administrative Fee. . . . . . . . . . . . . . . . . . . . . . . .20
REMIC Administrator . . . . . . . . . . . . . . . . . . . . . . . . . .20
REMIC Change of Law . . . . . . . . . . . . . . . . . . . . . . . . . .20
REMIC Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
REMIC Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Remittance Amount . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Remittance Date . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
REO Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
REO Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Required Class A Overcollateralization Level. . . . . . . . . . . . . .21
Required Conventional OC Level. . . . . . . . . . . . . . . . . . . . .21
Required Conventional Credit Support Multiple . . . . . . . . . . . . .21
Required Title I OC Level . . . . . . . . . . . . . . . . . . . . . . .22
Required Title I Credit Support Multiple. . . . . . . . . . . . . . . .22
Residual Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . .23
Series or Series 199__-__ . . . . . . . . . . . . . . . . . . . . . . .23
Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Servicer's Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . .23
Servicer's Monthly Remittance Report. . . . . . . . . . . . . . . . . .23
Servicer's Monthly Statement. . . . . . . . . . . . . . . . . . . . . .23
Servicer's Mortgage Loan File . . . . . . . . . . . . . . . . . . . . .23
Servicing Advances. . . . . . . . . . . . . . . . . . . . . . . . . . .23
Servicing Compensation. . . . . . . . . . . . . . . . . . . . . . . . .24
Servicing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Servicing Officer . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Standard & Poor's . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Startup Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Subsequent Mortgage Loan. . . . . . . . . . . . . . . . . . . . . . . .24
Subsequent Purchase Price . . . . . . . . . . . . . . . . . . . . . . .24
Subsequent Transfer Agreement . . . . . . . . . . . . . . . . . . . . .24
Subsequent Transfer Date. . . . . . . . . . . . . . . . . . . . . . . .25
Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Subservicing Account. . . . . . . . . . . . . . . . . . . . . . . . . .25
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Subservicing Agreement. . . . . . . . . . . . . . . . . . . . . . . . .25
Substitution Adjustment . . . . . . . . . . . . . . . . . . . . . . . .25
Superior Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Tax Matters Person. . . . . . . . . . . . . . . . . . . . . . . . . . .25
Tax Return. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Termination Price . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Title I Mortgage Loan . . . . . . . . . . . . . . . . . . . . . . . . .25
Title I Pool Principal Balance. . . . . . . . . . . . . . . . . . . . .26
Title I Program . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Transfer Affidavit and Agreement. . . . . . . . . . . . . . . . . . . .26
Transfer Certificate. . . . . . . . . . . . . . . . . . . . . . . . . .26
Transferor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Trustee Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Trustee's Mortgage Loan File. . . . . . . . . . . . . . . . . . . . . .27
United States Person. . . . . . . . . . . . . . . . . . . . . . . . . .27
Weighted Average Balance. . . . . . . . . . . . . . . . . . . . . . . .27
Weighted Average Certificate Interest Rate. . . . . . . . . . . . . . .27
ARTICLE II - SALE AND CONVEYANCE OF THE TRUST FUND . . . . . . . . . . . . .28
Section 2.01 Creation of Trust Fund; Transfer of Trust Fund Assets;
Issuance of Certificates Evidencing Interests in Trust
Fund; Priority and Subordination of Ownership
Interests. . . . . . . . . . . . . . . . . . . . . . . .28
Section 2.02 Conveyance of the Subsequent Mortgage Loans; Fixed
Price Contract . . . . . . . . . . . . . . . . . . . . .30
Section 2.03 Ownership and Possession of Mortgage Loan Files. . . . .32
Section 2.04 Books and Records. . . . . . . . . . . . . . . . . . . .32
Section 2.05 Delivery of Mortgage Loan Documents. . . . . . . . . . .32
Section 2.06 Acceptance by Trustee of the Trust Fund; Certain
Substitutions; Certification by Trustee. . . . . . . . .34
Section 2.07 Designations under REMIC Provisions; Designation of
Startup Day; REMIC Certificate Maturity Date . . . . . .36
ARTICLE III - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .36
Section 3.01 Representations and Warranties of the Depositor. . . . .36
Section 3.02 Representations, Warranties and Covenants of the
Servicer and Transferor. . . . . . . . . . . . . . . . .39
Section 3.03 Individual Mortgage Loans. . . . . . . . . . . . . . . .40
Section 3.04 Subsequent Mortgage Loans. . . . . . . . . . . . . . . .45
Section 3.05 Purchase and Substitution. . . . . . . . . . . . . . . .46
ARTICLE IV - THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . .48
Section 4.01 The Certificates . . . . . . . . . . . . . . . . . . . .48
Section 4.02 Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . . .49
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates. . . .53
Section 4.04 Book-Entry Certificates. . . . . . . . . . . . . . . . .53
- v -
Section 4.05 Persons Deemed Owners. . . . . . . . . . . . . . . . . .54
Section 4.06 The Guaranty Policy. . . . . . . . . . . . . . . . . . .54
ARTICLE V - ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS . . . . . . .55
Section 5.01 Duties of the Servicer . . . . . . . . . . . . . . . . .55
Section 5.02 Liquidation of Mortgage Loans. . . . . . . . . . . . . .57
Section 5.03 Establishment of Collection Accounts; Deposits in
Collection Accounts. . . . . . . . . . . . . . . . . . .58
Section 5.04 Permitted Withdrawals From the Collection Account. . . .59
Section 5.05 Initial Collection Account; Transfer of Collection
Account. . . . . . . . . . . . . . . . . . . . . . . . .60
Section 5.06 Fidelity Bond; Errors and Omission Insurance . . . . . .60
Section 5.07 Title, Management and Disposition of REO Property. . . .61
Section 5.08 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .62
Section 5.09 Access to Certain Documentation and Information
Regarding the Mortgage Loans . . . . . . . . . . . . . .62
Section 5.10 Superior Liens . . . . . . . . . . . . . . . . . . . . .62
Section 5.11 FHA Matters. . . . . . . . . . . . . . . . . . . . . . .62
Section 5.12 Subservicing . . . . . . . . . . . . . . . . . . . . . .65
Section 5.13 Duties of the Servicer relating to the REMIC.. . . . . .66
Section 5.14 The Standby Servicer.. . . . . . . . . . . . . . . . . .68
Section 5.15 Pre-Funding Account. . . . . . . . . . . . . . . . . . .68
Section 5.16 Capitalized Interest Account . . . . . . . . . . . . . .69
ARTICLE VI - DISTRIBUTIONS TO THE CERTIFICATEHOLDERS . . . . . . . . . . . .70
Section 6.01 Establishment of Certificate Account; Deposits in
Certificate Account. . . . . . . . . . . . . . . . . . .70
Section 6.02 Permitted Withdrawals from Certificate Account . . . . .70
Section 6.03 [Reserved] . . . . . . . . . . . . . . . . . . . . . . .71
Section 6.04 Investment of Accounts . . . . . . . . . . . . . . . . .71
Section 6.05 Priority and Subordination of Distributions;
Distributions and Transfers. . . . . . . . . . . . . . .71
Section 6.06 Statements . . . . . . . . . . . . . . . . . . . . . . .74
Section 6.07 Reports of Foreclosure and Abandonment of Mortgaged
Property . . . . . . . . . . . . . . . . . . . . . . . .77
Section 6.08 Specification of Certain Tax Matters . . . . . . . . . .78
Section 6.09 Establishment of FHA Insurance Premium Account;
Deposits in FHA Insurance Premium Account; Permitted
Withdrawals from FHA Insurance Premium Account . . . . .78
Section 6.10 Allocation of Losses . . . . . . . . . . . . . . . . . .79
ARTICLE VII - GENERAL SERVICING PROCEDURE. . . . . . . . . . . . . . . . . .80
Section 7.01 Assumption Agreements. . . . . . . . . . . . . . . . . .80
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Loan
Files. . . . . . . . . . . . . . . . . . . . . . . . . .81
Section 7.03 Servicing Compensation . . . . . . . . . . . . . . . . .82
Section 7.04 Quarterly Statements as to Compliance. . . . . . . . . .83
Section 7.05 Annual Independent Public Accountants' Servicing
Report . . . . . . . . . . . . . . . . . . . . . . . . .83
Section 7.06 Certificateholder's and Trustee's Right to Examine
Servicer Records . . . . . . . . . . . . . . . . . . . .83
Section 7.07 Reports to the Trustee; Collection Account
Statements . . . . . . . . . . . . . . . . . . . . . . .84
- vi -
ARTICLE VIII - REPORTS TO BE PROVIDED BY SERVICER. . . . . . . . . . . . . .84
Section 8.01 Financial Statements . . . . . . . . . . . . . . . . . .84
ARTICLE IX - THE SERVICER. . . . . . . . . . . . . . . . . . . . . . . . . .84
Section 9.01 Indemnification; Third Party Claims. . . . . . . . . . .84
Section 9.02 Merger or Consolidation of the Servicer. . . . . . . . .86
Section 9.03 Limitation on Liability of the Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . .86
Section 9.04 Servicer Not to Resign; Assignment . . . . . . . . . . .86
Section 9.05 Relationship of Servicer . . . . . . . . . . . . . . . .87
ARTICLE X - DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . .87
Section 10.01 Events of Default. . . . . . . . . . . . . . . . . . . .87
Section 10.02 Standby Servicer to Act; Appointment of Successor. . . .89
Section 10.03 Waiver of Defaults . . . . . . . . . . . . . . . . . . .90
Section 10.04 Accounting Upon Termination of Servicer. . . . . . . . .91
ARTICLE XI - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .91
Section 11.01 Termination. . . . . . . . . . . . . . . . . . . . . . .91
Section 11.02 Optional Termination by Servicer . . . . . . . . . . . .92
Section 11.03 Notice of Termination; Surrender and Cancellation of
Certificates.. . . . . . . . . . . . . . . . . . . . . .92
Section 11.04 Additional Termination Requirements. . . . . . . . . . .93
ARTICLE XII - THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . .94
Section 12.01 Duties of Trustee. . . . . . . . . . . . . . . . . . . .94
Section 12.02 Certain Matters Affecting the Trustee. . . . . . . . . .95
Section 12.03 Trustee Not Liable for Certificates or Mortgage
Loans. . . . . . . . . . . . . . . . . . . . . . . . . .97
Section 12.04 Trustee May Own Certificates . . . . . . . . . . . . . .97
Section 12.05 Trustee's Fees and Expenses. . . . . . . . . . . . . . .97
Section 12.06 Eligibility Requirements for Trustee . . . . . . . . . .98
Section 12.07 Resignation and Removal of the Trustee . . . . . . . . .98
Section 12.08 Successor Trustee. . . . . . . . . . . . . . . . . . . .99
Section 12.09 Merger or Consolidation of Trustee. . . . . . . . . . .100
Section 12.10 Appointment of Co-Trustee or Separate Trustee. . . . . 100
Section 12.11 Appointment of Custodians . . . . . . . . . . . . . . .101
Section 12.12 Trustee May Enforce Claims Without Possession of
Certificates. . . . . . . . . . . . . . . . . . . . . .102
Section 12.13 Suits for Enforcement . . . . . . . . . . . . . . . . .102
ARTICLE XIII - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . .102
Section 13.01 Acts of Certificateholders. . . . . . . . . . . . . . .102
Section 13.02 Amendment . . . . . . . . . . . . . . . . . . . . . . .102
Section 13.03 Recordation of Agreement. . . . . . . . . . . . . . . .103
Section 13.04 Duration of Agreement . . . . . . . . . . . . . . . . .104
Section 13.05 Governing Law . . . . . . . . . . . . . . . . . . . . .104
Section 13.06 Notices . . . . . . . . . . . . . . . . . . . . . . . .104
Section 13.07 Severability of Provisions. . . . . . . . . . . . . . .104
Section 13.08 No Partnership. . . . . . . . . . . . . . . . . . . . .105
Section 13.09 Counterparts. . . . . . . . . . . . . . . . . . . . . .105
Section 13.10 Successors and Assigns. . . . . . . . . . . . . . . . .105
- vii -
Section 13.11 Headings. . . . . . . . . . . . . . . . . . . . . . . .105
Section 13.12 Paying Agent. . . . . . . . . . . . . . . . . . . . . .105
Section 13.13 Actions of Certificateholders . . . . . . . . . . . . .106
Section 13.14 Reports to Rating Agencies. . . . . . . . . . . . . . .106
Section 13.15 Certificate Insurer Deemed Owner. . . . . . . . . . . .107
Section 13.16 Third Party Beneficiary . . . . . . . . . . . . . . . .107
Section 13.17 Suspension of Certificate Insurer's Rights. . . . . . .107
- viii -
EXHIBITS
EXHIBIT A Contents of Mortgage Loan File
EXHIBIT B-1 Form of Class A Certificate
EXHIBIT B-2 Form of Class B Certificate
EXHIBIT B-3 Form of Class R Certificate
EXHIBIT C Form of Collection Account Letter Agreement
EXHIBIT D Form of Investment Letter
EXHIBIT E Form of Assignment
EXHIBIT F-1 Form of Trustee Initial Acknowledgment
EXHIBIT F-2 Form of Custodian Initial Acknowledgment
EXHIBIT G-1 Form of Trustee Final Certification
EXHIBIT G-2 Form of Custodian Final Certification
EXHIBIT H Mortgage Loan Schedule
EXHIBIT I Form of Request for Release of Documents
EXHIBIT J-1 Form of Transfer Affidavit and Agreement
EXHIBIT J-2 Form of Transfer Certificate
EXHIBIT K Form of Custodial Agreement
EXHIBIT L Form of Liquidation Report
EXHIBIT M Form of FHA Claims Administration Agreement between Trustee and
Servicer
EXHIBIT N Form of Servicer's Monthly Remittance Report to Trustee
EXHIBIT O Form of Certification for Assignment of Mortgage Loan
EXHIBIT P Form of Agreement of Appointment and Acceptance of Separate
Trustee
EXHIBIT Q Form of Subsequent Transfer Agreement
- ix -
This Pooling and Servicing Agreement is entered into effective as of
___________1, 199__, by and between ___________________________, as trustee (the
"TRUSTEE"), Remodelers Investment Corporation, as Depositor (the "DEPOSITOR"),
Remodelers National Funding Corp. ("RNFC"), as Transferor (in such capacity, the
"TRANSFEROR") and Servicer (in such capacity, the "SERVICER") and
__________________________, as standby servicer (the "STANDBY SERVICER"):
PRELIMINARY STATEMENT
The Depositor intends to sell home improvement loan pass-through
certificates (collectively, the "CERTIFICATES"), to be issued hereunder in
multiple classes, which in the aggregate will evidence the entire beneficial
ownership interest in the Trust Fund. As provided herein, the Trustee, at the
direction of the Depositor, will make an election to treat the Trust Fund (other
than the Pre-Funding Account and the Capitalized Interest Account) as a real
estate mortgage investment conduit ("REMIC") for federal income tax purposes.
The Class A Certificates and the Class B Certificates will be the "regular
interests" in the REMIC and the Class R Certificates will be the "residual
interest" therein.
In consideration of the mutual agreements herein contained, the parties
hereto hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the meanings specified in this
Article.
ACCOUNT: The Certificate Account, the Collection Account, the FHA
Insurance Premium Account, the Pre-Funding Account or the Capitalized Interest
Account.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage
Loans to the Trust pursuant to SECTION 2.02 of this Agreement, notice of the
Depositor's designation of Subsequent Mortgage Loans to be sold to the Trust
Fund and the aggregate Principal Balance of such Subsequent Mortgage Loans as of
the related Cut-Off Date, which shall be given to the Trustee and to the
Certificate Insurer not later than three Business Days prior to the related
Subsequent Transfer Date.
AGGREGATE FHA INSURANCE PREMIUM DEPOSIT AMOUNT: As to any Determination
Date, the aggregate of the FHA Insurance Premium Deposit Amounts for all Title I
Mortgage Loans outstanding as of such Determination Date.
AGGREGATE FHA INSURANCE PROCEEDS: As of any date of determination and
with respect to the Title I Mortgage Loans only, the aggregate amount of all FHA
Insurance Proceeds received by the Trustee (directly or through any FHA Claims
Administrator), up to the last day of the immediately preceding Due Period.
POOLING AND SERVICING AGREEMENT - Page 1
AGGREGATE FHA PREMIUM REQUIREMENT: As of the Determination Date occurring
in _____________ of each year commencing in 199__, the aggregate of the FHA
Premium Requirements for all Title I Mortgage Loans outstanding as of such
Determination Date.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
AMOUNT AVAILABLE: With respect to any Remittance Date, the sum of (i) the
Available Remittance Amount (as reduced by any portion thereof that has been
deposited in the Certificate Account but 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),
(ii) all interest and gain, if any, on funds held in the Certificate Account and
(iii) any amount deposited into the Certificate Account from the Capitalized
Interest Account pursuant to SECTION 5.16(a).
ANNUAL FHA PREMIUM RATE: With respect to:
(i) Each Title I Mortgage Loan made to finance or refinance property
improvements, .50%; and
(ii) Each Title I Mortgage Loan made to finance or refinance the purchase
of a manufactured home and/or a lot on which a manufactured home will
be placed, or a share of a cooperative association which owns and
operates a manufactured home park, (A) for each year during the first
four years of the term of any such Mortgage Loan, 1.00%; (B) for each
of years five through seven of the term of any such Mortgage Loan,
.75%; and (C) for each year during the term of any such Mortgage Loan
subsequent to year seven, until the FHA premium charge is paid in
full, .50%.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan secured by a
Mortgage, an assignment, notice of transfer or equivalent instrument sufficient
under the laws of the jurisdiction wherein the related Mortgaged Property is
located to reflect of record the sale of the related Mortgage to the Trustee for
the benefit of the Certificateholders.
ASSUMED POOL PRINCIPAL BALANCE: On the Closing Date, the amount equal to
the sum of the Initial Pool Principal Balance, plus the Pre-Funding Account
Deposit, which amount is $__________.
AUTHORIZED DENOMINATIONS: Each of the Class A Certificates and the Class
B Certificates are issuable only in the minimum denomination of $250,000 or
integral multiples of $5,000 in excess thereof; provided, however, that one or
more Certificates of each such Class of Certificates shall be issuable in a
denomination (which may be less than the foregoing minimum denomination) equal
to an amount such that the aggregate denomination of all Certificates of such
Class shall be equal to the Original Class Principal Balance of such Class.
AVAILABLE REMITTANCE AMOUNT: With respect to any Remittance Date, the sum
of (A) all amounts described in clauses (i) through (ix) of SECTION 5.03
received by the Servicer or any Subservicer (including any amounts paid by the
Transferor, the Servicer or the Depositor and excluding any amounts not required
to be deposited in the Collection Account pursuant to
POOLING AND SERVICING AGREEMENT - Page 2
SECTION 5.03 and any amounts withdrawn by the Servicer pursuant to clauses (ii)
through (vii) of SECTION 5.04 as of the related Determination Date) during the
related Due Period and deposited into the Certificate Account on the Business
Day prior to the related Remittance Date; (B) with respect to the Pre-Funding
Termination Remittance Date, amounts, if any, deposited into the Certificate
Account by the Trustee from the Pre-Funding Account pursuant to SECTION 5.15(c)
at the end of the Funding Period (net of reinvestment income transferred to the
Capitalized Interest Account); (C) with respect to the final Remittance Date in
connection with the purchase of all the Mortgage Loans and REO Properties by the
Servicer, the Termination Price. No amount included in the computation of the
Available Remittance Amount with respect to any Remittance Date by virtue of
being described by any component of the definition thereof shall be included
more than once by virtue of also being described by any other component or
otherwise.
BENEFICIAL OWNER: With respect to a Book-Entry Certificate, the person who
is the beneficial owner thereof.
BOOK-ENTRY CERTIFICATE: A definitive certificate evidencing 100% of a
Class of Class A Certificates registered in the name of DTC or its nominee,
beneficial ownership of which is reflected on the books of DTC or on books of a
Person maintaining an account with DTC (directly or as an indirect participant
in accordance with the rules of DTC). As of the Closing Date, each Class of
Class A Certificates constitutes a Class of Book-Entry Certificates. None of
the Class B Certificates or Class R Certificates constitutes a Class of Book-
Entry Certificates.
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 Trustee is located are authorized or obligated by
law or executive order to be closed.
CAPITALIZED INTEREST ACCOUNT: The account established and maintained by
the Trustee pursuant to SECTION 5.16 hereof, which account shall contain the
Capitalized Interest Amount. The Capitalized Interest Account is not part of
the REMIC.
CAPITALIZED INTEREST ACCOUNT DEPOSIT: An amount equal to $___________.
CAPITALIZED INTEREST ACCOUNT REQUIREMENT: On the Closing Date, the
Capitalized Interest Account Requirement will equal the Capitalized Interest
Account Deposit. Thereafter, as determined by the Trustee on any Determination
Date prior to ________________, 199__, the Capitalized Interest Account
Requirement will equal the Projected Interest Shortfall.
CAPITALIZED INTEREST AMOUNT: The amount in the Capitalized Interest
Account as of any date of determination, after giving effect to (i) the
Capitalized Interest Account Deposit, (ii) amounts to be transferred to the
Certificate Account on the next Distribution Date pursuant to SECTION 5.16(a),
(iii) amounts released to the Depositor pursuant to SECTION 5.16(d), and (iv)
any amounts available under any letter of credit or, subject to the prior
consent of the Certificate Insurer, from immediately available funds deposited
with the Trustee pursuant to SECTION 5.16(c).
CAPITALIZED INTEREST EXCESS: The amount of excess funds on deposit in the
Capitalized Interest Account as a result of the delivery of Subsequent Mortgage
Loans; on any Determination Date occurring prior to _________________, 199__,
the Capitalized Interest Excess shall equal the
POOLING AND SERVICING AGREEMENT - Page 3
greater of (i) zero and (ii) the Capitalized Interest Amount less the
Capitalized Interest Account Requirement.
CERTIFICATE: Any Class A Certificate (including any Class A-1
Certificate, any Class A-2 Certificate, any Class A-3 Certificate and any
Class A-4 Certificate), Class B Certificate or Class R Certificate executed by
the Trustee on behalf of the Trust Fund and authenticated by the Trustee,
substantially in the applicable form annexed hereto as EXHIBITS B-1, B-2 AND
B-3, respectively.
CERTIFICATE ACCOUNT: The account established and maintained by the
Trustee pursuant to SECTION 6.01 hereof.
CERTIFICATE INSURER: MBIA Insurance Corporation, as issuer of the
Guaranty Policy, and its successors and assigns; provided that the rights of the
Certificate Insurer hereunder (including the rights to direct certain actions
and receive certain notices) shall terminate at such time as the Class Principal
Balances of the Class A Certificates have been reduced to zero and the
Certificate Insurer has been reimbursed for all Guaranteed Payments and any
other amounts owed under the Guaranty Policy and the Insurance Agreement.
CERTIFICATE INSURER DEFAULT: The failure of the Certificate Insurer to
make payments under the Guaranty Policy, or the entry of an order or decree with
respect to the Certificate Insurer in any insolvency or bankruptcy proceedings
which remain unstayed or undischarged for 90 days.
CERTIFICATE INSURER REIMBURSEMENT AMOUNT: At any time, an amount owed to
the Certificate Insurer as reimbursement for any Guaranteed Payments made under
the Guaranty Policy, together with interest thereon at the rate specified in the
Insurance Agreement, which have not previously been reimbursed.
CERTIFICATE INSURER PREMIUM: As specified in the Insurance Agreement.
CERTIFICATE INTEREST RATE: With respect to a Class of Certificates, the
annual rate of interest payable to the Certificateholders of such Class of
Certificates. The Certificate Interest Rate with respect to the Class A-1
Certificates is equal to ____%, the Certificate Interest Rate with respect to
the Class A-2 Certificates is equal to ____%, the Certificate Interest Rate with
respect to the Class A-3 Certificates is equal to ____%, the Certificate
Interest Rate with respect to the Class A-4 Certificates is equal to ____%, and
the Certificate Interest Rate with respect to the Class B Certificates is equal
to ____%.
CERTIFICATE REGISTER: As defined in SECTION 4.02 hereof.
CERTIFICATE REGISTRAR: Initially, the Trustee, and thereafter, any
successor appointed pursuant to SECTION 4.02 hereof.
CERTIFICATE TRANSFEROR: Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
CERTIFICATEHOLDER or HOLDER: Each Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purposes of
giving any consent, waiver, request or demand pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the
POOLING AND SERVICING AGREEMENT - Page 4
Servicer, Standby Servicer or any Subservicer, or registered in the name of any
Person known to a Responsible Officer of the Trustee to be an affiliate of any
of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite Percentage Interest of Certificates necessary to effect
any such consent, waiver, request or demand has been obtained.
CLASS: Collectively, Certificates bearing the same class designation,
including (i) in certain instances an alphabetical and/or numerical designation
(i.e., A, B or R), (ii) in other instances the complete alphabetical and
numerical designations (A-1, A-2, A-3, A-4, B and R), and (iii) in other
instances a class of Insured Certificates (i.e., A-1, A-2, A-3 or A-4), and, in
case of clause (ii), whose form is identical except for variation in the
Percentage Interest or the initial principal balance evidenced thereby.
CLASS A CERTIFICATE: A Certificate denominated as a Class A-1, Class A-2,
Class A-3 or Class A-4 Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A OVERCOLLATERALIZATION: As calculated on any Determination Date
based on the distributions of funds and the allocations of Net Loan Losses that
will be made on the related Remittance Date, the amount equal to the excess of
(A) the sum of (i) the Pool Principal Balance and (ii) the amount on deposit in
the Pre-Funding Account over (B) the aggregate Class Principal Balances of all
Classes of Class A Certificates.
CLASS A-1 CERTIFICATE: A Certificate denominated as a Class A-1
Certificate.
CLASS A-2 CERTIFICATE: A Certificate denominated as a Class A-2
Certificate.
CLASS A-3 CERTIFICATE: A Certificate denominated as a Class A-3
Certificate.
CLASS A-4 CERTIFICATE: A Certificate denominated as a Class A-4
Certificate.
CLASS B CERTIFICATE: A Certificate denominated as a Class B Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B LOSS REIMBURSEMENT AMOUNT: As defined in SECTION 6.10(c).
CLASS POOL FACTOR: As of any date of determination and with respect to
each Class of Certificates, exclusive of the Class R Certificates, the then
applicable Class Principal Balance of the respective Class of Certificates
divided by the Original Class Principal Balance of such Class.
CLASS PRINCIPAL BALANCE: As of any date of determination and with respect
to each Class of Certificates, exclusive of the Class R Certificates, the
Original Class Principal Balance of each such Class reduced by the sum of (i)
all amounts previously distributed to Certificateholders of such Class in
respect of principal on all previous Remittance Dates pursuant to SECTION 6.05,
and (ii) all amounts allocated to such Class on all previous Remittance Dates
for losses and write-offs pursuant to SECTION 6.10.
POOLING AND SERVICING AGREEMENT - Page 5
CLASS R CERTIFICATE: A Certificate denominated as a Class R Certificate
evidencing the Residual Interest in the REMIC for purposes of the REMIC
Provisions.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS R DISTRIBUTION TRIGGER: As defined in SECTION 6.05(b)(xiv).
CLOSING DATE: _______________, 199__.
CODE: The Internal Revenue Code of 1986, as amended.
COLLECTION ACCOUNT: The account established and maintained by the
Servicer in accordance with SECTION 5.03.
COMPLETION CERTIFICATE: With respect to a Mortgage Loan made to finance
property improvements, a certificate executed by the related Obligor wherein
such Obligor states the related contractor or seller of the property improvement
has completed to such Obligor's satisfaction the improvements for which the
related Mortgage Loan was obtained.
CONVENTIONAL MORTGAGE LOAN: An Initial Mortgage Loan or a Subsequent
Mortgage Loan which is not covered by FHA Insurance.
CREDIT SUPPORT REDUCTION DATE: The Remittance Date occurring on the later
of: (i) the thirty-sixth (36th) Remittance Date; or (ii) the Remittance Date on
which the Pool Principal Balance is equal to or less than fifty percent (____%)
of the aggregate Principal Balances as of the applicable Cut-Off Dates of all
the Mortgage Loans.
CUSTODIAL AGREEMENT: An agreement for the retention of the Trustee's
Mortgage Loan Files initially in the form attached as EXHIBIT K hereto.
CUSTODIAN: Any Custodian appointed pursuant to a Custodial Agreement and
SECTION 12.11, which shall not be affiliated with the Servicer, the Standby
Servicer, any Subservicer or the Depositor. Bank One, Texas, National
Association, shall be the initial Custodian pursuant to the terms of the
Custodial Agreement dated _________________, 199__ by and between the Depositor,
RNFC, as the Transferor and the Servicer, the Trustee, and Bank One, Texas,
National Association, as the Custodian.
CUSTODIAN FEE: If applicable, the annual fee payable to the Custodian
(including the Trustee, if acting in such capacity), calculated and payable
monthly on each Remittance Date equal to ____% (_____ basis points) per annum of
the Pool Principal Balance as of the immediately preceding Determination Date,
except with respect to the first Remittance Date, when such monthly fee shall be
pro rated based on two days for the first Due Period.
CUT-OFF DATE: With respect to the Initial Mortgage Loans, the close of
business on ___________________, 199__ and with respect to each Subsequent
Mortgage Loan, the close of business on the date specified as such in the
applicable Subsequent Transfer Agreement.
POOLING AND SERVICING AGREEMENT - Page 6
DEFAULTED MORTGAGE LOAN: With respect to the calculation of the Required
Conventional Credit Support Multiple and the Required Title I Credit Support
Multiple, during a Due Period, any Mortgage Loan, including without limitation
any Liquidated Mortgage Loan, with respect to which any of the following occurs:
(a) with respect to a Title I Mortgage Loan, an FHA Claim has been submitted;
(b) foreclosure proceedings have been commenced; (c) any portion of a scheduled
monthly payment of principal and interest becomes 180 days past due; or (d) the
Servicer or any Subservicer has determined in accordance with customary
servicing practices that the Mortgage Loan is uncollectible.
DEFICIENCY AMOUNT: With respect to the Guaranty Policy and as of any
Remittance Date, the amount by which the sum of the Interest Remittance Amount
and the Principal Remittance Amount for the Class A Certificates exceeds the
Amount Available for distribution on such Class A Certificates for such
Remittance Date.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be replaced by a
Qualified Substitute Mortgage Loan.
DEPOSITOR: Remodelers Investment Corporation, a Nevada corporation, and
any successor thereto.
DETERMINATION DATE: The day of each month which is five (5) Business Days
prior to the related Remittance Date.
DTC: The Depository Trust Company.
DUE DATE: The day of the month on which the Monthly Payment is due from
the Obligor on a Mortgage Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs, except with respect to
the first Remittance Date, the partial calendar month commencing on
__________________, 199__.
DUFF & PHELPS: Duff & Phelps Credit Rating Co., or any successor thereto.
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 Trustee hereunder, 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 Class A
Certificates, as evidenced in writing by such Rating Agency. (Each reference in
this definition of "Eligible Account" to the Rating Agency shall be construed as
a reference to Standard & Poor's and Moody's.)
POOLING AND SERVICING AGREEMENT - Page 7
ELIGIBLE SERVICER: A Person who is qualified to act as Servicer of the
Mortgage Loans under applicable federal and state laws and regulations and, with
respect to the servicing of any Title I Mortgage Loans, who is approved by HUD
to service loans insured under the Title I Program.
EVENT OF DEFAULT: As described in SECTION 10.01 hereof.
EXCESS FHA PREMIUM AMOUNT: As of the Determination Date occurring in
____________ of each year commencing in 199__, an amount equal to the greater of
(i) zero and (ii) the difference between (A) the amount on deposit in the FHA
Insurance Premium Account as of the last day of the immediately preceding Due
Period and (B) the Aggregate FHA Premium Requirement.
EXCESS SPREAD: As defined in SECTION 6.05(b)(xiv).
EXPECTED LOAN LOSSES: As defined in SECTION 10.01(a)(vii).
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHA: The Federal Housing Administration of HUD and any successor thereto.
Unless the context otherwise requires, the FHA and HUD are referred to herein
collectively as the "FHA".
FHA CLAIM: A claim for reimbursement of loss properly filed with the FHA
under the FHA Insurance applicable to a Title I Mortgage Loan.
FHA CLAIM AMOUNT: With respect to any Title I Mortgage Loan with respect
to which an FHA Claim is made, an amount equal to the amount the Trustee (or any
FHA Claims Administrator) is entitled to claim under the FHA Insurance pursuant
to the FHA Regulations.
FHA CLAIMS ADMINISTRATION AGREEMENT: An agreement between the Trustee and
each FHA Claims Administrator relating to the administration of the FHA Claims
as provided in SECTION 5.11(e), a form of which is attached hereto as EXHIBIT M.
