EXHIBIT 10.51.1
SERVICING AGREEMENT
This agreement for the servicing of Loans ("Servicing Agreement") is made and
dated as of August 26, 1993, between FIRST COLLATERAL SERVICES, INC.
("Purchaser") and ▇▇▇▇▇▇ MORTGAGE CORPORATION ("Originator"). All capitalized
terms used in this Servicing Agreement not defined herein shall have the meaning
given to such term in the Master Mortgage Loan Purchasing Agreement and related
Loan Purchasing Documents entered into between the parties on the August 26,
1993.
1. Option to Amend. Purchaser shall have the option at any time and from time
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to time in its sole discretion to modify the terms of this Servicing Agreement
to facilitate the sale of the Loans into the secondary market and any such
modification shall be effective from the time of written notice to Originator.
2. Representations and Warranties
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(a) Originator represents and warrants to, and covenants with Purchaser,
that as of the Closing Date of each Loan:
(1) Originator is duly organized, validly existing and in good
standing under the laws of CALIFORNIA and is qualified to transact business in
and is in good standing under the laws of each state where mortgaged property is
located or is otherwise exempt under applicable law from such qualification or
is otherwise not required under applicable law to effect such qualification and
no demand for such qualification has been made upon Originator by any state
having jurisdiction and in any event, Originator is or will be in compliance
with the laws of any such state to the extent necessary to insure the
enforceability of each Loan and the servicing of the Loans in accordance with
the terms of this Servicing Agreement;
(2) Originator has the full power and authority to originate, to hold
each Loan, to sell each Loan, to execute, deliver and perform, and to enter into
and consummate, all transactions contemplated by this Servicing Agreement.
Originator has duly authorized the execution, delivery and performance of this
Servicing Agreement, has duly executed and delivered this Servicing Agreement,
and this Servicing Agreement constitutes a legal, valid and binding obligation
of Originator, enforceable against it in accordance with its terms;
(3) Neither the execution and delivery of this Servicing Agreement,
the acquisition or origination of the Loans by Originator, the consummation of
the transactions contemplated hereby, nor the fulfilment of or compliance with
the terms and conditions of this Servicing Agreement, will conflict with or
result in a breach of any of the terms, conditions or provisions of Originator's
charter or by-laws or any legal restriction or any agreement or instrument to
which the Originator 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
Originator or its property is subject;
(4) Originator does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Servicing Agreement;
It is understood and agreed that the representations and warranties set forth in
this Servicing Agreement shall survive the sale of the Loans and delivery of the
Loans to Purchaser. Upon discovery by either Originator or Purchaser of breach
of any of the foregoing representations and warranties which materially and
adversely affects the value of the Loans or the interest of Purchaser (or which
materially and adversely affects the interests of Purchaser in the related Loan
in the case of a representation and warranty relating to a particular Loan), the
party discovering such breach shall give prompt written notice to the other.
Originator shall indemnify Purchaser and hold it harmless against any loss,
damages, penalties, fines, forfeitures, legal fees and related costs, judgments
and other costs and expenses resulting from any claim, demand, defense or
assertion based on or grounded upon, or resulting from, a breach of Originator's
representations and warranties contained in this Servicing Agreement.
3. Administration and Servicing of Loans in Warehouse
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(a) Originator To Act as Servicer. Originator shall service and administer
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the Loans and shall have power and authority to do any and all things in
connection with such servicing and administration which Originator
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may deem necessary or desirable and consistent with the terms of this Servicing
Agreement and the Master Mortgage Loan Purchasing Agreement excepting the
following:
(1) Originator may not waive, modify or vary any term of any Loan
or consent to the postponement of strict compliance with any such term or in any
manner grant indulgence to the Mortgagor without the prior consent of Purchaser.
(2) Originator may not permit any modification with respect to
any Loan that would increase or decrease the Mortgage Interest Rate, defer or
forgive the payment of any principal or interest, reduce the outstanding
principal amount (except for actual payments of principal), or extend the final
maturity date of such Loan.
