--------------------------------------------------------------------------------

 
Exhibit 10.3
 
 
 
 
 
 
 

 
CONFIDENTIAL TREATMENT REQUESTED

INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED IS OMITTED AND
IS IDENTIFIED BY THREE ASTERISKS, AS FOLLOWS “* * *”, AN UNREDACTED VERSION OF
THIS
DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
 
 
LOAN SERVICING AGREEMENT

by and among

VANTIUM CAPITAL MARKETS, L.P.,
as an Owner

VANTIUM REO CAPITAL MARKETS, L.P.
as an Owner,

and

FRANKLIN CREDIT MANAGEMENT CORPORATION
as the Servicer

dated as of July 1, 2010

 
 

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TABLE OF CONTENTS
 
ARTICLE I
DEFINITIONS; CERTAIN MATTERS OF
CONSTRUCTION..................................................................................................................................................................................................... 
1

 
ARTICLE II
ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS............................................................................................................................................................................................
10

 
 
2.1.
The Servicer to Act as the
Servicer................................................................................................................................................................................................................................................................... 
10

 
 
2.2.
Liquidation of Mortgage
Loans.........................................................................................................................................................................................................................................................................
11

 
 
2.3.
Collection of Mortgage Loan
Payments..........................................................................................................................................................................................................................................................
12

 
 
2.4.
Establishment of and Deposits to Custodial
Account.................................................................................................................................................................................................................................. 
12

 
 
2.5.
Permitted Withdrawals From Custodial
Account........................................................................................................................................................................................................................................... 
13

 
 
2.6.
Establishment of and Deposits to Escrow
Account...................................................................................................................................................................................................................................... 
14

 
 
2.7.
Permitted Withdrawals From Escrow
Account.............................................................................................................................................................................................................................................. 
15

 
 
2.8.
Payment of Taxes, Insurance and Other
Charges..........................................................................................................................................................................................................................................
15

 
 
2.9.
Protection of
Accounts..................................................................................................................................................................................................................................................................................... 
16

 
 
2.10.
Maintenance of Hazard
Insurance.................................................................................................................................................................................................................................................................. 
16

 
 
2.11.
Maintenance of Mortgage Impairment
Insurance........................................................................................................................................................................................................................................ 
17

 
 
2.12.
Maintenance of Fidelity Bond and Errors and Omissions
Insurance........................................................................................................................................................................................................ 
17

 
 
2.13.
Inspections......................................................................................................................................................................................................................................................................................................... 
17

 
 
2.14.
Restoration of Mortgaged
Property............................................................................................................................................................................................................................................................... 
17

 
 
2.15.
Maintenance of PMI Policy;
Claims............................................................................................................................................................................................................................................................... 
18

 
 
2.16.
Title, Management and Disposition of REO
Property................................................................................................................................................................................................................................. 
19

 
 
2.17.
REO
Reports....................................................................................................................................................................................................................................................................................................... 
20

 
 
2.18.
Liquidation
Reports.......................................................................................................................................................................................................................................................................................... 
20

 
 
2.19.
Reports of Foreclosures and Abandonments of Mortgaged
Property.................................................................................................................................................................................................... 
20

 
 
2.20.
Application of Buydown
Funds..................................................................................................................................................................................................................................................................... 
20

 
 
2.21.
Notification of
Adjustments........................................................................................................................................................................................................................................................................... 
20

 
 
2.22.
Transfer
Notices............................................................................................................................................................................................................................................................................................... 
21

 
 
 
 
 

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2.23.
Privacy............................................................................................................................................................................................................................................................................................................... 
21

 
 
2.24.
Losses and
Expenses...................................................................................................................................................................................................................................................................................... 
22

 
ARTICLE III
PAYMENTS TO
OWNER............................................................................................................................................................................................................................................................ 
23

 
 
3.1.
Remittances...................................................................................................................................................................................................................................................................................................... 
23

 
 
3.2.
Statements to the
Owners.............................................................................................................................................................................................................................................................................. 
24

 
 
3.3.
Monthly Advances by the
Servicer............................................................................................................................................................................................................................................................. 
24

 
ARTICLE IV
GENERAL SERVICING
PROCEDURES..................................................................................................................................................................................................................................... 
24

 
 
4.1.
Transfers of Mortgaged
Property................................................................................................................................................................................................................................................................ 
24

 
 
4.2.
Satisfaction of Mortgages and Release of Mortgage
Files...................................................................................................................................................................................................................... 
25

 
 
4.3.
Servicing
Compensation................................................................................................................................................................................................................................................................................ 
25

 
 
4.4.
Annual Independent Public Accountants’ Servicing
Report.................................................................................................................................................................................................................. 
25

 
 
4.5.
Right to Examine Servicer
Records............................................................................................................................................................................................................................................................... 
25

 
 
4.6.
Compliance with REMIC
Provisions............................................................................................................................................................................................................................................................ 
26

 
ARTICLE V
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS; SERVICER TO
COOPERATE........................................................................................................................................... 
26

 
 
5.1.
Provision of
Information................................................................................................................................................................................................................................................................................ 
26

 
 
5.2.
Financial Statements; Servicing
Facility...................................................................................................................................................................................................................................................... 
26

 
 
5.3.
Possession of Mortgage Files; Maintenance of Servicing
Files............................................................................................................................................................................................................. 
26

 
 
5.4.
Books and Records; Transfers of Mortgage
Loans.................................................................................................................................................................................................................................. 
26

 
 
5.5.
Custodial Agreement; Delivery of
Documents........................................................................................................................................................................................................................................... 
27

 
ARTICLE VI
REPRESENTATIONS AND
WARRANTIES............................................................................................................................................................................................................................ 
28

 
 
6.1.
General Representations and
Warranties.................................................................................................................................................................................................................................................... 
28

 
 
6.2.
Representations, Warranties and Covenants of the Owner Regarding Individual
Mortgage
Loans................................................................................................................................................ 
29

 
ARTICLE VII
THE
SERVICER................................................................................................................................................................................................................................................................................ 
31

 
 
 
 
 

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7.1.
Indemnification; Third Party
Claims...................................................................................................................................................................................................................................................................... 
31

 
 
7.2.
Merger or Consolidation of the
Servicer..............................................................................................................................................................................................................................................................
32

 
 
7.3.
Limitation on Liability of the Servicer and
Others.............................................................................................................................................................................................................................................. 
33

 
 
7.4.
Limitation on Assignment by the
Servicer.......................................................................................................................................................................................................................................................... 
33

 
ARTICLE VIII
REMOVAL OF MORTGAGE LOANS FROM
AGREEMENT........................................................................................................................................................................................................ 
34

 
 
8.1.
Removal of Mortgage Loans from Inclusion Under this
Agreement.............................................................................................................................................................................................................. 
34

 
ARTICLE IX
DEFAULT..............................................................................................................................................................................................................................................................................................
35

 
 
9.1.
Events of
Default..................................................................................................................................................................................................................................................................................................... 
35

 
 
9.2.
Waiver of
Defaults................................................................................................................................................................................................................................................................................................. 
36

 
ARTICLE X
TERMINATION................................................................................................................................................................................................................................................................................... 
37

 
 
10.1.
Termination............................................................................................................................................................................................................................................................................................................. 
37

 
 
10.2.
Termination With
Cause....................................................................................................................................................................................................................................................................................... 
37

 
 
10.3.
Termination Without
Cause................................................................................................................................................................................................................................................................................. 
37

 

ARTICLE XI
MISCELLANEOUS
PROVISIONS..................................................................................................................................................................................................................................................... 
38

 
 
11.1.
Successor to the
Servicer...................................................................................................................................................................................................................................................................................... 
38

 
 
11.2.
Reserved.................................................................................................................................................................................................................................................................................................................. 
38

 
 
11.3.
Amendment; Extension Not a
Waiver................................................................................................................................................................................................................................................................. 
38

 
 
11.4.
Governing Law;
Venue.......................................................................................................................................................................................................................................................................................... 
39

 
 
11.5.
Duration of
Agreement......................................................................................................................................................................................................................................................................................... 
39

 
 
11.6.
Notices.................................................................................................................................................................................................................................................................................................................... 
39

 
 
11.7.
Severability of
Provisions.................................................................................................................................................................................................................................................................................... 
40

 
 
11.8.
Relationship of
Parties..........................................................................................................................................................................................................................................................................................
40

 
 
11.9.
Execution; Successors and
Assigns...................................................................................................................................................................................................................................................................
40

 
 
11.10.
Assignment by the
Owners.................................................................................................................................................................................................................................................................................
40

 
 
11.11.
Time of
Payment....................................................................................................................................................................................................................................................................................................
40

 
 
 
 
 

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11.11.
Force
Majeure........................................................................................................................................................................................................................................................................................................
40

 
EXHIBITS

Exhibit A    Mortgage Loan Schedule
Exhibit B    Contents of each Mortgage Loan File
Exhibit C-1     Form of Custodial Account Certification
Exhibit C-2     Form of Escrow Account Certification
Exhibit D    Servicing Fee Schedule
Exhibit E    Reports
Exhibit F    Form of Limited Power of Attorney
Exhibit G    Approval Matrix
Exhibit H    Removed Mortgage Loans

 
 

 
 

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LOAN SERVICING AGREEMENT
 
This Loan Servicing Agreement (the “Agreement”), dated and effective as of July
1, 2010, is by and among Vantium Capital Markets, L.P. (“VCM”), Vantium REO
Capital Markets, L.P. (“VCMR”; together with VCM, the “Owners” and each
individually, the “Owner”), and Franklin Credit Management Corporation
(“Servicer”).
 
WHEREAS, the Mortgage Loans identified on the Mortgage Loan Schedule annexed
hereto as Exhibit A have been purchased by VCM; and
 
WHEREAS, the Servicer has agreed to service each Mortgage Loan and REO
Properties on behalf of the Owners commencing on the Effective Date (as defined
herein), and the parties hereto desire to provide the mechanics of such
servicing by the Servicer;
 
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth,
and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Owners and the Servicer agree as follows:
 
ARTICLE I

 
DEFINITIONS; CERTAIN MATTERS OF CONSTRUCTION
 
Whenever used herein, the following words and phrases shall have the following
meanings:
 
“Accepted Servicing Practices” means, with respect to any Mortgage Loan, those
customary and reasonable mortgage servicing practices generally undertaken by
prudent mortgage lending institutions that service mortgage loans of the same
type as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located, subject to and in accordance with the Approval Matrix.
 
“Adjustment Date” means, as to each adjustable rate Mortgage Loan, the date on
which the Mortgage Interest Rate is adjusted in accordance with the terms of the
related Mortgage Note and Mortgage.
 
“Agreement” has the meaning assigned to it in the preamble.
 
“Ancillary Income” means all income derived from the Mortgage Loans (other than
payments of principal and interest on the Mortgage Loans), including any Float
Benefit, insufficient fund fees, conversion fees, satisfaction fees, optional
insurance administrative fees, assumption fees, escrow account benefits,
reinstatement fees, customary real estate referral fees, release fees, late
payment fees and all other incidental fees and charges received by the Servicer
directly from or on behalf of the Mortgagor in accordance with Applicable
Requirements, but excluding Servicing Fees.
 
“Applicable Requirements” means as of the time of reference, with respect to the
Mortgage Loans, REO Property and the servicing of the Mortgage Loans, all of the
following: (i)
 
 
 
 
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all contractual obligations of the Servicer set forth in this Agreement; (ii)
the requirements set forth in the related Mortgage Note and the related
Mortgage; (iii) all applicable federal, state and local legal and regulatory
requirements (including statutes, rules, regulations and ordinances and
including the Privacy Requirements); (iv) all other applicable requirements and
guidelines of each governmental agency, board, commission, instrumentality and
other governmental body or officer having jurisdiction; (v) all other applicable
judicial and administrative judgments, orders, stipulations, awards, writs and
injunctions; and (vi) Accepted Servicing Practices.
 
“Appraised Value” means with respect to any Mortgage Loan, the lesser of (i) the
value set forth on the appraisal made in connection with the origination of the
related Mortgage Loan as the value of the related Mortgaged Property, or (ii)
the purchase price paid for the Mortgaged Property, provided, however, that in
the case of a refinanced Mortgage Loan, such value shall be based solely on the
appraisal made in connection with the refinancing of such Mortgage Loan.
 
“Approval Matrix” means the Servicer’s specified delegation of authority to the
Servicer  for servicing the Mortgage Loans, which is set forth on Exhibit G to
this Agreement and which may be amended from time to time by the Owner in the
sole discretion of the Owners.
 
 “Assignment of Mortgage” means an assignment of the Mortgage, notice of
transfer or equivalent instrument in recordable form, sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to reflect
the sale of the Mortgage to the related Owner.
 
“Bankruptcy Code” means 11 U.S.C. 101 et. seq., as the same may be amended,
modified or supplemented from time to time.
 
“Business Day” means any day other than (i) a Saturday or Sunday, or (ii) a day
on which banking institutions located in New York or New Jersey are authorized
or obligated by law or executive order to be closed.
 
“Buydown Agreement” means an agreement between the Originator and a Mortgagor,
or an agreement among the Servicer, a Mortgagor and a seller of a Mortgaged
Property or a third party with respect to a Mortgage Loan which provides for the
application of Buydown Funds.
 
“Buydown Funds” means, in respect of any Buydown Mortgage Loan, any amount held
by the Servicer, which was contributed by the seller of a Mortgaged Property
subject to a Buydown Mortgage Loan, the buyer of such property, the Originator
or any other source, plus interest earned thereon, in order to enable the
Mortgagor to reduce the payments required to be made from the mortgagor’s funds
in the early years of a Mortgage Loan.
 
“Buydown Mortgage Loan” means any Mortgage Loan in respect of which, pursuant to
a Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments
specified in the Mortgage Note for a specified period, and (ii) the difference
between the payments required under such Buydown Agreement and the Mortgage Note
is provided from Buydown Funds.
 
“Buydown Period” means the period of time when a Buydown Agreement is in effect
with respect to a related Buydown Mortgage Loan.
 
 
 
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“Change in Control” means with respect to any Person, the acquisition by any
other Person, or two or more other Persons acting in concert, other than The
Huntington National Bank or any of its affiliates, of beneficial ownership
(within the meaning of Rule 13d-3 of the Commission under the Exchange Act) of
outstanding shares of voting stock or other equity interests of such Person at
any time if after giving effect to such acquisition such other Person or Persons
owns fifty percent (50%) or more of such outstanding voting stock or other
equity interests, as applicable.
 
“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time or any successor statute thereto, and applicable U.S. Department of the
Treasury regulations issued pursuant thereto.
 
“Condemnation Proceeds” means all awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain or condemnation, to the extent not
required to be released to a Mortgagor in accordance with the terms of the
related Mortgage Loan Documents.
 
“Custodial Account” means the separate account or accounts created and
maintained pursuant to Section 2.4.
 
“Custodial Agreement” means the agreement governing the retention of the
originals of each Mortgage Note, Mortgage, Assignment of Mortgage and other
Mortgage Loan Documents.
 
“Custodian” means the custodian under the Custodial Agreement, or its successor
in interest or assigns, or any successor to the Custodian under the Custodial
Agreement as provided therein.
 
“Customer Information” means any personally identifiable information in any form
(written, electronic or otherwise) relating to a Mortgagor, including, but not
limited to: a Mortgagor’s name, address, telephone number, social security
number, Mortgage Loan number, Mortgage Loan payment history, delinquency status,
insurance carrier or payment information, tax amount or payment information; the
fact that the Mortgagor has a relationship with the servicer of such Mortgagor’s
Mortgage Loan; and any other non-public personally identifiable information.
 
“Cut-off Date” means July 1, 2010.
 
“Damages” means any and all assessments, judgments, claims, liabilities, losses,
costs, damages or expenses (including interest, penalties and reasonable
attorneys’ fees, expenses and disbursements in connection with any action, suit
or proceeding and including any such reasonable attorneys’ fees, expenses and
disbursements incurred in enforcing any right of indemnification against any
indemnitor).
 
“Delinquent” means a Mortgage Loan is “Delinquent” when any payment
contractually due thereon has not been made by the close of business on the Due
Date therefor.  Such Mortgage Loan is “30 days Delinquent” if such contractual
payment has not been received by the close of business on the numerically
corresponding day of the month immediately succeeding the month in which such
contractual payment was due, or, if there is no such numerically
 
 
 
3

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corresponding day (e.g., when a 30-day month follows a 31-day month in which a
payment was due on the 31st day of such month) then on the last day of such
immediately succeeding month. Similarly for “60 days Delinquent” the second
immediately succeeding month, and for “90 days Delinquent” the third immediately
succeeding month.
 
“Determination Date” means the last calendar day of the month immediately
preceding the related Remittance Date.
 
“Due Date” means the first day of the month on which the Monthly Payment is due
on a Mortgage Loan, exclusive of any days of grace.
 
“Due Period” means with respect to each Remittance Date, the period commencing
on the second day of the month preceding the month of the Remittance Date and
ending on the first day of the month of the Remittance Date.
 
“Effective Date” means July 1, 2010.
 
“Errors and Omissions Insurance Policy” means an errors and omissions insurance
policy to be maintained by the Servicer pursuant to Section 2.12.
 
“Escrow Account” means the separate account or accounts created and maintained
pursuant to Section 2.6.
 
“Escrow Payments” means with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, flood insurance premiums, mortgage insurance premiums, fire
and hazard insurance premiums, condominium charges, and any other payments
required to be escrowed by the Mortgagor with the mortgagee pursuant to the
Mortgage or any other related document.
 
“Event of Default” means any one of the conditions or circumstances enumerated
in Section 9.1.
 
“Exchange Act” means The Securities Exchange Act of 1934, as amended.
 
“Expenses” has the meaning assigned to it in Section 2.24.2.
 
“Fannie Mae” means the Federal National Mortgage Association or any successor
thereto.
 
“FDIC” means the Federal Deposit Insurance Corporation, or any successor
thereto.
 
“FHA” means the Federal Housing Administration, or any successor thereto.
 
“Fidelity Bond” means a fidelity bond to be maintained by the Servicer pursuant
to Section 2.12.
 
