EXHIBIT 10(A)
Draft of October 31, 1997
Marked to Show Changes From
Draft of September 15, 1997
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
Draft 10/31/97
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Servicing Agreement
between
▇▇▇▇▇▇ Trust and Savings Bank
and
▇▇▇▇▇▇ Preferred Capital Corporation
____________, 1997
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Table of Contents
Section Heading Page
Section 1. Definitions.............................................. 1
Section 1.1. Definitions.............................................. 1
Section 2. Servicing................................................... 4
Section 2.1. Duties of Servicer....................................... 4
Section 2.2. Liquidation of Mortgage Loans............................ 6
Section 2.3. Collection of Mortgage Loan Payments..................... 7
Section 2.4. Establishment of and Deposits to Custodial Account....... 8
Section 2.5. Permitted Withdrawals from Custodial Account............. 8
Section 2.6. Establishment of and Deposits to Escrow Account.......... 9
Section 2.7. Permitted Withdrawals from Escrow Account................ 10
Section 2.8. Payment of Taxes, Insurance and Other Charges............ 10
Section 2.9. Protection of Accounts................................... 11
Section 2.10. Maintenance of Hazard Insurance.......................... 11
Section 2.11. Maintenance of Mortgage Impairment Insurance............. 12
Section 2.12. Maintenance of Fidelity Bond............................. 12
Section 2.13. Inspections.............................................. 13
Section 2.14. Restoration of Mortgaged Property........................ 13
Section 2.15. Title, Management and Disposition of REO Property........ 13
Section 2.16. Permitted Withdrawals with Respect to REO Property....... 15
Section 2.17. Real Estate Owned Reports................................ 15
Section 3. Payments to the Company..................................... 15
Section 3.1. Remittances.............................................. 15
Section 3.2. Statements to the Company................................ 16
Section 4. General Servicing Procedures................................ 16
Section 4.1. Transfers of Mortgaged Property.......................... 16
Section 4.2. Satisfaction of Mortgages and Release of Mortgage Files.. 17
Section 4.3. Servicing Compensation................................... 17
Section 4.4. Annual Statement as to Compliance........................ 17
Section 4.5. Annual Independent Chartered Accountants Servicing Report 17
Section 4.6. Right to Examine Servicer Records........................ 18
Section 5. Servicer to Cooperate....................................... 18
Section 5.1. Provision of Information................................. 18
Section 6. Termination 18
Section 6.1. Agency Suspension.................................... 18
Section 6.2. Damages.............................................. 18
Section 6.3. Termination.......................................... 18
Section 6.4. Termination Without Cause............................ 19
Section 7. Books and Records...................................... 19
Section 7.1. Possession of Servicing Files........................ 19
Section 8. Indemnification and Assignment......................... 20
Section 8.1. Indemnification...................................... 20
Section 8.2. Limitation on Liability of Servicer and Others....... 20
Section 8.3. Limitation on Registration and Assignment by Servicer 21
Section 8.4. Assignment by Company................................ 21
Section 8.5. Merger or Consolidation of the Servicer.............. 22
Section 8.6. Successor to the Servicer............................ 22
Section 9. Representations, Warranties and Covenants of Company... 23
Section 9.1. Due Organization and Authority....................... 23
Section 9.2. No Conflicts......................................... 23
Section 9.3. Ability to Perform................................... 23
Section 9.4. No Litigation Pending................................ 23
Section 9.5. No Consent Require................................... 24
Section 10. Representations and Warranties of Servicer............. 24
Section 10.1. Due Organization and Authority....................... 24
Section 10.2. Ordinary Course of Business.......................... 24
Section 10.3. No Conflicts......................................... 24
Section 10.4. Ability to Service................................... 25
Section 10.5. Ability to Perform................................... 25
Section 10.6. No Litigation Pending................................ 25
Section 10.7. No Consent Required.................................. 25
Section 10.8. No Untrue Information................................ 25
Section 10.9. Reasonable Servicing Fee............................. 26
Section 10.10. Conflict of Interest................................. 26
Section 11. Default................................................ 26
Section 11.1. Events of Default.................................... 26
Section 11.2. Waiver of Defaults................................... 27
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Section 12. Miscellaneous Provisions................. 27
Section 12.1. Notices............................... 27
Section 12.2. Waivers............................... 28
Section 12.3. Entire Agreement Amendment............ 28
Section 12.4. Execution; Binding Effect............. 28
Section 12.5. Headings.............................. 28
Section 12.6. Governing Law......................... 28
Section 12.7. Relationship of Parties............... 29
Section 12.8. Severability of Provision............. 29
Section 12.9. Exhibits.............................. 29
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Servicing Agreement
Servicing Agreement (the "Servicing Agreement" or the "Agreement") entered
into as of ____________, 1997 between ▇▇▇▇▇▇ Trust and Savings Bank, an Illinois
banking corporation (the "Servicer") and ▇▇▇▇▇▇ Preferred Capital Corporation, a
Maryland corporation (the "Company");
Whereas the Company and ▇▇▇▇▇▇ Trust and Savings Bank, as assignor (the
"Assignor"), entered into an assignment of mortgage loans dated as of
____________, 1997 (the "Mortgage Loan Assignment Agreement") pursuant to which
the Assignor assigned to the Company certain first mortgage loans as set forth
on Exhibit A (the "Mortgage Loans");
Whereas the Company desires to have the Servicer service and administer the
Mortgage Loans, the Servicer desires to service and administer the Mortgage
Loans on behalf of the Company, and the parties desire to provide the terms and
conditions of such servicing and administration by the Servicer.
Now, Therefore, in consideration of the mutual agreements set forth herein
and for other good and valuable consideration, the receipt and the sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Definitions.
Section 1.1. Definitions. The following terms are defined as follows:
"Accepted Servicing Practices" means, with respect to any Mortgage Loan,
those normal mortgage servicing practices (i)established by the Company,
(ii)in the case of residential Mortgage Loans, with ▇▇▇▇▇▇ ▇▇▇ and FHLMC
guidelines and procedures, (iii)of prudent mortgage lending institutions which
service mortgage loans of the same type as such Mortgage Loan in the
jurisdiction where the related Mortgaged Property is located to the extent such
normal mortgage servicing practices do not conflict with the practices
established by the Company and the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and
procedures, and (iv) in accordance with other applicable law.
"Ancillary Income" means all late payment charges, penalties and assumption
fees, non-sufficient funds fees ("NSF"), escrow account benefits, reinstatement
fees and other miscellaneous and similar types of fees arising from or in
connection with any Mortgage Loan to the extent not otherwise payable to the
Mortgagor under applicable law or pursuant to the terms of any applicable loan
documents contained in the related Mortgage Loan File.
"Closing Date" means ____________, 1997, or such other date as is mutually
agreed upon by the parties hereto.
"Condemnation Proceeds" means all awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of
eminent domain, expropriation or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan File.
"Custodial Account" means the separate account or accounts created and
maintained pursuant to Section 2.4.
"Custodian" means the custodian under the custodial agreement dated
__________________, 1997, among Company, Servicer, and ________________________.
"Cut-off Date" means ___________, 1997.
"Determination Date" means one (1) Business Day prior to the related
Remittance Date.
"Due Period" means, with respect to each Remittance Date, the calendar
month preceding the Remittance Date.
"Escrow Account" means the separate account or accounts created and
maintained pursuant to Section 2.6.
"Escrow Payment" means, with respect to any Mortgage Loan, the amounts
constituting real estate tax payments and any other payments required to be
escrowed by the Mortgagor under the applicable documents contained in the
Mortgage Loan File.
"Event of Default" means any one of the conditions or circumstances
enumerated in Section11.1.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"▇▇▇▇▇▇ ▇▇▇" means the Federal National Mortgage Association.
"FHLMC" means the Federal Home Loan Mortgage Corporation.
"Fidelity Bond" means a fidelity bond to be maintained by the Servicer
pursuant to Section 2.12.
"Insurance Proceeds" means, with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
"Liquidation Proceeds" means cash received in connection with the
liquidation of a defaulted Mortgage Loan, whether through the sale of such
Mortgage Loan, foreclosure sale or otherwise, or the sale of the related
Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan.
"Monthly Remittance Advice" means the monthly remittance advice to be
provided to the Company pursuant to Section 3.2.
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"Mortgage Loan File" means, collectively, all of the agreements, deeds and
proceedings evidencing the Mortgage Loans and the Security, as well as any
architectural and engineering report, title report, survey, insurance policy and
other information and material with respect to the real property securing, the
Mortgage Loans and, with respect to each Mortgage Loan, all of the agreements,
deeds and proceedings evidencing such Mortgage Loan and the Security relating
thereto as well as any architectural and engineering report, title report,
survey, insurance policy and other information and material with respect to the
real property securing such Mortgage Loan.
"Mortgage Impairment Insurance Policy" means a mortgage impairment or
blanket hazard insurance policy as described in Section 2.11.
