**Exhibit10.128(u)**

 

**EXECUTIONCOPY**

 

 

SERVICINGAGREEMENT

 

by and among

 

First InvestorsAuto Owner Trust 2006-A

 

as Issuer

 

Wells Fargo Bank,National Association

 

as Back-upServicer, Indenture Trustee and Custodian

 

and

 

First InvestorsServicing Corporation

 

as Servicer

 

Dated as of

 

January 26, 2006

 

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| ARTICLE I   | DEFINITIONS                               | 2                                                                                                                |
|-------------|-------------------------------------------|------------------------------------------------------------------------------------------------------------------|
|        |                                      |                                                                                                             |   |
| 1.01.       |                                      | Defined Terms                                                                                                    | 2 |
|        |                                      |                                                                                                             |   |
| ARTICLE II  | ADMINISTRATION AND SERVICING OF CONTRACTS | 3                                                                                                                |
|        |                                      |                                                                                                             |   |
| 2.01.       |                                      | Appointment and Duties of the Back-up Servicer and  the Servicer                                                 | 3 |
| 2.02.       |                                      | Collection of Contract Payments; Defaulted  Contracts; Reporting Obligations                                     | 6 |
| 2.03.       |                                      | Realization Upon Contracts                                                                                       | 8 |
| 2.04.       |                                      | Physical Damage Insurance                                                                                        | 9 |
| 2.05.       |                                      | Maintenance of Security Interests in Financed  Vehicles and Contracts                                            | 9 |
| 2.06.       |                                      | Covenants of Servicer; Notices                                                                                   | 10 |
| 2.07.       |                                      | Repurchase of Contracts by Seller and Depositor Upon  Breach                                                     | 11 |
| 2.08.       |                                      | Monthly Servicing Fee; Back-up Servicing Fee                                                                     | 11 |
| 2.09.       |                                      | Annual Statement as to Compliance                                                                                | 11 |
| 2.10.       |                                      | Financial Statements; Annual Servicing Review                                                                    | 12 |
| 2.11.       |                                      | Costs and Expenses                                                                                               | 13 |
| 2.12.       |                                      | Responsibility for Insurance Policies; Processing of  Claims Under Insurance Policies; Daily Records and Reports | 14 |
| 2.13.       |                                      | Delivery of Documents to Custodian                                                                               | 14 |
| 2.14.       |                                      | Maintenance of Copies of Documents by the Servicer                                                               | 15 |
| 2.15.       |                                      | Possession of Servicer Files                                                                                     | 16 |
| 2.16.       |                                      | Processing of Information                                                                                        | 16 |
| 2.17.       |                                      | Warranties, Representations and Covenants With  Respect to Compliance with Law and Enforcement                   | 16 |
| 2.18.       |                                      | Standard of Care                                                                                                 | 16 |
| 2.19.       |                                      | Records                                                                                                          | 17 |
| 2.20.       |                                      | Inspection                                                                                                       | 17 |
| 2.21.       |                                      | Enforcement                                                                                                      | 18 |
| 2.22.       |                                      | Payment in Full on Contract                                                                                      | 19 |
| 2.23.       |                                      | Duties of Back-up Servicer                                                                                       | 19 |
| 2.24.       |                                      | Assumption of Duties by Back-up Servicer                                                                         | 20 |
| 2.25.       |                                      | Errors and Omissions Insurance                                                                                   | 21 |
| 2.26.       |                                      | Responsibilities of Back-up Servicer and Servicer                                                                | 21 |
| 2.27.       |                                      | Re-Liening                                                                                                       | 22 |
| 2.28.       |                                      | Repurchase by Servicer Upon Breach                                                                               | 23 |
| 2.29.       |                                      | Liability of Successor Servicer                                                                                  | 23 |
|        |                                      |                                                                                                             |   |
| ARTICLE III | ACCOUNTS; COLLECTIONS                     | 24                                                                                                               |
|        |                                      |                                                                                                             |   |
| 3.01.       |                                      | Accounts                                                                                                         | 24 |
| 3.02.       |                                      | Collections                                                                                                      | 24 |
| 3.03.       |                                      | Collection Account and Acknowledgment Letter                                                                     | 24 |
|        |                                      |                                                                                                             |   |
| ARTICLE IV  | REPRESENTATIONS AND WARRANTIES            | 24                                                                                                               |
|        |                                      |                                                                                                             |   |
| 4.01.       |                                      | Representations and Warranties of the Servicer                                                                   | 24 |
| 4.02.       |                                      | Representations and Warranties of the Back-up  Servicer                                                          | 25 |

 

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| 4.03.       |                            | Representations and Warranties of the Issuer                                                 | 26     |
|-------------|---------------------------------|----------------------------------------------------------------------------------------------|--------|
| 4.04.       |                            | Survival of Representations and Warranties                                                   | 27     |
| 4.05.       |                            | Merger or Consolidation of, or Assumption of the  Obligations of, or Resignation of Servicer | 27     |
|        |                            |                                                                                         |   |
| ARTICLE V   | DEFAULT, REMEDIES AND INDEMNITY | 28                                                                                           |
|        |                            |                                                                                         |   |
| 5.01.       |                            | Event of Servicing Termination                                                               | 28     |
| 5.02.       |                            | Remedies                                                                                     | 29     |
| 5.03.       |                            | Indemnity by the Servicer                                                                    | 32     |
| 5.04.       |                            | Procedure for Indemnification                                                                | 32     |
| 5.05.       |                            | Liability of the Back-up Servicer                                                            | 33     |
| 5.06.       |                            | Notification                                                                                 | 33     |
| 5.07.       |                            | Waiver of Event of Defaults                                                                  | 33     |
| 5.08.       |                            | Survival                                                                                     | 34     |
| 5.09.       |                            | Servicer and Back-up Servicer Not to Resign                                                  | 34     |
|        |                            |                                                                                         |   |
| ARTICLE VI  | TERMINATION OF AGREEMENT        | 34                                                                                           |
|        |                            |                                                                                         |   |
| 6.01.       |                            | Term                                                                                         | 34     |
| 6.02.       |                            | Effect of Termination                                                                        | 34     |
| 6.03.       |                            | Transfer of Servicing                                                                        | 34     |
|        |                            |                                                                                         |   |
| ARTICLE VII | MISCELLANEOUS PROVISIONS        | 35                                                                                           |
|        |                            |                                                                                         |   |
| 7.01.       |                            | Amendment                                                                                    | 35     |
| 7.02.       |                            | Waivers                                                                                      | 35     |
| 7.03.       |                            | Notices                                                                                      | 35     |
| 7.04.       |                            | Severability of Provisions                                                                   | 37     |
| 7.05.       |                            | Rights Cumulative                                                                            | 37     |
| 7.06.       |                            | No Offset                                                                                    | 37     |
| 7.07.       |                            | Inspection and Audit Rights                                                                  | 37     |
| 7.08.       |                            | Powers of Attorney                                                                           | 38     |
| 7.09.       |                            | Assignment and Binding Effect                                                                | 38     |
| 7.10.       |                            | Captions                                                                                     | 38     |
| 7.11.       |                            | Counterparts                                                                                 | 38     |
| 7.12.       |                            | Governing Law                                                                                | 38     |
| 7.13.       |                            | Parties                                                                                      | 38     |
| 7.14.       |                            | Relationship of the Parties                                                                  | 38     |
| 7.15.       |                            | No Bankruptcy Petition Against the Issuer or  Depositor                                      | 38     |
| 7.16.       |                            | Third Party Beneficiaries                                                                    | 39     |
| 7.17.       |                            | Other Agreements                                                                             | 39     |
| 7.18.       |                            | Purchase and Subsequent Pledge                                                               | 39     |
| 7.19.       |                            | Exercise of Rights by Insurer                                                                | 39     |
| 7.20.       |                            | Limitation of Liability                                                                      | 39     |

 

2

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**SERVICING AGREEMENT**

** **

This Servicing Agreement (“ServicingAgreement”) is made as of the 26th day of January, 2006, by and among FirstInvestors Auto Owner Trust 2006-A, a Delaware statutory trust, as issuer (the “Issuer”),Wells Fargo Bank, National Association, a national banking association, asback-up servicer (in such capacity, the “Back-up Servicer”), ascustodian (in such capacity, the “Custodian”) and as indenture trustee(in such capacity, the “Indenture Trustee”) and First InvestorsServicing Corporation, a Delaware corporation, as servicer (the “Servicer”).

 

**PRELIMINARY STATEMENT**

** **

WHEREAS, pursuant to theIndenture, the Issuer has issued the Notes; and

 

WHEREAS, the Insurer hasissued the Policy to provide for the full and timely payment of all amounts ofinterest due on each Class of Class A Notes on any Payment Date and, on theFinal Note Payment Date relating to each Class of Class A Notes, an amountequal to the outstanding principal balance of such Class of Class A Notes (aftermaking all distributions on such Final Note Payment Date). In addition, on eachPayment Date, the Insurance Policy will guarantee certain payments of principalof the Class A Notes; and

 

WHEREAS, First InvestorsFinancial Services, Inc. (the “Seller”) has acquired and will acquirecertain Contracts secured by Financed Vehicles and will contribute suchContracts and all related security to First Investors Auto Funding Corporation(the “Depositor”) pursuant to the Contribution Agreement of even dateherewith between the Seller and the Depositor (the “Contribution Agreement”);and

 

WHEREAS, pursuant to theSale and Allocation Agreement of even date herewith among the Servicer, theDepositor, the Indenture Trustee and the Issuer (the “Sale and AllocationAgreement”), the Depositor has absolutely sold and assigned the Contractsand related security to the Issuer; and

 

WHEREAS, pursuant to theIndenture, the Issuer has pledged, among other things, the Contracts to theIndenture Trustee for the benefit of the Noteholders and the Insurer; and

 

WHEREAS, pursuant to theterms of the Indenture, the Issuer is obligated to deliver or cause to bedelivered to the Custodian, the documents to be included in the Contract Files,which are to be held by the Custodian pursuant to the terms of the Indenture;and

 

WHEREAS, the Issuer, theIndenture Trustee, the Custodian, the Back-up Servicer and the Servicer desireto enter into this Servicing Agreement pursuant to which the Servicer and theBack-up Servicer will perform the duties as described herein.

 

NOW THEREFORE, inconsideration of the covenants and conditions contained in this ServicingAgreement, the parties, intending to be legally bound, hereby agree as follows:

 

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# ARTICLE IDEFINITIONS

#  

## 1.01.        Defined Terms. Capitalizedand defined terms used but not defined in this Servicing Agreement shall havethe respective meanings assigned to them in the Indenture or the Sale andAllocation Agreement, unless the context otherwise requires, and thedefinitions of such terms are equally applicable both to the singular andplural forms of such terms and to the masculine, feminine and neuter genders ofsuch terms.

##  

“Back-up Servicing Fee”shall mean the amount paid to the Back-up Servicer on each Payment Date for thepreceding Collection Period equal to the greater of (i) the product of (a) theBack-up Servicing Fee Rate divided by 12 and (b) the Pool Balance as of theclose of business on the first day of the related Collection Period, and (ii)$750.

 

“Back-up Servicing FeeRate” shall mean .015% per annum.

 

“Collection AccountDepository” shall mean the depository for the Collection Accountestablished pursuant to Section 3.1(a) of the Sale and Allocation Agreement.

 

“Collection Policy”shall mean the Servicer’s statement of policies and procedures for thecollection of Contracts attached hereto as Schedule I, as amended andrestated from time to time with the consent of the Insurer and in accordancewith the Transaction Documents.

 

“Continued Errors”shall have the meaning set forth in Section 2.29 hereof.

 

“Eligible Servicer” shallmean First Investors Servicing Corporation, as initial Servicer, Wells FargoBank, National Association, as initial Back-up Servicer, and any other Personwhich, at the time of its appointment as Servicer, (i) is approved in writingby the Insurer, (provided that no Insurer Default shall have occurred and becontinuing), (ii) has a net worth of not less than $50,000,000, (iii) is servicinga portfolio of motor vehicle retail installment sale contracts and/or motorvehicle loans, (iv) is legally qualified, and has the capacity, to service theContracts, (v) has demonstrated the ability to service a portfolio of motorvehicle retail installment sale contracts and/or motor vehicle loans similar tothe Contracts professionally and competently in accordance with standards ofskill and care that are consistent with prudent industry standards and (vi) isqualified and entitled to use pursuant to a license or other written agreement,and agrees to maintain the confidentially of, the software which the Serviceruses in connection with performing its duties and responsibilities under thisAgreement or obtain rights to use, or develops at its own expense, softwarewhich is adequate to perform its duties and responsibilities under thisAgreement.

 

“Errors” shall havethe meaning set forth in Section 2.29 hereof.

 

“Event of ServicingTermination” shall have the meaning set forth in Section 5.01 hereof.

 

“Extended Contract Rate”means, with respect to a Collection Period, the fraction, expressed as apercentage, the numerator of which is the number of Contracts whose paymentsare extended during the related Collection Period (measured on the last day ofsuch Collection

 

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Period)and the denominator of which is the number of Contracts as of the last day of suchCollection Period.

 

“Extension” shallhave the meaning set forth in Section 2.02(a) hereof.

 

“FIFSGI” shall meanFirst Investors Financial Services Group, Inc., a Texas corporation.

 

“Indemnified Parties”shall have the meaning set forth in Section 5.03 hereof.

 

“Indemnifying Party”shall have the meaning set forth in Section 5.03 hereof.

 

“Insurance Policies”means insurance policies covering the Financed Vehicles or the Obligors,including VSI Insurance.

 

“Lockbox Bank” means WachoviaBank, National Association, or such other bank chosen by the Servicer from timeto time, with the prior consent of the Insurer (if no Insurer Default shallhave occurred and be continuing) and the Indenture Trustee.

 

“Monthly Servicer Report”shall mean the monthly report provided by the Servicer as contemplated by Section2.02(c) hereof.

 

“Predecessor Servicer WorkProduct” shall have the meaning set forth in Section 2.29 hereof.

 

“Servicer Files”shall have the meaning set forth in Section 2.15 hereof.

 

“Subservicer” shallhave the meaning set forth in Section 2.01(g) hereof.

 

“Subservicing Agreement”shall have the meaning set forth in Section 2.01(g) hereof.

 

“Successor Servicer”shall mean the Back-up Servicer or any other Eligible Servicer who succeeds tothe authority, power, obligations and responsibilities of the Servicerhereunder in accordance with the provisions of Article V hereof.

 

“Successor Back-upServicer” shall mean any Eligible Servicer who succeeds to the authority,power, obligations and responsibilities of the Back-up Servicer hereunder inaccordance with the provisions of Article V hereof.

 

“Termination Notice”shall have the meaning set forth in Section 5.02 hereof.

 

# ARTICLE IIADMINISTRATION AND SERVICING OF CONTRACTS

#  

## 2.01.        Appointment andDuties of the Back-up Servicer and the Servicer.

##  

### (a)           The Issuerhereby appoints Wells Fargo Bank, National Association as Back-up Servicer andFirst Investors Servicing Corporation as Servicer and each of Wells Fargo Bank,National Association and First Investors Servicing Corporation accept suchappointments hereunder. The Back-up Servicer and the Servicer shall perform theservices

 

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### required of each pursuant to the terms of this Servicing Agreement. Inperforming their respective duties hereunder, the Back-up Servicer and Servicershall have full power and authority to do or cause to be done any and allthings in connection with such servicing and administration which either maydeem necessary or desirable, within the terms of this Servicing Agreement.

###  

### (b)           As of the dateof this Servicing Agreement, each of the Back-up Servicer and the Servicer is,and shall remain, for so long as it is acting as Back-up Servicer or Servicer,an Eligible Servicer. Compensation and expense reimbursement payable to theBack-up Servicer and Servicer under this Servicing Agreement shall be payablefrom the amounts on deposit in the Collection Account pursuant to the priorityof payments set forth in Section 3.5(d) of the Sale and Allocation Agreement,and except as provided herein or in the Sale and Allocation Agreement, none ofthe Issuer, the Insurer, the Indenture Trustee or the Noteholders will have anyliability to the Back-up Servicer or the Servicer with respect thereto; provided,however, that the Issuer shall remain liable to the extent of fundsavailable pursuant to Section 3.5(d)(x) of the Sale and Allocation Agreement(and not from any other source) for any fees, expenses and indemnities due andpayable to the Servicer and any fees, expenses and indemnities due and payableto the Back-up Servicer which have not been paid from the amounts on deposit inthe Collection Account in accordance with Section 3.5 of the Sale andAllocation Agreement.

###  

### (c)           The Insurer, orif an Insurer Default has occurred and is continuing, the Indenture Trustee,the Issuer or the Noteholders evidencing not less than 51% of the Class A NoteBalance, shall be entitled to terminate the services of the Servicer or theBack-up Servicer under this Servicing Agreement upon the occurrence of an Eventof Servicing Termination, in each case in accordance with the terms andconditions hereof; provided, however, that in the event oftermination of the Servicer, the Back-up Servicer shall act directly asServicer unless a different Successor Servicer is appointed in accordanceherewith and, with prior written notice to the Rating Agencies, the Insurershall direct the Issuer to enter into a servicing agreement with such SuccessorServicer acceptable to the Rating Agencies and the Insurer and which will bebound by the terms of such servicing agreement. In the event of termination ofthe Back-up Servicer or the Successor Servicer, the Insurer, or if an InsurerDefault has occurred and is continuing, the Indenture Trustee, or the IndentureTrustee at the direction of Noteholders evidencing not less than 51% of theClass A Note Balance shall appoint a Successor Servicer or a Successor Back-upServicer, as the case may be, and shall direct the Issuer to enter into aservicing agreement with a Successor Servicer or Successor Back-up Servicer, asthe case may be, which will be bound by the terms of such servicing agreement.

###  

### (d)           This ServicingAgreement shall be deemed to be among the Back-up Servicer, the IndentureTrustee, the Servicer and the Issuer; the Insurer and the Noteholders shall notbe deemed parties hereto and neither the Insurer, nor the Noteholders shallhave any obligations, duties or liabilities with respect to the Back-upServicer or the Servicer except as set forth herein and in the Indenture. TheIssuer has agreed that the Indenture Trustee, in its name or (to the extentrequired by law) in the name of the Issuer, may (but is not required to)enforce all rights of the Issuer and all obligations of the Servicer and theBack-up Servicer under, and shall be entitled to all benefits of, thisServicing Agreement for and on behalf of the Noteholders and the Insurer,whether or not the Issuer is in default thereunder. The Servicer, in makingcollections

 

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### of Contract payments pursuant to Section 2.02 hereof, shall beacting as agent for the Indenture Trustee, and shall be deemed to be holdingsuch funds in trust on behalf of, and as agent for, the Indenture Trustee.

###  

### (e)           In the eventthe Back-up Servicer shall for any reason no longer be acting as such (includingby reason of an Event of Servicing Termination as specified in Section 5.01hereof), the Successor Back-up Servicer shall thereupon assume all of therights and obligations of the outgoing Back-up Servicer under this ServicingAgreement. In such event, the Successor Back-up Servicer shall be deemed tohave assumed all of the outgoing Back-up Servicer’s interest herein and to havereplaced the outgoing Back-up Servicer as a party to this Servicing Agreementto the same extent as if this Servicing Agreement had been assigned to theSuccessor Back-up Servicer, except that the outgoing Back-up Servicer shall notthereby be relieved of any liability or obligations on its part under thisServicing Agreement arising prior to such replacement. The outgoing Back-upServicer shall, at the reasonable expense of the Issuer pursuant to thepriority of payments set forth in Section 3.5(d) of the Sale and AllocationAgreement, deliver to the Successor Back-up Servicer all documents and recordsrelating to this Servicing Agreement and the Contracts then being servicedhereunder and an accounting of amounts collected and held by it and otherwiseuse its best efforts to effect the orderly and efficient transfer of thisServicing Agreement to the Successor Back-up Servicer. Compensation and expensereimbursement of the outgoing Back-up Servicer shall be payable through thedate that the outgoing Back-up Servicer ceases to render services.

###  

### (f)            The Issuershall, at its own expense, duly and punctually perform and observe its obligationsto the Back-up Servicer and the Servicer under this Servicing Agreement inaccordance with the terms hereof. In addition, promptly following a requestfrom the Indenture Trustee to do so and at the Issuer’s own expense, the Issuershall take all such lawful action as the Indenture Trustee (which shall sorequest if directed by Noteholders evidencing not less than 51% of the Class ANote Balance, with the consent of the Insurer, to do so) may request to compelor secure the performance and observance by the Back-up Servicer and theServicer of each of its respective obligations to the Issuer under or inconnection with this Servicing Agreement, in accordance with the terms hereof,and in effecting such request shall exercise any and all rights, remedies,powers and privileges lawfully available to the Issuer under or in connectionwith this Servicing Agreement to the extent and in the manner directed by theIndenture Trustee, including, without limitation, the transmission of noticesof default on the part of the Back-up Servicer or the Servicer hereunder andthe institution of legal or administrative actions or proceedings to compel orsecure performance by the Back-up Servicer or the Servicer of its respectiveobligations under this Servicing Agreement.

###  

### (g)           The Servicer orthe Back-up Servicer, if applicable, may enter into one or more subservicingagreements (each, a “Subservicing Agreement”) with one or moreSubservicers (each, a “Subservicer”) for the servicing andadministration of certain of the Contracts; provided, however,that unless the Insurer otherwise agrees in writing, the only servicingfunctions that may be performed by Subservicers of the initial Servicer are (i)sending “welcome letters” to new Obligors, (ii) sending payment coupons to eachObligor on a monthly basis, (iii) receipt and posting of all payments receivedwith respect to the Contracts, (iv) tracking of Obligor compliance withphysical damage insurance, (v) repossessing Financed Vehicles, (vi) preparingFinanced Vehicles for sale and representing the Servicer throughout the

 

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### related vehicle auction process, (vii) tracking titles to and liens onthe Financed Vehicles and (viii) other functions pursuant to any other SubservicingAgreement approved in writing by the Insurer; provided, however,that entering into a Subservicing Agreement shall not relieve the Servicer orthe Back-up Servicer from any of their respective obligations hereunder.References in this Servicing Agreement to actions taken or to be taken by theServicer in servicing the Contracts include actions taken or to be taken by aSubservicer on behalf of the Servicer. Each Subservicing Agreement will be uponsuch terms and conditions as are not inconsistent with this Servicing Agreementand as the Servicer, or Back-up Servicer, as applicable, and the Subservicerhave agreed. The Servicer, or Back-up Servicer, as applicable, and aSubservicer may enter into amendments thereto; provided, however,that any such amendments shall be consistent with and not violate theprovisions of this Servicing Agreement.

