Franklin Credit Management Corporation 10-12G


 


Exhibit
10.21


 



















LOAN
SERVICING AGREEMENT




by and
between







BOSCO
CREDIT II TRUST SERIES 2010 - 1

as the
Owner,




and







FRANKLIN
CREDIT MANAGEMENT CORPORATION




as the
Servicer







dated and
made effective as of November 19, 2010














 


 




 









 





TABLE OF
CONTENTS

 


	
      ARTICLE
      I
	
      DEFINITIONS;
      CERTAIN MATTERS OF CONSTRUCTION 
	
      1




 



	
      ARTICLE
      II
	
      ADMINISTRATION
      AND SERVICING OF MORTGAGE LOANS  
	
      9




 



	
       
      
	
      2.1.
	
      The
      Servicer to Act as the Servicer 
	
      9




 


	
       
      
	
      2.2.
	
      Liquidation
      of Mortgage Loans 
	
      10




 


	
       
      
	
      2.3.
	
      Collection
      of Mortgage Loan Payments 
	
      11




 


	
       
      
	
      2.4.
	
      Establishment
      of and Deposits to Control Account 
	
      12




 


	
       
      
	
      2.5.
	
      Permitted
      Withdrawals From Control 
	
      12




 


	
       
      
	
      2.6.
	
      Establishment
      of and Deposits to Escrow Account 
	
      13




 


	
       
      
	
      2.7.
	
      Permitted
      Withdrawals From Escrow Account 
	
      13




 


	
       
      
	
      2.8.
	
      Payment
      of Taxes, Insurance and Other Charges 
	
      14




 


	
       
      
	
      2.9.
	
      Protection
      of Accounts 
	
      14




 


	
       
      
	
      2.10.
	
      Maintenance
      of Hazard Insurance 
	
      14




 


	
       
      
	
      2.11.
	
      Reserved 
	
      15




 


	
       
      
	
      2.12.
	
      Maintenance
      of Fidelity Bond and Errors and Omissions Insurance 
	
      15




 


	
       
      
	
      2.13.
	
      Inspections 
	
      15




 


	
       
      
	
      2.14.
	
      Restoration
      of Mortgaged Property. 
	
      16




 


	
       
      
	
      2.15.
	
      Reserved 
	
      16




 


	
       
      
	
      2.16.
	
      Title,
      Management and Disposition of REO Property 
	
      16




 


	
       
      
	
      2.17.
	
      REO
      Reports 
	
      17




 


	
       
      
	
      2.18.
	
      Liquidation
      Reports 
	
      17




 


	
       
      
	
      2.19.
	
      Reports
      of Foreclosures and Abandonments of Mortgaged
    Property 
	
      17




 


	
       
      
	
      2.20.
	
      Reserved 
	
      17




 


	
       
      
	
      2.21.
	
      Notification
      of Adjustments 
	
      17




 


	
       
      
	
      2.22.
	
      Transfer
      Notices. 
	
      18




 


	
       
      
	
      2.23.
	
      Privacy. 
	
      18




 


	
       
      
	
      2.24.
	
      Losses
      and Expenses. 
	
      19




 



 




 









 





	
      ARTICLE
      III
	
      REMITTANCES 
	
      20




 


	
       
      
	
      3.1.
	
      Reserve 
	
      20




 


	
       
      
	
      3.2.
	
      Statements
      to the Owner 
	
      20




 


	
       
      
	
      3.3.
	
      Monthly
      Advances by the Servicer 
	
      20




 


	
      ARTICLE
      IV
	
      GENERAL
      SERVICING PROCEDURES 
	
      20




 


	
       
      
	
      4.1.
	
      Transfers
      of Mortgaged Property 
	
      20




 


	
       
      
	
      4.2.
	
      Satisfaction
      of Mortgages and Release of Mortgage Files 
	
      21




 


	
       
      
	
      4.3.
	
      Servicing
      Compensation 
	
      21




 


	
       
      
	
      4.4.
	
      Reserved 
	
      21




 


	
       
      
	
      4.5.
	
      Right
      to Examine Servicer Records 
	
      21




 


	
      ARTICLE
      V
	
      POSSESSION
      OF MORTGAGE FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF
      DOCUMENTS; SERVICER TO COOPERATE 
	
      22




 


	
       
      
	
      5.1.
	
      Provision
      of Information 
	
      22




 


	
       
      
	
      5.2.
	
      Financial
      Statements; Servicing Facility 
	
      22




 


	
       
      
	
      5.3.
	
      Possession
      of Mortgage Files; Maintenance of Servicing Files 
	
      23




 


	
       
      
	
      5.4.
	
      Books
      and Records; Transfers of Mortgage Loans 
	
      24




 


	
       
      
	
      5.5.
	
      Custodial
      Agreement; Delivery of Documents 
	
      24




 


	
      ARTICLE
      VI
	
      REPRESENTATIONS
      AND WARRANTIES 
	
      24




 


	
       
      
	
      6.1.
	
      General
      Representations and Warranties 
	
      25




 


	
       
      
	
      6.2.
	
      Representations,
      Warranties and Covenants of the Owner Regarding Individual Mortgage
      Loans 
	
      25




 


	
      ARTICLE
      VII
	
      THE
      SERVICER 
	
      26




 


	
       
      
	
      7.1.
	
      Indemnification;
      Third Party Claims. 
	
      27




 


	
       
      
	
      7.2.
	
      Merger
      or Consolidation of the Servicer 
	
      27




 


	
       
      
	
      7.3.
	
      Limitation
      on Liability of the Servicer and Others 
	
      28




 


	
       
      
	
      7.4.
	
      Limitation
      on Assignment by the Servicer 
	
      28




 



 




 









 





	
      ARTICLE
      VIII
	
      RESERVED 
	
      34




 


	
       
      
	
      8.1.
	
      Reserved 
	
      34




 


	
      ARTICLE
      IX
	
      DEFAULT 
	
      35




 


	
       
      
	
      9.1.
	
      Events
      of Default 
	
      35




 


	
       
      
	
      9.2.
	
      Waiver
      of Defaults 
	
      36




 


	
      ARTICLE
      X
	
      TERMINATION 
	
      37




 


	
       
      
	
      10.1.
	
      Termination 
	
      37




 


	
       
      
	
      10.2.
	
      Termination
      With Cause 
	
      37




 


	
       
      
	
      10.3.
	
      Termination
      Without Cause 
	
      37




 





	
      ARTICLE
      XI
	
      MISCELLANEOUS
      PROVISIONS 
	
      38




 


	
       
      
	
      11.1.
	
      Successor
      to the Servicer 
	
      38




 


	
       
      
	
      11.2.
	
      Reserved 
	
      38




 


	
       
      
	
      11.3.
	
      Amendment;
      Extension Not a Waiver 
	
      38




 


	
       
      
	
      11.4.
	
      Governing
      Law; Venue 
	
      39




 


	
       
      
	
      11.5.
	
      Duration
      of Agreement 
	
      39




 


	
       
      
	
      11.6.
	
      Notices 
	
      39




 


	
       
      
	
      11.7.
	
      Severability
      of Provisions 
	
      40




 


	
       
      
	
      11.8.
	
      Relationship
      of Parties 
	
      40




 


	
       
      
	
      11.9.
	
      Execution;
      Successors and Assigns 
	
      40




 


	
       
      
	
      11.10.
	
      Assignment
      by the Owner 
	
      40




 


	
       
      
	
      11.11.
	
      Time
      of Payment 
	
      40




 


	
       
      
	
      11.11.
	
      Force
      Majeure 
	
      40




 

EXHIBITS




Exhibit
A                     Mortgage
Loan Schedule

Exhibit
B                     
Contents of Each Mortgage Loan File

Exhibit
C                      Reserved

Exhibit
D                     Servicing
Fee Schedule

Exhibit
E                      Reports

Exhibit
F                      Reserved

Exhibit
G                     Approval
Matrix

Exhibit
H                    
Agreed Servicing Guidelines




 








 


 




 









 





LOAN SERVICING
AGREEMENT

 

This Loan
Servicing Agreement (the “Agreement”), dated
and effective as of November 19, 2010, is by and between BOSCO CREDIT II TRUST
SERIES 2010 - 1, a Delaware statutory trust (“Owner”), and Franklin Credit
Management Corporation, a Delaware corporation (“Servicer”).

 

WHEREAS,
the Mortgage Loans identified on the Mortgage Loan Schedule annexed hereto as
Exhibit A have
been acquired by Owner; and

 

WHEREAS,
the Servicer has agreed to service each Mortgage Loan on behalf of the Owner
commencing on the Effective Date (as defined herein), and the parties hereto
desire to provide the mechanics of such servicing by the Servicer;

 

NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Owner and the Servicer agree as follows:

 

ARTICLE
I

 

DEFINITIONS; CERTAIN MATTERS
OF CONSTRUCTION

 

Whenever
used herein, the following words and phrases shall have the following
meanings:

 

“Accepted Servicing
Practices” means, with respect to any Mortgage Loan, those customary and
reasonable mortgage servicing practices generally undertaken by prudent mortgage
lending institutions that service mortgage loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, subject to and in accordance with the Approval Matrix and the Agreed
Servicing Guidelines.

 

“Adjustment Date”
means, as to each adjustable rate Mortgage Loan, the date on which the Mortgage
Interest Rate is adjusted in accordance with the terms of the related Mortgage
Note and Mortgage.

 

“Agreed Servicing
Guidelines” mean the Agreed Servicing Guidelines attached hereto as Exhibit
H.

 

“Agreement” has the
meaning assigned to it in the preamble.

 

“Ancillary Income”
means all income derived from the Mortgage Loans other than payments of
principal and interest on the Mortgage Loans, including any interest that
accrues on funds on deposit in the Escrow Account and the Control Account,
insufficient fund fees, conversion fees, satisfaction fees, optional insurance
administrative fees, assumption fees, escrow account benefits, reinstatement
fees, customary real estate referral fees, modification fees, release fees,
foreclosure fees, late payment fees,  prepayment penalty fees and all
other incidental fees and charges received by the Servicer, but excluding
Servicing Fees.

 



 













 




 

“Applicable
Requirements” means as of the time of reference, with respect to the
Mortgage Loans, REO Property and the servicing of the Mortgage Loans, all of the
following: (i) all contractual obligations of the Servicer set forth in this
Agreement; (ii) the requirements set forth in the related Mortgage Note and the
related Mortgage; (iii) all applicable federal, state and local legal and
regulatory requirements (including statutes, rules, regulations and ordinances
and including the Privacy Requirements); (iv) all other applicable requirements
and guidelines of each governmental agency, board, commission, instrumentality
and other governmental body or officer having jurisdiction; (v) all other
applicable judicial and administrative judgments, orders, stipulations, awards,
writs and injunctions; and (vi) Accepted Servicing Practices.

 

“Appraised Value”
means with respect to any Mortgage Loan, the lesser of (i) the value set forth
on the appraisal made in connection with the origination of the related Mortgage
Loan as the value of the related Mortgaged Property, or (ii) the purchase price
paid for the Mortgaged Property, provided, however, that in the case of a
refinanced Mortgage Loan, such value shall be based solely on the appraisal made
in connection with the refinancing of such Mortgage Loan.

 

“Approval Matrix”
means the Owner’s specified delegation of authority to the
Servicer  for servicing the Accounts, which is set forth on Exhibit G to this
Agreement.

 

“Assignment of
Mortgage” means an assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Owner.

 

“Business Day” means
any day other than (i) a Saturday or Sunday, or (ii) a day on which banking
institutions located in New York or New Jersey are authorized or obligated by
law or executive order to be closed.

 

 “Code” means the
Internal Revenue Code of 1986, as it may be amended from time to time or any
successor statute thereto, and applicable U.S. Department of the Treasury
regulations issued pursuant thereto.

 

“Condemnation
Proceeds” means all awards or settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related Mortgage
Loan Documents.

 

“Control Account” has
the meaning assigned to it in the Loan Agreement.

 

“Custodial Agreement”
means the agreement governing the retention of the originals of each Mortgage
Note, Mortgage, Assignment of Mortgage and other Mortgage Loan
Documents.

 

“Custodian” means the
custodian under the Custodial Agreement, or its successor in interest or
assigns, or any successor to the Custodian under the Custodial Agreement as
provided therein.

