LOAN SERVICING AGREEMENT AND AUTHORIZATION TO COLLECT
Exhibit
10.2
AND
AUTHORIZATION TO COLLECT
This Agreement is entered into as of
the date set forth below by and between Redwood Mortgage Corp., a California
corporation (“Broker”) and the undersigned beneficiary (“Beneficiary”) for the
purpose of establishing the terms, conditions and authority for the servicing of
a loan evidenced by a promissory note (the “Note”) and deed of trust (the “Deed
of Trust”), described as follows:
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Borrower:
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Loan
Amount:
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$
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Term:
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Interest
Rate:
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%
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Late
Charge:
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$
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Prepayment
Bonus:
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Yes
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No
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X
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Deed
of Trust Recorded: Series #
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County
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,
CA
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Beneficiary’s
Investment:
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$
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Percentage
of Ownership:
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%
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It is understood that the Beneficiary’s
interest in said Note may be a fractional undivided ownership interest, and that
other lenders (“partial beneficiaries”) also may own fractional undivided
interests in said Note. Beneficiary and the other partial
beneficiaries (collectively “Beneficiaries”) are not engaged in a partnership or
joint venture, but their relationship is specifically agreed to be that of
tenants in common. This Agreement shall be executed in counterpart by
all Beneficiaries, each of which shall be deemed an original and all of which
together shall constitute one agreement, and the terms hereof shall be uniformly
binding upon and enforceable by Beneficiary and all other partial beneficiaries,
against Broker and as between themselves. If Broker has previously
originated and funded the Note and Deed of Trust in Broker’s own name or the
interest in the Note and Deed of Trust covered herby were previously held by
another investor, Broker agrees to cause the Note to be duly endorsed or
assigned to Beneficiary and to cause an assignment of the Deed of Trust to be
recorded in favor of Beneficiary in the official records of the county where the
security property is located within ten (10) business days after Broker receives
any funds from Beneficiary or after close of escrow.
Beneficiary hereby appoints Broker to
service the Note on his behalf from and after the close of escrow, to hold the
original Note and the original Deed of Trust as Beneficiary’s agent, and to
deliver copies of all other documents as provided in Beneficiary’s escrow
instructions executed in connection with this loan transaction to Beneficiary at
the address indicated below. Such servicing activities shall include
all activities reasonably and customarily required to collect, disburse and
account for payment of principal, interest, late charges and prepayment bonuses
under the Note and to enforce all the terms and provisions of the Note and Deed
of Trust including, without limitation, the commencement of foreclosure
proceedings. Broker accepts such appointment and agrees to use
diligence in the performance of its duties hereunder.
Broker further agrees as
follows: (1) All loan payments received by Broker hereunder shall be
deposited immediately into Broker’s trust account, which trust account shall be
maintained in accordance with the provisions of law and regulations applicable
to trust accounts of licensed real estate Brokers and in accordance with the
provisions of subsection 10238(k) of the California Real Estate Law; (2) Such
loan payments shall not be commingled with the other assets of Broker or any
affiliate, or used for any transaction other than the transaction for which such
funds are received by Broker; (3) All loan payments received on the Note (less
service fees as described below and other costs, charges, and anticipated
foreclosure expenses) shall be transmitted to Beneficiary and the other partial
beneficiaries pro rata according to their respective percentage ownership
interests in the Note within 25 days after receipt thereof by Broker; (4) Broker
shall provide Beneficiary with a monthly and annual accounting of
Beneficiary’s interest in the Note in conformance with Section 10233(b) of the
California Real Estate Law; (5) Broker shall use diligence and care to assure
that proper casualty insurance is maintained
on the real property covered by the
Deed of
Trust or Deeds of Trust
1
securing
the Note; (6) Broker shall issue demands for payment and otherwise enforce the
terms of the Note in accordance with its established policies; (7) Broker shall
file a request for Notices of Default on prior encumbrances unless Broker will
receive such notices pursuant to California Civil Code Section 2924(b), and
Broker will promptly notify Beneficiary of any such defaults or on the Note
covered hereby; and (8) To the extent required by subsection 10238(k)(3) of the
California Real Estate Law, Broker will arrange for the inspection of Broker’s
trust account by an independent certified public accountant and forward the
report of such accountant to the California Commissioner of Real Estate if and
to the extent, in the manner, required by law.
