EXHIBIT 10.05
--------------------------------------------------------------------------------
FLOW SUBSERVICING AGREEMENT
AMONG
OCWEN FEDERAL BANK FSB,
(SUBSERVICER)
AND
METWEST MORTGAGE SERVICES, INC.,
METROPOLITAN MORTGAGE & SECURITIES CO., INC.,
WESTERN UNITED LIFE ASSURANCE COMPANY,
SUMMIT SECURITIES, INC.,
OLD STANDARD LIFE INSURANCE COMPANY, AND
OLD WEST ANNUITY & LIFE INSURANCE COMPANY
(OWNERS)
DATED AS OF SEPTEMBER 1, 2001
MORTGAGE AND NON-MORTGAGE LOANS AND RECEIVABLES
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................................1
Section 1.1. Definitions........................................................1
Section 1.2. Interpretation of Agreement.......................................11
ARTICLE II TRANSFER OF SERVICING, SERVICING RESPONSIBILITIES
AND SERVICING COMPENSATION..............................................11
Section 2.1. Transfer of Servicing Files to the Subservicer....................11
Section 2.2. Custodial Files to be Held by Subservicer.........................14
Section 2.3. Servicing Responsibilities........................................14
Section 2.4. Collection and Resolution Activities..............................18
Section 2.5. Servicing Compensation............................................19
Section 2.6. Additional Servicing Provisions Relating to Land Sale Contracts...19
Section 2.7. Whole Loan Transfers and Securitization Transfers.................19
ARTICLE III DEFAULT MANAGEMENT SERVICES.............................................20
Section 3.1. Default Management Responsibilities...............................20
Section 3.2. Foreclosure.......................................................20
Section 3.3. Deed in Lieu......................................................21
Section 3.4. Bankruptcy of Obligor.............................................22
ARTICLE IV PROPERTY MANAGEMENT AND DISPOSITION SERVICES.............................22
Section 4.1. Property Management and Disposition Responsibilities..............22
Section 4.2. Environmental Problems............................................23
ARTICLE V STANDARDS FOR CONDUCT.....................................................23
Section 5.1. Standards of Care and Delegation of Duties........................23
Section 5.2. Transactions with Related Persons.................................24
Section 5.3. Access to Records.................................................24
Section 5.4. Annual Audit......................................................25
ARTICLE VI REMITTANCES AND REPORTS TO OWNER.........................................26
Section 6.1. Servicing Advances................................................26
Section 6.2. Remittances and Monthly Report....................................26
Section 6.3. Remittance Upon Termination.......................................28
Section 6.4. Interest on Remittances...........................................28
Section 6.5. Document Deficiencies.............................................28
ARTICLE VII REPRESENTATIONS AND WARRANTIES..........................................29
Section 7.1. Representations and Warranties of the Subservicer.................29
Section 7.2. Representations and Warranties of the Owners......................30
i
ARTICLE VIII INDEMNIFICATION........................................................31
Section 8.1. Liabilities to Obligors...........................................31
Section 8.2. Subservicer's Indemnity of the Owner..............................31
Section 8.3. Owners' Indemnity of the Subservicer; Limitation on Liability
of the Subservicer...............................................32
Section 8.4. Indemnification Procedures........................................34
Section 8.5. Operation of Indemnities..........................................35
ARTICLE IX DEFAULT..................................................................35
Section 9.1. Events of Default.................................................35
Section 9.2. Effect of Transfer................................................36
ARTICLE X TERM......................................................................36
Section 10.1. Term of Agreement................................................36
Section 10.2. Transfers of Servicing...........................................37
Section 10.3. Subservicer Not to Resign........................................37
Section 10.4. Successor Subservicer............................................37
ARTICLE XI MISCELLANEOUS............................................................38
Section 11.1. Successors and Assigns; No Third Party Beneficiaries.............38
Section 11.2. Choice of Law....................................................38
Section 11.3. Notices..........................................................38
Section 11.4. Entire Agreement; Amendments; Waivers............................39
Section 11.5. No Joint Venture; Limited Agency.................................39
Section 11.6. Severability; Interpretation.....................................40
Section 11.7. Counterparts.....................................................40
Section 11.8. Waiver of Jury Trial.............................................40
Section 11.9. Limitation of Damages............................................40
EXHIBITS
The following exhibits are incorporated into this Agreement:
EXHIBIT A Additional Servicing Requirements
EXHIBIT B Servicing Transfer Provisions
EXHIBIT C Servicing and Deboarding Fees
EXHIBIT D Ancillary Income Allocation
EXHIBIT E Servicing File Specifications
ii
FLOW SUBSERVICING AGREEMENT
This
FLOW SUBSERVICING AGREEMENT (this "Agreement") dated effective as
of September 1, 2001, by and among METWEST MORTGAGE SERVICES, INC., a Washington
corporation ("Metwest"), METROPOLITAN MORTGAGE & SECURITIES CO., INC., a
Washington corporation ("Metropolitan"), WESTERN UNITED LIFE ASSURANCE COMPANY,
a Washington insurance corporation ("Western United"), SUMMIT SECURITIES, INC.,
an Idaho corporation ("Summit"), OLD STANDARD LIFE INSURANCE COMPANY, an Idaho
insurance corporation ("Old Standard"), OLD WEST ANNUITY & LIFE INSURANCE
COMPANY, an Arizona insurance corporation ("Old West", and together with
Metwest, Metropolitan, Western United, Summit and Old Standard, collectively the
"Owners" and individually an "Owner") and OCWEN FEDERAL BANK FSB, a federally
chartered savings bank (the "Subservicer").
WITNESSETH:
WHEREAS, the Owners originate and acquire residential (including
timeshare) mortgage loans, commercial and land mortgage loans, and other secured
loans and receivables from time to time (collectively, the "Assets"); and
WHEREAS, the Owners and the Subservicer desire to set forth the terms
and conditions on which the Subservicer will service and provide management and
disposition services for such Assets (including REO Properties and other
property acquired with respect to the Assets);
NOW, THEREFORE, in consideration for the mutual benefits and
obligations as hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
Capitalized terms used in this Agreement and not otherwise defined
shall have the meanings given to them in this Section 1.1.
"ACCEPTED SERVICING PRACTICES" means, with respect to any Asset or
Property, those servicing, collection, resolution or disposition practices that
are undertaken to maximize the net present value to the related Owner of such
Owner's investment in any Asset or Property followed with the same care, skill,
prudence and diligence with which (i) the Subservicer services and administers
assets or properties held for other portfolios similar to such Asset or
Property, or (ii) if the Subservicer does not service or administer similar
assets or properties, servicers of similar assets and properties service and
administer such assets or properties for their own portfolio and for others, but
in each case without regard to:
1. any relationship that the Subservicer, any subservicer or any
affiliate of the Subservicer or any other subservicer may have with the related
Obligor; or
Page 1
2. the Subservicer's or any subservicer's right to receive compensation
for its services hereunder or with respect to any particular transaction; or
3. the ownership, or servicing or management for others, by the
Subservicer or any other subservicer, of any other loans or property;
provided, however, that such services are performed in compliance with
the terms of this Agreement, the Requirements, the Contractual Requirements (to
the extent the related documents have been made available to the Subservicer)
and the provisions contained in Exhibit A attached hereto and incorporated
herein.
"AGREEMENT" means this Servicing Agreement as amended, modified or
supplemented from time to time, including all exhibits and schedules hereto.
"ANCILLARY INCOME" means all release fees, late payment charges,,
insufficient funds charges, assumption fees and modification fees (other than
fees paid to Metwest for assumptions and modifications negotiated by Metwest in
accordance with Section 3.1), fees associated with any repayment plan or
forbearance agreement, interest on the Collection Account and Escrow Accounts
(net of any interest payments due Obligors pursuant to the Requirements) and
other similar fees (exclusive of Prepayment Penalties). With respect to
Commercial Mortgage Loans, Ancillary Income shall not include those items
indicated on Exhibit D as being allocable to the related Owner.
"ASSET" means a Loan or a Receivable owned by the applicable Owner and
for which the servicing is transferred to the Subservicer from time to time
pursuant to the terms and provisions of Section 2.1.
"ASSOCIATION" means any homeowners' association or condominium
association.
"BALLOON MORTGAGE LOAN" means any Mortgage Loan that by its original
terms or by virtue of any modification provides for an amortization schedule
extending beyond its originally scheduled Maturity Date.
"BALLOON PAYMENT" means, with respect to a Balloon Mortgage Loan as of
any date of determination, the amount outstanding on the Maturity Date of such
Balloon Mortgage Loan in excess of the related Scheduled Payment.
"BANKRUPTCY CODE" means 11 U.S.C. 101 et. seq., as the same may be
amended, modified or supplemented from time to time.
"BUSINESS DAY" means any day other than (a) a Saturday or Sunday or (b)
a day on which banking and savings and loan institutions in the principal
business location of the Owners or of the Subservicer are authorized or
obligated by law or executive order to be closed.
"COLLECTION ACCOUNT" means the separate account(s) created pursuant to
Section 2.3(a) of this Agreement, which shall be entitled "Ocwen Federal Bank
FSB, as the Subservicer, in trust for certain Owners under a Subservicing
Agreement dated as of September 1, 2001."
Page 2
"COLLECTION PERIOD" means with respect to each Distribution Date, the
period commencing on the first day of the month preceding the month of the
Distribution Date and ending on the last day of the month preceding the month of
the Distribution Date.
"COMMERCIAL MORTGAGE LOAN" means a Mortgage Loan secured by a
multifamily residential property or a commercial property including, among
others, multifamily, retail, mixed use, office and industrial properties.
"CONTRACTUAL REQUIREMENTS" means the provisions, terms and conditions
set forth in the Custodial Documents, any contract or other governing agreement
relating to an Asset, any mortgage insurance policy relating to a Mortgage Loan,
if any, and any escrow agreement relating to an Escrow Mortgage Loan, if any.
"CURRENT SUBSERVICER" means an Owner or any other servicer,
subservicer, document custodian, owner, holder, originator or other Person who
has possession of any document or information constituting a part of a Servicing
File prior to the related Transfer Date.
"CUSTODIAL DOCUMENTS" means, with respect to an Asset, the original
note, Mortgage or other security agreement and other original documents relating
to an Asset that are held by a Custodian.
"CUSTODIAN" means an Owner or any custodian appointed by an Owner to
hold the related Custodial Documents until such time that the Custodial
Documents are delivered to the Subservicer, at which time the Subservicer shall
become the Custodian pursuant to Section 2.2.
"CUSTODIAN FILE" means with respect to an Asset, the file in which the
Custodial Documents relating to such Asset are maintained.
"DEBOARDING FEE" means, with respect to any Asset, the applicable fee
set forth on Exhibit C paid by the related Owner to the Subservicer pursuant to
Section 10.1(c).
"DETERMINATION DATE" means the last day (or if such day is not a
Business Day, the Business Day immediately preceding such day) of the Collection
Period.
"DISPOSITION" means any (a) taking of Mortgaged Property by eminent
domain or condemnation or sale in lieu thereof, (b) the liquidation of a
defaulted Asset through a foreclosure sale, trustee's sale, forfeiture,
deed-in-lieu of foreclosure or otherwise, (c) a sale or assignment of an Asset
or Property in accordance with the terms hereof, and/or (d) any other
disposition of an Asset or Property whether through a discounted payoff,
prepayment, Balloon Payment or any other similar disposition.
"DISTRIBUTION DATE" means the 10th day of each month.
"ELIGIBLE ACCOUNT" means an account maintained with a depository
institution, (i) whose accounts are insured by the FDIC and (ii) whose (or whose
direct or indirect parent's) long term unsecured debt obligations are rated at
least "A" or better by one of the Rating Agencies.
"ENVIRONMENTAL LIABILITY" shall have the meaning ascribed thereto in
Section 8.3(c).
Page 3
"ENVIRONMENTAL PROBLEM PROPERTY" means a Property that is in violation
of any environmental law, rule or regulation.
"ESCROW ACCOUNTS" means the separate account(s) created pursuant to
Section 2.3(a) of this Agreement, for the payment of taxes, Association dues,
assessments, Hazard Insurance and Mortgage Insurance premiums, ground rents and
similar items which shall be entitled "Ocwen Federal Bank FSB, as the
Subservicer, in trust for related Owners and Obligors under a Subservicing
Agreement dated as of September 1, 2001."
"ESCROW PAYMENTS" means amounts required to be paid for taxes,
Association dues, assessments, Hazard Insurance and Mortgage Insurance premiums,
ground rents and similar items and any and all other purposes for which funds
may or may not be held in escrow.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC" means ▇▇▇▇▇▇▇ Mac (formerly known as the Federal Home Loan
Mortgage Corporation), or any successor thereto.
"FITCH" means Fitch, Inc.
"FLOOD INSURANCE" or "FLOOD INSURANCE POLICY" means an insurance policy
insuring against flood damage to a Mortgaged Property.
"FNMA" means ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National
Mortgage Association), or any successor thereto.
"HAZARD INSURANCE" means casualty, fire, hazard, flood, wind, liability
or similar insurance policies relating to a Mortgaged Property.
"HUD" means the United States Department of Housing and Urban
Development.
"LAND SALE CONTRACT" means a contract, together with all amendments and
modifications thereto, for the sale of real estate and the improvements thereon
pursuant to which the Obligor promises to pay the amount due thereon to the
holder thereof and pursuant to which fee title to the related Mortgaged Property
is held by such holder until the Obligor has made all of the payments required
pursuant to such contract, at which time fee title is conveyed to the Obligor.
"LIABILITY" shall have the meaning ascribed thereto in Section 8.2.
"LIQUIDATION PROCEEDS" means cash received in connection with the
liquidation of an Asset, whether through a Disposition or otherwise, net of the
amount of any broker's fees payable in connection with any sale of the related
Property (but without any deduction for any legal fees or other costs or
expenses).
"LOAN" means an Asset that is either a Mortgage Loan or Non Mortgage
Loan, as the case may be.
Page 4
"MATURITY DATE" means, with respect to any Loan, the date on which the
last payment of principal is due and payable under the related promissory note
and, with respect to any Receivable, the date on which the final payment is due
with respect to such Receivable.
"MISSING DOCUMENT REPORT" means the report prepared by the Subservicer
and delivered to an Owner pursuant to Section 6.4.
"MONTHLY COLLECTION AMOUNT" means, for each Distribution Date and each
Owner, all amounts actually received into the Subservicer's lock box or
otherwise by Subservicer during the related Collection Period with respect to
the Assets relating to such Owner from whatever source (other than partial and
forbearance payments), including, without limitation, all payments of principal
and interest, and Prepayment Penalties, minus (i) amounts representing accrued
taxes and insurance premiums not yet due and payable to the applicable taxing
authority or insurer, calculated in accordance with the then current escrow
analysis performed by the Subservicer in accordance with applicable
Requirements, (ii) Servicing Fees and Ancillary Income with respect to the
related Assets to the extent received and retained by the Subservicer prior to
distribution pursuant to Section 6.02 and (iii) any amounts refunded to an
Obligor with respect to any such Asset that are determined to be in excess of
the amounts required under the terms of the related Custodial Documents.
"MONTHLY REPORT" means the monthly report prepared by the Subservicer
and delivered to an Owner pursuant to Section 6.2.
"MOODY'S" means Moody's Investor's Service Inc.
"MORTGAGE" means, the mortgage, deed of trust or other instrument
creating a first or junior lien on real property securing a Mortgage Loan.
"MORTGAGE INSURANCE" means any mortgage insurance or guaranty relating
to a Mortgage Loan issued by a Mortgage Insurer.
"MORTGAGE INSURER" means the Federal Housing Administration as a
mortgage insurer, the United States Department of Veterans Affairs as a mortgage
guarantor and any issuer of private mortgage insurance.
"MORTGAGE LOAN" means an Asset that is an individual mortgage loan or
Land Sale Contract including any Mortgaged Property that was acquired in
foreclosure or similar action.
"MORTGAGED PROPERTY" means the real property securing a Loan that is a
Mortgage Loan.
"NON-MORTGAGE LOAN" means any Loan that is not a Mortgage Loan.
"NON-RECOVERABLE ADVANCE" shall have the meaning set forth in Section
2.3(b) below.
"OBLIGOR" means (i) with respect to a Loan, the individual(s) obligated
to repay such Loan and (ii) with respect to a Receivable, the individual(s)
obligated to make payments with respect to such Receivable.
Page 5
"OWNER" means with respect to an Asset, either (i) Metwest, (ii)
Metropolitan, (iii) Western, (iv) Summit, (v) Old Standard and (vi) Old West.
Metwest, Metropolitan, Western, Summit, Old Standard and Old West are
collectively referred to herein as the "Owners".
"PERMITTED INVESTMENTS" means, any one or more of the obligations and
securities listed below which investment provides for a date of maturity not
later than the Distribution Date in each month:
(a) direct obligations of, and obligations fully guaranteed
by, the United States of America, FHLMC, FNMA, the Federal Home Loan
Banks or any agency or instrumentality of the United States of America
the obligations of which are backed by the full faith and credit of the
United States of America;
(b) (i) demand and time deposits in, certificates of deposit
of, bankers acceptances issued by, or federal funds sold by, any
depository institution or trust company (including the Subservicer or
its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal or
state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company or its ultimate parent has a short-term
unsecured debt rating in one of the two highest available rating
categories of S&P and the highest available rating category of Moody's
and provided that each such investment has an original maturity of no
more than 365 days, and (ii) any other demand or time deposit or
deposit which is fully insured by the FDIC;
(c) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (a) above and entered
into with a depository institution or trust company (acting as
principal) rated "A" or higher by S&P and rated "A2" or higher by
Moody's; provided, however, that collateral transferred pursuant to
such repurchase obligation must be of the type described in clause (a)
above and must (i) be valued daily at current market price plus accrued
interest, (ii) pursuant to such valuation, be equal, at all times, to
at least 105% of the cash transferred by the Subservicer in exchange
for such collateral, and (iii) be delivered to the Subservicer, or if
the Subservicer is supplying the collateral, an agent for the
Subservicer, in such a manner as to accomplish perfection of a security
interest in the collateral by possession of certificated securities;
(d) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any state thereof which has a short-term unsecured debt
rating in the highest available rating category of each of the Rating
Agencies at the time of such investment;
(e) commercial paper having an original maturity of less than
180 days and issued by an institution having a short-term unsecured
debt rating in the highest available rating category of each of the
Rating Agencies at the time of such investment;
(f) a guaranteed investment contract approved by each of the
Rating Agencies and the Owners and issued by an insurance company or
other corporation having a
Page 6
short-term unsecured debt rating in the highest available rating
category of each of the Rating Agencies at the time of such investment;
(g) money market funds having one of the two highest available
rating categories of S&P and the highest available rating category of
Moody's at the time of such investment, which invests only in other
Eligible Investments;
(h) Federal Housing Administration debentures; provided, that
any such investment shall be rated in one of the two highest ratings
categories by each Rating Agency;
(i) FHLMC participation certificates which guaranty timely
payment of principal and interest and senior debt obligations;
(j) consolidated senior debt obligations of any Federal Home
Loan Banks;
(k) FNMA mortgage-backed securities (other than stripped
mortgage securities which are valued greater than par on the portion of
unpaid principal) and senior debt obligations;
(l) federal funds, certificates of deposit time deposits, and
bankers' acceptances (having original maturities of not more than 365
days) of any domestic bank, the short-term debt obligations of which
have been rated F-1+ or better by Fitch, A-1+ or better by S&P and P-1
by Moody's; or
(m) deposits of any bank or savings and loan association (the
long-term deposit rating of which is Baa3 or better by Moody's and BBB
by each of S&P and Fitch) which has combined capital, surplus and
undivided profits of at least $50,000,000 which deposits are insured by
the FDIC and held up to the limits insured by the FDIC;
provided that all instruments described hereunder shall mature at par
on or prior to the next succeeding Distribution Date unless otherwise provided
in this Agreement and that no instrument described hereunder may be purchased at
a price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, limited liability company,
unincorporated organization or government or agency or political subdivision
thereof.
"PREPAYMENT PENALTY" means, with respect to each Loan, if applicable,
the penalty or premium required to be paid if the Obligor prepays such Loan as
provided in the related Custodial Documents.
"PRIME RATE" shall mean the prime rate announced to be in effect from
time to time, as published as the average rate in The Wall Street Journal.
"PROPERTY" means, (a) as of any Determination Date for the purpose of
calculating the relevant Servicing Fee, and (b) as of the actual date of
acquisition of title for all other purposes:
Page 7
any (i) Mortgaged Property or other collateral property subject to a Loan and
(ii) any Mortgaged Property or other collateral property that was subject to a
Loan, after such property has been acquired on behalf of the related Owner
pursuant to this Agreement through foreclosure or similar proceedings,
acceptance of deed-in-lieu of foreclosure, acquisition of title in lieu of
foreclosure or the acquisition of title by operation of law.
"PROPERTY IMPROVEMENT EXPENSES" means any costs and expenses for
repairs, replacements or improvements which the Subservicer deems advisable
under the circumstances, but only to the extent that they:
(a) are paid to Persons who are generally in the business of
providing such goods and services;
(b) are reasonable for the types of goods or services provided
in the geographical area in which such goods or services are provided;
(c) are designed to maintain or improve the value of a
Property but not immediately necessary to operate it; and
(d) are incurred for the purpose of facilitating the sale of
the related Loan or REO Property and maximizing the proceeds thereof,
including but not limited to the following:
(i) cosmetic improvements such as painting and
landscaping;
(ii) build-out or modification to suit a
particular prospective or actual tenant or
buyer;
(iii) replacement of items which are obsolete or
wearing out but which may not be
dysfunctional; and
(iv) moneys paid to a tenant or buyer for a
purpose similar to a Property Improvement
Expense.
"PROPERTY PROTECTION EXPENSES" means the following costs and expenses,
but only to the extent that they are paid to Persons who are generally in the
business of providing such goods and services and are reasonable for the types
of goods or services provided in the geographical area in which such goods or
services are provided:
(a) utility costs;
(b) payments required under service contracts, including but
not limited to service contracts for heating, ventilation and air
conditioning systems, elevators, landscape maintenance, pest
extermination, security, model furniture, swimming pool service, trash
removal, answering service and credit checks;
(c) property management fees;
Page 8
(d) payroll costs and benefits for on-site maintenance
personnel, including but not limited to housekeeping employees, porters
and general maintenance and security employees;
(e) usual and customary leasing and sales brokerage expenses
and commissions;
(f) permits, licenses and registration fees and costs;
(g) any expense necessary in order to prevent or cure a breach
under a lease, contract or agreement including any debt secured by a
lien which is superior or prior to the lien encumbering the Loan, if
the consequences of failure to prevent or cure could, in the sole
judgment of the Subservicer, have a material adverse effect with
respect to a Loan or Property;
(h) any expense necessary in order to prevent or cure a
material violation of any applicable law, regulation, code or
ordinance;
(i) costs and expenses of brokers' price opinions and surveys,
appraisals, valuations, surveys, inspections (including environmental
and engineering), environmental assessments and/or market studies
incidental to evaluation, leasing and/or sale of the Loans and/or
Properties;
(j) fees and expenses of attorneys, paralegals, surveyors,
title and escrow companies and uniform commercial code search/filing
companies (including, without limitation, costs, fees and/or expenses
for title insurance premiums, tax searches, title searches, escrow
fees, recording costs, uniform commercial code searches, and all costs
similar or related thereto), costs incurred to obtain documents or
information for the Servicing File, and any costs and expenses related
to the preparation and/or recordation of releases of liens or
satisfactions of mortgages (in whole or in part);
(k) property inspections;
(l) any mortgage or transfer recording fees or taxes and other
expenses incurred in connection with converting a Land Sale Contract to
a mortgage loan pursuant to Section 2.6 to the extent such amounts are
not paid by the Obligor;
(m) credit report costs; and
(n) other such reasonable fees and expenses incurred by the
Subservicer in connection with the enforcement, collection,
foreclosure, management and operation of the Property, sales of
Properties (including, without limitation, the costs and expenses set
forth in subsection (i) above and any and all transfer taxes and other
closing costs customarily paid by the seller in the locale where such
sale occurs) and the performance of its servicing activities.
"RATING AGENCIES" means, collectively, Fitch, ▇▇▇▇▇'▇ and S&P.
Page 9
"RECEIVABLE" means an Asset that represents rights to certain specified
amounts due from an Obligor and is not a Loan.
"REO PROPERTY" means a Mortgaged Property acquired by the Subservicer
on behalf of the related Owner through foreclosure, forfeiture, deed-in-lieu of
foreclosure or otherwise in accordance with applicable law in connection with
the default of a Mortgage Loan.
"REQUIREMENTS" means all federal, state or local laws and any other
requirements of any government or agency or instrumentality thereof applicable
to the servicing of the Assets, the management of the Properties or the
provision of services hereunder by the Subservicer, including, without
limitation, all servicing requirements imposed on an Owner or any successor to
an Owner.
"S&P" means Standard & Poor's Rating Group, A Division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"SCHEDULED PAYMENT" means the scheduled payment of principal and
interest or other amounts due on an Asset, if any, payable monthly or otherwise.
"SECURITIZATION TRANSFER" means the sale or transfer of some or all of
the Assets by one or more Owners to a trust, or pledge thereof to an indenture
trustee pursuant to an indenture, in connection with a publicly issued or
privately placed asset-backed securities transaction.
"SERVICING ADVANCES" means all amounts advanced by the Subservicer in
payment of Property Protection Expenses, Escrow Payments and Property
Improvement Expenses, but not including advances of tax and insurance payments
that are reflected in negative escrow balances and are to be paid by the related
Obligor following the next escrow analysis (to the extent paid by the Obligor).
"SERVICING DOCUMENTS" means, with respect to an Asset, the applicable
documents set forth on Exhibit E pertaining to such Asset that are included in
the related Servicing File.
"SERVICING FEE" means with respect to each Distribution Date and each
Asset, the applicable servicing fees set forth on Exhibit C. A Servicing Fee
shall not be collected with respect to any Asset on and after the month
following the month (A) in the case of a Mortgage Loan, in which all amounts
reasonably likely to be received upon liquidation of the related Mortgage
Property have been received and (B) in the case of an Asset that is not a
Mortgage Loan, in which an Owner has notified the Subservicer that such Asset is
a non-performing Asset and that the Subservicer shall not continue to service
such Asset.
"SERVICING FILE" means with respect to each Asset, the Servicing
Documents and information (including any servicing tapes, images and conversion
reports) received from the Current Subservicer, provided by the related Owners
(including title company investigations of matters relating to the Assets and
REO Properties), or obtained through the efforts of the Subservicer hereunder.
"SERVICING PORTFOLIO" means all Assets serviced by the Subservicer
pursuant to this Agreement.
Page 10
"SERVICING TRANSFER PROVISIONS" means with respect to each Asset, the
provisions relating to the transfer of servicing of such Asset to the
Subservicer as set forth on Exhibit B.
"SUBSERVICER" means Ocwen Federal Bank FSB, a federally chartered
savings bank, its successors in interest and permitted assigns.
"SUBSERVICER EVENT OF DEFAULT" shall have the meaning set forth in
Section 9.1.
"TRANSFER DATE" means, with respect to an Asset, the date on which the
Subservicer receives an Owner's request to add such Asset to the Servicing
Portfolio, in accordance with Section 2.1.
"WHOLE LOAN TRANSFER" means any sale or transfer of some or all of the
Assets by one or more Owners to a third party that is not an Owner.
SECTION 1.2. INTERPRETATION OF AGREEMENT.
(a) All references in this Agreement to designated Sections,
Articles, Exhibits and Schedules are to the designated sections and
articles of and exhibits and schedules to this Agreement.
(b) Use of the masculine gender is intended to include the
feminine gender.
(c) The headings and captions used in this Agreement are for
convenience of reference only and do not define, limit or describe the
scope or intent of the provisions of this Agreement.
(d) Terms in the singular include the plural and vice versa.
(e) The terms "includes" or "including" are intended to be
inclusive rather than exclusive.
(f) Whenever the phrase "at Owner's expense" is used in this
Agreement, such phrase shall be deemed to refer to all third-party
costs incurred by the Subservicer relating to actions taken by the
Subservicer pursuant to this Agreement.
ARTICLE II
TRANSFER OF SERVICING, SERVICING RESPONSIBILITIES AND SERVICING
COMPENSATION
SECTION 2.1. TRANSFER OF SERVICING FILES TO THE SUBSERVICER.