 

“Customer Information”
means any personally identifiable information in any form (written, electronic
or otherwise) relating to a Mortgagor, including, but not limited to: a
Mortgagor’s name, address, telephone number, Mortgage Loan number, Mortgage Loan
payment history, delinquency status, insurance carrier or payment information,
tax amount or payment information; the fact that the Mortgagor has a
relationship with the servicer of such Mortgagor’s Mortgage Loan; and any other
non-public personally identifiable information.

 

 



 




2








 




“Cut-off Date” means
the date of this Agreement, or with respect to Mortgage Loans and servicing
rights and obligations with respect to such Mortgage Loans made subject to this
Agreement after the first Effective Date hereunder, the date agreed to by the
Servicer and the Owner.

 

“Damages” means any
and all assessments, judgments, claims, liabilities, losses, costs, damages or
expenses (including interest, penalties and reasonable attorneys’ fees, expenses
and disbursements in connection with any action, suit or proceeding and
including any such reasonable attorneys’ fees, expenses and disbursements
incurred in enforcing any right of indemnification against any
indemnitor).  There shall be no limitation on the amount of Damages
under this Agreement except as provided in Section 7.3(c).

 

“Delinquent” means a
Mortgage Loan is “Delinquent” when any payment contractually due thereon has not
been made by the close of business on the Due Date therefor.  Such
Mortgage Loan is “30 days Delinquent” if such contractual payment has not been
received by the close of business on the numerically corresponding day of the
month immediately succeeding the month in which such contractual payment was
due, or, if there is no such numerically corresponding day (e.g., when a 30-day
month follows a 31-day month in which a payment was due on the 31st day of such
month) then on the last day of such immediately succeeding month. Similarly for
“60 days Delinquent” the second immediately succeeding month, and for “90 days
Delinquent” the third immediately succeeding month.

 

“Determination Date”
means the last calendar day of the month immediately preceding the related
Distribution Date.

 

“Distribution Date”
means the 10th day (or if such 10th day is not a Business Day, the first
Business Day immediately following) of any month, beginning with the first
Distribution Date.

 

“Due Date” means the
first day of the month on which the Monthly Payment is due on a Mortgage Loan,
exclusive of any days of grace.

 

“Due Period” means
with respect to each Distribution Date, the period commencing on the second day
of the month preceding the month of the Distribution Date and ending on the
first day of the month of the Distribution Date.

 

“Effective Date” means
November 19, 2010, or with respect to Mortgage Loans and servicing rights and
obligations with respect to such Mortgage Loans made subject to this Agreement
after such date, on the date that the Servicer obtains possession of the
Mortgage Loan Documents.

 

 “Errors and Omissions
Insurance Policy” means an errors and omissions insurance policy to be
maintained by the Servicer pursuant to Section 2.12.

 



 




3








 




“Escrow Account” means
the separate account or accounts created and maintained pursuant to Section
2.6.

 

“Escrow Payments”
means with respect to any Mortgage Loan, the amounts constituting ground rents,
taxes, assessments, water rates, sewer rents, municipal charges, mortgage
insurance premiums, fire and hazard insurance premiums, condominium charges, and
any other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to the Mortgage or any other related document.

 

“Event of Default”
means any one of the conditions or circumstances enumerated in Section
9.1.

 

“Expenses” has the
meaning assigned to it in Section 2.24.2.

 

“FDIC” means the
Federal Deposit Insurance Corporation, or any successor thereto.

 

“FHA” means the
Federal Housing Administration, or any successor thereto.

 

“Fidelity Bond” means
a fidelity bond to be maintained by the Servicer pursuant to Section
2.12.

 

“Float Benefit” means
the net economic benefit resulting from escrow and custodial deposits held for
the account of the Servicer or the Owner relating to the Mortgage Loan and
servicing thereof. The Float Benefit is based on the Servicer’s selection of the
investment facility or interest rate swap or other arrangement offered from time
to time by the financial institution holding custodial deposits.

 

“Franklin Trust Loans”
means the Mortgage Loans purchased by Bosco Credit II, LLC from Franklin
Mortgage Asset Trust 2009-A and subsequently transferred to Owner pursuant to an
Omnibus Assignment and Bill of Sale dated as of even date herewith.

 

“Gross Margin” means
with respect to each Mortgage Loan, the fixed percentage amount set forth in the
related Mortgage Note which is added to the Index in order to determine the
related Mortgage Interest Rate, as set forth in the Mortgage Loan
Schedule.

 

     “HELOC” means a
Mortgage Loan that is a home equity line of credit or any other arrangement
under which the Mortgagor has the right to demand further advances from the
mortgagee.




“High Cost Loan” means
a Mortgage Loan classified as (a) a “high cost” loan under HOEPA, (b) a “high
cost home,” “threshold,” “covered,” “high risk home,” “predatory” or similar
loan under any other applicable state, federal or local law or (c) a Mortgage
Loan categorized as “High Cost” pursuant to the Standard & Poor’s Glossary
for File Format for LEVELS®, Appendix E, as revised from time to
time.

 

“HOEPA” means the Home
Ownership Equity Protection Act of 1994, as amended.

 



 




4








 




“Index” means with
respect to any adjustable rate Mortgage Loan, the index identified on the
Mortgage Loan Schedule and set forth in the related Mortgage Note for the
purpose of calculating the interest thereon.

 

“Insurer” means any
entity that insures or guarantees all or part of the risk of loss of a Mortgage
Loan, and the providers of any hazard insurance policy, flood insurance policy
or title insurance policy.

 

“Insurance Proceeds”
means with respect to each Mortgage Loan, proceeds of insurance policies
insuring the Mortgage Loan or the related Mortgaged Property.

 

“Lender” means Värde Investment
Partners, L.P., a Delaware limited partnership.




“Litigation: means any
litigation, arbitration or other proceeding before any governmental,
administrative or arbitral court or tribunal, or any government investigation or
administrative enforcement action.

 

“Liquidation Proceeds”
means cash received in connection with the liquidation of a defaulted Mortgage
Loan, whether through the sale or assignment of such Mortgage Loan, trustee’s
sale, foreclosure sale or otherwise, or the sale of the related Mortgaged
Property if the Mortgaged Property is acquired in satisfaction of the Mortgage
Loan.

 

“Loan-to-Value Ratio or
LTV” means with respect to any Mortgage Loan, the ratio of the original
loan amount of the Mortgage Loan at its origination (unless otherwise indicated)
to the Appraised Value of the Mortgaged Property.

 

“Loan Agreement” means
that certain Master Loan Agreement between Bosco Credit II, LLC and Lender, and
joined in by Owner pursuant to a Joinder dated as of November 19, 2010, as amended, modified, supplemented,
replaced or renewed from time to time in accordance with its
terms.

 

“Monthly Payment”
means the scheduled monthly payment of principal and interest on a Mortgage
Loan.

 

“Mortgage” means the
mortgage, deed of trust or other instrument securing a Mortgage Note, which
creates a lien on Mortgaged Property securing the Mortgage Note.

 

“Mortgage File” means
the items pertaining to a particular Mortgage Loan referred to in Exhibit B to this
Agreement, and any additional documents required to be added to the Mortgage
File pursuant to this Agreement.

 

“Mortgage Interest
Rate” means the annual rate of interest borne on a Mortgage Note in
accordance with the provisions of the Mortgage Note.

 

“Mortgage Loan” means
each Mortgage Loan subject to this Agreement and which is identified on the
Mortgage Loan Schedule, which Mortgage Loan includes the Mortgage File, the
Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such
Mortgage Loan.  To the extent the context shall permit or require,
each such reference to Mortgage Loan shall include REO Property.

 



 




5








 




“Mortgage Loan
Documents” means with respect to a Mortgage Loan, the original related
Mortgage Note with applicable addenda and riders and endorsements, the original
related Mortgage and the originals of any required addenda and riders, the
original related Assignment of Mortgage and any original intervening related
assignments, any guarantees, any written modification agreements, the original
related title insurance policy, and the related appraisal report.

 

“Mortgage Loan Remittance
Rate” means with respect to each Mortgage Loan, the annual rate of
interest remitted to the Owner, which shall be equal to the related Mortgage
Interest Rate minus the Servicing Fee Rate.

 

“Mortgage Loan
Schedule” means a schedule of Mortgage Loans annexed hereto as Exhibit A, or as the
same may be supplemented from time to time by mutual agreement of the Owner and
the Servicer, such schedule setting forth the following information with respect
to each Mortgage Loan: (1) the Servicer’s Mortgage Loan number; (2) the
city state and zip code of the Mortgaged Property; (3) a code indicating whether
the Mortgaged Property is a single family residence, two-family residence,
three-family residence, four-family residence, PUD, mixed-use property, or
condominium; (4) the current Mortgage Interest Rate; (5) the current Mortgage
Loan Remittance Rate; (6) the current Monthly Payment; (7) the Gross Margin;
(8) the original term to maturity; (9) the scheduled maturity date; (10)
the principal balance of the Mortgage Loan as of the Cut-off Date; (11) the
Loan-to-Value Ratio; (12) the next Adjustment Date; (13) the lifetime Mortgage
Interest Rate cap; (14) a code indicating whether the Mortgage Loan is
convertible or not; (15) a code indicating whether the Mortgage Loan Documents
contain a prepayment fee, and, if so, additional fields setting forth the terms
thereof; and (16) any other information that the Servicer may
require.

 

“Mortgage Note” means
the note or other evidence of the indebtedness of a Mortgagor secured by a
Mortgage.

 

“Mortgaged Property”
means the real property securing repayment of the debt evidenced by a Mortgage
Note or, where the context permits or requires (including in Section 6.2), an
REO Property.

 

“Mortgagor” means the
obligor on a Mortgage Note.

 

“New Loan Data File”
means with respect to each Mortgage Loan delivered after the initial Effective
Date by the Owner to be serviced by the Servicer under this Agreement, the data
file produced by the Owner that is used to enable the Servicer to set up each
Mortgage Loan on its servicing system.

 

“Originator” means,
with respect to any Mortgage Loan, the entity or entities that (a) took the
relevant Mortgagor’s loan application; (b) processed the relevant Mortgagor’s
loan application: and/or (c) closed and/or funded such Mortgage
Loan.

 



 




6








 




“Owner” means Bosco
Credit II Trust Series 2010 - 1, a Delaware statutory trust, or its successor in
interest or any successor to the Owner under this Agreement as herein
provided.

 

“Owner Indemnitees”
has the meaning assigned to it in Section 7.1.1.

 

 “Person” means any
individual, corporation, partnership, joint venture, limited liability company,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof.

 

 “Principal Prepayment”
means any payment or other recovery of principal on a Mortgage Loan which is
received in advance of its scheduled Due Date, including any prepayment penalty
or premium thereon and which is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.

 

“Principal Prepayment
Period” means the month preceding the month in which the related
Distribution Date occurs.

 

“Prior Servicer” means
all servicers and subservicers, collectively and individually, other than the
Servicer, which, at any time prior to the applicable Effective Date, pooled,
sold, serviced or subserviced any of the Mortgage Loans.

 

“Privacy Requirements”
means the obligations imposed by (i) Title V of the Gramm-Leach-Bliley Act, 15
U.S.C. § 6801 et seq.; (ii) the applicable federal regulations implementing such
act and codified at 12 CFR Parts 40, 216, 332, 573, and/or 16 CFR Part 313;
(iii) Interagency Guidelines Establishing Standards For Safeguarding
Borrower Information published in final form on February 1, 2001 (such final
guidelines and/or rules the “Interagency Guidelines”) to establish and maintain
an Information Security Program  (as such term is defined in the
Interagency Guidelines); and (iv) other applicable federal, state and local
laws, rules, regulations, and orders relating to the privacy and security of
Customer Information, including the federal Fair Credit Reporting Act, 15 U.S.C.
§ 1681 et seq., and similar state laws.

 

“Qualified Depository”
means a deposit account or accounts maintained with a federal or state chartered
depository institution selected by Servicer the deposits in which are insured by
the FDIC to the applicable limits and the short-term unsecured debt obligations
of which (or, in the case of a depository institution that is a subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated A-1 by Standard & Poor’s Ratings Services or Prime-1 by
Moody’s Investors Service, Inc. (or a comparable rating if another rating agency
is specified by the Owner by written notice to the Servicer) at the time any
deposits are held on deposit therein.

 

“Qualified Insurer”
means a mortgage guaranty insurance Insurer duly authorized and licensed where
required by law to transact mortgage guaranty insurance business and generally
acceptable as an Insurer under Accepted Servicing Practices.

