**Exhibit 10.118**

 

**EXECUTION COPY**

 

 

SERVICING AGREEMENT

 

by and among

 

First Investors Auto Owner Trust 2005-A

 

as Issuer

 

Wells Fargo Bank, National Association

 

as Back-up Servicer, Indenture Trustee and Custodian

 

and

 

First Investors Servicing Corporation

 

as Servicer

 

Dated as of

 

May 5, 2005

 

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| ARTICLE I   |   | DEFINITIONS                                                                                                       |   |
|------------------|--------|-------------------------------------------------------------------------------------------------------------------|--------|
|             |   |                                                                                                              |   |
| 1.01.            |   | Defined Terms                                                                                                     |   |
|             |   |                                                                                                              |   |
| ARTICLE II  |   | ADMINISTRATION AND SERVICING  OF CONTRACTS                                                                        |   |
|             |   |                                                                                                              |   |
| 2.01.            |   | Appointment and Duties of the Back-up  Servicer and the Servicer                                                  |   |
| 2.02.            |   | Collection of Contract Payments;  Defaulted Contracts; Reporting Obligations                                      |   |
| 2.03.            |   | Realization Upon Contracts                                                                                        |   |
| 2.04.            |   | Physical Damage Insurance                                                                                         |   |
| 2.05.            |   | Maintenance of Security Interests in  Financed Vehicles and Contracts                                             |   |
| 2.06.            |   | Covenants of Servicer;  Notices                                                                                   |   |
| 2.07.            |   | Repurchase of Contracts by Seller and  Depositor Upon Breach                                                      |   |
| 2.08.            |   | Monthly Servicing Fee; Back-up Servicing Fee                                                                      |   |
| 2.09.            |   | Annual Statement as to Compliance                                                                                 |   |
| 2.10.            |   | Financial Statements; Annual Servicing  Review                                                                    |   |
| 2.11.            |   | Costs and Expenses                                                                                                |   |
| 2.12.            |   | Responsibility for Insurance  Policies; Processing of Claims Under Insurance Policies; Daily Records and  Reports |   |
| 2.13.            |   | Delivery of Documents to Custodian                                                                                |   |
| 2.14.            |   | Maintenance of Copies of Documents by  the Servicer                                                               |   |
| 2.15.            |   | Possession of Servicer Files                                                                                      |   |
| 2.16.            |   | Processing of Information                                                                                         |   |
| 2.17.            |   | Warranties, Representations and  Covenants With Respect to Compliance with Law and Enforcement                    |   |
| 2.18.            |   | Standard of Care                                                                                                  |   |
| 2.19.            |   | Records                                                                                                           |   |
| 2.20.            |   | Inspection                                                                                                        |   |
| 2.21.            |   | Enforcement                                                                                                       |   |
| 2.22.            |   | Payment in Full on Contract                                                                                       |   |
| 2.23.            |   | Duties of Back-up Servicer                                                                                        |   |
| 2.24.            |   | Assumption of Duties by Back-up  Servicer                                                                         |   |
| 2.25.            |   | Errors and Omissions Insurance                                                                                    |   |
| 2.26.            |   | Responsibilities of Back-up Servicer and  Servicer                                                                |   |
| 2.27.            |   | Re-Liening                                                                                                        |   |
| 2.28.            |   | Repurchase by Servicer Upon Breach                                                                                |   |
| 2.29.            |   | Liability of Successor Servicer                                                                                   |   |
|             |   |                                                                                                              |   |
| ARTICLE III |   | ACCOUNTS; COLLECTIONS                                                                                             |   |
|             |   |                                                                                                              |   |
| 3.01.            |   | Accounts                                                                                                          |   |
| 3.02.            |   | Collections                                                                                                       |   |
| 3.03.            |   | Collection Account and  Acknowledgment Letter                                                                     |   |
|             |   |                                                                                                              |   |
| ARTICLE IV  |   | REPRESENTATIONS AND  WARRANTIES                                                                                   |   |
|             |   |                                                                                                              |   |
| 4.01.            |   | Representations and Warranties of  the Servicer                                                                   |   |
| 4.02.            |   | Representations and  Warranties of the Back-up Servicer                                                           |   |
| 4.03.            |   | Representations and  Warranties of the Issuer                                                                     |   |

 

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

 
| SCHEDULE I  | Collection Policy                |
|------------------|----------------------------------|
| EXHIBIT A-1 | Monthly Servicer Report          |
| EXHIBIT A-2 | Certificate of Officer           |
| EXHIBIT B   | Monthly Verification Certificate |

