Current Report — Form 8-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 8-K Current Report 8 31K
2: EX-1.1 Asset Backed Notes 27 99K
3: EX-1.2 Indemnification Agreeement 16 62K
4: EX-4.1 Indenture 88 434K
5: EX-4.2 Sale and Servicing Agreement 116 417K
6: EX-4.3 Form of Note Insurance Policy and Endorsement 9 37K
7: EX-4.4 Unaffiliated Seller's Agreement 66 226K
8: EX-4.5 Purchase Agreement and Assignment 54 196K
9: EX-4.6 Glossary of Defined Terms 37 141K
10: EX-23.1 Consent of Independent Accountants 1 8K
EX-4.6 — Glossary of Defined Terms
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GLOSSARY OF DEFINED TERMS
The following words and phrases, unless otherwise defined in
the Sale and Servicing Agreement, the Trust Agreement or the Indenture, shall
have the meanings specified herein. For purposes of the Indenture, references
to the term "Trust" as used in this Glossary of Defined Terms shall be deemed
to be references to the Issuer.
"Accrued Note Interest": With respect to each Payment Date
and any Class A Note, interest accrued during the related Interest Accrual
Period at the applicable Class A Note Interest Rate for such Class A Note on
the Note Principal Balance of such Class A Note immediately prior to such
Payment Date.
"Accrued Shortfall Interest Carry Forward Amount: With
respect to any Payment Date and each Class of Notes, the amount of the
Shortfall Interest Deferred Amounts for such Class unpaid from preceding
Payment Dates together with interest thereon at the related Note Interest Rate
from such preceding Payment Dates to the current Payment Date.
"Act": The meaning specified in Section 12.3(a) of the
Indenture.
"Actual Owner": The meaning assigned to such term in Section
4.05 of the Sale and Servicing Agreement.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect
to any specified Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Assignment": An assignment of Mortgage, notice of transfer
or equivalent instrument, in recordable form, which is sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage.
"Authorized Newspaper": A newspaper of general circulation in
the Borough of Manhattan, The City of New York, printed in the English language
and customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Authorized Officer": With respect to the Trust, the
Depositor, the Unaffiliated Seller, the Back-up Servicer and the Servicer, any
officer or agent acting pursuant to a power of attorney of the Owner Trustee on
behalf of the Trust, the Depositor, the Unaffiliated Seller or the Servicer, as
applicable, who is authorized to act for the Owner Trustee, the Depositor, the
Unaffiliated Seller, the Back-up Servicer or the Servicer, as applicable, in
matters relating to the Trust, the Depositor, the Unaffiliated Seller, the
Back-up Servicer or the Servicer, as the case may be, and who is identified on
the list of Authorized Officers delivered by each of the Owner Trustee, the
Depositor, the
Unaffiliated Seller, the Back-up Servicer and the Servicer to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Available Distribution Amount": With respect to any Payment
Date for each Class of Notes, an amount equal to the excess of (i) the sum of
(a) the aggregate of the Monthly Payments, Liquidation Proceeds, Insurance
Proceeds, Principal Prepayments and other unscheduled recoveries of principal
and interest in respect of the Mortgage Loans in the related Group received
during or with respect to the related Collection Period, (b) the aggregate of
any amounts received in respect of an REO Property withdrawn from any REO
Account for the related Group and deposited in the Distribution Account for
such Payment Date pursuant to Section 3.25 of the Sale and Servicing Agreement,
(c) the aggregate of any amounts deposited in the Distribution Account
allocable to the related Group by the Servicer in respect of Prepayment
Interest Shortfalls for such Payment Date pursuant to Section 3.26 of the Sale
and Servicing Agreement, (d) the aggregate of any Monthly Advances for the
related Group made by the Servicer for such Payment Date pursuant to Section
4.03 of the Sale and Servicing Agreement, (e) the aggregate of any advances for
the related Group made by the Indenture Trustee for such Payment Date pursuant
to Section 7.02 of the Sale and Servicing Agreement, and (f) the Stated
Principal Balance of any Mortgage Loan in the related Group that was purchased
during the related Collection Period pursuant to or as contemplated by Section
2.05, or 10.01 of the Sale and Servicing Agreement and the amount of any
shortfall deposited into the Collection Account and allocable to the related
Group in connection with the substitution of a Deleted Mortgage Loan in the
related Group pursuant to Section 2.05 of the Sale and Servicing Agreement
during the related Collection Period over (ii) the sum of (a) amounts
reimbursable or payable to the Depositor, the Servicer, the Back-Up Servicer,
the Indenture Trustee, the Owner Trustee, the Unaffiliated Seller or any
Sub-Servicer pursuant to Section 3.11 or Section 3.14 of the Sale and Servicing
Agreement or otherwise payable in respect of extraordinary Trust Property
expenses, and, in each case, allocable to the related Group, (b) Stayed Funds,
allocable to the related Group, (c) amounts deposited in the Collection Account
or the Distribution Account and allocable to the related Group as the case may
be, in error, (d) amounts reimbursable to the Indenture Trustee for an advance
made pursuant to Section 7.02(b) of the Sale and Servicing Agreement which
advance the Indenture Trustee has determined to be nonrecoverable from the
Stayed Funds in respect of which it was made, (e) the Insurer Premium allocable
to the related Group payable to the Insurer pursuant to Section 8.10(b) of the
Indenture, (f) the Indenture Trustee Fee payable from the Distribution Account
pursuant to Section 6.7 of the Indenture, and allocable to the related Group
and (g) the Owner Trustee's Fee payable pursuant to Section 12.1 of the Trust
Agreement and allocable to the related Group.
"Back-up Servicing Fee": For each Payment Date, an amount
equal to one-twelfth the product of (i) the Back-up Servicing Fee Rate,
multiplied by (ii) the aggregate Stated Principal Balance of the Mortgage Loans
and any REO Properties as of the preceding Payment Date (or, in the case of the
initial Payment Date, as of the Cut-off Date).
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"Back-up Servicing Fee Rate": With respect to each Group,
0.06% per annum.
"Balloon Mortgage Loan": A Mortgage Loan that provides for
the payment of the unamortized principal balance of such Mortgage Loan in a
single payment at the maturity of such Mortgage Loan that is substantially
greater than the preceding monthly payment.
"Back-up Servicer": Fairbanks Capital Corp. and its permitted
successors and assigns.
"Balloon Payment": The final payment due on a Balloon
Mortgage Loan.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11 of the United States Code), as amended.
"Base Principal Distribution Amount" for any Payment Date for
each Class of Notes will be the lesser of:
(a) the excess of the Available Distribution Amount for such
Class over the Interest Distribution Amount (other than the Shortfall Interest
Deferred Amount and the Accrued Shortfall Interest Carry Forward Amount) for
such Class on such Payment Date; and
(b) the sum of:
(i) the principal portion of all monthly
payments on the Mortgage Loans in the related Group received during the related
Collection Period;
(ii) the principal portion of all proceeds
of the repurchase of a related Mortgage Loan from the related Group (or, in the
case of a substitution, certain amounts representing a principal adjustment) as
required by the Sale and Servicing Agreement during the related Collection
Period;
(iii) the principal portion of all other
unscheduled collections, including insurance proceeds, liquidation proceeds and
all full and partial principal prepayments, received during the related
Collection Period, to the extent applied as recoveries of principal on the
Mortgage Loans in the related Group, net of any portion that represents a
recovery of principal for which a Monthly Advance was made by the Servicer and
deposits during the related Collection Period into the Distribution Account, in
each case, with respect to the related Group;
(iv) the proceeds received by the Indenture
Trustee upon the exercise by the Servicer of its option to call the related
Class of Notes (to the extent such proceeds relate to principal);
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(v) any amount that the Insurer has elected
to pay as principal (including Liquidated Loan Losses) prior to any Remaining
Overcollateralization Deficit; minus
(vi) the amount of any
Overcollateralization Reduction Amount for such Class for such Payment Date.
"Basic Documents": The Sale and Servicing Agreement, the
Indenture, the Certificate of Trust, the Trust Agreement, the Indemnification
Agreement, the Insurance Agreement, the Underwriting Agreement and the other
documents and certificates delivered in connection therewith.
"BIF": The Bank Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Bank Insurance Fund is not existing and performing duties now
assigned to it, the body performing such duties on such date.
"Book Entry Notes": A beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by the
Depository as described in Section 2.9 of the Indenture.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the State of South
Carolina, or in the city in which the Insurer or the Corporate Trust Office of
the Indenture Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Business Trust Statute": Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Codess.3801 et seq. as the same may be amended from time
to time.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which were more than $1000 in excess of the principal balance of
any existing first mortgage or subordinate mortgage on the related Mortgaged
Property and related closing costs.
"Certificate": The Certificate executed and delivered by the
Owner Trustee on behalf of the Trust, and authenticated by the Owner Trustee,
pursuant to the Trust Agreement.
"Certificate of Trust": The certificate of trust of the Trust
as filed by the Initial Owner Trustee under the Business Trust Statute on
behalf of the Trust pursuant to the Trust Agreement.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 4.9 of the
Trust Agreement.