(a) On a daily basis an Owner may request that the Subservicer
add Assets originated or acquired by such Owner to the Servicing
Portfolio by sending servicing data with respect to the Asset in
electronic format to the Subservicer and designating such Assets as an
asset to be serviced hereunder. Upon receipt of such a request by an
Owner with respect to an Asset, it will become a part of the Servicing
Portfolio. Subservicer ▇▇▇▇
▇▇▇▇ 11
forward to the Owner within one (1) Business Day of receipt of such
request by an Owner a written or electronic acknowledgment that
Subservicer has received the request and the Ocwen file number that has
been assigned to such Asset. The Owners shall cause the Current
Subservicer to transfer to the Subservicer the Servicing Files and
other servicing records necessary to provide current data with respect
to each of the Assets for the Subservicer's receipt no later than five
(5) Business Days following the Subservicer's receipt of the request to
service an Asset and to otherwise comply with the Servicing Transfer
Provisions. In the event that not all of the related Servicing Files
and other necessary servicing records are transferred in accordance
with the terms of this Agreement and the Servicing Transfer Provisions,
the Subservicer shall upon discovery promptly notify the Owner so that
the Owner may obtain the necessary servicing records. The Subservicer
shall transfer and convert the Servicing Files to the Subservicer's
system as soon as reasonably possible from the date of receipt by the
Subservicer of the Servicing Files and such other documents as are
reasonably necessary to service the Assets from the Current
Subservicer, but in no event later than three (3) Business Days (or, in
the case of Commercial Mortgage Loans, five (5) Business Days)
following such receipt.
Notwithstanding any provision in this Section 2.1(a) to the
contrary, the Owners and the Subservicer acknowledge and agree that in
connection with the initial pool of Assets to be serviced under this
Agreement, that the following shall apply: (i) the Owners shall request
that such Assets be added to the Servicing Portfolio and shall send the
servicing data with respect to such Assets to the Subservicer, and such
Assets shall become part of the Servicing Portfolio, upon receipt by
the applicable Owners of a written or electronic acknowledgment that
the Subservicer has received the request and the Ocwen file numbers
that have been assigned to such Assets, which acknowledgment shall be
delivered within five (5) Business Days of receipt of the request by
the Owners and (ii) the reference to "three (3) Business Days" in the
last sentence of the preceding sentence shall be deemed to be "five (5)
Business Days".
Following the delivery to the Subservicer of the Servicing
Files and other servicing records required to be delivered under this
Agreement with respect to any Asset, the Subservicer shall assume
responsibility for any losses that arise as a result of errors in
connection with the set-up of such Asset on the Subservicer's servicing
system. The Subservicer agrees to provide the related Owner with
reasonable notice in a form mutually acceptable to the parties of any
material change to the original set-up information of an Asset, e.g.,
resulting from a modification, on the Subservicer's servicing system.
(b) Effective as of the related Transfer Date, the
Subservicer, assumes and accepts responsibility for providing the
services described herein with respect to each Asset; provided,
however, that if the Subservicer is making diligent efforts to complete
and verify the Servicing File because a Servicing File is not complete
or contains incorrect information on the Transfer Date, the Subservicer
shall not be responsible for any failure to provide any service
hereunder, or for any inaction or any action taken hereunder related to
such incompleteness or incorrectness. Exhibit E attached hereto and
made a part hereof sets forth the specifications of a complete
Servicing File for each type of Asset.
Page 12
(c) The Subservicer shall not be responsible for the payment
of Servicing Advances with respect to an Asset unless the Subservicer
has been provided with the necessary information to determine the
existence, amount and due date of such obligations, in which case the
Subservicer shall determine in accordance with Accepted Servicing
Practices whether or not to make any such payments within five (5)
Business Days after it has been provided with such information. In the
case of property taxes and similar items, the Subservicer shall retain
a tax service at its expense for all Assets secured by Property within
five (5) Business Days of the Transfer Date; provided, however, that
the actual tax service contract with respect to each such Asset may not
be available for up to thirty (30) days. The Subservicer shall be
deemed not to have knowledge of the existence, amount and/or due date
of such obligations until two (2) Business Days after receiving the
current report with respect to the Property from the tax service
retained by the Subservicer. The Subservicer shall take any required
action with respect to the information from the tax service within five
(5) Business Days of such current report. The Subservicer shall be
entitled to rely in all respects on any tax service report and shall
have no liability to the Owners if a tax sale occurs for which the
Subservicer (i) received no notice from the applicable taxing
authority, or (ii) received a report from a tax service indicating that
the taxes were current. In the event that interest or penalties are
incurred with respect to any tax for which the Obligor is not
responsible and for which the tax service did not notify the
Subservicer of the tax payment, the Subservicer shall file a claim with
the tax service provider to obtain the amount of such interest or
penalties. With respect to hazard insurance on any Asset secured by
Property with improvements, the Subservicer shall seek from the
Mortgagor, within ten (10) Business Days of receipt of the request by
the Owner that the Asset be added to the Servicing Portfolio, proof of
hazard insurance, unless such proof of hazard insurance is included in
the Servicing File.
(d) Upon reasonable request by the Subservicer, each Owner
shall furnish the Subservicer with such limited powers of attorney and
other documents prepared by the Subservicer and reasonably satisfactory
in form and substance to such Owner as may be necessary or appropriate
to enable the Subservicer to liquidate, collect payments against and
otherwise service and manage the Assets in accordance with this
Agreement. Additionally, the Subservicer may appoint certain designated
servicing officers in a writing to an Owner and such designated
servicing officers shall be authorized to act on behalf of such Owner
hereunder. Such list (or any amended list) designating such servicing
officers shall be sufficient so long as it is executed by any officer
of the Subservicer. All documents so provided to the Subservicer shall
be held in trust by the Subservicer on behalf of such Owner.
(e) The Owners agree to cooperate fully with the Subservicer
with respect to all reasonable requests made by the Subservicer in
connection with this Section 2.1.
(f) The Subservicer shall have no obligation or responsibility
for preparing or recording mortgage assignments or filing financing
statements with respect to any Asset,
Page 13
provided, however, that the Subservicer shall, record mortgage
assignments if necessary to service a Mortgage Loan in accordance with
this Agreement and shall prepare and file continuation statements and
termination statements to original UCC-1 financing statements for
Assets for which such original financing statements and filing
information are included in the related Asset File. Out-of-pocket costs
incurred by the Subservicer in connection with preparing, recording and
filing such mortgage assignments and continuation or termination
statements shall constitute Servicing Advances for purposes of this
Agreement.
(g) Notwithstanding any provision in this Agreement to the
contrary, the Subservicer shall cause the following Commercial Mortgage
Loans to be serviced pursuant to this Agreement by the Commercial
Finance Division of the Subservicer unless otherwise agreed by the
related Owner and the Subservicer: Commercial Mortgage Loans (i) with
an unpaid principal balance as of the Transfer Date of $300,000 or
greater, (ii) that are secured by gas stations, dry cleaners and hotels
or (iii) that were originated by Old Standard Life Insurance
Corporation.
SECTION 2.2. CUSTODIAL FILES TO BE HELD BY SUBSERVICER.
The Subservicer agrees to act as Custodian for the Custodial Files
relating to the Assets. In such capacity, the Subservicer shall act exclusively
as the Custodian for, and the bailee of the related Owners to the extent of
their respective interests therein. The Owners shall cause the related Custodial
Files to be shipped to the Subservicer no later than the Transfer Date for
delivery within five (5) Business Days of such Transfer Date.
The Subservicer shall retain possession of any Custodial Documents at
all times unless (i) the Asset has been liquidated and the Liquidation Proceeds
relating to the Asset have been deposited in the Collection Account, (ii) the
Custodial Documents have been delivered to an attorney or to a public trustee or
other public official as required by law for purposes of initiating or pursuing
legal action or other proceedings for the foreclosure, forfeiture or similar
action with respect to the related Property or to otherwise pursue a default
against an Obligor of an Asset or (iii) the Subservicer returns the Custodial
Documents to related Owner or its designee pursuant to the written request of
such Owner pursuant to Section 5.3 hereof.
Custodial Documents held by the Subservicer are and shall be held in
trust by the Subservicer for the benefit of the related Owner as the owner
thereof and the Subservicer's possession of the Custodial Documents so retained
is at the will of such Owner for the sole purpose of servicing the related
Asset, and such retention and possession by the Subservicer is in a custodial
capacity only. The Custodial Documents with respect to each Asset shall be
appropriately marked to clearly reflect the ownership of such Asset by the
related Owner. Following the pay-off or final resolution of any Asset, the
Subservicer shall return the related Custodial Documents to the respective Owner
at Owner's expense.
SECTION 2.3. SERVICING RESPONSIBILITIES.
Subject to Accepted Servicing Practices, the Subservicer shall have
full power and authority to do or cause to be done any and all things in
connection with such servicing and
Page 14
administration which it may deem necessary or desirable. Subject to Section 2.1
and in accordance with Accepted Servicing Practices, in performing its
obligations hereunder, the Subservicer shall comply with the following with
respect to each Asset, continuously from the date hereof until the date each
Asset ceases to be subject to this Agreement. To the extent there is a conflict
between the provisions set forth below and the Accepted Servicing Practices, the
Accepted Servicing Practices shall control:
(a) The Subservicer shall hold all funds received for the
Owners hereunder in trust for such Owners in a segregated Collection
Account in accordance with all applicable Requirements. Such funds
shall be deposited to the Collection Account within one (1) Business
Day of receipt. The Collection Account shall be held at the
Subservicer, or if it is not held at the Subservicer, then it must be
an Eligible Account. In the event the amount held in the Collection
Account maintained at the Subservicer, together with the aggregate of
all other amounts held in custodial or other accounts (excluding Escrow
Accounts) maintained by the Subservicer on behalf of the Owners,
exceeds $5 million, the Subservicer shall promptly deposit any excess
amounts to another Collection Account not maintained at the
Subservicer. Any amounts held in the Collection Account may be, but are
not required to be, invested by the Subservicer in Permitted
Investments. Any income on the Collection Account shall belong to the
Subservicer and may be withdrawn therefrom in accordance with Sections
6.2 and 6.3. If losses are incurred on investments in the Collection
Account, the Subservicer promptly shall deposit, from its own funds
without right to reimbursement, the full amount of such losses. The
Subservicer shall make remittances from the Collection Account as
provided in Sections 6.2 and 6.3. The Subservicer shall hold all funds
received to cover Escrow Payments in connection with the Assets in
trust for the related Owners and the related Obligor in a segregated
Escrow Account (which shall be maintained in accordance with all
applicable Requirements and the terms of the Custodial Documents). The
Subservicer shall disburse such funds from the appropriate Escrow
Accounts as necessary or advisable. The Subservicer shall also be
authorized to hold all partial payments and forbearance payments in the
Escrow Account and shall not be required to deposit same into the
Collection Account nor to remit same to the related Owner until such
time as the Subservicer applies such payments to the applicable Asset.
(b) The Subservicer shall timely determine the amounts of all
required disbursements from the Escrow Accounts and shall make
disbursements as they become due. The Subservicer shall also determine
whether any delinquency exists in the payment of Escrow Payments and
shall use commercially reasonable efforts to cause such deficient
amounts to be paid by the Obligor. If there are not sufficient funds in
the appropriate Escrow Account to make such payments as they become
due, the Subservicer shall advance Escrow Payments unless the
Subservicer determines in its reasonable judgment that an advance
pursuant to this or any other section will not be ultimately
recoverable from late payments, insurance proceeds, Liquidation
Proceeds or any other recovery on such Asset or the related Property (a
"Non-Recoverable Advance"). If the Subservicer determines that the
Escrow Payment would constitute a Non-Recoverable Advance, the
Subservicer will not be obligated to make such advance. Any advances
made towards Escrow Payments shall be deemed to be Servicing Advances.
The Subservicer shall be entitled to reimbursement of all such
Servicing Advances as
Page 15
provided in Section 6.2. NOTWITHSTANDING ANY PROVISIONS IN THIS
AGREEMENT TO THE CONTRARY, THE SUBSERVICER SHALL HAVE NO LIABILITY FOR
ANY LOSSES, PENALTIES OR OTHER ADVERSE CONSEQUENCES RESULTING FROM THE
FAILURE OF TAX BILLS OR INSURANCE PREMIUMS BEING PAID WHEN DUE PRIOR TO
THE RELATED TRANSFER DATE.
(c) The Subservicer shall comply with the provisions of all
applicable Contract Requirements, the Requirements and the Custodial
Documents relating to the giving of all notices or other communications
required to be given by or on behalf of the related Owner to any
Mortgage Insurer, title insurer or other insurer or guarantor, as
applicable. The Subservicer shall maintain all licenses that are
material to servicing the Assets pursuant to this Agreement. Where any
applicable Requirement or the Custodial Documents require any notice or
other communication to be given to an Obligor, the Subservicer shall,
in the absence of instructions to the contrary from the related Owner,
give such notice or other communication to the Obligor.
(d) In accordance with the Acceptable Servicing Practices, the
Subservicer shall advance the payment of property taxes and other
similar payments that are not timely paid by an Obligor on the date
when such tax or other cost for which such payment is intended is due,
in each instance if and to the extent amounts deposited into any
related Escrow Account are insufficient to pay such item when due and
the related Obligor has failed to pay such item on a timely basis, but
the Subservicer shall be required to so advance only to the extent that
such Servicing Advances would not be deemed to be a Non-Recoverable
Advance. If there is no Escrow Account, the Subservicer will be
required to advance such amounts necessary to protect the related
Owner's interest in such Mortgaged Property in accordance with
Acceptable Servicing Practices. The Subservicer also will be required
to make Servicing Advances necessary to protect the related Owner's
interest in any REO Property in accordance with Acceptable Servicing
Practices. All such Servicing Advances shall be reimbursable to the
Subservicer as provided in Section 6.02. Notwithstanding any provision
in this Agreement to the contrary, the Subservicer shall not be
required to make any Servicing Advance that it deems to be a
Non-Recoverable Advance.
(e) The Subservicer shall, as a Property Protection Expense if
not paid by an Obligor, (i) enforce the Obligor's obligations under the
Custodial Documents to cause each Property to be insured against risks,
hazards and liabilities as required by all applicable Requirements and
the Custodial Documents, in an amount at least equal to the unpaid
principal balance of the Asset, and (ii) cause each real estate owned
Property to be insured against risks, hazards and liabilities, in an
amount which is at least equal to the lesser of (A) the full
replacement value of the improvements which are a part of such real
estate owned Property, and (B) the outstanding principal balance of the
related Asset at the time it became real estate owned Property; such
insurance shall be obtained from a financially sound and reputable
insurance carrier. The Subservicer shall retain copies of all Hazard
Insurance policies or certificates of insurance representing such
coverage. The Subservicer shall comply with all of the terms of
Mortgage Insurance and guarantees relating to any Asset and shall use
its best efforts to maintain such Mortgage Insurance and guarantees in
full force and effect provided that the Subservicer has actual
knowledge of such insurance or guaranty. In the event of an insured
loss with respect to
Page 16
any Property, unless the Subservicer has actual knowledge that the
Obligor has filed such a claim with respect to a Property, the
Subservicer shall promptly file or cause to be filed a claim on the
Hazard Insurance. In the case of a Property, the Subservicer shall
apply or disburse all insurance proceeds in accordance with the terms
and provisions of the Custodial Documents and all Requirements, and, in
the case of a real estate owned Property, the Subservicer shall apply
or disburse all insurance proceeds in accordance with the instructions
of the related Owner, in each case net of any amounts due to the
Subservicer as otherwise provided herein. The Subservicer shall be
responsible for submitting a claim under any Mortgage Insurance or
other guaranty or insurance on a timely basis provided that the
Subservicer has actual knowledge of such insurance or guaranty. Except
as otherwise prescribed by Accepted Servicing Practices with respect to
any Assets which are not first liens on the related Properties, the
Subservicer shall, as a Property Protection Expense and where the
Obligor fails or refuses to maintain insurance on the Property in
accordance with the applicable Custodial Documents (or to pay escrows
sufficient therefor, as the case may be), subject the Properties to the
coverage of its "force-placed" hazard insurance policy with such
deductible as the Subservicer maintains for similar properties serviced
for itself and for others by the Subservicer. The amount of any
premiums to the Subservicer resulting from obtaining such coverage
shall be treated as a Property Protection Expense hereunder. The
related Owner shall be solely responsible for the amount of the
deductible in the event of any loss and the Subservicer shall have no
liability to such Owner therefor; provided however that the Subservicer
will take all reasonable action in accordance with Accepted Servicing
Practices to collect such amounts from the Obligor.
Subject to the preceding paragraph, the Subservicer shall keep
in force during the term of this Agreement a fidelity bond and a policy
or policies of insurance covering errors and omissions in the
performance of the Subservicer's obligations under this Agreement. Such
fidelity bond and policy or policies shall be maintained with
recognized insurers and shall be in such form and amount as would
permit the Subservicer to be qualified as a FNMA or FHLMC
seller-servicer. The Subservicer shall be deemed to have complied with
this provision if an affiliate of the Subservicer has such errors and
omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder
extends to the Subservicer. The Subservicer shall provide Metropolitan,
on behalf of the Owners, with a copy of such bond or insurance policy
on or prior to the Closing Date and shall provide Metropolitan in the
future within a reasonable time of receipt thereof with copies of any
material endorsements to any such policy or bond or new or replacement
polices or bonds.
If life-of-loan flood zone determination tracking exists prior
to the Transfer Date and was transferred to the Subservicer with
respect to a Mortgage Loan, the Subservicer shall ensure that Flood
Insurance is maintained on the related Property that are identified in
the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and the flood insurance described below
has been made available). Any such Flood Insurance shall meet the
current guidelines of the Federal Insurance Administration and shall be
with a generally acceptable insurance carrier. If life-of loan flood
zone determination tracking has not been transferred to the Subservicer
with respect
Page 17
to a Mortgage Loan, the Subservicer shall not have an obligation to
track or maintain flood insurance with respect to the related Property.
The amount of the Flood Insurance Policy shall equal the
greater of (i) the unpaid principal balance of the Asset and (ii) the
last known coverage amount maintained with respect to the Property
relating to such Asset.
(f) The Subservicer shall prepare promptly prepare and deliver
each report required by all applicable Requirements including reports
to be delivered to all governmental agencies having jurisdiction over
the servicing of the Assets and the Escrow Accounts, shall execute such
reports or, if the related Owner must execute such reports, shall
deliver such reports to such Owner for execution prior to the date on
which such reports are due and shall file such reports with the
appropriate Persons. The Subservicer shall timely prepare and deliver
to the appropriate Persons such Internal Revenue Service forms as is
required to service the Assets in accordance with the Accepted
Servicing Standards, including but not limited to 1099 int, 1099 misc,
1098, 1099A and 1099C (or any similar replacement, amended or updated
Internal Revenue Service forms) that are required with respect to any
Asset for the time period such Asset has been serviced by the
Subservicer. The related Owner shall be solely responsible for filing
any other forms including, without limitation and to the extent
applicable, forms 1041 and K-1 or any similar replacement, amended or
updated Internal Revenue Service forms. The reports to be provided
under this subsection shall cover the period through the end of the
month following the termination of this Agreement or, in the case of
reports to be sent to the Internal Revenue Service, the end of the
calendar year following termination of the Agreement. The Subservicer
shall promptly prepare all reports or other information required to
respond to any inquiry from or give any necessary instructions to any
Mortgage Insurer, provider of Hazard Insurance or other insurer or
guarantor, taxing authority, tax servicer, Association or the Obligor.
(g) The Subservicer shall maintain such computer systems
(hardware and software), experienced staff and facilities as is
necessary to service the Assets hereunder.
(h) The Subservicer shall hold and be responsible for
responding promptly and accurately to all reasonable requests from the
related Owner, the Obligor or other Persons for information relating to
an Asset or to the Obligor that the Subservicer is required or
permitted to disclose to such Person, upon compliance by such Person of
any conditions to the release of such information.
(i) Following a payment in full of any Asset, the Subservicer
shall prepare and cause to be recorded the related instrument of
satisfaction or deed of reconveyance.
SECTION 2.4. COLLECTION AND RESOLUTION ACTIVITIES.
The Subservicer shall be responsible until the date an Asset ceases to
be subject to this Agreement, for using measures consistent with the Contract
Requirements, the Requirements, and the Accepted Servicing Practices to attempt
to collect delinquent payments on such Asset.
Page 18
SECTION 2.5. SERVICING COMPENSATION.
The Subservicer shall be entitled each month to the Servicing Fee. The
Servicing Fee shall not be prorated for any period of less than a full calendar
month. In addition, the Subservicer shall be entitled to retain all Ancillary
Income. The Subservicer shall not be obligated to deposit any Ancillary Income
into the Collection Account. In the event that the Subservicer deposits into the
Collection Account any Ancillary Income, the Subservicer may withdraw such
amount at any time from the Collection Account, any provision herein to the
contrary notwithstanding.
SECTION 2.6. ADDITIONAL SERVICING PROVISIONS RELATING TO LAND SALE
CONTRACTS.
If an Obligor elects to convert a Land Sale Contract to a mortgage or
deed of trust and mortgage note, the Subservicer shall, if the terms of the Land
Sale Contract provide for such conversion or if local law requires such
conversion prepare a special warranty deed, mortgage note and mortgage or deed
of trust, in each case containing the same basic terms as the Land Sale Contract
to be converted and in recordable form in the appropriate jurisdiction and
complying with any terms specified in the Land Sale Contract, along with a
mortgage note. If an Obligor under a Land Sale Contract that does not
specifically provide for conversion requests that such Land Sale Contract be
converted to a mortgage or deed of trust, the Subservicer shall notify the Owner
of such a request. The Owner shall instruct the Subservicer within ten (10)
Business Days of its notification of such a request to take certain actions with
respect to the request or to forward the request to the Owner for processing by
the Owner. In accordance with and subject to Acceptable Servicing Practices and
the terms of the related Land Sale Contract, the Subservicer shall seek to have
the related Obligor pay any mortgage or transfer recording fees or taxes and
other expenses required to be paid in connection with converting such Land Sale
Contract to a mortgage loan pursuant to this Section 2.6. In the event the
Obligor fails to pay such amounts, the Subservicer shall be reimbursed for such
amounts as Property Protection Expenses to the extent paid by the Subservicer.
Prior to the execution of the mortgage note, mortgage or deed of trust,
the Owner shall confirm that the Obligor, the amount of the debt secured by the
mortgage or deed of trust, the interest rate on the mortgage note, the schedule
of payments and the maturity date of the mortgage note are identical to the
corresponding terms of the related Land Sale Contract at the time of conversion.
SECTION 2.7. WHOLE LOAN TRANSFERS AND SECURITIZATION TRANSFERS.
The Subservicer and the Owners agree that with respect to some or all
of the Assets, one or more Owners may effect one or more Whole Loan Transfers,
and/or Securitization Transfers. The Subservicer agrees to cooperate with the
Owners in connection with any Whole Loan Transfers or Securitization Transfers,
provided that the Subservicer shall be given a reasonable opportunity to review
and negotiate in good faith the related servicing agreement and shall not be
obligated to enter into any agreement that is not consistent with the terms of
this Agreement.
Page 19
ARTICLE III
DEFAULT MANAGEMENT SERVICES
SECTION 3.1. DEFAULT MANAGEMENT RESPONSIBILITIES.
Without limiting the generality of Section 2.3, the Subservicer is
hereby authorized and empowered by each Owner to take the following actions,
without limitation: (i) prepare, execute and deliver, on behalf of an Owner at
such Owner's expense, any and all financing statements, continuation statements
and other documents or instruments necessary to maintain the lien on each
Property and related collateral; and, at the related Owner's expense (to the
extent not paid by the Obligor and, with respect to Commercial Mortgage Loans
subject to such Owner's prior approval), modifications, waivers (including,
without limitation, waivers of any late payment charge in connection with any
delinquent payment on an Asset), consents, amendments, discounted payoff
agreements, forbearance agreements, cash management agreements or consents to or
with respect to any documents contained in the related Servicing File; and any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other instruments comparable to any of the types
of instruments described in this subsection (i), and (ii) institute and
prosecute judicial and non-judicial foreclosures, suits on promissory notes,
indemnities, guaranties or other Custodial Documents (including, without
limitation, suits for collection of monthly rental income under assignments of
rents and suits for enforcement of collateral contract obligations), actions for
equitable and/or extraordinary relief (including, without limitation, actions
for temporary restraining orders, injunctions, and appointment of receivers),
suits for waste, fraud, misapplication of rents and any and all other tort,
contractual and/or other claims of whatever nature, and to appear in and file on
behalf of an Owner such pleadings or documents as may be necessary or advisable
in any bankruptcy action, state or federal suit or any other action. The
Subservicer shall notify the related Owner regarding any Asset that is
proceeding through foreclosure/forfeiture without modification, and the Owner
shall have the option to attempt an Asset modification with the related Obligor
to the extent permitted by law. All such fees generated in respect of a
modification undertaken by the related Owner shall be remitted by the
Subservicer to such Owner unless the Subservicer has provided services in
connection therewith, in which case the related Owner and the Subservicer shall
cooperate in determining the appropriate allocation of such fees. The
Subservicer and the Owners agree to cooperate in good faith to effect any Asset
modifications desired to be entered into pursuant to this Agreement.
SECTION 3.2. FORECLOSURE.
If the Subservicer reasonably determines that foreclosure or forfeiture
is appropriate with respect to an Asset (including if it determines that
foreclosure/forfeiture is appropriate in conjunction with or as an alternative
to collection efforts and default management services hereunder), the
Subservicer shall retain an attorney and supervise the conduct of the
foreclosure/forfeiture proceeding, provided, however, that the Subservicer shall
use its best efforts to notify and consult with the related Owner in the event
that the related Obligor has asserted legal defenses based on the enforceability
of the related Loan documents and, at such Owner's option upon providing written
notice to the Subservicer, the Owner may direct such foreclosure action in those
cases where such defenses are raised, provided further that the Owner shall
instruct the Subservicer, using the Subservicer's posting instruction form, on
the manner in
Page 20
which amounts received in connection with such foreclosure/forfeiture
proceedings shall be posted and shall provide the Subservicer with copies of the
pleadings, correspondence, environmental reports, appraisals and such other
documents to the extent in the Owner's possession that the Subservicer may
reasonably need in connection with performing its obligations under this
Agreement. If the Owner elects the option of directing a foreclosure action, the
Subservicer shall only be responsible for posting funds in accordance with the
posting instruction form and loan documents and the Owner shall be responsible
for foreclosure bids, environmental reports, appraisals, property inspections
and all other usual and customary practices. If the Property is acquired in the
foreclosure/forfeiture proceeding, the Subservicer may acquire the Property in
the name of the related Owner or its designee, and the Subservicer shall
commence providing property management and disposition services as provided in
Section 4.1. Notwithstanding anything to the contrary contained herein, in the
event the Subservicer has reasonable cause to believe that a Property is an
Environmental Problem Property as described in Section 4.2 hereof, the
Subservicer shall notify the related Owner in writing within three (3) Business
Days of the Subservicer's discovery of the existence of the Environmental
Problem Property, describe such problem, make a recommendation to such Owner
regarding handling the Property and carry out the recommendation unless
otherwise directed by such Owner in writing within five (5) Business Days after
such Owner's receipt (or deemed receipt) of such notice in accordance with the
terms and provisions of Section 11.3 below. In no event will the Subservicer be
required to acquire record title to an Environmental Problem Property. If the
Subservicer elects to proceed with a foreclosure/forfeiture in accordance with
the laws of the state where the Property is located, the Subservicer shall not
be required to pursue a deficiency judgment against the related Obligor or any
other liable party if the laws of the state do not permit such a deficiency
judgment after such foreclosure or if the Subservicer determines in its
reasonable judgment that the likely recovery if a deficiency judgment is
obtained will not be sufficient to warrant the cost, time, expense and/or
exposure of pursuing the deficiency judgment. The Subservicer and Owners agree
to cooperate in good faith to effectuate the intent of this Section.
SECTION 3.3. DEED IN LIEU.
If the Subservicer pursues a deed in lieu of foreclosure pursuant to
the authority granted to the Subservicer by the terms and provisions of Section
3.1 above, the Subservicer will retain counsel to prepare appropriate
documentation, execute and deliver such documentation on behalf of the related
Owner and may enter into an agreement with Obligor regarding payment of any
deficiency. The actions described herein shall be taken by the Subservicer in
accordance with Accepted Servicing Practices or otherwise with the consent of
the related Owner. Title to such Property may be taken in the name of the
related Owner or its designee. Notwithstanding anything to the contrary
contained herein, in connection with a deed in lieu of foreclosure, in the event
the Subservicer has reasonable cause to believe that a Property is an
Environmental Problem Property as described in Section 4.2 hereof, the
Subservicer shall notify the related Owner in writing within three (3) Business
Days of the Subservicer's discovery thereof of the existence of the
Environmental Problem Property, describe such problem, make a recommendation to
such Owner regarding handling the Property and carry out the recommendation
unless otherwise directed by such Owner in writing within five (5) Business Days
after such Owner's receipt (or deemed receipt) of such notice in accordance with
the terms and provisions of Section 11.3 below. In no event will the Subservicer
be required to acquire
Page 21
record title to an Environmental Problem Property. The Subservicer will provide
the services described in Section 4.1 with respect to each Property for which a
deed in lieu of foreclosure is received by the Subservicer.
