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SERVICING AGREEMENT
Dated as of _________, 199_
among
MID-STATE TRUST 199 -
Issuer
and
MID-STATE HOMES, INC.,
Servicer
and
,
-----------------------------
Trustee
Relating to the Accounts Pledged to _____________________________, as Trustee,
as Collateral for the Issuer's [ ]% Asset Backed Notes, Class A-1, [ ]% Asset
Backed Notes, Class A-2 [ ]% Asset Backed Notes, Class A-3 and [ ]% Asset Backed
Notes, Class A-4 in the Aggregate Original Principal Amount of $____________.
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TABLE OF CONTENTS
ARTICLE ONE.......................................................................................................1
DEFINITIONS....................................................................................................1
Section 1.01. Defined Terms...............................................................................1
Section 1.02. Terms Defined in the Indenture..............................................................3
ARTICLE TWO.......................................................................................................3
ADMINISTRATION AND SERVICING OF ACCOUNTS.......................................................................3
Section 2.01. The Servicer to Act as Servicer.............................................................3
Section 2.02. Sub-Servicing Agreements Between Servicer and Sub-Servicer..................................6
Section 2.03. Successor Sub-Servicers.....................................................................7
Section 2.04. Liability of the Servicer...................................................................7
Section 2.05. No Contractual Relationship Between Sub-Servicer and Trustee or Issuer......................7
Section 2.06. Assumption of Sub-Servicing Agreement by Successor Servicer.................................8
Section 2.07. Collection of Account Payments; Holding Account.............................................8
Section 2.08. Collection Account; Servicing Account......................................................10
Section 2.09. Records and Servicing Account Moneys.......................................................11
Section 2.10. Assumption Agreements......................................................................12
Section 2.11. Permitted Withdrawals from the Collection Account..........................................13
Section 2.12. Advances for Delinquent Taxes..............................................................13
Section 2.13. Maintenance of Insurance; Collection Thereunder............................................13
Section 2.14. Realization upon Defaulted Accounts........................................................14
Section 2.15. Release of Accounts........................................................................15
Section 2.16. Servicing Compensation.....................................................................16
ARTICLE THREE....................................................................................................16
STATEMENTS, REPORTS AND NOTICES...............................................................................16
Section 3.01. Reporting by the Servicer..................................................................16
Section 3.02. Annual Certificate; Account Statement......................................................17
Section 3.03. Annual Accountants' Reports................................................................17
Section 3.04. Notices....................................................................................18
ARTICLE FOUR.....................................................................................................18
THE SERVICER..................................................................................................18
Section 4.01. Representations and Warranties of the Servicer.............................................18
Section 4.02. Merger or Consolidation of the Servicer....................................................19
Section 4.03. Performance of Obligations.................................................................19
Section 4.04. Servicer Not to Resign.....................................................................20
Section 4.05. Fidelity Bond..............................................................................20
ARTICLE FIVE.....................................................................................................21
DEFAULT.......................................................................................................21
Section 5.01. Events of Default..........................................................................21
Section 5.02. No Effect on Other Parties.................................................................22
Section 5.03. Rights Cumulative..........................................................................23
ARTICLE SIX......................................................................................................23
THE ACCOUNTS..................................................................................................23
Section 6.01. Representations and Warranties; Account Documents..........................................23
ARTICLE SEVEN....................................................................................................24
MISCELLANEOUS PROVISIONS......................................................................................24
Section 7.01. Termination................................................................................24
Section 7.02. Amendment..................................................................................24
Section 7.03. Governing Law..............................................................................25
Section 7.04. Notices....................................................................................25
Section 7.05. Severability of Provisions.................................................................25
Section 7.06. Inspection and Audit Rights................................................................26
Section 7.07. Binding Effect.............................................................................26
Section 7.08. Article and Section Headings...............................................................26
Section 7.09. The Owner Trustee..........................................................................26
Section 7.10. Distribution of Servicing Procedures and Standards.........................................27
Section 7.11. Property Address...........................................................................27
Section 7.12. Power of Attorney..........................................................................27
Section 7.13. Rights Upon Discharge of Indenture.........................................................27
EXHIBIT A FORM OF STANDBY SERVICING AGREEMENT................................................................29
EXHIBIT B MID-STATE TRUST VI SERVICER'S CERTIFICATE.........................................................30
EXHIBIT C None...............................................................................................36
EXHIBIT D Historical Servicing Standards.....................................................................37
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THIS SERVICING AGREEMENT, dated as of __________, 199_, among Mid-State
Trust 199 - a Delaware business trust (such trust being herein called the,
"Issuer"), Mid-State Homes, Inc., a Florida corporation (herein, together with
its successors and assigns, called the "Servicer") and ___________________, as
Trustee under the Indenture referred to below.
PRELIMINARY STATEMENT
The Issuer is a business trust created by a Trust Agreement dated as of
___________, 199_ between ________________ (in its capacity as Trustee
thereunder, the "Owner Trustee") and Mid-State Homes, Inc., as Grantor. The
Issuer will act at all times through the Owner Trustee. The Issuer has entered
into an Indenture (the "Indenture"), dated as of the date of this Agreement,
with ___________________, as Trustee (the "Trustee"), pursuant to which the
Issuer intends to issue its [ ]% Asset Backed Notes, Class A-1 (the "Class A-1
Notes"), [ ]% Asset Backed Notes, Class A-2 (the "Class A-2 Notes"), [ ]% Asset
Backed Notes, Class A-3 (the "Class A-3 Notes") and [ ]% Asset Backed Notes,
Class A-4 (the "Class A-4 Notes" and together with the Class A-1 Notes, Class
A-2 Notes and Class A-3 Notes, the "Notes"). Pursuant to the Indenture, as
security for the Notes, the Issuer is Granting to the Trustee a security
interest in, among other things, certain Accounts, its rights under this
Agreement, the Collection Account, the Holding Account and the Hazard Insurance
Policies (as such terms are hereinafter defined).
The parties desire to enter into this Agreement to provide, among other
things, for the servicing of the Accounts by the Servicer. The Servicer
acknowledges that, in order further to secure the Notes, the Issuer is Granting
to the Trustee a security interest in, among other things, its rights under this
Agreement, and the Servicer agrees that all covenants and agreements made by the
Servicer herein with respect to the Accounts shall also be for the benefit and
security of the Trustee and Holders of the Notes. For its services hereunder,
the Servicer will receive a Servicing Fee with respect to each Account serviced
hereunder as provided herein.
ARTICLE ONE
DEFINITIONS
Section 1.01. Defined Terms
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Agreement, and the definitions of such terms are applicable to
the singular as well as to the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms:
"Acquired Property": Property acquired by the Issuer by foreclosure,
deed in lieu of foreclosure, or otherwise in respect of a defaulted Account.
"Agreement": This Servicing Agreement as originally executed and as
amended or supplemented from time to time in accordance with the terms hereof
and of the Indenture.
"Bankruptcy Code": Title 11 of the United States Code.
"Custodian": As defined in the Holding Account Agreement dated as of
_______, 199_ between the Servicer and _______________________________, as
trustee.
"Default": Any occurrence or circumstance that, with notice or lapse of
time or both, would be an Event of Default.
"Event of Default": Any of the occurrences or circumstances enumerated
in Section 5.01.
"Holding Account": A custodial account established by the Servicer
pursuant to the Holding Account Agreement, dated as of _________, 199_ in the
name of the _______________, as Custodian for _______________________ as Trustee
under the Indenture and the Servicer, maintained at a depositary institution (i)
the deposits in which are fully insured by the Federal Deposit Insurance
Corporation through either the Bank Insurance Fund or the Savings Association
Insurance Fund and (ii) the commercial paper or other short term obligations of
which (or, in the case of a depository institution which is the principal
subsidiary of a holding company the commercial paper or other short-term debt
obligations of such holding company) have a credit rating of at least A-1 and
P-2 from S&P and Xxxxx'x, respectively.
"Homes": Xxx Xxxxxx Homes, Inc., a Florida corporation.
"Indenture": The Indenture dated as of _________, 199_ between the
Issuer and _________________, as Trustee, as such Indenture may be amended or
supplemented from time to time in accordance with its terms.
"Monthly Cut-off Date": The last day of any Remittance Period.
"Remittance Date": The first Business Day of each week (beginning
________, 199_) and the first Business Day following the end of each Due Period.
"Remittance Period": The period from the end of the preceding
Remittance Period (or from ______, 199_ in the case of the first Remittance
Period) through the last Friday of the next month or, in the case of the last
Remittance Period of a Due Period, through the last day of the next month.
"Reporting Date": With respect to any Remittance Period, the 20th day
of the month following such Remittance Period or if such day is not a Business
Day the next preceding Business Day.
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"Servicer Termination": As defined in Section 5.01.
"Servicing Account": As defined in Section 2.08(b).
"Servicing Fee": As defined in Section 2.16.
"Standby Servicing Agreement": The Standby Servicing Agreement dated as
of ________, 199_ by and among the Servicer, the Issuer and the Successor
Servicer in the form attached hereto as Exhibit A.
"Sub-Servicer": As defined in Section 2.02.
"Sub-Servicing Agreement": An agreement between the Servicer and a
Sub-Servicer as described in Section 2.02.
"Successor Servicer": As defined in the Indenture.
"Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the property cannot be completely restored out of the
proceeds of the Hazard Insurance Policies required to be maintained pursuant to
Section 2.13.
Section 1.02. Terms Defined in the Indenture.
For purposes of this Agreement, all capitalized terms used herein that
are defined in the Indenture (other than terms defined in Section 1.01 of this
Agreement) shall have the respective meanings assigned to such terms in the
Indenture.
ARTICLE TWO
ADMINISTRATION AND SERVICING OF ACCOUNTS
Section 2.01. The Servicer to Act as Servicer.
The Servicer shall service and administer the Accounts, in accordance
with the express terms of this Agreement, applicable state and federal law, and
with the standards and procedures employed by a prudent servicer with respect to
the servicing of similar accounts held in its own portfolio and in accordance
with the Servicer's historical servicing standards set forth on Exhibit D, and
the Servicer shall have full power and authority, acting alone, to do any and
all things in connection with such servicing and administration that it may deem
necessary or desirable and, subject to the foregoing and the provisions of the
Indenture to execute and deliver in the Servicer's own name, on behalf of the
Issuer, any and all deeds, sale contracts, instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Accounts and with respect to the
Mortgaged Properties; provided, however, any Successor Servicer shall not be
bound by the Servicer's historical servicing standards.
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Notwithstanding the preceding paragraph, the Servicer shall at all
times follow the procedures set forth below:
1. The Servicer shall use its reasonable best efforts to contact,
either by telephone, mail, in person, or in such other manner as the Servicer
deems appropriate under the circumstances, each Obligor on any Account that is
delinquent 30 days or more in any payments called for under the terms and
provisions of the Accounts (including outstanding advances for taxes, insurance
and other amounts) as of the most recent Monthly Cut-off Date, in order to
ascertain the reason for the delinquency and the likelihood that the Account
will become current. Thereafter, the Servicer shall diligently pursue collection
efforts in order to bring the Account current with respect to all outstanding
amounts (including outstanding taxes, insurance and other amounts) unless the
Servicer in its good faith judgment believes it is most appropriate, under the
circumstances, and not as a general matter, not to pursue the outstanding
amounts for taxes, insurance and other amounts.