###  

### (h)           The Back-upServicer may be removed by the Insurer or, if an Insurer Default has occurredand is continuing, by the Indenture Trustee, the Issuer, or the IndentureTrustee at the direction of the Class A Noteholders evidencing not less than51% of the Class A Note Balance, with or without cause upon thirty days’written notice to the Back-up Servicer; provided, however, that(A) such removal may be made immediately and shall not require notice if: (i)the Back-up Servicer shall consent to the appointment of a conservator,receiver or liquidator in any insolvency, readjustment of debt, marshalling ofassets and liabilities, or similar proceedings of or relating to the Back-upServicer or relating to all or substantially all of its property; or (ii) adecree or order of a court or agency or supervisory authority havingjurisdiction in the premises for the appointment of a conservator or receiveror liquidator in any insolvency, readjustment of debt, marshalling of assetsand liabilities, or similar proceedings, or for the winding up or liquidationof its affairs shall have been entered against the Back-up Servicer, and suchdecree or order shall have remained in force undischarged or unstayed for aperiod of 60 days; or (iii) the Back-up Servicer shall become insolvent oradmit in writing its inability to pay its debts generally as they become due,file a petition to take advantage of any applicable debtor relief laws, make anassignment for the benefit of its creditors or voluntarily suspend payment ofits obligations; or (iv) a petition is filed against the Back-up Servicerseeking relief under any applicable debtor relief laws of the United States orany state or other competent jurisdiction, and such petition, order, judgmentor decree shall have remained in force undischarged or unstayed for a period of60 days after its entry; and (B) such removal shall not be effective unless anduntil a Successor Back-up Servicer is appointed by the Insurer or, if anInsurer Default has occurred and is continuing, by the Indenture Trustee at thedirection of Noteholders evidencing not less than 51% of the Class A NoteBalance; provided, however, that the Back-up Servicer may petitiona court of competent jurisdiction to appoint a Successor Back-up Servicer ifone is not chosen within 60 days.

###  

## 2.02.        Collection ofContract Payments; Defaulted Contracts; Reporting Obligations.

##  

### (a)           The Servicershall be responsible for collection of payments called for under the terms andprovisions of the Contracts, as and when the same shall become due. TheServicer, consistent with the standard of care set forth in Section 2.18,shall service, manage, administer and make collections on the Contracts onbehalf of the Issuer and shall have full power and authority, acting aloneand/or through Subservicers as provided in Section 2.01(g), to do anyand all things which it may deem necessary or desirable in connection therewithwhich are consistent with this Servicing Agreement. The Servicer may extend thethen-current maturity

 

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### date of any Contract by one month (an “Extension”); provided,however, that (i) no Extension may be granted with respect to anyContract unless at least six scheduled payments have been received with respectto such Contract; (ii) Extensions may be granted in the aggregate for no morethan one month for each twelve months of the original term of a Contract, (iii)Extensions may be granted no more than twice for periods of one month eachduring any consecutive 12-month period and (iv) such Extension shall result inthe Contract becoming current. In the event that an Extension causes a Contractto remain outstanding on the Final Note Payment Date of the Class A-4 Notes,the Servicer shall purchase such Contract as of the Business Day preceding thePayment Date in December following the date such Extension was granted. Suchpurchase obligation shall commence on the Payment Date in December 2006. Inconsideration of the repurchase of such Contract hereunder, the Servicer shallremit the Purchase Amount of such Contract in the manner specified in Section3.4 of the Sale and Allocation Agreement. The sole remedy of the IndentureTrustee, the Owner Trustee or the Noteholders for any Extension that causes aContract to remain outstanding on the Final Note Payment Date of the Class A-4Notes shall be the repurchase thereof as provided herein. The Servicer may inits discretion waive any late payment charge or any other fees that may becollected in the ordinary course of servicing a Contract. In no event shall thePrincipal Balance of a Contract be reduced, except in connection with asettlement in the event the Contract becomes a Defaulted Contract. The Servicershall also enforce all rights of the Issuer under the Originator Agreementsincluding, but not limited to, the right to require an Originator to repurchaseContracts for breaches of representations and warranties made by the respectiveOriginators.

###  

### (b)           If the fullamount of a scheduled payment due under a Contract is not timely received, theServicer shall make reasonable and customary efforts to collect such Contractin accordance with this Servicing Agreement and the procedures set forth in theCollection Policy. The Servicer shall use its best efforts, consistent with thestandard of care set forth in Section 2.18 hereof, to collect funds on aDefaulted Contract; such collections shall be deposited into the CollectionAccount no later than two Business Days following receipt thereof. The Servicershall, consistent with the standard of care set forth in Section 2.18hereof, have the discretion to determine whether or not it is in the bestinterest of the Issuer to sell, or not to sell, a Defaulted Contract, and toact in accordance with its determination under this Article II.

###  

### (c)           The Servicershall provide monthly reports substantially in the form of Exhibit A-1hereto, each under a certificate substantially in the form of Exhibit A-2hereto, to the Indenture Trustee. The Servicer shall also provide,electronically and, by mail and facsimile transmission if requested, copies ofsuch reports and certificates to the Back-up Servicer, the Insurer, the RatingAgencies and any other Persons identified on a list provided to the Servicer bythe Issuer, as such list may be amended from time to time, regarding (i)payments received from or on behalf of the Obligors and deposited to theCollection Account (identified in Section 3.03 hereof) representingcollections with respect to the Contracts, (ii) other amounts received withrespect to the Contracts, including Liquidation Proceeds or the proceeds ofrepurchases under the Sale and Allocation Agreement, (iii) other mattersrelating to the Contracts including extensions, delinquencies, repossessionsand filing and payment of claims under Insurance Policies, (iv) financialinformation used to calculate whether certain Events of Default have occurred,(v) calculation of the three month average Delinquency Ratio and the CumulativeNet Loss Rate, and (vi) other items reflected on Exhibit A-1. Suchreports shall be delivered to the parties specified above no later than theDetermination Date related to each Collection

 

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### Period. The Servicer may submit the reports and other documentsdescribed in this section in electronic format.

###  

### (d)           The Back-upServicer shall provide monthly reports to the Indenture Trustee, and theIndenture Trustee shall provide copies of such reports to the Rating Agencies,the Insurer, the Issuer and any other Persons identified on a list provided tothe Back-up Servicer by the Issuer, as such list may be amended from time totime, substantially in the form of Exhibit B hereto. Such report shallbe dated as of the Determination Date for each Payment Date and delivered tothe Indenture Trustee on or before such Payment Date.

###  

### (e)           The Servicershall, upon request, promptly, but no later than two  (2) Business Days after receipt of a requestprovide, or cause to be provided, to the Back-up Servicer and the Insurercopies of all monthly bank statements, notices, reports or other documentsreceived from the Indenture Trustee and from the Collection Account Depositoryregarding funds held in or transferred to or from all applicable accounts.

###  

### (f)            No later thanthe Determination Date related to each Collection Period, the Servicer shallforward to the Back-up Servicer, via reputable overnight courier or electronictransmission, a computer diskette in a format mutually acceptable to theServicer and the Back-up Servicer, of its computerized records reflecting (i)all collections received during such Collection Period with respect to theContracts, (ii) the Pool Balance as of the last day of the Collection Period,(iii) information as of the last day of such Collection Period regarding thenumber of Defaulted Contracts, (iv) the number of repossessed Financed Vehiclesand the number of sales of repossessed Financed Vehicles as of the last day ofsuch Collection Period and (v) all other information necessary for the Back-upServicer to perform its duties under Section 2.23. Promptly upondiscovery by the Back-up Servicer or receipt by the Back-up Servicer of noticeof an Event of Servicing Termination with respect to the Servicer, the Back-upServicer shall input such information onto its computer system so that suchinformation is immediately available to the Back-up Servicer.

###  

## 2.03.        RealizationUpon Contracts.

##  

### (a)           Unlessotherwise contemplated by the Collection Policy, in the event a Contractbecomes or is reasonably anticipated to become a Defaulted Contract, theServicer, itself or through the use of independent contractors or agents shall,consistent with the standard of care set forth in Section 2.18,repossess or otherwise convert the ownership of the Financed Vehicle securingsuch Contract. In accordance with the priority of payments set forth in Section3.5(d)(x) of the Sale and Allocation Agreement, all costs and expenses incurredby the Servicer in connection with the repossession of the Financed Vehiclessecuring such Contracts shall be reimbursed to the Servicer from the CollectionAccount on the Payment Date relating to the Collection Period in which theServicer delivered to the Indenture Trustee an itemized statement of such costsand expenses. Notwithstanding the foregoing and consistent with the terms ofthis Servicing Agreement, the Servicer shall not be obligated to repossess ortake any action with respect to a Defaulted Contract if, in its reasonablejudgment consistent with the servicing standards specified in Section 2.18,the Liquidation Proceeds are expected to be a negative number.

 

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### (b)           The Servicer,itself or through the use of independent contractors or agents to the extentallowed by Section 2.01(g), shall follow practices consistent with thestandard of care set forth in Section 2.18, including the CollectionPolicy, in its servicing of automotive contracts, which may include selling theFinanced Vehicle, or requesting a Subservicer to sell the Financed Vehicle, atpublic or private sale; provided, however, that the Servicer,itself or through the use of independent contractors or agents to the extentallowed by Section 2.01(g), shall, in accordance with its CollectionPolicy, maximize the sales proceeds for each repossessed Financed Vehicle. Theforegoing shall be subject to the provision that, in any case in which theFinanced Vehicle shall have suffered damage, the Servicer shall not expendfunds for the repair or the repossession of such Financed Vehicle unless theServicer shall determine in its discretion that such repair or repossessionshould increase the Liquidation Proceeds.

###  

## 2.04.        Physical DamageInsurance.

##  

### (a)           The Servicer,itself or through the use of independent contractors or agents to the extentallowed by Section 2.01(g), in accordance with the standard of care setforth in Section 2.18, shall, upon receipt of notice that an Obligor’sphysical damage insurance covering the Financed Vehicle has lapsed or isotherwise not in force, send written notice to such Obligor stating that suchObligor is required to maintain physical damage insurance covering the FinancedVehicle throughout the term of the Contract.

###  

### (b)           In the event ofany physical loss or damage to a Financed Vehicle from any cause, whetherthrough accidental means or otherwise, the Servicer shall have no obligation tocause the affected Financed Vehicle to be restored or repaired. The Servicershall, however, comply with the provisions of any Insurance Policies directlyor indirectly related to any physical loss or damage to a Financed Vehicle.

###  

### (c)           The Servicerwill administer the filing of claims under the Insurance Policies as describedunder Section 2.12 hereof.

###  

## 2.05.        Maintenance ofSecurity Interests in Financed Vehicles and Contracts.

##  

### (a)           The Issuerhereby directs the Servicer, and the Servicer agrees, to (i) take or cause tobe taken such steps as are necessary, in accordance with the standard of careset forth in Section 2.18, to maintain perfection of the securityinterest created by any Contract covering a Financed Vehicle which has beenrelocated in such a manner as to require such steps, and (ii) within twoBusiness Days of its receipt thereof forward to the Custodian, on behalf of theIssuer, via reputable overnight courier, any certificate of title to a FinancedVehicle received by the Servicer for any reason with respect to a FinancedVehicle relating to a Contract serviced hereunder.

###  

### (b)           The Servicershall, at the direction of the Issuer, the Insurer or the Indenture Trustee(which shall so direct if directed by Noteholders evidencing not less than 51%of the Class A Note Balance to do so), take any action necessary to preserveand protect the security interests of the Issuer and the Indenture Trustee inthe Contracts, including any action specified in any opinion of counseldelivered to the Servicer.

 

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## 2.06.        Covenants ofServicer; Notices.

##  

### (a)           The Servicershall (i) not release any Financed Vehicle securing any Contract from thesecurity interest granted therein by such Contract in whole or in part exceptin the event of payment in full by the Obligor thereunder or upon transfer ofthe Financed Vehicle to a successor purchaser following repossession by theServicer or a Subservicer, (ii) not impair the rights of the Issuer, theNoteholders, the Insurer or the Indenture Trustee in the Contracts, (iii) notincrease the number of scheduled payments due under a Contract except aspermitted herein, (iv) prior to the payment in full of the Class A Notes, notsell, pledge, assign, or transfer to any other Person, or grant, create, incur,assume, or suffer to exist any Lien on any Contract pledged to the IndentureTrustee or any interest therein except with respect to Defaulted Contracts, (v)immediately notify the Issuer, the Back-up Servicer, the Insurer and theIndenture Trustee of the existence of any Lien on any Contract (other than theLien of the Indenture Trustee) if the Servicer has actual knowledge thereof,(vi) defend the right, title, and interest of the Issuer, the Noteholders, theInsurer and the Indenture Trustee in, to and under the Contracts pledged to theIndenture Trustee, against all claims of third parties claiming through orunder the Servicer, (vii) deposit into Collection Account or cause to bedeposited into the lockbox account maintained at the Lockbox Bank all paymentsreceived by the Servicer with respect to the Contracts in accordance with thisServicing Agreement, (viii) comply in all respects with the terms andconditions of this Servicing Agreement relating to the obligation of the Issuerto remove Contracts from the Collateral pursuant to the Indenture, theobligation of the Depositor to reacquire the Contracts from the Issuer pursuantto the Sale and Allocation Agreement, and the obligation of the Seller toreacquire Contracts from the Depositor pursuant to the Contribution Agreement,(ix) promptly notify the Issuer, the Back-up Servicer, the Insurer and theIndenture Trustee of the occurrence of any Event of Servicing Termination andany breach by the Servicer of any of its covenants or representations andwarranties contained herein, (x) promptly notify the Issuer, the Insurer, theBack-up Servicer and the Indenture Trustee of the occurrence of any eventwhich, to the knowledge of the Servicer, would require that the Issuer make orcause to be made any filings, reports, notices, or applications or seek anyconsents or authorizations from any and all government agencies, tribunals, orauthorities in accordance with the UCC and any state vehicle license orregistration authority as may be necessary or advisable to create, maintain,and protect a first-priority security interest of the Indenture Trustee in, to,and on the Financed Vehicles and a first-priority security interest of theIndenture Trustee in, to, and on the Contracts pledged to the Indenture Trusteeand (xi) take all reasonable action necessary to maximize the returns pursuantto the Insurance Policies.

###  

### (b)           The Servicershall, within three Business Days of its receipt thereof, respond to reasonablewritten directions or written requests for information that the Issuer, theIndenture Trustee, the Insurer, or the Indenture Trustee at the direction ofNoteholders evidencing not less than 51% of the Class A Note Balance might havewith respect to the administration of the Contracts.

###  

### (c)           The Servicerwill promptly advise the Issuer, the Insurer, the Back-up Servicer and theIndenture Trustee of any inquiry received from an Obligor which requires theconsent of the Issuer or the Indenture Trustee. Inquiries requiring consent ofthe Issuer, the Insurer, the Back-up Servicer or the Indenture Trustee mayinclude, but are not limited to,

 

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### inquiries about settlement of any unasserted claim or defense, orcompromise of any amount an Obligor owes.

 

### (d)           The Servicerwill not make any material change to the Collection Policy with respect to theContracts without the consent of the Insurer (unless an Insurer Default shallhave occurred and be continuing), which consent shall not be unreasonablywithheld; and if an Insurer Default shall have occurred and be continuing, theServicer will not make any material change to the Collection Policy withrespect to the Contracts if such change would have a material adverse effect onthe Contracts.

###  

## 2.07.        Repurchase ofContracts by Seller and Depositor Upon Breach. The Servicer shall informthe Issuer, the Insurer, the Indenture Trustee and the Back-up Servicerpromptly, in writing, upon the discovery of the occurrence of any event whichwould require the Seller or the Depositor to repurchase a Contract underSection 2.3 of the Contribution Agreement or Section 2.3 of the Sale andAllocation Agreement, as applicable; provided, however, that theServicer shall have no duty to investigate or determine the existence of anybreach except as specified herein. Unless waived by the Insurer, the Servicer shalldeliver to the Issuer a written demand to cause the Seller or the Depositor, asapplicable, to reacquire the affected Contract as provided in the ContributionAgreement and the Sale and Allocation Agreement. The sole remedy of the Issuer,the Indenture Trustee, the Insurer (except as otherwise provided in theInsurance Agreement) or the Noteholders against the Seller or the Depositorwith respect to any Contract shall be the repurchase thereof as provided in theContribution Agreement or the Sale and Allocation Agreement, as applicable.

##  

## 2.08.        MonthlyServicing Fee; Back-up Servicing Fee.

##  

### (a)           Pursuant to theSale and Allocation Agreement, the Issuer has agreed to cause the IndentureTrustee to pay out of monthly collections with respect to the Contracts to theBack-up Servicer, the Back-up Servicing Fee and to the Servicer, the MonthlyServicing Fee with respect to the Contracts serviced under this ServicingAgreement; provided, however, that the Issuer hereby agrees notto amend or consent to any amendment of any provision of the Sale andAllocation Agreement relating to compensation of the Back-up Servicer or theServicer without the prior written consent of such Person and the Insurer.

###  

### (b)           On each PaymentDate, the Back-up Servicing Fee with respect to the preceding Collection Periodshall be due. The Back-up Servicer shall also be entitled to reimbursement ofits conversion costs and other transition expenses associated herewith pursuantto Section 3.5(d)(i) of the Sale and Allocation Agreement, up to the limit setforth therein, and any excess pursuant to Section 3.5(d)(x) of the Sale andAllocation Agreement.

###  

### (c)           In the eventthis Servicing Agreement is terminated on a date other than the last day of aCollection Period or a Contract is designated to be no longer outstanding forpurposes of this Servicing Agreement, then the Monthly Servicing Fee for suchperiod or with respect to such Contract, as the case may be, shall bedetermined on a pro rata basis.

###  

## 2.09.        AnnualStatement as to Compliance. The Servicer shall deliverto the Owner Trustee and the Indenture Trustee, and the Indenture Trustee shalldeliver to the Issuer, the Back-up

 

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## Servicer, the Insurer, the Rating Agencies and any Persons identifiedon a list provided to the Servicer by the Issuer, as such list may be amendedfrom time to time, on or before July 31 of each year beginning July 31, 2006,an Officer’s Certificate, dated effective as of the preceding April 30, statingthat (i) a review of the activities of the Servicer during the preceding12-month period (or such shorter period, as is applicable) and of itsperformance under this Servicing Agreement during such period has been madeunder such officer’s supervision, (ii) based on such review, the Servicer hasfulfilled all its obligations under this Servicing Agreement throughout suchperiod, or, if there has been a default in the fulfillment of any suchobligation, specifying each such default known to such officer and the nature andstatus thereof and the remedies therefor being pursued; and (iii) to the bestof such officer’s knowledge, each Subservicer, if any, has fulfilled itsobligations under its Subservicing Agreement in all material respects, or ifthere has been a material default in the fulfillment of such obligations,specifying such default known to such officers and the nature and statusthereof. This Section shall not apply to the Back-up Servicer acting asServicer.

##  

## 2.10.        FinancialStatements; Annual Servicing Review.

##  

### (a)           The Servicer,shall deliver, in duplicate, to the Rating Agencies, the Insurer, the Back-upServicer, the Indenture Trustee and any other Persons identified on a listprovided to the Servicer by the Issuer, as such list may be amended from timeto time:

###  

#### (i)            as soon asavailable, but in no event later than 90 days after the end of each fiscalquarter of FIFSGI (commencing with the quarter ending January 31, 2006), anunaudited consolidated balance sheet and income statement (prepared inaccordance with generally accepted accounting principles applied on aconsistent basis, and subject to year end adjustments) for FIFSGI covering thepreceding quarter, in each case certified by the chief financial officer ofFIFSGI to be true, accurate and complete copies of such financial statements;and

####  

#### (ii)           on or before120 days after the end of each fiscal year of FIFSGI (commencing with thefiscal year ending April 30, 2006) the consolidated financial statements ofFIFSGI containing a report of a firm of independent public accountants selectedby FIFSGI to the effect that such firm has examined the books and records ofFIFSGI and that, on the basis of such examination conducted in compliance withgenerally accepted audit standards, such financial statements accuratelyreflect the financial condition of FIFSGI, in each case certified by the chieffinancial officer of FIFSGI, to be true, accurate and complete copies of suchfinancial statements.

####  

### (b)           The Servicerwill cause the same firm of independent public accountants which prepared theaudited financial statements pursuant to paragraph (a)(ii) of this Section todeliver to the Rating Agencies, the Insurer, the Back-up Servicer, theIndenture Trustee, the Owner Trustee and any Persons identified on a listprovided to the Servicer, as such list may be amended from time to time, uponreceipt of such covenants and representations from such Persons as theindependent public accountants may require, and as soon as practicable, but inany event within 120 days after the end of each fiscal year, an annual reviewof the Servicer’s procedures and operations in form and substance reasonablysatisfactory to the Insurer, prepared by such firm of independent publicaccountants, dated as of April 30 of each year beginning

 

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### 2006 and substantially stating to the effect that (i) such accountantshave examined the accounts and records of the Servicer relating to theCollateral and the conveyed property in all similar asset-based financingtransactions sponsored by the Issuer or an affiliate thereof (which recordsshall be described in one or more schedules to such statement), (ii) such firmhas compared the information contained in certain Monthly Servicer Reports (andsimilar reports for other similar asset-based financing transactions sponsoredby the Issuer or an affiliate thereof) delivered in the relevant period withinformation contained in the accounts and records or other relevant sourcedocuments for such period, and (iii) on the basis of the procedures performed,whether the information examined and contained in such Monthly Servicer Reports(and similar reports for such other similar asset-based financing transactions)delivered on the relevant period reconciles and agrees with the informationcontained in the accounts and records or other relevant source documents exceptfor such exceptions as such independent public accountants believe to beimmaterial and such other exceptions as shall be set forth in such statement.In the event such independent public accountants require the Indenture Trusteeto agree to the procedures to be performed by such firm in any of the reportsrequired to be prepared pursuant to this Section 2.10, the Servicershall direct the Indenture Trustee in writing to so agree; it being understoodand agreed that the Indenture Trustee will deliver such letter of agreement inconclusive reliance upon the direction of the Servicer, and the IndentureTrustee has not made any independent inquiry or investigation as to, and shallhave no obligation or liability in respect of, the sufficiency, validity orcorrectness of such procedures.