SECTION 3.4. BANKRUPTCY OF OBLIGOR.
If the Subservicer has actual knowledge that an Obligor is the subject
of a proceeding under the Bankruptcy Code or any other similar law, has made an
assignment for the benefit of creditors or has had a receiver or custodian
appointed for its property, the Subservicer shall retain an attorney to pursue
claims to payment on the Asset and, if applicable, foreclosure or begin a
forfeiture action on the Property, provided, however, that the Subservicer shall
use its best efforts to notify and consult with the related Owner in the event
that the related Obligor has asserted legal defenses based on the enforceability
of the related Loan documents and, at such Owner's option upon providing written
notice to the Subservicer, the Owner may direct such bankruptcy proceeding and
related actions in those cases where such defenses are raised, provided further
that the Owner shall instruct the Subservicer, using the Subservicer's posting
instruction form, on the manner in which amounts received in connection with
such bankruptcy proceedings shall be posted and shall provide the Subservicer
with copies of the pleadings, correspondence, environmental reports, appraisals
and such other documents to the extent in the Owner's possession that the
Subservicer may reasonably need in connection with performing its obligations
under this Agreement. If the Owner elects the option of directing the bankruptcy
proceeding, the Subservicer shall only be responsible for posting funds in
accordance with the loan documents and the Subservicer's posting instruction
form. If the Property is acquired in an insolvency proceeding, it shall be
acquired in the name of the related Owner or its designee. Within three (3)
Business Days of the Subservicer's obtaining actual knowledge thereof, the
Subservicer shall notify such Owner regarding any Asset the Obligor in respect
of which is the subject of a proceeding under the Bankruptcy Code or any other
similar law, has made an assignment for the benefit of creditors or has had a
receiver or custodian appointed for its property. The Subservicer and Owners
agree to cooperate in good faith to effectuate the intent of this Section.
ARTICLE IV
PROPERTY MANAGEMENT AND DISPOSITION SERVICES
SECTION 4.1. PROPERTY MANAGEMENT AND DISPOSITION RESPONSIBILITIES.
With respect to each Property that is acquired for the benefit of the
related Owner, the Subservicer shall, in accordance with Accepted Servicing
Practices, provide property management and disposition services with respect to
such Property, including analysis of sale and leasing potential of such
Property, leasing and collection of rents, property management (including
maintenance and repairs to such Property to render it leasable or salable),
Escrow Account administration for payment of Escrow Payments and property sales,
provided, however, that in the event that any single Property Improvement
Expense to be incurred with respect to any individual Property will equal or
exceed $10,000, unless previously approved by the Owner pursuant to a property
operating plan, the Subservicer shall notify the related Owner and such Owner
will review and approve or reject all or part of such expenditure within five
(5) Business
Page 22
Days of such notice by the Subservicer. An Owner may, in its discretion,
participate in the marketing and sales process in respect of any Property
acquired on such Owner's behalf, and such Owner may make the determination as to
sales price and marketing method and the selection of third-party vendors;
provided, that the Subservicer shall have no responsibility or liability with
respect to such determination and any third-party vendor selected by an Owner in
respect of a Property acquired on such Owner's behalf may be terminated by the
Subservicer for cause. Furthermore, an Owner may offer financing to a purchaser
of REO Property. Any fees charged by an Owner in connection with the marketing
of any REO Property will be remitted to such Owner by the Subservicer from the
related sales proceeds to the extent received by the Subservicer. The
Subservicer and Owners agree to cooperate in good faith to effectuate the intent
of this Section.
SECTION 4.2. ENVIRONMENTAL PROBLEMS.
If the Subservicer hereafter becomes aware that a Property is an
Environmental Problem Property, the Subservicer will notify the related Owner in
writing within three (3) Business Days of the existence of the Environmental
Problem Property. Additionally, the Subservicer shall set forth in such notice a
description of such problem, a recommendation to the related Owner relating to
the proposed action regarding the Environmental Problem Property and the
Subservicer shall carry out the recommendation set forth in such notice unless
otherwise directed by such Owner in writing within five (5) Business Days after
such Owner's receipt (or deemed receipt) of such notice in accordance with the
terms and provisions of Section 11.3 below. If the Subservicer has reason to
believe that a Property is an Environmental Problem Property (e.g., the
Subservicer obtains a broker's price opinion which reveals the potential for
such problem), the Subservicer will not accept a deed-in-lieu of foreclosure
upon any such Property without first obtaining a preliminary environmental
investigation for the Property satisfactory to the related Owner.
ARTICLE V
STANDARDS FOR CONDUCT
SECTION 5.1. STANDARDS OF CARE AND DELEGATION OF DUTIES.
(a) The obligation of the Subservicer to perform its duties
under this Agreement, including any duty to obtain or verify
information, will be satisfied so long as the Subservicer acts in a
manner consistent with Accepted Servicing Practices. The Subservicer
shall not be responsible for the form, substance, validity, perfection,
priority, effectiveness or enforceability of any documents in the
Servicing File on the applicable Transfer Date or on the date that it
obtains such documents from the Current Subservicer. The Subservicer
shall notify the Owner in writing within three (3) Business Days of the
Subservicer's discovery thereof of a claim against the substance,
validity, perfection, priority, effectiveness or enforceability of any
documents in the Servicing File or Custodial File.
(b) In the performance of its duties and obligations under
this Agreement, the Subservicer may act directly or through agents,
subservicers, independent counsel,
Page 23
accountants and other independent professional Persons, or it may
delegate the performance of functions and consult with agents,
independent counsel and other independent Persons; provided, however,
that no such delegation shall relieve the Subservicer from any of its
obligations hereunder and any subservicing arrangement shall require
the prior consent of the related Owner. Additionally, in the event that
the Subservicer believes that it is unable to comply with the
requirements of Section 5.1(a) with respect to any particular Asset as
a result of the Subservicer's relationship with an Obligor or some
other reason which would cause the Subservicer to be in violation of
Accepted Servicing Practices, it may enter into a subservicing
agreement whereby a subservicer shall perform the Subservicer's duties
with respect to such Asset. In such event, so long as such subservicer
performs such duties on behalf of the Subservicer, in accordance with
the other terms and provisions of this Agreement, then the Subservicer
shall be deemed to be in compliance therewith.
(c) The Subservicer shall be entitled to rely upon any notice,
document, correspondence, request, directives or other communication
received by it from an Owner that the Subservicer believes to be
genuine and to have been signed or presented by an authorized officer
or representative of an Owner, and shall not be obligated to inquire as
to the authority or power of any Person so executing or presenting any
notice, document, correspondence, request, directive or other
communication or as to the truthfulness of any statements therein.
SECTION 5.2. TRANSACTIONS WITH RELATED PERSONS.
In carrying out its obligations and duties under this Agreement, the
Subservicer may contract with its affiliates, provided that all Persons with
whom the Subservicer may contract, enter into arrangements with or otherwise
deal with, shall be engaged on a commercially reasonable arm's-length basis and
at competitive rates of compensation. Nothing contained in this Agreement will
prevent the Subservicer or its affiliates from engaging in other businesses or
from acting in a similar capacity for any other Person even though such Person
may engage in business activities similar to those of an Owner or its
affiliates.
SECTION 5.3. ACCESS TO RECORDS.
(a) To the extent required by this Agreement, the Subservicer
will establish and maintain a system of (i) records of operational
information relating to the collection of Assets, the conduct of
default management services and the administration, management,
servicing, repair, maintenance, rental, sale or other disposition of
Assets and Properties and (ii) books and accounts, which shall be
maintained in accordance with customary business practices, of
financial information relating to the Assets and the Properties.
Information may be maintained on a computer or electronic system. The
Subservicer shall maintain a disaster recovery system with respect to
such information.
(b) If an Owner provides reasonable prior written notice, such
Owner and its respective accountants, regulators, attorneys, agents or
designees may, subject to the confidentiality provisions of Section
8.3(d), examine the Subservicer's books and records relating to the
Assets during normal business hours of the Subservicer or request that
Page 24
Subservicer provide copies of such information to be delivered to
Owner, at Owner's cost. Any expenses incurred by any parties conducting
such examination shall not be the responsibility of the Subservicer. In
addition, the Subservicer shall provide to an Owner any other
information, related to the Assets reasonably requested by such Owner
in a format reasonably requested by such Owner, provided, however, that
such information and format are readily accessible and available to the
Subservicer at no added cost to the Subservicer. The Subservicer agrees
to reasonably cooperate with any requested audits of the servicing of
the Assets by the Owners or their respective insurance or other
regulators, provided, however, that the Subservicer shall be
compensated for any extraordinary time or document production demands
placed on the Subservicer in connection with such audits.
(c) Upon the written request by an Owner, the Subservicer
shall deliver to such Owner within three (3) Business Days of such
written request for a period of not more than twenty (20) Business Days
the Servicing File for any Asset; provided however that such 20 day
period may be extended for an additional twenty (20) Business Days upon
the written request of the Owner. The Owner may on a case-by-case basis
specify delivery of a Servicing File within one (1) Business Day in its
written request. In addition, upon the written request of the Owner,
the Subservicer will fax certain information relating to an Asset that
is reasonably available to it, including without limitation documents
from the Servicing File to the Owner within one (1) Business Day of
such request.
(d) The Subservicer shall, to the extent available, provide to
Metropolitan, on behalf of the Owners, on-line access to the
Subservicer's servicing system for purposes of certain servicing data
with respect to the Assets. In addition, in the event the Subservicer
images documents contained in the Servicing Files, the Subservicer
agrees to make available to the Owners or its designee on-line access
to such imaged documents to the extent such access is readily
available. The Owners shall be responsible for software and hardware
costs necessary for the Owners or its designee to access such on-line
information. In no event shall the Subservicer be obligated to make the
foregoing on-line access to information available to the extent not
permitted by law or otherwise inconsistent with the Servicing
Requirements.
SECTION 5.4. ANNUAL AUDIT.
On or before April 30 of each year, beginning with April 30, 2002, the
Subservicer shall furnish a statement to Metropolitan, on behalf of the Owners,
prepared by a firm of independent public accountants (who may also render other
services to the Subservicer), which is a member of the American Institute of
Certified Public Accountants, to the effect that such firm has examined certain
documents and records for the preceding calendar year (or during the period from
the date of commencement of such servicer's duties hereunder until the end of
such preceding calendar year in the case of the first such certificate) and
that, on the basis of such examination conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers, such firm is
of the opinion that the Subservicer's overall mortgage loan servicing operations
have been conducted in compliance with the Uniform Single Attestation Program
for Mortgage Bankers except for such exceptions that, in the opinion of such
firm, the
Page 25
Uniform Single Attestation Program for Mortgage Bankers require it to report, in
which case such exceptions shall be set forth in such statement. Such report
will also indicate that the firm is independent of the Servicer within the
meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
ARTICLE VI
REMITTANCES AND REPORTS TO OWNER
SECTION 6.1. SERVICING ADVANCES.
The Subservicer shall make Servicing Advances with respect to the
Assets in accordance with this Agreement and Accepted Servicing Practices;
provided, however, that the Subservicer shall not be obligated to make any such
Servicing Advance if the Subservicer determines in its reasonable judgment that
such advance will be a Non-Recoverable Advance. Any advances made towards Escrow
Payments, Property Protection Expenses and/or Property Improvement Expenses
shall be deemed to be Servicing Advances. The Subservicer shall be entitled to
reimbursement of all Servicing Advances made pursuant to this Agreement pursuant
to Section 6.2. To the extent that the Subservicer has previously withdrawn
funds from the Collection Account to pay for third party costs relating to any
Servicing Advances and the Subservicer thereafter recovers cash from the Obligor
or any other Persons for such amounts, the Subservicer shall deposit such
recovered cash into the Collection Account. The Subservicer shall use reasonable
efforts to seek reimbursement from Obligors for Servicing Advances made with
respect to the related Assets to the extent permitted under the related Contract
Requirements and the Requirements.
SECTION 6.2. REMITTANCES AND MONTHLY REPORT.
On each Distribution Date, the Subservicer shall submit to
Metropolitan, on behalf of each Owner, a Monthly Report for each Owner in
electronic format substantially in the form hereafter mutually agreed upon by
Metropolitan on behalf of each Owner, and the Subservicer, which report will
include the following, without limitation: (i) all collections of interest and
principal (from whatever source) and Prepayment Penalties on the Assets related
to such Owner and all collections in respect of the related REO Properties
(including sale proceeds and rental payments), if any, during the related
Collection Period, (ii) a detailed description of Servicing Fees and Ancillary
Fees with respect to the related Assets, (iii) a detailed description of all
Servicing Advances with respect to the related Assets incurred during the
related Collection Period, (iv) a detailed description of amounts received from
Obligors or other Persons in payment of Servicing Advances previously made with
respect to the related Assets, (v) all distributions from the Collection Account
with respect to the related Assets since the preceding Distribution Date with
respect to each Owner, (vi) those Assets with respect to such Owner that are in
foreclosure/forfeiture or subject to bankruptcy proceedings and the relevant
status date relating to each, (vii) the delinquency status of the Assets related
to such Owner, and (viii) those Assets for which an assumption has been
processed during the related Collection Period. On each Distribution Date, the
Subservicer shall withdraw the Monthly Collection Amount with respect to each
Owner from the Collection Account and distribute the amount withdrawn in the
following priority:
Page 26
(a) to pay itself (i) the applicable Servicing Fee with
respect to the Assets relating to such Owner earned during the related
Collection Period, (ii) to pay itself all Ancillary Income with respect
to such Assets earned during the related Collection Period (to the
extent deposited into the Collection Account) and (iii) any Deboarding
Fees pursuant to Section 10.1(c);
(b) to reimburse itself for Servicing Fees, Ancillary Income
and Deboarding Fees with respect to the Assets relating to such Owner
earned during Collection Periods prior to the related Collection
Period, to the extent not previously paid or reimbursed;
(c) to reimburse itself for unreimbursed Servicing Advances
made with respect to the Assets relating to such Owner during the
related Collection Period or prior Collection Periods;
(d) to reimburse the Subservicer for any expenses incurred by
and reimbursable to the Subservicer pursuant to this Agreement, but not
including expenses incurred pursuant to Section 8.3; and
(e) to each Owner, the amount remaining from the Monthly
Collection Amount relating to such Owner after applying amounts
pursuant to clauses (a) through (d) above.
Notwithstanding any provision in this Agreement to the contrary, the
Subservicer shall remit the proceeds from any loan liquidations or prepayments
in full (net of Servicing Fees and other amounts due the Subservicer with
respect to the related Asset) to Metropolitan, on behalf of the related Owner,
within five (5) Business Days of receipt by the Subservicer.
Amounts payable to the Owners pursuant to this Section 6.2 shall be
paid by wire transfer in immediately available funds (by 3:00 p.m., eastern time
on the day of transfer) to a single account designated by Metropolitan, on
behalf of the Owners.
Notwithstanding any provision in this Agreement to the contrary,
Servicing Fees and Ancillary Income received by the Subservicer need not be
deposited by the Subservicer in the Collection Account and may be retained by
the Subservicer. In addition, prior to remitting amounts to the Collection
Account the Subservicer may reimburse itself for Servicing Advances made with
respect to a particular Asset to the extent received from the related Obligor or
other Persons or from Liquidation Proceeds or proceeds from Mortgage Insurance
for the related Asset. In the event the Subservicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision to the
contrary notwithstanding.
Notwithstanding any provision in this Agreement to the contrary, the
Subservicer may withdraw at any time from amounts on deposit in the Collection
Account amounts necessary to pay or reimburse expenses incurred in connection
with clause (g) of the definition of "Property Protection Expenses". If amounts
in the Collection Account are not sufficient to pay such expenses, then upon the
written request of the Subservicer, the Owner shall fund such shortfall amount
in order that such expenses can be paid in a timely manner.
Page 27
SECTION 6.3. REMITTANCE UPON TERMINATION.
Upon the termination of this Agreement, the Subservicer shall withdraw
all funds from the Collection Account and shall distribute such funds in the
following priority:
(a) from amounts in the Collection Account received with
respect to the Assets relating to each Owner, to reimburse itself for
all unpaid Servicing Fees, Servicing Advances, Ancillary Income and
Deboarding Fees with respect to such Assets; and
(b) to each Owner the remaining amount in the Collection
Account received with respect to the Assets relating to such Owner
after applying amounts pursuant to clause (a) above.
Amounts payable to the Owners shall be paid by wire transfer in
immediately available funds (by 3:00 p.m., eastern time on the day of transfer)
to a single account designated by Metropolitan, on behalf of the Owners.
SECTION 6.4. INTEREST ON REMITTANCES. In the event that any remittance
required to be made by a date certain by the Subservicer to an Owner pursuant to
the terms of this Agreement is not made by such date certain, interest will
accrue on the outstanding balance of any such remittance at a rate equal to 2%
per annum plus the Prime Rate from the required remittance date to but not
including the date of payment. The Subservicer will pay the Owners all accrued
and unpaid interest weekly.
SECTION 6.5. DOCUMENT DEFICIENCIES.
Within forty-five (45) days following the applicable Transfer Date, the
Subservicer shall deliver to Metropolitan, on behalf of the Owners, the list of
servicing-related documents which have not been previously delivered to the
Subservicer or its designee and shall notify Metropolitan, on behalf of the
Owners, or any errors with respect to the reconciliation statement error, (a
"Servicing Document Deficiency"). The Subservicer shall not have any
responsibility to cure or correct any documentary or collateral defects with
respect to any Custodial File, including but not limited to the preparation and
recordation of Assignments of Mortgage. However, the Subservicer will not
suspend its servicing of any Asset with a Servicing Document Deficiency and will
notify Metropolitan, on behalf of the related Owners, of any such Servicing
Document Deficiency within five (5) Business Days of Subservicer's determination
that servicing of the Asset cannot continue without the missing documentation.
In the event that Metropolitan or the related Owner does not cure the Servicing
Document Deficiency within ten (10) Business Days of notification, the
Subservicer shall attempt to cure such deficiency. Notwithstanding the
foregoing, a Servicing Document Deficiency consisting of a mortgage or
assignment thereof not being returned from the relevant recording office shall
not be deemed to be a deficiency for which servicing shall be suspended with
respect to an Asset. In the event that the Subservicer incurs any out-of-pocket
costs in attempting to cure or correct such defects, the Subservicer shall be
reimbursed for such costs by the related Owner.
Page 28
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE SUBSERVICER.
The Subservicer, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to Owners as of the date hereof and each Transfer Date:
(a) Organization and Good Standing; Licensing. The Subservicer
is a federally chartered savings bank duly organized, validly existing
and in good standing under the laws of the United States of America and
has the power and authority to own its assets and to transact the
business in which it is currently engaged. The Subservicer is duly
qualified to do business as a foreign corporation and is in good
standing and is duly licensed in each jurisdiction in which the
character of the business transacted by it or properties owned, or
leased or serviced by it requires such qualification or licensing
(except where there is an appropriate statutory exemption applicable to
the Subservicer or the failure so to qualify would not have a material
adverse effect on the business, properties, assets or financial
condition of the Subservicer or any Owner).
(b) Authorization: Binding Obligations. The Subservicer has
the power and authority to make, execute, deliver and perform this
Agreement, including all instruments of transfer to be delivered
pursuant to this Agreement, and perform all of the transactions
contemplated to be performed by it under this Agreement, and has taken
all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this
Agreement will constitute the legal, valid and binding obligation of
the Subservicer enforceable against it in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies.
(c) No Consent Required. The Subservicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained or made or as to which the
failure to obtain or make will not materially adversely affect the
ability of the Subservicer to perform its obligation hereunder.
(d) No Violations. The execution, delivery and performance of
this Agreement by the Subservicer will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Subservicer, except for violations that will not
adversely affect the Subservicer's ability to perform its obligations
hereunder, or the charter or by-laws of the Subservicer, or constitute
a material breach of any mortgage, indenture, contract or other
agreement to which the Subservicer is a party or by which the
Subservicer may be bound.
Page 29
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently pending
or to the knowledge of the Subservicer threatened, against the
Subservicer or any of its properties or with respect to this Agreement,
which if adversely determined, would have a material adverse effect on
the transactions contemplated by this Agreement.
(f) FNMA or FHLMC Approved. The Subservicer is an approved
seller/servicer for FNMA or FHLMC in good standing. No event has
occurred that would make the Subservicer unable to comply with FNMA or
FHLMC eligibility requirements, would require notification to FNMA or
FHLMC, or, with notification to FNMA or FHLMC, would result in a breach
of the representation made in the preceding sentence.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF THE OWNERS.
Each Owner, as a condition to the consummation of the transactions
contemplated hereby, hereby makes the following representations and warranties
to the Subservicer as of the date hereof and each Transfer Date, provided,
however, that no Owner makes any such representation or warranty with respect to
any other Owner or any other Owner's related Assets:
(a) Organization and Good Standing; Licensing. Each Owner is a
corporation or insurance corporation, as the case may be, duly
organized, validly existing and in good standing under the laws of the
state of its organization and has the power and authority to own its
assets and to transact the business in which it is currently engaged.
Each Owner is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of
the business transacted by it or properties owned or leased by it
requires such qualification (except where there is an appropriate
statutory exemption applicable to an Owner or the failure so to qualify
would not have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of such Owner or the
Subservicer).
(b) Authorization: Binding Obligations. Each Owner has the
power and authority to make, execute, deliver and perform this
Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) and perform all of the transactions
contemplated to be performed by it under this Agreement, and has taken
all necessary action to authorize the execution, delivery and
performance of this Agreement. When executed and delivered, this
Agreement will constitute the legal, valid and binding obligation of
each Owner enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(c) No Consent Required. No Owner is required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement, except such as have been obtained or made.
Page 30
(d) No Violations. The execution, delivery and performance of
this Agreement by each Owner will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to such Owner, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which such Owner is
a party or by which such Owner may be bound.
(e) Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently pending
or to the knowledge of any Owner threatened, against such Owner or any
of its properties or with respect to this Agreement, which if adversely
determined would have a material adverse effect on the transactions
contemplated by this Agreement.
(f) Compliance with Laws. Each Asset has been originated and
serviced in compliance with all applicable federal, state and local
laws and regulations and consistent with the requirements of the
Assets.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. LIABILITIES TO OBLIGORS.
No liability to any Obligor under any of the Assets arising out of any
act or omission to act of any servicer, subservicer, owner, holder or originator
of the Assets prior to the applicable Transfer Date is assumed by the
Subservicer under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Subservicer expressly disclaims such
assumption.
SECTION 8.2. SUBSERVICER'S INDEMNITY OF THE OWNER.
(a) The Subservicer shall defend and indemnify each Owner against any
and all claims, losses, damages, liabilities, judgments, penalties, fines,
forfeitures, reasonable legal fees and expenses, and any and all related costs
and/or expenses of litigation, administrative and/or regulatory agency
proceedings, and any other costs, fees and expenses, suffered or incurred
(excluding, however, punitive damages, exemplary damages and loss of profit
damages) by such Owner (each, a "Liability") arising out of or resulting from
third party claims or actions that were caused directly by or directly resulted
from a breach of any of the Subservicer's representations and warranties
contained in this Agreement or the failure of the Subservicer to perform its
duties in accordance with the terms of this Agreement. The Subservicer shall not
be liable to any Owner, however, with respect to action taken, or for refraining
from taking any action, with respect to any Asset at or in conformity with the
direction of an Owner, or for any Liability caused by or resulting from a delay
occasioned by an Owner's objection to a proposal by the Subservicer hereunder,
or for any Liability caused by or resulting from an Owner's breach of a
representation or warranty herein or for any Liability incurred by reason of an
Owner's willful misfeasance, bad faith or negligence in acting or refraining
from acting or any failure of performance or as a result of a breach of any
representations, warranties or covenants made by an Owner hereunder. In any
event, the Subservicer shall not have any liability or obligations for any
actions of any prior servicer, subservicer, originator, holder or owner, or any
successor
Page 31
servicer (other than the Subservicer), of the Assets. Notwithstanding any
provisions of this Section 8.2 to the contrary, the Subservicer's obligations
with respect to holdbacks shall be limited as provided in Section 2.01 (D) of
the servicing requirements set forth on Exhibit A.
(b) It is understood and agreed that during the term of this Agreement
the Subservicer and its agents may have access to certain of each Owner's
confidential and proprietary information including, without limitation, each
Owner's acquisition methods and underwriting standards and procedures, and other
proprietary systems and procedures (the "Confidential Information"). The term
"Confidential Information" does not include information which becomes generally
available to the public other than as a result of disclosure by the Subservicer
or its representatives. The Subservicer shall keep confidential and shall not
divulge to any party other than an officer or employee or its agents of the
Subservicer who has a need to know, without any Owner's prior written consent,
any Confidential Information. In the event that the Subservicer is requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process) to disclose
any Confidential Information, it is agreed that the Subservicer will provide an
Owner with prompt notice of such request(s) so that such Owner may seek an
appropriate protective order and/or waive compliance with the provisions of this
subsection, in such Owner's sole and absolute discretion. If, failing the entry
of a protective order or the receipt of a waiver hereunder, the Subservicer is,
in the opinion of its counsel, compelled to disclose Confidential Information,
the Subservicer may disclose that portion of the Confidential Information, which
counsel advises that the Subservicer is compelled to disclose and will exercise
reasonable efforts to obtain assurance that confidential treatment will be
accorded to that portion of the Confidential Information which is being
disclosed. The Subservicer acknowledges that an Owner will incur irreparable
damage if the Subservicer should breach the terms and provisions of this
subsection. Accordingly, if the Subservicer or the Subservicer's directors,
officers, employees, invitees, agents or representatives breaches or threatens
to breach any of the provisions of this subsection, such Owner shall be
entitled, without prejudice, to all the rights and remedies available to it,
including a temporary restraining order and an injunction restraining any breach
of the provisions of this subsection (without any bond or other security being
required therefor).
SECTION 8.3. OWNERS' INDEMNITY OF THE SUBSERVICER; LIMITATION ON
LIABILITY OF THE SUBSERVICER.
(a) Each Owner shall defend and indemnify the Subservicer
against any Liability arising from (i) third party claims or actions
that were caused by or resulted from (A) any actions or omissions in
respect of any Asset of any Owner or any prior servicer, subservicer,
owner or originator of an Asset and/or (B) taking any action, or
refraining from taking any action, with respect to any Asset at or in
conformity with this Agreement or the direction of an Owner, and/or
(ii) any Environmental Liability (as defined in Section 8.3(c) below),
(iii) any breach by an Owner or an Owner's directors, officers,
employees, agents, invitees or representatives of an Owner's
obligations under Section 8.3(d) below, and (iv) any Liability relating
to the failure or refusal of an Owner or any trustee or custodian in
possession of original Custodial Documents to timely provide to the
Subservicer the originals of any Custodial Documents in order to allow
the Subservicer sufficient time to timely process satisfactions,
payoffs and releases.
Page 32
(b) Neither the Subservicer nor any directors, officers,
employees or agents of the Subservicer shall be liable to an Owner for
any action taken or for refraining from taking any action in good faith
pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Subservicer against
any liability directly and solely caused by the Subservicer that would
otherwise be imposed by reason of the Subservicer's negligence, willful
misfeasance or bad faith in the performance of or failure to perform
duties hereunder. The Subservicer may rely in good faith on any
document of any kind prima facie properly executed and submitted to the
Subservicer respecting any matters arising hereunder and shall not be
liable for taking any action or refraining from taking any action in
good faith reliance thereon, pursuant to this Agreement.
(c) The term "Environmental Liability" shall mean any and all
claims, losses, damages, liabilities, judgments, penalties, fines,
forfeitures, reasonable legal fees and expenses, and any and all
related costs and/or expenses of litigation, administrative and/or
regulatory agency proceedings, and any other costs, fees and expenses,
suffered or incurred by the Subservicer arising out of or resulting
from the introduction of such materials on any Property before and/or
after the date hereof, including, without limitation, (a) any liability
under or on account of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., as the
same may be amended from time to time, and/or any other federal or
state environmental laws, and specifically including, without
limitation, any liability relating to asbestos and asbestos containing
materials, polychlorinated biphenyls, radon gas, petroleum and
petroleum products, urea formaldehyde and any substances classified as
being "in inventory", "usable work in process" or similar
classification which would, if classified as unusable, be included in
the foregoing definition, including the assertion of any lien
thereunder, (b) claims brought by third parties for loss or damage
incurred or sustained subsequent to the date hereof, and (c) liability
with respect to any other matter affecting the Property within the
jurisdiction of the federal Environmental Protection Agency or state
environmental regulatory agencies pursuant to any state laws, and in
the regulations adopted pursuant to any of said laws; provided,
however, that the indemnity for Environmental Liability shall not be
effective with respect to any liability directly and solely caused by
the Subservicer that would otherwise be imposed by reason of the
Subservicer's gross negligence, willful misfeasance or bad faith in the
performance of or failure to perform duties hereunder.