Without limiting the generality of the above, Originator shall continue, and is
hereby authorized and empowered in accordance with this Servicing Agreement, to
execute and deliver on behalf of Purchaser, all instruments of satisfaction or
cancellation, or of partial or full release, discharge and all other comparable
instruments, with respect to the Loan and with respect to the Mortgaged
Property. If reasonably required by Originator, Purchaser shall furnish
Originator with any powers of attorney and other documents necessary or
appropriate to enable Originator to carry out its servicing and administrative
duties under this Servicing Agreement.
In servicing and administering the Loans, Originator shall employ procedures
(including the collection procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering Loans for its
own account giving due consideration to accepted mortgage servicing practices of
prudent lending institutions and the Purchaser's reliance on Originator.
The Loans may not be sub-serviced on behalf of Originator without written
permission from the Purchaser.
(b) Liquidation of Loans. In the event that any payment due under any
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Loan 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 any Loan and
such failure continues beyond any applicable grace period, Originator shall take
such action as it shall deem to be in the best interest of Purchaser. In the
event that any payment due under any Loan remains delinquent for a period of 60
days or more, Originator shall commence foreclosure proceedings after written
notification to Purchaser:
(c) Collection of Loan Payments. Continuously from the date hereof
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until the principal and interest on all Loans are paid in full, Originator will
proceed diligently to collect all payments due under each Loan when the same
shall become due and payable and will take special care in ascertaining and
estimating annual ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums, mortgage insurance premiums, and all other charges that, as
provided in the Mortgage, will become due and payable to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable.
(d) Establishment of Trust Accounts. Originator shall segregate and
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hold all funds collected and received pursuant to each Loan separate and apart
from any of its own funds and general assets and shall establish and maintain
one or more Trust Accounts. Such Trust Accounts shall be established with a
commercial bank, a mutual savings and loan or a savings and loan association
whose accounts are insured by FDIC and are acceptable under the requirements of
FNMA. Originator shall cause to be deposited in the Trust Accounts on a daily
basis, and retain therein:
(1) all scheduled payments due,
(2) the portion of all Monthly Payments which represent
interest on the Loans,
(3) all proceeds from a Cash Liquidation,
(4) all proceeds received by the Originator under any title,
hazard or other insurance policy, and
(5) all awards or settlements in respect of condemnation
proceedings affecting the Mortgaged Property which are not released to the
Mortgagor in accordance with Originator's normal servicing procedures.
The foregoing requirements for deposit in the Trust Accounts shall be exclusive,
it being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of late payment charges and assumption fees,
to the extent permitted, need not be deposited by Originator into the Trust
Accounts.
2.
(e) Permitted withdrawals from the Trust Accounts. Originator may, from
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time to time, withdraw funds from the Trust Accounts as specified in the Master
Mortgage Loan Purchasing Agreement.
(f) Establishment of Escrow Accounts: Deposits in Escrow Accounts.
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Originator shall segregate and hold all funds collected and received pursuant to
each Loan which constitute Escrow Payments separate and apart from any of its
own funds and general assets and shall establish and maintain in trust one or
more Escrow Accounts, in the form of segregated time deposit or demand accounts.
The Escrow Accounts shall be established with a commercial bank, a mutual
savings and loan or a savings and loan association whose accounts are insured by
FDIC and are acceptable under the requirements of FNMA.
Originator shall deposit, or cause to be deposited, in the Escrow
Account on a daily basis, and retain therein:
(1) all Escrow payments collected on account of such Loans for the
purpose of effecting timely payment of any such items as required under the
terms of this Servicing Agreement,
(2) all amounts representing proceeds of any hazard insurance policy
which are to be applied to the restoration or repair of any such Mortgaged
Property. Originator shall make withdrawals therefrom only to effect such
payments as are required under this Servicing Agreement, and for such other
purposes as shall be set forth. Originator shall pay, to the extent required by
law, interest on escrowed funds to the Mortgagor notwithstanding that the Escrow
Account is non-interest bearing or that interest paid thereon is insufficient
for such purposes.