 

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**SERVICING AGREEMENT**

** **

ThisServicing Agreement (“Servicing Agreement”) is made as of the 5th day ofMay, 2005, by and among First Investors Auto Owner Trust 2005-A, a Delawarestatutory trust, as issuer (the “Issuer”), Wells Fargo Bank, NationalAssociation, a national banking association, as back-up servicer (in suchcapacity, the “Back-up Servicer”), as custodian (in such capacity, the “Custodian”)and as indenture trustee (in such capacity, the “Indenture Trustee”) andFirst Investors Servicing Corporation, a Delaware corporation, as servicer (the“Servicer”).

 

**PRELIMINARY STATEMENT**

** **

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

 

WHEREAS,the Insurer has issued the Policy to provide for the full and timely payment ofall amounts of interest due on each Class of Class A Notes on anyPayment Date and, on the Final Note Payment Date relating to each Class ofClass A Notes, an amount equal to the outstanding principal balance ofsuch Class of Class A Notes (after making all distributions on suchFinal Note Payment Date).  In addition,on each Payment Date, the Insurance Policy will guarantee certain payments ofprincipal of the Class A Notes; and

 

WHEREAS,First Investors Financial Services, Inc. (the “Seller”) hasacquired and will acquire certain Contracts secured by Financed Vehicles andwill contribute such Contracts and all related security to First Investors AutoFunding Corporation (the “Depositor”) pursuant to the ContributionAgreement of even date herewith between the Seller and the Depositor (the “ContributionAgreement”); and

 

WHEREAS,pursuant to the Sale and Allocation Agreement of even date herewith among theServicer, the Depositor, the Indenture Trustee and the Issuer (the “Sale andAllocation Agreement”), the Depositor has absolutely sold and assigned theContracts and related security to the Issuer; and

 

WHEREAS,pursuant to the Indenture, the Issuer has pledged, among other things, theContracts to the Indenture Trustee for the benefit of the Noteholders and theInsurer; and

 

WHEREAS,pursuant to the terms of the Indenture, the Issuer is obligated to deliver orcause to be delivered to the Custodian, the documents to be included in theContract Files, which are to be held by the Custodian pursuant to the terms ofthe Indenture; and

 

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

 

NOWTHEREFORE, in consideration of the covenants and conditions contained in thisServicing Agreement, the parties, intending to be legally bound, hereby agreeas follows:

 

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# ARTICLE IDEFINITIONS

#  

## 1.01.                        Defined Terms.  Capitalized and defined terms used but notdefined in this Servicing Agreement shall have the respective meanings assignedto them in the Indenture or the Sale and Allocation Agreement, unless thecontext otherwise requires, and the definitions of such terms are equallyapplicable both to the singular and plural forms of such terms and to themasculine, feminine and neuter genders of such terms.

##  

“Back-upServicing Fee” shall mean the amount paid to the Back-up Servicer on eachPayment Date for the preceding Collection Period equal to the greater of (i) theproduct of (a) the Back-up Servicing Fee Rate divided by 12 and (b) thePool Balance as of the close of business on the first day of the relatedCollection Period, and (ii) $750.

 

“Back-upServicing Fee Rate” shall mean 0.015% per annum.

 

“CollectionAccount Depository” shall mean the depository for the Collection Accountestablished pursuant to Section 3.1(a) of the Sale and AllocationAgreement.

 

“CollectionPolicy” shall mean the Servicer’s statement of policies and procedures forthe collection of Contracts attached hereto as Schedule I, asamended and restated from time to time with the consent of the Insurer and inaccordance with the Transaction Documents.

 

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

 

“EligibleServicer” shall mean First Investors Servicing Corporation, as initialServicer, Wells Fargo Bank, National Association, as initial Back-up Servicer,and any other Person which, at the time of its appointment as Servicer, (i) isapproved in writing by the Insurer, (provided that no Insurer Default shallhave occurred and be continuing), (ii) has a net worth of not less than$50,000,000, (iii) is servicing a portfolio of motor vehicle retailinstallment sale contracts and/or motor vehicle loans, (iv) is legallyqualified, and has the capacity, to service the Contracts, (v) hasdemonstrated the ability to service a portfolio of motor vehicle retailinstallment sale contracts and/or motor vehicle loans similar to the Contractsprofessionally and competently in accordance with standards of skill and carethat are consistent with prudent industry standards and (vi) is qualifiedand entitled to use pursuant to a license or other written agreement, andagrees to maintain the confidentially of, the software which the Servicer usesin 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 have the meaning set forth in Section 2.29 hereof.