(d) It is understood and agreed that during the term of this
Agreement the Owners and their agents may have access to certain of the
Subservicer's confidential and proprietary information including,
without limitation, the Subservicer's computer systems and models,
secure web site, investor reporting systems, default management systems
and procedures, and other proprietary systems and procedures (the
"Confidential Information"). The term "Confidential Information" does
not include information which becomes generally available to the public
other than as a result of disclosure by an Owner or its
representatives, but shall be deemed not to include the Servicing Fee
contained herein (to the extent required to be reflected in an Owner's
financial statements) or any document that any Owner must file with
securities regulators, but shall include any and all passwords or
identification codes, access codes, modem dial-up numbers and similar
Page 33
items. The Owners shall keep confidential and shall not divulge to any
party other than an officer, employee or agent of the Owners who has a
need to know, without the Subservicer's prior written consent, any
Confidential Information. In the event that any Owner is requested or
required (by oral questions, interrogatories, requests for information
or documents, subpoena, civil investigative demand or similar process)
to disclose any Confidential Information, it is agreed that such Owner
will provide the Subservicer with prompt notice of such request(s) so
that the Subservicer may seek an appropriate protective order and/or
waive compliance with the provisions of this subsection, in the
Subservicer's sole and absolute discretion. If, failing the entry of a
protective order or the receipt of a waiver hereunder, the Owner is, in
the opinion of its counsel, compelled to disclose Confidential
Information, the Owner may disclose that portion of the Confidential
Information, which counsel advises that the Owner is compelled to
disclose and will exercise reasonable efforts to obtain assurance that
confidential treatment will be accorded to that portion of the
Confidential Information which is being disclosed. Each Owner
acknowledges that the Subservicer will incur irreparable damage if any
Owner should breach the terms and provisions of this subsection.
Accordingly, if an Owner or an Owner's directors, officers, employees,
invitees, agents or representatives breaches or threatens to breach any
of the provisions of this subsection, the Subservicer shall be
entitled, without prejudice, to all the rights and remedies available
to it, including a temporary restraining order and an injunction
restraining any breach of the provisions of this subsection (without
any bond or other security being required therefor).
SECTION 8.4. INDEMNIFICATION PROCEDURES.
If, for so long as this Agreement is in effect, a party entitled to
indemnification hereunder ("Indemnified Party") has actual notice or knowledge
of any claim or loss for which indemnification by an indemnifying party
hereunder ("Indemnifying Party") is asserted, the Indemnified Party shall give
to the Indemnifying Party written notice within such time as is reasonable under
the circumstances, describing such claim or loss in reasonable detail. In the
event that a demand or claim for indemnification is made hereunder with respect
to losses the amount or extent of which is not yet known or certain, the notice
of demand for indemnification shall so state, and, where practicable, shall
include an estimate of the amount of the losses.
(a) In the case of actual notice of indemnification hereunder
involving any litigation, arbitration, legal or regulatory proceeding,
the Indemnifying Party shall have responsibility to, and shall employ
counsel reasonably acceptable to the Indemnified Party, and shall
assume all expense with respect to, the defense or settlement of such
claim; provided however, that:
(i) the Indemnified Party shall be entitled to
participate in the defense of such claim and
to employ counsel at its own expense to
assist in the handling of such claim; and
(ii) the Indemnifying Party shall obtain the
prior written approval of the Indemnified
Party before entering into any settlement of
such claim or ceasing to defend against such
claim if, pursuant to or as a
Page 34
result of such settlement or cessation, (1)
injunctive or other relief (excepting the
payment of money damages) would be imposed
against any Indemnified Party which could
materially interfere with the business,
operations, assets, conditions (financial or
otherwise) or prospects of the Indemnified
Party, or (2) the settlement of cessation
shall result in an indemnification
obligation of the Indemnifying Party that,
in the reasonable judgment of the
Indemnified Party, cannot be fulfilled by
the Indemnifying Party in accordance with
the terms of this Agreement. If the
Indemnifying Party does not provide to the
Indemnified Party, within fifteen (15) days
after receipt of a notice of
indemnification, a written acknowledgment
that the Indemnifying Party shall assume
responsibility for the defense or settlement
of such claim as provided in this Section
8.4, the Indemnified Party shall have the
right to defend and settle the claim in such
manner as it may deem appropriate at the
cost and expense of the Indemnifying Party,
and the Indemnifying Party shall promptly
reimburse the Indemnified Party therefor in
accordance with this Agreement.
SECTION 8.5. OPERATION OF INDEMNITIES.
If any Person has made any indemnity payments to any other Person
pursuant to this Article VIII and such other Person thereafter collects any of
such amounts from others, such other Person will repay such amounts collected,
together with any interest collected thereon. The provisions of this Article
VIII shall survive any termination of this Agreement, the liquidation of any
Asset, or the transfer or assignment by an Owner to another Person of any Asset
or any interest in any Asset.
ARTICLE IX
DEFAULT
SECTION 9.1. EVENTS OF DEFAULT.
The following shall constitute "Subservicer Events of Default"
hereunder by the Subservicer:
(a) any failure by the Subservicer to make any deposit or
payment, or to remit any payment (including a Servicing Advance
required to be made pursuant to this Agreement), required to be made
under the terms of this Agreement which continues unremedied for a
period of three (3) Business Days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Subservicer by an Owner; or
(b) failure on the part of the Subservicer duly to observe or
perform in any material respect any other of the representations,
warranties, covenants or agreements on the part of the Subservicer set
forth in this Agreement which continues unremedied for a
Page 35
period of sixty (60) days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to the Subservicer by an Owner; or
(c) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or appointing a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Subservicer and such decree or order shall have remained in force
undischarged or unstayed for a period of sixty (60) days; or
(d) the Subservicer shall consent to the appointment of a
trustee, conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Subservicer or of or relating to all
or substantially all of the property of the Subservicer; or
(e) the Subservicer 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 take any action in furtherance of the
foregoing; or
(f) the Subservicer assigns or attempts to assign its rights
to the servicing compensation hereunder or attempts to assign this
Agreement or the servicing responsibilities hereunder without the
consent of the Owners except as otherwise expressly permitted by the
other terms and provisions of this Agreement.
SECTION 9.2. EFFECT OF TRANSFER.
After the effective date of the termination of servicing duties
pursuant to Section 10.1, the Subservicer shall have no further obligations
hereunder other than under Article VIII or Article X.
ARTICLE X
TERM
SECTION 10.1. TERM OF AGREEMENT.
(a) This Agreement shall terminate upon the distribution of
the final payment of Liquidation Proceeds on the last Asset subject to
this Agreement.
(b) If the Subservicer fails to perform any of its obligations
which would result, after expiration of the applicable notice and cure
or grace period (if applicable), in a Subservicer Event of Default
hereunder, the Owners may terminate this Agreement by written notice to
the Subservicer, specifying the effective date of such termination and
instructions with respect to the Servicing Files and Custodial Files.
The Subservicer shall do all things necessary or appropriate to effect
the purposes of such termination and the
Page 36
transfer of servicing, including payment of all of its costs and
expenses related to the transfer of servicing. On or after the receipt
by the Subservicer of such written notice, all authority and power of
the Subservicer under this Agreement with respect to the Assets shall
terminate effective as of the date specified in such written notice. If
the Subservicer fails to perform any of its obligations which would
result, after expiration of the applicable notice and cure or grace
period (if applicable), in a Subservicer Event of Default hereunder,
the Owners may also pursue whatever rights it may have at law or in
equity to damages, including injunctive relief and specific
performance.
(c) This Agreement also may be terminated by an Owner with
respect to one or more Assets at its election without cause at any time
upon sixty (60) days' prior written notice for any reason; provided,
however, that such Owner shall pay the Subservicer the related
Deboarding Fee and any related out-of-pocket servicing transfer costs.
The Deboarding Fee shall be waived in the event the subject Assets are
subject to a Whole Loan Transfer or a Securitization Transfer and the
Subservicer or one of its affiliates becomes the servicer of the Assets
under such transfer, provided that in such transfer the Subservicer
reasonably approves any new servicing agreement to be entered into. No
Deboarding Fee will be required if an Owner terminates the Subservicer
in connection with a Subservicer Event of Default.
SECTION 10.2. TRANSFERS OF SERVICING.
Except as provided in this Agreement, the Subservicer shall not pledge
or assign this Agreement or its rights to the Servicing Fee or transfer the
servicing hereunder or delegate its rights or duties hereunder without the prior
written approval of each Owner.
SECTION 10.3. SUBSERVICER NOT TO RESIGN.
The Subservicer shall not resign from the obligations and duties
imposed on the Subservicer by this Agreement, except (i) by mutual consent of
the Subservicer and each Owner, (ii) upon a material breach of an Owner's
obligations hereunder or, (iii) upon the determination that the Subservicer's
duties hereunder are no longer permissible under applicable law and such
incapacity cannot be cured by the Subservicer. Any determination under clause
(iii) above shall be evidenced by an opinion of counsel to such effect delivered
to each Owner in form and substance reasonably acceptable to the Owners. No
resignation shall become effective until the Owners or their designee shall have
assumed the Subservicer's responsibilities and obligations hereunder.
SECTION 10.4. SUCCESSOR SUBSERVICER.
If any successor servicer succeeds to the obligations of the
Subservicer after a termination pursuant to Sections 10.1 or 10.3 above, the
successor servicer, to the extent necessary to permit the successor servicer to
carry out the provisions of the terms hereof and without act or deed on the part
of the successor servicer, shall succeed to all of the rights and obligations of
the Subservicer under any servicing agreement entered into pursuant to Section
5.1(b), except that in the event of a Subservicer Event of Default or
resignation or termination at the option of the Subservicer, such servicing
agreements may be terminated or
Page 37
cancelled upon the request of the successor subservicer and any termination fees
will be borne by the Subservicer. In such event, the successor servicer shall be
deemed to have assumed all of the Subservicer's interest therein and to have
replaced the Subservicer as a party to such servicing agreement to the same
extent as if such servicing agreement had been assigned to the successor
servicer, except that the Subservicer, as applicable, shall not have any
liability or obligation under such servicing agreement in respect of events that
occur after such succession unless so provided in such servicing agreement or
unless such events arise out of actions or events that occurred prior to such
succession. In the event that the successor servicer assumes the servicing
obligations of the Subservicer, upon request of the successor servicer, the
Subservicer, shall at its own expense (if the transfer of servicing is
occasioned by a Subservicer Event of Default or the resignation of the
Subservicer pursuant to clause (iii) of Section 10.3 or is at the option of the
Subservicer pursuant to Section 10.1(d)) or at the related Owner's expense (if
the transfer is occasioned by the resignation of the Subservicer pursuant to
clauses (i) and (ii) of Section 10.3 or is at the option of the related Owner
pursuant to Section 10.1(c)) deliver to the successor servicer (as the case may
be) all documents and records relating to this Agreement and the Assets then
being serviced thereunder and an accounting of amounts collected and held by it,
if any, and will otherwise use its best efforts to effect the orderly and
efficient transfer of any servicing agreement to the successor servicer.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SUCCESSORS AND ASSIGNS; NO THIRD PARTY BENEFICIARIES.
This Agreement will inure to the benefit of and be binding upon the
parties hereto and their successors and permitted assigns. This Agreement may
not be assigned by either party without the written consent of the other party,
subject to the provisions of Sections 10.2 and 10.3 hereinabove. This Agreement
is not intended to confer on any person other than the parties hereto and their
successors and assigns any rights, obligations, remedies or liabilities.
SECTION 11.2. CHOICE OF LAW.
This Agreement is made under and shall be governed by and construed
under the laws of the State of
New York.
SECTION 11.3. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given and received: (a) upon receipt if delivered personally
(unless subject to clause (b)) or if mailed by registered or certified mail
return receipt requested, postage prepaid five (5) Business Days after deposit
in the U.S. Mail; (b) at 5:00 p.m. local time on the business day after dispatch
if sent by a nationally recognized overnight courier; or (c) upon the completion
of transmission (which is confirmed by telephone or by a statement generated by
the transmitting machine) if transmitted by telecopy or other means of facsimile
which provides immediate or near immediate transmission to compatible equipment
in the possession of the recipient, in any case to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy number for a
party as will be specified by like notice):
Page 38
if to the Subservicer:
Ocwen Federal Bank FSB
The Forum, Suite 1002
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Secretary
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Owners:
[Name of the Owner]
c/o Metropolitan Mortgage & Services Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
Any change of address must be in writing.
SECTION 11.4. ENTIRE AGREEMENT; AMENDMENTS; WAIVERS.
This Agreement constitutes the entire agreement between the parties
with respect to the transactions contemplated hereby and supersedes all prior
agreements (or contemporaneous oral agreements) of the parties with respect
thereto. This Agreement may be amended only in writing signed by each of the
parties hereto. Each of the Subservicer or the Owners may, by written notice to
the other, extend the time for or waive the performance of any of the
obligations of such other hereunder. The waiver by any party hereto of a breach
of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach. No delay, omission or act by a party shall be deemed a waiver
of such party's rights, powers or remedies. No course of dealing between the
parties hereto shall operate as a waiver of any provision hereof.
SECTION 11.5. NO JOINT VENTURE; LIMITED AGENCY.
The services provided by the Subservicer are in each case those of an
independent contractor providing a service. Nothing contained in this Agreement:
(i) shall constitute the Subservicer and the Owners as members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any liability as such
on the Subservicer or the Owners or (iii) shall, except as otherwise expressly
provided in this Agreement as to the Subservicer, constitute a general or
limited agency or be deemed to confer on it any express, implied or apparent
authority to incur any obligation or liability on behalf of the other.
Page 39
SECTION 11.6. SEVERABILITY; INTERPRETATION.
If any provision hereof is invalid, illegal or unenforceable, the
remaining provisions shall not be affected or impaired thereby. No provision of
this Agreement shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other authority by reason of such party having
or being deemed to have structured, dictated or drafted such provision. The
parties hereto acknowledge that no other agreement entered into by the
Subservicer for the provision of servicing, default management services and
property management and disposition services shall be used or referred to in
construing the provisions of this Agreement.
SECTION 11.7. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
SECTION 11.8. WAIVER OF JURY TRIAL.
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, WAIVES (TO
THE EXTENT PERMITTED BY APPLICABLE LAW) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT AND AGREES THAT ANY
SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.
SECTION 11.9. LIMITATION OF DAMAGES.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, THE PARTIES
AGREE THAT NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES WHATSOEVER, WHETHER IN CONTRACT, TORT OR ANY
OTHER LEGAL OR EQUITABLE PRINCIPLE.
Page 40
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto effective as of the date first written above.
OWNERS:
METWEST MORTGAGE SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Title: Secretary and Treasurer
----------------------------------
METROPOLITAN MORTGAGE &
SECURITIES CO., INC.
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: C. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------
Title: President and Chief Executive Officer
----------------------------------
WESTERN UNITED LIFE ASSURANCE
COMPANY
By: /s/ C. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: C. ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
Title: President and Chief Executive Officer
--------------------------------------
SUMMIT SECURITIES, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
OLD STANDARD LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: Vice President
--------------------------------------
Page 41
OLD WEST ANNUITY & LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: Vice President
--------------------------------------
SERVICER:
OCWEN FEDERAL BANK FSB
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President
--------------------------------------
Page 42
EXHIBIT A
ADDITIONAL SERVICING REQUIREMENTS
ARTICLE I. INTRODUCTION...............................................................................4
ARTICLE II. GENERAL SERVICING REQUIREMENTS.............................................................5
SECTION 2.01 HOLDBACKS.........................................................................5
SECTION 2.02 COLLECTION OF REIMBURSABLE SERVICING ADVANCES IN EXCESS OF $2,500.................7
SECTION 2.03 ASSUMPTION PROCESSING FOR MORTGAGE LOANS..........................................7
SECTION 2.04 MORTGAGE LOAN DEFAULT MANAGEMENT..................................................7
SECTION 2.05 BALLOON MORTGAGE LOAN REQUIREMENTS................................................8
ARTICLE III. LOTTERY, ANNUITY, STRUCTURED SETTLEMENT, AND MISCELLANEOUS CASH FLOW ASSETS...............10
SECTION 3.01. LOAN BOARDING REQUIREMENTS.......................................................10
(A) Customer Relationships...............................................................10
(B) Non-standard data entry fields.......................................................11
SECTION 3.02 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................11
(A) Outbound Welcome Call Campaign.......................................................11
(B) Payment Processing...................................................................11
(C) Advances.............................................................................13
(D) Annual Statements (Taxes)............................................................13
(E) Payoff Processing....................................................................13
(F) Reconveyance/Satisfaction............................................................13
(G) Other Customer Service/Customer Relations............................................14
SECTION 3.03 PERFORMING COLLECTIONS...........................................................14
(A) Customer contact.....................................................................14
(B) Collections timeline requirements....................................................14
(C) Available remedies; Owner involvement................................................15
SECTION 3.04 NON-PERFORMING COLLECTIONS.......................................................15
ARTICLE IV. PERSONAL LOANS............................................................................17
SECTION 4.01 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................17
(A) Outbound Welcome Call Campaign.......................................................17
(B) Payment Processing...................................................................17
(C) Reconveyance/Satisfaction............................................................17
(D) Other Customer Service/Customer Relations............................................17
SECTION 4.02 PERFORMING COLLECTIONS...........................................................17
ARTICLE V. TIMESHARE PRODUCTS........................................................................18
SECTION 5.01 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................18
(A) Payment Processing...................................................................18
(B) Payoff Processing....................................................................18
(C) Reconveyance/Satisfaction............................................................18
SECTION 5.02 NON-PERFORMING COLLECTIONS.......................................................18
SECTION 5.03 DEFAULT DISPOSITION..............................................................19
ARTICLE VI. FARM SUBSIDY PRODUCTS.....................................................................20
Servicing Requirements
Exhibit A to Flow Agreement
Page 1 of 59
SECTION 6.01 LOAN BOARDING REQUIREMENTS.......................................................20
(A) Customer Relationships...............................................................20
(B) Non-standard data entry fields.......................................................20
SECTION 6.02 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................20
(A) Outbound Welcome Call Campaign.......................................................20
(B) Payment Processing...................................................................21
(C) Payoff Processing....................................................................21
(D) Reconveyance/Satisfaction............................................................21
SECTION 6.03 PERFORMING COLLECTIONS...........................................................22
SECTION 6.04 NON-PERFORMING COLLECTIONS.......................................................22
ARTICLE VII. CONNECTICUT TAX LIENS.....................................................................23
SECTION 7.01 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................23
(A) Outbound Welcome Call Campaign.......................................................23
(B) Payoff Processing....................................................................23
ARTICLE VIII. OUTSIDE SERVICED REAL ESTATE LOANS........................................................24
SECTION 8.01 PRIVATE LABEL REQUIREMENTS.......................................................24
SECTION 8.02 LOAN BOARDING REQUIREMENTS.......................................................24
(A) Customer Relationships...............................................................24
(B) Non-standard data entry fields.......................................................24
SECTION 8.03 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................25
(A) Outbound Welcome Call Campaign.......................................................25
(B) Payment Processing...................................................................25
(C) Escrow/Impounds......................................................................25
(D) Advances.............................................................................25
(E) Research.............................................................................26
(F) Annual Statements (taxes)............................................................26
(G) Payoff Processing....................................................................26
(H) Reconveyance/Satisfaction............................................................27
(I) Other Customer Service/Customer Relations............................................27
SECTION 8.04 PERFORMING COLLECTIONS...........................................................27
(A) Customer contact.....................................................................27
(B) Collections timeline requirements....................................................27
(C) Available remedies; Owner involvement................................................28
(D) Notification requirements............................................................28
SECTION 8.05 NON-PERFORMING COLLECTIONS.......................................................28
(A) Collections timeline requirements....................................................28
(B) Available remedies; payment plans, litigation, Metro involvement.....................28
(C) Loan Resolution restrictions/opportunities...........................................28
(D) Default Disposition..................................................................28
ARTICLE IX. PARTIAL, REVERSE PARTIAL, SPLIT DISBURSEMENT AND FRACTIONAL ASSETS........................30
SECTION 9.01 PRODUCT TYPE EXAMPLES............................................................31
SECTION 9.02 PRIVATE LABEL REQUIREMENTS.......................................................31
Servicing Requirements
Exhibit A to Flow Agreement
Page 2 of 59
SECTION 9.03 LOAN BOARDING REQUIREMENTS.......................................................32
(A) Customer Relationships...............................................................32
(B) Non-standard data entry fields.......................................................33
SECTION 9.04 CUSTOMER SERVICE/CUSTOMER RELATIONS..............................................33
(A) Outbound Welcome Call Campaign.......................................................33
(B) Inbound Calls/Written Requests for Account Inquiry...................................33
(C) Payment Processing...................................................................34
(D) Escrow/Impounds......................................................................36
(E) Advances.............................................................................36
(F) Annual Statements (taxes)............................................................36
(G) Payoff Processing....................................................................37
(H) Reconveyance/Satisfaction............................................................38
SECTION 9.05 PERFORMING COLLECTIONS...........................................................38
(A) Customer contact.....................................................................38
(B) Collections timeline requirements....................................................38
(C) Available remedies; Owner involvement................................................39
SECTION 9.06 NON-PERFORMING COLLECTIONS.......................................................39
(A) Collections timeline requirements....................................................39
(B) Available remedies; Owner involvement................................................39
SECTION 9.07 DEFAULT DISPOSITION..............................................................40
ARTICLE X. OLD STANDARD LIFE INSURANCE COMPANY COMMERCIAL REAL ESTATE ASSETS (OSL COMMERCIAL)........41
SECTION 10.01 PAYOFF PROCESSING................................................................41
SECTION 10.02 NON-PERFORMING COLLECTIONS.......................................................41
SECTION 10.03 REO MANAGEMENT...................................................................41
ATTACHMENTS
1. Product Type Reference
2. Balloon Mortgage Notification
3. Lottery, Annuity, Structured Settlement, and Miscellaneous Cash Flow
payoff satisfaction notice to Original Beneficiary
4. Farm Subsidy payoff satisfaction notice to county recording office
5. Farm Subsidy payoff satisfaction notice to FSA Office
6. Farm Subsidy payoff satisfaction notice to farm Producer/Operator
7. Example of Full Payoffs of Partials, Reverse Partials, Split
Disbursement, and Partial Fractionals prior to termination of pass
through period or termination of Owner's interest
8. Remaindermen delinquency notification
9. Remaindermen modification notification
10. Form of data to Servicer Commercial Finance Division.
Servicing Requirements
Exhibit A to Flow Agreement
Page 3 of 59
ARTICLE I. INTRODUCTION
The contents of this Exhibit apply to Assets being serviced pursuant to the Flow
Agreement for which the Owner requires the Sub-Servicer (hereinafter referred to
as the "Servicer") to follow certain servicing practices that may be outside the
Servicer's historical experience or for which the Servicer does not currently
provide for other similar Assets.
Throughout this Exhibit, certain Assets are referred to by their common name
used by the Owner. A Product Type Reference is provided at Attachment 1 for the
Servicer to cross-reference these common names to the Owner's servicing system
coding values. The basis for much of these required servicing practices are
defined in the applicable Contractual Requirements, the documents for which may
be found in the Servicing Files.
For any aspects of Accepted Servicing Practices not directly addressed in this
Exhibit, the Servicer will service in accordance with the terms of the Flow
Agreement.
For purposes of this Exhibit, the phrase "at Owner's expense" shall relate to
all out of pocket third party expenses incurred by Servicer in connection with
the related action.
Servicing Requirements
Exhibit A to Flow Agreement
Page 4 of 59
ARTICLE II. GENERAL SERVICING REQUIREMENTS
DESCRIPTION:
These requirements apply to more than one general Asset category. Requirements
unique to one Asset classification are addressed at other sections of this
Exhibit.
SECTION 2.01. HOLDBACKS
(A) A payment holdback represents the next due and any overdue
installments on the loan at the time of loan acquisition and may
exist on Mortgage Loans and other Assets such as Structured
Settlement and Annuity products. Generally, these are withheld
from the proceeds of the party from whom the Owner purchased a
beneficial interest in the applicable security instrument
("Seller"), although they may have been withheld from the broker
associated with the transaction. These holdbacks ensure that the
first payment(s) are directed to the appropriate party. For
specific holdback provisions of individual loans, refer to the
applicable Receivable Purchase & Sale Agreement (RPSA) or Special
Holdback Agreement found in the Servicing File. The Commercial
servicing system does not have the ability to track holdbacks
because it will cause the holdbacks to appear on borrower history.
The Commercial Finance Division of Servicer will track holdbacks
on Commercial Mortgage Loans on spreadsheets.
(B) Owner shall provide Servicer with an accounting as to which
holdback payments have been received as of the date of the
servicing transfer.
(C) The following are general practices regarding treatment of
holdbacks, and the Servicer is required to develop processes to
provide for similar treatment:
(1) Specific servicing system fields must be available to
provide status of all holdbacks for individual loans,
to include:
(a) Payment due date for which holdback applies
(b) Amount of total holdback remaining for each
loan
(c) Party to whom holdback will be disbursed;
e.g. "Seller", "Broker".
(2) As each holdback is cleared from each loan, the
holdback tracking fields will be cleared to indicate
disbursement of the holdback has been resolved.
(3) If the Servicer receives a scheduled loan payment for
which there is an associated holdback, disbursement
of those holdback funds must be made to the
appropriate party within 30 days.
Servicing Requirements
Exhibit A to Flow Agreement
Page 5 of 59
(4) If the Servicer determines the scheduled loan payment
for which there is an associated holdback was
directed to another party, e.g. borrower sent the
next payment due on loan to the Seller rather than
the Servicer, the Servicer must first verify payment
was received by the party to whom borrower sent such
payment. Sufficient verification includes, verbal
statement by party to whom payment was sent
confirming receipt of payment, or proof provided by
borrower that the payment was sent to the appropriate
party by form of copy of the front and back of
cleared payment check. Upon verification of receipt
of payment to the appropriate party, the Servicer
will apply the holdback amount as a scheduled payment
to the loan within five (5) Business Days of
verification.
(5) In the case of a first payment default, should 90
days elapse from loan document recording and neither
the Seller, Broker, or Servicer has received the
payment for which there is an associated holdback,
the Servicer will notify the Owner for instructions
on remitting holdback.
(6) If the Servicer modifies the loan or executes any
other form of workout that eliminates or capitalizes
to principal balance the payment installments for
which there is an associated holdback, such holdback
will be forfeited, to the extent such forfeiture is
permitted by the applicable RPSA, and the Servicer
will notify the Owner for instructions on remitting
holdback.
(7) The Owner has established some accounts with
holdbacks for reasons other than to ensure payment of
a scheduled loan payment. such as for delinquent
taxes. For any inquiries by any interested parties to
the loan regarding these "special" holdbacks, the
Servicer will notify the Owner who will provide the
Servicer with instructions for further action.
(D) In the event the Servicer discovers or has been notified that a
holdback has been incorrectly applied or remitted to the wrong
party, the Servicer shall use reasonable efforts to recover such
holdback and apply or remit such holdback in the correct manner.
Notwithstanding any provisions in these Servicing Requirements or
in the Flow Agreement to the contrary, the Servicer shall not have
any responsibility or liability for holdbacks that are incorrectly
applied or remitted unless the Servicer acted in bad faith, was
grossly negligent in the performance of its obligations or failed
to attempt to verify a payment in accordance with Section
2.01(C)(4) above. The Owner agrees to cooperate with the Servicer
to provide appropriate information and direction regarding the
application and remittances of holdbacks and the recovery of
holdbacks that have been remitted to the incorrect person. The
Servicer shall be entitled to rely on the information and
direction provided by the Owner with respect to holdbacks.
Servicing Requirements
Exhibit A to Flow Agreement
Page 6 of 59
SECTION 2.02. COLLECTION OF REIMBURSABLE SERVICING ADVANCES IN EXCESS OF $2,500
(A) For all loans where reimbursable Servicing Advances exceed $2,500,
the Servicer will contact the Obligor to attempt payment
arrangements to satisfy payment of such Servicing Advances.
Attempts to collect these amounts will be accomplished on both
delinquent and non-delinquent Assets.
(B) In the event collection efforts do not result in full payment of
the advances within 90 days of the incurred expense, the Servicer
will initiate foreclosure action, subject to provisions allowed by
the applicable security instrument. The Servicer will continue
attempts at other workout options with the Obligor during the
foreclosure process.
SECTION 2.03. ASSUMPTION PROCESSING FOR MORTGAGE LOANS
(A) For all assumption requests made by the Obligor for loans not
fully assumable without restriction by the applicable security
instrument, e.g. mortgage contains a "Due on Sale" clause or
"Written Consent Required" clause, the Servicer will forward
request to the Owner for approval decision. If the Owner approves
the assumption request, the Servicer will execute all necessary
documents and notifications.
