**Exhibit 10.2**

 

***Execution Copy***

 

 

**CONTINGENTPAYMENT AGREEMENT**

 

ThisContingent Payment Agreement (the “Agreement”), dated as of August 12,2005, is among Select Portfolio Servicing, Inc. (“SPS”), Credit SuisseFirst Boston (USA), Inc. (the “Option Holder”), Greenrange Partners LLC(“Greenrange”), The PMI Group, Inc. (“PMI”) and FSA PortfolioManagement, Inc. (“FSA”, and together with Greenrange and PMI, each a “Payee”and collectively the “Payees”).

 

Background

 

A.                                   Pursuant to theOption Agreement (as defined herein), the Option Holder has acquired an option(the “Option”), exercisable on or before August 12, 2005, toacquire 100% of the outstanding capital stock of SPS Holding Corp. (“Holding”)from the Payees.  SPS is a wholly-ownedsubsidiary of Holding.  The purchaseprice for such acquisition will be comprised of a “Cash Payment” (as defined inthe Option Agreement), a series of “Monthly Contingent Payments” (as definedbelow) and the “Final Payment Amount” (as defined below).

 

B.                                     The parties heretowish to provide for the calculation of the Monthly Contingent Payments and theFinal Payment Amount and for the remittance thereof by the Option Holder to thePayees to the extent applicable hereunder.

 

Agreement

 

In consideration of the mutual premises andmutual obligations set forth herein and for other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged, theparties hereto, intending to be legally bound, agree as follows:

 

**Section 1.  Definitions.**  Whenever used in this Agreement, thefollowing words and phrases shall have the following meanings:

 

“Accountants”: As defined in Section 3(e).

 

“Advance”: Any servicing advance oradvance related to delinquent principal and/or interest made by SPS in respectof a Mortgage Loan.

 

“Affiliate”:  As defined in the Option Agreement.

 

“Aggregate Unit Cost”: With respect toany calendar month, the sum of the Unit Costs for each Mortgage Loan servicedby SPS on the first day of such calendar month.

 

“Agreement”: As defined in the preamblehereto.

 

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“Ancillary Income”: With respect to aMortgage Loan, all income received by SPS from such Mortgage Loan (other thanservicing and sub-servicing fees and prepayment penalties) including, but notlimited to, late charges, non-sufficient fund charges, speed pay fees,assignment fees, demand fees, payoff statement fees, loan document fees and anyother incidental fees and charges, in each case, to the extent that collectionof such amounts is not prohibited by the applicable Servicing Requirements or applicablelaw.

 

“Business Day”: A day of the weekother than (a) Saturday or Sunday or (b) a day on which banking orsavings institutions in New York or Utah are authorized or permitted underapplicable law to be closed.

 

“Cash Payment”: As defined in theOption Agreement.

 

“Closing Balance Sheet”: As defined inthe Option Agreement.

 

“Consent Order”: Order PreliminarilyApproving Stipulated Final Judgment and Order as to Fairbanks Capital Corp. andFairbanks Capital Holding Corp., entered by the United States District Courtfor the District of Massachusetts on November 21, 2003, as the same may bemodified from time to time in accordance with the terms thereof.

 

 “CumulativeShortfall”: For any calendar month, (i) the sum of the Shortfall forthat month and for any prior month less (ii) the Cumulative ShortfallDeductible Amount, if any, for all prior months.

 

“Cumulative Shortfall Deductible Amount”:For any calendar month, the lesser of (i) the Cumulative Shortfall forsuch calendar month and (ii) the Monthly Contingent Payment for suchcalendar month, calculated assuming that the Cumulative Shortfall DeductibleAmount for such month is zero.

 

“Curry Settlement”: The SettlementAgreement and Release, dated November 14, 2003, entered into by FairbanksCapital Corp., and Alanna Curry and certain other plaintiffs in connection withCivil Action No. 03-10895-DPW, and approved by the United States DistrictCourt for the District of Massachusetts, as the same may be modified from timeto time in accordance with the terms thereof.

 

“Customer Accommodation”: An amountpaid by SPS to a customer, or a credit by SPS to a customer’s account, in eithercase after the Option Closing Date, that (x) does not qualify as a CustomerReversal and (y) is a consequence of the customer alleging a Mortgage Loan ServicingError or SPS identifying a Mortgage Loan Servicing Error, in each case which (i) occurredprior to the Option Closing Date (and which may or may not have continuedthereafter) and (ii) SPS believes is reasonably likely to result inPrivate Litigation or a Regulatory Action; provided, however,that in no event will any Customer Accommodation (i) also be included inany calculation of Designated Litigation Expenses, (ii) include anyamounts payable in connection with a Private Litigation or Regulatory Action or(iii) include any matter related to the Specified Disputes.

 

“Customer Accommodation Amount”: Withrespect to any calendar month, the sum of all Customer Accommodations for suchcalendar month; provided, however, that:

 

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(i)            forany Customer Accommodation based in part upon Mortgage Loan Servicing Errors thatoccur both before the Option Closing Date and more than 180 days after theOption Closing Date, the related Customer Accommodation Amount (includingpursuant to the immediately succeeding clause (ii)) shall be reduced by fiftypercent (50%);

 

(ii)           anyCustomer Accommodation in excess of $10,000 made by SPS without the priorwritten approval of FSA and PMI shall be reduced by one-third (1/3) of theexcess of such Customer Accommodation over $10,000; and

 

(iii)          forany Customer Accommodation involving only Mortgage Loan Servicing Errorsoccurring after the Option Closing Date, the related Customer AccommodationAmount shall be zero.

 

“Customer Information”: As defined in Section 8(g).

 

“Customer Reversal”: An amount paid bySPS to a customer, or a credit by SPS to a customer’s account, in either caseafter the Option Closing Date, of an erroneous, duplicative or excessive fee orcharge to such customer prior to the Option Closing Date that resulted from aMortgage Loan Servicing Error which occurred prior to the Option Closing Date(and which may or may not have continued thereafter), except to the extent thatSPS had established a reserve with respect thereto prior to the Option ClosingDate and such reserve amount has not been reduced to zero as a result of aprior Customer Reversal Amount; provided, however, that in noevent will any Customer Reversal (i) also be included in any calculationof Designated Litigation Expenses, (ii) include any amounts payable inconnection with a Private Litigation or Regulatory Action or (iii) includeany matter related to the Specified Disputes.

 

“Customer Reversal Amount”: Withrespect to any calendar month, the sum of all Customer Reversals for suchcalendar month; provided, however, that:

 

(i)                                     theCustomer Reversal Amount shall not include any portion of a Customer Reversal thatresulted from a Mortgage Loan Servicing Error that occurred after the OptionClosing Date, unless, and only to the extent that, the erroneous, duplicativeor excessive fee or charge billed to the customer after the Option Closing Datewas included in the Monthly Contingent Payment actually paid to the Payeeshereunder;

 

(ii)                                  theportion of the Customer Reversal Amount that is permitted to be includedpursuant to the immediately preceding clause (i) shall be reduced by fiftypercent (50%) if the Mortgage Loan Servicing Error giving rise to the CustomerReversal continued to occur more than 180 days after the Option Closing Date;and

 

(iii)                               forany Customer Reversal involving only Mortgage Loan Servicing Errors occurringafter the Option Closing Date, the related Customer Reversal Amount shall bezero.

 

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“Delinquent”: With respect to anyMortgage Loan, when all or part of the related monthly payment or, whereapplicable, the escrow payment, is not paid on the related due date, ascalculated using the method established by the Mortgage Bankers Association andcommonly referred to as the MBA method.

 

“Designated Litigation Expense Adjustment”:Until such time as the Litigation Reserve Amount has been reduced to zero, theDesignated Litigation Expense Adjustment shall equal zero.  Thereafter, with respect to any calendarmonth (or portion thereof), the Designated Litigation Expense Adjustment shallequal the Designated Litigation Expenses paid by SPS during such calendar month(or portion thereof); provided, however, that to the extent theLitigation Reserve Amount has been reduced to zero and a Cumulative Shortfallexists with respect to a given calendar month, the Designated Litigation ExpenseAdjustment for such month shall equal zero.

 

“Designated Litigation Expenses”: Withrespect to any calendar month, the aggregate, without duplication,out-of-pocket costs related to damages, judgments, settlements, penalties,fines or expenses of any kind paid by SPS during such calendar month arisingout of any Private Litigation, including interest, penalties, reasonable attorneys’fees and expenses of outside counsel and all reasonable amounts paid in connectionwith the investigation, defense or settlement of any such claim; provided,however, that:

 

(i)                                     forany Private Litigation based in part upon Mortgage Loan Servicing Errors that occurboth before the Option Closing Date and more than 180 days after the Option ClosingDate, the related Designated Litigation Expenses  (including pursuant to the immediatelysucceeding clause (ii)) shall be reduced by fifty percent (50%);

 

(ii)                                  forany Private Litigation that is settled by SPS without the prior writtenapproval of FSA and PMI which results in Designated Litigation Expenses inexcess of $15,000, the related Designated Litigation Expenses shall be reducedby one-third (1/3) of the excess of such Designated Litigation Expenses over$15,000;

 

(iii)                               forany Private Litigation involving only Mortgage Loan Servicing Errors occurringafter the Option Closing Date, the related Designated Litigation Expenses shallbe zero; and

 

(iv)                              inno event will any Designated Litigation Expense (x) also be included in anycalculation of Designated Nonrecoverable Advances, Customer AccommodationAmounts or Customer Reversal Amounts, (y) include any amounts payable inconnection with any Regulatory Action or Origination Litigation, or (z) includethe Specified Disputes.