 

“Remittance Date” has
the meaning assigned to it in the Loan Agreement.

 

“REO Disposition”
means the final sale by the Servicer of any REO Property.

 



 




7








 




“REO Disposition
Proceeds” means all amounts received with respect to an REO Disposition
pursuant to Section 2.16.

 

“REO Property” means a
Mortgaged Property acquired through foreclosure, by deed in lieu of foreclosure
or otherwise, as described in Section 2.16.

 

“Servicer” means
Franklin Credit Management Corporation, or its successor in interest or assigns,
or any successor to the Servicer under this Agreement appointed as herein
provided.

 

“Servicer Employees”
means Servicer Employees has the meaning set forth in Section 2.12.

 

“Servicer Indemnitees”
has the meaning assigned to it in Section 7.1.2.

 

“Servicing Advances”
means all customary, reasonable and necessary “out of pocket” costs and expenses
(including reasonable attorney’s fees and disbursements) incurred in the
performance by the Servicer of its servicing obligations, including, but not
limited to, the cost of (a) the preservation, restoration and protection of the
Mortgage Loan or Mortgaged Property, (b) any enforcement or judicial
proceedings, including foreclosures, money judgments and bankruptcy proceedings,
(c) the management and liquidation of any REO Property, including, but not
limited to, the cost of environmental inspection or review of such property, (d)
compliance with the obligations under Sections 2.8, 2.10, 2.11, 2.14 and 2.15,
(e) other Expenses that are the responsibility of the Owner under Section 2.24,
and (f) any other amounts expressly  designated as Servicing Advances
pursuant to this Agreement.

 

 “Servicing Fee” means
with respect to each Mortgage Loan, the fees the Owner shall pay to the
Servicer, as set forth on Exhibit D to this
Agreement.

 

“Servicing Fee Rate”
means with respect to each Mortgage Loan, the percentage set forth on Exhibit D to this
Agreement.

 

“Servicing File” means
with respect to each Mortgage Loan, the file retained by the Servicer consisting
of originals of all documents in the Mortgage File which are not delivered to
the Custodian and copies of the Mortgage Loan Documents listed in the Custodial
Agreement, the originals of which are delivered to the Custodian pursuant to
Section 5.5.

 

“VA:  means
the United States Department of Veterans Affairs, or any successor
thereto.

 

Construction of this
Agreement and Certain Terms and Phrases.

 

(a) Unless the context of this
Agreement clearly indicates otherwise, (i) words of any gender include each
other gender; (ii) words denoting the singular shall include the plural and vice
versa; (iii) the terms “hereof”, “herein”, “hereby” and derivate or similar
words refer to this entire Agreement and not to any particular provision of this
Agreement; and (iv) the terms “Article”, “Section”, and “Exhibit” without any
reference to a specified document refer to the specified Article, Section and
Exhibit, respectively, of this Agreement.

 



 




8








 




(b) The words “including”, “include”
and “includes” are not exclusive and shall be deemed to be followed by the words
“without limitation”.

 

(c) The word “or” shall be construed to
mean “and/or” unless the context clearly prohibits that
construction.

 

(d) Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless Business Days
are specified.

 

(e) Any reference to any federal,
state, local or foreign statute or law, including any one or more sections
thereof, shall be deemed also to refer to, unless the context requires
otherwise, all rules and regulations promulgated thereunder.

 

(f) The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

ARTICLE
II


 

ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS

 

2.1. The Servicer to Act as the
Servicer. The Servicer, as an independent contractor, shall service and
administer the Mortgage Loans on an actual/actual basis in accordance with this
Agreement, in accordance with Accepted Servicing Practices, and shall have full
power and authority, acting alone or through the delegation of duties to third
party servicing providers, to do any and all things in connection with such
servicing and administration which the Servicer may deem necessary or desirable,
consistent with the terms of this Agreement. The Servicer may perform its
servicing responsibilities through agents or independent contractors, provided, however, that in no
event will the Servicer delegate oversight of servicing, interaction with the
Owner or the Custodian, administration of accounts or reporting and in no event
will the Servicer be released from any of its responsibilities hereunder on
account of any delegation.  Unless otherwise agreed in writing by the
Owner, in no event will the Owner act in a manner that is not consistent with
the Approval Matrix or the Agreed Servicing Guidelines.

 

From and
after the initial Effective Date, the Servicer shall assume responsibility under
this Agreement to service and administer additional Mortgage Loans upon the
delivery, in accordance with all reasonable instructions and directions which
the Servicer may give to the Owner, of the related New Loan Data File and all
related Mortgage Loan Documents by the Owner. To the extent available to the
Owner and not otherwise available to the Servicer, the Owner shall provide the
New Loan Data File for each Mortgage Loan to the Servicer no event later than
fifteen (15) days before the Servicer is expected to perform servicing on that
Mortgage Loan. To the extent available to the Owner and not otherwise available
to the Servicer, the Owner shall notify the Servicer within two (2) Business
Days, in writing, of any changes in the information contained in the New Loan
Data File. The Owner agrees to take such actions under the Custodial Agreement
as are required of the Owner in connection with the delivery to the Servicer of
copies of the Mortgage Note, the Mortgage or any other documents which are held
by the Custodian with respect to a Mortgage Loan that the Servicer deems
reasonably necessary in connection with its performance of the servicing of said
Mortgage Loan. The Servicer shall cooperate with the Owner in connection with
the transfer of the servicing rights and obligations with respect to the
Mortgage Loans.

 



 




9








 




The
Servicer shall have no liability hereunder and shall be excused from performance
to the extent that such liability or failure to perform is related to the fact
that the Servicer has not been provided with the Mortgage Loan
Documents.

 

Consistent
with the terms of this Agreement, the Servicer may waive, modify or vary any
term of any Mortgage Loan or consent to the postponement of strict compliance
with any such term or in any manner grant indulgence to any Mortgagor if in the
Servicer’s reasonable and prudent determination such waiver, modification,
postponement or indulgence is not materially adverse to the Owner and provided
that in no event will Servicer (i) make any such waiver, modification, variance
or consent unless permitted under the Agreed Servicing Guidelines and/or the
Approval Matrix or (ii) make any future advances with respect to a Mortgage
Loan. Unless the Mortgagor is in default with respect to the Mortgage Loan or
such default is, in the judgment of the Servicer, either imminent or reasonably
foreseeable, the Servicer shall not accept short sales or partial payments in
full satisfaction of any payment obligation, grant forbearances or permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, defer or forgive the payment of principal (except for actual
payments of principal), capitalize arrearages or change the final maturity date
on any Mortgage Loan (a “Prohibited Modification”). Notwithstanding the
foregoing sentence, the Servicer may permit a Prohibited Modification if the
Owner has consented to the same in writing or the Servicer has reasonably
determined that such activities are necessary and desirable and in the best
interests of the Owner to maximize recovery of principal and interest over the
life of the Mortgage Loans. Without limiting the generality of the foregoing,
the Servicer shall continue, and is hereby authorized and empowered, to execute
and deliver on behalf of itself and the Owner, all instruments of satisfaction
or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties. If reasonably required by the Servicer, the Owner
shall furnish the Servicer with any powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties under this Agreement.

 

Unless
the Servicer agrees for specified Mortgage Loans, the Owner shall not make any
Mortgage Loan subject to this Agreement for which the Owner or the Servicer has
knowledge that there may be a legal issue regarding the Mortgage Loan, including
without limitation, fraudulent origination, theft or identity, or failure to
comply with applicable laws and regulations in the origination or prior
servicing of the Mortgage Loan. The Owner shall notify the Servicer in writing
of those Mortgage Loans, if any, that have been subject to a report to a
governmental agency with regard to alleged fraud or identity theft. The
Servicer’s assumption of the responsibility to service and administer such
Mortgage Loan, if any, shall not constitute a waiver of the Servicer’s rights to
indemnification as otherwise provided in this Agreement.

 

2.2. Liquidation of Mortgage
Loans. In the event that any payment due under any Mortgage Loan and not
postponed pursuant to Section 2.1 is not paid when the same becomes due and
payable, or in the event the Mortgagor fails to perform any other covenant or
obligation under the Mortgage Loan and such failure continues beyond any
applicable grace period, the Servicer shall take such action as shall be
consistent with Applicable Requirements.  If foreclosure proceedings
are commenced, the Servicer shall make all necessary and proper Servicing
Advances, subject to reimbursement in accordance with the terms of this
Agreement, provided, however, that the Servicer shall not be required to expend
funds in connection with any foreclosure or towards the restoration or
preservation of any Mortgaged Property, unless it shall determine that such
preservation, restoration and/or foreclosure is reasonably expected to increase
the proceeds of liquidation of the Mortgage Loan to the Owner after
reimbursement to itself for such expenses.

 



 




10








 




Notwithstanding
anything to the contrary contained herein, in connection with a foreclosure or
acceptance of a deed in lieu of foreclosure, (a) the Servicer shall have no
obligation to commence or continue foreclosure proceedings or obtain title to
Mortgaged Property securing a Mortgage Loan as a result of or in lieu of
foreclosure or otherwise if (i) such Mortgage Loan is subject to HOEPA or any
regulations related thereto, (ii) such Mortgage Loan qualifies as a High Cost
Loan under a state or local anti-predatory lending law or regulation, or (iii)
the Servicer determines, in its reasonable judgment, that foreclosure and/or
acquisition of title to Mortgaged Property would expose it or the Owner to
material risk or liability pertaining to the acts, errors or omissions of the
Originator or Prior Servicers and (b) in the event the Servicer has reasonable
cause to believe that a Mortgaged Property is contaminated by hazardous or toxic
substances or wastes.  If the Owner otherwise requests an
environmental inspection or review of such Mortgaged Property, such an
inspection or review is to be conducted by a qualified inspector. The cost for
such inspection or review shall be borne by the Owner. Upon completion of the
inspection or review, the Servicer shall promptly provide the Owner with a
written report of the environmental inspection.

 

After
reviewing the environmental inspection report, the Owner shall determine how the
Servicer shall proceed with respect to the Mortgaged Property. In the event (a)
the environmental inspection report indicates that the Mortgaged Property is
contaminated by hazardous or toxic substances or wastes and (b) the Owner
directs the Servicer to proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, the Servicer shall be reimbursed for all costs and expenses
associated with such foreclosure or acceptance of a deed in lieu of foreclosure
and any related environmental clean up costs, as applicable, pursuant to the
terms of this Agreement. In the event the Owner directs the Servicer not to
proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the
Servicer shall be reimbursed for all Servicing Advances and Expenses made with
respect to the related Mortgaged Property pursuant to the terms of this
Agreement.

 

2.3. Collection of Mortgage Loan
Payments. Continuously from the date hereof until the principal and
interest on all Mortgage Loans are paid in full, the Servicer shall proceed
diligently to collect all payments due under each of the Mortgage Loans when the
same shall become due and payable and, where required under Applicable
Requirements, shall use commercially reasonable efforts in ascertaining and
estimating Escrow Payments and all other charges that will become due and
payable with respect to the Mortgage Loan and the Mortgaged
Property.

 



 




11








 




 

2.4. Establishment of and
Deposits to Control Account.  The Servicer shall segregate and
hold all funds collected and received pursuant to Mortgage Loans separate and
apart from any of its own funds and general assets.  Except as
provided herein, the Servicer shall deposit in the Control Account within two
(2) Business Days of the Servicer’s receipt, and retain therein, the following
collections received by the Servicer after the Cut-off Date or received by the
Servicer prior to the Cut-off Date but allocable to a period subsequent
thereto:

 

(a) all
payments on account of principal on the Mortgage Loans, including all Principal
Prepayments (other than any related prepayment penalty fees, which shall be
retained by the Servicer);

 

(b) all
payments on account of interest on the Mortgage Loans adjusted to the Mortgage
Loan Remittance Rate;

 

(c) all
Liquidation Proceeds;

 

(d) all
Insurance Proceeds (other than proceeds to be held in the Escrow Account in
accordance with Section 2.6 and applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with Section
2.14);

 

(e) all
Condemnation Proceeds which are not applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance with Section 2.14;
and

 

(f) any
amounts received with respect to or related to any REO Property and all REO
Disposition Proceeds pursuant to Section 2.16.