 
 
 
4

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“Float Benefit” means the net economic benefit resulting from escrow and
custodial deposits held for the account of the Servicer or the Owners relating
to the Mortgage Loan and servicing thereof.
 
“Gross Margin” means with respect to each Mortgage Loan, the fixed percentage
amount set forth in the related Mortgage Note which is added to the Index in
order to determine the related Mortgage Interest Rate, as set forth in the
Mortgage Loan Schedule.
 
“HAMP” means the Home Affordable Modification Program established by the U.S.
Department of Treasury pursuant to section 101 and 109 of the Emergency Economic
Stabilization Act of 2008 (the “Act”), as section 109 of the Act has been
amended by section 7002 of the American Recovery and Reinvestment Act of 2009.
 
“HELOC” means a Mortgage Loan that is a home equity line of credit or any other
arrangement under which the Mortgagor has the right to demand further advances
from the mortgagee.
 
“High Cost Loan” means a Mortgage Loan classified as (a) a “high cost” loan
under HOEPA, (b) a “high cost home,” “threshold,” “covered,” “high risk home,”
“predatory” or similar loan under any other applicable state, federal or local
law or (c) a Mortgage Loan categorized as “High Cost” pursuant to the Standard &
Poor’s Glossary for File Format for LEVELS®, Appendix E, as revised from time to
time.
 
“HOEPA” means the Home Ownership Equity Protection Act of 1994, as amended.
 
“Index” means with respect to any adjustable rate Mortgage Loan, the index
identified on the Mortgage Loan Schedule and set forth in the related Mortgage
Note for the purpose of calculating the interest thereon.
 
“Insurer” means any entity generally acceptable to mortgage lending institutions
that insures or guarantees all or part of the risk of loss of a Mortgage Loan,
including FHA, VA or any provider of a PMI Policy, and the providers of any
hazard insurance policy, flood insurance policy or title insurance policy.
 
“Insurance Proceeds” means with respect to each Mortgage Loan, proceeds of
insurance policies insuring the Mortgage Loan or the related Mortgaged Property.
 
“Litigation: means any litigation, arbitration or other proceeding before any
governmental, administrative or arbitral court or tribunal, or any government
investigation or administrative enforcement action.
 
“Liquidation Proceeds” means cash received in connection with the liquidation of
a defaulted Mortgage Loan, whether through the sale or assignment of such
Mortgage Loan, trustee’s sale, foreclosure sale or otherwise, or the sale of the
related Mortgaged Property if the Mortgaged Property is acquired in satisfaction
of the Mortgage Loan.
 
 
 
5

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 “Loan-to-Value Ratio or LTV” means with respect to any Mortgage Loan, the ratio
of the original loan amount of the Mortgage Loan at its origination (unless
otherwise indicated) to the Appraised Value of the Mortgaged Property.
 
“Material Adverse Change” means with respect to a Person, any material adverse
change in the business, condition (financial or otherwise), operations,
performance or properties of such Person.
 
“Material Adverse Effect” means (a) a Material Adverse Change with respect to
the Servicer or any of its affiliates taken as a whole; (b) a material
impairment of the ability of the Servicer to perform under this Agreement and to
avoid any Events of Default (that cannot be timely cured, to the extent a cure
period is applicable); or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability of this Agreement against the
Servicer.
 
“MBA Methodology” means a method of calculating delinquency of a Mortgage Loan
based upon the Mortgage Banker Association method, under which method a Mortgage
Loan is considered delinquent if the Monthly Payment related to such Mortgage
Loan has not been received by the end of the day immediately preceding the
loan’s next Due Date (generally the last day of the month which the payment was
due).  For example, assuming a cut-off date of the end of the calendar month, a
loan with a Due Date of August 1st, with no payment received by the close of
business on August 31st, would have been reported as delinquent on the September
statement.
 
“Monthly Payment” means (i) the scheduled monthly payment of principal and
interest on a Mortgage Loan plus (ii) tax and insurance escrow payment to the
extent required under the related Mortgage.
 
“Mortgage” means the mortgage, deed of trust or other instrument securing a
Mortgage Note, which creates a lien on Mortgaged Property securing the Mortgage
Note.
 
“Mortgage File” means the items pertaining to a particular Mortgage Loan
referred to in Exhibit B to this Agreement, and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
 
“Mortgage Interest Rate” means the annual rate of interest borne on a Mortgage
Note in accordance with the provisions of the Mortgage Note.
 
“Mortgage Loan” means each Mortgage Loan subject to this Agreement and which is
identified on the Mortgage Loan Schedule, which Mortgage Loan includes the
Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, Servicing Rights, REO
Disposition Proceeds and all other rights, benefits, proceeds and obligations
arising from or in connection with such Mortgage Loan.  To the extent the
context shall permit or require, each such reference to Mortgage Loan shall
include REO Property.
 
“Mortgage Loan Documents” means with respect to a Mortgage Loan, to the extent
in the applicable Owner or its designee’s possession, the original related
Mortgage Note with applicable addenda and riders, the original related Mortgage
and the originals of any required
 
 
 
6

--------------------------------------------------------------------------------

 
 
 
addenda and riders, the original related Assignment of Mortgage and any original
intervening related assignments, the original related title insurance policy,
related PMI Policy, if any.
 
“Mortgage Loan Schedule” means a schedule of Mortgage Loans annexed hereto as
Exhibit A, such schedule setting forth the following information with respect to
each Mortgage Loan: (1) the Servicer’s Mortgage Loan number and (2) the city
state and zip code of the Mortgaged Property.
 
“Mortgage Note” means the note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
 
“Mortgaged Property” means the real property securing repayment of the debt
evidenced by a Mortgage Note or, where the context permits or requires
(including in Section 6.2), an REO Property.
 
“Mortgagor” means the obligor on a Mortgage Note.
 
“Nonrecoverable Advance” means any advance previously made or proposed to be
made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer or the related  Owner, will not, or, in the
case of a proposed Servicing Advance, would not be, ultimately recoverable from
related late payments, Insurance Proceeds or Liquidation Proceeds on such
Mortgage Loan or REO Property as provided herein.
 
“Non-Performing Loan” means as of the Determination Date, a Mortgage Loan for
which any one of the following applies:  (a) any Monthly Payment is Delinquent
(using the MBA Methodology) at least two (2) calendar months determined without
giving effect to any grace period permitted by the related Mortgage Loan
Documents; (b) there has been a material default under the terms and provisions
of the Mortgage Loan Documents, and such material default is not likely to be
cured by Mortgagor within two (2) calendar months; (c) as to which Servicer
shall have received notice of the foreclosure (or deed-in-lieu of foreclosure)
or proposed foreclosure (or proposed deed-in-lieu of foreclosure) or exercise of
other remedies of any other mortgage or lien senior in priority to the Mortgage
on the Mortgaged Property; (d) as to which the Mortgagor has entered into or
consented to bankruptcy, appointment of a receiver or conservator or a similar
insolvency or similar proceeding, or the Mortgagor has become the subject of a
decree or order for such a proceeding which shall have remained in force
undischarged or unstayed for a period of two (2) calendar months; or (e) as to
which the Mortgagor admits in writing its inability to pay its debts generally
as they become due, files a petition to take advantage of any applicable
insolvency or reorganization statute, makes an assignment for the benefit of its
creditors or voluntarily suspends payments of its obligations.
 
“Opinion of Counsel” means a customary written opinion of counsel.
 
“Originator” means, with respect to any Mortgage Loan, the entity or entities
that (a) took the relevant Mortgagor’s loan application; (b) processed the
relevant Mortgagor’s loan application: and/or (c) closed and/or funded such
Mortgage Loan.
 
“Owner” shall have the meaning set forth in the first paragraph of this
Agreement.
 
 
 
 
7

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“Owners” shall have the meaning set forth in the first paragraph of this
Agreement.
 
“Owner Indemnitees” has the meaning assigned to it in Section 7.1.1.
 
“Pass-Through Transfer” means the sale or transfer of some or all of the
Mortgage Loans by the Owner to a trust formed as part of a publicly issued or
privately placed mortgage-backed securities transaction.
 
“Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof.
 
“PMI Policy” means a policy of primary mortgage guaranty insurance issued by an
Insurer.
 
“Principal Prepayment” means any payment or other recovery of principal on a
Mortgage Loan which is received in advance of its scheduled Due Date, including
any prepayment penalty or premium thereon and which is not accompanied by an
amount of interest representing scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
 
“Principal Prepayment Period” means the month preceding the month in which the
related Remittance Date occurs.
 
“Privacy Requirements” means the obligations imposed by (i) Title V of the
Gramm-Leach-Bliley Act, 15 U.S.C. § 6801 et seq.; (ii) the applicable federal
regulations implementing such act and codified at 12 CFR Parts 40, 216, 332,
573, and/or 16 CFR Part 313; (iii) Interagency Guidelines Establishing Standards
For Safeguarding Borrower Information published in final form on February 1,
2001 (such final guidelines and/or rules the “Interagency Guidelines”) to
establish and maintain an Information Security Program  (as such term is defined
in the Interagency Guidelines); and (iv) other applicable federal, state and
local laws, rules, regulations, and orders relating to the privacy and security
of Customer Information, including the federal Fair Credit Reporting Act, 15
U.S.C. § 1681 et seq., and similar state laws.
 
“Qualified Depository” means a deposit account or accounts maintained with a
federal or state chartered depository institution selected by the Owners the
deposits in which are insured by the FDIC to the applicable limits and the
short-term unsecured debt obligations of which (or, in the case of a depository
institution that is a subsidiary of a holding company, the short-term unsecured
debt obligations of such holding company) are rated A-1 by Standard & Poor’s
Ratings Services or Prime-1 by Moody’s Investors Service, Inc. (or a comparable
rating if another rating agency is specified by the Owners by written notice to
the Servicer) at the time any deposits are held on deposit therein.
 
“Qualified Insurer” means a mortgage guaranty insurance Insurer duly authorized
and licensed where required by law to transact mortgage guaranty insurance
business and generally acceptable as an Insurer under Accepted Servicing
Practices.
 
 
 
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“REMIC” means a “real estate mortgage investment conduit” within the meaning of
Section 860D of the Code.
 
“REMIC Provisions” means provisions of the federal income tax law relating to a
REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1,
Subtitle A of the Code, and related provisions, and regulations, rulings or
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.
 
“Remittance Date” means the fifth (5th) Business Day of each month.
 
“Removed Mortgage Loans”  means those Mortgage Loans identified on Exhibit H
attached hereto.
 
“REO Disposition” means the final sale by the Servicer of any REO Property.
 
“REO Disposition Proceeds” means all amounts received with respect to an REO
Disposition pursuant to Section 2.16.
 
“REO Property” means a Mortgaged Property acquired through foreclosure, by deed
in lieu of foreclosure or otherwise, as described in Section 2.16.
 
“Servicer” means Franklin Credit Management Corporation, or its successor in
interest or assigns, or any successor to the Servicer under this Agreement
appointed as herein provided.
 
“Servicer Employees” means Servicer Employees has the meaning set forth in
Section 2.12.
 
“Servicing Advances” means all customary, reasonable and necessary “out of
pocket” costs and expenses (including reasonable attorney’s fees and
disbursements) incurred in the performance by the Servicer of its servicing
obligations that would be reasonably believed to be recoverable in whole or in
part under Applicable Requirements, including, but not limited to, the cost of
(a) the preservation, restoration and protection of the Mortgaged Property or
REO Property, (b) any enforcement or judicial proceedings, including
foreclosures and bankruptcy proceedings, (c) the management and liquidation of
any REO Property, including, but not limited to, the cost of environmental
inspection or review of such property, (d) taxes, assessments, water rates,
sewer rents and other charges which are or may become a lien upon the Mortgaged
Property or REO Property, PMI Policy premiums and fire, flood and hazard
insurance coverage and (e) other Expenses that are the responsibility of the
Owners under Section 2.24.
 
“Servicing Fee” means with respect to each Mortgage Loan, the fees the Owners
shall pay to the Servicer, as set forth on Exhibit D to this Agreement.
 
“Servicing File” means with respect to each Mortgage Loan, the file retained by
the Servicer consisting of originals of all documents in the Mortgage File which
are not delivered to the Custodian and copies of the Mortgage Loan Documents
listed in the Custodial Agreement, the originals of which are delivered to the
Custodian pursuant to Section 5.5.
 
 
 
 
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“Servicing Rights”  means any and all of the following:  (a) any and all rights
to service the Mortgage Loans; (b) any payments or monies received by Servicer
other than Servicing Fees and other payments and reimbursements to Servicer as
provided in this Agreement; (c) subject to the terms and conditions of this
Agreement, any Ancillary Income with respect to the Mortgage Loans; (d) all
agreements or documents creating, defining or evidencing any such servicing
rights to the extent they relate to such servicing rights and all rights of
Servicer thereunder; (e) any and all rights to and in the Escrow Payments or
other similar payments with respect to the Mortgage Loans and any amounts
actually collected by Servicer with respect thereto (other than Prepayment
Charges); (f) all accounts and other rights to payment related to any of the
property described in this paragraph; and (g) any and all documents, files,
records, Servicing Files, servicing documents, servicing records, data tapes,
computer records, or other information pertaining to the Mortgage Loans or
pertaining to the past, present or prospective servicing of the Mortgage
Loans.  Notwithstanding anything set forth to the contrary in this Agreement,
the applicable Owner owns and retains 100% of the Servicing Rights related to
each Mortgage Loan and the Servicer does not own the Servicing Rights relating
to any Mortgage Loan.
 
“Servicing Transfer Costs”  mean all reasonable out-of-pocket costs and expenses
incurred in connection with the transfer of servicing, including, without
limitation, costs related to the transfer or procurement of acceptable tax or
flood certification contracts, assignment preparation and recordation costs,
MERS transfer costs, and any reasonable out-of-pocket costs or expenses
associated with the complete transfer of all servicing data and the completion,
correction or manipulation of such servicing data as may be required by the
Owners or Servicer (or any successor to Servicer appointed pursuant to Section
11.1) to correct any errors or insufficiencies in the servicing data that do not
enable the Mortgage Loans properly and effectively but not including overhead,
or similar costs.
 
“Termination Fee” means, with respect to each Mortgage Loan terminated pursuant
to Section 10.3, one half of one per cent (0.50%) of the then outstanding unpaid
principal balance of such Mortgage Loan.
 
“VA” means the United States Department of Veterans Affairs, or any successor
thereto.
 
“Whole Loan Transfer” means any sale or transfer of some or all of the Mortgage
Loans by the Owners to a third party, which sale or transfer is not a
Pass-Through Transfer.
 
Construction of this Agreement and Certain Terms and Phrases.
 
(a) Unless the context of this Agreement clearly indicates otherwise, (i) words
of any gender include each other gender; (ii) words denoting the singular shall
include the plural and vice versa; (iii) the terms “hereof”, “herein”, “hereby”
and derivate or similar words refer to this entire Agreement and not to any
particular provision of this Agreement; and (iv) the terms “Article”, “Section”,
and “Exhibit” without any reference to a specified document refer to the
specified Article, Section and Exhibit, respectively, of this Agreement.
 
(b) The words “including”, “include” and “includes” are not exclusive and shall
be deemed to be followed by the words “without limitation”.
 
 
 
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(c) The word “or” shall be construed to mean “and/or” unless the context clearly
prohibits that construction.
 
(d) Whenever this Agreement refers to a number of days, such number shall refer
to calendar days unless Business Days are specified.
 
(e) Any reference to any federal, state, local or foreign statute or law,
including any one or more sections thereof, shall be deemed also to refer to,
unless the context requires otherwise, all rules and regulations promulgated
thereunder.
 
(f) The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
 
ARTICLE II

 
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
 
2.1.   The Servicer to Act as the Servicer.
 
The Servicer, as an independent contractor, shall service and administer the
Mortgage Loans on an actual/actual basis in accordance with this Agreement and
Applicable Requirements, and shall have full power and authority, acting alone
or through the delegation of duties to third party servicing providers, to do
any and all things in connection with such servicing and administration which
the Servicer may deem necessary or desirable, consistent with the terms of this
Agreement. Notwithstanding anything set forth to the contrary in this Agreement,
the applicable Owner owns and retains 100% of the Servicing Rights related to
each Mortgage Loan and the Servicer does not own the Servicing Rights relating
to any Mortgage Loan.  The Servicer shall monitor and comply with all Applicable
Laws, rules and/or regulations affecting the servicing of the Mortgage Loans,
including but not limited to any foreclosure restrictions and changes in such
laws, rules and/or regulations.
 
Servicer shall be responsible for any and all acts of any third party service
provider it uses according to the terms of this Agreement and Servicer’s
utilization of such third party service provider shall in no way relieve the
liability of Servicer, if any, under this Agreement.  Notwithstanding the
provisions of any agreement between Servicer and such third party service
provider or subservicer, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a third party servicer
provider or subservicer or reference to actions taken through Servicer or
otherwise, the Servicer shall remain obligated and liable to the Owners and
their respective successors and assigns for the servicing and administration of
the Mortgage Loans in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such agreements or
arrangements with the third party service provider or subservicer or by virtue
of indemnification from the Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans.
 
In the event that the Servicer’s responsibilities and duties under this
Agreement are terminated pursuant to Article X, and if requested to do so by an
Owner the Servicer shall at its own cost and expense terminate the rights and
responsibilities of each subservicer effective as
 
 
 
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of the date of termination of the Servicer.  The Servicer shall pay all fees,
expenses or penalties necessary in order to terminate the rights and
responsibilities of each subservicer from the Servicer’s own funds without
reimbursement from any Owner.  Any subservicing agreement and any other
transactions or services relating to the Mortgage Loans involving a subservicer
shall be deemed to be between such subservicer and the Servicer alone, and the
Owners shall not have any obligations, duties or liabilities with respect to
such subservicer, including any duty obligation, duty or liability to pay such
subservicer’s fees and expenses.  For purposes of distributions by the Servicer
pursuant to this Agreement, the Servicer shall be deemed to have received a
payment on a Mortgage Loan when a subservicer has received such payment.
 