 

“Designated Nonrecoverable Advances”: Withrespect to any calendar month, the sum of any Advance (other than anyservicing, delinquency or other advance that was purchased, rather than made,by SPS) made by SPS prior to the Option Closing Date that

 

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SPS reasonably determines during such calendar month, consistent withthe practices of SPS during the six month period prior to the Option ClosingDate, to be a Nonrecoverable Advance; provided, however, that inno event will any Designated Nonrecoverable Advance include any matter relatingto the Specified Disputes.

 

“Designated Representative”: Asdefined in Section 8(d).

 

“Fee Matrix”:  As defined in the Option Agreement.

 

“Final Payment Amount”:  As defined in Section 3(c).

 

“FSA”: As defined in the preamble tothe Agreement.

 

“Governmental Entity”:  As defined in the Option Agreement.

 

“Greenrange”: As defined in thepreamble to the Agreement.

 

“Holding”: As defined in the preambleto the Agreement.

 

“Indemnified Party”: As defined in Section 11(a).

 

“Indemnifying Party”: As defined in Section 11(a).

 

“Interest Expense”: With respect toany calendar month, an amount equal to the product of (i) the averageoutstanding balance of Advances on the Mortgage Loans during such calendarmonth, times (ii) 85%, times (iii) one-month LIBOR asof the first Business Day of the month preceding such calendar month plus 2%, times(iv) 1/12.

 

“Interest Income”: With respect to anycalendar month, an amount equal to the sum of all interest income (including,without limitation, income received under the Pledge Agreement), float incomeand/or earnings credit and interest on Advances received by SPS during suchcalendar month, to the extent that such amounts relate to the ServicingAgreements or the Subsequent Designated Agreements, in each case, to the extentsuch amounts may be collected in accordance with the related ServicingAgreements or the Subsequent Designated Agreements, as applicable, and thecollection thereof is not prohibited by applicable law.

 

“Litigation Reserve Amount”: As of anydate of calculation, an amount equal to the (i) the sum of the reserve forlegal disputes (other than reserves for the Specified Disputes) and the “reservefor unasserted claims in Mississippi”, in each case as included on or reflectedin the Closing Balance Sheet, minus (ii) the aggregate DesignatedLitigation Expenses paid by SPS prior to such date of calculation but duringthe Payment Period; provided, however, that the result shall notbe less than zero.

 

“Measurement Date”: As defined in theOption Agreement.

 

“Monthly Contingent Payment”: Withrespect to any Payment Date, an amount paid to the Payees pursuant to Section 3(b),as such amount is received from collections

 

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on the Mortgage Loans.  EachMonthly Contingent Payment shall equal the following, for the calendar monthpreceding the calendar month in which the Payment Date occurs: (a) the sumof, without duplication, (i) all Servicing Income for such preceding calendarmonth, (ii) all Professional Services Income for such preceding calendarmonth, (iii) the Recovery Amount for such preceding calendar month, and (iv) theInterest Income for such preceding calendar month; less (b) the sum of,without duplication, (i) the Aggregate Unit Cost for such preceding calendarmonth, (ii) the Designated Litigation Expense Adjustment for such precedingcalendar month or, to the extent that the Litigation Reserve Amount has beenreduced to zero and a Cumulative Shortfall exists, the Cumulative ShortfallDeductible Amount, (iii) the Designated Nonrecoverable Advances for such precedingcalendar month, (iv) the Customer Accommodation Amount for such precedingcalendar month, (v) the Customer Reversal Amount for such precedingcalendar month, and (vi) the Interest Expense for such preceding calendarmonth; provided, however, that if the Monthly Contingent Paymentfor any calendar month is a negative amount, then the Monthly ContingentPayment for such month shall be zero, and a “Shortfall” shall be created inaccordance with the definition thereof.  Allcomponents of each Monthly Contingent Payment, as itemized in Exhibit A, otherthan the Aggregate Unit Cost, the Designated Litigation Expense Adjustment, theCustomer Accommodation Amount and the Interest Expense, shall be charged,collected, calculated and applied by SPS in a manner consistent with methodsutilized by SPS during the six months immediately preceding the Option Closing Date,consistently applied; provided, however, that the ServicingIncome and the Professional Services Income components of each MonthlyContingent Payment, as itemized in Exhibit A, shall be charged, collected,calculated and applied by SPS subject to Section 7(b);provided,further, that SPS shall use its commercially reasonable efforts and actin good faith to achieve the same outcome on individual Customer Accommodationsand Designated Litigation Expenses that was realized for comparable situationsduring the six months prior to the Option Closing Date.

 

“Mortgage Loan”: An individualmortgage loan related to a Servicing Agreement or Subsequent DesignatedAgreement.  As applicable, “Mortgage Loan”shall be deemed to refer to the related REO Property.

 

“Mortgage Loan Servicing Error”: Withrespect to any Portfolio Mortgage Loan, a violation by SPS of applicable lawsor applicable Servicing Requirements in its servicing of such PortfolioMortgage Loan.

 

“Nonrecoverable Advance”: Any Advance (otherthan any servicing, delinquency or other advance that was purchased, ratherthan made, by SPS) with respect to a Portfolio Mortgage Loan that was made bySPS prior to the Option Closing Date as a result of a Servicing Process Error,which (i) SPS has reasonably determined will not be recovered frompayments by or on behalf of the underlying obligor, liquidation proceeds orother amounts related to such Portfolio Mortgage Loan, or the relatednoteholder pursuant to the terms of the related Servicing Agreement and (ii) wasnot in a category included in SPS’s calculation of “Reserves for advancereceivables” on the Closing Balance Sheet.

 

“Notification Date”: The twentieth (20th)day of each calendar month (or, if such day is not a Business Day, the nextsucceeding Business Day) beginning with the second

 

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month of the Payment Period and ending on January 20, 2008 (or, ifsuch day is not a Business Day, the next succeeding Business Day).  For purposes of illustration only, Exhibit Bsets forth a sample timeline which identifies the Notification Date in relationto certain other dates relevant to this Agreement.

 

“Notification Summary”: As defined in Section 3(a).

 

“Objection”: As defined in Section 3(e).

 

“Option”:  As defined in the preamble.

 

“Option Agreement”: The OptionAgreement, dated as of August 12, 2005, among the Option Holder, Holding andthe Payees.

 

“Option Closing Date”:  The “Closing Date” as defined in the OptionAgreement.

 

“Option Holder”: As defined in thepreamble.

 

“Origination Litigation”:  Any litigation, action, suit, proceeding orclaim to the extent relating to the origination, rather than the servicing, ofa Portfolio Mortgage Loan.

 

“Payee”: As defined in the preamble tothe Agreement.

 

“Payee Designated Representative”: Asdefined in Section 8(d).

 

“Payment Date”: The twenty-fifth (25th)day of each calendar month (or, if such day is not a Business Day, the nextsucceeding Business Day) beginning with the second month of the Payment Periodand ending on January 25, 2008 (or, if such day is not a Business Day, thenext succeeding Business Day).

 

“Payment Period”: The periodcommencing on the first day of the first calendar month immediately followingthe Measurement Date and ending on December 31, 2007.

 

“Peer Group”: Four Subprime Servicers,which shall initially be:  CountrywideHome Loans, Inc., Ocwen Loan Servicing, Inc., Litton Loan Servicing,and Wells Fargo Bank, National Association doing business as America’sServicing Company, and any successor thereto, each solely in its (or its Affiliates’)capacity as a Subprime Servicer.  If anyof such entities ceases to be a Subprime Servicer or acts as Subprime Servicerfor a subprime mortgage loan portfolio of less than $10 billion, files or isthe subject of an involuntary filing for bankruptcy protection or becomesinsolvent, dissolves, liquidates, or sells all or substantially all of itsassets to an unaffiliated entity, or merges with or into another member of thePeer Group, then PMI and FSA may (but shall not be required to) jointly proposeto the Option Holder a replacement Subprime Servicer, which, subject to theconsent of the Option Holder (not to be unreasonably withheld or delayed),shall replace the affected Supbrime Servicer as a member of the Peer Group.

 

“Pledge Agreement”: The SecurityAgreement-Pledge (CDs, Commercial Paper, Loan Participations and InvestmentProperty Accounts) executed by SPS and dated May 8, 2001

 

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(in error, the actual date thereof being May 8, 2002), togetherwith any Revolving Credit Note executed by SPS in connection therewith.

 

“PMI”: As defined in the preamble tothe Agreement.

 

“Portfolio Mortgage Loan”:  An individual mortgage loan for which SPS hasbeen appointed as the servicer, subservicer and/or master servicer (excludingany loans assigned to SPS’s Loss Recovery Division for collection which are nototherwise being serviced by SPS).  Asapplicable, “Portfolio Mortgage Loan” shall be deemed to refer to the relatedREO Property.  For the avoidance ofdoubt, “Portfolio Mortgage Loans” shall include all Mortgage Loans (as definedherein), as well as all other mortgage loans and REO Properties serviced bySPS.

 

“Privacy and Collection Legislation”:  (a) the Fair Debt Collection PracticesAct, (b) the Gramm-Leach-Bliley Act, (c) federal and state collectionslicensing laws, (d) federal and state truth-in-lending laws, consumercredit protection laws, equal credit opportunity laws, predatory and abusivedisclosure laws, and (e) personal data privacy laws, and all applicableregulations passed under any such legislation, all as the same may be amendedor replaced from time to time.

 

“Private Litigation”: Any action, suitor proceeding initiated by or on behalf of a borrower in any federal or statecourt of competent jurisdiction alleging commission of a Mortgage LoanServicing Error by SPS prior to the Option Closing Date; provided, however,that (i) solely for purposes of the definition of Designated LitigationExpenses other than clause (iii) of the proviso contained therein, PrivateLitigation may include the alleged commission of a Mortgage Loan ServicingError by SPS that occurred both prior and subsequent to the Option ClosingDate; and (ii) Private Litigation shall exclude any Regulatory Action.