"Mortgage Loans" has the meaning set forth in the recitals.
"Mortgage Property" means, with respect to each Mortgage Loan, the real or
immovable property mortgaged, charged or hypothecated pursuant to such Mortgage
Loan, including all fixtures attached thereto.
"Mortgagor" means the mortgagor under the Mortgage Loans.
"Non-recoverable Advance" means any Servicing Advance previously made or
proposed to be made in respect of a Mortgage Loan which, in the good faith
judgment of the Servicer, will not or, in the case of a proposed Servicing
Advance, would not, be ultimately recoverable from related Insurance Proceeds,
Liquidation Proceeds or otherwise. The determination by the Servicer that it has
made a Non-recoverable Advance or that any proposed Servicing Advance, if made,
would constitute a Non-recoverable Advance, shall be evidenced by an Officer's
Certificate delivered to the Company.
"Officer's Certificate" means a certificate signed by the Senior Vice-
President of the Servicer, and delivered to the Company as required by this
Agreement.
"Principal Prepayment" means any payment or other recovery of principal on
a Mortgage Loan which is received in advance of its scheduled maturity date,
including any prepayment penalty or premium thereon, and which is not
accompanied by an amount of interest representing scheduled interest due any
date or dates in any month or months subsequent to the month of payment.
"Purchase Agreement" has the meaning set forth in the recitals.
"Qualified Depository" means a depository the accounts of which are insured
by the FDIC.
"Qualified Insurer" means an insurance company duly qualified as such under
the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided,
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and approved by ▇▇▇▇▇▇ ▇▇▇ and FHLMC as an insurer with respect to hazard
insurance and flood insurance.
"Remittance Date" means at the latest, the 15th day (or if such 15th day is
not a Business Day, the first Business Day immediately following) of any month,
beginning with the first Remittance Date on ____________ 15, 1997.
"REO Property" means a Mortgaged Property acquired by the Servicer on
behalf of the Company through foreclosure or by deed in lieu of foreclosure or
by taking in payment, as described in Section 2.15.
"Security" means collectively the security securing the Mortgage Loans and
set forth in the Mortgage Loan File, including, without limitation, any
mortgages and similar instruments securing the Mortgage Loans.
"Servicer Employees" has the meaning set forth in Section 2.12.
"Servicing Advances" means all customary, reasonable and necessary "out of
pocket" costs and expenses (including reasonable attorneys' fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures, (c) the management and liquidation
of the Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan and (d) compliance with the obligations under Section 2.8.
"Servicing Agreement" means this agreement between the Company and the
Servicer for the servicing and administration of the Mortgage Loans.
"Servicing Fee" means the amount of the annual fee the Company shall pay to
the Servicer, which shall, for a period of one (1) full month, be equal to the
sum of (i) one-twelfth of the product of the Servicing Fee Rate and the
aggregate outstanding balance of the Mortgage Loans as of the last day of each
calendar month, and (ii) any amounts not required to be deposited in the
Custodial Account pursuant to Section 2.4. Such fee shall be payable quarterly,
computed on the basis of the same principal amount and period in respect of
which any related interest payment on a Mortgage Loan is computed and shall be
pro rated for any portion of a month during which the Mortgage Loan is serviced
by the Servicer under this Agreement.
"Servicing Fee Rate" means, with respect to each Mortgage Loan, a rate of
0.25% per annum or such other rate to which the parties may mutually agree.
"Servicing File" means such duplicates or originals from the Mortgage Loan
File as are held by the Servicer.
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Section 2. Servicing.
Section 2.1. Duties of Servicer. From and after the Closing Date, the
Servicer shall service and administer the Mortgage Loans and shall, subject to
prior approval of the Company, do all things in connection with such servicing
and administration which are consistent with the terms of this Agreement and
Accepted Servicing Practices. The Servicer shall service the Mortgage Loans in
strict compliance with the servicing provisions of the ▇▇▇▇▇▇ ▇▇▇ and FHLMC
guidelines and procedures. In the event of any conflict, inconsistency or
discrepancy between any of the servicing provisions of this Agreement and any of
the servicing provisions of the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and procedures,
the provisions of the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and procedures shall
control and be binding upon the Servicer.
Consistent with the terms of this Agreement, but in strict compliance with
the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and procedures only, the Servicer may, if so
required by the Company, waive, modify or vary any term of any Mortgage Loan or
consent to the postponement of strict compliance with any such term or in any
manner grant any indulgence to any Mortgagor, provided, however, that unless the
Servicer has obtained the prior written consent of ▇▇▇▇▇▇ ▇▇▇ or FHLMC, the
Servicer shall not permit any modification with respect to any Mortgage Loan
that would change the mortgage interest rate, defer or forgive the payment of
principal or interest, reduce or increase the outstanding principal balance
(except for actual payments of principal) or change the final maturity date on
such Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall, if so required by the Company, execute and deliver on behalf of
itself and the Company, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties.
In servicing and administering the Mortgage Loans, the Servicer shall
employ procedures (including collection procedures) and exercise the same care
that it customarily employs and exercises in servicing and administering
mortgage loans for its own account, giving due consideration to Accepted
Servicing Practices and the Company's reliance on the Servicer.
The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof and the ▇▇▇▇▇▇ ▇▇▇
and FHLMC guidelines and procedures. For the purposes of this Agreement, the
Servicer shall be under no obligation to deal with any person with respect to
this Agreement or the Mortgage Loans unless the Servicer has been notified of
such transfers as provided in this Section 2.1. The Company may sell and
transfer, in whole or in part, the Mortgage Loans, provided that no such sale
and transfer shall be binding upon the Servicer unless such transferee shall
agree in writing to be bound by the terms of this Agreement, and an executed
copy of the same shall have been delivered to the Servicer. Upon receipt
thereof, the Servicer shall mark its books and records to reflect the ownership
of the Mortgage Loans by such assignee, and the Company shall be
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recalled from its obligations hereunder. The Servicer shall be required to remit
all amounts required to be remitted to the Company hereunder to said transferee,
and said transferee shall succeed to all rights of the Company hereunder,
commencing with the first Remittance Date falling after receipt of said copy of
the related assignment and assumption agreement provided that the Servicer
receives said copy no later than fifteen (15) Business Days immediately prior to
the first day of the month of the related Remittance Date.
The Mortgage Loan File retained by the Servicer pursuant to this Agreement
shall be appropriately marked and identified to clearly reflect the assignment
of the related Mortgage Loan to the Company. The Servicer shall release from its
custody the contents of the Mortgage Loan File retained by it only in accordance
with this Agreement.
The Servicer must have an internal quality control program that is capable
of evaluating and monitoring the overall quality of its servicing activities.
The program is to ensure that the Mortgage Loans; are (i) serviced in accordance
with Accepted Servicing Practices and generally accepted accounting principles;
(ii) guard against dishonest, fraudulent or negligent acts; and (iii) guard
against errors and omissions by officers, employees or other authorized persons.
Section 2.2. Liquidation of Mortgage Loans. In the event that any payment
due under any Mortgage Loan and not postponed pursuant to Section 2.1 is not
paid when the same becomes due and payable, or in the event the Mortgagor fails
to perform any other covenant or obligation under the Mortgage Loan File and
such failure continues beyond any applicable grace period, the Servicer shall
take such administrative action as is directed by Company or as
2.2.1 the Servicer would take under similar circumstances with respect
to a similar mortgage loan held for its own account for investment,
2.2.2 shall be consistent with Accepted Servicing Practices, and
2.2.3 the Servicer shall determine prudently to be in the best
interest of the Company.
In the event that any payment due under any Mortgage Loan is not postponed
pursuant to Section 2.1 and remains delinquent beyond the expiration of any
grace or cure period (or such other period as is required by law in the
jurisdiction where the related Mortgaged Property is located), the Servicer
shall, if so required by the Company, commence foreclosure proceedings in
accordance with Accepted Servicing Practices, provided that, prior to commencing
foreclosure proceedings, the Servicer shall transmit to the Company copies of
the notices given to, and received from, ▇▇▇▇▇▇ ▇▇▇ and FHLMC with respect
thereto. In such connection, the Servicer shall from its own funds make all
necessary and proper Servicing Advances, provided, however, that the Servicer
shall not be required to expend its own funds in connection with any foreclosure
or towards the restoration or preservation of any Mortgaged Property, unless its
shall determine:
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(a) that such preservation, restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan to Company after
reimbursement to itself for such expenses, and
(b) that such expenses will be recoverable by it either through
Liquidation Proceeds (in respect of which it shall have priority for
purposes of withdrawals from the Custodial Account pursuant to Section 2.5)
or through Insurance Proceeds (in respect of which it shall have similar
priority.