From and after the Effective Date, the Servicer shall assume responsibility
under this Agreement to service and administer the  Mortgage Loans.  The Owners
agree to cause the Custodian to provide the Servicer, within five (5) Business
Days after the Servicer’s request, copies of the Mortgage Note, the Mortgage or
any other documents the related Owner has in its possession or which are held by
the Custodian with respect to a Mortgage Loan that the Servicer deems reasonably
necessary in connection with its performance of the servicing of said Mortgage
Loan.
 
Consistent with the terms of this Agreement and Applicable Requirements, the
Servicer may waive, modify or vary any term of any Mortgage Loan or consent to
the postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer’s reasonable and prudent
determination such waiver, modification, postponement or indulgence is not
materially adverse to the related Owner; provided, however, the Servicer shall
not make any future advances with respect to a Mortgage Loan. Notwithstanding
the foregoing, and notwithstanding (i) if the Mortgage Loan is delinquent or
(ii) if the Mortgage Loan becoming delinquent is reasonably foreseeable, the
Servicer shall not accept short sales or partial payments in full satisfaction
of any payment obligation, grant forbearances or permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate, defer
or forgive the payment of principal or interest, reduce or increase the
outstanding principal balance (except for actual payments of principal),
capitalize arrearages or change the final maturity date on such Loan, unless the
Servicer has obtained the prior written consent of the related Owner or such
modification is in accordance with the Approval Matrix.  In the event of any
such modification for which Servicer did not obtain the prior written approval
of the related Owner and which permits the deferral of interest or principal or
forgives principal on any Mortgage Loan, Servicer shall, on the Business Day
immediately preceding the Remittance Date in any month in which any such
principal or interest payment has been deferred or forgiven, deposit in the
Custodial Account from its own funds, in accordance with Section 2.4, the
difference between (a) such month’s principal and one month’s interest at the
Mortgage Interest Rate on the outstanding principal balance of such Mortgage
Loan and (b) the amount paid by the Mortgagor.  Without limiting the generality
of the foregoing, the Servicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the related Owner, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Servicer, the related Owner shall furnish the Servicer with any powers of
attorney in the form of Exhibit F and other documents necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
under this Agreement and the Servicer shall indemnify and hold each Owner
harmless for any costs,
 
 
 
 
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liabilities or expenses incurred by any Owner in connection with any misuse of
such power of attorney by the Servicer or its agents.
 
Although the Servicer has recommended that Owner consent to and waive any
further restrictions that may prevent or inhibit Servicer modifying any eligible
Mortgage Loan or providing any other foreclosure prevention service in
accordance with HAMP, notwithstanding anything in this Agreement to contrary,
the Owners hereby withholds such consent to the Servicer having the authority,
for any eligible Mortgage Loan, except those Mortgage Loans identified on the
Mortgage Loan Schedule as HAMP Mortgage Loans, to modify such Mortgage Loan, or
provide any other foreclosure prevention services, in accordance with HAMP
guidelines and procedures in place at such time.
 
2.2.   Liquidation of Mortgage Loans.  In the event that any payment due under
any Mortgage Loan and not postponed pursuant to Section 2.1 is not paid when the
same becomes due and payable, or in the event the Mortgagor fails to perform any
other covenant or obligation under the Mortgage Loan and such failure continues
beyond any applicable grace period, the Servicer shall take such action as shall
be consistent with Applicable Requirements.  Servicer shall, only with the prior
written consent of the related Owner, foreclose upon or otherwise comparably
convert the ownership of such Mortgaged Properties as come into and continue in
default and as to which no satisfactory arrangements can be made for collection
of delinquent payments of the related Mortgage Loans pursuant to Section 2.1. If
Servicer determines that it is prohibited by Applicable Law from commencing
foreclosure proceedings, Servicer shall notify the related Owner no later than
three (3) Business Days following such determination.  If foreclosure
proceedings are commenced, the Servicer shall make all necessary and proper
Servicing Advances, subject to reimbursement in accordance with the terms of
this Agreement, provided, however, that the Servicer shall not be required to
expend funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine that such
preservation, restoration and/or foreclosure is reasonably expected to increase
the proceeds of liquidation of the Mortgage Loan to the Owners after
reimbursement to itself for such expenses.
 
Notwithstanding anything to the contrary contained herein, in connection with
the servicing of any Delinquent Mortgage Loan which (i) is subject to HOEPA or
any regulations related thereto, (ii) qualifies as a High Cost Loan under a
state or local anti-predatory lending law or regulation or (iii) the related
Owner otherwise identifies to the Servicer, the Servicer shall not, without the
prior approval of the Owner, commence or continue any collection or loss
mitigation activities with respect to such Mortgage Loan, including without
limitation, the commencement or continuation of any foreclosure proceedings or
other proceedings to obtain title to Mortgaged Property securing a Mortgage Loan
as a result of or in lieu of foreclosure or otherwise, the delivery of letters
or notices to the related Mortgagor, the communication with any Mortgagor
(whether by email, letter, telephone, facsimile or otherwise) or any other
pre-foreclosure postures or activities. To the extent that any such activities
are approved by the Owner, the Servicer shall act in strict compliance with the
Owner's written instructions (provided such instructions are made in accordance
with Applicable Requirements), including, without limitation, employing any
telephone scripts or other forms provided by the Owner or approved by the Owner
in writing in connection with any communication with the Mortgagor.
 
 
 
 
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In the event the Servicer has reasonable cause to believe that a Mortgaged
Property is contaminated by hazardous or toxic substances or wastes, Servicer
shall promptly notify the Owners.  If the related Owner otherwise requests an
environmental inspection or review of such Mortgaged Property, such an
inspection or review is to be conducted by a qualified inspector. The cost for
such inspection or review shall be deemed a Servicing Advance. Upon completion
of the inspection or review, the Servicer shall promptly provide the Owners with
a written report of the environmental inspection.
 
After reviewing the environmental inspection report, the related Owner shall
determine how the Servicer shall proceed with respect to the Mortgaged Property.
In the event (a) the environmental inspection report indicates that the
Mortgaged Property is contaminated by hazardous or toxic substances or wastes
and (b) the related Owner directs the Servicer to proceed with foreclosure or
acceptance of a deed in lieu of foreclosure, the Servicer shall be reimbursed
for all costs and expenses associated with such foreclosure or acceptance of a
deed in lieu of foreclosure and any related environmental clean up costs, as
applicable, pursuant to the terms of this Agreement. In the event the related
Owner directs the Servicer not to proceed with foreclosure or acceptance of a
deed in lieu of foreclosure, the Servicer shall be reimbursed for all Servicing
Advances and Expenses made with respect to the related Mortgaged Property
pursuant to the terms of this Agreement.
 
With respect to any Mortgage Loan, if the related Owner instructs the Servicer
in writing, the Servicer shall charge off the related Mortgage Loan on the date
indicated by such Owner in its instructions (such date, a “Charge Off Date”; and
each such Mortgage Loan, a “Charged Off Mortgage Loan”).
 
2.3.   Collection of Mortgage Loan Payments.  Continuously from the date hereof
until the principal and interest on all Mortgage Loans are paid in full, the
Servicer shall proceed diligently to collect all payments due under each of the
Mortgage Loans when the same shall become due and payable and, where required
under Applicable Requirements, shall use commercially reasonable efforts in
ascertaining and estimating Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loan and the Mortgaged
Property.
 
If the Servicer has actual knowledge that a Mortgagor is the subject of a
proceeding under the Bankruptcy Code or any other similar law, has made an
assignment for the benefit of creditors or has had a receiver or custodian
appointed for its property, subject to the terms of this Agreement, the Servicer
may retain an attorney to pursue motions for relief from the automatic stay on
the Mortgage Loan and foreclosure on the Mortgaged Property (if an attorney is
needed in that particular jurisdiction).  If the Mortgaged Property is acquired
in an insolvency proceeding, it shall be acquired in the name of the party
designated by the related Owner.
 
2.4.   Establishment of and Deposits to Custodial Account.  The Servicer shall
segregate and hold all funds collected and received pursuant to Mortgage Loans
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Custodial Accounts, in the form of time
deposit or demand accounts, titled Franklin Credit Management Corporation, in
trust for Vantium Capital Markets, L.P., and various Mortgagors - P & I.” The
Custodial Account shall be established with a Qualified Depository and shall be
 
 
 
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evidenced by a certification in the form of Exhibit C-1 and any other evidence
reasonably requested by the Owners to confirm the establishment of such account.
Upon request of the Owners and within three (3) Business Days thereof, the
Servicer shall provide the Owners with written confirmation of the existence of
such Custodial Account. Funds deposited in the Custodial Account may be drawn on
by the Servicer in accordance with Section 2.5.
 
Except as provided herein, the Servicer shall deposit in the Custodial Account
within two (2) Business Days of the Servicer’s receipt, and retain therein, the
following collections received by the Servicer after the Cut-off Date or
received by the Servicer prior to the Cut-off Date but allocable to a period
subsequent thereto:
 
(a)   all payments on account of principal on the Mortgage Loans, including all
Principal Prepayments;
 
(b)   all payments on account of interest on the Mortgage Loans;
 
(c)   all Liquidation Proceeds;
 
(d)   all Insurance Proceeds (other than proceeds to be held in the Escrow
Account in accordance with the related Mortgage Loan Documents and Applicable
Requirements and applied to the restoration or repair of the Mortgaged Property
or released to the Mortgagor in accordance with Section 2.14);
 
(e)   all Condemnation Proceeds which are not applied to the restoration or
repair of the Mortgaged Property or released to the Mortgagor in accordance with
the related Mortgage Loan Documents and Applicable Requirements;
 
(f)   any amounts received with respect to or related to any REO Property and
all REO Disposition Proceeds pursuant to Section 2.16;
 
(g)   any amounts required to be deposited by Servicer pursuant to Section 2.11
in connection with the deductible clause in any blanket hazard insurance policy;
 
(h)   any amounts received by Servicer under a PMI Policy; and
 
(i)   any other amount required to be deposited in the Custodial Account
pursuant to this Agreement.
 
The foregoing requirements for deposit into the Custodial Account shall be
exclusive, it being understood and agreed that, notwithstanding the foregoing,
the Servicer may net Servicing Advances, Expenses, Servicing Fees and Ancillary
Income from funds collected and received on Mortgage Loans before any
collections are deposited by the Servicer into the Custodial Account; provided
that, Servicer shall only be entitled to retain Ancillary Income from payments
representing Ancillary Income that the Servicer received from or on behalf of
the Mortgagor.  For the avoidance of doubt and notwithstanding any provision to
the contrary set forth in this Agreement, Servicer shall be entitled to receive
Ancillary Income only from funds received from or on behalf of the Mortgagor
which was in excess of the related Monthly Payment and/or the related prepayment
charges.  The right to net funds for Servicing Advances, Expenses, Servicing
 
 
 
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Fees and Ancillary Income is not restricted to or limited by funds collected or
received in respect of the related Mortgage Loan. Additionally, any other
benefit derived from the Custodial Account associated with the receipt,
disbursement and accumulation of principal, interest, taxes, hazard insurance,
mortgage insurance, etc. shall accrue to the Servicer.
 
2.5.   Permitted Withdrawals From Custodial Account.  The Servicer shall, from
time to time, withdraw funds from the Custodial Account for the following
purposes:
 
(a)   to make payments to the Owners in accordance with Section 3.1;
 
(b)   in the event the Servicer did not retain the Servicing Fee prior to the
depositing funds in the Custodial Account, to pay itself the related Servicing
Fee;
 
(c)   to reimburse itself for any unreimbursed Servicing Advances or Expenses or
Ancillary Income not retained prior to depositing funds in the Custodial Account
or that are otherwise reimbursable to the Servicer pursuant to this Agreement;
 
(d)   to pay itself interest or other Float Benefit on funds deposited in the
Custodial Account;
 
(e)   [reserved];
 
(f)   to pay any amount required to be paid pursuant to Section 2.16 related to
any REO Property;
 
(g)   [reserved];
 
(h)   to remove funds inadvertently placed in the Custodial Account by the
Servicer;
 
(i)   to clear and terminate the Custodial Account upon the termination of this
Agreement.
 
On each Remittance Date, the Servicer shall withdraw all funds from the
Custodial Account except for those amounts which, pursuant to Section 3.1, the
Servicer is not obligated to remit on such Remittance Date.  The Servicer may
apply such withdrawn funds for any of the purposes described in this Section
2.5.  If on any Remittance Date the amounts on deposit in the Custodial Account
are insufficient to cover payment or reimbursement to the Servicer of any
Servicing Advances or Expenses, the Owners shall reimburse the Servicer for any
such amounts within a reasonable time period after receipt by the Owners of an
invoice in accordance with Section 2.24.2.
 
2.6.   Establishment of and Deposits to Escrow Account.  The Servicer shall
segregate and hold all funds collected and received pursuant to a Mortgage Loan
constituting Escrow Payments separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Escrow Accounts, in
the form of time deposit or demand accounts, titled, “Franklin Credit Management
Corporation, in trust for Vantium Capital Markets, L.P., and various Mortgagors
- T & I.” The Escrow Accounts shall be established with
 
 
 
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a Qualified Depository and shall be evidenced by a certification in the form of
Exhibit C-2 and any other evidence reasonably requested by the Owners to confirm
the establishment of such account. Upon request of the Owners and within three
(3) Business Days thereof, the Servicer shall provide the Owners with written
confirmation of the existence of such Escrow Account. Funds deposited in the
Escrow Account may be drawn on by the Servicer in accordance with Section 2.7.
 
The Servicer shall deposit in the Escrow Account or Accounts within two (2)
Business Days of the Servicer’s receipt, and retain therein:
 
(a)   all Escrow Payments collected on account of the Mortgage Loans, for the
purpose of effecting timely payment of any such items as required under the
terms of this Agreement;
 
(b)   all amounts representing Insurance Proceeds or Condemnation Proceeds which
are to be applied to the restoration or repair of any Mortgaged Property; and
 
(c)   all payments on account of Buydown Funds.
 
The Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 2.7. The
Servicer shall be entitled to retain any interest or other Float Benefits paid
on funds deposited in the Escrow Account by the depository institution, other
than interest on escrowed funds required by Applicable Requirements to be paid
to the Mortgagor. Additionally, any other benefit derived from the Escrow
Account associated with the receipt, disbursement and accumulation of principal,
interest, taxes, hazard insurance, mortgage insurance, etc. shall accrue to the
Servicer. To the extent required by Applicable Requirements, the Servicer shall
pay interest on escrowed funds to the Mortgagor (without reimbursement thereof
to the extent that as of the applicable Determination Date interest earned from
funds deposited in the Escrow Account, on an aggregate basis, would otherwise be
available to pay such amount) notwithstanding that the Escrow Account may be
non-interest bearing or that interest paid thereon is insufficient for such
purposes.
 
2.7.   Permitted Withdrawals From Escrow Account.  Withdrawals from the Escrow
Account or Accounts may be made by the Servicer only:
 
(a)   to effect timely payments of ground rents, taxes, assessments, water
rates, mortgage insurance premiums, flood insurance premiums (if applicable),
condominium charges, fire and hazard insurance premiums or other items
constituting Escrow Payments for the related Mortgage;
 
(b)   to reimburse the Servicer for any unreimbursed Servicing Advances or
Expenses made by the Servicer pursuant to Section 2.8;
 
(c)   to refund to any Mortgagor any funds found to be in excess of the amounts
required under the terms of the related Mortgage Loan;
 
 
 
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(d)   for transfer to the Custodial Account and application to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
related Mortgage and Mortgage Note;
 
(e)   for application to the restoration or repair of the Mortgaged Property in
accordance with the procedures outlined in Section 2.14;
 
(f)   to pay to the Servicer, or any Mortgagor to the extent required by
Applicable Requirements, any interest or other Float Benefit paid on the funds
deposited in the Escrow Account;
 
(g)   to remove funds inadvertently placed in the Escrow Account by the
Servicer;
 
(h)   to remit to the Owners payments on account of Buydown Funds as applicable;
and
 
(i)   to clear and terminate the Escrow Account on the termination of this
Agreement.
 
2.8.   Payment of Taxes, Insurance and Other Charges.  With respect to each
Mortgage Loan that provides for Escrow Payments and with respect to each REO
Property, the Servicer shall maintain accurate records reflecting the status of
ground rents, taxes, assessments, water rates, sewer rents, and other charges
which are or may become a lien upon the Mortgaged Property or REO Property and
the status of PMI Policy premiums, flood insurance premiums (if applicable), and
fire and hazard insurance coverage and shall obtain, from time to time, all
bills for the payment of such charges (including renewal premiums) (“Property
Charges”) and shall effect payment thereof prior to the applicable penalty or
termination date, employing for such purpose (i) with respect to the related
Mortgage Loans, deposits of the Mortgagor in the Escrow Account which shall have
been estimated by Servicer in amounts sufficient for such purposes or (ii) with
respect to the related REO Properties, Servicing Advances.  Servicer assumes
full responsibility for the timely payment of all such bills and shall effect
timely payment of all such charges irrespective of each Mortgagor’s faithful
performance in the payment of same or the making of the Escrow Payments. Any
Servicing Advances or Expenses to effect payments of such charges are
reimbursable in accordance with the terms of this Agreement.
 
To the extent that a Mortgage Loan does not provide for Escrow Payments,
Servicer shall make a Servicing Advance from its own funds to effect payment of
all Property Charges upon receipt of notice of any failure to pay on the part of
the Mortgagor, or at such other time as Servicer determines to be in the best
interest of the applicable Owner unless Servicer reasonably believes that an
advance pursuant to this or any other section will be a Nonrecoverable Advance,
provided that, in any event Servicer shall pay such charges on or before the
earlier of (i) any date by which payment is necessary to preserve the lien
status of the Mortgage or (ii) the date by which is the earlier of (A) ninety
(90) days after the date on which such charges first became due and (B) payment
is required in order to avoid the accrual of penalties or fees with respect to
non-payment of such Property Charges.  Servicer shall pay any
 
 
 
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late fee or penalty which is payable due to any delay in payment of any Property
Charge, without reimbursement, caused by Servicer’s action or inaction.
 