 

“Professional Services Income”: Allincome earned from professional services performed by SPS or its Affiliates (including,without limitation, Alta Real Estate Services, Inc., ResidentialRealEstate Review, Inc., Mountain West Realty Corp., Pelatis InsuranceAgency Corp. and Pelatis Insurance Limited), in each case to the extent derivedfrom or related to the Mortgage Loans, less the amount of all direct orindirect, fixed or variable, costs or expenses derived from or related to suchprofessional services.

 

“Proprietary Information”: As definedin Section 8(g).

 

“Recovery Amount”: For any calendarmonth, the aggregate amount recovered during such month on account of any DesignatedNonrecoverable Advances irrespective of when such Designated NonrecoverableAdvance was deducted from the Monthly Contingent Payment.

 

“Regulatory Action”: As defined in theOption Agreement.

 

“Regulatory Fee Scrutiny”: Any of thefollowing shall have occurred with respect to any fee or charge billed to a borrowerwhich is included in the Fee Matrix:

 

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(i)            SPSis examined or receives a direct communication from a Federal or state regulatoralleging that the fee or charge imposed by SPS violates applicable law or thatthe amount of such fee or charge by SPS might subject SPS to regulatory sanctions;

 

(ii)           Either(A) a Federal or state regulator has made a statement that it intends to,or has taken an action to, subject Subprime Servicers to regulatory sanctionsfor imposing such fee or charge at a rate which equals or exceeds the ratebeing imposed by SPS or (B) Subprime Servicers have generally reduced therate at which they impose such fees or charges to a rate that is less than the correspondingfee or charge included in the Fee Matrix; or

 

(iii)          anysuch fee or charge in the Fee Matrix is shown to exceed the highest such fee orcharge billed to borrowers by members of the Peer Group with respect tosubprime mortgage loans that are substantially similar to the Mortgage Loans bymore than 20%; provided, however, that for purposes of this clause(iii), the Option Holder shall use its commercially reasonable best efforts toobtain the amount of such fee or charge billed by each member of the Peer Group.

 

“REO Property”: A mortgaged propertyacquired by SPS, as servicer, through foreclosure, by deed in lieu offoreclosure or otherwise.

 

“Servicing Agreement”: Each poolingand servicing agreement, whole loan servicing agreement, subservicing agreementand similar agreement listed on Schedule 1 hereto.

 

“Servicing Income”: All servicing feesearned, subservicing fees earned and Ancillary Income, in each case to theextent derived from or related to the Mortgage Loans, as reduced by anycompensating interest payments required to be made by SPS related to the MortgageLoans.  Servicing Income for the applicablemonth shall be itemized and shown on each Monthly Contingent Payment reportdelivered pursuant to Section 3(a). Subject to Section 7(b), all components of Servicing Incomeshall be charged, collected, calculated and applied in a manner consistent withmethods utilized by SPS during the six months immediately preceding the Option ClosingDate, consistently applied.

 

“Servicing Process Error”: A clearly erroneousapplication by SPS of the “net present value” formula that it utilized prior tothe Option Closing Date to determine that an Advance would be reimbursable toSPS under the Servicing Agreement governing the Portfolio Mortgage Loan forwhich the Advance was being made.

 

“Servicing Requirements”: With respectto each Mortgage Loan, the applicable provisions of the related ServicingAgreement with respect to the servicing, control and administration of suchMortgage Loan.

 

“Servicing Rights”: Any and all of SPS’sright, title and interest in and to: (1) all rights of subservicing, servicingand/or master servicing of Mortgage Loans pursuant to

 

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any Servicing Agreement or Subsequent Designated Agreement; (2) allrights under each applicable Servicing Agreement to receive or retain amountsin respect of servicing fees, ancillary income, reimbursement for advances orother expenses and costs, and investment earnings or other benefits frompositive account balances, together with all contract rights, incidental incomeand benefits to the extent payable to SPS; (3) rights to possession anduse of servicing files and records directly or indirectly related to eachMortgage Loan or pertaining to the past, present or prospective servicing ofsuch Mortgage Loan, including, without limitation, borrower lists, insurance policiesand tax service agreements; (4) all agreements or documents creating,defining or evidencing any such servicing rights and all rights of SPS thereunder;(5) all accounts and other rights to payment related to any of theproperty described in this paragraph; and (6) all rights, powers andprivileges incident to any of the foregoing.

 

“Shortfall”: For any calendar monthafter the Litigation Reserve Amount has been reduced to zero, the dollaramount, if any (expressed as a positive number), by which the MonthlyContingent Payment for such calendar month is a negative amount.

 

“Specified Disputes”: As defined inthe Option Agreement.

 

“SPS”: As defined in the preamble tothe Agreement.

 

“SPS Designated Representative”: Asdefined in Section 8(d).

 

“Subprime Servicer”: An entity whichservices, master services and/or subservices subprime one-to-four familyresidential mortgage loans located within the United States, in each casesolely in its capacity as such.

 

“Subsequent Designated Agreement”: Asdefined in Section 9(b).

 

“Unit Cost”: For any calendar month: (i) withrespect to any Mortgage Loan which is less than ninety (90) days Delinquent asof the end of the last day of such calendar month, the Unit Cost is $18.35; and(ii) with respect to any Mortgage Loan which is ninety (90) days or more Delinquentas of the end of the last day of such calendar month, the Unit Cost is $50.96.  The Unit Cost shall apply to each MortgageLoan which is serviced by SPS for the related month and is subject to servicingas of the first day of such calendar month.

 

**Section 2.  Acknowledgment**

 

**(a)****                                  MortgageLoans.**  The parties to this Agreementacknowledge that some, but not all, of the Portfolio Mortgage Loans will be factoredinto the calculation of the Cash Payment made by the Option Holder to thePayees pursuant to the Option Agreement. The Monthly Contingent Payments and the Final Payment Amount will bebased upon the Mortgage Loans, and may reflect reductions, to the extentprovided herein, with respect to Designated Litigation Expenses, CustomerAccommodations, Customer Reversals, and Designated Nonrecoverable Advances relatingto both the Mortgage Loans and all other Portfolio Mortgage Loans.

 

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**(b)****                                  DesignatedLitigation Expenses.**  The parties to thisAgreement acknowledge that the Cash Payment made by the Option Holder to thePayees pursuant to the Option Agreement will not include an amount equal to theLitigation Reserve Amount.  Accordingly,the Monthly Contingent Payments to be made to the Payees hereunder will only bereduced for Designated Litigation Expenses once the Litigation Reserve Amountshall have been reduced to zero, as more specifically described in thedefinition of “Designated Litigation Expense Adjustment”.

 

**Section 3.  Payments**

 

**(a)****                                  PaymentNotification. **On each NotificationDate, SPS shall notify the Payees of the amount of the Monthly ContingentPayment to be made on the next Payment Date. Such notification shall include a detailed summary of each component of suchMonthly Contingent Payment in substantially the form of Exhibit Ahereto (the “Notification Summary”), together with a certificate of the ChiefFinancial Officer of SPS (or, if there is a vacancy in such office, the Chief ExecutiveOfficer of SPS) stating that such statement was prepared on the basis describedherein.

 

**(b)****                                  MonthlyContingent Payments.**  On each PaymentDate, the Option Holder shall remit (or cause SPS to remit on the Option Holder’sbehalf) to the Payees the Monthly Contingent Payment, if any, for such PaymentDate.

 

**(c)****                                 ****FinalPayment. **OnMarch 31, 2008 the Option Holder shall remit (or cause SPS to remiton the Option Holder’s behalf) to the Payees an amount (the “Final PaymentAmount”) equal to (i) the net present value, as of December 31,2007, of the anticipated Monthly Contingent Payments (excluding, for purposesof such anticipated Monthly Contingent Payments, any deduction on account ofDesignated Litigation Expense Adjustment, Designated Nonrecoverable Advances,Customer Accommodation Amount, or Customer Reversal Amount) through theexpected remaining term of the Servicing Rights, calculated using a discountrate of twenty percent (20%) per annum, reduced by (ii) the CumulativeShortfall Deductible Amount, if any, as of such date.  The calculation of the Final Payment Amountshall assume that the revenue components, the Aggregate Unit Costs and InterestExpense included in the calculation of Monthly Contingent Payments aremade or incurred in accordance with SPS’s financial projections as of December 31,2007, which shall be prepared by SPS in good faith and in a manner that SPSreasonably believes will represent the Monthly Contingent Payments through theremaining term of the Servicing Rights, and, in the case of the one-month LIBORrate used to calculate the Interest Expense, projected in accordance with theforward one-month LIBOR curve.  SPS shalldeliver to the Payees such projections and a detailed calculation of the FinalPayment Amount no later than February 15, 2008, together with all relatedback-up material that may be reasonably requested by the Payees in reviewingsuch projections and calculation.  SPSshall cooperate in good faith with the Payees in their review of suchprojections and calculation.