2. The Servicer shall use its reasonable best efforts to physically
inspect or visit the Mortgaged Property securing any Account that is 60 or more
days delinquent as of the most recent Monthly Cut-off Date, unless the Servicer
otherwise determines to its reasonable satisfaction that the value of the
Mortgaged Property securing such Account has not been materially impaired and
that such property has not been abandoned.
3. The Servicer shall use its reasonable best efforts to diligently
pursue, foreclose upon or otherwise comparably convert the ownership of
properties securing an Account that continues in default (including default in
payment of taxes and insurance) for more than 90 days, unless the Servicer, in
its best judgment, believes that the Account can be returned to current status
within a reasonable period of time or, solely with respect to defaults due
solely to default in payment of taxes and insurance and other amounts, unless
the Servicer in its good faith judgment believes it is most appropriate, under
the circumstances, and not as a general matter, not to pursue the outstanding
amounts for taxes, insurance and other amounts.
4. With respect to Mortgaged Properties that are known by the Servicer
to be abandoned or in foreclosure, or properties with respect to which title has
been acquired, the Servicer shall take such action as it deems necessary in its
good faith judgment and not in violation of law to protect such property from
vandalism or damage by the elements.
5. The deed to any Acquired Property delivered as a result of any
foreclosure or similar proceeding or deed in lieu thereof shall name the Issuer
as grantee unless the Servicer deems it necessary to foreclose or otherwise
comparably convert title to any Mortgaged Property in the name of a party other
than the Issuer. In that event, the Servicer may designate such a party (which,
except in the States of Ohio and Maryland, shall not be an Affiliate of the
Grantor) to hold title to the Acquired Property. The party designated to hold
such title shall sign a written acknowledgment that it is holding title on
behalf of the Issuer and any such acknowledgment shall be delivered to the
Trustee together with the deed to such Acquired Property.
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6. Upon acquisition of an Acquired Property by the Issuer, the Servicer
shall prepare a Trust Mortgage in form appropriate to the state in which such
Acquired Property is located and furnish such Trust Mortgage to the Trustee
within two Business Days of acquiring a deed in respect of such Acquired
Property for execution by the Issuer and recordation in accordance with the
terms of the Indenture. The Servicer or Sub-Servicer in order to facilitate the
sale of the Acquired Property, at its option, may execute and record as agent
and attorney in fact for the Issuer a deed granting to the Servicer or
Sub-Servicer a ten percent interest in the Acquired Property as a tenant in
common, which interest shall be subject to the Trust Mortgage. As consideration
for that interest, the Servicer or Sub-Servicer shall convey and hereby agrees
to convey to the Issuer all of its share of the proceeds of disposition of any
such Acquired Property (including any interest in any new Account with respect
to such Acquired Property). No other consideration shall be payable by the
Servicer or Sub-Servicer to the Issuer for that interest.
If an Acquired Property is resold in exchange for a new Account within
two Business Days of acquisition of such Acquired Property, the mortgage or deed
of trust executed by the Issuer need not be executed and delivered to the
Trustee, provided the Account Documents for such new Account and all assignments
and endorsements with respect to such new Account required by the Indenture are
delivered to the Trustee within five Business Days of acquisition.
7. Upon the acquisition of an Acquired Property, the Servicer shall (i)
deliver the deed or certificate of sale to the Trustee, (ii) advance all taxes
and standard hazard insurance premiums relating to the Acquired Property, (iii)
process any claims for redemption and otherwise comply with any redemption
procedures required by law, (iv) use its reasonable best efforts to promptly
sell or otherwise dispose of such Acquired Property at a price which in its best
judgment represents reasonable value and remit the proceeds to the Trustee, and
(v) if, in order to sell the property at what it reasonably determines to be the
best price available, the Servicer deems it reasonably necessary for the Issuer
to provide mortgage financing to the prospective buyer, the Servicer shall
undertake, as agent for the Issuer, to apply substantially the same underwriting
standards as the Servicer applies to similar transactions originated by it for
its own account; provided however that the Maturity Date of any such Account
shall not exceed June 1, 2031.
8. If the Servicer deems it reasonably necessary to convey an Acquired
Property in exchange for a new Account, such new Account may be originated on
documents naming the Servicer or Sub-Servicer as payee; provided, however, that
the Maturity Date of any such new Account shall not exceed _______, 20__. The
Sub-Servicer's or Servicer's rights under any such documents shall be subject to
its obligation to convey proceeds of the disposition of Acquired Property.
In connection with the sale of an Acquired Property, any contract of
sale or deed shall be executed by the Servicer or Sub-Servicer in its individual
capacity and as agent and attorney in fact for the Issuer. The Servicer shall
request release of the Trust Mortgage by the Trustee. Immediately upon
consummation of the sale, the Servicer or Sub-Servicer shall
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assign all of its right, title and interest in the new Account to the Issuer and
the Issuer shall assign all of its right, title and interest in the new Account
to the Trustee. The Servicer shall record the release, the deed, the Mortgage,
the assignment of the Servicer's or Sub-Servicer's interest to the Issuer and an
assignment of the Mortgage by the Issuer to the Trustee immediately.
9. The Servicer shall segregate and hold all funds collected and
received in connection with the rental or sale of any Acquired Property separate
and apart from its own funds and general assets and shall deposit such moneys in
the Holding Account in accordance with Section 2.07(b).
10. Except as expressly permitted by Section 2.10 or as otherwise
provided in Exhibit D, the Servicer shall not alter, change or modify, or permit
the alteration, change or modification of, any Account without the prior consent
of the Trustee; provided, however, that the Servicer may charge-off or write-off
Accounts when the Servicer determines in its best judgment that it is prudent to
do so and that the costs and expenses of continued servicing of such Accounts
(including foreclosure proceedings) exceeds the expected revenues therefrom, and
such determination is evidenced by a certification signed by a duly authorized
officer of the Servicer setting forth such conclusions and the basis therefor.
Promptly after the execution and delivery of this Agreement, the
Servicer shall deliver to the Issuer and the Trustee a list of officers of the
Servicer involved in, or responsible for, the administration and servicing of
the Accounts, which list shall from time to time be updated by the Servicer
after each change in servicing officers.
At all times while the Servicer is servicing the Accounts pursuant to
this Agreement, the Servicer shall employ field servicing personnel for each
state in which Mortgaged Properties are located who are assigned to service the
related outstanding Accounts of that state; provided, however, that if the
Servicer does not employ field servicing personnel in any such state or does not
employ sufficient field servicing personnel in any such state to service the
related outstanding Accounts of that state in accordance with the terms and
provisions of this Agreement, the Servicer shall enter into one or more
Sub-Servicing Agreements as described in Section 2.02 with a Sub-Servicer that
employs field servicing personnel or agents for that state providing for the
servicing of the effected outstanding Accounts of that state.
Section 2.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicer.
The Servicer may enter into sub-servicing agreements (each a
"Sub-Servicing Agreement") with sub-servicers (each, a "Sub-Servicer") which may
include Homes, an affiliate of the Servicer, for the servicing and
administration of any or all of the Accounts. In the event that any such
Sub-Servicing Agreement exists, the Sub-Servicer will represent and warrant that
it is duly organized and existing under the applicable laws of the United States
or any state and is duly qualified and licensed to do business in each state in
which Mortgaged Property relating to an Account to be serviced under such
Sub-Servicing Agreement is located. The requirements of the immediately
preceding sentence of this Section 2.02 shall not apply to
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any sub-servicing agreement entered into by the Successor Servicer upon its
assuming the rights, powers, duties and responsibilities of the Servicer
hereunder pursuant to Section 5.01 hereof. For purposes of this Agreement
(except as otherwise provided herein), the Servicer shall be deemed to have
received payments on Accounts referred to in Sections 2.07 and 2.15 when the
Sub-Servicer has received such payments. The Servicer and any Sub-Servicer may
enter into amendments of a Sub-Servicing Agreement; provided, however, that any
such amendments shall be consistent with and not violate the provisions of this
Agreement. Copies of all amendments shall promptly be sent as provided in
Section 7.04 hereof to the Trustee.
Section 2.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
that may exist from time to time in accordance with the terms and conditions of
such Sub-Servicing Agreement and, except as hereinafter provided in this Section
2.03, without any limitation by virtue of this Agreement; provided, however,
that in the event of termination of any Sub-Servicing Agreement by the Servicer
or the Sub-Servicer the Servicer shall either act as primary servicer of the
related Accounts or enter into a Sub-Servicing Agreement in accordance with the
provisions of Section 2.02 with a successor Sub-Servicer.
Section 2.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Sub-Servicer or reference to actions taken through a Sub-Servicer or otherwise,
the Servicer shall remain primarily obligated and liable to the Issuer and the
Trustee for the servicing and administering of the Accounts in accordance with
the provisions of this Agreement without diminution of such obligation or
liability by virtue of such Sub-Servicing Agreement or arrangements or by virtue
of indemnification from the Sub-Servicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Accounts. The Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer, and nothing contained in this Agreement shall be deemed to limit
or modify such indemnification.
Section 2.05. No Contractual Relationship Between Sub-Servicer and
Trustee or Issuer.
Any Sub-Servicing Agreement that may be entered into and any other
transactions or services relating to the Accounts involving a Sub-Servicer in
its capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone and the Sub-Servicer shall have no claim against the Trustee or
the Issuer except to the extent set forth in Section 2.06 arising from any
Sub-Servicing Agreement; provided, however, that the Trustee and the Issuer may
upon the happening of a default thereunder enforce the Servicer's rights under
any Sub-Servicing Agreement as third party beneficiaries thereof.
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Section 2.06. Assumption of Sub-Servicing Agreement by Successor
Servicer.
In the event the Servicer shall for any reason no longer be the Service
(including by reason of an Event of Default or Trigger Event), the Successor
Servicer may, at its election, assume all of the rights and obligations of the
Servicer under each Sub-Servicing Agreement that may have been entered into. The
Indenture provides that the Successor Servicer may, at its election, assume all
of the Servicer's interest therein and replace the Servicer as a party to the
Sub-Servicing Agreement to the same extent as if the Sub-Servicing Agreement had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligation under the Sub-Servicing Agreement.
The Servicer shall, upon request of the Trustee or the Successor
Servicer but at the expense of the Servicer, deliver to the Successor Servicer
all documents and records pursuant to Section 2.09 relating to the Sub-Servicing
Agreement and the Accounts then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreement to the assuming
party.
Section 2.07. Collection of Account Payments; Holding Account.