Notwithstanding anything to the contrary contained herein, in connection with a
foreclosure, in the event the Servicer has reasonable cause to believe that a
Mortgaged Property is contaminated by hazardous or toxic substances or wastes,
or if ▇▇▇▇▇▇ ▇▇▇ or FHLMC otherwise requests an environmental inspection or
review of such Mortgaged Property to be conducted by a qualified inspector, the
Servicer shall cause the Mortgaged Property to be so inspected at the expense of
the Company. Upon completion of the inspection, the Servicer shall, upon
request, promptly provide the Company with a written report of the environmental
inspection.
After reviewing the environmental inspection report, the Company, subject
to the rights of ▇▇▇▇▇▇ ▇▇▇ and FHLMC, shall determine how the Servicer shall
proceed with respect to the Mortgaged Property. In the event:
(a) the environmental inspection report indicates that the Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, and
(b) the Company and/or ▇▇▇▇▇▇ ▇▇▇ or FHLMC directs the Servicer to
proceed with foreclosure or acceptance of a deed in lieu of foreclosure,
the Servicer shall be reimbursed for all reasonable costs associated with such
foreclosure or acceptance of a deed in lieu of foreclosure and any related
environmental clean up costs, as applicable, from the related Liquidation
Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse the
Servicer, the Servicer shall be entitled to be reimbursed from amounts in the
Custodial Account pursuant to Section 2.5 hereof and to the extent amounts in
the Custodial Account are insufficient to fully reimburse the Servicer, the
Servicer shall be entitled to be reimbursed by the Company for such deficiencies
(upon presentation of evidence of such deficiency). In the event the Company
and/or ▇▇▇▇▇▇ ▇▇▇ or FHLMC directs the Servicer not to proceed with foreclosure
or acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all Servicing Advances made with respect to the related Mortgaged Property
from the Custodial Account pursuant to Section 2.5 hereof.
Section 2.3. Collection of Mortgage Loan Payments. Continuously from the
Closing Date, the Servicer shall proceed diligently to collect all payments due
under each of the Mortgage Loans when the same shall become due and payable and
shall take special care in ascertaining and estimating Escrow Payments and all
other charges that will become due and payable with respect to the Mortgage
Loans and each related Mortgaged Property, to the end
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that the installments payable by the Mortgagors will be sufficient to pay such
charges if and when they become due and payable.
Section 2.4. Establishment of and Deposits to Custodial Account . The
Servicer shall segregate and hold the hereinafter mentioned funds collected and
received pursuant to the Mortgage Loans separate and apart from any of its own
funds and general assets and shall establish and maintain one or more Custodial
Accounts, in the form of term deposit or demand accounts, titled "▇▇▇▇▇▇ Trust
and Savings Bank in trust for ▇▇▇▇▇▇ Preferred Capital Corporation" (or similar
designation with respect to any subsequent Company). The Custodial Account shall
be established with a Qualified Depository acceptable to the Company. If the
Custodial Account is held at a Qualified Depository the deposit accounts of
which are insured by the FDIC, any funds deposited in the Custodial Account
shall at all times be insured to the full extent permitted under applicable law.
Funds deposited in the Custodial Account may be drawn on by the Servicer in
accordance with Section 2.5. The creation of any Custodial Account shall be
evidenced by a certification in the form of Exhibit 2 hereto. A copy of such
certification shall be furnished to the Company and, upon request, to any
subsequent Company.
The Servicer shall deposit in the Custodial Account within one Business Day
of receipt, and retain therein, the following collections received by the
Servicer and payments made by the Servicer after the Cut-off Date, other than
payments of principal and interest due on or before the Cut-off Date, or
received by the Servicer prior to the Cut-off Date but allocable to a period
subsequent thereto:
2.4.1 all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
2.4.2 all payments on account of interest on the Mortgage Loans;
2.4.3 all Liquidation Proceeds and any amount received with respect to
REO Property;
2.4.4 all Insurance Proceeds including amounts required to be
deposited pursuant to Section 2.10 (other than proceeds to be held in the
Escrow Account and applied to the restoration or repair of the Mortgaged
Property or released to the Mortgagor in accordance with Section 2.14);
2.4.5 all Condemnation Proceeds which are not applied to the
restoration or repair of the Mortgaged Property or released to the
Mortgagor in accordance with Section 2.14; and
2.4.6 any amount required to be deposited in the Custodial Account
pursuant to Sections 2.15 or 3.1.
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Section 2.5. Permitted Withdrawals from Custodial Account. Subject to
Section 2.15 hereof, the Servicer shall, from time to time, withdraw funds from
the Custodial Account for the following purposes:
2.5.1 to make payments to the Company in the amounts and in the
manner provided for in Section 3.1;
2.5.2 to reimburse itself for unreimbursed Servicing Advances (except
to the extent reimbursed pursuant to Section 2.7), any accrued but unpaid
Servicing Fee and for unreimbursed advances of Servicer funds made pursuant
to Section 2.15, the Servicer's right to reimburse itself pursuant to this
subparagraph 2.5.2 with respect to any Mortgage Loan being limited to
related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and
such other amounts as may be collected by the Servicer from the Mortgagor
or otherwise relating to the Mortgage Loan, it being understood that, in
the case of any such reimbursement, the Servicer's right thereto shall be
subordinate to the right of the Company;
2.5.3 to pay to the person entitled thereto any amounts deposited in
error; and
2.5.4 to clear and terminate the Custodial Account upon the
termination of this Agreement.
In that event that the Custodial Account is interest bearing, on each Remittance
Date, the Servicer shall withdraw all funds from the Custodial Account except
for those amounts which, pursuant to Section 3.1, the Servicer is not obligated
to remit on such Remittance Date. The Servicer may use such withdrawn funds only
for the purposes described in this Section 2.5.
Section 2.6. Establishment of and Deposits to Escrow Account. The
Servicer shall segregate and hold all funds collected and received pursuant to a
Mortgage Loan constituting Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain one or more Escrow
Accounts, in the form of term deposit or demand accounts. The Escrow Account or
Accounts shall be established with a Qualified Depository. If the Escrow Account
is held at a Qualified Depository the deposit accounts of which are insured by
the FDIC, any funds deposited in the Escrow Account shall at all times be
insured to the full extent permitted under applicable law. Funds deposited in
the Escrow Accounts may be drawn on by the Servicer in accordance with
Section 2.7. The creation of any Escrow Account shall be evidenced by a
certification in the form of Exhibit 4 hereto. A copy of such certification
shall be furnished to the Company and, upon request, to any subsequent Company.
The Servicer shall deposit in the Escrow Account or Accounts within one
Business Day of receipt, and retain therein all Escrow Payments collected on
account of the Mortgage Loans, for the purpose of effecting timely payment of
any such items as required under the terms of this Agreement. The Servicer shall
deposit in the Escrow Account or Accounts as soon as possible, but within a
maximum of five (5) Business Days of receipt, all amounts
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representing Insurance Proceeds or Condemnation Proceeds which are to be applied
to the restoration or repair of any Mortgaged Property.
The Servicer shall make withdrawals from the Escrow Account only to effect
such payments as are required under this Agreement as set forth in Section 2.7.
The Servicer shall be entitled to retain any interest paid on, or other income
generated by and paid on, funds deposited in the Escrow Account by the
depository institution, other than interest on escrowed funds required by law of
the Mortgage Loan File to be paid to the Mortgagor. To the extent required by
law, the Servicer shall pay from its own funds interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes.
Section 2.7. Permitted Withdrawals from Escrow Account. Withdrawals from
each Escrow Account may be made by the Servicer only:
2.7.1 to effect timely payments of taxes, assessments, mortgage
insurance premiums, condominium charges or other items constituting Escrow
Payments for the related Mortgage Loan;
2.7.2 to reimburse the Servicer for any Servicing Advance made by the
Servicer pursuant to Section 2.8 with respect to a related Mortgage Loan,
but only from amounts received on the related Mortgage Loan which represent
late payments or collections of Escrow Payments thereunder;
2.7.3 to refund to the related Mortgagor any funds found to be in
excess of the amounts required under the terms of the related Mortgage Loan
or applicable federal or state law or judicial or administrative ruling;
2.7.4 for transfer to the Custodial Account and application to reduce
the principal balance of the Mortgage Loan in accordance with the terms of
the related Mortgage Loan File;
2.7.5 for application to restoration or repair of the related
Mortgaged Property, in accordance with the procedures outlined in Section
2.14;
2.7.6 to pay to the Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account;
2.7.7 to pay to the person entitled thereto any amounts deposited in
error; and
2.7.8 to clear and terminate the Escrow Account on the termination of
this Agreement.
Section 2.8. Payment of Taxes, Insurance and Other Charges. With respect
to each Mortgage Loan, the Servicer shall maintain accurate records reflecting
the status of ground rents, taxes, assessments, water rates, sewer rents, and
other charges, as applicable, which
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are or may become a lien, legal hypothec or priority upon the Mortgaged Property
and fire and hazard insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) and shall
effect payment thereof prior to the applicable penalty, or termination date,
employing for such purpose deposits of the Mortgagor in the Escrow Account which
shall have been estimated and accumulated by the Servicer in amounts sufficient
for such purposes, as allowed under the terms of the Mortgage Loan File. To the
extent that a Mortgage Loan does not provide for Escrow Payments, the Servicer
shall determine that any such payments relating to taxes or maintaining
insurance policies are made by the Mortgagor at the time they first become due.
