Exhibit 99.1
================================================================================
Equity One ABS, Inc.
Depositor
Equity One, Inc. (DE)
A Seller and the Servicer
Equity One, Incorporated (PA), Equity One, Inc. (MN),
Equity One Consumer Loan Company, Inc. (NH),
and Popular Financial Services, LLC (DE)
Sellers
Federal Home Loan Mortgage Corporation
Guarantor
(with respect to the Guaranteed Certificates)
and
JPMorgan Chase Bank
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of September 30, 2002
----------------------------------
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2002-5
================================================================================
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT............................................................1
ARTICLE I DEFINITIONS...........................................................4
60+ DAY DELINQUENT LOAN......................................................4
ADJUSTED MORTGAGE RATE.......................................................4
ADJUSTED NET MORTGAGE RATE...................................................4
ADVANCE......................................................................4
AGREEMENT....................................................................4
AMOUNT HELD FOR FUTURE DISTRIBUTION..........................................4
APPLIED REALIZED LOSS AMOUNT.................................................4
AVAILABLE FUNDS..............................................................4
BALLOON LOANS................................................................5
BANKRUPTCY CODE..............................................................5
BBA..........................................................................5
BENEFICIAL OWNER.............................................................5
BOOK-ENTRY CERTIFICATES......................................................5
BUSINESS DAY.................................................................5
CERTIFICATES.................................................................5
CERTIFICATE ACCOUNT..........................................................5
CERTIFICATE BALANCE..........................................................5
CERTIFICATEHOLDER OR HOLDER..................................................5
CERTIFICATE REGISTER.........................................................6
CERTIFICATE REGISTRAR........................................................6
CLASS........................................................................6
CLASS AF CERTIFICATES........................................................6
CLASS AF-1 CERTIFICATE.......................................................6
CLASS AF-2 CERTIFICATE.......................................................6
CLASS AF-3 CERTIFICATE.......................................................6
CLASS AF-4 CERTIFICATE.......................................................6
CLASS AV-1 CERTIFICATES......................................................6
CLASS B APPLIED REALIZED LOSS AMOUNT.........................................6
CLASS B CERTIFICATE..........................................................6
CLASS B PRINCIPAL DISTRIBUTION AMOUNT........................................7
CLASS B REALIZED LOSS AMORTIZATION AMOUNT....................................7
CLASS CERTIFICATE BALANCE....................................................7
CLASS INTEREST SHORTFALL.....................................................7
CLASS M-1 APPLIED REALIZED LOSS AMOUNT.......................................7
CLASS M-1 CERTIFICATE........................................................7
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT......................................7
CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT..................................8
CLASS M-2 APPLIED REALIZED LOSS AMOUNT.......................................8
CLASS M-2 CERTIFICATE........................................................8
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT......................................8
CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT..................................8
CLASS R CERTIFICATES.........................................................8
CLASS UNPAID INTEREST AMOUNTS................................................8
CLASS X CERTIFICATE..........................................................8
CLOSING DATE.................................................................8
i
CLOSING PLACE................................................................9
CODE.........................................................................9
COLLATERAL...................................................................9
COLLATERAL VALUE.............................................................9
COMBINED LOAN-TO-VALUE RATIO.................................................9
CORPORATE TRUST OFFICE.......................................................9
CORRESPONDING CLASS..........................................................9
COUNTERPARTY.................................................................9
CUSTODIAL AGREEMENT..........................................................9
CUSTODIAN....................................................................9
CUT-OFF DATE.................................................................9
CUT-OFF DATE GROUP I PRINCIPAL BALANCE.......................................9
CUT-OFF DATE GROUP II PRINCIPAL BALANCE.....................................10
CUT-OFF DATE POOL PRINCIPAL BALANCE.........................................10
CUT-OFF DATE PRINCIPAL BALANCE..............................................10
DEBT SERVICE REDUCTION......................................................10
DEFECTIVE LOAN..............................................................10
DEFICIENCY AMOUNT...........................................................10
DEFICIENT VALUATION.........................................................10
DEFINITIVE CERTIFICATES.....................................................10
DELETED LOAN................................................................10
DENOMINATION................................................................10
DEPOSITOR...................................................................10
DEPOSITORY..................................................................10
DEPOSITORY PARTICIPANT......................................................11
DETERMINATION DATE..........................................................11
DISTRIBUTION ACCOUNT........................................................11
DISTRIBUTION ACCOUNT DEPOSIT DATE...........................................11
DISTRIBUTION DATE...........................................................11
DUE DATE....................................................................11
DUE PERIOD..................................................................11
EARLY PAYMENT DEFAULT.......................................................11
ELIGIBLE ACCOUNT............................................................11
EQUITY ONE-DELAWARE.........................................................12
EQUITY ONE-MINNESOTA........................................................12
EQUITY ONE-NEW HAMPSHIRE....................................................12
EQUITY ONE-PENNSYLVANIA.....................................................12
ERISA.......................................................................12
ERISA QUALIFYING UNDERWRITING...............................................12
ERISA-RESTRICTED CERTIFICATE................................................12
ESCROW ACCOUNT..............................................................12
EVENT OF DEFAULT............................................................12
EXCESS PROCEEDS.............................................................12
EXPENSE RATE................................................................13
EXTRA PRINCIPAL DISTRIBUTION AMOUNT.........................................13
FDIC........................................................................13
FIRREA......................................................................13
FITCH.......................................................................13
FNMA........................................................................13
FREDDIE MAC.................................................................13
GROUP.......................................................................13
ii
GROUP I LOANS...............................................................13
GROUP I PRINCIPAL PERCENTAGE................................................13
GROUP II LOANS..............................................................13
GROUP II PRINCIPAL PERCENTAGE...............................................13
GROUP PRINCIPAL BALANCE.....................................................14
GUARANTEE...................................................................14
GUARANTEED CERTIFICATES.....................................................14
GUARANTEED INTEREST DISTRIBUTION AMOUNT.....................................14
GUARANTEED PRINCIPAL DISTRIBUTION AMOUNT....................................14
GUARANTOR...................................................................14
GUARANTOR DEFAULT...........................................................14
GUARANTOR PAYMENT...........................................................14
GUARANTOR REIMBURSEMENTS....................................................14
GUARANTOR'S MONTHLY FEE.....................................................15
INDIRECT PARTICIPANT........................................................15
INFORMATION CIRCULAR........................................................15
INITIAL CERTIFICATE ACCOUNT DEPOSIT.........................................15
INSURANCE POLICY............................................................15
INSURANCE PROCEEDS..........................................................15
INSURED EXPENSES............................................................15
INTEREST ACCRUAL PERIOD.....................................................15
INTEREST DISTRIBUTION AMOUNT................................................15
INTEREST REMITTANCE AMOUNT..................................................16
INVESTMENT LETTER...........................................................16
LATEST POSSIBLE MATURITY DATE...............................................16
LAST SCHEDULED DISTRIBUTION DATE............................................16
LIBOR.......................................................................16
LIBOR DETERMINATION DATE....................................................16
LIQUIDATED LOAN.............................................................16
LIQUIDATION PROCEEDS........................................................16
LOANS.......................................................................17
LOAN DATA REMITTANCE DATE...................................................17
LOAN DATA REMITTANCE REPORT.................................................17
LOAN SCHEDULE...............................................................17
MAJORITY IN INTEREST........................................................18
MERS (R)....................................................................18
MERS (R) SYSTEM.............................................................18
MOM LOAN....................................................................19
MIN.........................................................................19
MONTHLY EXCESS CASHFLOW AMOUNT..............................................19
MONTHLY EXCESS INTEREST AMOUNT..............................................19
MONTHLY PAYMENT.............................................................19
MONTHLY STATEMENT...........................................................19
MOODY'S.....................................................................19
MORTGAGE....................................................................19
MORTGAGED PROPERTY..........................................................19
MORTGAGE FILE...............................................................19
MORTGAGE LOAN SAMPLE........................................................19
MORTGAGE NOTE...............................................................20
MORTGAGE RATE...............................................................20
MORTGAGOR...................................................................20
iii
NET PREPAYMENT INTEREST SHORTFALLS..........................................20
NET WAC CAP.................................................................20
NET WAC CAP ACCOUNT.........................................................20
NET WAC CAP CARRYOVER.......................................................20
NET WAC CAP DEPOSIT AMOUNT..................................................21
NET WAC RATE................................................................21
NONRECOVERABLE ADVANCE......................................................21
NOTICE OF FINAL DISTRIBUTION................................................21
OFFERED CERTIFICATES........................................................21
OFFICER'S CERTIFICATE.......................................................21
OPINION OF COUNSEL..........................................................21
OPTIONAL TERMINATION DATE...................................................22
OPTIONAL TERMINATION........................................................22
ORIGINAL LOAN...............................................................22
OTS.........................................................................22
OUTSTANDING.................................................................22
OUTSTANDING LOAN............................................................22
OVERCOLLATERALIZATION AMOUNT................................................22
OVERCOLLATERALIZATION DEFICIENCY............................................22
OVERCOLLATERALIZATION RELEASE AMOUNT........................................22
OWNERSHIP INTEREST..........................................................22
PASS-THROUGH RATE...........................................................23
PAYING AGENT................................................................23
PERCENTAGE INTEREST.........................................................23
PERMITTED INVESTMENTS.......................................................23
PERMITTED TRANSFEREE........................................................24
PERSON......................................................................24
PLAN........................................................................24
POOL PRINCIPAL BALANCE......................................................24
POPULAR FINANCIAL...........................................................24
PREPAYMENT INTEREST EXCESS..................................................24
PREPAYMENT INTEREST SHORTFALL...............................................25
PREPAYMENT PERIOD...........................................................25
PRIMARY MORTGAGE INSURANCE POLICY...........................................25
PRIME RATE..................................................................25
PRINCIPAL DISTRIBUTION AMOUNT...............................................25
PRINCIPAL PREPAYMENT........................................................25
PRINCIPAL PREPAYMENT IN FULL................................................25
PRINCIPAL REMITTANCE AMOUNT.................................................25
PURCHASE PRICE..............................................................25
PTCE 95-60..................................................................26
PURCHASE AGREEMENT..........................................................26
RATING AGENCY...............................................................26
REALIZED LOSS AMOUNT........................................................26
REALIZED LOSSES.............................................................26
REALIZED LOSS AMORTIZATION AMOUNT...........................................26
RECORD DATE.................................................................26
REFINANCE LOAN..............................................................26
REGULAR CERTIFICATES........................................................27
RELIEF ACT..................................................................27
RELIEF ACT REDUCTIONS.......................................................27
iv
REMIC.......................................................................27
REMIC 1.....................................................................27
REMIC 2.....................................................................27
REMIC 1 ACCRETION DIRECTED CLASSES..........................................27
REMIC 1 ACCRUAL CLASS.......................................................27
REMIC CHANGE OF LAW.........................................................27
REMIC PROVISIONS............................................................27
REO PROPERTY................................................................27
REQUEST FOR RELEASE.........................................................27
REQUIRED INSURANCE POLICY...................................................27
RESERVE FUND................................................................28
RESPONSIBLE OFFICER.........................................................28
RULE 144A LETTER............................................................28
SCHEDULED PAYMENT...........................................................28
SECOND LIEN LOAN............................................................28
SECURITIES ACT..............................................................28
SELLERS.....................................................................28
SENIOR ENHANCEMENT PERCENTAGE...............................................28
SENIOR PRINCIPAL DISTRIBUTION AMOUNT........................................28
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE.....................................28
SERVICER....................................................................28
SERVICER ADVANCE DATE.......................................................28
SERVICING ADVANCES..........................................................29
SERVICING AMOUNT............................................................29
SERVICING AUDIT.............................................................29
SERVICING FEE...............................................................29
SERVICING FEE RATE..........................................................29
SERVICING OFFICER...........................................................29
SERVICING PRACTICE..........................................................29
S&P.........................................................................29
STARTUP DAY.................................................................29
STATED PRINCIPAL BALANCE....................................................29
STEPDOWN DATE...............................................................30
SUBORDINATE CERTIFICATES....................................................30
SUBSERVICER.................................................................30
SUBSTITUTE LOAN.............................................................30
SUBSTITUTION ADJUSTMENT AMOUNT..............................................30
TARGETED OVERCOLLATERALIZATION AMOUNT.......................................30
TAX MATTERS PERSON..........................................................30
TAX MATTERS PERSON CERTIFICATE..............................................30
TERMINATION PRICE...........................................................31
TRANSFER....................................................................31
TRANSFER AFFIDAVIT..........................................................31
TRANSFEROR CERTIFICATE......................................................31
TRIGGER EVENT...............................................................31
TRUST FUND..................................................................31
TRUSTEE.....................................................................31
TRUSTEE FEE.................................................................31
TRUSTEE FEE RATE............................................................31
TRUSTEE PERMITTED WITHDRAWAL AMOUNT.........................................31
TRUSTEE REMITTANCE REPORT...................................................32
v
TRUSTEE REPORTING DATE......................................................32
UNPAID REALIZED LOSS AMOUNT.................................................32
UNDERWRITER EXEMPTION.......................................................32
VOTING RIGHTS...............................................................32
YIELD MAINTENANCE AGREEMENT.................................................32
YIELD MAINTENANCE STATED TERMINATION........................................32
ARTICLE II CONVEYANCE OF LOANS; REPRESENTATIONS AND WARRANTIES..................32
SECTION 2.01. CONVEYANCE OF LOANS..........................................32
SECTION 2.02. ACCEPTANCE BY TRUSTEE OF THE LOANS...........................35
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLERS AND THE SERVICER................................................37
SECTION 2.03A. ADDITIONAL OBLIGATIONS OF EQUITY ONE-DELAWARE...............39
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
AS TO THE LOANS.........................................................40
SECTION 2.05. DELIVERY OF OPINION OF COUNSEL IN CONNECTION
WITH SUBSTITUTIONS......................................................40
SECTION 2.06. EXECUTION AND DELIVERY OF CERTIFICATES.......................41
SECTION 2.07. REMIC MATTERS................................................41
SECTION 2.08. COVENANTS OF THE SERVICER....................................41
ARTICLE III ADMINISTRATION AND SERVICING OF LOANS...............................42
SECTION 3.01. SERVICER TO SERVICE LOANS....................................42
SECTION 3.02. SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS
OF SERVICERS............................................................43
SECTION 3.03. RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN
RESPECT OF THE SERVICER.................................................43
SECTION 3.04. TRUSTEE TO ACT AS SERVICER...................................43
SECTION 3.05. COLLECTION OF LOAN PAYMENTS; CERTIFICATE ACCOUNT;
DISTRIBUTION ACCOUNT....................................................44
SECTION 3.06. PAYMENT OF TAXES, ASSESSMENTS, HAZARD INSURANCE
PREMIUMS AND SIMILAR ITEMS; ESCROW ACCOUNTS... .........................46
SECTION 3.07. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING THE LOANS.....................................................46
SECTION 3.08. PERMITTED WITHDRAWALS FROM THE CERTIFICATE
ACCOUNT AND DISTRIBUTION ACCOUNT........................................47
SECTION 3.09. MAINTENANCE OF HAZARD INSURANCE; MAINTENANCE OF
PRIMARY INSURANCE POLICIES..............................................49
SECTION 3.10. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS..............................................................50
SECTION 3.11. REALIZATION UPON DEFAULTED LOANS; REPURCHASE
OF CERTAIN LOANS........................................................51
SECTION 3.12. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF
SERVICER TO BE HELD FOR THE TRUSTEE.....................................53
SECTION 3.13. SERVICING COMPENSATION.......................................53
SECTION 3.14. ACCESS TO CERTAIN DOCUMENTATION..............................53
SECTION 3.15. ANNUAL STATEMENT AS TO COMPLIANCE............................54
SECTION 3.16. ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
STATEMENT; FINANCIAL STATEMENTS.........................................54
SECTION 3.17. ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS...............54
SECTION 3.18. SOLICITATION.................................................54
SECTION 3.19. DELINQUENT LOANS.............................................55
ARTICLE IIIA GUARANTEE; RESERVE FUND; AND NET WAC CAP ACCOUNT..................55
SECTION 3A.01. GUARANTEE...................................................55
SECTION 3A.02 RESERVE FUND AND YIELD MAINTENANCE AGREEMENT.................55
SECTION 3A.03. NET WAC CAP ACCOUNT.........................................56
vi
ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER..........................57
SECTION 4.01. ADVANCES.....................................................57
SECTION 4.02. PRIORITIES OF DISTRIBUTION AND ALLOCATION....................58
SECTION 4.03. MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.....................62
SECTION 4.04. REPORTING.....................................................65
SECTION 4.05. LOAN DATA REMITTANCE REPORT...................................65
SECTION 4.06. TRUSTEE REMITTANCE REPORT....................................65
ARTICLE V THE CERTIFICATES.....................................................66
SECTION 5.01. THE CERTIFICATES.............................................66
SECTION 5.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER
AND EXCHANGE OF CERTIFICATES............................................66
SECTION 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES............71
SECTION 5.04. PERSONS DEEMED OWNERS........................................71
SECTION 5.05. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES
AND ADDRESSES...........................................................71
SECTION 5.06. MAINTENANCE OF OFFICE OR AGENCY..............................71
ARTICLE VI THE DEPOSITOR AND THE SERVICER......................................72
SECTION 6.01. RESPECTIVE LIABILITIES OF THE DEPOSITOR AND
THE SERVICER............................................................72
SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR
THE SERVICER............................................................72
SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE
SELLERS, THE SERVICER AND OTHERS........................................72
SECTION 6.04. LIMITATION ON RESIGNATION OF SERVICER........................73
SECTION 6.05. INDEMNIFICATION..............................................73
SECTION 6.06 LIABILITY OF THE SERVICER.....................................73
ARTICLE VII DEFAULT............................................................74
SECTION 7.01. EVENTS OF DEFAULT............................................74
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.....................76
SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS...........................76
SECTION 7.04. SURVIVABILITY OF SERVICER LIABILITIES........................77
ARTICLE VIII CONCERNING THE TRUSTEE...........................................77
SECTION 8.01. DUTIES OF TRUSTEE............................................77
SECTION 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.........................78
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOANS.................79
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES.................................80
SECTION 8.05. TRUSTEE'S FEES AND EXPENSES..................................80
SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.........................80
SECTION 8.07. RESIGNATION AND REMOVAL OF TRUSTEE...........................81
SECTION 8.08. SUCCESSOR TRUSTEE............................................82
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE...........................82
SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE................82
SECTION 8.11. TAX MATTERS..................................................83
SECTION 8.12. PERIODIC FILINGS.............................................85
SECTION 8.13. APPOINTMENT OF CUSTODIANS....................................85
SECTION 8.14. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF CERTIFICATES.........................................................85
SECTION 8.15. SUITS FOR ENFORCEMENT........................................86
ARTICLE IX TERMINATION.........................................................86
SECTION 9.01. TERMINATION UPON LIQUIDATION OR PURCHASE OF ALL LOANS........86
vii
SECTION 9.02. FINAL DISTRIBUTION ON THE CERTIFICATES.......................87
SECTION 9.03. ADDITIONAL TERMINATION REQUIREMENTS..........................88
ARTICLE X MISCELLANEOUS PROVISIONS.............................................88
SECTION 10.01. AMENDMENT...................................................88
SECTION 10.02. RECORDATION OF AGREEMENT; COUNTERPARTS......................89
SECTION 10.03. GOVERNING LAW...............................................90
SECTION 10.04. INTENTION OF PARTIES........................................90
SECTION 10.05. NOTICES.....................................................91
SECTION 10.06. SEVERABILITY OF PROVISIONS..................................93
SECTION 10.07. ASSIGNMENT..................................................93
SECTION 10.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS..................93
SECTION 10.09. INSPECTION AND AUDIT RIGHTS.................................94
SECTION 10.10. CERTIFICATES NONASSESSABLE AND FULLY PAID...................94
SECTION 10.11. THE CLOSING.................................................94
SECTION 10.12. INTERPRETATION..............................................94
SECTION 10.13. RIGHTS OF GUARANTOR.........................................94
SECTION 10.14. NO PARTNERSHIP..............................................95
SECTION 10.15. PROTECTION OF ASSETS.........................................95
SECTION 10.16. EXECUTION OF YIELD MAINTENANCE AGREEMENT.....................96
SECTION 10.17. BENEFITS OF AGREEMENT........................................96
SECTION 10.18. RATINGS......................................................96
SCHEDULE I................................................................I-1
SCHEDULE IIA............................................................IIA-1
SCHEDULE IIB............................................................IIB-1
SCHEDULE IIC............................................................IIC-1
SCHEDULE IID............................................................IID-1
SCHEDULE IIE............................................................IIE-1
SCHEDULE IIX............................................................IIX-1
SCHEDULE IIIA..........................................................IIIA-1
SCHEDULE IIIB..........................................................IIIB-1
SCHEDULE IIIC..........................................................IIIC-1
SCHEDULE IIID.........................................................III-D-1
SCHEDULE IIIE.........................................................III-E-1
SCHEDULE IV..............................................................IV-1
SCHEDULE V................................................................V-1
viii
SCHEDULE VI..............................................................VI-1
SCHEDULE VII............................................................VII-1
EXHIBIT A-1.............................................................A-1-1
EXHIBIT A-2.............................................................A-2-1
EXHIBIT A-3 ............................................................A-3-1
EXHIBIT A-4 ............................................................A-4-1
EXHIBIT B-1.............................................................B-1-1
EXHIBIT B-2 ............................................................B-2-1
EXHIBIT C.................................................................C-1
EXHIBIT D.................................................................D-1
EXHIBIT E.................................................................E-1
EXHIBIT F.................................................................F-1
EXHIBIT G.................................................................G-1
EXHIBIT H.................................................................H-1
EXHIBIT I.................................................................I-1
EXHIBIT J.................................................................J-1
EXHIBIT K.................................................................K-1
EXHIBIT L.................................................................L-1
EXHIBIT M.................................................................M-1
EXHIBIT N.................................................................N-1
ix
THIS POOLING AND SERVICING AGREEMENT, dated as of September 30, 2002, by and
among Equity One ABS, Inc., a Delaware corporation, as depositor (the
"Depositor"), Equity One, Inc., a Delaware corporation, as a seller (in such
capacity, "Equity One-Delaware") and as servicer (in such capacity, the
"Servicer"), Equity One, Incorporated, a Pennsylvania corporation ("Equity
One-Pennsylvania"), Equity One, Inc., a Minnesota corporation ("Equity
One-Minnesota"), Equity One Consumer Loan Company, Inc., a New Hampshire
corporation ("Equity One-New Hampshire"), Popular Financial Services, LLC, a
Delaware limited liability company ("Popular Financial" and, together with
Equity One-Delaware, Equity One-Pennsylvania, Equity One-Minnesota and Equity
One-New Hampshire, the "Sellers"), Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States, as guarantor of the Guaranteed
Certificates (the "Guarantor") and JPMorgan Chase Bank, a New York banking
corporation organized under the laws of the State of New York, as trustee (the
"Trustee").
WITNESSETH THAT
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
PRELIMINARY STATEMENT
The Depositor is the owner of the Trust Fund that is hereby conveyed to the
Trustee in return for the Certificates. The Trust Fund (exclusive of the Net WAC
Cap Account, the Reserve Fund and the Yield Maintenance Agreement) for federal
income tax purposes will consist of two REMICs ("REMIC 1" and "REMIC 2"). The
Certificates will represent the entire beneficial ownership interest in the
Trust Fund. The assets of the Trust Fund (exclusive of the Net WAC Cap Account,
the Reserve Fund and the Yield Maintenance Agreement) will constitute the assets
of REMIC 1 and REMIC 1 will issue ten uncertificated regular interests that will
be held as the sole assets of REMIC 2. The Class AF-1, Class AF-2, Class AF-3,
Class AF-4, Class AV-1 Certificates (with respect to the Class AF-1 and Class
AV-1 Certificates, exclusive of any associated rights to receive payments from
the Net WAC Cap Account or the Reserve Fund), the Class M-1 and Class M-2
Certificates, the Class B Certificates and the Class X Certificates will
represent the "regular interests" in REMIC 2. The Class M-1, Class M-2 and Class
B Certificates are subordinate to and provide credit enhancement for the Class
AF-1, Class AF-2, Class AF-3, Class AF-4 and Class AV-1 Certificates. The Class
M-2 and Class B Certificates are subordinate to and provide credit enhancement
for the Class M-1 Certificates. The Class B Certificates are subordinate to and
provide credit enhancement for the Class M-2 Certificates. The Class R-1 and
Class R-2 Interests will be the residual interests in each of REMIC 1 and REMIC
2. All interests created hereby will be retired on or before the Latest Possible
Maturity Date.
REMIC 1
REMIC 1 will be evidenced by the Class 1-Accrual Interest (the "REMIC 1
Accrual Class"), and the Class 1-AF1, Class 1-AF2, Class 1-AF3, Class 1-AF4,
Class 1-AV1, Class 1-M1, Class 1-M2 and Class 1-B Interests (collectively, the
"REMIC 1 Accretion Directed Classes"), which will be uncertificated and
non-transferable and are hereby designated as the "regular interests" in REMIC 1
for federal income tax purposes and will have the following designations,
initial principal balances, pass-through rates, and corresponding classes of
REMIC 2 certificates ("Corresponding Classes"):
1
============================== ============================================= ==================== ==================
Corresponding
REMIC 1 Interests Initial Balance Pass-Through Rate Class
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-AF1 (1/2 Corresponding Class' initial Class Net WAC Rate AF-1
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-AF2 (1/2 Corresponding Class' initial Class Net WAC Rate AF-2
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-AF3 (1/2 Corresponding Class' initial Class Net WAC Rate AF-3
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-AF4 (1/2 Corresponding Class' initial Class Net WAC Rate AF-4
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-AV1 (1/2 Corresponding Class' initial Class Net WAC Rate AV-1
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-M1 (1/2 Corresponding Class' initial Class Net WAC Rate M-1
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-M2 (1/2 Corresponding Class' initial Class Net WAC Rate M-2
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
Class 1-B (1/2 Corresponding Class' initial Class Net WAC Rate B
Certificate Balance)
- ------------------------------ --------------------------------------------- -------------------- ------------------
REMIC 1 Accrual Class (1/2 Cut-off Date Pool Principal Balance Net WAC Rate N/A
plus1/2Closing Date
Overcollateralization Amount)
============================== ============================================= ==================== ==================
On each Distribution Date, 50% of any increase in the Overcollateralization
Amount will be payable as a reduction of the principal balances of the REMIC 1
Accretion Directed Classes (to each REMIC 1 Accretion Directed Class in an
amount equal to one half (1/2) of the amount paid in reduction of its
Corresponding Class). All payments of scheduled principal and prepayments of
principal generated by the Loans shall be allocated 50% to the REMIC 1 Accrual
Class, and 50% to the REMIC 1 Accretion Directed Classes (to each REMIC 1
Accretion Directed Class in an amount equal to one half (1/2) of the amount paid
in reduction of its Corresponding Class), until paid in full. Notwithstanding
the above, principal payments that are attributable to an Overcollateralization
Release Amount shall be allocated to the REMIC 1 Accrual Class (until paid in
full). Realized Losses shall be applied such that after all distributions have
been made on each Distribution Date the principal balances of (a) each of the
REMIC 1 Accretion Directed Classes is equal to 50% of the Class Certificate
Balance of its respective Corresponding Class, and (b) the REMIC 1 Accrual Class
is equal to 50% of the aggregate principal balance of the Loans plus 50% of the
Overcollateralization Amount.
REMIC 2
The following table sets forth characteristics of the Certificates, each of
which, except for the Class R Certificates, is hereby designated a "regular
interest" in REMIC 2, together with the minimum denominations and integral
multiples in excess thereof in which such Classes shall be issuable (except that
one Certificate of each Class of Certificates may be issued in a different
amount and, in addition, one Class R Certificate representing the Tax Matters
Person Certificate may be issued in a different amount):
2
=================== ======================= ============================= ================= ========================
Initial Class Pass-Through Rate(1) Minimum Integral Multiples in
Certificate Balance Denomination Excess of Minimum
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class AF-1 $171,000,000 LIBOR + 0.130% $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class AF-2 $50,000,000 3.632% $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class AF-3 $22,000,000 4.494% $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class AF-4 $17,658,000 5.184%(2) $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class AV-1 $166,230,000 LIBOR + 0.170%(3)(4) $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class M-1 $35,787,000 5.303%(5) $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class M-2 $29,396,000 5.837%(6) $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class B $19,171,000 6.030%(7) $25,000 $1,000
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class X (8) (9) N/A N/A
- ------------------- ----------------------- ----------------------------- ----------------- ------------------------
Class R $0 N/A $25,000 N/A
=================== ======================= ============================= ================= ========================
(1) As to any Distribution Date, this rate shall equal the lesser of (a) the
rate per annum set forth above and (b) the applicable Net WAC Cap.
(2) After the Optional Termination Date, this rate will increase to 5.684%.
(3) The Trustee will treat any entitlement to interest in respect of the Class
AV-1 Certificates in excess of the amount resulting under clause (i) of the
definition of Net WAC Cap in respect of the Class AV-1 Certificates as paid
pursuant to a limited recourse cap contract (in the same manner as it
reports the treatment of the Net WAC Cap Carryover in respect of the Class
AV-1 Certificates for federal income tax purposes) between the Holders of
the Class AV-1 Certificates and the Holders of the Class X Certificates, as
described in the third paragraph of Section 2.07 herein.
(4) After the Optional Termination Date, this rate will increase to
LIBOR+0.340%.
(5) After the Optional Termination Date, this rate will increase to 5.803%.
(6) After the Optional Termination Date, this rate will increase to 6.337%.
(7) After the Optional Termination Date, this rate will increase to 6.530%.
(8) On each Distribution Date, the Class X Certificates will have a notional
balance equal to the Pool Principal Balance.
(9) As to any Distribution Date, the Pass-Through Rate for the Class X
Certificates shall equal the excess of: (a) the Net WAC Rate over (b) the
product of: (i) two and (ii) the weighted average Pass-Through Rate of the
REMIC 1 regular interests, where the REMIC 1 Accrual Class is subject to a
cap equal to zero and each REMIC 1 Accretion Directed Class is subject to a
cap equal to the Pass-Through Rate on its Corresponding Class.
All fixed interest rates set forth in this Agreement are calculated based
on a 360-day year consisting of twelve 30-day months (30/360). All adjustable
interest rates set forth in this Agreement are calculated based on a 360-day
year and the actual number of days elapsed in the related Interest Accrual
Period.
3
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
60+ Day Delinquent Loan
-----------------------
Each Loan with respect to which any portion of a Scheduled Payment is,
as of the last day of the prior Due Period, 60 days or more contractually past
due (assuming 30 day months), each Loan in foreclosure, all REO Property and
each Loan for which the Mortgagor has filed for bankruptcy after the Closing
Date.
Adjusted Mortgage Rate
----------------------
As to each Loan, and at any time, the per annum rate equal to the
Mortgage Rate less the Servicing Fee Rate.
Adjusted Net Mortgage Rate
--------------------------
As to each Loan, and at any time, the per annum rate equal to the
Mortgage Rate less the Expense Rate.
Advance
-------
The payment required to be made by the Servicer with respect to any
Distribution Date pursuant to Section 4.01, the amount of any such payment being
equal to the aggregate of payments of principal and interest (net of the
Servicing Fee) on the Loans that were due on such Loans' respective Due Dates in
the related Due Period and not received as of the close of business on the
Determination Date in the month of such Distribution Date, other than the
aggregate amount of any such delinquent payments that the Servicer, in its good
faith judgment, has determined would not be recoverable out of Insurance
Proceeds, Liquidation Proceeds or otherwise from the related Loans.
Agreement
---------
This Pooling and Servicing Agreement, together with all of the
exhibits and schedules hereto, and all amendments or supplements of any of the
foregoing.
Amount Held for Future Distribution
-----------------------------------
As to any Distribution Date and the Offered Certificates, the
aggregate amount held in the Certificate Account at the close of business on the
related Determination Date on account of (a) Principal Prepayments received
after the Prepayment Period corresponding to such Distribution Date and
Liquidation Proceeds received in the month of such Distribution Date and (b) all
Scheduled Payments due after the Loans' respective Due Dates in the related Due
Period.
Applied Realized Loss Amount
----------------------------
With respect to (a) the Class M-1 Certificates, the Class M-1 Applied
Realized Loss Amount, (b) the Class M-2 Certificates, the Class M-2 Applied
Realized Loss Amount and (c) the Class B Certificates, the Class B Applied
Realized Loss Amount.
Available Funds
---------------
As to any Distribution Date, the sum of (a) the aggregate amount held
in the Certificate Account at the close of business on the related Determination
Date net of the Amount Held for Future Distribution and net of amounts permitted
to be withdrawn from the Certificate Account pursuant to clauses (i)-(viii),
inclusive, of Section 3.08(a) and amounts permitted to be withdrawn from the
4
Distribution Account pursuant to clauses (i) and (ii) of Section 3.08(b), (b)
the amount of the related Advance, if any, and (c) in connection with Defective
Loans, as applicable, the aggregate of the Purchase Prices and Substitution
Adjustment Amounts deposited in the Distribution Account on the related
Distribution Account Deposit Date, and (d) with respect to the initial
Distribution Date, the Initial Certificate Account Deposit.
Balloon Loans
-------------
Loans with balloon payments.
Bankruptcy Code
---------------
The United States Bankruptcy Reform Act of 1978, as amended, and
related rules promulgated thereunder.
BBA
---
The British Bankers' Association.
Beneficial Owner
----------------
With respect to any Book-Entry Certificate, the Person who is the
beneficial owner of such Book-Entry Certificate.
Book-Entry Certificates
-----------------------
The Subordinate Certificates.
Business Day
------------
Any day other than (a) a Saturday or a Sunday or (b) a day on which
the Guarantor or banking institutions in New York City, or in the city where the
chief executive office of the Servicer is located, are authorized or obligated
by law or executive order to be closed.
Certificates
------------
The Offered Certificates, the Class R Certificates and the Class X
Certificates.
Certificate Account
-------------------
The separate Eligible Account created and maintained by the Servicer
pursuant to Section 3.05 with a depository institution in the name of the
Servicer for the benefit of the Trustee on behalf of Certificateholders and
designated "Certificate Account, Equity One, Inc., as trustee for the registered
holders of Equity One ABS, Inc., Mortgage Pass-Through Certificates Series
2002-5."
Certificate Balance
-------------------
With respect to any Offered Certificate at any time, the maximum
dollar amount of principal to which the Holder thereof is then entitled
hereunder, such amount being equal to the Denomination thereof reduced by the
sum of (a) all amounts previously distributed to that Offered Certificate as
payments of principal, and (b) with respect to any Subordinate Certificate, that
Subordinate Certificate's pro rata share of the cumulative amount of Applied
Realized Loss Amounts with respect to such Class for all prior Distribution
Dates.
Certificateholder or Holder
---------------------------
The person in whose name a Certificate is registered in the
Certificate Register, except that, solely for the purpose of giving any consent
pursuant to this Agreement, any Certificate registered in the name of the
Depositor or any affiliate of the Depositor shall be deemed not to be
Outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage Interests
necessary to effect such consent has been obtained; provided, however,
5
that if any such Person (including the Depositor) owns 100% of the Percentage
Interests evidenced by a Class of Certificates, such Certificates shall be
deemed to be Outstanding for purposes of any provision hereof that requires the
consent of the Holders of Certificates of a particular Class as a condition to
the taking of any action hereunder. The Guarantor and Trustee are entitled to
rely conclusively on a certification of the Depositor or any affiliate of the
Depositor in determining which Certificates are registered in the name of an
affiliate of the Depositor.
Certificate Register
--------------------
The register maintained pursuant to Section 5.02.
Certificate Registrar
---------------------
JPMorgan Chase Bank and its successors and, if a successor certificate
registrar is appointed hereunder, such successor.
Class
-----
All Certificates bearing the same class designation as set forth in
the Preliminary Statement.
Class AF Certificates
---------------------
The Class AF-1, Class AF-2, Class AF-3 and Class AF-4 Certificates.
Class AF-1 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class AF-1 Certificate.
Class AF-2 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class AF-2 Certificate.
Class AF-3 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class AF-3 Certificate.
Class AF-4 Certificate
----------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-1 and designated as a
Class AF-4 Certificate.
Class AV-1 Certificates
-----------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-2 and designated as a
Class AV-1 Certificate.
Class B Applied Realized Loss Amount
------------------------------------
As to the Class B Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of the Principal Distribution Amount on that Distribution Date,
but prior to the application of the Class B Applied Realized Loss Amount, if
any, on that Distribution Date) and (b) the Realized Loss Amount as of that
Distribution Date.
Class B Certificate
-------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-4 and designated as a
Class B Certificate.
6
Class B Principal Distribution Amount
-------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Guaranteed Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date), (iii) the Class Certificate
Balance of the Class M-2 Certificates (after taking into account the payment of
the Class M-2 Principal Distribution Amount on that Distribution Date), and (iv)
the Class Certificate Balance of the Class B Certificates immediately prior to
that Distribution Date over (b) the lesser of (i) the product of (A) 91.00% and
(B) the Pool Principal Balance as of the last day of the related Due Period and
(ii) the Pool Principal Balance as of the last day of the related Due Period
minus the product of (A) 0.50% and (B) the Cut-off Date Pool Principal Balance.
Class B Realized Loss Amortization Amount
-----------------------------------------
As to the Class B Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class B Certificates as of
that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (xii)
of Section 4.02(d) for that Distribution Date.
Class Certificate Balance
-------------------------
With respect to any Class of Offered Certificates and as to any
Distribution Date, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date. The Class Certificate Balance of the Class R
Certificates shall be zero.
Class Interest Shortfall
------------------------
As to any Distribution Date and any Class of Offered Certificates, the
amount by which the amount described in the definition of Interest Distribution
Amount for such Class exceeds the amount of interest actually distributed on
such Class on such Distribution Date.
Class M-1 Applied Realized Loss Amount
--------------------------------------
As to the Class M-1 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of the Principal Distribution Amount on that Distribution Date,
but prior to the application of the Class M-1 Applied Realized Loss Amount, if
any, on that Distribution Date) and (b) the excess of (i) the Realized Loss
Amount as of that Distribution Date over (ii) the sum of the Class M-2 Applied
Realized Loss Amount and the Class B Applied Realized Loss Amount, in each case
as of that Distribution Date.
Class M-1 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class M-1 Certificate.
Class M-1 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Guaranteed Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date) and (ii) the Class Certificate Balance of the Class M-1
Certificates immediately prior to that Distribution Date over (b) the lesser of
(i) the product of (A) 72.00% and (B) the Pool Principal Balance as of the last
day of the related Due Period and (ii) the Pool Principal Balance as of the last
day of the related Due Period minus the product of (A) 0.50% and (B) the Cut-off
Date Pool Principal Balance.
7
Class M-1 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-1 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-1 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (vi) of
Section 4.02(d) for that Distribution Date.
Class M-2 Applied Realized Loss Amount
--------------------------------------
As to the Class M-2 Certificates and as of any Distribution Date, the
lesser of (a) the Class Certificate Balance thereof (after taking into account
the distribution of the Principal Distribution Amount on that Distribution Date,
but prior to the application of the Class M-2 Applied Realized Loss Amount, if
any, on that Distribution Date) and (b) the excess of (i) the Realized Loss
Amount as of that Distribution Date over (ii) the Class B Applied Realized Loss
Amount as of that Distribution Date.
Class M-2 Certificate
---------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit A-3 and designated as a
Class M-2 Certificate.
Class M-2 Principal Distribution Amount
---------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of
the Class Certificate Balances of the Guaranteed Certificates (after taking into
account the payment of the Senior Principal Distribution Amount on that
Distribution Date), (ii) the Class Certificate Balance of the Class M-1
Certificates (after taking into account the payment of the Class M-1 Principal
Distribution Amount on that Distribution Date) and (iii) the Class Certificate
Balance of the Class M-2 Certificates immediately prior to that Distribution
Date over (b) the lesser of (i) the product of (A) 83.50% and (B) the Pool
Principal Balance as of the last day of the related Due Period and (ii) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (A) 0.50% and (B) the Cut-off Date Pool Principal Balance.
Class M-2 Realized Loss Amortization Amount
-------------------------------------------
As to the Class M-2 Certificates and as of any Distribution Date, the
lesser of (a) the Unpaid Realized Loss Amount for the Class M-2 Certificates as
of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow
Amount over (ii) the sum of the amounts described in clauses (i) through (ix) of
Section 4.02(d) for that Distribution Date.
Class R Certificates
--------------------
The certificates representing the single "residual interest" in each
of REMIC 1 and REMIC 2, substantially in the form attached hereto as Exhibit
B-1.
Class Unpaid Interest Amounts
-----------------------------
As to any Distribution Date and any Class of Offered Certificates, the
amount by which the aggregate Class Interest Shortfalls for such Class on prior
Distribution Dates exceeds the amount of Class Unpaid Interest Amounts
distributed on such Class on prior Distribution Dates plus interest on such
amount at the related Pass-Through Rate.
Class X Certificate
-------------------
Any Certificate executed and authenticated by the Trustee
substantially in the form attached hereto as Exhibit B-2 and designated as a
Class X Certificate.
Closing Date
------------
November 7, 2002.
8
Closing Place
-------------
The offices of Messrs. Stradley, Ronon, Stevens & Young, LLP, 2600 One
Commerce Square, Philadelphia, Pennsylvania 19103.
Code
----
The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collateral
----------
The assets constituting the Loans, Mortgage Files and the Trust Fund,
and any and all contractual, legal, equitable or other rights in connection
therewith, and all proceeds thereof (but not including payments of interest and
principal due and payable with respect to the Loans on or before the Cut-off
Date).
Collateral Value
----------------
With respect to any Loan, other than Refinance Loans, an amount equal
to the lesser of (a) the appraised value of the related Mortgaged Property based
on an appraisal obtained by the originator from an independent fee appraiser at
the time of the origination of such Loan, and (b) if the Loan was originated
either in connection with the acquisition of the Mortgaged Property by the
borrower or within one year after acquisition of the Mortgaged Property by the
borrower, the purchase price paid by such borrower for the Mortgaged Property.
In the case of Refinance Loans, the Collateral Value is the appraised value of
the Mortgaged Property based upon the appraisal obtained at the time of
refinancing.
Combined Loan-to-Value Ratio
----------------------------
With respect to any Loan and as to any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of such Loan on the date of origination plus, in the case of a Second
Lien Loan, the outstanding principal balance of the related first lien mortgage
loan on the date of origination of such Second Lien Loan, and the denominator of
which is the Collateral Value of the related Mortgaged Property.
Corporate Trust Office
----------------------
The designated office of the Trustee in the State of New York at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which office at the date of the execution of
this Agreement is located at 4 New York Plaza, 6th Floor, New York, New York
10004 (Attention: Institutional Trust Services, Equity One 2002-5, facsimile
number: 212-623-5930) and which is the address to which notices to and
correspondence with the Trustee should be directed.
Corresponding Class
-------------------
As defined in the Preliminary Statement.
Counterparty
------------
Wachovia Bank, National Association, a national banking association.
Custodial Agreement
-------------------
As defined in Section 8.13.
Custodian
---------
As defined in Section 8.13.
Cut-off Date
------------
September 30, 2002
Cut-off Date Group I Principal Balance
--------------------------------------
9
The aggregate of the Cut-off Date Principal Balances of the Group I
Loans on the Cut-off Date ($345,012,987.34).
Cut-off Date Group II Principal Balance
---------------------------------------
The aggregate of the Cut-off Date Principal Balances of the Group II
Loans on the Cut-off Date ($166,229,792.60).
Cut-off Date Pool Principal Balance
-----------------------------------
The sum of the Cut-off Date Group I Principal Balance and the Cut-off
Date Group II Principal Balance ($511,242,779.94).
Cut-off Date Principal Balance
------------------------------
As to any Loan, the Stated Principal Balance thereof as of the close
of business on the Cut-off Date.
Debt Service Reduction
----------------------
With respect to any Loan, a reduction in the Scheduled Payment for
such Loan by a court of competent jurisdiction in a proceeding under the
Bankruptcy Code, which became final and non-appealable, except such a reduction
resulting from a Deficient Valuation.
Defective Loan
--------------
Any Loan which is required to be repurchased pursuant to Section 2.02
or 2.03.
Deficiency Amount
-----------------
With respect to any Distribution Date, the sum of the (i) Guaranteed
Interest Distribution Amount and (ii) Guaranteed Principal Distribution Amount.
Deficient Valuation
-------------------
With respect to any Loan, a valuation of the related Mortgaged
Property by a court of competent jurisdiction in an amount less than the then
outstanding principal balance of the Loan, or any reduction in the amount of
principal to be paid in connection with any Scheduled Payment that results in a
permanent forgiveness of principal, which valuation results from a proceeding
initiated under the Bankruptcy Code.
Definitive Certificates
-----------------------
Any Certificate issued in lieu of a Book-Entry Certificate pursuant to
Section 5.02(e).
Deleted Loan
------------
As defined in Section 2.03(c).
Denomination
------------
With respect to each Offered Certificate, Class X Certificate or Class
R Certificate, the amount set forth on the face thereof as the "Initial
Certificate Balance of this Certificate" or the "Percentage Interest."
Depositor
---------
Equity One ABS, Inc., a Delaware corporation, or its successor in
interest.
Depository
----------
The initial Depository shall be The Depository Trust Company, the
nominee of which is Cede & Co., as the registered Holder of the Book-Entry
Certificates. The Depository shall at all times be
10
a "clearing corporation" as defined in Section 8-102(a)(5) of the Uniform
Commercial Code of the State of New York.
Depository Participant
----------------------
A broker, dealer, bank or other financial institution or other Person
for whom from time to time a Depository effects book-entry transfers and pledges
of securities deposited with the Depository.
Determination Date
------------------
As to any Distribution Date, the 10th day of each month or, if such
day is not a Business Day, the next preceding Business Day.
Distribution Account
--------------------
The separate Eligible Account created and maintained by the Trustee
pursuant to Section 3.05 in the name of the Trustee for the benefit of the
Certificateholders and designated "Distribution Account, JPMorgan Chase Bank, as
trustee for the registered holders of Equity One ABS, Inc. Mortgage Pass-Through
Certificates, Series 2002-5." Funds in the Distribution Account shall be held
uninvested in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
Distribution Account Deposit Date
---------------------------------
As to any Distribution Date, 9:00 a.m. New York City time on the
Business Day immediately preceding such Distribution Date.
Distribution Date
-----------------
The 25th day of each calendar month after the initial issuance of the
Certificates, or if such day is not a Business Day, the next succeeding Business
Day, commencing in November, 2002.
Due Date
--------
With respect to any Loan, the date on which scheduled payments of
interest and/or principal are due thereon, which date is a set day, but not
necessarily the first day, of each month.
Due Period
----------
With respect to any Distribution Date, the calendar month prior to the
month of such Distribution Date.
Early Payment Default
---------------------
With respect to any Loan, if such Loan (i) is in foreclosure, (ii)
defaults on its first Monthly Payment following the Closing Date and remains
contractually delinquent for sixty (60) days or more (assuming thirty (30) day
months) or (iii) becomes contractually delinquent during the first six (6)
months of the term thereof and remains delinquent for sixty (60) days or more
(assuming thirty (30) day months).
Eligible Account
----------------
Any of (a) an account or accounts maintained with a federal or state
chartered depository institution or trust company, the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (b) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC (to the limits established by the FDIC) and the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee, the Guarantor and
to each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account or a perfected first priority security interest against
any
11
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of the
depository institution or trust company in which such account is maintained, or
(c) a trust account or accounts maintained with (i) the trust department of a
federal or state chartered depository institution or (ii) a trust company,
acting in its fiduciary capacity or (d) any other account acceptable to the
Guarantor and each Rating Agency, as evidenced by a letter from the Guarantor
and such Rating Agency to the Trustee, without reduction or withdrawal of the
then current ratings of the Subordinate Certificates. Eligible Accounts may bear
interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee.
Equity One-Delaware
-------------------
Equity One, Inc., a Delaware corporation.