(B) In the event of the Obligor executing an assumption without the
Servicer's or the Owner's approval, the Servicer will continue to
hold the original Obligor liable for payment of the Owner's Asset
balance until such time as the Obligor requests a release of
liability. All release of liability requests, regardless of
whether or not related to an assumption, must be approved by the
Owner. If the Owner approves the release of liability request, the
Servicer will execute all necessary documents and notifications at
Owner's expense.
SECTION 2.04. MORTGAGE LOAN DEFAULT MANAGEMENT
(A) Except where otherwise specified in this Exhibit, the Servicer
will follow these practices regarding the collection and
resolution of delinquent Mortgage Loans:
(1) For loans less than 90 days delinquent, the Servicer
will service according to Accepted Servicing
Practices.
(2) At no later than 90 days delinquent or upon
expiration of required notices of deferral sent in
Section 2.04(A)(1) above, the Servicer will initiate
foreclosure/forfeiture action upon the loan and
follow all Accepted Servicing Practices for
resolution and disposition, to include, but not
limited to, referring the loan to the Servicer's Loan
Resolution Center to pursue customary alternatives to
foreclosure, except for Balloon Mortgage
Servicing Requirements
Exhibit A to Flow Agreement
Page 7 of 59
Loans as provided for in Sec. 2.05(C) below,
referring the loan to the Servicer's Loan Resolution
Center.
(B) Any property market valuation used for any loan resolution
purpose, to include analysis of alternatives to foreclosure and
establishing the foreclosure sale bid, that does not exceed the
greater of (i) 75% of the Owner's current market valuation at the
time of Transfer Date or (ii) the Owner's current market valuation
at the time of Transfer Date less $15,000, must be approved by the
Owner prior to use for such loan resolution purpose.
If the Owner does not approve of the Servicer-provided market
valuation, the Owner may exercise the option to require an
alternative vendor source for valuation or may provide the
Servicer with a market valuation as determined by the Owner.
(C) The Servicer's authority to approve loan resolution actions as
alternatives to foreclosure/forfeiture shall be limited to
alternatives with a net present value of Owner's interest that
either (i) equal or exceed the net present value of the
foreclosure/forfeiture action, or (ii) exceed the greater of 90%
of the net present value of the foreclosure/forfeiture action or
$10,000 less than the net present value of the
foreclosure/forfeiture action. Any other alternatives recommended
by the Servicer must be forwarded to the Owner for review and
approval.
SECTION 2.05. BALLOON MORTGAGE LOAN REQUIREMENTS
(A) At no later than 110 days prior to the Maturity Date of any
Balloon Mortgage Loan, the Servicer will send a letter to the
Obligor, the form of which is at Attachment 2, as notification of
the Maturity Date and of possible options available for
disposition of the Balloon Payment.
(B) For any requests received from the Obligor relating to disposition
of the Balloon Payment on a Balloon Loan less than 60 days
delinquent, the Servicer will forward such request to the Owner.
If the Owner exercises the option to negotiate a disposition of
the Balloon Payment with the borrower, the treatment of all fees
generated by the Owner and all costs incurred by the Servicer
related to executing the Balloon Payment disposition will be
handled in accordance with the general provisions of Sec. 3.1 of
the Flow Agreement. If the Owner approves the disposition of a
Balloon, the Servicer will execute all necessary documents and
notifications at Owner's expense.
(C) At no later than 60 days delinquent, the Servicer will notify the
Owner of the delinquency status of any Balloon Loan, for possible
loan resolution actions by the Owner, to include balloon
eliminations or balloon forbearances.
Servicing Requirements
Exhibit A to Flow Agreement
Page 8 of 59
If the Owner exercises the option to negotiate a loan resolution
alternative with the borrower, the treatment of all fees generated
by the Owner and all costs incurred by the Servicer related to
executing the loan resolution alternative will be handled in
accordance with the general provisions of Sec. 3.1 of the Flow
Agreement. If the Owner approves the disposition of a Balloon, the
Servicer will execute all necessary documents and notifications at
Owner's expense.
(D) At no later than 90 days delinquent, if the Owner has not
exercised the option to negotiate a loan resolution alternative
with the borrower, the Servicer will refer the loan to the
Servicer's Loan Resolution Center to pursue customary alternatives
to foreclosure. With respect to loans serviced by Servicer's
Commercial Finance Division, the assigned Non-Performing Asset
Manager will pursue customary alternative to foreclosure.
Servicing Requirements
Exhibit A to Flow Agreement
Page 9 of 59
ARTICLE III. LOTTERY, ANNUITY, STRUCTURED SETTLEMENT, AND MISCELLANEOUS CASH
FLOW ASSETS
DESCRIPTION:
(A) Lottery winnings represent a series of payments from a state
lottery commission to an individual over a period of time. The
Owner buys the series of payments at a discount, providing the
lottery winner with an immediate lump sum.
(B) An Annuity is a contract or agreement providing for the payment of
a sum of money received in a series of equal or nearly equal
payments over a period of time. The Owner buys this series of
payments at a discount, giving the annuitant an immediate lump
sum.
(C) A Structured Settlement is a series of cash payments paid to an
individual over a period of time. The payments are typically made
through an annuity, but may be the direct obligation of a
corporation and are generally created to facilitate the settlement
of a personal injury claim. The Owner purchases the settlement at
a discount providing the claimant with an immediate lump sum.
(D) Other miscellaneous cash flows are purchased which are not lottery
or annuity based, such as royalty payments, lease agreements, or
limited partnership agreements.
(E) Further description and method of identification by the Owner's
system coding is available in the attached Product Type Reference.
SECTION 3.01. LOAN BOARDING REQUIREMENTS
(A) CUSTOMER RELATIONSHIPS
(1) The roles of the interested parties to these
transactions differ from Mortgage Loans, and the
Servicer is required to maintain contact information
for each party as needed for on-going servicing of
these Assets. The following section provides general
description of the roles for certain parties, and the
Servicer can find more detailed information for each
interested party within the applicable Contractual
Requirements.
(2) The Obligor is identified by various names depending
on the type of transaction. The Owner's servicing
system refers to these as the "primary" customer, and
includes, but are not limited to, the following:
o Annuity Issuer
o Borrower (in the case of transactions structured
as a loan)
o Defendant
Servicing Requirements
Exhibit A to Flow Agreement
Page 10 of 59
o Insurance Company
o Issuer/Owner
o Lottery Commission
(3) The parties from whom the Owner purchased a
beneficial interest of the applicable security
instrument ("Original Beneficiary") are also
identified by various names depending on the type of
transaction. The Owner's servicing system reference
to these customer, includes, but is not limited to,
the following:
o Annuitant
o Annuity Owner
o Plaintiff
o Prize Winner
o Seller
(B) NON-STANDARD DATA ENTRY FIELDS
(1) For those Assets secured by a beneficial interest in
an annuity product, communication with interested
parties is often in reference to the annuity policy
number. The Servicer must maintain this number in the
servicing system.
SECTION 3.02 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) The Servicer will make no welcome calls for these
Assets.
(B) PAYMENT PROCESSING
(1) Payments received from the Obligor may not contain
any reference to the Owner's account number. The
Servicer must develop processes to identify the
correct account to post payment from any variety of
reference identification found on the payment check.
This reference may include the Prize Winner or
Annuitant's name, or the Annuity Issuer's policy
number. In the case of multiple accounts for the same
Annuitant under the same policy number, the payment
due date may be used to identify the correct account
to post payment.
(2) The Owner has also purchased Partial or Split
Disbursement products (similar to Mortgage Loans
described in Article IX) and the Servicer is
Servicing Requirements
Exhibit A to Flow Agreement
Page 11 of 59
required to develop processes to pass through the
appropriate amount of each payment to the appropriate
parties pursuant to terms in the applicable
Receivable Purchase & Sale Agreement (RPSA).
(3) Payments received that are short of the scheduled
payment amount due must be handled differently
depending upon the Asset type. For payment shortages
of any Assets identified by the Owner's servicing
system data field "Receivable Subtype" with the
following values. the Servicer must notify the Owner
within two (2) business days and the Owner will
advise the Servicer of actions to take regarding
posting or collection of the payment:
Receivable Subtype
------------------
00507
00508
00539
00541
00543
00545
00546
00547
00574
(4) For payment shortages on other Asset types, the
Servicer must first refer to the Contractual
Requirements to determine if the Obligor is required
to remit payment net of Federal and State
withholding. If withholding is not required, the
Servicer will notify the Owner within two (2)
Business Days and the Owner will advise the Servicer
of actions to take regarding posting or collection of
the payment.
If withholding is required, the Servicer must gross
up the payment by the withholding amount and apply
the gross amount as a full payment.
If the payment check identifies the amount of the
withholding, the Servicer must gross up the remitted
payment by the stated withholding and apply the gross
amount to the appropriate account.
If the amount of the withholding is not stated, the
Servicer must gross up the remitted payment by 28%
federal withholding and 4% state withholding (for
states with income tax withholding requirements) and
apply the gross amount to the appropriate account.
The Servicer must develop a posting process that
identifies the federal and state withholding amounts
in unique general ledger accounts for Metropolitan's
Tax Department reporting requirements.
Servicing Requirements
Exhibit A to Flow Agreement
Page 12 of 59
(5) If the Servicer cannot identify the appropriate
account to which to apply the payment, the Servicer
must notify the Owner within five (5) Business Days
for direction of action to take regarding application
of payment.
(C) ADVANCES
(1) Some Lottery or Annuity Assets may require a life
insurance policy on the original annuitant. Premium
payment of these policies are an obligation of the
Owner and must not be charged to the loan, but rather
the Servicer will remit payment when applicable and
treat as a Servicing Advance that is reimbursable
from the Owner during the monthly remittance cycle.
(2) If a premium due notice is received from the Annuity
Issuer, the Servicer must determine from the
Contractual Requirements if premiums were paid in
full at closing or if annual premium payments are
required. If premiums were paid in full, the Servicer
must contact the Issuer as notification of payment
made. If annual premium payments are required, the
Servicer must first verify the life insurance policy
is still required before remitting payment.
(D) ANNUAL STATEMENTS (TAXES)
(1) Servicer must forward all IRS Form W-2G's received
from Lottery Commissions to the Owner with two (2)
Business Days of receipt.
(E) PAYOFF PROCESSING
(1) All request for payoff quotes must be forwarded to
the Owner within one (1) Business Day of receipt. The
Owner will calculate the payoff amount and return to
the Servicer with further payoff instructions.
(2) If payment is received for receivables where the
Obligor is identified as "The City of New Orleans",
the Servicer must request a payoff quote from the
Owner who will determine if payoff funds received are
for the correct amount.
(F) RECONVEYANCE/SATISFACTION
(1) Upon satisfaction of the Owner's account balance,
Servicer will:
o Send letter, the form of which is at Attachment
3, to Original Beneficiary as notification of
closing of Owner's account;
o Send other redirection of payment notification if
required pursuant to Contractual Requirements;
o Execute UCC termination if required pursuant to
the Contractual Requirements;
o ▇▇▇▇ the Promissory Note "Paid in Full" and
return to borrower if receivable is structured as
a loan.
Servicing Requirements
Exhibit A to Flow Agreement
Page 13 of 59
(G) OTHER CUSTOMER SERVICE/CUSTOMER RELATIONS
(1) The Servicer must notify the Owner of any request for
redirection of payment or garnishments within two (2)
Business Days. The Owner will instruct the Servicer
of required actions to take in response.
(2) The Servicer must notify the Owner of any
bankruptcies within three (3) Business Days of
Servicer notification, and the Owner will instruct
the Servicer of required actions to take in response.
(3) Servicer must file UCC continuation statements in
accordance with all applicable laws to maintain the
Owner's perfected security interest.
SECTION 3.03 PERFORMING COLLECTIONS
(A) CUSTOMER CONTACT
(1) For payment collection efforts, the Servicer must
only contact the Original Beneficiary.
(2) The Servicer may only contact the Obligor if payment
is not received as scheduled, in which case contact
will be limited to determining if the payment has
been made and where it was sent. The party Servicer
is allowed to contact in such case varies by the
following Asset types:
o For Lottery Trust transactions in MA, FL, or TX,
the Servicer may only contact the Trustee for
payment direction information.
o For all other Lottery transactions, the Servicer
may contact the Lottery Commission for payment
direction information.
o For all other Asset types, the Servicer may only
contact the Obligor for direction of payment
information.
(3) Assets where the Obligor is identified as "The City
of New Orleans" were purchased with a projected due
date. If payment is not received by such due date,
the Servicer will take no action to communicate with
the Original Beneficiary or Obligor, but rather must
notify the Owner who will direct the Servicer of
further action to take which may include changing the
projected due date.
(B) COLLECTIONS TIMELINE REQUIREMENTS
1. Annuities and Structured Settlements
o Two (2) days delinquent - begin telephone campaign to
contact the Original Beneficiary.
Servicing Requirements
Exhibit A to Flow Agreement
Page 14 of 59
o Six (6) days delinquent - send letter notifying the
Original Beneficiary of the delinquency and reminding
them of their contractual obligation to cooperate and
assist with the recovery of any delinquencies.
o Fifteen (15) days delinquent - contact the Obligor
for payment direction information
o Forty-five (45) days delinquent -notify the Owner for
the Owner's Legal Department referral. Return the
file to the Owner, including an outline detailing the
account activity leading up to the referral. The
Owner has the option to take appropriate legal
actions resulting in payment arrangement, full cure
payment, or judgment.
o In the event of a special circumstance, (i.e.,
bankruptcy, redirection of payments), refer account
immediately to the Owner for appropriate legal
action.
2. Lotteries
o Ten (10) days delinquent - begin telephone campaign
to contact the Lottery to check payment status.
o Fifteen (15) days delinquent - if unable to establish
contact with Obligor, contact -▇▇▇▇ ▇▇▇▇▇▇ for
further collection direction. (▇▇▇)▇▇▇-▇▇▇▇
o Owner may request account be sent to Owner's Legal
Department. Return file to the Owner, with an outline
detailing account activity leading to referral.
o In the event of a special circumstance, (i.e.,
bankruptcy, redirection of payments), refer account
immediately to the Owner for appropriate legal
action.
Special Note:
The timelines stated above may be extended by three (3) to five (5)
Business Days if payments are collected and forwarded to the Servicer
by an escrow company or if the payments are directed to certain P.O.
Boxes from which transmittal of the payments typically requires
additional time.
(C) AVAILABLE REMEDIES; OWNER INVOLVEMENT
(1) Payment arrangements may only be accepted with the
Original Beneficiary for full cure prior to 31 days
delinquent.
SECTION 3.04 NON-PERFORMING COLLECTIONS
(A) If the Owner exercises it option to take the legal option and the
Owner's legal action results in judgement, the Owner will notify
the Servicer of the terms of the judgement by which the Servicer
will monitor payment performance. Such monitoring will include
continued telephone contact with the Original Beneficiary for 60
days post
Servicing Requirements
Exhibit A to Flow Agreement
Page 15 of 59
judgement at which time the Servicer must notify the Owner who
will provide direction for further action which may include
decision to refer to outside collection agency.
(B) For accounts referred to the Owner's Legal Department, the Owner
may direct the Servicer to take other loan resolution actions such
as one payment modifications for certain Assets types.
Servicing Requirements
Exhibit A to Flow Agreement
Page 16 of 59
ARTICLE IV. PERSONAL LOANS
DESCRIPTION:
Personal loans funded by Metropolitan.
SECTION 4.01 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) The Servicer will make welcome calls to borrowers..
(B) PAYMENT PROCESSING
(1) The Servicer will collect payments directly from the
borrower and will issue monthly billing statements.
(C) RECONVEYANCE/SATISFACTION
(1) Upon loan satisfaction, Servicer will execute UCC
termination and send security agreement marked with
"Paid in Full" to the borrower.
(D) OTHER CUSTOMER SERVICE/CUSTOMER RELATIONS
(1) Servicer will file UCC continuations in accordance
with all applicable laws to maintain the Owner's
perfected security interest.
SECTION 4.02 PERFORMING COLLECTIONS
If an account becomes delinquent, the Servicer will attempt borrower contact a
minimum of every seven (7) days seeking payment arrangements. If unable to make
contact or enter into an adequate payment arrangement prior to becoming 30 days
delinquent, the Servicer will notify the Owner who will provide directions of
further actions to take.
Servicing Requirements
Exhibit A to Flow Agreement
Page 17 of 59
ARTICLE V. TIMESHARE PRODUCTS
DESCRIPTION:
The timeshare portfolio consists of loans for three resorts, Lawai Beach Resort
(LBR), Pono Kai, and Skier's Edge. These loans are secured by a Note and
Mortgage and will be serviced in a similar manner to other Mortgage Loans.
SECTION 5.01 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) PAYMENT PROCESSING
(1) The Owner allows payment by credit card for
individual monthly payments or for automatic payment
on a series of scheduled payments. These loans are
setup to be billed to the borrowers' credit card,
Visa and Master Card only, through the Global Payment
System which processes and gets approval for the
charge to be made to the credit card account. The
Servicer must develop process to accept credit card
payments on these loans in a similar manner.
(2) The Servicer must monitor the expiration dates and
account numbers for update on the timeshare loans
designated as payment made by credit card.
(B) PAYOFF PROCESSING
(1) The Servicer must accept payoff payments by credit
card in manner similar to credit card payment of
monthly payments.
(C) RECONVEYANCE/SATISFACTION
(1) For timeshares located in Hawaii, the Servicer must
exercise the option offered by the state to file
"blanket" releases of up to 25 loans per release, as
a cost savings measure to the Owner.
SECTION 5.02 NON-PERFORMING COLLECTIONS
(A) For any deed in lieu action, the Servicer must require the
borrower to pay 25% of any delinquent association maintenance
fees.
(B) Modifications which add back delinquent payments, fees, and
accruals to the remaining principal balance are allowed, not to
exceed a re-amortization of 84 months.
(C) Timeshares in Colorado are not subject to foreclosure or deed in
lieu actions and the Servicer will not initiate any such action on
these loans nor send any documentation, such as acceleration or
default notices, to borrower indicating the Owner authorizes
Servicing Requirements
Exhibit A to Flow Agreement
Page 18 of 59
such actions. All other workout options are available including
short payoffs, forbearance and modification. When any of these
loans become 120 days delinquent, the Servicer will notify the
Owner with recommendation of write-off and forward to unsecured
collections.
(D) For foreclosure actions on timeshares in Hawaii, the Servicer must
use the Owner's designated counsel unless otherwise approved by
Owner. Currently, designated counsel is identified as:
WHITE & ▇▇▇, ATTORNEYS AT LAW
A Law Corporation
▇▇▇▇▇ ▇▇▇▇▇ - Counsel
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone ▇▇▇-▇▇▇-▇▇▇▇
FAX ▇▇▇-▇▇▇-▇▇▇▇
(E) Servicer must initiate foreclosure actions in Hawaii in "bulk" at
a minimum of ten (10) accounts at one time. Two (2) pooled "bulk"
foreclosure sales annually can be initiated when the Owner's
portfolio of Hawaii timeshares reduces in total number to under 50
accounts.
SECTION 5.03 DEFAULT DISPOSITION
(A) The Owner will manage all activities related to disposition of
repossessed timeshares. Upon receipt of Release of Mortgage for
deed in lieu or foreclosure actions, the Servicer will notify the
Owner that the repossession is complete.
(B) Upon liquidation of any timeshare REO, the Owner will forward
proceeds from the sale directly to the Servicer to satisfy
outstanding balances.
Servicing Requirements
Exhibit A to Flow Agreement
Page 19 of 59
ARTICLE VI. FARM SUBSIDY PRODUCTS
DESCRIPTION:
(A) These are investments in government-backed, farm land-use programs
where the Owner obtains an assignment of the payments due to the
producer/operator of the farm payable from the Farm Service
Administration (FSA) office, a division of the Department of
Agriculture. Farm subsidy Assets include the following two
programs:
(1) Production Flexibility Program (PFC) - This program
subsidizes the ▇▇▇▇▇▇ for growing certain, specific
crops. Payments are made pursuant to the farm unit
number and crop grown, and are due annually in
September.
(2) Conservation Reserve Program (CRP) - This program
subsidizes the ▇▇▇▇▇▇ for returning highly erodible
land back to a natural state, by planting grass and
trees. Payments are made pursuant to the farm unit
number, and are due annually in December.
SECTION 6.01 LOAN BOARDING REQUIREMENTS
(A) CUSTOMER RELATIONSHIPS
(1) The Servicer must maintain contact information for
the various FSA offices located in the same counties
as the farm for which subsidies are paid. Current
contact information for each office may also be
located at the following internet address:
▇▇▇▇://▇▇▇.▇▇▇.▇▇▇▇.▇▇▇/▇▇▇▇/
(B) NON-STANDARD DATA ENTRY FIELDS
(1) Payments received from the FSA office reference the
farm unit number and are the only reference with
which to locate the correct account to apply payment.
The Servicer must maintain this number on servicing
system.
SECTION 6.02 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) The Servicer will call the producer/operators of the
farms to introduce themselves as the agency
performing collection activity on behalf of the Owner
and from whom the producer/operator will receive the
applicable pass-through payments.
Servicing Requirements
Exhibit A to Flow Agreement
Page 20 of 59
(2) The Servicer will call the applicable FSA offices to
verify receipt of change of address for payment
remittance as notified by the Owner.
(B) PAYMENT PROCESSING
(1) All Farm Subsidy accounts are partials with a portion
of the payment passed through to the
producer/operator from whom the Owner purchased the
remaining portion of the receivable. The payments due
for December are on the CRP payments. The payments
due for September are on the PFC payments. Multiple
payments may be received for each account, as each
FSA office issues payments numerically by farm unit
number and alphabetically by crop.
(2) If multiple checks are received for each account, the
Servicer should apply all funds received for each
account to a suspense fund and before any
disbursement is made to any producer/operator, all
farm subsidy accounts should be audited for
completeness of payment and for correct application
of payment.
If it is determined that any account has received a
shortfall, the Servicer will notify the
producer/operator of the shortfall to advise him that
the remaining payments will be taken from future FSA
disbursements. The Servicer will then apply the short
payment to a miscellaneous charges fund and bring the
account current. If the Servicer determines there are
not enough future funds due from the FSA to cover the
shortfall, the Servicer will contact the
producer/operator to attempt to make repayment
arrangements.
(C) PAYOFF PROCESSING
(1) All request for payoff quotes must be forwarded to
the Owner within one (1) Business Day of receipt. The
Owner will calculate the payoff amount and return to
the Servicer with instructions.
(2) If payment is received which appears to satisfy the
total account balance, the Servicer must request a
payoff quote from the Owner who will determine if
payoff received for the correct amount.
(D) RECONVEYANCE/SATISFACTION
(1) Upon satisfaction of the Owner's account balance, the
Servicer will:
(a) Send a satisfaction letter to the
applicable county recording office (form
at Attachment 4), FSA office (form at
Attachment 5), and to the
producer/operator of the farm (form at
Attachment 6);
(b) Execute UCC termination.
Servicing Requirements
Exhibit A to Flow Agreement
Page 21 of 59
SECTION 6.03 PERFORMING COLLECTIONS
(A) As stated above, in the event it is determined there are not
enough future funds from the FSA to cover any shortfall, the
Servicer is required to contact the producer/operator to attempt
repayment arrangements.
(B) Collections timeline requirements
o Ten (10) days delinquent - begin telephone
campaign to contact the ▇▇▇▇▇▇. Establish if the
▇▇▇▇▇▇ has requested funds from the Farm Service
Agency. If time lapsed from date of request is
more than ten (10) days, contact the Farm Service
Agency.
o Thirty (30) to forty-five (45) days delinquent -
send letter notifying ▇▇▇▇▇▇ of delinquency and
reminding them of their contractual obligation to
cooperate and assist with the recovery of any
delinquencies.
o Ninety (90) days delinquent - notify the Owner
for the Owner's Legal Department referral. Return
file to the Owner, with an outline detailing
account activity leading to referral.
o In the event of a special circumstance, (i.e.,
bankruptcy, redirection of payments), refer
account immediately to the Owner for appropriate
legal action.
SECTION 6.04 NON-PERFORMING COLLECTIONS
(A) If the producer/operator is not cooperative with the Servicer
regarding repayment arrangements or is unresponsive to contact
attempts by the Servicer, the Servicer will notify the Owner for
referral to the Owner's Legal Department for further action.
(B) Payments received by the FSA office follow the producer/operator
of the farm. At any point where the Servicer determines the party
from whom the Owner purchased a beneficial interest of the farm
subsidy payments is no longer the producer/operator of the farm,
the Servicer will notify the Owner for possible referral to the
Owner's Legal Department for further action. Indications of such
circumstances are:
(1) the failure of the owner of the farm to renew a lease
to the producer/operator or the lease is defaulted
upon by the producer/operator;
(2) the producer/operator files some type of bankruptcy
proceedings;
(3) any action taken by the local FSA office regarding
off-sets (this can arise where a ▇▇▇▇▇▇ takes a loan
from the FSA office which is off-set in accordance
with regulations which give superior position to that
loan over the Owner's assignment).
Servicing Requirements
Exhibit A to Flow Agreement
Page 22 of 59
ARTICLE VII. CONNECTICUT TAX LIENS
DESCRIPTION:
(A) Connecticut tax liens represent delinquent tax pool purchases from
three towns in Connecticut: Bethel, Fairfield, and Stratford. The
liens were purchased in different groups at different times and
can be either individual or company liens.
(B) A Connecticut tax lien account is defined as containing one year
of taxes owed, with a delinquency of no less than one year, on a
specific property. Usually a group of tax liens (each one a
different year) are connected to the same property. There may also
be more than one property associated with a taxpayer.
(C) A group of tax liens associated with a specific property are
serviced as separate accounts but are linked together in the
Owner's servicing system so that the oldest tax year account must
be paid first, then the next, and so forth, in chronological
order. The Contractual Requirements for groups of linked tax liens
are located in a single Servicing File. A listing of the linked
accounts is affixed to the outside of the Servicing File.
(D) The Owner has also serviced deferred tax years. The Owner did not
pay for these deferred tax years, but has serviced them for the
specific town from which the property tax liens were purchased.
The Owner accumulates interest on each deferred tax lien year,
which is then retained from the payoff of any of these tax years.
All money collected for a deferred account is paid to the town.
Deferred tax years are generally for taxes dated 1984 and earlier.
These Asset types are identified on Owner's servicing system by
"Product Type" value 591.
SECTION 7.01 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) The Servicer will only make welcome calls to
borrowers of tax lien accounts that have been
modified by Owner as a typical mortgage loan. These
loans are identified on Owner's servicing system by
"Product Type" value 592.
(B) PAYOFF PROCESSING
(1) Rather than calculate interest due on a per diem
rate, state statutes governing these tax lien
accounts dictate interests to be calculated by a full
month rate (18% annual). The Servicer must refer to
Contractual Requirements for payoff requirement
provisions.
Servicing Requirements
Exhibit A to Flow Agreement
Page 23 of 59
ARTICLE VIII. OUTSIDE SERVICED REAL ESTATE LOANS
DESCRIPTION:
(A) These accounts are seller-financed transactions acquired
individually or in a pool. In the original transaction, the
borrower and seller contracted with an escrow agent ("Agent") to
provide third-party accounting for payments, impounds where
required, and tax reporting to buyer and seller.
(B) The Agent is the custodian in most cases, although some Agents do
not offer this service and the Owner has been the custodian.
Due to the nature of the contract collection agreement ("Agent Contract"), i.e.
the contract between borrower, seller and agent, or the terms of the security
instrument which designate the use of such an agent, the Owner and any servicer
are prohibited from eliminating this agreement without the borrower's consent.
There are exceptions to this prohibition in the case of certain events of
default.
SECTION 8.01 PRIVATE LABEL REQUIREMENTS
(A) For all communication with the Agent, a private label servicing
approach may be required as in some cases Servicer will have to
make requests in the name of the Owner in order to achieve
satisfactory results as in some cases the Agent will not recognize
Servicer as a party to the transaction and will not release
information to, or follow directions from, the Servicer. This
includes letterhead and telephone contacts.
(B) Private label approach with the borrower is required only for
non-delinquency related issues.
SECTION 8.02 LOAN BOARDING REQUIREMENTS
(A) CUSTOMER RELATIONSHIPS
(1) Contact with Agent is necessary for servicing
throughout life of loan and contact information must
be maintained on servicing system.
(B) NON-STANDARD DATA ENTRY FIELDS
(1) The Agent maintains a separate account number and may
or may not refer to the Owner's account number when
remitting. The Agent account number must be
maintained on the loan, in order to identify payments
received and/or correspondence.
Servicing Requirements
Exhibit A to Flow Agreement
Page 24 of 59
SECTION 8.03 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) The Servicer will call borrower to introduce
themselves as the agency performing collection
activity on behalf of the Owner and to inform the
borrower to continue making payments to the Agent.
(2) The Servicer will call Agent to verify receipt of
change of address for payment remittance as notified
by the Owner. The Servicer will also provide Agent
with the Servicer's loan number to use for reference
in future communication, and will confirm borrower's
contact information with the Agent. Private label
requirements as stated above must be followed during
this welcome call campaign.