 

2.5. Permitted Withdrawals From
Control Account

 

On each
Remittance Date, the Owner shall cause amounts to be paid from the Control
Account as provided in Section 3.4 of the Loan Agreement, including, without
limitation, for the following purposes:

 

(a) to pay
the Servicing Fee;

 

(b) to pay
Servicer for any unreimbursed Servicing Advances or Expenses or Ancillary Income
not retained prior to depositing funds in the Control Account or that are
otherwise reimbursable to the Servicer pursuant to this Agreement;

 

(c) to
reimburse Servicer for expenses incurred and reimbursable to it pursuant to
Section 7.1;

 

(d) to pay
any amount required to be paid pursuant to Section 2.16 related to any REO
Property;

 

(e) to
reimburse Servicer for any REO expenses not otherwise reimbursed above;
and

 

(f) to remove
funds inadvertently placed in the Control Account by the Servicer..

 

If on any
Distribution Date the amounts on deposit in the Control Account are insufficient
to cover payment or reimbursement to the Servicer of any Servicing Advances or
Expenses, the Owner shall reimburse the Servicer for any such amounts within a
reasonable time period after receipt of notice of such insufficiency by the
Owner.

 



 




12








 




 

2.6. Establishment of and
Deposits to Escrow Account.  The Servicer shall segregate and
hold all funds collected and received pursuant to a Mortgage Loan constituting
Escrow Payments separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Escrow Accounts, in the form of
time deposit or demand accounts, titled, “Franklin Credit Management
Corporation, in trust for the Owner and/or subsequent the Owners of residential
Mortgage Loans, and various Mortgagors - T & I.” The Escrow Accounts shall
be established with a Qualified Depository. Upon request of the Owner and within
ten (10) days thereof, the Servicer shall provide the Owner with written
confirmation of the existence of such Escrow Account. Funds deposited in the
Escrow Account may be drawn on by the Servicer in accordance with Section
2.7.

 

The
Servicer shall deposit in the Escrow Account or Accounts within two (2) Business
Days of the Servicer’s receipt, and retain therein:

 

(a) all
Escrow Payments collected on account of the Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement; and

 

(b) all
amounts representing Insurance Proceeds or Condemnation Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property.

 

The
Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 2.7. The
Servicer shall be entitled to retain any interest or other Float Benefits paid
on funds deposited in the Escrow Account by the depository institution, other
than interest on escrowed funds required by law to be paid to the Mortgagor.
Additionally, any other benefit derived from the Escrow Account associated with
the receipt, disbursement and accumulation of principal, interest, taxes, hazard
insurance, mortgage insurance, etc. shall accrue to the Servicer. To the extent
required by law, the Servicer shall pay interest on escrowed funds to the
Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or
that interest paid thereon is insufficient for such purposes. Notwithstanding
the foregoing sentence, any interest paid to a Mortgagor which exceeds any
benefit to the Servicer derived from the Escrow Account, as described in this
paragraph, shall be reimbursable in accordance with the terms of this
Agreement.

 

2.7. Permitted Withdrawals From
Escrow Account.  Withdrawals from the Escrow Account or
Accounts may be made by the Servicer only:

 

(a) to effect
timely payments of ground rents, taxes, assessments, water rates, mortgage
insurance premiums, condominium charges, fire and hazard insurance premiums or
other items constituting Escrow Payments for the related Mortgage;

 

(b) to
reimburse the Servicer for any unreimbursed Servicing Advances or Expenses made
by the Servicer pursuant to Section 2.8;

 

(c) to refund
to any Mortgagor any funds found to be in excess of the amounts required under
the terms of the related Mortgage Loan;

 



 




13








 




(d) for
transfer to the Control Account and application to reduce the principal balance
of the Mortgage Loan in accordance with the terms of the related Mortgage and
Mortgage Note;

 

(e) for
application to the restoration or repair of the Mortgaged Property in accordance
with the procedures outlined in Section 2.14;

 

(f) to pay to
the Servicer, or any Mortgagor to the extent required by law, any interest or
other Float Benefit paid on the funds deposited in the Escrow
Account;

 

(g) to remove
funds inadvertently placed in the Escrow Account by the Servicer;
and

 

(h) to clear
and terminate the Escrow Account on the termination of this
Agreement.

 

2.8. Payment of Taxes, Insurance
and Other Charges.  With respect to each Mortgage Loan that
provides for Escrow Payments, the Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates, sewer
rents, and other charges which are or may become a lien upon the Mortgaged
Property and the status of fire and hazard insurance coverage and shall obtain,
from time to time, all bills for the payment of such charges (including renewal
premiums) and shall effect payment thereof, if required under Applicable
Requirements, prior to the applicable penalty or termination date, employing for
such purpose deposits of the Mortgagor in the Escrow Account which shall have
been estimated and accumulated by the Servicer for such purposes, as allowed
under the terms of the Mortgage. Any Servicing Advances or Expenses to effect
payments of such charges are reimbursable in accordance with the terms of this
Agreement.

 

2.9. Protection of
Accounts.   The Servicer may transfer the Escrow Account
to a different Qualified Depository from time to time.

 

2.10. Maintenance of Hazard
Insurance.  . The Servicer may in its reasonable discretion
cause to be maintained hazard insurance on some or all Mortgaged Properties,
subject to reimbursement as a Servicing Advance in accordance with the terms of
this Agreement.

 

To the
extent required by applicable law or at the prior written direction of the
Owner, if the related Mortgaged Property is located in an area identified by the
Flood Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available), the Servicer shall cause to be
maintained for such Mortgage Property a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance Administration
in effect in an amount representing coverage equal to the lesser of (i) the
minimum amount required, under the terms of coverage, to compensate for any
damage or loss on a replacement cost basis; (ii) the unpaid balance of the
related Mortgage; and (iii) the maximum amount of insurance which is available
under the Flood Disaster Protection Act of 1973, as amended. The cost of any
flood insurance purchased by the Servicer pursuant to the foregoing shall be
reimbursable as a Servicing Advance in accordance with the terms of this
Agreement.

 



 




14








 




 

It is
understood and agreed that the Servicer shall have no obligation to maintain
insurance to cover loss or damage from an earthquake, windstorm or similar
casualty.

 

In the
event that the Servicer shall determine that a Mortgaged Property should be
insured against loss or damage by hazards and risks not covered by the insurance
required to be maintained by the Mortgagor pursuant to the terms of the
Mortgage, the Servicer shall communicate and consult with the Mortgagor with
respect to the need for such insurance and bring to the Mortgagor’s attention
the desirability of protection of the Mortgaged Property.

 

All
policies required hereunder shall name the Servicer as loss payee and shall be
endorsed with standard or union mortgagee clauses, without contribution, which
shall provide for at least thirty (30) days’ prior written notice to Servicer of
any cancellation, reduction in amount or material change in
coverage.

 

Pursuant
to Section 2.4, any amounts collected by the Servicer under any such policies
(other than amounts to be deposited in the Escrow Account and applied to the
restoration or repair of the related Mortgaged Property, or property acquired in
liquidation of the Mortgage Loan, or to be released to the Mortgagor, in
accordance with the Servicer’s normal servicing procedures as specified in
Section 2.14) shall be deposited in the Control Account subject to withdrawal
pursuant to Section 2.5.

 

For
purposes of this Section 2.10 and Section 2.11, the Owner acknowledges and
agrees that an Insurer may be an affiliate of the Servicer. Notwithstanding the
foregoing, the Servicer shall not interfere with the Mortgagor’s freedom of
choice in selecting either his or her insurance carrier or agent.

 

2.11. Reserved.

 

2.12           Maintenance of Fidelity Bond
and Errors and Omissions Insurance. The Servicer shall maintain with
responsible companies, at its own expense, a blanket Fidelity Bond and an Errors
and Omissions Insurance Policy, with broad coverage on all of its officers,
employees or other persons acting in any capacity on behalf of the Servicer
requiring such persons to handle funds, money, documents or papers relating to
the Mortgage Loans (the “Servicer Employees”). Any such Fidelity Bond and Errors
and Omissions Insurance Policy shall be in the form of the Mortgage Banker’s
Blanket Bond and shall protect and insure the Servicer against losses, including
forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of
the Servicer Employees. Such Fidelity Bond and Errors and Omissions Insurance
Policy also shall protect and insure the Servicer against losses in connection
with the release or satisfaction of a Mortgage Loan without having obtained
payment in full of the indebtedness secured thereby. No provision of this
Section 2.12 requiring such Fidelity Bond and Errors and Omissions Insurance
Policy shall diminish or relieve the Servicer from its duties and obligations as
set forth in this Agreement. The minimum coverage under any such Fidelity Bond
and Errors and Omissions Insurance Policy shall be at least equal to the amounts
acceptable in accordance with Applicable Requirements.  In any event,
the Servicer shall maintain such insurance as is required under Section 7.20 of
the Loan Agreement.

 

2.13           Inspections. The
Servicer shall perform inspections on Mortgaged Property in accordance with
Applicable Requirements. The Servicer shall keep a written report of each such
inspection.

 



 




15








 




                      2.14           Restoration of Mortgaged
Property. The Servicer need not obtain the approval of the Owner prior to
releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be
applied to the restoration or repair of the Mortgaged Property if such release
is in accordance with Applicable Requirements. For claims greater than $15,000,
the Servicer shall comply with the following conditions in connection with any
such release of Insurance Proceeds or Condemnation Proceeds:

 

(a) the
Servicer shall receive satisfactory independent verification of completion of
repairs and issuance of any required approvals with respect
thereto;

 

(b)  the
Servicer shall take all steps necessary to preserve the priority of the lien of
the Mortgage, including, but not limited to requiring waivers with respect to
mechanics’ and materialmen’s liens;

 

(c) the
Servicer shall verify that the Mortgage Loan is not in default; and

 

(d) pending
repairs or restoration, the Servicer shall place the Insurance Proceeds or
Condemnation Proceeds in the Escrow Account.

 

If the
Owner is named as an additional loss payee, the Servicer is hereby empowered to
endorse any loss draft issued in respect of such a claim in the name of the
Owner.

      

             
2.15           Reserved.

 

                      2.16           Title, Management and
Disposition of REO Property.   In the event that title to
any Mortgaged Property is acquired in foreclosure, by deed in lieu of
foreclosure or otherwise (including by purchase), the deed or certificate of
sale shall be taken in the name of the Owner, or, at the direction of the Owner,
the deed or certificate of sale shall be taken in the name of a nominee for the
Owner. The Person or Persons holding such title other than the Owner shall
acknowledge in writing that such title is being held as nominee for the
Owner.

 

The
Servicer shall manage, conserve, protect and operate each REO Property for the
Owner solely for the purpose of its prompt disposition and sale. The Servicer,
either itself or through an agent selected by the Servicer, shall manage,
conserve, protect and operate the REO Property in the same manner that similar
property in the same locality as the REO Property is managed. The Servicer shall
attempt to sell the same (and may temporarily rent the same for a period not
greater than three years, except as otherwise provided below) on such terms and
conditions as the Servicer deems to be in the reasonable interest of the
Owner.

 

The
Servicer shall use commercially reasonable efforts to dispose of the REO
Property as soon as possible and shall sell such REO Property in any event
within three years after title has been taken to such REO Property, unless the
Servicer determines, and gives notice to the Owner to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property [or that to
maximize recovery the REO Property should be rented]. If a period longer than
three years is permitted under the foregoing sentence and is necessary to sell
any REO Property, the Servicer shall report monthly to the Owner as to the
progress being made in selling such REO Property.

 

The
Servicer shall also maintain on each REO Property fire and hazard insurance with
extended coverage in amount which is at least equal to the maximum insurable
value of the improvements which are a part of such property, liability insurance
and, to the extent required and available under the Flood Disaster Protection
Act of 1973, as amended, flood insurance in the amount required
above.

 



 




16








 




 

The
disposition of REO Property shall be carried out by the Servicer at such price,
and upon such terms and conditions, as the Servicer deems to be in the
reasonable interests of the Owner. The proceeds of sale of the REO Property
shall be promptly deposited in the Control Account. As soon as practical
thereafter, the expenses of such sale shall be paid and the Servicer shall
reimburse itself for any related unreimbursed Servicing Advances, Expenses and
unpaid Servicing Fees. On the Distribution Date immediately following the
Principal Prepayment Period in which such sale proceeds are received, the net
cash proceeds of such sale remaining in the Control Account shall be distributed
to the Owner, net of any Ancillary Income or unreimbursed Servicing Fees,
Expenses or Servicing Advances.