(a) In accordance with the servicing standards set forth in Section
2.01, the Servicer shall use its reasonable best efforts to cause each Obligor
to make all payments in respect of his or her Account to the Servicer and to
collect all payments (including amounts for taxes and insurance) called for
under the terms and provisions of the Accounts (other than any fees and charges
the collectibility of which is not legally enforceable). Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charge,
assumption fee, prepayment charge, or penalty interest in connection with the
prepayment of an Account and (ii) arrange a schedule for liquidation of
delinquent payments due on an Account, running for a period as the Servicer
reasonably believes prudent under the circumstances.
(b) On or before the Closing Date the Servicer shall establish the
Holding Account and shall cause all payments received with respect to the
Accounts to be deposited in the Holding Account. The deposit of substantially
all such amounts shall be made as soon as reasonably practicable after such
payment is actually received by it but in no event later than one Business Day
after receipt by the Servicer, and in the case of all payments received by
Sub-Servicers with respect to the Accounts, such amounts shall be mailed as soon
as reasonably practicable to the Servicer but in no event later than two
Business Days after collection by the Sub-Servicer and deposited by the Servicer
in the Holding Account as described above. The Sub-Servicer shall not deposit
any amounts received by it in any deposit, trust, or similar account prior to
remitting such amounts to the Servicer. On each Remittance Date the Servicer
shall submit to the Custodian, with a copy to the Trustee, a report
substantially in the form provided in the Holding Account Agreement relating to
funds deposited in the Holding Account during the immediately preceding calendar
week which specifies the amount of such funds referred to in Section 2.08(a) to
be transferred from the Holding Account by the Custodian to the Collection
Account.
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(c) The Servicer may, by written request delivered to the Custodian,
with a copy to the Trustee, receive funds from the Holding Account for the
following purposes:
(i) to repay to the Servicer moneys in the Holding Account upon
certification by the Servicer reasonably acceptable to the
Trustee that such funds are not part of the Trust Estate;
(ii) to clear the Holding Account pursuant to Section 7.01(a);
(iii) to deposit Insurance Proceeds in the Servicing Account for
application to restoration or repair of a Mortgaged Property
in the future, to the extent such proceeds were deposited in
the Holding Account;
(iv) to pay the Servicer the Servicing Fee pursuant to Section
2.16;
(v) to pay the Servicer amounts represented by any late payment
charges, interest charged on advances of taxes and insurance
premiums, assumption fees and other such additional charges
and net income earned on investments of funds on deposit in
the Holding Account as additional servicing compensation;
(vi) to reimburse the Servicer for advances of taxes, insurance
premiums and other amounts in accordance with Sections 2.12
and 2.13, respectively; provided, however, that with respect
to advances of taxes and insurance premiums and other amounts
made on the Accounts on or prior to the Cut-Off Date the
extent of reimbursement for such advances shall be limited to
the related amounts collected by the Servicer or, in the case
of a liquidation, the amount by which the related Liquidation
Proceeds, if any, for each such Account exceeds the sum of the
Economic Balance of the related Account and the related
Liquidation Expenses other than such advances;
(vii) to reimburse the Servicer from the related Insurance Proceeds
and Liquidation Proceeds with respect to a Mortgaged Property
for any expenses incurred by it in good faith pursuant to
Section 2.14 for restoration of such Mortgaged Property
damaged by an Uninsured Cause;
(viii) to reimburse the Servicer from the Holding Account for any
unreimbursed usual and customary Liquidation Expenses subject
to the limitations set forth in Sections 2.12 and 2.13 with
respect to advances for taxes and insurance;
(ix) to reimburse the Servicer for expenses reasonably incurred by
the Servicer pursuant to Section 6.01; and
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(x) to reimburse the Servicer for reasonable and necessary
expenses incurred in connection with the preservation and
management of Acquired Properties.
Section 2.08. Collection Account; Servicing Account.
(a) On or before the Closing Date the Issuer shall open the Collection
Account as provided in Section 8.02 of the Indenture. On the Closing Date, the
Servicer shall on behalf of the Issuer remit to the Trustee for deposit in the
Collection Account all Monthly Payments and all prepayments (net of the
applicable Servicing Fee) collected on the Accounts after the Cut-off Date and
received by the Servicer not less than five Business Days before the Closing
Date. All funds collected in respect of the Accounts prior to the Closing Date
not deposited in the Collection Account pursuant to the preceding sentence on
the Closing Date shall be deposited in the Holding Account on the Closing Date
and transferred to the Collection Account on the first Remittance Date following
the Closing Date. Thereafter, the Servicer shall submit to the Custodian, with a
copy to the Trustee, the report required by Section 2.07(b) directing the
deposit into the Collection Account or, with respect to certain Insurance
Proceeds, the Servicing Account of all payments and collections in respect of
the Accounts then on deposit in the Holding Account (other than withdrawals
simultaneously requested pursuant to Section 2.07(c) and amounts in respect of
payments by Obligors made by checks subsequently returned for insufficient funds
or other reason for non-payment) including the following:
(i) all Obligor payments on account of principal, including Full
Prepayments, of the Accounts;
(ii) all Obligor payments on account of finance charges on the
Accounts; and
(iii) all net Insurance Proceeds (other than proceeds to be applied
to the restoration or repair of the related Mortgaged Property
which shall be deposited to the Servicing Account) and Net
Liquidation Proceeds with respect to the Accounts.
The Servicer may request withdrawals from the Collection Account as
permitted by Section 2.11 hereof.
(b) The Servicer shall open, at the Corporate Trust Office or at any
other financial institution the deposits of which are fully insured by the
Federal Deposit Insurance Corporation ("FDIC") (through either the Bank
Insurance Fund or the Savings Association Insurance Fund), one or more accounts
(collectively, the "Servicing Account"), which such accounts shall be Eligible
Accounts, designated as follows: "Mid-State Homes, Inc., as Servicer for
Mid-State Trust 199 - ". There shall be deposited in the Servicing Account on
the Closing Date all Insurance Proceeds which are to be applied to the
restoration or repair of the related Mortgaged Property received after the
Cut-off Date and still in the custody of the Servicer on the Closing Date;
thereafter all Insurance Proceeds shall be deposited into the Servicing Account.
If required by any applicable law or regulation, Obligors' funds in a
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Servicing Account shall be segregated, and the Servicer shall instruct the
financial institution in which such account is maintained accordingly. The
Servicing Account shall be an interest bearing account fully insured as to
amounts deposited therein by the FDIC. In addition, moneys in the Servicing
Account may be invested as provided in Section 2.08(c). The Servicer shall make
withdrawals from a Servicing Account only (i) for the purpose of applying
proceeds of a Hazard Insurance Policy or other insurance policy to the
restoration or repair of a Mortgaged Property, to the extent such proceeds were
deposited in such Servicing Account; (ii) to the extent required by applicable
law or regulation or by the related Accounts and to the extent of earnings on
the Servicing Account then on deposit in the Servicing Account to pay interest
on funds in such Servicing Account to the Obligors entitled thereto; (iii) to
pay to the Obligors Insurance Proceeds required to be paid to them pursuant to
the terms of the related Account Note; (iv) to clear and terminate such
Servicing Account at the termination of this Agreement in accordance with
Section 7.01; (v) to pay to the Servicer net earnings on amounts in the
Servicing Account to the extent permitted by Section 2.08(c) below; or (vi) to
transfer to the Holding Account any funds then on deposit in the Servicing
Account upon a determination by the Servicer that such funds will not be applied
in the manner described in (i) through (v) above.
(c) Moneys in any Servicing Account from time to time may be invested
and reinvested by the Servicer, but only in one or more Eligible Investments and
obligations on which the Trustee in its commercial capacity is the obligor. All
net income or gain from such investment of moneys shall be paid to the Servicer
as it is earned and received, provided that all interest required to be paid to
Obligors shall be paid to them as required or shall be held for the Obligors
entitled thereto. If any loss results from such investments, the Servicer shall
promptly reimburse the Servicing Account for the amount of any such loss. The
maturity of such investments shall be such as not to conflict with the
requirements for disbursement of funds out of such Servicing Account. Whenever
any amounts invested as aforesaid shall be needed for disbursement from a
Servicing Account, the Servicer shall cause a sufficient amount of such
investments to be sold or otherwise converted to cash for such purpose.
(d) Notwithstanding Section 2.08(c), all funds in the Servicing Account
are held by the Servicer as agent and bailee of the Trustee for the benefit of
the Trustee, the Noteholders and the Obligors.
Section 2.09. Records and Servicing Account Moneys.
(a) The Servicer agrees to act as agent and bailee of the Trustee in
holding any Account Documents released to the Servicer pursuant to Section
3.13(c) of the Indenture, and any other items constituting a part of the Trust
Estate that from time to time come into the possession of the Servicer. The
Servicer agrees, for the benefit of the Trustee and the Noteholders, to act as
such agent and bailee, and to hold and deal with such Accounts and such items,
as agent and bailee for the Trustee, in accordance with the provisions of this
Agreement and the Indenture.
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(b) The Servicer shall for a period of four years following termination
of this Agreement or from the time an Account is paid in full, with respect to
such Account, retain all data relating directly to or maintained in connection
with the servicing of the Accounts at the Servicer's principal service office in
Tampa, Florida, or at such other place where the servicing offices of the
Servicer are located, and shall give the Trustee access to all data at all
reasonable times, and, while an Event of Default shall be continuing, the
Servicer shall, on demand of the Trustee or the Successor Servicer, deliver to
the Trustee or the Successor Servicer, as the case may be, all data necessary
for the servicing of the Accounts, provide the Trustee and the Successor
Servicer with the information called for by Section 2.07(b) concerning all
moneys in the Holding Account and deliver to the Trustee all moneys in each
Servicing Account and all other moneys collected by it from Obligors and not
previously deposited in the Holding Account or the Servicing Account. If the
rights of the Servicer shall have been terminated in accordance with Section
5.01 or if this Agreement shall have been terminated pursuant to Section
7.01(b), the Servicer shall, upon demand of the Trustee, the Successor Servicer
or the Noteholders in the case of Section 5.01, or of the successor to the
rights of the Issuer in the case of Section 7.01(b), deliver to the Successor
Servicer all data necessary for the servicing of the Accounts, provide the
Trustee and the Successor Servicer with the information called for by Section
2.07(b) concerning all moneys in the Holding Account and deliver to the Trustee
all moneys in each Servicing Account and all other moneys collected by it from
obligors and not previously deposited in the Holding Account or the Servicing
Account. In addition to delivering such data and moneys the Servicer shall use
its reasonable best efforts to effect the orderly and efficient transfer of the
servicing of the Accounts to the party which will be assuming responsibility for
such servicing.
Section 2.10. Assumption Agreements.