###  

## 2.11.        Costs andExpenses.

##  

### (a)           Except as setforth in Sections 2.11(b) and 2.27, all costs and expensesincurred by the Servicer in carrying out its duties hereunder, fees andexpenses of independent public accountants with respect to preparation of thefinancial statements and reports described in Section 2.10(a) and (b)and all other fees and expenses not expressly permitted pursuant to thepriorities of Section 3.5(d) of the Sale and Allocation Agreement to be for theaccount of the Issuer, shall be paid or caused to be paid by the Servicer outof the compensation to be paid to the Servicer pursuant to Section 2.08.

###  

### (b)           During the termof this Servicing Agreement, the Servicer shall be reimbursed pursuant toSection 3.5(d)(x) of the Sale and Allocation Agreement for actual out-of-pocketcosts and expenses incurred in connection with the sale or other disposal of aFinanced Vehicle or collection of amounts due with respect to a Contractincluding, but not limited to, the following (to the extent such cost orexpense relates to the sale or other disposal or collection of amounts due withrespect to a Contract or a Financed Vehicle):

###  

#### (i)            Anycompensation paid to outside legal counsel retained to protect the interests ofthe Issuer, the Indenture Trustee, the Insurer or the Noteholders in the assetsadministered under this Servicing Agreement as the Servicer deems necessary inaccordance with its normal procedures;

####  

#### (ii)           Anycompensation paid to independent repossessors, auctioneers or appraisers andany direct out of pocket expenses arising from or related to realization of theContracts administered under this Servicing Agreement;

 

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#### (iii)          Any sales,franchise, income, excise, personal property or other taxes arising from orrelated to any Contracts administered under this Servicing Agreement;

####  

#### (iv)          Any parking orother fees, insurance, title or similar fees arising from or related to anyContracts administered under this Servicing Agreement;

####  

#### (v)           Any expensesfor special forms and materials, freight, tapes, communications, lock-box andother bank service charges, and other expenses approved by the Issuer; and

####  

#### (vi)          Any expensesand fees paid to outside accountants in connection with the procedures requiredto be performed pursuant to Section 2.10(a) and (b) hereof.

####  

## 2.12.        Responsibilityfor Insurance Policies; Processing of Claims Under Insurance Policies; DailyRecords and Reports.

##  

### (a)           The Servicer,on behalf of the Issuer, will administer and enforce all rights andresponsibilities of the holder of the Contracts provided for in the InsurancePolicies relating to the Contracts.

###  

### (b)           The Servicerwill administer the filings of claims under the Insurance Policies by filingthe appropriate notices related to claims, including initial notices of loss,as well as claims with the respective carriers or their authorized agents allin accordance with the terms of the Insurance Policies. The Servicer shall usereasonable efforts to file such claims on a timely basis after obtainingknowledge of the events giving rise to such claims, subject to the servicingstandard set forth in Section 2.18 hereof. The Servicer will utilizesuch notices, claim forms and claim procedures as are required by therespective insurance carriers.

###  

The Servicer shall not berequired to pay any premiums or, other than administering the filing of claimsand performing reporting requirements specified in the Insurance Policies inconnection with filing such claims, perform any obligations of the namedinsured under such Insurance Policies. The Servicer shall not be responsible tothe Issuer, the Insurer, the Noteholders or the Indenture Trustee (i) for anyact or omission to act done in order to comply with the requirements or satisfyany provisions of the Insurance Policies or (ii) for any act, absent willful misconduct,reckless disregard or negligence, or omission to act done in compliance withthis Servicing Agreement. In the case of any inconsistency between thisServicing Agreement and the terms of any Insurance Policy, the Servicer shallcomply with the latter. A copy of any claim shall be furnished to the Insurerupon the Insurer’s request.

 

## 2.13.        Delivery ofDocuments to Custodian. The Servicer shall deliver or cause to bedelivered all of the Contract  Files withrespect to the Contracts in its possession to the Custodian via reputableovernight courier service for receipt by the Custodian no later than theClosing Date, with respect to the Contracts acquired by the Issuer on theClosing Date, or the applicable Additional Contract Purchase Date, with respectto Contracts acquired by the Issuer on an Additional Contract Purchae Date, asthe case may be. While in its possession, the Servicer shall hold the ContractFiles in trust on behalf of the Custodian.

 

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## 2.14.        Maintenance ofCopies of Documents by the Servicer.

##  

### (a)           The Servicershall maintain legible copies (in electronic or hard-copy form, in thediscretion of the Servicer) or originals of the following documents in itsfiles with respect to each Contract and the Financed Vehicle related thereto:

###  

#### (i)            application ofthe Obligor for credit;

####  

#### (ii)           a copy (but notthe original) of the retail installment contract or promissory note andsecurity agreement and any amendments thereto; provided, however,that the Servicer shall deliver any original amendments to the retail installmentcontract or promissory note and security agreement to the Indenture Trusteeimmediately following execution thereof;

####  

#### (iii)          a copy (but notthe original) of a certificate of title with a lien notation or an applicationtherefor;

####  

#### (iv)          a certificate ofinsurance or application therefor with respect to the Financed Vehicle securingthe Contract;

####  

#### (v)           a copy of theproof of income and references, credit report and approval sheet utilized bythe Seller in the underwriting of the Contract;

####  

#### (vi)          the invoice forthe Financed Vehicle (in the case of a new vehicle) or the bookout sheet (inthe case of a used vehicle);

####  

#### (vii)         Obligor’s orderfor the Financed Vehicle, together with proof (if any) of down payment;

####  

#### (viii)        a copy of theservice contract, if any, on the Financed Vehicle;

####  

#### (ix)           a copy of thecredit life insurance policy, if any, and the credit disability insurancepolicy, if any, on the Obligor relating to the Financed Vehicle and a copy of acertificate evidencing physical damage insurance covering the related FinancedVehicle, if any; and

####  

#### (x)            such otherdocuments as the Servicer may reasonably request in order to accomplish itsduties under this Servicing Agreement.

####  

### (b)           The Servicershall keep books and records, satisfactory to the Insurer, pertaining to eachContract and shall make periodic reports in accordance with this ServicingAgreement. Such records may not be destroyed or otherwise disposed of except asprovided herein and as allowed by applicable laws, regulations or decrees. Alldocuments, whether developed or originated by the Servicer or not, reasonablyrequired to document or to properly administer any loan shall remain at alltimes the property of the Issuer and shall be held in trust by the Servicer.The Servicer shall not acquire any property rights with respect to suchrecords, and shall not have the right to possession of them except as subjectto the conditions

 

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### stated in this Servicing Agreement. The Servicer shall bear the entirecost of restoration in the event any Servicer Files (as defined below) shallbecome damaged, lost or destroyed while in the Servicer’s possession orcontrol.

###  

## 2.15.        Possession ofServicer Files. Unless otherwise specified herein, the Servicershall maintain physical possession of the instruments and documents listed inparagraph 2.14(a) above; such other instruments or documents that modify orsupplement the terms or conditions of any of the foregoing; and, all otherinstruments, documents, correspondence and memoranda generated by or cominginto the possession of the Servicer (including, but not limited to, insurancepremium receipts, ledger sheets, payment records, insurance claim files,correspondence and current and historical computerized data files) that arerequired to document or service any Contract. Collectively, all of thedocuments described in this Section 2.15 with respect to a Contract arereferred to as the “Servicer Files”. The Servicer hereby agrees that thecomputer files and other physical records of the Contracts maintained by theServicer will bear an indication reflecting that the Contracts are owned by theIssuer and pledged to the Indenture Trustee for the benefit of the Noteholdersand the Insurer and that all Servicer Files shall remain the property of theIssuer and shall be held in trust by the Servicer. The Servicer shall respondto all third party inquiries concerning ownership of the Contracts byindicating that the Contracts have been assigned by the Seller to the Issuer andpledged to the Indenture Trustee for the benefit of the Noteholders and theInsurer.

##  

## 2.16.        Processing ofInformation. Information with respect to each Contract is to berecorded into the Servicer’s loan management and accounting system.

##  

## 2.17.        Warranties,Representations and Covenants With Respect to Compliance with Law andEnforcement.

##  

### (a)           The Issuerhereby represents to the Servicer, based on certain representations theDepositor has made to the Issuer concerning the Contracts in the Sale andAllocation Agreement, and on which representations the Issuer has relied inacquiring the Contracts and with respect to the pledge of the Contracts to theIndenture Trustee, that each Contract and the sale of the related FinancedVehicle complied at the time it was originated or made and on the Cutoff Date,as the case may be, does comply in all material respects with all requirementsof applicable federal, state and local laws, and regulations thereunder.

###  

### (b)           The Servicercovenants that in the event that the Servicer realizes upon any Contract, themethods utilized by the Servicer to realize upon such Contract or otherwiseenforce any provisions of the Contract, will not subject the Servicer, theIssuer, the Noteholders, the Insurer or the Indenture Trustee to liabilityunder any federal, state or local law, and that such enforcement by theServicer will be conducted in accordance with the provisions of this ServicingAgreement, the standard of care set forth in Section 2.18 hereof and inthe Collection Policy.

###  

## 2.18.        Standard ofCare. In performing its duties and obligations hereunder and inadministering and enforcing the Insurance Policies relating to the Contractspursuant to this Servicing Agreement, the Servicer will comply with allapplicable state and federal laws and shall service and administer theContracts by employing such procedures (including collection

 

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## procedures) and degree of care, in each case consistent with prudentindustry standards, as are customarily employed by the Servicer in servicingand administering motor vehicle retail installment sales contracts and notesowned or serviced by the Servicer comparable to the Contracts. In performingsuch duties, so long as First Investors Servicing Corporation is the Servicer(i) it shall comply with the Collection Policy, and (ii) it shall not make anymaterial amendment to such Collection Policy without the prior written consentof the Insurer (provided that no Insurer Default shall have occurred and be continuing)which consent shall not be unreasonably withheld; provided, however,that notwithstanding the foregoing, the Servicer shall not, except pursuant toa judicial order from a court of competent jurisdiction, or as otherwiserequired by applicable law or regulation, release or waive the right to collectthe unpaid balance on any Contract. In performing its duties and obligationshereunder, the Servicer shall comply with all applicable federal and state lawsand regulations, shall maintain all state and federal licenses and franchisesnecessary for it to perform its servicing responsibilities hereunder, and shallnot impair the rights of the Issuer, the Insurer or the Indenture Trustee onbehalf of the Noteholders in the Collateral.

##  

## 2.19.        Records. The Servicershall maintain or cause to be maintained such books of account and otherrecords as will enable the Issuer and the Insurer to determine the status ofeach Contract and any Insurance Policy relating thereto.

##  

## 2.20.        Inspection.

##  

### (a)           At all times duringthe term hereof, the Servicer shall afford the Issuer, the Insurer, the Back-upServicer and the Indenture Trustee and their authorized agents, upon threeBusiness Days’ prior written notice, reasonable access during normal businesshours to the Servicer’s records and files relating to the Contracts and theCollateral and will cause its personnel to assist in any examination of suchrecords by the Issuer, the Insurer, the Back-up Servicer or the IndentureTrustee, and will permit such parties to discuss the affairs, finances andaccounts of the Servicer with the chief operating officer and chief financialofficer of the Servicer. The examination referred to in this Section 2.20will be conducted in a manner which does not unreasonably interfere with theServicer’s normal operations or customer or employee relations. Withoutotherwise limiting the scope of the examination, the Issuer, the Insurer, theBack-up Servicer or the Indenture Trustee may, using generally accepted auditprocedures, verify the status of each Contract and review the Servicer Filesand records relating thereto for conformity to Monthly Servicer Reportsprepared pursuant to Section 2.02(c) and compliance with the standardsrepresented to exist as to each Contract in this Servicing Agreement. Nothingherein shall require the Issuer, the Insurer, the Back-up Servicer or theIndenture Trustee to conduct any inspection pursuant to this Section. Suchparties may, with the Servicer’s consent, which shall not be unreasonablywithheld or delayed, discuss the affairs, finances and accounts of the Servicerwith the Servicer’s independent accountants, provided that an officer of theServicer shall have the right to be present during such discussions.

###  

### (b)           At all timesduring the term hereof, the initial Servicer shall keep available at its officelocated at 380 Interstate North, Atlanta, Georgia 30559 (or such other locationas to which it shall give written notice to the Issuer, the Indenture Trustee,and the Insurer), for inspection by the Issuer, the Insurer, the Back-upServicer and the Indenture Trustee a copy of the Contract Schedule, as amended.

 

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### (c)           All informationobtained by the Issuer, the Insurer, the Back-up Servicer or the Indenture Trusteeregarding the Obligors and the Contracts, whether upon exercise of its rightsunder this Section 2.20 or otherwise, shall be maintained by the Issuer,the Insurer, the Back-up Servicer or the Indenture Trustee in confidence andshall not be disclosed to any other Person, except as otherwise required byapplicable law or regulation.

###  

### (d)           The Servicerwill, at the Issuer’s or the Insurer’s request, provide the Issuer or theInsurer with a data extract disk of portfolio information.

###  

### (e)           The Servicer andthe Insurer and their agents and representatives shall at all times have fulland free access during normal business hours to all computer tapes, books,correspondence and records of the Back-up Servicer insofar as they relate tothe Contracts and the Insurer and its agents and representatives may examinethe same, take extracts therefrom and make photocopies thereof. The Servicerand the Insurer each agree that all such information, practices, books,correspondence and records are to be regarded as confidential information andthat (a) it shall retain in strict confidence and shall use its best efforts toensure that its representatives retain in strict confidence and will notdisclose without the prior written consent of the Back-up Servicer any or all ofsuch information practices, books, correspondence and records furnished to itand (b) it will not, and it will use its best efforts (in the case of theInsurer, consistent with Section 2.02 of the Insurance Agreement) to ensurethat its agents and representatives will not make any use whatsoever (otherthan for purposes contemplated by this Agreement) of any of such informationpractices, computer tapes books, correspondence and records without the priorwritten consent of the Back-up Servicer, unless such information (i) isgenerally available to the public, (ii) is required by law, regulation, orcourt order to be disclosed or is requested by any governmental authorityhaving authority over the Servicer and the Insurer, or is necessary to preserveany of such Persons’ rights under or to enforce any provision of the Indenture,or (iii) is required by the Rating Agencies in connection with their rating ofthe related Notes or the implied rating of the facility.

###  

## 2.21.        Enforcement.

##  

### (a)           The Servicerwill, consistent with the standard of care required by Section 2.18 hereof, actwith respect to the Contracts and the Insurance Policies in such manner aswill, in the reasonable judgment of the Servicer, maximize the amount to bereceived by the Indenture Trustee with respect thereto.

###  

### (b)           The Servicershall to the extent consistent with the servicing standards set forth in Section2.18, including the Collection Policy, or at the written direction of theInsurer, sue to enforce or collect upon the Contracts and the InsurancePolicies (including unpaid claims), in its own name, if possible, or as agentfor the Issuer or the Indenture Trustee. If the Servicer commences a legalproceeding to enforce a Contract or an Insurance Policy, the act ofcommencement shall be deemed to be an automatic assignment of the Contract andthe related rights under the Insurance Policies by the Issuer to the Servicerfor purposes of collection only. If, however, in any enforcement suit or legalproceeding it is held that the Servicer may not enforce a Contract or anInsurance Policy on the grounds that it is not a real party in interest or aholder entitled to enforce the Contract or the Insurance Policy, the Issuershall, at the Servicer’s request, assign the Contract or the Insurance Policyto the Servicer to the limited extent

 

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### necessary to enforce the Contract or the Insurance Policy, or take suchsteps as the Issuer deems necessary to enforce the Contract or the InsurancePolicy, including bringing suit in its name.

###  

### (c)           The Servicershall exercise any rights of recourse against third persons that exist withrespect to any Contract in accordance with the standard of care required by Section2.18 hereof. In exercising such recourse rights, the Servicer is herebyauthorized on the Issuer’s behalf to reassign the Contract and to deliver thecertificate of title to the Financed Vehicle to the person against whomrecourse exists at the price set forth in the document creating the recourse.

###  

### (d)           The Servicermay grant to the Obligor on any Contract that has been repaid in full anyrebate, refund or adjustment that the Servicer in good faith believes isrequired because of prepayment in full of the Contract, and may deduct theamount of any such rebate, refund or adjustment from the amount otherwisepayable by the Servicer into the Collection Account. The Servicer may notpermit any rescission or cancellation of any Contract nor may it take anyaction with respect to any Contract, except as required by applicable law,regulation or court order, or Insurance Policy which would materially impairthe rights of the Indenture Trustee, the Insurer or the Noteholders therein orin the proceeds thereof.

###  

## 2.22.        Payment in Fullon Contract. Upon payment in full on any Contract, the Servicershall notify the Custodian prior to the next succeeding Determination Date by awritten request for the release of such Contract (which shall include astatement of an officer of the Servicer to the effect that all amounts receivedin connection with such payment in full which are required to be deposited inthe Collection Account pursuant to Sections 3.02 and 3.03 hereofhave been so deposited).

##  

## 2.23.        Duties ofBack-up Servicer.

##  

### (a)           The Back-upServicer will perform the services set forth in this Section 2.23 whichshall not be delegated to the Servicer. The Back-up Servicer shall, unless itis prohibited as a matter of law, as evidenced by an Opinion of Counselprovided for in Section 5.09 and unless a different Successor Serviceris appointed by the Insurer, service the Contracts upon receipt of writtennotice of an Event of Servicing Termination by the Servicer under thisServicing Agreement. The Back-up Servicer will, on a periodic basis, performthe functions specified in this Section 2.23, provided that the Back-upServicer shall be entitled to request of and receive from the Indenture Trusteeand the Servicer, as appropriate, all information necessary to conduct tests ormake reports in a timely manner as specified below and, except as otherwisespecified herein, the Back-up Servicer shall be entitled to assume for allpurposes that the information received by it is true, correct and complete, andthe Back-up Servicer shall be fully protected in relying upon such informationwithout any independent investigation or audit to prove the facts statedtherein. The Back-up Servicer shall utilize such methods as it deems reasonableand necessary to reconcile information provided by the Servicer with the cashbalances held by the Indenture Trustee.

###  

### (b)           Prior to eachPayment Date, the Back-up Servicer shall review the Monthly Servicer Reportrelated thereto and shall:

 

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#### (i)            determine thatsuch Monthly Servicer Report is complete on its face;

####  

#### (ii)           review theamounts on deposit in the Collection Account against the monthly distributionamounts set forth in such Monthly Servicer Report and reasonably determinewhether the amount on deposit is sufficient to pay such distribution amounts;and

####  

#### (iii)          determine theamount on deposit in the Reserve Account.

####  

### (c)           No later thaneach Payment Date, the Back-up Servicer shall load the computer tape ordiskette received from the Servicer pursuant to Section 2.02(f) hereof,and confirm that such computer tape or diskette is in readable form andcalculate and confirm the aggregate Principal Balance of Contracts as of themost recent Payment Date.

###  

In addition, the Back-upServicer shall confirm that the Delinquency Ratio, the average DelinquencyRatio for any three Collection Periods and the Cumulative Net Loss Rate as setforth in the Monthly Servicer Report, are accurate based solely on a comparisonto the computer tape referred to above.

 

### (d)           In the event ofany discrepancy between the information set forth in subparagraphs (b) and (c),as calculated by the Servicer, from that determined or calculated by theBack-up Servicer, the Back-up Servicer shall promptly notify the Servicer, theIndenture Trustee, and the Insurer of such discrepancy. If within ten days ofsuch notice being provided to the Servicer, the Back-up Servicer and theServicer are unable to resolve such discrepancy, the Back-up Servicer shallpromptly notify the Rating Agencies, the Insurer, the Indenture Trustee and anyother Persons identified on a list provided to the Back-up Servicer, as suchlist may be amended from time to time, of such discrepancy.

###  

### (e)           Other than asspecifically set forth elsewhere in this Servicing Agreement, the Back-upServicer shall have no obligation to supervise, verify, monitor or administerthe performance of the Servicer and shall have no liability for any actiontaken or omitted by the Servicer.

###  

### (f)            The Back-upServicer shall consult fully with the Servicer as may be necessary from time totime to perform or carry out the Back-up Servicer’s obligations hereunder,including the obligation, if requested by the Insurer, to succeed at any timeto the duties and obligations of the Servicer as servicer under Section 5.02hereof.

###  

## 2.24.        Assumption of Dutiesby Back-up Servicer. At any time following the assumption of duties ofthe Servicer by the Back-up Servicer or the designation of a Successor Servicerpursuant to Section 2.01(c), the Servicer shall, at the IndentureTrustee’s or the Insurer’s request, (A) assemble all of the records relating tothe Collateral including all Contract Files, and shall make the same availableto the Indenture Trustee and the Insurer at a place selected by the IndentureTrustee and the Insurer or its designee, and (B) segregate all cash, checks andother instruments received by it from time to time constituting collections ofCollateral in a manner acceptable to the Indenture Trustee and the Insurer, andshall promptly upon receipt but no later than two Business Days after receipt,remit all such cash, checks and instruments, duly endorsed

 

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## or with duly executed instruments of transfer, to the lockbox accountmaintained by the Lockbox Bank or its designee.

##  

## 2.25.        Errors andOmissions Insurance. The Servicer has obtained, and shall continue tomaintain in full force and effect, errors and omissions insurance and employeetheft insurance of a type and in such amount as is customary for servicersengaged in the business of servicing automobile contracts. The scope of suchinsurance coverage shall include the acts and omissions of Subservicers or, ifthat is not the case with respect to any Subservicer, the Servicer shallrequire such Subservicer to maintain such insurance or a bond substantiallyequivalent thereto. Annually, or more frequently upon request of the Issuer,the Insurer, the Indenture Trustee or the Back-up Servicer, the Servicer shallcause to be delivered to the Indenture Trustee a certification evidencingcoverage under such insurance. Any such insurance shall not be canceled ormodified in a materially adverse manner without thirty days’ prior writtennotice to the Issuer, the Insurer, the Indenture Trustee and the RatingAgencies. No provision of this Section 2.25 requiring the maintenance ofinsurance shall diminish or relieve the Servicer from its duties andobligations as set forth in this Servicing Agreement.