The Servicer assumes full responsibility for the timely payment of all such
bills to the extent it has or should have notice of such bills and shall effect
timely payment of all such charges irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments, and the
Servicer shall make advances from its own funds to effect such payments, such
advances to be reimbursable to the same extent as Servicing Advances.
Section 2.9. Protection of Accounts. The Servicer may transfer the
Custodial Account or the Escrow Account to a different Qualified Depository from
time to time. Such transfer shall be made only upon obtaining the consent of the
Company. The Servicer shall bear any expenses, losses or damages sustained by
the Company because the Custodial Account and/or the Escrow Account are not
demand deposit accounts.
Section 2.10. Maintenance of Hazard Insurance. The Servicer shall cause to
be maintained for each Mortgage Loan hazard insurance such that all buildings
upon the Mortgaged Property are insured against loss by fire, hazards of
extended coverage and such other hazards as are required to be insured pursuant
to Accepted Servicing Practices.
If at any time during the term of the Mortgage Loan, the Servicer
determines in accordance with applicable law and pursuant to the ▇▇▇▇▇▇ ▇▇▇ and
FHLMC guidelines and procedures that a Mortgaged Property is located in a
special flood hazard area and is not covered by flood insurance satisfactory to
▇▇▇▇▇▇ ▇▇▇ and FHLMC, the Servicer shall notify the related Mortgagor (to the
extent permitted by the applicable Mortgage Loan File) that the Mortgagor must
obtain such flood insurance coverage, and if said ▇▇▇▇▇▇▇▇▇ fails to obtain the
required flood insurance coverage within forty-five (45) days after such
notification, the Servicer shall immediately purchase the required flood
insurance on the Mortgagor's behalf.
The Servicer shall cause to be maintained on each Mortgaged Property such
other or additional insurance as may be required pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance, or pursuant to the requirements of the ▇▇▇▇▇▇ ▇▇▇ and
FHLMC guidelines and procedures. All policies required hereunder shall name the
Servicer and its successors and assigns as mortgagee and shall provide for at
least thirty (30) days' prior written notice of any cancellation, reduction in
amount or material change in coverage.
The Servicer shall not interfere with the Mortgagee's freedom of choice in
selecting either his insurance carrier or agent, provided, however, that the
Servicer shall not accept
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any such insurance policies from insurance companies which do not meet or exceed
applicable requirements of the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and procedures.
The Servicer shall determine that such policies provide sufficient risk coverage
and amounts as required pursuant to the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and
procedures, that they insure the property owner, and that they properly describe
the property address. To the extent reasonably possible the Servicer shall
furnish to the Mortgagor a formal notice of expiration of any such insurance in
sufficient time for the Mortgagor to arrange for renewal cover age by the
expiration date; provided, however, that in the event that no such notice is
furnished by the Servicer, the Servicer shall ensure that replacement insurance
policies are in place in the required coverages and the Servicer shall be solely
liable for any losses in the event such coverage is not provided.
Pursuant to Section 2.4, any amounts collected by the Servicer under any
such policies (other than amounts to be deposited in the Escrow Account and
applied to the restoration or repair of the related Mortgaged Property, or
property acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor as specified in Section 2.14) shall be deposited in the Custodial
Account subject to withdrawal pursuant to Section 2.5.
Section 2.11. Maintenance of Mortgage Impairment Insurance . In the event
that the Servicer shall obtain and maintain a blanket policy insuring against
losses arising from fire and hazards covered under extended coverage on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 2.10 and otherwise
complies with all other requirements of Section 2.10, it shall conclusively be
deemed to have satisfied its obligations as set forth in Section 2.10. Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.5. Such policy may contain a deductible clause, in which case, in
the event that there shall not have been maintained on the related Mortgaged
Property a policy complying with Section 2.10, and there shall have been a loss
which would have been covered by such policy, the Servicer shall deposit in the
Custodial Account at the time of such loss the amount not otherwise payable
under the blanket policy because of such deductible clause, such amount to be
deposited from the Servicer's funds, without reimbursement therefor. Upon
request of the Company, the Servicer shall cause to be delivered to the Company
a certified true copy of such policy and a statement from the insurer thereunder
that such policy shall in no event be terminated or materially modified without
thirty (30) days' prior written notice to the Company.
Section 2.12. Maintenance of Fidelity Bond . The Servicer shall maintain
with responsible companies, at its own expense, a blanket Fidelity Bond and an
Errors and Omissions Insurance Policy, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans
("Servicer Employees"). Any such Fidelity Bond and Errors and Omissions
Insurance Policy shall be in the form of the Mortgage Banker's Blanket Bond and
shall protect and insure the Servicer against losses, including forgery,
embezzlement, fraud, errors and omissions and negligent acts of such Servicer
Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also
shall protect and insure the Servicer
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against losses in connection with the release or satisfaction of a Mortgage Loan
without having obtained payment in full of the indebtedness secured thereby. No
provision of this Section 2.12 requiring such Fidelity Bond and Errors and
Omissions Insurance Policy shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The minimum coverage
under any such Fidelity Bond and Errors and Omissions Insurance Policy shall be
at least equal to the corresponding amounts required by Accepted Servicing
Practices. Upon the request of the Company, the Servicer shall cause to be
delivered to the Company a certified true copy of such Fidelity Bond and Errors
and Omissions Insurance Policy and a statement from the surety and the insurer
that such Fidelity Bond and Errors and Omissions Insurance Policy shall in no
event be terminated or materially modified without thirty (30) days' prior
written notice to the Company. In the event that the surety or insurer charges
the Servicer a fee for providing such evidence, the Company shall reimburse the
Servicer for the reasonable expense incurred by the Servicer in furnishing such
evidence.
Section 2.13. Inspections. The Servicer shall inspect the Mortgaged
Property as often as deemed necessary by the Servicer to assure itself that the
value of the Mortgaged Property is being preserved, the whole in accordance with
Accepted Servicing Practices. The Servicer shall keep a written report of each
such inspection.
Section 2.14. Restoration of Mortgaged Property. The Servicer need not
obtain the approval of the Company prior to releasing any Insurance Proceeds or
Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with the
applicable Mortgage Loan File and the Accepted Servicing Practices. At a
minimum, the Servicer shall comply with the following conditions in connection
with any such release of Insurance Proceeds or Condemnation Proceeds:
2.14.1 the Servicer shall receive satisfactory independent
verification of completion of repairs and issuance of any required
approvals with respect thereto;
2.14.2 the Servicer shall take all steps necessary to preserve the
priority of the lien securing the Mortgage Loan, including, but not limited
to, requiring waivers or releases with respect to mechanics' and
materialmen's liens in favor of the persons having taken part in the
renovation of the Mortgaged Property;
2.14.3 the Servicer shall verify that the Mortgage Loan is not in
default; and
2.14.4 pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Company is named as an additional mortgagee, the Servicer is hereby
empowered to endorse any loss draft issued in respect of such a claim in the
name of the Company.
Section 2.15. Title, Management and Disposition of REO Property. In the
event that title to any Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure,
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the deed or certificate of sale shall be taken in the name of the Servicer as
nominee for the Company.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Company solely for the purpose of its prompt disposition and sale
(unless otherwise directed by the Company). The Servicer, either itself or
through an agent selected by the Servicer and reasonably acceptable to the
Company, ▇▇▇▇▇▇ ▇▇▇ and FHLMC, shall manage, conserve, protect and operate the
REO Property in the same manner that it manages, conserves, protects and
operates other foreclosed property for its own account, and in the same manner
that similar property in the same locality as the REO Property is managed.
The Servicer shall use its best efforts to dispose of the REO Property as
soon as possible and shall sell such REO Property in any event within one year
after title has been taken to such REO Property (unless otherwise directed by
the Company). If a period longer than one (1) year is permitted under the
foregoing sentence and is necessary to sell any REO Property, the Servicer shall
report monthly to the Company as to the progress being made in selling such REO
Property.
The Servicer shall also maintain on each REO Property fire and hazard
insurance with extended coverage in an amount which is at least equal to the
maximum insurable value of the improvements which are a part of such property,
liability insurance and, to the extent required and available, flood insurance
in the amount required above.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems
appropriate (subject to approval by the Company). The proceeds of sale of the
REO Property shall be promptly deposited in the Custodial Account. As soon as
practical thereafter the expenses of such sale shall be paid and the Servicer
shall reimburse itself pursuant to Section 2.5.3 hereof, as applicable, for any
related unreimbursed Servicing Advances, unpaid Servicing Fees and unreimbursed
advances made pursuant to this Section, and on the Remittance Date immediately
following the Due Period in which such sale proceeds are received the net cash
proceeds of such sale remaining in the Custodial Account shall be distributed to
the Company; provided that such distribution shall, in any event, be made within
ninety (90) days from and after the closing of the sale of such REO Property.