(a) When a Mortgaged Property has been or is about to be conveyed by
the Obligor, the Servicer is authorized to take or enter into an assumption
agreement or other similar agreement from or with the person to whom such
Mortgaged Property has been or is about to be conveyed, provided that (i) the
Account Rate on, Monthly Payment and balance of such Account shall not be
reduced, (ii) the term of the Account shall not be extended, (iii) there are
either no unreimbursed advances for taxes and insurance on such Account
following assumption or such advances are assumed and (iv) the Servicer shall
not agree to any other modification unless in the best judgment of the Servicer
such modification would not materially adversely affect the collectibility or
enforceability of the Accounts or the interests of the Noteholders. The Servicer
shall notify the Trustee that any such assumption agreement or similar agreement
has been completed by forwarding to the Trustee the original copy of such
assumption agreement or similar agreement for addition to the related Account
Documents. Any fee collected by the Servicer for entering into an assumption
agreement or similar agreement shall be retained by the Servicer as additional
servicing compensation. The Servicer shall use its reasonable best efforts to
enter into an assumption agreement or other similar agreement; however, if, in
connection with the conveyance of such Mortgaged Property, the continuation of
liability of the original Obligor shall be impracticable, or if, in the opinion
of the Servicer, the release of the liability of the original Obligor would not
substantially impair the ability of the holder of the related Account to realize
the full repayment of such Account,
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the Servicer may release the original Obligor from liability on such Account so
long as the new Obligor meets the underwriting standards which the Servicer is
applying to similar transactions originated for its own account. The Servicer
shall notify the Trustee if the original Obligor is released from liability on
such Account.
(b) The Servicer shall not be deemed to be in default, breach or any
other violation of its obligations under this Agreement by reason of any
assumption of an Account by operation of law or any assumption or transfer of
property subject to an Account which the Servicer may be restricted by law from
preventing, for any reason whatever.
Section 2.11. Permitted Withdrawals from the Collection Account.
If at any time funds on deposit in the Holding Account are insufficient
to satisfy the Servicer withdrawal requests referred to in Section 2.07(c)
hereof, and so long as no Event of Default or Trigger Event shall have occurred
and be continuing, the Servicer may request withdrawal of such deficiency from
the Collection Account, and upon receipt of such written request, the Trustee
shall withdraw the amount of such deficiency from the Collection Account and
make the requested payments to the Servicer, provided that such payments shall
not be made within six Business Days of a Payment Date.
Section 2.12. Advances for Delinquent Taxes.
(a) If the Servicer shall have knowledge that real property taxes or
other taxes, charges or assessments relating to any Mortgaged Property have not
been paid when due, the Servicer shall make such payment prior to the time by
which failure to make such payment would give rise to a lien on the related
Mortgaged Property. Any costs so incurred by the Servicer shall be recoverable
by the Servicer as Liquidation Expenses pursuant to Section 2.07, or to the
extent recoverable from any Sub-Servicer servicing such Account, or from the
related Obligor or from other funds on deposit in the Holding Account to the
extent that the Servicer certifies that such advances are not otherwise
recoverable due to insufficient Net Liquidation Proceeds.
(b) The Servicer shall indemnify the Issuer for any losses resulting
from a failure to make the payments referred to in Paragraph (a) above and the
Servicer shall deposit the amount of such loss in the Collection Account on the
next Remittance Date following the determination of such loss.
Section 2.13. Maintenance of Insurance; Collection Thereunder.
(a) Except as otherwise provided in subsection (b) of this Section
2.13, the Servicer shall cause to be maintained with respect to each Mortgaged
Property and Acquired Property one or more Hazard Insurance Policies that
provide at least the same coverage as a standard form fire and extended coverage
insurance policy issued by a company regulated under applicable state law and
authorized by such state to issue such policies in the state in which the
Mortgaged Property or Acquired Property is located and in an amount that is not
less than an amount that would satisfy the definition of Full Prepayment with
respect to the
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related Account; provided, however, that the amount of coverage provided by each
Hazard Insurance Policy shall be sufficient to avoid the application of any
co-insurance clause contained therein. Any individual Hazard Insurance Policies
shall name the Servicer as additional loss payee and run to the benefit of the
Servicer's successors and assigns as their interests may appear. Any amounts
received under any such policies shall be transferred to or deposited in the
Holding Account or Servicing Account (or paid over to the related Obligor if the
Servicer reasonably does not deem it necessary to deposit such amounts in the
Servicing Account) pursuant to Sections 2.07 and 2.08. If any Obligor is in
default in the payment of such premiums, the Servicer shall pay such premiums
out of its own funds, and any costs so incurred by the Servicer shall be
recoverable by the Servicer to the extent such costs constitute Liquidation
Expenses pursuant to Section 2.14, or to the extent recoverable from any
Sub-Servicer servicing such Account, or from the related Obligor or from other
funds on deposit in the Holding Account to the extent that the Servicer
certifies that such advances are not otherwise recoverable due to insufficient
Net Liquidation Proceeds.
(b) The Servicer may, in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Mortgaged Property pursuant to
subsection (a) of this Section 2.13, and shall, to the extent that the related
Accounts do not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related Mortgaged Property, maintain one or more blanket
insurance policies covering losses on the mortgagee's interest in the Accounts
resulting from the lack of or insufficiency of individual Hazard Insurance
Policies issued by a company regulated under applicable state law and authorized
by such state to issue such policies in the state in which the Mortgaged
Property is located and in an amount that is not less than an amount that would
satisfy the definition of Full Prepayment with respect to the related Account.
The Servicer shall pay the premium for such policy on the basis described
therein and shall pay any deductible amount with respect to claims under such
policy relating to the Accounts; provided, however, that such deductible cannot
exceed an amount that is customary under similar policies. If the insurer
thereunder shall cease to be acceptable to the Servicer, the Servicer shall
exercise its best efforts to obtain from another insurer a replacement policy
comparable to such policy. All amounts collected by the Servicer under any such
policy and reimbursements by the Servicer of deductible amounts shall be
deposited in the Holding Account in accordance with Section 2.07.
(c) The Servicer shall indemnify the Issuer for any losses resulting
from a failure to maintain insurance pursuant to this Section 2.13 and the
Servicer shall deposit the amount of such loss in the Collection Account on the
next Remittance Date following the determination of such loss.
Section 2.14. Realization upon Defaulted Accounts
With respect to any defaulted Account, the Servicer shall use its
reasonable best efforts consistent with the servicing procedures as set forth in
Section 2.01 hereof, to foreclose upon or otherwise comparably convert (through
replevin, deed in lieu of foreclosure or otherwise) the ownership of properties
securing any Account that comes into and continues in default and as to which no
satisfactory arrangements can be made for collection of delinquent
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payments pursuant to Section 2.07. The Servicer shall prepare all documents
necessary and appropriate in connection with the realization upon defaulted
Accounts. The Servicer's obligations under this Section 2.14 are subject to the
proviso that, in the case of damage to Mortgaged Property from an Uninsured
Cause, the Servicer shall not be required to expend its own funds in restoring
such property unless it shall in good faith determine (i) that such restoration
will increase the proceeds of liquidation of the related Account, after
reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by it either as Liquidation Expenses or as Insured Expenses. For
purposes of clause (ii) of the preceding sentence, if the Servicer is
maintaining a blanket Hazard Insurance Policy pursuant to Section 2.13(b),
expenses shall be deemed recoverable as Insured Expenses if they would have been
recoverable under an individual Hazard Insurance Policy maintained pursuant to
Section 2.13(a). The Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
defaulted Account; provided, however, that it shall be entitled to reimbursement
of such costs and expenses to the extent they constitute Liquidation Expenses,
Insured Expenses or reasonable and necessary expenses incurred in the
preservation and the management of Acquired Properties. All Liquidation Proceeds
shall be deposited in the Holding Account in accordance With Section 2.07(b)
hereof.
Section 2.15. Release of Accounts.
In the case of a final Monthly Payment, Full Prepayment or liquidation
of any Account, the Servicer shall deliver to the Trustee and the Issuer an
Officers' Certificate (i) identifying the Account that was the subject of such
final payment, Full Prepayment or liquidation, (ii) stating with respect to a
Full Prepayment that all prepayment proceeds received in connection therewith
are in an amount necessary to effect a Full Prepayment (after taking into
account amounts representing reimbursement for advances by the Servicer for
taxes and insurance premiums) and have been deposited in the Holding Account,
(iii) stating with respect to a liquidation of an Account, that all Liquidation
Proceeds which have been determined by the Servicer in its reasonable judgment
to be finally recoverable have been received and the Net Liquidation Proceeds
have been deposited in the Holding Account, (iv) stating that with respect to a
final Monthly Payment, all amounts due under such Account have been paid (after
taking into account amounts representing reimbursement for advances by the
Servicer for taxes and insurance premiums) and such amounts have been deposited
in the Holding Account and (v) identifying such documents as the Servicer or the
Obligor may request to evidence satisfaction and discharge of such Account. In
connection with any prepaid Account with respect to which the related Mortgage
is a deed of trust, the Servicer is authorized to procure from the trustee under
such deed of trust a deed of full reconveyance covering the property encumbered
by such deed of trust, which deed of reconveyance shall be delivered by the
Servicer to the person or persons entitled thereto, but no expenses incurred in
connection with such deed of reconveyance shall be payable out of the proceeds
received in respect of such Account. If from time to time and as appropriate for
the servicing or foreclosure of any Account the Servicer requests the Trustee to
release the related Account Documents and delivers to the Trustee a trust
receipt reasonably satisfactory to the Trustee and signed by a Servicing
Officer, the Trustee shall release the related Account Documents to the
Servicer. Such trust receipt shall obligate the Servicer to return the related
Account Documents to the
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Trustee when the need therefor by the Servicer no longer exists. If such Account
shall be liquidated and the Trustee receives a certificate from the Servicer as
provided above, then, upon request of the Issuer, the Trustee shall release the
trust receipt to or upon the order of the Issuer.
Section 2.16. Servicing Compensation.
As compensation for the performance of its obligations under this
Agreement, the Servicer shall be entitled to a servicing fee (the "Servicing
Fee") for each Account that is not a repossessed or foreclosed Account at the
beginning of any month and that has an Economic Balance commencing on the
Cut-off Date and terminating on the first to occur of the maturity of such
Account or the date of Full Prepayment of such Account. The Servicing Fee with
respect to any Account is $____ per month. The Servicing Fee in respect of an
Account for a particular month shall be paid to the Servicer by the Custodian
from amounts held in the Holding Account upon submission to the Custodian of a
withdrawal request pursuant to Section 2.07(c). In addition to the Servicing
Fee, the Servicer shall be entitled to receive pursuant to this Section 2.16 as
additional servicing compensation all late payment charges, assumption fees,
interest on taxes, insurance premiums and similar charges paid in respect of the
Accounts and previously deposited in the Holding Account together with net
income earned on investments of funds on deposit in the Holding Account. The
Servicer shall pay all expenses and charges imposed on the Servicer hereunder,
including servicing fees, expenses and charges of any Sub-Servicers, out of its
servicing compensation or its own funds, and shall not be entitled to
reimbursement for such expenses and charges except as specifically provided for
herein.
ARTICLE THREE
STATEMENTS, REPORTS AND NOTICES
Section 3.01. Reporting by the Servicer.