##  

## 2.26.        Responsibilitiesof Back-up Servicer and Servicer. Neither the Back-upServicer nor the Servicer shall have any duties, obligations orresponsibilities other than those specifically expressed and set forth hereinand no implied obligations of the Back-up Servicer or the Servicer shall beread into this Servicing Agreement. Neither the Back-up Servicer nor theServicer nor any of their respective directors, officers, agents or employeesshall be liable to any Person, including, without limitation, the Servicer orthe Back-up Servicer, as the case may be, or the Issuer, the Insurer, theIndenture Trustee or the Noteholders in connection with this ServicingAgreement, except for the breach of any of its representations and warrantiesor obligations under this Servicing Agreement or for the negligence, bad faith orwillful misconduct of the Back-up Servicer or the Servicer, as the case may be,or any of their respective officers, directors, agents or employees. TheBack-up Servicer may rely on and shall be protected in acting upon, or inrefraining from acting in accordance with, any resolution, officer’scertificate, certificate of auditors or any other certificate, instrument,opinion, report, notice, request, consent, order, appraisal, bond or otherpaper or document reasonably believed by it to be genuine and correct and tohave been signed or presented by the proper person or persons. Without limitingthe foregoing, the Back-up Servicer (i) may consult with legal counsel(including the Indenture Trustee’s or the Back-up Servicer’s), independentpublic accountants and other experts selected by it with reasonable care andshall not be liable for any action reasonably taken or omitted to be taken byit in accordance with the advice of such counsel, accountants or experts, (ii)shall not be responsible to the Issuer, the Insurer, the Servicer, the IndentureTrustee or any other Person for any recitals, statements, warranties orrepresentations made in or in connection with this Servicing Agreement, theTransaction Documents or any other agreement, document or instrument executedin connection therewith by any other Person, (iii) shall not be responsible forthe actions or omissions of any other Person, including, without limitation,the Servicer, the Seller, the Issuer, the Insurer, the Indenture Trustee andthe Noteholders unless such act or omission was caused by an act or omission ofthe Back-up Servicer, (iv) except as provided in this Servicing Agreement orany Transaction Document, shall not have any duty to ascertain or to inquire asto the performance or observance of any of the terms, covenants or conditionsof the Indenture or any other Transaction Document on the part of any Person,or to inspect the property (including the books and records) of the Seller, the

 

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## Insurer, the Issuer or the Servicer, (v) except as otherwise providedherein, shall not be charged with the knowledge of any breach of representationor warranty by any other Person, or the failure of any other Person to complywith its obligations, hereunder or under any other Transaction Document, or ofthe occurrence of any Event of Servicing Termination unless a responsibleofficer of the Back-up Servicer has received written notice of the same fromthe Servicer, the Insurer or the Indenture Trustee, as the case may be, orotherwise has actual knowledge of such breach or Event of ServicingTermination, (vi) shall not be responsible to any Person for the due execution,legality, validity and enforceability against the other parties of thisServicing Agreement and (vii) shall incur no liability under or in respect ofthis Servicing Agreement by acting upon any notice (including notice bytelephone), consent, certificate or other instrument or writing (which may betelex or telecopy) reasonably believed by it to be genuine and signed, sent or communicatedby the proper party or parties.

##  

It is agreed and understoodthat the Back-up Servicer is responsible for providing the services describedin Section 2.23 only in accordance with the information as shall havebeen timely supplied to it by the Servicer, the Indenture Trustee or theCollection Account Depository, as the case may be. The Back-up Servicer shallincur no liability for any failure by the Servicer, the Indenture Trustee orthe Collection Account Depository to furnish information required of it, norshall the Back-up Servicer be responsible for the content or accuracy of anyinformation provided to it by any such Person, unless required by theTransaction Documents to do so. Except as may be expressly provided herein orin the Indenture, the Back-up Servicer shall have no duty to supervise,investigate or audit any records or activities of the Servicer with respect tothe servicing of the Collateral. The Back-up Servicer shall have noresponsibility or liability for any acts or omissions of the Servicer withrespect to the Collateral.

 

The Back-up Servicer shallnot be required to expend or risk its own funds or otherwise incur financialliability in the performance of any of its duties hereunder, or in the exerciseof any of its rights or powers, if the repayment of such funds or adequatewritten indemnity against such risk or liability is not reasonably assured toit in writing prior to the expenditure or risk of such funds or incurrence offinancial liability.

 

## 2.27.        Re-Liening. Upon theoccurrence of a Re-Liening Trigger, the Insurer may instruct the Servicer totake or cause to be taken such actions as may, in the judgment of the Insureror its counsel, be necessary to perfect or re-perfect the security interests inthe Financed Vehicles in the name of the Indenture Trustee by amending thetitle documents relating to such Financed Vehicles or by such other reasonablemeans as may, in the judgment of the Insurer or its counsel, be necessary orprudent. The Servicer shall take or cause to be taken such actions and the feesand expenses arising as a result of the occurrence of a Re-Liening Triggerrelated to such perfection or re-perfection shall be reimbursed as provided inSection 3.5(d)(viii) of the Sale and Allocation Agreement. The Servicer agreesto take all action necessary therefor, including the preparation, execution anddelivery of all such documents as may be requested by the Indenture Trustee orthe Insurer in connection therewith. The Servicer shall grant to the SuccessorServicer an irrevocable power of attorney, pursuant to which the Servicer shallappoint the Successor Servicer as its attorney-in-fact, such appointment beingcoupled with an interest, to take any and all steps required to be performed byit pursuant to this Section 2.27 including execution of certificates oftitle or any other documents in the name and stead of the Servicer. If at anytime a Person other than First Investors

 

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## Servicing Corporation becomes the Servicer, First Investors ServicingCorporation shall grant to such Successor Servicer, promptly after itsappointment as such, a power of attorney as described in the precedingsentence.

##  

## 2.28.        Repurchase byServicer Upon Breach. The Seller, the Insurer, the Servicer or theIssuer, as the case may be, shall inform the parties to this Agreementpromptly, in writing, upon the discovery of any breach or failure to be true ofthe representations and warranties made by the Servicer pursuant to thisAgreement. If such breach or failure shall not have been cured by the close ofbusiness on the last day of the Collection Period which includes the thirtieth(30th) day after the date on which the Servicer becomes aware of or receiveswritten notice from the Seller, the Insurer or the Issuer of, such breach orfailure, and such breach or failure materially and adversely affects theinterest of the Issuer or the Insurer in a Contract, the Servicer shallrepurchase such Contract from the Issuer on the Business Day next preceding thePayment Date immediately following such Collection Period. In consideration ofthe repurchase of a Contract hereunder, the Servicer shall remit the PurchaseAmount of such Contract in the manner specified in Section 3.4 of the Sale andAllocation Agreement. The sole remedy of the Issuer, the Indenture Trustee, theInsurer (except as otherwise specified in the Insurance Agreement), and theNoteholders with respect to a breach or failure to be true of the representationsand warranties made by the Servicer pursuant to this Agreement shall be torequire the Servicer to repurchase Contracts pursuant to this Section 2.28.Neither the Owner Trustee nor the Indenture Trustee shall have any duty toconduct an affirmative investigation as to the occurrence of any conditionrequiring the repurchase of any Contract pursuant to this Section 2.28or the eligibility of any Contract for purposes of this Agreement.

##  

## 2.29.        Liability ofSuccessor Servicer. Notwithstanding anything contained in thisAgreement to the contrary, Wells Fargo Bank, National Association as SuccessorServicer is authorized to accept and reasonably rely on all of the accounting,records (including computer records) and work of the prior Servicer relating tothe Contracts (collectively, the “Predecessor Servicer Work Product”)without any audit or other examination thereof, and Wells Fargo Bank, NationalAssociation shall have no duty, responsibility, obligation or liability for theacts and omissions of the prior Servicer; provided, however, thatWells Fargo Bank, National Association will provide notice to the IndentureTrustee and the Insurer if it discovers any defective or inaccurate data. Ifany error, inaccuracy, omission or incorrect or non-standard practice orprocedure (collectively, “Errors”) exist in any Predecessor ServicerWork Product and such Errors make it materially more difficult to service orshould cause or materially contribute to Wells Fargo Bank, National Associationmaking or continuing any Errors (collectively, “Continued Errors”),Wells Fargo Bank, National Association shall provide notice of suchcircumstances to the Indenture Trustee and the Insurer and shall have no duty,responsibility, obligation or liability for such Continued Errors; provided,however, that Wells Fargo Bank, National Association agrees to use itsbest efforts to prevent further Continued Errors. In the event that Wells FargoBank, National Association becomes aware of Errors or Continued Errors, WellsFargo Bank, National Association shall, with the prior consent of the IndentureTrustee and the Insurer, use its best efforts to reconstruct and reconcile suchdata as is commercially reasonable to correct such Errors and Continued Errorsand to prevent future Continued Errors. Wells Fargo Bank, National Associationshall be entitled to recover its costs thereby expended from the Servicer and,to the extent not paid by the Servicer, pursuant to Section 3.5(d)(i) of theSale and Allocation Agreement (provided that the Insurer has provided its priorwritten consent to the amount of such costs and expenses).

 

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# ARTICLE IIIACCOUNTS; COLLECTIONS

#  

## 3.01.        Accounts. There hasbeen established pursuant to the Sale and Allocation Agreement the CollectionAccount in the name of the Indenture Trustee for the benefit of the Noteholdersand the Insurer.

##  

## 3.02.        Collections. The Servicershall remit or cause a Subservicer to remit first, to a lockbox accountmaintained with the Lockbox Bank and second, to the Collection Accountdescribed in Section 3.03 hereof, and to no other account, as soon aspracticable, but in no event later than the Collection Account Depository’sclose of business two Business Days after receipt thereof in the lockbox, allCollections received during the Collection Period in respect of a Contractbeing serviced by the Servicer, and all payments or other amounts, if any, madeby or on behalf of an Obligor or received by the Servicer with respect to anyContract.

##  

## 3.03.        CollectionAccount and Acknowledgment Letter.

##  

### (a)           The Issuershall provide thirty days notice to the Servicer, the Indenture Trustee, theInsurer and the Back-up Servicer of its appointment of a successor CollectionAccount Depository which shall be acceptable to the Rating Agencies, theInsurer and the Indenture Trustee and which shall hold the Collection Accountunder the terms and conditions outlined herein and in the Indenture.

###  

### (b)           Except asotherwise provided herein, the Servicer shall deposit or cause to be depositedinto the Collection Account all amounts (including late payments) remitted byObligors to the Servicer under the terms of the Contracts within two BusinessDays after receipt thereof by the lockbox.

###  

# ARTICLE IVREPRESENTATIONS AND WARRANTIES

#  

## 4.01.        Representationsand Warranties of the Servicer. The initial Servicerhereby represents, warrants and covenants to the Back-up Servicer, the Issuer,the Insurer, the Noteholders and the Indenture Trustee that as of the date ofthis Servicing Agreement:

##  

### (a)           The Servicer isa corporation duly organized, validly existing and in good standing under thelaws of the State of Delaware;

###  

### (b)           All necessarycorporate, regulatory or other similar action has been taken to authorize andempower the Servicer and the officers or representatives acting on the Servicer’sbehalf, and the Servicer has full power and authority to execute, deliver andperform this Servicing Agreement;

###  

### (c)           This ServicingAgreement and the Sale and Allocation Agreement have been duly authorized,executed and delivered by the Servicer and the performance and compliance withthe terms of this Servicing Agreement and the Sale and Allocation Agreement

 

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### will not violate the Servicer’s certificate of incorporation or bylawsor constitute a default (or an event which, with notice or lapse of time, orboth, would constitute a default) under, or result in the breach of, anyTransaction Document or any other contract, loan, lease, credit agreement orany other agreement or instrument to which the Servicer is a party or which maybe applicable to the Servicer or any of its assets;

###  

### (d)           The Servicer isduly licensed and qualified to perform the functions specified herein and thisServicing Agreement and the Sale and Allocation Agreement each constitute avalid, legal and binding obligation of the Servicer, enforceable in accordancewith its terms, subject to applicable bankruptcy, insolvency, reorganization,moratorium and other laws affecting the enforcement of creditors’ rightsgenerally and to general principles of equity;

###  

### (e)           The Servicer isnot in violation of, and the execution, delivery and performance of thisServicing Agreement and the Sale and Allocation Agreement by the Servicer willnot constitute a violation with respect to any order or decree of any court orany order, regulation or demand of any federal, state, municipal orgovernmental agency, which violation might have consequences that wouldmaterially and adversely affect the condition (financial or other) oroperations of the Servicer or its properties or might have consequences thatwould affect the performance of its duties hereunder;

###  

### (f)            No proceedingof any kind, including but not limited to litigation, arbitration, judicial oradministrative, is pending or threatened against or contemplated by theServicer which would under any circumstance have an adverse effect on theexecution, delivery, performance or enforceability of this Servicing Agreementor the Sale and Allocation Agreement;

###  

### (g)           No information,officer’s certificate or statement furnished in writing or report delivered tothe Indenture Trustee, the Issuer, the Insurer, the Back-up Servicer or theNoteholders by the Servicer required under this Servicing Agreement or the Saleand Allocation Agreement contains any untrue statement of a material fact oromits a material fact necessary to make the information, certificate, statementor report not misleading; provided, however, that the Servicermakes no representation or warranty with respect to any informationincorporated into or forming the basis of any officer’s certificate,information, statement or report provided by the Servicer that is provided tothe Servicer by any other Person;

###  

### (h)           The Servicerhas the knowledge, the experience and the systems, financial and operationalcapacity available to timely perform each of its obligations hereunder; and

###  

### (i)            The Servicerhas, with respect to the Contracts, complied in all material respects with theCollection Policy.

###  

## 4.02.        Representationsand Warranties of the Back-up Servicer. The Back-up Servicerhereby represents, warrants and covenants to the Issuer, the Insurer, theNoteholders, the Servicer and the Indenture Trustee that as of the date hereofor as of such date specifically provided herein:

 

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### (a)           The Back-upServicer is a national banking association duly organized, validly existing andauthorized to engage in a banking business under the federal laws of the UnitedStates of America;

###  

### (b)           All necessarycorporate, regulatory or other action has been taken to authorize and empowerthe Back-up Servicer and the officers or representatives acting on the Back-upServicer’s behalf to perform and comply with the Back-up Servicer’s obligationsunder this Servicing Agreement, and the Back-up Servicer has full power andauthority to execute, deliver and perform this Servicing Agreement;

###  

### (c)           The executionand delivery of this Servicing Agreement by the Back-up Servicer and itsperformance and compliance with the terms of this Servicing Agreement will notviolate the Back-up Servicer’s articles of association or bylaws or constitutea default (or an event which, with notice or lapse of time, or both, wouldconstitute a default) under, or result in the breach of, any material contract,security agreement, loan, credit agreement or any other agreement or instrumentto which the Back-up Servicer is a party or which may be applicable to theBack-up Servicer or any of its assets;

###  

### (d)           This ServicingAgreement constitutes a legal, valid and binding obligation of the Back-upServicer, enforceable in accordance with its terms, subject to applicablebankruptcy, insolvency, reorganization, moratorium and other similar lawsaffecting the enforcement of creditors’ rights generally and to generalprinciples of equity;

###  

### (e)           The Back-upServicer is not in violation of, and the execution, delivery and performance ofthis Servicing Agreement by the Back-up Servicer will not constitute a violationwith respect to, any applicable order or decree of any court or any order,regulation or demand of any federal, state, municipal or governmental agency,which violation might have consequences that would materially and adverselyaffect the condition (financial or other) or operations of the Back-up Serviceror its properties or might have consequences that would materially adverselyaffect the performance of its duties hereunder; and

###  

### (f)            No proceedingof any kind, including but not limited to litigation, arbitration, judicial oradministrative, is pending or, to the knowledge of the Back-up Servicer,contemplated or threatened against the Back-up Servicer which would under anycircumstance have an adverse effect on the execution, delivery, performance orenforceability of this Servicing Agreement by or against the Back-up Servicer.

###  

## 4.03.        Representationsand Warranties of the Issuer. The Issuer herebyrepresents, warrants and covenants to the Back-up Servicer, the Servicer, theNoteholders, the Insurer and the Indenture Trustee that as of the date of thisServicing Agreement or as of such date specifically provided herein:

##  

### (a)           The Issuer is aDelaware statutory trust duly organized and validly existing under the laws ofthe State of Delaware and has full power and authority to execute and deliverthis Servicing Agreement and to perform the terms and provisions hereof;

###  

### (b)           The execution,delivery and performance by the Issuer of this Servicing Agreement have beenduly authorized by all necessary action by the Issuer, do not

 

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### require any approval or consent of any Person, do not and will notconflict with any material provision of the organizational documents of theIssuer, and do not and will not conflict with or result in a breach which wouldconstitute a material default under any agreement binding upon or applicable toit or such of its property which is material to it, or any law or governmentalregulation or court decree applicable to it or such material property, and thisServicing Agreement is the legal, valid and binding obligation of the Issuerenforceable in accordance with its terms except as the same may be limited byinsolvency, bankruptcy, reorganization or other laws relating to or affectingthe enforcement of creditors’ rights or by general equity principles; and

###  

### (c)           No litigationor administrative proceeding of or before any court, tribunal or governmentalbody is presently pending, or to the knowledge of the Issuer threatened,against the Issuer or its properties or with respect to this ServicingAgreement, which, if adversely determined would, in the opinion of the Issuer,have a material adverse effect on the transactions contemplated by thisServicing Agreement.

###  

## 4.04.        Survival of Representationsand Warranties. The representations and warranties set forth inthis Article IV are continuous and shall survive the date of thisServicing Agreement. Upon discovery by any of the Issuer, the IndentureTrustee, the Back-up Servicer or the Servicer of a breach of any of theforegoing representations and warranties, the party discovering such breachshall give prompt written notice to the other parties hereto, including theInsurer and the Indenture Trustee.

##  

## 4.05.        Merger orConsolidation of, or Assumption of the Obligations of, or Resignation ofServicer. Any Person (a) into which the Servicer may bemerged or consolidated, (b) which may result from any merger or consolidationto which the Servicer shall be a party, (c) which may succeed to the propertiesand assets of the Servicer substantially as a whole, or (d) which may succeedto the duties and obligations of the Servicer under this Servicing Agreementfollowing the resignation of the Servicer subject to Section 2.01hereof, which Person executes an agreement of assumption to perform everyobligation of the Servicer hereunder, shall be the successor to the Servicerunder this Servicing Agreement with the prior written consent of the Insurer(if no Insurer Default shall have occurred and be continuing) and withoutfurther act on the part of any of the parties to this Servicing Agreement; provided,however, that (i) written notice of such merger, consolidation orassumption of liabilities shall be delivered by the Servicer to the Insurer andthe Noteholders, (ii) immediately after giving effect to such transaction, noEvent of Servicing Termination (as defined in Section 5.01), and noevent which, after notice or lapse of time, or both, would become an Event ofServicing Termination shall have occurred or be continuing, (iii) no Event ofDefault, Event of Servicing Termination or Re-Liening Trigger would occur as aresult of such merger, consolidation or assumption of liability, (iv) theServicer shall have delivered to the Issuer, the Insurer, the Back-up Servicerand the Indenture Trustee an officer’s certificate and an Opinion of Counseleach stating that such consolidation, merger, succession or resignation andsuch agreement of assumption comply with this Section 4.05 and that allconditions precedent provided for in this Servicing Agreement relating to suchtransaction have been complied with and (v) the Servicer shall have deliveredto the Issuer, the Insurer, the Back-up Servicer and the Indenture Trustee anOpinion of Counsel either (A) stating that, in the opinion of such counsel, allfinancing statements, continuation statements and amendments and notations oncertificates of title thereto have been executed and

 

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## filed (or authorized and filed, as applicable) that are necessary fullyto preserve and protect the interest of the Issuer, the Noteholders, theInsurer and the Indenture Trustee in the Contracts and the Financed Vehicles,and reciting the details of such filings, or (B) stating that, in the opinionof such counsel, no such action shall be necessary to preserve and protect suchinterest.

##  

# ARTICLE VDEFAULT, REMEDIES AND INDEMNITY

#  

## 5.01.        Event ofServicing Termination. Any of the following acts or occurrencesshall constitute an “Event of Servicing Termination” under thisServicing Agreement:

##  

### (a)           any failure bythe Servicer to make any required payment, transfer or deposit to the IndentureTrustee under any Transaction Document on the date such payment, transfer ordeposit is required to be made;

###  

### (b)           any failure bythe Servicer to provide any notices to the Indenture Trustee and the Insurerpursuant to this Servicing Agreement relating to the transfer or calculation offunds;

###  

### (c)           failure on thepart of the Servicer to duly observe or perform in any material respect anyother covenants or agreements of the Servicer set forth in this ServicingAgreement or in any other Transaction Document; or the Servicer shall assignits duties hereunder (except as expressly permitted herein);

###  

### (d)           anyrepresentation, warranty or certification made by the Servicer or any successorthereto in this Servicing Agreement or in any other Transaction Document, or inany certificate delivered pursuant to this Servicing Agreement or any otherTransaction Document (other than any representation or warranty relating to aContract that has been purchased by the Servicer), shall prove to have beenincorrect when made, which has a material adverse effect on the Noteholders orthe Insurer;

###  

### (e)           the Servicer orBack-up Servicer shall consent to the appointment of a conservator or receiveror liquidator in any insolvency, readjustment of debt, marshalling of assetsand liabilities or similar proceedings of or relating to the Servicer orBack-up Servicer, respectively, or of or relating to all or substantially allof their respective properties; or a decree or order of a court or agency orsupervisory authority having jurisdiction in the premises for the appointmentof a conservator or receiver or liquidator in any insolvency, readjustment ofdebt, marshalling of assets and liabilities or similar proceedings, or for thewinding-up or liquidation of its affairs, shall have been entered against theServicer or Back-up Servicer or Successor Servicer or Successor Back-up Servicerand such decree or order shall have remained in force undischarged or unstayedfor a period of 60 days; or the Servicer or Back-up Servicer or any successorto either shall admit in writing its inability to pay its debts generally asthey become due, file or have filed against it a petition or commence an actionto take advantage of any applicable insolvency or reorganization statute, makeany assignment for the benefit of its creditors or voluntarily suspend paymentof its obligations;

###  

### (f)            the Servicer orthe Back-up Servicer or any successor to either shall cease to be an EligibleServicer as determined by the Insurer;

 

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### (g)           the Servicermakes any material changes to its Collection Policy with respect to theContracts without the consent of the Insurer, which consent shall not beunreasonably withheld;

###  

### (h)           an Event ofDefault under the Indenture with respect to the Servicer occurs which has notbeen waived by the Insurer;

###  

### (i)            the averageExtended Contract Rate with respect to any 3 consecutive Collection Periodsexceeds 1.75%;

###  

### (j)            the merger orconsolidation (including a conveyance transaction) of the Servicer with or intoany Person whereby the Servicer is not the surviving entity; or

###  

### (k)           the Servicershall have defaulted on any payment required to be made by it under anymaterial credit agreement or other loan agreement pursuant to which it hasborrowed money.