"Certificateholder" or "Holder": The Person in whose name the
Certificate is registered in the Certificate Register.
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"Class": Collectively, all of the Notes bearing the same
class designation.
"Class A Note": Any of the Class A-1 Notes and Class A-2
Notes executed by the Owner Trustee on behalf of the Trust and authenticated
and delivered by the Indenture Trustee pursuant to the Indenture.
"Class A Noteholder": Any Holder of a Class A-1 or Class A-2
Note.
"Class A Note Interest Rate": With respect to the Class A-1
Notes, the Class A-1 Interest Rate, and with respect to the Class A-2 Notes,
the Class A-2 Interest Rate.
"Class A Note Principal Balance": The aggregate of the Note
Principal Balance of all Notes as of the date of determination.
"Class A-1 Available Distribution Amount": The Available
Distribution Amount with respect to the Class A-1 Notes.
"Class A-1 Interest Distribution Amount": On any Payment
Date, the amount equal to (i) the aggregate Accrued Note Interest on the Class
A-1 Notes during the related Interest Accrual Period, reduced by the Shortfall
Interest Deferred Amount, if any, for such Payment Date in respect of such
Class plus (ii) to the extent the remaining Available Distribution Amount for
such Class for such Payment Date is sufficient for the payment thereof, the
Accrued Shortfall Interest Carry Forward Amount, if any, for such Payment Date
in respect of such Class.
"Class A-1 Interest Rate": For each Payment Date, a rate per
annum equal to 6.87% (for each Interest Accrual Period on or prior to the date
on which the Servicer could exercise its option to redeem the Notes as provided
in Article X of the Indenture) or 7.37% (for each Interest Accrual Period after
such date).
"Class A-1 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Group I and any Payment Date, the sum of (x)
the excess, if any, of the aggregate Prepayment Interest Shortfalls with
respect to Group I for the related Collection Period over the aggregate amount
of Compensating Interest paid by the Servicer in respect thereto and (y) the
aggregate amount of Civil Relief Act Interest Shortfalls in respect of which
the Servicer did not make a Monthly Advance.
"Class A-1 Note": Any one of the Class A-1 Notes executed by
the Owner Trustee on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee, pursuant to the Indenture.
"Class A-1 Note Principal Balance": The Class Note Balance
for the Class A-1 Notes.
"Class A-2 Available Distribution Amount": The Available
Distribution Amount with respect to the Class A-2 Notes.
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"Class A-2 Interest Distribution Amount": On any Payment
Date, the amount equal to (i) the aggregate Accrued Note Interest on the Class
A-2 Notes during the related Interest Accrual Period, reduced by the Shortfall
Interest Deferred Amount, if any, for such Payment Date in respect of such
Class, plus (ii) to the extent the remaining Available Distribution Amount for
such Class for such Payment Date is sufficient for the payment thereof, the
Accrued Shortfall Interest Carry Forward Amount, if any, for such Payment Date
in respect of such Class.
"Class A-2 Interest Rate": For each Payment Date, a rate per
annum equal to 6.82% (for each Interest Accrual Period on or prior to the date
on which the Servicer could exercise its option to redeem the Notes as provided
in Article X of the Indenture) or 7.32% (for each Interest Accrual Period after
such date).
"Class A-2 Mortgage Loan Interest Shortfall Amount": With
respect to the Mortgage Loans in Group II and any Payment Date, the sum of (x)
the excess, if any, of the aggregate Prepayment Interest Shortfalls with
respect to Group II for the related Collection Period over the aggregate amount
of Compensating Interest paid by the Servicer in respect thereto and (y) the
aggregate amount of Civil Relief Act Interest Shortfalls in respect of which
the Servicer did not make a Monthly Advance.
"Class A-2 Note": Any one of the Class A-2 Notes executed by
the Owner Trustee on behalf of the Trust, and authenticated and delivered by
the Indenture Trustee, pursuant to the Indenture.
"Class A-2 Note Principal Balance": The Class Note Balance
for the Class A-2 Notes.
"Class Note Balance": As to any Class of Notes and any date
of determination, the aggregate of the Note Principal Balances of all Notes of
such Class as of such date of determination.
"Clean-Up Call Date": With respect to each Class of Notes,
the first Payment Date after the Note Principal Balance of such Class is less
than 10% of the Note Principal Balance of such Class as of the Closing Date.
"Closing Date": May 27, 1999.
"Code": The Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": The meaning specified in the Granting Clause of
the Indenture.
"Collection Account": The account or accounts created and
maintained by the Servicer pursuant to Section 3.10(a) of the Sale and
Servicing Agreement, which shall be entitled "First Union National Bank, as
Indenture Trustee, in trust for (A) registered holders of HomeGold Home Equity
Loan Trust Asset Backed Notes, Series 1999-1, and (B) Financial Security
Assurance, Inc." and which must be an Eligible Account.
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"Collection Period": With respect to each Class of Notes in
the case of any Payment Date and any Mortgage Loan, the calendar month
immediately preceding the calendar month in which such Payment Date occurs.
"Commission": The United States Securities and Exchange
Commission.
"Compensating Interest": Advances by the Servicer pursuant to
Section 3.26 of the Sale and Servicing
Agreement.
"Company": HomeGold, Inc.
"Corporate Trust Office": With respect to the Indenture
Trustee, the principal corporate trust office of the Indenture Trustee at which
at any particular time its corporate trust business in connection with the
Indenture shall be administered, which office at the date of the execution of
the Indenture is located at 230 South Tryon Street, 9th Floor, Charlotte, North
Carolina 28288-1179, Attention: Corporate Trust Department. With respect to the
Owner Trustee, the principal corporate trust office of the Owner Trustee at
which at any particular time its corporate trust business in connection with
the Trust Agreement shall be administered, which office at the date of the
execution of the Trust Agreement is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
"Cumulative Insurance Payments": As of any time of
determination, the aggregate of all Insurance Payments previously made by the
Insurer plus interest thereon from the date such amount became due until paid
in full, at a rate of interest calculated as provided in the Insurance
Agreement minus all payments previously made to the Insurer pursuant to Section
8.3 of the Indenture hereof as reimbursement for such amounts.
"Cumulative Loss Percentage": For any Payment Date, the
percentage equivalent of a fraction, the numerator of which is aggregate amount
of Realized Losses incurred from and including the first Collection Period to
and including the most recently ended Collection Period, and the denominator of
which is the Maximum Collateral Amount.
"Cut-off Date": With respect to each Mortgage Loan, the
opening of business on May 1, 1999; and with respect to all Qualified
Substitute Mortgage Loans, the first day of the calendar month in which the
substitution occurs. References herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off
Dates for such Mortgage Loans.
"Debt Service Reduction": With respect to any Mortgage Loan,
a reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a proceeding under the Bankruptcy Code, except
such a reduction resulting from a Deficient Valuation.
"Default": Any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
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"Deficiency Amount": With respect to each Class of Class A
Notes as of any Payment Date (i) any shortfall in amounts available in the
Distribution Account to pay the Interest Payment Amount for such Class, net of
any Relief Act Interest Shortfalls and Prepayment Interest Shortfalls allocated
to such Class, (ii) the Remaining Overcollateralization Deficit, if any, for
such Payment Date for such Class and (iii) without duplication of the amount
specified in clause (ii), the applicable Note Principal Balance to the extent
unpaid on the final Payment Date for such Class of the Class A Notes or the
earlier termination of the Trust pursuant to the terms of the Trust Agreement.
"Deficiency Event": The inability of the Indenture Trustee to
make the Scheduled Payment on any Payment Date due to a shortage of funds for
such purpose then held in the Distribution Account and the failure of the
Insurer to pay in full a claim made in accordance with the Policy with respect
to such Payment Date.
"Deficient Valuation": With respect to any Mortgage 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 Mortgage Loan, which valuation results from a proceeding initiated under
the Bankruptcy Code.
"Definitive Notes": The meaning specified in Section 2.9 of
the Indenture.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Percentage": As of the last day of any
Collection Period, the percentage equivalent of a fraction, the numerator of
which equals the aggregate Stated Principal Balances of all Mortgage Loans that
are 90 or more days Delinquent, in foreclosure or converted to REO Properties
as of such last day of such Collection Period, and the denominator of which is
the aggregate Stated Principal Balance of the Mortgage Loans as of the last day
of such Collection Period.
"Delinquent": A Mortgage Loan is Delinquent if the Monthly
Payment due on a Due Date is not paid on or before the next succeeding Due
Date, at which time, such Mortgage Loan is 30 days Delinquent. If the Monthly
Payment due on a Due Date is not paid on or before the second or third
succeeding Due Date, respectively, such Mortgage Loan is 60 or 90 days
Delinquent, as the case may be.