Equity One-Minnesota
--------------------
Equity One, Inc., a Minnesota corporation.
Equity One-New Hampshire
------------------------
Equity One Consumer Loan Company, Inc., a New Hampshire corporation.
Equity One-Pennsylvania
-----------------------
Equity One, Incorporated, a Pennsylvania corporation.
ERISA
-----
The Employee Retirement Income Security Act of 1974, as amended.
ERISA Qualifying Underwriting
-----------------------------
A best efforts or firm commitment underwriting or private placement
that meets the requirements (without regard to the ratings requirement or other
requirements that the securities or the investor must satisfy) of the
Underwriter Exemption, or any substantially similar administrative exemption
granted by the U.S. Department of Labor.
ERISA-Restricted Certificate
----------------------------
Any of the Class X Certificates or Class R Certificates; any
Certificate of a Class that ceases to satisfy the applicable rating requirements
of the Underwriter Exemption.
Escrow Account
--------------
The Eligible Account or Eligible Accounts established and maintained
by the Servicer pursuant to Section 3.06(a).
Event of Default
----------------
As defined in Section 7.01.
Excess Proceeds
---------------
With respect to any Liquidated Loan, the amount, if any, by which the
sum of any Liquidation Proceeds of such Loan received in the calendar month in
which such Loan became a Liquidated Loan, net of any amounts previously
reimbursed to the Servicer as Nonrecoverable Advance(s) with respect to such
Loan pursuant to Section 3.08(a)(iii), exceeds (a) the unpaid principal balance
of such Liquidated Loan as of the Due Date in the calendar month in which such
Loan became a Liquidated Loan plus (b) accrued interest at the Mortgage Rate
from the Due Date as to which interest was last paid or advanced (and not
reimbursed) to Certificateholders up to the Due Date in the calendar month in
which such Loan became a Liquidated Loan.
12
Expense Rate
------------
As to each Loan, the sum of the Servicing Fee Rate, the Trustee Fee
Rate and a fraction expressed as a percentage, the numerator of which is the
product of (a) the rate at which the Guarantor's Monthly Fee accrues and (b) the
aggregate Class Certificate Balance of the Guaranteed Certificates, and the
denominator of which is the Pool Principal Balance.
Extra Principal Distribution Amount
-----------------------------------
As of any Distribution Date, the lesser of (a) the Monthly Excess
Interest Amount for that Distribution Date and (b) the Overcollateralization
Deficiency for that Distribution Date.
FDIC
----
The Federal Deposit Insurance Corporation, or any successor thereto.
FIRREA
------
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989.
Fitch
-----
Fitch Ratings or any successor thereto. For purposes of Section
10.05(b) the address for notices to Fitch shall be Fitch, Inc., 1 State Street
Plaza, New York, New York 10004, Attention: Residential Mortgage Backed
Securities Group, or such other address as Fitch may hereafter furnish to the
Depositor or the Servicer.
FNMA
----
Fannie Mae, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
Freddie Mac
-----------
The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.
Group
-----
Either the Group I Loans or the Group II Loans, as the case may be.
Group I Loans
-------------
The mortgage loans identified as such on the Loan Schedule.
Group I Principal Percentage
----------------------------
With respect to any Distribution Date and the Class AF-1, Class AF-2,
Class AF-3 and Class AF-4 Certificates, the percentage equivalent of a fraction,
the numerator of which is the amount of principal collections (including the
principal component of any Advances made by the Servicer) on the Group I Loans
during the related Due Period, and the denominator of which is the amount of
principal collections (including the principal component of any Advances made by
the Servicer) on the Loans during the related Due Period.
Group II Loans
--------------
The mortgage loans identified as such on the Loan Schedule.
Group II Principal Percentage
-----------------------------
With respect to any Distribution Date and the Class AV-1 Certificates,
the percentage equivalent of a fraction, the numerator of which is the amount of
principal collections (including the
13
principal component of any Advances made by the Servicer) on the Group II Loans
during the related Due Period, and the denominator of which is the amount of
principal collections (including the principal component of any Advances made by
the Servicer) on the Loans during the related Due Period.
Group Principal Balance
-----------------------
With respect to any Distribution Date and either the Group I Loans or
the Group II Loans, the aggregate of the Stated Principal Balances of the Loans
in such Group that were Outstanding Loans (including Loans in foreclosure and
REO Properties) on their Due Dates in the related Due Period.
Guarantee
---------
The obligations of the Guarantor pursuant to Section 3A.01(a).
Guaranteed Certificates
-----------------------
The Class AF-1, Class AF-2, Class AF-3, Class AF-4 and Class AV-1
Certificates.
Guaranteed Interest Distribution Amount
---------------------------------------
With respect to any Distribution Date and the Guaranteed Certificates,
the amount, if any, after giving effect to the distributions made with respect
to such Guaranteed Certificates pursuant to Section 4.02(a) and Section 4.02(g)
hereof, by which (a) the sum of (i) the Interest Distribution Amounts and Class
Unpaid Interest Amounts payable to the Guaranteed Certificates for such
Distribution Date and (ii) the Net Prepayment Interest Shortfalls and Relief Act
Reductions allocated to the Guaranteed Certificates for such Distribution Date
exceeds (b) the amount of interest actually paid to the Holders of the
Guaranteed Certificates on such Distribution Date. The Guaranteed Interest
Distribution Amount does not include payments of Net WAC Cap Carryover.
Guaranteed Principal Distribution Amount
----------------------------------------
With respect to any Distribution Date and the Guaranteed Certificates,
(a) the amount, if any, by which (i) the aggregate Class Certificate Balance of
the Guaranteed Certificates (after giving effect to all amounts distributable
and allocable to principal on such Guaranteed Certificates but prior to giving
effect to any Guarantor Payment on such Distribution Date) exceeds (ii) the Pool
Principal Balance (after giving effect to the principal portion of Scheduled
Payments due during the related Due Period, to the extent paid by the Mortgagor
or paid through an Advance, or through Principal Prepayments), plus (b) on the
Last Scheduled Distribution Date, any unpaid Class Certificate Balance of the
Guaranteed Certificates.
Guarantor
---------
Freddie Mac, or its successor in interest.
Guarantor Default
-----------------
Either (a) a continuance of any failure by the Guarantor to pay
Guaranteed Interest Distribution Amounts or Guaranteed Principal Distribution
Amounts, unless such failure was caused by or resulted from a breach of the
terms of this Agreement by any party hereto other than the Guarantor or (b) the
existence of a proceeding in bankruptcy by or against the Guarantor.
Guarantor Payment
-----------------
Any payment made by the Guarantor in respect of a Deficiency Amount.
Guarantor Reimbursements
------------------------
With respect to any Distribution Date the sum of (i) any accrued but
unpaid Guarantor's Monthly Fees for all prior Distribution Dates, (ii) all
amounts paid by the Guarantor in respect of Deficiency Amounts for all prior
Distribution Dates to the extent not previously reimbursed, with interest
14
thereon at a rate equal to the Prime Rate plus 2.00%, and (iii) any amounts due
and owing to the Guarantor by the Trust Fund pursuant to Section 6.03 hereof.
Guarantor's Monthly Fee
-----------------------
The fee payable to the Guarantor on each Distribution Date in an
amount equal to the product of the per annum rate specified in that certain
letter from the Guarantor to the Depositor, the Sellers and the Trustee and the
aggregate Class Certificate Balance of the Guaranteed Certificates on each
Distribution Date (prior to giving effect to any distributions of principal to
be made to the Guaranteed Certificates on such Distribution Date) computed on
the basis of a 360 day year and the actual number of days elapsed in the related
Due Period.
Indirect Participant
--------------------
A broker, dealer, bank or other financial institution or other Person
that clears through or maintains a custodial relationship with a Depository
Participant.
Information Circular
--------------------
The information circular, dated October 18, 2002, relating to the
offer of the Guaranteed Certificates.
Initial Certificate Account Deposit
-----------------------------------
As defined in Section 2.01(a).
Insurance Policy
----------------
With respect to any Loan included in the Trust Fund, any insurance
policy, and including all riders and endorsements thereto in effect, including
any replacement policy or policies for any Insurance Policies.
Insurance Proceeds
------------------
Proceeds paid by an insurer pursuant to any Insurance Policy, in each
case other than any amount included in such Insurance Proceeds in respect of
Insured Expenses.
Insured Expenses
----------------
Expenses covered by an Insurance Policy.
Interest Accrual Period
-----------------------
With respect to the Class AF-1 and Class AV-1 Certificates, and any
Distribution Date, the period commencing on the Distribution Date in the
calendar month prior to the month of such Distribution Date (or on the Closing
Date with respect to the first Distribution Date) and ending on the day
preceding such Distribution Date. With respect to the Class AF-2, Class AF-3,
Class AF-4, Class M-1, Class M-2 and Class B Certificates and any Distribution
Date, the calendar month preceding the month of such Distribution Date.
Interest Distribution Amount
----------------------------
With respect to any Distribution Date and each Class of the Offered
Certificates, the amount of interest accrued during the related Interest Accrual
Period at the Pass-Through Rate for such Class on the related Class Certificate
Balance, reduced by such Class' pro rata share of the amount of (a) Net
Prepayment Interest Shortfalls and (b) Relief Act Reductions incurred on the
Loans during the related Due Period (each such Class' pro rata share to be based
on the amount of interest to which such Class would have been entitled
notwithstanding such Net Prepayment Interest Shortfalls and Relief Act
Reductions).
15
Interest Remittance Amount
--------------------------
As of any Distribution Date, the sum, without duplication, of (a) the
interest portion of each Scheduled Payment due on each Loan on such Loan's Due
Date in the related Due Period and received by the Servicer on or prior to the
related Determination Date, including any Advances with respect thereto, (b) the
portion of any Substitution Adjustment Amount or payment in connection with any
repurchase of a Defective Loan allocable to interest received with respect to
such Distribution Date, (c) with respect to each Loan that became a Liquidated
Loan during the related Due Period, the amount of Liquidation Proceeds allocable
to interest received during the related Due Period with respect to such
Liquidated Loan, and (d) on the Distribution Date on which the Trust Fund is to
be terminated in accordance with Section 9.01 hereof, that portion of the
Termination Price allocable to interest.
Investment Letter
-----------------
As defined in Section 5.02(b).
Latest Possible Maturity Date
-----------------------------
The Distribution Date following the third anniversary of the scheduled
maturity date of the Loan having the latest scheduled maturity date as of the
Cut-off Date.
Last Scheduled Distribution Date
--------------------------------
The Distribution Date in November 2032.
LIBOR
-----
As of any LIBOR Determination Date, the rate determined by the Trustee
on the basis of the "Interest Settlement Rate" for U.S. dollar deposits of
one-month maturity set by the BBA as such rate appears on Telerate Page 3750 as
of 11:00 a.m. (London time) on such LIBOR Determination Date. With respect to
any LIBOR Determination Date, if the BBA's Interest Settlement Rate does not
appear on Telerate Page 3750 as of 11:00 a.m. (London time) on such date, or if
Telerate Page 3750 is not available on such date, the Trustee will obtain such
from Reuters Monitor Money Rates Service page "LIBOR01" or Bloomberg L.P. page
"BBAM." If such rate is not published for such LIBOR Determination Date, LIBOR
for such date will be the most recently published Interest Settlement Rate. In
the event that the BBA no longer sets an Interest Settlement Rate, the Trustee,
with the Guarantor's consent, will designate an alternative index that has
performed, or that the Trustee expects to perform, in a manner substantially
similar to the BBA's Interest Settlement Rate.
LIBOR Determination Date
------------------------
With respect to any Interest Accrual Period for the Class AF-1 and
Class AV-1 Certificates, the second London business day preceding the
commencement of such Interest Accrual Period. For purposes of determining LIBOR,
a "London business day" is any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
Liquidated Loan
---------------
With respect to any Distribution Date, a defaulted Loan (including any
REO Property) that was liquidated in a calendar month preceding the month of
such Distribution Date and as to which the Servicer has determined (in
accordance with this Agreement) that it has received all amounts it expects to
receive in connection with the liquidation of such Loan, including the final
disposition of an REO Property.
Liquidation Proceeds
--------------------
Amounts, including Insurance Proceeds, received in connection with the
partial or complete liquidation of defaulted Loans, whether through trustee's
sale, foreclosure sale or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and
16
any other proceeds received in connection with an REO Property, less the
Servicing Amount applicable to such defaulted Loans.
Loans
-----
The mortgage loans identified on the Loan Schedule.
Loan Data Remittance Date
-------------------------
With respect to any Determination Date, four (4) Business Days
following such Determination Date, or if such day is not a Business Day, the
next succeeding Business Day, but no later than eight (8) Business Days prior to
the Distribution Date.
Loan Data Remittance Report
---------------------------
As defined in Section 4.05.
Loan Schedule
-------------
As of any date, the list of Group I Loans and Group II Loans included
in the Trust Fund on such date, attached hereto as Schedule I (as from time to
time amended by the Servicer to reflect the addition of Substitute Loans and the
deletion of Deleted Loans pursuant to the provisions of this Agreement), setting
forth the following information with respect to each Loan:
(a) the name of the Mortgagor and the Seller's Loan identifying
number;
(b) the state and zip code of the Mortgaged Property;
(c) the type of residential dwelling constituting the Mortgaged
Property;
(d) the occupancy status (as represented by the borrower) of the
Mortgaged Property at origination;
(e) the original months to maturity;
(f) the date of origination;
(g) the first Due Date;
(h) the stated maturity date;
(i) the stated remaining months to maturity as of the Cut-off Date;
(j) the original principal balance of the Loan;
(k) the Stated Principal Balance of the Loan as of the Cut-off Date;
(l) whether such Loan is a Balloon Loan (if such Loan is a fixed rate
Loan);
(m) the current Mortgage Rate of the Loan as of the Cut-off Date;
(n) the current principal and interest payment due on the Loan as of
the Cut-off Date;
(o) the interest "paid to date" on the Loan as of the Cut-off Date;
17
(p) the Combined Loan-to-Value Ratio at origination;
(q) the delinquency status of the Loan as of the Cut-off Date;
(r) the Seller's credit grade assigned to such Loan;
(s) the index that is associated with such Loan (if such Loan is an
adjustable rate Loan);
(t) the gross margin (if such Loan is an adjustable rate Loan);
(u) the periodic rate cap for the initial adjustment date (if such
Loan is an adjustable rate Loan);
(v) the minimum mortgage rate (if such Loan is an adjustable rate
Loan);
(w) the maximum mortgage rate (if such Loan is an adjustable rate
Loan);
(x) the periodic rate cap for each adjustment date after the initial
adjustment date (if such Loan is an adjustable rate Loan);
(y) the first adjustment date immediately following the applicable
Cut-off Date (if such Loan is an adjustable rate Loan);
(z) the rate adjustment frequency (if such Loan is an adjustable rate
Loan);
(aa) the purpose of such Loan (i.e., purchase, cash out refinance or
rate/term refinance);
(bb) whether such Loan is covered by a Primary Mortgage Insurance
Policy;
(cc) the credit score (FICO) of such Loan;
(dd) the number of units;
(ee) the lien position of the Loan;
(ff) the documentation type of the Loan; and
(gg) the number of months the related prepayment penalty, if any, is
in effect.
Majority in Interest
--------------------
As to each Class of Offered Certificates, the Holders of Certificates
of such Class evidencing, in the aggregate, at least 51% of the Percentage
Interests evidenced by all Certificates of such Class.
MERS (R)
--------
Mortgage Electronic Registration Systems, Inc., or its successors in
interest.
MERS (R) System
---------------
18
That certain electronic registry system maintained by MERSCORP, Inc.,
or its successors in interest.
MOM Loan
--------
Any Loan as to which MERS (R) is acting as mortgagee solely as nominee
for the originator of such Loan and its successors and assigns.
MIN
---
The Mortgage Identification Number assigned by MERS (R) to a MOM Loan.
Monthly Excess Cashflow Amount
------------------------------
The sum of the Monthly Excess Interest Amount, the
Overcollateralization Release Amount and (without duplication) any portion of
the Principal Distribution Amount remaining after principal distributions on the
Offered Certificates.
Monthly Excess Interest Amount
------------------------------
As to any Distribution Date, an amount equal to any Interest
Remittance Amount remaining after the distributions set forth in clauses (i)
through (viii) of Section 4.02(a).
Monthly Payment
---------------
With respect to any Loan, the Scheduled Payment, determined: (a) after
giving effect to (i) any Deficient Valuation and/or Debt Service Reduction with
respect to such Loan and (ii) any reduction in the amount of interest
collectible from the related Mortgagor pursuant to the Relief Act; (b) without
giving effect to any extension granted or agreed to by the Servicer as may be
permitted pursuant to Section 3.01; and (c) on the assumption that all other
amounts, if any, due under such Loan are paid when due.
Monthly Statement
-----------------
The statement prepared by the Trustee pursuant to Section 4.03.
Moody's
-------
Moody's Investors Service, Inc., or any successor thereto. For
purposes of Section 10.05(b) the address for notices to Moody's shall be Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
Residential Mortgage Monitoring Department, or such other address as Moody's may
hereafter furnish to the Depositor or the Servicer.
Mortgage
--------
The mortgage, deed of trust or other instrument creating a first or
second lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
Mortgaged Property
------------------
The underlying property securing a Loan.
Mortgage File
-------------
The mortgage documents listed in Section 2.01 hereof pertaining to a
particular Loan and any additional documents delivered to the Trustee to be
added to the Mortgage File pursuant to this Agreement.
Mortgage Loan Sample
--------------------
As defined in Section 3.07(d).
19
Mortgage Note
-------------
The original executed note or other evidence of indebtedness
evidencing the indebtedness of a Mortgagor under a Loan, together with any
amendment or modification thereto.
Mortgage Rate
-------------
The annual rate of interest borne by a Mortgage Note as set forth
therein.
Mortgagor
---------
The obligor(s) on a Mortgage Note.
Net Prepayment Interest Shortfalls
----------------------------------
As to any Distribution Date, the amount by which the aggregate of
Prepayment Interest Shortfalls during the related Due Period exceeds an amount
equal to the aggregate Servicing Fee for such Distribution Date before reduction
of the Servicing Fee in respect of such Prepayment Interest Shortfalls.
Net WAC Cap
-----------
As to any Distribution Date, the per annum rate equal to: (a) with
respect to the Class AF-2, Class AF-3, Class AF-4, Class M-1, Class M-2 and
Class B Certificates, the weighted average Adjusted Net Mortgage Rate of the
Loans as of the first day of the Due Period relating to that Distribution Date,
weighted on the basis of the aggregate principal balance of the Loans as of the
first day of the related Due Period (calculated on the basis of a 360-day year
made up of twelve 30-day months); (b) with respect to the Class AF-1
Certificates, the weighted average Adjusted Net Mortgage Rate of the Loans as of
the first day of the Due Period relating to that Distribution Date, weighted on
the basis of the aggregate principal balance of the Loans as of the first day of
the related Due Period (calculated on the basis of a 360-day year and the actual
number of days elapsed in the related Interest Accrual Period) and (c) with
respect to the Class AV-1 Certificates, the sum of (i) the Net WAC Cap for the
Class AF-1 Certificates and (ii) a fraction (expressed as a percentage) (A) the
numerator of which is the lesser of (x) the product of the excess, if any, of
the weighted average Adjusted Net Mortgage Rate of the Group II Loans over the
Net WAC Cap for the Class AF-1 Certificates and the Class Certificate Balances
of the Class AV-1 Certificates (prior to the distribution of any principal on
that Distribution Date) and (y) the sum of (1) the product of the excess, if
any, of the Net WAC Cap for the other classes of Offered Certificates over the
weighted average of the Pass-Through Rates of the Certificates (other than the
Class AV-1 and Class X Certificates) (weighted on the basis of their respective
Class Certificate Balances prior to the distribution of any principal on that
Distribution Date) and the aggregate Class Certificate Balance of the
Certificates (other than the Class AV-1 and Class X Certificates) and (2) the
product of the Net WAC Cap for the Class AF-1 Certificates and the
Overcollateralization Amount for that Distribution Date (adjusted to account for
the actual number of days in the Interest Accrual Period) and (B) the
denominator of which is the Class Certificate Balance of the Class AV-1
Certificates.
Net WAC Cap Account
-------------------
The account established and maintained pursuant to Section 3A.03.
Net WAC Cap Carryover
---------------------
20
With respect to the Class AF-1 Certificates, Class AV-1 Certificates
and any Distribution Date, the sum of (a) the excess, if any, of the Interest
Distribution Amount for such Class for such Distribution Date, calculated at its
Pass-Through Rate (without regard to the applicable Net WAC Cap) (subject to a
maximum rate of 14.00% with respect to the Class AV-1 Certificates and a maximum
rate of 10.00% with respect to the Class AF-1 Certificates), over the actual
Interest Distribution Amount for such Class for such Distribution Date, and (b)
any related Net WAC Cap Carryover remaining unpaid from prior Distribution
Dates, together with one month of interest accrued thereon at its Pass-Through
Rate (without regard to the applicable Net WAC Cap).
Net WAC Cap Deposit Amount
--------------------------
As to any Distribution Date, an amount equal to the sum of (a) the
aggregate Net WAC Cap Carryover for such Distribution Date plus (b) the amount,
if any, needed to increase the aggregate amount on deposit in the Net WAC Cap
Account (after giving effect to all payments to be made pursuant to Section
4.02(f)) to $10,000.
Net WAC Rate
------------
As to any Distribution Date, a rate equal to the weighted average of
the Adjusted Net Mortgage Rates of all Outstanding Loans, such weighted average
to be calculated based on the principal balances of such Outstanding Loans as of
the first day of the related Interest Accrual Period on the basis of either (a)
a 360-day year and the actual number of days elapsed in the related Interest
Accrual Period or (b) a 360-day year made up of twelve 30-day months, as
applicable.
Nonrecoverable Advance
----------------------
Any portion of an Advance previously made or proposed to be made by
the Servicer that, in the good faith judgment of the Servicer, will not be
ultimately recoverable by the Servicer from the related Mortgagor, related
Liquidation Proceeds or otherwise.
Notice of Final Distribution
----------------------------
The notice to be provided pursuant to Section 9.02 to the effect that
final distribution on any of the Certificates shall be made only upon
presentation and surrender thereof.
Offered Certificates
--------------------
The certificates representing "regular interests" in REMIC 2, which
are designated as the Guaranteed Certificates and the Subordinate Certificates.
Officer's Certificate
---------------------
A certificate (a) signed by the Chairman of the Board, the Vice
Chairman of the Board, the President, a Managing Director, a Vice President
(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Depositor or the Servicer, or (b), if provided for in this Agreement, signed by
a Servicing Officer, as the case may be, and delivered to the Depositor and the
Trustee, as the case may be, as required by this Agreement.
Opinion of Counsel
------------------
A written opinion of counsel, who may be counsel for the Depositor or
the Servicer, including, in-house counsel, reasonably acceptable to the Trustee
and Guarantor; provided, however, that with respect to the interpretation or
application of the REMIC Provisions, such counsel must (a) in fact be
independent of the Depositor and the Servicer, (b) not have any direct financial
interest in the Depositor or the Servicer or in any affiliate of either, and (c)
not be connected with the Depositor or the Servicer as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
21
Optional Termination Date
-------------------------
The first Distribution Date following the date on which the Optional
Termination may be exercised by the Servicer.
Optional Termination
--------------------
The termination of the trust created hereunder in connection with the
purchase of the Loans pursuant to Section 9.01(a) hereof.
Original Loan
-------------
The mortgage loan refinanced in connection with the origination of a
Refinance Loan.
OTS
---
The Office of Thrift Supervision.
Outstanding
-----------
With respect to the Certificates as of any date of determination, all
Certificates theretofore executed and authenticated under this Agreement except
(a) Certificates theretofore canceled by the Trustee or delivered to the Trustee
for cancellation; and (b) Certificates in exchange for which or in lieu of which
other Certificates have been executed and delivered by the Trustee pursuant to
this Agreement.
Outstanding Loan
----------------
As of any Due Date, a Loan with a Stated Principal Balance greater
than zero, which was not the subject of a Principal Prepayment in Full prior to
such Due Date and which did not become a Liquidated Loan prior to such Due Date.
Overcollateralization Amount
----------------------------
As of any Distribution Date, the excess, if any, of (a) the Pool
Principal Balance as of the last day of the immediately preceding Due Period
over (b) the aggregate Class Certificate Balance of all Classes of Offered
Certificates (after taking into account all distributions of principal on that
Distribution Date).
Overcollateralization Deficiency
--------------------------------
As of any Distribution Date, the excess, if any, of (a) the Targeted
Overcollateralization Amount for that Distribution Date over (b) the
Overcollateralization Amount for that Distribution Date, calculated for this
purpose after taking into account the reduction on that Distribution Date of the
Class Certificate Balances of all Classes of Offered Certificates resulting from
the distribution of the Principal Distribution Amount (but not the Extra
Principal Distribution Amount) on that Distribution Date, but prior to taking
into account any Applied Realized Loss Amounts on that Distribution Date.
Overcollateralization Release Amount
------------------------------------
With respect to any Distribution Date on or after the Stepdown Date on
which a Trigger Event is not in effect, the lesser of (a) the Principal
Remittance Amount for that Distribution Date and (b) the excess, if any, of (i)
the Overcollateralization Amount for that Distribution Date, assuming that 100%
of the Principal Remittance Amount is applied as a principal payment on the
Certificates on that Distribution Date, over (ii) the Targeted
Overcollateralization Amount for that Distribution Date. With respect to any
Distribution Date on which a Trigger Event is in effect, the
Overcollateralization Release Amount will be zero.
Ownership Interest
------------------
22
As to any Class R Certificate, any ownership 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.
Pass-Through Rate
-----------------
With respect to each Class of Certificates, as set forth in the
Preliminary Statement.
Paying Agent
------------
JPMorgan Chase Bank and its successors and, if a successor paying
agent is appointed hereunder, such successor.
Percentage Interest
-------------------
As to any Offered Certificate, the percentage interest evidenced
thereby in distributions required to be made to such Offered Certificate, such
percentage interest being set forth on the face thereof or equal to the
percentage obtained by dividing the Denomination of such Certificate by the
aggregate of the Denominations of all Certificates of the same Class. With
respect to the Class X Certificates and the Class R Certificates, the
"Percentage Interest" specified on the face thereof.
Permitted Investments
---------------------
(a) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United States;
(b) general obligations of or obligations guaranteed by any state of the United
States or the District of Columbia receiving the highest long-term debt rating
of each Rating Agency rating the Subordinate Certificates, or such lower rating
as will not result in the downgrading or withdrawal of the ratings then assigned
to the Subordinate Certificates, by each such Rating Agency; (c) commercial or
finance company paper which is then receiving the highest commercial or finance
company paper rating of each such Rating Agency, or such lower rating as will
not result in the downgrading or withdrawal of the ratings then assigned to the
Subordinate Certificates, by each such Rating Agency; (d) certificates of
deposit, demand or time deposits, or bankers' acceptances issued by any
depository institution or trust company incorporated under the laws of the
United States or of any state thereof and subject to supervision and examination
by federal and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository institution or
trust company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if Moody's is not a Rating Agency)
are then rated the highest long-term and one of the two highest short-term
ratings of each such Rating Agency for such securities, or such lower ratings as
will not result in the downgrading or withdrawal of the rating then assigned to
the Subordinate Certificates, by any such Rating Agency; (e) demand or time
deposits or certificates of deposit issued by any bank or trust company or
savings institution to the extent that such deposits are fully insured by the
FDIC; (f) guaranteed reinvestment agreements issued by any bank, insurance
company or other corporation containing, at the time of the issuance of such
agreements, such terms and conditions as will not result in the downgrading or
withdrawal of the rating then assigned to the Subordinate Certificates by any
such Rating Agency; (g) repurchase obligations with respect to any security
described in clauses (a) and (b) above, in either case entered into with a
depository institution or trust company (acting as principal) described in
clause (d) above; (h) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof which, at
the time of such investment, have the highest long term rating and one of the
two highest short term ratings of each Rating Agency (except if the Rating
Agency is Moody's, such rating shall be the highest commercial paper rating of
Moody's for any such securities), or such lower rating as will not result in the
downgrading or withdrawal of the rating then assigned to the Subordinate
Certificates, by any such Rating Agency, as evidenced by a signed writing
delivered by each such Rating
23
Agency; and (i) such other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to each Rating Agency and
Guarantor as will not result in the downgrading or withdrawal of the rating then
assigned to the Subordinate Certificates by any Rating Agency, as evidenced by a
signed writing to such effect delivered by each such Rating Agency and the
Guarantor; provided that no such instrument shall be a Permitted Investment if
such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument.
Permitted Transferee
--------------------
Any person other than (a) the United States, any State or political
subdivision thereof, or any agency or instrumentality of any of the foregoing,
(b) a foreign government, International Organization or any agency or
instrumentality of either of the foregoing, (c) 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)(l) of the Code) with respect to any Class R
Certificate, (d) rural electric and telephone cooperatives described in section
1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or resident of
the United States, (ii) a corporation or partnership (or other entity properly
treated as a corporation or partnership for U.S. federal income tax purposes)
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, or (iv) a trust if a court within the United States is
able to exercise primary supervision over the administration of the trust and
one or more United States Persons have authority to control all substantial
decisions of the trust, unless such Person listed in clause (i), (ii), (iii) or
(iv) above has furnished the transferor and the Trustee with a duly completed
Internal Revenue Service Form W-8ECI and (f) any other Person so designated by
the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Class R Certificate to such Person may cause any REMIC hereunder
to fail to qualify as one or more REMICs at any time that the Certificates are
outstanding. 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
the Federal Home Loan Mortgage Corporation, a majority of its board of directors
is not selected by such government unit.
Person
------
Any individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated
organization or government, or any agency or political subdivision thereof.
Plan
----
As defined in Section 5.02(b)
Pool Principal Balance
----------------------
With respect to any Distribution Date, the sum of the Group Principal
Balances for the Group I Loans and the Group II Loans.
Popular Financial
-----------------
Popular Financial Services, LLC, a Delaware limited liability company.
Prepayment Interest Excess
--------------------------
As to any Principal Prepayment on a Loan received by the Servicer
subsequent to its Due Date in the related Prepayment Period, all amounts paid by
the related Mortgagor in respect of interest on
24
such Principal Prepayment that are intended to cover the period on and after the
Due Date. All Prepayment Interest Excess shall be paid to the Servicer as
additional servicing compensation.
Prepayment Interest Shortfall
-----------------------------
As to any Distribution Date and any Principal Prepayment on a Loan
received by the Servicer on or before its Due Date in the related Prepayment
Period, the amount, if any, by which one month's interest at the related
Adjusted Mortgage Rate on such Principal Prepayment, exceeds the amount of
interest paid in connection with such Principal Prepayment.
Prepayment Period
-----------------
With respect to any Distribution Date, the calendar month prior to the
month of such Distribution Date.
Primary Mortgage Insurance Policy
---------------------------------
Each policy of primary mortgage guaranty insurance or any replacement
policy therefor with respect to any Loan.
Prime Rate
----------
The prime rate of United States money center commercial banks as
published in The Wall Street Journal.
Principal Distribution Amount
-----------------------------
As of any Distribution Date, the sum of (a) the Principal Remittance
Amount (minus the Overcollateralization Release Amount, if any) and (b) the
Extra Principal Distribution Amount, if any.
Principal Prepayment
--------------------
Any payment of principal by a Mortgagor on a Loan that is received in
advance of its scheduled Due Date and is not accompanied by an amount
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment. Partial Principal Prepayments shall be
applied by the Servicer in accordance with the terms of the related Mortgage
Note.
Principal Prepayment in Full
----------------------------
Any Principal Prepayment made by a Mortgagor of the entire principal
balance of a Loan.
Principal Remittance Amount
---------------------------
As to any Distribution Date, the sum of (a) the principal portion of
each Scheduled Payment due on each Loan on such Loan's Due Date in the related
Due Period and received by the Servicer on or prior to the related Determination
Date, including any Advances with respect thereto, (b) the Stated Principal
Balance of each Loan that was repurchased by a Seller or the Servicer pursuant
to this Agreement as of such Distribution Date, (c) the portion of any
Substitution Adjustment Amount allocable to principal received with respect to
such Distribution Date, (d) any Liquidation Proceeds allocable to recoveries of
principal of Loans that are not yet Liquidated Loans received during the related
Due Period, (e) with respect to each Loan that became a Liquidated Loan during
the related Due Period, the amount of Liquidation Proceeds allocable to
principal received during the related Due Period with respect to such Liquidated
Loan, (f) all Principal Prepayments on Loans received during the related
Prepayment Period and (g) on the Distribution Date on which the Trust Fund is to
be terminated in accordance with Section 9.01 hereof, that portion of the
Termination Price allocable to principal.
Purchase Price
--------------
25
With respect to any Loan required to be repurchased by a Seller
pursuant to Section 2.02 or 2.03 hereof or purchased at the option of the
Servicer pursuant to Section 3.11 hereof, an amount equal to the sum of (a) 100%
of the Stated Principal Balance of the Loan on the date of such purchase, and
(b) accrued interest thereon at the applicable Mortgage Rate (or at the
applicable Adjusted Mortgage Rate if (x) the purchaser is the Servicer or (y)
the purchaser is a Seller and Equity One-Delaware is the Servicer) from the date
through which interest was last paid by the Mortgagor or advanced (and not
reimbursed) by the Servicer to the Determination Date in the month in which the
Purchase Price is to be distributed to Certificateholders.
PTCE 95-60
----------
As defined in Section 5.02(b).
Purchase Agreement
------------------
That certain Purchase Agreement by and between the Depositor and the
Guarantor, dated November 7, 2002, pursuant to which the Depositor will sell the
Guaranteed Certificates to the Guarantor.
Rating Agency
-------------
Moody's, S&P and Fitch. If any of these organizations or a successor
thereof is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Depositor and acceptable to Guarantor, notice of which
designation shall be given to the Trustee. References herein to a given rating
category of a Rating Agency shall mean such rating category without giving
effect to any modifiers.
Realized Loss Amount
--------------------
With respect to each Distribution Date, the excess, if any, of (a) the
aggregate of the Class Certificate Balances of the Offered Certificates (after
giving effect to all distributions on such Distribution Date) over (b) the Pool
Principal Balance at the end of the related Due Period.
Realized Losses
---------------
With respect to any Distribution Date, the sum of (a) the aggregate
amount, if any, by which (i) the outstanding principal balance of each Loan that
became a Liquidated Loan during the related Due Period (such principal balance
determined immediately before such Loan became a Liquidated Loan) exceeds (ii)
the Liquidation Proceeds allocable to principal received during the related Due
Period in connection with the liquidation of such Loan which have not
theretofore been used to reduce the Stated Principal Balance of such Loan, and
(b) any Deficient Valuations.
Realized Loss Amortization Amount
---------------------------------
With respect to (a) the Class M-1 Certificates, the Class M-1 Realized
Loss Amortization Amount, (b) the Class M-2 Certificates, the Class M-2 Realized
Loss Amortization Amount and (c) the Class B Certificates, the Class B Realized
Loss Amortization Amount.
Record Date
-----------
With respect to the Class AF-2, Class AF-3, Class AF-4, Class M-1,
Class M-2 and Class B Certificates and any Distribution Date, the close of
business on the last Business Day of the calendar month immediately preceding
such Distribution Date (or the Closing Date with respect to the first
Distribution Date). With respect to the Class AF-1 and Class AV-1 Certificates
and any Distribution Date, the close of business on the Business Day immediately
preceding such Distribution Date.
Refinance Loan
--------------
Any Loan originated for the purpose of refinancing an existing
mortgage loan.
26
Regular Certificates
--------------------
The Offered Certificates and the Class X Certificates.
Relief Act
----------
The Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
Relief Act Reductions
---------------------
With respect to any Distribution Date and any Loan as to which there
has been a reduction in the amount of interest collectible thereon for the most
recently ended calendar month as a result of the application of the Relief Act,
the amount, if any, by which (a) interest collectible on such Loan for the most
recently ended calendar month is less than (b) interest accrued thereon for such
month pursuant to the Mortgage Note without taking into account the application
of the Relief Act.
REMIC
-----
A "real estate mortgage investment conduit" within the meaning of
section 860D of the Code.
REMIC 1
-------
As defined in the Preliminary Statement.
REMIC 2
-------
As defined in the Preliminary Statement.
REMIC 1 Accretion Directed Classes
----------------------------------
As defined in the Preliminary Statement.
REMIC 1 Accrual Class
---------------------
As defined in the Preliminary Statement.
REMIC Change of Law
-------------------
Any proposed, temporary or final regulation, revenue ruling, revenue
procedure or other official announcement or interpretation relating to REMICs
and the REMIC Provisions issued after the Closing Date.
REMIC Provisions
----------------
Provisions of the federal income tax law relating to real estate
mortgage investment conduits, which appear at sections 860A through 860G of
Subchapter M of Chapter 1 of the Code, and related provisions, and regulations
promulgated thereunder, as the foregoing may be in effect from time to time, as
well as provisions of applicable state laws.
REO Property
------------
A Mortgaged Property acquired by the Trust Fund through foreclosure or
deed-in-lieu of foreclosure in connection with a defaulted Loan.
Request for Release
-------------------
The Request for Release submitted by the Servicer to the Trustee,
substantially in the form of Exhibit J.
Required Insurance Policy
-------------------------
With respect to any Loan, any insurance policy that is required to be
maintained from time to time under this Agreement.
27
Reserve Fund
------------
The account established and maintained by the Trustee pursuant to
Section 3A.02.
Responsible Officer
-------------------
When used with respect to the Trustee, any officer assigned to the
Corporate Trust Division of the Trustee (or any successor thereto), including
any Vice President, any Assistant Vice President, the Secretary, 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.
Rule 144A Letter
----------------
As defined in Section 5.02(b).
Scheduled Payment
-----------------
The scheduled monthly payment on a Loan due on any Due Date allocable
to principal and/or interest on such Loan.
Second Lien Loan
----------------
Any Loan secured by a mortgage that is second in lien priority.
Securities Act
--------------
The Securities Act of 1933, as amended.
Sellers
-------
Collectively, the following entities, their successors and assigns,
each in its capacity as a Seller of the Loans to the Depositor: Equity
One-Delaware; Equity One-Minnesota; Equity One-New Hampshire; Equity
One-Pennsylvania; and Popular Financial.
Senior Enhancement Percentage
-----------------------------
With respect to any Distribution Date, the percentage obtained by
dividing (a) the sum of (i) the aggregate Class Certificate Balance of the
Subordinate Certificates and (ii) the Overcollateralization Amount, in each case
before taking into account the distribution of the Principal Distribution Amount
on that Distribution Date by (b) the Pool Principal Balance as of the last day
of the related Due Period.
Senior Principal Distribution Amount
------------------------------------
As of any Distribution Date on or after the Stepdown Date and as long
as a Trigger Event is not in effect, the lesser of (a) the Principal
Distribution Amount and (b) the excess of (i) the sum of the Class Certificate
Balances of the Guaranteed Certificates immediately prior to that Distribution
Date over (ii) the lesser of (A) the product of (1) 58.00% and (2) the Pool
Principal Balance as of the last day of the related Due Period and (B) the Pool
Principal Balance as of the last day of the related Due Period minus the product
of (1) 0.50% and (2) the Cut-off Date Pool Principal Balance.
Senior Specified Enhancement Percentage
---------------------------------------
As of any date of determination thereof, 42.00%.
Servicer
--------
Equity One, Inc., a Delaware corporation, and its successors and
assigns, in its capacity as servicer hereunder.
Servicer Advance Date
---------------------
28
As to any Distribution Date, the 18th day of the month in which such
Distribution Date occurs, or if such day is not a Business Day, the next
succeeding Business Day.
Servicing Advances
------------------
All customary, reasonable and necessary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of a Mortgaged Property, (b) the foreclosure,
trustee's sale, or other liquidation of any Mortgage or Mortgaged Property, (c)
any expenses reimbursable to the Servicer pursuant to Section 3.11 and any
enforcement or judicial proceedings, including foreclosures, (d) the management
and liquidation of any REO Property, (e) compliance with the obligations
described in Section 3.06 and (f) any payments made by the Servicer pursuant to
Section 3.09.
Servicing Amount
----------------
The sum of (a) the Servicing Fee, (b) unreimbursed Advances and (c)
unreimbursed Servicing Advances.
Servicing Audit
---------------
A physical visit by the Guarantor to the Servicer's chief executive
office during the Servicer's regular business hours for the purpose of reviewing
and auditing its Servicing Practice.
Servicing Fee
-------------
As to each Loan and any Distribution Date, an amount payable out of
each full payment of interest received on such Loan and equal to one-twelfth of
the Servicing Fee Rate multiplied by the Stated Principal Balance of such Loan
as of the Due Date in the month of such Distribution Date (prior to giving
effect to any Scheduled Payments due on such Loan on such Due Date), subject to
reduction as provided in Section 3.13.
Servicing Fee Rate
------------------
With respect to each Loan, 0.50% per annum.
Servicing Officer
-----------------
Any officer of the Servicer involved in, or responsible for, the
administration and servicing of the Loans whose name and facsimile signature
appear on a list of servicing officers furnished to the Trustee by the Servicer
on the Closing Date pursuant to this Agreement, as such list may from time to
time be amended.
Servicing Practice
------------------
The Servicer's practices with respect to collections, property
assessment, workouts, foreclosures, loss mitigation and management of REO
Properties.
S&P
---
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. For purposes of Section 10.05(b) the address for notices to S&P
shall be Standard & Poor's Ratings Services, 55 Water Street, 41st Floor, New
York, New York 10041, Attention: Residential Mortgage Surveillance, or such
other address as S&P may hereafter furnish to the Depositor and the Servicer.
Startup Day
-----------
The Closing Date.
Stated Principal Balance
------------------------
29
As to any Loan, the unpaid principal balance of such Loan as of its
most recent Due Date as specified in the amortization schedule at the time
relating thereto (before any adjustment to such amortization schedule by reason
of any moratorium or similar waiver or grace period) after giving effect to any
previous partial Principal Prepayments and Liquidation Proceeds allocable to
principal (other than with respect to any Liquidated Loan) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment by
the related Mortgagor.
Stepdown Date
-------------
The earlier to occur of (a) the Distribution Date on which the
aggregate Class Certificate Balance of the Guaranteed Certificates is reduced to
zero or (b) the later to occur of (i) the Distribution Date in November 2005
(the 37th Distribution Date) or (ii) the first Distribution Date on which the
Senior Enhancement Percentage is greater than or equal to the Senior Specified
Enhancement Percentage.
Subordinate Certificates
------------------------
The Class M-1, Class M-2 and Class B Certificates.
Subservicer
-----------
Any person to whom the Servicer has contracted for the servicing of
all or a portion of the Loans pursuant to Section 3.02.
Substitute Loan
---------------
A Loan substituted by a Seller for a Deleted Loan(s) which must, on
the date of such substitution, as confirmed in a Request for Release,
substantially in the form of Exhibit J, (a) have a Stated Principal Balance not
in excess of, and not more than 10% less than, the Stated Principal Balance(s)
of the Deleted Loans (such Stated Principal Balances to be measured as of the
respective Due Dates in the month of substitution); (b) have an interest rate
that is determined in the same manner as that of the Deleted Loans(s); (c) have
a Mortgage Rate not lower than, and not more than 1% per annum higher than, that
of the Deleted Loan(s); (d) have a Combined Loan-to-Value Ratio not higher than
that of the Deleted Loan(s); (e) have a debt to income ratio not higher than
that of the Deleted Loan(s); (f) have been originated pursuant to the same
underwriting standards as the Deleted Loan(s); (g) have a remaining term to
maturity not greater than, and not more than one year less than, that of the
Deleted Loan(s); (h) if originated on or after October 1, 2002, not have been
originated in the State of Georgia; and (i) comply, as of the date of
substitution, with each representation and warranty set forth or referred to in
Section 2.03.
Substitution Adjustment Amount
------------------------------
The meaning ascribed to such term pursuant to Section 2.03.
Targeted Overcollateralization Amount
-------------------------------------
As of any Distribution Date, (a) prior to the Stepdown Date, 4.50% of
the Cut-off Date Pool Principal Balance and (b) on and after the Stepdown Date,
the lesser of (i) 4.50% of the Cut-off Date Pool Principal Balance and (ii) the
greater of (A) 9.00% of the Pool Principal Balance as of the last day of the
related Due Period and (B) 0.50% of the Cut-off Date Pool Principal Balance.
Tax Matters Person
------------------
The person designated as "tax matters person" in the manner provided
under Treasury regulation ss.1.860F-4(d) and temporary Treasury regulation
ss.301.6231(a)(7)-1T. Initially, the Tax Matters Person shall be the Trustee.
Tax Matters Person Certificate
------------------------------
The Class R Certificate with a Denomination of .00001%.
30
Termination Price
-----------------
As defined in Section 9.01.
Transfer
--------
Any direct or indirect transfer or sale of any Ownership Interest in a
Class R Certificate.
Transfer Affidavit
------------------
As defined in Section 5.02(c).
Transferor Certificate
----------------------
As defined in Section 5.02(b).
Trigger Event
-------------
With respect to any Distribution Date, if (a) the six-month rolling
average of 60+ Day Delinquent Loans equals or exceeds 40.00% of the Senior
Enhancement Percentage; provided, that if the Class Certificate Balance of the
Guaranteed Certificates has been reduced to zero, a Trigger Event will have
occurred if the six-month rolling average of 60+ Day Delinquent Loans equals or
exceeds 16.80% or (b) the aggregate amount of Realized Losses incurred since the
Cut-off Date through the last day of the related Due Period divided by the
Cut-off Date Pool Principal Balance exceeds the applicable percentages set forth
below with respect to that Distribution Date:
- ----------------------------------------- -----------------------------------
Distribution Date Occurring In Percentage
- ----------------------------------------- -----------------------------------
November 2005 - October 2006 3.50%
- ----------------------------------------- -----------------------------------
November 2006 - October 2007 4.25%
- ----------------------------------------- -----------------------------------
November 2007 - October 2008 4.75%
- ----------------------------------------- -----------------------------------
November 2008 and thereafter 5.25%
- ----------------------------------------- -----------------------------------
Trust Fund
----------
The corpus of the trust created hereunder consisting of (a) the Loans
and all interest and principal received, or receivable, on or with respect
thereto after the Cut-off Date to the extent not applied in computing the
Cut-off Date Principal Balance thereof and all interest and principal payments
on such Loans received prior to the Cut-off Date in respect of installments of
interest and principal due thereafter; (b) the Certificate Account, the
Distribution Account, the Net WAC Cap Account, the Reserve Fund and all amounts
deposited therein pursuant to the applicable provisions of this Agreement; (c)
property that secured a Loan and has been acquired by foreclosure, deed-in-lieu
of foreclosure or otherwise; (d) the Yield Maintenance Agreement; (e) the
Guarantee and (f) all proceeds of the conversion, voluntary or involuntary, of
any of the foregoing.
Trustee
-------
JPMorgan Chase Bank and its successors and, if a successor trustee is
appointed hereunder, such successor.
Trustee Fee
-----------
As to any Distribution Date, an amount equal to one-twelfth of the
Trustee Fee Rate multiplied by the Pool Principal Balance as of such
Distribution Date.
Trustee Fee Rate
----------------
With respect to each Loan, 0.02% per annum.
Trustee Permitted Withdrawal Amount
-----------------------------------
31
Means an aggregate amount not to exceed (a) with respect to costs
associated with the transitioning of servicing, $50,000 per servicing transition
event and (b) with respect to amounts (other than the Trustee Fee) which are
payable to the Trustee pursuant to Section 8.05 hereof, $100,000 per annum.
Trustee Remittance Report
-------------------------
As defined in Section 4.06.
Trustee Reporting Date
----------------------
With respect to each Distribution Date, the fifth (5th) Business Day
immediately preceding such Distribution Date, or if such day is not a Business
Day, the next succeeding Business Day.