If the Escrow Payment would constitute a Nonrecoverable Advance, Servicer will
not, unless otherwise directed by the related Owner, be obligated to make such
advance.  The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by an Officer’s Certificate delivered to the
applicable Owner on the next distribution report provided by the Servicer.
 
2.9.   Protection of Accounts.  Upon the Owners prior written consent, the
Servicer may transfer the Custodial Account or the Escrow Account to a different
Qualified Depository.
 
2.10.   Maintenance of Hazard Insurance.  The Servicer shall cause to be
maintained for each Mortgaged Property and/or REO Property hazard insurance such
that all buildings upon each Mortgaged Property and/or REO Property are insured
by a generally acceptable Insurer acceptable to mortgage lending institutions
against loss by fire, hazards of extended coverage and such other hazards as are
customary in the area where the Mortgaged Property and/or REO Property is
located, in an amount which is at least equal to the lesser of (i) the
replacement value of the improvements securing such Mortgaged Property and/or
REO Property and (ii) the greater of (a) the outstanding principal balance of
the Mortgaged Property and/or REO Property and (b) an amount such that the
proceeds thereof shall be sufficient to prevent the Mortgagor or the loss payee
from becoming a co-insurer.  If the Mortgagor fails to maintain hazard
insurance, Servicer shall, if the Mortgaged Property and/or REO Property is
occupied, advance an amount sufficient to maintain the existing Mortgagor’s
policy, which such advance shall be deemed a Servicing Advance.  If such policy
cannot be maintained, Servicer shall obtain such coverage, and the costs and
expenses Servicer incurs for coverage shall be deemed a Servicing Advance.
 
If the related Mortgaged Property and/or REO Property is located in an area
identified by the Flood Emergency Management Agency as having special flood
hazards (and such flood insurance has been made available), the Servicer shall
cause to be maintained for such Mortgaged Property and/or REO Property a flood
insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration in effect in an amount representing coverage
equal to the lesser of (i) the minimum amount required, under the terms of
coverage, to compensate for any damage or loss on a replacement cost basis; (ii)
the unpaid balance of the related Mortgage; and (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. The cost of any flood insurance purchased by the Servicer pursuant to
the foregoing shall be reimbursable as a Servicing Advance in accordance with
the terms of this Agreement.
 
If at any time during the term of the Mortgage Loan the Servicer determines in
accordance with Applicable Requirements that a Mortgaged Property is located in
a special flood hazard area and is not covered by flood insurance or is covered
in an amount less than the amount required by the Flood Disaster Protection Act
of 1973, as amended, Servicer shall, advance an amount sufficient to maintain
the existing Mortgagor’s policy and notify the related
 
 
 
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Mortgagor that the Mortgagor must obtain such flood insurance coverage, and if
said Mortgagor fails to obtain the such flood insurance coverage within
forty-five (45) days after such notification, the Servicer shall immediately
force place the required flood insurance on the Mortgagor’s behalf.  The costs
and expenses Servicer incurs for such flood insurance coverage shall be a
Servicing Advance.
 
In the event that the Servicer shall determine that a Mortgaged Property should
be insured against loss or damage by hazards and risks not covered by the
insurance required to be maintained by the Mortgagor pursuant to the terms of
the Mortgage, the Servicer shall communicate and consult with the Mortgagor with
respect to the need for such insurance and bring to the Mortgagor’s attention
the desirability of protection of the Mortgaged Property.
 
If a Mortgage Loan is secured by a unit in a condominium project, Servicer shall
use commercially reasonable efforts to attempt to verify if the insurance
coverage required of the owner’s association, including hazard, flood,
liability, and fidelity coverage is adequate under Accepted Servicing Practices,
in an attempt to secure from the owner’s association its agreement to notify
Servicer promptly of any material change in insurance coverage or of any
condemnation or casualty loss that may have a material effect on the value of
the Mortgaged Property as security.  The Servicer shall promptly notify the
Owners in the event of any such material change or cancellation or in the event
that the Servicer is unable to verify the adequacy of the insurance coverage.
 
All policies required hereunder shall name the Servicer as loss payee and shall
be endorsed with standard or New York mortgagee clauses, without contribution,
which shall provide for at least thirty (30) days’ prior written notice to
Servicer of any cancellation, reduction in amount or material change in
coverage.
 
Pursuant to Section 2.4, any amounts collected by the Servicer under any such
policies (other than amounts to be deposited in the Escrow Account and applied
to the restoration or repair of the related Mortgaged Property, or property
acquired in liquidation of the Mortgage Loan, or to be released to the
Mortgagor, in accordance with the Applicable Requirements as specified in
Section 2.14) shall be deposited in the Custodial Account subject to withdrawal
pursuant to Section 2.5.
 
Notwithstanding the foregoing, the Servicer shall not interfere with the
Mortgagor’s freedom of choice in selecting either his or her insurance carrier
or agent, provided, however, that Servicer shall not accept any such insurance
policies from insurance companies unless such companies are generally acceptable
to mortgage lending institutions.  Servicer shall determine that such policies
insure the property owner and that they properly describe the property
address.  Servicer shall furnish to the Mortgagor a formal notice of expiration
of any such insurance in sufficient time for the Mortgagor to arrange for
renewal coverage by the expiration date.
 
2.11.   Maintenance of Mortgage Impairment Insurance.  In the event that the
Servicer shall obtain and maintain a blanket policy insuring against losses
arising from fire, flood and hazards covered under extended coverage on all of
the Mortgage Loans, then, to the extent such policy provides coverage in an
amount equal to the amount required pursuant to Section 2.10 and otherwise
complies with all other requirements of Section 2.10, it shall conclusively be
 
 
 
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deemed to have satisfied its obligations as set forth in Section 2.10. The
Servicer shall prepare and make any claims on the blanket policy as deemed
necessary by the Servicer in accordance with Accepted Servicing Practices. Any
amounts collected by the Servicer under any such policy relating to a Mortgage
Loan shall be deposited in the Custodial Account subject to withdrawal pursuant
to Section 2.5.  Such blanket policy may contain a deductible clause, in which
case, in the event that there shall not have been maintained on the related
Mortgaged Property or REO Property, a policy complying with Section 2.11, and
there shall have been a loss which would have been covered by such policy,
Servicer shall deposit in the Custodial Account at the time of such loss the
amount not otherwise payable under the blanket policy because of such deductible
clause, such amount to be deposited from Servicer’s funds, without reimbursement
therefor.  Upon request of the Owners, Servicer shall cause to be delivered to
the Owners a certificate of insurance for such policy and a statement from the
insurer thereunder that such policy shall in no event be terminated or
materially modified without thirty (30) days’ prior written notice to the
related Owner.
 
2.12.   Maintenance of Fidelity Bond and Errors and Omissions Insurance.  The
Servicer shall maintain with responsible companies, at its own expense without
reimbursement thereof, a blanket Fidelity Bond and an Errors and Omissions
Insurance Policy, with broad coverage on all of its officers, employees or other
persons acting in any capacity on behalf of the Servicer requiring such persons
to handle funds, money, documents or papers relating to the Mortgage Loans (the
“Servicer Employees”).  Any such Fidelity Bond and Errors and Omissions
Insurance Policy shall be in the form of the Mortgage Banker’s Blanket Bond and
shall protect and insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of the Servicer
Employees.  Such Fidelity Bond and Errors and Omissions Insurance Policy also
shall protect and insure the Servicer against losses in connection with the
release or satisfaction of a Mortgage Loan without having obtained payment in
full of the indebtedness secured thereby. No provision of this Section 2.12
requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
diminish or relieve the Servicer from its duties and obligations as set forth in
this Agreement. The minimum coverage under any such Fidelity Bond and Errors and
Omissions Insurance Policy shall be at least equal to the amounts generally
acceptable to mortgage lending institutions. Upon the execution of this
Agreement and any other time upon the request of the Owners, the Servicer shall
cause to be delivered to the Owners a certificate of insurance for such Fidelity
Bond and Errors and Omissions Insurance Policy and shall request a statement
from the surety and the insurer that such Fidelity Bond and Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
thirty (30) days’ prior written notice to the Owners.
 
2.13.   Inspections.  The Servicer shall be responsible for further safeguarding
the related Owner’s interest in the REO Property (or Mortgaged Property with
respect to a Non-Performing Loan) by inspecting each REO Property (or Mortgaged
Property with respect to a Non-Performing Loan) as often as deemed necessary by
the Servicer to assure itself that the value of the REO Property (or Mortgaged
Property with respect to a Non-Performing Loan) is being preserved, which costs
and expenses shall be deemed a Servicing Advance; provided that the Servicer
shall inspect the REO Property (or Mortgaged Property with respect to a
Non-Performing Loan) within five (5) days of such property becoming an REO
Property (or such Mortgage Loan becoming a Non-Performing Loan) and shall
conduct subsequent inspections approximately every thirty (30) days, but no more
than thirty-five (35) days after the prior
 
 
 
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inspection, to assure itself that the value of the REO Property or Mortgaged
Property, as applicable is being preserved in accordance with Applicable
Requirements.  The Servicer shall maintain appropriate records of each such
inspection. The Servicer shall provide a monthly electronic report that
references each such inspection and provide such report to the related Owner or
Owner’s designee.
 
2.14.   Restoration of Mortgaged Property.  Solely with respect to any Mortgage
Loan which is less than 30 days Delinquent, the Servicer need not obtain the
approval of the related Owner prior to releasing any Insurance Proceeds or
Condemnation Proceeds to the Mortgagor to be applied to the restoration or
repair of the Mortgaged Property if such release is in accordance with
Applicable Requirements. For claims greater than $5,000, the Servicer shall
comply with the following conditions in connection with any such release of
Insurance Proceeds or Condemnation Proceeds:
 
(a)   the Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;
 
(b)   the Servicer shall take all steps necessary to preserve the priority of
the lien of the Mortgage, including, but not limited to requiring waivers with
respect to mechanics’ and materialmen’s liens;
 
(c)   the Servicer shall verify that the Mortgage Loan is not in default; and
 
(d)   pending repairs or restoration, the Servicer shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.
 
Notwithstanding the foregoing, with respect to any Mortgage Loan which is
greater than 30 days Delinquent or any REO Property, the Servicer shall not
release any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property without the prior
written consent of the applicable Owner.
 
If the related Owner is named as an additional loss payee, the Servicer is
hereby empowered to endorse any loss draft issued in respect of such a claim in
the name of the related Owner.
 
2.15.   Maintenance of PMI Policy; Claims.  The Servicer shall maintain or cause
the Mortgagor to maintain in full force and effect, with respect to each
Mortgage Loan with an existing PMI Policy on the Effective Date, a PMI Policy
insuring the portion over 78% until terminated pursuant to the Home Owners
Protection Act of 1998, 12 U.S.C. § 4901, et seq. (if applicable) or the terms
of the related PMI Policy.  In the event that such PMI Policy shall be
terminated other than as required by Applicable Requirements or the terms of the
PMI Policy, the Servicer shall obtain from another Qualified Insurer a
comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Servicer shall determine whether recoveries under the PMI
Policy are jeopardized for reasons related to the financial condition of such
insurer, it being understood that the Servicer shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy for
such reason.  If the Servicer determines that recoveries are so jeopardized, it
shall notify the Owners and the Mortgagor, if required, and make commercially
 
 
 
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reasonable efforts obtain from another Qualified Insurer a replacement insurance
policy at substantially the same fee level, to the extent commercially
available; provided, however, that the Servicer shall promptly notify the Owners
in the event the Servicer is unable to obtain such replacement insurance policy.
The Servicer shall not take any action which would result in noncoverage under
any applicable PMI Policy of any loss which, but for the actions of the Servicer
would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
4.1, the Servicer shall promptly notify the insurer under the related PMI
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of such PMI Policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
such PMI Policy. If such PMI Policy is terminated as a result of such assumption
or substitution of liability, the Servicer shall obtain a replacement PMI Policy
as provided above subject to reimbursement as a Servicing Advance in accordance
with the terms of this Agreement.
 
With respect to each Mortgage Loan covered by a PMI Policy, Servicer shall take
all such actions on behalf of the applicable Owner as are necessary to service,
maintain and administer the related Mortgage Loan in accordance with such policy
and to enforce the applicable Owner’s rights under such policy.  Except as
expressly set forth herein, Servicer shall have full authority on behalf of the
applicable Owner to act in accordance with the Applicable Requirements in
connection with the servicing, maintenance and administration of such policy;
provided that Servicer shall not take any action to permit any modification or
assumption of a Mortgage Loan covered by a PMI Policy, or take any other action
with respect to such Mortgage Loan, which would result in non-coverage under
such policy of any loss which, but for actions of any Servicer, would have been
covered thereunder.  If the Qualified Insurer fails to pay a claim in whole or
in part under a PMI Policy as a result of a breach by Servicer of its
obligations hereunder or under such policy, Servicer shall be required to
deposit in the Custodial Account on or prior to the next succeeding Remittance
Date an amount equal to such unpaid claim from its own funds without any rights
to reimbursement from Owners.  Servicer shall cooperate with the Insurers and
shall furnish all reasonable evidence and information in the possession of
Servicer to which Servicer has access with respect to the related Mortgage Loan.
 
In connection with its activities as servicer, the Servicer agrees to prepare
and present, on behalf of itself and the Owners, claims to the Insurer under any
PMI Policy in a timely fashion in accordance with the terms of such PMI Policy
and, in this regard, to take such action as shall be necessary to permit
recovery under any PMI Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 2.4, any amounts collected by the Servicer under any PMI Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
2.5.
 
2.16.   Title, Management and Disposition of REO Property.  In the event that
title to any Mortgaged Property is acquired in foreclosure, by deed in lieu of
foreclosure or otherwise (including by purchase), the deed or certificate of
sale shall be taken in the name of VCMR, or, at the direction of the related
Owner, the deed or certificate of sale shall be taken in the name of a nominee
for the related Owner. The Person or Persons holding such title other than the
related Owner shall acknowledge in writing that such title is being held as
nominee for the related Owner.
 
 
 
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In accordance with an REO marketing plan approved by the Owners, the Servicer
shall manage, conserve, protect and operate each REO Property for the related
Owner solely for the purpose of maximizing the net present value of proceeds
recoverable by the applicable Owner. The Servicer shall cause each REO Property
to be inspected promptly upon the acquisition of title thereto and shall cause
each REO Property to be inspected in accordance with Section 2.13.  The
Servicer, either itself or through an agent selected by the Servicer, shall
manage, conserve, protect and operate the REO Property in the same manner that
similar property in the same locality as the REO Property is managed. The
Servicer shall attempt to sell the same (and may temporarily rent the same for a
period not greater than three years, except as otherwise provided below) on such
terms and conditions as the Servicer deems to be in the reasonable interest of
the related Owner.
 
The Servicer shall use commercially reasonable efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within three years after title has been taken to such REO Property, unless (i) a
REMIC election has not been made with respect to the arrangement under which the
Mortgage Loans and the REO Property are held, and (ii) the Servicer determines,
and gives notice to the related Owner to such effect, that a longer period is
necessary for the orderly liquidation of such REO Property or that to maximize
recovery the REO Property should be rented.  The Servicer shall report monthly
to the Owners as to the progress being made in selling each REO Property in
accordance with Section 2.17.
 
The Servicer shall also maintain on each REO Property fire and hazard insurance
with extended coverage in amount which is at least equal to the maximum
insurable value of the improvements which are a part of such property, liability
insurance and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in the amount required
above.
 
The disposition of REO Property shall be carried out by the Servicer at such
price, and upon such terms and conditions, as the Servicer deems to be in the
best interests of the related Owner; provided that the Servicer has received the
prior written consent of the related Owner with respect to each disposition
thereof. The proceeds of sale of the REO Property shall be promptly deposited in
the Custodial Account. As soon as practical thereafter, the expenses of such
sale shall be paid and the Servicer shall reimburse itself for any related
unreimbursed Servicing Advances, Expenses and unpaid Servicing Fees. On the
Remittance Date immediately following the Principal Prepayment Period in which
such sale proceeds are received, the net cash proceeds of such sale remaining in
the Custodial Account shall be distributed to the Owners, net of any Ancillary
Income or unreimbursed Servicing Fees, Expenses or Servicing Advances.
 
The Servicer shall withdraw from the Custodial Account funds necessary for the
proper operation, management and maintenance of the REO Property, including the
cost of maintaining any hazard insurance pursuant to Section 2.10. Such advances
shall be considered a Servicing Advance.  Notwithstanding the foregoing, in the
event any such cost exceeds $5,000 before making any such advance the Servicer
shall obtain the related Owner’s prior written approval.
 
2.17.   REO Reports.  Together with the statement furnished pursuant to Section
3.2, the Servicer shall furnish to the Owners on or before the Remittance Date
of each month a statement with respect to any REO Property, which statement
shall cover the operation of such
 
 
 
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REO Property for the previous month and the Servicer's efforts in connection
with the sale of such REO Property and any rental of such REO Property
incidental to the sale thereof for the previous month. That statement shall be
accompanied by such other information as the Owners or their designee shall
reasonably request.
 
2.18.   Liquidation Reports.  Upon the foreclosure sale of any Mortgaged
Property or the acquisition thereof by VCMR pursuant to a deed in lieu of
foreclosure, the Servicer shall submit to the Owners a liquidation report with
respect to such Mortgaged Property.
 
2.19.   Reports of Foreclosures and Abandonments of Mortgaged Property.
 Following the foreclosure sale or abandonment of any Mortgaged Property or REO
Property, the Servicer shall report such foreclosure or abandonment as required
pursuant to Section 6050J of the Code. The Servicer shall file information
reports with respect to the receipt of mortgage interest received in a trade or
business and information returns relating to cancellation of indebtedness income
with respect to any Mortgaged Property as required by the Code. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by the Code.
 