(a) On or before each Reporting Date, the Servicer shall render to the
Issuer, the Independent Accountant, the Trustee and Xxxxxx Brothers Inc. a
certificate, as of the immediately preceding Monthly Cut-Off Date, certifying to
all funds collected by it through such Monthly Cut-off Date that it was required
to deposit in the Holding Account in respect of the preceding Remittance Period
and, except for amounts provided on a cumulative basis, that have not been
previously reflected on a prior certificate pursuant to this Section 3.01 and
reporting certain other information. Such certificate shall be substantially in
the form of Exhibit B hereto. Such certificate shall also be sent to [Xxxxx'x
Investors Service, Inc., 00 Xxxxxx Xxxxxx, X.X., X.X. 00000 Attention: ABS
Monitoring Department] [Standard & Poor's Ratings Service, 00 Xxxxxxxx, X.X.,
X.X. 00000 Xxxxxxxxx: Asset Backed Surveillance Group] [Duff & Xxxxxx Credit
Rating Co., 00 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX 00000 Attention:_______]
[Fitch IBCA, Inc., Xxx Xxxxx Xxxxxx Xxxxx, X.X., X.X. 00000 Attention:________].
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(b) On or before each Reporting Date, the Servicer shall provide the
Issuer, with such information as of the immediately preceding Monthly Cut-off
Date as is necessary in connection with the maintenance of the Issuer's
financial records and preparation of the Issuer's financial statements.
(c) On or before each Reporting Date, the Servicer shall provide the
Successor Servicer with servicing tapes in a format compatible with the
Successor Servicer's computer systems and containing such data as the Successor
Servicer may reasonably request.
Section 3.02. Annual Certificate; Account Statement.
On or before 120 days after the end of the first fiscal year of the
Servicer that ends more than three months after the Closing Date and each fiscal
year thereafter, the Servicer shall deliver or cause to be delivered to the
Issuer and the Trustee an Officers' Certificate, dated as of the first Monthly
Cut-off Date following the end of the preceding fiscal year, to the effect that
a review of the activities of the Servicer during the period from the beginning
of the first Remittance Period (or the Closing Date in the case of the first
such Officers' Certificate required to be delivered) to the end of the last
Remittance Period during the preceding fiscal year has been made under the
supervision of the officers executing such Officers' Certificate with a view to
determining whether during such period the Servicer had performed and observed
all of its obligations under this Agreement. Such Certificate shall state to the
best of the Servicer's knowledge either (A) no Default by the Servicer under
this Agreement has occurred and is continuing, or (B) if such a Default has
occurred and is continuing, specifying such Default and the nature and status
thereof.
Section 3.03. Annual Accountants' Reports.
On or before 120 days after the end of the first fiscal year of the
Servicer that ends more than three months after the Closing Date and each fiscal
year thereafter, the Servicer shall deliver to the Issuer and the Trustee a
report, prepared by a firm of Accountants of recognized national standing
selected by the Servicer, to the effect that (i) they have examined the balance
sheet of the Servicer as of the last day of said fiscal year and the related
statements of income, retained earnings and changes in financial position for
such fiscal year in accordance with generally accepted auditing standards and
have issued an opinion thereon, specifying the date thereof and (ii) they have
examined certain documents and records relating to the Accounts during the
preceding fiscal year in accordance with the requirements of the Uniform Single
Audit Program for Mortgage Bankers and disclosed no exceptions that, in their
opinion, were material, relating to such Accounts, or, if any such exceptions
were disclosed thereby, setting forth such exceptions that, in their opinion,
were material. If any of the Accounts are being serviced by a Sub-Servicer, the
firm of Accountants preparing the report with respect to the servicing of such
Accounts by the Servicer may rely, as to matters relating to the servicing of
such Accounts, upon a comparable report (rendered with respect to the most
recent fiscal year of such Sub-Servicer which ended at or prior to the end of
the Servicer's fiscal year) of another firm of Accountants of recognized
national standing with respect to such Sub-Servicer's servicing of such
Accounts.
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Section 3.04. Notices.
The Servicer shall, as promptly as practicable (i) following receipt by
it of notice thereof, notify the Trustee of the commencement of a class-action
litigation challenging the validity or enforceability of Accounts having an
aggregate Economic Balance totaling $1,000,000 or more or any individual claim
for damage with respect to the Accounts in excess of $250,000 and (ii) notify
the Trustee of any occurrence that materially and adversely affects the
Servicer's ability to service the Accounts.
ARTICLE FOUR
THE SERVICER
Section 4.01. Representations and Warranties of the Servicer.
The Servicer represents and warrants to the Issuer as follows:
(a) The Servicer (i) is a corporation, validly existing and in good
standing under the laws of the State of its incorporation, (ii) has qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, and (iii) has full power,
authority and legal right to own its property, to carry on its business as
presently conducted, and to enter into and perform its obligations under this
Agreement.
(b) The execution and delivery by the Servicer of this Agreement are
within the corporate power of the Servicer and have been duly authorized by all
necessary corporate action on the part of the Servicer. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict with or
result in a breach of, or constitute a default under, any of the provisions of
any law, governmental rule, regulation, judgment, decree or order binding on the
Servicer or its properties or the charter or by-laws of the Servicer, or any of
the provisions of any indenture, mortgage, contract or other instrument to which
the Servicer is a party or by which it is bound or result in the creation or
imposition of any lien, charge or encumbrance upon any of its property pursuant
to the terms of any such indenture, mortgage, contract or other instrument (or
if such conflict with, breach of or default under any such indenture, mortgage,
contract or other instrument exists or will exist, any remedies in respect
thereof and in respect of any such related lien, charge or encumbrance have been
stayed under the Bankruptcy Code).
(c) The execution, delivery and performance by the Servicer of this
Agreement and the consummation of the transactions contemplated hereby do not
require the consent or approval of, the giving of notice to, the registration
with, or the taking of any other action in respect of, any state, federal or
other governmental authority or agency, except as has been previously obtained
and are in effect.
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(d) This Agreement has been duly executed and delivered by the Servicer
and constitutes a legal, valid and binding instrument enforceable against the
Servicer in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally.
(e) Except as set forth in Exhibit C attached hereto, there are no
actions, suits or proceedings pending or, to the knowledge of the Servicer,
threatened or likely to be asserted against or affecting the Servicer, before or
by any court, administrative agency, arbitrator or governmental body with
respect to any of the transactions contemplated by this Agreement or the
Indenture, or which will, if determined adversely to the Servicer, materially
and adversely affect it or its business, assets, operations or condition,
financial or otherwise, or adversely affect the Servicer's ability to perform
its obligations under this Agreement. The Servicer is not in default with
respect to any order of any court, administrative agency, arbitrator or
governmental body so as to materially and adversely affect the transactions
contemplated by the above-mentioned documents.
(f) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of stockholders, creditors, lessors and
other nongovernmental persons, in each case, in connection with the execution,
delivery and performance of this Agreement.
The foregoing representations and warranties shall be deemed to be made
to the Trustee, as assignee of the Issuer.
Section 4.02. Merger or Consolidation of the Servicer.
The Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the State of Florida, and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Indenture or any of the Accounts and to
perform its duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any entity resulting from any merger or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer shall
be the successor of the Servicer hereunder, without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
Section 4.03. Performance of Obligations.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement and shall take such
action as may be necessary to prevent the attachment on the Mortgaged Properties
of liens or levies superior to the lien of the Mortgages securing the Accounts
arising from actions by or claims against the Servicer.
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(b) The Servicer shall not take any action, or permit any
action to be taken by others, which would (i) materially and adversely affect
the validity or collectibility of the Accounts or (ii) excuse any person from
any of its covenants or obligations under any of the Accounts or under any other
instrument included in the Trust Estate, or (iii) result in the amendment,
hypothecation, subordination, termination or discharge of, or (iv) impair the
validity or effectiveness of any of the Account Documents or any such
instrument, except as expressly provided herein and therein.
Section 4.04. Servicer Not to Resign.
(a) The Servicer shall not resign from the obligations and duties
hereby imposed on it except upon determination that its duties hereunder are no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation shall become effective
unless and until the Successor Servicer or another new servicer, qualified to
act as a mortgage servicer, enters into a servicing agreement with the Issuer
and the Trustee in form and substance substantially similar to this Agreement.
(b) The Servicer may not assign this Agreement or any of its rights,
powers, duties or obligations hereunder except as permitted under Section 4.02
hereof.
(c) Except as provided in Section 4.04(a), the duties and obligations
of the Servicer under this Agreement shall continue until this Agreement shall
have been terminated as provided in Section 7.01, and shall survive the exercise
by the Issuer or the Trustee of any right or remedy under this Agreement, or the
enforcement by the Issuer, the Trustee or any Noteholder of any provision of the
Indenture, the Notes or this Agreement.
Section 4.05. Fidelity Bond.
On or before the Closing Date, the Servicer shall obtain and deliver to
the Trustee and shall thereafter maintain in effect a fidelity bond (or a direct
surety bond) in the amount of $1,500,000 (subject to a deductible of an amount
not exceeding $[250,000.00]), issued by a surety company qualified to do
business in the State of North Carolina and having an Xxxxxx X. Best Company
general policyholders rating of A or better and a financial rating of Class 15,
or equivalent ratings by a generally recognized successor rating agency. Such
bond shall name the Trustee as an additional insured and as a joint loss payee,
shall provide for 30 days' prior notice of cancellation to the Trustee and shall
otherwise be in form and substance reasonably satisfactory to the Trustee. Any
successor to the Servicer appointed as servicer of the Accounts pursuant to
Section 3.07(d) of the Indenture or Section 4.04(a) of this Agreement shall be
obligated to obtain and maintain a fidelity bond to the same extent as the
Servicer is obligated under this Section 4.05 or 28 under the then current FNMA
or FHLMC guidelines and shall deliver a copy of such bond to the Trustee
promptly after its appointment. The Servicer or any successor servicer shall
deliver to the Trustee, within 30 days prior to the expiration of any such bond,
a renewal or replacement thereof.
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ARTICLE FIVE
DEFAULT
Section 5.01. Events of Default.