 

“Eventof Servicing Termination” shall have the meaning set forth in Section 5.01hereof.

 

“ExtendedContract Rate” means, with respect to a Collection Period, the fraction,expressed as a percentage, the numerator of which is the number of Contractswhose payments are extended during the related Collection Period (measured onthe last day of such Collection

 

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

 

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

 

“FIFSGI”shall mean First Investors Financial Services Group, Inc., a Texascorporation.

 

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

 

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

 

“InsurancePolicies” means insurance policies covering the Financed Vehicles or theObligors, including VSI Insurance.

 

“LockboxBank” means Wachovia Bank, National Association, or such other bank chosenby the Servicer from time to time, with the prior consent of the Insurer (if noInsurer Default shall have occurred and be continuing) and the IndentureTrustee.

 

“MonthlyServicer Report” shall mean the monthly report provided by the Servicer ascontemplated by Section 2.02(c) hereof.

 

“PredecessorServicer Work Product” shall have the meaning set forth in Section 2.29hereof.

 

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

 

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

 

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

 

“SuccessorServicer” shall mean the Back-up Servicer or any other Eligible Servicerwho succeeds to the authority, power, obligations and responsibilities of theServicer hereunder in accordance with the provisions of Article Vhereof.

 

“SuccessorBack-up Servicer” shall mean any Eligible Servicer who succeeds to theauthority, power, obligations and responsibilities of the Back-up Servicerhereunder in accordance with the provisions of Article V hereof.

 

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

 

# 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 tothe terms of this Servicing Agreement. In performing their respective dutieshereunder, the Back-up Servicer and Servicer shall have full power andauthority to do or cause to be done any and all things in connection with suchservicing and administration which either may deem 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 AllocationAgreement, and except as provided herein or in the Sale and AllocationAgreement, none of the Issuer, the Insurer, the Indenture Trustee or theNoteholders will have any liability to the Back-up Servicer or the Servicerwith respect thereto; provided, however, that the Issuer shallremain liable to the extent of funds available pursuant to Section 3.5(d)(x)of the Sale and Allocation Agreement (and not from any other source) for anyfees, expenses and indemnities due and payable to the Servicer and any fees,expenses and indemnities due and payable to the Back-up Servicer which have notbeen paid from the amounts on deposit in the Collection Account in accordancewith Section 3.5 of the Sale and Allocation Agreement.

###  

### (c)                                  The Insurer, orif an Insurer Default has occurred and is continuing, the Indenture Trustee orthe Issuer, 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 be boundby the terms of such servicing agreement. In the event of termination of theBack-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 the Class ANote 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. The Issuerhas agreed that the Indenture Trustee, in its name or (to the extent requiredby law) in the name of the Issuer, may (but is not required to) enforce allrights of the Issuer and all obligations of the Servicer and the Back-upServicer under, and shall be entitled to all benefits of, this ServicingAgreement for and on behalf of the Noteholders and the Insurer, whether or notthe Issuer is in default thereunder. The Servicer, in making collections ofContract payments pursuant to Section 2.02 hereof, shall be actingas agent for the Indenture

 

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### Trustee, and shall be deemedto be holding such funds in trust on behalf of, and as agent for, the IndentureTrustee.

###  

### (e)                                  In the eventthe Back-up Servicer shall for any reason no longer be acting as such(including by 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 andAllocation Agreement, deliver to the Successor Back-up Servicer all documentsand records relating to this Servicing Agreement and the Contracts then beingserviced hereunder and an accounting of amounts collected and held by it andotherwise use its best efforts to effect the orderly and efficient transfer ofthis Servicing Agreement to the Successor Back-up Servicer. Compensation andexpense reimbursement of the outgoing Back-up Servicer shall be payable throughthe date that the outgoing Back-up Servicer ceases to render services.