2.20.   Application of Buydown Funds.  If the Mortgagor on a Buydown Mortgage
Loan defaults on such Mortgage Loan during the Buydown Period and the Mortgaged
Property securing such Buydown Mortgage Loan is sold in the liquidation thereof
(either by the Servicer or the insurer under any related PMI Policy) the
Servicer shall, on the Remittance Date following the date upon which Liquidation
Proceeds or REO Disposition Proceeds are received with respect to any such
Buydown Mortgage Loan, distribute to the Owners all remaining Buydown Funds for
such Mortgage Loan then remaining in the Escrow Account. Pursuant to the terms
of each Buydown Agreement, any amounts distributed to the Owners in accordance
with the preceding sentence will be applied to reduce the outstanding principal
balance of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown
Mortgage Loan prepays such Mortgage Loan in its entirety during the related
Buydown Period, the Servicer shall be required to withdraw from the Escrow
Account any Buydown Funds remaining in the Escrow Account with respect to such
Buydown Mortgage Loan in accordance with the related Buydown Agreement. If a
principal prepayment by a Mortgagor on a Buydown Mortgage Loan during the
related Buydown Period, together with any Buydown Funds then remaining in the
Escrow Account related to such Buydown Mortgage Loan, would result in a
principal prepayment of the entire unpaid principal balance of the Buydown
Mortgage Loan, the Servicer shall distribute to the Owners on the Remittance
Date occurring in the month immediately succeeding the month in which such
Principal Prepayment is received, all Buydown Funds related to such Mortgage
Loan so remaining in the Escrow Account, together with any amounts required to
be deposited into the Custodial Account.
 
2.21.   Notification of Adjustments.  With respect to each adjustable rate
Mortgage Loan, the Servicer shall adjust the Mortgage Interest Rate on the
related Adjustment Date and shall adjust the Monthly Payment on the related
mortgage payment adjustment date, if applicable, in compliance with the
requirements of Applicable Requirements. The Servicer shall execute and deliver
any and all necessary notices required under Applicable Requirements regarding
the Mortgage Interest Rate and Monthly Payment adjustments. Servicer shall
promptly, upon written request therefor, deliver to the Owners such
notifications and any
 
 
 
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additional applicable data regarding such adjustments and the methods used to
calculate and implement such adjustments.  Upon the discovery by Servicer or the
receipt of notice from the Owners that Servicer has failed to adjust a Mortgage
Interest Rate or Monthly Payment in accordance with the terms of Applicable
Requirements, Servicer shall immediately deposit in the Custodial Account from
its own funds the amount of any interest loss or deferral caused thereby.
 
2.22.   Reserved.
 
2.23.   Privacy.
 
2.23.1.   Except in accordance with this Section 2.23, the Servicer shall not
disclose any Customer Information to any Person, including, but not limited to,
any of the Servicer’s employees, agents, or contractors, or any third party not
affiliated with the Servicer. The Servicer shall disclose such Customer
Information only to the extent permitted by, or necessary to carry out the
Servicer’s express obligations and rights under, this Agreement or under
Applicable Requirements and for no other purpose.  Servicer shall ensure that
each vendor or other Person to which the Servicer intends to disclose Customer
Information shall, prior to any such disclosure of information; agree to: (i)
keep confidential any such Customer Information in accordance with the terms of
this Agreement; and (ii) use or disclose such Customer Information only to the
extent necessary to carry out the Servicer’s  express obligations and rights
under this Agreement.
 
2.23.2.   Without limiting the scope of the above, the Servicer shall use at
least the same physical and other security measures to protect all Customer
Information in the Servicer’s possession or control as the Servicer uses for its
own confidential and proprietary information of a similar nature.   The Servicer
shall at all times have in place information security programs that (i) ensure
the security and confidentiality of the trademarks, trade secrets, know-how,
business methods and practices, internal procedures and other intellectual
property and confidential information of the Owners and Customer Information
(collectively, the “Protected Information”), (ii) protect against any
anticipated threats or hazards to the security or integrity of Protected
Information, (iii) protect against unauthorized access to or use of Protected
Information that could result in substantial harm or inconvenience to any
Person, and (iv) ensure the proper disposal of Protected Information.  Any
failure by the Servicer to comply with the requirements set forth in this
paragraph as they relate to the Mortgage Loans hereunder shall constitute a
security breach (“Security Breach”).  In the event of any Security Breach, the
Servicer shall (i) provide written notice of the same to the Owners, and (ii)
provide the Owners with all information that is relevant to the Security
Breach.  In either case, the Servicer shall take all appropriate actions to
protect against further Security Breaches, and to fully cooperate with the
Owners and all governmental authorities with respect to compliance with all
requirements of Applicable Requirements relating to Security Breaches.
 
2.24.   Losses and Expenses.
 
2.24.1.   The related Owner shall remain responsible, as between such Owner and
the Servicer, for losses related to the related Owner’s investment in the
Mortgage Loans.  Losses of the type referred to above for which the related
Owner shall remain responsible include, but are not limited to: credit losses,
special hazard insurance premiums,
 
 
 
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losses in connection with the final sale price of a REO Property or foreclosure
sale, losses on Mortgage Loans in default or in bankruptcy, and losses in
connection with the Soldiers and Sailors Civil Relief Act (and any successor to
such Act); provided that Servicer shall be liable for any losses resulting or
arising from failure of Servicer to perform its duties and service the Mortgage
Loans in compliance with the terms of this Agreement.
 
2.24.2.   In the event withdrawals from the Custodial or Escrow Accounts are
insufficient to reimburse the Servicer pursuant to this Agreement the related
Owner shall promptly upon receipt of an invoice with proper documentation and
evidence of amounts owed reimburse the Servicer for Servicing Advances and the
following expenses (“Expenses”): (i) any out-of-pocket expense the Servicer
incurs with the prior approval of the Owners in connection with its servicing
and administrative obligations set forth in this Agreement to the extent such
expense is not ordinary to the servicing function (but not including salaries,
rent and other general operating expenses of the Servicer normally classified as
overhead); (ii) [reserved]; and (iii) expenses mutually agreed upon and incurred
in connection with the performance by the Servicer at the request of the Owners
of any activity that is not specifically required to be performed by the
Servicer under this Agreement and is not reasonably ancillary to any specific
requirements of the Owners under this Agreement. Except as otherwise expressly
provided in this Agreement, each party shall pay its own expenses incurred in
connection with the preparation of and performance under this Agreement,
including its own legal fees and expenses of preparing and delivering the
notices, documents, reports, accountings and any other information required of
it hereunder.
 
2.24.3.   [reserved].
 
2.24.4. (a)       The Owners shall be solely responsible for all guaranty fees,
credit enhancement fees, custodial fees (and related shipping costs), trustee
fees, and costs to record assignments.
 
(b)   Except as otherwise expressly set forth in this Agreement, the Servicer
shall be solely responsible for the direct and indirect internal and
administrative costs associated with its obligations as the Servicer of the
Mortgage Loans hereunder, said costs to include but not be limited to:
personnel, facilities; supplies; mailing and computer system expenses,
regardless of whether the Servicer elects to contract with third party vendors
to perform all or any portion of such internal and administrative functions.
 
2.24.5.  Except as otherwise provided in this Section, any Litigation related
solely to a single Mortgage Loan (other than Litigation between or among the
Owners or any of its affiliates, on the one hand, and the Servicer and any of
its affiliates, on the other hand) including foreclosure, evictions, quiet title
and bankruptcy filings, shall be managed by the Servicer working with local
counsel selected by and working on behalf of the Owners. The costs and expenses
of such Litigation shall be deemed a Servicing Advance and be subject to
reimbursement pursuant to the terms of this Agreement. The Servicer shall not
manage (on behalf of the Owners or any of its affiliates other than the
Servicer) any class action claim in which the Owners or any of its affiliates
(other than the Servicer) is a defendant or any Litigation based upon alleged
actions or omissions of the Owners unless the Owners shall elect otherwise with
respect to any particular Litigation(s) and the Servicer shall in its discretion
agree to
 
 
 
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manage and administer such Litigation(s) on behalf of the Owners or any of its
affiliates on price and other terms acceptable to the Servicer, which shall be
set forth in a separate writing between the parties.  The Servicer shall
cooperate in obtaining or making available information or documents respecting
Mortgage Loans involved in Litigation as may be reasonably required by the
Owners or its counsel. The Owners shall reimburse the Servicer for any
reasonable and necessary out-of-pocket costs that the Servicer incurs in
connection with any Litigation described in this Section 2.24.5 (other than
Litigation between or among the Owners or its affiliates, on the one hand, and
the Servicer or its affiliates, on the other hand).
 
2.25.   Credit Reporting.
 
For each Mortgage Loan, Servicer shall accurately and fully furnish, in
accordance with the Fair Credit Reporting Act and its implementing regulations,
accurate and complete information (e.g., favorable and unfavorable) on its
borrower credit files to each of the following credit repositories:  Equifax
Credit Information Services, Inc., Trans Union, LLC and Experian Information
Solution, Inc., on a monthly basis.
 
2.26.   Superior Liens.
 
If Servicer is notified that any holder of a superior lien has accelerated or
intends to accelerate the obligations secured by the superior lien, or has
declared or intends to declare a default under the Mortgage or the Mortgage Note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, Servicer shall take, on behalf of the
applicable Owner, whatever actions reasonably requested by such Owner as are
necessary to protect the interests of the applicable Owner in accordance with
Applicable Requirements; provided that Servicer shall obtain the prior written
approval of the applicable Owner prior to a subordination or takeout of any
superior lien.  Servicer shall not be required to make a Servicing Advance
except to the extent that the applicable Owner has provided its prior written
consent and the Servicer determines in its reasonable good faith judgment that
such advance would be recoverable from Liquidation Proceeds on the related
Mortgage Loan and in no event in an amount that is greater than then outstanding
principal balance of the related Mortgage Loan.  The Servicer shall thereafter
take such reasonable action as is necessary to recover the amount so advanced.
 
With respect to any Mortgage Loans that are second liens on the related
Mortgaged Properties, the Servicer shall provide notice to the applicable first
lienholder to the extent the Servicer has knowledge or is notified that a first
lien mortgage loan has delinquent taxes or insurance.
 
2.27.   MERS Membership.
 
If Servicer’s membership in MERS is terminated by MERS for any reason, Servicer
shall, within thirty (30) days of the effective date of such termination and
with the Owners’ consent, deliver to the recording office Assignments of
Mortgage from MERS to the applicable Owner or its designee at Servicer’s cost
and expense, without reimbursement therefor.
 
In connection with the assignment of any Mortgage Loan for which MERS is
designated as the mortgagee of record, the Servicer agrees that it will cause,
at the Seller’s
 
 
 
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expense, the MERS mortgage electronic registry system (as more particularly
described in the MERS Procedures Manual) (the “MERS System”) to indicate that
such Mortgage Loans have been assigned to the related Owner by including in such
computer files the information required by the MERS System to identify such
Owner as “investor” under the MERS System.
 
 
ARTICLE III

 
PAYMENTS TO OWNER
 
3.1.   Remittances.  On each Remittance Date, the Servicer shall remit by wire
transfer of immediately available funds to the Owners:  (a) all amounts
deposited in the Custodial Account as of the close of business on the
Determination Date (net of charges against or withdrawals from the Custodial
Account pursuant to Section 2.5).
 
3.2.   Statements to the Owners.  Not later than the Remittance Date, the
Servicer shall furnish to the Owners a monthly remittance statement, with a
trial balance report attached thereto containing such information and reports
reasonably acceptable to the Owners, as to the preceding remittance and the
period ending on the last day of the preceding month.
 
Servicer shall prepare and file any and all necessary 1098 and 1099 tax reports
with Mortgagors, covering the period of Servicer’s servicing of the related
Mortgage Loans.  In addition, Servicer shall provide the applicable Owner with
such information from the Servicing Files as the applicable Owner shall
reasonably request to prepare any tax returns, and any other federal, state or
local tax or information returns or reports that are required to be so filed by
the applicable Owner.
 
Upon advance notice which is reasonable given the related circumstances, the
Servicer agrees to allow access, during normal business hours and in a manner so
as to not interfere with its normal business operations, to knowledgeable
financial, accounting and servicing officers of the Servicer for the purpose of
answering questions asked by the Owners regarding recent developments affecting
the Servicer or servicing practices or the financial statements of the Servicer.
 
The Servicer shall file information reports with respect to the receipt of
mortgage interest received in a trade or business, reports of foreclosure and
abandonment of any Mortgaged Property or REO Property and information returns
relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
 
3.3.   Monthly Advances by the Servicer.  In no event shall the Servicer advance
Delinquent monthly payments to the Owners.  In no event shall the Servicer make
any Servicing Advance that it deems to be a Nonrecoverable Advance unless
otherwise directed by the related Owner.  In addition, the Servicer shall cease
making Servicing Advances with respect any Mortgage Loan or REO Property
identified by such Owner in the event that the related Owner so directs the
Servicer.
 
 
 
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ARTICLE IV

 
GENERAL SERVICING PROCEDURES
 
4.1.   Transfers of Mortgaged Property.  The Servicer shall use commercially
reasonable efforts to enforce any “due-on-sale” provision contained in any
Mortgage or Mortgage Note and to deny assumption by the person to whom the
Mortgaged Property has been or is about to be sold whether by absolute
conveyance or by contract of sale, and whether or not the Mortgagor remains
liable on the Mortgage and the Mortgage Note. When the Mortgaged Property has
been conveyed by the Mortgagor, the Servicer shall, to the extent it has
knowledge of such conveyance, exercise its rights to accelerate the maturity of
such Mortgage Loan under the “due-on-sale” clause applicable thereto, provided,
however, that the Servicer shall not exercise such rights if prohibited by law
from doing so or if the exercise of such rights would impair or threaten to
impair any recovery under the related PMI Policy, if any.
 
If the Servicer reasonably believes (a) enforcement is not in the best interest
of the applicable Owner or (b) it is unable under Applicable Requirements to
enforce such “due-on-sale” clause, the Servicer shall enter into (i) an
assumption and modification agreement with the person to whom such property has
been conveyed, pursuant to which such person becomes liable under the Mortgage
Note and the original Mortgagor remains liable thereon or (ii) in the event the
Servicer is unable under Applicable Requirements to require that the original
Mortgagor remain liable under the Mortgage Note and the Servicer has the prior
consent of the primary mortgage guaranty insurer, a substitution of liability
agreement with the owner of the Mortgaged Property pursuant to which the
original Mortgagor is released from liability and the owner of the Mortgaged
Property is substituted as Mortgagor and becomes liable under the Mortgage Note.
If an assumption fee is collected by the Servicer for entering into an
assumption agreement, the fee will be retained by the Servicer as additional
servicing compensation; provided that any such fee collected by the Seller for
entering into an assumption or substitution of liability agreement in excess of
1% of the outstanding principal balance of the Mortgage Loan shall be deposited
in the Custodial  Account for the benefit of the related Owner. In connection
with any such assumption, neither the Mortgage Interest Rate borne by the
related Mortgage Note, the term of the Mortgage Loan, the outstanding principal
amount of the Mortgage Loan nor any other materials terms shall be changed
without the related Owner’s consent.
 
To the extent that any Mortgage Loan is assumable under the terms of the
Mortgage Note, the Servicer shall inquire diligently into the credit worthiness
of the proposed transferee, and shall use the underwriting criteria for
approving the credit of the proposed transferee which are used with respect to
underwriting mortgage loans of the same type as the Mortgage Loans. If the
credit worthiness of the proposed transferee does not meet such underwriting
criteria, the Servicer shall diligently, to the extent permitted by the Mortgage
or the Mortgage Note and by Applicable Requirements, accelerate the maturity of
the Mortgage Loan.  The Servicer shall notify the related Owner of any
assumption requests.
 
4.2.   Satisfaction of Mortgages and Release of Mortgage Files.  Upon the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Servicer shall notify the related Owner in the monthly
remittance statement as provided in Section 3.2, and
 
 
 
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may request the release of any Mortgage Loan Documents.  Servicer shall cause a
satisfaction of mortgage to be prepared and recorded, if required by Applicable
Requirements, within the time frame so prescribed.  In the event Servicer fails
to do so and such failure is due to the action or inaction of the Servicer or
its agent, Servicer shall be responsible for any and all penalties, fines, and
damages arising out of or based upon such failure.
 
If Servicer satisfies or releases a Mortgage without first having obtained
payment in full of the indebtedness secured by the Mortgage or should Servicer
otherwise prejudice any rights any Owner may have under the mortgage
instruments, Servicer shall promptly deposit into the Custodial Account the
entire outstanding principal balance of the related Mortgage Loan, plus all
accrued interest on such Mortgage Loan as of such satisfaction and release.  The
Servicer shall maintain the Fidelity Bond and Errors and Omissions Insurance
Policy as provided for in Section 2.12 insuring the Servicer against losses it
may sustain with respect to Mortgage Loans not satisfied in accordance with the
procedures set forth herein.
 
4.3.   Servicing Compensation.  As compensation for its services hereunder, the
Servicer shall be entitled to the fees specified in the Servicing Fee Schedule
detailed on Exhibit D to this Agreement.  Such fees shall be payable monthly by
Servicer’s debit of such fees from the Custodial Account. Notwithstanding
anything in this Agreement to the contrary, if the Servicer is unable to
withdraw the full amount of the Servicing Fee from the Custodial Account in any
month, then the outstanding amount of the Servicing Fee due to the Servicer
shall be due and payable by the related Owner to the Servicer in immediately
available funds and the related Owner shall pay the Servicer such outstanding
amount within twenty (20) Business Days of presentation of an invoice therefor.
All servicing compensation shall be payable monthly, in arrears, and all
servicing compensation shall be fully earned if the Mortgage Loan is serviced
for any portion of the month and shall not be prorated on a per diem basis.
 
Additional servicing compensation in the form of Ancillary Income shall be
retained by the Servicer. Except as specifically provided for herein, the
Servicer shall be required to pay all expenses incurred by it in connection with
its servicing activities hereunder (other than Servicing Advances or Expenses)
and shall not be entitled to reimbursement thereof.
 
If a Mortgage Loan transitions into a different category for purposes of the
Servicing Fee during a month, the Servicing Fee will be based on the status of
the Mortgage Loan at the end of such month (based on the MBA Methodology) (or
the end of the prior month if the Mortgage Loan is liquidated, paid in full, or
transferred out during the month).  Notwithstanding anything set forth to the
contrary in this Agreement, the parties hereby acknowledge and agree that,
delinquency status with respect to determining the Servicer’s compensation and
Servicing Fee hereunder shall be determined using the MBA Methodology.
 