(B) PAYMENT PROCESSING
(1) The Agent is entitled to their service fees, which
may be netted from the remittance amount or invoiced
to the Owner. Consequently, the payments are remitted
to the Agent, who will then net out any fees owed and
net disburse to the Owner. The Owner then grosses up
the disbursement via a GL offset for the difference
at posting.
The bulk of these accounts have the service fee
assessed and taken per payment. A small portion are
netted annually and a small portion are invoiced.
These fees need to be treated as Servicing Advances
by the Servicer, but must not be passed on to the
borrower as they are an obligation of the Owner.
(2) In the case of a borrower's returned for
non-sufficient funds ("NSF") to the Agent, for which
the Agent has already remitted payment to the
Servicer, the Servicer may be required to return
those funds until the NSF is recovered by the Agent.
The Servicer cannot charge a NSF fee in addition to
the fee charged by the Agent. The remittance of funds
required to be returned to the Agent should be made
directly to the Agent less any offset for fees held
by the Agent.
(C) ESCROW/IMPOUNDS
(1) In some cases, the Servicer must maintain an impound
account for the borrower, outside of the Agent. In
this case, the Agent passes through the required
escrow portion with the netted remittance each month.
The Servicer must send the Agent a copy of any escrow
analysis, in addition to the copy sent to the
borrower, in order to facilitate this pass-through.
(D) ADVANCES
(1) The Servicer must notify the Agent of any corporate
advances made by the Servicer for inclusion in any
payoff quotes. These disclosures should be made via
certified mail and any responses from the Agent
should be documented. Aggressive collection of these
advances from the borrower
Servicing Requirements
Exhibit A to Flow Agreement
Page 25 of 59
should occur immediately, upon the Agent's refusal to
track these advances, which is their most common
response. Failure to aggressively collect or workout
advances with the borrower prior to payoff to the
Agent may result in unsecured debt for which the
Servicer retains responsibility for collection
effort.
(E) RESEARCH
(1) The Agent Contract may call for simple daily
interest, in direct conflict with the terms of the
Note. When this occurs, there can be a discrepancy
for delinquency, as the Owner's receivable will
continue to accrue on the Note-specified basis.
General procedure is to obtain the Agent histories
(there may be a fee for this that cannot generally be
passed to the borrower) and determine if the required
number of payments per year have been made. Using
interest-paid-to is not an accurate method for this
scenario, as the Agent will be applying all, or
nearly all of the payments received to bring the
interest current.
(2) The Servicer must retain all Agent correspondence and
payment histories related to account research to
facilitate periodic the Owner audits.
(F) ANNUAL STATEMENTS (TAXES)
(1) At yearend, the Agent will provide IRS Form 1098
reporting to the borrower and an IRS Form 1099Int
statement to the Owner. These IRS Forms 1099 may
include a payment history and should be maintained in
the service file for future uses in audits, etc., to
minimize costs to the Owner. The IRS Forms 1099 may
be discarded, unless there is federal tax withholding
indicated, in which case the statement should be
referred to the Metropolitan Corporate Tax Officer.
(2) Where the Servicer maintains the impound account, in
order to comply with state regulations, the Servicer
must issue an Escrow Account Information form. This
form details the yearend information for the impound
account only, such as balance, disbursements,
deposits and interest. Where interest was posted, an
IRS Form 1099Int would also be issued for amounts
greater than $10.00.
(G) PAYOFF PROCESSING
(1) The Agent is required to issue all payoff quotes,
subject to the Servicer's approval of their quoted
figures. If the quoted amount, less any Agent fees,
satisfies the Owner's balance within $100.00, the
Servicer is allowed to accept the quote. If the
variance appears to be greater, an audit is required
to determine if there are missing payments, etc., to
the Owner. In addition, the Servicer may have to
re-state the corporate advances for inclusion on the
quote at this time.
(2) In the case of a partial, reverse partial, split
disbursement, or partial fractional account, the full
payoff amount will be disbursed to the Servicer
Servicing Requirements
Exhibit A to Flow Agreement
Page 26 of 59
who must then remit to the Remaindermen/Coowner(s).
In the case of full purchases or full fractionals,
any overage should be returned to the Obligor.
Further description of these payoff scenarios is
covered in the Partials Asset type section (Sec
9.04(G)).
(3) Servicer must retain all Agent correspondence and
payment histories related to payoff audits and
approvals to facilitate periodic Owner audits.
(H) RECONVEYANCE/SATISFACTION
(1) The Agent is responsible for executing, recording,
and delivering all satisfaction documents in the
event of borrower's full loan satisfaction.
(2) For Partial Asset types, upon satisfaction of the
Owner's interest prior to satisfaction of borrower's
full loan balance, the Servicer must execute an
assignment to the entitled party pursuant to the
applicable RPSA or subsequent assignments. The
Servicer must also send notification to the Agent to
redirect future payments to the entitled party.
(I) OTHER CUSTOMER SERVICE/CUSTOMER RELATIONS
(1) There is high potential for assumptions to occur on
these accounts without any Owner permission that may
be required by the security instrument. Because the
Agent is not required to monitor these activities,
they may accept new borrower information and update
their records, without notification to the Owner or
permission therefor. Upon discovery, the Servicer may
accept the transfer (due the time passed) and make
the appropriate update to the servicing system.
However, any release of liability issues must be
followed in accordance with Sec. 2.03(B) above.
SECTION 8.04 PERFORMING COLLECTIONS
(A) CUSTOMER CONTACT
(1) First contact borrower to verify amount and date paid
to Agent, then contact the Agent to verify receipt of
payment.
(2) Any discrepancy between information provided by
borrower and the Servicer information needs to be
researched by contact with the Agent.
(B) COLLECTIONS TIMELINE REQUIREMENTS
(1) The Servicer will perform all collections activities
as performed for similar Mortgage Loans as the Agent
provides no late notices, collection calls or
demands.
(2) Due to delay between the Agent's receipt of payment
and remittance to the Owner (via Servicer), all of
the Servicer's collections timelines should be
delayed by 10 calendar days from other similar
Mortgage Loans.
Servicing Requirements
Exhibit A to Flow Agreement
Page 27 of 59
(C) AVAILABLE REMEDIES; OWNER INVOLVEMENT
(1) All remedies allowed for other mortgage-type loans
apply. Verbal payment arrangements do not need to be
communicated with the Agent as the Agent does not
monitor any aspects of account delinquency.
(2) In the case of a Split Disbursement or Fractional
Asset, collection efforts must consider the
borrower's full payment obligation pursuant to the
promissory note and not only in consideration of the
terms stated in the applicable RPSA.
(3) Except in the case of collection of Servicer
Advances, the Servicer should never direct the
borrower to remit payments directly to Servicer.
(D) NOTIFICATION REQUIREMENTS
(1) All notifications sent to the borrower related to the
event of default/acceleration must also be sent to
the Agent or the Agent will continue to accept
payments.
SECTION 8.05 NON-PERFORMING COLLECTIONS
(A) COLLECTIONS TIMELINE REQUIREMENTS
(1) At this point of default, no consideration to delay
between Agent receipt of payment and remittance to
owner is required.
(B) AVAILABLE REMEDIES; PAYMENT PLANS, LITIGATION, METRO INVOLVEMENT
(1) At this point of default, many Agent Contracts can be
terminated. As this improves the overall process of
servicing these loans, the Servicer will explore this
option when notice of default is sent to borrower.
(C) LOAN RESOLUTION RESTRICTIONS/OPPORTUNITIES
(1) Should the borrower desire a workout/modification,
whether related to delinquency status or not, the
Servicer will require the closeout of the Agent
Contract, if permissible, to be a requirement of the
workout/modification.
In any event of closeout of the Agent Contract, the
Servicer will establish the appropriate servicing
system accounts in order to continue servicing as
non-outside serviced. If, due the nature of the Agent
Contract as stated above, the closeout is not
available, full disclosure of the final negotiated
workout should be made to the Agent, via certifiable
delivery.
(D) DEFAULT DISPOSITION
(1) If default results in repossession and the Servicer
is unable to closeout the Agent Contract during the
foreclosure process, the Servicer must send a
Servicing Requirements
Exhibit A to Flow Agreement
Page 28 of 59
copy of the foreclosure deed or declaration of
forfeiture to the Agent with request for final
invoice and original Custodian Documents.
Servicing Requirements
Exhibit A to Flow Agreement
Page 29 of 59
ARTICLE IX. PARTIAL, REVERSE PARTIAL, SPLIT DISBURSEMENT AND FRACTIONAL
ASSETS
DESCRIPTION:
(A) These are purchases of a portion of the cash flow associated with
a security instrument, the terms of which are detailed in the
Receivable Purchase & Sale Agreement (RPSA) or Option Agreement
found in the Servicing File for each loan. The Servicer is
responsible for tracking the Obligor's payment obligations on the
entire, or "full", balance under the terms defined by the security
instrument, i.e. Promissory Note, for applying the appropriate
amount of the Obligor's payment to the Owner's Asset account, and
for making disbursement of other portions of the Obligor's payment
to other parties ("Remaindermen") holding the remaining beneficial
interest in the security agreement not purchased by the Owner. The
Servicer's responsibility to track the full balance extends only
to the point where the Owner's Asset portion is fully satisfied.
The responsibility to track the full balance is limited in certain
cases of Outside Serviced loans.
(B) There are four common methods that the Owner has used to purchase
partial interests in receivables. In all cases, the Owner holds a
beneficial interest in the security instrument, while the original
beneficiary's interests are now limited to that which are defined
in the RPSA.
(1) An RPSA is created directly between the Owner and the
original beneficiary of the receivable.
(2) An RPSA is created between the Broker and the
original beneficiary of the receivable. The Owner
will then receive an assignment of that RPSA and the
security instrument from the Broker; the Broker is
assigning all of their roles and amounts purchased in
the RPSA to the Owner.
(3) An RPSA is created between the Broker and the
original beneficiary of the receivable. A second RPSA
is created for the Owner to purchase from the Broker.
This typically indicates that the Broker purchased an
amount larger than sold to the Owner, and there may
be two or more Remaindermen.
(4) Unlike the above, an older method may not have a
document specifically titled "Receivable Purchase &
Sale Agreement" but rather "Option Agreement." These
option agreements typically will have a typed in
section toward the middle of the document stating
"Metropolitan agrees to purchase $(dollar amount) of
the receivable for the amount listed below." Most
often, this reflects a method similar to the first
example.
(C) For loans to be serviced by the Servicer's Commercial Finance
Division, Owner shall provide Servicer with date in the form
attached hereto as Attachment 10 hereto.
Servicing Requirements
Exhibit A to Flow Agreement
Page 30 of 59
SECTION 9.01 PRODUCT TYPE EXAMPLES
(A) The following are examples in the form of cashflows. These refer
to a loan consisting of 180 installments until the loan would pay
in full (PIF). Either the Original Beneficiary of the receivable,
the broker, or a combination of the two could hold the remainder
position thus it is very important to read the RPSA(s) and
understand who is to receive what installment.
(1) PARTIAL - A Metropolitan company owns the "front end"
of the loan.
▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
(2) REVERSE PARTIAL - A Metropolitan company owns the
"back end" of the loan.
▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
(3) REVERSE PARTIAL/PARTIAL - A Metropolitan company owns
the "middle" of the loan.
▇-▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
157-180 Remaindermen
(4) SPLIT DISBURSEMENT - A Metropolitan company owns a
portion of each installment through the entire life
of the loan.
60% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
40% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
(5) SPLIT DISBURSEMENT/PARTIAL - A Metropolitan company
owns a portion of each installment on the "front end"
of the loan.
60% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
40% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
100% of 157-180 Remaindermen
(6) FULL FRACTIONAL - A Metropolitan company purchases a
specified percentage interest in the security
instrument, it has no interest in the
Servicing Requirements
Exhibit A to Flow Agreement
Page 31 of 59
additional percentage interested parties and is only
entitled to receive its fraction of the payment.
EXAMPLE: Three people obtain the interest of one
person in a Deed of Trust. Each of these people holds
a 1/3 interest in the security instrument. If
Metropolitan purchases the interest of one of these
three people, Metropolitan is co-owners of the
security instrument with the other two parties; i.e.
Metropolitan owns a 1/3rd interest.
33.3% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ (Co-owner 1
sold to Metropolitan)
66.7% of 1-180 Co-owners 2, 3
(7) PARTIAL FRACTIONAL - A Metropolitan company purchases
a portion of a specified percentage interest in the
security instrument, it has no interest in the
additional percentage held by the interested parties
and is only entitled to receive its fraction of the
payment. In the above example, if Metropolitan
purchased only 120 payment from one of the owners,
the cash flow would be as follows:
33.3% of ▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
33.3% of 121-180 Co-owner 1
66.4% of 1-180 Co-owners 2, 3
(8) CUSTOM - other combinations of the above may exist,
the following would be considered a Reverse
Partial/Split Disbursement.
100% of 1-24 Remaindermen
60% of ▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
40% of ▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
SECTION 9.02 PRIVATE LABEL REQUIREMENTS
(A) None required, except as addressed elsewhere in Sec. 8.01, such as
for Outside Serviced loans that may also be Partials.
SECTION 9.03 LOAN BOARDING REQUIREMENTS
(A) CUSTOMER RELATIONSHIPS
Servicing Requirements
Exhibit A to Flow Agreement
Page 32 of 59
(1) Contact with the Remaindermen is necessary for
servicing throughout life of loan and the Servicer is
required to maintain contact information on servicing
system.
(2) Fractionals have other interested parties
("Co-owners") whose contact information must be
maintained on servicing system.
(B) NON-STANDARD DATA ENTRY FIELDS
(1) Although only the partial amount of the full
receivable purchased by the Owner is considered in
the definition of "Asset" elsewhere in this
Agreement, most servicing functions related to the
borrower are done in context of the full receivable
balance.
The Servicer is required to track all balances
related to the full balance alongside the Owner's
Asset balance, except for Outside Serviced and
Fractionals where the Owner has not been servicing
the co-owner obligations.
(2) In the case of Outside Serviced Reverse Partial
products, no payments are remitted to the Servicer
during the pass-through period eliminating the
ability to systematically track the borrower's
performance on his full balance obligation. Servicer
is required to track the payment status of the
borrower's obligation during this period; this
process is further defined later in Sec 9.05(B)(3).
SECTION 9.04 CUSTOMER SERVICE/CUSTOMER RELATIONS
(A) OUTBOUND WELCOME CALL CAMPAIGN
(1) Welcome calls commonly made for other Mortgage Loans
are required, except for Outside Serviced loans as
addressed elsewhere in Sec. 8.03(A).
(B) INBOUND CALLS/WRITTEN REQUESTS FOR ACCOUNT INQUIRY
(1) Remaindermen and Co-owner(s) are considered
authorized parties and the Servicer must allow full
access to loan information to the same extent
provided the borrower.
(2) Servicer is required to provide a primary contact
person for Remainderman inquiries and respond within
one business day. Servicer will provide a separate
primary contact for assets serviced by the Servicer's
Commercial Finance Division.
(3) Servicer will provide Owner required account level
information to facilitate additional purchases of
existing partial cash flows within two business days.
Servicer will provide a separate primary contact for
assets serviced by the Servicer's Commercial Finance
Division.
Servicing Requirements
Exhibit A to Flow Agreement
Page 33 of 59
(C) PAYMENT PROCESSING
(1) The following is provided as a general description of
the practices used by the Owner related to payment
processing. The Servicer is required to implement
similar systems and procedures to effect similar
account balance tracking capability.
(a) PARTIALS ("FRONT END" PURCHASES)
FULL ACCOUNT (710) PARTIAL ACCOUNT (720)
------------------------- ---------------------------
DUE FROM BORROWER GL XXXXXXX PORTION DUE TO OWNER
o Full Principal Overnight Processing Principal and Overnight Processing o Partial Principal
Balance Interest applied Balance
o Interest to the 710 "flows o Partial Interest
o Advances, Fees, and down" to the GL,
Late Charges then to the 720
overnight.
------------------------- ---------------------------
The use of the 710 (Full) product type signifies that the Owner owns the current
cashflow and will revert (will be assigned) to the Remaindermen when the 720
(Asset) product type has been paid in full.
(b) REVERSE PARTIAL ("MIDDLE, OR BACK END"
PURCHASES), SPLIT DISBURSEMENT (PARTIAL
PURCHASE OF EACH INSTALLMENT), AND
FRACTIONAL WHERE CO-OWNER INTEREST IS
SERVICED
FULL ACCOUNT (712 OR 512) PARTIAL ACCOUNT (722 OR 522)
------------------------- ---------------------------
DUE FROM BORROWER GL XXXXXXX PORTION DUE TO OWNER
o Full Principal Overnight Processing Principal and Overnight Processing o Partial Principal
Balance Interest applied Balance
o Interest and/or to the 712 or 512 o Partial Interest
o Advances, Fees, and -flows down" to
Late Charges the GL, then split
between the 722 or
522 and/or a check
------------------------- ---------------------------
------------------------------------------------------
Servicer 123
$$$$
Payable to: Remainderman
Dollars and 00/100--------------------
Signature
------------------------------------------------------
712 and 512 accounts are used to either send pass-through installments to the
Remaindermen, or divide the funds received on the 712 or 512 between a check and
a 722 or 522 account.
Advances, fees, and late charges are tracked on the full account type but are
due to the Owner, or to the Servicer as allowed for in this Agreement. The
partials accounts track the principal and
Servicing Requirements
Exhibit A to Flow Agreement
Page 34 of 59
interest amount due to the Owner and represent the "Asset" as defined in the
definitions section of this Agreement.
There are six (6) types of disbursement rules for payment amounts received
(excluding required escrow impound amounts), as outlined in the table below. The
Servicer must develop processes to accommodate all 6 rules, including the
required interest income calculation and reporting as described in Sec.
9.04(F)(2).
----------------------------------------------------------------------------------------------------------------------
*RULE CODE DESCRIPTION
----------------- ----------------------------------------------------------------------------------------------------
E All excess received over scheduled principal and interest is disbursed to payee
----------------- ----------------------------------------------------------------------------------------------------
F Fixed amount is issued to payee, all else to Owner
----------------- ----------------------------------------------------------------------------------------------------
K Owner keeps a fixed amount of scheduled principal and interest, the balance of payment to payee
----------------- ----------------------------------------------------------------------------------------------------
N A percentage of the scheduled principal and interest to payee, remaining percent plus any
curtailments to Owner
----------------- ----------------------------------------------------------------------------------------------------
P A percentage of the amount received to payee; a minimum of one full scheduled payment must be
received prior to payee disbursement
----------------- ----------------------------------------------------------------------------------------------------
R A percentage of the remaining payment to payee after deducting Owner's fixed fees
----------------------------------------------------------------------------------------------------------------------
*The rule code is identified on the Owner's servicing system by the data item
"Pay Rule Type Identifier".
Pass through monies or disbursements to the remaindermen interest are required
to be remitted on the Thursday following the week in which the payment was
received, unless otherwise defined in the RPSA. No RPSA shall require Servicer
to disburse funds to a remainderman in the same business week in which said
funds were received. If defined under the RPSA, Servicer will disburse
accordingly. In the event the disbursement date is a non-business day, the
remittance will be made on the following business day.
(c) OUTSIDE SERVICED VERSIONS OF THE ABOVE EXAMPLES
ESCROW AGENT (FULL ACCOUNT) PARTIAL ACCOUNT (705)
DUE FROM BORROWER Escrow Agent Mails a Check PORTION DUE TO OWNER
----------------------------------------- -----------------------
o Full Principal Escrow Agent Co. 123 o Partial Principal
Balance $$$$ Balance
o Interest Payable to: Metropolitan Company o Partial Interest
o Late Charges Dollars and 00/100-------------------- o Advances, Fees,
and Late Charges
Signature
----------------------------------------- -----------------------
The Agent's primary responsibility will be to track the principal, interest, and
late charges due from the borrower. The Agent's principal balance should reflect
what is due from the borrower, thus our partial account principal balance should
be less than what the Agent shows as due.
Servicing Requirements
Exhibit A to Flow Agreement
Page 35 of 59
ESCROW AGENT (FULL ACCOUNT) RVS PARTIAL, SPLIT, OR FRACTIONAL (705)
DUE FROM BORROWER Escrow Agent Mails a Check PORTION DUE TO OWNER
----------------------------------------- -----------------------
o Full Principal Escrow Agent Co. 123 o Partial Principal
Balance and/or $$$$ Balance
o Interest Payable to: Metropolitan Company o Partial Interest
o Late Charges Dollars and 00/100-------------------- o Advances, Fees,
and Late Charges
Signature
----------------------------------------- -----------------------
------------------------------------------------------
Escrow Agent Co. 123
$$$$
Payable to: Remainder
Dollars and 00/100--------------------
Signature
------------------------------------------------------
In the case of an Outside Serviced Reverse Partial, the pass-through checks
would be issued direct to the Remaindermen from the Agent and then at the
appropriate time made to the Owner. On the other hand, if the account is some
type of fractional or split disbursement, two checks are to be generated by the
Agent (one to the Owner and the other to the Remaindermen).
(D) ESCROW/IMPOUNDS
(1) Escrow/Impounds are tracked on the full balance
account, not the partial (Asset) account.
(E) ADVANCES
(1) Advances are tracked on the full balance account, not
the partial (Asset) account.
(F) ANNUAL STATEMENTS (TAXES)
(1) Servicer must send IRS Forms 1098 to borrower
providing information relevant to the full balance,
not the Asset balance.
(2) For loans where disbursements were made during the
tax year from payments received from the borrower to
Remaindermen or Co-owners who are considered a
non-corporate entity, Servicer must issue an IRS Form
1099Int to all recipients of such disbursements. The
interest income amount, reportable in Box 1 of IRS
Form 1099Int, is based on an amortization of the
Remaindermen or Coowner's cashflow only.
The Servicer must develop processes where the total
amount of Remaindermen or Co-owner's disbursements
are amortized over the term of disbursement at the
same interest rate as the Note for the purposes of
tracking the required amount of reportable interest
income.
An exception to the IRS Form 1099Int requirement is
for Reverse Partial products where the pass through
disbursements are made to a broker as their
commission for the brokerage of the transaction, in
which case the
Servicing Requirements
Exhibit A to Flow Agreement
Page 36 of 59
Servicer must issue an IRS Form 1099Misc, reporting
the entire amount of disbursements issued during the
tax year to these brokers who are non-corporate
entities in Box 7 of such form.
(G) PAYOFF PROCESSING
(1) The Remaindermen owns the backend interest of the
cashflow. The Owner receives a designated net present
value through timely payment of scheduled future
payments by the borrower, as per the RPSA. Upon
satisfaction of the Owner's balance, interest and
fees, the account reverts to the Remaindermen.
The Servicer is required to execute an assignment and
send the originals, along with a status letter to the
Remaindermen for future servicing. The borrower must
also be notified of the new payment address.
(2) There are two types of payoffs:
(a) Paid in Full - The entire contract paid
in full by the borrower. This type
supplies enough cash to satisfy both the
Owner and all other remainder interest
holders.
When a full payoff is received prior to
the completion of either a pass through
period or the termination of the Owner's
partial interest, the Servicer must
provide remittance and tax reporting
documentation to the disbursement
recipients, the form and example of
which is provided at Attachment 7.
(b) Partial Payoff - There are two
subgroups, both of which signify that
the Owner's portion has been satisfied
but that the borrower is still liable to
pay the/an outstanding balance; often
referred to as 720-Only Payoff.
(i) Natural Partial Payoff - The
borrower makes the regularly
scheduled installments or an
accelerated amount of
installments. The scheduled
amount to be received by the
Owner has been received and
satisfied, the receivable is
assigned to the Remaindermen to
collect the outstanding
balance.
(ii) Remainder Buyback - The
Remaindermen exercises their
right as outlined in the RPSA
and pays the portion then due
to the Owner in order to own
the receivable in full. The
receivable is assigned to the
Remaindermen to collect the
outstanding balance. The amount
remitted by the Remaindermen
does not reduce the amount that
the borrower must repay.
Closeout statements must
reflect the correct amount that
the
Servicing Requirements
Exhibit A to Flow Agreement
Page 37 of 59
borrower must repay. This is
also called a Remainder
Repurchase.
(H) RECONVEYANCE/SATISFACTION
(1) In the event of a Partial Payoff, the Servicer will
execute an assignment to the entitled party pursuant
to the RPSA, and any excess repayment must be
forwarded to the Remaindermen.
(2) In the event of a full payoff, customary satisfaction
procedures apply.
SECTION 9.05 PERFORMING COLLECTIONS
(A) CUSTOMER CONTACT
(1) The primary contact is with the borrower as with
other Mortgage Loans, except in the case if Outside
Serviced as addressed elsewhere in this Agreement.
(B) COLLECTIONS TIMELINE REQUIREMENTS
(1) The Servicer's default timelines to be followed
similar to other Mortgage Loans, except in the case
of Outside Serviced as addressed elsewhere in this
Agreement at Sec 8.04(B).
(2) At 30 days past due, the Servicer must send Notice of
Delinquency to Remaindermen, the form of which is at
Attachment 8.
(3) In the case of Outside Serviced Reverse Partial
products, no payments are remitted to the Servicer
during the pass-through period eliminating the
ability to systematically track the borrower's
performance on his full balance obligation. Servicer
is required to track the payment status of the
borrower's obligation during this period in similar
manner to the following process:
(a) Servicer is required to contact the
Agent on a monthly basis to determine
and capture in the Servicer' servicing
system the following information as
reflected in the Agent's records:
(i) Next payment due;
(ii) Principal balance;
(iii) Total due;
(b) Using the borrower's payment status
during the pass-through period as
determined by this monthly Agent
contact, the Servicer will follow
default timelines similar to other
Mortgage Loans.
Servicing Requirements
Exhibit A to Flow Agreement
Page 38 of 59
(c) Additionally, during the process of
monthly Agent contact, the Servicer must
verify the Agent is prepared to redirect
payments to the Servicer if within 60
days of the Owner's first payment due,
as indicated by Owner's servicing system
field "Rev. Partial 1st Pmt Due". This
issue must be approached with the
appropriate consideration given to
Private Label requirements specified in
Sec. 8.01.
(C) AVAILABLE REMEDIES; OWNER INVOLVEMENT
(1) All remedies allowed for other Mortgage Loans apply.
However, the borrower is obligated to perform
according to the full terms of the promissory note.
regardless of the terms in the RPSA, and the Servicer
is required to seek remedies within the context of
the borrower's entire obligation.
For example, in the case of a Split Disbursement
where the borrower is required to remit $500 monthly
payment and the Servicer is required to apply $250 to
the Owner's asset account and disburse $250 to a
Remainderman, all collection activity must be
directed to collection of the $500 payment amount.
SECTION 9.06 NON-PERFORMING COLLECTIONS
(A) COLLECTIONS TIMELINE REQUIREMENTS
(1) In the event of foreclosure or litigation activity,
the Servicer is required to send notice to the
Remaindermen advising them of the default and to
refer to their RPSA for their options. Attempts to
contact the Remaindermen by phone are also required
to get their intent.
(B) AVAILABLE REMEDIES; OWNER INVOLVEMENT
(1) All remedies with the borrower allowed for other
mortgage-type loans apply. However, alternative
workout scenarios must be done with consideration of
the partial (Asset) balance rather than the full
balance. Although the borrower is obligated to
perform according to the full terms of the note, the
net present value impact to the Owner of alternatives
is relative to the outstanding amounts due on the
Asset balance.
For example, in the case of a Partial where the
unpaid principal balance due from the borrower under
the terms of the promissory note equals $50,000 and
the unpaid amounts remaining on the Owner's asset
account equals $10,000, collection activity must be
directed to collection of the $50,000, but the net
present value impact to the Owner need only consider
the asset account balance of $10,000.
Servicing Requirements
Exhibit A to Flow Agreement
Page 39 of 59
(2) Additionally, the Remaindermen is allowed to
repurchase the Owner's interest pursuant to the RPSA
and the Servicer is required to pursue as an option
to the extent this option is in the best interest of
the Owner.
(3) If the Remaindermen is unwilling or unable to
repurchase the Owner's interest and no workout is
pending with the borrower, the Servicer must notify
the Owner in order for the Owner to negotiate the
purchase of the remainder interest. Any request of
the Servicer from the Remaindermen for the Owner to
purchase the remainder interest must be forwarded to
the Owner for negotiation.
(4) All modifications are subject to the approval of the
Remaindermen and/or Co-owner(s), and the Servicer is
required to notify those interested parties prior to
execution of the modification, using the form of
notification as is in Attachment 9. If the interested
parties do not approve of the proposed modification,
the Servicer must renegotiate with the borrower.
SECTION 9.07 DEFAULT DISPOSITION
(A) If default results in repossession, the Remaindermen option for
repurchase of the Owner's interest extends into the
post-repossession period. Such options vary by different versions
of the RPSA and the Servicer is required to incorporate
consideration for these options into their existing REO
liquidation processes.