In the event of any default by the
obligor or obligors under the Note, Broker shall perform all acts and execute
all documents necessary to exercise the power of sale contained in the Deed of
Trust or Deeds of Trust securing same, including without limitation the
following: Substitute trustees, select a foreclosure agent, give
demands, accept reinstatements, commence litigation to enforce the collection of
the Note, obtain relief from any court-ordered stay of foreclosure proceedings,
defend any litigation which may seek to restrain said foreclosure, receive a
trustee’s deed for the benefit of Beneficiaries, as tenants-in-common, and
otherwise to do all things reasonably necessary or appropriate to enforce
Beneficiary’s rights under the Note and Deed of Trust or Deeds of
Trust. Beneficiary hereby authorizes Broker to initiate, maintain
and/or defend any such legal actions or proceedings in the name of Beneficiary,
and to employ attorneys therefor at Beneficiary’s expense. Broker
agrees to notify Beneficiary in writing within fifteen (15) days after the
occurrence of any of the following events: (1) the recording of a
notice of default on behalf of Beneficiary; (2) the recording of a notice of
trustee’s sale on behalf of Beneficiary together with a copy of such notice;
(3) the receipt of any payment constituting an amount equal to or greater
than five monthly installment payments together with a request for partial or
full reconveyance of the real property covered by the Deed of Trust, with any
necessary or appropriate transfer or delivery instructions; (4) receipt by
Broker on behalf of Beneficiary of any request for reconveyance of the Deed of
Trust together with a copy of such request; or (5) delinquency of any
installment or other obligation under the Note for more than 30
days.
Beneficiary agrees that Broker shall
not be liable for any costs, expenses or damages that may arise from or in
connection with any acts or omissions of Broker or its agents or employees
hereunder, so long as any such act or omission shall have been undertaken in
good faith, notwithstanding any active or passive negligence (whether sole or
contributory) of Broker or its agents or employees, and Beneficiary shall hold
Broker harmless therefrom.
In consideration for the services to be
rendered hereunder, Broker shall be entitled to receive an annual service fee
equal to one quarter of one percent (0.25%), or such lesser amount as may be
agreed to by Broker and Beneficiary from time to time, of the outstanding
principal balance of the Note, payable in equal monthly installments, or in
other periodic payments if payments by obligor are made other than monthly.
Broker is hereby authorized to deduct and retain all such service fees from the
collected monthly loan payments or be paid by beneficiary monthly.
In the event of default in payment of
any sum due under the Note, Broker shall be authorized to advance such payments
to Beneficiary, but shall have no obligation whatsoever to do so. In
the event the source for any payment to Beneficiary is not the obligor under the
Note, then Broker shall inform Beneficiary of the actual source of such
payment. Broker shall also be authorized to advance monthly payments
or other sums to any senior lien holder, to pay insurance and taxes and to pay
any other expenses reasonably incurred in connection with the enforcement of the
Note and the protection of the security of the Deed of Trust securing same, but
shall have no obligation whatsoever to do so. In the event of such
advance by Broker, Broker shall, not later than 10 days after making any such
payment, notify Beneficiary in writing of the date and amount of payment, the
name of the payee, the source of funds and the reason for the
payment.
In the event of a default under the
Note or Deed of Trust, or any foreclosure action, legal action, sale or any
other event in which payments are advanced to Beneficiary or any other person or
expenses are incurred to protect the rights of Beneficiary under the Note and
Deed of Trust, then Beneficiary agrees to pay (or reimburse Broker for) his pro
rata share of such advances and expenses upon demand therefor by Broker,
according to his respective ownership interest in the Note. In the
event Beneficiary fails to pay such sums upon demand, then the following
provisions shall apply: (1) interest shall accrue on such sums at the
same rate as is provided in the Note, and (2) Broker and the other
partial beneficiaries shall have the option, but not the
obligation, to advance such sums for the
benefit of Beneficiary.
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All sums
thereafter collected by Broker hereunder shall be applied in the following
priority; (1) first, to the reinstatement of any senior liens or encumbrances;
(2) Second, to reimburse Broker for any advances made by Broker hereunder; (3)
Third, to reimburse all Beneficiaries for any advances made to enforce the Note
or protect the security of the Deed of Trust or Deeds of Trust securing same, in
the same order as such advances were made; (4) Fourth, to the payment of
interest under the Note; (5) Fifth, to the payment of accrued but unpaid
principal under the
Note (such principal and interest to be allocated among all Beneficiaries; and
(6) Thereafter, any remaining sums shall be allocated to all Beneficiaries in
accordance with their respective undivided interests in the Note.