In addition to the Servicer's obligations set forth in this Section 2.15,
the Servicer shall deliver to the Company whenever title to any Mortgaged
Property is acquired in foreclosure or by deed in lien of foreclosure copies of
all notices transmitted to, and received from, ▇▇▇▇▇▇ ▇▇▇ or FHLMC with respect
thereto, together with a copy of the appraisal, if any, of the related Mortgaged
Property obtained by the Servicer on or prior to the date of such acquisition.
Notwithstanding anything to the contrary contained herein, the Company may, at
the Company's sole option, terminate the Servicer as servicer of any such REO
Property without payment of any Termination Fee with respect thereto, provided
that (i) the Company gives the Servicer notice of such termination within ten
(10) Business Days of receipt of said copies of notices from the Servicer which
termination shall be effective no more than fifteen (15) Business Days from and
after the date of said notice from the
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Company and (ii) the Servicer shall on the date said termination takes effect be
reimbursed by Company for any unreimbursed advances of the Servicer's funds made
pursuant to Section 3.2 and any unreimbursed Servicing Advances in each case
relating to the Mortgage Loan underlying such REO Property. In the event of any
such termination, the provisions of Section 8.6 hereof shall apply to said
termination and the transfer of servicing responsibilities with respect to such
REO Property to the Company.
With respect to each REO Property, the Servicer shall deposit all funds
collected and received in connection with the operation of the REO Property in
the Custodial Account. The Servicer shall cause to be deposited on a daily basis
upon the receipt thereof in the Custodial Account all revenues received with
respect to the conservation and disposition of the related REO Property.
Section 2.16. Permitted Withdrawals with Respect to REO Property. For so
long as the Servicer is acting as servicer of any Mortgage Loan relating to any
REO Property, the Servicer shall withdraw funds on deposit in the Custodial
Account with respect to each related REO Property necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 2.10 and the fees of any
managing agent acting on behalf of the Servicer. The Servicer shall make monthly
distributions on each Remittance Date to the Company of the net cash flow from
the REO Property (which shall equal the revenues from such REO Property net of
the expenses described in Section 2.15 and of any reserves reasonably required
from time to time to be maintained to satisfy anticipated liabilities for such
expenses).
Section 2.17. Real Estate Owned Reports. For so long as the Servicer is
acting as servicer of any Mortgage Loan relating to any REO Property, the
Servicer shall submit to the Company all reports with respect to such Mortgaged
Property which it is obligated to submit to ▇▇▇▇▇▇ ▇▇▇ or FHLMC pursuant to
Accepted Servicing Practices.
Section 3. Payments to the Company.
Section 3.1. Remittances. On each Remittance Date, the Servicer shall remit
by wire transfer of immediately available funds to the Company:
(a) all amounts deposited in the Custodial Account as of the close
of business on the Determination Date, minus
(b) any amounts payable to the Servicer under Article 2 of this
Agreement.
With respect to any remittance received by the Company after the fifth day
following the Business Day on which such payment was due, the Servicer shall pay
to the Company a "late charge" in an amount equal to 5% of such late payment.
Such late charge shall be deposited in the Custodial Account by the Servicer on
the date such late payment is made. Such late charge shall be remitted along
with the distribution payable on the next succeeding
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Remittance Date. The payment by the Servicer of any such late charge shall not
be deemed an extension of time for payment or a waiver of any Event of Default
by the Servicer.
Section 3.2. Statements to the Company. Not later than the fifteenth day
of each month, the Servicer shall furnish to the Company in a mutually-
acceptable format the reports required by the Company, together with a Monthly
Remittance Advice showing the scheduled payments of principal and interest, the
principal prepayments and the prepayment penalties.
In addition, the Servicer shall furnish to the Company an annual statement
in accordance with the requirements of applicable income tax laws as to the
aggregate of remittances for the applicable portion of such year. Such
obligation of the Servicer shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Servicer
pursuant to any requirements of the governmental taxing authority as from time
to time are in force.
The Servicer shall prepare and file, with respect to each Mortgage Loan,
any and all tax returns, information statements or other filings required to be
delivered to any governmental taxing authority or to the Company pursuant to any
applicable law with respect to the Mortgage Loans and the transactions
contemplated hereby. In addition, the Servicer shall provide the Company with
such information concerning the Mortgage Loans as is necessary for the Company
to prepare any applicable income tax returns as the Company may reasonably
request from time to time.
Section 4. General Servicing Procedures.
Section 4.1. Transfers of Mortgaged Property. The Servicer shall be
required, consistent with Accepted Servicing Practices, to enforce any "due-on-
sale" provision contained in any Mortgage Loan File and to deny assumption by
the person to whom the Mortgaged Property has been or is about to be sold
whether by absolute conveyance or by contract of sale, whether or not the
Mortgagor remains liable on the Mortgage Loan. When the Mortgaged Property has
been conveyed by the Mortgagor, the Servicer shall, to the extent it has
knowledge of such conveyance, exercise its rights to accelerate the maturity of
such Mortgage Loan under the "due-on-sale" clause applicable thereto, provided,
however, that the Servicer shall not exercise such rights if the Servicer
determines in good faith that it is prohibited by law from doing so or if the
exercise of such rights would impair or threaten to impair any recovery under
the related primary mortgage guaranty insurance policy issued with respect to
such Mortgage Loan, if any.
If the Servicer reasonably believes it is unable under applicable law to
enforce "due-on-sale" clause, the Servicer, in the Company's name, shall, to the
extent permitted by applicable law, enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Loan and the
original Mortgagor remains liable thereon or (ii) in the event the Servicer is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Servicer has the prior consent of ▇▇▇▇▇▇ ▇▇▇ and
FHLMC,
16
a substitution of liability agreement with the Company of the Mortgaged
Property pursuant to which the original Mortgagor is released from liability and
the Company of the Mortgaged Property is substituted as Mortgagor and becomes
liable under the Mortgage Loan. In connection with any such assumption, neither
the mortgage interest rate borne by the related Mortgage Loan, the term of the
Mortgage Loan nor the outstanding principal amount of the Mortgage Loan shall be
changed.
To the extent that any Mortgage Loan is assumable, the Servicer shall
inquire diligently into the creditworthiness of the proposed transferee, and
shall use the underwriting criteria for approving the credit of the proposed
transferee which are used by ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and procedures with
respect to underwriting mortgage loans of the same type as the Mortgage Loans.
If the credit of the proposed transferee does not meet such underwriting
criteria, the Servicer diligently shall, to the extent permitted by the Mortgage
Loan File and by applicable law, accelerate the maturity of the Mortgage Loan.
Section 4.2. Satisfaction of Mortgages and Release of Mortgage Files. Upon
the payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the Company in the Monthly Remittance
Advice as provided in Section 3.2 and may request the release of any Mortgage
Loan File from the Company in accordance with this Section 4.2 hereof. The
Servicer shall obtain discharge of the related Mortgage Loan as of record within
any related time limit required by applicable law.
Section 4.3. Servicing Compensation. As consideration for servicing the
Mortgage Loans hereunder, the Servicer shall deduct the Servicing Fee with
respect to each Mortgage Loan from payments as received from Mortgagors and
shall remit the net balance into the Custodial Account.
Additional servicing compensation in the form of Ancillary Income shall be
retained by the Servicer as and when collected. The Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement thereof except as
specifically provided for herein.
Section 4.4. Annual Statement as to Compliance. The Servicer shall deliver
to the Company, on or before March 1st of each year beginning March 1, 1998 an
Officer's Certificate, stating that (i) a review of the activities of the
Servicer during its preceding fiscal year and of performance under this
Agreement has been made under such officer's supervision, and (ii) the Servicer
has complied in all material respects with the provisions of Article 2 and
Article 3, and (iii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year or part thereof, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and the action being taken by the
Servicer to cure such default.
17
Section 4.5. Annual Independent Certified Public Accountants Servicing
Report. On or before March 1 of each year, beginning with March 1, 1998, the
Servicer at its expense shall cause a firm of independent certified public
accountants (who may also render other services to the Servicer or any affiliate
thereof) to furnish a statement to the Company to the effect that such firm has,
as part of their examination of the financial statements of the Servicer,
performed tests embracing the records and documents relating to mortgage loans
serviced by the Servicer in accordance with the requirements of generally
accepted accounting principles and that their examination disclosed no
exceptions that, in their opinion, were material, relating to mortgage loans
serviced by the Servicer.
Section 4.6. Right to Examine Servicer Records. The Company, upon
reasonable written notice, shall have the right to examine and audit any and all
of the books, records, or other information of the Servicer, whether held by the
Servicer or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during business hours or at such other times as
may be reasonable under applicable circumstances, upon reasonable advance
notice.