Unpaid Realized Loss Amount
---------------------------
For any Class of Subordinate Certificates and as to any Distribution
Date, the excess of (a) the cumulative amount of Applied Realized Loss Amounts
with respect to that Class for all prior Distribution Dates over (b) the
cumulative amount of Realized Loss Amortization Amounts with respect to that
Class for all prior Distribution Dates.
Underwriter Exemption
---------------------
Prohibited Transaction Exemption 2000-58, 65 Fed. Reg. 67765 (2000),
as amended (or any successor thereto).
Voting Rights
-------------
The portion of the voting rights of all of the Certificates, which is
allocated to any Certificate. With respect to any date of determination, the
Offered Certificates shall be allocated 100% of all Voting Rights. The Voting
Rights allocated to each Class of the Offered Certificates shall be the
fraction, expressed as a percentage, the numerator of which is the Class
Certificate Balance of such Class then outstanding and the denominator of which
is the aggregate Stated Principal Balance of the Loans then outstanding. The
Voting Rights allocated to each Class of Certificates shall be allocated among
the Certificates of each such Class in accordance with their respective
Percentage Interests. The Class X and the Class R Certificates will not have any
Voting Rights. Notwithstanding any of the foregoing, on any date on which any
Guaranteed Certificates are outstanding or any amounts are owed to the Guarantor
under this Agreement, all of the Voting Rights allocated to the Guaranteed
Certificates shall be vested in the Guarantor.
Yield Maintenance Agreement
---------------------------
The Master Agreement (including the Schedule thereto and the
transactions thereunder evidenced by a confirmation) dated as of November 7,
2002 by and between the Counterparty and the Trustee, a copy of which is
attached hereto as Exhibit L.
Yield Maintenance Stated Termination
------------------------------------
April 25, 2005, subject to the Following Business Day Convention (as
such term is defined in the Yield Maintenance Agreement).
ARTICLE II
CONVEYANCE OF LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Loans.
----------------------------------
32
(a) Subject to its substitution and repurchase obligations hereunder,
each Seller, concurrently with the execution and delivery hereof, hereby
irrevocably sells, transfers, grants, bargains, assigns, sets over and otherwise
conveys to the Depositor, without recourse, all the right, title and interest of
such Seller in and to that portion of the Loans listed on the Loan Schedule that
pertains to such Seller, including all interest and principal received or
receivable by such Seller on or with respect to such Loans after the Cut-off
Date and all interest and principal payments on such Loans received on or prior
to the Cut-off Date in respect of installments of interest and principal due
thereafter, but not including payments of principal and interest due and payable
on such Loans on or before the Cut-off Date. On or prior to the Closing Date,
each Seller shall deliver to the Depositor or, at the Depositor's direction, to
the Trustee or other designee of the Depositor, the Mortgage File for each Loan
listed in that portion of the Loan Schedule that pertains to such Seller. Such
delivery of the Mortgage Files shall be made against payment by the Depositor of
the purchase price, previously agreed to by such Seller and the Depositor, for
the Loans listed on the Loan Schedule that pertain to such Seller. With respect
to any Loan that does not require the first payment of principal or interest
thereon to be made on or before such Loan's Due Date in the month prior to the
first Distribution Date, such Seller shall deposit into the Certificate Account
on the Closing Date, an amount equal to one month's interest at the related
Mortgage Rate on the Cut-off Date Principal Balance of such Loan (the "Initial
Certificate Account Deposit"). The Sellers, for the benefit of the Depositor,
shall, in connection with the conveyance described in this Section 2.01(a),
deliver to the Depositor on or prior to the Closing Date the financing
statements described in Schedule VI. The Sellers shall also arrange for the
delivery to the Depositor or its assignee, as applicable, of any appropriate
Uniform Commercial Code continuation statements as may be necessary in
connection with the financing statements referenced in the foregoing sentence.
(b) The Depositor, concurrently with the execution and delivery
hereof, hereby irrevocably sells, transfers, grants, bargains, assigns, sets
over and otherwise conveys to the Trustee for the benefit of the Guarantor and
the Certificateholders, without recourse, all the right, title and interest of
the Depositor in and to the Trust Fund together with the Depositor's right to
require the Sellers to cure any breach of a representation or warranty made
herein by the Sellers or to repurchase or substitute for any affected Loan in
accordance herewith. In addition, the Depositor, for the benefit of the Trustee,
the Guarantor and the Certificateholders, shall, in connection with the
conveyance described in this Section 2.01(b), deliver to the Trustee on or prior
to the Closing Date the financing statements described in Schedule VII. The
Depositor shall also arrange for the delivery to the Trustee of any appropriate
Uniform Commercial Code continuation statements as may be necessary in
connection with the financing statements referenced in the foregoing sentence.
(c) In connection with the sale, transfer and assignment set forth in
clause (b) above, the Depositor has delivered or caused to be delivered to the
Trustee or a Custodian for the Trustee on or before the Closing Date or shall
deliver or cause to be delivered to the Trustee or a Custodian for the Trustee
on or before such later date as is set forth below, for the benefit of the
Guarantor and the Certificateholders the following documents or instruments with
respect to each Loan so sold, transferred and assigned:
(i) the original Mortgage Note endorsed (by manual or
facsimile signature) as follows: "Pay to the order of JPMorgan Chase
Bank as trustee for the benefit of the Certificateholders of Equity
One ABS, Inc. Mortgage Pass-Through Certificates Series 2002-5 without
recourse," with all intervening endorsements and all riders and
modifications showing a complete chain of endorsement from the
originator to the Person endorsing it to the Trustee (each such
endorsement being sufficient to transfer all right, title and interest
of the party so endorsing, as noteholder or assignee thereof, in and
to that Mortgage Note);
33
(ii) except as provided below, the original recorded
Mortgage;
(iii) an original recorded assignment of the Mortgage (which
may be included in a blanket assignment or assignments), duly executed
by the appropriate Seller and the Depositor, which assignment will not
be delivered on or before the Closing Date, but shall be delivered
within the time period set forth in this Section 2.01, together with,
except as provided below, all interim recorded assignments of such
Mortgage, if any, all riders or modifications to such Mortgage, if
any, (each such assignment to be in recordable form and sufficient to
effect the assignment of and transfer to the assignee thereof, under
the Mortgage to which the assignment relates, with the original to be
recorded by the Servicer as follows: the Servicer shall promptly send
such assignments for recording, and shall return the original recorded
assignment to the Trustee once returned as recorded by the applicable
recording office);
(iv) the original of each assumption, modification, written
assurance or substitution agreement, if any; and
(v) except as provided below, the original or duplicate
original lender's title policy and all riders thereto.
Notwithstanding the foregoing, in lieu of providing the documents
described in clause (iii) above, the Depositor may at its discretion provide
evidence that the related Mortgage is held through the MERS (R) System. With
respect to any MOM Loan, the original recorded Mortgage that is provided shall
note the MIN of such MOM Loan. Certain Mortgages were or may be, at the sole
discretion of the Servicer, originally recorded in the name of MERS (R), solely
as nominee for the applicable Seller and its successors and assigns;
furthermore, subsequent assignments of such Mortgages were or may be, at the
sole discretion of the Servicer, registered electronically through the MERS (R)
System. For certain other Loans, (i) the Mortgage was recorded in the name of
the Seller, (ii) record ownership was later assigned to MERS (R), solely as
nominee for that Seller, and (iii) subsequent assignments of the Mortgage were
or may be, at the sole discretion of the Servicer, registered electronically
through the MERS (R) System. For each of these Loans, MERS (R) serves as
mortgagee of record on the Mortgage solely as a nominee in an administrative
capacity on behalf of the Trustee, and does not have any beneficial interest in
the Loan.
In the event that in connection with any Loan the Depositor cannot
deliver (a) the original recorded Mortgage, (b) all interim recorded
assignments, if any, or (c) the lender's title policy (together with all riders
thereto) satisfying the requirements of clause (ii), (iii) or (v) above,
respectively, concurrently with the execution and delivery hereof because such
document or documents have not been returned from the applicable public
recording office in the case of clause (ii) or (iii) above, or because the title
policy has not been delivered to either the Servicer or the Depositor by the
applicable title insurer in the case of clause (v) above, and, in the case of
the assignments, if any, of the Mortgage to the Trustee as required under (iii)
above, the Depositor shall promptly deliver to the Trustee, in the case of
clause (ii) or (iii) above, such original recorded Mortgage or such original
recorded assignment, if any, as the case may be, with evidence of recording
indicated thereon upon receipt thereof from the public recording office, or a
copy thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery of the original recorded Mortgage and each
such original recorded assignment, if any, or a copy thereof, certified, if
appropriate, by the relevant recording office, and each title policy as required
by clause (v) above be made later than one year following the Closing Date;
provided, however, in the event the Depositor is unable to deliver within one
year following the Closing Date each original recorded Mortgage, and each such
original recorded assignment, if any, or each such title policy by reason of the
fact that any such documents have not been returned by the appropriate recording
office, or, in the case of
34
each such assignment, if any, because the related original recorded Mortgage or
any related interim recorded assignment have not been returned by the
appropriate recording office or, in the case of each title policy, because the
title insurer has not received the recording information from the appropriate
recording office for such original recorded Mortgage or original recorded
assignment, if any, has not been returned by the appropriate recording office,
the Depositor shall deliver such documents to the Trustee as promptly as
possible upon receipt thereof and, in any event, within 720 days following the
Closing Date. The Depositor shall forward or cause to be forwarded to the
Trustee (a) from time to time additional original documents evidencing an
assumption or modification of a Loan and (b) any other documents required to be
delivered by the Depositor or the Servicer to the Trustee. In the event that the
original recorded Mortgage is not delivered and, in connection with the payment
in full of the related Loan, the public recording office requires the
presentation of a "lost instruments affidavit and indemnity" or any equivalent
document, because only a copy of the Mortgage can be delivered with the
instrument of satisfaction or reconveyance, the Servicer shall execute and
deliver or cause to be executed and delivered such a document to the public
recording office. In the case where a public recording office retains the
original recorded Mortgage or in the case where an original recorded Mortgage is
lost after recordation in a public recording office, the appropriate Seller
shall deliver to the Trustee a copy of such Mortgage certified by such public
recording office to be a true and complete copy of the original recorded
Mortgage.
As promptly as practicable subsequent to such transfer and assignment,
and in any event, within thirty (30) days thereafter, the Servicer shall (i)
affix the Trustee's name to each assignment of Mortgage, if any, as the assignee
thereof as Trustee for the benefit of the Certificateholders, (ii) cause such
assignment, if any, to be in proper form for recording in the appropriate public
office for real property records and (iii) cause to be delivered for recording
in the appropriate public office for real property records the assignments, if
any, of the Mortgages to the Trustee, except that, with respect to any
assignments of Mortgages as to which the information required to prepare such
assignment in recordable form has not yet been received, the Servicer's
obligation to do so and to deliver the same for such recording shall be as soon
as practicable after receipt of such information and in any event within thirty
(30) days after receipt thereof.
In the case of Loans that have been prepaid in full as of the Closing
Date the Depositor, in lieu of delivering the above documents to the Trustee,
will deposit in the Certificate Account the portion of such payment that is
required to be deposited in the Certificate Account pursuant to Section 3.05
hereof.
SECTION 2.02. Acceptance by Trustee of the Loans.
--------------------------------------------------
35
The Trustee acknowledges receipt of the documents identified in the
initial certification in the form annexed hereto as Exhibit D and declares that
it holds and will hold such documents and the other documents delivered to it
constituting the Mortgage Files, and that it holds or will hold such other
assets as are included in the Trust Fund, in trust for the exclusive use and
benefit of all present and future Certificateholders and the Guarantor. The
Trustee acknowledges that it will maintain possession of the Mortgage Notes in
the State of Texas, unless otherwise permitted by the Rating Agencies and the
Guarantor. In the event that the Trustee desires to maintain possession of the
Mortgage Notes in a state (other than the State of Texas) constituting one of
the United States of America, the Trustee shall, at least thirty (30) days prior
to discontinuing possession of the Mortgage Notes in the State of Texas, provide
(i) a notice of such intention to the Rating Agencies, the Guarantor and the
Sellers and (ii) an Opinion of Counsel stating that such relocation of the
Mortgage Notes and the possession by the Trustee of the Mortgage Notes in such
other state will not (a) destroy or impair the perfection by the Trustee of the
security interests assigned and granted to the Trustee pursuant to the
provisions of Section 10.04 or (b) subject any REMIC to any state tax.
The Trustee agrees to execute and deliver on the Closing Date to the
Depositor, the Guarantor, the Servicer and the Sellers an initial certification
in the form annexed hereto as Exhibit D. Based on its review and examination,
and only as to the documents identified in such initial certification, the
Trustee shall acknowledge that such documents appear regular on their face and
relate to the Loans listed in the Loan Schedule or shall indicate any noted
deviations. The Trustee, at the time of delivery of the initial certification,
shall be under no duty or obligation (i) to inspect, review or examine said
documents, instruments, certificates or other papers to determine that the same
are genuine, enforceable or appropriate for the represented purpose or that they
have actually been recorded in the real estate records or that they are other
than what they purport to be on their face or (ii) to determine whether the
Mortgage File shall include any of the documents listed in Section 2.01(c),
except for the Mortgage Note. Should there be any exceptions to the Trustee's
initial certification, the appropriate Seller shall have thirty (30) days from
the Closing Date to cure such exception or deliver a Mortgage File or Mortgage
Files for a Substitute Loan or Substitute Loans in accordance with Section
2.03(c). A Seller may cure an exception based on absence of a Mortgage Note for
a Loan by delivering an executed copy of an Affidavit of Lost Note in the form
attached as Annex I to Exhibit D hereto to the Trustee.
Not later than 90 days after the Closing Date, the Trustee shall
deliver to the Depositor, the Guarantor, the Servicer and the Sellers a final
certification in the form annexed hereto as Exhibit E, with any applicable
exceptions noted thereon. At any time upon request (but not more frequently than
once per calendar month), the Trustee shall deliver to the Depositor, the
Guarantor, the Servicer and the Sellers, an updated schedule of open exceptions
in electronic or written format.
If the Trustee or the Guarantor finds any document constituting a part
of a Mortgage File which does not meet the requirements of Section 2.01, the
Trustee shall list such as an exception in the final certification; provided,
however that the Trustee shall not make any determination as to whether (i) any
endorsement is sufficient to transfer all right, title and interest of the party
so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note or
(ii) any assignment is in recordable form or is sufficient to effect the
assignment of and transfer to the assignee thereof under the mortgage to which
the assignment relates. In performing any such review, the Trustee may
conclusively rely on the Depositor 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 Mortgage Files is limited solely to confirming that the
documents listed in Section 2.01(c) have been received and further confirming
that any and all documents delivered pursuant to Section 2.01(c) have been
executed and relate to the Loans identified in the 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
36
document has been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction. The appropriate Seller shall promptly correct or cure such defect
within 90 days from the date it was so notified of such defect and, if such
Seller does not correct or cure such defect within such period, such Seller
shall either (a) substitute for the related Loan a Substitute Loan, which
substitution shall be accomplished in the manner and subject to the conditions
set forth in Section 2.03, or (b) purchase such Loan from the Trustee within 90
days from the date such Seller was notified of such defect in writing at the
Purchase Price of such Loan; provided, however, that in no event shall such
substitution or purchase occur more than 540 days from the Closing Date, except
that if the substitution or purchase of a Loan pursuant to this provision is
required by reason of a delay in delivery of any comments by the appropriate
recording office, and there is a dispute between either the Servicer or such
Seller and the Trustee over the location or status of the recorded document,
then such substitution or purchase shall occur within 720 days from the Closing
Date; provided, that any Loan that does not constitute a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code shall be subject to a
substitution or repurchase as provided in Section 2.05(b) of this Agreement. The
Trustee shall deliver a report to each Rating Agency and the Guarantor within
720 days from the Closing Date indicating a list of all documents in each
Mortgage File in the possession of the Trustee. Any such substitution pursuant
to (a) above or purchase pursuant to (b) above shall not be effected prior to
the delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, if any, and any substitution pursuant to (a) above shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit J. No substitution is permitted to be made
in any calendar month after the Determination Date for such month. The Purchase
Price for any such Loan shall be deposited by such Seller in the Certificate
Account on or prior to the Distribution Account Deposit Date for the
Distribution Date in the month following the month of repurchase and, upon
receipt of such deposit and certification with respect thereto in the form of
Exhibit J, the Trustee shall release the related Mortgage File to such Seller
and shall execute and deliver at such Seller's request such instruments of
transfer or assignment prepared by such Seller, in each case without recourse,
as shall be necessary to vest in such Seller, or a designee, the Trustee's
interest in any Loan released pursuant hereto.
If, pursuant to the foregoing provisions, a Seller repurchases a Loan
that is registered on the MERS (R) System, the Servicer shall cause MERS (R) to
execute and deliver an assignment of the related Mortgage in recordable form to
transfer the Mortgage from MERS (R) to such Seller and shall cause such Mortgage
to be removed from registration on the MERS (R) System in accordance with MERS'
(R) rules and regulations or (ii) cause MERS (R) to designate on the MERS (R)
System the Seller as the beneficial holder of such Loan.
The Trustee shall retain possession and custody of each Mortgage File
in accordance with and subject to the terms and conditions set forth herein. The
Servicer shall promptly deliver to the Trustee, upon the execution or receipt
thereof, the originals of such other documents or instruments constituting the
Mortgage File as come into the possession of the Servicer from time to time.
It is understood and agreed that the obligation of the appropriate
Seller to substitute for or to purchase any Loan which does not meet the
requirements of Section 2.01 above shall constitute the sole and exclusive
remedy respecting such defect available to the Trustee, the Depositor and any
Certificateholder against any Seller.
SECTION 2.03. Representations, Warranties and Covenants of the Sellers
----------------------------------------------------------------------
and the Servicer.
-----------------
(a) (i) Equity One-Delaware, Equity One-Minnesota, Equity One-New
Hampshire, Equity One-Pennsylvania and Popular Financial, in their
capacities as
37
Sellers, hereby make the representations and warranties set forth in
Schedules IIA through IIE respectively, and by this reference
incorporated herein, to the Depositor, the Guarantor and the Trustee,
as of the Closing Date or if so specified therein, as of the Cut-off
Date; and
(ii) The Servicer hereby makes the representations and warranties set
forth in Schedule IIX, and by this reference incorporated herein, to
the Depositor, the Guarantor and the Trustee, as of the Closing Date
or if so specified therein, as of the Cut-off Date.
(b) Equity One-Delaware, Equity One-Minnesota, Equity One-New
Hampshire, Equity One-Pennsylvania and Popular Financial, in their capacities as
Sellers, hereby make the representations and warranties set forth in Schedules
IIIA through IIIE respectively, and by this reference incorporated herein, to
the Depositor, the Guarantor and the Trustee, as of the Closing Date or if so
specified therein, as of the Cut-off Date.
(c) Upon discovery by any of the parties hereto or the Guarantor of a
breach of a representation or warranty made pursuant to Section 2.03(b) that
materially and adversely affects the interests of the Certificateholders or the
Guarantor in any Loan, the party discovering such breach shall give prompt
notice thereof to the other parties. Any breach of the representations and
warranties set forth in items 44, 45 and 65 of Schedules III-A through III-E
shall automatically be deemed to be "material and adverse to Guarantor's
interest." Each Seller, for itself and not jointly and severally for all other
Sellers, hereby covenants that within 90 days of the earlier of its discovery or
its receipt of written notice from any party of a breach of any representation
or warranty made pursuant to Section 2.03(b) with respect to any Loan listed on
the Loan Schedule that pertains to such Seller, such Seller may, and if such
breach materially and adversely affects the interests of the Certificateholders
or the Guarantor such Seller shall, cure such breach in all material respects,
and if such breach is not so cured, may or shall, as the case may be, (i) if
such 90-day period expires prior to the second anniversary of the Closing Date,
remove such Loan (a "Deleted Loan") from the Trust Fund and substitute in its
place a Substitute Loan, in the manner and subject to the conditions set forth
in this Section or (ii) repurchase the affected Loan or Loans from the Trustee
at the Purchase Price in the manner set forth below; provided, however, that any
such substitution pursuant to (i) above shall not be effected prior to the
delivery to the Trustee of the Opinion of Counsel required by Section 2.05
hereof, if any, and any such substitution pursuant to (i) above shall not be
effected prior to the additional delivery to the Trustee of a Request for
Release substantially in the form of Exhibit J and the Mortgage File for any
such Substitute Loan. Notwithstanding the preceding sentence, any Loan that does
not constitute a "qualified mortgage" within the meaning of Section 860G(a)(3)
of the Code shall be subject to substitution or repurchase as provided in
Section 2.05(b) of this Agreement. The appropriate Seller shall promptly
reimburse the Servicer and the Trustee for any expenses reasonably incurred by
the Servicer or the Trustee in respect of enforcing the remedies for such
breach. With respect to the representations and warranties described in this
Section which are made to the best of a Seller's knowledge, if it is discovered
by either the Depositor, the appropriate Seller, the Guarantor or the Trustee
that the substance of such representation and warranty is inaccurate and such
inaccuracy materially and adversely affects the value of the related Loan or the
interests of the Certificateholders or the Guarantor therein, notwithstanding
such Seller's lack of knowledge with respect to the substance of such
representation or warranty, such inaccuracy shall be deemed a breach by such
Seller of the applicable representation or warranty.
With respect to any Substitute Loan or Loans, such Seller shall
deliver to the Trustee for the benefit of the Certificateholders and the
Guarantor the Mortgage Note, the Mortgage, the related assignment of the
Mortgage, if any, and such other documents and agreements as are required by
Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution is permitted to be made in any
calendar month after the Determination Date for such month.
38
Scheduled Payments due with respect to Substitute Loans in the month of
substitution shall not be part of the Trust Fund and will be retained by the
appropriate Seller on the next succeeding Distribution Date. For the month of
substitution, distributions to the relevant Class will include the monthly
payment due on any Deleted Loan for such month and thereafter the appropriate
Seller shall be entitled to retain all amounts received in respect of such
Deleted Loan. The Servicer shall amend the Loan Schedule for the benefit of the
Certificateholders and the Guarantor to reflect the removal of such Deleted Loan
and the substitution of the Substitute Loan or Loans and the Servicer shall
deliver the amended Loan Schedule to the Trustee. Upon such substitution, the
Substitute Loan or Loans shall be subject to the terms of this Agreement in all
respects, and the appropriate Seller shall be deemed to have made with respect
to such Substitute Loan or Loans, as of the date of substitution, the
representations and warranties made pursuant to Section 2.03(b). Upon any such
substitution and the deposit to the Certificate Account of the amount required
to be deposited therein in connection with such substitution as described in the
following paragraph, the Trustee shall release the Mortgage File held for the
benefit of the Certificateholders and the Guarantor relating to such Deleted
Loan to the appropriate Seller and shall execute and deliver at the appropriate
Seller's direction such instruments of transfer or assignment prepared by such
Seller, in each case without recourse, as shall be necessary to vest title in
such Seller, or its designee, with respect to the Trustee's interest in any
Deleted Loan substituted for pursuant to this Section 2.03.
For any month in which the appropriate Seller substitutes one or more
Substitute Loans for one or more Deleted Loans, the Servicer will determine the
amount (if any) by which the aggregate Stated Principal Balance of all such
Substitute Loans is less than the aggregate Stated Principal Balance of all such
Deleted Loans (such Stated Principal Balances to be measured as of the
respective Due Dates in the month of substitution). The amount of such shortage
(the "Substitution Adjustment Amount") plus an amount equal to the aggregate of
any unreimbursed Advances with respect to such Deleted Loans shall be deposited
in the Certificate Account by such Seller on or before the Distribution Account
Deposit Date for the Distribution Date in the month succeeding the calendar
month during which the related Loan became required to be purchased or replaced
hereunder.
In the event that the appropriate Seller shall have repurchased a
Loan, the Purchase Price therefor shall be deposited in the Certificate Account
pursuant to Section 3.05 on or before the Distribution Account Deposit Date for
the Distribution Date in the month following the month during which such Seller
became obligated hereunder to repurchase or replace such Loan and upon such
deposit of the Purchase Price, the delivery of the Opinion of Counsel required
by Section 2.05 and receipt of a Request for Release in the form of Exhibit J,
the Trustee shall release the related Mortgage File held for the benefit of the
Certificateholders and the Guarantor to such Seller, and the Trustee shall
execute and deliver at such Seller's direction such instruments of transfer or
assignment prepared by such Seller, in each case without recourse, as shall be
necessary to transfer title from the Trustee. It is understood and agreed that
the obligation under this Agreement of any Seller to cure, repurchase or replace
any Loan as to which a breach of a representation or warranty has occurred and
is continuing shall constitute the sole and exclusive remedy against such
Sellers respecting such breach of a representation and warranty available to
Certificateholders, the Depositor or the Trustee on their behalf.
(d) The representations and warranties made pursuant to this Section
2.03 shall survive delivery of the respective Mortgage Files to the Trustee for
the benefit of the Certificateholders and the Guarantor.
SECTION 2.03A. Additional Obligations of Equity One-Delaware.
-------------------------------------------------------------
39
(a) In addition to the representations and warranties made by Equity
One-Delaware in its capacity as a Seller, as described in Section 2.03 and set
forth in Schedules IIA and IIIA, Equity One-Delaware hereby represents and
warrants to the Depositor, the Guarantor and the Trustee that all of the
representations and warranties of (i) the other Sellers described in Section
2.03 and set forth in Schedules IIB through IIE and IIIB through IIIE and (ii)
the Depositor set forth in Section 1 of the Purchase Agreement, are true and
accurate in all respects.
(b) Equity One-Delaware hereby covenants that it shall comply with the
repurchase and substitution obligations described in Section 2.02 and 2.03 in
the event that (i) a breach of any of the representations and warranties set
forth in Schedules IIIB through IIIE occurs and (ii) the related Seller defaults
on its repurchase and substitution obligations under Sections 2.02 and 2.03.
(c) Equity One-Delaware shall indemnify the Trust Fund for any loss,
liability or expense incurred by the Trust Fund in connection with any legal
action arising from a breach of any of the representations and warranties of the
Sellers set forth in Schedules IIIA through IIIE.
SECTION 2.04. Representations and Warranties of the Depositor as to
----------------------------------------------------------------------
the Loans
---------
The Depositor hereby represents and warrants to the Trustee and the
Guarantor with respect to each Loan that as of the Closing Date, and following
the transfer of the Loans to it by the Sellers, the Depositor had good title to
the Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Depositor, concurrently with the execution and delivery hereof,
hereby irrevocably sells, transfers, assigns, sets over, grants, bargains and
otherwise conveys to the Trustee for the benefit of the Certificateholders and
the Guarantor, without recourse, all of its rights, title and interest with
respect to the Loans including, without limitation, the representations and
warranties of the Sellers made pursuant to Sections 2.03(a) and 2.03(b) hereof,
together with all rights of the Depositor to require any applicable Seller to
cure any breach thereof or to repurchase or substitute for any affected Loan in
accordance with this Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the Mortgage Files to
the Trustee. Upon discovery by the Depositor, the Guarantor or the Trustee of a
breach of any of the foregoing representations and warranties set forth in this
Section 2.04, which breach materially and adversely affects the interest of the
Certificateholders or the Guarantor, the party discovering such breach shall
give prompt written notice to the other parties and to each Rating Agency.
SECTION 2.05. Delivery of Opinion of Counsel in Connection with
----------------------------------------------------------------------
Substitutions.
--------------
(a) Notwithstanding any contrary provision of this Agreement, no
substitution pursuant to Section 2.02 or Section 2.03 shall be made more than 90
days after the Closing Date unless the appropriate Seller delivers to the
Trustee and the Guarantor an Opinion of Counsel, which Opinion of Counsel shall
not be at the expense of either the Trustee or the Trust Fund, addressed to the
Trustee, to the effect that such substitution will not (i) result in the
imposition of the tax on "prohibited transactions" on the Trust Fund or
contributions after the Startup Day, as defined in Sections 860F(a)(2) and
860G(d) of the Code, respectively, and/or (ii) cause the Trust Fund to fail to
qualify as one or more REMICs at any time that any Certificates are outstanding.
40
(b) Upon discovery by the Depositor, the appropriate Seller, the
Servicer, the Guarantor or the Trustee that any Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall promptly (and in any event within five (5)
Business Days of discovery) give written notice thereof to the other parties. In
connection therewith, the Trustee shall require the appropriate Seller, at such
Seller's option, to either (i) substitute, if the conditions in Section 2.03(c)
with respect to substitutions are satisfied, a Substitute Loan for the affected
Loan within 90 days from the discovery or (ii) repurchase the affected Loan
within 90 days of such discovery in the same manner as it would repurchase a
Loan for a breach of representation or warranty made pursuant to Section 2.03.
The Trustee shall reconvey to such Seller the Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would
release a Loan repurchased for breach of a representation or warranty contained
in Section 2.03.
SECTION 2.06. Execution and Delivery of Certificates.
-----------------------------------------------------
The Trustee acknowledges the transfer and assignment to it of the
Trust Fund and, concurrently with such transfer and assignment and in payment
therefor, has executed and delivered to or upon the order of the Depositor, the
Certificates in authorized denominations evidencing directly or indirectly the
entire ownership of the Trust Fund. The Trustee agrees to hold the Trust Fund
and exercise the rights referred to above for the benefit of all present and
future Certificateholders and the Guarantor and to perform the duties set forth
in this Agreement to the best of its ability, to the end that the interests of
the Certificateholders and the Guarantor may be adequately and effectively
protected.
SECTION 2.07. REMIC Matters.
----------------------------
The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Day" for purposes of the REMIC Provisions shall be the
Closing Date. The "tax matters person" with respect to each REMIC created
hereunder shall be the Trustee and the Trustee shall hold the Tax Matters Person
Certificate. The Trust Fund's fiscal year shall be the calendar year and, for
purposes of section 860C of the Code, the taxable income of each REMIC created
hereunder shall be computed under an accrual method of accounting.
The Trustee shall treat each of the Net WAC Cap Account and the
Reserve Fund as a separate and distinct outside reserve fund within the meaning
of ss.1.860G-2(h) of the Income Tax Regulations. Neither the Net WAC Cap
Account, the Reserve Fund, nor the Yield Maintenance Agreement shall be treated
as an asset of any REMIC. The Trustee shall treat the rights of (a) the Holders
of the Class AF-1 and Class AV-1 Certificates to receive payments from the Net
WAC Cap Account and (b) the Holders of the Class AV-1 Certificates to receive
payments from the Reserve Fund as rights in a limited recourse interest rate cap
contract. The Holders of the Class X Certificates will own each of the Net WAC
Cap Account and the Reserve Fund. The Class AF-1 and Class AV-1 Certificates
shall be treated as representing ownership of not only a regular interest in a
REMIC but also ownership of an interest in an interest rate cap contract.
The Trustee shall treat the payment of any Net WAC Cap Carryover as
paid first to the Class X Certificates, deposited by the Class X Holders in the
Net WAC Cap Account and then paid from the Net WAC Cap Account to the relevant
Offered Certificates. The Trustee shall treat the Offered Certificates as
"contractual rights coupled with regular interests" within the meaning of
ss.1.860G-2(i) of the Income Tax Regulations. In determining the issue price of
the regular interests issued to Holders of Offered Certificates, the Trustee
shall assume that each interest rate cap contract has a value of $10,000.
SECTION 2.08. Covenants of the Servicer.
----------------------------------------
41
The Servicer hereby covenants to the Depositor, the Guarantor and the
Trustee as follows:
(a) the Servicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, any affiliate
of the Depositor, the Guarantor or the Trustee and prepared by the Servicer
pursuant to this Agreement will contain any untrue statement of a material fact
or omit to state a material fact necessary to make such information,
certificate, statement or report not misleading.
ARTICLE III
ADMINISTRATION AND SERVICING
OF LOANS
SECTION 3.01. Servicer to Service Loans.
----------------------------------------
For and on behalf of the Certificateholders and the Guarantor, the
Servicer shall service and administer the Loans in accordance with the terms of
this Agreement and customary and usual standards of practice of prudent mortgage
loan servicers. In connection with such servicing and administration, the
Servicer shall have full power and authority, acting alone and/or through
Subservicers as provided in Section 3.02 hereof, to do or cause to be done any
and all things that it may deem necessary or desirable in connection with such
servicing and administration, including but not limited to, the power and
authority, subject to the terms hereof, (i) to execute and deliver, on behalf of
the Certificateholders and the Trustee customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds and (iv) to effectuate foreclosure or
other conversion of the ownership of the Mortgaged Property securing any Loan;
provided that the Servicer shall not take any action that is inconsistent with
or prejudices the interests of the Trust Fund, the Guarantor or the
Certificateholders in any Loan or the rights and interests of the Depositor, the
Guarantor, the Trustee and the Certificateholders under this Agreement. The
Servicer shall represent and protect the interests of the Trust Fund in the same
manner as it protects its own interests in mortgage loans in its own portfolio
in any claim, proceeding or litigation regarding a Loan, and shall not make or
permit any modification, waiver or amendment of any Loan which would cause the
Trust Fund to fail to qualify as one or more REMICs or result in the imposition
of any tax under Section 860F(a) or Section 860G(d) of the Code. Without
limiting the generality of the foregoing, the Servicer, in its own name or in
the name of the Depositor and the Trustee, is hereby authorized and empowered by
the Depositor and the Trustee, when the Servicer believes it appropriate in its
reasonable judgment, to execute and deliver, on behalf of the Trustee, the
Depositor, the Certificateholders or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Loans, and with respect to the
Mortgaged Properties held for the benefit of the Certificateholders. The
Servicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by either or both of them as are
necessary or appropriate to enable the Servicer to service and administer the
Loans to the extent that the Servicer is not permitted to execute and deliver
such documents pursuant to the preceding sentence. Upon receipt of such
documents, the Depositor and/or the Trustee shall execute such documents and
deliver them to the Servicer.
42
SECTION 3.02. Subservicing; Enforcement of the Obligations of
----------------------------------------------------------------------
Servicers.
----------
(a) The Servicer may arrange for the subservicing of any Loan by a
Subservicer pursuant to a subservicing agreement with any institution which is
pre-approved by the Guarantor and is an approved Freddie Mac servicer as
indicated in writing; provided, however, that (i) such subservicing arrangement
and the terms of the related subservicing agreement must provide for the
servicing of such Loans in a manner consistent with the servicing arrangements
contemplated hereunder and (ii) the Servicer shall terminate such subservicing
arrangement and related subservicing agreement (for which the Trust Fund and
Trustee shall not incur any termination fees or transfer expenses in connection
with any such termination) upon either (A) the request of Guarantor, if such
subservicer is no longer an approved Freddie Mac servicer or (B) the reasonable
request of Guarantor, for any other reason. The Servicer shall give prior notice
to the Guarantor and the Trustee of the appointment of any Subservicer and shall
furnish the Guarantor a copy of any subservicing agreement. Unless the context
otherwise requires, references in this Agreement to actions taken or to be taken
by the Servicer in servicing the Loans include actions taken or to be taken by a
Subservicer on behalf of the Servicer. Notwithstanding the provisions of 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 liable to the Depositor, the Trustee, the Guarantor and the
Certificateholders for the servicing and administration of the 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 Loans. All actions of each Subservicer
performed pursuant to the related subservicing agreement shall be performed as
an agent of the Servicer with the same force and effect as if performed directly
by the Servicer.
(b) For purposes of this Agreement, the Servicer shall be deemed to
have received any collections, recoveries or payments with respect to the Loans
that are received by a Subservicer regardless of whether such payments are
remitted by the Subservicer to the Servicer.
SECTION 3.03. Rights of the Depositor and the Trustee in Respect of
----------------------------------------------------------------------
the Servicer.
-------------
The Depositor may, but is not obligated to, enforce the obligations of
the Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Servicer hereunder and in
connection with any such defaulted obligation to exercise the related rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of any
of its obligations hereunder by virtue of such performance by the Depositor or
its designee. Neither the Trustee nor the Depositor shall have any
responsibility or liability for any action or failure to act by the Servicer nor
shall the Trustee or the Depositor be obligated to supervise the performance of
the Servicer hereunder or otherwise.
SECTION 3.04. Trustee to Act as Servicer.
-----------------------------------------
In the event that the Servicer shall for any reason no longer be the
Servicer hereunder (including by reason of an Event of Default), the Trustee or
its successor shall thereupon assume all of the rights and obligations of the
Servicer hereunder arising thereafter (except that the Trustee shall not be (i)
liable for losses of the Servicer pursuant to Section 3.09 hereof or any acts or
omissions of the predecessor Servicer hereunder, (ii) obligated to make Advances
if it is prohibited from doing so by applicable law, (iii) obligated to
effectuate repurchases or substitutions of Loans hereunder including, but not
limited to, repurchases or substitutions of Loans pursuant to Section 2.02 or
2.03 hereof, (iv) responsible for expenses of the Servicer pursuant to Section
2.03 or (v) deemed to have made any
43
representations and warranties of the Servicer hereunder). Any such assumption
shall be subject to Section 7.02 hereof. If the Servicer shall for any reason no
longer be the Servicer (including by reason of any Event of Default), the
Trustee or its successor shall succeed to any rights and obligations of the
Servicer under each subservicing agreement.
The Servicer shall, upon request of the Trustee, but at the expense of
the Servicer, deliver to the assuming party all documents and records relating
to each subservicing agreement or substitute subservicing agreement and the
Loans then being serviced thereunder and an accounting of amounts collected or
held by it and otherwise use its best efforts to effect the orderly and
efficient transfer of the substitute subservicing agreement to the assuming
party.
SECTION 3.05. Collection of Loan Payments; Certificate Account;
----------------------------------------------------------------------
Distribution Account.
---------------------
(a) The Servicer shall make reasonable efforts in accordance with the
customary and usual standards of practice of prudent mortgage servicers to
collect all payments called for under the terms and provisions of the Loans to
the extent such procedures shall be consistent with this Agreement and the terms
and provisions of any related Required Insurance Policy. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge
or any prepayment charge or penalty interest in connection with the prepayment
of a Loan and (ii) extend the due dates for payments due on a Mortgage Note for
a period not greater than 180 days; provided, however, that the Servicer cannot
extend the maturity of any such Loan past the date on which the final payment is
due on the latest maturing Loan as of the Cut-off Date. In the event of any such
arrangement, the Servicer shall make Advances on the related Loan in accordance
with the provisions of Section 4.01 during the scheduled period in accordance
with the amortization schedule of such Loan without modification thereof by
reason of such arrangements. The Servicer shall not be required to institute or
join in litigation with respect to collection of any payment (whether under a
Mortgage, Mortgage Note or otherwise or against any public or governmental
authority with respect to a taking or condemnation) if it reasonably believes
that enforcing the provision of the Mortgage or other instrument pursuant to
which such payment is required is prohibited by applicable law.
(b) The Servicer shall establish and maintain a Certificate Account
into which the Servicer shall deposit or cause to be deposited within one
Business Day of receipt, except as otherwise specifically provided herein, the
following payments and collections remitted by Subservicers or received by it in
respect of the Loans subsequent to the Cut-off Date (other than in respect of
principal and interest due on the Loans on or before the Cut-off Date) and the
following amounts required to be deposited hereunder:
(i) all payments on account of principal on the Loans,
including Principal Prepayments;
(ii) all payments on account of interest on the Loans, net
of the related Servicing Fee;
(iii) all Insurance Proceeds and Liquidation Proceeds, other
than proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with the
Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Servicer
pursuant to Section 3.05(d) in connection with any losses on Permitted
Investments;
44
(v) any amounts required to be deposited by the Servicer
pursuant to Section 3.09(c) and, in respect of net monthly rental
income from REO Property, pursuant to Section 3.11 hereof;
(vi) all Substitution Adjustment Amounts;
(vii) all Advances made by the Servicer pursuant to Section
4.01; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Servicer shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of prepayment penalties, late payment
charges or assumption fees, if collected, need not be remitted by the Servicer.
In the event that the Servicer shall remit any amount not required to be
remitted, it may at any time withdraw or direct the institution maintaining the
Certificate Account to withdraw such amount from the Certificate Account, any
provision herein to the contrary notwithstanding. Such withdrawal or direction
may be accomplished by delivering written notice thereof to the Trustee or such
other institution maintaining the Certificate Account which describes the
amounts deposited in error in the Certificate Account. The Servicer shall
maintain adequate records with respect to all withdrawals made pursuant to this
Section. All funds deposited in the Certificate Account shall be held in trust
for the Certificateholders and the Guarantor until withdrawn in accordance with
Section 3.08.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders and the Guarantor, the Distribution Account. The Trustee
shall, promptly upon receipt, deposit in the Distribution Account and retain
therein the following:
(i) the aggregate amount remitted by the Servicer to the
Trustee pursuant to Section 3.08(a)(ix); and
(ii) any other amounts deposited hereunder which are
required to be deposited in the Distribution Account.
In the event that the Servicer shall remit any amount not required to
be remitted, it may at any time direct the Trustee to withdraw such amount from
the Distribution Account, any provision herein to the contrary notwithstanding.
Such direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds deposited in the Distribution Account shall be held by the
Trustee uninvested in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.08. In
no event shall the Trustee incur liability for withdrawals from the Distribution
Account at the direction of the Servicer.
(d) Each institution at which the Certificate Account is maintained
shall invest the funds therein as directed in writing by the Servicer in
Permitted Investments, which shall mature not later than, the second Business
Day next preceding the Distribution Account Deposit Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
account or a fund for which such institution or an affiliate thereof serves as
an investment advisor, administrator, shareholder servicing agent and /or
custodian or subcustodian, then such Permitted Investment shall mature not later
than the Business Day next preceding such Distribution Account Deposit Date) and
shall not be sold or disposed of prior to its maturity. All such Permitted
Investments shall be made in the name of the Trustee, for the benefit of the
Certificateholders. So long as no Event of Default shall have occurred and be
continuing, all income and gain net of any losses realized from any such
investment of funds on
45
deposit in the Certificate Account shall be for the benefit of the Servicer as
servicing compensation and shall be remitted to it monthly as provided herein.
If an Event of Default has occurred and is continuing, all income and gain net
of any losses realized from Permitted Investments made with funds on deposit in
the Certificate Account shall be deposited into the Certificate Account. The
amount of any realized losses in the Certificate Account in respect of any such
investments shall promptly be deposited by the Servicer in the Certificate
Account without right of reimbursement. The Trustee in its fiduciary capacity
shall not be liable for the amount of any loss incurred in respect of any
investment or lack of investment of funds held in the Certificate Account and
made in accordance with this Section 3.05.
(e) The Servicer shall give notice to the Trustee, the Guarantor, each
Seller, each Rating Agency and the Depositor of any proposed change of the
location of the Certificate Account prior to any change thereof. The Trustee
shall give notice to the Servicer, each Seller, each Rating Agency and the
Depositor of any proposed change of the location of the Distribution Account
prior to any change thereof.
SECTION 3.06. Payment of Taxes, Assessments, Hazard Insurance Premiums
----------------------------------------------------------------------
and Similar Items; Escrow Accounts.
-----------------------------------
(a) The Servicer shall require Mortgagors to pay all taxes,
assessments, hazard insurance premiums, flood insurance premiums, condominium
association dues or comparable items for the account of the Mortgagors. To the
extent required by the Seller at the time the related Loan was originated and
not violative of current law, the Servicer shall establish and maintain one or
more accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors (or advances by the Servicer) for the payment of
taxes, assessments, hazard insurance premiums, condominium association dues or
comparable items for the account of the Mortgagors. Nothing herein shall require
the Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law or if the Seller of the related Loan did not require the
establishment of an Escrow Account at the time the Loan was originated.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium association dues, or comparable items, to reimburse the
Servicer out of related collections for any payments made pursuant to Sections
3.01 hereof (with respect to taxes and assessments and insurance premiums) and
3.09 hereof (with respect to hazard insurance), to refund to any Mortgagors any
sums determined to be overages, to pay interest, if required by law or the terms
of the related Mortgage or Mortgage Note, to Mortgagors on balances in the
Escrow Account or to clear and terminate the Escrow Account at the termination
of this Agreement in accordance with Section 9.01 hereof. The Escrow Accounts
shall not be a part of the Trust Fund.
(b) The Servicer shall advance any payments referred to in Section
3.06(a) that are not timely paid by the Mortgagors on the date when the tax,
premium or other cost for which such payment is intended is due, but the
Servicer shall be required so to advance only to the extent that such advances,
in the good faith judgment of the Servicer, are required to be made to protect
the lien of the Mortgage and will be recoverable by the Servicer out of
Insurance Proceeds, Liquidation Proceeds or otherwise. The amount of any such
advances made by the Servicer for the purpose of maintaining any hazard or flood
insurance shall not, for the purpose of calculating monthly distributions to the
Certificateholders or remittances to the Trustee for their benefit, be added to
the principal balance of the related Loan, notwithstanding that the terms of the
Loan so permit. Any advance made by the Servicer pursuant to this Section 3.06
shall be recoverable as a Servicing Advance to the extent permitted by Section
3.08.
SECTION 3.07. Access to Certain Documentation and Information
----------------------------------------------------------------------
Regarding the Loans.
--------------------
46
(a) The Servicer shall afford the Depositor, the Guarantor, the
Trustee and each Rating Agency reasonable access to all records and
documentation regarding the Loans and all accounts, insurance information and
other matters relating to this Agreement, such access being afforded without
charge, but only upon reasonable request and during normal business hours at the
office designated by the Servicer.
(b) Upon reasonable advance notice in writing, the Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and reasonable access to information and
documentation regarding the Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the OTS or other regulatory authorities
with respect to investment in the Certificates; provided that the Servicer shall
be entitled to be reimbursed by each such Certificateholder for actual expenses
incurred by the Servicer in providing such reports and access.
(c) If any Loan is subject to an Early Payment Default, the Servicer
will forward to the Guarantor, upon its reasonable request, copies of the Loan
documentation and related underwriting documentation with respect to such Loan
that is or was required to be delivered to the Trustee pursuant to this
Agreement.
(d) The Guarantor will be permitted, upon reasonable notice and during
normal business hours, at the chief executive office of the Servicer, to review
copies of the Loan documentation and related underwriting documentation that is
or was required to be delivered to the Trustee pursuant to this Agreement with
respect to 300 of the Loans (a "Mortgage Loan Sample"), in order to ascertain
whether each such Loan was purchased generally in accordance with the Seller's
underwriting criteria as set forth in the Information Circular. If, as a result
of such investigation, the Guarantor determines (after the appeals process set
forth in the Freddie Mac Single Family Seller/Servicer Guide) that more than 20%
(by number) of the Loans in such Mortgage Loan Sample were not so underwritten,
the Servicer will permit the Guarantor to review an additional Mortgage Loan
Sample in accordance with the same procedures until the Guarantor has reviewed a
Mortgage Loan Sample that contains fewer than 20% (by number) of Loans that were
not purchased generally in accordance with the Seller's underwriting criteria
set forth in the Information Circular. If any such Mortgage Loan Sample is
incomplete, unreadable or unavailable to Guarantor, the related Seller(s) shall,
at Guarantor's request, either (i) repurchase such Loan(s) or (ii) replace them
with Substitute Loan(s), provided, however, that any such Substitute Loan(s)
shall be acceptable to Guarantor, in its reasonable discretion. Any repurchase
or substitution pursuant to the foregoing sentence shall be accomplished in the
manner and subject to the conditions set forth in Section 2.03.
(e) For a period of two years from the Closing Date, the Guarantor may
contact the Sellers to confirm that the Sellers continue to actively engage in
the business of purchasing or originating loans to low-income families and to
obtain other non-proprietary information about the Seller's activities that may
assist the Guarantor in completing its own regulatory requirements. The Seller
shall use commercially reasonable efforts to provide such information to
Guarantor.
(f) The Guarantor, at its sole expense, shall be entitled to access
the servicing files relating to the Loans during regular business hours at the
Servicer's chief executive office, within 90 days of any request therefore in
order to compile loan level data for HUD reporting.
SECTION 3.08. Permitted Withdrawals from the Certificate Account and
----------------------------------------------------------------------
Distribution Account.