In the event Beneficiary assigns his
interest in the Note to any person, such assignment shall be evidenced by
execution and delivery to Broker of an assignment or endorsement of the Note and
a recordable assignment of the Deed of Trust, and the assignee shall be required
to execute a counterpart of this Agreement.
Beneficiaries holding more than 50% of
the unpaid dollar amount of the Note may determine and direct the actions by
Broker on behalf of all partial Beneficiaries in the event of default or with
respect to other matters requiring the direction or approval of the
Beneficiaries under this Agreement.
Beneficiary is hereby notified of his,
her or its right to receive a copy of the appraisal or Broker’s evaluation of
the real property covered by the Deed of Trust that was prepared in connection
with the origination of the Note and Deed of Trust.
Upon any default under the Note or Deed
of Trust Beneficiary shall have the right to (1) direct the Trustee under the
Deed of Trust to exercise the power of sale contained therein, or (2) to bring
an action of judicial foreclosure, in which event all other partial
Beneficiaries shall be joined therein. Beneficiary understands and
acknowledges that, if the power of sale under the Deed of Trust securing the
Note is exercised, all Beneficiaries may acquire fee title to the security
property as tenants-in-common. In such event, reasonable cooperation
between all Beneficiaries will be essential for the protection of this
investment, and Beneficiary therefore agrees to execute in favor of Broker a
special power of attorney authorizing Broker on behalf of Beneficiary to list
and market, the security property and to negotiate the sale of such property,
execute sales contracts as agent for Beneficiary and consummate such sale in
Beneficiary’s name, place and stead and on Beneficiary’s behalf, all on such
terms and conditions as Broker may deem proper and reasonable; provided, that
any sale that will generate net sales proceeds to Beneficiary, after payment of
all selling expenses, in an amount less than the outstanding principal balance
of the Note as of the date of the foreclosure sale, shall be subject to approval
by more than 50% of the partial Beneficiaries under the Note and Deed of
Trust.
Beneficiary hereby authorizes Broker,
as Beneficiary’s agent, to receive and act upon any Notice of Rescission
delivered by any borrower under the Truth in Lending Simplification and Reform
Act (the “Act”) with respect to the Note or any refinancing
thereof. In the event that Beneficiary is a creditor as defined in
the Act, Beneficiary hereby agrees that Broker shall comply with all
requirements of the Act and regulations issued thereunder , and to give all
written disclosures required thereby.
In the event at the time of maturity of
this Note, the borrower is in the process of refinancing the loan with the
assistance of Broker, the Beneficiary agrees to extend the term of this loan for
an additional period not to exceed (90) days or such other period of time to
which the Broker and Beneficiary agree. All other terms and
conditions of the original Promissory Note shall continue in full force and
effect during said extension period.
This Agreement may be terminated by the
parties as follows: (1) by Broker, at any time, upon 30 days written
notice to Beneficiary; provided, however, if there are multiple Beneficiaries
and the Note and Deed of Trust were sold by Broker pursuant to the exemption
contained in Section 10238 of the California Real Estate Law, then Broker shall
not have the right to terminate this Agreement without the approval of
Beneficiaries holding more than 50% of the outstanding ownership interests in
the Note; or (2) by Beneficiary and/or other partial Beneficiaries holding more
than 50% of the outstanding ownership interests in the Note, upon 30 days
written notice to Broker. Beneficiary understands that this Agreement
may not be terminated by Beneficiary alone without the written consent of such
majority interest of all owners of the Note, and further that other partial
Beneficiaries have the right to terminate this Agreement as to all Beneficiaries
including the undersigned Beneficiary, without Beneficiary’s consent, if such
other partial BENEFICIARIES constitute more than 50% of the interests of all
owners of the Note. In such event, Beneficiary agrees to accept the
substitution of any servicing agent chosen by such majority interest so long as
the compensation to be paid shall not exceed the amounts set forth
herein.
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By signing below, Beneficiary hereby
acknowledges receipt of a copy of this Agreement.
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the respective dates set forth
below.
Broker: REDWOOD
MORTGAGE CORP., a
California corporation
By:
____________________________________________
Xxxxxxx Xxxxxxx,
President
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Date:
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Beneficiary: REDWOOD
MORTGAGE INVESTORS IX, LLC a
Delaware limited liability
company
By:
____________________________________________
Gymno Corporation, Managing
Member
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Date:
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