Section 5. Servicer to Cooperate.
Section 5.1. Provision of Information. During the term of this Agreement,
the Servicer shall furnish to the Company such periodic, special, or other
reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Company or the
purposes of this Agreement. All such reports or information shall be provided by
and in accordance with all reasonable instructions and directions which the
Company may give. The Servicer shall execute and deliver all such instruments
and take all such action as the Company may reasonably request from time to
time, in order to effectuate the purposes and to carry out the terms of this
Agreement.
Section 6. Termination.
Section 6.1. Agency Suspension. Should the Servicer at any time during the
term of this Agreement have its right to service temporarily or permanently
suspended by ▇▇▇▇▇▇ ▇▇▇ or FHLMC or otherwise cease to be an approved servicer
of conventional residential mortgage loans for ▇▇▇▇▇▇ ▇▇▇ or FHLMC, then the
Company may immediately terminate this Agreement without assessment of any
termination fee.
Section 6.2. Damages. The Company shall have the right at any time to seek
and recover from the Servicer any damages or losses suffered by it as a result
of any failure by the Servicer to observe or perform any duties, obligations,
covenants or agreements herein contained, or as a result of the Servicer's
failure to remain an approved ▇▇▇▇▇▇ ▇▇▇ or FHLMC mortgage servicer.
Section 6.3. Termination. The respective obligations and responsibilities
of the Servicer shall terminate upon:
18
6.3.1 the earlier of the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan
serviced by the Servicer, the remittance of all funds due
hereunder or the first anniversary of this Agreement; or
6.3.2 by mutual consent of the Servicer and the Company in writing,
unless earlier terminated pursuant to this Agreement.
Section 6.4. Termination Without Cause. The Company, may, at its sole
option, upon not less than sixty (60) days' prior written notice to the Servicer
terminate any rights the Servicer may have hereunder with respect to any or all
of the Mortgage Loans, without cause, upon written notice, provided that the
Servicer shall have an additional period of not more than sixty (60) days from
and after the date of said notice from the Company within which to effect the
related transfer of servicing. Any such notice of termination shall be in
writing and delivered to the Servicer as provided in Section 12.1 of this
Agreement. In the event of such termination, the Servicer shall be entitled to a
termination fee, equal to the product of 0.0002% of the then current aggregate
unpaid principal balance of the related Mortgage Loans and the number of months
remaining until the first anniversary of this Agreement, provided, however, that
the successor servicer is not an affiliate of the Servicer.
Section 7. Books and Records.
Section 7.1. Possession of Servicing Files. The contents of each Servicing
File are and shall be held by the Servicer for the benefit of the Company as the
assignee thereof. The Servicer shall maintain in the Servicing File a copy
(which may be in microfiche form) of the contents of each Mortgage Loan File.
Servicer shall request the original (and duplicate originals, if any) of any
Mortgage Loan only for the purpose of initiating any claim for reimbursement
with respect to the Mortgage Loan or in connection with the payment in full or
liquidation of the Mortgage Loan and shall promptly return such originals to the
possession of the Custodian or otherwise properly dispose of such originals, but
in no case shall Servicer maintain possession of such originals for any period
exceeding twenty-one days. The possession of the Servicing File by the Servicer
is at the will of the Company for the sole purpose of servicing the related
Mortgage Loan, pursuant to this Agreement, and such retention and possession by
the Servicer is in its capacity as Servicer only and at the election of the
Company. The Servicer shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Company or other
termination of the Servicer with respect to the related Mortgage Loans, unless
such release is required as incidental to the Servicer's servicing of the
Mortgage Loans pursuant to this Agreement.
The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the assignment of each Mortgage Loan to the Company. In
particular, the Servicer shall maintain in its possession, available for
inspection by the Company during normal business hours, and shall deliver to the
Company upon reasonable notice, evidence of compliance with all federal, state
and local laws, rules, and regulations, and requirements of ▇▇▇▇▇▇ ▇▇▇ and
19
FHLMC guidelines and procedures, documentation evidencing insurance coverage and
eligibility of any condominium project for approval by ▇▇▇▇▇▇ ▇▇▇ and FHLMC and
periodic inspection reports as required by Section 2.13 and Accepted Servicing
Practices.
To the extent that original documents are not required for purposes of
realization of Liquidation Proceeds or Insurance Proceeds, documents maintained
by the Servicer may be in the form of microfilm or microfiche so long as the
Servicer complies with the requirements of Accepted Servicing Practices.
The Servicer shall keep at its servicing office books and records in which,
subject to such reasonable regulations as it may prescribe, the Servicer shall
note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made
unless such transfer is in compliance with the terms hereof. For the purposes of
this Agreement, the Servicer shall be under no obligation to deal with any
person with respect to this Agreement or the Mortgage Loans unless the books and
records show such person as the owner of the Mortgage Loan. The Company may,
subject to the terms of this Agreement, sell or transfer one or more of the
Mortgaged Loan. The Company also shall advise the Servicer of the transfer. Upon
receipt of notice of the transfer, the Servicer shall mark its books and records
to reflect the ownership of the Mortgage Loans of such assignee, and shall
release the Company from its obligations hereunder with respect to the Mortgage
Loans sold or transferred.
Section 8. Indemnification and Assignment.
Section 8.1. Indemnification. The Servicer agrees to indemnify and hold the
Company harmless from any liability, claim, loss or damage (including, without
limitation, any reasonable legal fees, judgments or expenses relating to such
liability, claim, loss or damage) to the Company directly or indirectly
resulting from the Servicer's failure to observe and perform any or all of
Servicer's duties, obligations, covenants, agreements, warranties or
representations contained in this Agreement or the Servicer's failure to comply
with all applicable requirements with respect to the transfer of servicing
rights as set forth herein.
The Servicer shall notify the Company as soon as reasonably possible if a
claim is made by a third party with respect to this Agreement.
Section 8.2. Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Company for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Servicer or any such person against any breach of
warranties or representations made herein, or failure to perform its obligations
in material compliance with any standard of care set forth in this Agreement, or
any liability which would otherwise be imposed by reason of any breach of the
terms and conditions of this Agreement. The Servicer and any director, officer,
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any person with respect to
any matter arising hereunder. The Servicer shall not be under
20
any obligation to appear in, prosecute or defend any legal action which is not
incidental to its duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may involve it in any expense or liability,
provided, however, that the Servicer may, with the prior written consent of the
Company, undertake any such action which it may deem necessary or desirable in
respect to this Agreement and the rights and duties of the parties hereto. In
such event, the Servicer shall be entitled to reimbursement from the Company of
the reasonable legal expenses and costs of such action. Notwithstanding the
foregoing, in the event that the Servicer fails to perform its duties under the
Servicing Agreement in accordance with the terms thereof and, as a result, the
Company becomes liable for tax on the amounts it receives from ▇▇▇▇▇▇ Trust and
Savings Bank on the Loan (as this expression is defined in that certain Loan
Agreement entered into between ▇▇▇▇▇▇ Trust and Savings Bank and ▇▇▇▇▇▇
Preferred Capital Corporation on this day), the Servicer shall indemnify and
hold ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Preferred Capital Corporation for such tax.
Section 8.3. Limitation on Registration and Assignment by Servicer. The
Company has entered into this Agreement with the Servicer in reliance upon the
representations as to the adequacy of its servicing facilities, plant,
personnel, records and procedures, its integrity, reputation and financial
standing, and the continuance thereof. Therefore, the Servicer shall not (i)
assign this Agreement or the servicing hereunder or (ii) delegate any
substantial part of its rights or duties hereunder without the prior written
consent of the Company, which consent shall not be unreasonably withheld or
conditioned provided that (a) any delegation of such rights or duties shall not
release the Servicer from its obligations hereunder and the Servicer shall
remain responsible hereunder for all acts and omissions of any delegee as if
such acts or omissions were those of the Servicer and (b) any such assignee or
designee shall satisfy the requirements for a successor or surviving person set
forth in Section 8.5 and Section 8.6 hereof. The Servicer shall notify the
Company in writing at least 30 days prior to selling or otherwise disposing of
all or substantially all of its assets and receipt of such notice shall entitle
the Company to terminate this Agreement, without payment of any termination fee,
except as set forth in Section 8.5 hereof.
Servicer shall not resign from the obligations and duties hereby imposed on
it except by mutual consent of the Servicer and the Company or upon the
determination that its duties hereunder are no longer permissible under
applicable law and such incapacity cannot be cured by the Servicer. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an opinion of counsel of the Servicer to such effect delivered to the Company
which opinion of counsel shall be in form and substance acceptable to the
Company. No such resignation shall become effective until a successor approved
by ▇▇▇▇▇▇ ▇▇▇ and FHLMC shall have assumed the Servicer's responsibilities and
obligations hereunder in the manner provided in Section 8.6.