 

**(d)****                                  PaymentInstructions.**  All payments pursuantto this Section 3 shall be made as follows: 61.36500% of eachMonthly Contingent Payment and the Final Payment Amount shall be paid to PMI, 37.40412%of each Monthly Contingent Payment

 

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and the Final Payment Amount shall be paid to FSA and 1.23088% of eachMonthly Contingent Payment and the Final Payment Amount shall be paid to Greenrange.  Such payments shall be made by wire transferas follows:

 
| In the case of PMI:                                                               |
|-----------------------------------------------------------------------------------|
|                                                                              |
| Bank:                                                                             | Bank of New York |
| ABA #:                                                                            | 021 000 018 |
| Account #:                                                                        | 290430 |
| Account Name:  The PMI Group, Inc.                                      |
| Reference: Please include full details on the  wire                               |
|                                                                              |
|                                                                              |
| In the case of FSA:                                                               |
|                                                                              |
| Bank:                                                                             | The Bank of New York |
|                                                                              | One Wall Street |
|                                                                              | New York, NY  10286 |
| Bank ABA:                                                                         | 021 000 018 |
| or                                                                                |
| SWIFT Code:                                                                       | IRVTUS3N |
| For Further Credit:                                                               |
| FSA  Portfolio Management Inc.                                                    |
| Account # :   8900 298 073                                                   |
| Reference:     Please  include full details on the wire. |
|                                                                              |
|                                                                              |
| In the case of Greenrange:                                                        |
|                                                                              |
| Name of Bank:  Mellon Bank                                              |
| Address of Bank:  Pittsburgh, PA                                             |
| ABA Number: 043-000-261                                                           |
| Credit to:   Merrill Lynch A/C 101-1730                                      |
|                                                                              |
| For credit to:  81N-07016 n/o                                                |
| Greenrange Partners                                                               |
|                                                                              |
| Reference:                                                                        | Please include full details on the wire |
|                                                                                   |  |  |  |

 

Each Payee may change its wire transferinstructions by providing the Option Holder and SPS with written notice of suchPayee’s new wire transfer instructions.

 

**(e)****                                  Reconciliationand Dispute Resolution. **SPS shall deliverto the Payee Designated Representatives, within five (5) days after itsreceipt of written notice from the Payee Designated Representatives, allrelated back-up material that may be reasonably requested to verify theaccuracy of the related Monthly Contingent Payment report delivered pursuant toSection 3(a) and to recalculate the related Monthly ContingentPayment.  SPS shall cooperate in goodfaith with the Payees in their review of such material and in the Payees’reconciliation.  In the event that thatPMI or FSA does not agree with the amount of any particular Monthly ContingentPayment or the Final Payment Amount, such Payee may deliver to SPS (with a copyto the Option Holder) a notice objecting to the amount of such payment (an “Objection”).  If PMI or FSA delivers an Objection to SPS(with a copy to the Option Holder), the Payees and SPS shall negotiate in goodfaith with a view to resolving the disputed items and arriving at a mutuallyagreed amount for such payment.  If suchnegotiations fail to resolve all

 

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disputed items within thirty (30) days after the Objection wasdelivered to SPS, the remaining disputed items shall be submitted to Ernst &Young LLP (or such other “Big Four” accounting firm as is mutually agreed to bySPS and the Payees) (the “Accountants”) for final and exclusiveresolution.  The Accountants shall affordeach of SPS and the Payees and their respective representatives the opportunityto present their positions as to the disputed items (which opportunity shallnot extend for more than thirty (30) days after the expiration of the thirty(30) day period described in the previous sentence).  Each presentation shall include a statementof the Monthly Contingent Payment or Final Payment Amount, as applicable,proposed by such party and shall be accompanied by reasonably detailedsupporting documentation.  No later thanten (10) days after the presentations to the Accountants by SPS and thePayees of their respective positions on the disputed items, the Accountantsshall deliver their decision with respect to the disputed items, which decisionshall be in writing and shall include a reasonably detailed description of thebasis for such determination.  TheAccountants’ determination shall be final and binding upon all parties heretoand shall be reflected in any necessary revisions to the relevant NotificationSummary, and SPS shall promptly remit to the Payees any amounts due, ifapplicable, as a result of the Accountants’ determination, in proportion to thepercentages identified in Section 3(d).  The fees, costs and expenses of theAccountants in connection with any such determination shall be borne by SPS if theamount adopted as correct by the Accountants is closer to the amount proposedby the Payees than the Monthly Contingent Payment or the Final Payment Amount,as the case may be, originally proposed by the Option Holder and shallotherwise be borne by the Payees in proportion to the percentages identified inSection 3(d).  TheAccountants’ decision may be enforced in any state or federal court ofcompetent jurisdiction.  The failure todeliver an Objection with respect to any particular Monthly Contingent Payment(or the component calculations thereof) shall in no way prejudice the rights ofthe Payees to object to other Monthly Contingent Payments or the Final PaymentAmount.

 

**(f)****                                    PaymentsUnsecured.**  The Monthly ContingentPayment obligations owing under this Agreement shall be unsecured.  No Payee will require, solicit or accept thepledge, mortgage, assignment or hypothecation of any property or property rightsor interests of SPS or the Option Holder, including, without limitation, theServicing Rights, as direct or indirect security for such Monthly ContingentPayment obligations, or any covenant to pledge any of the same, and the partieshereto agree that any such pledge, mortgage, assignment or hypothecation shallbe void *ab initio*.  Nothing in this Agreement, including the precedingsentence, shall be construed to prevent or limit the Payees from assigningtheir right to receive all or a portion of the Monthly Contingent Payments andthe Final Payment Amount.

 

**(g)****                                ****No Set Off.**  All payments to be made by the Option Holderor SPS to a Payee hereunder (including, without limitation, the MonthlyContingent Payments and the Final Payment Amount) shall be made without anysetoff, abatement, withholding, deduction, counter claim or reduction inrespect of, or otherwise affected by, any claim or dispute related to theOption Agreement, any Servicing Agreement or any Subsequent DesignatedAgreement, that the Option Holder or SPS or any of their respective parents,

 

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subsidiaries or Affiliates may have with any of the Payees or theirrespective parents, subsidiaries or Affiliates. For the avoidance of doubt:

 

(i)            theMonthly Contingent Payment may be reduced by the Aggregate Unit Cost,Designated Litigation Expense Adjustment or Cumulative Shortfall DeductibleAmount (as applicable), Customer Accommodation Amount, Customer Reversal Amount,Designated Nonrecoverable Advances and Interest Expense, as provided herein;

 

(ii)           theFinal Payment Amount may be reduced by the Aggregate Unit Cost and the InterestExpense, as contemplated by Section 3(c); and

 

(iii)          nothingin the immediately preceding sentence shall preclude the Option Holder fromseeking indemnification pursuant to and in accordance with the provisions of Section 11.2(d) ofthe Option Agreement.

 

**(h)****                                ****No Sale ofServicing Rights.**  SPS shallnot sell, transfer or assign, and the Option Holder shall not permit the director indirect sale, transfer or assignment of, its respective right, title orinterest in and to the Servicing Agreements and Designated ServicingAgreements.  SPS shall, and the OptionHolder shall cause SPS to, maintain its corporate existence until thisAgreement is terminated in accordance with Section 10 hereof.

 

**Section 4.  Effective Date.**

 

This Agreement shall become effective on theOption Closing Date.

 

**Section 5.  Representations and Warranties of SPS**

 

SPS represents and warrants to each Payee andthe Option Holder that, as of the date hereof and the Option Closing Date:

 

**(a)****                                 **SPSis duly organized, validly existing and in good standing under the laws of thejurisdiction of its organization.  SPShas all requisite power and authority to own its properties and carry on itsbusiness as and where now being conducted. SPS has all requisite power and authority to enter into this Agreement,and the agreements to which it is or will become a party as contemplated bythis Agreement, and to carry out the transactions contemplated hereby.

 

**(b)****                                 **Theexecution and delivery by SPS of this Agreement, and of the agreements to beentered into pursuant hereto, and the consummation of the transactionscontemplated hereby have each been duly and validly authorized by all necessaryaction, and this Agreement and such other agreements constitute valid andlegally binding agreements enforceable in accordance with their respectiveterms.

 

**(c)****                                 **Theexecution and delivery of this Agreement and the consummation of the transactionscontemplated hereby will not violate, conflict with, result in a breach of,constitute a default under or be prohibited by, or require any additionalapproval, waiver

 

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or consent under SPS’s charter or other agreement relating to itsorganization or any instrument or agreement to which it is a party or by whichit is bound or any federal or state law, rule or regulation or anyjudicial or administrative decree, order, ruling or regulation applicable toit.

 

**(d)****                                 **Thereis no litigation or action at law or in equity pending, or, to SPS’s knowledge,threatened against SPS and no proceeding or investigation of any kind ispending or, to its knowledge, threatened, by any federal, state or localgovernmental or administrative body, which could reasonably be expected tomaterially affect SPS’s ability to consummate the transactions contemplatedhereby.

 

**(e)****                                 **SPSholds and maintains all required permits, licenses, approvals and registrationsfor the servicing of the Mortgage Loans, except where the failure to hold anysuch permit, license, approval or registration would not have a materialadverse effect on the servicing of the Mortgage Loans or the ability of SPS toperform its obligations hereunder.

 

**Section 6.  Representations and Warranties of the OptionHolder**

 

The Option Holder represents and warrants tothe Payees and to SPS that, as of the date hereof and the Option Closing Date:

 

**(a)**                                  The Option Holder isduly organized, validly existing and in good standing under the laws of thejurisdiction of its organization.  TheOption Holder has all requisite power and authority to own its properties andcarry on its business as and where now being conducted.  The Option Holder has all requisite power andauthority to enter into this Agreement, and the agreements to which it is orwill become a party as contemplated by this Agreement, and to carry out thetransactions contemplated hereby.

 

**(b)****                                 **Theexecution and delivery by the Option Holder of this Agreement, and of theagreements to be entered into pursuant hereto, and the consummation of thetransactions contemplated hereby have each been duly and validly authorized byall necessary action, and this Agreement and such other agreements constitutevalid and legally binding agreements enforceable in accordance with theirrespective terms.