 

The
Servicer shall withdraw from the Control Account funds necessary for the proper
operation, management and maintenance of the REO Property, including the cost of
maintaining any hazard insurance pursuant to Section 2.10 and the fees of any
managing agent of the Servicer, or the Servicer itself.

 

                      2.17           REO
Reports.  Together with the statement furnished pursuant to
Section 3.2, the Servicer shall furnish to the Owner on or before the
Distribution Date of each month a statement with respect to any REO Property,
which statement shall cover the operation of such REO Property for the previous
month and the Servicer's efforts in connection with the sale of such REO
Property and any rental of such REO Property incidental to the sale thereof for
the previous month.

 

                      2.18           Liquidation
Reports.  Upon the foreclosure sale of any Mortgaged Property
or the acquisition thereof by the Owner pursuant to a deed in lieu of
foreclosure, the Servicer shall submit to the Owner a liquidation report with
respect to such Mortgaged Property.

 

                      2.19           Reports of Foreclosures and
Abandonments of Mortgaged Property.  Following the foreclosure
sale or abandonment of any Mortgaged Property, the Servicer shall report such
foreclosure or abandonment as required pursuant to Section 6050J of the Code.
The Servicer shall file information reports with respect to the receipt of
mortgage interest received in a trade or business and information returns
relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by the Code. Such reports shall be in form and substance
sufficient to meet the reporting requirements imposed by the Code.

 

                      2.20           Reserved.

 

                      2.21           Notification of
Adjustments.  With respect to each adjustable rate Mortgage
Loan, the Servicer shall adjust the Mortgage Interest Rate on the related
Adjustment Date in compliance with the requirements of applicable law and the
related Mortgage and Mortgage Note. The Servicer shall execute and deliver any
and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Interest Rate
adjustments.

 



 




17








 




                      2.22           Transfer
Notices.

 

2.22.1           At
least fifteen (15) days before the Servicer initiates servicing under this
Agreement, the Servicer and the Owner shall provide any required notice to the
Mortgagors of the transactions contemplated herein through a notice jointly
prepared and delivered by the Servicer and the Owner in accordance with
Applicable Requirements. The parties shall cooperate to accomplish such
notification in a timely and efficient manner as will best facilitate the
assumption by the Servicer of the servicing responsibilities. The form of the
notice to be sent to Mortgagors shall be approved by the Owner and the Servicer
before mailing.

 

2.22.2           The
Owner shall notify, or cause to be notified, all Insurers, by overnight or
registered mail, that all insurance premium billings for the Mortgage Loans must
be sent to the Servicer. Additionally, the Owner shall, prior to the applicable
Effective Date, obtain the written consent of any Insurers that have the
contractual right to approve the assumption of the servicing responsibilities by
the Servicer.

 

2.22.3           For
any Mortgage Loan that provides for Escrow Payments, the Owner, with the
reasonable assistance of the Servicer, shall notify the applicable taxing
authorities (except as such is handled through the tax service company) of the
assumption of the servicing responsibilities by the Servicer and include
instructions to deliver all notices and tax bills to the Servicer or the
applicable tax service provider, as the case may be, from and after the
Effective Date.

 

2.22.4           The
Owner shall notify all attorneys who, on the Effective Date, are providing legal
services to or on behalf of the Owner in connection with pending foreclosure or
Litigation involving one or more of the Mortgage Loans, of the transfer of the
servicing rights and obligations with respect to the Mortgage Loans to the
Servicer.

 

2.22.5           All
notifications required to be made under this Section 2.22 shall be paid for or
reimbursed by the Owner.

 

                      2.23           Privacy.

 

2.23.1           Except
in accordance with this Section 2.23, the Servicer shall not disclose any
Customer Information to any Person, including, but not limited to, any of the
Servicer’s employees, agents, or contractors, or any third party not affiliated
with the Servicer. The Servicer shall disclose such Customer Information only to
the extent permitted by, or necessary to carry out the Servicer’s express
obligations and rights under, this Agreement or under Applicable Requirements
and for no other purpose. If and to the extent required by Applicable
Requirements, the Servicer shall ensure that each vendor or other Person to
which the Servicer intends to disclose Customer Information shall, prior to any
such disclosure of information; agree to: (i) keep confidential any such
Customer Information; and (ii) use or disclose such Customer Information only to
the extent necessary to carry out the Servicer’s  express obligations
and rights under this Agreement.

 

2.23.2           Without
limiting the scope of the above, the Servicer shall use at least the same
physical and other security measures to protect all Customer Information in the
Servicer’s possession or control as the Servicer uses for its own confidential
and proprietary information of a similar nature.

 



 




18








 




                      2.24           Losses and
Expenses.

 

2.24.1           The
Owner shall remain responsible, as between the Owner and the Servicer, for
losses related to the Owner’s investment in the Mortgage
Loans.  Losses of the type referred to above for which the Owner shall
remain responsible include, but are not limited to: credit losses, special
hazard insurance premiums, earthquake losses, losses resulting from the absence
or inadequacy of hazard insurance or flood insurance for a Mortgaged Property in
accordance with Applicable Requirements, foreclosure losses, REO Property
losses, losses on Mortgage Loans in default or in bankruptcy, and losses in
connection with the Soldiers and Sailors Civil Relief Act (and any successor to
such Act).

 

2.24.2           In
the event withdrawals from the Control Account or Escrow Accounts are
insufficient to reimburse the Servicer pursuant to this Agreement the Owner
shall promptly upon receipt of an invoice reimburse the Servicer for Servicing
Advances and the following expenses (“Expenses”): (i) any
out-of-pocket expense the Servicer incurs with the prior approval of the Owner
in connection with its servicing and administrative obligations set forth in
this Agreement to the extent such expense is not ordinary to the servicing
function (but not including salaries, rent and other general operating expenses
of the Servicer normally classified as overhead); (ii) expenses that the Owner
has expressly agreed to pay or be liable for hereunder; and (iii) expenses
incurred in connection with the performance by the Servicer at the request of
the Owner of any activity that is not specifically required to be performed by
the Servicer under this Agreement and is not reasonably ancillary to any
specific requirements of the Owner under this Agreement. Except as otherwise
expressly provided in this Agreement, each party shall pay its own expenses
incurred in connection with the preparation of and performance under this
Agreement, including its own legal fees and expenses of preparing and delivering
the notices, documents, reports, accountings and any other information required
of it hereunder.

 

2.24.3           
On a monthly basis, following receipt of an invoice from the Servicer, the Owner
shall promptly reimburse the Servicer for outstanding Servicing Advances,
Expenses and Servicing Fees as provided in Section 2.7.

 

2.24.4           The
Owner shall be solely responsible for all guaranty fees, credit enhancement
fees, custodial fees (and related shipping costs), trustee fees, and costs to
record assignments.  Except as otherwise expressly set forth in this
Agreement, the Servicer shall be solely responsible for the direct and indirect
internal and administrative costs associated with its obligations as the
Servicer of the Mortgage Loans hereunder, said costs to include but not be
limited to: personnel, facilities; supplies; mailing and computer system
expenses, regardless of whether the Servicer elects to contract with third party
vendors to perform all or any portion of such internal and administrative
functions.

 

2.24.5           Except
as otherwise provided in this Section, any Litigation related solely to a single
Mortgage Loan (other than Litigation between or among the Owner or any of its
affiliates, on the one hand, and the Servicer and any of its affiliates, on the
other hand) including foreclosure, evictions, quiet title and bankruptcy
filings, shall be managed by the Servicer working with local counsel selected by
and working on behalf of the Owner. The costs and expenses of such Litigation
shall be deemed a Servicing Advance and be subject to reimbursement pursuant to
the terms of this Agreement. The Owner shall reimburse the Servicer for any
out-of-pocket costs that the Servicer incurs in connection with any Litigation
described in this Section 2.24.5 (other than Litigation between or among the
Owner or its affiliates, on the one hand, and the Servicer or its affiliates, on
the other hand).  Servicer will not engage in Litigation relating to
any single Mortgage Loan unless such Litigation is consistent with the Agreed
Servicing Guidelines and the Approval Matrix or as otherwise agreed to in
writing by the Owner.

 






 




19








 




 

ARTICLE
III

 

REMITTANCE

 

3.1. Reserved.

 

3.2. Statements to the
Owner.  The Servicer shall cause the “Remittance Report” (as
defined in the Loan Agreement) to be furnished to Lender as and when required
pursuant to the Loan Agreement..

 

3.3. Monthly Advances by the
Servicer.  The Servicer shall not be required to advance
Delinquent monthly payments to the Owner.

 

ARTICLE
IV

 

GENERAL SERVICING
PROCEDURES

 

4.1. Transfers of Mortgaged
Property.  The Servicer shall use commercially reasonable
efforts to enforce any “due-on-sale” provision contained in any Mortgage or
Mortgage Note and to deny assumption by the person to whom the Mortgaged
Property has been or is about to be sold whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains liable on the
Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed by
the Mortgagor, the Servicer shall, to the extent it has knowledge of such
conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan
under the “due-on-sale” clause applicable thereto.

 

If the
Servicer reasonably believes it is unable under applicable law to enforce such
“due-on-sale” clause, the Servicer shall enter into (i) an assumption and
modification agreement with the person to whom such property has been conveyed,
pursuant to which such person becomes liable under the Mortgage Note and the
original Mortgagor remains liable thereon or (ii) in the event the Servicer is
unable under applicable law to require that the original Mortgagor remain liable
under the Mortgage Note and the Servicer has the prior consent of the primary
mortgage guaranty insurer, a substitution of liability agreement with the owner
of the Mortgaged Property pursuant to which the original Mortgagor is released
from liability and the owner of the Mortgaged Property is substituted as
Mortgagor and becomes liable under the Mortgage Note. If an assumption fee is
collected by the Servicer for entering into an assumption agreement, the fee
will be retained by the Servicer as additional servicing compensation. In
connection with any such assumption, neither the Mortgage Interest Rate borne by
the related Mortgage Note, the term of the Mortgage Loan, the outstanding
principal amount of the Mortgage Loan nor any other materials terms shall be
changed without the Owner’s consent.

 



 




20








 




To the
extent that any Mortgage Loan is assumable under the terms of the Mortgage Note,
the Servicer shall inquire diligently into the credit worthiness of the proposed
transferee, and shall use the underwriting criteria for approving the credit of
the proposed transferee which are used with respect to underwriting mortgage
loans of the same type as the Mortgage Loans. If the credit worthiness of the
proposed transferee does not meet such underwriting criteria, the Servicer shall
diligently, to the extent permitted by the Mortgage or the Mortgage Note and by
applicable law, accelerate the maturity of the Mortgage Loan.

 

4.2. Satisfaction of Mortgages
and Release of Mortgage Files. Upon the payment in full of any Mortgage
Loan, or the receipt by the Servicer of a notification that payment in full will
be escrowed in a manner customary for such purposes, the Servicer shall notify
the Owner in the monthly remittance statement as provided in Section 3.2, and
may request the release of any Mortgage Loan Documents. The Servicer shall
maintain the Fidelity Bond and Errors and Omissions Insurance Policy as provided
for in Section 2.12 insuring the Servicer against losses it may sustain with
respect to Mortgage Loans not satisfied in accordance with the procedures set
forth herein.

 

4.3. Servicing
Compensation.  As compensation for its services hereunder, the
Servicer shall be entitled to the fees specified in the Servicing Fee Schedule
detailed on Exhibit
D to this Agreement.  Such fees shall be payable monthly by
Servicer’s debit of such fees from the Control Account as provided in Section
2.5. Notwithstanding anything in this Agreement to the contrary, if the Servicer
is unable to or otherwise does not withdraw the full amount of the Servicing Fee
from the Control Account in any month for any reason, then the outstanding
amount of the Servicing Fee due to the Servicer shall be due and payable by the
Owner to the Servicer in immediately available funds and the Owner shall pay the
Servicer such outstanding upon presentation of an invoice therefore as provided
in Section 2.5. All servicing compensation shall be fully earned if the Mortgage
Loan is serviced for any portion of the month and shall not be
prorated.

 

Any
Ancillary Income shall be paid in the same manner as the Servicing Fee. Except
as specifically provided for herein, the Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(other than Servicing Advances or Expenses) and shall not be entitled to
reimbursement thereof.