FHA CLAIMS ADMINISTRATOR: Initially, the Servicer, who shall serve as
such and as agent and attorney-in-fact for the Trustee for purposes of handling
all aspects of administering, processing and submitting FHA Claims, pursuant to
an FHA Claims Administration Agreement in the form attached hereto as EXHIBIT M;
and thereafter, any other Person that holds a valid contract of insurance with
and is approved by the FHA to originate, purchase, service and/or sell loans
insured under the Title I Program, and is appointed as a successor FHA Claims
Administrator to the Servicer pursuant to SECTION 5.11(e) hereof.
FHA INSURANCE: With respect to the Title I Mortgage Loans, the mortgage
insurance provided by the FHA pursuant to Title I of the National Housing Act of
1934, as amended.
FHA INSURANCE AMOUNT: As of any date of determination, an amount equal to
(i) the sum of (A) the Initial FHA Insurance Amount, (B) the FHA Insurance
attributable to any Qualified Substitute Mortgage Loan that replaces a Deleted
Mortgage Loan pursuant to SECTION 2.06 or 3.05 and (C) the amount of any FHA
Insurance attributable to FHA Insurance Proceeds reclaimed by the FHA in
connection with the rejection of an FHA Claim, less (ii) the sum of (A) the
Aggregate FHA Insurance Proceeds with respect to the Title I Mortgage Loans, (B)
that portion of the FHA Insurance
POOLING AND SERVICING AGREEMENT - Page 8
Amount attributable to any Title I Mortgage Loan that is purchased or replaced
by the Transferor or the Depositor pursuant to SECTION 2.06 or 3.05, and (C) any
other insurance amounts deducted by the FHA from the Trustee's FHA Title I
insurance coverage reserve account which deduction is attributable to any
Title I Mortgage Loans.
FHA INSURANCE PREMIUM ACCOUNT: The account established and maintained by
the Trustee in accordance with SECTION 6.09.
FHA INSURANCE PREMIUM DEPOSIT AMOUNT: As to any Determination Date and
with respect to each Title I Mortgage Loan outstanding as of such date, an
amount equal to the product of (i) 1/12 and (ii) the FHA Premium Amount with
respect to such Title I Mortgage Loan.
FHA INSURANCE PROCEEDS: With respect to any Title I Mortgage Loan,
proceeds, if any, received by the Trustee (or any FHA Claims Administrator) from
the FHA pursuant to the FHA Insurance, which upon final payment of such proceeds
such Title I Mortgage Loan shall become a Liquidated Mortgage Loan, if not
previously so determined.
FHA INSURANCE TRANSFER CERTIFICATE: The written certification delivered
by the Trustee (or any FHA Claims Administrator) to the Depositor, the
Certificate Insurer and each Rating Agency pursuant to SECTION 5.11(b) hereof.
FHA PREMIUM AMOUNT: With respect to each Title I Mortgage Loan, an amount
per annum equal to the product of (i) the Annual FHA Premium Rate then
applicable to such Title I Mortgage Loan and (ii) the original principal balance
of such Title I Mortgage Loan.
FHA PREMIUM REQUIREMENT: As of the Determination Date occurring in
December of each year commencing in 199__ and with respect to each Title I
Mortgage Loan outstanding as of the last day of the immediately preceding Due
Period, an amount equal to the product of (i) the FHA Premium Amount and (ii) a
fraction the numerator of which is the number of full calendar months which have
elapsed since the most recent anniversary of the calendar month in which the
Title I Mortgage Loan was originated and the denominator of which is 12.
FHA REGULATIONS: The rules, regulations and procedures promulgated by HUD
under the National Housing Act of 1934, as amended, relating to Title I property
improvement loans and loans pertaining to manufactured homes and related real
property, currently found at 24 C.F.R. Parts 201 and 202, together with the "TI
Letters" and HUD Handbook 4700.2, as the same may be amended or supplemented
from time to time; provided that with respect to the origination or servicing of
a Title I Mortgage Loan, such rules and regulations that were in effect at the
time the relevant origination or servicing actions occurred.
FHA TRANSFER DATE: Each date on which the FHA reports to the Trustee the
transfer of the FHA Insurance with respect to any Title I Mortgage Loans from
the Transferor's contract of insurance to the Trustee's contract of insurance;
provided that each such date shall not be more than 120 days after (i) the
Closing Date, in the case of Initial Mortgage Loans that are Title I Mortgage
Loans or (ii) the related Subsequent Transfer Date, in the case of Subsequent
Mortgage Loans that are Title I Mortgage Loans; provided that such 120 day
period may be extended by the Transferor with the consent of the Certificate
Insurer.
POOLING AND SERVICING AGREEMENT - Page 9
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in SECTION 5.06 hereof.
FNMA: The Federal National Mortgage Association and any successor
thereto.
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 below $_______ and the Transferor directs that the Funding
Period end, or (b) the close of business on _____________, 199__; provided,
however, that the Funding Period shall end on the close of business on any
Determination Date prior to ___________, 199__ if the Depositor fails to deposit
with the Trustee on or before such Determination Date a letter of credit issued
by a financial institution, and in a form, approved by the Certificate Insurer
and the Rating Agencies or immediately available funds, subject to the prior
consent of the Certificate Insurer, in either case in an amount equal to any
positive difference between the Capitalized Interest Account Requirement and the
Capitalized Interest Amount as of such Determination Date.
GUARANTEED PAYMENT: With respect to the Guaranty Policy and as of any
Remittance Date, the sum of (i) any Deficiency Amount and (ii) any unpaid
Preference Amount.
GUARANTY POLICY: That certain certificate guaranty insurance policy for
the Insured Certificates, number ___________, dated ________________, 199__ and
issued by the Certificate Insurer to the Trustee guaranteeing payment on each
Remittance Date of the Interest Remittance Amount, Principal Remittance Amount
and any unpaid Preference Amounts in connection with the Insured Certificates.
GUARANTY POLICY PROCEEDS: With respect to the Insured Certificates, the
proceeds, if any, received by the Trustee from the Certificate Insurer pursuant
to the Guaranty Policy. Such Guaranty Policy Proceeds shall be applied solely
to the Insured Certificates pursuant to SECTION 4.06(c) and SECTION 6.05(b) in
the event of a shortfall with respect to the payment of any Interest Remittance
Amount or Principal Remittance Amount, each in respect of the Insured
Certificates only, on any Remittance Date.
HUD: The United States Department of Housing and Urban Development and
any successor thereto.
INITIAL CLASS A OVERCOLLATERALIZATION: On the Closing Date, the amount
equal to the excess of the Assumed Pool Principal Balance over the Original
Class Principal Balance of all Classes of Class A Certificates, which excess
shall initially equal the Original Class Principal Balance of the Class B
Certificate.
INITIAL FHA INSURANCE AMOUNT: After the final FHA Transfer Date, an amount
equal to the actual amount (expressed in dollars) of FHA Insurance transferred
on the books and records of the FHA from the Transferor to the Trustee in
respect of the Title I Mortgage Loans, including Initial Mortgage Loans and
Subsequent Mortgage Loans that are Title I Mortgage Loans.
INITIAL FHA INSURANCE PREMIUM ACCOUNT DEPOSIT: An amount equal to
$__________.
POOLING AND SERVICING AGREEMENT - Page 10
INITIAL MORTGAGE LOAN: An individual property improvement and/or home
equity loan of the type described in SUBSECTION 3.03(v), which is assigned and
transferred to the Trustee pursuant to this Agreement on the Closing Date,
together with the rights and obligations of a holder thereof and payments
thereon and proceeds therefrom, the Initial Mortgage Loans subject to this
Agreement being identified on the Mortgage Loan Schedule annexed hereto as
EXHIBIT H.
INITIAL POOL PRINCIPAL BALANCE: $_____________, the Pool Principal
Balance as of the Cut-Off Date.
INSURANCE AGREEMENT: The Insurance and Indemnification Agreement, dated
as of ________________, 199__, between the Depositor, the Standby Servicer, the
Trustee, the Transferor, the Servicer, the FHA Claims Administrator, RAC
Financial Group, Inc. and the Certificate Insurer.
INSURANCE PROCEEDS: With respect to any Mortgage Loan, the proceeds paid
to the Trustee or the Servicer by any insurer pursuant to any insurance policy
covering a Mortgage Loan, Mortgaged Property, or REO Property or any other
insurance policy that relates to a Mortgage Loan, net of any expenses which are
incurred by the Servicer or the Trustee in connection with the collection of
such proceeds and not otherwise reimbursed to the Servicer, other than FHA
Insurance Proceeds, Guaranty Policy Proceeds and proceeds of any insurance
policy that are to be applied to the restoration or repair of the Mortgaged
Property or released to the Obligor in accordance with customary mortgage loan
servicing procedures for property improvement and/or home equity loans or
manufactured housing loans, as applicable.
INSURED CERTIFICATES: Each Class of the Class A Certificates.
INTEREST CARRY-FORWARD AMOUNT: As of any Remittance Date, the amount, if
any, by which (A) the Remittance Amount (excluding the amounts described in
clause (i) and (v) and the principal portion of clause (iii) of the definition
thereof) with respect to any Class of Certificates, exclusive of the Class R
Certificates, as of the immediately preceding Remittance Date exceeded (B) the
amount of the actual distributions of interest to the Holders of such Class of
Certificates made pursuant to the applicable clause in SECTION 6.05(b) for such
Class on such immediately preceding Remittance Date.
INTEREST REMITTANCE AMOUNT: As to any Remittance Date, and with respect to
the Class A Certificates and the Class B Certificates then outstanding, 30 days'
interest at the respective Certificate Interest Rate on the Class Principal
Balance of the respective Certificates, provided, however, that with respect to
the first Remittance Date, _____________, 199__, the Interest Remittance Amount
shall consist of only two days of interest at the respective Certificate
Interest Rates on the Class Principal Balance of the respective Certificates.
INTEREST SHORTFALL: The amount of the shortfall in interest on the Class
A Certificates and the Class B Certificates arising as a result of the
utilization of the Pre-Funding Account for the purchase by the Trust Fund of
Subsequent Mortgage Loans after the Closing Date. With respect to the
______________ 199__ Remittance Date, the Interest Shortfall is equal to two
days' interest on the Pre-Funding Account Deposit computed at a per annum rate
equal to the Weighted Average Certificate Interest Rate, based on the respective
Class Principal Balances on the Closing Date. With respect to the ____________
199__ Remittance Date and the ____________ 199__ Remittance
POOLING AND SERVICING AGREEMENT - Page 11
Date, the Interest Shortfall will be equal to 30 days' interest on the average
daily balance in the Pre-Funding Account (net of interest and investment
earnings) during the related Due Period, computed at a per annum rate equal to
the Weighted Average Certificate Interest Rate as of the immediately preceding
Remittance Date (after distributions).
INTEREST SHORTFALL RATE: The per annum rate equal to ____%, such rate
having been derived as follows: (a)(i) the sum of (A) the Weighted Average
Certificate Interest Rate as of the Closing Date and (B) the Class A-4
Certificate Interest Rate, divided by (ii) two; minus (b) ____%.
LIQUIDATED MORTGAGE LOAN: Any Mortgage Loan or REO Property in respect of
a Mortgage Loan on which a Monthly Payment is in excess of 30 days past due and
as to which the Servicer has determined that all amounts which it reasonably and
in good faith expects to collect have been recovered from or on account of such
defaulted Mortgage Loan or the related REO Property; provided that in any event
such defaulted Mortgage Loan or the related REO Property shall be deemed
uncollectible and therefore deemed a Liquidated Mortgage Loan upon the earlier
of: (a) with respect to a Title I Mortgage Loan, the receipt of FHA Insurance
Proceeds after the submission of an FHA Claim, (b) the liquidation of the
related REO Property acquired through foreclosure or similar proceedings, (c)
the determination by the Servicer in accordance with customary servicing
practices that no further amounts are collectible from the Mortgage Loan and any
related security, or (d) the date on which any portion of a Monthly Payment on
any Mortgage Loan is in excess of 300 days past due.
LIQUIDATION PROCEEDS: With respect to a Liquidated Mortgage Loan, any cash
amounts received in connection with the liquidation of such Liquidated Mortgage
Loan, whether through trustee's sale, foreclosure sale, REO Disposition or
otherwise, and any other amounts required to be deposited in the Collection
Account pursuant to SECTION 5.07 hereof (in each case other than FHA Insurance
Proceeds, Insurance Proceeds and Released Mortgaged Property Proceeds).
LOAN SALE AGREEMENT: Each loan sale agreement entered into by the
Transferor, as purchaser, pursuant to which the Transferor has acquired any of
the Mortgage Loans and which shall include all of the rights and benefits of the
Transferor thereunder, subject to any limitations thereunder regarding
assignment by the Transferor.
MAJORITY CERTIFICATEHOLDERS: (i) Until such time as the sum of the Class
Principal Balances of all Classes of Class A Certificates have been reduced to
zero, the Holder or Holders of in excess of 50% of the Class Principal Balance
of all Classes of Class A Certificates (accordingly, the Holders of the Class B
Certificates shall be excluded from any rights or actions of the Majority
Certificateholders during such period); and (ii) thereafter, the Holder or
Holders of in excess of 50% of the Class Principal Balance of the Class B
Certificates.
MODIFIED MORTGAGE LOAN: A Mortgage Loan with respect to which the
Servicer has deferred delinquent interest and has modified the terms thereof to
increase the principal amount of such Mortgage Loan, both pursuant to SECTION
5.01(b).
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Mortgage Loan, as set
forth in the related Note.
MOODY'S: Moody's Investors Service, Inc. or any successor thereto.
POOLING AND SERVICING AGREEMENT - Page 12
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
in accordance with applicable law on a Mortgaged Property to secure the Note
which evidences a secured Mortgage Loan.
MORTGAGE LOAN INTEREST RATE: The fixed annual rate of interest borne by a
Note, as shown on the related Mortgage Loan Schedule.
MORTGAGE LOAN SCHEDULE: The schedule of Initial Mortgage Loans attached
hereto as EXHIBIT H, as amended or supplemented from time to time, including any
schedules of Subsequent Mortgage Loans attached as exhibits to any Subsequent
Transfer Agreement, such schedules identifying each Mortgage Loan by address of
the Mortgaged Property and the name(s) of each Obligor and setting forth as to
each Mortgage 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 Mortgage Loan Interest Rate, (vi)
the first date on which a Monthly Payment is due under the related Note, (vii)
the Monthly Payment, (viii) the maturity date of the related Note, (ix) the
remaining number of months to maturity as of the applicable Cut-Off Date, (x)
the applicable Mortgaged Property State and (xi) whether the Mortgage Loan is a
Title I Mortgage Loan or a Conventional Mortgage Loan, except for approximately
80 Initial Mortgage Loans for which the Mortgaged Property address and state has
not been set forth thereon, but with respect to which the Depositor and the
Transferor shall provide such information within 30 days after the Closing Date.
MORTGAGE LOANS: The Initial Mortgage Loans and the Subsequent Mortgage
Loans. As applicable, Mortgage Loan shall be deemed to refer to the related
Note, Mortgage, and any related REO Property acquired through foreclosure of a
related Mortgage. The term "Mortgage Loan" shall include and encompass, as to
any Title I Mortgage Loan, the FHA Insurance applicable thereto, the right to
file an FHA Claim thereunder and the right to receive any FHA Insurance Proceeds
in respect thereof.
MORTGAGED PROPERTY: The property (real, personal or mixed) encumbered by
the Mortgage which secures the Note evidencing a secured Mortgage Loan.
MORTGAGED PROPERTY STATES: Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Iowa, Kansas,
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi,
Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina,
Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee,
Texas, Utah, Virginia, Washington, Wisconsin, Wyoming and any other state
wherein a Mortgaged Property securing any Subsequent Mortgage Loan may be
located.
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of any reimbursements
to the Servicer made therefrom for any unreimbursed Servicing Advances made and
any other fees and expenses paid in connection with the foreclosure,
conservation and liquidation of the related Mortgage Loan or REO Property
pursuant to SECTIONS 5.02 AND 5.07 hereof.
NET LOAN LOSSES: On each Remittance Date, with respect to the Liquidated
Mortgage Loans occurring or becoming such during the immediately preceding Due
Period, an amount (but not less than zero) determined as of the related
Determination Date equal to:
POOLING AND SERVICING AGREEMENT - Page 13
(i) the aggregate uncollected Principal Balances of and accrued and unpaid
interest on such Liquidated Mortgage Loans as of the last day of such
Due Period, with interest computed at the sum of the Weighted Average
Certificate Interest Rate, and the rates at which the Trustee Fee, the
Custodian Fee, the REMIC Administrator Fee, the Servicing Fee and the
Certificate Insurer Premium, if any, are calculated, for such
Liquidated Mortgage Loans determined as of the date of determination,
and without the application of any amounts included in clause (ii)
below, less
(ii) the aggregate amount of any recoveries with respect to such Liquidated
Mortgage Loans from whatever source received during such Due Period,
including any Net Liquidation Proceeds, any FHA Insurance Proceeds,
any Insurance Proceeds, any Released Mortgaged Property Proceeds, any
payments from the related Obligor and any payments made pursuant to
SECTION 3.05.
NON-UNITED STATES PERSON: Any Person other than a United States Person.
NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of an Obligor under a Mortgage Loan.
OBLIGOR: Each obligor on a Note.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee signed by
the President or a Vice President or an Assistant Vice President of the
Depositor, the Servicer, the Standby Servicer, or any FHA Claims Administrator
then serving as agent and attorney-in-fact for the Trustee, in each case, as
required by this Agreement.
ORIGINAL CLASS PRINCIPAL BALANCE: In the case of the Class A-1
Certificates, $__________; in the case of the Class A-2 Certificates, $________;
in the case of the Class A-3 Certificates, $__________; in the case of the
Class A-4 Certificates, $__________; and in the case of the Class B
Certificates, $__________.
OWNERSHIP INTEREST: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
PAYING AGENT: Initially, the Trustee, and thereafter, the Trustee or any
other Person that meets the eligibility standards for the Paying Agent specified
in SECTION 13.12 and is authorized by the Trustee to make payments on the
Certificates on behalf of the Trustee.
PERCENTAGE INTEREST: With respect to any Certificate, except the Class R
Certificates, the portion of the Class evidenced by such Certificate, expressed
as a percentage rounded to five decimal places, equivalent to a fraction the
numerator of which is the denomination represented by such Certificate and the
denominator of which is the Original Class Principal Balance of such Class.
With respect to any Class R Certificate, the portion of the Class evidenced
thereby as stated on the face of such Certificate.
POOLING AND SERVICING AGREEMENT - Page 14
PERMITTED INSTRUMENTS: Each of the following:
(i) obligations of, or guaranteed as to principal and interest by,
the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United States;
(ii) a repurchase agreement that satisfies the following criteria and
is acceptable to the Certificate Insurer: (1) must be between the Trustee
and either (a) primary dealers on the Federal Reserve reporting dealer list
which are rated in one of the two highest categories for long-term
unsecured debt obligations by each Rating Agency, or (b) banks rated in one
of the two highest categories for long-term unsecured debt obligations by
each Rating Agency; and (2) the written repurchase agreement must include
the following: (a) 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 Trustee
or a third party custodian acting as agent for the Trustee by appropriate
book entries and confirmation statements, with a copy to the Certificate
Insurer, 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
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 Trustee plus accrued interest (i.e. a margin call), then additional
cash and/or acceptable securities must be transferred to the 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 Trustee under such repurchase agreement;
(iii) 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 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 long-term rating
categories;
(iv) deposits, including deposits with the Trustee, which are fully
insured by the Bank Insurance Fund or the Savings Association Insurance
Fund of the FDIC, as the case may be;
(v) commercial paper of any corporation incorporated under the laws
of the United States or any state thereof, including corporate affiliates
of the 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;
(vi) debt obligations rated by each Rating Agency at the time at which
the investment is made in its highest long-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
long-term rating categories);
POOLING AND SERVICING AGREEMENT - Page 15
(vii) money market funds which are rated by each Rating Agency at
the time at which the investment is made in its highest long-term rating
category, any such money market funds which provide for demand withdrawals
being conclusively deemed to satisfy any maturity requirements for
Permitted Instruments set forth in the Certificates or this Agreement; or
(viii) any other demand, money market or time deposit obligation,
security or investment as may be acceptable to each Rating Agency and the
Certificate Insurer 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.
Each reference in this definition of "Permitted Instruments" to the Rating
Agency shall be construed, in the case of each subparagraph above referring to
each Rating Agency, as a reference to Standard & Poor's and Moody's.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization (as
defined below) or any agency or instrumentality of either of the foregoing,
(iii) an organization (except certain farmers' cooperatives described in Section
521 of the Code) which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income) on any excess inclusions (as defined in Section 860E(c)(1) of
the Code) with respect to any Class R Certificate, (iv) rural electric and
telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) any
other Person so designated by the Trustee or the Depositor if the transfer of an
Ownership Interest in a Class R Certificate to such Person may cause the REMIC
to fail to qualify as a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code at any time that any Certificates are
outstanding, or (vi) any other Person so designated by the Trustee based upon an
opinion of counsel, which opinion shall be at the expense of the Transferor,
that the holding of an Ownership Interest in a Class R Certificate by such
Person may cause the Trust Fund or any Person having an Ownership Interest in
any Class of Certificates, other than such Person, to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Class R Certificate to such Person.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by any such governmental unit.
POOLING AND SERVICING AGREEMENT - Page 16
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.
PLAN: As defined in Section 4.02(e).
POOL PRINCIPAL BALANCE: The aggregate Principal Balances as of any
Determination Date.
POST LIQUIDATION PROCEEDS: As defined in SECTION 5.02.
PRE-FUNDING ACCOUNT: The account established and maintained by the
Trustee pursuant to SECTION 5.15, which account is NOT part of the REMIC.
PRE-FUNDING ACCOUNT DEPOSIT: An amount equal to $__________.
PRE-FUNDING TERMINATION REMITTANCE DATE: The first Remittance Date
following the Due Period in which the Funding Period ends.
PREFERENCE AMOUNT: Any amount previously distributed to the Holder of an
Insured Certificate that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code, in accordance with a final, non-appealable order of a court having
competent jurisdiction.
PREPAYMENT ASSUMPTION: For REMIC purposes, an assumed constant rate of
prepayment equal to ____% per annum.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or related REO
Property, (i) at the applicable Cut-Off Date, the outstanding principal balance
of the Mortgage Loan as of such Cut-Off Date and (ii) with respect to any Due
Period after such Cut-Off Date, the outstanding principal balance of the
Mortgage Loan as of the first day of such Due Period (after considering all
payments received thereon and any writedowns effected with respect to
reclassifying this Mortgage Loan as a Liquidated Mortgage Loan during the
immediately preceding Due Period), without giving effect to amounts received in
respect of such Mortgage Loan or related REO Property after such day; PROVIDED,
HOWEVER, with respect to a Modified Mortgage Loan, the Principal Balance of such
Modified Mortgage Loan shall be the product of (i) the outstanding principal
balance thereof as of the first day of such Due Period and (ii) the REMIC Factor
for such Modified Mortgage Loan.
PRINCIPAL CARRY-FORWARD AMOUNT: As of any Remittance Date, the amount, if
any, by which (i) the Remittance Amount (excluding the amounts described in
clauses (ii) and (iv) and the interest portion of clause (iii) of the definition
thereof) with respect to any Class of Certificates, exclusive of the Class R
Certificates, as of the immediately preceding Remittance Date exceeded (ii) the
amount of the actual distribution of principal to the Holders of such Class of
Certificates made pursuant to the applicable clause in SECTION 6.05(b) for such
Class on such immediately preceding Remittance Date.
PRINCIPAL PREPAYMENT: With respect to any Mortgage Loan and with respect
to any Due Period, any principal amount received on a Mortgage Loan in excess of
the scheduled principal amount included in the Monthly Payment due on the Due
Date in such Due Period.
POOLING AND SERVICING AGREEMENT - Page 17
PRINCIPAL REMITTANCE AMOUNT: As to any Remittance Date (other than the
Remittance Date described in the next succeeding sentence) and with respect to
the Class A Certificates and the Class B Certificates, the amount of principal
required to be distributed on such Remittance Date from the Amount Available,
such amount of principal, subject to the following two sentences, being equal to
the lesser of (A) the sum of the Class Principal Balance of each such Class of
Certificates immediately prior to such Remittance Date and (B) the sum of (i)
each payment of scheduled principal received by the Servicer (exclusive of
Principal Prepayments and amounts described in clause (B)(iii) hereof) in the
related Due Period, excluding any partial or advance payments (other than any
Principal Prepayments) held by the Servicer in accordance with customary
mortgage loan servicing practices and the FHA Regulations, if applicable; (ii)
all Principal Prepayments received by the Servicer during the related Due
Period; (iii) the principal portion (as determined in accordance with SECTION
2.08) of all Net Liquidation Proceeds, FHA Insurance Proceeds, Insurance
Proceeds and Released Mortgaged Property Proceeds received during the related
Due Period; (iv) (a) that portion of the purchase price (as provided in SECTION
3.05(a)) of any repurchased Mortgage Loans which represents principal and (b)
the principal portion of any Substitution Adjustments required to be deposited
in the Collection Account as of the related Determination Date; and (v) upon the
reduction of the Class A Overcollateralization to zero, the principal portion of
any Net Loan Losses in excess of such Class A Overcollateralization. As to the
final Remittance Date, subject to the following sentence, the amount of
principal required to be distributed on such Remittance Date from the Amount
Available in respect of the Class A Certificates and the Class B Certificates
shall be equal to the amount described in clause (A) of the immediately
preceding sentence. The purpose and intent of clause (v) of the first sentence
of this definition is that, for purpose of calculating the Deficiency Amount in
respect of a Class of Insured Certificates and the Principal Remittance Amount
distributable to such Class pursuant to SECTION 6.05(b), the amount of Net Loan
Losses allocated to such Class of Insured Certificates pursuant to SECTION 6.10
on such Remittance Date shall be added to, as applicable, the amount of
principal calculated pursuant to each of the two preceding sentences in
determining the Principal Remittance Amount for such Class.
PROJECTED INTEREST SHORTFALL: As determined by the Trustee on any
Determination Date prior to _____________, 199__, the Projected Interest
Shortfall shall be the amount equal to the Interest Shortfall Rate multiplied by
the Weighted Average Balance in the Pre-Funding Account as of such Determination
Date, multiplied by the number of days in the Due Period in which such
Determination Date occurs and any Due Period thereafter ending on or before
______________, 199__ (assuming a 360-day year consisting of twelve 30-day
months) and divided by 360 days.
PROSPECTUS: The Prospectus of the Depositor regarding Mortgage
Certificates, dated ________________, 19__, together with the Prospecuts
Supplement of the Depositor regarding Home Improvement Loan Asset-Backed
Certificates, dated _____________, 19__.
QUALIFIED MORTGAGE: The meaning set forth for such term from time to time
in the definition thereof at Section 860G(a)(3) of the Code (or any successor
statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to SECTION 2.06 or 3.05, which
(i) has or have an interest rate or rates of not less than (and not more than
two percentage points more than) the Mortgage Loan Interest Rate for the Deleted
Mortgage Loan, (ii) matures or mature not more than one year later than and not
more than one year earlier than the Deleted Mortgage Loan, (iii) has or have a
principal balance or principal balances (after application of all payments
received on or prior to the date of
POOLING AND SERVICING AGREEMENT - Page 18
substitution) equal to or less than the Principal Balance of the Deleted
Mortgage Loan as of such date, (iv) has or have a lien priority no lower than
the Deleted Mortgage Loan, (v) satisfies or satisfy the criteria set forth from
time to time in the definition of "qualified replacement mortgage" at Section
860G(a)(4) of the Code (or any successor statute thereto), (vi) complies or
comply as of the date of substitution with each representation and warranty set
forth in SECTION 3.03, (vii) in the case of a Deleted Mortgage Loan which is a
Title I Mortgage Loan, is the same type of loan as the Deleted Mortgage Loan,
either a property improvement loan or a manufactured home loan (as those terms
are defined in the FHA Regulations) and is covered by FHA Insurance under the
Title I Program, and (viii) is secured by a Mortgage on Mortgaged Property.
Notwithstanding clause (ii) above, a mortgage loan or mortgage loans proposed to
be substituted for one or more Deleted Mortgage Loans shall not be "Qualified
Substitute Mortgage Loans" if the substitution thereof would result in any
deferral of the "latest possible maturity date" (as such term is used in
Section 2.07(c)) of any Class of the Class A Certificates. For purposes of
determining whether multiple mortgage loans proposed to be substituted for one
or more Deleted Mortgage Loans pursuant to Section 2.06 or 3.05 are in fact
"Qualified Substitute Mortgage Loans" as provided above, the criteria specified
in clauses (i), (ii) and (iii) 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 Mortgage Loan Interest Rate of any mortgage loans proposed
to be substituted is not less than (and not more than two percentage points more
than) the Mortgage Loan Interest Rate for the designated Deleted Mortgage Loan
or Mortgage Loans, the requirements of clause (i) above would be deemed
satisfied).
RATING AGENCY OR RATING AGENCIES: One or all of (i) Standard & Poor's,
(ii) Duff & Phelps, or (iii) Moody's, provided that when the terms Rating Agency
or Rating Agencies are used in reference to the Insured Certificates, such terms
shall mean one or both of Standard & Poor's or Moody's.
RATINGS: The ratings initially assigned to each of the Class A
Certificates by the Rating Agencies.
RECORD DATE: The close of business on the last Business Day of the month
immediately preceding the month in which a Remittance Date occurs.
RELEASED MORTGAGED PROPERTY PROCEEDS: With respect to any Mortgage Loan,
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 Obligor in accordance with applicable law,
customary second mortgage servicing procedures and this Agreement.
REMIC: The "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code consisting of the assets in the Trust Fund except
the Pre-Funding Account and the Capitalized Interest Account.
REMIC ADMINISTRATIVE FEE: The annual fee payable to the REMIC
Administrator, calculated and payable monthly on each Remittance Date, equal to
____% (__ basis points) per annum of the Pool Principal Balance as of the
immediately preceding Determination Date, except with respect to the first
Remittance Date, such monthly amount shall be prorated based on two days for the
first Due Period.
POOLING AND SERVICING AGREEMENT - Page 19
REMIC ADMINISTRATOR: The Person with whom the Servicer has contracted to
perform certain of its duties hereunder relating to (i) the generation of
reports, including the Servicer's Monthly Remittance Report and the Servicer's
Monthly Statement, (ii) the calculation of distributions pursuant to SECTION
6.05(b) (which is commonly referred to as "bond administration") and (iii) the
REMIC Administration of the Trust Fund, including the required federal and state
tax filings, which Person on the Closing Date will be Residential Funding
Corporation.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to the REMIC and the REMIC Provisions issued after the Closing Date.
REMIC FACTOR: With respect to any Modified Mortgage Loan, an amount equal
to (i) the outstanding principal balance thereof immediately prior to such
Modified Mortgage Loan being modified divided by (ii) the outstanding principal
balance thereof immediately after such Modified Mortgage Loan was modified.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of the Code, and any related provisions and proposed, temporary and final
Treasury regulations promulgated thereunder, as the foregoing may be in effect
from time to time.
REMITTANCE AMOUNT: As to any Remittance Date and with respect to each
Class of Certificates, exclusive of the Class R Certificates, the sum of (i) the
Principal Remittance Amount, if any, applicable to such Class of Certificates
pursuant to the priority scheme set forth in SECTION 6.05(b), (ii) the Interest
Remittance Amount applicable to such Class of Certificates, (iii) an amount
equal to any amount that constitutes any Obligor payment that is recovered from
the Certificateholders of such Class during the related Due Period as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code in accordance with a final, nonappealable order of a court having competent
jurisdiction, (iv) the Interest Carry-Forward Amount, if any, applicable to such
Class of Certificates, and (v) the Principal Carry-Forward Amount, if any,
applicable to such Class of Certificates.
REMITTANCE DATE: The 20th day of any month or if such 20th day is not a
Business Day, the first Business Day immediately following such day, commencing
on _______________, 199__.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO PROPERTY: As defined in SECTION 5.07.
REQUIRED CLASS A OVERCOLLATERALIZATION LEVEL: On each Remittance Date, as
of the related Determination Date the amount equal to the sum of the Required
Title I OC Level and the Required Conventional OC Level.