###  

## 5.02.        Remedies.

##  

### (a)           If an Event ofServicing Termination shall occur and be continuing, the Insurer (or, if anInsurer Default shall have occurred and be continuing, any of the IndentureTrustee (to the extent an officer of the Indenture Trustee has actual knowledgethereof), the Issuer, or the Indenture Trustee at the direction of Noteholdersevidencing not less than 51% of the Class A Note Balance), by notice given inwriting to the Servicer or the Back-up Servicer, as the case may be (“TerminationNotice”) (with copies to the Indenture Trustee and the Issuer if given bythe Insurer), may terminate all of the rights and obligations of the Serviceror the Back-up Servicer, as the case may be, under this Servicing Agreement(except as set forth in Section 5.03). On or after the receipt by theServicer of such Termination Notice, all authority, power, duties, obligationsand responsibilities of the Servicer under this Servicing Agreement, whetherwith respect to the Contracts, or otherwise, automatically shall pass to, bevested in and become obligations and responsibilities of the Back-up Servicer(or such other Successor Servicer appointed in accordance herewith); provided,however, that the Successor Servicer shall have no liability withrespect to any obligation which was required to be performed by the terminatedServicer prior to the date that the Successor Servicer becomes the Servicer orany claim based on any alleged action or inaction of the terminated Servicer.The Successor Servicer is authorized and empowered by this Agreement to executeand deliver, on behalf of the terminated Servicer, as attorney-in-fact orotherwise, any and all documents and other instruments and to do or accomplishall other acts or things necessary or appropriate to effect the purposes ofsuch Termination Notice, whether to complete the transfer and endorsement ofthe Contracts and related documents to show the Issuer or the Indenture Trusteeas lienholder or secured party on the related title documents, or otherwise.The terminated Servicer agrees to cooperate with the Successor Servicer ineffecting the termination of the responsibilities and rights of the terminatedServicer under this Servicing Agreement, including, without limitation, thetransfer to the Successor Servicer for administration by it of all cash amountsthat shall at the time be held by the terminated Servicer for deposit, or havebeen deposited by the terminated Servicer, in the Collection Account orthereafter received with respect to the Contracts and the delivery to theSuccessor Servicer of all Servicer Files, collection records and a computertape in

 

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### readable form as of the most recent Business Day containing allinformation necessary to enable the Back-up Servicer or other SuccessorServicer, as the case may be, to service the Contracts. The terminated Servicershall grant the Issuer, the Indenture Trustee, the Successor Servicer and theInsurer reasonable access to the terminated Servicer’s premises at theterminated Servicer’s expense. Subject to Section 2.08(b), the SuccessorServicer shall be entitled to be reimbursed pursuant to Section 3.5(d)(i) ofthe Sale and Allocation Agreement, to the extent described therein, and anyexcess pursuant to 3.5(d)(x) of the Sale and Allocation Agreement forreasonable costs incurred by it in connection with a transfer of servicing fromthe Servicer to such Successor Servicer.

###  

### (b)           On and afterthe time the Servicer receives a Termination Notice pursuant to Section5.02(a), the Back-up Servicer (unless the Insurer shall have exercised itsoption pursuant to the following paragraph to appoint an alternate SuccessorServicer) shall be the successor in all respects to the Servicer in itscapacity as servicer under this Servicing Agreement and the transactions setforth or provided for in this Servicing Agreement, and shall be subject to allthe rights, responsibilities, restrictions, duties, liabilities and terminationprovisions relating thereto placed on the Servicer by the terms and provisionsof this Servicing Agreement except as otherwise stated herein. The Issuer andsuch successor shall take such action, consistent with this ServicingAgreement, as shall be necessary to effectuate any such succession. If aSuccessor Servicer is acting as Servicer hereunder, it shall only be subject totermination under Section 5.02 upon the occurrence of any Event ofServicing Termination with respect to such Successor Servicer.

###  

### (c)           On and afterthe receipt by the terminated Servicer of a Termination Notice pursuant to thisSection 5.02, the terminated Servicer shall continue to perform allservicing functions under this Servicing Agreement until the date specified inthe Termination Notice. The Insurer (provided that no Insurer Default shallhave occurred and be continuing) may exercise at any time (after a TerminationNotice is given) its right to appoint as Successor Back-up Servicer or asSuccessor Servicer a Person other than the Person serving as Indenture Trusteeor Back-up Servicer, as the case may be, at the time, and (without limiting theInsurer’s obligations under the Policy with respect to the Class A Notes) shallhave no liability to the Issuer, the Indenture Trustee, the Person then servingas Back-up Servicer, any Noteholder or any other Person if it does so. If aSuccessor Servicer is not chosen within 90 calendar days after the receipt bythe Servicer of the Termination Notice, the Back-up Servicer shall act asSuccessor Servicer unless it is legally unable to do so, in which event theoutgoing Servicer shall continue to act as Servicer until a successor has beenappointed and accepted such appointment. If the Back-up Servicer shall belegally unable to act as Servicer, and an Insurer Default shall have occurredand be continuing, the Back-up Servicer, the Indenture Trustee, Noteholdersevidencing not less than 51% of the Class A Note Balance or the Issuer maypetition a court of competent jurisdiction to appoint an Eligible Servicer asthe Successor Servicer. Notwithstanding the above, no provision of thisServicing Agreement shall be construed as relieving the Back-up Servicer of itsobligation to succeed as Successor Servicer upon the termination of theServicer pursuant to this Section 5.02 or the resignation of theServicer pursuant to Section 5.09. If, upon the termination of theServicer pursuant to this Section 5.02 or the resignation of theServicer pursuant to Section 5.09, the Insurer appoints a SuccessorServicer other than the Back-up Servicer, the Back-up Servicer shall not berelieved of its duties as Back-up Servicer hereunder. Within 30 days oftermination of the Servicer, if such termination causes a change in the address

 

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### to which Obligor payments are to be sent, the Successor Servicer shallsend, or cause to be sent, to each Obligor, a written notice of the name andmailing address of the Successor Servicer to which payments on the Contractsare to be made.

###  

### (d)           The Insurer or,if an Insurer Default has occurred and is continuing, the Indenture Trustee,the Issuer, or the Indenture Trustee at the direction of Noteholders evidencingnot less than 51% of the Class A Note Balance shall as promptly as possibleappoint a Successor Back-up Servicer following delivery of a Termination Noticewith respect to the Back-up Servicer. If the Insurer or Indenture Trustee, asapplicable, shall fail to approve a Successor Back-up Servicer within 30 daysof the date of a Termination Notice, the Indenture Trustee may petition a courtof competent jurisdiction for the appointment of a Successor Back-up Servicerthat is an Eligible Servicer. Notwithstanding the above, the Indenture Trusteeshall, if it is legally unable so to act, petition a court of competentjurisdiction to appoint any Eligible Servicer as the Successor Back-up Servicerhereunder.

###  

### (e)           Upon itsappointment, the Successor Servicer or Successor Back-up Servicer, as the casemay be, shall be the successor in all respects to the terminated Servicer orBack-up Servicer, as the case may be, with respect to servicing functions underthis Servicing Agreement and shall be subject to all the responsibilities,duties and liabilities (arising on and after the time of such appointmentexcept for liability arising from the condition of the Servicer’s records atthe time the servicing duties are transferred to the Back-up Servicer or otherSuccessor Servicer or for actions or omissions of other Persons) relatingthereto placed on the Servicer or Back-up Servicer, respectively, by the termsand provisions hereof (except as otherwise provided in this Servicing Agreementwith respect to the Back-up Servicer acting as Servicer), any SuccessorServicer shall become the successor Administrator in accordance with Section 20of the Administration Agreement, and all references in this Servicing Agreementto the Servicer or Back-up Servicer shall be deemed to refer to the SuccessorServicer or Successor Back-up Servicer unless the context otherwise requires; provided,however, that the Successor Servicer shall have (i) no liability withrespect to any obligation which was required to be performed by the terminatedServicer prior to the date that the Successor Servicer becomes the Servicer orany claim of a third party based on any alleged action or inaction of theterminated Servicer, (ii) no obligation to perform any repurchase or advancing obligations,if any, of the Servicer, (iii) no obligation to pay any taxes required to bepaid by the Servicer, (iv) no obligation to pay any of the fees and expenses ofany other party involved in this transaction and (v) no liability or obligationwith respect to any Servicer indemnification obligations of any prior servicerincluding the original servicer. The indemnification obligations of the BackupServicer, upon becoming a Successor Servicer, are expressly limited to mattersarising from the gross negligence or willful misconduct of the Backup Servicerin its role as Successor Servicer.

###  

### (f)            In connectionwith such appointment and assumption, the Back-up Servicer may make sucharrangements for the compensation of itself and the Successor Servicer out ofcollections of Contract payments, as it and such Successor Servicer shallagree; provided, however, that no such compensation shall be inexcess of the Back-up Servicing Fees and Monthly Servicing Fees permitted tothe Back-up Servicer and the Servicer, respectively, pursuant to this ServicingAgreement without the approval of the Insurer or, if an Insurer Default hasoccurred and is continuing, Noteholders evidencing not less than 51% of theClass A Note Balance.

 

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## 5.03.        Indemnity bythe Servicer. The Servicer shall be liable to the Issuer, theInsurer, the Indenture Trustee, the Holders of the Class A Notes, the OwnerTrustee, the Paying Agent and Certificate Registrar under the Trust Agreementand the Back-up Servicer (collectively, the “Indemnified Parties”) tothe extent of the following:

##  

### (a)           The Servicershall indemnify, defend and hold harmless the Indemnified Parties and any ofthe officers, directors, employees and agents of the Indemnified Parties fromand against any and all costs, expenses, losses, damages, claims andliabilities, including reasonable fees and expenses of counsel and expenses oflitigation, arising out of or resulting from the use, ownership or operation bythe Servicer or any affiliate thereof of a Financed Vehicle.

###  

### (b)           The Servicershall indemnify, defend and hold harmless the Indemnified Parties and any ofthe officers, directors, employees and agents of the Indemnified Parties fromand against any and all costs, expenses, losses, claims, damages andliabilities to the extent that such cost, expense, loss, claim, damage orliability arose out of, or was imposed upon any such Person through the breachof this Servicing Agreement by the Servicer, the negligence, misfeasance or badfaith of the Servicer in the performance of its duties under this ServicingAgreement or by reason of reckless disregard of its obligations and dutiesunder this Servicing Agreement.

###  

### (c)           The Servicershall be strictly accountable for all payments actually received on theContracts.

###  

THE FOREGOINGINDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH SECTION 5.03 LIABILITIESAND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANYCLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART BY ANYNEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIED PARTY.

 

### (d)           Notwithstandingany thing herein to the contrary, the Servicer shall not be obligated toindemnify any Person with respect to any amounts representing recourse foruncollectible Contracts.

###  

### (e)           Notwithstandingany other provision in this Agreement or any other Transaction Document to thecontrary, should the Back-up Servicer by any means become Successor Servicer,the Back-up Servicer shall not inherit any of the indemnification obligationswith respect to the actions of any prior servicer including the originalServicer.

###  

## 5.04.        Procedure forIndemnification. Notwithstanding anything to the contrary in thisServicing Agreement, in the event that an Indemnified Party is entitled toindemnification pursuant to the terms of this Servicing Agreement, suchIndemnified Party shall promptly notify the Person against whom such indemnitymay be sought (hereinafter called the “Indemnifying Party”) in writingand the Indemnifying Party, upon request of the Indemnified Party, shall retaincounsel reasonably satisfactory to the Indemnified Party or, at the IndemnifiedParty’s option, such Indemnified Party may select its own counsel with theconsent of the Indemnifying Party, which consent shall not be unreasonablywithheld or delayed, to represent the Indemnified Party

 

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## and any others the Indemnified Party may designate in such proceedingand shall pay the reasonable fees and disbursements of such counsel related tosuch proceeding. It is understood that the Indemnifying Party shall not, inconnection with any proceeding or related proceedings in the same jurisdiction,be liable for the reasonable fees and expenses of more than one separate firmat any one time (in addition to any local counsel) for all such IndemnifiedParties (unless necessary because of conflicts of interest), and all such feesand expenses shall be reimbursed as they are incurred. Such firm shall bedesignated in writing by the Indemnified Party. The Indemnifying Party shallnot be liable for any settlement of any proceeding effected without its writtenconsent, which consent shall not be unreasonably withheld or delayed, but ifsettled with such consent or if there be an adverse final judgment, theIndemnifying Party agrees to indemnify the Indemnified Party from and againstany loss or liability by reason of such settlement or judgment.

##  

## 5.05.        Liability ofthe Back-up Servicer. The Back-up Servicer shall not be liable to theServicer, the Issuer, the Insurer, the Indenture Trustee or the Noteholders (i)by reason of any act, contract or transaction performed in good faith by theBack-up Servicer pursuant to this Servicing Agreement nor shall it be liablefor any loss resulting therefrom or for any lost profit derived therefrom orany errors in judgment, so long as such act, contract or transaction shall, atthe time at which it was performed or entered into, have been reasonable andprudent under the circumstances and shall have conformed in all materialrespects to the express provisions of this Servicing Agreement or (ii) for anyaction taken or for errors in judgment committed directly resulting from fraud,negligence or willful misconduct of the Seller, the Issuer, the Servicer, theInsurer, the Indenture Trustee or the Noteholders.

##  

## 5.06.        Notification. Upondiscovery of the occurrence of any Event of Servicing Termination, after theexpiration of any applicable grace period, the Servicer or the Back-up Servicershall give written notice of the occurrence of an Event of ServicingTermination to the Insurer, the Indenture Trustee, and the Owner Trustee.Unless the Insurer, or if an Insurer Default has occurred and is continuing,Noteholders evidencing not less than 51% of the Class A Note Balance, giveswritten notice to the Servicer or the Back-up Servicer, as the case may be,within seven Business Days of receipt of such notice from the Servicer or theBack-up Servicer that the Insurer or Noteholders evidencing not less than 51%of the Class A Note Balance, as the case may be, have waived such Event ofServicing Termination, the Servicer or the Back-up Servicer, as the case maybe, shall then give notice in writing to the Rating Agencies, the Issuer andany other Persons identified on a list provided to the Servicer or the Back-upServicer, as the case may be, by the Issuer as such list may be amended fromtime to time, and the Indenture Trustee shall give notice to the Noteholders.

##  

## 5.07.        Waiver of Eventof Defaults. The Insurer or the Indenture Trustee at thedirection of Noteholders evidencing not less than 51% of the Class A NoteBalance (with the prior written consent of the Insurer if no Insurer Defaultshall have occurred and be continuing) may waive any Event of ServicingTermination, except for an Event of Servicing Termination arising by virtue ofa default in making any required deposits to or payments from the CollectionAccount, the Class A Note Payment Account, the Class B Note Payment Account orthe Reserve Account in accordance with this Servicing Agreement.Notwithstanding the preceding sentence, the Insurer (if no Insurer Defaultshall have occurred and be continuing) may, on behalf of all Noteholders, waiveany Event of Servicing Termination. Upon any such waiver of an Event of

 

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## Servicing Termination, such default shall cease to exist, and anydefault arising therefrom shall be deemed to have been remedied for everypurpose of this Servicing Agreement. No such waiver shall extend to anysubsequent or other default or impair any rights of the Noteholders or theInsurer with respect to subsequent Events of Servicing Termination consequentthereon except to the extent expressly so waived.

##  

## 5.08.        Survival. Theagreements in Section 5.03 shall survive the termination of theIndenture, the removal, resignation or replacement of the Servicer and thepayment in full of the Notes.

##  

## 5.09.        Servicer andBack-up Servicer Not to Resign. Subject to the provisionsof Section 5.02, neither the Servicer nor the Back-up Servicer shallresign from the obligations and duties imposed on it by this ServicingAgreement as Servicer or Back-up Servicer except upon a determination that byreason of a change in legal requirements the performance of its duties underthis Servicing Agreement would cause it to be in violation of such legalrequirements in a manner which would have a material adverse effect on theServicer or the Back-up Servicer, as the case may be, and the Insurer does notelect to waive the obligations of the Servicer or the Back-up Servicer, as thecase may be, to perform the duties which render it legally unable to act or todelegate those duties to another Person. Any such determination permitting theresignation of the Servicer or Back-up Servicer shall be evidenced by anopinion of counsel to such effect delivered and acceptable to the Issuer, theIndenture Trustee, and the Insurer. No resignation of the Servicer shall becomeeffective until the Back-up Servicer or an entity acceptable to the Insurer (ifno Insurer Default shall have occurred and be continuing) shall have assumedthe responsibilities and obligations of the Servicer. No resignation of theBack-up Servicer shall become effective until an entity acceptable to theInsurer shall have assumed the responsibilities and obligations of the Back-upServicer; provided, however, that in the event a successorBack-up Servicer is not appointed within 60 days after the Back-up Servicer hasgiven notice of its resignation and has provided the opinion of counselrequired by this Section 5.09, the Back-up Servicer may petition a courtof competent jurisdiction for its removal.

##  

# ARTICLE VITERMINATION OF AGREEMENT

#  

## 6.01.        Term. ThisServicing Agreement shall remain in effect until termination of the Indenture.

##  

## 6.02.        Effect ofTermination. Upon termination of this Servicing Agreement, theServicer shall, at the direction of the Issuer, promptly deliver to the Issueror its designee all Servicer Files and any related files and correspondence inits possession as are related to the management of the Contracts and theservices provided hereunder.

##  

## 6.03.        Transfer ofServicing. Upon termination of this Servicing Agreement, theServicer shall cooperate in the transfer of the Servicer Files. Any matterspending at the effective termination date will continue to be processed in anorderly and timely fashion; it being intended, however, that responsibility forthe Contracts shall transfer as quickly as practicable and in any event withinthirty days after the termination date.

 

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# ARTICLE VIIMISCELLANEOUS PROVISIONS

#  

## 7.01.        Amendment. ThisServicing Agreement may only be amended by mutual written consent of the partieshereto and with the prior written consent of the Insurer and Noteholdersevidencing not less than 51% of the Class A Note Balance. No amendment made tothe Sale and Allocation Agreement or the Indenture, without the Back-upServicer’s or the Servicer’s written consent, shall be effective as to theBack-up Servicer or the Servicer, respectively, to the extent such amendment isdisadvantageous in any respect to the Back-up Servicer or the Servicer,respectively. The Rating Agencies and any other Persons identified on a listprovided to the Issuer, as such list may be amended from time to time, shall begiven by the Issuer prior notice of any proposed amendment to the ServicingAgreement, the Sale and Allocation Agreement or the Indenture and, upon any suchamendment, shall promptly be provided by the Issuer a copy of any suchamendment.

##  

## 7.02.        Waivers. Theprovisions of this Servicing Agreement may only be waived by written consent ofthe Insurer or, if an Insurer Default has occurred and is continuing, Noteholdersevidencing not less than 51% of the Class A Note Balance, and the partieshereto. The failure of any party at any time to require performance by theother of any provision of this Servicing Agreement shall in no way affect thatparty’s right to enforce such provision, nor shall the waiver by any party ofany breach of any provision of this Servicing Agreement be taken or held to bea waiver of any further breach of the same provision or any other provision.

##  

## 7.03.        Notices. All notices,requests, consents and other communications hereunder shall be in writing andshall be delivered personally or mailed by first-class registered or certifiedmail, postage prepaid, or by telephonic facsimile transmission and overnightdelivery service, postage prepaid, in any case addressed as follows:

##  

To the Servicer:

 

First Investors ServicingCorporation

c/o First InvestorsFinancial Services, Inc.

675 Bering, Suite 710

Houston, Texas 77057

Attention: Bennie H. Duck

Telephone: (713) 977-2600

Fax: (713) 260-0028

 

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To the IndentureTrustee/Back-up Servicer:

 

Wells Fargo Bank,National Association

MAC N9311-161

Sixth Street andMarquette Avenue

Minneapolis, Minnesota55479

Attention: CorporateTrust Services – Asset-Backed Administration

Telephone: (612) 667-8058

Fax: (612) 667-3464

 

To the Issuer:

 

First Investors AutoOwner Trust 2006-A

c/o Wells Fargo DelawareTrust Company, as Owner Trustee

919 North Market Street,Suite 700

Wilmington, Delaware 19801

Attention: CorporateTrust Administration, Ann Dukart

Telephone: (302) 575-2004

Fax: (302) 575-2006

 

To the Rating Agencies:

 

Moody’s InvestorsService, Inc.

99 Church Street, 4thFloorNew York, New York 10007Attn: Yan Yan

ServicerReports@moodys.com

 

With an additional copyto:

 

Moody’s InvestorsService, Inc.

99 Church Street, 4thFloor

New York, New York 10007

Attn: ABS MonitoringDepartment

 

Standard & Poor’s

55 Water Street

New York, New York 10041

Attention: Amy Martin

Phone: (212) 438-2404

Fax: (212) 438-2649

 

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To the Insurer:

 

MBIA InsuranceCorporation

113 King Street

Armonk, New York 10504

Attention: InsuredPortfolio Management-

Structured Finance(IPM-SF)

Phone: (914) 273-4545

Fax: (914) 765-3810

 

Such notice, request,consent or other communication shall be deemed given when so delivered, or ifmailed, two days after deposit with the U.S. Postal Service.