(a) Any of the following acts or occurrences shall constitute an Event
of Default by the Servicer under this Agreement:
(i) any failure by the Servicer to remit to the Trustee any amount
required to be so remitted under the terms of this Agreement
that continues unremedied for a period of two Business Days
after the date upon which such amount was due to be so
remitted; or
(ii) failure to submit to the Trustee the report called for by
Section 2.07(b) within 2 days following the related Remittance
Date; or
(iii) failure on the part of the Servicer duly to observe or perform
in any material respect any other of the covenants or
agreements on the part of the Servicer in this Agreement
contained that continues unremedied for a period of 30 days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Servicer by the Trustee or to the Servicer and the Trustee
by the holders of Notes representing at least a majority of
the Voting Rights; or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises pursuant to any
bankruptcy or insolvency law or any other law relating to the
relief of debtors, to the readjustment, composition or
extension of indebtedness, to liquidation or to
reorganization, or any formal or informal proceeding for the
dissolution, liquidation or winding up of the affairs of, or
for the settlement of claims against, the Servicer which is
involuntary on the part of the Servicer is entered and is not
discharged or stayed for a period of sixty (60) days; or
(v) the Servicer becomes insolvent, generally fails to pay its
debts as they become due, has any receiver, trustee,
liquidator, sequestrator or custodian of it or any of its
property appointed (whether with or without its consent),
makes any assignment for the benefit of creditors or commences
any case or other proceeding pursuant to any bankruptcy or
insolvency law or any other law relating to the relief of
debtors, to the readjustment, composition or extension of
indebtedness, to liquidation or to reorganization, or any
formal or informal proceeding for the dissolution, liquidation
or winding up of the affairs of, or for the settlement of
claims against it; or
21
(vi) any representation, warranty or statement of the Servicer made
in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any
material respect as of the time when the same shall have been
made and, within 30 days after written notice thereof shall
have been given to the Servicer by the Trustee or by the
holders of Notes representing not less than a majority of the
Voting Rights, the circumstance or condition in respect of
which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured.
(b) If an Event of Default shall have occurred and be continuing, the
Issuer or the Trustee (in each case subject to the provisions of the Indenture),
or, the holders of Notes representing not less than a majority of the then
Voting Rights, may, by notice given to the Servicer (with a copy to the parties
not giving such notice), terminate all of the rights and powers of the Servicer
under this Agreement ("Servicer Termination"), including without limitation all
rights of the Servicer to receive the Servicing Fee. On and after the receipt of
such notice, all rights, powers, duties and responsibilities of the Servicer
under this Agreement, whether with respect to the Accounts, Holding Account,
Collection Account, Servicing Account, any Servicing Fee or otherwise, shall
vest in and be assumed by the Successor Servicer as provided in Section 3.07 of
the Indenture, and the Issuer and the Trustee are each hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, all documents and other instruments (including any notices to
Obligors deemed necessary or advisable by the Trustee) and to do or accomplish
all other acts or things necessary or appropriate to effect such vesting and
assumption. The terminated Servicer shall cooperate promptly and in good faith
with the Successor Servicer to transfer the servicing records and other account
documents maintained by the terminated Servicer to the Successor Servicer in a
prompt and efficient manner. Except as otherwise expressly provided in the
Indenture, the Issuer shall not have any right to waive any Default or Event of
Default by the Servicer under this Agreement. In addition to any right of the
Trustee upon an Event of Default hereunder, the Trustee may take any action at
law or in equity that it deems appropriate to protect the interest of the
Holders of Notes.
Section 5.02. No Effect on Other Parties.
Upon any termination of the rights and powers of the Servicer from time
to time pursuant to Section 5.01 or upon any appointment of a successor to the
Servicer, all the rights, powers, duties and obligations of the Issuer under
this Agreement or under the Indenture shall remain unaffected by such
termination or appointment and shall remain in full force and effect thereafter,
except as otherwise expressly provided in this Agreement or in the Indenture.
Section 5.03. Rights Cumulative.
All rights and remedies from time to time conferred upon or reserved to
the Issuer, the Trustee or the Noteholders or to any or all of the foregoing are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict
22
observance or performance of any provision of this Agreement, or in exercising
any right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy. Every right and remedy may
be exercised from time to time and as often as deemed expedient.
ARTICLE SIX
THE ACCOUNTS
Section 6.01. Representations and Warranties; Account Documents.
The representations and warranties of the Issuer set forth in Section
3.11 of the Indenture with respect to each Account shall survive delivery of the
Account Documents to the Trustee and shall continue so long as such Account
remains outstanding. Upon discovery by the Issuer, the Trustee or the Servicer
that any of such representations or warranties was incorrect as of the time made
or that any of the Account Documents relating to any such Account has not been
properly executed by the Obligor or contains a material defect or has not been
received by the Trustee, the party making such discovery shall give prompt
notice to the other and to the Trustee (other than in cases where the Trustee
has given notice thereof). If any such defect, misrepresentation or omission
materially and adversely affects the interest of the holders of Notes, as
provided in Section 3.11(b) of the Indenture, the Servicer shall, after
discovery thereof or receipt of notice thereof, use its best efforts to cure the
defect or eliminate or otherwise cure the circumstances or condition in respect
of which such representation or warranty was incorrect as of the time made and
within 90 days of notice of such defect the Servicer shall notify the Trustee of
the action it has taken with respect thereto and the results thereof. If such
breach, omission or defect is not or cannot be cured within such 90-day period
or, with the prior written consent of a Responsible Officer of the Trustee if so
consented to under the Indenture, such longer period as specified in such
consent, the Servicer shall cause the Issuer to either (i) deposit into the
Collection Account an amount equal to 100% of the then current Economic Balance
of the affected Account, at which time the Defective Account shall be released
from the lien of the Indenture and reconveyed to the Grantor or (ii) remove such
Account from the Trust Estate and substitute one or more Qualified Substitute
Accounts. The Servicer shall be entitled to reimbursement for any reasonable and
necessary expenses incurred by it in the performance of its obligations under
this Section 6.01.
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
Section 7.01. Termination.
(a) The respective duties and obligations of the Servicer and the
Issuer created by this Agreement shall terminate upon the final payment or other
liquidation of the last outstanding Account. Upon the termination of this
Agreement pursuant to this Section
23
7.01(a), the Servicer shall pay all moneys in the Servicing Account to the
persons entitled thereto, and shall direct the Trustee to pay over to the Issuer
or any other person entitled thereto all other moneys held in the Holding
Account.
(b) Following an Event of Default under the Indenture and foreclosure
upon the Trust Estate pursuant thereto, the successor to the rights of the
Issuer (including, without limitation, the Trustee or any or all of the related
Noteholders) shall have the right to terminate this Agreement by notice to the
Servicer and the Issuer, within 90 days after the date such successor shall have
succeeded to such rights of the Issuer. Upon such termination, the Servicer
shall be entitled to receive only the accrued and unpaid Servicing Fee to the
date of such termination, any amounts it would have been permitted to receive
pursuant to Section 2.07 from the Holding Account or the Collection Account as
of the date of such termination.
Section 7.02. Amendment.
(a) This Agreement may be amended from time to time by the Issuer and
the Servicer in each case with the prior written consent of the Trustee, or any
of the Noteholders, provided that such action shall not adversely affect in any
material respect the interests of any Noteholder and the Trustee shall have
received an Opinion of Counsel to the effect that such amendment does not
adversely affect in any material respect the interest of the Noteholders (such
Opinion of Counsel may rely as to factual matters on representations of the
parties hereto or other persons appropriate therefor).
(b) Notwithstanding paragraph (a) of this Section 7.02, this Agreement
may be amended in accordance with the proviso set forth in the first sentence of
Section 3.14 of the Indenture.
(c) This Agreement may also be amended from time to time by the Issuer
and the Servicer, with the written consent of the Trustee and the Holders of
Notes representing more than 50% of the Voting Rights, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement; provided, however, that no such amendment shall, without the
consent of the Trustee and each holder of Outstanding Notes, (i) adversely
affect in any material respect the amount of, or the timing of, payments
received on the related Accounts which are required to be deposited in the
Holding Account and the Collection Account; (ii) alter the priorities with which
any allocation of funds shall be made under this Agreement; (iii) permit the
creation of any lien on the Trust Estate or any portion thereof or deprive any
such holder of the benefit of this Agreement with respect to the Trust Estate or
any portion thereof; or (iv) modify this Section 7.02 or Section 4.02, 4.03(b),
4.04 or 4.05.
(d) Promptly after the execution of any amendment, the Servicer shall
send to the Trustee a conformed copy of each such amendment, but the failure to
do so will not impair or affect its validity.
(e) It shall not be necessary for any consent of Noteholders under this
Section 7.02 to approve the particular form of any proposed amendment, but it
shall be sufficient
24
if such consent shall approve the substance thereof. The manner of obtaining
such consents and of evidencing the authorization of the execution thereof by
Noteholders shall be subject to such reasonable regulations as the Trustee may
prescribe.
(f) Any amendment or modification effected contrary to the provisions
of this Section 7.02 shall be void.
Section 7.03. Governing Law.
This Agreement shall be construed in accordance with the laws of the
State of North Carolina, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 7.04. Notices.
All demands, notices and communications hereunder shall be in writing
and shall be delivered or mailed by registered or certified United States mail,
postage prepaid, and addressed in each case as follows: (a) if to the Issuer, at
________________________, Attention: _____________________, (b) if to the
Servicer, at 0000 Xxxxx Xxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxx, 00000, Attention:
Xxxxxx X. Xxxxxx, (c) if to the Trustee, at _________________________________,
Attention: ________________, with a copy sent to
__________________________________________, Attention: ____________ and (d) if
to any Noteholder, at the address of such holder as it appears in the Note
Register. Any of the persons in subclauses (a) through (c) above may change its
address for notices hereunder by giving notice of such change to the other
persons. Any change of address shown on a Note Register shall, after the date of
such change, be effective to change the address for such Noteholder hereunder.
All notices and demands shall be deemed to have been given either at the time of
the delivery thereof to any officer of the person entitled to receive such
notices and demands at the address of such person for notices hereunder, or on
the third day after the mailing thereof to such address, as the case may be.
Section 7.05. Severability of Provisions.
If one or more of the provisions of this Agreement shall be for any
reason whatever held invalid or unenforceable, such provisions shall be deemed
severable from the remaining covenants, agreements and provisions of this
Agreement and such invalidity or unenforceability shall in no way affect the
validity or enforceability of such remaining provisions, the rights of any
parties hereto, or the rights of the Trustee or any Noteholders. To the extent
permitted by law, the parties hereto hereby waive any provision of law that
renders any provision of this Agreement invalid or unenforceable in any respect.
Section 7.06. Inspection and Audit Rights.
Section 7.06. Inspection and Audit Rights
The Servicer agrees that, on reasonable prior notice, it will permit
any representative of the Trustee or the Issuer, during the Servicer's normal
business hours, to
25
examine all the books of account, records, reports and other papers of the
Servicer relating to the Accounts, to make copies and extracts therefrom to
cause such books to be audited by Accountants selected by the Trustee or the
Issuer, as the case may be, and to discuss its affairs, finances and accounts
relating to the Accounts with its officers, employees and Independent
Accountants (and by this provision the Servicer hereby authorizes said
Independent Accountants to discuss with such representatives such affairs,
finances and accounts) all at such reasonable times and as often as may be
reasonably requested. Any expense incident to the exercise by the Trustee or the
Issuer of any right under this Section 7.06 shall be borne by the Trustee or the
Issuer, as the case may be, provided that if an audit is made during the
continuance of an Event of Default, the expense incident to such audit shall be
borne by the Servicer.
Section 7.07. Binding Effect.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Trustee, the Noteholders and
their successors and assigns.
Section 7.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning thereof.