###  

### (f)                                    The Issuershall, at its own expense, duly and punctually perform and observe itsobligations to the Back-up Servicer and the Servicer under this ServicingAgreement in accordance with the terms hereof. In addition, promptly followinga request from the Indenture Trustee to do so and at the Issuer’s own expense,the Issuer shall take all such lawful action as the Indenture Trustee (whichshall so request if directed by Noteholders evidencing not less than 51% of theClass A Note Balance, with the consent of the Insurer, to do so) may requestto compel or secure the performance and observance by the Back-up Servicer andthe Servicer 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 paymentsreceived with respect to the Contracts, (iv) tracking of Obligorcompliance with physical damage insurance, (v) repossessing FinancedVehicles, (vi) preparing Financed Vehicles for sale and representing theServicer throughout the related vehicle auction process, (vii) trackingtitles to and liens on the Financed Vehicles and

 

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### (viii) other functionspursuant to any other Subservicing Agreement approved in writing by theInsurer; provided, however, that entering into a SubservicingAgreement shall not relieve the Servicer or the Back-up Servicer from any oftheir respective obligations hereunder. References in this Servicing Agreementto actions taken or to be taken by the Servicer in servicing the Contractsinclude actions taken or to be taken by a Subservicer on behalf of theServicer. Each Subservicing Agreement will be upon such terms and conditions asare not inconsistent with this Servicing Agreement and as the Servicer, orBack-up Servicer, as applicable, and the Subservicer have agreed. The Servicer,or Back-up Servicer, as applicable, and a Subservicer may enter into amendmentsthereto; provided, however, that any such amendments shall beconsistent with and not violate the provisions 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 lessthan 51% of the Class A Note Balance, with or without cause upon thirtydays’ written notice to the Back-up Servicer; provided, however,that (A) such removal may be made immediately and shall not require noticeif: (i) the Back-up Servicer shall consent to the appointment of aconservator, receiver or liquidator in any insolvency, readjustment of debt,marshalling of assets and liabilities, or similar proceedings of or relating tothe Back-up Servicer or relating to all or substantially all of its property;or (ii) a decree or order of a court or agency or supervisory authorityhaving jurisdiction in the premises for the appointment of a conservator orreceiver or liquidator in any insolvency, readjustment of debt, marshalling ofassets and liabilities, or similar proceedings, or for the winding up orliquidation of its affairs shall have been entered against the Back-upServicer, and such decree or order shall have remained in force undischarged orunstayed for a period of 60 days; or (iii) the Back-up Servicer shallbecome insolvent or admit in writing its inability to pay its debts generallyas they become due, file a petition to take advantage of any applicable debtorrelief laws, make an assignment for the benefit of its creditors or voluntarilysuspend payment of its obligations; or (iv) a petition is filed againstthe Back-up Servicer seeking relief under any applicable debtor relief laws ofthe United States or any state or other competent jurisdiction, and suchpetition, order, judgment or decree shall have remained in force undischargedor unstayed for a period of 60 days after its entry; and (B) such removalshall not be effective unless and until a Successor Back-up Servicer isappointed by the Insurer or, if an Insurer Default has occurred and iscontinuing, by the Indenture Trustee at the direction of Noteholders evidencingnot less than 51% of the Class A Note Balance; provided, however,that the Back-up Servicer may petition a court of competent jurisdiction toappoint a Successor Back-up Servicer if one 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 doany and all things which it may deem necessary or desirable in connectiontherewith which are consistent with this Servicing Agreement. The Servicer mayextend the then-current maturity date of any Contract by one month (an “Extension”);provided, however, that (i) no Extension

 

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### may be granted with respectto any Contract unless at least six scheduled payments have been received withrespect to such Contract; (ii) Extensions may be granted in the aggregatefor no more than one month for each twelve months of the original term of aContract, (iii) Extensions may be granted no more than twice for periodsof one month each during any consecutive 12-month period and (iv) suchExtension shall result in the Contract becoming current. In the event that anExtension causes a Contract to remain outstanding on the Final Note PaymentDate of the Class A-2 Notes, the Servicer shall purchase such Contract asof the Business Day preceding the Payment Date in December following thedate such Extension was granted.  Suchpurchase obligation shall commence on the Payment Date in December 2005.In consideration of the repurchase of such Contract hereunder, the Servicershall remit the Purchase Amount of such Contract in the manner specified in Section 3.4of the Sale and Allocation Agreement. The sole remedy of the Issuer, theIndenture Trustee, or the Noteholders for any Extension that causes a Contractto remain outstanding on the Final Note Payment Date of the Class A-2Notes 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 fundson a Defaulted Contract; such collections shall be deposited into theCollection Account no later than two Business Days following receipt thereof.The Servicer shall, consistent with the standard of care set forth in Section 2.18hereof, have the discretion to determine whether or not it is in the best interestof the Issuer to sell, or not to sell, a Defaulted Contract, and to act inaccordance 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) paymentsreceived from or on behalf of the Obligors and deposited to the CollectionAccount (identified in Section 3.03 hereof) representingcollections with respect to the Contracts, (ii) other amounts receivedwith respect to the Contracts, including Liquidation Proceeds or the proceedsof repurchases under the Sale and Allocation Agreement, (iii) othermatters relating to the Contracts including extensions, delinquencies,repossessions and filing and payment of claims under Insurance Policies, (iv) financialinformation used to calculate whether certain Events of Default have occurred, (v) calculationof the three month average Delinquency Ratio and the Cumulative Net Loss Rate,and (vi) other items reflected on Exhibit A-1. Such reportsshall be delivered to the parties specified above no later than theDetermination Date related to each Collection

