SERVICING AGREEMENT
Dated as of May 1, 1997
among
MID-STATE TRUST VI
Issuer
and
MID-STATE HOMES, INC.,
Servicer
and
FIRST UNION NATIONAL BANK OF FLORIDA,
Trustee
Relating to the Accounts Pledged to First Union
National Bank of Florida,
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 $439,150,000
Table of Contents
ARTICLE ONE
DEFINITIONS
Section 1.01. Defined Terms......................................... 1
Section 1.02. Terms Defined in the Indenture........................ 3
ARTICLE TWO
ADMINISTRATION AND SERVICING OF ACCOUNTS
Section 2.01. The Servicer to Act as Servicer....................... 3
Section 2.02. Sub-Servicing Agreements Between
Servicer and Sub-Servicer.......................... 7
Section 2.03. Successor Sub-Servicers............................... 8
Section 2.04. Liability of the Servicer............................. 8
Section 2.05. No Contractual Relationship Between
Sub-Servicer and Trustee or Issuer................. 8
Section 2.06. Assumption of Sub-Servicing Agreement by
Successor Servicer................................. 9
Section 2.07. Collection of Account Payments;
Holding Account.................................... 9
Section 2.08. Collection Account; Servicing Account................. 11
Section 2.09. Records and Servicing Account Moneys.................. 13
Section 2.10. Assumption Agreements................................. 14
Section 2.11. Permitted Withdrawals from the
Collection Account................................. 15
Section 2.12. Advances for Delinquent Taxes......................... 15
Section 2.13. Maintenance of Insurance; Collection
Thereunder......................................... 16
Section 2.14. Realization upon Defaulted Accounts................... 17
Section 2.15. Release of Accounts................................... 18
Section 2.16. Servicing Compensation................................ 19
ARTICLE THREE
STATEMENTS, REPORTS AND NOTICES
Section 3.01. Reporting by the Servicer............................. 19
Section 3.02. Annual Certificate; Account Statement................. 20
Section 3.03. Annual Accountants' Reports........................... 20
Section 3.04. Notices............................................... 21
ARTICLE FOUR
THE SERVICER
Section 4.01. Representations and Warranties of the
Servicer.............................. 21
Section 4.02. Merger or Consolidation of the Servicer............... 23
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Section 4.03. Performance of Obligations......................... 23
Section 4.04. Servicer Not to Resign............................. 23
Section 4.05. Fidelity Bond...................................... 24
ARTICLE FIVE
DEFAULT
Section 5.01. Events of Default.................................. 24
Section 5.02. No Effect on Other Parties......................... 26
Section 5.03. Rights Cumulative.................................. 26
ARTICLE SIX
THE ACCOUNTS
Section 6.01. Representations and Warranties; Account
Documents.......................................... 27
ARTICLE SEVEN
MISCELLANEOUS PROVISIONS
Section 7.01. Termination........................................ 28
Section 7.02. Amendment.......................................... 28
Section 7.03. Governing Law...................................... 29
Section 7.04. Notices............................................ 29
Section 7.05. Severability of Provisions......................... 30
Section 7.06. Inspection and Audit Rights........................ 30
Section 7.07. Binding Effect..................................... 30
Section 7.08. Article and Section Headings....................... 31
Section 7.09. The Owner Trustee.................................. 31
Section 7.10. Distribution of Servicing Procedures and
Standards.......................................... 31
Section 7.11. Property Address................................... 31
Section 7.12. Power of Attorney.................................. 31
Section 7.13. Rights Upon Discharge of Indenture................. 32
EXHIBITS
Exhibit A Form of Standby Servicing Agreement................A-1
Exhibit B Form of Servicer's Certificate.....................B-1
Exhibit C Litigation.........................................C-1
Exhibit D Historical Servicing Standards.....................D-1
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THIS SERVICING AGREEMENT, dated as of May 1, 1997, among Mid-State
Trust VI 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 First Union National Bank
of Florida, as Trustee under the Indenture referred to below.
PRELIMINARY STATEMENT
The Issuer is a business trust created by a Trust Agreement dated as of
March 1, 1997 between Wilmington Trust Company (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 First Union National Bank of Florida, 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
May 1, 1997 between the Servicer and First Union National Bank of Florida, 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 May 1, 1997 in the
name of the First Union National Bank of Florida, as Custodian for First Union
National Bank of Florida as Trustee under the Indenture, 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 May 1, 1997 between the Issuer
and First Union National Bank of Florida, 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 April
__, 1997) and the first Business Day following the end of each Due Period.
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"Remittance Period": The period from the end of the preceding Remittance
Period (or from April __, 1997 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.