Section 7.09. The Owner Trustee.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by ___________________, not
individually or personally but solely as Owner Trustee under the Trust
Agreement, in the exercise of the powers and authority conferred and vested in
it as the Owner Trustee, (b) each of the representations, undertakings and
agreements herein made on the part of the Issuer is made and intended not as
personal representations, undertakings and agreements by ________________ but is
made and intended for the purpose for binding only the Trust Property, (c)
nothing herein contained shall be construed as creating any liability on
______________________, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the Servicer, Trustee and by any Person claiming by, through
or under the Servicer and Trustee and (d) under no circumstances shall
_____________________ be personally liable for the payment of any indebtedness
or expenses of the Trustee or be liable for the breach or failure of any
obligation, representations, warranty or covenant made or undertaken by the
Issuer under this Agreement.
Section 7.10. Distribution of Servicing Procedures and Standards.
The Servicer agrees to distribute the procedures and standards set
forth herein to each of its field offices and to take all reasonable action to
instruct its field servicing personnel concerning their duties hereunder as soon
as practicable after execution hereof.
26
Section 7.11. Property Address.
Within nine months from the Closing Date the Servicer shall provide the
Trustee a magnetic tape showing, for each Account, the Account number, property
address and customer name.
Section 7.12. Power of Attorney.
The Issuer is authorized from time to time to deliver one or more
powers of attorney to the Servicer or Sub-Servicer that authorize the Servicer
and/or Sub-Servicer, as applicable, to act on behalf of the Issuer as
contemplated by this Agreement and any Sub-Servicing Agreement. The Issuer shall
upon request of any Successor Servicer deliver one or more powers of attorney to
the Successor Servicer or its designated agent for purposes contemplated by this
Agreement.
Section 7.13. Rights Upon Discharge of Indenture.
Upon the payment in full of the Notes, the satisfaction and discharge
of the Indenture, the Owner Trustee will succeed to all rights of the Trustee
hereunder and the Owners (as such term is defined in the Trust Agreement) will
succeed to all rights of the Noteholders hereunder.
27
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Issuer, the
Servicer and the Trustee have caused this Agreement to be duly executed by their
respective officers thereunder duly authorized as of the day and year first
above written.
ISSUER:
MID-STATE TRUST 199 -
By: ________________, not
in its individual capacity,
but solely as Owner Trustee of
Mid-State Trust 199 -
By:
-----------------------------------
Name:
Title:
SERVICER:
MID-STATE HOMES, INC.
By:
-----------------------------------
Name:
Title:
------------------------------,
as Trustee
By:
-----------------------------------
Name:
EXHIBIT A
FORM OF STANDBY SERVICING AGREEMENT
EXHIBIT B
MID-STATE TRUST 199 -
SERVICER'S CERTIFICATE
_______________ and ________________ hereby certify that they
are officers of Mid-State Homes, Inc. (the "Servicer") holding their respective
offices set forth beneath their signatures and that they are duly authorized to
execute this Servicer's Certificate on behalf of the Servicer and further
certify that with respect to the preceding Remittance Period (________ to
________):
(i) the Economic Balance of all Accounts as of the first
day of the month preceding each Payment Date;
(ii) the total number of Outstanding Accounts as of the end of
the preceding Due Period is _____ and the aggregate funds collected on
the Accounts with respect to the preceding Remittance Period is
$________ and the cumulative amount for the related Due Period is
$__________;
(iii) (a) the aggregate amount of the Servicing Fee included
in (i) above is $________ based on the ________ Outstanding Accounts
that have an Economic Balance of more than zero as of the beginning of
the preceding Remittance Period and the cumulative amount for the
related Due Period is $________;
(b) the aggregate amount of reimbursement for advances
for taxes and insurance premiums and other advances
included in (i) above is $________ and the cumulative
amount for the related Due Period is $__________;
(c) the aggregate amount of late payment charges,
prepayment penalties and assumption fees included in
(i) above is $___________ and the cumulative amount
for the related Due Period is $_________________;
(d) the aggregate amount previously deposited in the
Holding Account in respect of payments by Obligors
made by checks subsequently returned for insufficient
funds or other reason for non-payment is $_________
and the cumulative amounts for the related Due Period
is $_________;
(iv) the amount in (i) for the preceding Remittance Period
minus the total of amounts in (ii) for the preceding Remittance Period
is $___________ and the cumulative amount in (i) for the related Due
Period minus the total of the cumulative amounts in (ii) for the
related Due Period is $_____________;
(v) (a) the aggregate amount withdrawn from the Holding
Account as reimbursement to the Servicer for expenses for the
restoration of Mortgaged Property damaged by an Uninsured Cause and as
reimbursement for usual and customary Liquidation Expenses is
$______________, [A schedule of the Account numbers for
the related Account shall be attached] and the cumulative amount for
the related Due Period is $___________;
(b) the aggregate amount withdrawn from the Holding
Account as reimbursement for Insured Expenses is
$________, [A schedule of the Account numbers for the
related Accounts, shall be attached] and the
cumulative amount for the related Due Period is
$_________; and
(c) the aggregate amount withdrawn from the Holding
Account that is not part of the Trust Estate is
$_______ and the cumulative amount for the related
Due Period is $_______;
(vi) the amount in (iv) minus the total of the amounts in (v)
is $________ and the cumulative amount for the related Due Period is
$________;
(a) the portion of such amount that represents Net
Insurance Proceeds that do not constitute a Full
Prepayment with respect to any Account is $________
and the cumulative amount for the related Due Period
is $_________;
(b) the portion of such amount that represents Net
Liquidation Proceeds is $___________ and the
cumulative amount for the related Due Period is
$_________;
(c) the portion of such amount that represents Full
Prepayments is $_________ and the cumulative amount
for the related Due Period is $_________;
(vii) with respect to each Account that was the subject of a
Full Prepayment:
Account Number Full Prepayment Amount
-------------- ---------------------
(viii) the amount of Cumulative Prepayments is $______;
(ix) the amount of Cumulative Actual Net Economic Losses is
$___________;
(a) the cumulative Economic Balance of all Accounts which
have been repossessed equals $_______; and
(b) if applicable, the Economic Balance of those Accounts
which are delinquent over 120 days equals $_________;
and
(c) the amount of cumulative Net Liquidation Proceeds is
$_____________;
(x) the Economic Balance of all Accounts with respect to which
there is a material breach of any representation or warranty made in
Section 3.11 of the Indenture
31
or as to which there is a material defect in the related Account
Documents in accordance with Section 3.12(b) of the Indenture is
$________.
(xi) the amount that represents the cumulative amount since
the Cut-Off Date of the cash component of aggregate Net Liquidation
Proceeds equals $________;
(xii) with respect to delinquent Accounts:
Period Number of Account Balance
of Delinquency Accounts $
--------------------------- --------------------------- ---------------------------
0-30 days
31-60 days
67-90 days
91 or more days
--------------------------- --------------------------- ---------------------------
Total
--------------------------- --------------------------- ---------------------------
The percentage of Accounts on a gross receivables basis that
are 90 days or more delinquent (including Accounts in foreclosure and
the balance of "real estate owned" on a gross receivables basis) for
the immediately preceding three months is set forth on Schedule _
hereto.
(xiii) with respect to property acquired in respect of an Account:
Period of Time Number of Account Balance
As Real Estate Owned Accounts $
--------------------------- --------------------------- ---------------------------
0-3 months
4-6 months
7-9 months
10-12 months
over 12 months
--------------------------- --------------------------- ---------------------------
Total
--------------------------- --------------------------- ---------------------------
(xiv) delivered herewith, if previously requested, is a copy
of a magnetic ape file containing the Schedule of Accounts information
and current mailing address information for each Account and showing
the paid-through status of each Account;
(xv) a list of Accounts which became the subject of an
Assumption Agreement;
32
(xvi) with respect to the Servicing Account for the related
Due Period:
Beginning Balance
Deposits
Disbursements
----------------
Ending Balance $
---------------
(xvii) with respect to each Account that was the subject of a
Repossession:
Account Number Account Balance
-------------- --------------
(xviii) with respect to each Account that was the subject of a
Resale:
Account Number Account Balance
-------------- --------------
(xix) the total number of Outstanding Accounts as of the end
of the previous Due Period was ;
------------
(xx) the aggregate number and gross receivable balance of all
Accounts that were set-up (i.e., rewritten) during the Remittance
Period was $________ and $________, respectively;
(xxi) the aggregate number and gross receivables balance of
all Accounts that were set-up (i.e., rewritten) during the Remittance
Period and the prior eleven (11) Remittance Periods was _________ and
$________, respectively;
(xxii) the numbers and Aggregate Economic Balances of all
Accounts, 30, 60 and 90 or more days past due and in reposession,
foreclosure or bankruptcy are as follows:______________.
The undersigned hereby certify that all amounts received from the
Holding Account during the preceding Remittance Period are authorized
withdrawals pursuant to Section 2.07(c) or 2.11 of the Servicing Agreement.
Mid-State Homes, Inc.
By:
------------------------------------
Name:
Title:
By:
------------------------------------
Name:
Title:
33
34
State of New York )
) ss.
County of New York )
Be it remembered that on this ____ day of _____________, 1997
A.D. personally came before me, the undersigned, a Notary Public in and for said
State duly commissioned and sworn, ______________, of _______________, not in
its individual capacity but solely as Owner Trustee under the Trust Agreement,
party to the within and foregoing instrument, known to me personally to be such
and the person who executed such instrument on behalf of such trust, and
acknowledged to me that such instrument was his own act and deed and the act and
deed of such trust, that the signature therein is his own proper handwriting,
that his act of executing and delivering such instrument was duly authorized and
that the facts stated therein are true. Given under my hand and seal of office
the day and year aforesaid.
[Seal]
Signature of Notary Public
MID-STATE TRUST 199 -
By:_________________, not in its individual
capacity but solely as Owner Trustee of
Mid-State Trust 199-
By:
------------------------------------
35
EXHIBIT C
None.
EXHIBIT D
Historical Servicing Standards
MID-STATE HOMES, INC.
0000 Xxxxx Xxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
, 199
--------- -
Servicing Procedures
Mid-State Homes, Inc.
Reference is made to the Servicing Agreement (the "Servicing
Agreement") dated as of _______, 199_, among the undersigned (the "Servicer"),
Mid-State Trust 199 - , a business trust established under the laws of the State
of Delaware (the "Trust") and __________________ (the "Trustee") entered into in
connection with the issuance and sale by the Trust of its Asset-Backed Notes
(the "Notes") pursuant to the indenture dated as of ________, 199_ (the
"Indenture") between the Trust and the Trustee.
Set forth below is a description of the servicing standards
historically employed by the Servicer referred to in Section 2.01 of the
Servicing Agreement.
I. COLLECTION PROCEDURES
The following procedures are those generally followed by the Servicer
as of ________, 199_ in the collection, through its subservicing agent, Xxx
Xxxxxx Homes, Inc. ("JWH"), of past-due Accounts. However, it should be noted
that since supervisory personnel and management exercise substantial
discretionary judgment in the collection effort, the procedures followed in the
collection of any particular past-due Account may deviate from those described
below.