---------------------
47
(a) The Servicer may from time to time make withdrawals from the
Certificate Account for the following purposes:
(i) to pay to the Servicer (to the extent not previously
retained by the Servicer) the servicing compensation to which it is
entitled pursuant to Section 3.13, and, subject to Section 3.05(d), to
pay to the Servicer, as additional servicing compensation, earnings on
or investment income with respect to funds in or credited to the
Certificate Account;
(ii) to reimburse the Servicer for unreimbursed Advances
made by it, such right of reimbursement pursuant to this subclause
(ii) being limited to amounts received on the Loan(s) in respect of
which any such Advance was made, excluding any Purchase Price proceeds
received from the Servicer pursuant to Section 3.11 and subject to
Section 9.01;
(iii) to reimburse the Servicer for any Nonrecoverable
Advance previously made, except that the Servicer shall no longer be
entitled to reimbursement for any Nonrecoverable Advance on a Loan as
of the date the Servicer purchases such Loan from the Trust Fund
pursuant to Section 3.11 or Section 9.01;
(iv) to reimburse the Servicer for Insured Expenses from the
related Insurance Proceeds;
(v) to reimburse the Servicer for (a) unreimbursed Servicing
Advances, the Servicer's right to reimbursement pursuant to this
clause (a) with respect to any Loan being limited to amounts received
on such Loan(s) which represent late recoveries of the payments for
which such Servicing Advances were made pursuant to Section 3.01 or
Section 3.06 and (b) for unpaid Servicing Fees as provided in Section
3.11 hereof;
(vi) to pay to the purchaser, with respect to each Loan or
property acquired in respect thereof that has been purchased pursuant
to Section 2.02, 2.03 or 3.11, all amounts received thereon after the
date of such purchase;
(vii) to (A) reimburse the Sellers or the Depositor for
expenses incurred by any of them that are reimbursable pursuant to
Section 6.03 hereof or (B) to pay to the Trustee any Trustee Permitted
Withdrawal Amounts;
(viii) to withdraw any amount deposited in the Certificate
Account and not required to be deposited therein;
(ix) on or prior to the Distribution Account Deposit Date,
to withdraw an amount equal to the Available Funds for such
Distribution Date and remit such amounts to the Trustee for deposit in
the Distribution Account; and
(x) to clear and terminate the Certificate Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Loan by
Loan basis, for the purpose of justifying any withdrawal from the Certificate
Account pursuant to such subclauses (i), (ii), (iv), (v) and (vi). Prior to
making any withdrawal from the Certificate Account pursuant to subclause (iii),
the Servicer shall deliver to the Trustee an Officer's Certificate of a
Servicing Officer indicating the amount of any previous Advance determined by
the Servicer to be a Nonrecoverable Advance and identifying the related
Loans(s), and their respective portions of such Nonrecoverable Advance.
48
(b) The Trustee shall withdraw funds from the Distribution Account to
make the distributions specified in this Agreement (and to withhold from the
amounts so withdrawn, the amount of any taxes that it is authorized to withhold
pursuant to the last paragraph of Section 8.11). In addition, the Trustee may
from time to time make withdrawals from the Distribution Account for the
following purposes:
(i) to the extent not remitted by the Servicer pursuant to
Section 3.08(a)(vii)(B) above within a reasonable period of time after
request by the Trustee, to remit (prior to making any other
distributions from amounts held in the Distribution Account) to itself
any Trustee Permitted Withdrawal Amounts;
(ii) to withdraw and return to the Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. Maintenance of Hazard Insurance; Maintenance of Primary
----------------------------------------------------------------------
Insurance Policies.
-------------------
(a) The Servicer shall require Mortgagors to maintain, for each Loan,
hazard insurance with extended coverage (i) in the case of a Loan secured by a
Mortgage creating a first lien on the related Mortgaged Property, in an amount
that is at least equal to the original principal balance of such Loan or the
maximum insurable value of the improvements on such Mortgaged Property,
whichever is less, and (ii) in the case of a Second Lien Loan, in an amount
equal to the lesser of the combined principal balance of such Second Lien Loan
and the related first lien mortgage loan or the maximum insurable value of the
improvements on the related Mortgaged Property. Each such policy of standard
hazard insurance shall contain, or have an accompanying endorsement that
contains, a standard mortgagee clause. Any amounts collected by the Servicer
under any such policies (other than the amounts to be applied to the restoration
or repair of the improvements on the related Mortgaged Property or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Certificate Account. It is understood and
agreed that no earthquake or other additional insurance is to be required of any
Mortgagor or maintained on property acquired in respect of a Mortgage other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged Property
is located at the time of origination of the Loan in a federally designated
special flood hazard area and such area is participating in the national flood
insurance program, the Servicer shall require the related Mortgagor to maintain
flood insurance with respect to such Loan. Such flood insurance shall be in an
amount equal to the original principal balance of the related Loan.
(b) The Servicer shall not be required to have Mortgagors maintain any
Primary Mortgage Insurance Policy with respect to any Loan, but may do so as
allowed by law, and shall allow the cancellation of any such Primary Mortgage
Insurance Policy as required by law. The Servicer shall not take any action
which would result in non-coverage under any applicable Primary Mortgage
Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. If any Mortgagor fails to pay the premiums for its
Primary Mortgage Insurance Policy, if any, the Servicer may, but shall not be
required to, pay such premiums. Any payment made by the Servicer pursuant to
this Section 3.09(b) shall be recoverable as a Servicing Advance to the extent
permitted by Section 3.08.
49
(c) In connection with its activities as Servicer of the Loans, the
Servicer agrees to present on behalf of itself, the Trustee, the Guarantor and
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, to take such reasonable action as shall be
necessary to permit recovery under any Primary Mortgage Insurance Policies
respecting defaulted Loans. Any amounts collected by the Servicer under any
Primary Mortgage Insurance Policies shall be deposited in the Certificate
Account.
SECTION 3.10. Enforcement of Due-on-Sale Clauses; Assumption
----------------------------------------------------------------------
Agreements.
-----------
(a) When any property subject to a Mortgage has been conveyed by the
Mortgagor, the Servicer, to the extent that it has knowledge of such conveyance,
may, at its discretion, but is not required to, enforce any due-on-sale clause
contained in any Mortgage Note or Mortgage, to the extent permitted under
applicable law and governmental regulations, but only to the extent that such
enforcement will not adversely affect or jeopardize coverage under any Required
Insurance Policy. The Servicer is authorized, subject to Section 3.10(b), to
take or enter into an assumption and modification agreement from or with the
Person to whom such property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Loan shall continue to be covered (if so covered before the Servicer enters such
agreement) by the applicable Required Insurance Policies. The Servicer, subject
to Section 3.10(b), is also authorized with the prior approval of the insurers
under any Required Insurance Policies to enter into a substitution of liability
agreement with such Person, pursuant to which the original Mortgagor is released
from liability and such Person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Notwithstanding the foregoing, the Servicer shall not
be deemed to be in default under this Section by reason of any transfer or
assumption which the Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(b) In any case in which a Mortgaged Property has been conveyed to a
Person by a Mortgagor, and such Person is to enter into an assumption agreement
or modification agreement or supplement to the Mortgage Note or Mortgage that
requires the signature of the Trustee, or if an instrument of release signed by
the Trustee is required releasing the Mortgagor from liability on the Loan, the
Servicer shall prepare and deliver or cause to be prepared and delivered to the
Trustee for signature and shall direct, in writing, the Trustee to execute the
assumption agreement with the Person to whom the Mortgaged Property is to be
conveyed and such modification agreement or supplement to the Mortgage Note or
Mortgage or other instruments as are reasonable or necessary to carry out the
terms of the Mortgage Note or Mortgage or otherwise to comply with any
applicable laws regarding assumptions or the transfer of the Mortgaged Property
to such Person. In connection with any such assumption, no material term of the
Mortgage Note may be changed. In addition, the substitute Mortgagor and the
Mortgaged Property must be acceptable to the Servicer in accordance with its
underwriting standards as then in effect. Together with each such substitution,
assumption or other agreement or instrument delivered to the Trustee for
execution by it, the Servicer shall deliver an Officer's Certificate signed by a
Servicing Officer stating that the requirements of this subsection have been met
in connection therewith. The Servicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. Any fee
collected by the Servicer for entering into an assumption or substitution of
liability agreement will be retained by the Servicer as additional servicing
compensation.
50
SECTION 3.11. Realization Upon Defaulted Loans; Repurchase of Certain
----------------------------------------------------------------------
Loans.
------
The Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments. In connection
with such foreclosure or other conversion, the Servicer shall follow such
practices and procedures as it shall deem necessary or advisable, in its sole
discretion, and as shall be normal and usual in its general mortgage servicing
activities and meet the requirements of the insurer under any Required Insurance
Policy; provided, however, that the Servicer shall not be required to expend its
own funds in connection with any foreclosure or towards the restoration of any
property unless it shall determine (i) that such restoration and/or foreclosure
will increase the proceeds of liquidation of the Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Certificate Account). The Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the liquidation proceeds with respect to the related Mortgaged
Property, as provided in the definition of Liquidation Proceeds. If the Servicer
has knowledge that a Mortgaged Property which the Servicer is contemplating
acquiring in foreclosure or by deed in lieu of foreclosure is located within a
one mile radius of any site with environmental or hazardous waste risks known to
the Servicer, the Servicer will, prior to acquiring the Mortgaged Property,
consult with the Guarantor and, following such consultation, evaluate all of the
risks involved and only take such action as it deems appropriate, in its sole
discretion, in accordance with its established environmental review procedures.
With respect to any REO Property, the deed or certificate of sale
shall be taken in the name of the Trustee for the benefit of the
Certificateholders, or its nominee, on behalf of the Certificateholders. The
Trustee's name shall be placed on the title to such REO Property solely as the
Trustee hereunder and not in its individual capacity. The Servicer shall ensure
that the title to such REO Property references this Agreement and the Trustee's
capacity thereunder. As described more fully below, the Servicer shall have the
sole discretion to determine whether an immediate sale of an REO Property or
continued management of such REO Property is in the best interest of the
Certificateholders. In order to facilitate sales of REO Properties by the
Servicer, upon the Servicer's request, the Trustee shall promptly provide the
Servicer with appropriate limited durable powers of attorney or such other
documentation as may reasonably be required by the Servicer or purchasers of REO
Properties to consummate such sales. Pursuant to its efforts to sell such REO
Property, the Servicer shall either itself or through an agent selected by the
Servicer protect and conserve such REO Property in the same manner and to such
extent as is customary in the locality where such REO Property is located and
may, incident to its conservation and protection of the interests of the
Certificateholders, rent the same, or any part thereof, as the Servicer, in its
sole discretion, deems to be in the best interest of the Certificateholders for
the period prior to the sale of such REO Property. The Servicer shall prepare
for and deliver to the Trustee a statement with respect to each REO Property
that has been rented showing the aggregate rental income received and all
expenses incurred in connection with the management and maintenance of such REO
Property at such times as is necessary to enable the Trustee to comply with the
reporting requirements of the REMIC Provisions. The net monthly income, if any,
from such REO Property shall be deposited in the Certificate Account no later
than the close of business on each Determination Date. The Servicer shall
perform the tax reporting and withholding required by Sections 1445 and 6050J of
the Code with respect to foreclosures and abandonments, the tax reporting
required by Section 6050H of the Code with respect to the receipt of mortgage
interest from individuals and any tax reporting required by Section 6050P of the
Code with respect to the cancellation of indebtedness by certain financial
entities, by preparing such tax and information returns as may be required, in
the form required, and delivering the same to the Trustee for filing.
51
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Loan, the Servicer shall dispose of such Mortgaged Property prior to the close
of the third taxable year of the Trust Fund following the taxable year of the
Trust Fund in which the Trust Fund acquired such Mortgaged Property unless the
Trustee shall have been supplied with an Opinion of Counsel (which Opinion of
Counsel shall not be at the expense of the Trustee) to the effect that the
holding by the Trust Fund of such Mortgaged Property subsequent to such
three-year period will not result in the imposition of taxes on "prohibited
transactions" of any REMIC hereunder as defined in section 860F of the Code or
cause any REMIC to fail to qualify as one or more REMICs at any time that any
Certificates are outstanding, in which case the Trust Fund may continue to hold
such Mortgaged Property (subject to any conditions contained in such Opinion of
Counsel). Notwithstanding any other provision of this Agreement, no Mortgaged
Property acquired by the Trust Fund shall be rented (or allowed to continue to
be rented) or otherwise used for the production of income by or on behalf of the
Trust Fund in such a manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of section 860G(a)(8) of the Code or (ii) subject any REMIC to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property under Section 860G(c) of the Code or otherwise, unless
the Servicer has agreed, in its sole discretion, to indemnify and hold harmless
the Trust Fund with respect to the imposition of any such taxes.
The decision of the Servicer to foreclose on a defaulted Loan shall be
subject to a determination by the Servicer, in its sole discretion, that the
proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding.
The proceeds from any liquidation of a Loan, as well as any income
from an REO Property, will be applied in the following order of priority: first,
to reimburse the Servicer for any related unreimbursed Servicing Advances and
Servicing Fees related to such Liquidated Loan; second, to reimburse the
Servicer for any unreimbursed Advances; third, to accrued and unpaid interest
(to the extent no Advance has been made for such amount or any such Advance has
been reimbursed) on the Loan or related REO Property, at the Adjusted Net
Mortgage Rate to the Due Date occurring in the calendar month preceding the
month in which such amounts are required to be distributed; and fourth, as a
recovery of principal of the Loan. Excess Proceeds, if any, from the liquidation
of a Liquidated Loan will be retained by the Servicer as additional servicing
compensation pursuant to Section 3.13.
The Servicer, in its sole discretion, shall have the right to purchase
for its own account or for resale as set forth herein from the Trust Fund any
Loan which is 91 days or more delinquent at a price equal to the Purchase Price.
The Purchase Price for any Loan purchased hereunder shall be deposited in the
Certificate Account and the Trustee, upon receipt of a Request for Release from
the Servicer substantially in the form of Exhibit J, shall release or cause to
be released to the Servicer the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment prepared by the purchaser of
such Loan, in each case without recourse, as shall be necessary to vest in the
Servicer any Loan released pursuant hereto and the Servicer shall succeed to all
the Trustee's right, title and interest in and to such Loan and all security and
documents related thereto. Such assignment shall be a sale and assignment
outright and not for security. The Servicer shall thereupon own such Loan, and
all security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
The Holders of the Class R Certificates shall be deemed to have
purchased the ownership interest held by the Holders of the Regular Certificates
in any Liquidated Loan. After such repurchase, the Servicer, if requested by
such Certificateholder and if offered suitable indemnification and reimbursement
for expenses, may seek a deficiency judgment to the extent permitted by law
against the Mortgagor under such Liquidated Loan on behalf of the Holders of the
Class R Certificates to the extent of any Realized Loss.
52
SECTION 3.12. Documents, Records and Funds in Possession of Servicer
----------------------------------------------------------------------
to be Held for the Trustee.
---------------------------
Notwithstanding any other provisions of this Agreement, the Servicer
shall transmit to the Trustee as required by this Agreement all documents and
instruments in respect of a Loan coming into the possession of the Servicer from
time to time and shall account fully to the Trustee for any funds received by
the Servicer or which otherwise are collected by the Servicer as Liquidation
Proceeds or Insurance Proceeds in respect of any Loan. All Mortgage Files and
funds collected or held by, or under the control of, the Servicer in respect of
any Loans, whether from the collection of principal and interest payments or
from Liquidation Proceeds, including but not limited to, any funds on deposit in
the Certificate Account, shall be held by the Servicer for and on behalf of the
Trustee and shall be and remain the sole and exclusive property of the Trustee,
subject to the applicable provisions of this Agreement. The Servicer also agrees
that it shall not create, incur or subject any Mortgage File or any funds that
are deposited in the Certificate Account, Distribution Account, or any funds
that otherwise are or may become due or payable to the Trustee for the benefit
of the Certificateholders or the Guarantor, to any claim, lien, security
interest, judgment, levy, writ of attachment or other encumbrance, or assert by
legal action or otherwise any claim or right of setoff against any Mortgage File
or any funds collected on, or in connection with, a Loan, except, however, that
the Servicer shall be entitled to set off against and deduct from any such funds
any amounts that are properly due and payable to the Servicer under this
Agreement.
SECTION 3.13. Servicing Compensation.
-------------------------------------
As compensation for its activities hereunder, the Servicer shall be
entitled to retain or withdraw from the Certificate Account an amount equal to
the Servicing Fee for each Loan, provided that the aggregate Servicing Fee for
the Loans with respect to any Distribution Date shall be reduced (i) by an
amount equal to the aggregate of the Prepayment Interest Shortfalls, if any,
with respect to such Distribution Date, up to the full amount of the aggregate
Servicing Fee, and (ii) with respect to the first Distribution Date, an amount
equal to any amount to be deposited into the Certificate Account by the Sellers
pursuant to Section 2.01(a) and not so deposited.
Additional servicing compensation in the form of Excess Proceeds,
Prepayment Interest Excess, prepayment penalties, assumption fees, late payment
charges and all income and gain net of any losses realized from Permitted
Investments made with funds on deposit in the Certificate Account shall be
retained by the Servicer to the extent not required to be deposited in the
Certificate Account pursuant to Section 3.05 hereof. 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 in this Agreement.
SECTION 3.14. Access to Certain Documentation.
----------------------------------------------
The Servicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising certain Certificateholders and the examiners
and supervisory agents of the OTS, the FDIC and such other authorities, access
to the documentation regarding the Loans required by applicable regulations of
the OTS and the FDIC. Such access shall be afforded without charge, but only
upon reasonable and prior written request and during normal business hours at
the offices designated by the Servicer. Nothing in this Section shall limit the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Mortgagors and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation shall
not constitute a breach of this Section.
53
SECTION 3.15. Annual Statement as to Compliance.
------------------------------------------------
The Servicer shall deliver to the Depositor, the Guarantor and the
Trustee on or before 120 days after the end of the Servicer's fiscal year,
commencing with its 2002 fiscal year, an Officer's Certificate stating, as to
the signer thereof, that (i) a review of the activities of the Servicer during
the preceding fiscal year and of the performance of the Servicer under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. The Trustee
shall forward a copy of each such statement to each Rating Agency and to the
Guarantor.
SECTION 3.16. Annual Independent Public Accountants' Servicing
----------------------------------------------------------------------
Statement; Financial Statements.
--------------------------------
(a) On or before 120 days after the end of the Servicer's fiscal year,
commencing with its 2002 fiscal year, the Servicer at its expense shall cause a
nationally or regionally recognized firm of independent public accountants (who
may also render other services to the Servicer, the Seller or any affiliate
thereof) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee, the Guarantor and the
Depositor to the effect that such firm has examined certain documents and
records relating to the servicing of the Loans under this Agreement and that, on
the basis of such examination, conducted substantially in compliance with the
Uniform Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FNMA and Freddie Mac, such servicing has been conducted
in compliance with this Agreement except for such significant exceptions or
errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FNMA and Freddie Mac requires it to report. In rendering such
statement, such firm may rely, as to matters relating to direct servicing of
mortgage loans by Subservicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or the Audit Program for Mortgages serviced for
FNMA and Freddie Mac (rendered within one year of such statement) of independent
public accountants with respect to the related Subservicer. Copies of such
statement shall be provided by the Trustee to any Certificateholder upon request
at the Servicer's expense, provided such statement is delivered by the Servicer
to the Trustee.
(b) Upon request, the Servicer shall furnish the Guarantor with copies
of its most recent audited financial statements.
SECTION 3.17. Errors and Omissions Insurance; Fidelity Bonds.
-------------------------------------------------------------
The Servicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and (b) a fidelity bond in respect of its officers, employees and
agents. Each such policy or policies and bond shall, together, comply with the
requirements from time to time of FNMA or Freddie Mac for persons performing
servicing for mortgage loans purchased by FNMA or Freddie Mac. In the event that
any such policy or bond ceases to be in effect, the Servicer shall obtain a
comparable replacement policy or bond from an insurer or issuer, meeting the
requirements set forth above as of the date of such replacement.
SECTION 3.18. Solicitation.
---------------------------
Although the Servicer periodically conducts telemarketing and mass
mailings to its existing customers, including customers with Loans in the Trust
Fund, with respect to the refinancing of
54
existing mortgage loans, the Servicer will not specifically direct these
marketing efforts to customers who have Loans in the Trust Fund.
SECTION 3.19. Delinquent Loans.
-------------------------------
For all purposes in this Agreement and the Exhibits and Schedules
attached hereto, the determination as to whether a Loan is delinquent shall be
based on the number of days that payments on such Loan are contractually past
due, assuming 30-day months. For example, a payment due on the first day of a
month is not 30 days delinquent until the first day of the following month.
ARTICLE IIIA
GUARANTEE; RESERVE FUND; AND NET WAC CAP ACCOUNT
SECTION 3A.01. Guarantee.
-------------------------
(a) With respect to any Distribution Date, if the related statement of
the Trustee (as set forth and described in Section 4.03(a)) indicates a
Deficiency Amount for such Distribution Date, then the Guarantor shall
distribute on such Distribution Date a Guarantor Payment in an aggregate amount
equal to the Deficiency Amount for such Distribution Date directly to the
Holders of the Guaranteed Certificates, without first depositing such amount
into the Distribution Account.
(b) Notwithstanding anything in this Agreement to the contrary, in the
event that a Guarantor Default has occurred and is continuing, the Guarantor
shall not be permitted to exercise any rights or receive any benefits under this
Agreement, in its capacity as guarantor of the Guaranteed Certificates,
including, without, limitation any rights or benefits under Section 10.13
hereof; provided, however; that nothing in this clause (b) shall (i) be deemed
to apply to any rights or benefits that the Guarantor may have as a Holder of an
Offered Certificate or (ii) relieve or otherwise diminish, in any way, the
obligations of the Guarantor under its Guarantee.
SECTION 3A.02 Reserve Fund and Yield Maintenance Agreement.
-----------------------------------------------------------
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AV-1
Certificates, the Reserve Fund to cover certain payments on the Class AV-1
Certificates. The Reserve Fund shall be an Eligible Account, and funds on
deposit therein shall be held separate and apart from, and shall not be
commingled with, any other moneys, including without limitation, other moneys
held by the Trustee pursuant to this Agreement. The Reserve Fund shall be
treated as an "outside reserve fund" under applicable Treasury regulations and
will not be part of any REMIC. Any investment earnings on the Reserve Fund will
be treated as owned by the Holders of the Class X Certificates and will be
taxable to the Holders of the Class X Certificates. Distributions made to any
outside reserve fund under this document shall be treated as made to the Class X
Certificateholders.
(b) In addition, on the Closing Date, the Yield Maintenance Agreement
will be entered into by the Counterparty and the Trustee, for the benefit of the
Holders of the Class AV-1 Certificates. Pursuant to the Yield Maintenance
Agreement, on each Distribution Date, the Trustee will deposit into the Reserve
Fund any amounts received pursuant to the Yield Maintenance Agreement. The
Trustee shall collect payments due under and otherwise enforce the terms of the
Yield Maintenance Agreement. The Trustee shall make withdrawals from the Reserve
Fund to make distributions pursuant to Sections 4.02(g) and (h). Notwithstanding
anything to the contrary contained herein, in no event shall the Trustee in its
fiduciary capacity be liable to the Holders of the Class AV-1 Certificates, be
required to
55
make any deposit from its own funds into the Reserve Fund or be required to take
any action against the Counterparty in connection with any delay in payment of
amounts due under the Yield Maintenance Agreement caused by (i) any wire
transfer problem or any operational or administrative error or omission or (ii)
any government action each as further described in clause (i) of Part I of the
Schedule to the Yield Maintenance Agreement during the grace period specified
therein.
(c) The Trustee shall invest the funds in the Reserve Fund as directed
in writing by the Holders of the Class X Certificates in Permitted Investments,
which shall mature not later than, the second Business Day preceding each
Distribution Date (except that if such Permitted Investment is an obligation of
the institution that maintains such account, then such Permitted Investment
shall mature not later than the Business Day next preceding such Distribution
Date) and shall not be sold or disposed of prior to their maturity. All such
Permitted Investments shall be made in the name of the Trustee, for the benefit
of the Holders of the Class AV-1 Certificates. All income and gain net of any
losses realized from any such investment of funds on deposit in the Reserve Fund
shall be deposited in the Reserve Fund. The Trustee in its fiduciary capacity
shall not be liable for the amount of any loss incurred in respect of any
investment or lack of investment of funds held in the Reserve Fund and made in
accordance with this Section 3A.02.
(d) Upon termination of the Trust Fund, any amounts remaining in the
Reserve Fund shall be distributed to the Holders of the Class X Certificates in
the same manner as if distributed pursuant to Section 4.02(h)(ii) hereof.
(e) In the event that the Yield Maintenance Agreement is terminated
prior to the Yield Maintenance Stated Termination and the Counterparty has not
obtained a replacement counterparty to assume its obligations thereunder
pursuant to the terms of the Yield Maintenance Agreement, the Trustee shall
obtain a replacement yield maintenance agreement acceptable to the Servicer and
shall apply any amounts received from the Counterparty under the Yield
Maintenance Agreement in connection with its termination, to the extent
necessary, to obtain such replacement. In no event whatsoever shall the Trustee
be responsible for costs and expenses incurred in connection with obtaining a
replacement yield maintenance agreement or for any fees, costs or expenses
payable thereunder.
(f) If, upon termination of the Trust Fund pursuant to the provisions
of Article IX hereof, the "Notional Outstanding," as set forth in Attachment 1
to the Rate Cap Transaction Confirmation relating to the Yield Maintenance
Agreement, is greater than zero, the Trustee shall, as of the date of such
termination, assign to Equity One, Inc. all of its right, title and interest in
and to the Yield Maintenance Agreement and any payments thereunder.
SECTION 3A.03. Net WAC Cap Account
----------------------------------
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Holders of the Class AF-1 and Class
AV-1 Certificates, the Net WAC Cap Account and deposit therein the amount of
$10,000 paid to the Trustee by the Depositor. The Net WAC Cap Account shall be
an Eligible Account, and funds on deposit therein shall be held separate and
apart from, and shall not be commingled with, any other moneys, including
without limitation, other moneys held by the Trustee pursuant to this Agreement.
The Net WAC Cap Account shall be treated as an "outside reserve fund" under
applicable Treasury regulations and will not be part of any REMIC. Any
investment earnings on the Net WAC Cap Account will be treated as owned by the
Holders of the Class X Certificates and will be taxable to the Holders of the
Class X Certificates. Distributions made to any outside reserve fund under this
document shall be treated as made to the Class X Certificateholders.
56
(b) On each Distribution Date, the Trustee shall deposit amounts in
the Net WAC Cap Account pursuant to Section 4.02(d)(xiv). The amount required to
be deposited into the Net WAC Cap Account on any Distribution Date will equal
the aggregate Net WAC Cap Deposit Amount for the Class AF-1 and Class AV-1
Certificates. The Trustee shall make withdrawals from the Net WAC Cap Account to
make distributions pursuant to Section 4.02(f).
(c) The Trustee shall invest the funds in the Net WAC Cap Account as
directed in writing by the Holders of the Class X Certificates in Permitted
Investments, which shall mature not later than, the second Business Day
preceding each Distribution Date (except that if such Permitted Investment is an
obligation of the institution that maintains such account, then such Permitted
Investment shall mature not later than the Business Day next preceding such
Distribution Date) and shall not be sold or disposed of prior to their maturity.
Any investment earnings on such amounts shall be payable to the Holders of the
Class X Certificates. The Holders of the Class X Certificates shall be treated
as the owners of the Net WAC Cap Account for federal tax purposes. The Trustee
in its fiduciary capacity shall not be liable for the amount of any loss
incurred in respect of any investment or lack of investment of funds held in the
Net WAC Cap Account and made in accordance with this Section 3A.03(c).
(d) Upon termination of the Trust Fund, any amounts remaining in the
Net WAC Cap Account shall be distributed to the Holders of the Class X
Certificates.
ARTICLE IV
DISTRIBUTIONS AND
ADVANCES BY THE SERVICER
SECTION 4.01. Advances.
-----------------------
The Servicer shall determine on or before each Servicer Advance Date
whether it is required to make an Advance pursuant to the definition thereof. If
the Servicer determines it is required to make an Advance, it shall, on or
before the Servicer Advance Date, either (i) deposit into the Certificate
Account an amount equal to the Advance or (ii) make an appropriate entry in its
records relating to the Certificate Account that any Amount Held for Future
Distribution has been used by the Servicer in discharge of its obligation to
make any such Advance. Any funds so applied shall be replaced by the Servicer by
deposit in the Certificate Account no later than the close of business on the
next Servicer Advance Date. The Servicer shall be entitled to be reimbursed from
the Certificate Account for all Advances of its own funds made pursuant to this
Section as provided in Section 3.08. The obligation to make Advances with
respect to any Loan shall continue if such Loan has been foreclosed or otherwise
terminated and the Mortgaged Property has not been liquidated.
The Guarantor, in its reasonable judgment, shall have the right to
require the Servicer to remit, from its own funds, to the Certificate Account an
amount equal to all Advances previously made out of funds held in the
Certificate Account and not previously repaid from collections on the related
Loans and, in such event, the Servicer shall thereafter remit all Advances from
its own funds. In no event shall the preceding sentence be construed as limiting
the Servicer's right to (a) pass through late collections on the related Loans
in lieu of making Advances or (b) reimburse itself for such Advances from late
collections on the related Loans.
57
SECTION 4.02. Priorities of Distribution and Allocation.
--------------------------------------------------------
(a) On each Distribution Date, the Trustee shall distribute the
Interest Remittance Amount, to the extent available, to the parties, in the
amounts and in the priorities indicated:
(i) first, to the Guarantor, the Guarantor's Monthly Fee,
plus any Guarantor Reimbursements then due and owing;
(ii) second, to the Trustee, the Trustee Fee based on the
aggregate Stated Principal Balance of the Loans;
(iii) third, to the Servicer, an amount equal to the sum of
(A) the aggregate Servicing Fee, except to the extent previously paid
by permitted withdrawals under Section 3.08, and (B) any other amounts
expended by the Servicer in connection with the Loans and reimbursable
thereto under this Agreement but not previously reimbursed;
(iv) fourth, concurrently, to the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AV-1, pro rata, the applicable Interest
Distribution Amounts for such Distribution Date;
(v) fifth, concurrently, to the Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AV-1 Certificates, pro rata, the
applicable Class Unpaid Interest Amounts, if any;
(vi) sixth, to the Class M-1 Certificates, the applicable
Interest Distribution Amount for such Distribution Date;
(vii) seventh, to the Class M-2 Certificates, the applicable
Interest Distribution Amount for such Distribution Date;
(viii) eighth, to the Class B Certificates, the applicable
Interest Distribution Amount for such Distribution Date; and
(ix) ninth, the amount, if any, of the Interest Remittance
Amount remaining after application pursuant to clauses (i) through
(viii) above will be applied as described under Section 4.02(d)
hereof.
(b) On each Distribution Date before the Stepdown Date or with respect
to which a Trigger Event is in effect, the Trustee shall distribute the
Principal Distribution Amount to the extent available, to the parties, in the
amounts and in the priorities indicated:
(i) first, to the Guarantor, the Guarantor's Monthly Fee and
any remaining Guarantor Reimbursements then due and owing, which have
not been distributed pursuant to Section 4.02(a)(i) above;
(ii) second, to the Class AF-1, Class AF-2, Class AF-3 and
Class AF-4 Certificates, sequentially in that order, the Group I
Principal Percentage of the Principal Distribution Amount for such
Distribution Date until the Class Certificate Balances thereof have
been reduced to zero;
58
(iii) third, to the Class AV-1 Certificates, the Group II
Principal Percentage of the Principal Distribution Amount for such
Distribution Date until the Class Certificate Balance thereof has been
reduced to zero;
(iv) fourth, once the Class Certificate Balances of the
Class AF-1, Class AF-2, Class AF-3 and Class AF-4 have been reduced to
zero, to the Class AV-1 Certificates, 100% of the Principal
Distribution Amount for such Distribution Date until the Class
Certificate Balance of the Class AV-1 Certificates has been reduced to
zero;
(v) fifth, once the Class Certificate Balance of the Class
AV-1 Certificates has been reduced to zero, sequentially, to the Class
AF-1, Class AF-2, Class AF-3 and Class AF-4 Certificates, in that
order, 100% of the Principal Distribution Amount for such Distribution
Date until the Class Certificate Balances of the Class AF-1, Class
AF-2, Class AF-3 and Class AF-4 Certificates have been reduced to
zero;
(vi) sixth, once the Class Certificate Balances of the
Guaranteed Certificates have been reduced to zero, to the Class M-1
Certificates, 100% of the Principal Distribution Amount for such
Distribution Date until the Class Certificate Balance of the Class M-1
Certificates has been reduced to zero;
(vii) seventh, once the Class Certificate Balance of the
Class M-1 Certificates has been reduced to zero, to the Class M-2
Certificates, 100% of the Principal Distribution Amount for such
Distribution Date until the Class Certificate Balance of the Class M-2
Certificates has been reduced to zero;
(viii) eighth, once the Class Certificate Balance of the
Class M-2 Certificates has been reduced to zero, to the Class B
Certificates, 100% of the Principal Distribution Amount for such
Distribution Date until the Class Certificate Balance of the Class B
Certificates has been reduced to zero; and
(ix) ninth, any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses (i) through
(viii) above shall be applied as set forth in Section 4.02(d).
(c) On each Distribution Date on or after the Stepdown Date and as
long as a Trigger Event is not in effect, the Trustee shall distribute the
Principal Distribution Amount, to the extent available, to the parties, in the
amounts and in the priorities indicated:
(i) first, concurrently as follows:
(A) the Group I Principal Percentage of the
lesser of (1) the Principal Distribution
Amount and (2) the Senior Principal
Distribution Amount, sequentially, to
the Class AF-1, Class AF-2, Class AF-3
and Class AF-4 Certificates, in that
order, until the Class Certificate
Balance of each of those classes has
been reduced to zero and then to the
Class AV-1 Certificates, until the Class
Certificate Balance thereof has been
reduced to zero; and
(B) the Group II Principal Percentage of the
lesser of (1) the Principal Distribution
Amount and (2) the Senior Principal
Distribution Amount, to the Class AV-1
Certificates, until the
59
Class Certificate Balance thereof has
been reduced to zero and then
sequentially to the Class AF-1, Class
AF-2, Class AF-3 and Class AF-4
Certificates, in that order, until the
Class Certificate Balance thereof has
been reduced to zero;
(ii) second, the lesser of (A) the excess of (1) the
Principal Distribution Amount over (2) the amount distributed to the
Guaranteed Certificates in clause (i) above and (B) the Class M-1
Principal Distribution Amount, to the Class M-1 Certificates until the
Class Certificate Balance thereof has been reduced to zero;
(iii) third, the lesser of (A) the excess of (1) the
Principal Distribution Amount over (2) the sum of the amount
distributed to the Guaranteed Certificates in clause (i) above and the
amount distributed to the Class M-1 Certificates in clause (ii) above
and (B) the Class M-2 Principal Distribution Amount, to the Class M-2
Certificates until the Class Certificate Balance thereof has been
reduced to zero;
(iv) fourth, the lesser of (A) the excess of (1) the
Principal Distribution Amount over (2) the sum of the amount
distributed to the Guaranteed Certificates in clause (i) above, the
amount distributed to the Class M-1 Certificates in clause (ii) above
and the amount distributed to the Class M-2 Certificates in clause
(iii) above and (B) the Class B Principal Distribution Amount, to the
Class B Certificates until the Class Certificate Balance thereof has
been reduced to zero; and
(v) fifth, any amount of the Principal Distribution Amount
remaining after making all of the distributions in clauses (i) through
(iv) above shall be applied as set forth in Section 4.02(d).
(d) On each Distribution Date, the Trustee shall distribute the
Monthly Excess Cashflow Amount, to the extent available, to the parties, in the
amounts and in the priorities indicated:
(i) first, to the Class AF-1, Class AF-2, Class AF-3, Class
AF-4 and Class AV-1 Certificates, pro rata, any remaining applicable
Interest Distribution Amount for such Distribution Date;
(ii) second, to the Class AF-1, Class AF-2, Class AF-3,
Class AF-4 and Class AV-1 Certificates, pro rata, any remaining Class
Unpaid Interest Amounts for the classes of Guaranteed Certificates;
(iii) third, to the extent not paid by Trustee Permitted
Withdrawal Amounts, expenses and indemnity amounts due and owing to
the Trustee;
(iv) fourth, to fund the Extra Principal Distribution Amount
for such Distribution Date;
(v) fifth, to the Class M-1 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(vi) sixth, to the Class M-1 Certificates, any remaining
Unpaid Interest Amount for the Class M-1 Certificates;
60
(vii) seventh, to fund the Class M-1 Realized Loss
Amortization Amount for that Distribution Date;
(viii) eighth, to the Class M-2 Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(ix) ninth, to the Class M-2 Certificates, any remaining
Unpaid Interest Amount for the Class M-2 Certificates;
(x) tenth, to fund the Class M-2 Realized Loss Amortization
Amount for that Distribution Date;
(xi) eleventh, to the Class B Certificates, any remaining
Interest Distribution Amount for that Distribution Date;
(xii) twelfth, to the Class B Certificates, any remaining
Unpaid Interest Amount for the Class B Certificates;
(xiii) thirteenth, to fund the Class B Realized Loss
Amortization Amount for that Distribution Date;
(xiv) fourteenth, for deposit into the Net WAC Cap Account,
the Net WAC Cap Deposit Amount;
(xv) fifteenth, to the Class X Certificates, the excess of
(A) the sum of (1) the product of their notional balance and
Pass-Through Rate as provided in the Preliminary Statement and (2) the
amount, if any, of any Overcollateralization Release Amount for such
Distribution Date, over (B) the sum of the amounts described in
clauses (i) through (xiii) above; and
(xvi) sixteenth, to the Class R Certificates, any remaining
Monthly Excess Cashflow Amount.
(e) Realized Losses shall be allocated first against the
Overcollateralization Amount, until the Overcollateralization Amount has been
reduced to zero. If, after giving effect to the distribution of the Principal
Distribution Amount on any Distribution Date the aggregate Class Certificate
Balance of the Offered Certificates exceeds the Pool Principal Balance as of the
end of the related Due Period, such excess will be allocated against the Class
B, Class M-2 and Class M-1 Certificates, in that order and until the respective
Class Certificate Balances thereof are reduced to zero.
(f) On each Distribution Date, following all distributions, deposits
and allocations made pursuant to subsections (a) through (e) above, the Trustee
shall distribute, pro rata, to the Class AF-1 and Class AV-1 Certificates, the
applicable Net WAC Cap Carryover for such Distribution Date, if any, from the
Net WAC Cap Account (to the extent of available funds therein).
(g) On each Distribution Date, following all distributions and
deposits made pursuant to subsections (a) through (f), the Trustee will withdraw
from the Reserve Fund (to the extent of available funds therein) an amount
sufficient to pay the following items, and shall distribute such amount in the
following order of priority:
61
(i) first, to pay, the Interest Distribution Amount payable
to the Class AV-1 Certificates, to the extent not covered by Available
Funds (including payments from the Net WAC Cap Account); and
(ii) second, to pay to the Class AV-1 Certificates, the
Group II Principal Percentage of the Principal Distribution Amount or
Senior Principal Distribution Amount, as applicable, to the extent not
covered by Available Funds.
(h) On each Distribution Date, following all distributions and
deposits made pursuant to subsections (a) through (g) above, the Trustee will
withdraw from the Reserve Fund any amounts remaining therein and shall
distribute such amounts to pay the following items, in the following order of
priority:
(i) first, to the Class AV-1 Certificates, to pay any
remaining Net WAC Cap Carryover for the Class AV-1 Certificates, to
the extent not paid out of the Net WAC Cap Account on such
Distribution Date; and
(ii) second, to the holders of the Class X Certificates.
SECTION 4.03. Monthly Statements to Certificateholders.
-------------------------------------------------------
(a) Not later than 12:00 p.m. New York time on each Distribution Date,
the Trustee shall post on its website at www.jpmorgan.com/absmbs, which posting
shall be accessible to each Certificateholder, the Guarantor, the Servicer, the
Depositor and each Rating Agency, a statement setting forth with respect to the
related distribution (provided, however, that the Guarantor and each
Certificateholder, upon request to the Trustee, shall be entitled to receive
from the Trustee a paper copy of such statement if such Certificateholder is
unable to access the Trustee's website):
(i) with respect to each Group, the amount thereof allocable
to principal, separately identifying the aggregate amount of any
Principal Prepayments and Liquidation Proceeds included therein;
(ii) the amount thereof allocable to interest, any Class
Unpaid Interest Amount included in such distribution and any remaining
Class Unpaid Interest Amount after giving effect to such distribution;
(iii) if the distribution to the Holders of a Class of
Certificates is less than the full amount that would be distributable
to such Holders if there were sufficient funds available therefor, the
amount of the shortfall and the allocation thereof as between
principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Principal Balance and the Group Principal
Balances for the following Distribution Date;
(vi) the amount of the Servicing Fee paid to or retained by
the Servicer with respect to such Distribution Date;
(vii) the Pass-Through Rate for each Class of Offered
Certificates with respect to such Distribution Date;
62
(viii) the amount of Advances included in the distribution
on such Distribution Date and the aggregate amount of Advances
outstanding as of the close of business on such Distribution Date;
(ix) with respect to each Group, the number and aggregate
principal amounts of Loans (A) contractually past due (assuming 30 day
months) (exclusive of Loans in foreclosure) (1) 1 to 30 days (2) 31 to
60 days (3) 61 to 90 days and (4) 91 or more days and (B) in
foreclosure (1) 1 to 30 days (2) 31 to 60 days (3) 61 to 90 days and
(4) 91 or more days, as of the close of business on the last day of
the Prepayment Period preceding such Distribution Date;
(x) with respect to each Group and with respect to any Loan
that became an REO Property during the preceding calendar month, the
loan number and Stated Principal Balance of such Loan as of the close
of business on the last day of the Prepayment Period preceding such
Distribution Date and the date of acquisition thereof;
(xi) with respect to each Group, the total number and
principal balance of any REO Properties (and market value, if
available) as of the close of business on the last day of the
Prepayment Period preceding such Distribution Date;
(xii) with respect to each Group, the amount equal to the
sum of the Stated Principal Balances of the three Loans with the
largest individual Stated Principal Balances;
(xiii) with respect to the Class AF-1 Certificates, Class
AV-1 Certificates, the amount of the Net WAC Cap Carryover to be paid
to such Class from the Net WAC Cap Account and the amount remaining
unpaid;
(xiv) with respect to each Group, the aggregate principal
balance of Balloon Loans with original terms less than or equal to 36
months which are 60 or more days contractually past due (assuming 30
day months) (including Loans in foreclosure and REO Properties) on the
last day of the Prepayment Period preceding such Distribution Date;
(xv) with respect to each Group, the cumulative aggregate
amount of Realized Losses as of the last day of the Prepayment Period
preceding such Distribution Date;
(xvi) with respect to the Class AV-1 Certificates, the
amount of funds withdrawn from the Reserve Fund and included in such
distribution and the outstanding balance of the Reserve Fund after
giving effect to such distribution;
(xvii) with respect to each Group, the number of Loans
repurchased by Sellers during the Due Period related to such
Distribution Date;
(xviii) with respect to each Group, the weighted average
Mortgage Rate of the Outstanding Loans, such weighted average to be
calculated based on the principal balances of such Outstanding Loans
on the first day of the Due Period related to such Distribution Date;
(xix) with respect to each Group, the weighted average
maturity date of the Outstanding Loans;
(xx) the Targeted Overcollateralization Amount after giving
effect to such distribution;
63
(xxi) the amount of any Overcollateralization Release Amount
included in the distribution on such Distribution Date;
(xxii) with respect to each Group, the cumulative amount of
Realized Losses from the Cut-off Date through the last day of the Due
Period relating to such Distribution Date;
(xxiii) any Overcollateralization Deficiency after giving
effect to the distribution of principal on such Distribution Date;
(xxiv) whether a Trigger Event has occurred and is
continuing, and the cumulative Realized Losses, as a percentage of the
original Pool Principal Balance;
(xxv) the aggregate amount of 60+ Day Delinquent Loans as a
percentage of the current Pool Principal Balance;
(xxvi) the amount of funds collected by the Trustee under
the Yield Maintenance Agreement during the Due Period relating to such
Distribution Date;
(xxvii) the Guarantor's Monthly Fee to be paid to the
Guarantor with respect to the Guaranteed Certificates for such
Distribution Date;
(xxviii) to the extent that the Trustee and/or the Servicer
possess such information, such other information as the Guarantor may
reasonably request in such format as reasonably requested by the
Guarantor and any other information that is required by the Code and
regulations thereunder to be made available to Certificateholders.
(b) The Trustee's responsibility for posting the above information on
its website is limited to the availability, timeliness and accuracy of the
information provided by the Servicer. On or before the Loan Data Remittance
Date, commencing on November 13, 2002, the Servicer shall deliver to the Trustee
a report, in a form acceptable to the Trustee, containing all of the necessary
information for the Trustee to complete items (i), (v), (vi), (viii)-(xii),
(xiv), (xv), (xvii)-(xix), (xxii) and (xxviii) of the statement described in (a)
above. The Trustee shall be responsible for obtaining the necessary information
to complete items (ii), (iii), (iv), (vii), (xiii), (xvi), (xx), (xxi),
(xxiii)-(xxviii) of the statement described in (a) above.
(c) Within a reasonable period of time after the end of each calendar
year, but in no case later than the time prescribed by the Code and applicable
Treasury regulations, the Trustee shall cause to be furnished to the Guarantor
and each Person who at any time during the calendar year was a
Certificateholder, a statement containing the information set forth in clauses
(a)(i), (a)(ii), (a)(vii) and (a)(xiii) of this Section 4.03 aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time in effect.
(d) By not later than the third Distribution Date, the Trustee shall
confirm to the Guarantor, to the extent such data is available in the
Information Circular or provided to the Trustee from the Underwriter or the
Guarantor, that the models used to calculate (A) the cash flows provided to the
Trustee and the Guarantor by the Underwriter with respect to the Offered
Certificates, (B) the weighted average lives and yields set forth in the
Information Circular with respect to the Offered Certificates and (C) the credit
enhancement default analysis prepared by the Guarantor and provided to the
Trustee with
64
respect to the Offered Certificates are consistent with the model the Trustee is
using for the calculations that the Trustee is required to make pursuant to
Section 4.02.
SECTION 4.04. Reporting.
------------------------
On each Distribution Date, the Servicer shall provide to the Trustee
current information of the type set forth in Schedule I hereto presented in a
format substantially similar to Exhibit K attached hereto and the Trustee shall
then forward such information to a reporting service mutually agreed upon by the
Servicer and the Trustee.
SECTION 4.05. Loan Data Remittance Report.
------------------------------------------
On each Loan Data Remittance Date, the Servicer shall furnish a
complete and accurate report to the Guarantor in the form attached as Exhibit M
to this Agreement (the "Loan Data Remittance Report") by electronic medium as
agreed to by the Servicer and the Guarantor. If in any month the Servicer fails
to provide the Guarantor the Loan Data Remittance Report on or prior to the Loan
Data Remittance Date or if such report is deemed to be materially incomplete or
inaccurate by the Guarantor, the Servicer shall pay to the Guarantor the
following amounts: (i) upon the first such failure in any two year period, $0;
(ii) upon the second such failure in any two year period, $750 and (iii) upon
the third such failure in any two year period, $1,000. Upon the fourth such
failure in any two year period to provide the Loan Data Remittance Report to the
Guarantor pursuant to this Section 4.05, the Guarantor may, at its option,
perform a Servicing Audit.
SECTION 4.06. Trustee Remittance Report.
----------------------------------------
(a) On each Trustee Reporting Date, the Trustee shall furnish a report
to the Guarantor in the form attached as Exhibit N to this Agreement (together
with a statement containing the information that is required to be included in
the statement to be prepared by the Trustee pursuant to Section 4.03) (the
"Trustee Remittance Report") to the Guarantor by electronic medium as agreed to
by the Trustee and the Guarantor.