REQUIRED CONVENTIONAL OC LEVEL: On each Remittance Date, as of the
related Determination Date the amount equal to the greater of (i) ____% of the
sum of the aggregate Principal Balances as of the applicable Cut-Off Dates of
the Conventional Mortgage Loans and the amount on deposit in
POOLING AND SERVICING AGREEMENT - Page 20
the Pre-Funding Account that is intended to fund the purchase of Conventional
Mortgage Loans based on the characteristics of the then existing Pool Principal
Balance (the "REQUIRED CONVENTIONAL OC FLOOR"), and (ii) the product of (x) the
Required Conventional Credit Support Multiple and (y) ____% of the aggregate
Principal Balances as of the applicable Cut-Off Dates of the Conventional
Mortgage Loans and the amount on deposit in the Pre-Funding Account that is
intended to fund the purchase of Conventional Mortgage Loans based on the
characteristics of the then existing Pool Principal Balance; PROVIDED, HOWEVER,
that on each Remittance Date on or after the Credit Support Reduction Date on
which the Required Conventional Credit Support Multiple is equal to 1.0, as of
the related Determination Date, the amount equal to the greater of (i) the
Required Conventional OC Floor and (ii) the product of (x) the Required
Conventional Credit Support Multiple and (y) the lesser of (A) ____% of the
aggregate Principal Balances as of the applicable Cut-Off Dates of the
Conventional Mortgage Loans and the amount on deposit in the Pre-Funding Account
that is intended to fund the purchase of Conventional Mortgage Loans based on
the characteristics of the then existing Pool Principal Balance and (B) ____% of
the aggregate outstanding Principal Balances of the Conventional Mortgage Loans
and the amount on deposit in the Pre-Funding Account that is intended to fund
the purchase of Conventional Mortgage Loans based on the characteristics of the
then existing Pool Principal Balance.
REQUIRED CONVENTIONAL CREDIT SUPPORT MULTIPLE: On each Remittance Date, as
of the related Determination Date the amount calculated as follows: (i) if less
than ____% (by Principal Balance) of the Conventional Mortgage Loans are more
than 30 days delinquent, and if less than ____% (by Principal Balance) of the
Conventional Mortgage Loans are more than 60 days delinquent, and if less than
____% (by Principal Balance) of the Conventional Mortgage Loans have become
Defaulted Mortgage Loans, then such amount will be 1.0; (ii) if less than ____%
(by Principal Balance) of the Conventional Mortgage Loans are more than 30 days
delinquent, and if less than ____% (by Principal Balance) of the Conventional
Mortgage Loans are more than 60 days delinquent, and if less than ____% (by
Principal Balance) of the Conventional Mortgage Loans have become Defaulted
Mortgage Loans, then such amount will be 1.25; (iii) if less than ____% (by
Principal Balance) of the Conventional Mortgage Loans are more than 30 days
delinquent, and if less than ____% (by Principal Balance) of the Conventional
Mortgage Loans are more than 60 days delinquent, and if less than ____% (by
Principal Balance) of the Conventional Mortgage Loans have become Defaulted
Mortgage Loans, then such amount will be 1.50; (iv) if ____% or more (by
Principal Balance) of the Conventional Mortgage Loans are more than 30 days
delinquent, or if ____% or more (by Principal Balance) of the Conventional
Mortgage Loans are more than 60 days delinquent, or if ____% or more (by
Principal Balance) of the Conventional Mortgage Loans have become Defaulted
Mortgage Loans, then such amount will be 2.50; or (v) if ____% or more (by
Principal Balance) of the Conventional Mortgage Loans have become Defaulted
Mortgage Loans on a cumulative basis on or prior to the first anniversary of the
________________, 19__ Cut-Off Date, or if ____% or more (by Principal Balance)
of the Conventional Mortgage Loans have become Defaulted Mortgage Loans on a
cumulative basis on or prior to the second anniversary of the _____________,
199__ Cut-Off Date, or if ____% or more (by Principal Balance) of the
Conventional Mortgage Loans have become Defaulted Mortgage Loans on a cumulative
basis after the second anniversary of the ____________, 199__ Cut-Off Date, then
such amount will be 2.50; provided that except with respect to the calculation
on a cumulative basis through the immediately preceding Due Period for the above
clause (v), the above delinquency and default percentages will be calculated as
the average of the ratios for the immediately preceding three Due Periods based
on the outstanding aggregate Principal Balances for such Conventional Mortgage
Loans, which default percentages will be calculated on an annualized basis as
the average of the ratios for the immediately preceding three Due Periods
POOLING AND SERVICING AGREEMENT - Page 21
where such ratio equals the quotient of (A) 12 times the aggregate outstanding
Principal Balance for such Conventional Mortgage Loans that became Defaulted
Mortgage Loans, over (B) the aggregate outstanding Principal Balance of such
Conventional Mortgage Loans as of the end of the related Due Period.
REQUIRED TITLE I OC LEVEL: On each Remittance Date, as of the related
Determination Date the amount equal to the greater of (i) the sum of (a) ____%
of the sum of the aggregate Principal Balances as of the applicable Cut-Off
Dates of the Title I Mortgage Loans and the amount on deposit in the Pre-Funding
Account that is intended to fund the purchase of Title I Mortgage Loans based
on the characteristics of the then existing Pool Principal Balance, (b) plus the
difference (but not less than zero) between (I) ____% of the aggregate Principal
Balances as of the applicable Cut-Off Dates of the Title I Mortgage Loans, minus
(II) the Initial FHA Insurance Amount (the "REQUIRED TITLE I OC FLOOR"), and
(ii) the product of (x) the Required Title I Credit Support Multiple, and (y)
____% of the aggregate Principal Balances as of the applicable Cut-Off Dates of
the Title I Mortgage Loans and the amount on deposit in the Pre-Funding Account
that is intended to fund the purchase of Title I Mortgage Loans based on the
characteristics of the then existing Pool Principal Balance; PROVIDED, HOWEVER,
that on each Remittance Date on or after the Credit Support Reduction Date on
which the Required Title I Credit Support Multiple is equal to 1.0, as of the
related Determination Date, the amount equal to the greater of (i) the Required
Title I OC Floor, and (ii) the product of (x) the Required Title I Credit
Support Multiple, and (y) the lesser of (A) ____% of the aggregate Principal
Balances as of the applicable Cut-Off Dates of the Title I Mortgage Loans and
the amount on deposit in the Pre-Funding Account that is intended to fund the
purchase of Title I Mortgage Loans based on the characteristics of the then
existing Pool Principal Balance or (B) ____% of the aggregate outstanding
Principal Balances of the Title I Mortgage Loans and the amount on deposit in
the Pre-Funding Account that is intended to fund the purchase of Title I
Mortgage Loans based on the characteristics of the then existing Pool Principal
Balance.
REQUIRED TITLE I CREDIT SUPPORT MULTIPLE: On each Remittance Date, as of
the related Determination Date the amount calculated as follows: (i) if less
than ____% (by Principal Balance) of the Title I Mortgage Loans are more than 30
days delinquent, and if less than ____% (by Principal Balance) of the Title I
Mortgage Loans are more than 60 days delinquent, and if less than ____% (by
Principal Balance) of the Title I Mortgage Loans have become Defaulted Mortgage
Loans, then such amount will be 1.0; (ii) if less than ____% (by Principal
Balance) of the Title I Mortgage Loans are more than 30 days delinquent, and if
less than ____% (by Principal Balance) of the Title I Mortgage Loans are more
than 60 days delinquent, and if less than ____% (by Principal Balance) of the
Title I Mortgage Loans have become Defaulted Mortgage Loans, then such amount
will be 1.25; (iii) if less than ____% (by Principal Balance) of the Title I
Mortgage Loans are more than 30 days delinquent, and if less than ____% (by
Principal Balance) of the Title I Mortgage Loans are more than 60 days
delinquent, and if less than ____% (by Principal Balance) of the Title I
Mortgage Loans have become Defaulted Mortgage Loans, then such amount will be
1.50; (iv) if ____% or more (by Principal Balance) of the Title I Mortgage Loans
are more than 30 days delinquent, or if ____% or more (by Principal Balance) of
the Title I Mortgage Loans are more than 60 days delinquent, or if ____% or more
(by Principal Balance) of the Title I Mortgage Loans have become Defaulted
Mortgage Loans, then such amount will be 2.5; or (v) if ____% or more (by
Principal Balance) of the Title I Mortgage Loans have become Defaulted Mortgage
Loans on a cumulative basis on or prior to the first anniversary of the
_______________, 199__ Cut-Off Date, or if ____% or more (by Principal Balance)
of the Title I Mortgage Loans have become Defaulted Mortgage Loans on a
cumulative basis on or prior to the second anniversary of the _______________,
199__
POOLING AND SERVICING AGREEMENT - Page 22
Cut-Off Date, or if ____% or more (by Principal Balance) of the Title I
Mortgage Loans have become Defaulted Mortgage Loans on a cumulative basis after
the second anniversary of the _______________, 199__Cut-Off Date, then such
amount will be 2.50; provided that except with respect to the calculation on a
cumulative basis through the immediately preceding Due Period for the above
clause (v), the above delinquency and default percentages will be calculated
as the average of the ratios for the immediately preceding three Due Periods
based on the outstanding aggregate Principal Balances for such Title I Mortgage
Loans, which default percentages will be calculated on an annualized basis as
the average of the ratios for the immediately preceding three Due Periods,
where such ratio equals the quotient of (A) 12 times the aggregate outstanding
Principal Balance for such Title I Mortgage Loans that became Defaulted
Mortgage Loans, over (B) the aggregate outstanding Principal Balance of such
Title I Mortgage Loans as of the end of the related Due Period.
RESIDUAL INTEREST: A "residual interest" in a "real estate mortgage
investment conduit" within the meaning of Section 860G(a)(2) of the Code.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any officer
assigned to the Corporate Trust Division (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement. When used with respect to the Depositor, the Transferor, the
Servicer, the Custodian, the Standby Servicer or any FHA Claims Administrator,
the President or any Vice President, Assistant Vice President, or any Secretary
or Assistant Secretary.
SERIES or SERIES 199 - : Remodelers Home Improvement Loan Asset-Backed
Certificates, Series 199__-__.
SERVICER: RNFC, in its capacity as the servicer hereunder, or any
successor appointed as herein provided.
SERVICER'S FISCAL YEAR: October 1st through September 30th of each year.
SERVICER'S MONTHLY REMITTANCE REPORT: A report prepared by the Servicer
substantially in the form of EXHIBIT N attached hereto.
SERVICER'S MONTHLY STATEMENT: As defined in SECTION 6.06.
SERVICER'S MORTGAGE LOAN FILE: As described in EXHIBIT A.
SERVICING ADVANCES: Subject to SECTION 5.01(b), all reasonable and
customary "out of pocket" costs and expenses advanced or paid by the Servicer
with respect to the Mortgage 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 5.02, (iii) the conservation, management and
sale or other disposition of an REO Property pursuant to SECTION 5.07, (iv) the
POOLING AND SERVICING AGREEMENT - Page 23
preservation of the security for a Mortgage Loan if a Superior Lien has
accelerated or intends to accelerate its obligations pursuant to SECTION 5.10;
provided that such Servicing Advances are reimbursable to the Servicer to the
extent provided in the applicable clause of SECTION 6.05(b) or deducted or
retained in calculating Net Liquidation Proceeds hereunder.
SERVICING COMPENSATION: The Servicing Fee and other amounts to which the
Servicer is entitled pursuant to SECTIONS 7.01 and 7.03.
SERVICING FEE: As to each Mortgage Loan (including any Mortgage Loan as to
which the related Mortgaged Property has become an REO Property, but excluding
any Liquidated Mortgage Loan), the fee payable monthly to the Servicer on each
Remittance Date, which shall be the product of ____% times the Principal Balance
of such Mortgage Loan as of the beginning of the immediately preceding Due
Period, divided by 12; provided that with respect to the first Remittance Date,
such monthly fee attributable to the performance of its servicing functions
commencing on the Closing Date shall be pro rated based on two days for the
first Due Period. The Servicing Fee includes any servicing fees owed or payable
to any Subservicer which fees shall be paid from the Servicing Fee.
SERVICING OFFICER: Any officer of the Servicer or Subservicer involved
in, or responsible for, the administration and servicing of the Mortgage 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 Trustee, on behalf of the Certificateholders,
as such list may from time to time be amended.
STANDARD & POOR'S: Standard & Poor's, a division of The McGraw-Hill
Companies, Inc., or any successor thereto.
STARTUP DAY: The day designated as such pursuant to SECTION 2.07.
SUBSEQUENT MORTGAGE LOAN: An individual property improvement and/or home
equity loan of the type described in SUBSECTION 3.03(v), which is assigned and
transferred to the 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, the Subsequent
Mortgage Loans subject to this Agreement will be identified on a Mortgage Loan
Schedule attached as an exhibit to the related Subsequent Transfer Agreement.
SUBSEQUENT PURCHASE PRICE: The Principal Balance of any Subsequent
Mortgage Loans as of the applicable Cut-Off Date.
SUBSEQUENT TRANSFER AGREEMENT: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which Subsequent Mortgage Loans are transferred
to the Trust Fund by the Depositor, in substantially the form attached hereto as
EXHIBIT Q.
SUBSEQUENT TRANSFER DATE: The date specified in each Subsequent Transfer
Agreement, but no later than _______________, 199__ .
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 5.12(a) in respect of the qualifications of a
Subservicer.
POOLING AND SERVICING AGREEMENT - Page 24
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 certain Mortgage
Loans as provided in SECTION 5.12(a), copies of which shall be made available,
along with any modifications thereto, to the Trustee and to the Certificate
Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to SECTIONS 2.06 or 3.05, the amount, if any, by which (a) the sum of
the aggregate principal balance (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution plus any accrued interest thereon
that is scheduled to be paid during the Due Period in which such substitution
occurs, is less than (b) the sum of the aggregate of the Principal Balances,
together with accrued and unpaid interest thereon to the date of substitution,
of the related Deleted Mortgage Loans.
SUPERIOR LIEN: With respect to any Mortgage Loan which is secured by
other than a first priority lien, the mortgage loan(s) relating to the
corresponding Mortgaged Property having a superior priority lien.
TAX MATTERS PERSON: The Class R Certificateholder holding the largest
Percentage Interest, from time to time.
TAX RETURN: The federal income tax return on Internal Revenue Service
Form 1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of the REMIC due to its classification as a "real estate mortgage
investment conduit" within the meaning of Section 860D of the Code under the
REMIC Provisions, together with any and all other information reports or returns
that may be required to be furnished to the Certificateholders or filed with the
Internal Revenue Service or any other governmental taxing authority under any
applicable provision of federal, state or local tax laws.
TERMINATION PRICE: As of any date of determination, an amount equal to
the sum of (i) the aggregate Class Principal Balance of the Class A and Class B
Certificates as of such date, and (ii) the sum of any outstanding Interest
Carry-Forward Amount with respect to the Class A and Class B Certificates and 30
days' interest on the aggregate Class Principal Balance of the Class A and
Class B Certificates as of such date, computed at the weighted average Mortgage
Loan Interest Rate of the Mortgage Loans (including REO Properties) then
outstanding.
TITLE I MORTGAGE LOAN: A Mortgage Loan that has been or will be
registered by FHA for FHA Insurance under the Title I Program.
TITLE I POOL PRINCIPAL BALANCE: The aggregate Principal Balances of the
Title I Mortgage Loans as of any date of determination.
TITLE I PROGRAM: The mortgage insurance program authorized pursuant to
the National Housing Act of 1934, as amended.
POOLING AND SERVICING AGREEMENT - Page 25
TRANSFER: Any direct or indirect transfer, sale, pledge, hypothecation or
other form of assignment of any Ownership Interest in a Certificate.
TRANSFER AFFIDAVIT AND AGREEMENT: As defined in SECTION 4.02(d)(i).
TRANSFER CERTIFICATE: As defined in SECTION 4.02(d)(i).
TRANSFEROR: RNFC, in its capacity as the transferor hereunder.
TRUST FUND: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, designated as the
"Remodelers Series 199__-__ Trust Fund" and consisting of: (i) such Mortgage
Loans as from time to time are subject to this Agreement, including both the
Initial Mortgage Loans and any Subsequent Mortgage Loans conveyed to the Trust
Fund during the Funding Period, together with the Servicer's Mortgage Loan
Files and the Trustee's Mortgage Loan Files relating thereto and all proceeds
thereof, (ii) such assets as from time to time are identified as REO Property,
(iii) such assets and funds as are from time to time deposited in the Collection
Account, the FHA Insurance Premium Account, the Certificate Account, the Pre-
Funding Account and the Capitalized Interest Account, including amounts on
deposit in such accounts which are invested in Permitted Instruments, (iv) the
Trustee's rights under all insurance policies with respect to the Mortgage Loans
required to be maintained pursuant to this Agreement and any Insurance Proceeds,
(v) the Trustee's rights under the FHA Insurance applicable to the Title I
Mortgage Loans, including the right to make FHA Claims and the right to direct
any FHA Claims Administrator to make FHA Claims, subject to the terms of this
Agreement, (vi) the Guaranty Policy applicable to the Class A Certificates,
(vii) Net Liquidation Proceeds, FHA Insurance Proceeds, Guaranty Policy Proceeds
and Released Mortgaged Property Proceeds, (viii) all right, title and interest
of the Transferor in and to the obligations of any seller pursuant to a Loan
Sale Agreement, (ix) all right, title and interest of the Depositor in and to
the obligations of the Transferor under that certain Loan Sale Agreement dated
as of _______________, 199__ , between the Transferor, as seller, and the
Depositor, as purchaser, (x) all right, title and interest of the Trustee, as
purchaser, on behalf of the Trust Fund, under each Subsequent Transfer
Agreement, and (xi) all right, title and interest of the Servicer and the
Transferor in and to the rights and obligations of any Subservicer, pursuant to
any Subservicing Agreement.
TRUSTEE: First Trust of California, National Association, or its
successor in interest, or any successor trustee appointed as herein provided.
TRUSTEE FEE: The annual fee payable to the Trustee, calculated and
payable monthly on each Remittance Date, equal to ____% (___ basis points) per
annum of the Pool Principal Balance as of the immediately preceding
Determination Date, except with respect to the first Remittance Date such
monthly amount shall be pro rated based on two days for the first Due Period.
TRUSTEE'S MORTGAGE LOAN FILE: The documents delivered to the Trustee or
its designated agent pursuant to SECTION 2.05.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is
POOLING AND SERVICING AGREEMENT - Page 26
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
WEIGHTED AVERAGE BALANCE: On any Determination Date, with respect to the
calculation of the weighted average balance on a daily basis of the amount on
deposit in the Pre-Funding Account for the Due Period in which such
Determination Date occurs, the division of (x) the total of (A) the sum of the
actual amount on deposit on each day prior to such Determination Date plus (B)
the sum of the amount on deposit on such Determination Date for the days
remaining in such Due Period including the Determination Date (but assuming a 30
day month) divided by (y) thirty days; and with respect to such calculation for
any Due Period thereafter that ends on or before _______________, 199__ , the
amount on deposit on such Determination Date (assuming no further reductions of
such amount during the remaining term of the Funding Period).
WEIGHTED AVERAGE CERTIFICATE INTEREST RATE: As of any particular date of
determination, the sum of:
(i) the product of (1) the Class Principal Balance of the Class A-1
Certificates divided by the Class Principal Balance of the Class A
Certificates and the Class B Certificates, and (2) the Certificate Interest
Rate for such Class A-1 Certificates; and
(ii) the product of (1) the Class Principal Balance of the Class A-2
Certificates divided by the Class Principal Balance of the Class A
Certificates and the Class B Certificates, and (2) the Certificate Interest
Rate for such Class A-2 Certificates; and
(iii) the product of (1) the Class Principal Balance of the Class
A-3 Certificates divided by the Class Principal Balance of the Class A
Certificates and the Class B Certificates, and (2) the Certificate Interest
Rate for such Class A-3 Certificates; and
(iv) the product of (1) the Class Principal Balance of the Class A-4
Certificates divided by the Class Principal Balance of the Class A
Certificates and the Class B Certificates, and (2) the Certificate Interest
Rate for such Class A-4 Certificates; and
(v) the product of (1) the Class Principal Balance of the Class B
Certificates divided by the Class Principal Balance of the Class A
Certificates and the Class B Certificates, and (2) the Certificate Interest
Rate for such Class B Certificates.
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 CREATION OF TRUST FUND; TRANSFER OF TRUST FUND ASSETS;
ISSUANCE OF CERTIFICATES EVIDENCING INTERESTS IN TRUST FUND;
PRIORITY AND SUBORDINATION OF OWNERSHIP INTERESTS.
(a) The Trust Fund is hereby created. The Depositor hereby appoints the
Trustee as trustee hereunder of the Trust Fund effective as of the Closing Date
and the Trustee hereby acknowledges and accepts such appointment. The Trust
Fund shall be administered pursuant to and in accordance with the provisions of
this Agreement for the benefit of the Certificateholders.
POOLING AND SERVICING AGREEMENT - Page 27
(b) The Depositor, as of the Closing Date and concurrently with the
execution and delivery hereof, does hereby sell, transfer, assign, set over,
convey and grant to the Trustee, without recourse, but subject to the other
terms and provisions of this Agreement, and does hereby grant to the Trustee, in
trust for the exclusive use and benefit of the Certificateholders, all of the
right, title and interest of the Depositor in and to the Mortgage Loans and all
other assets included or to be included in the Trust Fund, whether now owned or
hereafter acquired and including, without limitation, the Initial Mortgage Loans
(including all interest thereon accrued after the Closing Date), any Subsequent
Mortgage Loans (including all interest thereon accrued after the related
Subsequent Transfer Date), the Pre-Funding Account Deposit, the Capitalized
Interest Account Deposit, the Initial FHA Insurance Premium Account Deposit, all
right, title and interest of the Depositor in and to the FHA Insurance of the
Transferor applicable to the Title I Mortgage Loans and all right, title and
interest of the Servicer and the Transferor in and to the rights and obligations
of any Subservicer. Notwithstanding any provision to the contrary herein, the
preceding sale, transfer, assignment, set over, conveyance and grant by the
Depositor shall not include the accrued interest at the respective Mortgage Loan
Interest Rates on the principal amount of the Initial Mortgage Loans up to the
Closing Date, which pre-transfer accrued interest on the Initial Mortgage Loans
and all right, title and interest in and to such pre-transfer accrued interest
will be retained by the Transferor from which the Depositor will have acquired
its interest in the Initial Mortgage Loans subject to such right, title and
interest retained by the Transferor. The foregoing sale, transfer, assignment,
set over, conveyance and grant does not and is not intended to result in a
creation or an assumption by the Trustee of any obligation of the Depositor, the
Transferor or any other person in connection with the Mortgage Loans or under
any agreement or instrument relating thereto except as specifically set forth
herein.
It is expressly intended that the conveyance of the Mortgage Loans, and all
other assets included or to be included in the Trust Fund, by the Depositor to
the Trustee as provided in this SECTION 2.01 or the following SECTION 2.02 be,
and be construed for all purposes as, an absolute conveyance of the Mortgage
Loans and such other assets by the Depositor to the Trustee for the benefit of
the Certificateholders. It is not intended that such conveyance be deemed a
grant of a security interest or a pledge or collateral assignment of the
Mortgage Loans and such other assets by the Depositor to the Trustee to secure a
debt or other obligation of the Depositor. However, in the event that the
Mortgage Loans or such other assets are held to be property of the Depositor, or
if for any reason this Agreement is held or deemed to create a security interest
in the Mortgage Loans or such other assets, then it is intended that, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the Uniform Commercial Code in effect in the State of Texas
or any other applicable state; (b) the conveyance provided for in this SECTION
2.01 and the following SECTION 2.02 shall be deemed to be a grant by the
Depositor to the Trustee, for the benefit
POOLING AND SERVICING AGREEMENT - Page 28
of the Certificateholders, of a security interest in all of the Depositor's
right, title and interest in and to the Mortgage Loans, all amounts payable to
the holders of the Mortgage Loans in accordance with the terms thereof, all
other assets included or to be included in the Trust Fund and all income and
proceeds of the conversion, voluntary or involuntary, of the foregoing, whether
in the form of cash, instruments, securities or other property, including
without limitation, all amounts from time to time held or invested in the
Accounts; (c) the possession by the Trustee or its agent of Notes and such other
items of property as constitute instruments, money, negotiable documents or
chattel paper shall be deemed to be "possession by the secured party" for
purposes of perfecting the security interest pursuant to Section 9.305 of the
Uniform Commercial Code in effect in the State of Texas or any other applicable
state; (d) Uniform Commercial Code financing statements shall be filed in
appropriate jurisdictions reflecting the Depositor as debtor and the Trustee,
for the benefit of the Certificateholders, as secured party; and (e)
notifications to persons holding such property, and acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee shall be made, all for the purpose of perfecting such security
interest under applicable law. The Depositor and the Servicer shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans or any other assets included or to be included in the Trust Fund,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of this Agreement.
As used in this SECTION 2.01, the term "security interest" shall mean a
security interest as contemplated under the Uniform Commercial Code in effect in
the State of Texas or any other applicable state, as well as a common law pledge
or collateral assignment of property to secure a debt or other obligation.
(c) The Trustee acknowledges the conveyance to it of the Initial Mortgage
Loans, the Pre-Funding Account Deposit and the Capitalized Interest Account
Deposit, together with the conveyance to it of all other assets initially
included in the Trust Fund, receipt of which is hereby acknowledged. The
Trustee, as of the Closing Date and concurrently with the execution and delivery
hereof, does hereby agree that upon the acknowledgment by the FHA of the Initial
FHA Insurance Amount the Trustee shall be deemed to have sold, transferred,
assigned, set over, conveyed and granted its entire beneficial ownership
interest in such Initial FHA Insurance Amount to the Trust Fund and shall
maintain the FHA Insurance Amount for the benefit of the Certificateholders in
accordance with the provisions of this Agreement. Concurrently with such
delivery and in exchange therefor, the Trustee, pursuant to the written request
of the Depositor, has executed (not in its individual capacity, but solely as
Trustee) and caused to be authenticated and delivered to or upon the order of
the Depositor, the Class A Certificates, the Class B Certificates and the Class
R Certificates. The Class R Certificates evidence the ownership of the Residual
Interests in the REMIC. The rights of the Class R Certificateholders to receive
distributions from the proceeds of the Trust Fund in respect of the Class R
Certificates and all ownership interests of the Class R Certificateholders in
such distributions shall be as set forth in this Agreement.
(d) For purposes of Texas law, the parties to this Agreement intend to
create an "express trust" under the Texas Trust Act.
Section 2.02 CONVEYANCE OF THE SUBSEQUENT MORTGAGE LOANS; FIXED PRICE
CONTRACT.
(a) On or before the last day of the Funding Period, the Depositor shall
convey to the Trustee, and the Trustee shall purchase on behalf of the Trust
Fund, pursuant to this SECTION 2.02 the lesser of: (i) all Mortgage Loans then
in its possession that satisfy the requirements of this SECTION 2.02 or (ii) the
maximum principal balance of Mortgage Loans that satisfies the requirements of
this SECTION 2.02 whose 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 Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of the
Subsequent Purchase Price of the related Subsequent Mortgage Loans from amounts
on deposit in the Pre-Funding Account, the Depositor shall, from time to time,
on any Subsequent Transfer Date sell, transfer, assign, set over, convey and
grant to the Trustee, without recourse, but subject to the other terms and
provisions of this Agreement, and shall thereby grant to the Trustee, in trust
for the exclusive use and benefit of the Certificateholders, all of the right,
title and interest of the Depositor
POOLING AND SERVICING AGREEMENT - Page 29
in and to each Subsequent Mortgage Loan (including all interest thereon accrued
after the related Subsequent Transfer Date) identified on the Mortgage Loan
Schedule attached to the related Subsequent Transfer Agreement and delivered by
the Depositor on such Subsequent Transfer Date and all items with respect to
such Subsequent Mortgage Loan included or to be included in the Trust Fund
pursuant to SECTION 2.01 and other items in the related Trustee's Mortgage Loan
File. Notwithstanding any provision to the contrary herein, the preceding sale,
transfer, assignment, set over, conveyance and grant by the Depositor shall not
include the accrued interest at the respective Mortgage Loan Interest Rates on
the principal amount of the Subsequent Mortgage Loans up to the related
Subsequent Transfer Date, which pre-transfer accrued interest on the Subsequent
Mortgage Loans and all right, title and interest in and to such pre-transfer
accrued interest will be retained by the Transferor from which the Depositor
will have acquired its interest in the Subsequent Mortgage Loans subject to such
right, title and interest retained by the Transferor. The sale, transfer,
assignment, set over, conveyance and grant by the Depositor of the Subsequent
Mortgage Loans to the Trustee does not and is not intended to result in a
creation or an assumption by the Trustee of any obligation of the Depositor, the
Transferor or any other person in connection with the Subsequent Mortgage Loans
or under any agreement or instrument relating thereto except as specifically set
forth herein.
(b) The amount released from the Pre-Funding Account on any Subsequent
Transfer Date in connection with any conveyance of Subsequent Mortgage Loans
shall be equal to the aggregate of the Subsequent Purchase Prices for such
Subsequent Mortgage Loans, which amount shall not exceed the amount then on
deposit in the Pre-Funding Account. If the Subsequent Purchase Price for such
Subsequent Mortgage Loans 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 Depositor shall cause the delivery of immediately available
funds equal to such insufficiency to the Trustee in escrow (which funds shall
not be part of the Trust Fund or the REMIC) and the Trustee, in turn, shall
remit such immediately available funds, together with funds from the Pre-Funding
Account equal to Subsequent Purchase Price, to the third party designated by the
Transferor or the Depositor that is releasing its interest in such Subsequent
Mortgage Loans. The amount released from the Pre-Funding Account in connection
with any conveyance of Subsequent Mortgage Loans shall, for federal income tax
purposes, be considered cash contributed to the REMIC by the Depositor and used
by the Trustee to acquire the related Subsequent Mortgage Loans pursuant to the
fixed price contract established pursuant to this Section 2.02.
With respect to any Subsequent Mortgage Loans that are Title I Mortgage
Loans, the Transferor or Depositor shall remit an amount to the Trustee for
deposit in the FHA Insurance Premium Account which amount shall be reasonably
determined by the Transferor as necessary to provide sufficient funds for the
payment of the FHA Premium Amount for such Title I Mortgage Loans on the next
annual due date therefor.
On the related Subsequent Transfer Date, the Depositor shall transfer to
the Trustee the Subsequent Mortgage 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 to the related Subsequent Transfer Date:
(i) the Subsequent Mortgage 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
POOLING AND SERVICING AGREEMENT - Page 30
less than $__________, except in the case of the final Subsequent Transfer
Date when no minimum Principal Balance requirement shall be applicable;
(ii) the Transferor and/or Depositor shall provide the Trustee and the
Certificate Insurer with an Addition Notice and shall provide any
information reasonably requested by the Trustee or the Certificate Insurer
with respect to the Subsequent Mortgage Loans;
(iii) the Depositor shall deliver to the Trustee and the
Certificate Insurer a duly executed Subsequent Transfer Agreement,
including all exhibits listed therein;
(iv) the Transferor shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received on or
after the related Cut-Off Date subject to the Transferor's retention of the
accrued interest thereon up to the Subsequent Transfer Date;
(v) the Transferor and the Depositor shall certify that, as of the
Subsequent Transfer Date, the Transferor and the Depositor, respectively,
was not insolvent nor was made insolvent by such transfer nor is aware of
any pending insolvency;
(vi) the Transferor and the Depositor shall certify that, such
addition of Subsequent Mortgage Loans will not result in a material adverse
tax consequence to the Trust Fund or the Holders of Class A Certificates;
(vii) the Funding Period shall not have terminated;
(viii) the Transferor shall make the representations and warranties
set forth in SECTION 3.02 and SECTION 3.04(A) hereof and shall reconfirm
the accuracy of the representations and warranties set forth in Section
3.03 hereof.
(c) In addition, the Transferor and/or Depositor will provide the
Certificate Insurer and the Trustee with data regarding all Subsequent Mortgage
Loans transferred to the Trust Fund on the related Subsequent Transfer Date,
which shall be delivered at least three Business Days prior to such Subsequent
Transfer Date. No later than the end of the Funding Period, the following
conditions shall have been satisfied with respect to all Subsequent Mortgage
Loans transferred to the Trust Fund on any Subsequent Transfer Date:
(i) the Transferor and Depositor shall have delivered to the Trustee
and the Certificate Insurer an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this SECTION 2.02 and
in the related Subsequent Transfer Agreements;
(ii) on the date of the final delivery of Subsequent Mortgage Loans,
the Transferor and/or Depositor shall have delivered to the Certificate
Insurer and the Trustee opinions of counsel with respect to the transfer of
all of the Subsequent Mortgage Loans to the Trust Fund on any Subsequent
Transfer Date substantially in the form of the opinions of counsel
delivered to the Trustee and the Certificate Insurer on the Closing Date
(regarding certain bankruptcy, corporate, securities and tax matters);
POOLING AND SERVICING AGREEMENT - Page 31
(iii) on the date of the final delivery of Subsequent Mortgage
Loans, the Trustee shall deliver to the Certificate Insurer and the
Depositor an opinion of counsel with respect to each of the Subsequent
Transfer Agreements substantially in the form of the opinion of counsel
delivered to the Depositor and the Certificate Insurer on the Closing Date;
(iv) the Transferor and Depositor shall make the representations and
warranties set forth in SECTION 3.04(B) hereof; and
(v) the Certificate Insurer shall deliver to the Depositor and the
Trustee a written notice confirming the Certificate Insurer's consent and
approval to the addition of all Subsequent Mortgage Loans purchased by the
Trust Fund on any Subsequent Transfer Date.