 

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### Period. The Servicer maysubmit the reports and other documents described in this section inelectronic 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 reportshall be dated as of the Determination Date for each Payment Date and deliveredto the Indenture Trustee on or before such Payment Date.

###  

### (e)                                  The Servicershall, upon request, promptly, but no later than two (2) Business Daysafter receipt of a request provide, or cause to be provided, to the Back-upServicer and the Insurer copies of all monthly bank statements, notices,reports or other documents received from the Indenture Trustee and from theCollection Account Depository regarding funds held in or transferred to or fromall 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) allcollections received during such Collection Period with respect to theContracts, (ii) the Pool Balance as of the last day of the CollectionPeriod, (iii) information as of the last day of such Collection Periodregarding the number of Defaulted Contracts, (iv) the number ofrepossessed Financed Vehicles and the number of sales of repossessed FinancedVehicles as of the last day of such Collection Period and (v) all otherinformation necessary for the Back-up Servicer to perform its duties under Section 2.23.Promptly upon discovery by the Back-up Servicer or receipt by the Back-upServicer of notice of an Event of Servicing Termination with respect to theServicer, the Back-up Servicer shall input such information onto its computersystem so that such information is immediately available to the Back-upServicer.

###  

## 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 Section 3.5(d)(x)of the Sale and Allocation Agreement, all costs and expenses incurred by theServicer in connection with the repossession of the Financed Vehicles securingsuch Contracts shall be reimbursed to the Servicer from the Collection Accounton the Payment Date relating to the Collection Period in which the Servicerdelivered to the Indenture Trustee an itemized statement of such costs andexpenses. Notwithstanding the foregoing and consistent with the terms of thisServicing Agreement, the Servicer shall not be obligated to repossess or takeany action with respect to a Defaulted Contract if, in its reasonable judgmentconsistent 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 withthe standard of care set forth in Section 2.18, including theCollection Policy, in its servicing of automotive contracts, which may includeselling the Financed Vehicle, or requesting a Subservicer to sell the FinancedVehicle, at public or private sale; provided, however, that theServicer, itself or through the use of independent contractors or agents to theextent allowed by Section 2.01(g), shall, in accordance with itsCollection Policy, maximize the sales proceeds for each repossessed FinancedVehicle. The foregoing shall be subject to the provision that, in any case inwhich the Financed Vehicle shall have suffered damage, the Servicer shall notexpend funds for the repair or the repossession of such Financed Vehicle unlessthe Servicer 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 careset forth in Section 2.18, shall, upon receipt of notice that anObligor’s physical damage insurance covering the Financed Vehicle has lapsed oris otherwise not in force, send written notice to such Obligor stating thatsuch Obligor is required to maintain physical damage insurance covering theFinanced Vehicle 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 causeto be taken such steps as are necessary, in accordance with the standard ofcare set forth in Section 2.18, to maintain perfection of thesecurity interest created by any Contract covering a Financed Vehicle which hasbeen relocated in such a manner as to require such steps, and (ii) withintwo Business Days of its receipt thereof forward to the Custodian, on behalf ofthe Issuer, via reputable overnight courier, any certificate of title to aFinanced Vehicle received by the Servicer for any reason with respect to aFinanced Vehicle 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 topreserve and protect the security interests of the Issuer and the IndentureTrustee in the Contracts, including any action specified in any opinion ofcounsel delivered 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 ANotes, not sell, pledge, assign, or transfer to any other Person, or grant,create, incur, assume, or suffer to exist any Lien on any Contract pledged tothe Indenture Trustee or any interest therein except with respect to DefaultedContracts, (v) immediately notify the Issuer, the Back-up Servicer, theInsurer and the Indenture Trustee of the existence of any Lien on any Contract(other than the Lien of the Indenture Trustee) if the Servicer has actualknowledge thereof, (vi) defend the right, title, and interest of theIssuer, the Noteholders, the Insurer and the Indenture Trustee in, to and underthe Contracts pledged to the Indenture Trustee, against all claims of thirdparties claiming through or under the Servicer, (vii) deposit intoCollection Account or cause to be deposited into the lockbox account maintainedat the Lockbox Bank all payments received by the Servicer with respect to theContracts in accordance with this Servicing Agreement, (viii) comply inall respects with the terms and conditions of this Servicing Agreement relatingto the obligation of the Issuer to remove Contracts from the Collateral pursuantto the Indenture, the obligation of the Depositor to reacquire the Contractsfrom the Issuer pursuant to the Sale and Allocation Agreement, and theobligation of the Seller to reacquire Contracts from the Depositor pursuant tothe Contribution Agreement, (ix) promptly notify the Issuer, the Back-upServicer, the Insurer and the Indenture Trustee of the occurrence of any Eventof Servicing Termination and any breach by the Servicer of any of its covenantsor representations and warranties contained herein, (x) promptly notify theIssuer, the Insurer, the Back-up Servicer and the Indenture Trustee of theoccurrence of any event which, to the knowledge of the Servicer, would requirethat the Issuer make or cause to be made any filings, reports, notices, orapplications or seek any consents or authorizations from any and all governmentagencies, tribunals, or authorities in accordance with the UCC and any statevehicle license or registration authority as may be necessary or advisable tocreate, maintain, and protect a first-priority security interest of theIndenture Trustee in, to, and on the Financed Vehicles and a first-prioritysecurity interest of the Indenture Trustee in, to, and on the Contracts pledgedto the Indenture Trustee and (xi) take all reasonable action necessary tomaximize the returns pursuant to 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 mighthave with 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 settlementof any unasserted claim or defense, or compromise of any amount an Obligorowes.