 

## 7.04.        Severability ofProvisions. If one or more of the provisions of this ServicingAgreement shall be held invalid for any reason, such provisions shall be deemedseverable from the remaining provisions of this Servicing Agreement and shallin no way affect the validity or enforceability of such remaining provisions.To the extent permitted by law, the parties hereto hereby waive any law whichrenders any provision of this Servicing Agreement prohibited or unenforceable.

##  

## 7.05.        RightsCumulative. All rights and remedies under this ServicingAgreement are cumulative, and none is intended to be exclusive of another. Nodelay or omission in insisting upon the strict observance or performance of anyprovision of this Servicing Agreement, or in exercising any right or remedy,shall be construed as a waiver or relinquishment of such provision, nor shallit impair such right or remedy. Every right and remedy may be exercised fromtime to time and as often as deemed expedient.

##  

## 7.06.        No Offset. Prior to thetermination of this Servicing Agreement, the obligations of the Back-upServicer and the Servicer under this Servicing Agreement shall not be subjectto any defense, counterclaim or right of offset which the Back-up Servicer orthe Servicer may have against the other or against the Issuer, the Seller, theInsurer, any Noteholder or the Indenture Trustee, whether in respect of thisServicing Agreement, any Contract or otherwise.

##  

## 7.07.        Inspection andAudit Rights. The Servicer agrees that, upon prior writtennotice, it will permit the Issuer, the Insurer, the Back-up Servicer, or theIndenture Trustee and their respective representatives, during the Servicer’snormal business hours, to examine the Servicer Files, all the books of account,records, reports and other papers of the Servicer relating to the Contracts, tomake copies and extracts therefrom, to cause such books to be audited byindependent public accountants selected by the Issuer, and to discuss itsaffairs, finances and accounts relating to the Contracts with its officers,employees and independent certified public accountants, all at such reasonabletimes and as often as may be reasonably requested. Any expense incident to theexercise by the Issuer, the Insurer or the Indenture Trustee of any right underthis Section 7.07 shall be borne by the Servicer. The Servicer shallallow such examination within two (2) Business Days of receipt of the requirednotice if so requested by the requesting party.

 

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## 7.08.        Powers ofAttorney. The Issuer shall, from time to time, provide tothe employees of the Servicer and the Indenture Trustee limited, revocablepowers of attorney or other such written authorizations as may be appropriateto enable the Servicer and the Indenture Trustee to perform its respectiveobligations under this Servicing Agreement and the Indenture; provided, however,that the Issuer shall not be required to provide such powers with respect toany matter for which the Issuer does not have authority to perform itself.

##  

## 7.09.        Assignment andBinding Effect. Except with respect to the pledge of its rightsunder this Servicing Agreement by the Issuer to the Indenture Trustee pursuantto the Indenture and as expressly provided herein, this Servicing Agreement maybe assigned by the Issuer only with the written consent of the parties heretoand the Insurer or, if an Insurer Default has occurred and is continuing,Noteholders evidencing not less than 51% of the Class A Note Balance; however,in the event of an assignment, all provisions of this Servicing Agreement shallbe binding upon and inure to the benefit of the respective successors andassigns of the parties hereto.

##  

## 7.10.        Captions. The article,paragraph and other headings contained in this Servicing Agreement are forreference purposes only, and shall not limit or otherwise affect the meaninghereof.

##  

## 7.11.        Counterparts. ThisServicing Agreement may be executed in any number of counterparts, each ofwhich counterparts shall be deemed to be an original, and such counterpartsshall constitute but one and the same instrument.

##  

## 7.12.        Governing Law. This ServicingAgreement shall be deemed entered into under and shall be governed by andinterpreted in accordance with the laws of the State of New York withoutreference to its conflict of law provisions, and the obligations, rights andremedieis of the parties hereunder shall be deterimined in accordance with suchlaws.

##  

## 7.13.        Parties. Except as setforth in Section 7.16 hereof, this Servicing Agreement shall inuresolely to the benefit of and shall be binding upon the parties hereto, andtheir respective successors, legal representatives and assigns, and no other Personshall have or be construed to have any equitable right, remedy or claim underor in respect of or by virtue of this Servicing Agreement or any provisioncontained herein.

##  

## 7.14.        Relationship ofthe Parties. The relationship of the parties to this ServicingAgreement is that of independent contractors. Neither this Servicing Agreementnor any of the activities contemplated hereby shall be deemed to create anypartnership, joint venture, agency or employer/employee relationship among theBack-up Servicer, the Servicer and the Issuer.

##  

## 7.15.        No BankruptcyPetition Against the Issuer or Depositor. The Back-up Servicer, theServicer and the Indenture Trustee agree that, prior to the date that is oneyear and one day after the payment in full of the Notes, none of them willinstitute against or join any other Person in instituting against, the Issueror the Depositor, any bankruptcy, reorganization, arrangement, insolvency orliquidation proceedings or other proceedings under the laws of the UnitedStates or any state of the United States. This Section 7.15 shallsurvive the termination of this Servicing Agreement.

 

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## 7.16.        Third PartyBeneficiaries. This Servicing Agreement shall inure to thebenefit of the Noteholders and the Insurer and their respective successors andassigns. Without limiting the generality of the foregoing, all covenants andagreements in this Servicing Agreement which expressly confer rights upon theInsurer or the Noteholders shall be for the benefit of and run directly tothem, and each shall be entitled to rely on and enforce such covenants to thesame extent as if it were a party hereto. Notwithstanding the foregoing, theNoteholders shall have no rights to enforce the provisions of this ServicingAgreement so long as there is no Insurer Default that has occurred and iscontinuing.

##  

## 7.17.        OtherAgreements. The Servicer and the Back-up Servicer will not beobligated or bound by any provision or term of any other agreement, includingthe Indenture and the Sale and Allocation Agreement, except to the extent, andonly to the extent, expressly stated herein or therein.

##  

## 7.18.        Purchase andSubsequent Pledge. The Servicer hereby acknowledges that the Issuerwill acquire the Contracts and the other items included in the Collateralpursuant to the Sale and Allocation Agreement and will pledge the Contracts andthe other items included in the Collateral along with the Issuer’s rights underthis Servicing Agreement, the Contribution Agreement and the Sale andAllocation Agreement to the Indenture Trustee for the benefit of theNoteholders and the Insurer pursuant to the terms of the Indenture, and thatthe representations and warranties contained in the Contribution Agreement,Sale and Allocation Agreement, this Servicing Agreement and the Indenture andthe rights of the Issuer under the Indenture, this Servicing Agreement, theContribution Agreement and the Sale and Allocation Agreement are intended tobenefit the Noteholders and the Insurer.

##  

## 7.19.        Exercise ofRights by Insurer. All rights granted to the Insurer pursuant to thisServicing Agreement shall terminate during the pendency of an Insurer Defaultand during such time the Insurer’s rights may be exercised by Noteholdersevidencing not less than 51% of the Class A Note Balance; provided, however,the Insurer’s rights shall be reinstated in full, immediately upon the cure ofsuch Insurer Default.

##  

## 7.20.        Limitation ofLiability. Notwithstanding any other provision herein orelsewhere, this Servicing Agreement has been executed and delivered by WellsFargo Delaware Trust Company, not in its individual capacity, but solely in itscapacity as Owner Trustee of the Issuer. In no event shall Wells Fargo DelawareTrust Company or the Owner Trustee have any liability in respect of therepresentations, warranties, or obligations of the Issuer hereunder or underany other Transaction Document and for all purposes of this Agreement and eachother Transaction Document the Owner Trustee and Wells Fargo Delaware TrustCompany shall be entitled to the benefits of the Trust Agreement.

##  

[THEREMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, theIssuer, the Back-up Servicer, the Servicer, the Custodian and the IndentureTrustee have caused this Servicing Agreement to be duly executed by theirrespective authorized officers as of the date and year first above written.

 
|   |   | First Investors Auto  Owner Trust 2006-A, as Issuer                                                                     |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                    |
|   |   | By:                                                                                                                     | Wells Fargo Delaware  Trust Company, not  in its individual capacity but solely as Owner  Trustee on behalf of the Trust |
|   |   |                                                                                                                    |
|   |   | By:                                                                                                                     |   |   |
|   |   | Name:                                                                                                                   |
|   |   | Title:                                                                                                                  |
|   |   |                                                                                                                    |
|   |   | Wells Fargo Bank,  National Association, not in its  individual capacity but solely as Back-up Servicer                 |
|   |   |                                                                                                                    |
|   |   |                                                                                                                    |
|   |   | By:                                                                                                                     |   |   |
|   |   | Name:                                                                                                                   |
|   |   | Title:                                                                                                                  |
|   |   |                                                                                                                    |
|   |   |                                                                                                                    |
|   |   | Wells Fargo Bank,  National Association, not in its  individual capacity but solely as Indenture Trustee  and Custodian |
|   |   |                                                                                                                    |
|   |   |                                                                                                                    |
|   |   | By:                                                                                                                     |   |   |
|   |   | Name:                                                                                                                   |
|   |   | Title:                                                                                                                  |
|   |   |                                                                                                                    |
|   |   |                                                                                                                    |
|   |   | First Investors  Servicing Corporation, as Servicer                                                                     |
|   |   |                                                                                                                    |
|   |   |                                                                                                                    |
|   |   | By:                                                                                                                     |   |   |
|   |   | Name:                                                                                                                   |
|   |   | Title:                                                                                                                  |
|        |        |                                                                                                                         |  |  |  |

 

Servicing AgreementSignature Page

 

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**SCHEDULE I**

 

**FIRST INVESTORS FINANCIAL SERVICES**

** **

**RETAIL COLLECTION POLICY & OPERATING PROCEDURES**

** **

March 2003

 

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**Preface**

 

This procedure explains the First Investors Financial(FIFS) policy for collections. In addition, this section explains the variousmethods to be employed by office personnel to maximize collection efforts; FIFScomplies with the Fair Debt Collection Practices Act and all applicable stateand federal laws and regulations. (For specific requirements or specific statelegislation refer to Legal Procedures.)

 

***Note:  Any exception******to this policy manual needs tobe approved by a Manager or higher Authority.***

 

**OfficeResponsibilities**

 

The office goals are:

 

•                                          Successfuland profitable liquidation of accounts receivables;

 

•                                          Tomaintain client satisfaction- which leads to repeat business.

 

The office can meet theseobjectives by establishing timely and effective collection practices.

 

The importance of immediatefollow-up on a delinquent account cannot be over-emphasized. The later in thedelinquency cycle a customer is contacted, the fewer options are available toFIFS and the customer.

 

Profitability on an accountis effected by more than the potential loss on repossession. An account thatmust be contacted every month for payment is incrementally less profitable thanan account that pays “as agreed,” even though all payments are made in bothcases.

 

**CollectionsUnit Organization**

 

FIFS organizes thecollection department by utilizing an online (auto dialer system) and offlinesystem consisting of three steps:

 

•                                          Accountsare assigned to collection queues determined by: 1) the delinquency of theaccount (days past due), 2) the status of the account (repossession,bankruptcy, skip, etc.) and 3) the balance of workloads.

 

•                                          Accountsare assigned to in-house collectors titled Account Service Representatives.(ASR’s) according to experience level and previous performance.

 

•                                          TheASR is responsible for ensuring proper collection follow-up for all assignedaccounts. The ASR’s are separated into two departments. The front-linecollection  group handles accounts under30 days past due. Back-end collectors handle accounts over 30 days past dueuntil resolution ( i.e. account brought

 

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current, paid-in-full, repossessed orforwarded to a specialty unit such as bankruptcy or litigation).

 

**AccountDistribution**

 

The basis of the FIFScollection philosophy is that all past due accounts not already awaitingresolution or another specific strategy, will be reviewed for daily activity. Thisis the minimum requirement, but collectors are encouraged to follow up as oftenas conditions warrant. Daily Routine will be governed by each collectiondepartment to ensure best coverage and delinquency management for all past dueaccounts.

 

**AccountTracking**

 

FIFS uses an automated collection system that tracksall delinquent accounts. The system is extremely flexible and allows FIFSmaximum ability to organize collection follow-up. The collection systemcontains data on all accounts and provides collector “queues” based on a numberof variables including, balance, days past due, behavioral score, test group,and credit score.

 

On the first day of delinquency, accounts are placedin the collection system for follow-up. Each ASR is given a collection queue tomanage on a daily basis. The accounts are randomly distributed to each queuebased on delinquency level and ASR experience. Accounts remain with theassigned collector until a point is reached requiring designation of anotherASR or department.

 

**TelephoneCollection Concept**

 

Emphasis is placed on the use of the telephone as theprimary tool for customer contact. It is the most effective collection tool. Telephonecontact is quick and provides immediate results. Poor follow-up results in theloss of revenue and potential repeat customers.

 

•                                          Theadvantages of telephone collection follow-up are:

 

•                                          **Efficiency-**The collector is able to contact more customersduring a given time period.

 

•                                          **Low Cost-**In comparison to travel and direct contactexpenses.

 

•                                          **Privacy-**The collector is able to take notes and refer torecords without distracting the customer.

 

**TheCollection Call**

 

An effective collection call is made up of a series oflogical steps. These steps assure that all the information needed fromcustomers is obtained, while also meeting all of FIFS legal and ethicalrequirements.

 

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The steps of an effective collection call are listedand described below. Always follow and complete the steps as the customer andthe nature of the individual call dictate. This will ensure a thorough andsuccessful contact.

 

| Four Steps to an Effective Collection Call |
|--------------------------------------------------------------------------|
| ** **                                                               |
| **Step  One**                                                            | ** ** | **Greeting** |
| ** **                                                               | ** ** | ** ** |
| **Step  Two**                                                            | ** ** | **Facts** |
| ** **                                                               | ** ** | ** ** |
| **Step  Three**                                                          | ** ** | **Negotiations** |
| ** **                                                               | ** ** | ** ** |
| **Step  Four**                                                           | ** ** | **Power  Close** |

 

**StepOne – Greeting**

 

•                                          Confirmthat it is our customer

•                                          DevelopRight Party Contact (RPC) if the contact is not our customer

•                                          Identifyyourself and the company (i.e. This is                          with First Investors Financial Services....)

•                                          Clearlystate the purpose of the call

•                                          PAUSE

 

**Special note:**  Maintain a professional tone and alwaysmaintain control of conversation.

 

**StepTwo – Facts**

 

•                                          Gatherkey Facts / Reasons for delinquency

•                                          Stickwith the topic of conversation

•                                          Verifyinformation – Address, place of employment, contact numbers, income, debtstatement, and location of collateral

•                                          Resolveany conflicts or disputes

•                                          Askfor the Total Due

 

**Special note:**  Tone reflects sincere empathy for thecustomer and his/her situation.

 

**StepThree - Negotiate**

 

•                                          Overcomeobjections

•                                          Identifyall customer benefits

•                                          Createa solution

•                                          Obtaincustomer commitment

 

**Special note:**  Listen to what the customer is saying.Emphasize customer benefits such as:  toeliminates additional action, stop collection calls and notices, and promotesgood CBR rating.

 

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**StepFour – Power Close**

 

•                                          Urgency

•                                          Reconfirmationof arrangements

•                                          Stressconfidence in arrangements

•                                          Thankcustomer

•                                          Setcustomer expectations

 

Before ending the call, verify pertinent customerinformation such as residence address and telephone, current employment andtelephone and any mobile or pager numbers, to facilitate the next contact. **Always determine the location of and who is in possession of ourcollateral.**

 

If the customer states the delinquent payment wasmailed, the ASR should confirm the amount of the payment mailed, type ofpayment (check, cashier check, etc.), and source of the funds. **The customer should be reminded that there is no grace period and toallow for mailing time.**

 

If the customer has not mailed a payment to bring theloan current, arrangements for bringing the account current should be made. Arrangementsfor all past due monies as well as future payments should be set-up by thecollector and agreed upon by the customer. **On all collection callsthe reason for delinquency (RFD) should be discussed and noted.**

 

The ASR should attempt to use urgency payments on allpast due payments. Western Union Quick Collect should be the main source ofurgency suggested (express mail is another good delivery tool). **Phone Pay should be offered on EVERY collection call.**

 

The customer benefits of using phone pay are: 1)it isless expensive than Western Union Quick Collect, 2) the customer’s voided checkprovides them with a permanent record and 3) the customer receives aconfirmation letter from Western Union.

 

**It is important that all details of the collectioncall be noted for future use.**

 

**Workingwith the Customer**

 

Proper account handling is critical to the success ofFirst Investors Financial Services. The first step in providing quality accountservicing is to recognize who the customer is. Virtually every person whom wecome in contact with while acting as a FIFS employee is our customer. The nextstep is to understand the elements that comprise Quality Customer Service –service that not only meets, but also exceeds our customers’ expectations.

 

**TheThree C’s**

 

Quality Customer Service consist of three basicelements:

 

•               Competence

•               Concern

•               Courtesy

 

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**Competence**

 

The ability to deliver quality customer service dependson the employee’s competence – having the knowledge and skill necessary to dothe job properly.

 

Simply having job knowledge and skills is just thestarting point. Each employee must also *demonstrate* toboth internal and external customers that he/she can do the job- that theemployee can deliver on our promise of quality customer service. Few things aremore frustrating to a customer than dealing with a company whose employees lackcompetence. When competence is missing in a customer contact, the customerdoubts the ability of the employee to provide quality service.

 

The specific knowledge and skill required to perform atask completely differ from job to job, but there are four broad competencystandards that apply to any job:

 

1.                                       **Demonstrate efficient job skill:**  Every job at FIFS has a set of job skillsnecessary for performance of the job. It is important to understand thatwhatever a person’s job, our customers expect employees to know how to performthe skills for which they are responsible in quick and efficiently manner.

 

2.                                       **Demonstrate knowledge of FIFS, its policies and procedures.**Tothe customer, each employee is FIFS. Therefore, employees will often be in theposition of having to explain company policies and procedures in a way thatmakes them sound logical and customer-oriented, rather than arbitrary. Thisincludes understanding your own span of authority. Know when it is appropriateto get others involved when helping customers (i.e. when customers requestexceptions to settlement policy requirements).

 

3.                                       **Provide complete information.**Customers expect that FIFSwill provide all the information they will reasonably need about its’processes, procedures and policies. It is every employee’s responsibility toknow these things and to be able to tell the customer what they need to know. Weshould never leave it up to the customer to discover things on his or her own.

 

4.                                       **Know where to get information.**Another requirement ofcompetency is to know what resources to consult, whether those resources aremanuals or fellow employees. An employee is not expected to know everything. Eventhe most demanding customers will understand that the person they’re speakingwith may not have the answer to a problem, as long as an answer can be obtainedwithin a timely fashion.

 

**Show concern.**All customers wantto feel the companies they deal with have a genuine concern for them and theirneeds. Without concern, the positive impression created by Competence willquickly disappear. When concern is missing, customers feel like they are just anumber and are not valued. Showing concern involves following a few simpleguidelines:

 

1.                                       **Project a warm, friendly presence.**A smile goes a long waytoward making customer’s feel that their concerns really matter. That may seemobvious when dealing with a

 

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customer face-to-face, but it is equally trueover the telephone. Studies have shown that when people smile while talking onthe telephone, the person on the other end of the line “hears the smile” intheir voice. An added benefit is that smiling tends to make a person morerelaxed and less stressed.

 

2.                                       **Use the customer’s name.**All people like to be recognizedand respected. One simple way to show respect and recognition of customers asindividuals with their own unique identity is by using their names. When usingcustomers’ names, do so at times when it is natural. Do not use names sofrequently that it becomes forced or insincere. A good rule of thumb is to tryto use the customer’s name two to three times during a conversation.

 

3.                                       **Express empathy.**Empathy is the ability for the ASR to puthim/herself in the “customers’ shoes” – to show understanding of their pointsof views and concerns. Expressing empathy requires careful listening to whatthe customer says, and sincere understanding of his/her underlying feelings offrustration, fear, or anger. A simple “I’m sorry that happened” when mistakesoccur goes a long way toward defusing customer anger, and shows that the ASRunderstands the customer’s point of view. It is possible to show we understanda customer’s problem without accepting fault on the part of the company.

 

4.                                       **Take responsibility for customer satisfaction.**When contactis made with a customer, the ASR’s job is not finished until the customer’sneeds have been met. If the ASR can not personally satisfy the need, thecustomer should be directed to someone who can. Also, when the ASR is presentedwith a problem that the customer perceives to be “our” fault, it is extremelyimportant to avoid blaming someone else in the company. We all “own” customerproblems and blaming others simply appears to the customer as “passing the buck”.Whatever agreement is made with a customer be sure that the agreement iscarried through and followed-up as stated.

 

5.                                       **The ASR should give the customer their undivided attention.**Noone is more important than the customer. No office activity is more importantthan a conversation with a customer. To make sure customers get this messageloudly and clearly, the ASR will need to take precautions to ensure that whenserving a customer, they keep interruptions to an absolute minimum. Inparticular, they should avoid side conversations with other employees unless itis directly related to the customer’s need. If it becomes necessary to leavethe customer to obtain information, clearly explain where you are going, andhow long it will take.

 

**Courtesy**

 

Practicing courtesy towards a customer sounds likesimple common sense. Who would be intentionally rude to a customer?  However, one’s behavior can sometimes appeardiscourteous unintentionally. Unprofessional greetings, abrupt, unexplainedholds, and long waits equal bad business conduct because customers perceivethese behaviors as rude.

 

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**Courtesy is almost synonymous with respectfulness.**Being courteous in a business setting is a matter offollowing rules of etiquette designed to show respect.

 

**Greet and respond to customers quickly andproperly.**It is common courtesy that the ASR responds quicklyand properly to any customer who calls on the telephone. Remember thatcustomers are not interruptions. Taking care of customers is our primary job. Ifthe person who normally greets customers is not available, the ASR should takeit upon his/herself to greet the customer.

 

**When using the customers’ name, use their titleand last name.**For example, “Good afternoon, Mr. Marks.”  Do not address customers by their firstnames.

 

**Listen to customers.**Listeningwithout interrupting may be the most important element of quality customerservice. Listening to customers is a matter of respect. It is virtuallyimpossible to show concern, demonstrate competence, or practice courtesy if theASR does not first listen to what the customer has to say.