 

**(c)****                                 **Theexecution and delivery of this Agreement and the consummation of thetransactions contemplated hereby will not violate, conflict with, result in abreach of, constitute a default under or be prohibited by, or require anyadditional approval, waiver or consent under the Option Holder’s charter orother agreement relating to its organization or any instrument or agreement towhich it is a party or by which it is bound or any federal or state law, rule orregulation or any judicial or administrative decree, order, ruling orregulation applicable to it.

 

**(d)**                                  There is nolitigation or action at law or in equity pending, or, to the Option Holder’sknowledge, threatened against the Option Holder and no proceeding orinvestigation of any kind is pending or, to its knowledge, threatened, by anyfederal, state or local governmental or administrative body, which couldreasonably be expected to

 

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materially affect the Option Holder’s ability to consummate thetransactions contemplated hereby.

 

**Section 7.  Servicing of the Mortgage Loans**

 

**(a)****                                  Compliancewith Servicing Agreements.**  From andafter the Option Closing Date, SPS shall service the Mortgage Loans inaccordance with the Servicing Requirements, and in compliance with the ConsentOrder, the Curry Settlement, all consent agreements or similar documents towhich SPS is a party with any other federal, state, or local regulatoryauthority or any other similar agreement, and applicable laws, rules andregulations and shall have full power and authority, acting alone, to do anyand all things in connection with such servicing and administration that SPSmay deem reasonably necessary or desirable, consistent with the terms of thisAgreement and the Servicing Requirements. From and after the Option Closing Date, with respect to the MortgageLoans, SPS shall apply the Servicing Requirements, consistent with thepractices employed by SPS during the six month period prior to the Option ClosingDate, unless prohibited by applicable law.

 

**(b)****                                  AncillaryIncome.**  Notwithstanding anythingherein to the contrary, all components of Servicing Income and ProfessionalServices Income for any calendar month based on fees or charges billed directlyto borrowers shall be determined as if the rate for each such fee or charge utilizedby SPS is the same as the rate for such fee or charge utilized by SPS duringthe six months prior to the Option Closing Date (regardless of whether SPSactually continues to impose such fees or charges at such rates) or, ifgreater, the highest rate for such fee or charge actually utilized by SPS inthe applicable jurisdiction during such calendar month for the PortfolioMortgage Loans; provided, however, that:

 

(i)            ifany such fee or charge is shown to, or due to a change in law will, violateapplicable law, the rate deemed to be used for the jurisdiction subject to suchlaw shall be limited to amounts that do not violate applicable law;

 

(ii)           ifa regulator with jurisdiction over SPS requires that SPS reduce such fee orcharge, or indicates that SPS might face adverse regulatory consequences forfailing to reduce such fee or charge, the rate deemed to be used in suchjurisdiction shall be limited to the rate required, or requested in order toavoid adverse regulatory consequences, by the regulator; and

 

(iii)          subjectto Sections 7(b)(i) and 7(b)(ii), if any Regulatory FeeScrutiny exists with respect to a particular fee or charge billed directly toborrowers that is included in the Fee Matrix in effect on the Option ClosingDate, the rate of such particular fee or charge used for all Mortgage Loans withinthe jurisdiction of the applicable regulator shall be deemed to be equal to thegreater of:

 

(x)                       the highestrate for such fee or charge actually utilized by SPS in the applicablejurisdiction during such calendar month for the Portfolio Mortgage Loans, and

 

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(y)                     (1) theamount shown by the Option Holder to be the average of the top two (2) ratesat which members of the Peer Group impose such fee or charge in the applicablejurisdiction, if it has obtained such information from at least two (2) membersof the Peer Group, or (2) if the Option Holder obtains information fromonly one (1) member of the Peer Group, 98% of the rate at which suchmember imposes such fee or charge; provided, however, that forpurposes of this clause (y), (a) the Option Holder shall use its commerciallyreasonable efforts to obtain the amount of such fee or charge billed by eachmember of the Peer Group in such jurisdiction, (b) if the Option Holderhas been unable to obtain information from a member of the Peer Group (afterusing its commercially reasonable efforts to do so), the average described inclause (y)(1) shall be based on only the Peer Group members’ fees orcharges as to which the Option Holder has obtained such information, and (c) forthe avoidance of doubt, if the top two (or more) rates of Peer Group membersare identical, the fee or charge to be used hereunder shall be equal to 98% of suchrate.

 

**(c)****                                  Standardof Care.**  From and after the Option ClosingDate, SPS shall assure that the Mortgage Loans are generally serviced with thesame degree of care, attention and skill as the other Portfolio Mortgage Loans.

 

**(d)****                                  Terminationof Servicing Agreements.**  SPS willnot waive any material right which it may have under a Servicing Agreementwithout the prior written consent of the Payee Designated Representatives,unless such waiver will not adversely affect the Payees’ right to or interestin the Monthly Contingent Payments or the Final Payment Amount.

 

**(e)****                                  QuarterlyAccounting Forecast.**  Not later than15 days before the end of any calendar quarter (any such date being a “ForecastDate”), beginning with the calendar quarter in which the Closing occurs andending with the last quarter of 2007, the Company shall deliver to the Payees aforecast (each such forecast being a “Forecast”) prepared as follows: for each calendarquarter beginning with the quarter immediately following the Forecast Date andending with the last quarter of 2009, the Company shall estimate the amounts tobe realized on account of Servicing Income, Interest Income, ProfessionalServices Income, Interest Expense and Aggregate Unit Costs (the “ForecastedItems”), as those terms are used in, and with the supporting detail providedby, Exhibit A hereto.  Theestimates will be prepared using substantially the same procedures that theCompany used in the six months prior to the Option Closing Date hereof toderive the cash flow projections used in its determination of the GAAP balancesheet values for the Servicing Rights.  ThePayees acknowledge that (i) the Forecasts are being prepared by the Companyonly as an accommodation to certain reporting requirements of the Payees and (ii) SPSshall not be deemed to make any representations or warranties as to whether theForecasts will reflect the future performance of SPS or its business or whetherthe Forecasts will be achieved.  MonthlyContingent Payments paid to the Payees from time to time shall be determinedfrom amounts actually received or paid on account of the Forecasted Items andnot from the amounts shown in any of the

 

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Forecasts.  SPS shall reasonablypromptly provide each Payee with any additional information reasonablyrequested by such Payee in order for such Payee to prepare its auditedfinancial statements and to satisfy any financial reporting obligationsapplicable to it.  Notwithstandinganything to the contrary contained herein, in no event shall the Option Holdernor SPS have any liability for the accuracy of the information that it providespursuant to this Section 7(e).

 

**Section 8.  Monitoring and Consultation Rights**

 

**(a)****                                  MonthlyReporting. **SPS agrees that from andafter the Option Closing Date, to the extent not prohibited by applicable law orthe Servicing Requirements, SPS shall provide the Payees with: (i) accessto all loan-level and pool-level monthly servicing reports and all otherreports, notices and certifications that are delivered by SPS with respect to theServicing Agreements, together with copies of such reports, notices andcertifications upon request, and (ii) all documentation and informationreasonably requested in writing by any Payee Designated Representative toverify the accuracy of any Monthly Contingent Payment report delivered pursuantto Section 3(a).

 

**(b)****                                  Accessto Information. **Upon reasonable writtenprior notice to SPS, SPS shall provide the Payees and their respective counsel,accountants and other representatives with reasonable access during normalbusiness hours to all of SPS’s files, books and records relating to the MortgageLoans; provided, however, that SPS shall be entitled to takereasonable and appropriate actions to assure that the Payees maintain theconfidentiality of the names and addresses of the borrowers under the MortgageLoans and all non-public information obtained in any such investigation thatcould reasonably be construed to be of a confidential or proprietarynature.  SPS shall provide the Payeeswith access to and reasonable cooperation of SPS’s officers and employees inconnection with any such investigation.

 

**(c)****                                  On-siteMonitoring.**  PMI and FSA shall havethe collective right, but not the obligation, to designate one individual to conductonsite monitoring, to the extent not prohibited by law, of SPS’s compliancewith this Agreement.  PMI and FSA shallhave the collective right, exercisable in their sole discretion at any time, toremove any individual designated to conduct onsite monitoring pursuant to this Section 8(c) andmay, if they collectively so elect, designate a new individual to conductonsite monitoring pursuant to this Section 8(c).  SPS shall provide (without cost to the Payees)such individual with an assigned workspace, reasonably requested support fromSPS’s Information Technology Department and access, during normal businesshours, to all of SPS’s files, books and records relating to the Mortgage Loans,with such access subject to SPS’s normal security procedures for third partyaccess to such information.  It isexpressly understood and agreed that the designated individual shall in noevent be deemed an officer or employee of SPS.

 

**(d)****                                  DesignatedRepresentatives.** SPS shall designatetwo individuals (each an “SPS Designated Representative”) and PMI andFSA shall each designate one individual (each a “Payee DesignatedRepresentative”, and together with the SPS Designated Representatives, the “DesignatedRepresentatives”) as contacts for SPS, PMI

 

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and FSA, respectively, for all communications relating to thisAgreement.  Each of PMI and FSA shallhave the individual right, exercisable in its sole discretion at any time, toremove any individual designated by it pursuant to the preceding sentence andto designate a new individual as a contact for such Payee.  Each of the Payee Designated Representatives andat least one of the SPS Designated Representatives shall meet in person notless frequently than monthly during the first 18 months following the OptionClosing Date, and beginning in the 19th month following the OptionClosing Date and each quarter thereafter until the paymentof the Final Payment Amount and conclusion of any dispute resolutionproceedings pursuant to Section 3(e) hereof with respectthereto, to review any issues identified by SPS or the Payees withrespect to this Agreement.