###  

### (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 inform the Issuer, theInsurer, the Indenture Trustee and the Back-up Servicer promptly, in writing,upon the discovery of the occurrence of any event which would require theSeller or the Depositor to repurchase a Contract under Section 2.3 of theContribution Agreement or Section 2.3 of the Sale and AllocationAgreement, as applicable; provided, however, that the Servicershall have no duty to investigate or determine the existence of any breachexcept 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 thelimit set forth therein, and any excess pursuant to Section 3.5(d)(x) ofthe Sale and Allocation Agreement.

###  

### (c)                                  In the eventthis Servicing Agreement is terminated on a date other than the last day of a CollectionPeriod or a Contract is designated to be no longer outstanding for purposes ofthis Servicing Agreement, then the Monthly Servicing Fee for such period orwith respect to such Contract, as the case may be, shall be determined on a prorata basis.

###  

## 2.09.                        AnnualStatement as to Compliance.  The Servicer shall deliver to the IndentureTrustee, and the Indenture Trustee shall deliver to the Issuer, the Back-upServicer, the Insurer,

 

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## the Rating Agencies and anyPersons identified on a list provided to the Servicer by the Issuer, as suchlist may be amended from time to time, on or before July 31 of each yearbeginning July 31, 2006, an Officer’s Certificate, dated effective as ofthe preceding April 30, stating that (i) a review of the activitiesof the Servicer during the preceding 12-month period (or such shorter period,as is applicable) and of its performance under this Servicing Agreement duringsuch period has been made under such officer’s supervision, (ii) based onsuch review, the Servicer has fulfilled all its obligations under thisServicing Agreement throughout such period, or, if there has been a default inthe fulfillment of any such obligation, specifying each such default known tosuch officer and the nature and status thereof and the remedies therefor beingpursued; and (iii) to the best of such officer’s knowledge, eachSubservicer, if any, has fulfilled its obligations under its SubservicingAgreement in all material respects, or if there has been a material default inthe fulfillment of such obligations, specifying such default known to suchofficers and the nature and status thereof. 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 60 days after the end of each fiscalquarter of FIFSGI (commencing with the quarter ending July 31, 2005), 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 beforeninety (90) days after the end of each fiscal year of FIFSGI (commencing withthe fiscal year ending April 30, 2006) the consolidated financialstatements of FIFSGI containing a report of a firm of independent publicaccountants selected by FIFSGI to the effect that such firm has examined thebooks and records of FIFSGI and that, on the basis of such examinationconducted in compliance with generally accepted audit standards, such financialstatements accurately reflect the financial condition of FIFSGI, in each casecertified by the chief financial officer of FIFSGI, to be true, accurate andcomplete copies of such financial 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 substantiallystating to the effect that (i) such accountants have examined the accountsand records of the Servicer relating to the Collateral and the conveyedproperty in all similar asset-based financing transactions sponsored by theIssuer or an affiliate thereof (which records shall be described in one or moreschedules to such statement), (ii) such firm has compared the informationcontained in certain Monthly Servicer Reports (and similar reports for othersimilar asset-based financing transactions sponsored by the Issuer or anaffiliate thereof) delivered in the relevant period with information containedin the accounts and records or other relevant source documents for such period,and (iii) on the basis of the procedures performed, whether theinformation examined and contained in such Monthly Servicer Reports (andsimilar 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 permittedpursuant to the priorities of Section 3.5(d) of the Sale andAllocation Agreement to be for the account of the Issuer, shall be paid orcaused to be paid by the Servicer out of the compensation to be paid to theServicer pursuant to Section 2.08.