 

     
          4.4           Reserved.

 

                       
        4.5           Right to Examine Servicer
Records.  The Owner, or its designee, shall have the right to
examine and audit any and all of the books, records, or other information of the
Servicer, whether held by the Servicer or by another on its behalf, with respect
to or concerning this Agreement or the Mortgage Loans, during business hours or
as otherwise acceptable to the Servicer, upon reasonable advance notice. The
Owner shall pay all of its or its designees’ costs and expenses associated with
such examination.

 






 




21








 




 

ARTICLE
V


 

POSSESSION OF MORTGAGE
FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS; SERVICER
TO COOPERATE

 

5.1. Provision of
Information.  During the term of this Agreement, the Servicer
shall furnish the Owner with the reports listed on Exhibit E to this
Agreement. Servicer shall also furnish to the Owner copies or originals of any
documents contained in the Servicing File for each Mortgage Loan as well as all
special reports or information not provided for herein as shall be necessary,
reasonable, and appropriate with respect to the Owner or any regulatory agency
and will be provided at the Owner’s expense. All such reports, documents or
information shall be provided by and in accordance with all reasonable
instructions and directions which the Owner may give to the
Servicer.  Servicer shall also assist the Owner in preparing or
delivering all reports required to be delivered by the Owner to the Lender under
the Loan Agreement.

 

5.2. Financial Statements;
Servicing Facility.  In connection with marketing the Mortgage
Loans, the Owner may make available to a prospective Owner a Consolidated
Statement of Operations of the Servicer for the most recently completed two
fiscal years for which such a statement is available, as well as a Consolidated
Statement of Condition at the end of the last two fiscal years covered by such
Consolidated Statement of Operations to the extent any such statements have been
prepared by or on behalf of the Servicer (and are available upon request to
members or stockholders of the Servicer or to the public at large).

 

5.3. Possession of Mortgage
Files; Maintenance of Servicing Files.  The contents of each
Mortgage File not delivered to the Custodian are and shall be held in trust by
the Servicer for the benefit of the Owner as owner thereof. The Servicer shall
maintain a Servicing File consisting of a copy of the contents of each Mortgage
File and the originals of the documents in each Mortgage File not delivered to
the Custodian. The Servicer shall release its custody of the contents of any
Servicing File only in accordance with written instructions from the Owner,
unless such release is required as incidental to the Servicer’s servicing of the
Mortgage Loans. All such costs associated with the release, transfer and
re-delivery to the Servicer shall be the responsibility of the
Owner.

 

5.4. Books and Records; Transfers
of Mortgage Loans.  Except as otherwise provided in this
Agreement, all rights arising out of the Mortgage Loans, including, but not
limited to, all funds received on or in connection with the Mortgage Loans,
shall be received and held by the Servicer in trust for the benefit of the Owner
as owner of the Mortgage Loans, and any record title to the related Mortgages
that the Servicer may have or acquire shall be for the sole purpose of
facilitating the servicing and the supervision of the servicing of the Mortgage
Loans.

 

The
Servicer shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be marked clearly to
reflect the ownership of each Mortgage Loan by the Owner. To the extent that
original documents are not required for purposes of realization of Liquidation
Proceeds or Insurance Proceeds, documents maintained by the Servicer may be in
the form of microfilm or microfiche or such other reliable means of recreating
original documents, including but not limited to, optical imagery techniques so
long as the Servicer complies with document retention requirements in accordance
with Applicable Requirements.

 



 




22








 




The
Servicer shall maintain with respect to each Mortgage Loan and shall make
available for inspection by the Owner or its designee the related Servicing File
during the time the Owner retains ownership of a Mortgage Loan and thereafter in
accordance with Applicable Requirements.

 

The
Servicer shall keep at its servicing office, or such other location as the
Servicer may designate from time to time, books and records in which, subject to
such reasonable policies, procedures, rules and regulations as it may prescribe,
the Servicer shall note transfers of Mortgage Loans. No transfer of a Mortgage
Loan may be made unless such transfer is in compliance with the terms hereof.
For the purposes of this Agreement, the Servicer shall be under no obligation to
deal with any person with respect to this Agreement or the Mortgage Loans unless
the books and records show such person as the owner of the Mortgage Loan. The
Owner may, subject to the terms of this Agreement, sell and transfer one or more
of the Mortgage Loans. The Owner also shall advise the Servicer of the transfer.
Upon receipt of notice of the transfer, the Servicer shall mark its books and
records to reflect the ownership of the Mortgage Loans of such assignee and,
unless the Servicer agrees otherwise, the Servicer shall not be responsible for
servicing the transferred Mortgage Loan.  If the Servicer receives
notification of a transfer less than five (5) Business Days before the last
calendar day of the month, the Servicer’s duties to remit and report as required
by Section 3 shall begin with the next Due Period.

 

5.5. Custodial Agreement;
Delivery of Documents.  To the extent in the Owner’s possession
or control, the Owner has delivered and released, or caused to be delivered and
released, to the Custodian those Mortgage Loan Documents as required by Exhibit B to this
Agreement with respect to each Mortgage Loan.

 

The
Custodian has certified its receipt of all such Mortgage Loan Documents required
to be delivered pursuant to the Custodial Agreement, as evidenced by the trust
receipt of the Custodian in the form annexed to the Custodial Agreement. The
Owner will be responsible for the fees and expenses of the
Custodian.

 

The
Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 2.1 or 4.1 within one (1) week of their
execution, provided, however, that the Servicer shall provide the Custodian with
a certified true copy of any such document submitted for recordation within ten
(10) days of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within ten (10) days following receipt of such document from the public
recording office.

 

From time
to time, the Servicer may have a need for Mortgage Loan Documents to be released
by the Custodian. If the Servicer shall require any of the Mortgage Loan
Documents, the Servicer shall notify the Custodian in writing of such request.
The Owner shall cause the Custodian to release such documents, to the extent
available, promptly upon request. To the extent that the Servicer obtains
possession of any such document which is held by the Custodian, the Servicer
agrees that it will act as the custodian and bailee and trustee of such
documents for the benefit of the Owner during the term of this
Agreement.

 



 




23








 




ARTICLE
VI

 

REPRESENTATIONS AND
WARRANTIES

 

6.1. General Representations and
Warranties.  Each of the Servicer and the Owner hereby
represents and warrants to the other that, as of the initial Effective
Date:

 

6.1.1. Due Organization and
Authority. It is the type of entity first described above, duly
organized, validly existing and in good standing under the laws of the state of
formation and has all licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in each state where a
Mortgaged Property is located if the laws of such state require licensing or
qualification in order to conduct business of the type conducted by it, and in
any event it is in compliance with the laws of any such state to the extent
necessary to ensure the enforceability of the related Mortgage Loan and the
servicing of such Mortgage Loan in accordance with the terms of this
Agreement.  It has the full corporate power and authority to execute
and deliver this Agreement and to perform in accordance herewith.  The
execution, delivery and performance of this Agreement by it and the consummation
of the transactions contemplated hereby have been duly authorized and approved
by all necessary actions on its part.  This Agreement has been duly
executed and delivered by it and constitutes legal, valid and binding
obligations of it, enforceable against it in accordance with its
terms;

 

6.1.2. No Conflicts. Neither
the execution and delivery of this Agreement, or the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions of
this Agreement will conflict with or result in a breach of any of its articles
of incorporation or by-laws or other governing documents or any legal
restriction or, except as has been waived prior to the applicable Effective
Date, any material agreement or instrument to which it is now a party or by
which it is bound, or constitute a default or result in the violation of any
law, rule, regulation, order, judgment or decree to which it or its property is
subject;

 

6.1.3. No Litigation
Pending. There is no action, suit, proceeding or investigation pending or
to the best of its knowledge threatened against it which, either in any one
instance or in the aggregate, may result in any material adverse change in the
business, operations, financial condition, properties or assets of it, or in any
material impairment of the right or ability of it to carry on its business
substantially as now conducted, or in any material liability on the part of it,
or which would draw into question the validity of this Agreement or the Mortgage
Loans or of any action taken or to be contemplated herein, or which would be
likely to impair materially the ability of it to perform under the terms of this
Agreement;

 

6.1.4. No Consent Required.
No consent, approval, authorization or order of any court or governmental agency
or body is required for the execution, delivery and performance by it of or
compliance by it with this Agreement, or if required, such approval has been
obtained prior to the applicable Effective Date; and

 



 




24








 




6.2. Representations, Warranties
and Covenants of the Servicer Regarding Certain Individual Mortgage
Loans

 

In
consideration of the Owner’s agreement to retain the Servicer under this
Agreement with respect to the Franklin Trust Loans, and in light of the fact
that the Servicer previously owned and serviced the Franklin Trust Loans, as to
each Franklin Trust Loan (including REO Property, as appropriate), and
understanding that the Owner will rely on the following representations,
warranties and covenants in accepting the Franklin Trust Loans, the Servicer
hereby represents, warrants and covenants to the Owner with respect to the
Franklin Trust only, as of the applicable Effective Date:

 

6.2.1. Loan Schedule. The
information set forth in the Mortgage Loan Schedule attached hereto as Exhibit A and the
information contained in each electronic data file delivered to the Servicer
accurately represents the information maintained on the books and records of the
Servicer.

 

6.2.2. No Modifications Except as
Disclosed in the Mortgage File. Other than as indicated in the Mortgage
Loan Schedule, the terms of the Mortgage and the Mortgage Note have not been
waived, altered, or modified in any material respect, except by a written
instrument that has been recorded, if necessary, and that is a part of the
Mortgage File and included with the Mortgage Loan Documents delivered to the
Owner by the seller of the Franklin Trust Loans.

 

6.2.3. No Satisfaction,
Cancellation, Subordination or Rescission. The Mortgage has not been
satisfied, canceled, subordinated or rescinded.  No Mortgagor and no
part of any Mortgaged Property has been released, in whole or in part, except as
indicated in the Mortgage File and reflected on the Mortgage Loan Schedule. No
instrument has been executed that would effect any such release, cancellation,
subordination or rescission.

 

6.2.4. No
Litigation.  Other than foreclosures or bankruptcies described
on the Mortgage Loan Schedule, to the best knowledge of the Servicer, there is
no litigation, bankruptcy or governmental proceeding pending or, to the
Servicer’s actual knowledge, threatened with respect to a Franklin Trust Loan or
the related Mortgaged Property or Mortgagor that will be reasonably likely to
materially and adversely affect the Owner’s right, title or interest thereon or
the priority of the Mortgage, or the value of the Mortgage Loan.

 

6.2.5. Compliance with Applicable
Laws.  To the best knowledge of the Servicer, any and all
requirements of any federal, state or local law including, without limitation,
usury, truth-in-lending, real estate settlement procedures, consumer credit
protection, predatory, abusive and fair lending laws, equal credit opportunity
and disclosure laws or unfair and deceptive practices laws applicable to the
Mortgage Loan, have been complied with in all material respects in connection
with the servicing of the Franklin Trust Loans, except to the extent that
non-compliance would not be reasonably likely to materially and adversely affect
the Owner’s right, title or interest in the Mortgage Loan or the priority of the
Mortgage, or the value of the Mortgage Loan.

 

6.2.6. Full Disbursement of
Proceeds.  Each Franklin Trust Loan has been closed and the
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor have been complied with.  All costs, fees and
expenses incurred in making or closing the Mortgage Loan and the recording of
the Mortgage were paid, and the Mortgagor is not entitled to any refund of any
amounts paid or due under the Mortgage Note or Mortgage.

 



 




25








 




6.2.7. Reserved.

 

6.2.8. Single-premium Credit Life
Insurance Policy.  In connection with the origination of any
Franklin Trust Loan, no proceeds from any Franklin Trust Loan were used to
finance or acquire a single-premium credit life insurance policy.  No
Mortgagor was required to purchase any single premium credit insurance policy
(e.g., life, disability, accident, unemployment or property insurance product)
or debt cancellation agreement as a condition of obtaining the extension of
credit.  No Mortgagor obtained a prepaid single premium credit
insurance policy (e.g., life, disability, accident, unemployment or property
insurance policy) in connection with the origination of the Franklin Trust Loan;
no proceeds from any Franklin Trust Loan were used to purchase single premium
credit insurance policies or debt cancellation agreements as part of the
origination of, or as a condition to closing, such Franklin Trust
Loan.