Section 2.03 OWNERSHIP AND POSSESSION OF MORTGAGE LOAN FILES. Upon the
issuance of the Certificates, with respect to the Initial Mortgage Loans, and
upon payment of the related Subsequent Purchase Price, with respect to the
Subsequent Mortgage Loans, the ownership of each Note, the related Mortgage and
the contents of the related Servicer's Mortgage Loan File and the Trustee's
Mortgage Loan File shall be vested in the Trustee for the benefit of the
Certificateholders, although possession of the Servicer's Mortgage Loan Files
(other than items required to be maintained in the Trustee's Mortgage Loan
Files) shall remain with the Servicer, as contemplated in SECTION 3.02.
Section 2.04 BOOKS AND RECORDS.
The sale of each Mortgage Loan shall be reflected on the Depositor's
balance sheets and other financial statements as a sale of assets by the
Depositor. The Depositor shall be responsible for maintaining, and shall
maintain, a complete set of books and records for each Mortgage Loan which shall
be clearly marked to reflect the ownership of each Mortgage Loan by the Trustee
for the benefit of the Certificateholders.
Section 2.05 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
(a) With respect to each Initial Mortgage Loan, on the Closing Date the
Depositor has delivered or caused to be delivered, and with respect to each
Subsequent Mortgage Loan, on the related Subsequent Transfer Dates, the
Depositor will deliver or will cause to be delivered, to the Trustee or, if a
Custodian has been appointed pursuant to Section 12.11, to the Custodian each of
the following documents:
(i) The original Note, with any intervening endorsements evidencing a
complete chain of title from the originator thereof to the Depositor,
endorsed "Pay to the order of First Trust of California, National
Association, as Trustee, without recourse" and signed, by facsimile or
manual signature, in the name of the Depositor by a Responsible Officer
thereof;
(ii) With respect to each Note, 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;
POOLING AND SERVICING AGREEMENT - Page 32
(iii) With respect to each Note, either: (A) the original
Assignment of Mortgage to "First Trust of California, National Association,
as Trustee under the Pooling and Servicing Agreement dated as of
_______________, 199__ , regarding Remodelers Home Improvement Loan Asset-
Backed Certificates, Series 199__-__" 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 Trustee, 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 Mortgage Loans secured by Mortgaged Properties located in the same
county, if permitted by applicable law; PROVIDED further that on the
Closing Date, any Assignment of Mortgage may be assigned in blank and that
promptly thereafter the Depositor and Transferor shall satisfy the
foregoing requirements of either clause (A), (B) or (C).
(iv) With respect to each Note, either: (A) originals of all
intervening assignments, if any, showing a complete chain of title from the
originator of such Note to the assignor of the Assignment of Mortgage to
the Trustee contemplated in Section 2.05(a)(iii) above, including any
recorded warehousing assignments, 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; 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.
(b) The Depositor agrees to deliver or cause to be delivered on or before
the applicable Subsequent Transfer Date to the Trustee, or if a Custodian has
been appointed pursuant to SECTION 12.11, to the Custodian each of the documents
identified in paragraphs (i) through (v) of subsection (a) above with respect to
any Subsequent Mortgage Loans.
(c) 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 Mortgage Loans) or the related Subsequent Transfer Date (in
the case of the Subsequent Mortgage Loans), deliver or cause to be delivered to
the Trustee or, if a Custodian has been appointed pursuant to SECTION 12.11, to
the Custodian: (i) the original recorded Mortgage in those instances where a
copy thereof certified by the Transferor was delivered to the Trustee or the
Custodian; (ii) the original recorded Assignment of Mortgage to the Trustee,
which, together with any intervening assignments of Mortgage, evidences a
complete chain of title from the originator to the Trustee, in those instances
where copies
POOLING AND SERVICING AGREEMENT - Page 33
thereof certified by the Transferor were delivered to the Trustee or the
Custodian; and (iii) 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, 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 Depositor and Transferor shall be deemed to have
satisfied their or its respective obligations hereunder upon delivery to the
Trustee or the Custodian of a copy of such Mortgage, Assignment of Mortgage,
intervening assignments of Mortgage or assumption and modification agreement
certified by the public recording office to be a true copy of the recorded
original thereof.
All Mortgage Loan documents held by the Trustee or the Custodian as to each
Mortgage Loan are referred to herein as the "TRUSTEE'S MORTGAGE 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 TRUSTEE OF THE TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
(a) The Trustee agrees to execute and deliver or cause the Custodian, if
any, to execute and deliver on the Closing Date an acknowledgment of receipt of
the Trustee's Mortgage Loan File for each Initial Mortgage Loan, and the Trustee
agrees to execute and deliver or cause the Custodian, if any, to execute and
deliver on any Subsequent Transfer Date an acknowledgment of receipt of the
Trustee's Mortgage Loan File for each Subsequent Mortgage Loan, in the form
attached hereto as EXHIBIT F-1, if the Trustee delivers such acknowledgments and
in the form attached hereto as EXHIBIT F-2, if the Custodian delivers such
acknowledgment. The Trustee declares that it will hold or cause the Custodian
to hold such documents and any amendments, replacements or supplements thereto,
as well as any other assets included in the definition of Trust Fund and
delivered to the Trustee, as Trustee in trust, upon and subject to the
conditions set forth herein for the benefit of the Certificateholders. The
Trustee agrees, for the benefit of the Certificateholders, to review (or cause
to be reviewed) each Trustee's Mortgage Loan File within 45 days after the
Closing Date (or, with respect to any Qualified Substitute Mortgage Loan or
Subsequent Mortgage Loan, within 45 days after the receipt by the Trustee
thereof) and to deliver or cause the Custodian to deliver to the Transferor, the
Depositor, the Certificate Insurer, the Servicer and the Standby Servicer a
certification in the form attached hereto as EXHIBIT G-1, if prepared by the
Trustee, or EXHIBIT G-2, if prepared by the Custodian, to the effect that, as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification), (i) all documents required
to be delivered to the 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(A)(II) OR 2.05(C), (ii) all documents delivered by the
Depositor and the Transferor pursuant to SECTION 2.05 have been reviewed by the
Trustee or the Custodian on its behalf 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 Mortgage Loan, (iii) based on the Trustee's examination, or the examination
of the Custodian on its behalf, and only as to the foregoing documents, the
information set forth on the Mortgage Loan Schedule accurately reflects the
information set forth in the Trustee's Mortgage Loan File and (iv) each Note has
been endorsed as provided in SECTION 2.05. The Trustee shall be under no duty
or obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are
POOLING AND SERVICING AGREEMENT - Page 34
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 Trustee's Mortgage Loan File should include any of the documents
specified in SECTION 2.05(A)(V).
(b) If the Trustee during the process of reviewing the Trustee's Mortgage
Loan Files finds any document constituting a part of a Trustee's Mortgage Loan
File which is not executed, has not been received, is unrelated to any Mortgage
Loan identified in the Mortgage 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 Mortgage Loan Schedule, then the
Trustee shall promptly so notify the Transferor, the Servicer, the Certificate
Insurer, the Standby Servicer and the Depositor. In performing any such review,
the Trustee may conclusively rely on the Depositor and the Transferor as to the
purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's review of the Trustee's Mortgage 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 Mortgage Loans
identified in the Mortgage Loan Schedule. The Trustee shall have no
responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, 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 Trustee's Mortgage Loan File is discovered, then the Depositor and
Transferor shall comply with the cure, substitution and repurchase provisions of
SECTION 3.05 hereof.
(c) Within the three month period beginning on the Closing Date, each of
the Depositor and the Transferor shall have the option, exercisable in its sole
discretion, to remove a Mortgage Loan from the Trust Fund and substitute
therefor a Qualified Substitute Mortgage Loan in the manner and subject to the
conditions set forth in SECTION 3.05 applicable to substitutions made by the
Transferor and subject to the further conditions that (i) the Depositor and/or
the Transferor may only effect substitutions under this Section 2.06(c) which,
in the aggregate, amount to (A) not more than ____% of the aggregate Cut-Off
Date Principal Balances of the Mortgage Loans (as measured by the aggregate
Principal Balance of the Deleted Mortgage Loans) on the Determination Date
immediately preceding the substitution date, without Certificate Insurer
approval and (B) not more than ____% of the aggregate Cut-Off Date Principal
Balances of the Mortgage Loans (as measured by the aggregate Principal Balance
of the Deleted Mortgage Loans) on the Determination Date immediately preceding
the substitution date, with Certificate Insurer approval, and (ii) no such
substitution shall be undertaken unless and until (A) the Trustee shall have
received written assurances from each Rating Agency that such substitution once
effected would not result in the ratings assigned to any Class A Certificates
being downgraded and (B) the Trustee and Certificate Insurer shall have received
an opinion of counsel, which opinion of counsel shall be acceptable to the
Trustee, that such substitution once effected would not cause the Trust Fund to
be an "investment company" as defined under the Investment Company Act of 1940.
(d) Upon receipt by the Trustee of a certification of a Servicing Officer
of the Servicer of such substitution and the deposit of the Substitution
Adjustment pursuant to SECTION 3.05 in the Collection Account (which
certification shall be in the form of EXHIBIT I hereto), the Trustee shall
release (or cause to be released) to the Servicer for release to the Depositor
or the Transferor, as the case may be, the related Trustee's Mortgage Loan File
for each Deleted Mortgage Loan and shall execute, without recourse,
representation or warranty, and deliver such instruments of transfer
POOLING AND SERVICING AGREEMENT - Page 35
presented to it by the Servicer as shall be necessary to transfer such Deleted
Mortgage Loan to the Depositor or the Transferor, as the case may be.
(e) On the Remittance Date in ___________ of each year commencing in
199__, the Trustee shall deliver to the Depositor, the Certificate Insurer, the
Standby Servicer and the Servicer a certification listing all Trustee's Mortgage
Loan Files held by the Trustee (or by the Custodian on behalf of the Trustee) on
such Remittance Date.
Section 2.07 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF STARTUP
DAY; REMIC CERTIFICATE MATURITY DATE.
(a) The Class A Certificates and the Class B Certificates are hereby
designated as the "regular interests" and the Class R Certificates are hereby
designated as the single class of "residual interest" in the REMIC for purposes
of the REMIC Provisions. The Pre-Funding Account and the Capitalized Interest
Account are not part of the REMIC.
(b) The Closing Date will be the "Startup Day" of the REMIC within the
meaning of Section 860G(a)(9) of the Code.
(c) For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations under the Code the "latest possible maturity date" of the
Certificates is March 20, 2018.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Trustee, the Servicer,
the Standby Servicer, the Certificate Insurer and the Certificateholders as of
the Closing Date:
(a) The Depositor is a business trust duly organized, validly existing,
and in good standing under the laws of the State of Delaware and either directly
or through its Owner Trustee, First Trust of California, National Association,
or its Delaware Trustee, Wilmington Trust Company, has all licenses necessary to
carry on its business as now being conducted and either directly or through its
Owner Trustee, First Trust of California, National Association, or its Delaware
Trustee, Wilmington Trust Company, 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
Depositor and perform its obligations as Depositor hereunder; the Depositor's
Owner Trustee, First Trust of California, National Association, holds a valid
Title I contract of insurance, is approved by the FHA to originate, purchase,
service and/or sell loans insured under the Title I Program and is not subject
to any administrative action, probation, suspension, withdrawal or termination
of its contract of insurance under the Title I Program; the Depositor 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 Depositor and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
action of the Depositor;
POOLING AND SERVICING AGREEMENT - Page 36
this Agreement evidences the valid, binding and enforceable obligation of the
Depositor; and all requisite action has been taken by the Depositor to make this
Agreement valid, binding and enforceable upon the Depositor 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 Depositor makes no such representation or warranty),
that are necessary in connection with the purchase and sale of the Certificates
and the execution and delivery by the Depositor 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 Depositor and the performance by the Depositor of its obligations as
Depositor 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 trust
agreement creating and governing the Depositor, (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 Depositor, its
Owner Trustee, First Trust of California, National Association, or their
respective property is subject (including, without limitation, such Owner
Trustee's Title I contract of insurance from the FHA), (iii) the violation of
any law, rule, regulation, order, judgment or decree to which the Depositor, its
Owner Trustee, First Trust of California, National Association, or their
respective property is subject, (iv) the cancellation, termination or suspension
of, or other administrative action by the FHA against, such Owner Trustee's
Title I contract of insurance or (v) the rejection by the FHA of any claims for
reimbursement of losses on any loans insured under the Title I Program;
(d) Neither this Agreement nor the Prospectus nor any statement, report or
other document prepared by the Depositor 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 Depositor's knowledge, threatened against the Depositor 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 Depositor or in any material impairment of the right or ability of
the Depositor to carry on its business substantially as now conducted, or in any
material liability on the part of the Depositor or which would draw into
question the validity of this Agreement or the Mortgage Loans or of any action
taken or to be taken in connection with the obligations of the
POOLING AND SERVICING AGREEMENT - Page 37
Depositor contemplated herein, or which would be likely to impair materially the
ability of the Depositor to perform under the terms of this Agreement;
(f) The Depositor 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 other) or operations
of the Depositor or its properties or might have consequences that would
materially and adversely affect its performance hereunder;
(g) As of the Closing Date, the Trustee will have good and marketable
title on behalf of the Trust Fund to each Initial Mortgage Loan and such other
items comprising the corpus of the Trust Fund free and clear of any lien,
mortgage, pledge, charge, security interest or other encumbrance;
(h) As of any Subsequent Transfer Date, the Trustee will have good and
marketable title on behalf of the Trust Fund to each Subsequent Mortgage Loan
transferred on such date and such other items comprising the corpus of the Trust
Fund free and clear of any lien, mortgage, pledge, charge, security interest or
other encumbrance; and
(i) The transfer, assignment and conveyance of the Mortgage Loans, the
Notes and the Mortgages by the Depositor 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.
Notwithstanding anything to the contrary in this Agreement, there shall be
no recourse to the Depositor's Owner Trustee, in its individual, corporate
capacity, as a result of any error or inaccuracy in any of the representations
or warranties of the Depositor set forth in this Agreement, and such recourse
shall exist only with respect to the Depositor and its assets. The
representations and warranties of the Depositor have been made without the
Depositor's Owner Trustee having conducted any independent investigation of such
matters.
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 Depositor, the Trustee, the
Standby Servicer, the Certificate Insurer and the Certificateholders 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; the Servicer holds a valid Title I contract of insurance, is approved
by the FHA to originate, purchase, service and/or sell loans insured under the
Title I Program as a servicer and lender and is not subject to any
administrative action, probation, suspension, withdrawal or termination of its
contract of insurance under the Title I Program; 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
POOLING AND SERVICING AGREEMENT - Page 38
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
(including without limitation the Servicer's Title I contract of insurance from
the FHA), (iii) the violation of any law, rule, regulation, order, judgment or
decree to which the Servicer or its property is subject, (iv) the cancellation
of the Servicer's Title I contract of insurance, or (v) the rejection by the FHA
of any claims for reimbursement of losses on any loans insured under the Title I
Program;
(d) Neither this Agreement 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 Mortgage 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;
POOLING AND SERVICING AGREEMENT - Page 39
(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 other) 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 Remodelers National Funding Corp. is the Servicer of the
Mortgage Loans hereunder, the Servicer's Mortgage Loan Files (other than the
Trustee's Mortgage Loan Files) for each Mortgage Loan will be maintained at 3101
Bee Caves Road, Suite 200, Austin, Texas 78746, or, if Remodelers National
Funding Corp. is no longer the Servicer hereunder or if Remodelers National
Funding Corp. changes the location of the Servicer's Mortgage Loan Files (other
than items required to be maintained in the Trustee's Mortgage Loan Files), the
Servicer's Mortgage Loan Files (other than items required to be maintained in
the Trustee's Mortgage Loan Files) for each Mortgage Loan shall be maintained at
such address as may be indicated on an Officer's Certificate executed by a
Responsible Officer of the Servicer and delivered to the Trustee, the Standby
Servicer and the Depositor;
(h) The Servicer shall not solicit any refinancing of any of the Mortgage
Loans; provided, that this covenant shall not prevent or restrict 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 lists of the Obligors of the Mortgage Loans; 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
Mortgage Loans to any third party.
Section 3.03 INDIVIDUAL MORTGAGE LOANS.
The Transferor hereby represents and warrants to the Depositor, the
Trustee, the Certificate Insurer, the Standby Servicer and the
Certificateholders, with respect to each Initial Mortgage Loan, as of the
Closing Date and, with respect to each Subsequent Mortgage Loan, as of the
related Subsequent Transfer Date:
(a) MORTGAGE LOAN INFORMATION. The information with respect to each
Mortgage Loan set forth in the Mortgage Loan Schedule is true and correct in all
material respects as of the applicable Cut-Off Date.
(b) DELIVERY OF MORTGAGE LOAN DOCUMENTS. All of the original or certified
documentation required to be delivered to the 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. No scheduled payments on the Mortgage Loans are
delinquent 90 days or more as of the applicable Cut-Off Date, based on the terms
under which the related Mortgages and Notes 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 Mortgage Loan.
POOLING AND SERVICING AGREEMENT - Page 40
(d) NO WAIVER OR MODIFICATION. The terms of each Note and Mortgage have
not been impaired, waived, altered or modified in any respect, except by written
instruments reflected in the Trustee's Mortgage Loan File and no provision of
any Mortgage or Note has been "whited out" or erased unless such modification
has been initialed by each of the parties to the related Mortgage Loan. No
instrument of waiver, alteration, modification or assumption has been executed
except for the instruments that are part of the Trustee's Mortgage Loan File and
the terms of which are reflected in the Trustee's Mortgage Loan File.
(e) NO DEFENSES. No Note or Mortgage is subject to any set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of any Note or Mortgage, or the exercise of any right
thereunder, render such Note or Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense, including
the defense of usury, and to the best of the Transferor's knowledge, no such
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 Mortgage Loan was originated.
(f) COMPLIANCE WITH LAWS. Any and all requirements of any federal, state
or local law applicable to each Mortgage Loan have been complied with including,
without limitation, all consumer, usury, truth-in-lending, consumer credit
protection, equal credit opportunity or disclosure laws applicable to each
Mortgage Loan, and with respect to the Title I Mortgage Loans, the FHA
Regulations; each Mortgage Loan was originated in compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in connection
therewith; any Mortgage Loan originated in the State of Texas, was originated
pursuant to Chapter 6 of the Texas Consumer Credit Code.
(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 a Mortgage securing a Mortgage Loan (in the case of a Title I Mortgage
Loan, as permitted by FHA Regulations), with respect to which a related Superior
Lien was released in connection with the refinancing of the mortgage loan
relating to such Superior Lien.
(h) VALID LIEN. Each Note is secured by a Mortgage and each Mortgage is
or creates a valid, subsisting and enforceable lien on the related Mortgaged
Property, including, in the case of a Mortgage securing a property improvement
loan, the land and all buildings on the Mortgaged Property.
(i) VALIDITY OF MORTGAGE LOAN DOCUMENTS. Each Note 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 enforceability 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 Note and each Mortgage had legal capacity at the time to enter
into the related Mortgage Loan and to execute and deliver such Note and
Mortgage, and such Note and Mortgage have been duly and properly executed by
such parties.
(j) FULL DISBURSEMENT OF PROCEEDS. As of the applicable Cut-Off Date the
proceeds of each Mortgage Loan have been fully disbursed and there is no
requirement for future advances
POOLING AND SERVICING AGREEMENT - Page 41
thereunder, all costs, fees and expenses incurred in making or closing each
Mortgage Loan and the recording of the Mortgage were disbursed, the Obligor is
not entitled to any refund of any amounts paid or due under the Note or any
related Mortgage and any and all requirements set forth in the related Mortgage
Loan documents have been complied with.
(k) OWNERSHIP. Immediately prior to the conveyance thereof to the
Depositor, the Transferor had good and marketable title to each Mortgage Loan,
Note and Mortgage, was the sole owner thereof and had full right to sell each
Mortgage Loan, Note and Mortgage to the Depositor and upon the conveyance
thereof by the Transferor to the Depositor, the Depositor became the sole owner
of each Mortgage Loan, Note and Mortgage free and clear of any encumbrance,
equity, lien, pledge, charge, claim or security interest.
(l) OWNERSHIP OF MORTGAGED PROPERTY. The related Servicer's Mortgage Loan
File contains a title document with respect to each Mortgage Loan reflecting
that title to the related Mortgaged Property is held at least 50% by the Obligor
under such Mortgage Loan.
(m) NO DEFAULTS. Except with respect to any delinquent scheduled payment
which is not more than 90 days delinquent as of the applicable Cut-Off Date,
there is no default, breach, violation or event of acceleration existing under
any Mortgage or any Note 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 Trustee's Mortgage Loan File.
(n) NO CONDEMNATION OR DAMAGE. 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 Mortgage Loan (normal wear and tear excepted)
and there is no proceeding pending for the total or partial condemnation of any
Mortgaged Property.
(o) 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.
(p) FHA INSURANCE COVERAGE. Each Title I Mortgage Loan is an FHA Title I
property improvement loan (as such term is defined in 24 C.F.R. Part 201.2)
underwritten by the originator thereof in accordance with such originator's then
current underwriting guidelines and all FHA requirements for the Title I Program
as set forth in the FHA Regulations, and has been or will be reported to and
acknowledged by the FHA for FHA Insurance under the Transferor's Title I
contract of insurance. The Transferor has no knowledge of any event which would
invalidate or cancel the FHA Insurance for such Title I Mortgage Loan.
(q) UNDERWRITING OF CONVENTIONAL MORTGAGE LOANS. Each Conventional
Mortgage Loan is either a property improvement and/or home equity loan or a
first or junior lien purchase money loan, and has been underwritten by the
originator thereof in accordance with such originator's then current
underwriting guidelines.
POOLING AND SERVICING AGREEMENT - Page 42
(r) TERMS OF MORTGAGE LOANS. Each Mortgage Loan is a fixed rate loan;
each Note has an original term to maturity of not less than 24 months nor more
than 20 years and 32 days from the date of origination; each Note 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 Mortgage Loan Interest Rate; and no Note provides for any extension of
the original term.
(s) SECURITY. No Note is, or has been, secured by any collateral except
the lien of the related Mortgage.
(t) DEED OF TRUST. If a Mortgage 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 the 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) VALUE AND TITLE I INSURABILITY. Except with respect to conditions and
circumstances expressly permitted pursuant to the applicable underwriting
guidelines, the Transferor has no knowledge of any conditions or circumstances
(that are not reflected in the Trustee's Mortgage Loan File or in the Servicer's
Mortgage Loan File) that could reasonably be expected to materially and
adversely affect the value of the related Mortgaged Property with respect to any
Conventional Mortgage Loan. Further, the Transferor has no knowledge of any
conditions or circumstances that could reasonably be expected to affect the FHA
insurability with respect to any Title I Mortgage Loan under the Title I
Program.
(v) TYPES OF MORTGAGE LOANS. Each Mortgage Loan is (i) in respect of (1)
a property improvement and/or home equity loan, or (2) a first or junior lien
purchase money loan, and (ii) not a loan in respect of the purchase of a
manufactured home; provided that each Title I Mortgage Loan is only in respect
of a property improvement loan.
(w) COMPLETION OF IMPROVEMENTS. With respect to all Mortgage Loans
(except for such Mortgage Loans that are first lien or junior lien purchase
money loans, the proceeds of which have been used in part to improve the related
Mortgaged Property), all improvements to be made to each Mortgaged Property with
the proceeds of the related Mortgage Loan have been completed and, except as to
Mortgage Loans that are such purchase money loans or that were made by the
originator thereof directly to the owner of the property being improved, the
Servicer's Mortgage Loan File with respect to such Mortgage Loan contains a
Completion Certificate.
(x) ORIGINATION PRACTICES. The origination practices used by each
originator of the Mortgage Loans and the servicing and collection practices used
by the Transferor with respect to each Mortgage Loan, and with respect to each
Title I Mortgage Loan the refinancing practices, if applicable, have been in all
material respects legal, proper, prudent and customary in the property
improvement and/or home equity loan origination and servicing business and, in
the case of Title I Mortgage Loans, in compliance with all FHA Regulations.
POOLING AND SERVICING AGREEMENT - Page 43
(y) SERVICING PRACTICES. Each Mortgage Loan has been serviced in
accordance with all applicable laws and, to the best of the Transferor's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
(z) NO BULK TRANSFER. The sale, transfer, assignment, conveyance and
grant of the Notes and the Mortgages by the Transferor to the Depositor were not
subject to the bulk transfer laws or any similar statutory provisions in effect
in any applicable jurisdiction.
(aa) DELINQUENCIES. As of the _______________, 199__ Cut-Off Date, none
of the Initial Mortgage Loans were 31 days or more delinquent.
(bb) RELIEF ACT MATTERS. No Obligor has notified the Transferor, and the
Transferor has no knowledge of any relief requested or allowed to an Obligor
under the Soldiers' and Sailors' Civil Relief Act of 1940.
(cc) SELECTION CRITERIA. The Mortgage Loans were not selected by the
Transferor for sale to the Depositor or for inclusion in the Trust Fund on any
basis intended to adversely affect the Depositor or the Trust Fund.
(dd) REMIC QUALIFICATION. With respect to each Mortgage Loan, either: (i)
the original principal balance of the Mortgage Loan as of the date of
origination thereof was less than 125% of the value of the Mortgaged Property
attributable to only the real property securing such Mortgage Loan less the
amount of all indebtedness secured by such Mortgaged Property which is senior or
pari passu with the lien of such Mortgage Loan; or (ii) substantially all of the
proceeds of such Mortgage Loan were used to acquire or to improve or protect an
interest in real property that, at the date of origination of such Mortgage
Loan, was the only security therefor.
(ee) APPRAISED MORTGAGE LOAN-TO-VALUE. At origination, each Title I
Mortgage Loan in excess of $15,000, that was not owner-occupied, had an
appraised loan-to-value ratio not in excess of 100%; provided that the FHA
Regulations in effect at the time of such origination required an appraisal of
the Mortgaged Property.
(ff) TYPE OF MORTGAGED PROPERTIES. At the time of origination, each Title
I Mortgage Loan with a principal balance of $7,500 or greater was secured by a
lien on an owner-occupied one-to-four family dwelling.
(gg) SENIOR LIEN DELINQUENCIES. No lien senior to the lien created by a
Mortgage at the time of origination of the related Mortgage Loan was more than
30 days past due.
(hh) AGGREGATE PRINCIPAL BALANCES OF THE CONVENTIONAL MORTGAGE LOANS. The
aggregate outstanding principal balances of the Conventional Mortgage Loans as
of each Cut-Off Date will not represent more than ____% of the Pool Principal
Balance.
The Transferor has reviewed all of the documents constituting each
Servicer's Mortgage Loan File and each Trustee's Mortgage Loan File and has made
such inquiries as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
POOLING AND SERVICING AGREEMENT - Page 44
With respect to the 80 individual Initial Mortgage Loans for which the
Mortgaged Property address and state has not been set forth on the Mortgage Loan
Schedule on the Closing Date, the Depositor or Transferor shall provide to the
Trustee and the Custodian, if applicable, the Mortgaged Property address and
state for each such Initial Mortgage Loan within 30 days after the Closing Date.
Section 3.04 SUBSEQUENT MORTGAGE LOANS.
(a) The Transferor shall represent and warrant to the Depositor, the
Trustee, the Certificate Insurer, the Standby Servicer and the
Certificateholders that as of each Subsequent Transfer Date:
(i) No Subsequent Mortgage Loan provides for negative amortization;
and
(ii) No Subsequent Mortgage Loan has a Cut-Off Date or a Subsequent
Transfer Date later than _______________, 199__ ; and
(iii) No Subsequent Mortgage Loan has a maturity date later than
__________, 20__.
(b) The Transferor shall represent and warrant to the Depositor, the
Trustee, the Certificate Insurer and the Certificateholders that as of the end
of the Funding Period:
(i) The Mortgage Loans have a Mortgage Loan Interest Rate of at least
____%;
(ii) The Mortgage Loans have a weighted average original term to
stated maturity of not more than 20 years;
(iii) No Title I Mortgage Loans have a Principal Balance as of the
related Cut-Off Date of greater than $__________ and no Conventional
Mortgage Loans have a Principal Balance as of the related Cut-Off Date of
greater than $__________;
(iv) There is not a concentration of Mortgage Loans in a single zip
code in excess of ____% by Pool Principal Balance;
(v) The other quantitative criteria set forth in paragraphs 32 and 33
of that certain Commitment to Issue a Financial Guaranty Insurance Policy
(Application No. ___________) dated as of _______________, 199__ issued by
the Certificate Insurer, have been satisfied; and
(vi) No more than ten percent (____%) of the Subsequent Mortgage Loans
by Principal Balance as of the respective Cut-Off Dates shall be property
improvement and home equity loans in which less than fifty percent (50%) of
the proceeds from each such loan have been used for the improvement of the
related Mortgaged Property.
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 transfer and assignment
of the Mortgage Loans to the Trust
POOLING AND SERVICING AGREEMENT - Page 45
Fund and delivery of the Certificates to the Certificateholders. Upon discovery
by the Depositor, the Servicer, the Transferor, the Custodian, the Trustee, the
Certificate Insurer or any Certificateholder of a breach of any of such
representations and warranties which materially and adversely affects the value
of the Mortgage Loans or the interest of the Certificateholders, or which
materially and adversely affects the interests of the Certificateholders in the
related Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was 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, promptly cure such breach in all material respects.
If, however, within 60 days after the notice to the Transferor respecting such
breach the Transferor has not remedied the breach and the breach materially and
adversely affects the interest of the Certificateholders generally or in the
related Mortgage Loan, the Depositor shall cause the Transferor on the
Determination Date next succeeding the end of such 60 day period either (i) to
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the conditions set forth in this SECTION 3.05
or (ii) to purchase such Mortgage Loan at a purchase price equal to the Purchase
Price (as defined below) by depositing such Purchase Price in the Collection
Account; provided any such substitution may be effected not later than the date
which is two years after the Startup Day; provided further, however, that if it
is discovered that any Mortgage Loan does not constitute a Qualified Mortgage,
the Transferor shall and the Trustee shall cause the Transferor to repurchase
the affected Mortgage Loan or to substitute in lieu of such Mortgage Loan a
Qualified Substitute Mortgage Loan, no later than 90 days after the earliest of
such discovery by the Servicer, the Transferor, the Certificate Insurer, the
Depositor or the Trustee. The Transferor shall provide the Servicer and the
Trustee 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 Mortgage Loan or substituting in lieu of such
Mortgage Loan a Qualified Substitute Mortgage Loan. With respect to the
purchase of a defective Mortgage Loan pursuant to this Section, the "PURCHASE
PRICE" shall be equal to the Principal Balance of such Mortgage Loan as of the
date of purchase, plus all accrued and unpaid interest on such Mortgage Loan to
but not including the Due Date in the Due Period most recently ended prior to
such Determination Date computed at the Mortgage Loan Interest Rate, plus the
amount of any unreimbursed Servicing Advances made by the Servicer with respect
to such Mortgage Loan, which Purchase Price shall be deposited in the Collection
Account (after deducting therefrom any amounts received in respect of such
repurchased Mortgage Loan and being held in the Collection Account for future
distribution 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). As to any Title I Mortgage
Loan for which the related FHA Insurance has not been transferred on the books
of the FHA from the Transferor's contract of insurance to the Trustee's contract
of insurance within 120 days after the Closing Date (in the case of Title I
Mortgage Loans that are Initial Mortgage Loans) or the related Subsequent
Transfer Date (in the case of Title I Mortgage Loans that are Subsequent
Mortgage Loans), the Transferor shall purchase such Mortgage Loan from the Trust
Fund in the manner and at the price set forth in this SECTION 3.05(a) for the
purchase of a defective Mortgage Loan; provided that such 120 day period may be
extended by the Transferor with the consent of the Certificate Insurer.
Any substitution of Mortgage Loans pursuant to this SECTION and SECTION
2.06(c) shall be accompanied by payment by the Transferor of the Substitution
Adjustment, if any, to be deposited
POOLING AND SERVICING AGREEMENT - Page 46
in the Collection Account. For purposes of calculating the Available Remittance
Amount for any Remittance Date, amounts paid by the Transferor pursuant to this
SECTION 3.04 in connection with the repurchase or substitution of any Mortgage
Loan that are on deposit in the Collection Account as of the Determination Date
for such Remittance Date shall be deemed to have been paid during the related
Due Period and shall be transferred to the Certificate Account pursuant to
SECTION 5.04(i) on the Determination Date for such Remittance Date.