Without in any way limiting the generality of this Section 8.3, in the
event that the Servicer either shall assign this Agreement or the servicing
responsibilities hereunder or delegate its duties hereunder or any portion
thereof without (i) satisfying the requirements set forth herein or (ii) the
prior written consent of the Company, then the Company shall have the right to
terminate this Agreement as set forth in Section 6.4, without any payment of any
penalty or damages and without any liability whatsoever to the Servicer (other
than
21
with respect to accrued but unpaid Servicing Fees and Servicing Advances
remaining unpaid) or any third party.
Section 8.4. Assignment by Company. The Company shall have the right,
without the consent of the Servicer, to assign, in whole or in part, its
interest under this Agreement with respect to some or all of the Mortgage Loans
and designate any person to exercise any rights of the Company hereunder, by
executing an assignment and assumption agreement and the assignee or designee
shall accede to the rights and obligations hereunder of the Company with respect
to such Mortgage Loans. All references to the Company in this Agreement shall be
deemed to include its assignee or designee.
Section 8.5. Merger or Consolidation of the Servicer. The Servicer will
keep in full effect its existence and rights as a bank under the laws of its
jurisdiction of incorporation except as permitted herein.
Any person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any person succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving person shall be (i) obligated to
service the Mortgage Loans in accordance with this Agreement and Accepted
Servicing Practices, (ii) an institution whose deposits are insured by FDIC or a
company whose business includes the origination and servicing of mortgage loans
and (iii) a ▇▇▇▇▇▇ ▇▇▇ and FHLMC-approved servicer in good standing.
Section 8.6. Successor to the Servicer. Prior to termination of Servicer's
responsibilities and duties under this Agreement pursuant to Sections 2.15, 6.1,
6.4, 8.3 or 11.1, the Company shall appoint a successor which shall succeed to
all rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement. In connection with such appointment and
assumption, the Company may make such arrangements for the compensation of such
successor out of payments on Mortgage Loans as it and such successor shall
agree. In the event that the Servicer's duties, responsibilities and liabilities
under this Agreement should be terminated pursuant to the aforementioned
sections, the Servicer shall discharge such duties and responsibilities during
the period from the date it acquires knowledge of such termination until the
effective date thereof with the same degree of diligence and prudence which it
is obligated to exercise under this Agreement, and shall take no action
whatsoever that might impair or prejudice the rights or financial condition of
its successor. The resignation or removal of Servicer pursuant to the
aforementioned Sections shall not become effective until a successor shall be
appointed pursuant to this Section 8.6 and shall in no event relieve the
Servicer of the representations, warranties and covenants made pursuant to and
the remedies available to the Company with respect thereto, it being understood
and agreed that the provisions of Article 10 shall be applicable to the Servicer
notwithstanding any such resignation or termination of the Servicer, or the
termination of this Agreement.
22
Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Company, an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination of this Agreement pursuant to Sections 2.15, 6.1, 6.4, 8.3 or
11.1 shall not affect any claims that the Company may have against the Servicer
arising prior to any such termination or resignation.
The Servicer shall timely deliver to the successor the funds in the
Custodial Account and the Escrow Account and the Mortgage Loan Files and related
documents and statements held by it hereunder and the Servicer shall account for
all funds. The Servicer shall execute and deliver such instruments and do such
other things all as may reasonably be required to more fully and definitely vest
and confirm in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer. The successor shall make
arrangements as it may deem appropriate to reimburse the Servicer for amounts
the Servicer actually expended pursuant to this Agreement which the successor is
entitled to retain hereunder and which would otherwise have been recovered by
the Servicer pursuant to this Agreement but for the appointment of the successor
servicer.
Upon a successor's acceptance of appointment as such, the Servicer shall
notify by mail the Company of such appointment.
Section 9. Representations, Warranties and Covenants of Company.
As of the Closing Date, the Company warrants and represents to, and
covenants and agrees with, the Servicer as follows:
Section 9.1. Due Organization and Authority. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. The Company has the full corporate power and authority to
execute and deliver this Agreement and to perform in accordance therewith; the
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Company; and all requisite corporation action has been taken
by the Company to make this Agreement valid and binding upon the Company in
accordance with its terms.
Section 9.2. No Conflicts. Neither the execution and delivery of this
Agreement, nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Company's articles of incorporation or by-laws
or any legal restrictions or any agreement or instrument to which the Company is
now a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any law,
rule, regulation, order, judgment or decree to which the Company or its property
is subject.
-23-
Section 9.3. Ability to Perform. The Company does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant made by it in this Agreement.
Section 9.4. No Litigation Pending. There is no action, suit proceeding or
investigation pending or threatened against the Company, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Company, or in any
material impairment of the right or ability of the Company to carry on its
business substantially as now conducted, or in any material liability on the
part of the Company, or which would draw into question the validity of this
Agreement or of any action taken or to be taken in connection with the
obligations of the Company contemplated herein.
Section 9.5. No Consent Required. No consent, approval, authorization or
order of any court, or governmental agency or regulatory authority, banking or
otherwise, or body is required for the execution, delivery and performance by
the Company of, or compliance by the Company with, this Agreement as evidenced
by the consummation of the transactions contemplated by this Agreement, or if
required, such approval has been obtained prior to the Closing Date.
Section 10. Representations and Warranties of Servicer.
As of the Closing Date, the Servicer warrants and represents to, and
covenants and agrees with, the Company as follows:
Section 10.1. Due Organization and Authority. The Servicer is an Illinois
banking corporation duly organized, validly existing and in good standing under
the laws of Illinois, and is licensed, qualified and in good standing in each
jurisdiction where a Mortgaged Property is located if applicable laws require
licensing or qualification in order to conduct business of the type conducted by
the Servicer, and in any event the Servicer is in compliance with the laws of
any such jurisdiction to the extent necessary to ensure the enforceability of
the related Mortgage Loan in accordance with the terms of this Agreement; the
Servicer has the full corporate power and authority to execute and deliver this
Agreement and to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized; this
Agreement evidences the valid, legal, binding and enforceable obligation of the
Servicer subject to receivership laws and other similar laws of general
application affecting rights of creditors, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder, and all requisite
corporate action has been taken by the Servicer to make this Agreement valid and
binding upon the Servicer in accordance with its terms.
-24-
Section 10.2. Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Servicer.
Section 10.3. No Conflicts. Neither the execution and delivery of this
Agreement, nor the fulfillment of or compliance with the terms and conditions of
this Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Servicer's charter or by-laws or any legal
restriction or any agreement or instrument to which the Servicer is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Servicer or its property is
subject, or impair the ability of the Company to realize on the Mortgage Loans,
impair the value of the Mortgage Loans, or impair the ability of the Company to
realize the full amount of any mortgage insurance benefits accruing pursuant to
this Agreement.
Section 10.4. Ability to Service. The Servicer is an approved servicer of
residential mortgage loans in accordance with the ▇▇▇▇▇▇ ▇▇▇, FHLMC and all
other applicable guidelines and procedures, with the facilities, procedures and
experienced personnel necessary for the sound servicing of mortgage loans of the
same type as the Mortgage Loans. The Servicer is duly qualified, licensed,
registered and otherwise authorized under all applicable federal, state and
municipal laws, regulations and by-laws, if applicable, and is in good standing
to enforce, originate, sell mortgage loans to, and service mortgage loans in the
jurisdictions wherein the Mortgaged Properties are located and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer unable to comply with either eligibility requirements or
which would require notification to ▇▇▇▇▇▇ ▇▇▇ or FHLMC.
Section 10.5. Ability to Perform. The Servicer does not believe, nor does
it have any reason or cause to believe, that it cannot perform each and every
covenant contained in this Agreement.
Section 10.6. No Litigation Pending. There is no action, suit, proceeding
or investigation pending or threatened against the Servicer, before any court,
administrative agency or other tribunal asserting the invalidity of this
Agreement, seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or which, either in any one instance or in the
aggregate, may result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer, or in any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer, or which would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or which
would be likely to impair materially the ability of the Servicer to perform
under the terms of this Agreement.
Section 10.7. No Consent Required. No consent, approval, authorization or
order of any court, or governmental agency or regulatory authority, banking or
otherwise, or body is required for the execution, delivery and performance by
the Servicer of or compliance by
25
the Servicer with this Agreement or the servicing of the Mortgage Loans as
evidenced by the consummation of the transactions contemplated by this
Agreement, or if required, such approval has been obtained prior to the Closing
Date.
Section 10.8. No Untrue Information. Neither this Agreement nor any
statement, tape, diskette, form, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of fact or omits to state a
fact necessary to make the statements contained therein not misleading.
Section 10.9. Reasonable Servicing Fee. The Servicer acknowledges and
agrees that the Servicing Fee represents reasonable compensation for performing
such services and that the entire Servicing Fee shall be treated by the
Servicer, for accounting and tax purposes, as compensation for the servicing and
administration of the Mortgage Loans pursuant to this Agreement.