 

Listening to customers goes beyond hearing what theyhave to say. An important part of listening is to assure customers that theyare being listened to. **This means that the ASRneeds to actively listen.**Questions should be asked to get customersto explain situations fully. Summarize what the customers says to show thatthey are understood. Once the ASR has demonstrated active listening, it will bepossible to express empathy, take responsibility for customer satisfaction, andprovide complete information.

 

**Ensure the customers’ understanding.**Inorder to ensure that the ASR has successfully handled a customer’s request orneed to its resolution, The collector should discuss the interaction with thecustomer. **Unless both the ASR and the customer come awayfrom the contact with the same understanding of what has occurred or beendecided, we have not provided quality customer service.**

 

**Reconfirm the action that you or the customer willtake.**For example, “Okay, Mr. Carr, you are going to talk toyour banker about a consolidation loan so that we can get your account settled.”

 

**Know and use telephone etiquette.**Themajority of contacts with customers occur via telephone, so it is essential toknow and use the rules of telephone etiquette.

 

**TelephoneEtiquette**

 

**Be professional.**Talk in afriendly tone and control your rate of speech.

 

To convey competence, concern, and courtesy whenhandling telephone calls, each ASR should use the following:

 

•                                          **Answer promptly.**Answer calls between the first and thirdring. Generally, the optimal point to answer is after the second ring.

 

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•                                          **Greet the caller.**When answering the telephone say:  “Thank you for calling FIFS. This is [yourname], how may I help you?”  This willusually cause the customer to provide the information you need to be able torespond, either by helping the customer yourself, or by directing the call tothe appropriate person.

 

•                                          **Handle or direct the call.**Either handle the call yourselfor direct the call to the employee who can best serve the customer’s needs. Identifythe caller and obtain the account number when appropriate.

 

•                                          **Use holds when necessary.**If it is necessary to put callerson hold, proceed as follows:

 

Request and obtain caller’s permission to putthem on hold. **For example,**“It will take a minute to look up your payment information. Will you pleasehold?”

 

•                                          **Do not leave callers on hold for longer than on minute withoutreturning to the line.**If it is necessary to extend the hold,explain the delay, and ask callers if they will continue to hold. If this isother than a collection call, offer to have the appropriate person call back ifthe hold will have to continue for more than a minute.

 

•                                          **When picking up a call that was on hold, thank the customer for holding.****For example,** “Thankyou for holding, Mr. Carr. I have the information for you now.”

 

•                                          **Always use the hold feature on your telephone so that the customercannot hear office conversation while waiting.**

 

•                                          **Transfer when appropriate.**When referring a call to anotheremployee for handling: Tell the callers the first and last name of the personwhom they will be speaking. **Forexample,** “Mr. Carr, I’ll be transferring you to Marge Sands.

 

•                                          **Thank the customer.**

 

**Usethe holds skill to transfer the call**

 

Tell the employee the caller’s name and the reason forthe call. For example, “Marge, I have Mr. Carr on the line. He wants to knowabout the settlement offer he faxed to you.”

 

**Pick-up Transfers properly.    **When picking up a call that was transferred:

 

1)  Greet the caller by name.

 

2)  Tell the caller your name (must be donewithin the first 60 seconds of a call)

 

3)  Restate the purpose of the call.

 

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**For example,** “ Hello, Mr. Carr. Thisis Marge Sands. I understand you have a question about the letter you receivedthis morning.” This lets the caller know that the ASR has been informed of thereason for their call.

 

•                                          **Take messages.**Always try to take care of the caller ordirect the call to someone who can do so. When it is not possible, takecomplete and accurate messages. Follow these guidelines:

 

•                                Obtainthe caller’s name, telephone number, and nature of the call.

 

•                                Ifthe caller has a difficult name, ask for the correct spelling and not thecorrect pronunciation phonetically.

 

**For example,** “Stawiarski”would be correctly spelled on the message and then the phonetic spelling, “Stavarski”,would be noted in parentheses.

 

•                                          **Conclude the call positively.**End each telephone call on apositive note:

 

•                                          **Thank the customer for calling.**

 

**VoiceQuality**

 

When the ASR talks to someone over the telephone,personality is conveyed entirely through voice. Because we do not have theadvantage of facial expression and body language when speaking on the phone,our voice needs to communicate warmth, friendliness, and a desire to be ofservice to all callers. If the ASR is smiling, the smile will be reflected inhis/her voice by a friendly tone. If the ASR is slouched in their chair, theirvoice is likely to have an indifferent, lackadaisical quality, instead ofsounding eager to serve.

 

To help communicate competence, concern and courtesyfor customers while speaking over the phone, the ASR should speak as thought the caller were seated across the deskfrom them. Smile when appropriate, even though the caller can’t see the smile. ASR’sshould sit up straight, and focus attention to the caller.

 

**VoiceQuality**

 

There are four elements to a professional businesslikevoice quality:

 

**Tone, Rate, Volume and Diction**

 

Following is a description of each element andsuggestions for effective use.

 

**Tone**

 

This should be friendly, warm, and courteous withoutbeing overly familiar or formal. An ASR should always smile. Even when speakingabout a serious matter and the customer has become upset, continue to befriendly and professional.

 

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**Rate**

 

Generally, it is best that the ASR match rate ofspeech to that of the customer. If the ASR speaks much faster than the customerdoes, the customer may get the impression that rushing to them off the telephone. Speaking slower than the customer, onthe other hand, can give the impression that the ASR is unsure or perhaps boredand do not place high priority on the callers needs.

 

**Volume**

 

The ASR should Speak as though they were speaking tosomeone seated across the desk, unless the caller has difficulty hearing atthis normal volume. A low volume makes the ASR sound timid and uncertain. Ahigh volume makes the ASR sound harsh and insensitive.

 

**Diction**

 

Pronounce each worked clearly to make sure that whatis being said is understood and sounds professional. Be careful not to use runon words or “swallow” word endings.

 

**Reasonsfor Delinquency**

 

There are two things to keep in mind about customerswith delinquent accounts. First, customers whose accounts have becomedelinquent and have had their account placed with our office are not ouradversaries. These are the same people who we investigated and to whom weextended credit not long ago based on the facts that this customer had theability and the willingness to repay their obligations. One of the ASR’s keyresponsibilities, then, is to determine what has changed since that time andhow we can work with the customer to resolve the situation to our mutual benefit.

 

Second, keep in mind that there are many reasons whyan account may become delinquent. These Include:

 

**Unemployment or Reduction in Income –**Layoffs,strikes, slow times in business resulting in fewer hours and lower pay,termination, disability, or retirement can all seriously affect a customer’sability to meet payment obligations.

 

**Unforeseen Expenses / Over obligation –**Asudden or unforeseen jump in expenses such as medical costs, car repairs ordental bills can affect the customer’s ability to repay their loan or bills. Also,a customer who does not handle his or her money well many incur more debt thancan be reasonably managed with available resources.

 

**Vehicle Purchase Dispute –**Sometimes,customers encounter problems with the vehicle they purchased. When this occurs,customers will often stop paying and never have the matter resolved.

 

**Divorce or Separation –**A changein the customer’s marital status can significantly affect his or her income dueto the pressures of alimony, new housing expenses, child support, loss of aspouse’s financial contribution to a household, etc.

 

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**Illness –**If a customer becomesill and cannot work for a period of time, or if illness strikes a member of hisor her family, a loss of income and the cost of medical expenses can affect hisor her ability to meet financial obligations.

 

**HelpingFind Solutions**

 

While all of these circumstances are regrettable, mostare temporary. Even in cases of bankruptcy or death, it is possible to collecton the account. Generally, we will find that customers would like to repaytheir obligations if they could only figure out how to do it in light of theiraltered circumstances.

 

The ASR can offer a valuable service to thesecustomers and to FIFS by helping them find the best solution that will let thempay the money they owe. This includes finding the reason behind why the are notpaying, and letting the customer know that FIFS wants to help them solve theproblem. The next step for the ASR is to work on a plan that will allow then topay off their account as soon as possible.

 

The most effective way to prevent delinquency is tomanage each account on a daily basis. To do this, the ASR must keep accountrecords up to date, anticipate problems whenever possible, and communicate withcustomers frequently to ensure promises are kept.

 

Objective is to educate the customer and resolvedelinquency. There are several practices to remember while you work towardsresolution.

 

•                                          Telephoneis the primary tool

•                                          Workaccounts daily

•                                          Firmcommunication, keep control

•                                          Followup on broken promises

•                                          Alwaysobtain reason for delinquency

•                                          Stressurgency to get account paid

•                                          Educatecustomers on payment options

•                                          Repeatarrangements

•                                          Verifyaccount information

•                                          Educatefollow up

•                                          Setthe customers Expectations.

 

**Right Party Contacts (customer)**

 

•                                          Whoyou spoke with (the person’s name).

•                                          ActualReason for delinquency.

•                                          Whenthey will be paying.

•                                          Theamount of the payment.

•                                          Thesource from where the funds for the payment is coming form.

•                                          Whenthey will be making their next payment.

•                                          Anyother relative facts that will help collect the account now and in the future.

•                                          Verifyhome address, telephone number and any employment information

 

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**Third Party Contacts**

 

•                                          Whoyou spoke with (the person’s name and relation to customer).

•                                          Whenthe customer will be home for a return call.

•                                          Ifyou did or did not leave a message.

•                                          Wherethe customer is at the time of the call.

•                                          Anyother information provided by the person you spoke with that will help withfuture collections.

 

All notes should be clear and easy to understand.

 

Opinions about the customer should not be formed ornoted on the collection record. Stick to the facts and details of the call.

 

If the customer is not reached after reasonableattempts and messages have been left for return calls, the customer file shouldbe pulled and references should be contacted. If the ASR is able to contact areference, the ASR should attempt to update the customer’s file, verifying homeaddress, telephone and any employment information. A call back number should beleft with the reference for the customer.

 

* When speaking with a third party, ALWAYS ask forpermission to call them in the future with respect to confirming informationregarding our customer. Once they give permission, document it clearly in thenotes.

 

*FDCPA states only to contact a 3rd party again ifrequested by the third party or if you have reason to believe information iserroneous.

 

After references have been worked, the ASR shouldobtain a neighbor and related name list for location calls and messages. Aneighbor should only verify our customer’s address.

 

If attempts to reach the customer are unsuccessful,the ASR should confirm that we have the best possible address and employmentinformation. This information should help to assist in the repossessionprocess.

 

If the above have been completed, the unit supervisorshould review the account for final resolution.

 

Record all ISDN (caller ID number) numbers supplied inpermanent text.

 

Input the appropriate activity code and associatednote into the collection system. The system automatically assigns the currentdate and time. The note should recap the results of the contact.

 

Follow-up on any promises or commitments onagreed-upon dates.

 

**Note:** It is recommended that headsets be used by allcollectors.

 

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**Theoffice must avoid conducting telephone activities, which fall into thefollowing categories:**

 

1.                                       **Hours of collections** – Telephonecalls to customers can be made from 8:00 AM to 9:00 PM in their respective timezones Monday through Friday. Calls are also made on weekends and holidays. Ifthe customer specifically requests contact outside the 8:00 AM to 9:00 PMwindow, and there is no conflict with that states laws, then calls can be made.

 

2.                                       **Calls to friends, neighbors, relatives, andchildren** - The only reason for such calls is an attempt tolocate a customer who has moved without advising FIFS of his new address. Inthat case, discussion of the account is **not**permissible since it could embarrass the customer and violate federal and/orstate privacy laws.

 

3.                                       **Calls making a variety of threats** -Threats should never be made, stated, or implied. Discussions of thepossibility of repossession might be considered a form of threat and should notbe used in such manner. Repossession is and should be the last resort. UnlessFIFS is ready and has the present intent to take legal action, this possibilityshould not be mentioned.

 

4.                                       **Calls asserting falsely that credit ratings willbe hurt** - Offices must be careful of this because it isdifficult to define. Discussion of such a possibility might also be considereda form of threat. Use language such as “are you aware that informationconcerning your account is regularly reported to credit reporting agencies.”Threats should never be made, stated, or implied.

 

5.                                       **Calls falsely saying that legal process is about tobe served** - Unless FIFS is ready, willing, and has the presentintent to take legal action, this possibility should not be mentioned. Threatsshould never be made, stated, or implied.

 

6.                                       **Calls to places of employment**-When calling the customer’s employment care must be taken to ensure that thecustomer is able and willing to discuss the account freely, so as to avoidpossible embarrassment with his fellow workers. Do not contact the customer atplace of employment if it actually known, or if there is any such reason toknow that the customer’s employer prohibits such calls or if restricted bystate law.

 

7.                                       Phone messagesshould include collector name, company phone number and extension ONLY.

 

•                                          **Calls after office receives written request tocease communication**- If the customer notifies the office inwriting to cease communication, or that they refuse to pay the debt, the officewill not communicate further, except to:

 

•                                Advisethe customer that the office collection efforts are being terminated;

 

•                                Notifythe customer that the office will invoke specific remedies which are ordinarlyinvoked.

 

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•                                Whereapplicable, notify the customer that the office intends to invoke a specificremedy.

 

•                                          **Representative by an attorney**- Ifit is known that the customer is represented by an attorney with regard to thedebt, communication should be made only with the attorney. The customer may becontacted if the attorney so agrees, or the attorney does not respond within areasonable time. In general, five business days are the maximum amount of timenecessary to make the determination unless legal counsel has advised otherwise.

 

**Misrepresentation,Harassment, Abuse**

 

In addition to the above-prohibited activities, listedbelow are the other collection approaches that must not be used.

 

•                                          Theuse of threat of violence, to harm the person, the person’s family, the person’sreputation, or the person’s property.

 

•                                          Theuse of obscene or profane language, or language which the receiving party couldconsider abusive.

 

•                                          Causinga telephone to ring continuously or telephoning a person repeatedly.

 

•                                          Theplacement of telephone calls without disclosing your identity except asprovided in Procedure 419, Skip Tracing.

 

•                                          Continuousattempts to contact a customer through his employer thereby jeopardizing hiscontinued employment.

 

•                                          Failureto reveal to the customer that the purpose of the communication is to collect adebt.

 

•                                          Thecirculation of a list of customers who refuse to pay their debts (a “dead-beat”list). Valid account information provided on specific accounts to a creditbureau or to the selling dealer is not prohibited.

 

•                                          Threatsto take action (s) that cannot legally be taken, or that are not actuallyintended to be taken.

 

•                                          Implyingthat non-payment will result in arrest, imprisonment, or garnishment of wages.

 

•                                          Thefalse representation of the amount or status of an account, or the penalties orservice charges which may be assessed because of non-payment.

 

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•                                          Communicating,or threatening to communicate to any person, false credit information about thecustomer or the account. This includes the failure to communicate that anaccount is disputed.

 

•                                          Theuse of any deceptive means, or false representations to attempt to collect anaccount or to obtain information concerning the customer.

 

•                                          Placingcollect telephone calls to the customer.

 

•                                          Bringinglegal action against the customer in court purposely chosen to inconvenience ordisadvantage the customer. Assure that local counsel initiates legal actiononly in the judicial district in which:

 

•                                          Thecustomer signed the contract, or

 

•                                Thecustomer resides at the time the action is commenced.

 

•                                          Representingthat you are affiliated with any federal, state, or local government.

 

•                                          Attemptingto shame a customer by falsely implying he has committed a crime or acteddisgracefully.

 

•                                          Usingdocuments purported to be issued or authorizes by a court, governmental agency,or official.

 

*In some states, representation that a phonecall is of an “urgent” nature is prohibited. (Refer to the applicable state(s)in Legal Procedure).

 

*We should not use phrases such as:  “urgent”, “very important”, “We have goodnews, it   is imperative that you call usback...”  A phone message should includethe collector’s name, company name, phone number and extension only.

 

•                                          Theuse of any business, company, or organization names other than that of FIFS.

 

•                                          Discussingthe delinquency status of an account with any party other than the buyer orco-buyer unless written authorization to communicate with a third party isprovided by the buyer or co-buyer.

 

•                                          Taking,or threatening to take, repossession action if:

 

•                                FIFShas no present right to take possession of the property,

 

•                                Youdo not actually intend to repossess the property, or

 

•                                Theproperty is exempt by law from repossession.

 

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**AttitudeTowards Customers**

 

Treat all customers in a fair and equitable manner. Delinquentcustomers need, and are entitled to receive, helpful assistance in a courteousmanner. This is not only the best way to conduct business, but also the mosteffective way to collect delinquent accounts. A customer may overreact to eventhe most businesslike collection contact by raising their voice or usingprofane language. Never reply in kind.

 

An invitation to discuss the delinquency problem witha supervisory associate may prompt a response that leads to continued paymenton the account thereby avoiding further collection activity.

 

If the ASR has a negative attitude, the images arenegative and the results tend to be negative.

 

If the ASR has a positive attitude, the reverse tendsto be true. Their attitude determines their images, their images (mentalpractice) determines their actions and their actions determine reality.

 

The ASR spends a big part of their day talking aboutmoney with people that they have never seen or spoken to before. Contact withthem is brief, and yet they need something important from them – money. In thiskind of delicate situation, the wrong assumptions can cause problems.

 

The thing to do after a difficult conversation with acustomer is wall off that call. In other words, do what needs to do to done tolet go of the stress and strain. Do not let if spill over into the next call,assuming unconsciously that the next customer is going to be just asuncooperative as the last one.

 

**PastDue Notices**

 

In addition to telephone activity, a well-timedcollection letter can either reinforce previous conversation or begin theprocess if there has been no previous contact.

 

•                                          **System Generated Letters**

 

There are a number of collection letters thatare available for the colector to send out on past due accounts. These lettershave a range of urgency to them, and are generated through our computer system.

 

•                                          **Form Notices and Form Letters**

 

Several series of printed form lettersdesigned to fit various types of collection situations are available for use toreinforce other collection activity and not as a substitute.

 

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**Individually Written Letters**

 

We should only use pre-approved letters oncompany letterhead. Any individually composed letter must be signed by adepartment Manager before forwarding to customer.

 

•                                          **Notifying Guarantors, Additional Endorsers, orCo-Buyers**

 

Notifying the co-buyer or guarantor of thedefault is necessary and should result in strengthening follow-up as theco-buyer or guarantor would be interested in protecting his/her interest. Everypossible consideration should be extended to the second party. Some statesrequire written notice to co-buyers and guarantors in order to hold them liablefor the account. See Legal Procedures.

 

**Pre-RepossessionNotice/Cure Letter**

 

Depending on individual state regulations (LegalProcedure), the buyer, as well as the co-buyer/guarantors, if applicable, willbe notified of the right to cure a default by a pre-repossession notice/cureletter. This will be sent by regular mail unless otherwise specified by stateregulation.

 

A Right to Cure letter should be sent immediately oncethe account becomes 30 days past due (in all applicable states).

 

The customer must be given a period of time (dependingon state regulations) from the date the notice is mailed to cure the default. Duringthis period, the branch will not:

 

•                                          Attemptrepossession;

 

•                                          Takecourt action against the customer;

 

•                                          Acceleratethe balance

 

Accounts, which do not respond satisfactorily to thepre-repossession notice/cure letter, revert to normal handling followingexpiration of the specified period.

 

**SelectingAccounts for Cure Notice Issuance**

 

The buyer and co-signer/guarantor should be selectedfor pre-repossession notice/cure letter issuance when such notice is requiredby state law or when the office believes that the account falls into one of thefollowing categories:

 

•                                          FIFSis aware that the customer is withholding payment because of a productcomplaint against the dealer or the manufacturer.

 

•                                          Animpasse situation is encountered due to the customer’s inability to pay andunwillingness to admit it.

 

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•                                          Theoffice is unable to contact a customer with previous satisfactory payingexperience.

 

•                                          Thecustomer is not a skip hazard, but all previous collection effort has failed toproduce customer payment. The cure notice may cause payment or result involuntary surrender of the collateral.

 

•                                          Theaccount is chronically delinquent and repossession is considered necessary toresolve the problem.

 

•                                Whenthe office can no longer tolerate a chronic collection account, apre-repossession notice/cure letter warns the customer that FIFS will no longeraccept habitual late payment. The use of the notice will preclude a claim bythe customer that, by accepting previous payments on a late basis, FIFS hadestablished a pattern of conduct leading the customer to believe that FIFSshould continue to accept late payments without exercising its contractualremedies.

 

•                                Tominimize unnecessary delays, the office should select most accounts forpre-repossession notice/cure letter issuance during the office phase ofcollection activity. (Normally no later than 45 days past due).

 

**Note:**  The office should avoid the indiscriminateuse of cure letters as a collection tool.

 

**CustomerContact**

 

The automated collection system has many features,which enhance the daily procedure and routines in retail collections.

 

This section will highlight some of these features andexplain how they facilitate customer contact. For further detail or additionalexplanation refer to the Collection System Reference Guide.

 

It is important to set the tone and gain control ofthe collection call by using an opening line that is clear and direct. Youropening statement sets the tone for the entire call. The ASR should soundprofessional, serious and non-threatening.

 

The standard greeting on initial contacts is: (afterwe have determined that we have a right party contact)

 

*“Mr.Rodgers, this is Bob Wade with First Investors Financial Services. According tomy records you are past due on your account with us and now due for $500. Whattime today can I expect you to send your payment?”**       **Pause ****

 

When an opening statement is brief, clear and to thepoint, your professionalism and the seriousness of the call will be evident.

 

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**AccountReview**

 

The ASR will review their queue on a daily basis andattempt to work all accounts. If an account cannot or should not be called bythat ASR, it should be assigned to the individual or party who can contact thecustomer.

 

Manager and Supervisor reviews – Accounts worked by anASR will be randomly selected and reviewed by management staff. These accountreviews will ensure that accounts are being handled by the guidelines set bythis policy manual and departmental standards. These reviews will be completedon a weekly basis.

 

**TelephoneCommunication Principles**

 

When the ASR is talking on the telephone, the customeris forming a mental picture of them. Therefore, it is important that the ASRget a “smile” into their voice. Remember that the customer is the reason thatwe are in business. So, maintain enthusiasm, a positive attitude, and openmind.

 
| Pitch             |   | Speech experts recommend a low pitch because it  projects & carries better, and is more pleasant.                                |
|-------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|              |   |                                                                                                                                 |
| Inflection        |   | Don’t talk in monotone - Use feeling to express  attitude.                                                                      |
|              |   |                                                                                                                                 |
| Courtesy          |   | Common courtesy applies the same as face to face -  Even more important when on the telephone.                                       |
|              |   |                                                                                                                                 |
| Tone              |   | Often it isn’t what you say, but how you say it.  Your voice should reflect sincerity, pleasantness, confidence & interest. |
|              |   |                                                                                                                                 |
| Understandability |   | Avoid talking with anything in your mouth.                                                                                           |
|              |   |                                                                                                                                 |
| Rate              |   | The rate of speech should be matched to that of your  audience. Avoid extremes, either way.                                          |

 

The telephone is a two-way communication tool, whichhas the capacity to provide instant understanding. Listening properly willhelp  to fully comprehend our customer’sneeds. Do not assume or guess.