As to any Deleted Loan for which the Transferor substitutes a Qualified
Substitute Loan or Loans, the Transferor shall effect such substitution by
delivering to the Trustee a certification in the form attached hereto as
EXHIBIT I, executed by a Responsible Officer, and the documents constituting the
Trustee's Loan File for such Qualified Substitute Loan or Loans.
In addition to the preceding repurchase obligations, each of the Depositor
and the Transferor shall have the option, exercisable in its sole discretion at
any time, to repurchase any Mortgage Loan from the Trust Fund in the event that
such Mortgage Loan is in foreclosure, default or imminent default; provided that
any repurchase pursuant to this paragraph is conducted in the same manner as the
repurchase of a defective Mortgage Loan pursuant to this SECTION 3.05.
(b) The Transferor shall deposit in the Collection Account all payments
received in connection with such Qualified Substitute Mortgage Loan or Loans
after the date of such substitution. Monthly Payments received with respect to
Qualified Substitute Mortgage Loans on or before the date of substitution will
be retained by the Transferor. The Trust Fund will own all payments received on
the Deleted Mortgage Loan on or before the date of substitution, and the
Transferor shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Transferor shall give
written notice to the Trustee, the Servicer, the Standby Servicer and the
Certificate Insurer that such substitution has taken place and shall amend the
Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from
the terms of this Agreement and the substitution of the Qualified Substitute
Mortgage Loan. The Transferor shall promptly deliver to the Trustee, the
Servicer and the Certificate Insurer a copy of the amended Mortgage Loan
Schedule. Upon such substitution, such Qualified Substitute Mortgage Loan or
Mortgage 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 Mortgage 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 Substitution Adjustment, if any.
(c) 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
Mortgage Loan constitute the sole remedies of the Trustee, the
Certificateholders and the Certificate Insurer hereunder respecting a breach of
the representations and warranties contained in SECTIONS 3.03 and 3.04. Any
cause of action against the Depositor relating to or arising out of a defect in
a Trustee's Mortgage Loan File as contemplated by SECTION 2.06 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 Mortgage Loan
upon (i) discovery of such defect or breach by any party and notice thereof to
the Depositor or the Transferor, as applicable, or notice thereof by the
Transferor or the Depositor, as applicable, to the Trustee, (ii) failure by the
Transferor or the Depositor, as applicable, to cure such defect or breach or
purchase or substitute such Mortgage Loan as specified above, and (iii) demand
upon the
POOLING AND SERVICING AGREEMENT - Page 47
Transferor or the Depositor, as applicable, by the Trustee or the Majority
Certificateholders for all amounts payable in respect of such Mortgage Loan.
(d) Notwithstanding any contrary provision of this Agreement, no purchase
or substitution pursuant to SECTIONS 2.06(c) or 3.05 shall be made unless such
purchase or substitution would not (i) result in the imposition of taxes on
"prohibited transactions" of the Trust Fund, as defined in Section 860F of the
Code, or a tax on contributions to the REMIC under the REMIC Provisions, or
(ii) cause the REMIC to fail to qualify as a "real estate mortgage investment
conduit" within the meaning of Section 860D of the Code at any time that any
Certificates are outstanding. Any Mortgage Loan as to which purchase or
substitution was delayed pursuant to this paragraph shall be purchased or
substituted (subject to compliance with Sections 2.06(c) and 3.05) upon the
occurrence of a default or when a default becomes reasonably foreseeable with
respect to such loan.
(e) The Trustee shall have no 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
Mortgage Loan pursuant to this Section or the eligibility of any Mortgage Loan
for purposes of this Agreement.
ARTICLE IV
THE CERTIFICATES
Section 4.01 THE CERTIFICATES.
The Class A, Class B and Class R Certificates shall be substantially in the
forms annexed hereto as Exhibits B-1, B-2 and B-3, respectively, and shall, upon
original issue, be executed (not in its individual capacity, but solely as
Trustee) and delivered by the Trustee to the Certificate Registrar for
authentication and delivery to or upon the order of the Depositor, concurrently
with the transfer and assignment to the Trustee of the Initial Mortgage Loans,
the Pre-Funding Account Deposit, the Capitalized Interest Account Deposit and
the other items of the Trust Fund pursuant to SECTION 2.01. All Certificates
shall be executed and authenticated by manual or facsimile signature by an
authorized officer of the Trustee and on behalf of the Certificate Registrar by
an authorized officer of the Certificate Registrar. Certificates bearing the
signatures of individuals who were at the time of the execution of the
Certificates the proper officers of the Trustee shall bind the Trust Fund,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
Section 4.02 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Class A Certificates shall initially be issued only in book-entry
form. The Beneficial Owners of interests in any Class A Certificates will hold
their Certificates through the book entry facilities of DTC. So long as the
Class A Certificates are in book-entry form, each such Class A Certificate will
be evidenced by one or more Book-Entry Certificates registered in the name of
the nominee of DTC. The interests of such Beneficial Owners will be represented
by book-entries on the records of DTC and participating members thereof. No
Beneficial Owners will be entitled to receive a definitive certificate
representing such person's interest, except in the event that
POOLING AND SERVICING AGREEMENT - Page 48
definitive certificates evidencing the Class A Certificates are issued due to
the termination of the book-entry registration of the Class A Certificates. All
references in this Agreement to any Class A Certificates reflect the rights of
Beneficial Owners only as such rights may be exercised through DTC and its
participating members for so long as such Class A Certificates are held by DTC.
Beneficial ownership interests in each Class of Class A or Class B Certificates
will be issued only in minimum denominations of $250,000 and integral multiples
of $1,000 in excess thereof; provided, however, that one or more beneficial
ownership interests in each Class of Class A or Class B Certificates may be
issued in a different denomination such that the aggregate initial principal
balance of such Class of Class A or Class B Certificates will equal the Original
Class Principal Balance of such Class.
(b) The Trustee shall cause to be kept at its office in St. Paul,
Minnesota, or at its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, it shall provide for the
registration of the Certificates (including the Book-Entry Certificates) and of
transfers and exchanges of Certificates as herein provided. The Certificate
Register shall contain the name, remittance instructions, Class and Percentage
Interest of each Certificateholder, as well as the Series and the number in the
Series. The Trustee hereby accepts appointment as Certificate Registrar for the
purpose of registering the Certificates and transfers and exchanges of such
Certificates as herein provided. If requested, the Trustee shall furnish the
Depositor with a copy of the Certificate Register promptly after the transfer or
exchange of any Certificates as provided herein.
(c) Each Person who has or who acquires any Ownership Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the following provisions and to have
irrevocably authorized the Trustee or its designee under clause (iii)(A) below
to deliver payments to a Person other than such Person and to negotiate the
terms of any mandatory sale under clause (iii)(B) below and to execute all
instruments of transfer and to do all other things necessary in connection with
any such sale.
(i) The rights of each Person acquiring any Ownership Interest in a
Class R Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall be a United States Person and a Permitted
Transferee and shall not be a Plan and shall promptly notify the
Trustee of any change or impending change in its status as a United
States Person, a Permitted Transferee or a Plan.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Class R Certificate
until its receipt of, (I) an affidavit and agreement (a "TRANSFER
AFFIDAVIT AND AGREEMENT"), in the form attached hereto as EXHIBIT J-1,
from the proposed Transferee, in substance satisfactory to the
Trustee, representing and warranting, among other things, that it is a
United States Person and a Permitted Transferee, that it is not
acquiring its Ownership Interest in the Class R Certificate that is
the subject of the proposed Transfer as a nominee, trustee or agent
for any Person who is not a Permitted Transferee, that for so long as
it retains its Ownership Interest in a Class R Certificate, it will
endeavor to remain a Permitted Transferee, and that it has reviewed
the provisions of this Section 4.02(d) and agrees
POOLING AND SERVICING AGREEMENT - Page 49
to be bound by them, and (II) a certificate (a "TRANSFER
CERTIFICATE"), in the form attached hereto as EXHIBIT J-2, from the
Holder wishing to transfer the Class R Certificate, in substance
satisfactory to the Trustee, representing and warranting, among other
things, that no purpose of the proposed Transfer is to impede the
assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if the
Trustee has actual knowledge that the proposed Transferee is not a
United States Person and a Permitted Transferee, no Transfer of an
Ownership Interest in a Class R Certificate to such proposed
Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer Affidavit
and Agreement from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class R Certificate and (y) not
to Transfer its Ownership Interest unless it provides a Transfer
Certificate to the Trustee.
(E) Each Person holding or acquiring an Ownership Interest in a
Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary
Treasury regulations Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Class R Certificate, if it is, or
is holding an Ownership Interest in a Class R Certificate on behalf
of, a "pass-through interest holder".
(ii) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement, a
Transfer Certificate of the Holder requesting such transfer and all of such
other documents as shall have been reasonably required by the Trustee as a
condition to such registration. Transfers of the Class R Certificates to
Non-United States Persons and "Disqualified Organizations" (as defined in
Section 860E(e)(5) of the Code) are prohibited.
(iii) (A) If any Disqualified Organization shall become a holder
of a Class R Certificate, then the last preceding Permitted Transferee
shall be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration
of such Transfer of such Class R Certificate. If a Non-United States
Person shall become a holder of a Class R Certificate, then the last
preceding United States Person shall be restored, to the extent
permitted by law, to all rights and obligations as Holder thereof
retroactive to the date of registration of such Transfer of such Class
R Certificate. If a Transfer of a Class R Certificate is disregarded
pursuant to the provisions of Treasury regulations Section 1.860E-1 or
Section 1.860G-3, then the last preceding Permitted Transferee shall
be restored, to the extent permitted by law, to all rights and
obligations as Holder thereof retroactive to the date of registration
of such Transfer of such Class R Certificate. The Trustee shall be
under no liability to any Person for any registration of Transfer of a
Class R Certificate that is in fact not permitted by this SECTION
4.02(d) or for making any
POOLING AND SERVICING AGREEMENT - Page 50
payments due on such Certificate to the Holder thereof or for taking
any other action with respect to such Holder under the provisions of
this Agreement.
(B) If any purported Transferee shall become a Holder of a Class
R Certificate in violation of the restrictions in this Section 4.02(d)
and to the extent that the retroactive restoration of the rights of
the Holder of such Class R Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the Trustee
shall have the right, without notice to the Holder or any prior Holder
of such Class R Certificate, to sell such Class R Certificate to a
purchaser selected by the Trustee on such terms as the Trustee may
choose. Such purported Transferee shall promptly endorse and deliver
each Class R Certificate in accordance with the instructions of the
Trustee. Such purchaser may be the Trustee itself or any Affiliate of
the Trustee. The proceeds of such sale, net of the commissions (which
may include commissions payable to the Trustee or its Affiliates),
expenses and taxes due, if any, will be remitted by the Trustee to
such purported Transferee. The terms and conditions of any sale under
this clause (iii)(B) shall be determined in the sole discretion of the
Trustee, and the Trustee shall not be liable to any Person having an
Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
(d) Each prospective initial purchaser of a beneficial interest in a Class
B Certificate and any subsequent transferee of a beneficial interest in a Class
B Certificate (each, a "PROSPECTIVE OWNER"), shall either (i) represent and
warrant, in writing, to the Depositor, the Servicer, the Standby Servicer, the
Trustee, the Certificate Insurer, the Placement Agent and any of their
successors that (1) the Prospective Owner is not an "employee benefit plan"
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or a "plan" within the meaning of Section
4975(e)(1) of the Code (any such plan or employee benefit plan, a "PLAN") and is
not directly or indirectly purchasing the Class B Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of, or with assets of a
Plan or (2) either (I) the Prospective Owner is acquiring the Class B
Certificate for its own account and no part of the assets used to acquire the
Class B Certificate constitute assets of a Plan, or (II) the source of funds to
be used to acquire the Class B Certificate is an "insurance company general
account," within the meaning of Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35925 (July 12, 1995) (the "EXEMPTION"), and there is no Plan with
respect to which the amount of such general account's reserves for the
contract(s) held by or on behalf of such Plan (determined under Section 807(d)
of the Code), together with the amount of the reserves of the contract(s) held
by or on behalf of any other Plans (determined under Section 807(d) of the Code)
maintained by the same employer (or an affiliate thereof as defined in Section
V(a)(1) of the Exemption) or by the same employee organization, exceed 10% of
the total of all liabilities of such general account; or (ii) furnish to the
Depositor, the Transferor, the Servicer, the Standby Servicer, the Trustee, the
Certificate Insurer, the Placement Agent and any of their successors an opinion
of counsel acceptable to such persons that (A) the proposed issuance or transfer
will not cause any assets of the Trust Fund to be deemed assets of a Plan, or
(B) the proposed issuance or transfer will not cause the Depositor, the
Transferor, the Servicer, the Standby Servicer, the Trustee, the Certificate
Insurer, the Placement Agent or any of their successors to be a fiduciary of a
Plan within the meaning of Section 3(21) of ERISA and will not give rise to a
transaction described in Section 406 of ERISA or Section 4975(c)(1) of the Code
for which a statutory or administrative exemption is unavailable. In the case
of clause (i) in the
POOLING AND SERVICING AGREEMENT - Page 51
preceding sentence, such representation and warranty shall be in the form of
paragraph 9 of the form of investment letter attached hereto as Exhibit D or
such other form as is acceptable to the Trustee.
(e) Subject to the preceding paragraphs, upon surrender for registration
of transfer of any Certificate at the corporate trust office of the Trustee (or
at the office of the designated Certificate Registrar), the Trustee shall
execute, authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee.
(f) At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of Authorized Denominations of a like Class and aggregate
Percentage Interest, upon surrender of the Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute, authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer substantially in the form of
EXHIBIT E hereto, or such other endorsement or written instrument of transfer as
is satisfactory to the Trustee, duly executed by the Holder thereof or his
attorney duly authorized in writing, together with wiring instructions, if
applicable, in the form set forth in EXHIBIT E.
(g) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for registration of transfer and exchange
shall be marked "cancelled" by the Trustee, and after proper notation in the
Certificate Register reflecting such transfer and exchange has been made, such
Certificates may be destroyed by the Trustee pursuant to its customary
practices.
Section 4.03 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (ii) there is delivered to
the Depositor, the Trustee, the Certificate Insurer (only where Insured
Certificates are involved) and the Certificate Registrar such security or
indemnity as may be required by each of them to save each of them harmless in a
form acceptable to the Certificate Registrar and the Trustee, then, in the
absence of notice to the Depositor, the Trustee, the Certificate Insurer (only
where Insured Certificates are involved) and the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, deliver and authenticate, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor, Class and Percentage Interest, but bearing a number not contemporaneously
outstanding. Upon the issuance of any new Certificate under this Section 4.03,
the Depositor and the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith. Any duplicate Certificate
issued pursuant to this Section 4.03 shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the mutilated, destroyed, lost or stolen Certificate shall be found at any time.
POOLING AND SERVICING AGREEMENT - Page 52
Section 4.04 BOOK-ENTRY CERTIFICATES. The Book-Entry Certificates shall
initially be registered in the name of Cede & Co., as nominee for DTC. Until
such date as the Class A Certificates are no longer registered in the name of
Cede & Co., as nominee of DTC:
(a) All notices, transmittals of payment and other communications and
transactions between the Transferor, the Servicer, the Trustee or the Standby
Servicer and the Beneficial Owners of the Book-Entry Certificates shall occur
between the Transferor, the Servicer, the Trustee or the Standby Servicer, as
the case may be, and DTC. DTC shall be responsible for transmitting information
and payments to its participants who shall be responsible for transmitting such
information and payments to indirect participants and the Beneficial Owners;
(b) Any requirements of surrender of Book-Entry Certificates under this
Agreement, if agreed by DTC and the Trustee, may be waived and an appropriate
notation may be made on the Book-Entry Certificate then in the possession of
DTC;
(c) Nothing in this Agreement shall be construed to require or permit
Book-Entry Certificates to be registered otherwise than in the name of DTC or
its nominee or delivered otherwise than to DTC or at the direction of DTC;
(d) The Transferor and the Depositor hereby authorize the Trustee to
execute and deliver a letter of representations in the form required by DTC (the
"LETTER TO REPRESENTATIONS"); and
(e) Delivery of Book-Entry Certificates shall be effected by appropriate
delivery under the rules and procedures of DTC and the Letter of
Representations, dated the date of the issuance of the Book-Entry Certificates,
by and between the Trustee, the Depositor and DTC.
Section 4.05 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Depositor, the Trustee, the Certificate Insurer and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to SECTION 6.05 and for all other purposes whatsoever, and
the Depositor, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar shall not be affected by notice to the contrary.
Section 4.06 THE GUARANTY POLICY.
(a) On the Determination Date preceding each Remittance Date, the Trustee
shall determine if a Deficiency Amount exists with respect to any of the Class A
Certificates. If a Deficiency Amount does exist with respect to any of the
Class A Certificates, the Trustee shall promptly, but in no event later than
12:00 noon New York City time on the second Business Day preceding the related
Remittance Date, make a claim under the Guaranty Policy in accordance with the
terms of such policy.
(b) On any date on which the Trustee receives written notice from the
Holder of a Class A Certificate that a Preference Amount is payable pursuant to
the terms of the Guaranty Policy, the Trustee shall make a claim for the payment
of such Preference Amount and shall deliver
POOLING AND SERVICING AGREEMENT - Page 53
the documents required to be delivered under the Guaranty Policy to the
Certificate Insurer with respect thereto in the manner set forth in the Guaranty
Policy.
(c) The Trustee shall (i) receive as attorney-in-fact of each Holder of
the Class A Certificates with respect to which a Deficiency Amount has been
determined to exist, any Guaranteed Payment from the Certificate Insurer under
the Guaranty Policy and (ii) disburse such Guaranteed Payment to such Holders of
such Class A Certificates as set forth in SECTION 6.05(b). Guaranteed Payments
for the Class A Certificates disbursed by the Trustee from the Guaranty Policy
Proceeds shall not be considered payment by the Trust Fund with respect to such
Class A Certificates, nor shall such payments discharge the obligation of the
Trust Fund, with respect to such Class A Certificates, and the Certificate
Insurer shall become the owner of such unpaid amounts due from the Trust Fund in
respect of Guaranteed Payments for such Class and the deemed assignee of such
Holders of such Class A Certificates. The Trustee hereby agrees on behalf of
each Beneficial Owner of a Class A Certificate for the benefit of the
Certificate Insurer that it recognizes that to the extent the Certificate
Insurer makes Guaranteed Payments for such Class A Certificates, either directly
or indirectly (as by paying through the Trustee), to the Beneficial Owners of
such Class A Certificates, the Certificate Insurer will be entitled to receive
the related Insurer Reimbursement Obligation pursuant to SECTION 6.05(b).
(d) To the extent of any Guaranteed Payment for the Class A Certificates
under the Guaranty Policy, the Certificate Insurer shall be fully subrogated to
the rights of the Beneficial Owners of such Class A Certificates and the Trustee
in respect of such Class A Certificates, the Deficiency Amount or Preference
Amount giving rise to such Guaranteed Payment or in any proceedings relating
thereto.
ARTICLE V
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
Section 5.01 DUTIES OF THE SERVICER.
(a) SERVICING STANDARD. The Servicer, as independent contract servicer,
shall service and administer the Mortgage Loans and shall have full power and
authority, acting alone, to do any and all things in connection with such
servicing and administration which the Servicer may deem necessary or desirable
and consistent with the terms of this Agreement. Notwithstanding anything to
the contrary contained herein, the Servicer, in servicing and administering the
Mortgage Loans, shall employ or cause to be employed procedures (including
collection, foreclosure, liquidation and REO 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 Mortgage 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 Mortgage
Loans and giving due consideration to the Certificateholders' reliance on the
Servicer. With respect to any Title I Mortgage Loan, the foregoing servicing
standard also shall include the requirement that the Servicer shall, and shall
cause any Subservicer to, comply with FHA Regulations in servicing the Title I
Mortgage Loans so that the FHA Insurance remains in full force and effect with
respect to the Title I Mortgage Loans, except for good faith disputes relating
to FHA Regulations or such FHA Insurance, unless such disputes would result in
the termination or suspension of such FHA
POOLING AND SERVICING AGREEMENT - Page 54
Insurance. 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 of the Mortgage Loans. Consistent with the
terms of this Agreement, the Servicer may, with the prior written consent of the
Trustee, with respect to any material obligations hereunder which consent shall
not be unreasonably withheld, employ or retain agents or contract with third
parties to aid in the performance of the Servicer's obligations hereunder;
provided that the Servicer may employ or retain agents or contract with third
parties to perform the REMIC reporting duties set forth in Section 5.13,
including the retention of the Standby Servicer therefor, without the consent of
the Trustee. The REMIC reporting duties will initially be performed by the
Standby Servicer pursuant to a REMIC Administration Master Agreement between the
Servicer and the Standby Servicer.
(b) SERVICING ADVANCES. In accordance with the preceding general
servicing standard, the Servicer, or any Subservicer on behalf of the Servicer,
shall make all reasonable and necessary Servicing Advances in connection with
the servicing of each Mortgage 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 Mortgage 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 distributions to
Certificateholders be added to the amount owing under the related Mortgage Loan.
Notwithstanding any obligation by the Servicer to make a Servicing Advance
hereunder with respect to a Mortgage 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 Mortgage Loan, and (ii)
recovering any amounts attributable to outstanding interest and principal owing
on such Mortgage Loan for the benefit of the Certificateholders 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 of all Superior Liens. The Servicer shall only make a Servicing
Advance with respect to a Mortgage 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 and the FHA Regulations, the Servicer may waive, modify or vary
any provision of any Mortgage 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
Certificateholders or the Certificate Insurer; provided, however, that such
waiver, modification, postponement or indulgence would not affect the status of
the REMIC or cause a tax to be imposed upon the REMIC for federal income tax
purposes; provided, further, however, unless the Obligor is in default with
respect to the Mortgage Loan, or such default is, in the judgment of the
Servicer, reasonably foreseeable, the Servicer may not permit any modification
with respect to any Mortgage Loan that would change the Mortgage 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
Mortgage Loan) or extend the final maturity date on the Mortgage Loan. The
Servicer may grant a waiver or enter into a subordination agreement with respect
to the refinancing of a superior lien on the Mortgaged Property, provided that
the Obligor is in a better financial or cash flow
POOLING AND SERVICING AGREEMENT - Page 55
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 Trustee of any modification, waiver or
amendment of any provision of any Mortgage Loan and the date thereof, and shall
deliver to the Trustee for deposit in the related Trustee's Mortgage Loan File,
an original counterpart of the agreement relating to such modification, waiver
or amendment promptly following the execution thereof.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of each Mortgage Loan and the related Note
and Mortgage, if applicable. 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 Note for a period (with respect to each payment as to
which the due date is extended) not greater than 90 days after the initially
scheduled due date for such payment, provided that such extension (i) would not
result in an extension of the final maturity date of such Note, (ii) would not
affect the status of the REMIC or cause a tax to be imposed upon the REMIC, and
(iii) would not result in a violation of FHA Regulations.
(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 Trustee and each Certificateholder, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Servicer, the Trustee shall furnish the Servicer with any powers of attorney
and other documents necessary or appropriate to enable the Servicer to carry out
its servicing and administrative duties under this Agreement.
Section 5.02 LIQUIDATION OF MORTGAGE LOANS.
(a) In the event that any payment due under any Mortgage Loan and not
postponed pursuant to SECTION 5.01(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 Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as it shall deem to
be in the best interest of the Certificateholders. Without limiting the
generality of the preceding sentence, the Servicer shall, in accordance with the
standard of care specified in SECTION 5.01(a), (i) in the case of Title I
Mortgage Loans only, after the FHA Transfer Date for such Title I Mortgage Loan,
direct the Trustee or any FHA Claims Administrator, as the case may be, to
submit an FHA Claim in lieu of commencing foreclosure proceedings, or (ii) take
such other action as the Servicer shall deem to be in the best interests of the
Certificateholders (including the resale or substitution of such Mortgage 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 Trustee for the benefit of
Certificateholders), provided such action would not affect the status of the
REMIC or cause a tax to be imposed upon the REMIC for federal income tax
purposes. The Servicer shall give the Trustee (and any FHA Claims
Administrator) notice of the election of remedies made pursuant to this SECTION
5.02. 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 foreclosure activities, the Servicer shall exercise collection or
foreclosure procedures
POOLING AND SERVICING AGREEMENT - Page 56
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 Mortgage Loan becomes a
Liquidated Mortgage Loan, the Servicer shall deposit into the Collection Account
any proceeds received by it with respect to such Liquidated Mortgage Loan or the
related REO Property ("POST LIQUIDATION PROCEEDS"), including without limitation
any FHA Insurance Proceeds that are received by the Servicer in any Due Period
occurring after the expiration of 300 days from the receipt by the Servicer of
any portion of a Monthly Payment.
(c) After a Mortgage Loan has become a Liquidated Mortgage Loan, the
Servicer shall promptly prepare and forward to the Trustee (and any FHA Claims
Administrator), the Certificate Insurer and, upon request of any
Certificateholder, to such Certificateholder a Liquidation Report, in the form
attached hereto as EXHIBIT L, detailing following: (i) the Net Liquidation
Proceeds, FHA Insurance Proceeds, Insurance Proceeds or Released Mortgaged
Property Proceeds received from the Liquidated Mortgage Loan; (ii) expenses
incurred with respect thereto; (iii) any Net Loan Losses incurred in connection
therewith; and (iv) any Post Liquidation Proceeds.
Section 5.03 ESTABLISHMENT OF COLLECTION ACCOUNTS; DEPOSITS IN COLLECTION
ACCOUNTS.
The Servicer shall cause to be established and maintained one or more
Collection Accounts, which shall be Eligible Accounts, which may be interest-
bearing, entitled "First Trust of California, National Association, in trust for
the Beneficial Owners of Remodelers Home Improvement Loan Asset-Backed
Certificates, Series 199__-__, Collection Account." The Collection Account may
be maintained with the Trustee or 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 Trustee
shall be evidenced by a letter agreement in the form of EXHIBIT C hereto. A copy
of such letter agreement shall be furnished to the Trustee, the Certificate
Insurer and, upon request of any Certificateholder, to such Certificateholder.
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 and retain therein:
(i) all payments on account of scheduled principal on the Mortgage
Loans collected after the applicable Cut-Off Date;
(ii) all payments on account of interest accruing on the Initial
Mortgage Loans and collected on and after the Closing Date and all payments
on account of interest accruing on the Subsequent Mortgage Loans and
collected on and after the applicable Subsequent Transfer Date;
(iii) all Net Liquidation Proceeds and Post Liquidation Proceeds
pursuant to SECTIONS 5.02 or 5.07;
(iv) all Insurance Proceeds;
(v) all FHA Insurance Proceeds, other than those received in respect
of a Deleted Mortgage Loan which shall be delivered to the Transferor;
POOLING AND SERVICING AGREEMENT - Page 57
(vi) all Released Mortgaged Property Proceeds;
(vii) any amounts payable in connection with the repurchase of any
Mortgage Loan and the amount of any Substitution Adjustment pursuant to
SECTIONS 2.06 and 3.05;
(viii)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 5.06 or the deposit of the
Termination Price under SECTION 11.02; and
(ix) interest and gains on funds held in the Collection Account.
With respect to any Modified Mortgage Loan, the Servicer shall (a) include
as payments on account of scheduled principal, an amount equal to the product of
(i) the principal portion of the Monthly Payment for such Modified Mortgage Loan
and (ii) the REMIC Factor for such Modified Mortgage Loan and (b) include as
payments on account of interest, an amount equal to (i) the Monthly Payment
received with respect to such Modified Mortgage Loan less (ii) the amount
calculated in (a) above in this paragraph.
The foregoing requirements for deposit in the Collection Account shall be
exclusive.
Section 5.04 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT.
The Servicer shall withdraw or cause to be withdrawn funds from the
Collection Account for the following purposes:
(i) to effect the remittance to the Trustee on the Business Day
immediately preceding each Remittance Date of the Available Remittance
Amount, plus any amount which would exceed the 12 month time limit in the
second paragraph following this paragraph;
(ii) to pay itself any accrued and unpaid Servicing Fees;
(iii) to withdraw any amount received from an Obligor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction;
(iv) to withdraw funds attributable to accrued interest on the
Initial Mortgage Loans up to the Closing Date and accrued interest on the
Subsequent Mortgage Loans up to the applicable Subsequent Transfer Date,
but deposited in the Collection Account on and after the Closing Date and
such Subsequent Transfer Date, respectively, and to withdraw any funds
deposited in the Collection Account that were not required to be deposited
therein (such as Servicing Compensation) or were deposited therein in error
or that constituted FHA Insurance Proceeds the FHA seeks to reclaim on the
grounds that a Title I Mortgage Loan which was the subject of an FHA Claim
is found not to conform to FHA Regulations;
(v) to pay itself Servicing Compensation pursuant to SECTION 7.03
hereof to the extent not paid pursuant to SECTION 5.04(ii);
POOLING AND SERVICING AGREEMENT - Page 58
(vi) to withdraw funds necessary for the conservation and disposition
of REO Property pursuant to the third paragraph of SECTION 5.07; and
(vii) to clear and terminate the Collection Account upon the
termination of this Agreement with any amounts on deposit therein being
paid to the Certificate Account.
Notwithstanding the preceding clause (iv), with respect to any Remittance
Date following the Closing Date, the Servicer shall only withdraw the funds
attributable to such accrued interest on the Initial Mortgage Loans or the
Subsequent Mortgage Loans up to the Closing Date or the applicable Subsequent
Transfer Date to the extent that the Servicer determines and certifies to the
Trustee that a sufficient amount of funds will be deposited into the Certificate
Account to equal the sum of the interest and principal amounts distributable to
all Classes of Certificates, exclusive of the Class R Certificates, plus the
fees distributable to the Trustee, the Custodian, the REMIC Administrator and
the Certificate Insurer and the FHA Premium Deposit Amount, on each such
Remittance Date.
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 Certificate Account on a first-in, first-out basis.
The funds held in the Collection Account may be invested (to the extent
practicable and consistent with any requirements of the Code) in Permitted
Instruments, as directed in writing to the Servicer by the Depositor. In any
case, funds in the Collection Account must be available for withdrawal without
penalty, and any Permitted Instruments must mature or otherwise be available for
withdrawal, not later than one Business Day immediately preceding the Remittance
Date next following the date of such investment and shall not be sold or
disposed of prior to its maturity. All Permitted Instruments in which funds in
the Collection Account are invested must be held by or registered in the name of
"First Trust of California, National Association, in trust for the Beneficial
Owners of Remodelers Home Improvement Loan Asset-Backed Certificates, Series
199__-__."
Section 5.05 INITIAL COLLECTION ACCOUNT; TRANSFER OF COLLECTION ACCOUNT.
Pursuant to Section 5.03, the Collection Account shall be established, as
of the Closing Date, with Bank One, Texas, N.A., as an Eligible Account pursuant
to the definition thereof. The Collection Account may, upon written notice to
the Trustee, be transferred to a different depository institution so long as
such transfer is to an Eligible Account.
Section 5.06 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, FHA and
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 Mortgage Loans ("SERVICER EMPLOYEES"). Any such fidelity bond
and errors and omissions insurance shall protect and insure
POOLING AND SERVICING AGREEMENT - Page 59
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
Mortgage 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 Mortgage Loan without having obtained payment in full of the
indebtedness secured thereby. In the event of any loss of principal or interest
on a Mortgage Loan for which reimbursement is received from 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 5.06
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 Trustee, the Servicer shall cause to be
delivered to the Trustee a certified true copy of such fidelity bond and
insurance policy. On the Closing Date, such bond and insurance is maintained by
the Servicer with Reliance Insurance Company of Illinois.
Section 5.07 TITLE, MANAGEMENT AND DISPOSITION OF REO PROPERTY.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO PROPERTY"), the deed or
certificate of sale shall be taken in the name of the Trustee for the benefit of
the Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale. The Servicer shall, either itself or through an agent
selected by the Servicer, manage, conserve, protect and operate the REO Property
in the same manner that it manages, conserves, protects and operates other
foreclosed property for its own account, and in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer
shall attempt to sell the same (and may temporarily rent the same) on such terms
and conditions as the Servicer deems to be in the best interest of the
Certificateholders.
The disposition of REO 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 Certificateholders 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 REO Property shall be promptly deposited by the
Servicer in the Collection Account for distribution to the Certificateholders in
accordance with SECTION 6.05, 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 REO Property.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or default reasonably foreseeable on a Mortgage
Loan, the Servicer shall dispose of such Mortgaged Property within two years
after its acquisition unless the holding of such Mortgaged Property subsequent
to two years after its acquisition will not result in the imposition of taxes on
"prohibited transactions" as defined in Section 860F of the Code or cause the
REMIC to fail to qualify as a "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code at any time that any Certificates are
outstanding. Notwithstanding any other provision of this Agreement, (i) no
Mortgaged Property acquired by the Servicer pursuant to this SECTION 5.07 shall
be rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the REMIC, and (ii) no construction
shall take place on such Mortgaged Property in such a manner or pursuant to any
terms, such that in the case of either clause (i) or (ii) such action
POOLING AND SERVICING AGREEMENT - Page 60
would cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or result in the receipt by
the REMIC of any "net income from foreclosure property" which is subject to
taxation within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code.