 

6.2.9.           Delivery of Books and
Records. The Owner will, on or before the applicable Effective Date,
deliver, or cause to be delivered, to the Servicer or the Custodian, as
applicable, all of the books, records, data, files and Mortgage Loan Documents,
including records on microfiche or its equivalent, reasonably required by the
Servicer and available to the Owner to document and service each Mortgage
Loan.  Such books, records, data, files and documents contain all of
the items (including but not limited to hazard insurance policies, flood
insurance policies and private mortgage insurance policies) which are required
by the Applicable Requirements to service the Mortgage Loans and are true,
accurate and complete in all material respects.  It is reasonable for
the Servicer to rely thereon.




6.2.10.                      Ownership. With
respect to each Mortgage Loan, the Owner is the owner of all the right, title
and interest in and to the Mortgage Loan, free and clear of any claims or
encumbrances.

 



 




26








 




 

ARTICLE
VII


THE
SERVICER

 

 

7.1. Indemnification; Third Party
Claims.

 

7.1.1. The
Servicer shall indemnify the Owner and the Certificate Trustee, and their
affiliates and their respective officers, directors, employees and agents
(collectively, “Owner
Indemnitees”) and hold each of the Owner Indemnitees harmless from and
against any and all third party claims and Damages that the Owner, the
Certificate Trustee and the other Owner Indemnitees may sustain to the extent
resulting from or related to a breach by the Servicer of any covenant,
agreement, representation or warranty in this Agreement. The Owner shall
promptly notify the Servicer of any claim covered hereby; provided, however, that the
Servicer shall not be relieved of its indemnification obligations hereunder due
to the Owner’s failure to give such notice except to the extent that the Owner
has knowledge of the breach, fails to notify the Servicer and the Servicer has
been prejudiced thereby. In connection with the Servicer’s indemnification
obligations hereunder, the Servicer may assume (with the prior written consent
of the Owner, if required pursuant to the terms hereof, and with counsel
reasonably satisfactory to the Owner) the defense of any such claim and pay all
reasonable expenses in connection therewith, including reasonable counsel fees,
and promptly pay, discharge and satisfy any final judgment or decree which may
be entered against the Owner or any other Owner Indemnitees in respect of such
claim.  The Servicer agrees that it will not enter into any settlement
of any such claim without the consent of the Owner (which consent shall not be
unreasonably withheld or delayed) and such other Owner Indemnitees unless such
settlement includes an unconditional release of the Owner and such other Owner
Indemnitees from all liability that is the subject matter of such
claim.

 

7.1.2. The Owner
shall indemnify the Servicer, its affiliates, and their respective officers,
directors, employees and agents (collectively, “Servicer
Indemnitees”) and hold each of such Persons harmless from and against any
and all third party claims and Damages that the Servicer or such Persons may
sustain to the extent resulting from or related to a breach by the Owner of any
covenant, agreement, representation or warranty in this
Agreement.  The Servicer shall notify the Owner of any claim covered
hereby; provided, however, that the Owner shall not be relieved of its
indemnification obligations hereunder due to the Servicer’s failure to give such
notice except to the extent that the Servicer has knowledge of the breach, fails
to notify the Owner and the Servicer has been prejudiced thereby.  In
connection with the Owner’s indemnification obligations hereunder, the Owner may
assume (with the prior written consent of the Servicer, if required pursuant to
the terms hereof, and with counsel reasonably satisfactory to the Servicer) the
defense of any such claim and pay all reasonable expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any final judgment or decree which may be entered against the Servicer
or any other Servicer Indemnitees in respect of such claim.  The Owner
agrees that it will not enter into any settlement of any such claim without the
consent of the Servicer (which consent shall not be unreasonably withheld or
delayed) and such other indemnified Person unless such settlement includes an
unconditional release of the Servicer and such other indemnified Person from all
liability that is the subject matter of such claim.

 



 




27








 




 

7.1.3. In
addition to the indemnification set forth in Section 7.1.1 hereof, the Servicer
shall indemnify and hold the Owner Indemnitees harmless from and against any
Damages resulting from or related to the Servicer’s failure (either under this
Agreement or as servicer of any Mortgage Loan prior to this Agreement) to have
complied with all Applicable Requirements with respect to the origination,
purchase, sale, securitization or servicing of the Mortgage Loans.

 

7.1.4. In
addition to the indemnification set forth in Section 7.1.2 hereof, the Owner
shall indemnify and hold the Servicer Indemnitees harmless from and against any
Damages resulting from or related to:

 

(a) any
outstanding Servicing Advance for which the Servicer is not reimbursed in
accordance with Section 2.24 hereof or  any outstanding Servicing Fee
for which Servicer is not paid in accordance with Section 4.3.hereof ;
or

 

(b) any
Litigation commenced against the Servicer after the applicable Effective Date as
a result of the Servicer’s acting as, or status as, servicer of the Mortgage
Loans hereunder, to the extent that such Litigation does not arise out of or
result from the Servicer’s breach of any provision of this Agreement (including
any failure by the Servicer to disclose such Litigation as required
herein).

 

7.1.5. The
provisions of this Section 7.1 shall survive termination of this
Agreement.

 

7.1.6. For all
purposes of this Agreement, knowledge of the Servicer will not be imputed or
attributed to the Owner, and knowledge of the Owner will not be imputed or
attributed to the Servicer.

 

7.2. Merger or Consolidation of
the Servicer.  The Servicer shall keep in full effect its
existence, rights and franchises as a corporation, and shall obtain and preserve
all required licenses and its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement or any of
the Mortgage Loans and to perform its duties under this Agreement.

 

Any
person into which the Servicer may be merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. Furthermore, in the event the
Servicer transfers or otherwise disposes of all or substantially all of its
assets to an affiliate of the Servicer, such affiliate shall satisfy the
condition above, and shall also be fully liable to the Owner for all of the
Servicer’s obligations and liabilities hereunder.

 



 




28








 




7.3. Limitation on Liability of
the Servicer and Others.

 

(a) Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Owner for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment, provided, however, that this provision
shall not protect the Servicer or any such Person against any breach of
warranties or representations made herein, or failure to comply with the
obligations of the Servicer under this Agreement.  The Servicer and
any director, officer, employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.

 

(b)           EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY OTHER
WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

(c)           IN
NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INCIDENTAL,
SPECIAL, INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES, REGARDLESS OF
THE FORM OF THE CAUSE OF ACTION, WHETHER IN CONTRACT, STATUTE, TORT, INCLUDING,
BUT NOT LIMITED TO, NEGLIGENCE, OR OTHERWISE, EVEN IF THE PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES.

 

7.4. Limitation on Assignment by
the Servicer.  The Owner has entered into this Agreement with
the Servicer and subsequent Owners will purchase the Mortgage Loans in reliance
upon the independent status of the Servicer, and the representations as to the
adequacy of its servicing facilities, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, except as allowed or permitted by Section 7.2 of this Agreement, the
Servicer shall neither assign this Agreement or the servicing hereunder without
the prior written consent of the Owner, which consent may be given or withheld
in the sole discretion of the Owner.

 



 




29








 




ARTICLE
VIII

 

Reserved.

 

 

ARTICLE
IX

 

DEFAULT

 

9.1. Events of
Default.  Each of the following shall constitute an Event of
Default on the part of the applicable party hereto:

 

(a) any
failure by such party to remit to the other party any payment required to be
made under the terms of this Agreement, which continues unremedied for a period
of five (5) days after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to such party;
or

 

(b) unless
otherwise specified herein, a party shall fail duly to perform or observe any of
its covenants, conditions or terms contained herein or in the Custodial
Agreement and such failure shall remain uncured for thirty (30) calendar days
following notice from the non-defaulting party; provided, however, that if the
nature of such breach is such that it cannot reasonably be cured within thirty
(30) days following such written notice, but can reasonably be cured within
sixty (60) days following such written notice, the defaulting party may cure
such breach by commencing in good faith to cure the breach promptly after its
receipt of such written notice and prosecuting the cure of such breach to
completion with diligence and continuity within a reasonable time thereafter,
but in any event within sixty (60) days thereafter; or

 

(c) a decree
or order of a court or agency or supervisory authority having jurisdiction for
the appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, including bankruptcy, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its affairs,
shall have been entered against such party and such decree or order shall have
remained in force undischarged or unstayed for a period of sixty (60) days;
or

 

(d) such
party shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to such party or of or
relating to all or substantially all of its property; or

 

(e) such
party shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency,
bankruptcy or reorganization statute, make an assignment for the benefit of its
creditors, voluntarily suspend payment of its obligations or cease its normal
business operations for three (3) Business Days; or

 

9.2. Waiver of
Defaults.  By a written notice, the non-breaching party may
waive any default by the breaching Party in the performance of its obligations
hereunder and its consequences. Upon any explicit written waiver of a past
default, such default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so
waived.

 



 




30








 




 

ARTICLE
X

 

TERMINATION

 

10.1. Termination.  This
Agreement shall terminate upon the earliest of:  (i) the liquidation
and dissolution of the Owner; (ii) mutual consent of the Servicer and the Owner
in writing; or (iii) termination of this Agreement pursuant to Section 10.2 or
Section 10.3. The termination of this Agreement pursuant to this Article X shall
not release either party from liability for its own misrepresentation or for any
breach by it of any covenant, agreement or warranty herein prior to such
termination.

 

10.2. Termination With
Cause.  So long as an Event of Default shall have occurred and
shall not have been remedied, the non-breaching party, by notice in writing to
the other party, may, in addition to whatever rights such party may have at law
or equity to damages, including injunctive relief and specific performance,
terminate this Agreement.  Upon written request from the Owner, the
Servicer shall prepare, execute and deliver to a successor servicer any and all
documents and other instruments relating to the Mortgage Loans, place in such
successor’s possession all Mortgage Servicing Files and do or cause to be done
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Mortgage Loans and related documents to the
successor at the Servicer’s sole expense if the termination is based on a
Servicer Event of Default or the Owner’s sole expense if the termination is
based on an Owner Event of Default. The Servicer agrees to cooperate with the
Owner and such successor in effecting the termination of the Servicer’s
responsibilities and rights hereunder, including the transfer to such successor
for administration by it of all amounts which shall at the time be credited by
the Servicer to the Control Account or Escrow Account or thereafter received
with respect to the Mortgage Loans.  In the event of a termination by
the Servicer upon an Owner Event of Default pursuant to this Section 10.2, the
Owner shall pay the Servicer (1) any fees and costs for which the Servicer is
entitled to reimbursement hereunder, and (2) as liquidated damages, the
termination fee detailed on Exhibit D with
respect to each Mortgage Loan.

 

10.3. Termination Without
Cause

 

.  The
Owner may terminate the Servicer’s right to service one or more Mortgage Loans
under this Agreement, as provided in this Section 11.03 (provided however, that
Owner shall not adversely select such Mortgage Loans) upon thirty (30) days
prior written notice.  Any such notice of termination shall be in
writing and delivered to the Servicer by registered mail as provided in Section
12.06.  In the event that the Servicer is terminated pursuant to this
Section 10.3, the Owner shall pay the Servicer an amount equal to (1) the costs
and expenses of Servicer to transfer the servicing rights and obligations with
respect to such Mortgage Loans, (2) all outstanding Servicing Advances, Expenses
and other Servicer expenditures for which Servicer is entitled to reimbursement
hereunder, Servicing Fees and other compensation and (3) as liquidated damages,
the termination fee detailed on Exhibit D with
respect to each such Mortgage Loan.

 






 




31








 




 

ARTICLE
XI


 

MISCELLANEOUS
PROVISIONS

 

11.1. Successor to the
Servicer.  Upon effectiveness of termination of the Servicer’s
servicing of any Mortgage Loans under this Agreement pursuant to Section 10.1,
the Owner or its successors shall (i) appoint a successor to assume all of the
responsibilities, duties and liabilities of the Servicer under this Agreement or
(ii) if no such appointment has been made, automatically and immediately succeed
to and assume all of the Servicer’s responsibilities, duties and obligations
under this Agreement. In connection with such appointment and assumption, the
Owner may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree, subject to
having first paid or reimbursed Servicer for all outstanding amounts due to the
Servicer. Prior to the transfer of servicing with respect to any Mortgage Loan
hereunder, the Servicer shall be reimbursed by the Owner or the successor
servicer for any unpaid Servicing Fees, Expenses and Servicing Advances with
respect to such Mortgage Loan.