(g) Permitted Withdrawals from Escrow Account. Withdrawals from the Escrow
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Account may be made by Originator to effect timely payments of ground rents,
taxes, assessments, water rates, mortgage insurance premiums, fire and hazard
insurance premiums or other items constituting Escrow Payments for the related
Mortgage.
(h) Payment of Taxes, Insurance and other Charges. With respect to each
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Loan, Originator shall maintain accurate records reflecting the status of ground
rents, taxes, assessments, water rates and other charges which are or may become
a lien upon the Mortgaged Property and the status of primary mortgage guaranty
insurance premiums 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 and at a time appropriate for securing maximum discounts
allowable, employing for such purpose deposits of the Mortgagor in the Escrow
Account which shall have been estimated and accumulated by Originator in amounts
sufficient for such purposes, as allowed under the terms of the Mortgage. To the
extent that a Mortgage does not provide for Escrow Payments, Originator shall
determine that any such payments are made by the Mortgagor at the time they
first become due. Originator assumes full responsibility for the timely payment
of all such bills and shall effect timely payments of all such bills
irrespective of each Mortgagor's faithful performance in the payment of same or
the making of the Escrow Payments and shall make advances from its own funds to
effect such payments.
(i) Maintenance of Hazard Insurance. Originator shall cause to be
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maintained for each Loan fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is equal to at least 100 percent of the maximum insurable value of the
improvements securing such Loan or the principal balance owing on such Loan,
whichever is the greater. If the Mortgaged Property is in an area identified in
the Federal Register by the Flood Emergency Management Agency as having special
flood hazards (and such flood insurance has been made available) Originator will
cause to be maintained a flood insurance policy meeting the requirements of the
current guidelines of the National Flood Insurance Protection Act which funds
are to be deposited in the Escrow Account. If on the Mortgaged Property has been
identified by geological survey or indicated on the appraisal of the Mortgaged
Property as being located in a high earthquake area Originator will cause to be
maintained special earthquake insurance riders to the hazard policy. All such
policies shall be endorsed with standard mortgage language naming Purchaser as
mortgagee. Originator shall not interfere with the Mortgagor's, freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that Originator shall not accept any such insurance policies from insurance
companies unless such companies currently reflect a General Policy Rating of B+
or better in Bests Key Rating Guide and are licensed to do business in the state
wherein the property subject to the policy is located.
(j) Fidelity Bond and Mortgage Impairment. Originator shall maintain, at
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its own expense, a blanket fidelity bond, mortgage impairment and an errors and
omissions insurance policy, with broad coverage with responsible companies on
all officers, employees or other persons acting in any capacity with regard to a
Loan who handle funds, money, documents and papers relating to a Loan. Any such
fidelity bond and errors and omissions
3.
insurance shall protect and insure Originator and Purchaser against losses,
including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of Originator and of any such persons. No provision of this
Section requiring such fidelity bond and errors and omissions insurance shall
diminish or relieve Originator from its duties and obligations as set forth in
this Servicing Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by FNMA in
Section 1.01 of the FNMA Guaranteed Mortgage Backed Securities Sellers' and
Servicers' Guide, or by FHLMC in Section 6.402 or 6.403 of the FHLMC Sellers'
and Servicers' Guide. Upon request of Purchaser, Originator shall cause to be
delivered to Purchaser a certified true copy of such fidelity bond and insurance
policy and a statement from the surety and the insurer that such fidelity bond
or insurance policy shall in no event be terminated or materially modified
without 30 days' prior written notice to Purchaser.