                      4.4           Annual Independent Public Accountants’
Servicing Report.  On or before March 31st of each year beginning March 31,
2011, the Servicer, at the expense of the Servicer without reimbursement, shall
cause a firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement to the Owners
to the effect that such firm has examined certain documents and records relating
to the servicing of the mortgage loans similar in nature and that such firm is
of the opinion that the Servicer’s management’s assertion that Servicer has
complied with the minimum servicing standards identified in the Uniform Single
Attestation Program for Mortgage Bankers is fairly stated for
 
 
 
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the year ended in all material respects except for exceptions as shall be set
forth in such statement. By providing the Owners a copy of a Uniform Single
Attestation Program Report from their independent public accountant’s on an
annual basis, the Servicer shall be considered to have fulfilled any obligations
under this Section 4.4.
 
Servicer shall deliver to the Owners, on or before March 31st, each year
beginning March 31, 2011, an Officer’s Certificate, stating that (i) a review of
the activities of Servicer during the preceding calendar year and of performance
under this Agreement or similar agreements has been made under such officer’s
supervision, and (ii) to the best of such officer’s knowledge, based on such
review, Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officer and the
nature and status thereof and the action being taken by Servicer to cure such
default.
 
                      4.5           Right to Examine Servicer Records.  Each
Owner, or its designee, shall have the right to examine and audit any and all of
the books, records, or other information of the Servicer, whether held by the
Servicer or by another on its behalf, with respect to or concerning this
Agreement or the Mortgage Loans, during regular advance notice which is
reasonable given the related circumstances, . The related Owner shall pay all of
its or its designees’ costs and expenses associated with such examination.
 
To the extent permitted by law, Servicer shall promptly advise the Owners of any
audit, investigation or review of its servicing practices, procedures or
operations by any third party agency, Person or entity as it relates to the
Mortgage Loans or any Mortgage Loan and which may have an adverse affect on the
Mortgage Loans, in the aggregate, or on Servicer’s ability to perform under the
provisions of this Agreement.  Servicer agrees to provide the Owners with a copy
of any and all reports, documents, findings and other information, memoranda or
correspondence relating to such audit, investigation or review as it pertains to
Mortgage Loans as soon as reasonably possible but in any case within five (5)
Business Days of Servicer’s receipt or generation of the same, to the extent
permitted by law or the agreement under which the audit, investigation or review
is performed.
 
The Servicer shall have an internal quality control program that shall include
evaluating and monitoring the overall quality of the Servicer’s loan portfolio
and the servicing activities of the Servicer.  The Servicer shall conduct
quality control reviews of its servicing operations in accordance with the
Servicer’s servicing practices, which shall be no less than what Servicer
performs for itself or its Affiliates.  The Servicer shall provide to any Owner
the results of such internal quality control program upon the Owners’ request.
 
                      4.6           Compliance with REMIC Provisions.  If a
REMIC election has been made with respect to the arrangement under which the
Mortgage Loans and REO Property are held, the Servicer shall not take any
action, cause the REMIC to take any action or fail to take (or fail to cause to
be taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii)
result in the imposition of a tax upon the REMIC (including but not limited to
the tax on “prohibited transactions” as defined Section 860(a)(2) of the Code
and the tax on “contributions” to a REMIC set forth in Section 860(d) of the
Code) unless the Servicer has received an Opinion of Counsel (at the
 
 
 
 
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expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such REMIC status or result in the
imposition of any such tax.
 
ARTICLE V

 
POSSESSION OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL
AGREEMENT; DELIVERY OF DOCUMENTS; SERVICER TO COOPERATE
 
5.1.   Provision of Information.  During the term of this Agreement, the
Servicer shall furnish the Owners with the reports listed on Exhibit E to this
Agreement.  Copies or originals of any documents contained in the Servicing File
for each Mortgage Loan as well as all special reports or information not
provided for herein as shall be necessary, reasonable, and appropriate with
respect to the Owners or any regulatory agency and will be provided at the
related Owner’s expense. All such reports, documents or information shall be
provided by and in accordance with all reasonable instructions and directions
which the Owners may give to the Servicer.
 
5.2.   Financial Statements; Servicing Facility.  In connection with marketing
the Mortgage Loans, a Owner may make available to a prospective owner a
Consolidated Statement of Operations of the Servicer for the most recently
completed two fiscal years for which such a statement is available, as well as a
Consolidated Statement of Condition at the end of the last two fiscal years
covered by such Consolidated Statement of Operations to the extent any such
statements have been prepared by or on behalf of the Servicer (and are available
upon request to members or stockholders of the Servicer or to the public at
large).
 
5.3.   Possession of Mortgage Files; Maintenance of Servicing Files.  The
contents of each Mortgage File not delivered to the Custodian are and shall be
held in trust by the Servicer for the benefit of the Owners as owner thereof.
The Servicer shall maintain a Servicing File consisting of a copy of the
contents of each Mortgage File and the originals of the documents in each
Mortgage File not delivered to the Custodian. The Servicer shall release its
custody of the contents of any Servicing File only in accordance with written
instructions from the Owners, unless such release is required as incidental to
the Servicer’s servicing of the Mortgage Loans. All such costs associated with
the release, transfer and re-delivery to the Servicer shall be the
responsibility of the Owners.
 
5.4.   Books and Records; Transfers of Mortgage Loans.  Except as otherwise
provided in this Agreement, all rights arising out of the Mortgage Loans,
including, but not limited to, all funds received on or in connection with the
Mortgage Loans, shall be received and held by the Servicer in trust for the
benefit of the Owners as owner of the Mortgage Loans, and any record title to
the related Mortgages that the Servicer may have or acquire shall be for the
sole purpose of facilitating the servicing and the supervision of the servicing
of the Mortgage Loans.
 
The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Mortgage Loan which shall be marked
clearly to reflect the ownership of each Mortgage Loan by the related Owner. To
the extent that original documents are not required for purposes of realization
of Liquidation Proceeds or Insurance Proceeds,
 
 
 
 
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documents maintained by the Servicer may be in the form of microfilm or
microfiche or such other reliable means of recreating original documents,
including but not limited to, optical imagery techniques so long as the Servicer
complies with document retention requirements in accordance with Applicable
Requirements.
 
The Servicer shall maintain with respect to each Mortgage Loan and shall make
available for inspection by the Owners or its designee the related Servicing
File during the time the Owners retains ownership of a Mortgage Loan and
thereafter in accordance with Applicable Requirements.
 
The Servicer shall make available to the related Owner on occasion, at no
additional cost to any Owner, access (with access to any electronic data system
to be on a read-only basis) to allow the Owners to monitor or otherwise manage
their respective assets on-site at the Servicer’s offices during regular
business hours upon advance notice which is reasonable given the related
circumstances.  On a daily basis, the Servicer shall provide the related Owner
with such data and reports to allow the Owners to monitor or otherwise manage
their respective assets.  The Servicer shall use commercially reasonable efforts
to provide the related Owner continuous read-only electronic access to allow the
Owners to monitor or otherwise manage their respective assets remotely.  Such
on-site access shall include a means for the Owners to view the status of its
Mortgage Loans, a phone, printer and fax machine.
 
The Servicer shall keep at its servicing office, or such other location as the
Servicer may designate from time to time, books and records in which, subject to
such reasonable policies, procedures, rules and regulations as it may prescribe,
the Servicer shall note transfers of Mortgage Loans. No transfer of a Mortgage
Loan may be made unless such transfer is in compliance with the terms hereof.
For the purposes of this Agreement, the Servicer shall be under no obligation to
deal with any person with respect to this Agreement or the Mortgage Loans unless
the books and records show such person as the owner of the Mortgage Loan. The
related Owner may, subject to the terms of this Agreement, sell and transfer one
or more of the Mortgage Loans. The related Owner also shall advise the Servicer
of the transfer. Upon receipt of notice of the transfer, the Servicer shall mark
its books and records to reflect the ownership of the Mortgage Loans of such
assignee and, unless the Servicer agrees otherwise, the Servicer shall not be
responsible for servicing the transferred Mortgage Loan.
 
5.5.   Custodial Agreement; Delivery of Documents.  The related Owner has
delivered and released, or caused to be delivered and released, to the Custodian
those Mortgage Loan Documents as required by Exhibit B to this Agreement with
respect to each Mortgage Loan.
 
The Custodian has certified its receipt of all such Mortgage Loan Documents
required to be delivered pursuant to the Custodial Agreement, as evidenced by
the trust receipt of the Custodian in the form annexed to the Custodial
Agreement. The Owners will be responsible for the fees and expenses of the
Custodian.
 
The Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 2.1 or 4.1 within one (1) week of their
execution, provided, however,
 
 
 
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that the Servicer shall provide the Custodian with a certified true copy of any
such document submitted for recordation within ten (10) days of its execution,
and shall provide the original of any document submitted for recordation or a
copy of such document certified by the appropriate public recording office to be
a true and complete copy of the original within ten (10) days following receipt
of such document from the public recording office.
 
From time to time, the Servicer may have a need for Mortgage Loan Documents to
be released by the Custodian. If the Servicer shall require any of the Mortgage
Loan Documents, the Servicer shall notify the Custodian in writing of such
request. The Owners shall cause the Custodian to release such documents, to the
extent available, promptly upon request. To the extent that the Servicer obtains
possession of any such document which is held by the Custodian, the Servicer
agrees that it will act as the custodian and bailee and trustee of such
documents for the benefit of the Owners during the term of this Agreement.
 
ARTICLE VI

 
REPRESENTATIONS AND WARRANTIES
 
6.1.   General Representations and Warranties of Servicer.  The Servicer hereby
represents and warrants to the Owners, as of the Effective Date:
 
6.1.1.   Due Organization and Authority.  It is a corporation duly organized,
validly existing and in good standing under the laws of the state of
incorporation and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each state
where a Mortgaged Property is located if the laws of such state require
licensing or qualification in order to conduct business of the type conducted by
it, and in any event it is in compliance with the laws of any such state to the
extent necessary to ensure the enforceability of the related Mortgage Loan and
the servicing of such Mortgage Loan in accordance with the terms of this
Agreement.  It has the full corporate power and authority to execute and deliver
this Agreement and to perform in accordance herewith.  The execution, delivery
and performance of this Agreement by it and the consummation of the transactions
contemplated hereby have been duly authorized and approved by all necessary
actions on its part.  This Agreement has been duly executed and delivered by it
and constitutes legal, valid and binding obligations of it, enforceable against
it in accordance with its terms;
 
6.1.2.   No Conflicts. Neither the execution and delivery of this Agreement, or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement will conflict with or result in a
breach of any of its articles of incorporation or by-laws or other governing
documents or any legal restriction or, except as has been waived prior to the
applicable Effective Date, any material agreement or instrument to which it is
now a party or by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to which it or
its property is subject;
 
6.1.3.   No Litigation Pending. There is no action, suit, proceeding or
investigation pending or to the best of its knowledge threatened against it
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business,
 
 
 
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operations, financial condition, properties or assets of it, or in any material
impairment of the right or ability of it to carry on its business substantially
as now conducted, or in any material liability on the part of it, or which would
draw into question the validity of this Agreement or the Mortgage Loans or of
any action taken or to be contemplated herein, or which would be likely to
impair materially the ability of it to perform under the terms of this
Agreement;
 
6.1.4.   No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by it of or compliance by it with this Agreement, or if
required, such approval has been obtained prior to the applicable Effective
Date; and
 
6.1.5.   Ability to Perform.  Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;
 
6.1.6.   No Untrue Information. Neither this Agreement nor any statement, report
or other document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact necessary to make
the statements contained therein not misleading; and
 
6.1.7.   MERS.  Servicer is a member of MERS in good standing.
 
6.2.   Section 6.02.  Remedies for Breach of Representations, Warranties and
Covenants of Servicer.
 
It is understood and agreed that the representations and warranties set forth in
Section 6.1 shall survive the engagement of Servicer to perform the servicing
responsibilities as of the Effective Date hereunder and shall inure to the
benefit of Owners.  Upon discovery by either Servicer or the applicable Owner of
a breach of any of the foregoing representations and warranties set forth in
Section 6.1 which materially and adversely affects the ability of Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Party discovering
such breach shall give prompt written notice to the other.
 
Within sixty (60) days of the earlier of either discovery by or notice to
Servicer of any breach of a representation or warranty set forth in Section 6.1
which materially and adversely affects the ability of Servicer to perform its
duties and obligations under this Agreement or otherwise materially and
adversely affects the value of the Mortgage Loans, the Mortgaged Properties or
the priority of the security interest on such Mortgage Loans or Mortgaged
Properties, Servicer shall cure such breach in all material respects.  If such
breach cannot be cured, such failure to cure shall be considered an Event of
Default, and the related Owner may terminate this Agreement pursuant to Section
10.2.  The Servicer shall pay all Servicing Transfer Costs in connection
therewith and no Owner shall be liable for any Termination Fee or any other
deboarding fee in connection therewith.
 
Any cause of action against Servicer arising out of or based upon the breach of
any representations and warranties made in Section 6.1 shall accrue upon
(i) discovery of such
 
 
 
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breach by Servicer or notice thereof by an Owner to Servicer, (ii) failure by
Servicer to cure such breach within the applicable cure period, and (iii) demand
upon Servicer by an Owner for compliance with this Agreement.
 
6.3.   General Representations and Warranties of Owners.  Each Owner hereby
represents and warrants to the Servicer that as of the Effective Date:
 
6.3.1.   Due Organization and Authority. It is a limited partnership duly
organized, validly existing and in good standing under the laws of the state of
incorporation and has all licenses necessary to operate its business.  It has
the full corporate power and authority to execute and deliver this Agreement and
to perform in accordance herewith.  The execution, delivery and performance of
this Agreement by it and the consummation of the transactions contemplated
hereby have been duly authorized and approved by all necessary actions on its
part.  This Agreement has been duly executed and delivered by it and constitutes
legal, valid and binding obligations of it, enforceable against it in accordance
with its terms;
 
6.3.2.   No Conflicts. Neither the execution and delivery of this Agreement, or
the transactions contemplated hereby, nor the fulfillment of or compliance with
the terms and conditions of this Agreement will conflict with or result in a
breach of any of its articles of incorporation or by-laws or other governing
documents or any legal restriction or, except as has been waived prior to the
applicable Effective Date, any material agreement or instrument to which it is
now a party or by which it is bound, or constitute a default or result in the
violation of any law, rule, regulation, order, judgment or decree to which it or
its property is subject;
 
6.3.3.   No Litigation Pending. There is no action, suit, proceeding or
investigation pending or to the best of its knowledge threatened against it
which, either in any one instance or in the aggregate, may result in any
material adverse change in the business, operations, financial condition,
properties or assets of it, or in any material impairment of the right or
ability of it to carry on its business substantially as now conducted, or in any
material liability on the part of it, or which would draw into question the
validity of this Agreement or the Mortgage Loans or of any action taken or to be
contemplated herein, or which would be likely to impair materially the ability
of it to perform under the terms of this Agreement; and
 
6.3.4.   No Consent Required. No consent, approval, authorization or order of
any court or governmental agency or body is required for the execution, delivery
and performance by it of or compliance by it with this Agreement, or if
required, such approval has been obtained prior to the applicable Effective
Date.
 
ARTICLE VII

 
THE SERVICER
 
7.1.   Indemnification; Third Party Claims.
 
7.1.1.   The Servicer shall indemnify the Owners, its affiliates and their
respective officers, directors, employees and agents (collectively, “Owner
Indemnitees”) and hold each of the Owner Indemnitees harmless from and against
any and all third party claims and
 
 
 
 
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Damages that the Owners and the Owner Indemnitees may sustain to the extent
resulting from or related to (i) a breach of Servicer’s representations,
warranties and covenants set forth in this Agreement, (ii) the failure of
Servicer to perform its duties and service the Mortgage Loans in compliance with
the terms of this Agreement or (iii) any negligent, reckless or wrongfully
intended action or omission of the Servicer.  The related Owner shall promptly
notify the Servicer of any claim covered hereby; provided, however, that the
Servicer shall not be relieved of its indemnification obligations hereunder due
to the related Owner’s failure to give such notice except to the extent the
Servicer has been prejudiced thereby.  In connection with the Servicer’s
indemnification obligations hereunder, the Servicer may assume (with the prior
written consent of the Owners and with counsel reasonably satisfactory to the
Owners) the defense of any such claim and pay all reasonable expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any final judgment or decree which may be entered against
the Owners or any other Owner Indemnitees in respect of such claim.  The related
Owner promptly shall reimburse the Servicer for all amounts advanced by it
pursuant to the preceding sentence except to the extent that such claim results
from or arises out of the Servicer’s indemnification pursuant to this Section
7.1.1, the failure of the Servicer to service and administer the Mortgage Loans
or REO Properties in strict compliance with the terms of this Agreement, or the
negligence, bad faith or willful misconduct of the Servicer.  The Servicer
agrees that it will not enter into any settlement of any such claim without the
consent of the Owners (which consent shall be in the sole and absolute
discretion the Owners) and such other Owner Indemnitees.
 
7.1.2.   The related Owner shall indemnify, defend and hold Servicer, its
Affiliates and each of their respective officer, directors, members, managers,
employees, agents, and representatives (collectively, the “Servicer
Indemnitees”) harmless from any and all third-party claims and Damages incurred
by or asserted against any of such individuals or entities arising out of or
based upon (i) any breach of any representation, warranty or covenant made by
such Owner in this Agreement or (ii) the Servicer’s compliance with the written
instructions of the Owner to the extent such instructions are not in compliance
with Applicable Requirements.
 
7.1.3.   The provisions of this Section 7.1 shall survive termination of this
Agreement.
 
7.2.   Merger or Consolidation of the Servicer.  The Servicer shall keep in full
effect its existence, rights and franchises as a corporation, and shall obtain
and preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement or any of the Mortgage Loans and
to perform its duties under this Agreement.
 