"Depositor": Prudential Securities Secured Financing
Corporation, a Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
8
"Depository Institution": Any depository institution or trust
company, including the Indenture Trustee, that (a) is incorporated under the
laws of the United States of America or any State thereof, (b) is subject to
supervision and examination by federal or state banking authorities and (c) has
outstanding unsecured commercial paper or other short-term unsecured debt
obligations (or, in the case of a depository institution that is the principal
subsidiary of a holding company, such holding company has unsecured commercial
paper or other short-term unsecured debt obligations) that are rated at least
P-1 by Moody's and A-1 by S&P (or comparable ratings if Moody's and S&P are not
the Rating Agencies).
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to each Payment Date, the
fifth Business Day prior to such Payment Date.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to the performance of any construction work thereon or any use of such REO
Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Indenture Trustee (or the
Servicer on behalf of the Indenture Trustee) shall not be considered to
Directly Operate an REO Property solely because the Indenture Trustee (or the
Servicer on behalf of the Indenture Trustee) establishes rental terms, chooses
tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.
"Distribution Account": The trust account established and
maintained by the Indenture Trustee pursuant
to Section 8.7 of the Indenture.
"Due Date": With respect to each Payment Date, the day of the
month on which the Monthly Payment is due on a Mortgage Loan during the related
Collection Period, exclusive of any days of grace.
"Eligible Account": Any of (i) 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 short-term unsecured debt obligations of such holding
company) are rated at least P-1 by Moody's and A-1 by S&P (or comparable
ratings if Moody's and S&P are not the Rating Agencies) at the time any amounts
are held on deposit therein, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity. Eligible
Accounts may bear interest.
9
"ERISA": Employee Retirement Income Security Act of 1974, as
amended
"Escrow Payments": As defined in Section 3.09 of the Sale and
Servicing Agreement.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Overcollateralization Amount": With respect to each
Group of Mortgage Loans and any Payment Date, the excess, if any, of (i) the
Overcollateralization Amount for the related Class of Notes for such Payment
Date over (ii) the Specified Overcollateralization Amount for such Class for
such Payment Date.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Expense Account": The account established and maintained
pursuant to Section 8.10 of the Indenture.
"Expenses": The meaning assigned to such term in Section 12.2
of the Trust Agreement.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Maturity Date": With respect to any Class of the Class
A Notes the Final Scheduled Payment Date or, if earlier, the Redemption Date.
"Final Payment Date": With respect to any Class of the Class
A Notes the earlier of the Final Maturity Date and the Payment Date with
respect to such Class on which the principal of and all accrued but unpaid
interest on the Notes of such Class shall be paid in full.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Unaffiliated Seller, the Depositor, the Servicer or the
Insurer pursuant to or as contemplated by Section 2.05, 3.18(d) or 10.01) of
the Sale and Servicing Agreement, a determination made by the Servicer that all
Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which
the Servicer, in its reasonable good faith judgment, expects to be finally
recoverable in respect thereof have been so recovered. The Servicer shall
maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination made thereby.
"Final Scheduled Payment Date": In the case of the Class A-1
Notes, the Payment Date in July 2029 and in the case of the Class A-2 Notes,
the Payment Date in August 2029.
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"FNMA": Federal National Mortgage Association or any
successor thereto.
"Grant": Mortgage, pledge, bargain, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and
confirm pursuant to this Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring proceedings in the name of the Granting party or otherwise
and generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Group": Group I or Group II, as the case may be.
"Group I": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group I, as reflected on the Mortgage Loan
Schedule.
"Group I Mortgage Loans": The Mortgage Loans assigned to
Group I.
"Group II": The group of Mortgage Loans pledged to the
Indenture Trustee and assigned to Group II, as reflected on the Mortgage Loan
Schedule.
"Group II Mortgage Loans": The Mortgage Loans assigned to
Group II.
"HomeGold Financial": HomeGold Financial, Inc., a South
Carolina corporation.
"Indebtedness": With respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles,
recorded as capital leases; (c) current liabilities of such Person in respect
of unfunded vested benefits under plans covered by Title IV of ERISA; (d)
obligations issued for or liabilities incurred on the account of such Person;
(e) obligations or liabilities of such Person arising under acceptance
facilities; (f) obligations of such Person under any guarantees, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (g) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such
Person; or (h) obligations of such Person under any interest rate or currency
exchange agreement.
11
"Indemnification Agreement": The Indemnification Agreement
dated as of May 19, 1999 among the Trust, the Insurer, the Unaffiliated Seller,
the Company, HomeGold Financial, Inc., the Depositor and Prudential Securities
Incorporated.
"Indemnified Parties": The meaning assigned to such term in
Section 12.2 of the Trust Agreement.
"Indenture": The Indenture dated as of May 1, 1999 between
the Trust and the Indenture Trustee relating to the Notes.
"Indenture Trustee": First Union National Bank, a national
banking association, or its successor-in-interest, or any successor trustee
appointed as provided in the Indenture.
"Indenture Trustee Trust Secured Obligations": All amounts
and obligations which the Trust may at any time owe to the Indenture Trustee
for the benefit of the Noteholders under this Indenture or the Notes.
"Indenture Trustee's Fee": The amount payable to the
Indenture Trustee on each Payment Date pursuant to Section 6.7 of the Indenture
as compensation for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties of the Indenture Trustee hereunder, which amount shall equal one twelfth
of the product of (i) the Indenture Trustee's Fee Rate, multiplied by (ii) the
aggregate Stated Principal Balance of the Mortgage Loans and any REO Properties
as of the preceding Payment Date (or, in the case of the initial Payment Date,
as of the Cut-off Date).
"Indenture Trustee's Fee Rate": 0.015% per annum.
"Independent": When used with respect to any specified
Person, any such Person who (a) is in fact independent of the Trust, the
Unaffiliated Seller, the Depositor, the Servicer and their respective
Affiliates, (b) does not have any direct financial interest or any material
indirect financial interest in the Trust, the Unaffiliated Seller, the
Depositor, the Servicer or any Affiliate thereof, and (c) is not connected with
the Trust, the Unaffiliated Seller, the Depositor, the Servicer or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions; provided, however,
that a Person shall not fail to be Independent of the Trust, the Unaffiliated
Seller, the Depositor or the Servicer or any Affiliate thereof merely because
such Person is the beneficial owner of 1% or less of any class of securities
issued by the Trust, the Unaffiliated Seller, the Depositor or the Servicer or
any Affiliate thereof, as the case may be.
"Independent Certificate": A certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 12.1 of the
Indenture, prepared by an Independent appraiser or other expert appointed
pursuant to an Trust Order and approved by the Indenture Trustee in the
exercise of reasonable care, and such opinion or certificate shall
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state that the signer has read the definition of "Independent" in this
Indenture and that the signer is Independent within the meaning thereof.
"Independent Contractor": Either (i) any Person (other than
the Servicer) that would be an "independent contractor" with respect to the
Trust within the meaning of Section 856(d)(3) of the Code, so long as the Trust
does not receive or derive any income from such Person and provided that the
relationship between such Person and the Trust Property is at arm's-length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer) if the Indenture Trustee has received an
Opinion of Counsel to the effect that the taking of any action in respect of
any REO Property by such Person, subject to any conditions therein specified,
that is otherwise herein contemplated to be taken by an Independent Contractor
will not cause such REO Property to cease to qualify as "foreclosure property"
within the meaning of Section 856(e)(1) of the Code, or cause any income
realized in respect of such REO Property to fail to qualify as Rents from Real
Property.
"Insurance Agreement": The Insurance and Indemnity Agreement,
dated as of May 1, 1999, among the Trust, the Depositor, the
Originator/Servicer, the Unaffiliated Seller, HomeGold Financial, HomeGold
Residual Holdings Corporation and the Insurer, as amended or supplemented in
accordance with the provisions thereof.
"Insurance Payment": Any payment made by the Insurer under
the Policy with respect to the Class A Notes.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that
the Servicer would follow in servicing mortgage loans held for its own account,
subject to the terms and conditions of the related Mortgage Note and Mortgage.
"Insured Payment": With respect to either Class of Notes as
of any Payment Date (i) the Interest Distribution Amount (other than the
Shortfall Interest Deferred Amount and the Accrued Shortfall Interest Carry
Forward Amount for the related Interest Accrual Period), (ii) the Remaining
Overcollateralization Deficit, if any, for such Payment Date and (iii) without
duplication of the amount specified in clause (ii), the applicable Note
Principal Balance to the extent unpaid on the Final Scheduled Payment Date for
such Class or the earlier termination of the Trust pursuant to the terms of the
Trust Agreement.
"Insurer": Financial Security Assurance, Inc. a stock
insurance company organized and created under the laws of the State of New
York, and any successors thereto.
"Insurer Default": The existence and continuance of any of
the following:
(a) the Insurer fails to make a payment required under the
Policy in accordance with its terms; or
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(b) the Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or any other competent regulatory authority
shall have entered a final and nonappealable order, judgment or decree
(i) appointing a custodian, trustee, agent, or receiver for the Insurer
or for all or any material portion of its property or (ii) authorizing
the taking of possession by a custodian, trustee, agent, or receiver of
the Insurer of all or any material portion of its property.
"Insurer Issuer Secured Obligations": All amounts and
obligations which the Trust may at any time owe to or on behalf of the Insurer
under the Indenture, the Insurance Agreement or any other Basic Document.