 

**(e)****                                  DesignatedLitigation Expense and Regulatory Matters Review.**In addition to themeetings referred to in Section 8(d) hereof, each of the PayeeDesignated Representatives and at least one of the SPS DesignatedRepresentatives (together with, if appropriate, one or more officers of SPSresponsible for litigation and regulatory procedures) shall meet in person (exceptas otherwise mutually agreed to by such Designated Representatives) not lessfrequently than monthly to review (i) all Regulatory Actions (other thanroutine examinations, except to the extent that the applicable regulatoridentifies any matters which may give rise to matters subject to the indemnityprovided in Section 11.2(f) of the Option Agreement), (ii) anyaction initiated by or on behalf of a consumer in any federal, state orarbitral forum in respect of a Mortgage Loan which is classified as a “RiskRated 5” action by SPS, and (iii) any Designated Litigation Expenses whichwere used to reduce prior Contingent Monthly Payments or resulted in aCumulative Shortfall Deductible Amount. The meetings referred to in this Section 8(e) and Section 8(d) shallbe held at a mutually convenient location in New York, New York (withtelephonic access provided upon request to each Payee Designated Representativeand SPS Designated Representative), or via teleconference.

 

**(f)****                                    Payees’Consultation Rights.**  Each Payee may(but has no obligation to) provide SPS with advice regarding the management ofspecific Mortgage Loans, which advice may be made in writing, in the form of electronicmail or orally.  Such advice may be basedon observations made in conjunction with the information provided pursuant to Section 8(a),8(b), 8(c), 8(d) and 8(e) of thisAgreement, or in conjunction with any Payee’s general review of SPS’s operations.  Each party to this Agreement acknowledgesthat (i) such advice is made in the form of recommendations, and that thePayees do not have the right (nor any obligation) to direct SPS in performingits duties under the Servicing Agreements and (ii) SPS has no obligationto follow or adopt such recommendation.

 

**(g)****                                 Confidentiality.**  The Payees shall keep confidential and shallnot divulge to any party, without the prior written consent of SPS, anydocuments, files or other information pertaining to the Mortgage Loans or anymortgagor thereunder (“Customer Information”), except to the extent thatit is appropriate for the Payees to do so in enforcing their rights hereunderor working with their respective legal counsel, auditors, taxing authorities,other governmental agencies, insurance carriers, any property inspector, orother person necessary to fulfill such Payee’s obligations hereunder.  To the extent that the Customer Informationincludes information which constitutes “nonpublic

 

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personal information” under 16 C.F.R. 314 (2002), the Payees willmaintain appropriate safeguards to safeguard such Customer Information inaccordance with the “Standards for Safeguarding Customer Information” asrequired by 16 C.F.R., Chapter I, Part 314.  Notwithstanding any provision of thisAgreement, the trademarks, trade secrets, know-how, business methods andpractices, internal procedures and other intellectual property and confidentialinformation of SPS (“Proprietary Information”) shall remain vested in SPS,and are not hereby transferred to the other party, and SPS shall have the rightto take all actions necessary to protect the Proprietary Information.  Notwithstanding any provision of thisAgreement, this Agreement and its terms may be disclosed by the Payees withoutrestriction.

 

**Section 9.  Option Holder**

 

**(a)****                                  Compliancewith Agreement.**  From and after the OptionClosing Date, the Option Holder shall cause SPS to fully and completely performeach of SPS’s obligations under the Agreement in the manner and at the timesset forth herein.

 

**(b)****                                  SubsequentDesignated Agreements.**  With respectto any mortgage servicing rights acquired or to be acquired by SPS after November 30,2004 and prior to the Option Closing Date from any third party not affiliatedwith the Option Holder, SPS may request that the Option Holder indicate whetherthe purchase price to be bid by SPS for such servicing rights is acceptable tothe Option Holder.  The Option Holdershall respond to any such request within three (3) Business Days.  If the Option Holder shall have notified SPSthat the purchase price is acceptable, then such servicing rights will notconstitute Subsequent Designated Agreements for purposes of the Cash Payment.  If the Option Holder shall not have notifiedSPS that the purchase price is acceptable, but SPS proceeds with thetransaction, then the related pooling and servicing agreement, whole loanservicing agreement, subservicing agreement or similar agreement shall beconsidered a “Subsequent Designated Agreement”.  Nothing in this Section 9(b) shallbe deemed to limit SPS’s ability to acquire mortgage servicing rights from anythird party not affiliated with the Option Holder.  The Subsequent Designated Agreements ineffect as of the date hereof are identified on Schedule 1 hereto.  On the Option Closing Date, SPS shall deliverto the Payees a revised Schedule 1 that identifies all of theSubsequent Designated Agreements as of such date.

 

**Section 10.  Termination of the Agreement**

 

Except as otherwise specifically set forthherein, the obligations and responsibilities of the parties to this Agreementshall terminate upon the date (the “Termination Date”) which is the earliest tooccur of: (i) the date on which all Monthly Contingent Payments and theFinal Payment Amount have been paid in full to the Payees in the mannerrequired hereunder and are not subject to dispute under Section 3(e) hereof;and (ii) such other date as shall have been agreed upon by all of theparties hereto.  Section 8(g) ofthis Agreement shall survive any termination of this Agreement.  Section 11 of this Agreementshall survive any termination of this Agreement until the date (the “IndemnificationExpiration Date”) that is 18 months after the Termination Date; provided,however, that, notwithstanding the foregoing, the Option Holder shall remain

 

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obligated under Section 11 with respect to any mattergiving rise to indemnification thereunder as to which an Indemnified Partyshall have given written notice to the Option Holder prior to theIndemnification Expiration Date.

 

**Section 11.  Indemnification**

 

**(a)****                                  IndemnificationObligations.** Option Holder (the “IndemnifyingParty”) shall indemnify, defend and hold harmless each of the Payees and theirrespective parents, subsidiaries, Affiliates, directors, officers, shareholders,representatives, successors and assigns (each an “Indemnified Party”),from and against, without duplication, any and all actual losses, costs,obligations, liabilities, damages, settlement payments, awards, judgments,fines, penalties, damages, deficiencies or other charges (including withoutlimitation reasonable attorneys’ fees and expenses and reasonable accountants’fees and expenses), whether or not arising out of any claims by or on behalf ofa third party, to the extent arising from: (i) the willful misconduct orgross negligence of the Indemnifying Party, SPS (from and after the ClosingDate) or any of their respective agents in the performance of the duties andobligations of SPS (from and after the Closing Date) or the Option Holder hereunder;or (ii) the breach by the Indemnifying Party or SPS (from and after theClosing Date) of any of the representations, warranties or covenants of SPS orthe Option Holder set forth herein; provided, however, that, inthe event that the loss giving rise to such indemnification results from aMortgage Loan Servicing Error occurring both before and after the OptionClosing Date, then (i) such indemnity shall not apply to the portion ofany such loss that results solely from a Mortgage Loan Servicing Error thatoccurred before the Option Closing Date and continues for no more than 180 daysafter the Option Closing Date; and (ii) the amount of loss indemnified shallbe reduced by 50% of the portion of any such loss that results solely from aMortgage Loan Servicing Error that occurred before the Option Closing Date and continuesfor more than 180 days after the Option Closing Date.  Notwithstanding anything to the contrarycontained herein, the Option Holder agrees that a Mortgage Loan Servicing Errorthat occurs solely after the Option Closing Date shall not adversely affect orotherwise diminish the foregoing indemnity in any respect.

 

**(b)****                                  IndemnificationProcedures. **(i)  Within ten (10) daysafter receipt by an Indemnified Party of any claim or the commencement of anyaction, the Indemnified Party shall, if a claim in respect thereof is to bemade against the Indemnifying Party under this Agreement, deliver a claimnotice to the Indemnifying Party; provided, however, that theomission to so notify the Indemnifying Party shall not relieve the IndemnifyingParty from any liability that the Indemnifying Party may have to theIndemnified Party unless such delay has materially prejudiced the IndemnifyingParty.  In the event that such claim ismade or action brought against the Indemnified Party and the Indemnified Partynotifies the Indemnifying Party of the commencement thereof, the IndemnifyingParty shall be entitled to participate therein and, to the extent that it shallwish, to assume the defense thereof with counsel reasonably satisfactory to theIndemnified Party.  The IndemnifyingParty shall give prompt notice to the Indemnified Party of whether it intendsto participate and/or assume the Indemnified Party’s defense.

 

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(ii)  The Indemnified Party may alsoemploy separate counsel in any action or claim and to participate in thedefense thereof but the fees and expenses of such counsel shall be at theexpense of such Indemnified Party unless: (i) the employment thereof has been specifically authorized by the IndemnifyingParty in writing; (ii) the named parties to such action (including anyimpleaded parties) include both the Indemnified Party and the Indemnifying Partyand representation of both parties by the same counsel would be inappropriatedue to actual or potential differing interests between them; or (iii) the IndemnifyingParty has failed to assume the defense of such action and employ counselreasonably satisfactory to the Indemnified Party.  If such Indemnified Party notifies the IndemnifyingParty in writing that it elects to employ separate counsel at the expense ofthe Indemnifying Party in accordance with the preceding sentence, the IndemnifyingParty shall not have the right to assume the defense of such action on behalfof such Indemnified Party, it being understood, however, that the Indemnifying Partyshall not, in connection with any one such action or separate but substantiallysimilar or related actions in the same jurisdiction arising out of the samegeneral allegations or circumstances, be liable for the fees and expenses ofmore than one separate firm of attorneys (in addition to local counsel) at anytime for all Indemnified Parties.