Any person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion 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, anything herein to the contrary notwithstanding. Furthermore,
subject to Article IX, in the event the Servicer transfers or otherwise disposes
of all or substantially all of its assets
 
 
 
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to an affiliate of the Servicer, such affiliate shall satisfy the condition
above, and shall also be fully liable to the Owners for all of the Servicer’s
obligations and liabilities hereunder.
 
7.3.   Limitation on Liability of the Servicer and Others.
 
(a)           Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Owners for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment, provided, however, that
this provision shall not protect the Servicer or any such Person against any
breach of warranties or representations made herein, or failure to comply with
the obligations of the Servicer under this Agreement.  The Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
(a) each Owner’s written instructions that conflict with any terms of this
Agreement and (b) any servicing document prima facie properly executed and
submitted by an Owner respecting any matters arising hereunder.
 
(b)           EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY OTHER WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY
IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
 
(c)           IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
INCIDENTAL, SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES,
REGARDLESS OF THE FORM OF THE CAUSE OF ACTION, WHETHER IN CONTRACT, STATUTE,
TORT, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, OR OTHERWISE, EVEN IF THE PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
 
7.4.   Limitation on Assignment by the Servicer.  The Owners have entered into
this Agreement with the Servicer and subsequent owners will purchase the
Mortgage Loans in reliance upon the independent status of the Servicer, and the
representations as to the adequacy of its servicing facilities, personnel,
records and procedures, its integrity, reputation and financial standing, and
the continuance thereof. Therefore, the Servicer shall neither assign this
Agreement nor the servicing responsibilities hereunder nor delegate its rights
or duties hereunder or any portion hereof other than to a third party service
provider or sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of the Owners.
 
ARTICLE VIII

 
REMOVAL OF MORTGAGE LOANS FROM AGREEMENT
 
8.1.   Removal of Mortgage Loans from Inclusion Under this Agreement.  The
Owners and the Servicer agree that with respect to some or all of the Mortgage
Loans, the related Owner, at its sole option, may effect Whole Loan Transfers or
Pass-Through Transfers. Subject to the Servicer’s consent and at fees acceptable
to the Servicer, which shall be reflected and set forth in a term sheet (“Term
Sheet”) between the parties, the related Owner may retain the Servicer as the
servicer of such transferred Mortgage Loans or subservicer if a master servicer
is employed, or as applicable, the “seller/servicer.” On the date of such Whole
Loan Transfers or
 
 
 
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Pass-Through Transfers, the Mortgage Loans transferred shall cease to be covered
by this Agreement.
 
ARTICLE IX

 
DEFAULT
 
9.1.   Events of Default.  Each of the following shall constitute an Event of
Default if any of the following events exist on the part of Servicer:
 
(a)   any failure by the Servicer to remit to the Owners any payment required to
be made under the terms of this Agreement, which continues unremedied for a
period of two (2) Business Days after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to Servicer by
the Owners; or
 
(b)   failure by Servicer to observe or perform any other of the material
covenants or agreements on the part of Servicer set forth in this Agreement,
which continues unremedied for a period of thirty (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; or
 
(c)   a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, including bankruptcy, marshaling of assets
and liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period of thirty
(30) days; or
 
(d)   Servicer shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to Servicer or of or relating
to all or substantially all of its property; or
 
(e)   Servicer shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency, bankruptcy or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its obligations or
cease its normal business operations for three (3) Business Days; or
 
(f)   failure by the Servicer to maintain the material licenses to do business
or service residential mortgage loans in any jurisdiction where the Mortgaged
Property is located, but only to the extent such non-qualification materially
and adversely affects the Servicer’s ability to perform its obligations
hereunder and such failure continues unremedied for a period of sixty (60) days
after the date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Servicer; provided, that if the
Servicer shall have promptly commenced and been diligently pursuing a cure; or
remedy for such breach, but the breach shall have remained uncured after
expiration of the sixty (60) day period, the Owners may, in their sole
discretion,
 
 
 
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extend such sixty (60) day period for a reasonable period of time to allow for
cure or remedy of the breach, but in no event shall such failure continue
unremedied for a period of more than ninety (90) days after the date upon which
written notice of such failure, requiring the same to be remedied, shall have
been given to the Servicer; or
 
(g)   the net worth of Servicer shall be less than $2,500,000; or
 
(h)   any representation or warranty made by the Servicer shall prove to be
untrue or incomplete in any material respect and continues unremedied pursuant
to Section 6.2 for a period of sixty (60) days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Servicer by the related Owner; or
 
(i)   the Servicer’s membership in MERS is terminated by MERS for any reason; or
 
(j)   except in accordance with this Agreement, Servicer either shall assign
this Agreement or the servicing responsibilities hereunder or delegate its
rights or duties hereunder or any portion hereof (to a party other than a third
party service provider) or sell or otherwise dispose of all or substantially all
of its property or assets; or
 
(k)   failure by the Servicer to duly perform, within the required time period,
its obligations under Section 4.4 which failure continues unremedied for a
period of ten (10) 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 an
Owner; or
 
(l)   Fitch, Moody’s and S&P or their successors lowers the Servicer’s servicer
ranking by one (1) full category anytime after the date of this Agreement; or
 
(m)   any governmental authority or any Person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the property or assets of Servicer or any of Servicer’s
affiliates, or shall have taken any action to displace the management of
Servicer or any of Servicer’s affiliates or to curtail its authority in the
conduct of the business of Servicer or any of Servicer’s affiliates, or takes
any action in the nature of enforcement to remove, limit or restrict the
approval of Servicer or any of Servicer’s affiliates as an issuer, buyer or a
servicer of Mortgage Loans or securities backed thereby; or
 
(n)   a Change in Control of the Servicer or a material change in the management
of the Servicer shall have occurred which has not been approved (which approval
shall not be unreasonably withheld) by the Owners;
 
(o)   the Owners shall have reasonably determined, in good faith, that a
Material Adverse Effect shall have occurred; or
 
(p)   the Servicer’s audited annual financial statements or the notes thereto or
other opinions or conclusions stated therein shall be qualified or limited by
reference to
 
 
 
 
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the status of the Servicer as a “going concern” or a reference of similar import
or shall indicate that the Servicer has a negative net worth or is insolvent; or
 
(q)   the Servicer fails to continue to have the independent status or servicing
facilities, plant, systems, records, procedures, integrity, reputation or
financial standing generally acceptable to lending institutions that it had on
the Effective Date; or
 
(r)   the Servicer’s disaster recovery plan fails to meet the standards set
forth in Section 11.11.
 
9.2.   Waiver of Defaults.  By a written notice, the Owners may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
 
ARTICLE X

 
TERMINATION
 
10.1.   Termination.  This Agreement shall terminate upon the earliest of:  (i)
the later of (a) the distribution of the final payment or liquidation proceeds
on the last Mortgage Loan to Owners, and (b) the disposition of all REO Property
acquired upon foreclosure of the last Mortgage Loan and the remittance of all
funds due hereunder; (ii) mutual consent of the Servicer and the Owners in
writing; or (iii) termination of this Agreement pursuant to Section 10.2 or
Section 10.3. The termination of this Agreement pursuant to this Article X shall
not release either party from liability for its own misrepresentation or for any
breach by it of any covenant, agreement or warranty herein prior to such
termination.
 
10.2.   Termination With Cause.  So long as an Event of Default shall have
occurred and shall not have been remedied, the Owners, by notice in writing to
the Servicer, may, in addition to whatever rights such party may have at law or
equity to damages, including injunctive relief and specific performance,
terminate this Agreement.  Upon receipt by Servicer of such written notice, all
authority and power of Servicer under this Agreement, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in a successor
servicer appointed by the Owners.  Servicer shall prepare, execute and deliver
to the successor servicer designated by the related Owner, any and all documents
and other instruments reasonably necessary, place in such successor’s possession
all Servicing Files, and, in a timely manner, do or cause to be done all other
acts or things necessary and appropriate to effect the purposes of such notice
of termination, including, but not limited to, the transfer and endorsement or
assignment of the Mortgage Loans and related documents to the successor
servicer, at the  Servicer’s sole expense.  Servicer shall, in a timely manner,
reasonably cooperate with the related Owner and such successor in effecting the
termination of the servicing responsibilities hereunder, including without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by Servicer to the Custodial Account
or Escrow Account or thereafter received with respect to the Mortgage Loans and
to provide
 
 
 
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supporting documentation for all advances if requested by the related Owner.  In
the event that the Servicer is terminated as a result of an Event of Default,
the Servicer shall not be entitled to any Termination Fee or any other
deboarding fee with respect to each related Mortgage Loan and Servicer will be
responsible for all Servicing Transfer Costs.
 
10.3.   Termination Without Cause.   The Owners may terminate the Servicer’s
right to service one or more Mortgage Loans under this Agreement, as provided in
this Section 10.3 upon ninety (90) calendar days prior written notice.  The
Servicer may terminate this Agreement, as provided in this Section 10.3 upon
ninety (90) calendar days prior written notice.  Any such notice of termination
shall be in writing and delivered to the non-terminating party by registered
mail as provided in Section 11.6.  In the event that the Servicer is terminated
pursuant to this Section 10.3, the related Owner shall pay the Servicer an
amount equal to (1) the costs and expenses of Servicer to transfer the servicing
rights and obligations with respect to such Mortgage Loans, (2) all outstanding
Servicing Advances, Expenses, Servicing Fees and (3) as liquidated damages, the
Termination Fee with respect to each such Mortgage Loan.  Notwithstanding the
foregoing, with respect to the Removed Mortgage Loans, VCM may terminate the
Servicer’s right to service such Removed Mortgage Loans and VCM shall have no
obligation to pay to the Servicer a Termination Fee for the removal of such
Removed Mortgage Loans.
 
ARTICLE XI

 
MISCELLANEOUS PROVISIONS
 
11.1.   Successor to the Servicer.  Upon effectiveness of termination of the
Servicer’s servicing of any Mortgage Loans under this Agreement pursuant to
Section 10.1, the Owners or its successors shall (i) appoint a successor to
assume all of the responsibilities, duties and liabilities of the Servicer under
this Agreement or (ii) if no such appointment has been made, automatically and
immediately succeed to and assume all of the Servicer’s responsibilities, duties
and obligations under this Agreement.  Prior to the transfer of servicing with
respect to any Mortgage Loan hereunder, the Servicer shall be reimbursed by the
Owner or the successor servicer for any undisputed and unpaid Servicing Fees,
Expenses and Servicing Advances with respect to such Mortgage Loan.  In the
event that Servicer’s duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned Section, Servicer
shall discharge such duties and responsibilities during the period from the date
it acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement.  The resignation or removal of Servicer pursuant to the
aforementioned Sections shall not become effective until a successor shall be
appointed pursuant to this Section 11.1 and shall in no event relieve Servicer
of the representations, warranties and covenants made pursuant to Section 6.1
and the remedies available to any Owner under Section 6.2, it being understood
and agreed that the provisions of such Sections 6.1 and 6.2 shall be applicable
to Servicer notwithstanding any such resignation or termination of Servicer, or
the termination of this Agreement.
 
Within thirty (30) days of the appointment of a successor entity by the related
Owner, Servicer shall prepare, execute and deliver to the successor entity any
and all documents and other instruments reasonably necessary, place in such
successor’s possession all Servicing
 
 
 
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Files, and, in a timely manner, do or cause to be done all other acts or things
necessary and appropriate to effect the purposes of such notice of termination,
including, but not limited to, the transfer of the funds in the Custodial
Account and Escrow Account and the transfer of the Servicing Files and related
documents, at the related Owner’s, expense if Servicer is terminated without
cause, or otherwise at Servicer’s expense.  Servicer shall, in a timely manner,
reasonably cooperate with the related Owner and such successor in effecting the
termination of Servicer’s responsibilities hereunder and the transfer of
servicing responsibilities to the successor servicer, including, without
limitation, the transfer to such successor for administration by it of all cash
amounts which shall at the time be credited by Servicer to the Custodial Account
or Escrow Account or thereafter received with respect to the Mortgage Loans.
 
Any termination or resignation by a party or termination of this Agreement
pursuant to Section 10.1 shall not affect any claims that the other party may
have against such party arising out of such party’s actions or failure to act
prior to any such termination or resignation.
 
Upon a successor’s acceptance of appointment as such, the Owners shall notify by
mail the Servicer of such appointment in accordance with Section 11.6.
 
11.2.   Reserved
 
11.3.   Amendment; Extension Not a Waiver.  This Agreement sets forth the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous agreements or understandings,
written, oral or otherwise with respect to the subject matter hereof.  This
Agreement may be amended from time to time by, and only by, a writing signed by
the Servicer and the Owners.
 
No delay or omission in the exercise of any power, remedy or right herein
provided or otherwise available to any party hereto will impair or affect the
right of such party thereafter to exercise the same.  Any extension of time or
other indulgence granted to any party hereunder will not otherwise alter or
affect any power, remedy or right of any other party hereto, or the obligations
of the party to whom such extension or indulgence is granted.
 
11.4.   Governing Law; Venue.  This Agreement shall be construed in accordance
with the laws of the State of New York applicable to agreements made and fully
performed within the State of New York without giving effect to the conflict of
laws principles thereof (except for Section 5-1401 of the New York General
Obligations Law) and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
 
Any action or other legal proceeding brought under this Agreement will be
subject to the exclusive jurisdiction of the United States District Court for
the Southern District of New York in New York County, New York or the United
States District Court for the Eastern District of New York in Kings County, New
York and in the absence of federal jurisdiction, the jurisdiction of any state
court of general jurisdiction sitting in New York County, New York or Kings
County, New York.  Each of the Owner and the Servicer consents to such
jurisdiction for actions or legal proceedings brought by either party and waives
any objection which it may have to the laying of the venue of such suit, action
or proceeding in any of such courts.
 
 
 
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11.5.   Duration of Agreement.  This Agreement shall continue in existence and
effect until terminated as herein provided. This Agreement shall continue
notwithstanding transfers of the Mortgage Loans by the Owners.
 
11.6.   Notices.  All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if (i) personally delivered
to the appropriate Party hereto, (ii) mailed, by registered or certified mail,
return receipt requested, to the appropriate Party hereto at the address below,
or (iii) transmitted by facsimile transmission or by electronic mail with
acknowledgment, to the appropriate Party hereto at the facsimile number or the
electronic mail address provided below:
 
(a)   if to the Servicer:

Franklin Credit Management Corporation
101 Hudson Street
Jersey City, NJ 07302
Attn: Chief Operating Officer

With a copy to:

Franklin Credit Management Corporation
101 Hudson Street
Jersey City, NJ 07302
Attn: General Counsel

or such other address as may hereafter be furnished to the Owners in writing by
the Servicer;

        (ii)        if to VCM:
 
Vantium Capital Markets LP
730 5th Avenue, 5th Floor, New York, NY  10019
Attn: Mike Nocco
Telephone: (212) 822-0631

With a copy to:

Vantium Capital, Inc.
7880 Bent Branch Dr., Suite 150
Irving, Texas 75063
Attention: Ron Bendalin
Telephone: (972) 715-1019

        (iii)        if to VCMR:

Vantium Capital Markets LP
 
 
 
 
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730 5th Avenue, 5th Floor, New York, NY  10019
Attn: Mike Nocco
Telephone: (212) 822-0631

With a copy to:
Acqura Loan Services, a Vantium Capital, Inc. Company
6500 International Parkway, Suite 1500
Plano, TX  75093
Attention: Ron Bendalin
Telephone: (972) 715-1019

or such other address as may hereafter be furnished to the Servicer in writing
by the Owners;

11.7.   Severability of Provisions.  If any provision of this Agreement is found
to be unenforceable by a court of competent jurisdiction, such unenforceable
provision shall not affect the other provisions, but such court shall have the
authority to modify such unenforceable provision to the extent necessary to
render it enforceable, preserving to the fullest extent permissible the intent
of the parties.
 
11.8.   Relationship of Parties.  The parties are entering into, and shall
perform, this Agreement as independent contractors.  Nothing in this Agreement
shall be construed to make either party the agent of the other for any purpose
whatsoever, to authorize either party to enter into any contract or assume any
obligation on behalf of the other or to establish a partnership, franchise or
joint venture between the parties.
 
11.9.   Execution; Successors and Assigns.  This Agreement may be executed in
one or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an
original; such counterparts, together, shall constitute one and the same
agreement.  Subject to Section 7.4, this Agreement shall inure to the benefit of
and be binding upon the Servicer and the Owners and their respective successors
and assigns.  The Parties agree that this Agreement, any documents to be
delivered pursuant to this Agreement and any notices hereunder may be
transmitted between them by email and/or by facsimile. The Parties intend that
faxed signatures and electronically imaged signatures such as .pdf files shall
constitute original signatures and are binding on all Parties. The original
documents shall be promptly delivered, if requested.
 
11.10.   Assignment by the Owners.  This Agreement shall bind and inure to the
benefit of and be enforceable by Servicer and any Owner and the respective
permitted successors and permitted assigns of Servicer and the related
Owner.  This Agreement shall not be assigned, pledged or hypothecated by
Servicer to a third party without the prior written consent of the related
Owner.  Any Owner shall have the right, in its sole discretion, to assign its
interest under this Agreement with respect to some or all of the Loans to any
affiliate managed by the related Owner’s or Owner’s subsidiaries.
 
11.11.   Disaster Recovery.  The Servicer shall, at its own expense, maintain a
disaster recovery plan in support of the processing and related functions it
performs for the
 
 
 
 
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Owners under this Agreement that provides for disaster recovery and the
resumption of business in the event that a disaster disrupts or impairs its
provision of servicing pursuant to this Agreement.  The Servicer's disaster
recovery plan shall include, at a minimum, procedures for back-up/restoration of
operating and application software, procedures for the protection of Owners’
source documentation; procedures and third-party agreements for replacement
equipment (e.g. computer equipment), and procedures and third-party agreements
for off-site production facilities.  The Servicer agrees to release the
information necessary to the related Owner and will have a summary of its
disaster recovery plan available for the related Owner to review upon request.
The Servicer agrees to annually test its disaster recovery plan, shall promptly
take corrective action as necessary to comply with this Section 11.17 and, upon
request, provide a written report thereof to the related Owner. If the results
of the related Owner’s review of Servicer’s disaster recovery plan are
unsatisfactory to the Owners (in the reasonable and good faith determination of
the Owners) and the plan does not meet standards generally acceptable to
mortgage lending institutions, the Owners may immediately terminate this
Agreement and all costs and expenses to transfer the servicing shall be paid by
the Servicer upon presentation of reasonable documentation of such costs.  The
Servicer shall notify the Owners promptly of any material change to Servicer’s
disaster recovery plan.
 