A. Accounts
Lists of delinquent Accounts are produced each month, between the 7th
and 11th of the month. Each delinquent Account is assigned to one of the three
following categories:
1. "Field Accounts": Accounts in respect of which the outstanding gross
receivable mortgage balance, in each case, equals or exceeds $10,000 and in
respect of which the Obligor will, if a payment is not made during the course of
the then current month, be in arrears by at least two installment payments.
Field Account Obligors may also owe amounts advanced by the Servicer in respect
of insurance premiums, real property taxes or other amounts.
2. "Low-Balance Accounts": Accounts in respect of which the outstanding
gross receivable mortgage balance, in each case, is less than $10,000.
Low-Balance Account Obligors may be:
(a) current on installment payments, but indebted for amounts
advanced by the Servicer in respect of insurance premiums, real
property taxes or other amounts;
(b) delinquent by one or more installment payments and
indebted for amounts advanced by the Servicer in respect of insurance
premiums, real property taxes or other amounts; or
(c) delinquent by two or more installment payments, in the
event that no payment is made during the course of the then-current
month, and owe no amounts with respect to insurance or taxes.
3. "Off-Code Accounts": Accounts in respect of which the outstanding
gross receivable mortgage balance, in each case, equals or exceeds $10,000 and
in respect of which the Obligor either is current on installment payments or, in
the event that a payment is not made during the course of the then-current
month, will be in arrears with respect to only one installment payment at the
end of such month, and is indebted to the Servicer for amounts advanced by the
Servicer in respect of insurance premiums, real property taxes or other amounts.
B. Field Offices
Field Accounts are serviced from JWH's Field Offices. JWH has
approximately 109 such Field Offices located in 17 different states.
Approximately one-third of the Field Offices have either two or three Field
Representatives, while the remainder have one Field Representative. Each Field
Representative services an average of 175 Accounts per month. Each Field
Representative is furnished monthly with the report of delinquent Field Accounts
respecting properties within his service area, and a copy of such list for each
Field Office within a region is furnished to the Regional and Assistant Regional
Supervisors. Lead Representatives receive copies for the Field Offices for which
they are directly responsible.
Upon receipt of such list, each Field Representative seeks to make
contact with each delinquent Obligor either by telephone or in person, in order
to make payment arrangements with such Obligors. Field Representatives and their
respective Lead Representatives communicate not less frequently than every other
day to review each list of Field Accounts and to discuss progress and problems
in such Field Representative's collection efforts. All collection efforts of the
Field Representatives (whether by phone or in person) are documented directly on
the Field Representative's own monthly delinquency report (cover sheets) with a
cross reference to the Field Representative's personal file or chase card.
At least weekly, the Lead Representative reviews orally with the
respective Assistant Regional Supervisor and Regional Supervisor the results of
the field collection efforts for the previous week. Additionally, Lead
Representatives request, upon the recommendation
38
of the Field Representative, that the account be foreclosed or repossessed,
request a deed in lieu of foreclosure or refrain from foreclosing or
repossessing an account which is two or more installments in arrears. The final
decision is made by the Regional Supervisor.
In the event an Obligor fails to adhere to the payment schedule
arranged with the Field Representative, the Field Representative will re-contact
such Obligor, usually by means of a visit to the Obligor's home. The Field
Representatives spend a significant portion of their time on the road making
face-to-face contact with delinquent Obligors. Not only does such visit seek to
impress upon the Obligor the urgency of coming to some successful arrangement,
but also affords the Field Representative the opportunity to make a cursory
inspection of the condition of the house and property, so that repair plans can
be made should reacquisition become necessary. The highest priority of
visitation is placed on the delinquent accounts with the largest balance.
In some circumstances, a satisfactory payment schedule can be arranged
with the Obligor (see below "WORK-OUT POLICIES"). However, if it is felt that
the chances of arranging a successful repayment program satisfactory to the
Servicer are not good, after a final attempt by all or some of the Lead
Representatives, the Regional or Assistant Regional Supervisor, the Field
Account Obligor will either be requested to sign a deed in lieu of foreclosure
or will be advised that his Account has been or will be referred to an attorney
for the commencement of foreclosure proceedings (see below "FORECLOSURE
POLICIES").
Field Representatives frequently receive monthly payments and other
repayments of outstanding advances directly from the Obligors. The Field
Representatives give the Obligor a receipt for such payment and mail the payment
to Tampa as soon as practicable. When the receipt book is used up it is
forwarded to the Regional Office for review and then forwarded to Tampa for
filing for a period of one year. Each day the Field Representatives take all
collections made or which have otherwise been received and mail such payments to
Tampa headquarters.
C. Collection of Low-Balance Accounts and Off-Code Accounts
Five Collection Managers at the central office of JWH in Tampa, Florida
are primarily responsible for the collection of Low-Balance or Off-Code
Accounts. Collection efforts begin immediately upon receipt of the monthly
delinquency report and are confined to contacting Obligors by telephone and by
mail. Since the majority of Obligors with respect to Accounts in these
categories have built up substantial equity in the relevant properties, it is
the experience of the Servicer that such Obligors can be persuaded to bring
their Account balance current with relative ease. Therefore, the bulk of the
collection effort expended by such Collection Managers is directed toward
collecting amounts advanced by the Servicer on such Obligor's behalf in respect
of insurance premiums and real property taxes. All Obligor contacts in the
collection effort are documented directly on the collector's terminal and stored
in the computer. Account Obligors incapable of paying all such amounts upon
demand are permitted to pay in installments pursuant to a repayment schedule
satisfactory to the Servicer.
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However, in the event that (i) a Low-Balance Account should fall into
arrears by three installment payments, (ii) an Off-Code Account with respect to
which installment payments are due on the 5th of each month should fall into
arrears by two installment payments or (iii) an Off-Code Account with respect to
which installment payments are due on the 20th of each month should fall into
arrears by one installment payment, then, in each case, such Account is referred
to the relevant Field Office to be treated as a Field Account, as described in
Section B above.
Central Office Collection Managers review the collection status of all
their accounts with the Collection Supervisor at least every other day. When in
his judgment, the Collection Manager deems it appropriate, he will refer a
Low-Balance or Off-Code account to the field for collection efforts by a Field
Representative.
II. WORK-OUT POLICIES
As a general rule, the Servicer will not permit an Account to remain
two installment payments in arrears. Whether or not the Obligor will be allowed
to arrange a repayment schedule rather than be required either to bring the
Account current or see foreclosure proceedings brought will depend upon the
Servicer's estimate of the likelihood of a successful work-out being
accomplished. Naturally, such an estimate is subjective to a certain degree.
The factors considered in arriving at a decision whether or not to
enter into an arrangement with an Obligor include whether or not the Obligor has
a record of making previous payments in a timely fashion, the nature of the
reason for failure to remain current on mortgage payments, the likelihood of
such reason being cured or removed in the near future and the difficulty, if
any, anticipated in prosecuting an action for foreclosure.
Generally, an acceptable work-out schedule of payments will require the
Obligor to pay either two installment payments, or a payment and a half, in the
immediately following month or months. On rare occasions, if an Obligor has a
good past payment record and experiences difficulty in making payment, which
difficulty, in the judgment of the relevant Representatives and Supervisors, is
likely to be cured or removed, the Account may be deemed current and the
delinquent payments added to the end of the original outstanding balance of such
Account.
A successful work-out should result in a current Account within the
space of two or three months following agreement upon a repayment schedule.
III. FORECLOSURE POLICIES
A. Generally
Accounts in respect of which foreclosure proceedings are to be
commenced are assigned for foreclosure to Xxx Xxxxxx Homes, Inc. ("JWH"). The
actual foreclosure process consists of JWH delivering the necessary Account
Documents to attorneys in the state in which
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the mortgaged property is located with direction to foreclose on the Account as
quickly as possible. JWH also has counsel in Tampa, North Carolina to oversee
the foreclosure activities of all local counsel. In any case in which an Obligor
has agreed to surrender the mortgaged property by deed in lieu of foreclosure,
Mid-State performs a search of the judgment records on file in the applicable
county to determine whether the property is subject to tax or other liens. If
there are liens on record, other than tax liens, Mid-State refuses the deed in
lieu of foreclosure and, if necessary, initiates foreclosure to acquire the
property free of such liens.
Accounts recommended for foreclosure are notified that JWH intends to
initiate foreclosure or repossession if payment is not made in 30 days. Provided
that JWH is the successful bidder at the resulting judicial sale, the relevant
JWH Field Representative will be responsible for reselling the repossessed
property. The average period elapsed between repossession of a property by JWH
and its resale is approximately 30 days.
B. Maintenance and Completion of Repossessed Homes
Immediately upon becoming aware that a property has been abandoned or
vacated or following repossession of a property, the Field Representative will
arrange for basic clean-up of the yard and interior of the house as necessary.
Periodic inspections of the property are made during the period between
repossession and resale to ensure that the property does not deteriorate
significantly.
The Field Representative will recommend needed repairs to the Regional
Supervisor. Generally speaking, repairs necessary to prevent any structural
deterioration will be made forthwith. Depending upon the magnitude of interior
repairs, such repairs may either be made at once or they may be made a part of
the negotiation of the price and terms of the resale contract. Likewise, in the
case of a house which was both sold and repossessed in an unfinished state, as a
rule no work will be done on the interior to bring it to a higher state of
completion except as part of a firm contact of resale.
JWH generally does not maintain a Hazard Insurance Policy on each
Acquired Property; however, it does pay all property taxes, assessments and
utility bills for such properties and arranges for utilities to be connected or
disconnected, as appropriate, and for the properties to be protected in winter
months to avoid damage to plumbing.
C. Resale
During the repossession and/or foreclosure process, the Field
Representative resale efforts are commenced. The Field Representative's resale
effort may take the form of canvassing the neighborhood, leaving information and
pictures at corner stores and factories or advertising in local newspapers.
1. Resale Price
Several points of reference are used in arriving at a resale price for
a repossessed home. First, the Servicer will provide the Field Representative
with a figure
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representing the Servicer's actual cash cost in the home multiplied by a factor
of 150%. This figure provides a baseline price below which the property
generally will not be sold. Sales for a price below such baseline price require
the permission of the Regional or Assistant Regional Supervisor. Second, the
Field Representative makes reference to the current price for a similar new
home. Finally, the Field Representative refers to the market price prevailing
for comparable homes in the area, discounting, if necessary, for the work left
to be done to bring the house to completion.
2. Resale Credit Policies
Prospective purchasers at resale are subject to the same credit review
procedures as purchasers of new homes. In lieu of the pledge of real property
received from new home buyers, a certain amount of equity in the property is
provided in a resale by requiring the purchaser at resale to make a down payment
of between $500 and $1,000, depending upon the creditworthiness of such
purchaser.
MID-STATE HOMES, INC.
By:
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Title: Vice President
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