(k) Notification of Adjustments. Originator shall make interest rate
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adjustments and payment amount adjustments for each Loan in compliance with the
requirements of the Mortgage and the Mortgage Note and applicable law on each
Adjustment Date which reflects the movement of the Indices. Originator shall
execute and deliver the notices required by the Mortgage and Mortgage Note and
applicable law regarding interest rate and payment amount adjustments. In the
event the relevant Loan is in default, the notice shall reserve all rights and
remedies available to Purchaser. Originator shall also provide timely
notification to Purchaser of all applicable data and information regarding such
interest rate adjustments and methods of implementation of such interest rate
adjustments.
(l) Waiver of Defaults. Purchaser may waive any default by Originator in
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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 Servicing 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.
(m) Termination. The respective obligations and responsibilities of
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Originator shall terminate upon written notification by Purchaser in its sole
discretion.
(n) No Hypothecation. Originator may not sell, assign or transfer in any
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way its right to receive a portion of the Servicing Fee as provided in this
Section without the prior written consent of Purchaser, except under a Qualified
Takeout Commitment.
(o) Successor to Originator. Upon the termination of Originator's
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responsibilities and duties under this Servicing Agreement pursuant to any
Article or Section, Purchaser shall:
(1) succeed to and assume all of Originator's responsibilities,
rights, duties and obligations under this Servicing Agreement, or
(2) appoint a successor which shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of Originator under this
Servicing Agreement. In the event that Originator's duties, responsibilities and
liabilities under this Servicing Agreement should be terminated pursuant to the
aforementioned Article or Sections, Originator 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 Servicing Agreement,
and shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor. The removal of Originator pursuant to the
aforementioned Sections shall not become effective until a successor shall be
appointed pursuant to this Section and shall in no event relieve Originator of
the representations and warranties made pursuant to Article III and the remedies
available to Purchaser thereunder, it being understood and agreed that the
provisions of such Article III shall be applicable to Originator notwithstanding
any such resignation or termination of Originator, or the termination of this
Servicing Agreement.
Any termination or resignation of Originator or this Servicing Agreement shall
not affect any claims that Purchaser may have against Originator arising prior
to any such termination or resignation. Originator shall deliver in a timely
manner to the successor the funds in the Trust Account and the Escrow Account
and any mortgage files and related documents and statements held by it
hereunder and Originator shall account for all funds. Originator 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
Originator.
(p) Resolution of Disputes by Reference. The parties to this Agreement
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covenant and agree that any dispute, whether in tort or contract or of any other
nature, arising out of or related to the Loan Documents, this
4.
Agreement, or their interpretation, application or performance, or out of the
relationship between the parties shall be determined by a reference pursuant to
California Code of Civil Procedure (S)638(1). The reference shall be a general
reference of all issues of fact and law and the person appointed shall have the
power to enter all interlocutory and final orders (including orders to deliver
possession of collateral or funds) and to decide all issues of law and fact
without a jury. Until a referee has been appointed and has accepted the
reference the Superior Court shall have jurisdiction to appoint receivers, issue
writs and grant any other interim relief which may be necessary or proper. The
referee shall be a retired California Superior Court Judge selected by agreement
of the parties or if they fail to agree by the Superior Court of the State of
California, Contra Costa County upon application of either party with 24 hours
notice in writing or by telefax to the other party. Discovery shall be allowed
according to California Code of Civil Procedure (S)(S)20l6, et seq. Each party
shall pay one half of the fees of the referee so appointed, of the court
reporter, and of the rental of hearing room daily in advance. The party
prevailing shall recover its entire costs and attorney's fees. If neither party
prevails in full, the person appointed referee shall allocate the costs and
attorney's fees of the parties in accordance with his sound discretion. The
parties agree that the proceedings will be conducted in Contra Costa County,
California, USA and waive any objections to jurisdiction and venue. The action
may not be removed to the United States District Court. An appeal from the
orders or judgments entered by the person appointed shall lie to the California
Court of Appeal, as specified in Code of Civil Procedure (S)645.