 

(iii)  Upon the payment in full of anyclaim hereunder, the Indemnifying Party shall be subrogated to the rights ofthe Indemnified Party against any person with respect to the subject matter ofsuch claim.  In the event of a dispute,the parties shall proceed in good faith to negotiate a resolution of suchdispute.

 

(iv)  The Indemnifying Party shall not beliable for any settlement of any such action effected without its writtenconsent (which consent shall not be unreasonably withheld), but if settled withits written consent or if there be a final judgment for the plaintiff in anysuch action, the Indemnifying Party agrees to indemnify and hold harmless any IndemnifiedParty from and against any loss or liability by reason of such settlement orjudgment.  The Indemnifying Party shall not,without prior written consent of the Indemnified Party, effect any settlementof any pending or threatened action in respect of which such Indemnified Partyis or could have been a party and indemnity could have been sought hereunder bysuch Indemnified Party unless such settlement includes an unconditional releaseof such Indemnified Party from all liability on any claims that are the subjectmatter of such action.

 

(v)  In the event that the IndemnifyingParty reimburses the Indemnified Party with respect to any third party claimand the Indemnified Party subsequently receives reimbursement from anotherperson with respect to that third party claim, then the Indemnified Party shallremit such reimbursement from such other person to the Indemnifying Partywithin fifteen (15) business days of receipt thereof.

 

**(c)****                                  TaxTreatment of Indemnification Payments. **Theparties agree to treat any indemnification payment made pursuant to thisAgreement as an adjustment to the Exercise Price (as defined in the OptionAgreement) for tax purposes.

 

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**Section 12.  Miscellaneous**

 

**(a)****                                  Amendments.**  This Agreement may be amended from time totime by the parties hereto only by written agreement signed by all of theparties hereto.

 

**(b)****                                  FurtherAssurances.**  Each party heretocovenants and agrees that, subsequent to the execution of this Agreement, andwithout any additional consideration, such party will execute and deliver anyfurther legal instruments and perform any acts which are or may becomenecessary to effectuate the purposes of this Agreement.

 

**(c)****                                  GOVERNINGLAW.**  THIS AGREEMENT SHALL BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,WITHOUT REGARD TO ITS CHOICE OF LAW PROVISIONS.

 

**(d)****                                  WAIVEROF JURY TRIAL.**  EACH PARTY HERETOACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THISAGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFOREEACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCHPARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY ORINDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONSCONTEMPLATED BY THIS AGREEMENT.  EACHPARTY CERTIFIES AND ACKNOWLEDGES THAT (1) NO REPRESENTATIVE, AGENT ORATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCHOTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOINGWAIVER, (2) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OFTHIS WAIVER, (3) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (4) EACHPARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THEMUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

**(e)****                                  Notices.**  Any notices or other communications permittedor required hereunder shall be in writing and shall be deemed conclusively tohave been given if delivered by overnight courier (delivery being evidenced bya written receipt) to, personally delivered at, mailed by registered mail,postage prepaid, and return receipt requested to or transmitted by confirmed facsimile,to (i) in the case of SPS, if by overnight courier, personal delivery orregistered mail, 3815 South West Temple, Salt Lake City, Utah 84115-4412, Attn:General Counsel or, if by facsimile (801) 293-2555, or such other address ortelecopy number as may hereafter be furnished to the other parties hereto inwriting by SPS; (ii) in the case of FSA, if by overnight courier, personaldelivery or registered mail, 31 West 52nd Street, New York, New York10019, Attn: General Counsel, if by e-mail to generalcounsel@fsa.com or, if by facsimile[(212) 339-3560, or such other address or telecopy number as may hereafter befurnished to the other parties hereto in writing by FSA; provided, however,that the Notification Summary to be delivered to FSA shall be delivered viatelecopy or e-mail to the Payee Designated Representative of FSA at suchtelecopy or e-mail address as such Payee Designated

 

23

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Representative may specify; (iii) in the case of PMI, if byovernight courier, personal delivery or registered mail, 3003 Oak Road, WalnutCreek, California 94597, Attn: General Counsel, or, if by facsimile (925) 658-6384,or such other address or telecopy number as may hereafter be furnished to theother parties hereto in writing by PMI; provided, however, that theNotification Summary to be delivered to PMI shall be delivered via telecopy ore-mail to the Payee Designated Representative of PMI at such telecopy or e-mailaddress as such Payee Designated Representative may specify; (iv) in thecase of Greenrange, if by registered mail, P.O. Box 975, DarienConnecticut  06820, Attn: James H.Ozanne, and if by overnight courier or personal delivery to 114 Goodwives RiverRoad, Darien, Connecticut  06820 or, ifby facsimile (203) 655-6044, or such other address or telecopy number as mayhereafter be furnished to the other parties hereto in writing by Greenrange;and (v) in the case of the Option Holder, if by overnight courier,personal delivery or registered mail, 11 Madison Avenue, 4th Floor,New York, NY  10010, Attn: BruceKaiserman, or, if by facsimile (917) 326-7936, with a copy to One MadisonAvenue, 9th Floor, New York, NY 10010, Attn:  Colleen A. Graham, Esq.,or if by facsimile (212) 325-8282, or such other address or telecopy number asmay hereafter be furnished to the other parties hereto in writing by the OptionHolder.

 

**(f)****                                    Exhibitsand Schedules.**  The Exhibits and Schedulesto this Agreement are hereby incorporated and made a part hereof and are anintegral part of this Agreement.

 

**(g)****                                 Severability. **Any part, provision, representation orwarranty of this Agreement which is prohibited or which is held to be void orunenforceable shall be ineffective to the extent of such prohibition orunenforceability without invalidating the remaining provisions hereof.  Any part, provision, representation orwarranty of this Agreement which is prohibited or unenforceable or is held tobe void or unenforceable in any jurisdiction shall be ineffective, as to suchjurisdiction, to the extent of such prohibition or unenforceability withoutinvalidating the remaining provisions hereof, and any such prohibition orunenforceability in any jurisdiction shall not invalidate or renderunenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law,the parties hereto waive any provision of law which prohibits or renders voidor unenforceable any provision hereof. If the invalidity of any part, provision, representation or warranty ofthis Agreement shall deprive any party of the economic benefit intended to beconferred by this Agreement, the parties shall negotiate, in good-faith, todevelop a structure the economic effect of which is as close as possible to theeconomic effect of this Agreement without regard to such invalidity.

 

**(h)****                                 GeneralInterpretive Principles.     **Forpurposes of this Agreement, except as otherwise expressly provided or unlessthe context otherwise requires:

 

(i)                                     theterms defined in this Agreement have the meanings assigned to them in thisAgreement and include the plural as well as the singular;

 

(ii)                                  accountingterms not otherwise defined herein have the meanings assigned to them inaccordance with generally accepted accounting principles;

 

24

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(iii)                               referencesherein to “Sections,” “Subsections” and other subdivisions without reference toa document are to designated Sections, Subsections and other subdivisions ofthis Agreement;

 

(iv)                              thewords “herein,” “hereof,” “hereunder” and other words of similar import referto this Agreement as a whole and not to any particular provision; and

 

(v)                                 theterm “include” or “including” shall mean without limitation by reason ofenumeration.

 

**(i)****                                    Reproductionof Documents. **This Agreement and alldocuments relating thereto, including, without limitation, (i) consents,waivers and modifications which may hereafter be executed, (ii) documentsreceived by any party at the closing, and (iii) financial statements,certificates and other information previously or hereafter furnished, may bereproduced by any photographic, photostatic, microfilm, micro-card, miniaturephotographic or other similar process. The parties agree that any such reproduction shall be admissible inevidence as the original itself in any judicial or administrative proceeding,whether or not the original is in existence and whether or not such reproductionwas made by a party in the regular course of business, and that anyenlargement, facsimile or further reproduction of such reproduction shalllikewise be admissible in evidence.

 

**(j)****                                    Counterparts. **This Agreement may be executed in anynumber of counterparts, each of which shall be deemed to be an original and allof which together shall be deemed to be one instrument.  It shall not be necessary in making proof ofthis Agreement or any counterpart thereof to produce or account for any othercounterpart.  Telecopy signatures shallbe deemed valid and binding to the same extent as originals.

 

**(k)****                                Expenses. **Each of the parties hereto shall bear itsown expenses incurred in connection with the transactions contemplated by thisAgreement.

 

**(l)****                                    EntireAgreement, Successors and Assigns.**  ThisAgreement and the Option Agreement constitute the entire agreement between theparties hereto and supersedes all rights and prior agreements andunderstandings, oral and written, between the parties hereto with respect tothe subject matter hereof.  ThisAgreement shall not be assignable, directly or indirectly, in whole or in part byany party hereto without the prior written consent of the other parties hereto.  Notwithstanding the foregoing, in the case ofany assignment by the Payees, consent shall not be unreasonably withheld ordelayed by the Option Holder or SPS; provided, however, that suchconsent may be unreasonably withheld or delayed by the Option Holder or SPS ifthe assignee is a competitor of one or more of the mortgage or mortgage-relatedbusinesses conducted by the Option Holder or any of its Affiliates or any ofthe businesses conducted by SPS; and provided, further, that thePayees may assign their rights under this Agreement to any of their respectiveAffiliates without the consent of any other party hereto.  This Agreement and any rights, remedies,obligations or liabilities under or by reason of the Agreement shall inure tothe

 

25

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benefit of and be binding on the parties hereto and on their respectivesuccessors and permitted assigns.