"Insurer Premium": The Policy premium payable pursuant to
Section 8.10(b) of the Indenture.
"Insurer Premium Rate": 0.25% per annum.
"Insurer Premium Supplement": The premium supplement payable
to the Insurer pursuant to Section 5.02 of the Insurance Agreement.
"Interest Accrual Period": With respect to any Payment Date,
the calendar month immediately preceding the month in which such Payment Date
occurs.
"Interest Distribution Amount": With respect to any Payment
Date, the Class A-1 Interest Distribution Amount or the Class A-2 Interest
Distribution Amount, as the case may be, for such Payment Date.
"Investment Account": As defined in Section 3.14 of the Sale
and Servicing Agreement.
"Issuer": The Trust until a successor replaces it and,
thereafter, means the successor and, for purposes of any provision contained in
the Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request": A written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
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"Issuer Secured Obligations": The Insurer Issuer Secured
Obligations and the Indenture Trustee Issuer Secured Obligations.
"Issuer Secured Parties": Each of the Indenture Trustee in
respect of the Indenture Trustee Issuer Secured Obligations and the Insurer in
respect of the Insurer Issuer Secured Obligations.
"Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the Determination Date immediately following any
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any
acceleration of payments under the related Mortgage and Mortgage Note) but
delinquent for such Collection Period and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any
of the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan, or (iii) such Mortgage
Loan is removed from the Trust Property by reason of its being purchased, sold
or replaced pursuant to or as contemplated by Section 2.05 or Section 10.01 of
the Sale and Servicing Agreement. With respect to any REO Property, either of
the following events: (i) a Final Recovery Determination is made as to such REO
Property; or (ii) such REO Property is removed from the Trust Property by
reason of its being purchased pursuant to Section 10.01 of the Sale and
Servicing Agreement.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Servicer in connection with (i) the taking
of all or a part of a Mortgaged Property by exercise of the power of eminent
domain or condemnation and (ii) the liquidation of a defaulted Mortgage Loan by
means of a trustee's sale, foreclosure sale or otherwise.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance of the related Mortgage Loan at such date and the denominator of which
is the Value of the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as
to which the original Mortgage Note has been permanently lost or destroyed and
has not been replaced, an affidavit from the Originator certifying that the
original Mortgage Note has been lost, misplaced or destroyed (together with a
copy of the related Mortgage Note).
"Majority Certificateholder": Any single Holder of the
Certificate representing the greatest Percentage Interest in the Certificate.
"Maximum Collateral Amount": With respect to each Group the
Original Pool Balance of such Group.
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"Monthly Advance": As to any Mortgage Loan or REO Property,
any advance made by the Servicer in respect of any Payment Date pursuant to
Section 4.03 of the Sale and Servicing Agreement.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related
Mortgage Note, determined: (a) after giving effect to (i) any Deficient
Valuation and/or Debt Service Reduction with respect to such Mortgage 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 pursuant to Section 3.07 of the
Sale and Servicing Agreement; and (c) on the assumption that all other amounts,
if any, due under such Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc. or its successor
in interest.
"Mortgage": The mortgage, deed of trust or other instrument
creating a lien on, or security interest in, a Mortgaged Property securing a
Mortgage Note.
"Mortgage File": The mortgage documents listed in Section
2.03 of the Sale and Servicing Agreement pertaining to a particular Mortgage
Loan and any additional documents required to be added to the Mortgage File
pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Indenture Trustee pursuant to Section 2.01, Section 2.02 or Section
2.05(d) of the Sale and Servicing Agreement as from time to time held as a part
of the Trust Property, the Mortgage Loans so held being identified in the
Mortgage Loan Schedule.
"Mortgage Loan Schedule": As of any date, the list of
Mortgage Loans included in the Trust Property on such date. The Mortgage Loan
Schedule shall set forth following information with respect to each Mortgage
Loan:
1. the Originator's or Servicer's Mortgage Loan identifying number;
2. the Mortgagor's name;
3. the street address of the Mortgaged Property including the state and
zip code;
4. a code indicating whether the Mortgaged Property is owner-occupied;
5. the type of Residential Dwelling constituting the Mortgaged Property;
6. the original months to maturity;
7. the remaining months to stated maturity from the Cut-off Date based
on the original amortization schedule;
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8. the Loan-to-Value Ratio at origination;
9. (A) the date on which the first Monthly Payment was due on
the Mortgage Loan and, (B) if such date is not consistent
with the Due Date currently in effect, such Due Date;
10. the stated maturity date;
11. the amount of the Monthly Payment due on the first Due Date on or
after the Cut-off Date;
12. the last Due Date on which a Monthly Payment was actually applied to
the unpaid Stated Principal Balance;
13. the original principal amount of the Mortgage Loan;
14. the outstanding principal balance of the Mortgage Loan as of the close
of business on the Cut-off Date;
15. a code indicating the purpose of the Mortgage Loan (i.e., purchase
financing, Rate/Term Refinancing, Cash-Out Refinancing);
16. the Mortgage Rate;
17. a code indicating the documentation style program;
18. the risk grade;
19. the Value of the Mortgaged Property;
20. the sale price of the Mortgaged Property, if applicable;
21. whether the Mortgage Loan has a due-on-sale clause;
22. the program code; and
23. the lien priority of the Mortgage Loan.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date with respect to the Mortgage Loans in the
aggregate in each Group: (1) the number of Mortgage Loans; (2) the current
principal balance of the Mortgage Loans; (3) the weighted average Mortgage Rate
of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage
Loans. The Mortgage Loan Schedule shall be amended from time to time by the
Servicer in accordance with the provisions of this Agreement.
"Mortgage Note": The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
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"Mortgage Pool": The pool of Mortgage Loans, identified on
the Mortgage Loan Schedule from time to time, and any REO Properties acquired
in respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan in accordance with
the provisions of the related Mortgage Note.
"Mortgage Schedule": The meaning ascribed thereto in the Sale
and Servicing Agreement.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cashflow": With respect to each Class of
Notes, the excess of the (x) the Available Distribution Amount for such Class
over (y) the Interest Distribution Amount (other than the Shortfall Interest
Deferred Amount and the Accrued Shortfall Interest Carry Forward Amount) and
the Base Principal Distribution Amount for such Class.
"Net Mortgage Loan Interest Shortfall Amount": The Class A-1
Mortgage Interest Shortfall or the Class A-2 Mortgage Loan Interest Shortfall
Amount, as applicable.
"Net Mortgage Rate": With respect to any Mortgage Loan (or
the related REO Property), as of any date of determination, a per annum rate of
interest equal to the then applicable Mortgage Rate for such Mortgage Loan
minus the Servicing Fee Rate.
"New Lease": Any lease of REO Property entered into on behalf
of the Trust Property, including any lease renewed or extended on behalf of the
Trust Property if the Trust Property has the right to renegotiate the terms of
such lease.
"Nonrecoverable Monthly Advance": Any Monthly Advance or
Servicing Advance previously made or proposed to be made in respect of a
Mortgage Loan in a Group or REO Property that, in the good faith business
judgment of the Servicer, will not or, in the case of a proposed Monthly
Advance, would not be ultimately recoverable from related late payments,
Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan in such Group
or REO Property as provided herein.
"Non-United States Person": Any Person other than a United
States Person.
"Note": A Class A-1 Note or Class A-2 Note.
"Note Factor": With respect to each Class of Notes as of any
Payment Date, a fraction, expressed as a decimal carried to six places, the
numerator of which is
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the Class Note Balance of the related Notes on such Payment Date (after giving
effect to any distributions of principal in reduction of the Class Note Balance
of the related Notes to be made on such Payment Date), and the denominator of
which is the related Class Note Balance of the related Notes as of the Closing
Date.
"Note Owner": With respect to a Book-Entry Note, the Person
who is the beneficial owner of such Note as reflected on the books of the
Depository or on the books of a Depository Participant or on the books of an
indirect participating brokerage firm for which a Depository Participant acts
as agent.
"Note Paying Agent": The Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Indenture and is authorized by the Trust to make
payments to and distributions from the Distribution Account, including payment
of principal of or interest on the Notes on behalf of the Trust.
"Note Principal Balance": With respect to each Class of Notes
as of any date of determination, the Note Principal Balance of such Class A
Note on the Payment Date immediately prior to such date of determination, minus
all distributions allocable to principal made thereon on such immediately prior
Payment Date for such Class (or, in the case of any date of determination up to
and including the first Payment Date, the initial Note Principal Balance of
such Class, as stated on the face thereof).
"Note Register" and "Note Registrar": The register maintained
and the registrar appointed pursuant to Section 2.3 of the Indenture.
"Noteholder" or "Holder": The Person in whose name a Note is
registered in the Note Register, and the Insurer to the extent of Cumulative
Insurance Payments.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Trust (or Owner Trustee on
behalf of the Trust), the Servicer, the Unaffiliated Seller or the Depositor,
as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Servicer
acceptable to the Indenture Trustee, the Insurer or the Owner Trustee, as the
case may be.