(B) Servicer will provide applicable notice to the Remaindermen of the
REO
(C) Servicer will determine payoff amount and distribution of proceeds
in accordance to the RPSA.
Servicing Requirements
Exhibit A to Flow Agreement
Page 40 of 59
ARTICLE X. OLD STANDARD LIFE INSURANCE COMPANY COMMERCIAL REAL ESTATE
ASSETS (OSL COMMERCIAL)
DESCRIPTION:
(A) These are loans originated by the Owner for commercial ventures or
development and funded by the subsidiary insurance company. They
are generally characterized by provisions in the loan structure to
include interest reserves, construction holdbacks, default
interest rates, exit or prepayment fees, and/or participation
agreements.
(B) Servicer will administer these loans in a manner similar to other
commercial Mortgage Loans with the following exceptions.
SECTION 10.01 PAYOFF PROCESSING
(A) All requests for payoff quotes will be forwarded to the Owner for
approval of quoted amount. In the event there is a discrepancy
between Owner's payoff amount and Servicer's payoff amount, Owner
shall provide Servicer with back-up data to support its
calculation.
(B) Upon receipt of scheduled full payoff payments, the Servicer will
notify the Owner for account review and approval for execution of
reconveyance documents.
SECTION 10.02 NON-PERFORMING COLLECTIONS
(A) At no later than 30 days delinquent, the Servicer will:
(1) Send all applicable notifications required by the
Contractual Requirements in order to initiate
foreclosure proceedings upon notice expiration.
(2) Change interest rate to the default rate as allowed
in the Contractual Requirements.
(3) Notify the Owner of delinquency status who will
provide direction of further action to take, which
may include executing modification terms as
determined by the Owner.
SECTION 10.03 REO MANAGEMENT
(A) All of the Servicer's actions related to property improvement
expenditures, sale and marketing of these Assets are subject to
the approval of the Owner, to the extent
Servicing Requirements
Exhibit A to Flow Agreement
Page 41 of 59
Owner's prior approval has not been obtained pursuant to
Servicer's property operating plan with respect to such Asset.
Servicing Requirements
Exhibit A to Flow Agreement
Page 42 of 59
ATTACHMENT 1
PRODUCT TYPE REFERENCE
This guide is to be used to relate the common descriptive terms used for the
various types of assets in Metropolitan's portfolio to the corresponding data
fields in Metropolitan's servicing system. Two data fields used to categorize
all assets are "Product Type" and "Receivable Subtype." Product Type is
generally used to describe the asset securing Metropolitan's interest in the
receivable while Receivable Subtype is generally used to describe the manner in
which the cash flow is structured. A combination of the two fields is assigned
to each asset in the portfolio and is used to group assets into descriptive
categories as presented in the following table:
----------------------------------------------------------------------------------------------------------------------
ASSET TYPE PRODUCT TYPES RECEIVABLE SUBTYPES
------------------------------------------------------ ---------------------------------- ----------------------------
Lottery 500 00502
522 (linked to 512) 00507
00508
00509
00510
00513
00514
00515
00516
00539
00540
00541
00543
00545
00546
00547
------------------------------------------------------ ---------------------------------- ----------------------------
Annuity 500 00501
522 (linked to 512) 00542
00548
00549
00552
------------------------------------------------------ ---------------------------------- ----------------------------
Structured Settlement 500 00529
522 (linked to 512) 00530
00532
00535
00536
------------------------------------------------------ ---------------------------------- ----------------------------
Miscellaneous Cash Flow 500 00574
522 (linked to 512) 00575
00576
00580
00581
------------------------------------------------------ ---------------------------------- ----------------------------
Bankruptcy; pre-petition 510 00511
----------------------------------------------------------------------------------------------------------------------
Servicing Requirements
Attachment 1
Page 43 of 59
----------------------------------------------------------------------------------------------------------------------
ASSET TYPE PRODUCT TYPES RECEIVABLE SUBTYPES
------------------------------------------------------ ---------------------------------- ----------------------------
Personal/Employee 515 00503
00504
00506
------------------------------------------------------ ---------------------------------- ----------------------------
Unsecured 516 any
------------------------------------------------------ ---------------------------------- ----------------------------
Timeshare 520 00521
525 00523
526 00524
00525
00526
00527
------------------------------------------------------ ---------------------------------- ----------------------------
Farm Subsidy 550 00550
00551
------------------------------------------------------ ---------------------------------- ----------------------------
Connecticut Tax Lien 590 00590
591
592
------------------------------------------------------ ---------------------------------- ----------------------------
Real Estate - Full (Metropolitan owns entire unpaid 700 00701
principal balance) 702 00702
703 00703
704 00704
705 00705
750 00706
755 00707
00708
00713
00724
00740
------------------------------------------------------ ---------------------------------- ----------------------------
Real Estate - Partial, Reverse ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇▇▇▇ owns a portion of the 720 (linked to 710) 00721
unpaid principal balance) 722 (linked to 712) 00722
00723
00725
00726
00728
00729
00741
00742
------------------------------------------------------ ---------------------------------- ----------------------------
Real Estate Owned (REO) Inventory 799 Any
----------------------------------------------------------------------------------------------------------------------
The following two tables provide the descriptive label for each Product Type and
Receivable Subtype as they currently exist in Metropolitan's servicing system.
Further definition or explanation for any product types can be obtained from
Metropolitan.
Servicing Requirements
Attachment 1
Page 44 of 59
Product Type Descriptions
----------------------------------------------------------------------------------------------------------------------
PRODUCT TYPE DESCRIPTION
------------------ ---------------------------------------------------------------------------------------------------
500 NON-SVO LOTTERY/ANNUITY/STRUC SETTLEMENT
------------------ ---------------------------------------------------------------------------------------------------
512 ALTRNTV CSHFLW FULL BAL W/MET & OTHR DISBURSEMENTS
------------------ ---------------------------------------------------------------------------------------------------
522 COMPANY ASSET FOR 512
------------------ ---------------------------------------------------------------------------------------------------
510 JUDGMENTS/BANKRUPTCIES
------------------ ---------------------------------------------------------------------------------------------------
515 PERSONAL/EMPLOYEE LOANS
------------------ ---------------------------------------------------------------------------------------------------
516 UNSECURED LOAN
------------------ ---------------------------------------------------------------------------------------------------
520 TIMESHARES
------------------ ---------------------------------------------------------------------------------------------------
525 TIMESHARES - LAWAI BEACH
------------------ ---------------------------------------------------------------------------------------------------
526 TIMESHARES - PONO KAI
------------------ ---------------------------------------------------------------------------------------------------
550 FARM SUBSIDY
------------------ ---------------------------------------------------------------------------------------------------
590 TAX LIENS
------------------ ---------------------------------------------------------------------------------------------------
591 SERVICE ONLY TAX LIENS
------------------ ---------------------------------------------------------------------------------------------------
592 TAX LIENS - MODIFIED
------------------ ---------------------------------------------------------------------------------------------------
700 FULL BALANCE CONTRACT REC.
------------------ ---------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ (▇-▇ ▇▇▇▇▇▇▇▇▇▇▇)
------------------ ---------------------------------------------------------------------------------------------------
703 LENDING (NON-RESIDENTIAL 1-4)
------------------ ---------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (▇-▇ ▇▇▇▇▇▇▇▇▇▇▇)
------------------ ---------------------------------------------------------------------------------------------------
705 OUTSIDE SERVICED LOANS
------------------ ---------------------------------------------------------------------------------------------------
710 PURCHASERS FULL BALANCE ON PARTIAL REC
------------------ ---------------------------------------------------------------------------------------------------
720 PARTIAL BALANCE/RECEIVABLE (COMPANY ASSET FOR 710)
------------------ ---------------------------------------------------------------------------------------------------
712 FULL BALANCE W MET & OTHER DISBURSEMENTS
------------------ ---------------------------------------------------------------------------------------------------
722 COMPANY ASSET FOR 712
------------------ ---------------------------------------------------------------------------------------------------
750 FHA CONTRACT RECEIVABLES
------------------ ---------------------------------------------------------------------------------------------------
755 VA CONTRACT RECEIVABLES
------------------ ---------------------------------------------------------------------------------------------------
799 EQUITY NON-RECEIVABLE
----------------------------------------------------------------------------------------------------------------------
Receivable Subtype Descriptions
----------------------------------------------------------------------------------------------------------------------
RECEIVABLE
SUBTYPE DESCRIPTION
------------------ ---------------------------------------------------------------------------------------------------
00501 ANNUITY-OWNER/PAYEE/BENEFICIARY CHG
------------------ ---------------------------------------------------------------------------------------------------
00502 LOTTERY-NO ANNUITY/COURT APPROVED
------------------ ---------------------------------------------------------------------------------------------------
00503 EMPLOYEE COMPUTER
------------------ ---------------------------------------------------------------------------------------------------
00504 EMPLOYEE OTHER
------------------ ---------------------------------------------------------------------------------------------------
00506 MISC EQUITY
------------------ ---------------------------------------------------------------------------------------------------
00507 LOTTERY SEC'D LN-COURT APPR/NO ANNUITY
------------------ ---------------------------------------------------------------------------------------------------
00508 LOTTERY-LOAN/COURT APPR/ANNUITY FUNDED
------------------ ---------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇ ▇▇▇▇▇ ORDER/TRUST ASSIGNMENT
------------------ ---------------------------------------------------------------------------------------------------
00510 ▇▇▇▇-▇▇▇ FUND/NO COURT ORD/▇▇▇▇ COMM APP
------------------ ---------------------------------------------------------------------------------------------------
00511 BANKRUPTCY
------------------ ---------------------------------------------------------------------------------------------------
00513 SWEEPSTAKES - ANNUITY FUNDED
----------------------------------------------------------------------------------------------------------------------
Servicing Requirements
Attachment 1
Page 45 of 59
----------------------------------------------------------------------------------------------------------------------
RECEIVABLE
SUBTYPE DESCRIPTION
------------------ ---------------------------------------------------------------------------------------------------
00514 SWEEPSTAKES - NO ANNUITY
------------------ ---------------------------------------------------------------------------------------------------
00515 ▇▇▇▇-NO ▇▇▇/NO COURT ORD/▇▇▇▇ COMM APP `
------------------ ---------------------------------------------------------------------------------------------------
00516 LOTTERY-COURT ORD/▇▇▇ FUNDED-TERM LIFE 1
------------------ ---------------------------------------------------------------------------------------------------
00521 SKIER'S EDGE
------------------ ---------------------------------------------------------------------------------------------------
00523 CABANNA CLUB
------------------ ---------------------------------------------------------------------------------------------------
00524 LAWAI BEACH - ACTIVE
------------------ ---------------------------------------------------------------------------------------------------
00525 NIHI ▇▇▇ ▇▇▇▇▇
------------------ ---------------------------------------------------------------------------------------------------
00526 EDGEWATER
------------------ ---------------------------------------------------------------------------------------------------
00527 POND KAI
------------------ ---------------------------------------------------------------------------------------------------
00528 STRUC SETTLE-PA CAT FUND
------------------ ---------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ VIT/ANNUITY FUNDED/TRUST ASGN
------------------ ---------------------------------------------------------------------------------------------------
00530 STRUC SETTLE-ANNUITY OWNER TRANSFER
------------------ ---------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇ ASGN/TERM LIFE
------------------ ---------------------------------------------------------------------------------------------------
00535 STRUC SETTLE-PAYEE & BENEFICIARY CHANGE
------------------ ---------------------------------------------------------------------------------------------------
00536 STRUC SETTLE-COURT ORD ASGN/BENE CHANGE
------------------ ---------------------------------------------------------------------------------------------------
00539 LOT LN-LOT COMM APPR/NO ANNUITY/BENE CHG
------------------ ---------------------------------------------------------------------------------------------------
00540 LOTTERY-ANNUITY FUNDED/COURT APPROVED
------------------ ---------------------------------------------------------------------------------------------------
00541 ▇▇▇▇ ▇▇-▇▇▇▇ COMM APPR/ANNUITY/BENE CHG
------------------ ---------------------------------------------------------------------------------------------------
00542 ANNUITY-DIRECT PMTS/BENE CHANGE
------------------ ---------------------------------------------------------------------------------------------------
00543 LOTLN-DUR OF PMTS/ANNUITY
------------------ ---------------------------------------------------------------------------------------------------
00545 LOT LN-DUR OF PMTS/NO ANNUITY
------------------ ---------------------------------------------------------------------------------------------------
00546 LOT LN-DIR OF PMTS/NO ANNUITY/BENE CHG
------------------ ---------------------------------------------------------------------------------------------------
00547 LOT LN-LOT COMM APPR/ANNUITY/TERM LIFE
------------------ ---------------------------------------------------------------------------------------------------
00548 ANNUITY/DIR PMTS/TEST AGREE
------------------ ---------------------------------------------------------------------------------------------------
00549 ANNUITY/PAYEE CHANGE/TERM LIFE
------------------ ---------------------------------------------------------------------------------------------------
00550 FARM SUBSIDY - PFC
------------------ ---------------------------------------------------------------------------------------------------
00551 FARM SUBSIDY - CRP
------------------ ---------------------------------------------------------------------------------------------------
00552 ANNUITY/IRREVOC DIR/BENE CHANGE
------------------ ---------------------------------------------------------------------------------------------------
00574 MISC/CASH FLOW/LOAN/PMT DIR
------------------ ---------------------------------------------------------------------------------------------------
00575 MISC/CASH FLOW/COURT ORD
------------------ ---------------------------------------------------------------------------------------------------
00576 MISC/CASH FLOW/IRREVOC PMT DIR
------------------ ---------------------------------------------------------------------------------------------------
00577 STRUC SETTLE-DIRECT PMTS/TEST AGREE
------------------ ---------------------------------------------------------------------------------------------------
00578 STRUC SETTLE-COURT ORD/TEST AGREE
------------------ ---------------------------------------------------------------------------------------------------
00580 MISCELLANEOUS LEASE CASH FLOWS
------------------ ---------------------------------------------------------------------------------------------------
00581 MISC CASHFLOW-LMTD PARTNERSHIP INTEREST
------------------ ---------------------------------------------------------------------------------------------------
00590 TAX LIENS
------------------ ---------------------------------------------------------------------------------------------------
00701 FULL
------------------ ---------------------------------------------------------------------------------------------------
00702 FULL OVERALL
------------------ ---------------------------------------------------------------------------------------------------
00703 FDIC/RTC PURCHASE
------------------ ---------------------------------------------------------------------------------------------------
00704 EQUITY
------------------ ---------------------------------------------------------------------------------------------------
00705 OUTSIDE SERVICED
------------------ ---------------------------------------------------------------------------------------------------
00706 ▇▇▇▇▇▇▇/▇▇▇▇▇▇
------------------ ---------------------------------------------------------------------------------------------------
00707 CORRESPONDENT - NON-CONFORMING
----------------------------------------------------------------------------------------------------------------------
Servicing Requirements
Attachment 1
Page 46 of 59
----------------------------------------------------------------------------------------------------------------------
RECEIVABLE
SUBTYPE DESCRIPTION
------------------ ---------------------------------------------------------------------------------------------------
00708 CORRESPONDENT - CONFORMING
------------------ ---------------------------------------------------------------------------------------------------
00709 EQUITY - NON-RECEIVABLE
------------------ ---------------------------------------------------------------------------------------------------
00713 WULA ORIGINATED
------------------ ---------------------------------------------------------------------------------------------------
00720 ▇▇▇▇▇▇▇ PARTIAL
------------------ ---------------------------------------------------------------------------------------------------
00721 PARTIAL
------------------ ---------------------------------------------------------------------------------------------------
00722 REVERSE PARTIAL
------------------ ---------------------------------------------------------------------------------------------------
00723 PARTIAL OVERALL
------------------ ---------------------------------------------------------------------------------------------------
00724 FRACTIONAL
------------------ ---------------------------------------------------------------------------------------------------
00725 PARTIAL FRACTIONAL
------------------ ---------------------------------------------------------------------------------------------------
00726 PARTIAL/PARTIAL PAYMENT
------------------ ---------------------------------------------------------------------------------------------------
00727 ADDT'L RECEIVABLES
------------------ ---------------------------------------------------------------------------------------------------
00728 REVERSE PARTIAL/PARTIAL
------------------ ---------------------------------------------------------------------------------------------------
00729 PARTIAL/PAYPRICE YIELD
------------------ ---------------------------------------------------------------------------------------------------
00739 SECURITIZATION REPO
------------------ ---------------------------------------------------------------------------------------------------
00740 SECONDARY MARKET POOLS
------------------ ---------------------------------------------------------------------------------------------------
00741 SPLIT DISBURSEMENT
------------------ ---------------------------------------------------------------------------------------------------
00742 SPLIT DISBURSEMENT PARTIAL
----------------------------------------------------------------------------------------------------------------------
Servicing Requirements
Attachment 1
Page 47 of 59
ATTACHMENT 2
BALLOON MORTGAGE NOTIFICATION
((SERVICER LETTERHEAD))
((Obligor name))
((Address 1))
((City)), ((ST)) ((Zip))
((Servicer name)) File No.
RE: Notice of Maturity/Balloon
Due Date: ((Balloon date))
Property: ((Collateral address))
Dear ((Obligor name)):
On the date indicated above, your loan matures and final payment of the balance
is due in full. Final payment must be made on or before ((Balloon date)) to:
((Servicer payment address))
Your final payment is estimated to be $ ((Balloon Payment)). THIS IS AN ESTIMATE
BASED ON THE TIMELY PAYMENT OF ALL SCHEDULED INSTALLMENTS COMING DUE BETWEEN THE
DATE OF THIS NOTICE AND THE DATE OF FINAL PAYMENT. To obtain an exact pay-off
quote, please make a request by one of the following methods: ((Servicer contact
information))
((Servicer name)) is currently offering programs to eliminate your balloon.
Taking care of your balloon now will help you avoid the rush and panic of
looking for new financing. If you are interest in finding out more about
((Servicer name)) programs please call ((Servicer contact telephone number)).
Sincerely,
((Servicer representative))
Servicing Requirements
Attachment 2
Page 48 of 59
ATTACHMENT 3
LOTTERY, ANNUITY, STRUCTURED SETTLEMENT, AND MISCELLANEOUS
CASH FLOW PAYOFF SATISFACTION NOTICE TO ORIGINAL BENEFICIARY
((SERVICER LETTERHEAD))
((Original Beneficiary))
((Address 1 ))
((City)), ((ST)) ((Zip))
RE: ((Payment Obligor))
((Owner name, i.e. Metropolitan company)) # ((Owner account number))
Dear ((Original Beneficiary)),
Please be advised your account with ((Owner name)) #((Owner account number)) has
been paid in full and closed. Please advise ((Payment Obligor)), in writing
that, your payments should now be sent to you or the current owner/assignee of
the payments.
Thank you for the opportunity to work with you. Please feel free to contact us
in the future should the need arise.
Sincerely,
((Servicer Representative))
Servicing Requirements
Attachment 3
Page 49 of 59
ATTACHMENT 4
FARM SUBSIDY PAYOFF SATISFACTION NOTICE TO COUNTY RECORDING OFFICE
RECORDATION REQUESTED BY:
Metropolitan CRP Trust 1997-A
((or PFC Trust 1997-A, throughout document))
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
WHEN RECORDED MAIL TO:
((Replace with Servicer name, address))
Metwest Mortgage Services, Inc.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Records Management 410002402 SPACE ABOVE THIS LINE IS FOR RECORDER'S USE ONLY
----------------------------------------------- ------------------------------------------------------
RELEASE
OF
NOTICE OF PURCHASE AND ASSIGNMENT AGREEMENT
NOTICE IS HEREBY GIVEN that the undersigned, Metropolitan CRP Trust
1997-A, located at ▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of Spokane, Washington,
hereby certifies and declares that the Notice of Purchase and Assignment
Agreement dated January 20, 2000 executed by ▇▇▇▇ ▇. ▇▇▇▇, located at ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, and recorded on February 1, 2000 in the
office of the county recorder of Otoe, in the State of Nebraska, in book 77, at
page 313, together with the debt secured by the Notice of Purchase and
Assignment Agreement, fully paid, satisfied,. released, and discharged, and that
the property secured by the mortgage has been released from the lien of the
Notice of Purchase and Assignment Agreement, to-wit:
For legal description see Exhibit "A" attached hereto and incorporated
herein by this reference.
Metropolitan CRP Trust 1997-A
By:
----------------------------------------
Southshore Corporation, Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary
((Replace with Servicer designee))
State of Washington )
) ss.
County of Spokane )
On this _____ day of __________, 2001, before me, _______________, the
undersigned officer, personally appeared ▇▇▇▇▇ ▇▇▇▇▇▇▇, who acknowledged
themselves to be the secretary of Southshore Corporation, as Trustee for
Metropolitan CRP Trust 1997-A, a corporation. and that they, as such secretary,
being authorized so to do, executed the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by themselves as
secretary.
Servicing Requirements
Attachment 4
Page 50 of 59
In witness whereof I hereunto set my hand and official seal.
_________________________________________________________
Notary Public in and for the State of Washington Residing
at ______________________________________________________
My Commission expires: ________________
Servicing Requirements
Attachment 4
Page 51 of 59
ATTACHMENT 5
FARM SUBSIDY PAYOFF SATISFACTION NOTICE TO FSA OFFICE
((SERVICER LETTERHEAD))
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ County FSA Office
((Replace with applicable FSA Office))
((Address 1))
((City)), ((ST)) ((Zip))
RE: ((Farm Producer/Operator))
To Whom It May Concern:
Regarding the above referenced assignment, please terminate the CCC - 36
assignment requested by ((Farm Producer/Operator)) ("our Seller'), for the
amount of $125,000.00 for the years 1998 through 2004 ((Replace with assignment
information from the applicable Contractual Requirement documents found in the
Servicing File)).
Please sign this letter where noted below, thereby acknowledging and agreeing to
make the change as requested. Please return the executed letter to Metropolitan
PFC Trust 1997-A ((or CRP Trust 1997-A)), at its address specified below,
together with any additional forms required by the FSA Office, necessary to
effectuate the aforesaid change.
Thank you for your cooperation and assistance in this matter. Sincerely.
Metropolitan PFC Trust 1997-A ((or CRP Trust 1997-A))
-------------------------------------------
By: Southshore Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇, Secretary
((Replace with Servicer designee))
Acknowledgement by((FSA Office))
-------------------------------------------
By:
Its:
Servicing Requirements
Attachment 5
Page 52 of 59
ATTACHMENT 6
FARM SUBSIDY PAYOFF SATISFACTION NOTICE TO FARM PRODUCER/OPERATOR
((SERVICER LETTERHEAD))
((Farm Producer/Operator))
((Address 1 ))
((City)), ((ST)) ((Zip))
Re: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ County FSA Office
((Replace with applicable FSA Office))
((Servicer))File #((Servicer account number))
Dear Sir or Madam:
Please be advised your account with Metropolitan PFC Trust 1997-A ((or CRP Trust
1997-A)) has been paid in full and is closed. A request for termination of the
CCC-36 assignment has been sent to ((FSA Office)).
Thank you for the opportunity to work with you.
Sincerely,
((Servicer representative))
Servicing Requirements
Attachment 6
Page 53 of 59
ATTACHMENT 7
EXAMPLE OF FULL PAYOFFS OF PARTIALS, REVERSE PARTIALS, SPLIT
DISBURSEMENT, AND PARTIAL FRACTIONALS PRIOR TO TERMINATION OF
PASS THROUGH PERIOD OR TERMINATION OF OWNER'S INTEREST
In the following example, the Owner purchased 120 payments of $440.43 each. The
Obligor has made 71 scheduled payment plus one principal reduction of $1,000 and
has incurred fees and late charges. In addition, there is $6.00 in his suspense
account. The account paid in full on 5/13/01, with interest paid to 4/1/01.
Part 1 of the worksheet captures the payoff information on the Obligor's
balance, including original status information. The beginning balance (A) is
amortized through the received cashflow, and the interest is calculated on the
ending balance. Fees and late charges are added to the payoff amount and
suspense funds are subtracted to determine the "Total to pay in full" (B).
Notice that the escrow account is not mentioned here. Since this amount is not
used to calculate the payoff, it does not need to be dealt with it on this
worksheet. If it had been used as a credit to payoff, it would have been
included as a credit on the worksheet as well.
Part 2 of the worksheet is used to calculate the payoff to the Owner, after the
amount due on the total note, as well as any overage of interest per diem to the
Obligor (C) is calculated on Part 1. Again, the original balance of the Owner's
120-payment partial (D) is captured and in this case, the Owner was to receive
100% of each of those 120 payments. The cashflow is amortized and the interest
due calculated on the remaining balance. Fees, late charges and suspense funds
are carried through to determine the total required to payoff the Owner's
interest (E). This total is subtracted from the amount received as payoff on the
Obligor's balance (F), less the Obligor's refund (G), where applicable. The
resulting amount (H) is owed to the Remainderman, whose SSN must be known to
report correctly the amount of interest income included in that payoff amount
(calculated in the table following the payoff calculation worksheet).
Upon completion of this task, the payoff disbursement check would be issued to
the Remainderman as well as the IRS Form 1099Int created with the reportable
amount in Box 1.
Servicing Requirements
Attachment 7
Page 54 of 59
Payoff Calculation Worksheets
PART 1:
FULL BALANCE INFORMATION
File Number: 123456
(A) Beginning Balance: $40,000
Payment: $440.43
Interest Rate: 12.0 %
Number and Amounts of Payments Received:
50 @ 440.43, 1 @ 1,440.43, 20 @ 440.43
Ending Balance $34,628.33
One Month's Interest 346.28 X 1 Months 346.28
Interest from to 5112/01 136.62
Per Diem 11.38 X 12 Days
Miscellaneous Charges 354.00
Late Charges 25.53
Unapplied Funds Balance 6.00
(B) Total to pay in full $35,484.76
Total Received 35,600.00
(C) Amount to be refunded to Obligor 115.24
Servicing Requirements
Attachment 7
Page 55 of 59
PART 2:
PARTIAL ACCOUNT INFORMATION
File Number: 12345
(D) Beginning Balance: $30,698.20
Payment Amount: $440.43
Interest Rate: 12%
Number and Amounts of Payments Received:
50 @ 440.43, 1 @ 1,440.43, 20 @ 440.43
Ending Balance $15,775.16
One Month's Interest 157.75 X 1 Months 157.75
Interest to 5/12/01 62.24
Per Diem 5.19 X 12 Days
Miscellaneous Charges 354.00
Late Charges 25.53
Unapplied Funds Balance 6.00
(E) Total to pay in full $16,380.68
(F) Amount Received 35,600.00
(G) Less Amount refunded to Obligor (from C) 115.24
(H) Refund to Remainderman 19,116.08
Remainderman: ▇▇▇▇ ▇▇▇▇▇
Tax ID Number: ###-##-####
Calculation of amount to include in Box 1 of IRS Form 1099Int. Amounts
determined from referenced worksheet items.
--------------------------------------------- -------------- ------------------------------------------- -------------
(A) Beginning Principal Full Contract 40,000.00 (B) Full Contract Total Due 35,484.76
(D) Partial Principal Amount Sold 30,898.20 (E) Total Due to Purchaser (Owner) 16,368.68
--------------------------------------------- -------------- ------------------------------------------- -------------
1 (A-D) Remainderman Retained Principal 9,031.80 2 (B-E) Difference Due to Remainderman 19,116.08
--------------------------------------------- -------------- ------------------------------------------- -------------
3 (2-1) Reportable Interest Income; Box 10,084.28
1, IRS Form 1099Int
------------------------------------------- -------------
Servicing Requirements
Attachment 7
Page 56 of 59
ATTACHMENT 8
REMAINDERMEN DELINQUENCY NOTIFICATION
((SERVICER LETTERHEAD))
((Account and delinquency information))
Dear((Remaindermen)),
The above-referenced account is in default for failure to pay mortgage loan
installments when due. The amount of this default, as of the date hereof, is
shown above.
This receivable was purchased by ((Owner name, i.e. Metropolitan company)), (the
"Company") pursuant to the terms of a receivable purchase and sale agreement
("Agreement").
You may repurchase this receivable by paying to the Company the amount due it
pursuant to the Agreement. The Agreement sets forth your rights should you elect
not to exercise this option, including time limitations affecting these rights.
If the mortgage loan default remains uncured, the Company has authorized
((Servicer)) to initiate foreclosure proceedings in less than thirty (30) days.
You should be aware that if ((Servicer)) does not hear from you within thirty
(30) days, preparation and completion of the foreclosure will reduce,
considerably or altogether, any remaining interest you might still hold in the
receivable.
If you would like more information on your options, or would like to repurchase
the receivable now, please call ((Servicer contact phone #)).