"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
April __, 1997 by and among the Servicer, the Issuer and the Successor Servicer.
"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
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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.
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
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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 acknowledgement shall be delivered to the Trustee together
with the deed to such Acquired Property.
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 SubServicer 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
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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.
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 the final Payment Date on the Notes. 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 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
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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
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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 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.
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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.
Section 2.06. Assumption of Sub-Servicing Agreement by Successor
Servicer.
In the event the Servicer shall for any reason no longer be the Servicer
(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.
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(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.
(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
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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
(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
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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
VI". 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 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
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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
3.14(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.
(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
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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
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impair the ability of the holder of the related Account to realize the full
repayment of such Account, 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
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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 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
16
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 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.
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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 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.
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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 $25 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 and Standard & Poor's Ratings Service, 00 Xxxxxxxx, X.X.,
X.X. 00000 Xxxxxxxxx: Asset Backed Surveillance Group.
(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
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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 preceeding fiscal year in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers
20
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.
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 totalling $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
21
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.
(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.
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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.
(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
23
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 Florida 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.
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:
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(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;
(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
(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
25
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
26
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 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 Seller 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.
27
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 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
28
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 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 Florida, 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
Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000 c/o Wilmington Trust Company,
Attention: Corporate Trust Administration, (b) if to the Servicer, at 0000 Xxxxx
Xxxx Xxxxx Xxxxxxx, Xxxxx, Xxxxxxx, 00000, Attention: Xxxxxx X. Xxxxxx, (c) if
to the Trustee, at One Southeast Financial Center, 000 Xxxxx Xxxxxxxx Xxxxxxxxx,
Xxxxx, Xxxxxxx 00000, Attention: Corporate Trust Department, with a copy sent to
First Union Corporation, Legal Division, One First Union Center, NC 0013,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Attention: General Counsel 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
29
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.
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 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.
30
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 Wilmington Trust Company, 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 Wilmington Trust
Company 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 Wilmington Trust Company, 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 Wilmington Trust Company 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.
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 Successer Servicer deliver one or more powers of attorney to the
31
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.
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 VI
By: WILMINGTON TRUST COMPANY, not
in its individual capacity,
but solely as Owner Trustee of
Mid-State Trust VI
By:
---------------------------------
Name:
Title:
SERVICER:
MID-STATE HOMES, INC.
By:
---------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF
FLORIDA, as Trustee
By:
---------------------------------
Name:
Title:
EXHIBIT A
FORM OF STANDBY SERVICING AGREEMENT
EXHIBIT B
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
1
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
2
(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 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:
Account
Period of Number of Balance
Delinquency Accounts $
---------------------- --------------------- -----------------
0-30 days
31-60 days
61-90 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:
3
Period of Time Account
as Real Estate Number of Balance
Owned Accounts $
---------------------- --------------------- -----------------
0-3 months
4-6 months
7-9 months
10-12 months
over 12 months
--------------------- -----------------
Total
(xiv) delivered herewith is a copy of a magnetic tape 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;
(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;
4
(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.
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:
------------------------------------
0
Xxxxx xx Xxx Xxxx )
: 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 Wilmington Trust Company,
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 VI
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
of Mid-State Trust, VI
By:
------------------------------
6
EXHIBIT C
None.
EXHIBIT D
Historical Servicing Standards
MID-STATE HOMES, INC.
0000 Xxxxx Xxxx Xxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
May 1, 1997
Servicing Procedures
Mid-State Homes, Inc.
Reference is made to the Servicing Agreement (the "Servicing Agreement")
dated as of April , 1997, among the undersigned (the "Servicer"), Mid-State
Trust VI, a business trust established under the laws of the State of Delaware
(the "Trust") and First Union National Bank of Florida (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 May 1, 1997 (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 April 30, 1997 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
2
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
3
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 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.
4
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
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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.
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-
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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
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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 the mortgaged property is located with
direction to foreclose on the Account as quickly as possible. JWH also has
counsel in Tampa, Florida 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
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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,
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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 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
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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:
---------------------------------
Title: Vice President
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