Section 10.10. Conflict of Interest. The Servicer agrees that it shall
service the Mortgage Loans hereunder solely with a view toward the interests of
the Company, and without regard to the interests of the Servicer or its
affiliates.
Section 11. Default.
Section 11.1. Events of Default. The following shall constitute an Event of
Default under this Agreement on the part of the Servicer:
11.1.1 any failure by the Servicer to remit to the Company any payment
required to be made under the terms of this Agreement which continues
unremedied for a period of five (5) Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Company; or
11.1.2 the failure by the Servicer to duly observe or perform in any
material respect any other of the covenants or agreements on the part of
the Servicer set forth in this Agreement which continues unremedied for a
period of thirty (30) days (except that such number of days shall be
fifteen (15) in the case of a failure to pay any premium for any insurance
policy required to be maintained under this Agreement) after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Company; or
11.1.3 a decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a receiver or liquidator in any
insolvency, receivership, similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer
and such decree or order shall have remained in force undischarged or
unstayed for a period of sixty (60) days; or
-26-
11.1.4 the Servicer shall consent to the appointment of a receiver
or liquidator in any insolvency, receivership, or similar proceedings of or
relating to the Servicer of or relating to all or substantially all of its
property; or
11.1.5 the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment of its
obligations; or
11.1.6 the Servicer loses temporarily or permanently its qualification
as an approved lender under the ▇▇▇▇▇▇ ▇▇▇ and FHLMC guidelines and
procedures.
11.1.7 the Servicer, without the consent of the Company (other than as
permitted by Sections 8.3 or 8.5 hereof), attempts to assign this Agreement
or the servicing responsibilities hereunder or to delegate any substantial
part of its duties hereunder or any portion thereof; or
11.1.8 the Servicer fails to maintain its license to do business or
service residential mortgage loans in any jurisdiction where the Mortgaged
Properties are located and such failure results in a material adverse
effect on the Mortgage Loans, the servicing of the Mortgage Loans, or the
Company's rights with respect to the Mortgage Loans.
In each and every such case, so long as an Event of Default shall not have
been remedied, in addition to whatsoever rights the Company may have at law or
equity to damages, including injunctive relief and specific performance, the
Company, by notice in writing to the Servicer, may terminate without
compensation or reimbursement (other than Servicing Fees previously earned but
remaining unpaid and Servicing Advances remaining unreimbursed) all the rights
and obligations of the Servicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Mortgage
Loans or otherwise, shall pass to and be vested in the successor appointed
pursuant to Section 8.6. Upon written request from the Company, the Servicer
shall prepare, execute and deliver any and all documents and other instruments
reasonably requested by the Company, place in such successor's possession all
Mortgage Loan Files (to the extent not properly delivered to the Company by the
Servicer previously), and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the Servicer's sole expense. The Servicer
agrees to reasonably cooperate with the Company and such successor in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for administration
by it of all cash amounts which shall at the time be credited by the Servicer to
the Custodial Account or Escrow Account or thereafter received with respect to
the Mortgage Loans.
-27-
Section 11.2. Waiver of Defaults. The Company may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon except to the extent
expressly so waived.
Section 12. Miscellaneous Provisions.
Section 12.1. Notices. All notices, requests, demands and other
communications which are required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given upon the
delivery or mailing thereof, as the case may be, sent by registered or certified
mail, return receipt requested:
12.1.1 If to Company to:
▇▇▇▇▇▇ Preferred Capital Corporation
---------------------
---------------------
---------------------
12.1.2 If to the Servicer to:
▇▇▇▇▇▇ Trust and Savings Bank
---------------------
---------------------
---------------------
Section 12.2. Waivers. Either the Servicer or the Company may upon consent
of all parties, by written notice to the others:
12.2.1 waive compliance with any of the terms, conditions or covenants
required to be complied with by the others hereunder; and
12.2.2 waive or modify performance of any of the obligations of the
others hereunder.
The waiver by any party hereto of a breach of any provisions of this
Agreement shall not operate or be construed as a waiver of any other subsequent
breach.
Section 12.3. Entire Agreement; Amendment. This Agreement constitutes the
entire agreement between the parties with respect to servicing of the Mortgage
Loans. This Agreement may be amended and any provision hereof waived but only in
writing signed by the party against whom such enforcement is sought.
-28-
Section 12.4. Execution; Binding Effect. This Agreement may be executed in
one or more counterparts and by different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement. Subject to Sections 8.3 and 8.4, this Agreement shall inure to the
benefit of and be binding upon the Servicer and the Company and their respective
successors and assigns.
Section 12.5. Headings. Headings of the Articles and Sections in this
Agreement are for reference purposes only and shall not be deemed to have any
substantive effect.
Section 12.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois and the
obligations, rights and remedies hereunder shall be determined in accordance
with the substantive laws of the State of Illinois.
Each of the parties hereto irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of any court sitting
in Illinois, and any appellate court thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement in the courts of any jurisdiction. Each of the
parties hereto irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection they may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in the courts of Illinois. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court. The parties hereto hereby agree that the final judgment in any such
action or proceeding shall be conclusive and may be in force in any other
jurisdiction by suit on the judgment or in any other manner provided by law.
Section 12.7. Relationship of Parties. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the
parties. The duties and responsibilities of the Servicer shall be rendered by it
as a provider of services and not as a general purpose agent of the Company. The
Servicer shall have full control of all of its acts, doings, proceedings,
relating to or requisite in connection with the discharge of its duties and
responsibilities under this Agreement.
Section 12.8. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
-29-
Section 12.9. Exhibits. The exhibits to this Agreement are hereby
incorporated and made a part hereon and are integral parts of this Agreement.
In Witness Whereof, the parties have executed this Agreement as of the date
first written above.
▇▇▇▇▇▇ Preferred Capital Corporation
By:
---------------------------------
▇▇▇▇▇▇ Trust and Savings Bank
By:
---------------------------------
-30-
EXHIBIT 1
CUSTODIAL ACCOUNT CERTIFICATION
______________________, 1997
▇▇▇▇▇▇ Trust and Savings Bank hereby certified that it has established the
account described below as a Custodial Account pursuant to Section 2.4 of the
Servicing Agreement, dated as of _______________, 1997.
Title of Account: ▇▇▇▇▇▇ Trust and Savings Bank, in trust for
[named Company], and various
Mortgagors
Address of office or branch of the Servicer at which the Account is maintained:
________________________________________________________________________________
________________________________________________________________________________
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By _______________________________________
Name:
Title:
EXHIBIT 2
CUSTODIAL ACCOUNT LETTER AGREEMENT
__________________________, 1997
To:______________________________________ (the "Depository")
As Servicer under the Servicing Agreement dated as of ________________,
1997 (the "Agreement"), we hereby authorize and request you to establish an
account, as a Custodial Account pursuant to Section 2.4 of the Agreement, to be
designated as "▇▇▇▇▇▇ Trust and Savings Bank, in trust for [named Company] and
various Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by ▇▇▇▇▇▇ Trust and Savings Bank. This letter is
submitted to you in duplicate. Please execute and return one original to us.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By_________________________________________
Name:
Title:
The undersigned, as Depository, hereby certified that the above described
account has been established under Account Number ____________________________,
at the office of the Depository indicated above, and agrees to honor withdrawals
on such account as provided above.
DEPOSITORY
By_________________________________________
Name:
Title:
EXHIBIT 3
ESCROW ACCOUNT CERTIFICATION
______________________, 1997
▇▇▇▇▇▇ Trust and Savings Bank hereby certified that it has established the
account described below as a Escrow Account pursuant to Section 2.6 of the
Servicing Agreement, dated as of _______________, 1997.
Title of Account: ▇▇▇▇▇▇ Trust and Savings Bank, in trust for
[named Company], and various
Mortgagors
Account Number: ____________________________________________
Address of office or branch of the Servicer at which the Account is maintained:
_______________________________________________________________________________
_______________________________________________________________________________
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By_________________________________________
Name:
Title:
EXHIBIT 4
ESCROW ACCOUNT LETTER AGREEMENT
__________________________, 1997
To: ___________________________________ (the "Depository")
As Servicer under the Servicing Agreement dated as of ____________, 1997
(the "Agreement"), we hereby authorize and request you to establish an account,
as an Escrow Account pursuant to Section 2.6 of the Agreement, to be designated
as "▇▇▇▇▇▇ Trust and Savings Bank, in trust for [named Company] and various
Mortgagors." All deposits in the account shall be subject to withdrawal
therefrom by order signed by ▇▇▇▇▇▇ Trust and Savings Bank. This letter is
submitted to you in duplicate. Please execute and return one original to us.
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By_________________________________________
Name:
Title:
The undersigned, as Depository, hereby certified that the above described
account has been established under Account Number ____________________________,
at the office of the Depository indicated above, and agrees to honor withdrawals
on such account as provided above.
DEPOSITORY
By_________________________________________
Name:
Title: