Exhibit 10.5
MORTGAGE SERVICING AGREEMENT
THIS AGREEMENT made and entered into this_ day of _____________, 1996
between UNITED MORTGAGE TRUST, a Maryland real estate investment trust, having
its principal place of business at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxx 00000, hereinafter called "Investor" and SOUTH CENTRAL
MORTGAGE, INC., a corporation duly organized under the laws of Texas, and
having its principal place of business at 0000 X. Xxxxxxxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxx 00000, hereinafter called the "Servicer":
WITNESSETH:
WHEREAS, Investor has acquired or may acquire as holder and owner,
certain notes secured by deeds to secure debt, deeds of trust, and mortgages
on real property and the parties hereto contemplate that Servicer shall, in
the manner as herein provided, service such notes, deeds to secure debt, deeds
of trust, and mortgages subject to the terms hereof, all of which instruments
are hereinafter sometimes referred to as "mortgages"; and
WHEREAS, Investor desires Servicer to service the mortgages in the
manner as herein provided and to manage the premises covered thereby in the
event that the premises are conveyed to Investor pursuant to a foreclosure or
deed in lieu of foreclosure in the manner as herein provided;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed by and between the parties hereto as follows:
1. COLLECTIONS FROM MORTGAGOR
Effective from the date of delivery of the mortgages to Investor from
Servicer and continuously thereafter until the principal and interest of the
mortgages are paid in full, or until any foreclosure sale or conveyance of the
property securing the mortgage by deed in lieu of foreclosure, Servicer shall
diligently proceed to collect all payments due under the mortgages as and when
the same payments are due, and make remittance of the same (less the servicing
fee herein provided for) to Investor in accordance with the terms hereof.
2. REMITTANCE AND HANDLING OF FUNDS
Servicer shall pay monthly to Investor or its order on or about the
25th day of each month but not later than the last day of each month all funds
previously received by Servicer from mortgagors which are applicable to the
payment of principal and interest (less the servicing fee herein provided for)
on the mortgages. Each such remittance shall be accompanied by a
reconciliation for the then current month of the total mortgage account of
Investor being serviced by Servicer. As to any mortgages reported as
delinquent in the reconciliation accompanying the monthly remittance, reports
of collections of such delinquent items shall be made by Servicer to Investor
as the same are received by
Servicer. A trust account or accounts shall be maintained by Servicer in a
bank whose accounts are insured by the Federal Deposit Insurance Corporation.
Servicer's records shall clearly show the respective interests of Investor and
of each individual mortgagor in all accounts maintained aforesaid.
Servicer shall maintain appropriate bookkeeping records of each
payment made by each mortgagor, showing the amounts applicable to principal,
interest, taxes, hazard insurance and mortgage insurance. Servicer shall also
maintain appropriate records of all payments remitted to Investor and of all
funds returned by Investor to Servicer for the purpose of discharging
mortgagee's duties, rights or privileges hereunder or under the mortgage
documents and shall also maintain appropriate records of the application of
the funds returned by Investors to Servicer for the purposes aforesaid.
3. COMPENSATION OF SERVICER
As full compensation for its services rendered as herein provided,
Servicer shall retain from each monthly payment collected an amount equal to
1/12 of 1/2 of 1% of the principal balance of the note upon which the monthly
interest payment is computed. If any late charge on any past due payment or
installment on any loan is received by Servicer from any mortgagor pursuant to
the terms of any loan document, such late charge shall be retained by Servicer
as additional compensation to Servicer.
4. INSURANCE
At all times during the existence of each mortgage, Servicer shall
require each mortgagor to maintain insurance on all of the buildings upon the
premises covered by each mortgage for loss or damage by fire, with extended
coverage, and for such other insurable hazards and risks as are customarily
required by the Servicer or other prudent lenders with respect to similar
types of loan in the locality and with insurance companies rated "B Plus" or
better by Xxxxxx X. Best Company, Inc. Servicer shall hold for the account of
Investors all such polices which shall be endorsed in such a manner as to
indicate that losses payable thereunder are payable to Investor as first
mortgagee as the interest of such first mortgagee may appear. Servicer shall
attempt to collect the proceeds from such policies with respect to all losses
which may occur, and after obtaining the endorsement or the mortgagor, if
required and if possible, and unless otherwise directed in writing by
Investor, Servicer shall transmit all checks for such proceeds to Investor, or
if the loss be $5,000.00 or less, in lieu of such transmittal, Servicer may
endorse such checks and drafts on behalf of Investor and permit the mortgagor
to apply such proceeds to the repair of the property. In the cases where
losses shall have occurred for which the insuring company or companies shall,
pursuant to its or their policy or policies, pay an amount in excess of
52,500.00, Servicer shall inspect all repairs so as to ascertain if the work
is done properly unless instructed to the contrary by Investor as mortgagee.
Servicer shall promptly notify
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Investor of any loss or damage by fire or from any other cause to the
mortgaged premises exceeding $5.000.00 of which the Servicer has actual
notice.
As to each mortgage and insofar as applicable, where it is determined
that the mortgaged premises are within an area identified by the Secretary of
Housing and Urban Development as having special flood hazards and flood
insurance is available under the National flood program, Servicer shall cause
each mortgagor to maintain insurance against loss due to flood at all times
during the existence of such mortgage.
5. DEFAULTS OF MORTGAGOR
In the event that principal and interest and all other charges with
respect to any mortgage are not paid on or before the first day of the month
following the month they become due and payable, Servicer shall notify
Investor of the same, and monthly thereafter until the default is cured, shall
send to Investor a statement listing the account numbers, the due date and
amount of default for each such mortgage, together with a report of the
servicing and collection activities in respect to each such mortgage and a
recommendation as to the future action to be taken in respect thereto. In the
event any mortgagor fails to perform any other covenant or obligation under
any mortgage, and such failure continues for a period of one month from the
time such default comes to the attention of Servicer, Servicer shall notify
Investor of the nature and extent of the default and the efforts taken by the
Servicer to cause such default to be cured, together with a recommendation as
to the future action to be taken in respect thereto. in addition to the
statement, reports and recommendations as to defaults hereinabove required,
Servicer shall send to Investor such additional statements, reports and
recommendations of the character hereinabove provided, as Investors may from
time to time request.
6. LIMITATION OF SERVICER'S AUTHORITY
Servicer is authorized only to receive and to forward the monthly
payments as provided in the notes and mortgages for interest, amortization of
principal, and service or other charges where called for herein, and shall not
receive and forward to Investor any additional sums in reduction of the
principal amount of the mortgage or for the retirement thereof (unless
permitted by the terms of the mortgage) without the written consent and
authority of Investor. Servicer is not authorized or empowered to waive or
vary the terms of any note or mortgage and shall not at any time waive or
consent to a postponement of strict compliance on the part of the mortgagors
with any term, provision or covenant of the mortgages, nor grant in any other
manner any indulgence to any mortgagor except as may be required by law or
regulation. Servicer is charged with complying with all terms of any Note or
Mortgage and will insure a delivery of all notice requirements in a timely
manner and comply with all provisions set forth in any Note or
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Mortgage.
The Servicer will comply with all applicable laws in carrying out its
duties hereunder.
7. INSPECTIONS
Servicer shall make an inspection of the premises within 60 days of
the time any default comes to the attention of Servicer and shall until any
foreclosure sale or conveyance of the property securing the mortgage by deed
in lieu of foreclosure, make such reasonable additional inspections as
Investor may from time to time request, and shall promptly call to the
attention of Investor any substantial lack of repair or other substantial
deterioration suffered, committed, or threatened in respect to such premises.
Servicer shall furnish Investor with a written report covering such
inspections upon request of investor.
8. VACANCIES AND SALES
Servicer shall promptly notify Investor of any vacancies in any of the
mortgaged premises which come to its attention. Upon request of Investor,
servicer shall notify Investor of any sale or transfer of the legal or
equitable title to any of the mortgaged premises which come to its attention.
9. FORECLOSURE
In case of default with respect to any mortgage, the Servicer when so
authorized by Investor, shall promptly institute foreclosure proceedings or
proceed to acquire the property by other means in accordance with applicable
law and the requirements of all applicable documents, provided however, that
Investor shall indemnify the Servicer for all costs and expenses necessary to
complete foreclosure proceedings and for preservation of the property,
including reasonable attorney fees. The Servicer shall have the authority and
power to appoint attorneys for the purpose of foreclosure and to negotiate
with the mortgagor to acquire the secured property by deed in lieu of
foreclosure. The Servicer shall conduct all proceedings as directed by
Investor.
10. PROPERTY MANAGEMENT
In the event that foreclosure proceedings are instituted by Servicer,
then unless and until otherwise directed by Investor, and when authorized by
the Court where such authority is required, Servicer, from the date of
commencement until the termination thereof by foreclosure sale, or by
acceptance of a deed in lieu of foreclosure from mortgagor, shall (a) protect
the mortgaged premises under foreclosure in such manner and to such extent as
are customarily embraced in the proper protection of properties in the
locality involved, (b) maintain insurance on the premises in the manner
provided in Paragraph 4 hereof, and (c) render to Investor such reports as
Investor may reasonably require. Servicer shall have no further responsibility
under the terms hereof with respect to the management, inspection, protection
or sale of such property
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after the foreclosure sale or the acceptance of a deed in lieu of
foreclosure from mortgagor.
Servicer shall segregate and hold for Investor until paid over to it,
in a special custodial account of the character described in Paragraph 2
hereof, all monies in respect to said premises which shall come into the hands
of Servicer.