 

 

*Rest of Page leftBlank Intentionally*

 

26

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IN WITNESS WHEREOF, the parties have causedtheir names to be signed hereto by their respective officers thereunto dulyauthorized, as of the dates set forth below.

 
|   | SELECT PORTFOLIO SERVICING, INC.       |
|--------|----------------------------------------|
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ Matt Hollingsworth |   |
|   |                                   | Name: Matt Hollingsworth |
|   |                                   | Title: CEO |
|   |                                   |
|   |                                   |
|   | CREDIT SUISSE FIRST BOSTON (USA), INC. |
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ James P. Healy |   |
|   |                                   | Name: James  P. Healy |
|   |                                   | Title: Managing Director |
|   |                                   |
|   |                                   |
|   | THE PMI GROUP, INC.                    |
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ Victor J. Bacigalupi |   |
|   |                                   | Name: Victor J. Bacigalupi |
|   |                                   | Title: Executive Vice President, Chief  Administrative Officer and General Counsel |
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ Donald P. Lofe, Jr. |   |
|   |                                   | Name: Donald P. Lofe, Jr. |
|   |                                   | Title: Executive Vice President and Chief  Financial Officer |
|   |                                   |
|   |                                   |
|   | FSA PORTFOLIO MANAGEMENT, INC.         |
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ Bruce E. Stern |   |
|   |                                   | Name: Bruce E. Stern |
|   |                                   | Title: General Counsel and Managing  Director |
|   |                                   |
|   |                                   |
|   | GREENRANGE PARTNERS LLC                |
|   |                                   |
|   |                                   |
|   | By:                                    | /s/ James H. Ozanne |   |
|   |                                   | Name: |
|   |                                   | Title: |
|        |                                        |  |  |  |

 

*Signature Page toContingent Payment Agreement*

 

----

 

**Exhibit AtoContingent Payment Agreement**

 

**Monthly****ContingentPayment****Calculation**

 

**Preparedfor Calendar Month                  ,20**

 
| **1.   Servicing Income** |   |                                                                                         |   |   |   |   |
|--------------------------------|--------|----------------------------------------------------------------------------------------------|--------|--------|--------|--------|
|                           |   |                                                                                         |   |   |   |   |   |   |
|                           |   | Servicing  fees and subservicing fees, earned                                                |   | $      | xxxxxx |   |   |   |
|                           |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | Plus  Ancillary Income                                                                       |   | $      | xxxxxx |   |   |   |
|                           |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | Less BofA  Mortgage Loan demand fee applied against outstanding receivable on balance  sheet |   | $      | (xxxxx | )      |   |   |
|                           |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | Less  compensating interest paid by SPS under the related Servicing Agreement                |   | $      | (xxxxx | )      |   |   |
|                           |   |                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | Subtotal  Servicing Income                                                                   |   |   |   | $      | xxxxxx |   |
|                                |        |                                                                                              |        |        |        |        |  |  |  |  |  |  |  |  |  |  |  |

 

**2. Professional Services Income (PSI)**

 
| ** **                                                                                             | ** ** | **ARS** | ** ** | **RRR** | ** ** | **MWR** | ** ** | **PIA** | ** ** | **PIL** | ** ** | ** ** | ** ** | ** ** | ** ** |
|--------------------------------------------------------------------------------------------------------|------------|---------|------------|---------|------------|---------|------------|---------|------------|---------|------------|------------|------------|------------|------------|
| All income  earned from professional services                                                          |       | $       | xxx        |    | $          | xxx     |       | $       | xxx        |    | $          | xxx        |       | $          | xxx        |   |   |   |   |   |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |
| Divided by #  Units(1) and Portfolio Mortgage Loans generating income from  professional services |       | xxx     |       | xxx     |       | xxx     |       | xxx     |       | xxx     |       |       |       |       |       |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |
| Unit Margin                                                                                            |       | $       | xxx        |    | $          | xxx     |       | $       | xxx        |    | $          | xxx        |       | $          | xxx        |   |   |   |   |   |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |
| Multiplied  by # of Mortgage Loans generating income from professional services                        |       | xxx     |       | xxx     |       | xxx     |       | xxx     |       | xxx     |       |       |       |       |       |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |
| Calculated  PSI by business                                                                            |       | $       | xxx        |    | $          | xxx     |       | $       | xxx        |    | $          | xxx        |       | $          | xxx        |   |   |   |   |   |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |
| Subtotal  calculated PSI                                                                               |       |    |       |    |       |    |       |    |       |    |       |       |       | $          | xxxxxx     |   |
|                                                                                                   |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |   |
| **3.  Recovery Amount**                                                                           |       |    |       |    |       |    |       |    |       |    |       |       |       | $          | xxxxxx     |   |
| ** **                                                                                             |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |   |
| **4.  Interest Income**                                                                           |       |    |       |    |       |    |       |    |       |    |       |       |       | $          | xxxxxx     |   |
| ** **                                                                                             |       |    |       |    |       |    |       |    |       |    |       |       |       |       |       |   |
| **2a.  Subtotal Monthly Net Cash Flow Revenues**                                                  |       |    |       |    |       | **$**   | **xxxxxx** |    |

 

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(1) Whenthe income earned from professional services is derived from both PortfolioMortgage Loans and other sources, those other sources will be measured in unitsassigned so that the effort required to obtain income earned from professionalservices for the unit is comparable to the effort so required for a PortfolioMortgage Loan.

 

----

 
| **5.   Aggregate Unit Costs**                     |                                                                                                    |       |       |       |                                             |   |
|--------------------------------------------------------|---------------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------------------------------------|--------|
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
|                                                   | Unit Cost  for Mortgage Loans less than 90 days Delinquent                                              | $          | 18.35      |       |                                             |   |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
|                                                   | Number of  Mortgage Loans less than than 90 days Delinquent                                             | Xxxx       |       |       |                                             |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |
|                                                   | Total Costs  for Mortgage Loan less than 90 days Delinquent                                             |       |       | $          | xxxxxx                                           |   |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
|                                                   | Unit Cost  for Mortgage Loan 90 days or more Delinquent                                                 | $          | 50.96      |       |                                             |   |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
|                                                   | Number of  Mortgage Loans 90 days or more Delinquent                                                    | xxxx       |       |       |                                             |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |
|                                                   | Total Costs  for Mortgage Loans 90 days or more Delinquent                                              |       |       | $          | xxxxxx                                           |   |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
|                                                   | Subtotal  Aggregate Unit Costs                                                                          |       |       |       |                                             | $      | (xxxxx | ) |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |   |
| **6.   Designated Litigation Expense Adjustment** | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
|                                                   | **OR (if  the Litigation Reserve Amount has been  reduced to zero and a Cumulative Shortfall exists):** |       |       |       |                                             |   |   |   |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **6.   Cumulative Shortfall Deductible Amount**   | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **7.   Designated Nonrecoverable Advances**       | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **8.   Customer Accommodation Amount**            | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **9.   Customer Reversal Amount**                 | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **10.   Interest Expense**                        | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
|                                                   | Average  outstanding Advances during the calendar month                                                 |       |       | $          | xxxx                                             |   |   |   |
|                                                   | One-month  LIBOR as of the first Business Day of the immediately preceding calendar  month              |       |       |       |          | %      |   |   |
|                                                   |                                                                                                    |       |       |       |                                             |   |   |   |
| **10a.  Subtotal Monthly Net Cash Flow Expenses** | ** **                                                                                              | **$**      | **(xxxxx** | **)**      |
| ** **                                             | ** **                                                                                              | ** ** | ** ** | ** ** |
| **Monthly Net Cash Flow**                              | ** **                                                                                              | **$**      | **xxxxxx** | ** ** |
|                                                        |                                                                                                         |            |            |            |                                                  |        |  |  |  |  |  |

 

----

 
| For your information:                                                                   |   |   |    | ** ** |
|-----------------------------------------------------------------------------------------|--------|--------|---------|------------|
|                                                                                    |   |   |    | ** ** |
| 1.   The remaining Litigation Reserve Amount at the end of the calendar  month was |   | $      | xxxxxxx |       |
|                                                                                    |   |   |    |       |
| 2.   The Shortfall for the calendar month and all prior months was                 |   | $      | xxxxxxx |       |
|                                                                                    |   |   |    |       |
| 3.   The Cumulative Shortfall Deductible Amount for all prior months was           |   | $      | xxxxxxx |       |
|                                                                                    |   |   |    |       |
| 4.   The Cumulative Shortfall at the end of the calendar month was                 |   | $      | xxxxxxx |       |

 

----

 

**Exhibit BtoContingent Payment Agreement**

 

**SampleTimeline**

 

For purposes of illustration only, assuming that on August 12,2005 the Option Holder delivered notice of its intent to exercise the Option andclose the purchase of the Option Shares on September 30, 2005, thefollowing dates would become relevant under this Agreement.

 

 
| August 12, 2005                                                                           |   | Option Exercise Date                                                                                                              |
|------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|
|                                                                                           |   |                                                                                                                              |
| September 30, 2005  (month end for SPS)                                                   |   | Measurement Date                                                                                                                  |
|                                                                                           |   |                                                                                                                              |
| October 3, 2005 (first  Business Day after the  Measurement Date)                         |   | Option Closing Date                                                                                                               |
|                                                                                           |   |                                                                                                                              |
| October 1, 2005 (first  day of the first calendar  month following the  Measurement Date) |   | Commencement of the Payment Period under  the Contingent Payment Agreement                                                        |
|                                                                                           |   |                                                                                                                              |
| November 21, 2005  (first Business Day  following the 20th day  of such calendar month)   |   | The initial Notification Date under the  Contingent Payment Agreement (relating to payment accruing during the month  of October) |
|                                                                                           |   |                                                                                                                              |
| November 25, 2005                                                                         |   | The initial Payment Date under the  Contingent Payment Agreement (relating to payment accruing during the month  of October)      |

 

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