(b) Subject to Section 4.06(d) below, if in any month the Trustee
fails to deliver the Trustee Remittance Report on the related Trustee Reporting
Date, the Guarantor shall use its best efforts to determine the amount of any
required Guarantor Payment. If on any Distribution Date the Guarantor makes any
Guarantor Payment as a result of such failure of the Trustee to deliver the
Trustee Remittance Report, the Trustee shall pay the Guarantor from its own
funds (not from the proceeds of the Trust Fund), not later than four (4)
Business Day following such Distribution Date, a $100 fee plus an amount equal
to the product of (i) the principal portion of such Guarantor Payment, (ii) a
percentage equal to (A) the Prime Rate plus 2.00% divided by (B) 365 and (iii)
the number of days between the Trustee Reporting Date and the date on which the
Guarantor received the Trustee Remittance Report.
(c) Subject to Section 4.06(d) below, if in any month the Trustee
fails to provide the Guarantor the Trustee Remittance Report on or prior to the
Trustee Reporting Date, the Trustee shall pay to the Guarantor the following
amounts: (i) upon the first such failure in any two year period, $0; (ii) upon
the second such failure in any two year period, $750 and (iii) upon the third
such failure in any two year period, $1,000. Upon the fourth such failure in any
two year period to provide the Trustee Remittance Report to the Guarantor
pursuant to this Section 4.06, the Guarantor may, at its option, remove the
Trustee for cause.
(d) Notwithstanding the foregoing, the Trustee shall have no
responsibility or liability (including removal as Trustee) under paragraphs (b)
and (c) of this Section 4.06 if the Trustee's
65
failure to timely deliver the Trustee Remittance Report is due to the failure of
the Servicer to furnish the Trustee with a report in accordance with Section
4.03. If the Trustee's failure to timely deliver the Trustee Remittance Report
is due to the failure of the Servicer to furnish the Trustee with a report in
accordance with Section 4.03, the Servicer shall pay to the Guarantor the amount
set forth in Section 4.06(b) and 4.06(c) above.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
-------------------------------
The Certificates shall be substantially in the forms attached hereto
as exhibits. The Certificates shall be issuable in the minimum denominations,
integral multiples in excess thereof (except that one Certificate in each Class
may be issued in a different amount which must be in excess of the applicable
minimum denomination) and aggregate denominations per Class set forth in the
Preliminary Statement.
Subject to Section 9.02 hereof respecting the final distribution on
the Certificates, on each Distribution Date the Trustee shall make distributions
to each Certificateholder of record on the preceding Record Date either (a) by
wire transfer in immediately available funds to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if (i) such Holder
has so notified the Trustee at least five Business Days prior to the related
Record Date and (ii) such Holder shall hold (A) 100% of the Class Certificate
Balance or Percentage Interest of any Class of Certificates or (B) Certificates
of any Class with an aggregate principal Denomination of not less than
$1,000,000 or (b) by check mailed by first class mail to such Certificateholder
at the address of such Holder appearing in the Certificate Register.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the countersignature and delivery of such Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless countersigned by the Trustee by manual signature, and such
countersignature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their countersignature. On the
Closing Date, the Trustee shall countersign the Certificates to be issued at the
direction of the Depositor, or any affiliate thereof.
The Depositor shall provide, or cause to be provided, to the Trustee
on a continuous basis, an adequate inventory of Certificates to facilitate
transfers.
SECTION 5.02. Certificate Register; Registration of Transfer and
----------------------------------------------------------------------
Exchange of Certificates.
-------------------------
(a) The Trustee shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.06 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. Upon surrender for registration of
transfer of any Certificate, the Trustee shall execute
66
and deliver, in the name of the designated transferee or transferees, one or
more new Certificates of the same Class and aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of the same Class in authorized denominations and
evidencing the same aggregate Percentage Interest upon surrender of the
Certificates to be exchanged at the office or agency of the Trustee. 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 in the form of Exhibit G duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of transfer or exchange of Certificates, but 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 may be required.
All Certificates surrendered for registration of transfer or exchange
shall be canceled and subsequently destroyed by the Trustee in accordance with
the Trustee's customary procedures.
(b) Except for the initial transfer of the Guaranteed Certificates,
Class X Certificates and Class R Certificates, no transfer of a Guaranteed
Certificate, Class X Certificate or Class R Certificate shall be made unless
such transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such state securities laws. In the
event that a transfer is to be made in reliance upon an exemption from the
Securities Act and such laws, in order to assure compliance with the Securities
Act and such laws, (i) the Certificateholder desiring to effect such transfer
and such Certificateholder's prospective transferee shall each certify to the
Trustee in writing the facts surrounding the transfer, the Certificateholder by
delivering a certificate in substantially the form set forth in Exhibit G (the
"Transferor Certificate") and the Certificateholder's prospective transferee by
delivering a letter in substantially the form of either Exhibit H (the
"Investment Letter") or Exhibit I (the "Rule 144A Letter") or (ii) there shall
be delivered to the Trustee at the expense of the transferor an Opinion of
Counsel that such transfer may be made pursuant to an exemption from the
Securities Act. The Depositor shall provide to any Holder of a Guaranteed
Certificate, Class X Certificate or Class R Certificate and any prospective
transferee designated by any such Holder, information regarding the related
Certificates and the Loans and such other information as shall be necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) for transfer
of any such Certificate without registration thereof under the Securities Act
pursuant to the registration exemption provided by Rule 144A. The Trustee and
the Servicer shall cooperate with the Depositor in providing the Rule 144A
information referenced in the preceding sentence, including providing to the
Depositor such information regarding the Certificates, the Loans and other
matters regarding the Trust Fund as the Depositor shall reasonably request to
meet its obligation under the preceding sentence. Each Holder of a Guaranteed
Certificate, Class X Certificate or Class R Certificate desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee and the
Depositor, the Sellers, the Guarantor and the Servicer against any liability
that may result if the transfer is not so exempt or is not made in accordance
with such federal and state laws.
No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received (i) a representation letter from the transferee
substantially in the form of Exhibit H or Exhibit I, to the effect that (x) such
transferee is not an employee benefit plan or arrangement subject to Section 406
of ERISA or a plan or arrangement subject to Section 4975 of the Code, nor a
person acting on behalf of any such plan or arrangement, nor using the assets of
any such plan or arrangement to effect such transfer or (y) if the purchaser is
an insurance company and the ERISA Restricted Certificate is not a
67
Class R Certificate and has been the subject of an ERISA Qualifying
Underwriting, a representation that the purchaser is an insurance company which
is purchasing such Certificates with funds contained in an "insurance company
general account" (as such term is defined in Section V(e) of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the purchase and
holding of such Certificates are covered under Sections I and III of PTCE 95-60
or (ii) in the case of any such ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, or a plan
or arrangement subject to Section 4975 of the Code (or comparable provisions of
any subsequent enactments), or a trustee of any such plan or any other person
acting on behalf of any such plan or arrangement, or using such plan's or
arrangement's assets, an Opinion of Counsel satisfactory to the Trustee, which
Opinion of Counsel shall not be an expense of either the Trustee or the Trust
Fund, addressed to the Trustee to the effect that the purchase or holding of
such ERISA-Restricted Certificate will not result in the assets of the Trust
Fund being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee to any
obligation in addition to those expressly undertaken in this Agreement or to any
liability. Notwithstanding anything else to the contrary herein, any purported
transfer of an ERISA-Restricted Certificate to or on behalf of an employee
benefit plan subject to ERISA or to the Code without the delivery to the Trustee
of an Opinion of Counsel satisfactory to the Trustee as described above shall be
void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 5.02(b) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Trustee in accordance with the foregoing requirements.
No transfer of a Class AV-1 Certificate shall be made to an employee
benefit plan or arrangement subject to Section 406 of ERISA or a plan or
arrangement subject to Section 4975 of the Code (a "Plan") unless the Trustee
shall have received a representation letter from the transferee substantially to
the effect that the Plan is a Plan investor or group of Plan investors on whose
behalf the decision to purchase the Class AV-1 Certificate is made by an
independent fiduciary that is (i) qualified to analyze and understand the terms
and conditions of the Yield Maintenance Agreement and the effect of the Yield
Maintenance Agreement on the credit ratings of the Class AV-1 Certificates and
(ii) a "qualified professional asset manager," as defined in Part V(a) of
Prohibited Transaction Class Exemption 84-14, an "in-house asset manager" as
defined in Part IV(a) of Prohibited Transaction Class Exemption 96-22 or a Plan
fiduciary with total Plan and non-Plan assets under management of at least $100
million at the time of the acquisition of the Class AV-1 Certificates.
Notwithstanding the foregoing, with respect to any transfer of a Class AV-1
Certificate that is held in book-entry form, the transferee shall be deemed to
have made the representations in clauses (i) and (ii) in the preceding sentence.
(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
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class
68
R Certificate unless, in addition to the certificates required to be
delivered to the Trustee under subparagraph (b) above, the Trustee
shall have been furnished with an affidavit (a "Transfer Affidavit")
of the initial owner or the proposed transferee in the form attached
hereto as Exhibit F.
(iii) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer of
a Class R Certificate and (C) not to Transfer its Ownership Interest
in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of 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 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the Transfer was registered after receipt of the related Transfer
Affidavit, Transferor Certificate and either the Rule 144A Letter or
the Investment Letter. The Trustee shall be entitled but not obligated
to recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
(v) The Depositor shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Sellers
or the Servicer, to the effect that the elimination of such restrictions will
not cause the Trust Fund hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding or result in the imposition of
any tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class R Certificate hereby
consents to any amendment of this Agreement which, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (A) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (B) to provide for a means to compel the Transfer of a Class R
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
69
(d) The preparation and delivery of all certificates and opinions
referred to above in this Section 5.02 in connection with transfer shall be at
the expense of the parties to such transfers.
(e) Except as provided below, the Book-Entry Certificates shall at all
times remain registered in the name of the Depository or its nominee and at all
times: (i) registration of the Certificates may not be transferred by the
Trustee except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Beneficial Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Beneficial Owners of the Book-Entry Certificates for
purposes of exercising the rights of Holders under this Agreement, and requests
and directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Beneficial Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Beneficial Owners.
All transfers by Beneficial Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Beneficial Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Beneficial Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
If (x) (i) the Servicer advises the Trustee in writing that the
Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee is unable to locate a
qualified successor, (y) the Servicer at its option advises the Trustee in
writing that it elects to terminate the book-entry system through the Depository
or (z) after the occurrence of an Event of Default or the resignation or removal
of the Servicer, Beneficial Owners representing at least 51% of the sum of the
then outstanding Class Certificate Balance of all Book-Entry Certificates
together advise the Depository, either directly or through the Depository
Participants, in writing (with instructions to notify the Trustee in writing)
that the continuation of a book-entry system through the Depository is no longer
in the best interests of the Beneficial Owners. Upon the occurrence of any of
the events described in the immediately preceding sentence, the Trustee shall
notify all Beneficial Owners of the occurrence of any such event and of the
availability through the Depository of definitive, fully-registered Certificates
(the "Definitive Certificates") to Beneficial Owners requesting the same. Upon
surrender to the Trustee of the related Class of Certificates by the Depository,
accompanied by the instructions from the Depository for registration, the
Trustee shall issue the Definitive Certificates. Neither the Servicer, the
Depositor nor the Trustee shall be liable for any delay in delivery of such
instruction and each may conclusively rely on, and shall be protected in relying
on, such instructions. The Servicer shall provide the Trustee with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder; provided
that the Trustee shall not by virtue of its assumption of such obligations
become liable to any party for any act or failure to act of the Depository.
70
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
----------------------------------------------------------------
If (a) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate and (b) there is delivered to the Servicer, the Guarantor and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, countersign and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section 5.03 shall constitute complete and indefeasible evidence of
ownership, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
------------------------------------
The Servicer, the Guarantor, the Trustee and any agent of the Servicer
or the Trustee may treat the Person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving distributions as
provided in this Agreement and for all other purposes whatsoever, and neither
the Servicer, the Trustee nor any agent of the Servicer or the Trustee shall be
affected by any notice to the contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
----------------------------------------------------------------------
Addresses.
----------
If three or more Certificateholders (a) request such information in
writing from the Trustee, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor or Servicer shall request such information in writing from the
Trustee, then the Trustee shall, within ten Business Days after the receipt of
such request, provide the Depositor, the Servicer or such Certificateholders at
such recipients' expense the most recent list of the Certificateholders of such
Trust Fund held by the Trustee, if any. The Depositor and every
Certificateholder, by receiving and holding a Certificate, agree that the
Trustee shall not be held accountable by reason of the disclosure of any such
information as to the list of the Certificateholders hereunder, regardless of
the source from which such information was derived.
SECTION 5.06. Maintenance of Office or Agency.
----------------------------------------------
The Trustee will maintain or cause to be maintained at its expense an
office or offices or agency or agencies in New York City where Certificates may
be surrendered for registration of transfer or exchange. The Trustee initially
designates its Corporate Trust Office for such purposes. The Trustee will give
prompt written notice to the Certificateholders of any change in such location
of any such office or agency.
71
ARTICLE VI
THE DEPOSITOR AND THE SERVICER
SECTION 6.01. Respective Liabilities of the Depositor and the
----------------------------------------------------------------------
Servicer.
---------
The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
----------------------------------------------------------------------
Servicer.
---------
The Depositor and the Servicer will each keep in full effect their
respective existence, rights and franchises as a corporation under the laws of
the United States or under the laws of one of the states thereof and will each
obtain and preserve their respective qualifications to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided, however, that
the successor or surviving Person to the Servicer shall be qualified to sell
mortgage loans to, and to service mortgage loans on behalf of, FNMA or Freddie
Mac and shall be reasonably acceptable to the Guarantor.
SECTION 6.03. Limitation on Liability of the Depositor, the Sellers,
----------------------------------------------------------------------
the Servicer and Others.
------------------------
None of the Depositor, the Sellers, the Servicer or any of the
directors, officers, employees or agents of the Depositor, the Sellers or the
Servicer shall be under any liability to the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Sellers, the Servicer or any such
Person against any breach of representations or warranties made by it herein or
protect the Depositor, the Sellers, the Servicer or any such Person from any
liability which would otherwise be imposed by reasons of willful misfeasance,
bad faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Depositor, the Sellers, the
Servicer and any director, officer, employee or agent of the Depositor, the
Sellers or the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor, the Sellers, the Servicer and the Guarantor
any director, officer, employee or agent of the Depositor, the Sellers, the
Servicer or the Guarantor shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Loan or Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. None of the Depositor, the Sellers or the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its respective duties hereunder and which in its opinion may
involve it in any expense or
72
liability; provided, however, that any of the Depositor, the Sellers or the
Servicer may in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto and interests of the Trustee and the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Sellers and the Servicer shall be entitled to
be reimbursed therefor out of the Certificate Account.
SECTION 6.04. Limitation on Resignation of Servicer.
----------------------------------------------------
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) upon appointment of a successor servicer acceptable to
the Guarantor and receipt by the Trustee of a letter from each Rating Agency
that such a resignation and appointment will not result in a downgrading of the
rating of any of the Subordinate Certificates or (b) upon determination that its
duties hereunder are no longer permissible under applicable law. Any such
determination under clause (b) permitting the resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
No such resignation shall become effective until the Trustee or a successor
servicer reasonably acceptable to the Guarantor shall have assumed the
Servicer's responsibilities, duties, liabilities and obligations hereunder.
SECTION 6.05. Indemnification.
------------------------------
The Servicer agrees to indemnify and hold the Trustee, the Depositor,
the Guarantor and each Certificateholder harmless 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
Guarantor 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 Loans in compliance with the terms
of this Agreement. 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 Guarantor and each Certificateholder if a claim is
made by a third party for which any of such parties could require
indemnification from the Servicer under this Section 6.05, and the Servicer
shall assume (with the consent of the Trustee and the Guarantor) 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 non-appealable, final judgment or decree which may be entered
against the Servicer, the Trustee, the Depositor, the Guarantor and/or the
Certificateholder in respect of such claim. The indemnity provided for in this
Section 6.05 shall survive the termination of the Agreement.
SECTION 6.06 Liability of the Servicer.
---------------------------------------
Notwithstanding any subservicing agreement or 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
Guarantor and the Certificateholders for the servicing and administering of the
Loans in accordance with the provisions of Article III 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 Loans. 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.
73
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
--------------------------------
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Servicer to deposit in the
Certificate Account or remit to the Trustee any payment (other than a
payment required to be made under Section 4.01 hereof) required to be
made with respect to any Class of Certificates under the terms of this
Agreement, which failure shall continue unremedied for one Business
Day after the date upon which written notice of such failure shall
have been given (a) to the Servicer by the Trustee or the Depositor or
(b) to the Servicer, the Depositor and the Trustee by the Guarantor or
the Holders of Certificates of such Class evidencing not less than 25%
of the Voting Rights allocated to such Class;
(ii) any failure by the Servicer to duly observe or perform
in any material respect any other of the covenants or agreements on
the part of the Servicer contained in this Agreement, which failure
shall continue unremedied for a period of 30 days after the date on
which written notice of such failure shall have been given (a) to the
Servicer by the Trustee or the Depositor or (b) to the Servicer, the
Depositor and the Trustee by the Guarantor or the Holders of
Certificates of any Class evidencing not less than 25% of the Voting
Rights allocated to such Class;
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceeding, 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 consecutive days;
(iv) the Servicer shall consent to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or all or substantially all of the property
of the Servicer;
(v) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
(vi) so long as the Servicer is a Seller, any failure by any
Seller to observe or perform in any material respect any of the other
covenants or agreements on the part of any Seller contained in this
Agreement, which failure shall continue unremedied for a period of 30
days after the date on which written notice of such failure shall have
been given to such Seller by the Trustee or the Depositor, or to such
Seller and the Trustee by the Guarantor or the Holders of Certificates
of any Class evidencing not less than 25% of the Voting Rights
allocated to such Class; or
(vii) any failure of the Servicer to make any Advance in the
manner and at the time required to be made pursuant to Section 4.01
which continues unremedied for a period of one Business Day after the
date of such failure.
74
(viii) at the Guarantor's option, if, following completion
of a Servicing Audit, Guarantor has made a reasonable good faith
determination that the then current Servicing Practice materially and
adversely affects the interests of the Certificateholders and the
Guarantor under this Agreement, and such deficiency in Servicing
Practice has not been remedied within a period of sixty (60) days
after the date on which written notice of such deficiency shall have
been given to the Servicer by the Guarantor (with a copy to the
Trustee).
If an Event of Default described in clauses (i) to (viii) of this
Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Trustee may, and at the
direction of the Guarantor or at the direction of the Holders of Certificates of
any Class evidencing not less than 25% of the Voting Rights allocated to such
Class and with the consent of the Guarantor, by notice in writing to the
Servicer (with a copy to each Rating Agency) shall, terminate all of the rights
and obligations of the Servicer under this Agreement and in and to the Loans and
the proceeds thereof, other than its rights as a Certificateholder hereunder. On
and after the receipt by the Servicer of such written notice, all authority and
power of the Servicer hereunder, whether with respect to the Loans or otherwise,
shall pass to and be vested in the Trustee. The Trustee shall, subject to 3.04
hereof, thereupon make any Advance described in clause (vii) hereof. The Trustee
is hereby authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Loans and related
documents, or otherwise. Unless expressly provided in such written notice, no
such termination shall affect any obligation of the Servicer to pay amounts owed
pursuant to Article VIII. The Servicer agrees to cooperate with the Trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to the Trustee of all
cash amounts which shall at the time be credited to the Certificate Account, or
thereafter be received with respect to the Loans.
The Trustee shall be entitled to be reimbursed from the Servicer (or
by the Trust Fund if the Servicer does not fulfill its obligations hereunder)
for all costs associated with the transfer of servicing from the predecessor
Servicer, including, without limitation, any costs or expenses associated with
the complete transfer of all servicing data and the completion, correction or
manipulation of such servicing data as may be required by the Trustee to correct
any errors or insufficiencies in the servicing data or otherwise to enable the
Trustee to service the Loans properly and effectively, costs reasonably
allocable to specific employees and overhead, legal fees and expenses,
accounting and financial consulting fees and expenses, costs or expenses
associated with the transfer of all servicing files and costs of amending the
Agreement, if necessary. If the terminated Servicer does not pay such
reimbursement within thirty (30) days of its receipt of an invoice therefor,
such reimbursement shall be an expense of the Trust Fund and the Trustee shall
be entitled to receive such reimbursement from amounts on deposit in the
Certificate Account pursuant to Section 3.08(a)(vii)(B) or from the Distribution
Account pursuant to Section 3.08(b)(i), as applicable, in an amount not to
exceed the Trustee Permitted Withdrawal Amount and to receive all amounts in
excess of the Trustee Permitted Withdrawal Amount pursuant to Section
4.02(d)(iii).
Notwithstanding any termination of the activities of the Servicer
hereunder, the Servicer shall be entitled to receive, out of any late collection
of a Scheduled Payment on a Loan which was due prior to the notice terminating
such Servicer's rights and obligations as Servicer hereunder and received after
such notice, that portion thereof to which such Servicer would have been
entitled pursuant to Sections 3.08(a)(i) through (viii), and any other amounts
payable to such Servicer hereunder the entitlement to which arose prior to the
termination of its activities hereunder.
75
SECTION 7.02. Trustee to Act; Appointment of Successor.
-------------------------------------------------------
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, subject to and to the extent
provided in Section 3.04, be the successor 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 and
applicable law including the obligation to make Advances pursuant to Section
4.01. As compensation therefor, the Trustee shall be entitled to all funds
relating to the Loans that the Servicer would have been entitled to charge to
the Certificate Account or Distribution Account if the Servicer had continued to
act hereunder. Notwithstanding the foregoing, if the Trustee has become the
successor to the Servicer in accordance with Section 7.01 hereof, the Trustee
may, if it shall be unwilling to so act, or shall, if it is prohibited by
applicable law from making Advances pursuant to Section 4.01 hereof or if it is
otherwise unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution the
appointment of which does not adversely affect the then current rating of the
Subordinate Certificates by each Rating Agency as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Any successor to the Servicer shall be
approved by the Guarantor as evidenced by its prior written consent and shall be
an institution which is a FNMA and Freddie Mac approved seller/servicer in good
standing, which has a net worth of at least $10,000,000, and which is willing to
service the Loans and executes and delivers to the Depositor and the Trustee an
agreement accepting such delegation and assignment, which contains an assumption
by such Person of the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer (other than liabilities of the Servicer under
Section 6.03 hereof incurred prior to termination of the Servicer under Section
7.01), with like effect as if originally named as a party to this Agreement; and
provided further that no such delegation and assignment shall become effective
unless each Rating Agency acknowledges that its rating of the Subordinate
Certificates in effect immediately prior to such delegation and assignment will
not be qualified or reduced as a result of such delegation and assignment.
Pending appointment of a successor to the Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3.04 hereof, act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of the Servicing Fee permitted the Servicer hereunder. The Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. Neither the Trustee nor any
other successor servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof or any failure to perform, or any delay in performing, any
duties or responsibilities hereunder, in either case caused by the failure of
the Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
Any successor to the Servicer as servicer shall give notice to the
Mortgagors of such change of servicer.
SECTION 7.03. Notification to Certificateholders.
-------------------------------------------------
(a) Upon any termination or appointment of a successor to the
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders, the Guarantor and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders and the Guarantor
notice of each such Event of Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
76
SECTION 7.04. Survivability of Servicer Liabilities.
----------------------------------------------------
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. 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 Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge has occurred and remains uncured 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 that are specifically required to be furnished pursuant to any
provision of this Agreement shall examine them to determine whether they are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such resolution,
certificate, statement, opinion, report, document, order or other instrument.
Unless an Event of Default of which a Responsible Officer of the
Trustee shall have actual knowledge shall have occurred and be continuing, 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 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 which it believed in good faith to be genuine and
to have been duly executed by the proper authorities respecting any matters
arising hereunder.
The Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer or other officers of the Trustee, unless it shall
be finally proven that the Trustee was negligent in ascertaining the pertinent
facts.
The Trustee shall not be liable with respect to any action taken,
suffered or omitted to be taken by it in good faith in accordance with this
Agreement or with the direction of the Guarantor or Holders of Certificates
evidencing not less than 25% of the Voting Rights of the Certificates (with the
Guarantor's consent) relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee under this Agreement.
Subject to the other provisions of this Agreement and without limiting
the generality of this Section 8.01, the Trustee shall have no duty (A) to see
to any recording, filing, or depositing of this
77
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 filing or depositing or to any
re-recording, 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 other than
from funds available in the Certificate Account or (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; provided, however, that
the provisions of this Section 8.01(iv) shall not apply during any period during
which the Trustee is acting in the capacity of servicer.
Notwithstanding anything contained in this Section 8.01 to the
contrary, 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.
SECTION 8.02 Certain Matters Affecting the Trustee.
---------------------------------------------------
Except as otherwise provided in Section 8.01:
(i) the Trustee (acting as Trustee, Tax Matters Person or as
agent of the Tax Matters Person for any REMIC) may request and rely
upon 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, 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 and the Trustee shall have
no responsibility to ascertain or confirm the genuineness of any
signature of any such party or parties;
(ii) the Trustee (acting as Trustee, Tax Matters Person or
as agent of the Tax Matters Person for any REMIC) may consult with
counsel, financial advisers or accountants and the advice of any such
counsel, financial advisers or accountants and any Opinion of Counsel
shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such Opinion of Counsel;
(iii) the Trustee shall not be 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;
(iv) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document, unless
requested in writing so to do by the Guarantor or Holders of
Certificates evidencing not less than 25% of the Voting Rights
allocated to each Class of Certificates; 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 Trustee and shall be repaid pursuant to Section 4.02(a)(ii)
hereof;
78
(v) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents, accountants, custodians or attorneys, and the Trustee
shall not be responsible for any misconduct or negligence on the part
of any such agent, accountant, custodian or attorney appointed by the
Trustee with due care;
(vi) the Trustee shall not be required to risk or expend its
own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it, and none of the
provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except
during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of the
Servicer in accordance with the terms of this Agreement;
(vii) the Trustee shall not be liable for any loss on any
investment of funds pursuant to this Agreement (other than as issuer
of the investment security);
(viii) the Trustee shall not be required to take notice or
be deemed to have knowledge of any Event of Default (except an event
of nonpayment by the Servicer) until a Responsible Officer of the
Trustee shall have received written notice thereof, and in the absence
of receipt of such notice, the Trustee may conclusively assume that
there is no default or Event of Default;
(ix) the Trustee shall be under no obligation to exercise
any of the trusts, rights or powers vested in it by this Agreement or
to institute, conduct or defend any litigation hereunder or in
relation hereto at the request, order or direction of the Guarantor or
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless the Guarantor or such Certificateholders shall have
offered to the Trustee reasonable security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which may
be incurred therein or thereby;
(x) 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;
(xi) 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
(xii) anything in this Agreement to the contrary
notwithstanding, in no event shall the Trustee be liable for special,
indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Trustee has
been advised of the likelihood of such loss or damage and regardless
of the form of action.
SECTION 8.03. Trustee Not Liable for Certificates or Loans.
-----------------------------------------------------------
The recitals contained herein and in the Certificates shall be taken
as the statements of the Depositor or the Sellers, 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 Loan or related document other than with respect to the
Trustee's execution and counter-signature of the Certificates. The Trustee shall
not be accountable for the use or application by the Depositor or the Servicer
of any of the Certificates or of the proceeds of such Certificates or for the
79
use and application of any funds paid to the Depositor or the Servicer in
respect of the Loans or deposited in or withdrawn from the Certificate Account
by the Depositor or 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; provided, however, that the foregoing language shall not apply to the
Trustee's obligations under this Agreement.
SECTION 8.04. Trustee May Own Certificates.
-------------------------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates, and may otherwise deal with the parties hereto
with the same rights as it would have if it were not the Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
------------------------------------------
The Trustee, as compensation for its activities hereunder, shall be
entitled to withdraw from the Distribution Account on each Distribution Date an
amount equal to the Trustee Fee (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) and expenses
for such Distribution Date. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer and held harmless
against any loss, liability or expense (including reasonable attorney's fees)
(i) incurred in connection with any claim or legal action relating to (a) this
Agreement, (b) the Certificates or (c) in connection with the performance of any
of the Trustee's duties hereunder, other than any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or negligence in the
performance of any of the Trustee's duties hereunder and (ii) resulting from any
error in any tax or information return prepared by the Servicer. Such indemnity
shall survive the termination of this Agreement or the resignation or removal of
the Trustee hereunder. Without limiting the foregoing, the Servicer covenants
and agrees, except as otherwise agreed upon in writing by the Depositor and the
Trustee, and except for any such expense, disbursement or advance as may arise
from the Trustee's negligence, bad faith or willful misconduct, to pay or
reimburse the Trustee, for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement with respect to the following: (A) the reasonable compensation and the
expenses and disbursements of its counsel not associated with the closing of the
issuance of the Certificates, (B) the reasonable compensation, expenses and
disbursements of any accountant, engineer or appraiser that is not regularly
employed by the Trustee, to the extent that the Trustee must engage such persons
to perform acts or services hereunder and (C) printing and engraving expenses in
connection with preparing any Definitive Certificates. Except as otherwise
provided herein, the Trustee shall not be entitled to payment or reimbursement
for any routine ongoing expenses incurred by the Trustee in the ordinary course
of its duties as Trustee, Certificate Registrar, Tax Matters Person or Paying
Agent hereunder or for any other expenses.
SECTION 8.06. Eligibility Requirements for Trustee.
---------------------------------------------------
The Trustee hereunder shall at all times be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000 subject to
supervision or examination by federal or state authority and with a credit
rating which would not cause either of the Rating Agencies to reduce their
respective then current ratings of the Subordinate Certificates (or having
provided such security from time to time as is sufficient to avoid such
reduction). If such corporation or 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 8.06
the combined capital and surplus of such corporation or 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
80
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 8.06, the Trustee shall resign immediately in the
manner and with the effect specified in Section 8.07 hereof. The entity serving
as Trustee may have normal banking and trust relationships with the Depositor
and its affiliates or the Servicer and its affiliates; provided, however, that
such entity cannot be an affiliate of the Servicer other than the Trustee in its
role as successor to the Servicer.
SECTION 8.07. Resignation and Removal of Trustee.
-------------------------------------------------
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice of resignation to the Depositor, the
Guarantor and the Servicer and each Rating Agency not less than 60 days before
the date specified in such notice when, subject to Section 8.08, such
resignation is to take effect, and acceptance by a successor trustee in
accordance with Section 8.08 meeting the qualifications set forth in Section
8.06. If no successor trustee meeting such qualifications shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice or resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request thereto by the Depositor or the Guarantor, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged as bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or a tax is imposed with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located and the imposition of such tax
would be avoided by the appointment of a different trustee, then the Depositor
or the Servicer, with the consent of the Guarantor, may remove the Trustee, and
shall, within 30 days after such removal, appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the Trustee, one copy of which shall be delivered to the Servicer and one copy
to the successor trustee.
The Holders of Certificates entitled to at least 51% of the Voting
Rights with the prior written consent of the Guarantor may at any time remove
the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by the Guarantor or such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered by the successor trustee to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor so appointed. Notice of
any removal of the Trustee shall be given to each Rating Agency by the successor
trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
Notwithstanding anything to the contrary set forth herein, the Trustee
may not be removed by the Depositor or the Certificateholders without the prior
written consent of the Guarantor, which consent shall not be unreasonably
withheld.
If the Trustee resigns or is removed, the Guarantor may terminate any
Paying Agent; provided, however, that any such termination of any Paying Agent
shall not become effective until a successor trustee (or a successor Paying
Agent on its behalf) shall have assumed in writing the duties of the terminated
Paying Agent.
81
SECTION 8.08. Successor Trustee.
--------------------------------
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Servicer 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 Depositor, the 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 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof, is approved in writing
by the Guarantor and its appointment shall not adversely affect the then current
rating of the Subordinate Certificates.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, 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. 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 8.09. Merger or Consolidation of Trustee.
-------------------------------------------------
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided that such corporation shall be eligible under
the provisions of Section 8.06 hereof without the execution or filing of any
paper or further act on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
------------------------------------------------------------
Notwithstanding any other provisions of this Agreement, 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 any Mortgage Note may at the
time be located, the Servicer and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust Fund or any part
thereof, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. Any such
co-trustee or separate trustee shall be subject to the prior written approval of
the Servicer and the Guarantor. If the Servicer shall not have joined in such
appointment within 15 days after the receipt by it of a request to do so, or in
the case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 8.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 8.08.
82
Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) to the extent necessary to effectuate the purposes of
this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee, except for the obligation of
the Trustee under this Agreement to advance funds on behalf of the
Servicer, shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in
such act), except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to 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 applicable Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be held personally liable by
reason of any act or omission of any other trustee hereunder and such
appointment shall not, and shall not be deemed to, constitute any such
separate trustee or co-trustee as agent of the Trustee;
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee, with the consent of the
Guarantor; and
(iv) the Servicer, and not the Trustee, shall be liable for
the payment of reasonable compensation, reimbursement and
indemnification to any such separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the separate trustees and co-trustees, when
and 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 VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer, the Guarantor and the Depositor.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 8.11. Tax Matters.
--------------------------
It is intended that the assets with respect to which any REMIC
election is to be made, as set forth in the Preliminary Statement, shall
constitute, and that the conduct of matters relating to such assets shall be
such as to qualify such assets as, a "real estate mortgage investment conduit"
as defined in and in accordance with the REMIC Provisions. In furtherance of
such intention, the Trustee covenants and agrees that it shall act as agent (and
the Trustee is hereby appointed to act as agent) on behalf of each
83
REMIC created hereunder and that in such capacity it shall: (a) prepare and
file, or cause to be prepared and filed, in a timely manner, U.S. Real Estate
Mortgage Investment Conduit Income Tax Returns (Forms 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file or cause to be
prepared and filed with the Internal Revenue Service and applicable state or
local tax authorities income tax or information returns for each taxable year
with respect to each REMIC created hereunder, containing such information and at
the times and in the manner as may be required by the Code or regulations, rules
or procedures issued under the Code, or state or local tax laws, regulations, or
rules, and furnish or cause to be furnished to Certificateholders the schedules,
statements or information at such times and in such manner as may be required
thereby; (b) within thirty days of the Closing Date, furnish or cause to be
furnished to the Internal Revenue Service, on Forms 8811 or as otherwise may be
required by the Code, the name, title, address, and telephone number of the
person that the holders of the Certificates may contact for tax information
relating thereto, together with such additional information as may be required
by such Form, and update such information at the time or times in the manner
required by the Code; (c) make or cause to be made elections that such assets be
treated as a REMIC on the federal tax return for its first taxable year (and, if
necessary, under applicable state law); (d) prepare and forward, or cause to be
prepared and forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax authorities, all information returns and
reports as and when required to be provided to them in accordance with the REMIC
Provisions, including without limitation, the calculation of any original issue
discount using the prepayment assumption described in the Information Circular;
(e) provide information necessary for the computation of tax imposed on the
transfer of a Class R Certificate to a Person that is not a Permitted
Transferee, or an agent (including a broker, nominee or other middleman) of a
non-Permitted Transferee, or a pass-through entity in which a non-Permitted
Transferee is the record holder of an interest (the reasonable cost of computing
and furnishing such information may be charged to the Person liable for such
tax, but the Trustee shall remain obligated to timely provide such information
even if such Person fails to pay these costs); (f) to the extent that they are
under its control, conduct matters relating to such assets at all times that any
Certificates are outstanding so as to maintain the REMIC status of each REMIC
created hereunder under the REMIC Provisions; (g) not knowingly or intentionally
take any action or omit to take any action that would cause the termination of
the REMIC status of any of the REMICs created hereunder; (h) pay, from the
sources specified in the last paragraph of this Section 8.11, the amount of any
federal or state tax, including prohibited transaction taxes as described below,
imposed on each REMIC created hereunder prior to its termination when and as the
same shall be due and payable (but such obligation shall not prevent the Trustee
or any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Trustee from withholding payment of such
tax, if permitted by law, pending the outcome of such proceedings); (i) ensure
that federal, state or local income tax or information returns shall be signed
by the Trustee or such other person as may be required to sign such returns by
the Code or state or local laws, regulations or rules; (j) maintain records
relating to each REMIC created hereunder, including, but not limited to, the
income, expenses, assets, and liabilities thereof and the fair market value and
adjusted basis of the assets determined at such intervals as may be required by
the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information; and (k) as and when necessary and appropriate,
represent each REMIC created hereunder in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, provided that to the extent such representation affects the
Guarantor's obligations hereunder, the Trustee agrees to consult with the
Guarantor and accommodate the Guarantor's reasonable requests, request an
administrative adjustment as to any taxable year of each REMIC created
hereunder, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of each REMIC created
hereunder, and otherwise act on behalf of each REMIC created hereunder in
relation to any tax matter or controversy involving it.
In order to enable the Trustee to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Trustee
within ten (10) days after the Closing Date all information
84
or data that the Trustee requests in writing and determines to be relevant for
tax purposes to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flows of the Certificates and the Loans. Thereafter, the
Depositor shall provide to the Trustee promptly upon written request therefor,
any such additional information or data that the Trustee may, from time to time,
reasonably request to enable the Trustee to perform its duties as set forth
herein. The Depositor hereby indemnifies the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any errors
or miscalculations of the Trustee that result from any failure of the Depositor
to provide, or to cause to be provided, accurate information or data to the
Trustee on a timely basis.
If any tax is imposed on "prohibited transactions" of any REMIC
created hereunder as defined in Section 860F(a)(2) of the Code, on the "net
income from foreclosure property" of any REMIC created hereunder as defined in
Section 860G(c) of the Code, on any contribution to any REMIC created hereunder
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax and all other
related costs shall be paid by (i) the Trustee, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, (ii) the Servicer, or if such tax arises out of or results from a
breach by the Servicer or a Seller of any of their obligations under this
Agreement, (iii) the Sellers, if any tax arises out of or results from any
Seller's obligation to repurchase a Loan pursuant to Section 2.02 or 2.03 or
(iv) in all other cases, or if the Trustee, the Servicer or a Seller fails to
honor its obligations under the preceding clause (i),(ii) or (iii), such tax
will be paid with amounts otherwise to be distributed to the Certificateholders,
as provided in Section 3.08(b).
SECTION 8.12. Periodic Filings.
-------------------------------
The Depositor shall prepare, execute and file all periodic reports
required under the Securities Exchange Act of 1934. In connection with the
preparation and filing of such periodic reports, the Servicer shall timely
provide to the Depositor all material information available to it which is
required to be included in such reports and not known to it to be in the
possession of the Depositor and such other information as the Depositor
reasonably may request from it and otherwise reasonably shall cooperate with the
Depositor. The Depositor shall have no liability with respect to any failure to
properly prepare or file such periodic reports resulting from or relating to the
Depositor's inability or failure to obtain any information not resulting from
its own negligence or willful misconduct.
SECTION 8.13. Appointment of Custodians.
----------------------------------------
The Trustee may, with the consent of the Servicer and the Guarantor,
appoint one or more custodians (each, a "Custodian") to hold all or a portion of
the Trustee's Mortgage Files as agent for the Trustee, by entering into a
custodial agreement ("Custodial Agreement"). 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 and the
Guarantor. The Trustee shall be liable for the fees of any Custodian appointed
hereunder. Each Custodian shall be a depository institution subject to
supervision by federal or state authority and shall be qualified to do business
in the jurisdiction in which it holds any Trustee's Mortgage File.
SECTION 8.14. 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
85
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Guarantor
or the Certificateholders in respect of which such judgment has been recovered.
The Trustee shall afford the Sellers, the Depositor, the Servicer, the
Guarantor and each Certificateholder, upon reasonable notice during normal
business hours, access to all records maintained by the Trustee in respect of
its duties hereunder and access to officers of the Trustee responsible for
performing such duties. Upon request, the Trustee shall furnish the Sellers, the
Depositor, the Servicer, the Guarantor, and each Certificateholder with its most
recent financial statements. The Trustee shall cooperate fully with the Sellers,
the Servicer, the Depositor, the Guarantor and such Certificateholder and shall
make available to the Sellers, the Servicer, the Depositor, the Guarantor and
such Certificateholder for review and copying at the expense of the party
requesting such copies, such books, documents or records as may be requested
with respect to the Trustee's duties hereunder. The Sellers, the Depositor, the
Servicer, the Guarantor and the Certificateholders shall not have any
responsibility or liability for any action or failure to act by the Trustee and
are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
SECTION 8.15. 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, may proceed to
protect and enforce its rights and the rights of the Guarantor and 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, the
Guarantor or the Certificateholders.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Purchase of all Loans.
--------------------------------------------------------------------
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Servicer, the Guarantor and the Trustee created hereby with
respect to the Trust Fund shall terminate upon the later to occur of (I) the
payment in full of all amounts owing to the Guarantor unless the Guarantor shall
otherwise consent and (II) the earlier to occur of (a) the purchase by the
Servicer of all Loans (and REO Properties) remaining in the Trust Fund at a
price equal to the sum of (i) 100% of the Stated Principal Balance of each Loan
plus accrued and unpaid interest thereon at the applicable Mortgage Rate and
(ii) 100% of the Stated Principal Balance of each Loan related to any REO
Property plus accrued and unpaid interest thereon at the applicable Mortgage
Rate (the "Termination Price"); provided, however, that in no event shall the
Termination Price be less than (1) with respect to the Offered Certificates,
100% of their then outstanding principal balance, (2) with respect to the
Offered Certificates, any accrued and unpaid interest thereon at the applicable
Pass-Through Rate (including any Class Unpaid Interest Amounts) and (3) with
respect to the Class AF-1 and Class AV-1 Certificates, any accrued and unpaid
Net WAC Cap Carryover as of such Distribution Date, or (b) the later of (i) the
maturity or other liquidation of the last Loan remaining in the Trust Fund (or
any Advance with respect thereto) and the disposition of all REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement. In no event shall the trusts
created hereby continue beyond the earlier of (i) the expiration of 21 years
from the death of the survivor of the descendants of
86
Joseph P. Kennedy, the late Ambassador of the United States to the Court of St.
James, living on the date hereof or (ii) the Latest Possible Maturity Date. The
right to purchase all Loans and REO Properties pursuant to clause (a) above
shall be conditioned upon the Pool Principal Balance, at the time of any such
repurchase, aggregating less than ten percent (10%) of the Cut-off Date Pool
Principal Balance. If the Servicer elects to exercise its purchase right
pursuant to clause (a) above, the Servicer's right to reimbursement from the
Trust Fund for any Advances previously made on the Loans being purchased shall
terminate as of the date the purchase of the Loans and REO Properties is
completed.
SECTION 9.02. Final Distribution on the Certificates.
-----------------------------------------------------
If on any Determination Date, the Servicer determines that there are
no Outstanding Loans and no other funds or assets in the Trust Fund other than
the funds in the Certificate Account, the Servicer shall direct the Trustee
promptly to send a final distribution notice to each Certificateholder. If the
Servicer elects to terminate the Trust Fund pursuant to clause (a) of Section
9.01, at least 20 days prior to the date notice is to be mailed to the affected
Certificateholders, the Servicer shall notify the Depositor, the Guarantor and
the Trustee of the date the Servicer intends to terminate the Trust Fund and of
the applicable repurchase price of the Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and not later than the 15th day of the month next preceding the month of
such final distribution. Any such notice shall specify (a) the Distribution Date
upon which final distribution on the Certificates will be made upon presentation
and surrender of Certificates at the office therein designated, (b) the amount
of such final distribution, (c) the location of the office or agency at which
such presentation and surrender must be made, and (d) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distributions
being made only upon presentation and surrender of the Certificates at the
office therein specified. The Servicer will give such notice to each Rating
Agency at the time such notice is given to Certificateholders.
In the event such notice is given, the Servicer shall cause all funds
in the Certificate Account to be remitted to the Trustee for deposit in the
Distribution Account on the Business Day prior to the applicable Distribution
Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Servicer the Mortgage Files for the Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 4.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (i) as to the Offered Certificates, the Class
Certificate Balance of each Class thereof plus accrued interest thereon and (ii)
as to the Class R Certificates, the amount, if any, which remains on deposit in
the Distribution Account (other than the amounts retained to meet claims) after
application pursuant to clause (i) above.
In the event that any affected Certificateholders shall not surrender
Certificates for cancellation within six months after the date 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 the applicable 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
87
funds and other assets which remain a part of the Trust Fund. If within one year
after the second notice all Certificates shall not have been surrendered for
cancellation, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets of the Trust Fund which remain subject hereto.
SECTION 9.03. Additional Termination Requirements.
--------------------------------------------------
(a) In the event the Servicer exercises its purchase option as
provided in Section 9.01, the Trust Fund shall be terminated in accordance with
the following additional requirements, unless the Trustee has been supplied with
an Opinion of Counsel, at the expense of the Servicer, to the effect that the
failure to comply with the requirements of this Section 9.03 will not (i) result
in the imposition of taxes on "prohibited transactions" on any REMIC created
hereunder as defined in section 860F of the Code, or (ii) cause any REMIC
created hereunder to fail to qualify as a REMIC at any time that any
Certificates are outstanding:
(1) Within 90 days prior to the final Distribution Date set
forth in the notice given by the Servicer under Section 9.02, the
Servicer shall prepare and the Trustee, at the expense of the Tax
Matters Person, shall adopt a plan of complete liquidation within the
meaning of section 860F(a)(4) of the Code which, as evidenced by an
Opinion of Counsel (which opinion shall not be an expense of the
Trustee or the Tax Matters Person), meets the requirements of a
qualified liquidation; and
(2) Within 90 days after the time of adoption of such a plan
of complete liquidation, the Trustee shall sell all of the assets of
the Trust Fund to the Servicer for cash in accordance with Section
9.01.
(b) The Trustee as agent for each REMIC created hereunder hereby
agrees to adopt and sign such a plan of complete liquidation upon the written
request of the Servicer, and the receipt of the Opinion of Counsel referred to
in Section 9.03(a)(1) and to take such other action in connection therewith as
may be reasonably requested by the Servicer.
(c) By their acceptance of the Certificates, the Holders thereof
hereby authorize the Servicer to prepare and the Trustee to adopt and sign a
plan of complete liquidation.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
-------------------------
This Agreement may be amended from time to time by the Depositor, the
Sellers, the Servicer and the Trustee with the consent of the Guarantor, but
without the consent of any of the Certificateholders, (a) to cure any ambiguity,
(b) to correct or supplement any provisions herein which may be defective or
inconsistent with any other provisions herein, (c) to make any other revisions
relating to matters or questions arising under this Agreement, provided that any
such revisions shall not be inconsistent with the provisions of this Agreement
or (d) to modify, eliminate or add to any of its provisions to such extent as
shall be necessary or helpful to (i) maintain the qualification of the Trust
Fund as one or more REMICs under the Code or (ii) avoid or minimize the risk of
imposition of any tax on any REMIC; provided that, (x) in the case of clauses
(a) - (c), that amendment will not adversely affect in any material respect the
interests of any Certificateholders covered by this Agreement as evidenced
either by an Opinion of Counsel to that effect or the delivery to the Trustee of
written notification from
88
each Rating Agency that provides, at the request of the Depositor, a rating for
the Subordinate Certificates, of the related series to the effect that that
amendment or supplement will not cause that Rating Agency to lower or withdraw
the then current rating assigned to those Certificates, and (y) in the case of
clause (d), the Trustee has received an Opinion of Counsel (which opinion shall
not be an expense of the Trustee or the Trust Fund) to the effect that the
amendment is necessary or helpful to (i) maintain the qualification of the Trust
Fund as one or more REMICs under the Code or (ii) avoid or minimize the risk of
imposition of any tax on any REMIC, as applicable.