11. RECORDS
Servicer shall keep satisfactory books and records pertaining to the
mortgages, and upon the termination of this agreement, Investor shall be
permitted at its own expense to make copies of such of these records as it may
desire. Such books and records may be removed from Servicer's office for the
purpose of copying, and shall be returned within a reasonable time. Servicer
shall maintain and preserve all records with respect to each mortgage or loan
serviced hereunder for Investor until each mortgage or loan shall have been
paid in full and satisfied or foreclosed.
12. ASSIGNMENT AND SATISFACTION
This agreement shall not be assignable by Servicer or its successors,
without the consent of Investor, its successors and assigns. This agreement
shall inure to the benefit of the parties hereto and their respective
successors or assigns.
In the event any owner of any of the mortgaged premises shall satisfy,
pay and discharge the mortgage indebtedness, then the obligations and rights
hereunder of both parties shall continue in full force and effect with respect
to the remaining mortgages. In the event of either or both the sale or
assignment of any or all of the mortgages which may now or hereafter be
serviced by the Servicer for Investor hereunder, Servicer agrees to service,
upon all of the terms and conditions contained in the agreement, such
mortgages so sold or assigned, for the party or parties to whom Investor shall
have sold or assigned the same mortgages or any of the same.
13. SERVICER-INDEPENDENT CONTRACTOR
Servicer is and shall be an independent contractor and is not and
shall not be subject to direction by Investor as to the manner of the
performance of the Servicer's obligations hereunder.
14. TERMINATION
Investor may terminate this agreement with or without cause upon
thirty (30) days written notice to Servicer and upon payment to Servicer of a
sum equal to 1% of the aggregate principal amount then outstanding on all of
the loans as to which servicing is being terminated provided, however, that
Investor shall pay no termination fee when a mortgage is withdrawn from this
agreement by reason of foreclosure or satisfaction of such mortgage. Upon
termination of this agreement in any manner, Servicer shall
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forthwith deliver to Investor a statement showing the payments collected and
all monies held by it for payment of taxes, insurance and other charges, and
shall immediately pay over to Investor all monies so collected and held.
Servicer shall further turn over to Investor at the main office of Servicer
all books, papers and records, or transcripts thereof, pertaining to the
mortgages for which the servicing is being terminated.
15. TERM OF AGREEMENT
Unless sooner terminated as herein provided, this agreement shall
continue from the date hereof through the term of the mortgage having the
longest term until the principal and interest on all of the mortgages are paid
in full, or until completion of proceedings instituted to foreclose all of the
mortgages remaining subject to the terms of this agreement or title to the
mortgaged premises is acquired by Investor by deed in lieu of foreclosure;
provided, however, that this agreement shall nevertheless remain in effect for
the period and to the extent provided in Paragraphs 9 and 10 hereof.
16. NO WAIVER
None of the provisions contained in this agreement shall be deemed
waived, altered, modified or changed except by an agreement in writing signed
by the parties hereto.
17. ADDRESSES
Notices required to be provided pursuant to the within agreement shall
be sent by overnight delivery service or mailed to the parties at the
addresses set forth in the first paragraph of this Agreement or at such other
addresses as the parties may from time to time designate in writing. Notice
shall be deemed effective upon actual receipt or within five (5) days
following deposit in the United States Postal System.
18. APPLICABLE LAW
This agreement shall be governed by and construed under the Laws of
the State of Texas.
19. DISCLAIMER
The parties acknowledge that Investor may purchase or may have
purchased loans from third parties pursuant to agreements containing
representations and warranties made by the sellers of said loans. The parties
hereto agree that Servicer does not warrant in any respect the loans purchased
or to be purchased by Investor from any third parties and the parties
expressly agree that Servicer is not responsible for any acts or omissions of
prior owners or servicers of such loans.
20. PRESUMPTION OF OWNERSHIP
Upon assignment by Investor of any mortgage being serviced
hereunder, Investor shall mail written notice thereof to Servicer,
giving the name and address of the assignee of Investor. Until
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Servicer receives such written notice, Investor shall be presumed to be the
owner of such mortgage and Servicer is hereby authorized and directed to
continue making payments hereunder to Investor.
21. OBLIGATIONS OF PARTIES
The parties acknowledge that nothing contained herein shall obligate
Investor to engage the services of Servicer with respect to any loan owned or
hereafter acquired by Investor and nothing contained herein shall obligate
Servicer to undertake the servicing of any such loan.
IN WITNESS WHEREOF, each party has caused this agreement to be signed
and executed by the parties duly authorized on the day and year written above.
UNITED MORTGAGE TRUST
By:
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Xxxxxxxxx Xxxxxxx, President
SOUTH CENTRAL MORTGAGE, INC.
By:
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Xxxx Xxxxx, President
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