"Original Pool Balance": With respect to each Group, an
amount equal to the aggregate of the Stated Principal Balances of the Mortgage
Loans in such Group as of the Cut-off Date.
"Originator": HomeGold, Inc.
"Outstanding": As of the date of determination, all Notes
theretofore authenticated and delivered under the Indenture except:
19
(i) Notes theretofore canceled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Note Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor,
satisfactory to the Indenture Trustee has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a protected or bona fide purchaser;
provided, however, that Notes which have been paid with proceeds of the Policy
shall continue to remain Outstanding for purposes of this Indenture until the
Insurer has been paid as subrogee or reimbursed pursuant to the Insurance
Agreement as evidenced by a written notice from the Insurer delivered to the
Indenture Trustee, and the Insurer shall be deemed to be the Holder thereof to
the extent of any payments thereon made by the Insurer; provided, further, that
in determining whether the Holders of the requisite Outstanding Amount of the
Notes have given any request, demand, authorization, direction, notice, consent
or waiver hereunder or under any Basic Document, Notes owned by the Trust, the
Unaffiliated Seller or the Servicer or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer either actually knows to be so owned or has
received written notice thereof shall be so disregarded and Notes so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee's right so
to act with respect to such Notes and that the pledgee is not the Trust, the
Unaffiliated Seller or the Servicer or any Affiliate of any thereof.
"Outstanding Amount": The aggregate Note Principal Balance of
all Notes, or Class of Notes, as applicable, Outstanding at the date of
determination.
"Overcollateralization Amount": With respect to each Class of
Notes and to any Payment Date, the excess, if any, of (a) the aggregate Stated
Principal Balances of the Mortgage Loans in the related Group as of the close
of business on the last day of the related Collection Period over (b) the Note
Principal Balance of such Class of Notes as of such Payment Date (after taking
into account the payment of the amounts described in clauses (b)(i) through
(iv) of the definition of Principal Distribution Amount for such Class on such
Payment Date); provided, however, that such amount shall not be less than zero.
"Overcollateralization Deficit": The amount, if any, by which
the aggregate Note Principal Balance of both Classes of Notes on a Payment
Date, after
20
payment of the Base Principal Distribution Amount, but before taking into
account any principal payment funded from Net Monthly Excess Cash Flow, the
Reserve Account or any Insured Payment, exceeds the aggregate principal balances
of the Mortgage Loans in both Groups as of the close of business on the last day
of the related Collection Period. For purposes of determining the amount to be
paid on account of the Overcollateralization Deficit to the Holders of each
Class of Notes on the Payment Date, the Overcollateralization Deficit shall be
allocated to each Class pro rata based on the amount by which the Note Principal
Balance of each Class on such Payment Date, after payment of the Base Principal
Distribution Amount but before taking into account any principal payment funded
from Net Monthly Excess Cashflow, the Reserve Account or any Insured Payment,
exceeds the aggregate principal balances of the Mortgage Loans in the related
Group as of the close of business on the last day of the related Collection
Period.
"Overcollateralization Deficiency Amount": With respect to
each Class of Notes and to any Payment Date, the excess, if any, of (a) the
Specified Overcollateralization Amount for such Class applicable to such
Payment Date over (b) the Overcollateralization Amount for such Class
applicable to such Payment Date prior to taking into account the payment of any
Overcollateralization Increase Amounts for such Class on such Payment Date.
"Overcollateralization Increase Amount": With respect to each
Class of Notes and to any Payment Date, the lesser of (a) the
Overcollateralization Deficiency Amount for such Class as of such Payment Date
(after taking into account the payment of the Base Principal Distribution
Amount for such Class, on such Payment Date, exclusive of the payment of any
Overcollateralization Increase Amount for such Class) and (b) the amount of Net
Monthly Excess Cashflow available for such Payment Date reduced by any
Cumulative Insurance Payments or payments allocated to the
Overcollateralization Deficit.
"Overcollateralization Reduction Amount": With respect to
each Class of Notes and to any Payment Date, an amount equal to the lesser of
(a) the Excess Overcollateralization Amount for such Class and (b) the Base
Principal Distribution Amount of such Class.
"Owner Trustee": Wilmington Trust Company, not in its
individual capacity but solely as owner trustee under the Trust Agreement, and
any successor to it as owner trustee thereunder.
"Owner Trustee Fees": The amounts payable to the Owner
Trustee as contemplated in Section 12.1 of the Trust Agreement.
"Ownership Interest": As to any Note, any ownership or
security interest in such Note, including any interest in such Note as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee. As to the Certificate, any
ownership or security interest in the Certificate, including any
21
interest in the Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as
pledgee.
"Owner Trust Estate": (i) the sum deposited in the Collection
Account pursuant to Section 2.5 of the Trust Agreement, (ii) all right, title
and interest of the Trust in and to the property and rights assigned to the
Trust pursuant to Article II of the Sale and Servicing Agreement, (iii) all
funds on deposit from time to time in any of the Trust Accounts or the
Certificate Distribution Account and (iv) all other property of the Trust from
time to time, including any rights of the Owner Trustee and the Trust pursuant
to the Sale and Servicing Agreement.
"Payment Date": The 15th day of any month, or if such 15th
day is not a Business Day, the Business Day immediately following such 15th
day, commencing in June 1999.
"Percentage Interest": With respect to the Certificate, the
undivided percentage ownership of the Certificate evidenced by the Certificate,
as set forth in the Certificate.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Servicer, the Indenture
Trustee or any of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed by
the full faith and credit of the United States; provided, however, that
any obligation of, or guaranteed by, FHLMC or FNMA, other than a senior
debt or a mortgage participation or pass-through certificate guaranteed by
FHLMC or FNMA shall be a Permitted Investment only if, at the time of
investment, such investment is acceptable to the Insurer;
(ii) demand and time deposits in, certificates of deposit of, or
bankers' acceptances issued by, any Depository Institution;
(iii) repurchase obligations with respect to any security described in
clause (i) above entered into with a Depository Institution (acting as
principal);
(iv) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States of
America or any State thereof and that are rated by each Rating Agency in
its highest long-term unsecured rating categories at the time of such
investment or contractual commitment providing for such investment;
(v) commercial paper (including both noninterest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof) that is rated by
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each Rating Agency in its highest short-term unsecured debt rating
available at the time of such investment;
(vi) units of money market funds that have been rated "Aaa" by Moody's
and "AAA" by S&P; and
(vii) if previously confirmed in writing to the Indenture Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies and
the Insurer as a permitted investment of funds backing securities that
have been rated "Aaa" by Moody's and "AAA" by S&P;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": shall mean any Person designated as a
Permitted Transferee in accordance with the provisions of Article IV of the
Trust Agreement.
"Permitted Trust Investments": means non-assessable,
non-recourse debt or equity investment securities, held for income and/or
appreciation, in respect of which the Trust, as holder, shall not be liable for
the debts, liabilities or other obligations of the issuer thereof.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof or, in respect of
provisions of the Trust Agreement relating to matters of Constructive
Ownership, an individual, a trust qualified under Section 501(c)(17) of the
Code, the portion of a trust permanently set aside for or to be used
exclusively for the purposes described in Section 642(c) of the Code or a
private foundation within the meaning of Section 509(a) of the Code.
"Plan": The meaning assigned to such term in Section 4.10 of
the Trust Agreement.
"Policy": The Financial Guaranty Insurance Policy (No.
50816-N) issued by the Insurer relating to the Class A Notes, including any
endorsements thereto, attached as Exhibit C to the Indenture.
"Policy Payments Account": The account established pursuant
to Section 11.4(b) of the Indenture.
"Predecessor Note": With respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under
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Section 2.4 of the Indenture in lieu of a mutilated, lost, destroyed or stolen
Note shall be deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Note.
"Preference Claim": The meaning ascribed thereto in the
Indenture.
"Prepayment Assumption": The Prepayment Assumption assumes
that the pool of loans prepays in the first month at a constant annual
prepayment rate of 2.4% and increases by an additional 2.4% each month
thereafter until the tenth month, where it remains at a constant annual
prepayment rate equal to 24%.
"Prepayment Interest Shortfall": With respect to each Class
of Notes and to any Payment Date, for each Mortgage Loan in the related Group
that was during the related Collection Period the subject of a Principal
Prepayment in full or in part that was applied by the Servicer to reduce the
outstanding principal balance of such loan on a date preceding the Due Date in
the succeeding Collection Period, an amount equal to the excess of (i) interest
at the applicable Net Mortgage Rate on the amount of such Principal Prepayment
for the number of days commencing on the date on which the prepayment is
applied and ending on the last day of the related Collection Period over (ii)
the amount, if any, of the interest paid by the Mortgagor in connection with
such Principal Prepayment. The obligations of the Servicer in respect of any
Prepayment Interest Shortfall are set forth in Section 3.26 of the Sale and
Servicing Agreement.