11.12.   Force Majeure.  A party will not be liable to the other party for
delays or failures in performance of its obligations under this Agreement
arising out of or based upon acts of God, strikes, riots, acts of war,
terrorism, earthquakes, and other events beyond its reasonable control (each, a
“Force Majeure Event”).  A party excused from performance pursuant to this
Section shall exercise reasonable efforts to continue to perform its obligations
hereunder and shall thereafter continue with reasonable due diligence and good
faith to remedy its inability to so perform, except that nothing herein shall
obligate either party to settle a strike or labor dispute when it does not wish
to do so.  Notwithstanding the foregoing, the Owner may, without the payment of
a Termination Fee, terminate this Agreement by notice in writing if a Force
Majeure Event preventing the Servicer’s performance continues for more than five
(5) Business Days. Subject to a party’s obligations in this Section, the
consequences arising from the existence and continuation of a Force Majeure
Event shall be deemed not to constitute a breach by either party of any
representation, warranty, covenant, agreement or obligation in this Agreement.
 
[Intentionally Blank - Next Page Signature Page]
 
 
 
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IN WITNESS WHEREOF, the Servicer and the Owners have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
 
 
FRANKLIN CREDIT MANAGEMENT CORPORATION
 
 
By: /s/ Jimmy Yan
   Name: Jimmy Yan
   Title: Executive Vice President
     Managing Director of Servicing and Recovery
 
 
 
VANTIUM CAPITAL MARKETS, L.P.,
 
By: VANTIUM MANAGEMENT, L.P., its Manager
 
By: /s/ Paul Mangione
   Name: Paul Mangione
   Title: Managing Director
 
 
VANTIUM REO CAPITAL MARKETS, L.P.,
 
By: VANTIUM MANAGEMENT, L.P., its Manager
 
By: /s/ Paul Mangione
   Name: Paul Mangione
   Title: Managing Director

 

 
 

 

 
 

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EXHIBIT A

MORTGAGE LOAN SCHEDULE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit A-1

 

 
 

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EXHIBIT B

CONTENTS OF EACH MORTGAGE FILE

With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items (to the extent in the applicable Owner or its designee’s
possession), which the related Owner shall deliver a copy thereof to the
Servicer for retention in the Servicing File:
 
1.  
The original Mortgage Note bearing all intervening endorsements, endorsed “Pay
to the order of ______ without recourse” and signed in the name of the related
Owner by an authorized officer (in the event that the Mortgage Loan was acquired
by the related Owner in a merger, the signature must be in the following form:
“[the Owner], successor by merger to [name of predecessor]”; and in the event
that the Mortgage Loan was acquired or originated by the related Owner while
doing business under another name, the signature must be in the following form:
“[the Owner], formerly known as [previous name]”).

 
2.  
The original of any guarantee executed in connection with the Mortgage Note (if
any).

 
3.  
The original Mortgage, with evidence of recording thereon or a certified true
and correct copy of the Mortgage sent for recordation.

 
4.  
The originals or certified true copies of any document sent for recordation of
all assumption, modification, consolidation or extension agreements, with
evidence of recording thereon.

 
5.  
The original Assignment of Mortgage for each Mortgage Loan, in form and
substance acceptable for recording (except for the insertion of the name of the
assignee and recording information).

 
6.  
Originals or certified true copies of documents sent for recordation of all
intervening assignments of the Mortgage with evidence of recording thereon.

 
7.  
The original PMI Policy, where required pursuant to the Agreement.

 
8.  
The original mortgagee policy of title insurance or evidence of title.

 
9.  
Any security agreement, chattel mortgage or equivalent executed in connection
with the Mortgage.

 
With respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the related Owner or in the
possession of the related Owner’s agent(s):
 
10.  
The original hazard insurance policy and, if required by law, flood insurance
policy, in accordance with Section 4.10 of the Agreement.

 
 
Exhibit B-1
 
 
 
 

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11.  
Residential loan application.

 
12.  
Mortgage Loan closing statement.

 
13.  
Verification of employment and income, if applicable.

 
14.  
Verification of acceptable evidence of source and amount of down payment, if
applicable.

 
15.  
Credit report on the Mortgagor.

 
16.  
Residential appraisal report.

 
17.  
Photograph of the Mortgaged Property.

 
18.  
Survey of the Mortgage property, if required by the title owner or applicable
law.

 
19.  
Copy of each instrument necessary to complete identification of any exception
set forth in the exception schedule in the title policy, i.e. map or plat,
restrictions, easements, sewer agreements, home association declarations, etc.

 
20.  
All required disclosure statements.

 
21.  
If available, termite report, structural engineer’s report, water potability and
septic certification.

 
22.  
Sales contract, if applicable.

 
23.  
Evidence of payment of taxes and insurance premiums, insurance claim files,
correspondence, current and historical computerized data files, and all other
processing, underwriting and closing papers and records which are customarily
contained in a mortgage loan file and which are required to document the
Mortgage Loan or to service the Mortgage Loan.

 
24.  
Amortization schedule, if available.

 
25.  
Mortgage Loan payment history.

 
26.  
Original power of attorney, if applicable.

 
 
 
B-2

 
 
 

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EXHIBIT C-1

FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
 
___________________ __, 200__
 

To:    _____________________________
     
      _____________________________         
                 (the “Depository”)
 
As Servicer under the Loan Servicing Agreement, dated as of _______ __, 200_, we
hereby authorize and request you to establish an account, as a Custodial
Account, to be designated as “Franklin Credit Management Corporation in trust
for ____________________” All deposits in the account shall be subject to
withdrawal therefrom by order signed by the Servicer. This letter is submitted
to you in duplicate. Please execute and return one original to us.
 
Franklin Credit Management Corporation
 
By: /s/ Jimmy Yan
 
Name: Jimmy Yan
 
Title: Executive Vice President
   Managing Director of Servicing and Recovery
 
Date: July 20, 2010
 
 
 
 
 
Exhibit C-1-1
 

 
 

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The undersigned, as Depository, hereby certifies that the above-described
account has been established under Account Number ___________ at the office of
the Depository indicated above, and agrees to honor withdrawals on such account
as provided above.

 
_______________________________
       Depository
 
 
By:____________________________
 
Name:__________________________
 
Title:___________________________
 
Date:___________________________                                                                           
 

 
 
 
Exhibit C-1-2
 

 
 

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EXHIBIT C-2

FORM OF ESCROW ACCOUNT LETTER AGREEMENT
 

___________________ __, 200__
 

To: ________________________________
 
   ________________________________             
                    (the “Depository”)
 
As Servicer under the Loan Servicing Agreement, dated as of _______ __, 200_, we
hereby authorize and request you to establish an account, as an Escrow Account,
to be designated as “Franklin Credit Management Corporation in trust for
_____________________ and various Obligors, fixed and adjustable rate Loans.”
All deposits in the account shall be subject to withdrawal therefrom by order
signed by the Servicer. This letter is submitted to you in duplicate. Please
execute and return one original to us.
 
Franklin Credit Management Corporation
 
 
By: /s/ Jimmy Yan
 
Name: Jimmy Yan
 
Title: Executive Vice President
  Managing Director of Servicing and Recovery
 
Date: July 20, 2010
 
 
 
 
 
 
Exhibit C-2-1

 
 
 

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The undersigned, as Depository, hereby certifies that the above-described
account has been established under Account Number ___________ at the office of
the Depository indicated above, and agrees to honor withdrawals on such account
as provided above.
 
_______________________________
       Depository
 
 
By:____________________________
 
Name:__________________________
 
Title:___________________________
 
Date:___________________________                                                                           
 

 
 
 
Exhibit C-2-2
 
 

 
 

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EXHIBIT D

SERVICING FEE SCHEDULE

Monthly Servicing Fee per Loan per month

    Performing Mortgage Loans (0-29 days past due) ***     Delinquent Mortgage
Loans (30-59 days past due) ***     Delinquent Mortgage Loans (60+ days past
due) ***     Foreclosure ***     Bankruptcy *** 

 

        REO
In the 1st 12 months - *** for the first 3 months (from listing) & *** after
month 3
after month 12 - *** for the first 3 months (from listing) & *** after month 3
    Default Fees:       Resolution Fees (loan must become contractually
current)   
       Reinstatements (>= 91 days past due)
*** of Unpaid Principal Balance ( minimum fee ***, maximum fee ***)
           Modification
*** of Unpaid Principal Balance prior to Modification Minimum Fee, ***, Maximum
Fee, ***, collected by servicer, only after there are 4 consecutive payments
made by borrower.  **Applicable after successful completion of four (4) month
special forbearance trial payment period.
   
       Paid in Full (including a refinance, third-party sale
       or Homeowner Relief Program)
*** of Unpaid Principal Balance, first 12 months from the Effective Date
(minimum fee ***, maximum fee ***); thereafter, *** of Unpaid Principal Balance
(minimum fee ***, maximum fee ***)
    Disposition Fees (Property Liquidations)      
       Short Sales/Settlements
 
       (including a refinance, third-party sale
       or Homeowner Relief Program)
*** of Unpaid Principal Balance, first 12 months from the Effective Date
(minimum fee ***, maximum fee ***); thereafter, *** of Unpaid Principal Balance
(minimum fee ***, maximum fee ***)        

 
 
Exhibit D-1

 
 

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       Deed in Lieu *** of Unpaid Principal Balance (minimum fee ***, maximum
fee ***)    
    REO Disposition Fee
*** of gross proceeds, first 12 months from the Effective Date; thereafter, ***
of gross proceeds., *** Minimum per asset
   

   
Tax Certification Fee
Tax Contract Fees
    No existing contract
at cost
 
at cost

   
Contract transfer
        First American / Fidelity contract
        Non transferable contract
 
at cost
at cost

   
Flood Contract Fees
    No existing contract
    Contract transfer
        First American/Fidelity contract
        Non transferable contract
 
at cost
 
at cost
at cost

 
Ancillary Cash Flows        The table below indicates ownership of certain cash
flows.
 
       Cash
Flow                                                                  Owner
Late Charges
Retained by 100% by Servicer
Principal and Interest Float
Retained by servicer
Escrow Float
Retained by servicer
Servicing Activity Fees
Retained by servicer (e.g. payoff statements, fax fees)
Borrower Prepayment Fees
Retained by Purchaser

 

Contingency Fees on Charged off Mortgage Loans -
***
(deficiencies, unsecured Mortgage Loans and Mortgage Loans that are provided by
Owner on a monthly basis
 

 
Remittance and Billing

Recording Fees per Loan

Assignment                           prepared by third-party vendor at cost
At cost as dictated by county

Power of Attorney               at cost
If no corporate signing authority is provided

MERS                                     at cost

D-2

 
 

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EXHIBIT E

REPORTS

1.    Daily Collections Report (as provided as of the date of this Agreement).

2.    Monthly Servicing Update Report (as provided as of the date of this
Agreement) (provided by 2nd Business Day of the following month).
 
3.    Monthly Modification Performance/Vintage Report (as provided as of the
date of this Agreement)(provided by 2nd Business Day of the following month).
 
4.    Monthly REO Inventory and Sales Report (as provided as of the date of this
Agreement) (provided by 2nd Business Day of the following month).
 
5.    Monthly Third Party Expense Report (provided by 2nd Business Day of the
following month).
 
6.    Data, in form and substance, supporting and facilitating the Owners in
accounting, reporting and regulatory purposes. (provided by 2nd Business Day of
the following month).
 
7.    A monthly reconciliation report of all cash collections by the Servicer
(provided by the 5th Business Day of the following month).
 
8.    Upon request, copies of reconciliation prepared by the Servicer.
 
Such other reports, based on information reasonably available to the Servicer,
as the Owners shall reasonably request.
 
 
 
Exhibit E-1

 
 
 

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EXHIBIT F

FORM OF LIMITED POWER OF ATTORNEY

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
FRANKLIN CREDIT MANAGEMENT CORPORATION
[__________________]
[__________________]
Attn: [__________________]
 
LIMITED POWER OF ATTORNEY
 
KNOW ALL MEN BY THESE PRESENTS, that _______________________, a ________________
corporation organized and existing under the laws of the State of ________ and
having its principal place of business at __________________________________ as
Owner (the “Owner”) pursuant to that Loan Servicing Agreement, among Franklin
Credit Management Corporation (the “Servicer”) and the Owner, dated as of July
1, 2010 (the “Agreement”), hereby constitutes and appoints the Servicer, by and
through the Servicer’s officers, the Owner’s true and lawful Attorney-in-Fact,
in the Owner’s name, place and stead and for the Owner’s benefit, in connection
with all mortgage loans and REO properties subject to the terms of the Agreement
for the purpose of performing all acts and executing all documents in the name
of the Owner as may be customarily and reasonably necessary and appropriate to
effectuate the following enumerated transactions in respect of any of the
mortgages or deeds of trust (the “Mortgages” and the “Deeds of Trust”
respectively) and promissory notes secured thereby (the “Mortgage Notes”) for
which the undersigned is the Owner (whether the undersigned is named therein as
mortgagee or beneficiary or has become mortgagee by virtue of endorsement of the
Mortgage Note secured by any such Mortgage or Deed of Trust) and for which the
Servicer is performing sub-servicing activities all subject to the terms of the
Agreement.
 
This appointment shall apply to the following enumerated transactions only:
 
 
1.
The modification or re-recording of a Mortgage or Deed of Trust, where said
modification or re-recording is for the purpose of correcting the Mortgage or
Deed of Trust to conform same to the original intent of the parties thereto or
to correct title errors discovered after such title insurance was issued and
said modification or rerecording, in either instance, does not adversely affect
the lien of the Mortgage or Deed of Trust as insured.

 
2.
The subordination of the lien of a Mortgage or Deed of Trust to an easement in
favor of a public utility company of a United States governmental agency or unit
with powers of eminent domain; this section shall include, without limitation,
the execution of partial satisfactions/releases, partial reconveyances or the
execution or requests to trustees to accomplish same.

 
 
Exhibit F-1
 
 
 
 

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3.
The conveyance of the properties to the mortgage insurer, or the closing of the
title to the property to be acquired as real estate owned, or conveyance of
title to real estate owned.

 
4.
The completion of loan assumption agreements.

 
5.
The full satisfaction/release of a Mortgage or Deed of Trust or full conveyance
upon payment and discharge of all sums secured thereby, including, without
limitation, cancellation of the related Mortgage Note.

 
6.
The assignment of any Mortgage or Deed of Trust and the related Mortgage Note,
in connection with the repurchase of the mortgage loan secured and evidenced
thereby.

 
7.
The full assignment of a Mortgage or Deed of Trust upon payment and discharge of
all sums secured thereby in conjunction with the refinancing thereof, including,
without limitation, the assignment of the related Mortgage Note.

 
8.
With respect to a Mortgage or Deed of Trust, the foreclosure, the taking of a
deed in lieu of foreclosure, or the completion of judicial or non-judicial
foreclosure or termination, cancellation or rescission of any such foreclosure,
including, without limitation, any and all of the following acts:

 
a.
the substitution of trustee(s) serving under a Deed of Trust, in accordance with
state law and the Deed of Trust;

 
b.
the preparation and issuance of statements of breach or non-performance;

 
c.
the preparation and filing of notices of default and/or notices of sale

 
d.
the cancellation/rescission of notices of default and/or notices of sale;

 
e.
the taking of a deed in lieu of foreclosure; and

 
f.
the preparation and execution of such other documents and performance such other
actions as may be necessary under the terms of the Mortgage, Deed of Trust or
state law to expeditiously complete said transactions in paragraphs 8(a) through
8(e), above.

The undersigned gives said Attorney-in-Fact full power and authority to execute
such instruments and to do and perform all and every act and thing necessary and
proper to carry into effect the power or powers granted by or under this Limited
Power of Attorney, each subject to the terms and conditions set forth in the
Agreement and in accordance with the standard of care set forth in the Agreement
as fully as the undersigned might or could do, and hereby does ratify and
confirm to all that said Attorney-in-Fact shall lawfully do or cause to be done
by authority hereof. This Limited Power of Attorney shall be effective as of
____________ ___, _____.
 
 
 
D-2

 
 
 

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Third parties without actual notice may rely upon the exercise of the power
granted under this Limited Power of Attorney; and may be satisfied that this
Limited Power of Attorney shall continue in full force and effect and has not
been revoked unless an instrument of revocation has been made in writing by the
undersigned.
 
IN WITNESS WHEREOF, ________________________, as Owner pursuant to that
Servicing Agreement between the Owner and the Servicer, dated as of __________
1, 200__, has caused its corporate seal to be hereto affixed and these presents
to be signed and acknowledged in its name and behalf by ____________, its duly
elected and authorized ______________ this ___ day of ____________, _____.
 
______________________________
 
 
 
By:____________________________
Name:__________________________
Title:___________________________
 
 
 
 
 
D-3
 
 

 
 

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STATE OF __________________
COUNTY OF ________________
 
On ____________ __, _____, before me, the undersigned, a Notary Public in and
for said state, personally appeared _______________ of
_________________________, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that [she/he]
executed that same in [her/his] authorized capacity, and that by [her/his]
signature on the instrument the entity upon behalf of which the person acted and
executed the instrument.
WITNESS my hand and official seal.
(SEAL)
 
______________________________
       Notary Public
 

D-4
 

 
 

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EXHIBIT G

APPROVAL MATRIX
(to be negotiated to the satisfaction of the Owners)
 
 
 
 
 
 
 
 
 
 
Exhibit G-1

 
 
 

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EXHIBIT H

REMOVED MORTGAGE LOANS

 
 
 
 
 
 
 
 
Exhibit H-1