If a period greater than two years is permitted under this Agreement and is
necessary to sell any REO Property, the Servicer shall give appropriate notice
thereof to the Trustee (or any FHA Claims Administrator), request an extension
from the Internal Revenue Service, and report monthly to the Trustee as to the
progress being made in selling such REO Property. Any out-of-pocket expenses,
including the cost of opinions of counsel, incurred by the Servicer pursuant to
this paragraph shall be deemed to be "Servicing Advances".
Section 5.08 [Reserved]
Section 5.09 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS.
The Servicer shall provide to the Trustee (and any FHA Claims
Administrator), the Certificateholders, the Certificate Insurer and the
supervisory agents and examiners of each of the foregoing access to the
documentation regarding the Mortgage 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 5.10 SUPERIOR LIENS.
(a) The Servicer shall file (or cause to be filed) of record a request for
notice of any action by a superior lienholder under a Superior Lien for the
protection of the Trustee's interest, where permitted by local law and whenever
applicable state law does not require that a junior lienholder be named as a
party defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
(b) If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by a Superior Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have any Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust Fund, all reasonable actions that are necessary to protect
the interests of the Certificateholders, and/or to preserve the security of the
related Mortgage Loan, including making any Servicing Advances that are
necessary to cure the default or reinstate the Superior Lien, subject to the
application of the REMIC Provisions. The Servicer shall immediately notify the
Trustee (and any FHA Claims Administrator) of any such action or circumstances.
Any Servicing Advances by the Servicer pursuant to its obligations in this
Section 5.10 shall comply with requirements set forth in Section 5.01(b) hereof.
Section 5.11 FHA MATTERS.
(a) As soon as practicable after the Closing Date and as soon as
practicable after each Subsequent Transfer Date, the Transferor shall submit an
appropriate transfer of note report to the FHA regarding the conveyance of the
Title I Mortgage Loans to the Trustee. The Transferor shall use its best
efforts to cause the FHA to transfer the FHA Insurance relating to the Title I
Mortgage Loans to the Trustee as promptly as possible after the Closing Date or
the related Subsequent
POOLING AND SERVICING AGREEMENT - Page 61
Transfer Date, as applicable. With respect to each Title I Mortgage Loan, the
Transferor shall perform any actions, which are necessary or appropriate under
the Title I Program, to report such Title I Mortgage Loan for FHA Insurance
under the Transferor's Title I contract of insurance and to effectuate the
transfer of such portion of the FHA insurance coverage reserve account as may be
allocable to such Title I Mortgage Loan from the Transferor's Title I contract
of insurance to the Trustee's Title I contract of insurance; provided that such
transfer of the FHA Insurance to the Trustee's Title I contract of insurance
shall be completed within 120 days of the Closing Date or the related Subsequent
Transfer Date, as applicable, unless such 120 day period is extended by the
Transferor with the consent of the Certificate Insurer.
(b) On each FHA Transfer Date, the Trustee shall allocate on its books and
records as beneficially held on behalf of the Trust Fund that portion of its FHA
Insurance equal to the FHA Insurance transferred from the Transferor's FHA
insurance coverage reserve account to the Trustee's FHA insurance coverage
reserve account, which amount shall be available for FHA Claims relating to the
Title I Mortgage Loans, and promptly after the final FHA Transfer Date the
Trustee (or any FHA Claims Administrator) shall deliver a written certification
(an "FHA INSURANCE TRANSFER CERTIFICATE") to the Rating Agencies, the
Certificate Insurer and the Depositor with respect to (i) the exact amount of
the Initial FHA Insurance Amount actually transferred from the Transferor to the
Trustee on the books and records of the FHA in respect of the Title I Mortgage
Loans; (ii) whether such Initial FHA Insurance amount is less than ____% of the
Cut-Off Date Principal Balances of the Title I Mortgage Loans thereby causing
the amount of the initial Required Class A Overcollateralization Level to be
increased by 100% of the amount of such shortfall; and (iii) the actual
allocation by the Trustee on its books and records of the Initial FHA Insurance
Amount as available for FHA Claims relating to the Title I Mortgage Loans. From
time to time, during normal business hours, as requested by the Servicer, the
Depositor, the Certificate Insurer or any Certificateholder and upon reasonable
advance notice, the Trustee (and any FHA Claims Administrator) shall permit the
Servicer, the Depositor, the Certificate Insurer or such Certificateholder to
examine its books and records to determine that the Trustee has properly
allocated its FHA Insurance. If, pursuant to SECTION 5.02, the Servicer elects
to direct the Trustee (or any FHA Claims Administrator) to submit an FHA Claim
to the FHA, the Trustee (or any FHA Claims Administrator) shall submit such FHA
Claim to the FHA. In no event shall the Trustee (or any FHA Claims
Administrator) submit any FHA Claim if the amount of such FHA Claim would exceed
the FHA Insurance Amount. In addition, the Trustee (and any FHA Claims
Administrator) shall not submit any insurance claim to the FHA under the Title I
Program relating to a loan not part of the Trust Fund if the effect thereof
would be to reduce the FHA Insurance Amount. On each Determination Date, the
Trustee (or any FHA Claims Administrator) shall deliver to the Depositor and the
Certificate Insurer a certificate executed by a Responsible Officer of the
Trustee or the FHA Claims Administrator, as the case may be, setting forth the
FHA Insurance Amount as of the end of the preceding month and the amount of FHA
Claims submitted during the preceding month.
The Certificateholders shall not have any liability or obligation to repay
any FHA Insurance Proceeds for any FHA Claim that is rejected by the FHA within
the two-year period following the date the FHA Claim was certified for payment
by the FHA, including any such rejection by the FHA after the termination of
this Agreement pursuant to Article XI.
(c) If, pursuant to SECTION 5.02, the Servicer elects to direct any FHA
Claims Administrator to submit an FHA Claim to the FHA, the Servicer shall
notify the Trustee by certification of a Servicing Officer and shall request
delivery of the related Title I Mortgage Loan
POOLING AND SERVICING AGREEMENT - Page 62
and Trustee's Mortgage Loan File to the FHA Claims Administrator. Upon receipt
of such notice and request, the Trustee shall promptly release or cause to be
released such Title I Mortgage Loan and Trustee's Mortgage Loan File to the FHA
Claims Administrator and shall execute such documents as the FHA Claims
Administrator shall deem necessary to the prosecution of any FHA Claim. Such
receipt shall obligate the FHA Claims Administrator to return the original Note
and the related Trustee's Mortgage Loan File to the Trustee when its need by the
FHA Claims Administrator has ceased unless the Title I Mortgage Loan shall be
liquidated or assigned to the FHA. In the event a Title I Mortgage Loan is to
be assigned to the FHA, the FHA Claims Administrator shall prepare, the Trustee
shall execute and the FHA Claims Administrator shall deliver an Assignment of
Mortgage from the Trustee to the FHA. In the event the FHA rejects an FHA
Claim, the FHA Claims Administrator shall (i) immediately notify the Transferor,
the Servicer, the Standby Servicer, the Certificate Insurer, the Depositor and
the Trustee and (ii) specify in such notice the reason given by the FHA, if any,
for such rejection. The Transferor, the Depositor and the Servicer shall
cooperate with the FHA Claims Administrator and furnish to the FHA Claims
Administrator any and all documents, if any, necessary to cure such rejection.
If the FHA Claims Administrator gets notice from the FHA that the FHA Claim has
been rejected and the cause for such rejection is not subject to cure, the FHA
Claims Administrator shall (i) immediately notify the Transferor, the Trustee,
the Certificate Insurer, the Standby Servicer and the Servicer, and (ii) specify
in such notice the reason given by the FHA, if any, for such rejection. If the
cause for such rejection is related to a breach of the Transferor's
representations and warranties set forth in SECTION 3.03, the Depositor, the
Transferor and the Trustee shall comply with the provisions of SECTION 3.05
regarding the purchase or substitution of the related Mortgage Loan. If the
cause for such rejection is not related to a breach of the Transferor's
representations and warranties set forth in SECTION 3.03, the Servicer shall
employ collection and foreclosure procedures with respect to such Mortgage Loan
pursuant to SECTION 5.02.
(d) The Trustee (and any FHA Claims Administrator) shall deposit or cause
to be deposited all FHA Insurance Proceeds in the Collection Account pursuant to
SECTION 5.03.
(e) The Trustee on the Closing Date will enter into an FHA Claims
Administration Agreement with the Servicer pursuant to which the Servicer, as
FHA Claims Administrator, will assume full and complete responsibility for all
aspects of administering, processing and submitting FHA Claims, as agent and
attorney-in-fact for the Trustee, and will thereby become obligated and
primarily liable to the Trustee and the Certificateholders for the
administration of FHA Claims in accordance with the provisions of this
Agreement. The Trustee may enter into similar FHA Claims Administration
Agreements with successor FHA Claims Administrators to the Servicer. The
Trustee shall give written notice to the Depositor, the Servicer, the
Certificateholders, the Certificate Insurer, the Standby Servicer and the Rating
Agencies of the appointment of any FHA Claims Administrator, other than the
initial appointment of the Servicer as FHA Claims Administrator as contemplated
in this Agreement. In the event it is determined that any FHA Claims
Administrator is no longer able to perform its duties hereunder, the Trustee or
its designee shall perform the obligations and duties of such FHA Claims
Administrator until a successor has assumed such FHA Claims Administrator's
responsibilities and obligations hereunder; provided, however, (x) the Trustee
or its designee shall not be liable for the actions of any FHA Claims
Administrator prior to it and (y) the Trustee or its designee shall be entitled
to rely on the information contained in the most recent certificate delivered by
the FHA Claims Administrator to the Trustee pursuant to Section 5.11(b);
provided further, notwithstanding the above, the Trustee may, if it shall be
unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders so request in writing to the Trustee, appoint, or petition
POOLING AND SERVICING AGREEMENT - Page 63
a court of competent jurisdiction to appoint, any investing lender approved by
the FHA to purchase, hold and sell loans originated under the Title I Program,
or a lender approved to originate, purchase, service and/or sell loans
originated under the Title I Program, as the successor to the FHA Claims
Administrator.
(f) In the event the Trustee shall for any reason no longer be the record
owner of the FHA Insurance applicable to the Title I Mortgage Loans, the
successor to the Trustee's ownership of record of such FHA Insurance shall
thereupon assume all of the rights and obligations of the Trustee under any FHA
Claims Administration Agreement that the Trustee may have entered into, unless
the Trustee or such successor elects to terminate any FHA Claims Administration
Agreement in accordance with its terms. Such successor shall be deemed to have
assumed all of the Trustee's interest therein and to have replaced the Trustee
as a party to each FHA Claims Administration Agreement to the same extent as if
the FHA Claims Administration Agreement had been assigned to the assuming party,
except that the Trustee shall not thereby be relieved of any liability or
obligations under the FHA Claims Administration Agreements.
(g) The Trustee (and each FHA Claims Administrator) shall comply with FHA
Regulations and take all other actions so that the FHA Insurance remains in full
force and effect with respect to the Title I Mortgage Loans, except for good
faith disputes relating to the FHA Regulations or such FHA Insurance, unless
such disputes would result in the termination or suspension of such FHA
Insurance.
(h) The Trustee (or any FHA Claims Administrator) shall provide the
Servicer with the information described in Section 6.06(b)(viii) hereof.
(i) The Servicer shall not be entitled to any fees or compensation (other
than the Servicing Fee) for serving as the initial FHA Claims Administrator.
The Trustee shall not be responsible for the payment of any fees of any FHA
Claims Administrator. The Servicer shall be responsible for the payment of any
fees or compensation of (a) any Person who succeeds the Servicer as FHA Claims
Administrator and (b) any Person who succeeds the Trustee as record owner of the
FHA Insurance applicable to the Title I Mortgage Loans.
Section 5.12 SUBSERVICING.
(a) The Servicer, with the prior written consent of the Trustee (and any
FHA Claims Administrator) may enter into Subservicing Agreements for any
servicing and administration of Mortgage 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 Trustee, the Standby Servicer
and the Certificate Insurer (and any FHA Claims Administrator ) of the
appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement and with
respect to any Title I Mortgage Loans serviced thereunder shall comply with FHA
Regulations. The Servicer shall be entitled to terminate any Subservicing
Agreement in accordance with the terms and conditions of such Subservicing
Agreement and to either itself directly service the related Mortgage Loans or
enter into a Subservicing Agreement with a successor subservicer which qualifies
hereunder. The Trustee, the Standby Servicer and Certificate Insurer hereby
acknowledge and consent to each Person identified as a Subservicer in the
definition of such term as of the Closing Date.
POOLING AND SERVICING AGREEMENT - Page 64
(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 Trustee, the
Certificate Insurer and Certificateholders for the servicing and administering
of the Mortgage Loans in accordance with the provisions of this Agreement
without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments and,
unless the context otherwise requires, references in this Agreement to actions
taken or to be taken by the Servicer in servicing the Mortgage 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 Standby Servicer, on
behalf of the Trustee and the Certificateholders pursuant to SECTION 5.14, 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
Standby Servicer elects to terminate any Subservicing Agreement in accordance
with its terms. The Standby 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 Standby Servicer, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of the Subservicing Agreements to the assuming party.
(d) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee, the Certificate Insurer and the Certificateholders,
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
Mortgage 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 Mortgage 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 Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone and the Trustee, any FHA Claims
Administrator and the Certificateholders shall not be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer in its capacity as such except as set forth in SECTION 5.12(c)
above.
POOLING AND SERVICING AGREEMENT - Page 65
Section 5.13 DUTIES OF THE SERVICER RELATING TO THE REMIC.
(a) It is intended that the REMIC formed hereunder shall constitute, and
that the affairs of the REMIC shall be conducted so as to qualify it as a "real
estate mortgage investment conduit" as defined in and in accordance with the
REMIC Provisions. In furtherance of such intention, the Servicer covenants and
agrees that it shall: (i) prepare, execute and file, or cause to be prepared,
executed and filed, in a timely manner, a United States Real Estate Mortgage
Investment Conduit Income Tax Return (Form 1066) and any other Tax Return
required to be filed by the REMIC, using a calendar year as the taxable year for
the REMIC; (ii) make, or cause to be made, an election, on behalf of the REMIC,
to be treated as a "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code on the federal income tax return of the REMIC for
its first taxable year; (iii) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service and any
other relevant governmental taxing authority all information returns or reports
as and when required to be provided to them in accordance with the REMIC
Provisions including, without limitation, information reports relating to
"market discount" and "original issue discount," as defined in the Code, based
upon the Prepayment Assumption and calculated by using the issue price of the
Certificates; (iv) not take any action or omit to take any action that would
cause the termination of the status of the REMIC under the REMIC Provisions and
any other applicable federal, state and local laws; (v) direct the Trustee to
pay the amount of any and all federal, state, and local taxes, including,
without limitation, prohibited transaction taxes as defined in Section 860F of
the Code, other than any amount due as a result of a Transfer or attempted or
purported Transfer in violation of Section 4.02, imposed on the REMIC when and
as the same shall be due and payable (subject to the Trustee's right to be
reimbursed or indemnified for such tax payments as provided elsewhere herein and
provided that such obligation shall not prevent the Trustee, the Servicer or any
other appropriate Person from contesting any such tax in appropriate proceedings
and shall not prevent the Trustee from withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings); (vi) ensure that any
such returns or reports filed on behalf of the REMIC are properly executed by
the appropriate Person; (vii) as agent for the Tax Matters Person of the REMIC
(and the Tax Matters Person by its acceptance of its Class R Certificate hereby
appoints the Standby Servicer to act as its agent), represent the REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to
any taxable year of the REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
item of the REMIC and otherwise act on behalf of the REMIC in relation to any
tax matter involving the REMIC; and (viii) make available information required
under the Code or REMIC Provisions with respect to any Transfer of a Class R
Certificate, including any information necessary for the computation of any tax
imposed (A) as a result of the Transfer of an Ownership Interest in a Class R
Certificate to any Person other than a Permitted Transferee, including the
information regarding "excess inclusions" of such Class R Certificates required
to be provided to the Internal Revenue Service and certain Persons as described
in Treasury regulation sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a
result of any regulated investment company, real estate investment trust, common
trust fund, partnership, trust estate or organization described in Section 1381
of the Code that holds an Ownership Interest in a Class R Certificate having as
among its record holders at any time any Person who is not a Permitted
Transferee. The cost of the preparation of any tax returns of the REMIC shall
be borne by the Servicer.
POOLING AND SERVICING AGREEMENT - Page 66
In the event that any tax is imposed on the REMIC, such tax shall be borne
by the Holders of the Class R Certificates. The Trustee is hereby authorized to
retain from amounts otherwise distributable to the Holders of the Class R
Certificates on any Remittance Date sufficient funds to reimburse the Trustee
for the payment of such tax (to the extent that the Trustee has not been
previously reimbursed or indemnified therefor) and, if such amounts are
insufficient, to demand payment thereof from the Holders of the Class R
Certificates. The Trustee agrees first to seek indemnification for any such tax
payment from any indemnifying parties before reimbursing itself from amounts
otherwise distributable to the Holders of the Class R Certificates.
Notwithstanding anything to the contrary contained herein, if such taxes arise
out of a breach by the Trustee or the Standby Servicer of their respective
obligations hereunder, such tax shall be paid by the Trustee or the Standby
Servicer, as applicable, out of its own funds.
(b) The Servicer shall furnish any information which may be required under
the Code or the REMIC Provisions with respect to any Transfer of a Class R
Certificate, including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code), and, upon request, shall
provide such information to any Holder of a Class R Certificate for a reasonable
fee.
Section 5.14 THE STANDBY SERVICER. 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 Standby Servicer 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 Standby Servicer,
satisfies the requirements of an Eligible Servicer and is approved by Standard &
Poor's as a servicer for loans insured by the FHA under the Title I Program;
provided that if the Standby Servicer, becomes the successor servicer hereunder,
then such Standby Servicer shall have seventy-five (75) days to satisfy the
requirements of an Eligible Servicer.
Section 5.15 PRE-FUNDING ACCOUNT.
(a) No later than the Closing Date, the Trustee shall establish and
maintain with itself one or more Eligible Accounts entitled "Pre-Funding
Account, First Trust of California, National Association, as Trustee for
Remodelers Home Improvement Loan Asset-Backed Certificates, Series 199__-__".
On the Closing Date, the Depositor shall cause the Pre-Funding Account Deposit
to be deposited with the Trustee from the proceeds of the sale of the Class A
Certificates. The Trustee shall, promptly upon receipt, deposit in the Pre-
Funding Account on the Closing Date the Pre- Funding Account Deposit. On any
Subsequent Transfer Date, the Depositor shall instruct the Trustee to: (i)
withdraw from the Pre-Funding Account an amount equal to the Subsequent Purchase
Price for the Subsequent Mortgage Loans sold to the Trust Fund on such
Subsequent Transfer Date pursuant to a Subsequent Transfer Agreement; and
(ii) pay such amount to or upon the order of the Depositor upon satisfaction of
the conditions set forth in Section 2.02 of this Agreement with respect to such
transfer.
(b) The Pre-Funding Account will be part of the Trust Fund but not part of
the REMIC. Amounts held in the Pre-Funding Account shall be invested in
Permitted Investments of the type specified in clause (vii) of the definition of
Permitted Investments, which Permitted Investments shall mature on the Business
Day following the purchase date of such investments or upon demand. The Trustee
shall not be liable for any losses on amounts invested in accordance with the
provisions
POOLING AND SERVICING AGREEMENT - Page 67
hereof (except to the extent that the Trustee is the obligor and has defaulted
on such investments). Any losses realized in connection with any such investment
shall be for the account of the Depositor, and the Depositor shall deposit the
amount of such loss (to the extent not offset by income from other investments)
in the Pre-Funding Account immediately upon the realization of such loss. All
interest and any other investment earnings on amounts held in the Pre-Funding
Account shall be taxed to the Depositor and for federal and state income tax
purposes the Depositor shall be deemed to be the owner of the Pre-Funding
Account. All interest and any other investment earnings on amounts held in the
Pre-Funding Account shall be deposited into the Capitalized Interest Account on
each Remittance Date.
(c) 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, any amounts remaining
in the Pre-Funding Account (net of reinvestment earnings which shall be
transferred to the Capitalized Interest Account) shall be deposited into the
Certificate Account on the Business Day immediately preceding the Pre-Funding
Termination Remittance Date for distribution to the Class A Certificateholders
on a pro rata basis to all Classes of Class A Certificates on the Pre-Funding
Termination Remittance Date. Amounts that are transferred to the Certificate
Account from the Pre-Funding Account pursuant to this Section 5.15(c) may not be
invested in Permitted Investments or other investments after being transferred
into the Certificate Account.
Section 5.16 CAPITALIZED INTEREST ACCOUNT.
(a) No later than the Closing Date, the Trustee shall establish and
maintain with itself one or more Eligible Accounts entitled "Capitalized
Interest Account, First Trust of California, National Association, as Trustee
for Remodelers Home Improvement Loan Asset-Backed Certificates, Series 199__-
__". The Trustee shall, promptly upon receipt, deposit in the Capitalized
Interest Account the Capitalized Interest Account Deposit. The Trustee shall
hold the Capitalized Interest Account Deposit for the benefit of the
Certificateholders, exclusive of the Class R Certificateholders. On the Business
Day preceding each Remittance Date, the Trustee shall withdraw from the
Capitalized Interest Account and deposit into the Certificate Account the
Interest Shortfall, if any, with respect to such Remittance Date.
(b) The Capitalized Interest Account will be part of the Trust Fund but
not part of the REMIC. Amounts held in the Capitalized Interest Account shall
be invested in Permitted Investments of the type specified in clause (vii) of
the definition of Permitted Investments, which Permitted Investments shall
mature no later than the third Business Day prior to the Remittance Date. The
Trustee shall not be liable for any losses on amounts invested in accordance
with the provisions hereof (except to the extent that the Trustee is the obligor
and has defaulted on such investments). All interest and other investment
earnings on amounts held in the Capitalized Interest Account shall be paid by
the Trustee to the Depositor on each Remittance Date and for federal and state
income tax purposes the Depositor shall be deemed to be the owner of the
Capitalized Interest Account. Any losses realized in connection with any such
investment shall be for the account of the Depositor and the Depositor and the
Transferor shall deposit the amount of such loss (to the extent not offset by
income from other investments) in the Capitalized Interest Account immediately
upon the realization of such loss. All amounts earned on deposit in the
Capitalized Interest Account shall be taxed to the Depositor.
POOLING AND SERVICING AGREEMENT - Page 68
(c) On the Closing Date, the Depositor shall cause the Capitalized
Interest Account Deposit to be deposited with the Trustee from the proceeds of
the sale of the Class A Certificates. On or before each Determination Date
occurring prior to _______________, 199__ , the Transferor and the Depositor may
deposit with the Trustee a letter of credit issued by a financial institution,
and in a form, approved by the Certificate Insurer and the Rating Agencies or
immediately available funds, subject to the prior consent of the Certificate
Insurer, in either case in an amount equal to any positive difference between
the Capitalized Interest Account Requirement and the Capitalized Interest Amount
as of such Determination Date, and the Trustee shall notify the Certificate
Insurer of the receipt of such a letter of credit or such funds. The failure to
deposit such a letter of credit or such funds in respect of any such difference
before the close of business on such Determination Date will cause the Funding
Period to end on such Determination Date. Any amounts remaining in the
Capitalized Interest Account at the end of the Funding Period and not used as
described above will be distributed to the Depositor including any net
reinvestment income thereon.
(d) If the Capitalized Interest Excess is greater than zero on any
Determination Date occurring prior to _______________, 199__ , such Capitalized
Interest Excess will be released to the Depositor on the following Remittance
Date.
ARTICLE VI
DISTRIBUTIONS TO THE CERTIFICATEHOLDERS
Section 6.01 ESTABLISHMENT OF CERTIFICATE ACCOUNT; DEPOSITS IN
CERTIFICATE ACCOUNT.
No later than the Closing Date, the Trustee will establish and maintain
with itself one or more Eligible Accounts entitled "Certificate Account, First
Trust of California, National Association, as Trustee for Remodelers Home
Improvement Loan Asset-Backed Certificates, Series 199__-__." The Trustee shall,
promptly upon receipt, deposit in the Certificate Account and retain therein:
(i) the Available Remittance Amount remitted by the Servicer pursuant
to Section 5.04(i) hereof;
(ii) the Guaranty Policy Proceeds which shall be used only to make
distributions to the Holders of the Insured Certificates for which such
proceeds were paid by the Certificate Insurer;
(iii) amounts transferred from the Pre-Funding Account pursuant to
Section 5.15(c) hereof;
(iv) amounts transferred from the Capitalized Interest Account
pursuant to Section 5.16(a) hereof;
(v) amounts transferred from the FHA Insurance Premium Account
pursuant to Section 6.09(f) hereof; and
(vi) interest and gain on funds held in the Certificate Account.
POOLING AND SERVICING AGREEMENT - Page 69
Section 6.02 PERMITTED WITHDRAWALS FROM CERTIFICATE ACCOUNT.
The Trustee shall, based upon information set forth in the Servicer's
Monthly Remittance Report for such Remittance Date, withdraw amounts on deposit
in the Certificate Account on each Remittance Date to effect the distributions
described in Section 6.05(b) hereof; and also, in no particular order of
priority:
(i) to withdraw the amount necessary to cover any shortfall in the
FHA Insurance Premium Account pursuant to Section 6.09(e) hereof;
(ii) to invest amounts on deposit in the Certificate Account in
Permitted Instruments pursuant to Section 6.04 hereof;
(iii) to withdraw any amount not required to be deposited in the
Certificate Account or deposited therein in error;
(iv) from amounts otherwise distributable to the Class R
Certificateholders, to pay any taxes imposed on the REMIC pursuant to
Section 5.13(a) hereof; and
(v) to clear and terminate the Certificate Account in connection with
the termination of this Agreement.
Section 6.03 [RESERVED].
Section 6.04 INVESTMENT OF ACCOUNTS.
(a) So long as no Event of Default shall have occurred and be continuing,
and consistent with any requirements of the Code, all or a portion of the
Certificate Account, the Collection Account and the FHA Insurance Premium
Account held by the Trustee shall be invested by the Trustee, as directed in
writing, or by telephone or facsimile transmission confirmed in writing, by the
Depositor in one or more Permitted Instruments bearing interest or sold at a
discount. No such investment in any such Account shall mature later than the
Business Day immediately preceding the next Remittance Date. The Trustee shall
invest funds in such Accounts held by the Trustee, to the fullest extent
practicable, in such manner as the Depositor shall from time to time direct as
set forth in this Section 6.04(a), but only in one or more Permitted
Instruments. All income or other gain from investments in any such Account held
by the Trustee shall be deposited in such Account immediately on receipt.
(b) If any amounts are needed for disbursement from any Account held by or
on behalf of the Trustee and sufficient uninvested funds are not available to
make such disbursement, the Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Account. The
Trustee shall not be liable for any investment loss or other charge resulting
therefrom unless the Trustee's failure to perform in accordance with this
Section 6.04 is the cause of such loss or charge.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss
POOLING AND SERVICING AGREEMENT - Page 70
on any Permitted Instrument included therein (except to the extent that the
Trustee is the obligor and has defaulted thereon).
Section 6.05 PRIORITY AND SUBORDINATION OF DISTRIBUTIONS; DISTRIBUTIONS
AND TRANSFERS.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, Section 6.05(b) sets forth the priority of
distributions to the Certificateholders in which the Class R Certificates and
the Class B Certificates are subordinate in right of distributions to the Class
A Certificates as set forth in such Section 6.05(b). Notwithstanding anything
contained in this Agreement to the contrary, no Certificateholder shall be
required to refund any amount properly distributed to it pursuant to the terms
of this Agreement.
(b) On each Remittance Date, the Trustee shall withdraw from the
Certificate Account (1) the Amount Available, (2) any Guaranteed Payment
deposited in the Certificate Account by or on behalf of the Certificate Insurer
(which payments may only be used to pay the Holders of the Class A Certificates
the respective Interest Remittance Amount, the Interest Carry-Forward Amount,
the Principal Remittance Amount or the Principal Carry-Forward Amount, as
applicable), and (3) any amounts deposited into the Certificate Account from the
Pre-Funding Account. The Trustee shall, in accordance with the report prepared
and computed by the Servicer, make distributions and transfers thereof to each
Class sequentially in the following order of priority to the extent of the
Amount Available and any Guaranteed Payment (with respect to the Class A
Certificates only):
(i) first to the FHA Insurance Premium Account, an amount equal to
the aggregate FHA Insurance Premium Deposit Amount;
(ii) then to the Certificate Insurer, an amount equal to the
Certificate Insurer Premium;
(iii) then to the Trustee, an amount equal to the Trustee Fee and
then, if applicable, to the Custodian, an amount equal to the Custodian Fee
and then, if applicable, to the Servicer or its designee, an amount equal
to the REMIC Administrative Fee.
(iv) then pro rata to the Class A-1, Class A-2, Class A-3 and Class A-
4 Certificateholders, as a distribution of principal, any amounts deposited
into the Certificate Account from the amounts remaining in the Pre-Funding
Account;
(v) then, pro rata, to the Class A-1, Class A-2, Class A-3 and
Class A-4 Certificateholders, (A) the Interest Remittance Amount applicable
to the respective Class A Certificates and (B) the Interest Carry-Forward
Amount, if any, applicable to the respective Class A Certificates;
(vi) then to the Class A-1 Certificateholders, (A) to be applied to
reduce the Class Principal Balance of the Class A-1 Certificates until such
Class Principal Balance is reduced to zero, an amount equal to the
Principal Remittance Amount and (B) the Principal Carry- Forward Amount, if
any, applicable to the Class A-1 Certificates;
POOLING AND SERVICING AGREEMENT - Page 71
(vii) then to the Class A-2 Certificateholders, (A) to be applied
to reduce the Class Principal Balance of the Class A-2 Certificates until
such Class Principal Balance is reduced to zero, an amount equal to that
portion of the Principal Remittance Amount, if any, remaining after any
distributions pursuant to clause (vi) above and (B) the Principal Carry-
Forward Amount, if any, applicable to the Class A-2 Certificates;
(viii) then to the Class A-3 Certificateholders, (A) to be applied
to reduce the Class Principal Balance of the Class A-3 Certificates until
such Class Principal Balance is reduced to zero, an amount equal to that
portion of the Principal Remittance Amount, if any, remaining after any
distributions pursuant to clauses (vi) and (vii) above and (B) the
Principal Carry-Forward Amount, if any, applicable to the Class A-3
Certificates;
(ix) then to the Class A-4 Certificateholders, (A) to be applied to
reduce the Class Principal Balance of the Class A-4 Certificates until such
Class Principal Balance is reduced to zero, an amount equal to that portion
of the Principal Remittance Amount, if any, remaining after any
distributions pursuant to clauses (vi) through (viii) above and (B) the
Principal Carry-Forward Amount, if any, applicable to the Class A-4
Certificates;
(x) then to the Certificate Insurer, the Certificate Insurer
Reimbursement Amount;
(xi) then to the Class B Certificateholders, (A) the Interest
Remittance Amount applicable to the Class B Certificates and (B) the
Interest Carry-Forward Amount, if any, applicable to the Class B
Certificates;
(xii) then to the Class B Certificateholders, (A) to be applied to
reduce the Class Principal Balance of the Class B Certificates until such
Class Principal Balance is reduced to zero, an amount equal to an amount
equal to that portion of the Principal Remittance Amount, if any, remaining
after any distributions pursuant to clauses (vi), (vii), (viii), (ix) and
(x) above and (B) the Principal Carry-Forward Amount, if any, applicable to
the Class B Certificates;
(xiii) then after making all of the foregoing distributions, to the
extent of any remaining Amount Available, to the Servicer an amount equal
to Servicing Advances previously made by the Servicer and not previously
reimbursed;
(xiv) then after making all of the foregoing distributions, (A) to
the Class A Certificateholders, as an additional sequential distribution of
principal to that class of Class A Certificates entitled to principal
distributions in accordance with clauses (vi) through (ix) above, the
remaining balance, if any, of the Amount Available after all of the
foregoing distributions pursuant to clauses (i) through (xiii) above (the
"EXCESS SPREAD") up to the amount at which the Class A
Overcollateralization equals the Required Class A Overcollateralization
Level (each such occurrence being herein called a "CLASS R DISTRIBUTION
TRIGGER"); and, if a Class R Distribution Trigger occurs, then (B) to the
Class B Certificateholders an amount equal to the portion of the Excess
Spread, if any, remaining after any distributions to the Class A
Certificateholders pursuant to the preceding subclause (A), until the Class
B Loss Reimbursement Amount is reduced to zero, and then (C) to the Class R
Certificateholders an amount equal to the portion of the Excess Spread, if
any,
POOLING AND SERVICING AGREEMENT - Page 72
remaining after any distributions to the Class A Certificateholders and
Class B Certificateholders pursuant to the preceding subclauses (A) and
(B).