"Principal Distribution Amount": With respect to each Class
of Notes and to any Payment Date, the sum of:
(i) the Base Principal Distribution Amount for such Class
and such Payment Date;
(ii) the Overcollateralization Deficit allocable to that
Class, but only to the extent that it can be funded on such
Payment Date from Net Monthly Excess Cashflow available from
both Groups, if any, available from the Reserve Account,
(iii) such Class' pro rata portion of any Remaining
Overcollateralization Deficit on such Payment Date, to the
extent funded by the Insurer as an Insured Payment, and
(iv) the Overcollateralization Increase Amount for such
Class, but only to the extent it can be funded on such
Payment Date from Net Monthly Excess Cashflow available from
the related Group;
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the
full amount of scheduled interest due on any Due Date in any month or months
subsequent to the month of prepayment.
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"Proceeding": Any suit in equity, action at law or other
judicial or administrative proceeding.
"Purchase Agreement and Assignment": The Purchase Agreement
and Assignment dated as of May 1, 1999 among the Originator, HomeGold Financial
and the Unaffiliated Seller.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.05 or
10.01 of the Sale and Servicing Agreement, and as confirmed by an Officers'
Certificate from the Servicer to the Indenture Trustee, an amount equal to the
sum of (i) 100% of the Stated Principal Balance thereof as of the date of
purchase (or such other price as provided in Section 10.01 of the Sale and
Servicing Agreement), (ii) in the case of (x) a Mortgage Loan, accrued interest
on such Stated Principal Balance at the applicable Net Mortgage Rate in effect
from time to time from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an advance by the Servicer, which payment or
advance had as of the date of purchase been distributed pursuant to Section 8.3
of the Indenture, through the next date corresponding to such Due Date which is
on or after the date on which such purchase is to be effected, and (y) an REO
Property, the sum of (1) accrued interest on such Stated Principal Balance at
the applicable Net Mortgage Rate in effect from time to time from the Due Date
as to which interest was last covered by a payment by the Mortgagor or an
advance by the Servicer through the next date corresponding to such Due Date
which is on or after the date on which such REO Property was acquired, plus (2)
REO Imputed Interest for such REO Property from such corresponding date through
the next such corresponding date which is on or after the date on which such
purchase is to be effected, net of the total of all net rental income,
Insurance Proceeds, Liquidation Proceeds and Monthly Advances that as of the
date of purchase had been distributed as or to cover REO Imputed Interest
pursuant to Section 8.3 of the Indenture, (iii) any unreimbursed Servicing
Advances and Monthly Advances and any unpaid Servicing Fees allocable to such
Mortgage Loan or REO Property, (iv) any amounts previously withdrawn from the
Collection Account in respect of such Mortgage Loan or REO Property pursuant to
Sections 3.11(ix) and 3.18(b) of the Sale and Servicing Agreement, and (v) in
the case of a Mortgage Loan required to be purchased pursuant to Section 2.05
of the Sale and Servicing Agreement, expenses reasonably incurred or to be
incurred by the Servicer or the Indenture Trustee in respect of the breach or
defect giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have a Stated Principal
Balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the
outstanding principal balance of the Deleted Mortgage Loan as of the Due Date
in the calendar month during which the substitution occurs, (ii) have a
Mortgage Rate not less than (and not more than one percentage point in excess
of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) have a remaining term
to maturity not greater than (and not more than one year less than) that of the
Deleted Mortgage Loan, (iv) [intentionally left blank], (v) have a
Loan-to-Value Ratio as of the date of substitution
25
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (vi) have a risk grading determined by the Unaffiliated Seller,
with the approval of the Insurer, at least equal to the risk grading assigned
on the Deleted Mortgage Loan, and (vii) conform to each representation and
warranty set forth in the Unaffiliated Seller's Agreement applicable to the
Deleted Mortgage Loan. In the event that one or more mortgage loans are
substituted for one or more Deleted Mortgage Loans, the amounts described in
clause (i) hereof shall be determined on the basis of aggregate principal
balances, the Mortgage Rates described in clause (ii) hereof shall be
determined on the basis of weighted average Mortgage Rates, the risk gradings
described in clause (vi) hereof shall be satisfied as to each such mortgage
loan, the terms described in clause (iii) hereof shall be determined on the
basis of weighted average remaining term to maturity, the Loan-to-Value Ratios
described in clause (v) hereof shall be satisfied as to each such mortgage loan
and, except to the extent otherwise provided in this sentence, the
representations and warranties described in clause (viii) hereof must be
satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as
the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than $1000 in excess of the existing first
mortgage loan and any subordinate mortgage loan on the related Mortgaged
Property and related closing costs, and were used exclusively (except for up to
$1000) to satisfy the then existing first mortgage loan and any subordinate
mortgage loan of the Mortgagor on the related Mortgaged Property and to pay
related closing costs.
"Rating Agency or Rating Agencies": Moody's and S&P or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor and the
Insurer, notice of which designation shall be given to the Indenture Trustee,
the Trust, the Unaffiliated Seller and the Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made an amount (not less than
zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the
commencement of the calendar month in which the Final Recovery Determination
was made, plus (ii) accrued interest from the Due Date as to which interest was
last paid by the Mortgagor through the end of the calendar month in which such
Final Recovery Determination was made, calculated in the case of each calendar
month during such period (A) at an annual rate equal to the annual rate at
which interest was then accruing on such Mortgage Loan and (B) on a principal
amount equal to the Stated Principal Balance of such Mortgage Loan as of the
close of business on the Payment Date during such calendar month, plus (iii)
any amounts previously withdrawn from the Collection Account in respect of such
Mortgage Loan pursuant to Sections 3.11(ix) and 3.18(b) of the Sale and
Servicing Agreement, minus (iv) the proceeds, if any, received in respect of
such Mortgage Loan during the calendar month in which such Final Recovery
Determination was made, net of amounts that are payable therefrom to the
Servicer with respect to such Mortgage Loan pursuant to clause (iii) of Section
3.11 of the Sale and Servicing Agreement.
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With respect to any REO Property as to which a Final Recovery
Determination has been made an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Payment Date during such calendar month, plus (iii) REO Imputed Interest
for such REO Property for each calendar month commencing with the calendar
month in which such REO Property was acquired and ending with the calendar
month in which such Final Recovery Determination was made, plus (iv) any
amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Sections 3.11(ix) and 3.18(b) of the Sale and
Servicing Agreement, minus (v) the aggregate of all Monthly Advances made by
the Servicer in respect of such REO Property or the related Mortgage Loan for
which the Servicer has been or, in connection with such Final Recovery
Determination, will be reimbursed pursuant to Section 3.25 of the Sale and
Servicing Agreement out of rental income, Insurance Proceeds and Liquidation
Proceeds received in respect of such REO Property, minus (vi) the total of all
net rental income, Insurance Proceeds and Liquidation Proceeds received in
respect of such REO Property that has been, or in connection with such Final
Recovery Determination, will be transferred to the Distribution Account
pursuant to Section 3.25 of the Sale and Servicing Agreement.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected Monthly Payment.
A Realized Loss within the meaning of the foregoing
provisions shall constitute a Realized Loss regardless of how such Realized
Loss shall have arisen (e.g., whether by virtue of any default, bankruptcy,
fraud, special hazard or any other reason).
"Record Date": With respect to each Payment Date, the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
"Redemption Date": In the case of a redemption of a Class of
Notes pursuant to Article X of the Indenture, the Payment Date for such
redemption as provided in Article X of the Indenture.
27
"Redemption Price": As of any date, an amount equal to the
unpaid principal amount of the then outstanding principal amount of the related
Class of Notes, plus accrued and unpaid interest thereon to but excluding such
date.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any Payment
Date and any Mortgage Loan, any reduction in the amount of interest collectible
on such Mortgage Loan for the most recently ended calendar month as a result of
the application of the Relief Act.
"Remaining Overcollateralization Deficit": On any Payment
Date with respect to a Class of Notes, such Class' allocable portion of any
Overcollateralization Deficit, after taking into account the payment of the
related Principal Distribution Amount (including any portion thereof funded
from the Net Monthly Excess Cashflow, or from amounts, if any available from
the Reserve Account but excluding the amount of any Insured Payment) as of such
Payment Date.
"Remittance Report": As defined in Section 4.02 of the Sale
and Servicing Agreement.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained by the
Servicer in respect of an REO Property pursuant to Section 3.25 of the Sale and
Servicing Agreement.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of the Trust
Property, one month's interest at the applicable Net Mortgage Rate on the
Stated Principal Balance of such REO Property (or, in the case of the first
such calendar month, of the related Mortgage Loan if appropriate) as of the
close of business on the Payment Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar
month, whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the price paid in connection with a purchase of
some or all of the Mortgage Loans and REO Properties
28
pursuant to Section 10.01 of the Sale and Servicing Agreement that is allocable
to such REO Property) or otherwise, net of any portion of such amounts (i)
payable pursuant to Section 3.25(c) of the Sale and Servicing Agreement in
respect of the proper operation, management and maintenance of such REO
Property or (ii) payable or reimbursable to the Servicer pursuant to Section
3.25(d) of the Sale and Servicing Agreement for unpaid Servicing Fees in
respect of the related Mortgage Loan and unreimbursed Servicing Advances and
Monthly Advances in respect of such REO Property or the related Mortgage Loan,
over (b) the REO Imputed Interest in respect of such REO Property for such
calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer
on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.25 of the Sale and Servicing Agreement.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit E -1 or Exhibit E-2.