Sincerely,
((Servicer representative))
Servicing Requirements
Attachment 8
Page 57 of 59
ATTACHMENT 9
REMAINDERMEN MODIFICATION NOTIFICATION
((SERVICER LETTERHEAD))
Re: Account No.: ((Servicer account number))
Property Address: ((Collateral address))
Dear ((Remaindermen)),
((Owner, i.e. Metropolitan company)) has agreed to amend the above-mentioned
account with the purchaser ((Obligor)). Please sign the enclosed addendum to
indicate acceptance of this modification. If response has not been received
within ten (10) days of the date of this letter, it will be considered evidence
of agreement and approval.
If you have any questions, please feel free to contact ((Servicer contact
information)).
Very truly yours,
((Servicer representative))
Enclosure
Servicing Requirements
Attachment 9
Page 58 of 59
ADDENDUM TO RECEIVABLE PURCHASE & SALE AGREEMENT
THIS addendum is to be attached to and made a part of that certain
Receivable Purchase & Sale Agreement ("RPSA") dated ((date of applicable RPSA)),
made by and between, ((Original Beneficiary)) ("SELLER") and ((Owner, i.e.
Metropolitan company)), ("PURCHASER").
WHEREAS the Receivable is delinquent for ((Obligor's full balance
account delinquency information, to include total due from Obligor, and number,
amount, and dates of delinquent payments)).
WHEREAS the unpaid principal balance of the Receivable as of the date
of this Agreement is $((Obligor's full balance account unpaid principal
balance)).
WHEREAS the unpaid balance of the Amount Purchased by Purchaser is
$((Owner's Asset account unpaid principal balance, plus sums defined in this
sentence)), which sum includes interest to the date hereof on the unpaid
principal portion at the rate set forth in the Receivable (currently ((interest
rate))% per annum), from ((interest paid to date)), together with penalties and
late charges provided therein incurred by the Payor, and any additional expenses
incurred by Purchaser.
WHEREAS the Receivable is delinquent and to avoid foreclosure the Payor
desires to modify the terms of the Receivable. The RPSA is hereby amended as set
forth in the Amendment attached hereto as Exhibit A and incorporated herein by
this reference as though fully set forth.
EXCEPT as otherwise provided in this Agreement, the Receivable Purchase
& Sale Agreement shall remain unchanged.
IN WITNESS WHEREOF, the parties have signed and delivered this
Agreement this ____ day of __________, 2000.
SELLER: _______________
PURCHASER: _______________
Servicing Requirements
Attachment 10
Page 59 of 59
EXHIBIT B
SERVICING TRANSFER PROVISIONS
A. Prior to each Transfer Date:
1. The related Owner shall inform all flood and private mortgage
insurance companies and/or their agents providing insurance with respect to any
Mortgage Loan of the transfer and request a change in the loss payee mortgage
endorsement clause to the Subservicer's name. With respect to each Mortgage Loan
which is covered by a force placed insurance policy, the related Owner shall
cause such policy to be canceled as of the Transfer Date, and the Subservicer
shall cause such insurance to be provided by its force placed carrier as of such
Transfer Date. On each Transfer Date, the related Owner shall provide to the
Subservicer a list of all Mortgage Loans covered by force placed insurance that
will be canceled in connection with the transfer of servicing of such Mortgage
Loans to the Subservicer.
2. The Subservicer shall obtain transferable life-of-loan real estate
tax service contracts with either TransAmerica Real Estate Tax Service or First
American Real Estate Tax Service on all the Mortgage Loans.
3. If required by law, the related Owner shall, no later than fifteen
(15) days prior to the Transfer Date, cause the related Owner to inform all
Obligors of the change in servicer from the then current servicer to the
Subservicer by written notice in accordance with applicable law; provided,
however, the content and format of such letters shall have the prior approval of
the Subservicer. The related Owner shall promptly provide the Subservicer with
copies of all such notices. If the Asset is newly originated and if not required
by law, no such notice will be sent. Other than with respect to the initial pool
of Assets to be serviced under the
Flow Subservicing Agreement, the Owners shall
use their best efforts to have disclosures included in the documentation for
subsequent Asset originations providing that the related Obligors shall make
their initial payments with respect to such Asset to the Subservicer.
4. With respect to private mortgage insurance, hazard, flood,
earthquake and other insurance premiums for insurance covering any of the
Mortgage Loans, and real estate taxes for which bills have been received by the
related Owner prior to the Transfer Date, the related Owner will send to the
Subservicer, and the Subservicer will pay, any such bills and any bills received
by the Subservicer on or after the Transfer Date not paid by the Mortgagor or an
Owner, subject to Subservicer's rights to reimbursement under the
Flow
Subservicing Agreement and its limitation of liability set forth in Section
2.3(b) of the
Flow Subservicing Agreement.
5. The related Owner shall deliver to the Subservicer available
computer or like records of the related Owner reflecting the status of payments,
balances and other pertinent information on the Assets as of the Transfer Date
(such information shall include, but not be limited to, comprehensive tax and
insurance information for each Asset, identifying payee, payee address, next
payment due date, next amount payable, policy number/parcel number). Such
records shall include magnetic tapes reflecting all computer files maintained by
the related Owner with respect to the Assets, shall include hard copy trial
balance reports and schedules if
EXHIBIT B - Page 1
requested, and as reasonably required, by the Subservicer, shall be in a format
and storage medium acceptable for conversion to the Subservicer's servicing
computer system, and shall be delivered at least five (5) Business Days prior to
the Transfer Date, if such records exist. The Owners are not required to
maintain such records for Assets originated or acquired by the Owner within
fifteen (15) Business Days of the Transfer Date.
6. A hard copy of the asset file for each Asset (the "Servicing File"),
consisting of all documents available to the related Owner with respect to such
Asset, including original credit files held by the related Owner, to be
delivered within five (5) Business Days after the Transfer Date. In addition,
upon the Subservicer's reasonable request, the related Owner shall assist the
Subservicer in all reasonable respects in the Subservicer's efforts to obtain
any additional documents or information necessary to enable the Subservicer to
service the Assets properly. The related Owner shall be responsible for curing
all document deficiencies necessary to fulfill its obligations under the
Flow
Subservicing Agreement. If the deficiency has not been cured in a timely manner
and is preventing the proper servicing of an Asset, the Subservicer may cure
such deficiencies and shall be reimbursed by the related Owner for costs
incurred in connection therewith.
7. With respect to Assets for which the Obligor is in bankruptcy, the
related Owner shall provide the Subservicer with the following information in
electronic form: attorney name, address and phone number, foreclosure status,
bankruptcy status and bankruptcy case number, filing date and chapter. In
addition, Subservicer shall notify the bankruptcy trustee with respect to each
related Asset of the change in servicer from the related Owner to the
Subservicer and shall provide the Subservicer with copies of such notices.
B. After each Transfer Date:
1. Within five (5) Business Days after the Transfer Date, the related
Owner will deliver to the Subservicer reports setting forth all Loan
escrow/impound balances as of the Transfer Date, reporting all unposted payments
and unearned fees which are deemed collected as of the Transfer Date, and
including a reconciliation of such escrow/impound balances; provided, however,
that if the Asset was originated or acquired by the Owner within fifteen (15)
Business Days of the Transfer Date such information need not be provided.
8. The related Owner shall deliver to the Subservicer any
correspondence received by the related Owner relating to the Assets after the
Transfer Date, such as tax bills, insurance bills, Obligor letters and the like.
Such items shall be forwarded to the Subservicer within five (5) Business Days
following the day on which the correspondence is received by the related Owner .
The correspondence shall be forwarded to the Subservicer via overnight courier
for the first sixty (60) days subsequent to the Transfer Date and via regular
mail thereafter.
9. The related Owner shall deliver to the Subservicer any payments on
the Assets received by the related Owner from the related Obligors for a period
of seventy-five (75) days following the Transfer Date. The related Owner shall
forward or cause the related Owner to forward any such payment to the
Subservicer via overnight courier within two (2) Business Days after the related
Owner's or the related Owner's receipt thereof. Thereafter, the related Owner
shall return to the related Obligors any payments on the Assets received by the
related Owner.
EXHIBIT B - Page 2
10. The related Owner shall prepare and send (or cause to be prepared
and sent), in accordance with the provisions of the
Flow Subservicing Agreement,
Internal Revenue Service Form 1098's and 1099's to all Obligors for the period
from January 1 of the year in which the Transfer Date occurs through the
Transfer Date.
11. Unless the related Asset was originated or acquired by the Owner
within fifteen (15) Business Days of the related Transfer Date, no later than
one (1) Business Day after the Transfer Date, the related Owner shall deliver to
the Subservicer, copies of all investor cut-off or accounting reports as of the
Transfer Date relating to the Assets transferred on such Transfer Date,
including a trial balance and reports of collections, delinquencies,
prepayments, curtailments, escrow payments, escrow balances, partial payments,
partial payment balances and other like information on the Assets.
EXHIBIT B - Page 3
EXHIBIT C
SERVICING AND DEBOARDING FEES
The Subservicer shall be entitled to the following Servicing Fees for each Asset
subject to the
Flow Subservicing Agreement for the related month (or portion
thereof).
OCWEN RESIDENTIAL SERVICING FEES
APPLICABLE TO ALL ASSETS OTHER THAN COMMERCIAL MORTGAGE LOANS REO
SERVICED BY THE COMMERCIAL FINANCE DIVISION PURSUANT TO EQUAL TO OR METRO REO OCWEN
SECTION 2.1(g) LESS THAN 90 GREATER THAN 90 MANAGED MANAGED
-----------------------------------------------------------------------------------------------------------------------
Fulls Residential $ 15.00 $ 80.00 $ 90.00 $125.00
CNC Fulls - Contract Acquisition Residential $ 15.00 $ 80.00 $ 90.00 $125.00
CNC Outside Serviced - Contract Acquisition Residential $ 30.00 $160.00 $ 90.00 $125.00
CNC Partials - Contract Acquisition Residential $ 30.00 $160.00 $ 175.00 $250.00
CNC Outside Serviced Partials - Contract Acquisition Residential $ 30.00 $160.00 $ 175.00 $250.00
----------------------------------------------------------------------------------------------------------------------
ALTERNATIVE CASHFLOWS MONTHLY
----------------------------------------------------------------------------------------------------------------------
Lotteries $10.00
Farm Subsidies $10.00
Annuities $10.00
Structured Settlements (Assignable) $10.00
Timeshares $ 15.00 $ 80.00 $ 90.00 $125.00
----------------------------------------------------------------------------------------------------------------------
OCWEN COMMERCIAL SERVICING FEES
APPLICABLE ONLY TO COMMERCIAL MORTGAGE LOANS REO
SERVICED BY THE COMMERCIAL FINANCE DIVISION EQUAL TO OR METRO REO OCWEN
PURSUANT TO SECTION 2.1(g) LESS THAN 90 GREATER THAN 90 MANAGED MANAGED
----------------------------------------------------------------------------------------------------------------------
Principal Balance up to $1,000,000 $205.00 $500.00 $750.00 $1,250.00
Principal Balance $1,000,001 to $3,000,000 $290.00 $600.00 $850.00 $1,550.00
Principal Balance $3,000,001 or Greater $375.00 $700.00 $950.00 $2,500.00
EXHIBIT C - Page 1
DEBOARDING FEES
PERIOD FOLLOWING THE DATE ON
WHICH ASSET MADE SUBJECT TO DEBOARDING FEE DEBOARDING FEE
FLOW SUBSERVICING AGREEMENT (RESIDENTIAL DIVISION)(1) (COMMERCIAL DIVISION)(2)
---------------------------- ------------------------- ------------------------
0 - 12 months $25 per Asset $1,000 per Commercial
Mortgage Loan(3)
13 - 24 months $15 per Asset $ 500 per Commercial
Mortgage Loan(4)
25 months and thereafter $ 0 per Asset $ 0 per Commercial
Mortgage Loan
----------
(1) Includes any Assets, including Commercial Mortgage Loans, serviced by
the residential servicing division of the Subservicer.
(2) Includes only Commercial Mortgage Loans serviced by the commercial
finance division of the Subservicer.
(3) For loans with an unpaid principal balance of less than $300,000 as of
the Transfer Date, the fee shall be $500.
(4) For loans with an unpaid principal balance of less than $300,000 as of
the Transfer Date, the fee shall be $250.
EXHIBIT C - Page 2
EXHIBIT D
ANCILLARY INCOME ALLOCATION
COMMERCIAL ANCILLARY INCOME RECIPIENT
--------------------------- ---------
Participating Fees* Owner
Exit Fees* Owner
Equity Participation* Owner
Deferred Origination* Owner
Deed Release* Owner
Pre-approved Modifications & Extension* Owner
Extension Fees - Current Account* Owner
Default Interest* Owner
Prepayment Penalties* Owner
Pledge of Stock (or other cash or income producing security)* Owner
Late Fees Subservicer
Modification Fee (1%) (1) Subservicer
Nonperforming Commercial Mortgage Loan Disposition Subservicer/Ocwen(3)
Fee (0.50%) (2)
REO Disposition Fee (1%) Subservicer/Ocwen(3)
----------
* Provisions for these actions and fees are set forth in the related loan
documents
(1) Only payable to the Subservicer to the extent collected from the
related Obligor.
(2) Applicable to all Commercial Mortgage Loans that are 90 or more days
delinquent that are either reinstated or resolved through a payoff or
negotiated settlement as approved by the Owner.
(3) Fee shall be split between the Subservicer and the Owner in accordance
with the following general guidelines or as otherwise mutually agreed
by the Owner and the Subservicer: (a) if the Owner was the lead in
negotiating, documenting and closing the transaction, the Subservicer
would receive up to 50% of the applicable fee, (b) if the Owner was
involved, but not the primary participant in negotiating, documenting
and closing the transaction, the Subservicer would receive 75% of the
applicable fee, or (c) if the Owner was only involved to a minor
extent, the Subservicer would receive 100% of the applicable fee. On or
prior to February 1, 2002, the Subservicer and the Owners agree to
consult and cooperate in determining whether any specific changes
should be made to the foregoing fee splitting procedure based on the
experience to date.
EXHIBIT D - Page 1
EXHIBIT E
SERVICING FILE SPECIFICATIONS
CONTENTS OF LOAN FILES
A. With respect to each Mortgage Loan, the Loan File shall include each of the
following items:
1. Copy of the original Promissory Note.
2. Copy of the original recorded Mortgage or Deed of Trust or certified
true copy of the Mortgage submitted for recording if the original recorded
Mortgage has not yet been returned.
3. A copy of the original recorded Assignment of Mortgage to the
related Loan Owner if the Loan Owner is not the Mortgagee or beneficiary under
the original Mortgage or Deed of Trust executed by the assignor, and, if
required by Servicing Requirements, recorded. Subject to the foregoing and to
Servicing Requirements, such assignments may be by blanket assignments for
Mortgage Loans covering Mortgaged Properties situated within the same county.
4. Copy of the original policy of lender's title insurance, if
applicable.
5. Evidence of all Insurance Policies and Insurance Agreements, if
applicable.
6. Copy of the original of each assumption, extension, forbearance and
modification agreement, if any.
7. Copy of the original recorded intervening Assignments of Mortgage,
if any.
8. Original copy of the hazard insurance policy or certificate thereof,
if applicable and, in certain instances any evidence of flood insurance, with
extended coverage of the hazard insurance policy which may be appropriate.
9. Residential or commercial appraisal, as applicable, if any.
10. Origination documents, if applicable, not available on seller
financed portfolio or certain pool acquisitions:
A. Loan application;
B. Credit Report;
C. Preliminary Title Report and/or Commitment for Title
Insurance. Copies of easements and/or restrictions
and Tax Search sheet, if applicable; and
D. Loan Commitment, if any.
EXHIBIT E - Page 1
11. Closing certificates (for residential loans, if applicable, will
not be available on seller financed, employee loan portfolio or certain pool
acquisitions:
A. Executed Truth in Lending statement pursuant to
Federal Reserve Board Regulation Z;
B. Notices pursuant to the Equal Credit Opportunity Act
and Federal Reserve Board Regulation B, as amended;
C. Form HUD-1 (Real Estate Settlement Procedures Act);
D. If a refinance Mortgage, copy of the notice of right
to rescind, signed and dated; and
E. Sale contract/deposit receipt, or escrow
instructions, as required.
12. Other papers and records developed or originated by the Seller or
others, required to document the Mortgage Loan or to service the Mortgage Loan
pursuant to Metwest Servicing Requirements.
13. In addition, with respect to Commercial Mortgage Loans:
a. A copy of the original security agreement,
if any, and of any intervening assignment
thereof in recordable form to the Loan Owner
and all intervening assignments showing an
unbroken chain of assignment from the
originator thereof to the Person assigning
such security agreement to the Loan Owner.
b. A copy of the original of the related
assignment of leases, if any (if such item
is a document separate from the Mortgage)
and of any intervening assignments thereof
that precede the assignment to the Loan
Owner, in each case with evidence of
recording indicated thereon showing an
unbroken chain of assignment from the
originator thereof to the person assigning
such assignment of leases to the Loan Owner.
c. A copy of an original assignment of any
related assignment of leases (if such item
is a document separate from the Mortgage),
in recordable form to the Loan Owner.
d. Copies of filed copies of any prior UCC
financing statements in favor of the
originator of such Commercial Mortgage Loan
or in favor of any assignee prior to the
Loan Owner, if any, and copies of the
original UCC-2s or UCC-3s, as appropriate,
in favor of the Loan Owner in each case,
perfecting a security interest in personal
property.
EXHIBIT E - Page 2
e. A copy of any related loan agreement, ground
lessor recognition agreement, collateral
lease, management agreement, guaranty,
collateral assignment or other similar
agreements made for the benefit of the
originator of such Commercial Mortgage Loan,
if any, and, if separate from the Mortgage,
original assignments thereof in favor of the
Loan Owner (and all intervening
assignments).
f. Broker Price Opinions, if any.
g. Mortgage Loan histories, if any.
h. Environmental consultant's reports, if any.
i. Pleadings and correspondence relating to
foreclosure or collection efforts, if any.
j. Correspondence with borrower relating to
default or collection efforts, if any.
k. Property inspections, if any.
l. Operating statements, if any.
m. Borrower financial statements, if any.
B. With respect to Mortgage Loans that are Land Sale Contracts:
1. Copy of the original Land Sale Contract with evidence of recording
indicated thereon or if the evidence of recording is not indicated on such Land
Sale Contract, a Memorandum of Land Sale Contract with evidence of recording
indicated thereon, or appropriate recorded copy of the original Warranty Deed to
Seller.
2. A copy of the assignment of Land Sale Contract to the related Loan
Owner executed by the assignor, and, if required by Servicing Requirements,
recorded.
3. Copy of the original title insurance policy (or duplicate policy)
or, if the original title insurance policy has not been issued, the irrevocable
commitment to issue the same.
4. Copies of all assumption, modification and substitution agreements
in those instances where the terms or provisions of the Land Sale Contract have
been modified or assumed.
5. Copy of warranty deed in the name of the related Loan Owner, if not
included in the assignment of Land Sale Contract.
EXHIBIT E - Page 3
6. Copies of all original recorded intervening assignments, if any, of
the Land Sale Contract, with recording information thereon, showing a complete
chain of assignment from the originator of the Land Sale Contract to the related
Loan Owner.
7. To the extent contained in the file, in the case of each Land Sale
Contract relating to a Commercial Property, filed copies of prior UCC financing
statements, if any, in favor of the originator of such Mortgage Loan or in favor
of any assignee prior to the related Loan Owner and original UCC-2s or UCC-3s,
as appropriate, in favor of the related Loan Owner.
8. To the extent contained in the file, in the case of each Land Sale
Contract relating to a Commercial Property, copies of the related loan
agreement, ground lessor recognition agreement, collateral lease, management
agreement, guaranty, collateral assignment or other similar agreements made for
the benefit of the originator of such Mortgage Loan, if any, and, if separate
from the Mortgage, copies of the original assignments thereof in favor of the
related Loan Owner.
9. Residential or commercial appraisal, as applicable, if any.
10. Origination documents, if applicable, not available on seller
financed portfolio or certain pool acquisitions
a. Loan application;
b. Credit Report;
c. Preliminary Title Report and/or Commitment
for Title Insurance. Copies of easements
and/or restrictions and Tax Search sheet, if
applicable; and
d. Loan Commitment, if any.
11. Closing certificates (for residential Land Sale Contracts, if
applicable)- not available on seller financed portfolio, employee loans or
certain pool acquisitions:
a. Executed Truth in Lending statement pursuant
to Federal Reserve Board Regulation Z;
b. Notices pursuant to the Equal Credit
Opportunity Act and Federal Reserve Board
Regulation B, as amended;
c. Form HUD-1 (Real Estate Settlement
Procedures Act);
d. If a refinance Mortgage, copy of the notice
of right to rescind, signed and dated; and
e. Sale contract/deposit receipt, or escrow
instructions, as required.
EXHIBIT E - Page 4
12. Other papers and records developed or originated by the Seller or
others, required to document the Land Sale Contracts or to service the Land Sale
Contracts pursuant to Metwest Servicing Requirements.
C. With respect to each Non-Mortgage Loan, the Loan File shall include each of
the following items:
1. Copy of the original note, when applicable.
2. Copy of the original security agreement or similar agreement
granting a security interest in collateral.
3. Evidence of all Insurance Policies and Insurance Agreements, if any.
4. Copy of the original of each assumption, extension and modification
agreements, if any.
5. Collateral appraisal, if applicable.
6. Origination documents, if any:
a. Loan application;
b. Credit Report; and
c. Loan Commitment, if any.
7. Other papers and records developed or originated by the Seller or
others, required to document the Non-Mortgage Loan or to service the
Non-Mortgage Loan pursuant to Metwest Servicing Requirements.
8. In addition, with respect to Timeshare Loans:
a. Copy of the original Promissory Note.
b. Copy of the original recorded Mortgage or
Deed of Trust or certified true copy of the
Mortgage submitted for recording if the
original recorded Mortgage has not yet been
returned.
c. A copy of the original recorded Assignment
of Mortgage to the related Loan Owner if the
Loan Owner is not the Mortgagee or
beneficiary under the original Mortgage or
Deed of Trust executed by the assignor, and,
if required by Servicing Requirements,
recorded. Subject to the foregoing and to
Servicing Requirements, such assignments may
be by blanket assignments for Mortgage Loans
covering Mortgaged Properties situated
within the same county.
EXHIBIT E - Page 5
d. Copy of the original of each assumption,
extension and modification agreements, if
any.
e. Copy of the original recorded intervening
Assignments of Mortgage, if any.
f. Other papers and records developed or
originated by the Seller or others, required
to document the Mortgage Loan or to service
the Mortgage Loan pursuant to Metwest
Servicing Requirements.
9. In addition, with respect to Lottery Loans :
A. Copy of Court Order, certified true and correct copy
from issuing court, if applicable.
B. Copy of original promissory note, if applicable.
C. Security Agreement, if applicable.
D. To the extent contained in the file, in the case of
each Alternative Cashflow Transaction relating to a
Lottery loan transaction or other collateral loan,
filed copies of prior UCC financing statements, if
any, in favor of the originator of such Lottery loan
transaction or other collateral loan or in favor of
any assignee prior to the related Loan Owner and
original UCC-2s or UCC-3s, as appropriate, in favor
of the related Loan Owner.
E. Loan Agreement, if applicable.
F. Acknowledgement letter from Lottery Commission,
Annuity Owner, or Payment Obligor, if applicable, if
any, in favor of the originator of such Lottery Loan
or other collateral loan or in favor of any assignee
prior to the related Loan Owner and original UCC-2s
or UCC-3s, as appropriate, in favor of the related
Loan Owner.
G. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
LOTTERY ASSIGNMENTS:
A. Copy of Court Order, certified true and correct copy
from issuing court, if applicable.
B. Copy of Annuity Policy, if applicable.
C. Copy of original Lottery Prize Assignment between
Broker and Seller (prize winner), if applicable.
EXHIBIT E - Page 6
D. To the extent contained in the file, in the case of
each Alternative Cashflow Transaction relating to a
Assignable Lottery transaction or other collateral
loan, filed copies of prior UCC financing statements,
if any, in favor of the originator of such Assignable
Lottery transaction or other collateral loan or in
favor of any assignee prior to the related Owner and
original UCC-2s or UCC-3s, as appropriate, in favor
of the related Owner.
E. Acknowledgement letter from Lottery Commission,
Annuity Owner, or Payment Obligor, if applicable.
F. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
LOTTERY TRUST TRANSACTIONS:
A. Signed copy of the trust agreement.
B. Copy of Court Order, certified true and correct copy
from issuing court, if applicable.
C. Copy of original promissory note, if applicable.
D. Security Agreement, if applicable.
E. To the extent contained in the file, in the case of
each Alternative Cashflow Transaction relating to a
Lottery trust transaction, filed copies of prior UCC
financing statements, if any, in favor of the
originator of such Lottery trust or in favor of any
assignee prior to the related Loan Owner and original
UCC-2s or UCC-3s, as appropriate, in favor of the
related Loan Owner.
F. Loan Agreement, if applicable.
G. Acknowledgement letter from Trustee in favor of the
originator of such transaction or any assignee prior
to the related Loan Owner.
H. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
JUDGMENT TRANSACTIONS:
A. Filed copy of the judgment against the city/county,
etc.
B. Signed copy of the settlement agreement, if any.
C. Complete copy of the annuity policy, if any.
D. UCC, judgment and lien search made on the seller.
EXHIBIT E - Page 7
E. Affidavit made by the seller.
F. Notice of assignment and direction of payments.
G. Payment distribution letter (pass-thru letter), if
needed.
H. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
ANNUITY TRANSACTIONS:
A. Copy of Annuity Policy, if applicable.
B. Copy of original Assignment Agreement between Broker
and Seller (prize winner), if applicable.
C. To the extent contained in the file, in the case of
each Alternative Cashflow Transaction relating to a
Assignable Annuity transaction or other collateral
loan, filed copies of prior UCC financing statements,
if any, in favor of the originator of such Assignable
Annuity transaction or other collateral loan or in
favor of any assignee prior to the related Owner and
original UCC-2s or UCC-3s, as appropriate, in favor
of the related Owner.
D. Acknowledgement letter from Annuity Owner, or Payment
Obligor, if applicable.
E. Copy of Court Order, certified true and correct copy
from issuing court, if applicable.
F. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
MISCELLANEOUS CASHFLOW TRANSACTIONS:
A. To the extent contained in the file Copy of Court
Order, certified true and correct copy from issuing
court, if applicable.
B. To the extent contained in the file Copy of original
Assignment Agreement, Loan Agreement and Security
Agreement between Broker and Seller (prize winner),
if applicable.
C. To the extent contained in the file, a copy of the
original Promissory note and accompanying
endorsements.
D. To the extent contained in the file, in the case of
each Miscellaneous Cashflow Transaction relating to a
Miscellaneous Cashflow transaction or other
collateral loan, filed copies of prior UCC financing
statements, if
EXHIBIT E - Page 8
any, in favor of the originator of such Miscellaneous
Cashflow transaction or other collateral loan or in
favor of any assignee prior to the related Owner and
original UCC-2s or UCC-3s, as appropriate, in favor
of the related Owner.
E. Acknowledgement letter from Annuity Owner, or Payment
Obligor, if applicable.
F. Receivable Purchase and Sale Agreements between
Seller and/or Broker and Metropolitan affiliated
company.
FARM SUBSIDY TRANSACTIONS:
1. Conservation Reserve Payment Program CRP - documentation
requirements:
A. Copy of Sellers most recent Farm Operating
Plan/Financial Statement.
B. Signed copy of Highly Erodible Land Conservation
(HELC) and Wetland Conservation (WC) Certificate.
C. Copy of original Certificate Purchase and Assignment
Agreement.
D. Copy of Testamentary Agreement.
E. Copy of original Assignment of Payments (Form Ccc-36)
executed by the ▇▇▇▇▇▇.
F. Copy of written approval of assignment from the FSA
Office.
G. Copy of original signed Notice of Purchase and
Assignment Agreement from ▇▇▇▇▇▇.
2. Production Flexibility Contract Program - PFC documentation
requirements:
A. Copy of Sellers most recent Farm Operating
Plan/Financial Statement.
B. Copy of original Highly Erodible Land Conservation
(HELC) and Wetland Conservation (WC) Certificate.
C. Copy of original executed update to Operating Plan,
Form CCC-502 Or CCC-502ez, if any.
D. Copy of original Production Flexibility Contract
(Form CCC-478).
E. Copy of original Production Flexibility Contract
Payments Form.
F. Copy of original Form FSA-156ez (Printout From The
FSA Office).
EXHIBIT E - Page 9
G. Copy of original Sale, Assignment Form & Testamentary
Agreement between ▇▇▇▇▇▇ & FCC(Farm Capital Corp.).
H. Copy of original Assignment Of Payments (Form CCC-36)
executed by the ▇▇▇▇▇▇.
I. Copy of original written approval of assignment from
the FSA office.
J. Copy of signed Notice of Purchase and Assignment
Agreement from ▇▇▇▇▇▇.
EXHIBIT E - Page 10