No amounts will be distributed on the Class R Certificates until such time
as the Trustee (or the Servicer, as FHA Claims Administrator) has delivered to
the Depositor, the Certificate Insurer and the Rating Agencies the FHA Insurance
Transfer Certificate with respect to the Initial FHA Insurance Amount.
If the Amount Available is insufficient to distribute in full the amounts
described in items (v) through (ix) above to the Holders of the Class A
Certificates, the Trustee shall make a claim under the Guaranty Policy for the
amount of such insufficiency in accordance with the terms thereof. The Guaranty
Policy Proceeds, if any, for any Class A Certificates under the Guaranty Policy
shall be available only for distribution to Holders of the Class A Certificates
to compensate for any shortfalls in respect of the Interest Remittance Amounts
and the Principal Remittance Amounts with respect to Class A Certificates.
(c) All distributions made on the Class A-1, Class A-2, Class A-3, Class
A-4, Class B or Class R Certificates as a Class on each Remittance Date will be
made on a pro rata basis among the Certificateholders of the respective Class of
record on the next preceding Record Date based on the Percentage Interest
represented by their respective Certificates, and except as otherwise provided
in the next succeeding sentence, shall be made by wire transfer of immediately
available funds to the account of such Certificateholder, if such
Certificateholder shall own of record Certificates of the same Class which have
original denominations aggregating at least $250,000 and shall have so notified
the Trustee, and otherwise by check mailed to the address of such
Certificateholder appearing in the Certificate Register. 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
Certificateholders of such final distribution.
(d) If, on a particular Remittance Date, the Amount Available applied in
the order of priority described in SECTION 6.05(b) above is not sufficient to
make a full distribution of the Interest Remittance Amount on such Class A
Certificate, interest will be distributed pro rata to the Class A Certificates
based on the Interest Remittance Amount each such Class would otherwise have
been entitled to receive in the absence of such a shortfall.
(e) Notwithstanding the priority of distribution set forth in Section
6.05(b) above, for any Remittance Date occurring on or after the date on which
the sum of the Class Principal Balance of the Class B Certificates has been
reduced to zero as a result of any losses allocated to the Class B Certificates
pursuant to SECTION 6.10, all Principal Remittance Amounts (including any
Principal Carry Forward Amounts) will be distributed pro rata to the Class A
Certificateholders in accordance with their respective Class Principal Balances
immediately prior to such Remittance Date.
Section 6.06 STATEMENTS.
(a) No later than each Determination Date, the Servicer shall deliver to
the Trustee (and any FHA Claims Administrator), by facsimile, the receipt and
legibility of which shall be confirmed telephonically, and with hard copy
thereof to be delivered no later than one (1) Business Day after such
Determination Date, the Servicer's Monthly Remittance Report, setting forth the
date of such Report (day, month and year), the Series designation of the
Certificates (i.e. "Series 199__-__"), and
POOLING AND SERVICING AGREEMENT - Page 73
the date of this Agreement. Furthermore, no later than each Determination Date,
the Servicer shall deliver to the Trustee a magnetic tape or computer disk
providing such information regarding the Servicer's activities in servicing the
Mortgage Loans during the related Due Period as the Trustee may reasonably
require.
(b) On each Remittance Date, the Servicer shall prepare and the Trustee
shall distribute a monthly statement (the "SERVICER'S MONTHLY STATEMENT") to the
Depositor, the Certificateholders, the Beneficial Owners (who have notified the
Trustee by delivery of an Investment Letter to the Trustee), the Certificate
Insurer, the Rating Agencies and any FHA Claims Administrator, stating the date
of original issuance of the Certificates (day, month and year), the series
designation of the Certificates (i.e. "Series 199__-__"), the date of this
Agreement and the following information:
(i) the Available Remittance Amount for the related Remittance Date;
(ii) the Class Principal Balance of each Class of Certificates,
exclusive of the Class R Certificates, and the Pool Principal Balance
(including, until the Funding Period ends, the amount remaining in the Pre-
Funding Account and the Capitalized Interest Account as of such Remittance
Date) as of the first day of the related Due Period and after giving effect
to distributions made to the Holders of such Certificates on such
Remittance Date;
(iii) the Class Pool Factor with respect to each Class of
Certificates, exclusive of the Class R Certificates, then outstanding;
(iv) the amount of principal and interest received on the Conventional
Mortgage Loans and the Title I Mortgage Loans during the related Due
Period;
(v) the Principal Remittance Amount, the Interest Remittance Amount,
the Interest Carry-Forward Amount, the Principal Carry-Forward Amount and
the amount of any losses allocated to Certificateholders pursuant to
Section 6.10, if any, with respect to each Class of Certificates, exclusive
of the Class R Certificates, then outstanding;
(vi) whether a Class R Distribution Trigger has occurred on such
Remittance Date, and if so, the amount of any Excess Spread or any other
amount to be distributed to the Class R Certificateholders on such
Remittance Date;
(vii) the Servicing Fees, the Trustee Fees, the Custodian Fees,
the REMIC Administrative Fee, if any, the Certificate Insurer Premium and
the amounts deposited to the FHA Insurance Premium Deposit Amount;
(viii) the FHA Insurance Amount before and after such Remittance
Date, and the aggregate number of FHA Claims submitted, the aggregate
principal balance of all the Mortgage Loans relating to FHA Claims finally
rejected by the FHA and the amount of FHA Insurance Proceeds received, in
each case, during the related Due Period, and the cumulative amount of FHA
Insurance Proceeds received since the Closing Date;
(ix) the Class A Overcollateralization on such Remittance Date, the
Required Class A Overcollateralization Level as of such Remittance Date,
the Net Loan Losses
POOLING AND SERVICING AGREEMENT - Page 74
incurred during the related Due Period and the cumulative Net Loan Losses
as of such Remittance Date;
(x) the weighted average maturity of the Conventional Mortgage Loans
and the Title I Mortgage Loans and the weighted average Mortgage Loan
Interest Rate of the Conventional Mortgage Loans and the Title I Mortgage
Loans;
(xi) certain performance information, including delinquency and
foreclosure information with respect to the Conventional Mortgage Loans and
the Title I Mortgage Loans, as set forth in the Servicer's Monthly
Remittance Report;
(xii) the amount of any Guaranteed Payment included in the amounts
distributed on such Remittance Date;
(xiii) as identified with respect to the applicable Class of
Insured Certificates, the amount of any Certificate Insurer Reimbursement
Amount to be distributed to the Certificate Insurer on such Remittance Date
and the amount of any Certificate Insurer Reimbursement Amount remaining
unsatisfied following such distribution;
(xiv) the number of and aggregate Principal Balance of all
Mortgage Loans in foreclosure proceedings (other than any Mortgage Loans
described in clause (xv)) and the percent of the aggregate Principal
Balances of such Mortgage Loans to the aggregate Principal Balances of all
Mortgage Loans, all as of the close of business on the first day of the
related Due Period;
(xv) the number of and the aggregate Principal Balance of the Mortgage
Loans in bankruptcy proceedings (other than any Mortgage Loans described in
clause (xiv)) and the percent of the aggregate Principal Balances of such
Mortgage Loans to the aggregate Principal Balances of all Mortgage Loans,
all as of the close of business on the first day of the related Due Period;
(xvi) the number of REO Properties, the aggregate Principal
Balance of the related Mortgage Loans, the book value of such REO
Properties and the percent of the aggregate Principal Balances of such
Mortgage Loans to the aggregate Principal Balances of all Mortgage Loans,
all as of the close of business on the first day of the related Due Period;
(xvii) the aggregate Principal Balance of Mortgage Loans that
became Defaulted Mortgage Loans and the aggregate Principal Balance of
Mortgage Loans that became Liquidated Mortgage Loans during the related Due
Period; and
(xviii) the cumulative aggregate Principal Balance of Mortgage Loans
that became Defaulted Mortgage Loans and the cumulative aggregate Principal
Balance of Mortgage Loans that became Liquidated Mortgage Loans from the
Closing Date through the most current Due Period.
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 Trustee by the
POOLING AND SERVICING AGREEMENT - Page 75
Servicer, and the 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 the Trustee shall distribute to each Person
who at any time during the calendar year was a Certificateholder, exclusive of
the Class R Certificateholders, 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 Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer to the Trustee or the Certificateholders pursuant to any requirements
of the Code as are in force from time to time.
(d) On each Remittance Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Class A
Certificates and the Class B Certificates in respect of such Remittance Date and
a statement setting forth the amounts actually distributed to such Class R
Certificateholders on such Remittance Date, together with such other information
as the Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each calendar
year, the Servicer shall prepare and the Trustee shall distribute to each Person
who at any time during the calendar year was a Class R Certificateholder, if
requested in writing by such Person, such information as is reasonably necessary
to provide to such Person a statement containing the information provided
pursuant to the previous paragraph aggregated for such calendar year or
applicable portion thereof during which such Person was a Class R
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer to the Trustee and then to the Certificateholders
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 holder of a Class A Certificate or a Class B Certificate which is a
savings and loan association, bank or insurance company access to information
and documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the FDIC or other
regulatory authorities with respect to investment in such Certificates.
(g) The Servicer or its agent shall furnish to the Trustee, who in turn
shall forward to each Certificateholder, during the term of this Agreement, such
periodic, special, or other reports, including information tax returns or
reports required with respect to the Certificates, including Internal Revenue
Service Forms 1099 and (if instructed in writing by the Depositor on the basis
of the advice of legal counsel) Form 1066, Schedule Q and other similar reports
that are required to be filed by the Servicer or its agent and the Class R
Certificateholders, whether or not provided for herein, as shall be necessary,
reasonable, or appropriate with respect to the Certificateholder, or otherwise
with respect to the purposes of this Agreement, all such reports or information
to be provided by and in accordance with such applicable instructions and
directions as the Certificateholder may reasonably require.
(h) Reports and computer tapes furnished by the Servicer and the Trustee
pursuant to this Agreement shall be deemed confidential and of proprietary
nature, and shall not be copied or
POOLING AND SERVICING AGREEMENT - Page 76
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
Depositor or the Servicer or for any other purpose except as set forth in this
Agreement.
Section 6.07 REPORTS OF FORECLOSURE AND ABANDONMENT OF MORTGAGED
PROPERTY.
Each year beginning in 199__ 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 6.08 SPECIFICATION OF CERTAIN TAX MATTERS.
Each Certificateholder shall provide the Trustee with a completed and
executed Form W-9 prior to purchasing a Certificate. The Trustee shall comply
with all requirements of the Code, and applicable state and local law, with
respect to the withholding from any distributions made to any Certificateholder
of any applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
Section 6.09 ESTABLISHMENT OF FHA INSURANCE PREMIUM ACCOUNT; DEPOSITS IN
FHA INSURANCE PREMIUM ACCOUNT; PERMITTED WITHDRAWALS FROM
FHA INSURANCE PREMIUM ACCOUNT.
(a) No later than the Closing Date, the Trustee will establish and
maintain with itself one or more Eligible Accounts, which may be interest
bearing, entitled "FHA Insurance Premium Account; [Trustee], in trust for
Remodelers Home Improvement Loan Asset-Backed Certificates, Series 199__-__."
On the Closing Date, the Transferor shall deposit the Initial FHA Insurance
Premium Account Deposit into the FHA Insurance Premium Account. The Transferor
shall be entitled to reimbursement in accordance with SECTION 6.09(g).
(b) On or prior to each Remittance Date, the Servicer shall calculate the
FHA Insurance Premium Deposit Amount for each Title I Mortgage Loan outstanding
as of the related Determination Date and shall include the amount of the
Aggregate FHA Insurance Premium Deposit Amount in the Servicer's Monthly
Remittance Report delivered pursuant to SECTION 6.06(a). In addition, the
Servicer shall forward to the Trustee a copy of the invoice submitted by the FHA
in respect of the FHA Premium Amount payable with respect to each Title I
Mortgage Loan during such calendar month, together with the Servicer's
preliminary adjustments, if any, to such FHA invoice.
(c) On or prior to the 20th day of each month, the Servicer shall deliver
an Officer's Certificate stating (i) attached thereto is the Servicer's final
adjustments to the FHA invoice forwarded to the Trustee pursuant to SECTION
6.09(b) and (ii) the aggregate FHA Premium Amount for each Title I Mortgage Loan
as to which an FHA Premium Amount is payable.
(d) On or before the 28th day of each calendar month and in accordance
with the FHA Regulations, the Trustee shall withdraw from the FHA Insurance
Premium Account and pay to the FHA an amount equal to the FHA Premium Amount for
each Title I Mortgage Loan as to which
POOLING AND SERVICING AGREEMENT - Page 77
such FHA Premium Amount is payable to the FHA during such calendar month as
indicated on the Servicer's Officer's Certificate delivered pursuant to SECTION
6.09(c).
(e) If at any time the amount then on deposit in the FHA Insurance Premium
Account shall be insufficient to pay in full any FHA Premium Amount then due and
payable, the Trustee shall withdraw the amount of such shortfall from the
Certificate Account.
(f) On the Determination Date occurring in November of each year
commencing in ______, the FHA Claims Administrator shall deliver to the Trustee
an Officer's Certificate indicating the Aggregate FHA Premium Requirement. On
the Remittance Date occurring in November of each year commencing in ______, the
Trustee shall withdraw the Excess FHA Premium Amount from the FHA Insurance
Premium Account and deposit such amount in the Certificate Account to be
distributed in accordance with SECTION 6.05(b) hereof.
(g) On each Remittance Date, the Trustee shall withdraw from the FHA
Insurance Premium Account and distribute to the Transferor, any FHA Claims
Administrator or any Person acting on behalf of any of the foregoing, amounts
advanced to the FHA by the Transferor, any such FHA Claims Administrator or such
Person, as the case may be, and not previously reimbursed, in respect of the FHA
Premium Amount relating to any Title I Mortgage Loan which was not paid from
amounts on deposit in the FHA Insurance Premium Account.
Section 6.10 ALLOCATION OF LOSSES.
(a) In the event that Net Liquidation Proceeds, FHA Insurance Proceeds,
Insurance Proceeds or Released Mortgaged Property Proceeds on a Liquidated
Mortgage 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
Mortgage Loan, such Net Liquidation Proceeds, Insurance Proceeds, FHA Insurance
Proceeds, Released Mortgaged Property Proceeds or partial payment (excluding
partial payments held in escrow pursuant to FHA Regulations) shall be applied to
payment of the related Note, first to interest accrued at the Mortgage Loan
Interest Rate and then to principal.
(b) On any Remittance Date, any Net Loan Losses attributable to any
Mortgage Loans which became Liquidated Mortgage Loans during the immediately
preceding Due Period shall be allocated as follows: (i) first to reduce the
portion of the Pool Principal Balance attributable to the Class R Certificates
(which is the excess of the Pool Principal Balance over the aggregate Class
Principal Balance of the Class A Certificates and the Class B Certificates),
until such excess has been reduced to zero; and (ii) second, to reduce the Class
Principal Balance of the Class B Certificates, until such Class Principal
Balance has been reduced to zero. After the reduction of the Class A
Overcollateralization to zero, any Net Loan Losses will not be allocated to
reduce the Class Principal Balance of the Class A Certificates, but rather any
such Net Loan Losses will be included in the Principal Remittance Amount
attributable to the Class A Certificates pursuant to the definition of Principal
Remittance Amount.
(c) If Net Loan Losses are allocated to reduce the Class Principal Balance
of the Class B Certificates pursuant to this SECTION 6.10, then to the extent
that any portion of Excess Spread is available for distribution on any
Remittance Date upon the occurrence of a Class R Distribution Trigger, the
holders of the Class B Certificates pursuant to SECTION 6.05 (b) (xiv) shall be
distributed
POOLING AND SERVICING AGREEMENT - Page 78
such portion of the Excess Spread up to the Class B Loss Reimbursement Amount,
which distribution shall be prior to any distribution to the holders of the
Class R Certificates. With respect to any Remittance Date, the "CLASS B LOSS
REIMBURSEMENT AMOUNT" shall be the amount (but not less than zero) equal to (A)
the aggregate amount of the Net Loan Losses allocated to reduce the Class
Principal Balance of the Class B Certificates on such Remittance Date and any
prior Remittance Date and the corresponding amount of accrued and unpaid
interest on such reduced amount of the Class Principal Balance of the Class B
Certificates at the Certificate Interest Rate applicable thereto, minus (B) the
aggregate amount of any Excess Spread previously distributed to the Class B
Certificates pursuant to SECTION 6.05 (b) (xiv).
(d) Notwithstanding clause (v) of the definition of "Principal Remittance
Amount", if on the final Remittance Date the funds available from any source,
including Excess Spread and any Guaranteed Payment received by the Trustee are
not sufficient to provide for the distribution of the portion of the Principal
Remittance Amount attributable to such clause (v) for such Remittance Date and
any Principal Carry-Forward Amount applicable to such Remittance Date, then the
holders of the Class A Certificates will not be distributed such portion of the
Principal Remittance Amount and such Principal Carry-Forward Amount, in which
event such portion of the Principal Remittance Amount and such Principal Carry-
Forward Amount will be written-off and the Class Principal Balances of all Class
A Certificates will be reduced on a pro rata basis by the aggregate amount
thereof, without the distribution of funds to the Class A Certificateholders.
In addition, on the Remittance Date on which the final payment in respect of the
last Mortgage Loan has been received in the immediately preceding Due Period,
then after the final distribution of any Amount Available from the Certificate
Account on such Remittance Date, to the extent that any Class of Certificates
has a Class Principal Balance (including Principal Carry-Forward Amount
outstanding after such final distribution) and any accrued and unpaid interest
thereon (including any Interest Carry-Forward Amount), such Class of
Certificates shall be allocated losses to reduce its Class Principal Balance and
accrued and unpaid interest to zero.
ARTICLE VII
GENERAL SERVICING PROCEDURE
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 Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. In such event or in the
event the related Mortgage and Note 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 Note and, unless prohibited by
applicable law or the Mortgage 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 Note. The Servicer shall notify the Trustee that any such substitution
or assumption agreement has been
POOLING AND SERVICING AGREEMENT - Page 79
completed by forwarding to the Trustee the original of such substitution or
assumption agreement, which original shall be added by the Trustee to the
related Trustee's Mortgage Loan File and shall, for all purposes, be considered
a part of such Trustee's Mortgage 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 Mortgage 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 Mortgage
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
Mortgage 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 MORTGAGE LOAN
FILES.
Subject to the provisions of Sections 5.01 and 5.02, 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 Certificateholders may have under the mortgage instruments. The
Servicer shall maintain the Fidelity Bond and errors and omissions insurance as
provided for in Section 5.06 insuring the Servicer against any loss it may
sustain with respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.
Upon the payment in full of any Mortgage 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 (and forward a
copy of such notice to any FHA Claims Administrator) the Trustee (if it holds
the related Trustee's Mortgage Loan File) or the Custodian, as the case may be,
by an Officers' Certificate in the form of EXHIBIT I attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the Collection Account pursuant to Section 5.03 have been or will
be so deposited) of a Servicing Officer and shall request delivery to it of the
Trustee's Mortgage Loan File. Upon receipt of such certification and request,
the Trustee or such Custodian, as the case may be, shall promptly release the
related Trustee's Mortgage 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 or the Certificate Account. Upon receipt
by the Trustee or the Custodian, on behalf of the Trustee, of the certification
of a Servicing Officer, substantially in the form of the Request for Release of
Documents attached hereto as EXHIBIT I, with respect to the release of the
Trustee's Mortgage Loan File for any Mortgage Loan or any documents included
therein, the Trustee or the Custodian, as appropriate, shall release to the
Servicer the related Trustee's Mortgage Loan File for such Mortgage Loan and
shall deliver such instruments of transfer presented to it by the Servicer as
shall be necessary or appropriate for the release of such Trustee's Mortgage
Loan File in accordance with such certification of the Servicing Officer;
provided that in the case of a release of the related Trustee's Mortgage Loan
File in connection with a substitution or repurchase of any Mortgage Loan
pursuant to Section 2.06(c) and (d), Section 3.05 or Section 11.02 or a release
for other servicing reasons (as identified as box number 4, 5 or 7,
respectively, in the
POOLING AND SERVICING AGREEMENT - Page 80
form of the Request for Release of Documents), such release of the Trustee's
Mortgage Loan File by the Custodian shall be subject to the prior approval of
the Trustee.
The 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 Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Note or Mortgage or otherwise available at law or in equity. Together with such
documents or pleadings, the Servicer shall deliver to the Trustee a certificate
of a Servicing Officer requesting that such pleadings or documents be executed
by the Trustee and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee will not
invalidate 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 Trustee shall, upon receipt of a written request from a Servicing Officer,
execute any document provided to the 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 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 Trustee's receipt of such certificate
or documents. Such certificate or documents shall establish to the Trustee's
satisfaction that the related Mortgage 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
Trustee and Servicer shall be entitled to approve an assignment in lieu of
satisfaction with respect to any Mortgage Loan, provided the obligee with
respect to such Mortgage Loan following such proposed assignment provides the
Trustee and Servicer with a "Certification for Assignment of Mortgage Loan" in
the form attached hereto as EXHIBIT O, in form and substance satisfactory to the
Trustee and Servicer, providing the following: (i) that the Mortgage Loan is
secured by Mortgaged Property located in a jurisdiction in which an assignment
in lieu of satisfaction is required to preserve lien priority, minimize or avoid
mortgage recording taxes or otherwise comply with, or facilitate a refinancing
under, the laws of such jurisdiction; (ii) that the substance of the assignment
is, and is intended to be, a refinancing of such Mortgage Loan and that the form
of the transaction is solely to comply with, or facilitate the transaction
under, such local laws; (iii) that the Mortgage Loan following the proposed
assignment will have a rate of interest at least 0.25 percent below or above the
rate of interest on such Mortgage Loan prior to such proposed assignment; and
(iv) that such assignment is at the request of the borrower under the related
Mortgage Loan. Upon approval of an assignment in lieu of satisfaction with
respect to any Mortgage Loan, the Servicer shall receive cash in an amount equal
to the unpaid principal balance of and accrued interest on such Mortgage Loan
and the Servicer shall treat such amount as a Principal Prepayment with respect
to such Mortgage Loan for all purposes hereof.
Section 7.03 SERVICING COMPENSATION.
As compensation for its services hereunder, the Servicer shall be entitled
to withdraw from the Collection Account, the Servicing Fee out of which the
Servicer shall pay any servicing fees owed or payable to any Subservicer.
Additional servicing compensation in the form of assumption and other
administrative fees, amounts remitted pursuant to Section 7.01 and late payment
charges
POOLING AND SERVICING AGREEMENT - Page 81
shall be retained by or remitted to the Servicer to the extent not required to
be remitted to the Trustee for deposit in the Certificate Account.
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) all reasonable costs and expenses incurred by the Trustee
or the Depositor in investigating the Servicer's activities hereunder when, in
the reasonable opinion of the Trustee or the Depositor, such investigation is
warranted on the basis of adverse information about the Servicer obtained from a
reasonably reliable source, (ii) all reasonable costs and expenses incurred by
the Standby Servicer or the 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 (iii) 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 ____________, 19__ the
Servicer will deliver to the Trustee, the Certificate Insurer, the Standby
Servicer and to each Certificateholder, 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 officers 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 Depositor, the Trustee, the Certificateholders,
the Certificate Insurer, the Standby Servicer 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
Mortgage 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 mortgage 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 Audit 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.
POOLING AND SERVICING AGREEMENT - Page 82
Section 7.06 CERTIFICATEHOLDER'S AND TRUSTEE'S RIGHT TO EXAMINE SERVICER
RECORDS.
Each Certificateholder, the Trustee (and any FHA Claims Administrator), the
Certificate Insurer, the Standby Servicer 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 Certificateholder, the Trustee (and any FHA
Claims Administrator), the Certificate Insurer and the Standby Servicer agree
that any information obtained pursuant to the terms of this Agreement shall be
held confidential.
Section 7.07 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS.
If the Collection Account is not maintained with the Trustee, then not
later than 25 days after each Record Date, the Servicer shall forward to the
Trustee (and any FHA Claims Administrator), the Certificate Insurer, the Standby
Servicer and to each Majority Certificateholder 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 5.03, the aggregate of
withdrawals from the Collection Account for each category of withdrawal
specified in Section 5.04 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
Certificates, Certificateholders may request that the Servicer make available to
the Beneficial Owners and/or Certificateholders and to prospective Beneficial
Owners and/or Certificateholders 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
Beneficial Owners and/or Certificateholders, and any prospective Beneficial
Owners and/or Certificateholder 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 Beneficial Owners and/or Certificateholders and any prospective Beneficial
Owners and/or Certificateholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the Beneficial Owners
and/or Certificateholders and such prospective Beneficial Owners and/or
Certificateholder that the Servicer has the ability to service the Mortgage
Loans in accordance with this Agreement.
POOLING AND SERVICING AGREEMENT - Page 83
ARTICLE IX
THE SERVICER
Section 9.01 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and hold the Trustee, the Depositor,
the Certificate Insurer and each Certificateholder 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 Trustee, the
Depositor, the Certificate Insurer or any Certificateholder 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 Mortgage 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 Trustee, the Depositor, the Certificate Insurer and
each Certificateholder if a claim is made by a third party with respect to this
Agreement, and the Servicer shall assume (with the consent of the Trustee) 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 Trustee, the Depositor, the Certificate Insurer and/or any Certificateholder
in respect of such claim.
(b) The Depositor agrees to indemnify and hold the Trustee, the Servicer,
the Certificate Insurer and each Certificateholder 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 Trustee, the
Servicer, the Certificate Insurer or any Certificateholder may sustain directly
resulting from the negligence or willful misconduct of the Depositor 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 DEPOSITOR 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
DEPOSITOR. The Depositor shall immediately notify the Trustee, the Servicer,
the Certificate Insurer and each Certificateholder if a claim is made by a third
party with respect to this Agreement, and the Depositor shall assume (with the
consent of the Trustee) 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 Depositor, the Servicer, the Trustee, the Certificate Insurer and/or
any Certificateholder in respect of such claim.
(c) The Transferor agrees to indemnify and hold the Trustee, the Servicer,
the Certificate Insurer and each Certificateholder 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 Trustee, the
Servicer, the Certificate Insurer or any Certificateholder may sustain directly
POOLING AND SERVICING AGREEMENT - Page 84
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 Trustee, the Servicer,
the Certificate Insurer and each Certificateholder if a claim is made by a third
party with respect to this Agreement, and the Transferor shall assume (with the
consent of the Trustee) 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 Trustee, the Certificate Insurer
and/or any Certificateholder in respect of such claim.
(d) The obligations of the Servicer, the Depositor 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 Mortgage 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 Trustee, the Certificate
Insurer and the Standby Servicer.
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 Mortgage 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 Depositor, the
Trustee, the Certificate Insurer and the Majority Certificateholders, 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
POOLING AND SERVICING AGREEMENT - Page 85
of counsel (who may be an employee of the Servicer) to such effect delivered to
the Trustee, the Certificate Insurer and the Depositor, which opinion of counsel
shall be in form and substance acceptable to the Trustee and the Certificate
Insurer. No such resignation shall become effective until the Standby Servicer
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 the
Depositor, the Trustee, the Certificate Insurer and the Majority
Certificateholders; provided, however, the Servicer may assign this Agreement
without the prior written consent of the Depositor, the Trustee, the
Certificate Insurer and the Majority Certificateholders to (i) the Standby
Servicer or (ii) any Person that (A) is satisfactory to the Trustee, the
Certificate Insurer and the Majority Certificateholders, (B) services not less
than $25,000,000 in aggregate outstanding principal amount of FHA Title I
property improvement or manufactured home loans, (C) has a net worth of not less
than $2,500,000, (D) has a blanket fidelity bond and errors and omissions
insurance coverage satisfying the requirements set forth in Section 5.06 and (E)
will not cause any rating of the Class A Certificates 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 Standby Servicer) shall be effective only
upon delivery to the Trustee and the Certificate Insurer of an Agreement, duly
executed by the Servicer and such successor servicer in a form reasonably
satisfactory to the Trustee, 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.
The relationship of the Servicer (and of the Standby Servicer and any
successor to the Servicer as servicer under this Agreement) to the 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 Trustee, except
to the extent that the Servicer (or the Standby Servicer or any successor to the
Servicer as servicer under this Agreement) serves as FHA Claims Administrator
and in that capacity acts on behalf of the Trustee as its agent and attorney-in-
fact.
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 (1) deposit in the Collection
Account in accordance with SECTION 5.03 any payments in respect of the
Mortgage Loans received by the Servicer no later than the fourth Business
Day following the day on which such payments were received or (2) remit to
the Trustee the amounts required to be remitted to the Certificate Account
on any Remittance Date hereunder no later than the first Business Day after
receipt from the Trustee of notice of such failure; or
POOLING AND SERVICING AGREEMENT - Page 86
(ii) failure by the Servicer duly to observe or perform, in any
material respect, any other covenants, obligations or agreements of the
Servicer as set forth in this Agreement, which failure continues unremedied
for a period of 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 to the Servicer by
the Trustee or to the Servicer or the Trustee by any Certificateholder or
the Certificate Insurer; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force, undischarged or
unstayed for a period of 60 days; or
(iv) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of the Servicer's
property; 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 Certificateholders or the Certificate Insurer (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 Losses
(as defined below) exceed (1) commencing in _______________ 199__ up to
the fifth (5th) anniversary of the _______________, 199__ Cut-Off Date,
____% of the sum of the Initial Pool Principal Balance and the aggregate
Principal Balance as of the applicable Cut-Off Dates of all Subsequent
Mortgage Loans conveyed to the Trust Fund, or (2) thereafter up to the
tenth (10th) anniversary of the _______________, 199__ Cut-Off Date, ____%
of the sum of the Initial Pool Principal Balance and the aggregate
Principal Balance as of the applicable Cut- Off Dates of all Subsequent
Mortgage Loans conveyed to the Trust Fund (where the "EXPECTED LOAN LOSSES"
shall be the sum of (A) the cumulative Net Losses, plus (B) ____% of the
aggregate Principal Balance of the Mortgage Loans which are then more than
30 but less than 60 days delinquent, plus (C) ____% of the aggregate
Principal Balance of the
POOLING AND SERVICING AGREEMENT - Page 87
Mortgage Loans which are then more than 60 but less than 90 days
delinquent, plus (B) ____% of the aggregate Principal Balance of the
Mortgage Loans which are then more than 90 days delinquent).
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, the Majority Certificateholders, the Certificate
Insurer or the Trustee by notice in writing to the Servicer may, in addition to
whatever rights such Person may have at law or equity to damages, including
injunctive relief and specific performance, and with the consent of the
Certificate Insurer (which consent shall not be unreasonably withheld),
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage 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 Mortgage Loans or otherwise, shall, subject to SECTION 10.02, pass to and
be vested in the Standby Servicer and the Standby Servicer 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 Mortgage Loans and related
documents. If at the time of any such termination the Servicer is also serving
as FHA Claims Administrator pursuant to this Agreement and a FHA Claims
Administration Agreement, the Servicer's status as FHA Claims Administrator
shall be simultaneously terminated by the Trustee and the Servicer's
responsibilities as such shall be transferred to the Standby Servicer, as
successor FHA Claims Administrator (if the Standby Servicer is then qualified to
so act), or to another successor FHA Claims Administrator retained by the
Trustee, or to the Trustee itself if a successor FHA Claims Administrator cannot
be retained in a timely manner. The Servicer agrees to cooperate with the
Standby Servicer in effecting the termination of the Servicer's responsibilities
and rights hereunder, including, without limitation, the transfer to the Standby
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 Mortgage Loans.
Section 10.02 STANDBY SERVICER TO ACT; APPOINTMENT OF SUCCESSOR.