This Agreement may also be amended from time to time by the Depositor,
the Sellers, the Servicer and the Trustee with the consent of the Guarantor and
the Holders of Percentage Interests of at least 66% of each Class of
Certificates affected thereby for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate or (b) reduce the
aforesaid percentages of Certificates the Holders of which are required to
consent to any such amendment, without the consent of the Holders of all such
Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (which opinion shall not be an expense of the
Trustee or the Trust Fund) to the effect that such amendment will not cause the
Trust Fund to fail to qualify as one or more REMICs at any time that any
Certificates are outstanding. Prior to the execution of any amendment to this
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel (which opinion shall not be at the expense of the Trustee or the Trust
Fund) 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 that affects the Trustee's own rights, duties or immunities under
this Agreement.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders or the Guarantor, the Trustee shall
furnish written notification of the substance or a copy of such amendment to
each Certificateholder, the Guarantor and each Rating Agency.
It shall not be necessary for the consent of Certificateholders 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. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders or the Guarantor shall be subject to
such reasonable regulations as the Trustee may prescribe.
SECTION 10.02. Recordation of Agreement; Counterparts.
------------------------------------------------------
This Agreement is subject to recordation in all appropriate public
offices for real property records in all the counties or other comparable
jurisdictions in which any or all of the properties subject to the Mortgages are
situated, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by the Servicer at its expense, but only upon
direction by the Trustee accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders or the Guarantor.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts, taken together, shall
constitute one and the same instrument.
89
SECTION 10.03. Governing Law.
-----------------------------
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND
THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.04. Intention of Parties.
------------------------------------
It is the express intent of the parties hereto that the conveyance of
the Loans by the Sellers to the Depositor pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Depositor. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Sellers to the Depositor to secure a borrowing by the
Sellers from the Depositor. However, in the event that, notwithstanding the
intent of the parties, such assets are held to be the property of the Sellers or
any one of them, or if this Agreement is held or deemed to constitute or have
created a loan, lending transaction or an extension of credit by the Depositor
to the Sellers or any one of them, then and only then (i) this Agreement shall
be deemed, effective as of September 30, 2002, to be a security agreement within
the meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyance by the Sellers to the Depositor provided for in this Agreement shall
be deemed, effective as of September 30, 2002, to be an assignment and a grant
by the Sellers to the Depositor, and each of the Sellers does hereby grant and
assign to the Depositor, a security interest in, and lien upon, all of the
assets that constitute the Collateral, whether now owned or hereafter acquired.
The Sellers, for the benefit of the Depositor, shall, in connection
with the perfection of the security interest described in the preceding
paragraph of this Section 10.04, deliver to the Depositor on the Closing Date
the financing statements described in Schedule IV. The Sellers shall also
arrange for the delivery to the Depositor of any appropriate Uniform Commercial
Code continuation statements as may be necessary or appropriate to continue the
perfection of the security interest of the Depositor in the Collateral, whether
now owned or hereafter acquired. The Sellers, for the benefit of the Depositor,
shall, to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement is held or deemed to constitute or
have created a loan, lending transaction or an extension of credit by the
Depositor to the Sellers or any one of them, then and only then (i) this
Agreement shall be deemed, effective as of September 30, 2002, to be a security
agreement within the meaning of the Uniform Commercial Code of the State of New
York and (ii) the conveyance by the Sellers to the Depositor provided for in
this Agreement shall be deemed, effective as of September 30, 2002, to be an
assignment and a grant by the Sellers to the Depositor, and each of the Sellers
does hereby grant and assign to the Depositor, a security interest in, and lien
upon, all of the assets that constitute the Collateral, whether now owned or
hereafter acquired, such security interest shall 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. The Sellers shall arrange for
filing any appropriate Uniform Commercial Code financing statements,
continuation statements or other appropriate forms, notices or documents in
connection with any security interest granted or assigned to the Depositor.
The Depositor does hereby assign the security interest in and lien on
the Collateral, whether now owned or hereafter acquired, to the Trustee for the
benefit of the Certificateholders and the Guarantor. The Depositor shall arrange
for filing of such Uniform Commercial Code financing statements as are necessary
to effect the assignment of the security interest and lien to the Trustee for
the benefit of the Certificateholders and the Guarantor.
90
It is the express intent of the parties hereto that the conveyance of
the Trust Fund by the Depositor to the Trustee pursuant to Article II of this
Agreement be, and be construed as, an absolute sale thereof to the Trustee. It
is, further, not the intention of the parties that such conveyance be deemed a
pledge thereof by the Depositor to the Trustee to secure a borrowing by the
Depositor from the Trustee. However, in the event that, notwithstanding the
intent of the parties, the assets constituting the Trust Fund are held to be the
property of the Depositor, or if this Agreement is held or deemed to constitute
or have created a loan, lending transaction or an extension of credit by the
Trustee to the Depositor, then and only then (i) this Agreement shall be deemed,
effective as of September 30, 2002, to be a security agreement within the
meaning of the Uniform Commercial Code of the State of New York and (ii) the
conveyance by the Depositor to the Trustee provided for in this Agreement shall
be deemed, effective as of September 30, 2002, to be an assignment and a grant
by the Depositor to the Trustee, and the Depositor does hereby grant and assign
to the Trustee, for the benefit of the Certificateholders, a security interest
in, and lien upon, all of the assets that constitute the Collateral, whether now
owned or hereafter acquired.
The Depositor, for the benefit of the Trustee, the Guarantor and the
Certificateholders, shall, in connection with the perfection of the security
interest described in the preceding paragraph of this Section 10.04, deliver to
the Trustee on the Closing Date the financing statements described in Schedule
V. The Depositor shall also arrange for the delivery to the Trustee of any
appropriate Uniform Commercial Code continuation statements as may be necessary
or appropriate to continue the perfection of the security interest of the
Trustee in the Trust Fund, and all of the proceeds thereof, whether now owned or
hereafter acquired. The Depositor, for the benefit of the Trustee, the Guarantor
and the Certificateholders, shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement is held
or deemed to constitute or have created a loan, lending transaction or an
extension of credit by the Trustee to the Depositor, then and only then (i) this
Agreement shall be deemed, effective as of September 30, 2002, to be a security
agreement within the meaning of the Uniform Commercial Code of the State of New
York and (ii) the conveyance by the Depositor to the Trustee provided for in
this Agreement shall be deemed, effective as of September 30, 2002, to be an
assignment and a grant by the Depositor to the Trustee, and the Depositor does
hereby grant and assign to the Trustee, for the benefit of the
Certificateholders, a security interest in, and lien upon, all of the assets
that constitute the Collateral, whether now owned or hereafter acquired, such
security interest shall 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. The Servicer shall, within ten (10) days of the Closing Date,
present to the appropriate filing offices in the jurisdictions set forth on
Schedules IV and V all of the financing statements delivered on the Closing Date
by the Sellers to the Depositor, delivered by the Depositor to the Trustee on
the Closing Date and the financing statements delivered by the Depositor to the
Trustee on the Closing Date. The Servicer shall arrange for filing any
appropriate Uniform Commercial Code continuation statements or other appropriate
forms, notices or documents in connection with any security interest granted or
assigned to the Trustee.
SECTION 10.05. Notices.
-----------------------
(a) The Trustee shall use its best efforts to promptly provide notice
to the Guarantor, each Rating Agency and the Underwriter with respect to each of
the following of which it has actual knowledge:
1. any material change or amendment to this Agreement;
2. the occurrence of any Event of Default that has not been
cured;
91
3. the resignation or termination of the Servicer or the
Trustee and the appointment of any successor;
4. the repurchase or substitution of Loans pursuant to
Section 2.03; and
5. the final payment to Certificateholders.
In addition, the Trustee shall promptly furnish to each Rating Agency
and the Underwriter copies of the following:
1. each report to Certificateholders described in Section
4.03;
2. each annual statement as to compliance described in
Section 3.15;
3. each annual independent public accountants' servicing
report described in Section 3.16; and
4. any notice of a purchase of a Loan pursuant to Section
2.02, 2.03 or 3.11.
(b) All directions, demands and notices hereunder shall be in writing and shall
be deemed to have been duly given when delivered to the following addresses or
such other addresses as may hereafter be furnished in writing to the Servicer
and the Trustee: (a) in the case of the Depositor, Equity One ABS, Inc., 103
Springer Building, 3411 Silverside Road, Wilmington, Delaware 19810, Attention:
Chief Financial Officer, facsimile number: (302) 478-3667, (b) in the case of
the Servicer, Equity One, Inc., 301 Lippincott Drive, Marlton, New Jersey 08053,
Attention: Chief Financial Officer, facsimile number: (856) 396-2710, (c) in the
case of any of the Sellers, to that Seller at 301 Lippincott Drive, Marlton, New
Jersey 08053, Attention: Chief Financial Officer, facsimile number: (856)
396-2710, (d) in the case of the Trustee, JPMorgan Chase Bank, 4 New York Plaza,
6th Floor, New York, New York 10004, Attention: Institutional Trust Services,
Equity One 2002-5, facsimile number: 212-623-5930, (e) in the case of the Rating
Agencies, the address specified therefor in the definition corresponding to the
name of such Rating Agency, (f) in the case of the Underwriter, Wachovia
Securities, Inc., One Wachovia Center, 301 South College Street, TW10,
Charlotte, NC 28288, Attention: Michael Ciuffo, facsimile number: (704)
383-8121, and (g) in the case of the Guarantor, Federal Home Loan Mortgage
Corporation, 1551 Park Run Dr., Mailstop D2Q, McLean, VA 22102, Attention:
Richard Cooperstein , facsimile number: (571) 382-3377. Notices to
Certificateholders shall be deemed given when mailed, first class postage
prepaid, to their respective addresses appearing in the Certificate Register.
(c) Notwithstanding any provision of this Agreement to the contrary, any notice
to be given to the Servicer pursuant to Section 7.01 hereof, shall (i) clearly
describe the underlying breach precipitating such notice and the consequences of
a failure to cure such breach, (ii) be sent via certified mail, return receipt
requested, to Chief Executive Officer, Chief Financial Officer and Executive
Vice President at Equity One, Inc., 301 Lippincott Drive, Marlton, New Jersey
08053, or such other addressees as may hereafter be furnished in writing to the
Trustee, and (iii) be deemed given when received.
92
SECTION 10.06. Severability of Provisions.
------------------------------------------
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07. Assignment.
--------------------------
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6.02, this Agreement may not be assigned by the Servicer
without the prior written consent of the Trustee, Guarantor and Depositor.
SECTION 10.08. Limitation on Rights of Certificateholders.
----------------------------------------------------------
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the trust created hereby, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the trust created hereby, or otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party by reason of any action taken by the parties to this Agreement pursuant to
any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of an Event of Default and of the continuance thereof, as herein provided, and
unless the Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates shall also have made written request to the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity shall have neglected or refused to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder or to enforce any
right under this Agreement, except in the manner herein provided and for the
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
93
SECTION 10.09. Inspection and Audit Rights.
-------------------------------------------
The Servicer agrees that, on reasonable prior notice, it will permit
and will cause each Subservicer to permit any representative of the Depositor,
the Guarantor or the Trustee during the Servicer's normal business hours, to
examine all the books of account, records, reports and other papers of the
Servicer relating to the Loans, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants selected by
the Depositor or the Trustee and to discuss its affairs, finances and accounts
relating to the Loans with its officers, employees and independent public
accountants (and by this provision the Servicer hereby authorizes said
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 10.09 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the
Servicer or the related Subservicer.
SECTION 10.10. Certificates Nonassessable and Fully Paid.
---------------------------------------------------------
It is the intention of the Depositor that neither the Guarantor nor
the Certificateholders shall be personally liable for obligations of the Trust
Fund, that the interests in the Trust Fund represented by the Certificates shall
be nonassessable for any reason whatsoever, and that the Certificates, upon due
authentication thereof by the Trustee pursuant to this Agreement, are and shall
be deemed fully paid.
SECTION 10.11. The Closing.
---------------------------
The closing of the transactions contemplated by this Agreement shall
occur at 10:00 a.m. New York time on the Closing Date at the Closing Place.
SECTION 10.12. Interpretation.
------------------------------
Unless the context of this Agreement clearly requires otherwise, (a)
references to the plural include the singular, the singular the plural, the part
the whole, (b) references to one gender includes all genders, (c) "or" has the
inclusive meaning frequently identified with the phrase "and/or," (d)
"including" has the inclusive meaning frequently identified with the phrase "but
not limited to" and (e) references to "hereunder," "hereof" or "herein" relate
to this Agreement. The section and other headings contained in this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any respect. Section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
SECTION 10.13. Rights of Guarantor.
-----------------------------------
(a) By accepting ownership interest in its Certificates, each Holder
of the Guaranteed Certificates agrees that the Guarantor shall be deemed to be
the Certificateholder for all purposes (other than with respect to payment on
the Certificates) and shall have the right to exercise all rights of the Holders
of the Guaranteed Certificates without further consent of the Holders of the
Guaranteed Certificates. In addition, each Holder of the Guaranteed Certificates
agrees that such Holder may exercise the rights specifically enumerated in this
Agreement only with the prior written consent of the Guarantor.
(b) The Trustee shall not, without the Guarantor's consent or unless
directed by the Guarantor, agree to any amendment pursuant Section 10.01 hereof;
provided, however, that such consent shall not be unreasonably withheld. The
Guarantor may, in writing to the Trustee, and in its sole discretion, renounce
all or any of its rights to exercise the rights of the Holders of the Guaranteed
94
Certificates or any requirement for Guarantor's consent, for any period of time
that Guarantor shall deem appropriate.
(c) The Trustee shall hold the Collateral for the benefit of the
Certificateholders and, until such time as the Class Certificate Balance of each
class of Guaranteed Certificates has been reduced to zero and any Guarantor
Reimbursement Amounts have been paid in full, for the benefit of the Guarantor.
All references in this Agreement and in the Guaranteed Certificates to the
benefit of the Holders of the Certificates shall be deemed to include the
Guarantor. The Trustee shall cooperate in all reasonable respects with any
reasonable request by the Guarantor for action to preserve or enforce the
Guarantor's rights or interests under this Agreement and the Guaranteed
Certificates; provided, however, that prior to taking such action the Trustee
shall be entitled to receive and rely upon an opinion of counsel addressed to
the Trustee from counsel to the Guarantor stating that such action is not
adverse to the interests of the Certificateholders and does not diminish the
rights of the Certificateholders or impose additional burdens or restrictions on
the Certificateholders.
(d) The Servicer hereby acknowledges and agrees that it shall service
the Loans for the benefit of the Certificateholders and, until such time as the
Class Certificate Balance of each class of Guaranteed Certificates has been
reduced to zero and any Guarantor Reimbursement Amounts have been paid in full,
for the benefit of the Guarantor.
(e) The Guarantor may, at any time and at its sole expense, during
normal business hours, conduct a Servicing Audit upon reasonable advance notice
to the Servicer.
SECTION 10.14. No Partnership.
------------------------------
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Trustee and the Servicer shall be rendered as an independent contractor and
not as agent for the Certificateholders.
SECTION 10.15. Protection of Assets.
------------------------------------
(a) Except for transactions and activities entered into in connection
with the securitization that is the subject of this Agreement, the Trust Fund
created by this Agreement is not authorized and has no power to:
(1) borrow money or issue debt;
(2) merge with another entity, reorganize, liquidate or sell
assets;
(3) engage in any business or activities.
(b) Each party to this agreement agrees that it will not file an
involuntary bankruptcy petition against the Trustee or the Trust Fund or
initiate any other form of insolvency proceeding until after the Certificates
have been paid and any Guarantor Reimbursement Amounts have been paid in full.
95
SECTION 10.16. Execution of Yield Maintenance Agreement.
--------------------------------------------------------
The Depositor hereby directs the Trustee to enter into and execute the
Yield Maintenance Agreement on the Closing Date on behalf of the Holders of the
Class AV-1 Certificates. The Sellers, the Depositor, the Servicer and the
Holders of the Class AV-1 Certificates (by their acceptance of such
Certificates) acknowledge that JPMorgan Chase Bank is entering into the Yield
Maintenance Agreement solely in its capacity as Trustee of the Trust Fund and
not in its individual capacity.
SECTION 10.17. Benefits of Agreement.
-------------------------------------
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders and the
Guarantor and the other parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Notwithstanding the foregoing, any rights, benefits or obligations of the
Guarantor under this Agreement, other than those relating to indemnification,
shall expire on the Distribution Date on which all amounts due and owing to the
Guaranteed Certificates and any Guarantor Reimbursements have been paid in full.
SECTION 10.18. Ratings.
-----------------------
On the Closing Date, the Rating Agencies will have assigned the
Offered Certificates the following ratings (without taking into account the
Guarantee):
Standard &
Class Poor's Moody's Fitch
- -------------------- ----------------- ---------------- -----------------
AF-1 AAA Aaa AAA
AF-2 AAA Aaa AAA
AF-3 AAA Aaa AAA
AF-4 AAA Aaa AAA
AV-1 AAA Aaa AAA
M-1 AA Aa2 AA
M-2 A A2 A
B BBB Baa2 BBB
* * * * * *
96
IN WITNESS WHEREOF, the Depositor, the Trustee, each of the Sellers
and the Servicer have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
EQUITY ONE ABS, INC., as Depositor
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
FEDERAL HOME LOAN MORTGAGE CORPORATION, as Guarantor
By: /s/ Richard L. Cooperstein
------------------------------------------------
Name: Richard L. Cooperstein
Title: Vice President - Structured Transaction
JPMORGAN CHASE BANK, as Trustee
By: /s/ Aranka R. Paul
------------------------------------------------
Aranka R. Paul, Assistant Vice President
EQUITY ONE, INC. (DE), as a Seller and Servicer
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
EQUITY ONE, INCORPORATED (PA), as a Seller
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
EQUITY ONE, INC. (MN), as a Seller
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
EQUITY ONE CONSUMER LOAN COMPANY, INC. (NH), as a Seller
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
POPULAR FINANCIAL SERVICES, LLC, as a Seller
By: /s/ James H. Jenkins
------------------------------------------------
James H. Jenkins, Senior Vice President and CFO
97
SCHEDULE I
Loan Schedule
SEE ATTACHED
S-I-1
SCHEDULE IIA
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of Equity One-Delaware
-----------------------------------------------------
Equity One-Delaware ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIA to the Depositor, the Guarantor and
the Trustee, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller. Capitalized terms used
but not otherwise defined in this Schedule IIA shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Delaware corporation and
is validly existing and in good standing under the laws of the State
of Delaware and is duly authorized and qualified to transact any and
all business contemplated by the Agreement to be conducted by Seller
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Agreement
in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to
sell each Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by the Agreement and has
duly authorized by all necessary corporate action on the part of
Seller the execution, delivery and performance of the Agreement; and
the Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Seller,
the sale of the Loans by Seller under the Agreement, the consummation
of any other of the transactions contemplated by the Agreement, and
the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of Seller and will not (a) result in a
material breach of any term or provision of the charter or by-laws of
Seller or (b) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller; and Seller is not
in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation may materially impair Seller's ability to perform or meet
any of its obligations under the Agreement.
S-IIA-1
(4) No litigation is pending or, to the best of Seller's
knowledge, threatened, against Seller that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Seller to sell the Loans or to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Seller of, or compliance by Seller with,
the Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to
the Depositor as a sale under applicable law; however, for financial
reporting purposes Seller intends to treat this transaction as the
incurrence of debt by Seller.
(7) Seller is not insolvent nor is Seller aware of any
pending insolvency, and Seller will not become insolvent as a result
of its sale of the Loans under the Agreement, and Seller's sale of the
Loans to the Depositor under the Agreement will not be made with any
intent to hinder, delay or defraud any of its creditors.
S-IIA-2
SCHEDULE IIB
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of Equity One-Minnesota
------------------------------------------------------
Equity One-Minnesota ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIB to the Depositor, the Trustee and the
Guarantor, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller. Capitalized terms used
but not otherwise defined in this Schedule IIB shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Minnesota corporation and
is validly existing and in good standing under the laws of the State
of Minnesota and is duly authorized and qualified to transact any and
all business contemplated by the Agreement to be conducted by Seller
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to enforce each
Loan and to perform any of its other obligations under the Agreement
in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to
sell each Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by the Agreement and has
duly authorized by all necessary corporate action on the part of
Seller the execution, delivery and performance of the Agreement; and
the Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Seller,
the sale of the Loans by Seller under the Agreement, the consummation
of any other of the transactions contemplated by the Agreement, and
the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of Seller and will not (a) result in a
material breach of any term or provision of the charter or by-laws of
Seller or (b) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller; and Seller is not
in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
S-IIB-1
may materially impair Seller's ability to perform or meet any of its
obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's
knowledge, threatened, against Seller that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Seller to sell the Loans or to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Seller of, or compliance by Seller with,
the Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to
the Depositor as a sale under applicable law; however, for financial
reporting purposes Seller intends to treat this transaction as the
incurrence of debt by Seller.
(7) Seller is not insolvent nor is Seller aware of any
pending insolvency, and Seller will not become insolvent as a result
of its sale of the Loans under the Agreement, and Seller's sale of the
Loans to the Depositor under the Agreement will not be made with any
intent to hinder, delay or defraud any of its creditors.
S-IIB-2
SCHEDULE IIC
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of Equity One-New Hampshire
----------------------------------------------------------
Equity One-New Hampshire ("Seller") hereby makes the representations
and warranties set forth in this Schedule IIC to the Depositor, the Trustee and
the Guarantor, as of the Closing Date or if so specified herein, as of the
Cut-off Date with respect to the Loans being conveyed by Seller. Capitalized
terms used but not otherwise defined in this Schedule IIC shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be
used in this Schedule to refer to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a New Hampshire corporation
and is validly existing and in good standing under the laws of the
State of New Hampshire and is duly authorized and qualified to
transact any and all business contemplated by the Agreement to be
conducted by Seller in any state in which a Mortgaged Property is
located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Loan and to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to
sell each Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by the Agreement and has
duly authorized by all necessary corporate action on the part of
Seller the execution, delivery and performance of the Agreement; and
the Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Seller,
the sale of the Loans by Seller under the Agreement, the consummation
of any other of the transactions contemplated by the Agreement, and
the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of Seller and will not (a) result in a
material breach of any term or provision of the charter or by-laws of
Seller or (b) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller; and Seller is not
in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
S-IIC-1
may materially impair Seller's ability to perform or meet any of its
obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's
knowledge, threatened, against Seller that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Seller to sell the Loans or to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Seller of, or compliance by Seller with,
the Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to
the Depositor as a sale under applicable law; however, for financial
reporting purposes Seller intends to treat this transaction as the
incurrence of debt by Seller.
(7) Seller is not insolvent nor is Seller aware of any
pending insolvency, and Seller will not become insolvent as a result
of its sale of the Loans under the Agreement, and Seller's sale of the
Loans to the Depositor under the Agreement will not be made with any
intent to hinder, delay or defraud any of its creditors.
S-IIC-2
SCHEDULE IID
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of Equity One-Pennsylvania
---------------------------------------------------------
Equity One-Pennsylvania ("Seller") hereby makes the representations
and warranties set forth in this Schedule IID to the Depositor, the Trustee and
the Guarantor, as of the Closing Date or if so specified herein, as of the
Cut-off Date with respect to the Loans being conveyed by Seller. Capitalized
terms used but not otherwise defined in this Schedule IID shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be
used in this Schedule to refer to the Pooling and Servicing Agreement.
(1) Seller is duly organized as a Pennsylvania corporation
and is validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and is duly authorized and qualified to
transact any and all business contemplated by the Agreement to be
conducted by Seller in any state in which a Mortgaged Property is
located or is otherwise not required under applicable law to effect
such qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Loan and to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(2) Seller has the full corporate power and authority to
sell each Loan, and to execute, deliver and perform, and to enter into
and consummate the transactions contemplated by the Agreement and has
duly authorized by all necessary corporate action on the part of
Seller the execution, delivery and performance of the Agreement; and
the Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Seller,
the sale of the Loans by Seller under the Agreement, the consummation
of any other of the transactions contemplated by the Agreement, and
the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of Seller and will not (a) result in a
material breach of any term or provision of the charter or by-laws of
Seller or (b) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller; and Seller is not
in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
violation
S-IID-1
may materially impair Seller's ability to perform or meet any of its
obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's
knowledge, threatened, against Seller that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Seller to sell the Loans or to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Seller of, or compliance by Seller with,
the Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to
the Depositor as a sale under applicable law; however, for financial
reporting purposes Seller intends to treat this transaction as the
incurrence of debt by Seller.
(7) Seller is not insolvent nor is Seller aware of any
pending insolvency, and Seller will not become insolvent as a result
of its sale of the Loans under the Agreement, and Seller's sale of the
Loans to the Depositor under the Agreement will not be made with any
intent to hinder, delay or defraud any of its creditors.
S-IID-2
SCHEDULE IIE
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of Popular Financial
---------------------------------------------------
Popular Financial ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIE to the Depositor, the Trustee and the
Guarantor, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller. Capitalized terms used
but not otherwise defined in this Schedule IIE shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
(1) Seller is duly formed as a Delaware limited liability
company and is validly existing and in good standing under the laws of
the State of Delaware and is duly authorized and qualified to transact
any and all business contemplated by the Agreement to be conducted by
Seller in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Loan and to perform any of its other
obligations under the Agreement in accordance with the terms thereof.
(2) Seller has the full power and authority to sell each
Loan, and to execute, deliver and perform, and to enter into and
consummate the transactions contemplated by the Agreement and has duly
authorized by all necessary corporate action on the part of Seller the
execution, delivery and performance of the Agreement; and the
Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance
with its terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Seller,
the sale of the Loans by Seller under the Agreement, the consummation
of any other of the transactions contemplated by the Agreement, and
the fulfillment of or compliance with the terms thereof are in the
ordinary course of business of Seller and will not (a) result in a
material breach of any term or provision of the operating agreement of
Seller or (b) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which
Seller is a party or by which it may be bound or (c) constitute a
material violation of any statute, order or regulation applicable to
Seller of any court, regulatory body, administrative agency or
governmental body having jurisdiction over Seller; and Seller is not
in breach or violation of any material indenture or other material
agreement or instrument, or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it which breach or
S-IIE-1
violation may materially impair Seller's ability to perform or meet
any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Seller's
knowledge, threatened, against Seller that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Seller to sell the Loans or to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Seller of, or compliance by Seller with,
the Agreement or the consummation of the transactions contemplated
thereby, or if any such consent, approval, authorization or order is
required, Seller has obtained the same.
(6) Seller intends to treat the conveyance of the Loans to
the Depositor as a sale under applicable law; however, for financial
reporting purposes Seller intends to treat this transaction as the
incurrence of debt by Seller.
(7) Seller is not insolvent nor is Seller aware of any
pending insolvency, and Seller will not become insolvent as a result
of its sale of the Loans under the Agreement, and Seller's sale of the
Loans to the Depositor under the Agreement will not be made with any
intent to hinder, delay or defraud any of its creditors.
S-IIE-2
SCHEDULE IIX
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Representations and Warranties of the Servicer
----------------------------------------------
Equity-One Delaware, in its capacity as Servicer, hereby makes the
representations and warranties set forth in this Schedule IIX to the Depositor,
the Trustee and the Guarantor, as of the Closing Date or if so specified herein,
as of the Cut-off Date with respect to the Loans being conveyed by the
Seller(s). Capitalized terms used but not otherwise defined in this Schedule IIX
shall have the meanings ascribed thereto in the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") relating to the above-referenced Series,
among Seller, the other Sellers and the Servicer identified therein, Equity One
ABS, Inc., as depositor, and JPMorgan Chase Bank, as trustee. The term
"Agreement" shall be used in this Schedule to refer to the Pooling and Servicing
Agreement.
(1) Servicer is duly organized as a Delaware corporation and
is validly existing and in good standing under the laws of the State
of Delaware and is duly authorized and qualified to transact any and
all business contemplated by the Agreement to be conducted by Servicer
in any state in which a Mortgaged Property is located or is otherwise
not required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any such
state, to the extent necessary to ensure its ability to service the
Loans in accordance with the terms of the Agreement and to perform any
of its other obligations under the Agreement in accordance with the
terms thereof.
(2) Servicer has the full corporate power and authority to
service each Loan, and to execute, deliver and perform, and to enter
into and consummate the transactions contemplated by the Agreement and
has duly authorized by all necessary corporate action on the part of
Servicer the execution, delivery and performance of the Agreement; and
the Agreement, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Servicer, enforceable against Servicer in
accordance with its terms, except that (a) the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(3) The execution and delivery of the Agreement by Servicer,
the servicing of the Loans by Servicer under the Agreement, the
consummation of any other of the transactions contemplated by the
Agreement, and the fulfillment of or compliance with the terms thereof
are in the ordinary course of business of Servicer and will not (a)
result in a material breach of any term or provision of the charter or
by-laws of Servicer or (b) materially conflict with, result in a
material breach, violation or acceleration of, or result in a material
default under, the terms of any other material agreement or instrument
to which Servicer is a party or by which it may be bound or (c)
constitute a material violation of any statute, order or regulation
applicable to Servicer of any court, regulatory body, administrative
agency or governmental body having jurisdiction over Servicer; and
Servicer is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it
which breach or
S-IIX-1
violation may materially impair Servicer's ability to perform or meet
any of its obligations under the Agreement.
(4) No litigation is pending or, to the best of Servicer's
knowledge, threatened, against Servicer that would materially and
adversely affect the execution, delivery or enforceability of the
Agreement or the ability of Servicer to service the Loans or to
perform any of its other obligations under the Agreement in accordance
with the terms thereof.
(5) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by Servicer of, or compliance by Servicer
with, the Agreement or the consummation of the transactions
contemplated thereby, or if any such consent, approval, authorization
or order is required, Servicer has obtained the same.
S-IIX-2
SCHEDULE IIIA
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Loan Representations and Warranties of Equity One-Delaware
----------------------------------------------------------
Equity One-Delaware ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIA to the Depositor, the Trustee and the
Guarantor, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller and the Mortgages,
Mortgage Notes and Mortgaged Properties related thereto. Capitalized terms used
but not otherwise defined in this Schedule IIIA shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
1. The information set forth on Schedule I to the Agreement with respect to
the Loans is true and correct in all material respects as of the Closing
Date.
2. No misrepresentation of a material fact or fraud in respect of the
origination, modification or amendment of any Loan has taken place on the
part of any person, including, without limitation, the related mortgagor,
any appraiser, any builder or developer or any party involved in the
origination of such Loan.
3. As of the Cut-off Date, no Loan was contractually past due (assuming 30 day
months) for 60 or more days. In addition, not more than 0.56% (by principal
balance) of the Group I Loans and 0.12% (by principal balance) of the Group
II Loans set forth on Schedule I to the Agreement were 30 or more days
contractually past due (assuming 30 day months). No more than 15.86% (by
principal balance) of the Loans are Second Lien Loans.
4. Each Loan, as of the Closing Date, has an original term to maturity from
the initial Due Date for such Loan of not more than 30 years. Each Mortgage
Note, other than Mortgage Notes relating to Balloon Loans, will provide for
a schedule of substantially level and equal monthly payments which are
sufficient to amortize fully the principal balance of the related Loan over
a period of time equal to the amortization period of such Mortgage Note.
5. No more than 12.76%, 22.37% and 57.03% of the Loans, based on the Cut-off
Date Pool Principal Balance, had Combined Loan-to-Value Ratios at
origination in excess of 95%, 90% and 80% respectively. No Loans had
Combined Loan-to-Value Ratios at origination in excess of 100%. For
purposes of determining the date of origination on which each Loan's
Combined Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
6. Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan, (c) other matters to which like
S-IIIA-1
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage and (d)
in the case of a second lien, only to a first lien on such Mortgaged
Property.
7. Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan free
and clear of any pledge, lien (except in the case of a Second Lien Loan,
which shall be subject to prior liens approved by Seller), encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Agreement.
8. Except with respect to liens released immediately prior to the transfers
herein contemplated, each Mortgage Note and related Mortgage have not been
assigned or pledged and immediately prior to the transfers and assignments
herein contemplated, the Seller held good, marketable and indefeasible
title to, and was the sole owner and holder of, each Loan subject to no
liens, charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights of
others (each, an "Encumbrance"); the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to this Agreement; and
immediately upon the transfers and assignments herein contemplated, the
Seller shall have transferred all of its right, title and interest in and
to each Loan and the Trustee, as trustee for the benefit of the
Certificateholders, will hold good, marketable and indefeasible title, to,
and be the sole owner of, each Loan subject to no Encumbrances.
9. To the best of Seller's knowledge, there is no delinquent tax or assessment
lien against any Mortgaged Property.
10. As of the Closing Date, no Loan is the subject of foreclosure proceedings
and, to the best of the Seller's knowledge, no obligor of any of the Loans
has filed for bankruptcy protection.
11. No Loan is subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the operation of any of
the terms of any Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and, to the best
of Seller's knowledge, no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
12. To the best of Seller's knowledge, there are no mechanics' liens or claims
for work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to
in item (17) below.
13. To the best of the Seller's knowledge, each Mortgaged Property is free of
material damage and in good repair.
14. Each Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, and consummation of the transactions contemplated hereby
will not involve the violation of any such laws.
15. As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a
Loan may have been modified by a written
S-IIIA-2
instrument which has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been or shall be delivered to the Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
16. Except with respect to mortgages held through the MERS (R) System, each
original Mortgage was recorded and all subsequent assignments of the
original Mortgage (other than the assignment to the Trustee) have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or is in the process of being recorded.
17. For each Loan, other than Second Lien Loans with initial principal balances
of $50,000 or less, a lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in item (6) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
18. To the best of the Seller's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of each
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
19. To the best of the Seller's knowledge, no improvement located on or being
part of any Mortgaged Property is in violation of any applicable zoning law
or regulation. To the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and such
Mortgaged Property is lawfully occupied under applicable law.
20. Each Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and under applicable law. To the best of the
Seller's knowledge, all parties to such Mortgage Note and such Mortgage had
legal capacity to execute such Mortgage Note and such Mortgage and each
such Mortgage Note and Mortgage have been duly and properly executed by
such parties.
21. The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursement of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording such Loans were paid.
S-IIIA-3
22. There is no obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagor.
23. All amounts received with respect to any Loan after the Cut-off Date to
which the Seller is not entitled will be deposited into the Certificate
Account within two Business Days after the Closing Date.
24. The Seller has not transferred the Loans to the Depositor, and the
Depositor has not transferred the Loans to the Trustee, with any intent to
hinder, delay or defraud any of its creditors.
25. To the best of the Seller's knowledge, all parties which have had any
interest in any Loan, whether as originator, mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and disposed of
such interest, were), with respect to the state wherein the Mortgage
Property is located: (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. To
the best of Seller's knowledge, all parties which have had any interest in
the Loan were in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located or were not required to be licensed in such state.
26. Each Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of the security,
including, (a) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to the
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. Upon default by a Mortgagor on a Loan
and foreclosure on, or trustee's sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of the Loan will be able to
deliver good and marketable title to the Mortgaged Property.
27. With respect to each Mortgage constituting a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
28. Each Mortgage Note and each Mortgage is in substantially one of the forms
acceptable to FNMA or Freddie Mac, with such riders as have been acceptable
to FNMA or Freddie Mac, as the case may be.
29. The origination, underwriting and collection practices used by the Seller
with respect to each Loan have been in all respects legal, prudent and
customary in the mortgage lending and servicing business.
30. There is no pledged account or other security other than any Escrow Account
and real estate securing the Mortgagor's obligations.
31. No Loan has a shared appreciation feature, or other contingent interest
feature.
S-IIIA-4
32. Each Loan contains a customary "due on sale" clause.
33. To the best of Seller's knowledge: at the Closing Date, the improvements on
each Mortgaged Property were covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for fire
and extended coverage and coverage for such other hazards as are customary
in the area where such Mortgaged Property is located in an amount at least
equal to the lesser of (a) the maximum insurable value of the improvements
on such Mortgaged Property or (b) (i) in the case of a Loan secured by a
Mortgage creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances of
such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium unit. For all Mortgages creating a first lien on
the related Mortgaged Property, all such individual insurance policies and
all flood policies referred to in item (34) below contain a standard
mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice
that any premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance including
flood insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
34. If a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration was required at closing
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (a) the
original outstanding principal balance of the related Loan, (b) the minimum
amount required to compensate for damage or loss on a maximum insurable
value basis or (c) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973, as amended.
35. There is no proceeding occurring, pending or, to the best of the Seller's
knowledge, threatened for the total or partial condemnation of any
Mortgaged Property.
36. There is no material monetary default existing under any Mortgage or the
related Mortgage Note and, to the best of the Seller's knowledge, there is
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration under such Mortgage or related Mortgage Note; and
neither the Seller, nor, to the best of Seller's knowledge, any other
entity involved in originating or servicing a Loan, has waived any default,
breach, violation or event of acceleration.
37. Each Mortgaged Property is improved by a one- to four-family residential
dwelling including, without limitation, townhouses and condominium units,
but not including cooperatives, manufactured housing or mobile homes, and
does not constitute other than real property under state law.
38. Each Loan is being serviced by the Servicer.
39. Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related loan schedule. The
consolidated principal amount does not exceed the original principal amount
of
S-IIIA-5
such Loan. No Mortgage Note permits or obligates the Servicer to make
future advances to the Mortgagor at the option of the Mortgagor.
40. To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid,
except for items which have been assessed, but are not yet due and payable.
Except for (a) payments in the nature of escrow payments, and (b) interest
accruing from the date of any Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day which precedes by
one month the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the Servicer
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the related Mortgage.
41. Each Loan was underwritten in all material respects in accordance with the
Seller's underwriting guidelines as set forth in the Information Circular.
42. An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and Freddie Mac and includes an assessment of the fair market value of the
Mortgaged Property at the time of the appraisal.
43. No Loan is a graduated payment mortgage loan or a growing equity mortgage
loan, and no Loan is subject to a buydown or similar arrangement.
44. The Servicer has fully furnished with respect to each Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis
(during the period in which the Servicer serviced the Loans).
45. No proceeds from any Loan were used to purchase single-premium credit
insurance policies.
46. No Loan originated after October 1, 2002 has a prepayment penalty longer
than three years after its origination and no Loan originated prior to
October 1, 2002 has a prepayment penalty longer than five years after its
origination.
47. Each Loan was originated on or after April 30, 1994.
48. (i) Seller represents that Seller currently operates or actively
participates in an ongoing program or business to originate single family
mortgage loans ("SFMLs"), and/or make periodic purchases of SFMLs from
originators or sellers, and/or issue and/or purchase securities or bonds
supported by SFMLs, a portion of which SFMLs are made to borrowers who are:
a. low-income families (families with incomes of 80% or less of area
median income) living in low-income areas (a census tract or
block numbering area in which the median income does not exceed
80 percent of the area median income); or
S-IIIA-6
b. very low-income families (families with incomes of 60% or less of
area median income).
(ii) Seller acknowledges that Guarantor, for a period of two years
following the date of this Agreement, may contact the Seller to confirm
that the Seller continues to actively engage in the SFML business and to
obtain other non-proprietary information about the Seller's activities that
may assist Guarantor in completing its own regulatory reporting
requirements. The Seller shall make reasonable efforts to provide such
information to Guarantor.
(iii) Neither the inaccuracy of any representation or warranty under
subsection (i.) above nor the failure of Seller to provide the
non-proprietary information required by subsection (ii.) above shall
constitute a breach of this Agreement or shall entitle Guarantor to
exercise any remedies under this Agreement, including, without limitation,
requiring Seller to repurchase or substitute any Loans, but any such
inaccuracy or failure shall entitle Guarantor to refuse to purchase
mortgages from Seller in the future.
49. To the best of the Seller's knowledge, each Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
related Loan in the event the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder.
50. With respect to Second Lien Loans, either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File.
51. As of the Cut-off Date, no Second Lien Loan had an original principal
balance obligation in excess of 50% of Guarantor's one-family residence
mortgage amount limitation for first-lien mortgages in effect as of the
Cut-off Date.
52. As of the Cut-off Date, the Trust Fund does not contain a first lien Loan
and a Second Lien Loan relating to a single Mortgaged Property if the sum
of the original principal balances of such Loans would exceed Guarantor's
loan limits in effect as of the Cut-off Date.
53. To the best of the Seller's knowledge, none of the Loans were originated
while the mortgagor was in bankruptcy or if foreclosure proceedings had
begun.
54. No Loan had an original principal balance obligation that was higher than
the maximum principal balance obligation for Loans that are eligible for
purchase by Guarantor.
55. The Loans were selected from among the outstanding residential mortgage
loans in Seller's portfolio at the Closing Date as to which the
representations and warranties made as to such Loans set forth in this
Schedule IIIA can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders and the
Guarantor.
56. Each Loan has a Due Date in the month of the first Distribution Date.
57. Approximately (a) 32.28% of the Group I Loans and (b) none of the Group II
Loans (by principal balance) are Balloon Loans. All such Balloon Loans
provide for monthly payment based upon a 30-year amortization schedule with
a final balloon payment no later than the 15th year.
58. No Loan is subject to negative amortization or deferred interest payments.
S-IIIA-7
59. No Mortgagor has requested relief under the Relief Act.
60. None of the Loans are retail installment contracts for goods or services or
are home improvement loans for goods or services, which would be either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. ss.433.1.
61. No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty with
respect to goods or services provided in connection with any Loan.
62. Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3) of
the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
63. The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Information Circular.
64. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other
charges or payments due the Seller have been capitalized under any Mortgage
or related Mortgage Note.
65. All Loans calculate interest utilizing the actuarial method.
66. None of the Loans are subject to the Home Ownership & Equity Protection Act
of 1994, and are not in violation of any comparable state law. No Loan was
originated in Georgia on or after October 1, 2002.
67. As of the Cut-off Date, the Mortgage Rate relating to each Loan that is an
adjustable rate mortgage loan has been adjusted in accordance with the
terms of the related Mortgage Note.
68. Each Mortgage that is registered on the Mers (R) System has been properly
registered thereon in accordance with the rules of MERS (R).
S-IIIA-8
SCHEDULE IIIB
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Loan Representations and Warranties of Equity One-Minnesota
-----------------------------------------------------------
Equity One-Minnesota ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIB to the Depositor, the Trustee and the
Guarantor, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller and the Mortgages,
Mortgage Notes and Mortgaged Properties related thereto. Capitalized terms used
but not otherwise defined in this Schedule IIIB shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
1. The information set forth on Schedule I to the Agreement with respect to
the Loans is true and correct in all material respects as of the Closing
Date.
2. No misrepresentation of a material fact or fraud in respect of the
origination, modification or amendment of any Loan has taken place on the
part of any person, including, without limitation, the related mortgagor,
any appraiser, any builder or developer or any party involved in the
origination of such Loan.
3. As of the Cut-off Date, no Loan was contractually past due (assuming 30 day
months) for 60 or more days. In addition, not more than 0.56% (by principal
balance) of the Group I Loans and 0.12% (by principal balance) of the Group
II Loans set forth on Schedule I to the Agreement were 30 or more days
contractually past due (assuming 30 day months). No more than 15.86% (by
principal balance) of the Loans are Second Lien Loans.
4. Each Loan, as of the Closing Date, has an original term to maturity from
the initial Due Date for such Loan of not more than 30 years. Each Mortgage
Note, other than Mortgage Notes relating to Balloon Loans, will provide for
a schedule of substantially level and equal monthly payments which are
sufficient to amortize fully the principal balance of the related Loan over
a period of time equal to the amortization period of such Mortgage Note.
5. No more than 12.76%, 22.37% and 57.03% of the Loans, based on the Cut-off
Date Pool Principal Balance, had Combined Loan-to-Value Ratios at
origination in excess of 95%, 90% and 80% respectively. No Loans had
Combined Loan-to-Value Ratios at origination in excess of 100%. For
purposes of determining the date of origination on which each Loan's
Combined Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
6. Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan, (c) other matters to which like
S-IIIB-1
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage and (d)
in the case of a second lien, only to a first lien on such Mortgaged
Property.
7. Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan free
and clear of any pledge, lien (except in the case of a Second Lien Loan,
which shall be subject to prior liens approved by Seller), encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Agreement.
8. Except with respect to liens released immediately prior to the transfers
herein contemplated, each Mortgage Note and related Mortgage have not been
assigned or pledged and immediately prior to the transfers and assignments
herein contemplated, the Seller held good, marketable and indefeasible
title to, and was the sole owner and holder of, each Loan subject to no
liens, charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights of
others (each, an "Encumbrance"); the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to this Agreement; and
immediately upon the transfers and assignments herein contemplated, the
Seller shall have transferred all of its right, title and interest in and
to each Loan and the Trustee, as trustee for the benefit of the
Certificateholders, will hold good, marketable and indefeasible title, to,
and be the sole owner of, each Loan subject to no Encumbrances.
9. To the best of Seller's knowledge, there is no delinquent tax or assessment
lien against any Mortgaged Property.
10. As of the Closing Date, no Loan is the subject of foreclosure proceedings
and, to the best of the Seller's knowledge, no obligor of any of the Loans
has filed for bankruptcy protection.
11. No Loan is subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the operation of any of
the terms of any Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and, to the best
of Seller's knowledge, no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
12. To the best of Seller's knowledge, there are no mechanics' liens or claims
for work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to
in item (17) below.
13. To the best of the Seller's knowledge, each Mortgaged Property is free of
material damage and in good repair.
14. Each Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, and consummation of the transactions contemplated hereby
will not involve the violation of any such laws.
15. As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a
Loan may have been modified by a written
S-IIIB-2
instrument which has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been or shall be delivered to the Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
16. Except with respect to mortgages held through the MERS (R) System, each
original Mortgage was recorded and all subsequent assignments of the
original Mortgage (other than the assignment to the Trustee) have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or is in the process of being recorded.
17. For each Loan, other than Second Lien Loans with initial principal balances
of $50,000 or less, a lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in item (6) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
18. To the best of the Seller's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of each
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
19. To the best of the Seller's knowledge, no improvement located on or being
part of any Mortgaged Property is in violation of any applicable zoning law
or regulation. To the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and such
Mortgaged Property is lawfully occupied under applicable law.
20. Each Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and under applicable law. To the best of the
Seller's knowledge, all parties to such Mortgage Note and such Mortgage had
legal capacity to execute such Mortgage Note and such Mortgage and each
such Mortgage Note and Mortgage have been duly and properly executed by
such parties.
21. The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursement of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording such Loans were paid.
S-IIIB-3
22. There is no obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagor.
23. All amounts received with respect to any Loan after the Cut-off Date to
which the Seller is not entitled will be deposited into the Certificate
Account within two Business Days after the Closing Date.
24. The Seller has not transferred the Loans to the Depositor, and the
Depositor has not transferred the Loans to the Trustee, with any intent to
hinder, delay or defraud any of its creditors.
25. To the best of the Seller's knowledge, all parties which have had any
interest in any Loan, whether as originator, mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and disposed of
such interest, were), with respect to the state wherein the Mortgage
Property is located: (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. To
the best of Seller's knowledge, all parties which have had any interest in
the Loan were in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located or were not required to be licensed in such state.
26. Each Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of the security,
including, (a) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to the
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. Upon default by a Mortgagor on a Loan
and foreclosure on, or trustee's sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of the Loan will be able to
deliver good and marketable title to the Mortgaged Property.
27. With respect to each Mortgage constituting a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
28. Each Mortgage Note and each Mortgage is in substantially one of the forms
acceptable to FNMA or Freddie Mac, with such riders as have been acceptable
to FNMA or Freddie Mac, as the case may be.
29. The origination, underwriting and collection practices used by the Seller
with respect to each Loan have been in all respects legal, prudent and
customary in the mortgage lending and servicing business.
30. There is no pledged account or other security other than any Escrow Account
and real estate securing the Mortgagor's obligations.
31. No Loan has a shared appreciation feature, or other contingent interest
feature.