(q) Agent for Service of Process. Originator shall irrevocably appoint CT
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Corporation System of ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (or its
successor or assignee) as its agent for service of process to receive service of
all process, including without limitation thereto summons, complaints, writs,
injunctions, motions and orders, in connection with any dispute arising under
the Loan Documents or this Agreement, or out of the relationship between the
parties. Originator shall bear the cost of such appointment and shall not
rescind same while the Loan Documents or this Agreement are in force and effect
or any Obligations remain unpaid. This Agreement, and the Loan Documents, are
entered into by Purchaser in reliance upon such irrevocable appointment.
(r) Amendments. This Servicing Agreement may not be amended or in any
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manner modified by an oral agreement, whether or not such oral agreement is
supported by a new consideration. The Servicing Agreement may not be amended
or in any manner modified unless such amendment or modification is in writing
and signed by Purchaser and the Originator. This Servicing Agreement, the Master
Loan Purchasing Agreement and all related loan purchasing documents are for the
sole benefit of Purchaser and Originator and may be amended, modified or
cancelled at any time or from time to time without consultation or consent of
any other entity.
(s) Recordation of Servicing Agreement. To the extent required by
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applicable law, this Servicing Agreement is subject to recordation in all
appropriate public offices for real property records in all the counties or
other comparable jurisdictions in which any of the properties subject to the
Mortgages are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by Originator at Originator's expense
on direction from Purchaser accompanied by an opinion of counsel to the effect
that such recordation materially and beneficially affect the interests of
Purchaser or is necessary for the administration or servicing of the Loans.
(t) Duration of Servicing Agreement. This Servicing Agreement shall
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continue in existence and effect until terminated as herein provided or upon
termination of the Master Loan Purchasing Agreement.
(u) Governing Law. This Servicing Agreement shall be construed in
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accordance with the laws of the State of California, without giving effect to
its choice of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
(v) Notices. All notices given by either party to the other shall be in
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writing, delivered personally, by facsimile, or by depositing the same in the
United States mail, or overnight delivery, certified, with postage prepaid,
addressed to the party at the address set forth in the Commitment Letter. Either
party may change the address to which notices are to be sent by notice of such
change to the other party given as provided herein.
(w) Severability of Provisions. If any one or more of the covenants,
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agreements, provisions or terms of this Servicing Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Servicing Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Servicing Agreement.
(x) No Partnership. Nothing herein contained shall be deemed or construed
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to create a co-partnership or joint venture between the parties hereto and the
services of Originator shall be rendered as an independent contractor and not as
agent for Purchaser.
5.
(y) Servicing Fee. The Servicing Fee is fifteen basis points netted from
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the aggregate principal and interest, payable to Originator for the servicing of
Eligible Loans as specified in the Master Loan Purchasing Agreement.
4. Irrevocable Power of Attorney
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Originator grants to Purchaser an Irrevocable Power of Attorney in form
attached hereto as Exhibit A. Such Power of Attorney shall be irrevocable and
the execution of such Irrevocable Power of Attorney is an express condition of
Purchaser's agreement to enter into this Servicing Agreement. The Irrevocable
Power of Attorney shall grant to Purchaser the right and power in its absolute
discretion to perform any act to be performed by Originator under this Servicing
Agreement, but shall not require Purchaser to perform any act at all. Purchaser
may exercise the power granted to it under the Irrevocable Power of Attorney
whether or not this Servicing Agreement is terminated, and the exercise of such
Irrevocable Power of Attorney shall not operate to terminate this Servicing
Agreement or any Obligations of Originator hereunder, except in the absolute
discretion of Purchaser expressed in writing. Originator shall indemnify and
hold harmless Purchaser from all claims of any party, whether by Originator, its
successors and assigns, or any third party, and any third party which acts in
reliance upon this Irrevocable Power of Attorney.
IN WITNESS WHEREOF, ▇▇▇▇▇▇ MORTGAGE CORPORATION and First Collateral Services,
Inc. have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
ORIGINATOR: ▇▇▇▇▇▇ MORTGAGE CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇
President
PURCHASER: FIRST COLLATERAL SERVICES, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President & CFO
6.