 

The
Servicer shall, upon the request of the Owner, deliver promptly to the successor
servicer authority over the funds in the Control Account and Escrow Account
(subject to any withdrawals permitted under this Agreement and an additional
withdrawal amount to be retained as a reserve by the Servicer equal to the
Servicer’s estimated fees and expenses, in respect of termination and cessation
of services under this Agreement, until termination and cessation is finalized,
fees and expenses have been calculated, and permitted withdrawals have been made
from the amounts so withheld as a reserve.) and shall deliver all Mortgage Files
and related documents and statements held by it hereunder.  The
Servicer shall account for all funds and shall execute and deliver such
instruments and do such other things as may reasonably be required to more fully
and definitively vest in the successor all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer.

 

Upon a
successor’s acceptance of appointment as such, the Owner shall notify by mail
the Servicer of such appointment in accordance with Section 11.6.

 

11.2. Reserved.

 

11.3. Amendment; Extension Not a
Waiver.  This Agreement sets forth the entire agreement between
the parties with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous agreements or understandings, written, oral or
otherwise with respect to the subject matter hereof.  This Agreement
may be amended from time to time by, and only by, a writing signed by the
Servicer and the Owner.

 

No delay
or omission in the exercise of any power, remedy or right herein provided or
otherwise available to any party hereto will impair or affect the right of such
party thereafter to exercise the same.  Any extension of time or other
indulgence granted to any party hereunder will not otherwise alter or affect any
power, remedy or right of any other party hereto, or the obligations of the
party to whom such extension or indulgence is granted.

 

11.4. Governing Law;
Venue.  This Agreement shall be construed in accordance with
the laws of the State of New York applicable to agreements made and fully
performed within the State of New York without giving effect to the conflict of
laws principles thereof (except for Section 5-1401 of the New York General
Obligations Law) and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.

 

Any
action or other legal proceeding brought under this Agreement will be subject to
the exclusive jurisdiction of the United States District Court for the Southern
District of New York in New York County, New York or the United States District
Court for the Eastern District of New York in Kings County, New York and in the
absence of federal jurisdiction, the jurisdiction of any state court of general
jurisdiction sitting in New York County, New York or Kings County, New
York.  Each of the Owner and the Servicer consents to such
jurisdiction for actions or legal proceedings brought by either party and waives
any objection which it may have to the laying of the venue of such suit, action
or proceeding in any of such courts.

 

11.5. Duration of
Agreement.  This Agreement shall continue in existence and
effect until terminated as herein provided. This Agreement shall continue
notwithstanding transfers of the Mortgage Loans by the Owner.

 



 




32








 




11.6. Notices.  All
demands, notices and communications hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered at or mailed by
registered mail, postage prepaid, addressed as follows:

 

(a) if to the
Servicer:




Franklin Credit Management
Corporation

101 Hudson Street

Jersey City, NJ 07302

Attn: Chief Operating
Officer




With a copy to:




Franklin Credit Management
Corporation

101 Hudson Street

Jersey City, NJ 07302

Attn: General Counsel




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




(b)           if
to the Owner:

 

Bosco Credit II Trust Series 2010 -
1

c/o Franklin Credit Management
Corporation

101 Hudson Street, 25th
Floor

Jersey City, NJ 07302

Attn.:  Thomas J.
Axon




With copies to:




Bosco Credit II Trust Series 2010 –
1

Deutsche Bank National Trust
Company

c/o DB Services Americas,
Inc.

5022 Gate Parkway, Suite
200

Jacksonville, Florida
32256




Appel & Lucas, P.C.

1660 Seventeenth Street, Suite
200

Denver, CO, 80200

Attn: Peter J. Lucas, Esq.




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




11.7. Severability of
Provisions.  If any provision of this Agreement is found to be
unenforceable by a court of competent jurisdiction, such unenforceable provision
shall not affect the other provisions, but such court shall have the authority
to modify such unenforceable provision to the extent necessary to render it
enforceable, preserving to the fullest extent permissible the intent of the
parties.

 



 




33








 




 

11.8. Relationship of
Parties.  The parties are entering into, and shall perform,
this Agreement as independent contractors.  Nothing in this Agreement
shall be construed to make either party the agent of the other for any purpose
whatsoever, to authorize either party to enter into any contract or assume any
obligation on behalf of the other or to establish a partnership, franchise or
joint venture between the parties.

 

11.9. Execution; Successors and
Assigns.  . This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same
agreement.  Subject to Section 7.4, this Agreement shall inure to the
benefit of and be binding upon the Servicer and the Owner and their respective
successors and assigns.

 

11.10. Assignment by the
Owner.  . The Owner shall have the right, without the consent
of the Servicer but subject to the limits set forth in Section 5.4 hereof, to
assign, in whole or in part, its interest under this Agreement with respect to
some or all of the Mortgage Loans, and designate any person to exercise any
rights of the Owner hereunder, by executing an assignment and assumption
agreement  in a form acceptable to the Servicer and the assignee or
designee shall accede to the rights and obligations hereunder of the Owner with
respect to such Mortgage Loans.

 

11.11. Time of
Payment.  Unless otherwise specifically set forth in this
Agreement, any amount due to a party under this Agreement will be due and
payable upon receipt by the paying party of the invoice from the other party.
All amounts will be payable by wire transfer, in accordance with payment
instructions provided from time to time. Any amount not paid when due as set
forth in this Agreement will bear interest until paid at a rate of interest
equal to the prime rate published from time to time by The Wall Street
Journal, “Money Rates.”  If any portion of an amount due to a
party under this Agreement is subject to a bona fide dispute between the
parties, the other party will pay to that party on the date such amount is due
all amounts not disputed in good faith.

 

11.12. Force
Majeure.  The Servicer shall not be liable to any other Person
for any acts or omissions resulting from circumstances or causes beyond its
reasonable control, including fire or other casualty, act of God, strike or
labor dispute, war, terrorism  or other violence or any governmental
action or any acts or omissions of the other Person.






 




34








 




 

11.13.           Trustee
Capacity.  It is expressly understood and agreed by the parties
hereto that (a) this Agreement is executed and delivered by Deutsche Bank
National Trust Company ("DBNTC") on behalf of the Bosco Credit II Trust Series
2010-1 (the "Trust") pursuant to a Master Trust Agreement, dated November 19,
2010, among Bosco Credit II, LLC, as Depositor, Deutsche Bank National Trust
Company, as Certificate Trustee, and Deutsche Bank Trust Company Delaware, as
Delaware Trustee (the "Master Trust Agreement"), and not individually or
personally but solely as Certificate Trustee, in the exercise of the powers and
authority conferred and vested in it under the Master Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as a personal representation, undertaking or
agreement by DBNTC but is made and intended for the purpose of binding only the
Trust, (c) nothing herein contained shall be construed as creating any liability
on DBNTC, individually or personally, to perform any covenant either expressed
or implied contained herein, all such liability, if any, being expressly waived
by the parties hereto and by any person or entity claiming by, through or under
the parties hereto, and (d) under no circumstances shall DBNTC be personally
liable for the payment of any indebtedness or expenses of the Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Trust under this Agreement or otherwise. All
persons and entities having any claim against the Trust by reason of the
transactions contemplated by this Agreement shall look only to the Trust Estate
(as defined in the Master Trust Agreement) of the Trust for payment or
satisfaction thereof and it is the specific intent and understanding that the
Certificate Trustee executing on behalf of the Trust has no obligation to
perform any of the obligations of the Trust (whether the Trust is referenced as
Borrower, Company, Borrower Subsidiary, Owner or any other defined
term).

 

[Intentionally
Blank - Next Page Signature Page]






 




35








 




 

IN WITNESS WHEREOF, the
Servicer and the Owner have caused their names to be signed hereto by their
respective officers thereunto duly authorized as of the day and year first above
written.

 


	 
      	
      FRANKLIN
      CREDIT MANAGEMENT CORPORATION

       

       

      By:
      /s/ Thomas J. Axon

      Name:
      THOMAS J. AXON

      Title:
      PRESIDENT

	 
      	 
      
	 
      	
      BOSCO
      CREDIT II TRUST SERIES 2010 - 1, a Delaware statutory trust

       By:  DEUTSCHE
      BANK NATIONAL TRUST COMPANY, not in its individual capacity but solely as
      Certificate Trustee under the Master Trust Agreement

       

       

      By:
      /s/ Hang Luu

      Name:
      Hang Luu

      Authorized Signer

      Its:  Authorized
      Signatory

       

       

      And
      By: /s/ Tiffany Yuan

      Name:
      Tiffany Yuan

      Authorized Signer

      Its:  Authorized
      Signatory

	 
      	 
      










 


 




36








 





EXHIBIT
A




MORTGAGE
LOAN SCHEDULE












 













 





EXHIBIT
B




CONTENTS
OF EACH MORTGAGE FILE




With
respect to each Mortgage Loan, the Mortgage File shall include each of the
following items, which the Owner shall deliver a copy thereof to the Servicer
for retention in the Servicing File:

 


	
      1.  
	
      The
      original Mortgage Note bearing all intervening endorsements, endorsed “Pay
      to the order of ______ without recourse” and signed in the name of the
      Owner by an authorized officer (in the event that the Mortgage Loan was
      acquired by the Owner in a merger, the signature must be in the following
      form: “[the Owner], successor by merger to [name of predecessor]”; and in
      the event that the Mortgage Loan was acquired or originated by the Owner
      while doing business under another name, the signature must be in the
      following form: “[the Owner], formerly known as [previous
      name]”).




 


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




 


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




 


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




 


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




 


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




 


	
      7.  
	
      The
      original mortgagee policy of title insurance or evidence of
      title.




 


	
      8.  
	
      Any
      security agreement, chattel mortgage or equivalent executed in connection
      with the Mortgage.




 

With
respect to each Mortgage Loan, the Mortgage File shall include each of the
following items to the extent in the possession of the Owner or in the
possession of the Owner’s agent(s):

 


	
      9.  
	
      The
      original hazard insurance policy and, if required by law, flood insurance
      policy, in accordance with Section 4.10 of the
      Agreement.




 


	
      10.  
	
      Residential
      loan application.




 


	
      11.  
	
      Mortgage
      Loan closing statement.




 



 




 









 




 


	
      12.  
	
      Verification
      of employment and income, if
applicable.




 


	
      13.  
	
      Verification
      of acceptable evidence of source and amount of down payment, if
      applicable.




 


	
      14.  
	
      Credit
      report on the Mortgagor.




 


	
      15.  
	
      Residential
      appraisal report.




 


	
      16.  
	
      Photograph
      of the Mortgaged Property.




 


	
      17.  
	
      Survey
      of the Mortgage property, if required by the title owner or applicable
      law.




 


	
      18.  
	
      Copy
      of each instrument necessary to complete identification of any exception
      set forth in the exception schedule in the title policy, i.e. map or plat,
      restrictions, easements, sewer agreements, home association declarations,
      etc.




 


	
      19.  
	
      All
      required disclosure statements.




 


	
      20.  
	
      If
      available, termite report, structural engineer’s report, water potability
      and septic certification.




 


	
      21.  
	
      Sales
      contract, if applicable.




 


	
      22.  
	
      Evidence
      of payment of taxes and insurance premiums, insurance claim files,
      correspondence, current and historical computerized data files, and all
      other processing, underwriting and closing papers and records which are
      customarily contained in a mortgage loan file and which are required to
      document the Mortgage Loan or to service the Mortgage
  Loan.




 


	
      23.  
	
      Amortization
      schedule, if available.




 


	
      24.  
	
      Mortgage
      Loan payment history.




 


	
      25.  
	
      Original
      power of attorney, if applicable.




 






 


B-2 













 





EXHIBIT
C




Reserved.









 













 








EXHIBIT
D

SERVICING
FEE SCHEDULE















 













 





EXHIBIT
E




REPORTS







Trial
Balance




Principal
and Interest Collections




Prepaid
Loans




Delinquent
Loans




Unscheduled
Principal Collections (Curtailments)




Payoff/Foreclosure
Collections




Remittances




Loan
Transfers




Cutoff
Summary




Investor
Payment/Rate Changes















 


 













 








EXHIBIT
F

RESERVED












 


 













 








EXHIBIT
G

APPROVAL
MATRIX







TO BE
DETERMINED












 


 













 





EXHIBIT
H

AGREED
SERVICING GUIDELINES










TO BE
DETERMINED