"Reserve Account": That certain account, which shall be an
Eligible Account, established pursuant to Section 8.18 of this Indenture.
"Reserve Interest Rate": The rate per annum that the
Indenture Trustee determines to be either (i) the arithmetic mean (rounded
upwards if necessary to the nearest whole multiple of 0.0625%) of the one-month
U.S. dollar lending rates which New York City banks selected by the Indenture
Trustee are quoting on the relevant Interest Determination Date to the
principal London offices of leading banks in the London interbank market or, in
the event that the Indenture Trustee can determine no such arithmetic mean,
(ii) the lowest one-month U.S. dollar lending rate which New York City banks
selected by the Indenture Trustee are quoting on such Interest Determination
Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a FNMA eligible condominium project, (iv) a
detached one-family dwelling in a planned unit development or (v) a
manufactured home treated as real property under local law, none of which is a
co-operative, mobile or manufactured home (as defined in 42 United States Code,
Section 5402(6)).
"Responsible Officer": When used with respect to the
Indenture Trustee, any officer of the Corporate Trust Department of the
Indenture Trustee, including any Senior Vice President, any Assistant Vice
President, any Assistant Secretary, any Trust Officer or any other officer of
the Indenture Trustee customarily performing functions similar to those
performed by any of the above designated officers to whom, with respect to a
particular matter, such matter is referred. When used with respect to the Owner
Trustee, any officer of the Corporate Trust Department of the Owner Trustee,
including any Senior Vice President, any Assistant Vice President, any
Assistant Secretary, any Trust Officer or any other officer of the Initial
Owner Trustee customarily performing
29
functions similar to those performed by any of the above designated officers to
whom, with respect to a particular matter, such matter is referred.
"Rolling Delinquency Percentage": As of any Payment Date, the
average of the Delinquency Percentages for both Groups as of the last day of
each of the three (or one or two, in the case of the first and second Payment
Dates) most recently ended Collection Periods.
"Rolling Loss Percentage": As of any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
amount of Realized Losses for both Groups incurred during the preceding twelve
Collection Periods, and the denominator of which is the aggregate Stated
Principal Balance of the Mortgage Loans in both Groups as of the first day of
the twelfth preceding Collection Period.
"SAIF": The Savings Association Insurance Fund, as from time
to time constituted, created under the Financial Institutions Reform, Recovery
and Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
"Sale and Servicing Agreement": The Sale and Servicing
Agreement dated as of May 1, 1999, among the Trust, the Depositor, the
Servicer, the Back-up Servicer and the Indenture Trustee, as the same may be
amended or supplemented from time to time.
"Scheduled Payment": As defined in the Policy.
"Secretary of State": The Secretary of State of the State of
Delaware.
"Security Majority": A majority by principal amount of the
Noteholders so long as the Notes are outstanding and a majority by Percentage
Interest of the Certificateholders thereafter.
"Securityholder" or "Holder": A Noteholder and/or
Certificateholder, as the context requires.
"Servicer": HomeGold, Inc., a South Carolina corporation, or
any successor servicer appointed as provided in the Sale and Servicing
Agreement, in its capacity as Servicer under the Sale and Servicing Agreement.
"Servicer Event of Default": One or more of the events
described in Section 7.01 of the Sale and Servicing Agreement.
"Servicer Extension Notice": As described in Section 7.01 of
the Sale and Servicing Agreement.
"Servicer Remittance Date": With respect to any Payment Date,
12:00 noon New York time on the fourth Business Day prior to such Payment Date.
30
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09 of the Sale and Servicing Agreement.
"Servicing Advances": The reasonable "out-of-pocket" costs
and expenses incurred by the Servicer in connection with a default, delinquency
or other unanticipated event by the Servicer in the performance of its
servicing obligations, including, but not limited to, the cost of (i) the
preservation, restoration and protection of a Mortgaged Property, (ii) any
enforcement or judicial proceedings, including foreclosures, in respect of a
particular Mortgage Loan, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property, and (iv) the
performance of its obligations under Sections 3.01, 3.09, 3.16, 3.18 and 3.25
of the Sale and Servicing Agreement. The Servicer shall not be required to make
any Servicing Advance in respect of a Mortgage Loan or REO Property that, in
the good faith business judgment of the Servicer, would not be ultimately
recoverable from related Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
"Servicing Fee": With respect to each Mortgage Loan and for
any calendar month, an amount equal to one month's interest (or in the event of
any payment of interest which accompanies a Principal Prepayment in full made
by the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Servicing Fee Rate on the same
principal amount on which interest on such Mortgage Loan accrues for such
calendar month. A portion of such Servicing Fee may be retained by any
Sub-Servicer as its servicing compensation.
"Servicing Fee Rate": With respect to each Group, 0.50% per
annum, provided that if the Back-up Servicer has assumed the duties of Servicer
and (i) the Mortgage Loans that are more than 30 days delinquent are equal to
or greater than 12% but less than 18% of all Mortgage Loans (measured by the
aggregate Stated Principal Balance as of the time of servicing transfer), the
Servicing Fee Rate shall increase to 0.65% per annum or (ii) if the Mortgage
Loans that are more than 30 days delinquent are equal to or exceed 18% of all
Mortgage Loans (measured by the aggregate Stated Principal Balance as of the
time of servicing transfer) the Servicing Fee Rate shall increase to 0.75% per
annum.
"Servicing Officer": Any officer of the Servicer involved in,
or responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished by
the Servicer to the Indenture Trustee and the Insurer and the Depositor on the
Closing Date, as such list may from time to time be amended.
"Shortfall Interest Deferred Amount": For any Payment Date
with respect to any Class A Note, the amount, if any, of interest accrued
during the related Interest Accrual Period on the Note Principal Balance of
such Class A Note at the related Class A Note Interest Rate that is not
available for payment on such Payment Date out of the Available Distribution
Amount due to Relief Act Interest Shortfalls and, to the extent not funded by
the Servicer, Prepayment Interest Shortfalls.
31
"Single Security": With respect to any Class of Notes, a
hypothetical Note of such Class evidencing a Percentage Interest for such Class
corresponding to an initial Note Principal Balance of $1,000. With respect to
the Certificates, a hypothetical Certificate evidencing a 100% Percentage
Interest in the Certificates.
"S&P": Standard & Poor's Ratings Services, a division of
McGraw-Hill Inc., or its successor in interest.
"Specified Overcollateralization Amount": With respect each
Class of Notes and to any Payment Date, an amount equal to 13.50% of the
Maximum Collateral Amount of the Mortgage Loans in the related Group, subject
to the following: (i) if the Step Up Trigger for such Class of Notes has
occurred with respect to such Payment Date, the Specified Overcollateralization
Amount for such Class of Notes for such Payment Date will be an amount equal to
20% of the Maximum Collateral Amount of the Mortgage Loans in the related
Group, and (ii) if the Step Down Trigger has occurred, the Specified
Overcollateralization Amount for such Class of Notes for such Payment Date will
be an amount equal to the greatest of (A) 0.50% of the Original Pool Balance of
the Mortgage Loans in the related Group, (B) the lesser of (x) 13.50% of the
Maximum Collateral Amount of the Mortgage Loans in the related Group and (y)
the Stepped Down Specified Overcollateralization Percentage of the aggregate
Stated Principal Balance of the Mortgage Loans in such Group as of such Payment
Date, and (C) the product of three and the Stated Principal Balance of the
Mortgage Loan with the highest Stated Principal Balance in such Group as of
such Payment Date.
"Stated Principal Balance": With respect to any Mortgage
Loan: (a) as of any date of determination up to but not including the Payment
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the outstanding principal balance of such
Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule,
minus the sum of (i) the principal portion of each Monthly Payment due on a Due
Date subsequent to the Cut-off Date, to the extent received from the Mortgagor
or included in a Monthly Advance and distributed pursuant to Section 8.3 of the
Indenture on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date, to the extent distributed pursuant
to Section 8.3 of the Indenture on or before such date of determination, (iii)
all Liquidation Proceeds and Insurance Proceeds applied by the Servicer as
recoveries of principal in accordance with the provisions of Section 3.18, to
the extent distributed pursuant to Section 8.3 of the Indenture on or before
such date of determination, and (iv) any Realized Loss incurred with respect
thereto coinciding with or preceding such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Payment Date on
which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, zero. With respect to any REO Property: (a)
as of any date of determination up to but not including the Payment Date on
which the proceeds, if any, of a Liquidation Event with respect to such REO
Property would be distributed, an amount (not less than zero) equal to the
Stated Principal Balance of the related Mortgage Loan as of the date on which
such REO Property was acquired on behalf of the Trust, minus the aggregate
amount of REO Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent
32
distributed pursuant to Section 8.3 of the Indenture on or before such date of
determination, and (b) as of any date of determination coinciding with or
subsequent to the Payment Date on which the proceeds, if any, of a Liquidation
Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": As defined in Section 7.02(b) of the Sale and
Servicing Agreement.