S-IIIB-4
32. Each Loan contains a customary "due on sale" clause.
33. To the best of Seller's knowledge: at the Closing Date, the improvements on
each Mortgaged Property were covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for fire
and extended coverage and coverage for such other hazards as are customary
in the area where such Mortgaged Property is located in an amount at least
equal to the lesser of (a) the maximum insurable value of the improvements
on such Mortgaged Property or (b) (i) in the case of a Loan secured by a
Mortgage creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances of
such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium unit. For all Mortgages creating a first lien on
the related Mortgaged Property, all such individual insurance policies and
all flood policies referred to in item (34) below contain a standard
mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice
that any premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance including
flood insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
34. If a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration was required at closing
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (a) the
original outstanding principal balance of the related Loan, (b) the minimum
amount required to compensate for damage or loss on a maximum insurable
value basis or (c) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973, as amended.
35. There is no proceeding occurring, pending or, to the best of the Seller's
knowledge, threatened for the total or partial condemnation of any
Mortgaged Property.
36. There is no material monetary default existing under any Mortgage or the
related Mortgage Note and, to the best of the Seller's knowledge, there is
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration under such Mortgage or related Mortgage Note; and
neither the Seller, nor, to the best of Seller's knowledge, any other
entity involved in originating or servicing a Loan, has waived any default,
breach, violation or event of acceleration.
37. Each Mortgaged Property is improved by a one- to four-family residential
dwelling including, without limitation, townhouses and condominium units,
but not including cooperatives, manufactured housing or mobile homes, and
does not constitute other than real property under state law.
38. Each Loan is being serviced by the Servicer.
39. Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related loan schedule. The
consolidated principal amount does not exceed the original principal amount
of
S-IIIB-5
such Loan. No Mortgage Note permits or obligates the Servicer to make
future advances to the Mortgagor at the option of the Mortgagor.
40. To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid,
except for items which have been assessed, but are not yet due and payable.
Except for (a) payments in the nature of escrow payments, and (b) interest
accruing from the date of any Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day which precedes by
one month the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the Servicer
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the related Mortgage.
41. Each Loan was underwritten in all material respects in accordance with the
Seller's underwriting guidelines as set forth in the Information Circular.
42. An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and Freddie Mac and includes an assessment of the fair market value of the
Mortgaged Property at the time of the appraisal.
43. No Loan is a graduated payment mortgage loan or a growing equity mortgage
loan, and no Loan is subject to a buydown or similar arrangement.
44. The Servicer has fully furnished with respect to each Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis
(during the period in which the Servicer serviced the Loans).
45. No proceeds from any Loan were used to purchase single-premium credit
insurance policies.
46. No Loan originated after October 1, 2002 has a prepayment penalty longer
than three years after its origination and no Loan originated prior to
October 1, 2002 has a prepayment penalty longer than five years after its
origination.
47. Each Loan was originated on or after April 30, 1994.
48. (i) Seller represents that Seller currently operates or actively
participates in an ongoing program or business to originate single family
mortgage loans ("SFMLs"), and/or make periodic purchases of SFMLs from
originators or sellers, and/or issue and/or purchase securities or bonds
supported by SFMLs, a portion of which SFMLs are made to borrowers who are:
a. low-income families (families with incomes of 80% or less of area
median income) living in low-income areas (a census tract or
block numbering area in which the median income does not exceed
80 percent of the area median income); or
S-IIIB-6
b. very low-income families (families with incomes of 60% or less of
area median income).
(ii) Seller acknowledges that Guarantor, for a period of two years
following the date of this Agreement, may contact the Seller to confirm
that the Seller continues to actively engage in the SFML business and to
obtain other non-proprietary information about the Seller's activities that
may assist Guarantor in completing its own regulatory reporting
requirements. The Seller shall make reasonable efforts to provide such
information to Guarantor.
(iii) Neither the inaccuracy of any representation or warranty under
subsection (i.) above nor the failure of Seller to provide the
non-proprietary information required by subsection (ii.) above shall
constitute a breach of this Agreement or shall entitle Guarantor to
exercise any remedies under this Agreement, including, without limitation,
requiring Seller to repurchase or substitute any Loans, but any such
inaccuracy or failure shall entitle Guarantor to refuse to purchase
mortgages from Seller in the future.
49. To the best of the Seller's knowledge, each Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
related Loan in the event the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder.
50. With respect to Second Lien Loans, either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File.
51. As of the Cut-off Date, no Second Lien Loan had an original principal
balance obligation in excess of 50% of Guarantor's one-family residence
mortgage amount limitation for first-lien mortgages in effect as of the
Cut-off Date.
52. As of the Cut-off Date, the Trust Fund does not contain a first lien Loan
and a Second Lien Loan relating to a single Mortgaged Property if the sum
of the original principal balances of such Loans would exceed Guarantor's
loan limits in effect as of the Cut-off Date.
53. To the best of the Seller's knowledge, none of the Loans were originated
while the mortgagor was in bankruptcy or if foreclosure proceedings had
begun.
54. No Loan had an original principal balance obligation that was higher than
the maximum principal balance obligation for Loans that are eligible for
purchase by Guarantor.
55. The Loans were selected from among the outstanding residential mortgage
loans in Seller's portfolio at the Closing Date as to which the
representations and warranties made as to such Loans set forth in this
Schedule IIIB can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders and the
Guarantor.
56. Each Loan has a Due Date in the month of the first Distribution Date.
57. Approximately (a) 32.28% of the Group I Loans and (b) none of the Group II
Loans (by principal balance) are Balloon Loans. All such Balloon Loans
provide for monthly payment based upon a 30-year amortization schedule with
a final balloon payment no later than the 15th year.
58. No Loan is subject to negative amortization or deferred interest payments.
S-IIIB-7
59. No Mortgagor has requested relief under the Relief Act.
60. None of the Loans are retail installment contracts for goods or services or
are home improvement loans for goods or services, which would be either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. ss.433.1.
61. No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty with
respect to goods or services provided in connection with any Loan.
62. Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3) of
the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
63. The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Information Circular.
64. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other
charges or payments due the Seller have been capitalized under any Mortgage
or related Mortgage Note.
65. All Loans calculate interest utilizing the actuarial method.
66. None of the Loans are subject to the Home Ownership & Equity Protection Act
of 1994, and are not in violation of any comparable state law. No Loan was
originated in Georgia on or after October 1, 2002.
67. As of the Cut-off Date, the Mortgage Rate relating to each Loan that is an
adjustable rate mortgage loan has been adjusted in accordance with the
terms of the related Mortgage Note.
68. Each Mortgage that is registered on the Mers (R) System has been properly
registered thereon in accordance with the rules of MERS (R).
S-IIIB-8
SCHEDULE IIIC
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Loan Representations and Warranties of Equity One-New Hampshire
---------------------------------------------------------------
Equity One-New Hampshire ("Seller") hereby makes the representations
and warranties set forth in this Schedule IIIC to the Depositor, the Trustee and
the Guarantor, as of the Closing Date or if so specified herein, as of the
Cut-off Date with respect to the Loans being conveyed by Seller and the
Mortgages, Mortgage Notes and Mortgaged Properties related thereto. Capitalized
terms used but not otherwise defined in this Schedule IIIC shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be
used in this Schedule to refer to the Pooling and Servicing Agreement.
1. The information set forth on Schedule I to the Agreement with respect to
the Loans is true and correct in all material respects as of the Closing
Date.
2. No misrepresentation of a material fact or fraud in respect of the
origination, modification or amendment of any Loan has taken place on the
part of any person, including, without limitation, the related mortgagor,
any appraiser, any builder or developer or any party involved in the
origination of such Loan.
3. As of the Cut-off Date, no Loan was contractually past due (assuming 30 day
months) for 60 or more days. In addition, not more than 0.56% (by principal
balance) of the Group I Loans and 0.12% (by principal balance) of the Group
II Loans set forth on Schedule I to the Agreement were 30 or more days
contractually past due (assuming 30 day months). No more than 15.86% (by
principal balance) of the Loans are Second Lien Loans.
4. Each Loan, as of the Closing Date, has an original term to maturity from
the initial Due Date for such Loan of not more than 30 years. Each Mortgage
Note, other than Mortgage Notes relating to Balloon Loans, will provide for
a schedule of substantially level and equal monthly payments which are
sufficient to amortize fully the principal balance of the related Loan over
a period of time equal to the amortization period of such Mortgage Note.
5. No more than 12.76%, 22.37% and 57.03% of the Loans, based on the Cut-off
Date Pool Principal Balance, had Combined Loan-to-Value Ratios at
origination in excess of 95%, 90% and 80% respectively. No Loans had
Combined Loan-to-Value Ratios at origination in excess of 100%. For
purposes of determining the date of origination on which each Loan's
Combined Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
6. Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan, (c) other matters to which like
S-IIIC-1
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage and (d)
in the case of a second lien, only to a first lien on such Mortgaged
Property.
7. Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan free
and clear of any pledge, lien (except in the case of a Second Lien Loan,
which shall be subject to prior liens approved by Seller), encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Agreement.
8. Except with respect to liens released immediately prior to the transfers
herein contemplated, each Mortgage Note and related Mortgage have not been
assigned or pledged and immediately prior to the transfers and assignments
herein contemplated, the Seller held good, marketable and indefeasible
title to, and was the sole owner and holder of, each Loan subject to no
liens, charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights of
others (each, an "Encumbrance"); the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to this Agreement; and
immediately upon the transfers and assignments herein contemplated, the
Seller shall have transferred all of its right, title and interest in and
to each Loan and the Trustee, as trustee for the benefit of the
Certificateholders, will hold good, marketable and indefeasible title, to,
and be the sole owner of, each Loan subject to no Encumbrances.
9. To the best of Seller's knowledge, there is no delinquent tax or assessment
lien against any Mortgaged Property.
10. As of the Closing Date, no Loan is the subject of foreclosure proceedings
and, to the best of the Seller's knowledge, no obligor of any of the Loans
has filed for bankruptcy protection.
11. No Loan is subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the operation of any of
the terms of any Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and, to the best
of Seller's knowledge, no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
12. To the best of Seller's knowledge, there are no mechanics' liens or claims
for work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to
in item (17) below.
13. To the best of the Seller's knowledge, each Mortgaged Property is free of
material damage and in good repair.
14. Each Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, and consummation of the transactions contemplated hereby
will not involve the violation of any such laws.
15. As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a
Loan may have been modified by a written
S-IIIC-2
instrument which has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been or shall be delivered to the Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
16. Except with respect to mortgages held through the MERS (R) System, each
original Mortgage was recorded and all subsequent assignments of the
original Mortgage (other than the assignment to the Trustee) have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or is in the process of being recorded.
17. For each Loan, other than Second Lien Loans with initial principal balances
of $50,000 or less, a lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in item (6) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
18. To the best of the Seller's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of each
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
19. To the best of the Seller's knowledge, no improvement located on or being
part of any Mortgaged Property is in violation of any applicable zoning law
or regulation. To the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and such
Mortgaged Property is lawfully occupied under applicable law.
20. Each Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and under applicable law. To the best of the
Seller's knowledge, all parties to such Mortgage Note and such Mortgage had
legal capacity to execute such Mortgage Note and such Mortgage and each
such Mortgage Note and Mortgage have been duly and properly executed by
such parties.
21. The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursement of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording such Loans were paid.
S-IIIC-3
22. There is no obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagor.
23. All amounts received with respect to any Loan after the Cut-off Date to
which the Seller is not entitled will be deposited into the Certificate
Account within two Business Days after the Closing Date.
24. The Seller has not transferred the Loans to the Depositor, and the
Depositor has not transferred the Loans to the Trustee, with any intent to
hinder, delay or defraud any of its creditors.
25. To the best of the Seller's knowledge, all parties which have had any
interest in any Loan, whether as originator, mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and disposed of
such interest, were), with respect to the state wherein the Mortgage
Property is located: (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. To
the best of Seller's knowledge, all parties which have had any interest in
the Loan were in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located or were not required to be licensed in such state.
26. Each Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of the security,
including, (a) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to the
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. Upon default by a Mortgagor on a Loan
and foreclosure on, or trustee's sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of the Loan will be able to
deliver good and marketable title to the Mortgaged Property.
27. With respect to each Mortgage constituting a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
28. Each Mortgage Note and each Mortgage is in substantially one of the forms
acceptable to FNMA or Freddie Mac, with such riders as have been acceptable
to FNMA or Freddie Mac, as the case may be.
29. The origination, underwriting and collection practices used by the Seller
with respect to each Loan have been in all respects legal, prudent and
customary in the mortgage lending and servicing business.
30. There is no pledged account or other security other than any Escrow Account
and real estate securing the Mortgagor's obligations.
31. No Loan has a shared appreciation feature, or other contingent interest
feature.
S-IIIC-4
32. Each Loan contains a customary "due on sale" clause.
33. To the best of Seller's knowledge: at the Closing Date, the improvements on
each Mortgaged Property were covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for fire
and extended coverage and coverage for such other hazards as are customary
in the area where such Mortgaged Property is located in an amount at least
equal to the lesser of (a) the maximum insurable value of the improvements
on such Mortgaged Property or (b) (i) in the case of a Loan secured by a
Mortgage creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances of
such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium unit. For all Mortgages creating a first lien on
the related Mortgaged Property, all such individual insurance policies and
all flood policies referred to in item (34) below contain a standard
mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice
that any premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance including
flood insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
34. If a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration was required at closing
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (a) the
original outstanding principal balance of the related Loan, (b) the minimum
amount required to compensate for damage or loss on a maximum insurable
value basis or (c) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973, as amended.
35. There is no proceeding occurring, pending or, to the best of the Seller's
knowledge, threatened for the total or partial condemnation of any
Mortgaged Property.
36. There is no material monetary default existing under any Mortgage or the
related Mortgage Note and, to the best of the Seller's knowledge, there is
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration under such Mortgage or related Mortgage Note; and
neither the Seller, nor, to the best of Seller's knowledge, any other
entity involved in originating or servicing a Loan, has waived any default,
breach, violation or event of acceleration.
37. Each Mortgaged Property is improved by a one- to four-family residential
dwelling including, without limitation, townhouses and condominium units,
but not including cooperatives, manufactured housing or mobile homes, and
does not constitute other than real property under state law.
38. Each Loan is being serviced by the Servicer.
39. Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related loan schedule. The
consolidated principal amount does not exceed the original principal amount
of
S-IIIC-5
such Loan. No Mortgage Note permits or obligates the Servicer to make
future advances to the Mortgagor at the option of the Mortgagor.
40. To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid,
except for items which have been assessed, but are not yet due and payable.
Except for (a) payments in the nature of escrow payments, and (b) interest
accruing from the date of any Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day which precedes by
one month the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the Servicer
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the related Mortgage.
41. Each Loan was underwritten in all material respects in accordance with the
Seller's underwriting guidelines as set forth in the Information Circular.
42. An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and Freddie Mac and includes an assessment of the fair market value of the
Mortgaged Property at the time of the appraisal.
43. No Loan is a graduated payment mortgage loan or a growing equity mortgage
loan, and no Loan is subject to a buydown or similar arrangement.
44. The Servicer has fully furnished with respect to each Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis
(during the period in which the Servicer serviced the Loans).
45. No proceeds from any Loan were used to purchase single-premium credit
insurance policies.
46. No Loan originated after October 1, 2002 has a prepayment penalty longer
than three years after its origination and no Loan originated prior to
October 1, 2002 has a prepayment penalty longer than five years after its
origination.
47. Each Loan was originated on or after April 30, 1994.
48. (i) Seller represents that Seller currently operates or actively
participates in an ongoing program or business to originate single family
mortgage loans ("SFMLs"), and/or make periodic purchases of SFMLs from
originators or sellers, and/or issue and/or purchase securities or bonds
supported by SFMLs, a portion of which SFMLs are made to borrowers who are:
a. low-income families (families with incomes of 80% or less of area
median income) living in low-income areas (a census tract or
block numbering area in which the median income does not exceed
80 percent of the area median income); or
S-IIIC-6
b. very low-income families (families with incomes of 60% or less of
area median income).
(ii) Seller acknowledges that Guarantor, for a period of two years
following the date of this Agreement, may contact the Seller to confirm
that the Seller continues to actively engage in the SFML business and to
obtain other non-proprietary information about the Seller's activities that
may assist Guarantor in completing its own regulatory reporting
requirements. The Seller shall make reasonable efforts to provide such
information to Guarantor.
(iii) Neither the inaccuracy of any representation or warranty under
subsection (i.) above nor the failure of Seller to provide the
non-proprietary information required by subsection (ii.) above shall
constitute a breach of this Agreement or shall entitle Guarantor to
exercise any remedies under this Agreement, including, without limitation,
requiring Seller to repurchase or substitute any Loans, but any such
inaccuracy or failure shall entitle Guarantor to refuse to purchase
mortgages from Seller in the future.
49. To the best of the Seller's knowledge, each Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
related Loan in the event the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder.
50. With respect to Second Lien Loans, either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File.
51. As of the Cut-off Date, no Second Lien Loan had an original principal
balance obligation in excess of 50% of Guarantor's one-family residence
mortgage amount limitation for first-lien mortgages in effect as of the
Cut-off Date.
52. As of the Cut-off Date, the Trust Fund does not contain a first lien Loan
and a Second Lien Loan relating to a single Mortgaged Property if the sum
of the original principal balances of such Loans would exceed Guarantor's
loan limits in effect as of the Cut-off Date.
53. To the best of the Seller's knowledge, none of the Loans were originated
while the mortgagor was in bankruptcy or if foreclosure proceedings had
begun.
54. No Loan had an original principal balance obligation that was higher than
the maximum principal balance obligation for Loans that are eligible for
purchase by Guarantor.
55. The Loans were selected from among the outstanding residential mortgage
loans in Seller's portfolio at the Closing Date as to which the
representations and warranties made as to such Loans set forth in this
Schedule IIIC can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders and the
Guarantor.
56. Each Loan has a Due Date in the month of the first Distribution Date.
57. Approximately (a) 32.28% of the Group I Loans and (b) none of the Group II
Loans (by principal balance) are Balloon Loans. All such Balloon Loans
provide for monthly payment based upon a 30-year amortization schedule with
a final balloon payment no later than the 15th year.
58. No Loan is subject to negative amortization or deferred interest payments.
S-IIIC-7
59. No Mortgagor has requested relief under the Relief Act.
60. None of the Loans are retail installment contracts for goods or services or
are home improvement loans for goods or services, which would be either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. ss.433.1.
61. No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty with
respect to goods or services provided in connection with any Loan.
62. Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3) of
the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
63. The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Information Circular.
64. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other
charges or payments due the Seller have been capitalized under any Mortgage
or related Mortgage Note.
65. All Loans calculate interest utilizing the actuarial method.
66. None of the Loans are subject to the Home Ownership & Equity Protection Act
of 1994, and are not in violation of any comparable state law. No Loan was
originated in Georgia on or after October 1, 2002.
67. As of the Cut-off Date, the Mortgage Rate relating to each Loan that is an
adjustable rate mortgage loan has been adjusted in accordance with the
terms of the related Mortgage Note.
68. Each Mortgage that is registered on the Mers (R) System has been properly
registered thereon in accordance with the rules of MERS (R).
S-IIIC-8
SCHEDULE IIID
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Loan Representations and Warranties of Equity One-Pennsylvania
--------------------------------------------------------------
Equity One-Pennsylvania ("Seller") hereby makes the representations
and warranties set forth in this Schedule IIID to the Depositor, the Trustee and
the Guarantor, as of the Closing Date or if so specified herein, as of the
Cut-off Date with respect to the Loans being conveyed by Seller and the
Mortgages, Mortgage Notes and Mortgaged Properties related thereto. Capitalized
terms used but not otherwise defined in this Schedule IIID shall have the
meanings ascribed thereto in the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement") relating to the above-referenced Series, among Seller,
the other Sellers and the Servicer identified therein, Equity One ABS, Inc., as
depositor, and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be
used in this Schedule to refer to the Pooling and Servicing Agreement.
1. The information set forth on Schedule I to the Agreement with respect to
the Loans is true and correct in all material respects as of the Closing
Date.
2. No misrepresentation of a material fact or fraud in respect of the
origination, modification or amendment of any Loan has taken place on the
part of any person, including, without limitation, the related mortgagor,
any appraiser, any builder or developer or any party involved in the
origination of such Loan.
3. As of the Cut-off Date, no Loan was contractually past due (assuming 30 day
months) for 60 or more days. In addition, not more than 0.56% (by principal
balance) of the Group I Loans and 0.12% (by principal balance) of the Group
II Loans set forth on Schedule I to the Agreement were 30 or more days
contractually past due (assuming 30 day months). No more than 15.86% (by
principal balance) of the Loans are Second Lien Loans.
4. Each Loan, as of the Closing Date, has an original term to maturity from
the initial Due Date for such Loan of not more than 30 years. Each Mortgage
Note, other than Mortgage Notes relating to Balloon Loans, will provide for
a schedule of substantially level and equal monthly payments which are
sufficient to amortize fully the principal balance of the related Loan over
a period of time equal to the amortization period of such Mortgage Note.
5. No more than 12.76%, 22.37% and 57.03% of the Loans, based on the Cut-off
Date Pool Principal Balance, had Combined Loan-to-Value Ratios at
origination in excess of 95%, 90% and 80% respectively. No Loans had
Combined Loan-to-Value Ratios at origination in excess of 100%. For
purposes of determining the date of origination on which each Loan's
Combined Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
6. Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan, (c) other matters to which like
S-IIID-1
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage and (d)
in the case of a second lien, only to a first lien on such Mortgaged
Property.
7. Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan free
and clear of any pledge, lien (except in the case of a Second Lien Loan,
which shall be subject to prior liens approved by Seller), encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Agreement.
8. Except with respect to liens released immediately prior to the transfers
herein contemplated, each Mortgage Note and related Mortgage have not been
assigned or pledged and immediately prior to the transfers and assignments
herein contemplated, the Seller held good, marketable and indefeasible
title to, and was the sole owner and holder of, each Loan subject to no
liens, charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights of
others (each, an "Encumbrance"); the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to this Agreement; and
immediately upon the transfers and assignments herein contemplated, the
Seller shall have transferred all of its right, title and interest in and
to each Loan and the Trustee, as trustee for the benefit of the
Certificateholders, will hold good, marketable and indefeasible title, to,
and be the sole owner of, each Loan subject to no Encumbrances.
9. To the best of Seller's knowledge, there is no delinquent tax or assessment
lien against any Mortgaged Property.
10. As of the Closing Date, no Loan is the subject of foreclosure proceedings
and, to the best of the Seller's knowledge, no obligor of any of the Loans
has filed for bankruptcy protection.
11. No Loan is subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the operation of any of
the terms of any Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and, to the best
of Seller's knowledge, no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
12. To the best of Seller's knowledge, there are no mechanics' liens or claims
for work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to
in item (17) below.
13. To the best of the Seller's knowledge, each Mortgaged Property is free of
material damage and in good repair.
14. Each Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, and consummation of the transactions contemplated hereby
will not involve the violation of any such laws.
15. As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a
Loan may have been modified by a written
S-IIID-2
instrument which has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been or shall be delivered to the Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
16. Except with respect to mortgages held through the MERS (R) System, each
original Mortgage was recorded and all subsequent assignments of the
original Mortgage (other than the assignment to the Trustee) have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or is in the process of being recorded.
17. For each Loan, other than Second Lien Loans with initial principal balances
of $50,000 or less, a lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in item (6) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
18. To the best of the Seller's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of each
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
19. To the best of the Seller's knowledge, no improvement located on or being
part of any Mortgaged Property is in violation of any applicable zoning law
or regulation. To the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and such
Mortgaged Property is lawfully occupied under applicable law.
20. Each Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and under applicable law. To the best of the
Seller's knowledge, all parties to such Mortgage Note and such Mortgage had
legal capacity to execute such Mortgage Note and such Mortgage and each
such Mortgage Note and Mortgage have been duly and properly executed by
such parties.
21. The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursement of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording such Loans were paid.
S-IIID-3
22. There is no obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagor.
23. All amounts received with respect to any Loan after the Cut-off Date to
which the Seller is not entitled will be deposited into the Certificate
Account within two Business Days after the Closing Date.
24. The Seller has not transferred the Loans to the Depositor, and the
Depositor has not transferred the Loans to the Trustee, with any intent to
hinder, delay or defraud any of its creditors.
25. To the best of the Seller's knowledge, all parties which have had any
interest in any Loan, whether as originator, mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and disposed of
such interest, were), with respect to the state wherein the Mortgage
Property is located: (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. To
the best of Seller's knowledge, all parties which have had any interest in
the Loan were in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located or were not required to be licensed in such state.
26. Each Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of the security,
including, (a) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to the
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. Upon default by a Mortgagor on a Loan
and foreclosure on, or trustee's sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of the Loan will be able to
deliver good and marketable title to the Mortgaged Property.
27. With respect to each Mortgage constituting a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
28. Each Mortgage Note and each Mortgage is in substantially one of the forms
acceptable to FNMA or Freddie Mac, with such riders as have been acceptable
to FNMA or Freddie Mac, as the case may be.
29. The origination, underwriting and collection practices used by the Seller
with respect to each Loan have been in all respects legal, prudent and
customary in the mortgage lending and servicing business.
30. There is no pledged account or other security other than any Escrow Account
and real estate securing the Mortgagor's obligations.
31. No Loan has a shared appreciation feature, or other contingent interest
feature.
S-IIID-4
32. Each Loan contains a customary "due on sale" clause.
33. To the best of Seller's knowledge: at the Closing Date, the improvements on
each Mortgaged Property were covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for fire
and extended coverage and coverage for such other hazards as are customary
in the area where such Mortgaged Property is located in an amount at least
equal to the lesser of (a) the maximum insurable value of the improvements
on such Mortgaged Property or (b) (i) in the case of a Loan secured by a
Mortgage creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances of
such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium unit. For all Mortgages creating a first lien on
the related Mortgaged Property, all such individual insurance policies and
all flood policies referred to in item (34) below contain a standard
mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice
that any premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance including
flood insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
34. If a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration was required at closing
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (a) the
original outstanding principal balance of the related Loan, (b) the minimum
amount required to compensate for damage or loss on a maximum insurable
value basis or (c) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973, as amended.
35. There is no proceeding occurring, pending or, to the best of the Seller's
knowledge, threatened for the total or partial condemnation of any
Mortgaged Property.
36. There is no material monetary default existing under any Mortgage or the
related Mortgage Note and, to the best of the Seller's knowledge, there is
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration under such Mortgage or related Mortgage Note; and
neither the Seller, nor, to the best of Seller's knowledge, any other
entity involved in originating or servicing a Loan, has waived any default,
breach, violation or event of acceleration.
37. Each Mortgaged Property is improved by a one- to four-family residential
dwelling including, without limitation, townhouses and condominium units,
but not including cooperatives, manufactured housing or mobile homes, and
does not constitute other than real property under state law.
38. Each Loan is being serviced by the Servicer.
39. Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related loan schedule. The
consolidated principal amount does not exceed the original principal amount
of
S-IIID-5
such Loan. No Mortgage Note permits or obligates the Servicer to make
future advances to the Mortgagor at the option of the Mortgagor.
40. To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid,
except for items which have been assessed, but are not yet due and payable.
Except for (a) payments in the nature of escrow payments, and (b) interest
accruing from the date of any Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day which precedes by
one month the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the Servicer
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the related Mortgage.
41. Each Loan was underwritten in all material respects in accordance with the
Seller's underwriting guidelines as set forth in the Information Circular.
42. An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and Freddie Mac and includes an assessment of the fair market value of the
Mortgaged Property at the time of the appraisal.
43. No Loan is a graduated payment mortgage loan or a growing equity mortgage
loan, and no Loan is subject to a buydown or similar arrangement.
44. The Servicer has fully furnished with respect to each Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis
(during the period in which the Servicer serviced the Loans).
45. No proceeds from any Loan were used to purchase single-premium credit
insurance policies.
46. No Loan originated after October 1, 2002 has a prepayment penalty longer
than three years after its origination and no Loan originated prior to
October 1, 2002 has a prepayment penalty longer than five years after its
origination.
47. Each Loan was originated on or after April 30, 1994.
48. (i) Seller represents that Seller currently operates or actively
participates in an ongoing program or business to originate single family
mortgage loans ("SFMLs"), and/or make periodic purchases of SFMLs from
originators or sellers, and/or issue and/or purchase securities or bonds
supported by SFMLs, a portion of which SFMLs are made to borrowers who are:
a. low-income families (families with incomes of 80% or less of area
median income) living in low-income areas (a census tract or
block numbering area in which the median income does not exceed
80 percent of the area median income); or
S-IIID-6
b. very low-income families (families with incomes of 60% or less of
area median income).
(ii) Seller acknowledges that Guarantor, for a period of two years
following the date of this Agreement, may contact the Seller to confirm
that the Seller continues to actively engage in the SFML business and to
obtain other non-proprietary information about the Seller's activities that
may assist Guarantor in completing its own regulatory reporting
requirements. The Seller shall make reasonable efforts to provide such
information to Guarantor.
(iii) Neither the inaccuracy of any representation or warranty under
subsection (i.) above nor the failure of Seller to provide the
non-proprietary information required by subsection (ii.) above shall
constitute a breach of this Agreement or shall entitle Guarantor to
exercise any remedies under this Agreement, including, without limitation,
requiring Seller to repurchase or substitute any Loans, but any such
inaccuracy or failure shall entitle Guarantor to refuse to purchase
mortgages from Seller in the future.
49. To the best of the Seller's knowledge, each Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
related Loan in the event the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder.
50. With respect to Second Lien Loans, either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File.
51. As of the Cut-off Date, no Second Lien Loan had an original principal
balance obligation in excess of 50% of Guarantor's one-family residence
mortgage amount limitation for first-lien mortgages in effect as of the
Cut-off Date.
52. As of the Cut-off Date, the Trust Fund does not contain a first lien Loan
and a Second Lien Loan relating to a single Mortgaged Property if the sum
of the original principal balances of such Loans would exceed Guarantor's
loan limits in effect as of the Cut-off Date.
53. To the best of the Seller's knowledge, none of the Loans were originated
while the mortgagor was in bankruptcy or if foreclosure proceedings had
begun.
54. No Loan had an original principal balance obligation that was higher than
the maximum principal balance obligation for Loans that are eligible for
purchase by Guarantor.
55. The Loans were selected from among the outstanding residential mortgage
loans in Seller's portfolio at the Closing Date as to which the
representations and warranties made as to such Loans set forth in this
Schedule IIID can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders and the
Guarantor.
56. Each Loan has a Due Date in the month of the first Distribution Date.
57. Approximately (a) 32.28% of the Group I Loans and (b) none of the Group II
Loans (by principal balance) are Balloon Loans. All such Balloon Loans
provide for monthly payment based upon a 30-year amortization schedule with
a final balloon payment no later than the 15th year.
58. No Loan is subject to negative amortization or deferred interest payments.
S-IIID-7
59. No Mortgagor has requested relief under the Relief Act.
60. None of the Loans are retail installment contracts for goods or services or
are home improvement loans for goods or services, which would be either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. ss.433.1.
61. No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty with
respect to goods or services provided in connection with any Loan.
62. Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3) of
the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
63. The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Information Circular.
64. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other
charges or payments due the Seller have been capitalized under any Mortgage
or related Mortgage Note.
65. All Loans calculate interest utilizing the actuarial method.
66. None of the Loans are subject to the Home Ownership & Equity Protection Act
of 1994, and are not in violation of any comparable state law. No Loan was
originated in Georgia on or after October 1, 2002.
67. As of the Cut-off Date, the Mortgage Rate relating to each Loan that is an
adjustable rate mortgage loan has been adjusted in accordance with the
terms of the related Mortgage Note.
68. Each Mortgage that is registered on the Mers (R) System has been properly
registered thereon in accordance with the rules of MERS (R).
S-IIID-8
SCHEDULE IIIE
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
Loan Representations and Warranties of Popular Financial
--------------------------------------------------------
Popular Financial ("Seller") hereby makes the representations and
warranties set forth in this Schedule IIIE to the Depositor, the Trustee and the
Guarantor, as of the Closing Date or if so specified herein, as of the Cut-off
Date with respect to the Loans being conveyed by Seller and the Mortgages,
Mortgage Notes and Mortgaged Properties related thereto. Capitalized terms used
but not otherwise defined in this Schedule IIIE shall have the meanings ascribed
thereto in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") relating to the above-referenced Series, among Seller, the other
Sellers and the Servicer identified therein, Equity One ABS, Inc., as depositor,
and JPMorgan Chase Bank, as trustee. The term "Agreement" shall be used in this
Schedule to refer to the Pooling and Servicing Agreement.
1. The information set forth on Schedule I to the Agreement with respect to
the Loans is true and correct in all material respects as of the Closing
Date.
2. No misrepresentation of a material fact or fraud in respect of the
origination, modification or amendment of any Loan has taken place on the
part of any person, including, without limitation, the related mortgagor,
any appraiser, any builder or developer or any party involved in the
origination of such Loan.
3. As of the Cut-off Date, no Loan was contractually past due (assuming 30 day
months) for 60 or more days. In addition, not more than 0.56% (by principal
balance) of the Group I Loans and 0.12% (by principal balance) of the Group
II Loans set forth on Schedule I to the Agreement were 30 or more days
contractually past due (assuming 30 day months). No more than 15.86% (by
principal balance) of the Loans are Second Lien Loans.
4. Each Loan, as of the Closing Date, has an original term to maturity from
the initial Due Date for such Loan of not more than 30 years. Each Mortgage
Note, other than Mortgage Notes relating to Balloon Loans, will provide for
a schedule of substantially level and equal monthly payments which are
sufficient to amortize fully the principal balance of the related Loan over
a period of time equal to the amortization period of such Mortgage Note.
5. No more than 12.76%, 22.37% and 57.03% of the Loans, based on the Cut-off
Date Pool Principal Balance, had Combined Loan-to-Value Ratios at
origination in excess of 95%, 90% and 80% respectively. No Loans had
Combined Loan-to-Value Ratios at origination in excess of 100%. For
purposes of determining the date of origination on which each Loan's
Combined Loan-to-Value Ratio is measured, no Loan has been significantly
modified within the meaning of Treasury Regulation 1.860G-2(b) as of the
Closing Date.
6. Each Mortgage is a valid and enforceable first or second lien on the
referenced Mortgaged Property subject only to (a) the lien of non
delinquent current real property taxes and assessments, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal made in connection
with the origination of the related Loan, (c) other matters to which like
S-IIIE-1
properties are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage and (d)
in the case of a second lien, only to a first lien on such Mortgaged
Property.
7. Immediately prior to the assignment of the Loans to the Depositor, the
Seller had good title to, and was the sole owner of, each such Loan free
and clear of any pledge, lien (except in the case of a Second Lien Loan,
which shall be subject to prior liens approved by Seller), encumbrance or
security interest and had full right and authority, subject to no interest
or participation of, or agreement with, any other party, to sell and assign
the same pursuant to the Agreement.
8. Except with respect to liens released immediately prior to the transfers
herein contemplated, each Mortgage Note and related Mortgage have not been
assigned or pledged and immediately prior to the transfers and assignments
herein contemplated, the Seller held good, marketable and indefeasible
title to, and was the sole owner and holder of, each Loan subject to no
liens, charges, mortgages, claims, participation interests, equities,
pledges or security interests of any nature, encumbrances or rights of
others (each, an "Encumbrance"); the Seller has full right and authority
under all governmental and regulatory bodies having jurisdiction over the
Seller, subject to no interest or participation of, or agreement with, any
party, to sell and assign the same pursuant to this Agreement; and
immediately upon the transfers and assignments herein contemplated, the
Seller shall have transferred all of its right, title and interest in and
to each Loan and the Trustee, as trustee for the benefit of the
Certificateholders, will hold good, marketable and indefeasible title, to,
and be the sole owner of, each Loan subject to no Encumbrances.
9. To the best of Seller's knowledge, there is no delinquent tax or assessment
lien against any Mortgaged Property.
10. As of the Closing Date, no Loan is the subject of foreclosure proceedings
and, to the best of the Seller's knowledge, no obligor of any of the Loans
has filed for bankruptcy protection.
11. No Loan is subject to any right of rescission, set-off, counterclaim or
defense, including the defense of usury, nor will the operation of any of
the terms of any Mortgage Note or Mortgage, or the exercise of any right
thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, and, to the best
of Seller's knowledge, no such right of rescission, set-off, counterclaim
or defense has been asserted with respect thereto.
12. To the best of Seller's knowledge, there are no mechanics' liens or claims
for work, labor or material affecting any Mortgaged Property which are or
may be a lien prior to, or equal with, the lien of such Mortgage, except
those which are insured against by the title insurance policy referred to
in item (17) below.
13. To the best of the Seller's knowledge, each Mortgaged Property is free of
material damage and in good repair.
14. Each Loan at origination complied in all material respects with applicable
state and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, and consummation of the transactions contemplated hereby
will not involve the violation of any such laws.
15. As of the Closing Date, neither the Seller nor any prior holder of any
Mortgage has modified the Mortgage in any material respect (except that a
Loan may have been modified by a written
S-IIIE-2
instrument which has been recorded or submitted for recordation, if
necessary, to protect the interests of the Certificateholders and the
original or a copy of which has been or shall be delivered to the Trustee);
satisfied, canceled or subordinated such Mortgage in whole or in part;
released the related Mortgaged Property in whole or in part from the lien
of such Mortgage; or executed any instrument of release, cancellation,
modification or satisfaction with respect thereto.
16. Except with respect to mortgages held through the MERS (R) System, each
original Mortgage was recorded and all subsequent assignments of the
original Mortgage (other than the assignment to the Trustee) have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of the Seller,
or is in the process of being recorded.
17. For each Loan, other than Second Lien Loans with initial principal balances
of $50,000 or less, a lender's policy of title insurance together with a
condominium endorsement and extended coverage endorsement, if applicable,
in an amount at least equal to the Cut-off Date Stated Principal Balance of
each such Loan or a commitment (binder) to issue the same was effective on
the date of the origination of each Loan, each such policy is valid and
remains in full force and effect, and each such policy was issued by a
title insurer qualified to do business in the jurisdiction where the
related Mortgaged Property is located, which policy insures the Seller and
successor owners of indebtedness secured by the related insured Mortgage,
as to the applicable priority lien of the Mortgage subject to the
exceptions set forth in item (6) above; to the best of the Seller's
knowledge, no claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything which would impair the coverage of
such mortgage title insurance policy.
18. To the best of the Seller's knowledge, all of the improvements which were
included for the purpose of determining the appraised value of each
Mortgaged Property lie wholly within the boundaries and building
restriction lines of such property, and no improvements on adjoining
properties encroach upon such Mortgaged Property.
19. To the best of the Seller's knowledge, no improvement located on or being
part of any Mortgaged Property is in violation of any applicable zoning law
or regulation. To the best of the Seller's knowledge, all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of such Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities, unless the lack thereof would not have a
material adverse effect on the value of such Mortgaged Property, and such
Mortgaged Property is lawfully occupied under applicable law.
20. Each Mortgage Note and the related Mortgage are genuine, and each is the
legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms and under applicable law. To the best of the
Seller's knowledge, all parties to such Mortgage Note and such Mortgage had
legal capacity to execute such Mortgage Note and such Mortgage and each
such Mortgage Note and Mortgage have been duly and properly executed by
such parties.
21. The proceeds of each Loan (other than certain amounts escrowed for home
improvements) have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion
of any on-site or off-site improvements and as to disbursement of any
escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making, or closing or recording such Loans were paid.
S-IIIE-3
22. There is no obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagor.
23. All amounts received with respect to any Loan after the Cut-off Date to
which the Seller is not entitled will be deposited into the Certificate
Account within two Business Days after the Closing Date.
24. The Seller has not transferred the Loans to the Depositor, and the
Depositor has not transferred the Loans to the Trustee, with any intent to
hinder, delay or defraud any of its creditors.
25. To the best of the Seller's knowledge, all parties which have had any
interest in any Loan, whether as originator, mortgagee, assignee, pledgee
or otherwise, are (or, during the period in which they held and disposed of
such interest, were), with respect to the state wherein the Mortgage
Property is located: (A) organized under the laws of such state, or (B)
qualified to do business in such state, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state so as to require qualification or
licensing, or (E) not otherwise required to be licensed in such state. To
the best of Seller's knowledge, all parties which have had any interest in
the Loan were in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located or were not required to be licensed in such state.
26. Each Mortgage contains customary and enforceable provisions which render
the rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property of the benefits of the security,
including, (a) in the case of a Mortgage designated as a deed of trust, by
trustee's sale and (b) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the related Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage subject to the
applicable federal and state laws and judicial precedent with respect to
bankruptcy and rights of redemption. Upon default by a Mortgagor on a Loan
and foreclosure on, or trustee's sale of, the related Mortgaged Property
pursuant to the proper procedures, the holder of the Loan will be able to
deliver good and marketable title to the Mortgaged Property.
27. With respect to each Mortgage constituting a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no
fees or expenses are or will become payable by the Certificateholders to
the trustee under the deed of trust, except in connection with a trustee's
sale after default by the Mortgagor.
28. Each Mortgage Note and each Mortgage is in substantially one of the forms
acceptable to FNMA or Freddie Mac, with such riders as have been acceptable
to FNMA or Freddie Mac, as the case may be.
29. The origination, underwriting and collection practices used by the Seller
with respect to each Loan have been in all respects legal, prudent and
customary in the mortgage lending and servicing business.
30. There is no pledged account or other security other than any Escrow Account
and real estate securing the Mortgagor's obligations.
31. No Loan has a shared appreciation feature, or other contingent interest
feature.
S-IIIE-4
32. Each Loan contains a customary "due on sale" clause.
33. To the best of Seller's knowledge: at the Closing Date, the improvements on
each Mortgaged Property were covered by a valid and existing hazard
insurance policy with a generally acceptable carrier that provides for fire
and extended coverage and coverage for such other hazards as are customary
in the area where such Mortgaged Property is located in an amount at least
equal to the lesser of (a) the maximum insurable value of the improvements
on such Mortgaged Property or (b) (i) in the case of a Loan secured by a
Mortgage creating a first lien on such Mortgaged Property, the original
principal balance of such Loan, or (ii) in the case of a Loan which is
subject to a prior loan or prior loans, the combined principal balances of
such Loan and the prior loan(s). If such Mortgaged Property is a
condominium unit, it is included under the coverage afforded by a blanket
policy for the condominium unit. For all Mortgages creating a first lien on
the related Mortgaged Property, all such individual insurance policies and
all flood policies referred to in item (34) below contain a standard
mortgagee clause naming the Seller or the original mortgagee, and its
successors in interest, as mortgagee, and the Seller has received no notice
that any premiums due and payable thereon have not been paid; the Mortgage
obligates the Mortgagor thereunder to maintain all such insurance including
flood insurance at the Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to
obtain and maintain such insurance at the Mortgagor's cost and expense and
to seek reimbursement therefor from the Mortgagor.
34. If a Mortgaged Property is in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards, a
flood insurance policy in a form meeting the requirements of the current
guidelines of the Flood Insurance Administration was required at closing
with respect to such Mortgaged Property with a generally acceptable carrier
in an amount representing coverage not less than the least of (a) the
original outstanding principal balance of the related Loan, (b) the minimum
amount required to compensate for damage or loss on a maximum insurable
value basis or (c) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973, as amended.
35. There is no proceeding occurring, pending or, to the best of the Seller's
knowledge, threatened for the total or partial condemnation of any
Mortgaged Property.
36. There is no material monetary default existing under any Mortgage or the
related Mortgage Note and, to the best of the Seller's knowledge, there is
no event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach, violation
or event of acceleration under such Mortgage or related Mortgage Note; and
neither the Seller, nor, to the best of Seller's knowledge, any other
entity involved in originating or servicing a Loan, has waived any default,
breach, violation or event of acceleration.
37. Each Mortgaged Property is improved by a one- to four-family residential
dwelling including, without limitation, townhouses and condominium units,
but not including cooperatives, manufactured housing or mobile homes, and
does not constitute other than real property under state law.
38. Each Loan is being serviced by the Servicer.
39. Any future advances made prior to the Cut-off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate
and single repayment term reflected on the related loan schedule. The
consolidated principal amount does not exceed the original principal amount
of
S-IIIE-5
such Loan. No Mortgage Note permits or obligates the Servicer to make
future advances to the Mortgagor at the option of the Mortgagor.
40. To the best of Seller's knowledge, all taxes, governmental assessments,
insurance premiums, water, sewer and municipal charges, leasehold payments
or ground rents which previously became due and owing have been paid,
except for items which have been assessed, but are not yet due and payable.
Except for (a) payments in the nature of escrow payments, and (b) interest
accruing from the date of any Mortgage Note or date of disbursement of the
related Mortgage proceeds, whichever is later, to the day which precedes by
one month the Due Date of the first installment of principal and interest,
including without limitation, taxes and insurance payments, the Servicer
has not advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the related Mortgage.
41. Each Loan was underwritten in all material respects in accordance with the
Seller's underwriting guidelines as set forth in the Information Circular.
42. An appraisal of each Mortgaged Property was obtained from a qualified
appraiser, duly appointed by the originator, who had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Loan; such appraisal is in a form acceptable to FNMA
and Freddie Mac and includes an assessment of the fair market value of the
Mortgaged Property at the time of the appraisal.
43. No Loan is a graduated payment mortgage loan or a growing equity mortgage
loan, and no Loan is subject to a buydown or similar arrangement.
44. The Servicer has fully furnished with respect to each Loan, in accordance
with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to Equifax, Experian and Trans Union Credit
Information Company (three of the credit repositories), on a monthly basis
(during the period in which the Servicer serviced the Loans).
45. No proceeds from any Loan were used to purchase single-premium credit
insurance policies.
46. No Loan originated after October 1, 2002 has a prepayment penalty longer
than three years after its origination and no Loan originated prior to
October 1, 2002 has a prepayment penalty longer than five years after its
origination.
47. Each Loan was originated on or after April 30, 1994.
48. (i) Seller represents that Seller currently operates or actively
participates in an ongoing program or business to originate single family
mortgage loans ("SFMLs"), and/or make periodic purchases of SFMLs from
originators or sellers, and/or issue and/or purchase securities or bonds
supported by SFMLs, a portion of which SFMLs are made to borrowers who are:
a. low-income families (families with incomes of 80% or less of area
median income) living in low-income areas (a census tract or
block numbering area in which the median income does not exceed
80 percent of the area median income); or
S-IIIE-6
b. very low-income families (families with incomes of 60% or less of
area median income).
(ii) Seller acknowledges that Guarantor, for a period of two years
following the date of this Agreement, may contact the Seller to confirm
that the Seller continues to actively engage in the SFML business and to
obtain other non-proprietary information about the Seller's activities that
may assist Guarantor in completing its own regulatory reporting
requirements. The Seller shall make reasonable efforts to provide such
information to Guarantor.
(iii) Neither the inaccuracy of any representation or warranty under
subsection (i.) above nor the failure of Seller to provide the
non-proprietary information required by subsection (ii.) above shall
constitute a breach of this Agreement or shall entitle Guarantor to
exercise any remedies under this Agreement, including, without limitation,
requiring Seller to repurchase or substitute any Loans, but any such
inaccuracy or failure shall entitle Guarantor to refuse to purchase
mortgages from Seller in the future.
49. To the best of the Seller's knowledge, each Mortgage contains a provision
for the acceleration of the payment of the unpaid principal balance of the
related Loan in the event the related Mortgaged Property is sold without
the prior consent of the mortgagee thereunder.
50. With respect to Second Lien Loans, either (a) no consent for the Second
Lien Loan is required by the holder of the related first lien or (b) such
consent has been obtained and is contained in the Mortgage File.
51. As of the Cut-off Date, no Second Lien Loan had an original principal
balance obligation in excess of 50% of Guarantor's one-family residence
mortgage amount limitation for first-lien mortgages in effect as of the
Cut-off Date.
52. As of the Cut-off Date, the Trust Fund does not contain a first lien Loan
and a Second Lien Loan relating to a single Mortgaged Property if the sum
of the original principal balances of such Loans would exceed Guarantor's
loan limits in effect as of the Cut-off Date.
53. To the best of the Seller's knowledge, none of the Loans were originated
while the mortgagor was in bankruptcy or if foreclosure proceedings had
begun.