On and after the date the Servicer receives a notice of termination
pursuant to SECTION 10.01, or the 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 5.14, the Standby Servicer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof; provided, however,
that the Standby Servicer shall not be liable for any actions of any servicer
prior to it. In the event the Standby Servicer assumes the responsibilities of
the Servicer pursuant to this SECTION 10.02, the Standby Servicer will make
reasonable efforts consistent with applicable law to 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 Standby Servicer
shall be obligated to make Servicing Advances hereunder. As compensation
therefor, the Standby Servicer or any successor servicer appointed pursuant to
the following paragraph, shall be entitled to all funds relating to the Mortgage
Loans which the Servicer would have been entitled to receive from the Collection
Account pursuant to SECTION 5.04 and from the
POOLING AND SERVICING AGREEMENT - Page 88
Certificate Account pursuant to the applicable provisions of SECTION 6.05(b) if
the Servicer had continued to act as servicer hereunder, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in SECTIONS 7.01 and 7.03. 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 Servicer after removal or resignation shall
be endorsed by it to the Standby Servicer and remitted directly to the Standby
Servicer or, at the direction of the Standby Servicer, to the successor
servicer. The compensation of any successor servicer (including, without
limitation, the Standby Servicer) so appointed shall be the Servicing Fees,
together with other Servicing Compensation provided for herein. In the event
the Standby Servicer is required to solicit bids to appoint a successor
servicer, the Standby Servicer 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 Fees and Servicing Compensation provided for
herein. Within thirty days after any such public announcement, the Standby
Servicer 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 Standby Servicer shall deduct from
any sum received by the Standby Servicer from the successor to the 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 Standby Servicer. After such deductions, the
remainder of such sum shall be paid by the Standby Servicer to the Servicer at
the time of such sale, transfer and assignment to the Servicer's successor. The
Trustee (and any FHA Claims Administrator), any Custodian, the Servicer, the
Standby Servicer and any such successor servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Standby Servicer and any
successor servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Standby
Servicer or such successor servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and shall promptly also transfer to the Standby Servicer 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 Mortgage Loans. Neither the Standby
Servicer nor any other successor servicer shall be held liable by reason of any
failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the Servicer to deliver, or any
delay in delivering, cash, documents or records to it, or (ii) restrictions
imposed by any regulatory authority having jurisdiction over the Servicer
hereunder. No appointment of a successor to the Servicer hereunder shall be
effective until written notice of such proposed appointment shall have been
provided by the Standby Servicer to each Certificateholder, the Depositor, the
Trustee and the Certificate Insurer and, except in the case of the appointment
of the Standby Servicer as successor to the Servicer (when no consent shall be
required), the Depositor, the Majority Certificateholders, the Trustee and the
Certificate Insurer shall have consented thereto.
Pending appointment of a successor to the Servicer hereunder, the Standby
Servicer shall act as servicer hereunder as hereinabove provided. In connection
with such appointment and assumption, the Standby Servicer may make such
arrangements for the compensation of such successor servicer out of payments on
the Mortgage Loans as it and such successor servicer shall
POOLING AND SERVICING AGREEMENT - Page 89
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer pursuant to Section 7.03, together with other Servicing
Compensation in the form of assumption fees, late payment charges or otherwise
as provided in this Agreement. In the event the Standby Servicer is unable to
fulfill its duties as successor to the Servicer pursuant to this Section 10.02,
the Trustee shall fulfill such duties of the Standby Servicer and the Servicer
unless and until a successor Servicer is appointed.
Section 10.03 WAIVER OF DEFAULTS.
The Majority Certificateholders may with the prior consent of the
Certificate Insurer, on behalf of all Certificateholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article X,
provided, however, that the Majority Certificateholders may not waive a default
in making a required distribution on a Certificate without the consent of the
Holder of such Certificate. Upon any waiver of a past default, such default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereto
except to the extent expressly so waived.
Section 10.04 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer under this Article X, the Servicer shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Standby Servicer the funds in any Collection Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Standby Servicer all Mortgage Loan Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Standby Servicer, the Certificate Insurer and the Certificateholders 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 Mortgage 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 Mortgage 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.
Subject to SECTION 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the later of the distribution to Certificateholders of
the final payment or collection with respect
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to the last Mortgage Loan, or the disposition of all funds with respect to the
last Mortgage Loan and the remittance of all funds due hereunder and the payment
of all amounts due and payable to the Trustee, the Custodian and the Certificate
Insurer or (b) mutual consent of the Servicer, the Depositor, the Transferor,
the Certificate Insurer and all Certificateholders in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty- one years after the death of the last surviving
lineal descendant of Joseph P. Kennedy, late Ambassador of the United States to
the Court of St. James, alive as of the date hereof.
Section 11.02 OPTIONAL TERMINATION BY SERVICER
Subject to SECTION 11.03, on any date on which the Pool Principal Balance
is less than 10% of the sum of the Initial Pool Principal Balance and the
aggregate Principal Balances as of the applicable Cut-Off Dates of the
Subsequent Mortgage Loans conveyed to the Trust Fund, the Servicer may, at its
option, terminate this Agreement by purchasing, on the next succeeding
Remittance Date, all of the outstanding Mortgage Loans and REO Properties at a
price equal to the sum of the Termination Price and the outstanding and unpaid
fees and expenses of the Trustee, the Servicer, the Certificate Insurer and any
Custodian, including without limitation any unreimbursed Servicing Advances or
Certificate Insurer Reimbursement Amount.
Any such purchase by the Servicer shall be accomplished by depositing into
the Collection Account on the Determination Date immediately preceding the
Remittance Date on which the purchase is to occur the amount of the Termination
Price together with an amount equal to the fees and expenses of the Trustee, the
Servicer, the Certificate Insurer and any Custodian to be paid pursuant to the
preceding paragraph. On the same day that the Termination Price is deposited
into the Collection Account, the Termination Price and any amounts then on
deposit in the Collection Account (other than any amounts not required to have
been deposited therein pursuant to SECTION 5.03 and any amounts withdrawable
therefrom by the Servicer pursuant to SECTION 5.04(ii), (iv) and (v)) shall be
transferred to the Certificate Account for distribution to Certificateholders on
the final Remittance Date; and any amounts received with respect to the Mortgage
Loans and REO Properties subsequent to such transfer shall belong to the
Servicer. For purposes of calculating the Available Remittance Amount for the
final Remittance Date, amounts transferred to the Certificate Account pursuant
to the immediately preceding sentence on the Determination Date immediately
preceding such final Remittance Date shall in all cases be deemed to have been
received during the related Due Period, and such transfer shall be made pursuant
to SECTION 5.04(i). On the same day that the Termination Price is deposited
into the Collection Account and transferred to the Certificate Account, the
Trustee (or any FHA Claims Administrator) shall file appropriate transfer
documentation with the FHA in order to cause FHA Insurance in an amount not
greater than the remaining FHA Insurance Amount to be transferred to the
Servicer.
Section 11.03 NOTICE OF TERMINATION; SURRENDER AND CANCELLATION OF
CERTIFICATES.
Notice of any termination of this Agreement pursuant to the foregoing
provisions of this Article XI, specifying the Remittance Date upon which the
Trust Fund will terminate and notifying the Certificateholders to surrender
their Certificates to the Trustee for payment of the final distribution thereon
and cancellation thereof by the Trustee, shall be given promptly by the Trustee
by letter to Certificateholders mailed during the month of such final
distribution, but before the Determination Date in such month, also specifying
(i) the Remittance Date upon which final payment of the Certificates will be
made upon presentation and surrender of the Certificates at the
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office of the Trustee therein designated, (ii) the amount of any such final
payment and (iii) that the Record Date otherwise applicable to such Remittance
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office of the Trustee therein specified. On the final
Remittance Date, the Trustee shall transfer or credit, or cause to be
transferred or credited, the Amount Available for such Remittance Date in
accordance with Section 6.05(b) and shall distribute any amounts on deposit in
any of the Accounts in accordance with this Agreement.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
six months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. If within nine months after the second notice, all the Certificates
shall not have been surrendered for cancellation, the Class R Certificateholders
shall be entitled to all unclaimed funds and other assets which remain subject
hereto and the Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Certificateholders shall look solely to
the Class R Certificateholders for payment.
Section 11.04 ADDITIONAL TERMINATION REQUIREMENTS.
(a) In connection with the termination of this Agreement pursuant to
SECTION 11.01 and SECTION 11.02, the REMIC shall be terminated in accordance
with the following additional requirements, unless the Trustee and the Depositor
have received an opinion of counsel to the effect that the failure of the REMIC
to comply with the requirements of this Section will not (i) result in the
imposition on the REMIC of taxes on "prohibited transactions", as described in
Section 860F of the Code, or (ii) cause the REMIC to fail to qualify as a "real
estate mortgage investment conduit" at any time that any Certificate is
outstanding:
(i) The Standby Servicer and the Trustee shall establish a 90-day
liquidation period for the REMIC and the Trustee shall specify the first
day of such period in a statement attached to the REMIC's final Tax Return
pursuant to Treasury regulations Section 1.860F-1. The Standby Servicer and
the Trustee also shall satisfy all of the requirements of a qualified
liquidation for the REMIC under Section 860F of the Code and the
regulations thereunder;
(ii) The Standby Servicer shall notify the Trustee at the commencement
of such 90-day liquidation period and, at or prior to the time of making of
the final payment on the Certificates, the Trustee shall sell or otherwise
dispose of all of the remaining assets of the REMIC in accordance with the
terms hereof; and
(iii) If the Servicer is exercising its right to purchase the
assets of the REMIC, the Servicer shall, during the 90-day liquidation
period and at or prior to the end of the 90-day liquidation period,
purchase all of the assets of the REMIC for cash; provided, however, that
in the event that a calendar quarter ends after the commencement of the 90-
day liquidation period but prior to the end of the 90-day liquidation
period, the Servicer shall not purchase any of the assets of the REMIC
prior to the close of that calendar quarter.
POOLING AND SERVICING AGREEMENT - Page 92
(b) Each Holder of a Certificate and the Trustee hereby irrevocably
approves and appoints the Standby Servicer as its attorney-in-fact to adopt a
plan of complete liquidation for the REMIC in accordance with the terms and
conditions of this Agreement.
ARTICLE XII
THE TRUSTEE
Section 12.01 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge and after the
curing of all such Events of Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default of which a Responsible Officer of the Trustee
shall have actual knowledge has occurred and has not been cured or waived, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Transferor, the Servicer, the Standby Servicer, any FHA Claims
Administrator or the Depositor hereunder. If any such instrument is found not
to conform in any material respect to the requirements of this Agreement, the
Trustee shall notify the Certificateholders of such instrument in the event that
the Trustee, after so requesting, does not receive a satisfactorily corrected
instrument.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee shall have actual knowledge, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
POOLING AND SERVICING AGREEMENT - Page 93
(ii) The Trustee shall not be liable in its individual capacity for an
error of judgment made in good faith by a Responsible Officer or other
officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable in its individual capacity
with respect to any action taken, suffered or omitted to be taken by it in
good faith in accordance with this Agreement or at the direction of the
Majority Certificateholders, the Certificate Insurer or the Class R
Certificateholders, relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising or
omitting to exercise any trust or power conferred upon the Trustee, under
this Agreement;
(iv) The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default or Event of Default unless a
Responsible Officer of the Trustee shall have received written notice
thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that there is no default or Event of Default;
(v) Other than those obligations assumed by the Trustee as the
successor to the Servicer and the Standby Servicer pursuant to SECTION
10.02, the Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability for the performance of any of its
duties hereunder or the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of, the
Servicer and the Standby Servicer in accordance with the terms of this
Agreement; and
(vi) Subject to the other provisions of this Agreement and without
limiting the generality of this Section 12.01, the Trustee shall have no
duty (A) to see to any recording, filing, or depositing of this Agreement
or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or refiling or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see to the payment or discharge of any tax, assessment,
or other governmental charge or any lien or encumbrance of any kind owing
with respect to, assessed or levied against, any part of the Trust Fund
from funds available in the Certificate Account, (D) to confirm or verify
the contents of any reports or certificates of the Servicer delivered to
the Trustee pursuant to this Agreement believed by the Trustee to be
genuine and to have been signed or presented by the proper party or
parties.
Section 12.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in SECTION 12.01:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, opinion
of counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
POOLING AND SERVICING AGREEMENT - Page 94
appraisal, bond or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and any advice or opinion of
counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders or the
Certificate Insurer, pursuant to the provisions of this Agreement, unless
such Certificateholders or the Certificate Insurer shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby (which in the case
of the Majority Certificateholders will be deemed to be satisfied by a
letter agreement with respect to such costs from such Majority
Certificateholders); nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default of
which a Responsible Officer of the Trustee shall have actual knowledge
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs;
(iv) The Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or document, unless requested in writing to do so by the Majority
Certificateholders or the Certificate Insurer; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses
or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to taking any such action. The reasonable expense
of every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer upon demand from the Servicer's
own funds;
(vi) The right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence or willful
misconduct in the performance of such act;
(vii) The Trustee shall not be required to give any bond or surety
in respect of the execution of the Trust Fund created hereby or the powers
granted hereunder; and
POOLING AND SERVICING AGREEMENT - Page 95
(viii) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, attorneys or custodians, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent, attorney or
custodian appointed by the Trustee with due care.
(b) Following the Startup Day, the Trustee shall not knowingly accept any
contribution of assets to the REMIC except (i) with respect to Subsequent
Mortgage Loans pursuant to Section 2.02, (ii) Qualified Substitute Mortgage
Loans pursuant to Section 3.05, and (iii) deemed contributions from the Pre-
Funding Account and the Capitalized Interest Account, unless the Trustee shall
have received an opinion of counsel to effect that the inclusion of such assets
in the REMIC will not cause the REMIC to fail to qualify as a "real estate
mortgage investment conduit" within the meaning of 860D of the Code at any time
that any Certificates are outstanding or subject the REMIC to any tax under the
REMIC Provisions or other applicable provisions of federal, state and local law
or ordinances.
Section 12.03 TRUSTEE NOT LIABLE FOR CERTIFICATES OR MORTGAGE LOANS.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Depositor, the Transferor, the Servicer or the Standby
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Collection Account by the Servicer. The Trustee shall not be responsible for the
legality or validity of this Agreement or the validity, priority, perfection or
sufficiency of the security for the Certificates issued or intended to be issued
hereunder. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to record this Agreement.
Section 12.04 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Certificates with the same rights it would have if it were not
Trustee, and may otherwise deal with the parties hereto.
Section 12.05 TRUSTEE'S FEES AND EXPENSES.
The Trustee shall be entitled to the Trustee's Fee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by the Trustee in the execution of the
trusts hereby created and in the exercise and performance of any of the powers
and duties hereunder of the Trustee. The Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Depositor, the
Servicer and the Transferor and held harmless against any loss, liability or
reasonable expense incurred in connection with this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance by the Trustee
of its duties hereunder, including, without limitation, any such loss, liability
or expense incurred in connection with any legal action or
POOLING AND SERVICING AGREEMENT - Page 96
resulting from any error in any tax or information return prepared by any Person
other than the Trustee. IT IS THE EXPRESS INTENTION OF THE PARTIES TO THIS
AGREEMENT THAT THE INDEMNIFICATION OBLIGATIONS OF THE DEPOSITOR, THE SERVICER
AND 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 DEPOSITOR, THE SERVICER OR THE
TRANSFEROR. Any payment pursuant to the foregoing indemnity shall be from the
Depositor's, the Servicer's or the Transferor's own funds, without reimbursement
hereunder. The obligations of the Depositor, Servicer and the Transferor under
this SECTION 12.05 shall survive termination of the initial Servicer and payment
of the Certificates, and shall extend to any co-trustee or separate trustee
appointed pursuant to this Article XII.
Section 12.06 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times (i) be a banking association
organized and doing business under the laws of any state or the United States of
America, authorized under such laws to exercise corporate trust powers,
including taking title to the Trust Fund assets on behalf of the
Certificateholders, (ii) be a wholly-owned subsidiary of a bank holding company
and have a combined capital and surplus of at least $50,000,000, (iii) (A) have
a long-term debt rating of at least "BBB+" by Standard & Poor's and at least
"Baa1" by Moody's (except as provided in SECTION 12.08) or (B) be a wholly-owned
subsidiary of a bank holding company having a long-term debt rating of at least
"BBB+" by Standard & Poor's and at least "Baa1" by Moody's (except as provided
in SECTION 12.08), (iv) be subject to supervision or examination by federal or
state authority, (v) hold a valid Title I contract of insurance, be approved by
the FHA as a lender to originate, purchase, service and/or sell, or as an
investing lender to purchase, hold and sell, loans insured under the Title I
Program and meet the applicable approval requirements for participation in the
Title I Program, and (vi) use its FHA Title I contract of insurance only to
report for FHA Insurance thereunder loans that qualify for insurance under the
Title I Program and are transferred and assigned to the Trustee pursuant to this
Agreement or agreements similar to this Agreement which relate to the issuance
of securities rated by a nationally recognized statistical credit rating agency
and which have comparable provisions to this Section and SECTIONS 5.11 and 12.07
with respect to Trustee eligibility and the allocation of the FHA Insurance on
the books and records of the Trustee and the submission of claims to the FHA for
such loans subject to such agreements. If such banking association publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this SECTION 12.06 the combined capital and surplus of such association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease
to be eligible in accordance with the provisions of this SECTION 12.06, the
Trustee shall resign immediately in the manner and with the effect specified in
SECTION 12.07.
Section 12.07 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Standby Servicer,
the Depositor, the Certificate Insurer and the FHA Claims Administrator. Upon
receiving such notice of resignation, the Depositor shall, with the consent of
the Certificate Insurer, promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to
POOLING AND SERVICING AGREEMENT - Page 97
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Certificate Insurer by the Depositor. Unless a
successor trustee shall have been so appointed and have accepted appointment
within 60 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor trustee.
No resignation by the Trustee shall become effective unless (i) a successor
has assumed the Trustee's responsibilities and obligations hereunder, (ii) title
to the Title I Mortgage Loans shall be assigned to such successor on the records
of the FHA and (iii) the FHA Insurance applicable to the Title I Mortgage Loans
shall have been assigned to such successor by the FHA and evidence thereof shall
have been delivered to the Depositor, the Servicer, the Standby Servicer, the
Certificate Insurer and the Certificateholders. The Trustee agrees to cooperate
with the Servicer, any FHA Administrator then serving as such, and any successor
in effecting the termination of the Trustee's responsibilities and rights
hereunder and shall promptly provide such successor all documents and records
reasonably requested by it to enable it to assume the Trustee's functions
hereunder.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 12.06 and shall fail to resign after written request
therefor by the Depositor, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Depositor, with the
consent of the Certificate Insurer, or the Certificate Insurer may remove the
Trustee and shall, within 30 days after such removal, appoint a successor
trustee by written instrument, in duplicate, which instrument shall be delivered
to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Servicer, the Standby Servicer, the
Certificateholders and the Certificate Insurer by the Depositor.
If the Trustee fails to perform in accordance with the terms of this
Agreement, the Majority Certificateholders, with the consent of the Certificate
Insurer, or the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized or by the Certificate
Insurer, as applicable, one complete set of which instruments shall be delivered
to the Depositor, one complete set to the Trustee so removed and one complete
set to the successor Trustee so appointed. A copy of such instrument shall be
delivered to the Servicer, the Standby Servicer and the Certificateholders by
the Depositor.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this SECTION 12.07 shall become
effective upon acceptance of appointment by the successor trustee as provided in
SECTION 12.08.
If the Trustee resigns or is removed pursuant to this Section 12.07, then
such Trustee shall pay, without any reimbursement hereunder, all expenses and
costs incurred in connection with the appointment and acceptance of the
successor trustee pursuant to the applicable provisions of Section 12.08, and
such Trustee shall notify each Rating Agency thereof as provided in Section
13.14.
POOLING AND SERVICING AGREEMENT - Page 98
Section 12.08 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the Depositor, the Servicer, the Standby Servicer,
the Certificate Insurer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as trustee herein. The predecessor trustee
shall transfer and deliver to the successor trustee the Trust Fund, including,
without limitation, all Trustee's Mortgage Loan Files, the related documents and
statements and the FHA Insurance applicable to the Title I Mortgage Loans held
by it hereunder, and the Depositor, the Servicer, the Standby Servicer and the
predecessor trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this Section
12.08 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.06; provided, however, such
successor trustee or its bank holding company parent shall have a long-term debt
rating of at least "A-" by Standard & Poor's and at least "A3" by Moody's.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.08, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register and to the Rating Agencies and the Certificate Insurer. If
the Depositor fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Depositor.
Section 12.09 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or banking association resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation or banking association succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation or banking association shall be
eligible under the provisions of Section 12.06, without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 12.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the purpose
of meeting any legal requirements of any jurisdiction in which any part of the
Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly, with the prior consent of the
Certificate Insurer, shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as co-
trustee or co-trustees, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 12.10, such
powers, duties, obligations, rights and
POOLING AND SERVICING AGREEMENT - Page 99
trusts as the Depositor and the Trustee may consider necessary or desirable. If
the Depositor shall not have joined in such appointment or if the Certificate
Insurer shall not have responded to a request for consent, in either case within
15 days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 12.06 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 12.08.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
A separate trustee or co-trustee may, at any time, constitute the Trustee
its attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. The Trustee shall not be responsible for any action
or inaction of any such separate trustee or co-trustee. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
The Depositor and the Trustee are hereby directed to execute and deliver
the Agreement of Appointment and Acceptance of Separate Trustee in substantially
the form of EXHIBIT P hereto to appoint First Bank (N.A.) (the "Initial New
Jersey Separate Trustee") as separate-trustee with respect to the Mortgage Loans
secured by Mortgaged Properties situated in the State of New Jersey and any
other part of the Trust Fund or property securing the same that at any time may
be situated in the State of New Jersey (the "New Jersey Corpus"). The Initial
New Jersey Separate Trustee shall hold the New Jersey Corpus in trust for the
benefit of the Trustee and the Trust Fund.
POOLING AND SERVICING AGREEMENT - Page 100
Section 12.11 APPOINTMENT OF CUSTODIANS.
The Trustee may, with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Loan Files as
agent for the Trustee, by entering into a Custodial Agreement; provided that
such appointment shall not cause the transfer or loss of the FHA Insurance
applicable to the Title I Mortgage Loans. Subject to this Article XII, the
Trustee agrees to comply with the terms of each Custodial Agreement and to
enforce the terms and provisions thereof against the Custodian for the benefit
of the Certificateholders. Each Custodian shall be a depository institution
subject to supervision by federal or state authority or shall meet the standards
of an eligible Trustee as set forth in Section 12.06 and shall be qualified to
do business in the jurisdiction in which it holds any Trustee's Mortgage Loan
File. Each Custodial Agreement may be amended only as provided in Section
13.02.
Section 12.12 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES.
All rights of action and claims under this Agreement or the Certificates
may be prosecuted and enforced by the Trustee without the possession of any of
the Certificates or the production thereof in any proceeding relating thereto.
Any such proceeding instituted by the Trustee shall be brought in its own name
or in its capacity as Trustee. Any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Certificateholders in respect of which such judgment has been recovered.
Section 12.13 SUITS FOR ENFORCEMENT.
In case an Event of Default or other default by the Servicer hereunder
shall occur and be continuing, the Trustee, in its discretion, but subject to
Section 10.01, may proceed to protect and enforce its rights and the rights of
the Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 ACTS OF CERTIFICATEHOLDERS.
Except as otherwise specifically provided herein, whenever
Certificateholder 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 Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
POOLING AND SERVICING AGREEMENT - Page 101
Section 13.02 AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor, the
Servicer, the Standby Servicer, the Transferor and the Trustee by written
agreement with notice thereof to the Certificateholders, without the consent of
any of the Certificateholders, but with the consent of the Certificate Insurer,
to cure any error or ambiguity, to correct or supplement any provisions hereof
which may be defective or inconsistent with any other provisions hereof or 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 Certificateholders. An amendment described
above shall be deemed not to adversely affect in any material respect the
interests of the Certificateholders 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 Certificates then outstanding.
Notwithstanding the foregoing, the Depositor, the Servicer, the Standby
Servicer, the Transferor and the Trustee may at any time and from time to time
amend this Agreement, without the consent of the Certificateholders, to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of the REMIC as a REMIC under the
Code or to avoid or minimize the risk of the imposition of any tax on the Trust
Fund pursuant to the Code that would be a claim against the Trustee at any time
prior to the final redemption of the Certificates, provided that the Trustee has
obtained an opinion of independent counsel (which opinion also shall be
addressed to the Depositor, the Servicer and the Standby Servicer) to the effect
that such action is necessary or appropriate to maintain such qualification or
to avoid or minimize the risk of the imposition of such a tax.
(b) This Agreement may also be amended from time to time by the Depositor,
the Servicer, the Standby Servicer, the Transferor and the Trustee by written
agreement, with the prior written consent of the Majority Certificateholders and
the Certificate Insurer, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or distributions
which are required to be made on any Certificate, without the consent of the
Holders of 100% of each Class of Certificates affected thereby and the
Certificate Insurer, (ii) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in any manner other than as
described in (i), without the consent of the Holders of 100% of such Class of
Certificates, or (iii) reduce the percentage of any Class, the Holders of which
are required to consent to any such amendment, without the consent of the
Holders of 100% of such Class of Certificates and the Certificate Insurer.
(c) It shall not be necessary for the consent of Holders 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.
Prior to the execution of any amendment to this Agreement, the Trustee
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 Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement. Notwithstanding any contrary provision of this Agreement, the
Trustee shall not
POOLING AND SERVICING AGREEMENT - Page 102
consent to any amendment to this Agreement unless it shall have first received
an opinion of counsel to the effect that such amendment will not adversely
affect the status of the REMIC as a "real estate mortgage investment conduit"
within the meaning of Section 860D of the Code or cause a tax to be imposed on
the REMIC.
Section 13.03 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 Certificateholders'
expense on direction of the Majority Certificateholders or the Certificate
Insurer, but only when accompanied by an opinion of counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders or is necessary for the administration or servicing of the
Mortgage Loans.
Section 13.04 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS 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.
Section 13.06 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) the
Depositor, Remodelers Investment Corporation, 16901 Dallas Parkway, Suite 200,
Dallas Texas 75248, Attention: Mr. Daniel T. Phillips, or such other addresses
as may hereafter be furnished to the Certificateholders and the other parties
hereto in writing by the Depositor, (ii) in the case of the Trustee, ________
______________________________________________________________________________
________________________________________________, or such other address as may
hereafter be furnished to the Certificateholders and the other parties hereto,
(iii) in the case of the Transferor and the Servicer, Remodelers National
Funding Corp., 3101 Bee Caves Road, Suite 200, Austin, Texas 78746, Attention:
Mr. Jim Poythess and Mr. Greg Montgomery, or such other address as may hereafter
be furnished to the Certificateholders and the other parties hereto in writing
by the Servicer or the Transferor, (iv) in the case of the Standby Servicer,
______________________________________________________________________________
______________________________________________, or such other address as may be
POOLING AND SERVICING AGREEMENT - Page 103
furnished to the Certificateholders and the other parties hereto in writing by
the Standby Servicer, (v) in the case of a claim under the Guaranty Policy,
______________________________________________________________________________
________________________________________________, or such other address as may
be furnished to the Certificateholders and the other parties hereto in writing
by such Fiscal Agent or the Certificate Insurer, (vi) in the case of the
Certificate
Insurer,___________________________________________________________________
______________________________________________________________________________
________, and (vii) in the case of the Certificateholders, as set forth in the
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,
except that notices to the Certificateholders shall be effective upon mailing or
personal delivery.
Section 13.07 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 13.08 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 each
of the FHA Claims Administrator and the Servicer shall be rendered as an
independent contractor.
Section 13.09 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 13.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Standby Servicer, the Transferor, the Depositor, the Trustee and
the Certificateholders and their respective successors and permitted assigns.
Section 13.11 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 13.12 PAYING AGENT.
The Trustee hereby accepts appointment as Paying Agent. The Trustee may,
subject to the eligibility requirements for the Trustee set forth in SECTION
12.06, other than SECTION 12.06(v), appoint one or more other Paying Agents or
successor Paying Agents.
POOLING AND SERVICING AGREEMENT - Page 104
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.05, that such Paying Agent will:
(i) allocate all sums received for distribution to the Holders of
Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Holders in the proportion specified by
the Trustee; and
(ii) hold all sums held by it for the distribution of amounts due with
respect to the Certificates in trust for the benefit of the Holders
entitled thereto until such sums shall be paid to such Holders or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee, such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificateholders by mailing notice thereof to
their addresses appearing on the Certificate Register.
Section 13.13 ACTIONS OF CERTIFICATEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders 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 Trustee and, where required, to the Depositor or the
Servicer. 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 Trustee, the Depositor and the Servicer if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
POOLING AND SERVICING AGREEMENT - Page 105
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every Holder of every Certificate
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
Trustee, the Depositor, the Certificate Insurer, the Servicer or the Standby
Servicer in reliance thereon, whether or not notation of such action is made
upon such Certificate.
(d) The Trustee may require additional proof of any matter referred to in
this Section 13.13 as it shall deem necessary.
Section 13.14 REPORTS TO RATING AGENCIES.
(a) The Trustee shall provide to each Rating Agency copies of statements,
reports and notices, to the extent received or prepared by the Trustee
hereunder, as follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Mortgage Loans;
(iii) notice of any termination, replacement, succession, merger
or consolidation of either the Servicer, any Custodian or the Trustee, or
the appointment of any separate trustee or co-trustee or the appointment of
any successor FHA Administrator;
(iv) notice of final payment on each Class A Certificate;
(v) notice 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 6.06; and
(b) With respect to the requirement of the 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
Standard & Poor's, 26 Broadway, 15th Floor, New York, New York 10004-1064,
Attention: Asset-Backed Monitoring Department, (ii) if to Moody's, 99 Church
Street, Corporate Department - 4th Floor, New York, New York 10007, Attention:
Residential Mortgage Monitoring Department, or (iii) if to Duff & Phelps, 55
East Monroe Street, Chicago, Illinois, 60603, Attention: Asset-Backed
Monitoring Department.
Section 13.15 CERTIFICATE INSURER DEEMED OWNER. Unless a Certificate
Insurer Default shall be continuing, the Certificate Insurer shall be deemed to
be the Holder of 100% of the outstanding Insured Certificates for purpose of
exercising the rights, including voting rights, of the Holders of the Insured
Certificates under this Agreement. The rights of the Certificate Insurer to
direct certain actions and consent to certain actions of the Majority
Certificateholders hereunder will terminate at such time as the Class Principal
Balances of all Classes of Class A Certificates have been reduced to zero and
the Certificate Insurer has been reimbursed for all Guaranteed Payments and any
other amounts owed under the Guaranty Policy.
POOLING AND SERVICING AGREEMENT - Page 106
Section 13.16 THIRD PARTY BENEFICIARY. The parties hereto acknowledge
that the Certificate Insurer is an express third party beneficiary hereof
entitled to enforce any rights reserved to it hereunder as if it were actually a
party hereto.
Section 13.17 SUSPENSION OF CERTIFICATE INSURER'S RIGHTS. During the
continuation of a Certificate Insurer Default, rights reserved to the
Certificate Insurer hereunder shall vest instead in the Holders of 50% or more
of the outstanding principal balance of the Insured Certificates.
[Remainder of page intentionally left blank.]
POOLING AND SERVICING AGREEMENT - Page 107
IN WITNESS WHEREOF, the Servicer, the Transferor, the Trustee, the
Depositor and the Standby Servicer have caused their names to be signed to this
POOLING AND SERVICING AGREEMENT by their respective officers thereunto duly
authorized, as of the day and year first above written.
REMODELERS INVESTMENT CORPORATION,
as Depositor
By:
________________________________________
Name:
________________________________________
Title:
________________________________________
______________________________________________,
as Trustee
By:
________________________________________
Name:
________________________________________
Title:
________________________________________
REMODELERS NATIONAL FUNDING CORP., as
Transferor and Servicer
By:
________________________________________
Name:
________________________________________
Title:
________________________________________
_____________________________________________,
as Standby Servicer
By:
________________________________________
Name:
________________________________________
Title:
________________________________________
POOLING AND SERVICING AGREEMENT
THE STATE OF _________ )
)
COUNTY OF ___________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ______________________, known to me to be a person and
officer whose name is subscribed to the foregoing instrument and acknowledged to
me that the same was the act of the said ________________________________, as
_______________ of _______________________, and that he/she executed the same as
the act of such association for the purpose 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 __________
Commission Expires:
__________________________
THE STATE OF _________ )
)
COUNTY OF ___________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ______________________, known to me to be a person and
officer whose name is subscribed to the foregoing instrument and acknowledged to
me that the same was the act of the said ________________________________, as
_______________ of _______________________, and that he/she executed the same as
the act of such association for the purpose 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 __________
Commission Expires:
________________________
POOLING AND SERVICING AGREEMENT
THE STATE OF _________ )
)
COUNTY OF ___________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ______________________, known to me to be a person and
officer whose name is subscribed to the foregoing instrument and acknowledged to
me that the same was the act of the said ________________________________, as
_______________ of _______________________, and that he/she executed the same as
the act of such association for the purpose 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 __________
Commission Expires:
_______________________
THE STATE OF _________ )
)
COUNTY OF ___________ )
BEFORE ME, the undersigned authority, a Notary Public, on this day
personally appeared ______________________, known to me to be a person and
officer whose name is subscribed to the foregoing instrument and acknowledged to
me that the same was the act of the said ________________________________, as
_______________ of _______________________, and that he/she executed the same as
the act of such association for the purpose 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 __________
Commission Expires:
___________________________
POOLING AND SERVICING AGREEMENT