"Step Down Cumulative Loss Test": The Step Down Cumulative
Loss Test for both Groups will be met with respect to a Payment Date as
follows: (i) for the 30th through the 41st Payment Dates, if the Cumulative
Loss Percentage for both Groups for such Payment Date is 3.00% or less, (ii)
for the 42nd through the 53rd Payment Dates, if the Cumulative Loss Percentage
for both Groups for such Payment Date is 3.75% or less, (iii) for the 54th
through the 65th Payment Dates, if the Cumulative Loss Percentage for such
Payment Date is 4.50% or less, and (iv) for 66th Payment Date and any Payment
Date thereafter, if the Cumulative Loss Percentage for both Groups for such
Payment Date is 5.50% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test for both Groups will be met with respect to a Payment Date if
the Rolling Delinquency Percentage for both Groups for such Payment Date is
11.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss
Test for both Groups will be met with respect to a Payment Date if the Rolling
Loss Percentage for both Groups for such Payment Date is less than 1.25%.
"Step Down Trigger": For any Payment Date after the 30th
Payment Date, the Step Down Trigger for both Groups will have occurred if each
of the Step Down Cumulative Loss Test, the Step Down Rolling Delinquency Test
and the Step Down Rolling Loss Test for such Group is met. In no event will the
Step Down Trigger be deemed to have occurred for the 30th Payment Date or any
preceding Payment Date.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss
Test for both Groups will be met with respect to a Payment Date as follows (i)
for the 1st through the 12th Payment Dates, if the Cumulative Loss Percentage
for both Groups for such Payment Date is more than 1.50%, (ii) for the 13th
through the 24th Payment Dates, if the Cumulative Loss Percentage for both
Groups for such Payment Date is more than 2.25%, (iii) for the 25th through the
36th Payment Dates, if the Cumulative Loss Percentage for Groups for such
Payment Date is more than 3.50%, (iv) for the 37th through the 48th Payment
Dates, if the Cumulative Loss Percentage for both Groups for such Payment Date
is more than 4.75%, and (v) for the 49th Payment Date and any Payment Date
thereafter, if the Cumulative Loss Percentage for both Groups for such Payment
Date is more than 6.50%.
33
"Step Up Rolling Delinquency Test": The Step Up Rolling
Delinquency Test for both Groups will be met with respect to a Payment Date if
the Rolling Delinquency Percentage for both Groups for such Payment Date is
more than 15.00%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test
for both Groups will be met with respect to a Payment Date if the Rolling Loss
Percentage for both Groups for such Payment Date is 1.50% or more.
"Step Up Trigger": For any Payment Date, the Step Up Trigger
for both Groups will have occurred if any one of the Step Up Cumulative Loss
Test, the Step Up Rolling Delinquency Test or the Step Up Rolling Loss Test is
met for both Groups with respect to such Payment Date.
"Stepped Down Specified Overcollateralization Percentage":
For any Payment Date for which the Step Down Trigger for both Groups has
occurred, a percentage equal to (i) the percentage equivalent of a fraction,
the numerator of which is 13.50% of the Maximum Collateral Amount for both
Groups, and the denominator of which is the aggregate Stated Principal Balance
of the Mortgage Loans in both Groups as of such Payment Date, minus (ii) the
percentage equivalent of a fraction, the numerator of which is the product of
(A) the percentage calculated under clause (i) above minus 27.00%, multiplied
by (B) the number of consecutive Payment Dates through and including the
Payment Date for which the Stepped Down Specified Overcollateralization
Percentage both Groups is being calculated, up to a maximum of six, for which
the Step Down Trigger for both Groups has occurred, and the denominator of
which is six.
"Sub-Servicer": Any Person with which the Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02 of the Sale and Servicing Agreement.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 of the Sale
and Servicing Agreement and is otherwise acceptable to the Servicer.
"Sub-Servicing Agreement": The written contract between the
Servicer and a Sub-Servicer relating to servicing and administration of certain
Mortgage Loans as provided in Section 3.02 of the Sale and Servicing Agreement.
"Substitution Shortfall Amount": As defined in Section
2.05(d) of the Sale and Servicing Agreement.
"Tax Returns": Any and all other information reports or
returns that may be required to be furnished to the Certificateholder or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
"Termination Date": The latest of (i) the termination of the
Policy and the return of the Policy to the Insurer for cancellation, (ii) the
date on which the Indenture Trustee shall have received payment and performance
of all Insurer Trust Secured
34
obligations and (iii) the date on which the Indenture Trustee shall have
received payment and performance of all Indenture Trustee Trust Secured
Obligations.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in the
Certificate or a Note, as the case may be.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Security.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in the Certificate or Note, as the case may be.
"Transition Cost": Any documented expenses reasonably
incurred by the Back-up Servicer or Indenture Trustee in connection with a
transfer of servicing from the Servicer to a successor Servicer as successor
Servicer pursuant to Section 7.02 of the Sale and Servicing Agreement, but not
to exceed $5,000 with respect to any single succession.
"Treasury Regulations": Regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to
specific provisions of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust": The trust established by the Trust Agreement.
"Trust Accounts": The Collection Account, the Distribution
Account, the Reserve Account and the Expense Account.
"Trust Agreement": The Amended and Restated Trust Agreement
dated as of May 1, 1999 between the Unaffiliated Seller and the Owner Trustee
relating to the establishment of the Trust.
"Trust Indenture Act" or "TIA": The Trust Indenture Act of
1939, as amended and as in force on the date hereof, unless otherwise
specifically provided.
"Trust Interest": A beneficial interest in the Trust
representing the interest in the Trust of the Certificateholder.
"Trust Property": The two segregated pools of assets subject
hereto, constituting the primary trust created hereby and to be administered
hereunder, consisting of: (i) such Mortgage Loans as from time to time are
subject to this Agreement, together with the Mortgage Files relating thereto,
and together with all collections thereon and proceeds thereof, (ii) any REO
Property, together with all collections thereon and proceeds thereof, (iii) the
Indenture Trustee's rights with respect to the Mortgage Loans under all
insurance policies required to be maintained pursuant to this Agreement and any
proceeds thereof, (iv) the Depositor's rights under the Unaffiliated Seller's
Agreement (including any security interest created thereby), (v) the Collection
Account, the Distribution Account, any REO Account and the Expense Account and
such assets that
35
are deposited therein from time to time and any investments thereof, and (vi)
the Indenture Trustee's rights under the Policy, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, the Trust Property specifically excludes all payments and
other collections of principal and interest on the Mortgage Loans received on
or before the Cut-off Date.
"Unaffiliated Seller": Emergent Mortgage Holdings
Corporation, or its successor-in-interest, in its capacity as Unaffiliated
Seller under the Unaffiliated Seller's Agreement and the Trust Agreement.
"Unaffiliated Seller's Agreement": The agreement dated as of
May 1, 1999 among the Unaffiliated Seller, the Depositor and HomeGold Financial
and providing for the sale of the Mortgage Loans from the Unaffiliated Seller
to the Depositor.
"Underwriting Agreement": The Underwriting Agreement dated
May 19, 1999 among the Trust, the Depositor and Prudential Securities
Incorporated relating to the issuance and sale of the Notes.
"Uninsured Cause": Any cause of damage to a Mortgaged
Property such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies required to be maintained
pursuant to Section 3.16 of the Sale and Servicing Agreement.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or
an estate or trust whose income from sources without the United States is
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. The term "United States" shall have the meaning set forth in
Section 7701 of the Code.
"Value": With respect to any Mortgaged Property, the lesser
of (i) the lesser of (a) the value thereof as determined by an appraisal made
for the originator of the Mortgage Loan at the time of origination of the
Mortgage Loan by an appraiser who met the minimum requirements of FNMA and
FHLMC, and (b) the value thereof as determined by a review appraisal conducted
by the Servicer in the event any such review appraisal determines an appraised
value ten percent or more lower than the value thereof as determined by the
appraisal referred to in clause (i)(a) above and (ii) the purchase price paid
for the related Mortgaged Property by the Mortgagor with the proceeds of the
Mortgage Loan; provided, however, in the case of a Refinanced Mortgage Loan,
such value of the Mortgaged Property is based solely upon the lesser of (1) the
value determined by an appraisal made for the originator of such Refinanced
Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an
appraiser who met the minimum requirements of FNMA and FHLMC and (2) the value
thereof as determined by a review appraisal conducted by the Servicer in the
event any such review appraisal
36
determines an appraised value ten percent or more lower than the value thereof
as determined by the appraisal referred to in clause (ii)(l) above.
"Voting Rights": The voting rights hereunder of Holders of
the Notes or, so long as no Insurer Default shall have occurred and be
continuing, of the Insurer in the place and stead of the Holders of the Notes,
as provided in the Sale and Servicing Agreement and the Indenture.
Dates Referenced Herein and Documents Incorporated by Reference
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