54. No Loan had an original principal balance obligation that was higher than
the maximum principal balance obligation for Loans that are eligible for
purchase by Guarantor.
55. The Loans were selected from among the outstanding residential mortgage
loans in Seller's portfolio at the Closing Date as to which the
representations and warranties made as to such Loans set forth in this
Schedule IIIE can be made. Such selection was not made in a manner that
would adversely affect the interests of Certificateholders and the
Guarantor.
56. Each Loan has a Due Date in the month of the first Distribution Date.
57. Approximately (a) 32.28% of the Group I Loans and (b) none of the Group II
Loans (by principal balance) are Balloon Loans. All such Balloon Loans
provide for monthly payment based upon a 30-year amortization schedule with
a final balloon payment no later than the 15th year.
58. No Loan is subject to negative amortization or deferred interest payments.
S-IIIE-7
59. No Mortgagor has requested relief under the Relief Act.
60. None of the Loans are retail installment contracts for goods or services or
are home improvement loans for goods or services, which would be either
"consumer credit contracts" or "purchase money loans" as such terms are
defined in 16 C.F.R. ss.433.1.
61. No Mortgagor has or will have a claim or defense against Seller or any
assignor or assignee of Seller under any express or implied warranty with
respect to goods or services provided in connection with any Loan.
62. Each Loan is a "qualified mortgage" for purposes of Section 860G(a)(3) of
the Code and Treasury Regulations Section 1.860G-2(a)(1) and (3).
63. The Loans, individually and in the aggregate, conform in all material
respects to the descriptions thereof in the Information Circular.
64. There exist no deficiencies with respect to escrow deposits and payments,
if such are required, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of other
charges or payments due the Seller have been capitalized under any Mortgage
or related Mortgage Note.
65. All Loans calculate interest utilizing the actuarial method.
66. None of the Loans are subject to the Home Ownership & Equity Protection Act
of 1994, and are not in violation of any comparable state law. No Loan was
originated in Georgia on or after October 1, 2002.
67. As of the Cut-off Date, the Mortgage Rate relating to each Loan that is an
adjustable rate mortgage loan has been adjusted in accordance with the
terms of the related Mortgage Note.
68. Each Mortgage that is registered on the Mers (R) System has been properly
registered thereon in accordance with the rules of MERS (R).
S-IIIE-8
SCHEDULE IV
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY SELLERS TO DEPOSITOR
============================================== ================================================
SELLER LOCATION
============================================== ================================================
Equity One, Inc. (DE) Secretary of State of Delaware
- ---------------------------------------------- ------------------------------------------------
- ---------------------------------------------- ------------------------------------------------
Equity One, Incorporated (PA) Secretary of the Commonwealth of Pennsylvania
- ---------------------------------------------- ------------------------------------------------
- ---------------------------------------------- ------------------------------------------------
Equity One, Inc. (MN) Secretary of State of Minnesota
- ---------------------------------------------- ------------------------------------------------
- ---------------------------------------------- ------------------------------------------------
Equity One Consumer Loan Company, Inc. (NH) Secretary of State of New Hampshire
- ---------------------------------------------- ------------------------------------------------
- ---------------------------------------------- ------------------------------------------------
Popular Financial Services, LLC (DE) Secretary of State of Delaware
============================================== ================================================
S-IV-1
SCHEDULE V
LIST OF FINANCING STATEMENTS:
PERFECTION OF GRANT OF SECURITY INTEREST
BY DEPOSITOR TO TRUSTEE
========================================== =====================================
DEPOSITOR LOCATION
========================================== =====================================
Equity One ABS, Inc. Secretary of State of Delaware
========================================== =====================================
S-V-1
SCHEDULE VI
LIST OF FINANCING STATEMENTS:
PERFECTION OF SALE
BY SELLERS TO DEPOSITOR
================================================ ================================================
SELLER LOCATION
================================================ ================================================
Equity One, Inc. (DE) Secretary of State of Delaware
- ------------------------------------------------ ------------------------------------------------
- ------------------------------------------------ ------------------------------------------------
Equity One, Incorporated (PA) Secretary of the Commonwealth of Pennsylvania
- ------------------------------------------------ ------------------------------------------------
- ------------------------------------------------ ------------------------------------------------
Equity One, Inc. (MN) Secretary of State of Minnesota
- ------------------------------------------------ ------------------------------------------------
- ------------------------------------------------ ------------------------------------------------
Equity One Consumer Loan Company, Inc. (NH) Secretary of State of New Hampshire
- ------------------------------------------------ ------------------------------------------------
- ------------------------------------------------ ------------------------------------------------
Popular Financial Services, LLC (DE) Secretary of State of Delaware
================================================ ================================================
S-VI-1
SCHEDULE VII
LIST OF FINANCING STATEMENTS:
PERFECTION OF SALE
BY DEPOSITOR TO TRUSTEE
============================================ ===================================
DEPOSITOR LOCATION
============================================ ===================================
Equity One ABS, Inc. Secretary of State of Delaware
============================================ ===================================
S-VII-1
EXHIBIT A-1
Form of Class AF-[] Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
Certificate No. :
Cut-off Date: : September 30, 2002
First Distribution Date: : November 25, 2002
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
CUSIP :
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
Class AF-[]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage loans
divided into two groups, Group I and Group II (collectively, the "Loans").
The Loans in Group I are secured by first or second liens on one- to
four-family residential properties. The Loans in Group II are secured by
first liens on one- to four-family residential properties.
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
A-1-1
This certifies that _________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, Equity One, Inc.
(DE), Equity One, Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer
Loan Company, Inc. (NH) and Popular Financial Services, LLC (DE), as sellers (in
such capacity, collectively, the "Sellers"), Equity One, Inc. (DE) as servicer
(in such capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any proposed transfer of this Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
A-1-2
EXHIBIT A-2
Form of Class AV-1 Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED TO AN
EMPLOYEE BENEFIT PLAN OR ARRANGEMENT SUBJECT TO SECTION 406 OF ERISA OR A PLAN
OR ARRANGEMENT SUBJECT TO SECTION 4975 OF THE CODE (A "PLAN") UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE A REPRESENTATION LETTER TO THE EFFECT THAT
THE TRANSFEREE IS A PLAN INVESTOR OR GROUP OF PLAN INVESTORS ON WHOSE BEHALF THE
DECISION TO PURCHASE THIS CERTIFICATE IS MADE BY AN INDEPENDENT FIDUCIARY THAT
IS (1) QUALIFIED TO ANALYZE AND UNDERSTAND THE TERMS AND CONDITIONS OF THE YIELD
MAINTENANCE AGREEMENT AND THE EFFECT OF THE YIELD MAINTENANCE AGREEMENT ON THE
CREDIT RATINGS OF THIS CERTIFICATE AND (2) A "QUALIFIED PROFESSIONAL ASSET
MANAGER" AS DEFINED IN PART V(a) OF PROHIBITED TRANSACTION CLASS EXEMPTION
84-14, AN "IN-HOUSE ASSET MANAGER AS DEFINED IN PART IV(a) OF PROHIBITED
TRANSACTION CLASS EXEMPTION 96-23, OR A PLAN FIDUCIARY WITH TOTAL PLAN AND
NON-PLAN ASSETS UNDER MANAGEMENT OF AT LEAST $100 MILLION AT THE TIME OF THE
ACQUISITION OF THIS CERTIFICATE. NOTWITHSTANDING THE FOREGOING, WITH RESPECT TO
ANY TRANSFER OF A CLASS AV-1 CERTIFICATE THAT IS HELD IN BOOK-ENTRY FORM, THE
TRANSFEREE SHALL BE DEEMED TO HAVE MADE THE REPRESENTATIONS IN CLAUSES (1) AND
(2) IN THE PRECEDING SENTENCE.
Certificate No. :
Cut-off Date: : September 30, 2002
First Distribution Date: : November 25, 2002
Initial Class Certificate Balance
of this Certificate
("Denomination") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
CUSIP :
A-3-1
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
Class AV-1
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage loans
divided into two groups, Group I and Group II (collectively, the "Loans").
The Loans in Group I are secured by first or second liens on one- to
four-family residential properties. The Loans in Group II are secured by
first liens on one- to four-family residential properties.
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as
set forth herein. Accordingly, the Certificate Balance at any time may be less
than the Certificate Balance as set forth herein. This Certificate does not
evidence an obligation of, or an interest in, and is not guaranteed by the
Depositor, the Sellers, the Servicer or the Trustee referred to below or any of
their respective affiliates. Neither this Certificate nor the Loans are
guaranteed or insured by any governmental agency or instrumentality.
This certifies that ______________________ is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, Equity One, Inc.
(DE), Equity One, Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer
Loan Company, Inc. (NH) and Popular Financial Services, LLC (DE), as sellers (in
such capacity, collectively, the "Sellers"), Equity One, Inc. (DE) as servicer
(in such capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Any proposed transfer of this Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
A-3-2
EXHIBIT A-3
Form of Class M-[] Certificate
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS M-[] CERTIFICATE IS SUBORDINATE TO THE [LIST SENIOR CERTIFICATES AND
CLASS M-[] CERTIFICATES] OF THIS SERIES TO THE EXTENT DESCRIBED HEREIN AND IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Certificate No. :
Cut-off Date: : September 30, 2002
First Distribution Date: : November 25, 2002
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
CUSIP :
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
Class M-[]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage loans
divided into two groups, Group I and Group II (collectively, the "Loans").
The Loans in Group I are secured by first or second liens on one- to
four-family residential properties. The Loans in Group II are secured by
first liens on one- to four-family residential properties.
Equity One ABS, Inc., as Depositor
A-3-3
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies _______________________ that is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, Equity One, Inc.
(DE), Equity One, Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer
Loan Company, Inc. (NH) and Popular Financial Services, LLC (DE), as sellers (in
such capacity, collectively, the "Sellers"), Equity One, Inc. (DE) as servicer
(in such capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
A-3-4
EXHIBIT A-4
Form of Class B Certificate
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
THIS CLASS B CERTIFICATE IS SUBORDINATE TO THE [LIST SENIOR CERTIFICATES, THE
CLASS M-1 CERTIFICATES AND THE CLASS M-2 CERTIFICATES] OF THIS SERIES TO THE
EXTENT DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Certificate No. :
Cut-off Date: : September 30, 2002
First Distribution Date: : November 25, 2002
Initial Certificate Balance
of this Certificate
("Denomination") : $
Initial Class Certificate Balance
of all Certificates of
this Class: : $
CUSIP :
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
Class B
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a Trust Fund
consisting primarily of a pool of fixed and adjustable rate mortgage loans
divided into two groups, Group I and Group II (collectively, the "Loans").
The Loans in Group I are secured by first or second liens on one- to
four-family residential properties. The Loans in Group II are secured by
first liens on one- to four-family residential properties.
A-4-1
Equity One ABS, Inc., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Certificate Balance at any time may be less than
the Certificate Balance as set forth herein. This Certificate does not evidence
an obligation of, or an interest in, and is not guaranteed by the Depositor, the
Sellers, the Servicer or the Trustee referred to below or any of their
respective affiliates. Neither this Certificate nor the Loans are guaranteed or
insured by any governmental agency or instrumentality.
This certifies that ____________________________ is the registered owner of
the Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate Initial Certificate Balances
of all Certificates of the Class to which this Certificate belongs) in certain
monthly distributions with respect to a Trust Fund consisting primarily of the
Loans deposited by Equity One ABS, Inc. (the "Depositor"). The Trust Fund was
created pursuant to a Pooling and Servicing Agreement dated as of the Cut-off
Date specified above (the "Agreement") among the Depositor, Equity One, Inc.
(DE), Equity One, Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer
Loan Company, Inc. (NH) and Popular Financial Services, LLC (DE), as sellers (in
such capacity, collectively, the "Sellers"), Equity One, Inc. (DE) as servicer
(in such capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
A-4-2
EXHIBIT B-1
Form of Class R Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN THREE "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
PROPOSED TRANSFEREE DELIVERS TO THE TRUSTEE A TRANSFER AFFIDAVIT IN ACCORDANCE
WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
[THIS CERTIFICATE REPRESENTS THE "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE AGREEMENT REFERRED TO BELOW AND MAY NOT BE TRANSFERRED TO ANY PERSON
EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE TRANSFEREE OF THE DUTIES OF THE
SERVICER UNDER SUCH AGREEMENT.]
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER A REPRESENTATION LETTER TO THE EFFECT
THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT TO SECTION
4975 OF THE CODE, OR AN OPINION OF COUNSEL IN ACCORDANCE WITH THE PROVISIONS OF
THE AGREEMENT REFERRED TO HEREIN. NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY
HEREIN, ANY PURPORTED TRANSFER OF THIS CERTIFICATE TO OR ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR TO THE CODE WITHOUT THE OPINION OF
COUNSEL SATISFACTORY TO THE TRUSTEE AS DESCRIBED ABOVE SHALL BE VOID AND OF NO
EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
B-1-1
Certificate No. :
Cut-off Date : September 30, 2002
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
evidencing the distributions allocable to the Class R Certificates with
respect to a Trust Fund consisting primarily of a pool of fixed and
adjustable rate mortgage loans divided into two groups, Group I and Group
II (collectively, the "Loans"). The Loans in Group I are secured by first
or second liens on one- to four-family residential properties. The Loans in
Group II are secured by first liens on one- to four-family residential
properties.
Equity One ABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Sellers, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Loans are guaranteed or insured by any governmental agency
or instrumentality.
This certifies that __________________________ is the registered owner of
the Percentage Interest (set forth on the face hereof) in certain monthly
distributions with respect to a Trust Fund consisting of the Loans deposited by
Equity One ABS, Inc. (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement") among the Depositor, Equity One, Inc. (DE), Equity One,
Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer Loan Company, Inc.
(NH) and Popular Financial Services, LLC (DE), as sellers (in such capacity,
collectively, the "Sellers") and Equity One, Inc. (DE) as servicer (in such
capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Any distribution of the proceeds of any remaining assets of the Trust Fund
will be made only upon presentment and surrender of this Class R Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
New York, New York.
Any proposed transfer of a Class R Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
No transfer of a Class R Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer or (ii) in the case of any such Class R
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to the effect that the purchase or holding of such Class R
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an
B-1-2
expense of the Trustee or the Servicer. Notwithstanding anything else to the
contrary herein, any purported transfer of a Class R Certificate to or on behalf
of an employee benefit plan subject to ERISA or to the Code without the opinion
of counsel satisfactory to the Trustee as described above shall be void and of
no effect.
Each Holder of this Class R Certificate will be deemed to have agreed to be
bound by the restrictions of the Agreement, including but not limited to the
restrictions that (i) each person holding or acquiring any Ownership Interest in
this Class R Certificate must be a Permitted Transferee, (ii) no Ownership
Interest in this Class R Certificate may be transferred without delivery to the
Trustee of (a) a transfer affidavit of the proposed transferee and (b) a
transfer certificate of the transferor, each of such documents to be in the form
described in the Agreement, (iii) each person holding or acquiring any Ownership
Interest in this Class R Certificate must agree to require a transfer affidavit
and to deliver a transfer certificate to the Trustee as required pursuant to the
Agreement, (iv) each person holding or acquiring an Ownership Interest in this
Class R Certificate must agree not to transfer an Ownership Interest in this
Class R Certificate if it has actual knowledge that the proposed transferee is
not a Permitted Transferee and (v) any attempted or purported transfer of any
Ownership Interest in this Class R Certificate in violation of such restrictions
will be absolutely null and void and will vest no rights in the purported
transferee.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
B-1-3
EXHIBIT B-2
Form of Class X Certificate
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
NEITHER THIS CERTIFICATE NOR ANY INTEREST HEREIN MAY BE TRANSFERRED UNLESS THE
TRANSFEREE DELIVERS TO THE TRUSTEE EITHER (I) A REPRESENTATION LETTER TO THE
EFFECT THAT SUCH TRANSFEREE IS NOT AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR A PLAN SUBJECT
TO SECTION 4975 OF THE CODE, OR (II) IF THIS CERTIFICATE HAS BEEN THE SUBJECT OF
AN ERISA QUALIFYING UNDERWRITING, A REPRESENTATION THAT THE TRANSFEREE IS
PURCHASING SUCH CERTIFICATE WITH FUNDS CONTAINED IN AN "INSURANCE COMPANY
GENERAL ACCOUNT", AS DEFINED IN PROHIBITED TRANSACTION CLASS EXEMPTION 95-60
("PTCE 95-60") AND THAT THE PURCHASE AND HOLDING OF SUCH CERTIFICATES ARE
COVERED UNDER SECTIONS I AND III OF PTCE 95-60, OR (III) AN OPINION OF COUNSEL
IN ACCORDANCE WITH THE PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY HEREIN, ANY PURPORTED TRANSFER OF
THIS CERTIFICATE TO OR ON BEHALF OF AN EMPLOYEE BENEFIT PLAN SUBJECT TO ERISA OR
TO THE CODE WITHOUT THE OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AS
DESCRIBED ABOVE SHALL BE VOID AND OF NO EFFECT.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
B-2-1
Certificate No. : 1
Cut-off Date : September 30, 2002
Percentage Interest : __.__%
Equity One ABS, Inc.
Mortgage Pass-Through Certificates, Series 2002-5
evidencing the distributions allocable to the Class X Certificates with
respect to a Trust Fund consisting primarily of a pool of fixed and
adjustable rate mortgage loans divided into two groups, Group I and Group
II (collectively, the "Loans"). The Loans in Group I are secured by first
or second liens on one- to four-family residential properties. The Loans in
Group II are secured by first liens on one- to four-family residential
properties.
Equity One ABS, Inc., as Depositor
This Certificate does not evidence an obligation of, or an interest in, and
is not guaranteed by the Depositor, the Sellers, the Servicer or the Trustee
referred to below or any of their respective affiliates. Neither this
Certificate nor the Loans are guaranteed or insured by any governmental agency
or instrumentality.
This certifies that Equity One ABS, Inc. is the registered owner of the
Percentage Interest (set forth on the face hereof) in certain monthly
distributions with respect to a Trust Fund consisting of the Loans deposited by
Equity One ABS, Inc. (the "Depositor"). The Trust Fund was created pursuant to a
Pooling and Servicing Agreement dated as of the Cut-off Date specified above
(the "Agreement") among the Depositor, Equity One, Inc. (DE), Equity One,
Incorporated (PA), Equity One, Inc. (MN), Equity One Consumer Loan Company, Inc.
(NH) and Popular Financial Services, LLC (DE), as sellers (in such capacity,
collectively, the "Sellers") and Equity One, Inc. (DE), as servicer (in such
capacity, the "Servicer"), and JPMorgan Chase Bank, as trustee (the "Trustee").
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
No transfer of a Class X Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the
Trustee, to the effect that such transferee is not an employee benefit plan
subject to Section 406 of ERISA or Section 4975 of the Code, nor a person acting
on behalf of any such plan, which representation letter shall not be an expense
of the Trustee or the Servicer, (ii) if the Class X Certificate has been the
subject of an ERISA Qualifying Underwriting and the transferee is an insurance
company, a representation that the transferee is an insurance company which is
purchasing such Certificate with funds contained in an "insurance company
general account", as defined in Prohibited Transaction Class Exemption 95-60
("PTCE 95-60") and that the purchase and holding of the Certificate is covered
under Sections I and III of PTCE 95-60 or (iii) in the case of any such Class X
Certificate presented for registration in the name of an employee benefit plan
subject to ERISA, or Section 4975 of the Code (or comparable provisions of any
subsequent enactment), or a trustee of any such plan or any other person acting
on behalf of any such plan, an Opinion of Counsel satisfactory to the Trustee
and the Servicer to the effect that the purchase or holding of such Class X
Certificate will not result in the assets of the Trust Fund being deemed to be
"plan assets" and subject to the prohibited transaction provisions of ERISA and
the Code and will not subject the Trustee or the Servicer to any obligation in
addition to those undertaken in the Agreement, which Opinion of Counsel shall
not be an expense of the Trustee or the Servicer.
B-2-2
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class X Certificate to or on behalf of an employee benefit plan subject to
ERISA or to the Code without the opinion of counsel satisfactory to the Trustee
as described above shall be void and of no effect.
Any distribution of the proceeds of any remaining assets of the Trust Fund
will be made only upon presentment and surrender of this Class X Certificate at
the Corporate Trust Office or the office or agency maintained by the Trustee in
New York, New York.
Any proposed transfer of this Certificate shall be subject to the
restrictions on transfer described in Section 5.02 of the Agreement.
Reference is hereby made to the further provisions of this Certificate set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
This Certificate shall not be entitled to any benefit under the Agreement
or be valid for any purpose unless manually countersigned by an authorized
signatory of the Trustee.
* * *
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated_______________, 20__ JPMorgan Chase Bank,
as Trustee
Countersigned:
By:_____________________________ By:_________________________________
Authorized Signatory of
JPMorgan Chase Bank,
as Trustee
B-2-3
EXHIBIT C
Form of Reverse of Certificates
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
This Certificate is one of a duly authorized issue of Certificates
designated as Equity One ABS, Inc. Mortgage Pass-Through Certificates, of the
Series specified on the face hereof (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
Fund created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
25th day of each month or, if such 25th day is not a Business Day, the Business
Day immediately following (the "Distribution Date"), commencing on the first
Distribution Date specified on the face hereof, to the Person in whose name this
Certificate is registered at the close of business on the applicable Record Date
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to Holders of Certificates
of the Class to which this Certificate belongs on such Distribution Date
pursuant to the Agreement.
Distributions on this Certificate shall be made by wire transfer of
immediately available funds to the account of the Holder hereof at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
shall have so notified the Trustee in writing at least five Business Days prior
to the related Record Date and such Certificateholder shall satisfy the
conditions to receive such form of payment set forth in the Agreement, or, if
not, by check mailed by first class mail 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 Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Depositor, the Servicer and the Trustee with the consent of the Holders
of Certificates affected by such amendment evidencing the requisite Percentage
Interest, as provided in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the Corporate Trust Office or the office or agency maintained by the
Trustee
C-1
in New York, New York, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of the same Class in authorized
denominations and evidencing the same aggregate Percentage Interest in the Trust
Fund will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Depositor, the Servicer, the Sellers and the Trustee and any agent of
the Depositor or the Trustee may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Depositor,
the Trustee, nor any such agent shall be affected by any notice to the contrary.
On any Distribution Date on which the Pool Principal Balance is less than
10% of the Cut-off Date Pool Principal Balance, the Servicer will have the
option to repurchase, in whole, from the Trust Fund all remaining Loans and all
property acquired in respect of the Loans at a purchase price determined as
provided in the Agreement. In the event that no such optional termination
occurs, the obligations and responsibilities created by the Agreement will
terminate upon the later of the maturity or other liquidation (or any advance
with respect thereto) of the last Loan remaining in the Trust Fund or the
disposition of all property in respect thereof and the distribution to
Certificateholders of all amounts required to be distributed pursuant to the
Agreement. In no event, however, will the trust created by the Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living at the date of the Agreement of a certain person named
in the Agreement.
Any term used herein that is defined in the Agreement shall have the
meaning assigned in the Agreement, and nothing herein shall be deemed
inconsistent with that meaning.
C-2
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust Fund.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
________________________________________
Signature by or on behalf of assignor
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to _____________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
for the account of _____________________________________________________________
account number ____________________ or, if mailed by check, to ________________.
Applicable statements should be mailed to ______________________________________
This information is provided by ________________________________________________
the assignee named above, or ___________________________________________________
_______________________________________________________________________________,
as its agent.
C-3
EXHIBIT D
Form of Initial Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Sellers]
[Freddie Mac]
_____________________
_____________________
Re: Pooling and Servicing Agreement among Equity One ABS, Inc., as
Depositor, Equity One, Inc. (DE), Equity One, Incorporated, (PA),
Equity One, Inc. (MN), Equity One Consumer Loan Company, Inc.
(NH) and Popular Financial Services, LLC (DE) as Sellers, Equity
One, Inc. (DE) as Servicer, JPMorgan Chase Bank, as Trustee, and
Federal Home Loan Mortgage Corporation, as guarantor, Mortgage
Pass-Through Certificates, Series 2002-5
-----------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that, as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached schedule) it has
received the original Mortgage Note or an executed Affidavit of Lost Note in the
form attached hereto as Annex I, and confirms that, for all Mortgage Notes
received, the name on the Mortgage Note matches that on the Loan Schedule,
except as set forth on the Exception Report attached hereto.
Based on its review and examination and only as to the foregoing documents,
such documents appear regular on their face and related to such Loan.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
JPMorgan Chase Bank,
as Trustee
By:_____________________________________
Name:
Title:
D-1
Annex I
AFFIDAVIT OF LOST NOTE
----------------------
COMMONWEALTH OF PENNSYLVANIA :
: SS
COUNTY OF PHILADELPHIA :
The undersigned, being duly sworn, deposes and says that:
1. ___________________, a __________________ corporation (the
"Holder") is the owner of a note dated ___________________ of _________________,
in the principal amount of $_______________ (the "Note").
2. The Holder has not pledged or disposed of the Note in any manner
whatsoever to any person nor given any person authority to transfer or pledge
the same.
3. The Holder does not know of the whereabouts of the Note and
believes the Note has been lost or destroyed.
4. The Holder makes this affidavit to JPMorgan Chase Bank ("Trustee")
in order to induce the Trustee to issue its initial certification pursuant to
Section 2.02 of the Pooling and Servicing Agreement dated as of September 30,
2002 among the Trustee, the Holder and the other parties set forth therein,
without an exception therefrom.
5. The Holder and its successors and assigns shall at all time
indemnify and save harmless the Trustee against all loss or damage it might
suffer by reason of the issuance and delivery of a replacement note for the
Note, including all cost, charges, expenses and claims of every kind and nature.
6. If the Note shall be found the Holder shall promptly deliver the
same to the Trustee in order that it may be cancelled.
7. The undersigned is duly authorized to execute this Affidavit on
behalf of the Holder.
Date:_______________________________ [SELLER]
____________________________________ By:_____________________________
Witness Name:
Title:
D-2
EXHIBIT E
Form of Final Certification Of Trustee
[date]
[Depositor]
[Servicer]
[Seller]
[Freddie Mac]
_____________________
_____________________
Re: Pooling and Servicing Agreement among Equity One ABS, Inc.,
as Depositor, Equity One, Inc. (DE), Equity One,
Incorporated, (PA), Equity One, Inc. (MN), Equity One
Consumer Loan Company, Inc. (NH) and Popular Financial
Services, LLC (DE) as Sellers and Equity One, Inc. (DE) as
Servicer, JPMorgan Chase Bank, as Trustee, and Federal Home
Loan Mortgage Corporation, as guarantor, Mortgage
Pass-Through Certificates, Series 2002-5
------------------------------------------------------------
Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), the undersigned, as
Trustee, hereby certifies that as to each Loan listed in the Loan Schedule
(other than any Loan paid in full or listed on the attached Document Exception
Report), except as set forth on the Exception Report attached hereto, it has
received:
(i) the original Mortgage Note and confirms that the name on the
Mortgage Note matches that on the Loan Schedule;
(ii) the original recorded Mortgage (unless such Mortgage has not yet
been returned by the relevant recording office, as certified by the Depositor;
(iii) the original recorded assignment of the Mortgage in the form
provided in Section 2.01(c) of the Pooling and Servicing Agreement;
(iv) the original or duplicate original recorded assignment or
assignments of the Mortgage necessary to show a complete chain of assignment
from the originator to the Seller, unless the Depositor has certified that the
related assignment has not been returned from the applicable recording office;
and
(v) the original or duplicate original lender's title policy and all
riders thereto or, any one of an original title binder, an original preliminary
title report or an original title commitment, or a copy thereof certified by the
title company, unless the Depositor has certified that such title policy has not
yet been received from the applicable title insurance company.
E-1
Based on its review and examination and only as to the foregoing
documents, (a) such documents appear regular on their face and related to such
Loan, and (b) the information set forth in items (c), (d), (e) and (i) of the
definition of the "Loan Schedule" in Article I of the Pooling and Servicing
Agreement accurately reflects information set forth in the Mortgage File.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Loans identified on the
Loan Schedule, or (ii) the collectibility, insurability, effectiveness or
suitability of any such Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
JPMorgan Chase Bank,
as Trustee
By:_____________________________________
Name:
Title:
E-2
EXHIBIT F
Form of Transfer Affidavit
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
STATE OF )
) ss:
COUNTY OF )
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned is an officer of , the proposed Transferee of an
Ownership Interest in a Class R Certificate (the "Certificate") issued pursuant
to the Pooling and Servicing Agreement, (the "Agreement"), relating to the
above-referenced Series, by and among Equity One ABS, Inc., as depositor (the
"Depositor"), Equity One, Inc. (DE), Equity One, Incorporated, (PA), Equity One,
Inc. (MN), Equity One Consumer Loan Company, Inc. (NH) and Popular Financial
Services, LLC (DE), as sellers, Equity One, Inc. (DE) as servicer and JPMorgan
Chase Bank, as Trustee. Capitalized terms used, but not defined herein or in
Exhibit 1 hereto, shall have the meanings ascribed to such terms in the
Agreement. The Transferee has authorized the undersigned to make this affidavit
on behalf of the Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the date of
the Transfer, a Permitted Transferee. The Transferee is acquiring its Ownership
Interest in the Certificate for its own account. The Transferee has no knowledge
that any such affidavit is false.
3. The Transferee acknowledges that it understands that as the holder of
the residual interest, the Transferee may incur tax liabilities in excess of any
cash flows the residual interest generates and the Transferee intends to pay any
taxes associated with its holding the residual interest as those taxes become
due.
4. The Transferee represents that the conditions specified in either or
both of subparagraph (a) and (b) of this paragraph are satisfied:
(a) The requirements of this subparagraph (a) will be met if: the
present value of the anticipated tax liabilities associated with holding the
residual interest does not exceed the sum of: (i) the present value of any
consideration given to the Transferee to acquire the interest, (ii) the present
value of the expected future distributions on the interest, and (iii) the
present value of the anticipated tax savings associated with holding the
interest as the REMIC generates losses. For purposes of this subparagraph (a),
the Transferee is assumed to pay tax at a rate equal to the highest rate of tax
specified in section 11(b)(1) of the Code, and present values are computed using
a discount rate equal to the applicable federal rate prescribed by section
1274(d) of the Code, compounded semiannually, or such other rate that the
Transferee can demonstrate it borrows substantial funds at in the course of its
trade or business from unrelated third parties.
(b) The requirements of this subparagraph (b) will be met if: (i) at
the time of the transfer, and at the close of each of the Transferee's two
fiscal years preceding the year of transfer the Transferee's
F-2
gross assets for financial reporting purposes exceed $100 million and its net
assets for financial reporting purposes exceed $10 million, (ii) The Transferee
is an eligible corporation (within the meaning of section 860L(a)(2) of the
Code), (iii) The Transferee is not a foreign branch of an eligible corporation
or any other arrangement by which the Residual interest will at any time be
subject to net tax by a foreign country or possession of the United States, (iv)
The Transferee agrees, in executing this Certificate that any subsequent
transfer of the Residual interest will be to another eligible corporation in a
"qualifying transaction," and (v) the Transferee has not indicated to, nor
provided to the Transferor any grounds to believe that, the Transferee will not
pay the taxes associated with the residual interest. For purposes of applying
this subparagraph (b), the Transferee's gross assets and net assets do not
include any obligation of any person related to the Transferee within the
meaning of section 860L(g) of the Code, or any other asset if a principal
purpose for holding or acquiring the asset is to permit the Transferee to
satisfy the requirements of this subparagraph (b), and a "qualifying
transaction" is a transaction that satisfies the requirements of ss.4 of Rev.
Proc. 2001-12, 2001-3 I.R.B. 35.
5. The Transferee has been advised of, and understands that (i) a tax will
be imposed on Transfers of the Certificate to Persons that are not Permitted
Transferees; (ii) such tax will be imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of Transfer, such Person
does not have actual knowledge that the affidavit is false.
6. The Transferee has been advised of, and understands that a tax will be
imposed on a "pass-through entity" holding the Certificate if at any time during
the taxable year of the pass-through entity a Person that is not a Permitted
Transferee is the record holder of an interest in such entity. The Transferee
understands that such tax will not be imposed for any period with respect to
which the record holder furnishes to the pass-through entity an affidavit that
such record holder is a Permitted Transferee and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as a nominee for another
Person.)
7. The Transferee has reviewed the provisions of Section 5.02(c) of the
Agreement (attached hereto as Exhibit 2 and incorporated herein by reference)
and understands the legal consequences of the acquisition of an Ownership
Interest in the Certificate including, without limitation, the restrictions on
subsequent Transfers and the provisions regarding voiding the Transfer and
mandatory sales. The Transferee expressly agrees to be bound by and to abide by
the provisions of Section 5.02(c) of the Agreement and the restrictions noted on
the face of the Certificate. The Transferee understands and agrees that any
breach of any of the representations included herein shall render the Transfer
to the Transferee contemplated hereby null and void.
8. The Transferee agrees to require a Transfer Affidavit from any Person to
whom the Transferee attempts to Transfer its Ownership Interest in the
Certificate, and in connection with any Transfer by a Person for whom the
Transferee is acting as nominee, trustee or agent, and the Transferee will not
Transfer its Ownership Interest or cause any Ownership Interest to be
Transferred to any Person that the Transferee knows is not a Permitted
Transferee. In connection with any such Transfer by the Transferee, the
Transferee agrees to deliver to the Trustee a certificate substantially in the
form set forth as Exhibit G to the Agreement (a "Transferor Certificate") to the
effect that such Transferee has no actual knowledge that the Person to which the
Transfer is to be made is not a Permitted Transferee.
F-2
9. The Transferee does not have the intention to impede the assessment or
collection of any tax legally required to be paid with respect to the
Certificate.
10. The Transferee's taxpayer identification number is __________.
11. The Transferee is a U.S. Person as defined in Code Section 7701(a)(30).
12. The Transferee is aware that the Certificate may be a "noneconomic
residual interest" within the meaning of proposed Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
13. The Transferee is not an employee benefit plan that is subject to ERISA
or a plan or arrangement that is subject to Section 4975 of the Code, and the
Transferee is not acting on behalf of such a plan or arrangement or using the
assets of any such plan or arrangement to effect the transfer.
14. The Transferee has provided financial statements or other financial
information requested by the transferor in connection with the transfer of the
Class R Certificates to permit the transferor to assess the financial capability
of the Transferee to pay any such taxes.
* * *
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
duly authorized officer and its corporate seal to be hereunto affixed, duly
attested, this _____ day of _________________, 20__.
________________________________________
PRINT NAME OF TRANSFEREE
By:_____________________________________
Name:___________________________________
Title:__________________________________
[Corporate Seal]
ATTEST:
_________________________________
[Assistant] Secretary
Personally appeared before me the above-named ________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ______________________ of the Transferee, and acknowledged that he
executed the same as his free act and deed and the free act and deed of the
Transferee.
Subscribed and sworn before me this _____ day of _______________, 20__.
________________________________________
NOTARY PUBLIC
My Commission expires the ___ day of
_______________, 20__.
F-3
EXHIBIT 1
to EXHIBIT F
Certain Definitions
-------------------
"Ownership Interest": As to any Class R Certificate, any ownership 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.
"Permitted Transferee": Any person other than (a) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (b) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (c) 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)(l) of the Code) with respect to
any Class R Certificate, (d) rural electric and telephone cooperatives described
in section 1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or
resident of the United States, (ii) a corporation or partnership (or other
entity properly treated as a corporation or partnership for U.S. federal income
tax purposes) created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate whose income from sources
without the United States is includible in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or (iv) a trust if a court within
the United States is able to exercise primary supervision over the
administration of the trust and one or more United States Persons have authority
to control all substantial decisions of the trust, unless such Person listed in
clause (i), (ii), (iii) or (iv) above has furnished the transferor and the
Trustee with a duly completed Internal Revenue Service Form W-8ECI and (f) any
other Person so designated by the Depositor based upon an Opinion of Counsel
that the Transfer of an Ownership Interest in a Class R Certificate to such
Person may cause any REMIC hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding. 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 the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such government unit.
"Person": Any individual, corporation, partnership, joint venture, bank,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate, including the acquisition of a Certificate by the
Depositor.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
F-4
EXHIBIT 2
to EXHIBIT F
Section 5.02(c) of the Agreement
--------------------------------
(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
the rights of each Person acquiring any Ownership Interest in a Class R
Certificate are expressly subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Trustee shall not register the Transfer of any Class R Certificate
unless, in addition to the certificates required to be delivered to
the Trustee under subparagraph (b) above, the Trustee shall have been
furnished with an affidavit (a "Transfer Affidavit") of the initial
owner or the proposed transferee in the form attached hereto as
Exhibit F.
(iii) Each Person holding or acquiring any Ownership
Interest in a Class R Certificate shall agree (A) to obtain a Transfer
Affidavit from any other Person to whom such Person attempts to
Transfer its Ownership Interest in a Class R Certificate, (B) to
obtain a Transfer Affidavit from any Person for whom such Person is
acting as nominee, trustee or agent in connection with any Transfer of
a Class R Certificate and (C) not to Transfer its Ownership Interest
in a Class R Certificate or to cause the Transfer of an Ownership
Interest in a Class R Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of 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 or for making any payments due on such
Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of this Agreement so long
as the Transfer was registered after receipt of the related Transfer
Affidavit, Transferor Certificate and either the Rule 144A Letter or
the Investment Letter. The Trustee shall be entitled but not obligated
to recover from any Holder of a Class R Certificate that was in fact
not a Permitted Transferee at the time it became a Holder or, at such
subsequent time as it became other than a Permitted Transferee, all
payments made on such Class R Certificate at and after either such
time. Any such payments so recovered by the Trustee shall be paid and
delivered by the Trustee to the last preceding Permitted Transferee of
such Certificate.
F-5
(v) The Depositor shall use its best efforts to make
available, upon receipt of written request from the Trustee, all
information necessary to compute any tax imposed under Section 860E(e)
of the Code as a result of a Transfer of an Ownership Interest in a
Class R Certificate to any Holder who is not a Permitted Transferee.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Trustee of an Opinion of Counsel, which Opinion
of Counsel shall not be an expense of the Trust Fund, the Trustee, the Sellers
or the Servicer, to the effect that the elimination of such restrictions will
not cause the Trust Fund hereunder to fail to qualify as one or more REMICs at
any time that the Certificates are outstanding or result in the imposition of
any tax on the Trust Fund, a Certificateholder or another Person. Each Person
holding or acquiring any Ownership Interest in a Class R Certificate hereby
consents to any amendment of this Agreement which, based on an Opinion of
Counsel furnished to the Trustee, is reasonably necessary (A) to ensure that the
record ownership of, or any beneficial interest in, a Class R Certificate is not
transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (B) to provide for a means to compel the Transfer of a Class R
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.
F-6
EXHIBIT G
Form of Transferor Certificate
________________________
Date
Equity One ABS, Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Attention:___________________________
JPMorgan Chase Bank
_______________________________
_______________________________
Attention:_____________________
_____________________
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series
2002-5, Class ,
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our disposition of the above Certificates we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action which would result in, a violation of Section 5 of the Act and
(c) to the extent we are disposing of a Class R Certificate, we have no
knowledge the Transferee is not a Permitted Transferee.
Very truly yours,
________________________________________
Print Name of Transferor
By:_____________________________________
Authorized Officer
G-1
EXHIBIT H
Form of Investment Letter (Non Rule 144A)
________________________
Date
Equity One ABS, Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Attention:___________________________
JPMorgan Chase Bank
_______________________________
_______________________________
Attention:_____________________
_____________________
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series
2002-5, Class ,
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we are an
"accredited investor," as defined in Regulation D under the Act, and have such
knowledge and experience in financial and business matters that we are capable
of evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement, nor are we using the assets of any such plan or
arrangement to effect such acquisition, or (ii) we are an insurance company and
are purchasing Certificates, other than the Class R Certificates, that have been
the subject of an ERISA Qualifying Underwriting, we are purchasing the
Certificates with funds contained in an "insurance company general account", as
defined in Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and the
purchasing and holding of such Certificates are covered by Sections I and III of
PTCE 95-60, (e) we are acquiring the Certificates for investment for our own
account and not with a view to any distribution of such Certificates (but
without prejudice to our right at all times to sell or otherwise dispose of the
Certificates in accordance with clause (g) below), (f) we have not offered or
sold any Certificates to, or solicited offers to buy any Certificates from, any
person, or otherwise approached or negotiated with any person with respect
thereto, or taken any other action which would result in a violation of Section
5 of the Act, and (g) we will not sell, transfer or otherwise dispose of any
Certificates unless (1) such sale, transfer or other disposition is made
pursuant to
H-1
an effective registration statement under the Act or is exempt from such
registration requirements, and if requested, we will at our expense provide an
opinion of counsel satisfactory to the addressees of this Certificate that such
sale, transfer or other disposition may be made pursuant to an exemption from
the Act, (2) the purchaser or transferee of such Certificate has executed and
delivered to you a certificate to substantially the same effect as this
certificate, and (3) the purchaser or transferee has otherwise complied with any
conditions for transfer set forth in the Pooling and Servicing Agreement.
Very truly yours,
________________________________________
Print Name of Transferee
By:_____________________________________
Authorized Officer
H-2
EXHIBIT I
Form of Rule 144A Letter
________________________
Date
Equity One ABS, Inc.
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
Attention:___________________________
JPMorgan Chase Bank
_______________________________
_______________________________
Attention:_____________________
_____________________
Re: Equity One ABS, Inc. Mortgage Pass-Through Certificates, Series
2002-5, Class ,
-----------------------------------------------------------------
Ladies and Gentlemen:
In connection with our acquisition of the above Certificates we
certify that (a) we understand that the Certificates are not being registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities laws and are being transferred to us in a transaction that is exempt
from the registration requirements of the Act and any such laws, (b) we have
such knowledge and experience in financial and business matters that we are
capable of evaluating the merits and risks of investments in the Certificates,
(c) we have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Certificates and all matters relating
thereto or any additional information deemed necessary to our decision to
purchase the Certificates, (d) either (i) we are not an employee benefit plan
that is subject to the Employee Retirement Income Security Act of 1974, as
amended, or a plan or arrangement that is subject to Section 4975 of the
Internal Revenue Code of 1986, as amended, nor are we acting on behalf of any
such plan or arrangement, nor are we using the assets of any such plan or
arrangement to effect such acquisition, or (ii) we are an insurance company and
are purchasing Certificates, other than the Class R Certificates, that have been
the subject of an ERISA Qualifying Underwriting, we are purchasing the
Certificates with funds contained in an "insurance company general account", as
defined in Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60") and the
purchasing and holding of such Certificates are covered by Sections I and III of
PTCE 95-60, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited any
offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, that would constitute a
distribution of the Certificates under the Act or that would render the
disposition of the Certificates a violation of Section 5 of the Act or require
registration pursuant thereto, nor will act, nor has authorized or will
authorize any person to act, in such manner with respect to the Certificates,
and (f) we are a "qualified institutional buyer" as that term is defined in Rule
144A under the Act and have completed either of the forms of certification to
that effect attached hereto as Annex 1 or Annex 2. We
I-1
are aware that the sale to us is being made in reliance on Rule 144A. We are
acquiring the Certificates for our own account or for resale pursuant to Rule
144A and further, understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Act.
I-2
ANNEX 1 TO EXHIBIT I
- --------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the parties
listed in the Rule 144A Transferee Certificate to which this certification
relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief Financial
Officer, Senior Vice President or other executive officer of the Buyer.
2. In connection with purchases by the Buyer, the Buyer is a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned and/or
invested on a discretionary basis either at least $100,000,000 in securities or,
if Buyer is a dealer, Buyer must own and/or invest on a discretionary basis at
least $10,000,000 in securities (except for the excluded securities referred to
below) as of the end of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A and (ii) the Buyer satisfies the
criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts or
similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986,
as amended.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is attached
hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead association
or similar institution, which is supervised and examined by a State or
Federal authority having supervision over any such institutions or is
a foreign savings and loan association or equivalent institution and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, a copy of which is attached
hereto.
___ Broker-dealer. The Buyer is a dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
___ Insurance Company. The Buyer is an insurance company whose primary and
predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State, territory or the District of Columbia.
___ State or Local Plan. The Buyer is a plan established and maintained by
a State, its political subdivisions, or any agency or instrumentality
of the State or its political subdivisions, for the benefit of its
employees.
I-3
___ ERISA Plan. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ Investment Advisor. The Buyer is an investment advisor registered
under the Investment Advisors Act of 1940.
___ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business Investment Act of
1958.
___ Business Development Company. Buyer is a business development company
as defined in Section 202(a) (22) of the Investment Advisors Act of
1940.
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Buyer, (ii) securities that are part of an
unsold allotment to or subscription by the Buyer, if the Buyer is a dealer,
(iii) securities issued or guaranteed by the U.S. or any instrumentality
thereof, (iv) bank deposit notes and certificates of deposit, (v) loan
participations, (vi) repurchase agreements, (vii) securities owned but subject
to a repurchase agreement and (viii) currency, interest rate and commodity
swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer will
notify each of the parties to which this certification is made of any changes in
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan is provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
________________________________________
Print Name of Buyer
By:_____________________________________
Name:
Title:
Date:___________________________________
I-4
ANNEX 2 TO EXHIBIT I
- --------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
___ The Buyer owned $_____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
___ The Buyer is part of a Family of Investment Companies which owned
in the aggregate $_____ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance
with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and under-stands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the Rule 144A Transferee Certificate to which
this certification relates of any changes in
I-5
the information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
________________________________________
Print Name of Buyer
By:_____________________________________
Name:
Title:
IF AN ADVISER:
________________________________________
Print Name of Buyer
Date:___________________________________
I-6
EXHIBIT J
Form of Request for Release of Documents
Equity One ABS, Inc.
Mortgage Pass-Through Certificates
Series 2002-5
To:____________________________ Attn:___________________________________
________________________________________
Re: The Pooling & Servicing Agreement dated as of September 30, 2002 among
Equity One, Inc. (DE), Equity One, Incorporated, (PA), Equity One,
Inc. (MN), Equity One Consumer Loan Company, Inc. (NH) and Popular
Financial Services, LLC (DE), as Sellers, Equity One, Inc. (DE) as
Servicer, and Equity One ABS, Inc. as Depositor and JPMorgan Chase
Bank as Trustee
----------------------------------------------------------------------
Ladies and Gentlemen:
In connection with the administration of the Loans held by you as Trustee
for Equity One ABS, Inc., we request the release of the Mortgage File for the
Loan(s) described below, for the reason indicated.
FT Account #: Pool #:
Mortgagor's Name, Address and Zip Code:
Loan Number:
Reason for Requesting Documents (check one)
1. Loan paid in full (_______________________ hereby certifies that all
amounts have been received.)
2. Loan Liquidated (___________________________ hereby certifies that all
proceeds of foreclosure, insurance, or other liquidation have been
finally received.)
3. Loan in Foreclosure.
4. Other (explain):
The Documents and any proceeds thereof, including any proceeds of proceeds,
coming into the possession or control of the Servicer shall be deposited into
the Certificate Account, and the Servicer shall keep the Documents and any
proceeds separate and distinct from all other property in the Servicer's
possession, custody or control.
J-1
If item 1 or 2 above is checked, and if all or part of the Mortgage File
was previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above-specified Loan. If item 3 or 4 is checked, upon return of all of the above
documents to you as Trustee, please acknowledge your receipt by signing in the
space indicated below, and returning this form.
________________________________
________________________________
________________________________
By:________________________________
Name::_____________________________
Title::____________________________
Date::_____________________________
TRUSTEE CONSENT TO RELEASE AND
ACKNOWLEDGEMENT OF RECEIPT
By:________________________________
Name::_____________________________
Title::____________________________
Date::_____________________________
J-2
EXHIBIT K
Form of Reporting Document
SEE ATTACHED
K-1
EXHIBIT L
Yield Maintenance Agreement
SEE ATTACHED
L-1
EXHIBIT M
Loan Data Remittance Report
SEE ATTACHED
M-1
EXHIBIT N
Trustee Remittance Report
SEE ATTACHED
N-1