 

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**MakingSilence Work to Your Advantage**

 

The ASR needs to use a pause in their openingstatement in the conversations. They can express this opening statement in manydifferent ways, but all of them need to be followed by a pause, silence. Whatcan a collector accomplish through the first pause in the conversation?  First, he communicates through the silencethat the customer is supposed to say something. At this point, the ball is inthe customer’s court.

 

Second, he gives the customer an opportunity to thinkabout what the collector has said. Few people can listen and think at the sametime. The silence gives the customer an opportunity to digest what was said andthink of a response.

 

Third, the silence enables the collector to avoidmaking additional assumptions about the customer.

 

Fourth, the ASR silence communicates that he iswilling to listen.

 

Finally, the silence tells the customer that the ASRis comfortable with silence, and that he is in control of the conversation. TheASR will have greater power over the call if the customer know this from thestart.

 

**FactFinding Questions**

 

Often in the course of our conversation with thecustomer we hear objections to paying or “hard luck stories” on why a customercannot pay. The following are some questions to ask the customer to help find away to bring the account current.

 

**Unemployed or Lay-Off**

 

How long have you been unemployed?

If recently unemployed – Have you received your lastpaycheck?

Are you receiving unemployment?

If yes, how often are you receiving the unemploymentchecks?

Do you have other sources of income? (Spouse, P/T Job, etc.)

Do you have any job prospects?

Who can you borrow from? (Family or friends)

How are you paying your bills? (Rent, utilities, car loans, etc.)

What are you monthly expenses?

 

**Overobligated / Medical Bills / IRS**

 

What has caused the over extension?

Is this short term or long term? (Recent repairs shortterm, heavy credit card spending long term)

Who can you borrow from?

Do you have any other sources of income?

Are you able to get a P/T job?  Have you applied anywhere?

 

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Are you past due with other creditors?

Have you considered applying for a consolidation loanfor you other bills?

If Medical – Is this causing you to miss work?

If yes – Are you eligible for governmentassistance?  Are you eligible fordisability?

IRS – are you set up to pay them monthly?  When will the IRS be paid off?

What are your monthly expenses?

 

**Reduction in income – Long term / Short term**

 

When do you expect to return to full hours?

Do you have any other sources of income?

Are you behind with all creditors?

Have you looked into CCCS for your other bills?

Who can you borrow from?

What are your monthly expenses?

 

The above fact finding questions are just a few of themany that can be asked to customers when they are stating they cannot pay ontheir bill. Utilizing these questions will help the ASR work with the customeron arrangements and also to let them know that we want to help them with theirsituation. The more information we obtain the better chance we have incollecting the account.

 

**DiscussBudget and Negotiate**

 

Telephone collecting is sales. The ASR must becreative and convince the customer why he should pay you and not someone else. Themore imaginative creditor will get the money. The customer must be convincedthat his account is the most important thing right now. If he thinks that he isjust another number to FIFS, he is more likely not to pay. In addition, as inany other sales interaction, the ASR should never allow his words or yourmanner to reflect that slightest uncertainty about the eventual outcome.

 

During any of the stages of collecting, an ASR shouldbe aware of the options other than just getting a payment. Almost any collectorcan get one payment out of a customer, but only the truly skillful collectorcan help the problem customer back on the road to recovery. Some customers canbe rehabilitated if they are handled with patience and persistence. Others maynever be rehabilitated and must be handled firmly, but persuasively.

 

If the ASR is **convinced**that the customer can not pay you in full, they should work out the bestpossible budget with the customer – one that enables the customer to pay you asquickly as possible.

 

The ASR must be specific in making the arrangement. Mostimportant is the amount the customer can pay. The ASR must have a firm scheduleof payments with definite deadlines. Vague promises will only result in morefollow-up calls. Our goal, of course, is to make the best arrangements possible.As we work out your agreements or new payment terms, make notes. By doing this,we will make sure that we have thought of all the important details.

 

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It is seldom that the ASR gets more than what they askfor, so they should never start off by asking for a partial payment. Onlyconsider a partial payment when the customer is having problems. Encouragepartial payments only to prevent the customer from missing a payment entirely. Wewant the customer to develop the habit of paying FIFS. Regulation of paymentshelps ensure continuation. We do not want the customer to feel the relief, orbenefit, of not paying us anything.

 

**Definitionof a Promise to Pay:**

 

An account should be labeled as a Promise to Pay whenthe customer makes solid and clear arrangements to pay on their account. Thepromise should be the best possible arrangement to assure that the promise iskept. When setting up arrangements to pay with the customer the ASR shouldstrive for affordable and reasonable payment arrangements. A reasonablearrangement would be the best possible payment to work towards paying the debtoff. An affordable arrangement would be a payment that meets our customerscurrent income needs and would insure that the customer would be able to keepthe promise to pay. Keep in mind that our goal in every conversation is to getthe customer to pay off their account.

 

When we talk to the customer and they state that theywill try or might keep the arrangements agreed upon, this would NOT beconsidered a promise to pay. When talking to a customer the ASR needs to makesure that they have firm and solid payment arrangements. The customer shouldgive the ASR information on the exact date of payment, the method of payment,and where the funds are coming from. The customer should sound confident whenthey agree to a promise amount.

 

**AccountUpdate**

 

Good collection records must be kept for each account.Even if the ASR has a small volume of accounts, information should be recordedeach and every time a contact, oral or written, is made with the customer.

 

People who owe money have a tendency to keep poorrecords. Our good collection records indicate to the customer that the ASR is aprofessional and intends to be paid. Records give us credibility. The customermust believe that this debt is the most important matter to FIFS or he will nottake the matter seriously himself.

 

When noting an account it is imperative that the ASRhas documented all the information. The following information should be in theASRs notes.

 

Who – Name of the person you spoke to.

What – What are the arrangements?

Where – Where will payment be sent?

When – When will the payment be made (source of payment,check, quick collect, etc...)?

Why – Why is the customer past due?  REASON FOR DELINQUENCY!

 

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**Don’ts**

 

•           Do not documentpersonal feelings or opinions in notes.

•           Do not note any foullanguage, put the customer was rude and used foul language.

•           Do not put verifiedinformation if you in fact did not do so.

•           Never falsify anyinformation.

 

When contacting a customer; the personal informationshould be updated to facilitate future contact. This is to include (asappropriate) address, phone number, employer name, employee phone number, etc. Allchanges must be updated into the retail note system.

 

Once contact is made, the ASR should take everymeasure to make the current collection call the last collection contactnecessary. To accomplish this, the collector must not only talk about thedelinquent payments plus accumulated late charges, but make it clear to theborrower that there is no grace period, that the payments are due on the duedate and secure a commitment that future payments will be paid as they mature.

 

When collecting the delinquent payment (s), the firstthing the ASR must determine is why the payment(s) have not been made. Oncethis reason is determined, the collector will know how to overcome theobjection to payment.

 

Set a reasonable period of time when the payment(s)will be paid and validate the source of funds. It is important when the call is“closed” that the collector reminds the customer of their commitment. In fact,the best “close” is to have the customer repeat (in his/her own words) thepromise.

 

The customer may refuse to make a payment or suitablearrangements. When this happens, the customer must be reminded that he/she isforcing FIFS to “take further collection action” and that until paid, thedelinquency will be reported to the credit bureau. Do not say we will “repossess”or that we will “ruin the customer’s credit”.

 

When a customer states they are unable to bring theaccount completely current or they are candidates for an extension a financialupdate should be completed and noted on the system.

 

1.                                       Anytimecustomer requests an extension you must provide in the notes a completefinancial update for approval.

 

2.                                       Anytimecustomer states they cannot make their monthly payment and/or bring the accountcurrent, you must complete a financial update in the notes to determine therecourse for the account.

 

**RequiredItems for a Financial Update:**

 

•                                          Income

 

Borrower’s Income and Spouses Income

 

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(Should be their Monthly Net pay)

Any other source of Income, child support,alimony, side work, SSI, etc.

 

•                                          Mortgageor Monthly Rent

 

•                                          Utilities

 

Gas, Electric, Water, Garbage, Phone, Cable

 

•                                          Numberof Dependants ( children they are supporting)

 

•                                          Food

 

•                                          CarPayments (including ours)

 

•                                          CarInsurance (listed monthly)

 

•                                          MedicalBills

 

•                                          InstallmentLoans / Bank Loans

 

•                                          Visa,MasterCard, Discover Credit Card Payments

 

•                                          DepartmentStore Credit Card Payments

 

•                                          StudentLoans

 

•                                          Miscellaneousmonthly payments

 

•                                          Cellphones, pager bills, Internet, etc.

 

The collection notes should list the category thecustomer is paying and the monthly amount. At the end of notes provide thefollowing:

 

*TotalIncome subtracted by total monthly expenses, which will equal any extra moneythe customer may have for day to day living and savings.*

 

**SpecialConditions**

 

In most cases, collection follow-up results in paymentand resolution of the customer’s delinquency problem. On occasion, however, asituation may occur when the customer cannot or will not pay. In this case, itis the responsibility of FIFS collection personnel to initiate any and allpossible corrective actions in a manner acceptable to FIFS according to policy.Final action, such as repossession, is not to be taken until all other means toresole have been exhausted. Problems/situations, which are most often thereason the customer will not or cannot pay, are:

 

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**DisputedAccounts**

 

Occasionally, a customer may believe that they nolonger must make payments on their account because of a dispute over thebalance owing, the performance of the collateral, the service of the dealer, orsimilar situation. It is FIFS’s responsibility to record the Customer ComplaintReport, the details of the dispute and to assist the customer in resolving theproblem promptly. The office must avoid taking severe collection actions, suchas repossession, until the legitimacy of the dispute is determined and allpossible corrective actions have been attempted. As these accounts have highpossibility of legal action in the event we repossess prematurely, approvalmust be obtained prior to repossession.

 

**CustomerDisability or Illness**

 

If it is determined during the course of collectionfollow-up that the customer’s delinquency is the result of illness ordisability, ensure that contacts with the customer are in a sensitive andhelpful manner. Do not make commitments regarding a possible insurance claim. Referto Procedure 12 for specific instructions.

 

**CustomerDeath**

 

Whenever it is determined that the customer isdeceased, contact with the representative of the Estate is done in a helpfuland tactful manner. If applicable, let the insurance company involved resolveany matters regarding a credit life insurance claim. Refer to Procedure 413 forspecific instructions.

 

**Bankruptcy**

 

All types of bankruptcies are considered specialsituations. See Bankruptcy Administration in Procedure 417 for specificinstructions.

 

**Litigation**

 

Litigation is considered to be a special situationwhen a suit is actually filed by the customer against FIFS. Refer such cases tothe Legal Department – and take action only a directed by legal counsel.

 

**DamagedCollateral**

 

A customer who becomes delinquent because the vehiclehas been damaged should be advised of their responsibility to continue makingpayments. Assist the customer in expediting the insurance claim. If thecollateral is damaged in an accident involving another party, attempt to learnthe identity of the other party and the details of the accident. If the vehicleis a total loss see Procedure 426, Insurance Total Loss, for proper handling.

 

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**Military**

 

Customers who enter the armed forces after enteringinto a contract with FIFS are entitled to certain rights according to the “Soldiers’and Sailors’ Civic Relief Act”. Refer to Procedure 418, Military Personnel, andProcedure 409, Soldiers’ and Sailors’ Relief Act, for specific instructions.

 

**DevastatedAreas**

 

Occasionally, a specific section of the country willexperience a natural disaster (hurricane, flood, earthquake, etc.) that hinderscustomers’ ability to pay. First Investors Financial Services policy withrespect to collection from customer resolves itself into observance ofhumanitarian principles, and furtherance of customer, dealer and public goodwill.

 

The office should exercise sound judgment in theapplication of this policy and be aware of the opportunity to demonstrate adesire to be of genuine help for customers at a time when they are in need ofassistance. Personal communication should be established as promptly ascircumstances permit, either by representative or mail, preferably the former. Shouldthe situation arise, specific instructions for the handling of these accountswill be issued.

 

**Productand Service Compliant**

 

Occasionally, a customer will claim dissatisfactionwith the product or dealer as a reason to withhold payment from FIFS. In theseinstances the associate should:

 

•                                          Explainto the customer that FIFS is separate from the manufacturer, and is comparableto any financial source, which would finance the customer’s purchase of thevehicle. The customer’s contractual obligations to FIFS are enforceable,despite the type of compliant or dispute the customer may have with amanufacturer or with a dealer.

 

**Note:**

 

*Beforeassigning the account out for repossession, the office should refer to theprocedures concerning specific state laws.*

 

•                                          Ifthe customer claims that payments will not be made or insurance will not bemaintained for the period of time the customer is without the use of thevehicle, emphasize to the customer that the responsibility to fulfill allcontractual obligations, including monthly payments and insurance requirements,remain the customer’s responsibility, whether or not the customer has had theuse of the vehicle.

 

**IndianReservation Collection**

 

When FIFS’s collateral is located on an IndianReservation and the customer refuses to make payment, determine if the value ofthe vehicle warrants repossession. If so, contact our Legal

 

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department. If not, refer to Procedure 427, RetailRepossession, for information relating to Abandonment (page 2).

 

**CollectionRemedies**

 

Delinquency that cannot be resolved by payment may beresolved in a number of ways, such as:

 

•                                          Extensionand Due Date Changes

•                                          Rewrites

•                                          Transferof Equity

 

All remedies offered should hold a promise for apermanent solution to the delinquency and should not be offered solely toimprove office collection performance. Repossession is considered only when noother solution is possible.

 

**Reporting**

 

There are numerous reports available daily tomanagement and supervisors via FIFSNET. These reports include, currentdelinquency by portfolio, current delinquency by tier, daily delinquency byportfolio, summary of days activity, month-over-month comparison of actualdelinquency, month-over-month comparison of potential delinquency,month-over-month comparison of net potential delinquency, under 30 days pastdue delinquency report, delinquency trigger performance, month to daterepossessions, phonepays by pool, phonepays by portfolio, phonepays by date,extension report, net potential and net roll 30 plus days past due, list ofpotential 30 plus days past due accounts, list of month-to-date repossessions,list of out for repossession accounts, roll to 30 days past due, and phonepayson the roll.

 

Preface

 

A customer may occasionally find it difficult to payan installment as originally scheduled on the precomputed retail installmentcontract. In deserving cases, one or more of the remaining installments may byextended until the end of the contract (an “Extension”), or the day of eachmonth on which payments are due may be changed (a “Due Date Change”). Thecustomer will be required to pay an extension fee (were permitted by law),prior to the extension being processed. No extensions should be granted thatdoes not solve the current or future inability of the customer to make paymentsand only puts off repossession.

 

Simple Interest Contracts

 

Finance charges on a simple interest contact accrue onthe outstanding principal balance to the date of payment; therefore, the amountof the final payment may vary.

 

Extensions

 

An extension of a contract defers one or moreinstallments without affecting the due dates on the remaining installments. Thedeferred installment (s) are extended to the next due date 30 days

 

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after the originally scheduled final maturity date. Thedue date is automatically extended when an extension is processed.

 

•                                          Acollector must establish verbal or written contact with the customer.

•                                          Thecustomer must return to the office a signed Extension Agreement before the loancan be presented for the extension.

•                                          Allextensions are to be documented by completing an Extension Agreement.

•                                          Allextensions must have a complete financial update for approval noted on thesystem.

•                                          Theaccount must have at least one viable telephone contact number.

•                                          Thecustomer must have a positive cash balance on the financial update (greaterthan zero)

•                                          Theaccount must be completely updated for all parties listed on loan. Place ofemployment must include Company name, address where customer works andtelephone number.

•                                          Referencesand financial update must redone if 90 days has past since last update.

•                                          AnExtension Packet must be competed.

•                                          TheExtension Packet will include the following; Signed Extension Form by the customer,Signed Extension checklist by the Collector and Supervisor, Proof of Insurance(if necessary), any other supporting documentation.

•                                          Customermust have full coverage auto insurance verified.

•                                          Onlyone extension is allowed  for every 12months of a loans terms.                                                 60months = 5 months extend.

•                                          Noextension can be granted until the first 6 monthly installments are paid

•                                          Allextensions must be approved by a department manager or a high level.

 

After the collector offers and completes the necessarypaper work for an extension, they must forward all information to theSupervisor (signed extension form, signed check sheet, proof of Insurance, anyother supporting documentation). It is the responsibility of the Supervisor toverify that all the information is competed correctly and accurately. TheSupervisor must verify that the customer is fully aware of the terms of theextension, the months being extended, and any fees associated with theextension.

 

The Collection Manager must receive the extensionpacket that has been signed and approved by the Supervisor before approving anyextension. Once the paper work is received and reviewed by the CollectionManager he/she will approve or decline the extension. Unless otherwise approvedby the Collections Manager, the account must be brought current (no paymentdue) at the time of the extension is granted. If the extension itself does notbring the account current, a payment and any accumulated late charges must becollected at the time of the extension. No late charges may be assessed on anypayment amount being deferred.

 

Due Date Changes

 

The cumulative total of days deferred by all due datechanges processed must not exceed 15 days without Collection Managers approval.

 

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•                                          Onlyone due date changes are allowed within the life of the loan.

•                                          Thereason for due date change must be clearly noted on the account.

•                                          Awritten request from the customer must be received and place in the customerspermanent file.

 

**Guidelinesfor Extensions and Due Dates Changes**

 

**Reasonsfor Granting**

 

Remedies offered should fit customer and contractscircumstances and hold a promise for a permanent solution in each case. Do notadjust payment terms for reasons such as adjusting delinquency ratios or simplecustomer preference. If a customer has a legitimate reason for needing a changein payment terms, consider the following factors before granting the request:

 

•                                          Customer’sdesire and ability to pay

•                                          Pastpayment experience

•                                          Conditionof the vehicle

•                                          Customerequity in the vehicle

•                                          Actualvalue of the vehicle

•                                          Datethe next payment will be made.

•                                          Incomesource for making the next payment.

•                                          Validityof reason for request

 

**Note:**

 

*Thedenial of an extension or due date change can under no circumstances be basedupon the race, color, religion, national origin, sex, marital status or age ofthe customer, or on the fact that the customer receives any form of publicassistance income.*

 

**ExtensionAuthority**

 

Extensions and Due Date Changes may be granted withincertain limits as prescribed in the “Approval Authority Procedure”.

 

A Sr. Manager must approve all exceptions to thispolicy.

 

**GeneralGuidelines**

 

The following general rules apply to all extensionsand due date changes:

 

•                                          Customermust have completed extension agreement

•                                          Aextension can be granted after the first six installments

•                                          Anextension should not be granted if it does not bring the account current.

•                                          Theoriginal maturity of a monthly payment contract cannot be advanced by means ofextensions or due date changes more than 12 months total.

 

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•                                          Thecollector must obtain current information for the customer such as place ofemployment and telephone number, residence address and telephone number, and anew customer financial update. The account must have at least one viabletelephone contact number

•                                          Consistentpay history must be observed after loan is extended.

•                                          Customercan afford unit; and extension will correct the delinquency, not prolong it.

 

•                                          Anextension should not be granted if it does not bring the account current.

 

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EXHIBIT A-1

 

**MonthlyServicer Report**

 

**FirstInvestors Auto Owner Trust 2006-A**

 

A-1

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EXHIBIT A-2

 

**Certificateof Officer**

 

**FirstInvestors Servicing Corporation**

 

The undersigned, a dulyelected and qualified Officer of First Investors Servicing Corporation, makesthis certification pursuant to Section 2.02(c) of the Servicing Agreement datedas of January 26, 2006 by and among First Investors Auto Owner Trust 2006-A, asIssuer, Wells Fargo Bank, National Association, as Back-up Servicer andIndenture Trustee, and First Investors Servicing Corporation, as Servicer, anddoes hereby certify to the best of his knowledge that the attached MonthlyServicer Report hereby being furnished to the Indenture Trustee pursuant toSection 2.02(c) has been prepared in accordance with the terms and conditionsof the Transaction Documents, is true and correct in all material respects andpresents fairly the results covered thereby for the Collection Period ended                                .This certification is being provided as of the Determination Date of                                               .

 
|   | By:                 |   |   |
|--------|---------------------|--------|--------|
|   | Authorized  Officer |   |
|        |                     |        |        |  |

 

A-2

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EXHIBIT B

 

MONTHLYVERIFICATION CERTIFICATE

 

FIRST INVESTORSAUTO OWNER TRUST 2006-A

 

Date:

 

TO:         DISTRIBUTIONLIST ATTACHED

 

RE:

 

This certificate isfurnished pursuant to Section 2.02(d) of the Servicing Agreement (the “Agreement”),dated January 26, 2006, by Wells Fargo Bank, National Association (the Back-upServicer) as the Back-up Servicer for the above-entitled issue. Terms used butnot defined herein shall have the meanings provided in the Agreement. TheBack-up Servicer has made no independent examination of the Monthly ServicerReport beyond the review specifically required in the Agreement.

 

THE UNDERSIGNED HEREBYCERTIFIES THAT:

 

1.             I am a dulyelected Corporate Trust Officer of Wells Fargo Bank, National Association.(Back-up Servicer).

 

2.             The filereceived by the Back-up Servicer on [insert date], is in readable and usableform.

 

3.             The Back-upServicer has verified that the following obtained from the file is in agreementwith amount for such items reported in the Monthly Statement with respect tothe month ending [insert date], except as noted on the attached report:

 

(i)            AggregatePrincipal Balance of Contracts

 

(ii)           Delinquency Ratio

 

(iii)          Average DelinquencyRatio

 

(iv)          Cumulative NetLoss Rate

 

The foregoing certificationsare delivered this [insert date].

 
|   |   |   |   |
|--------|--------|--------|--------|
|   |   | Name:  |
|   |   | Title: |

 

B-1

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