###  

### (b)                                 During the termof this Servicing Agreement, the Servicer shall be reimbursed pursuant to Section 3.5(d)(x)of the Sale and Allocation Agreement for actual out-of-pocket costs andexpenses incurred in connection with the sale or other disposal of a FinancedVehicle or collection of amounts due with respect to a Contract including, butnot limited to, the following (to the extent such cost or expense relates tothe sale or other disposal or collection of amounts due with respect to a Contractor 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 use reasonable efforts tofile such claims on a timely basis after obtaining knowledge of the eventsgiving rise to such claims, subject to the servicing standard set forth in Section 2.18hereof. The Servicer will utilize such notices, claim forms and claimprocedures as are required by the respective insurance carriers.

###  

TheServicer shall not be required to pay any premiums or, other than administeringthe filing of claims and performing reporting requirements specified in theInsurance Policies in connection with filing such claims, perform anyobligations of the named insured under such Insurance Policies.  The Servicer shall not be responsible to theIssuer, 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, absentwillful misconduct 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.  TheServicer shall deliver or cause to be delivered 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 itspossession, the Servicer shall hold the Contract Files in trust on behalf ofthe 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 retailinstallment contract or promissory note and security agreement to the IndentureTrustee immediately following execution thereof;

####  

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

####  

#### (iv)                              a certificateof insurance or application therefor with respect to the Financed Vehiclesecuring the 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 ServicingAgreement. The Servicer shall bear the entire cost of restoration in the eventany Servicer Files (as defined below) shall become damaged, lost or destroyedwhile in the Servicer’s possession or control.

###  

## 2.15.                        Possession ofServicer Files.  Unlessotherwise specified herein, the Servicer shall maintain physical possession ofthe instruments and documents listed in paragraph 2.14(a) above; suchother instruments or documents that modify or supplement the terms orconditions of any of the foregoing; and, all other instruments, documents,correspondence and memoranda generated by or coming into the possession of theServicer (including, but not limited to, insurance premium receipts, ledgersheets, payment records, insurance claim files, correspondence and current andhistorical computerized data files) that are required to document or serviceany Contract. Collectively, all of the documents described in this Section 2.15with respect to a Contract are referred to as the “Servicer Files”. TheServicer hereby agrees that the computer files and other physical records ofthe Contracts maintained by the Servicer will bear an indication reflectingthat the Contracts are owned by the Issuer and pledged to the Indenture Trusteefor the benefit of the Noteholders and the Insurer and that all Servicer Filesshall remain the property of the Issuer and shall be held in trust by theServicer. The Servicer shall respond to all third party inquiries concerningownership of the Contracts by indicating that the Contracts have been assignedby the Seller to the Issuer and pledged to the Indenture Trustee for thebenefit of the Noteholders and the Insurer.

##  

## 2.16.                        Processing ofInformation.  Informationwith respect to each Contract is to be recorded into the Servicer’s loanmanagement 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 hereofand in the Collection Policy.

###  

## 2.18.                        Standard ofCare.  In performing its duties andobligations hereunder and in administering and enforcing the Insurance Policiesrelating to the Contracts pursuant to this Servicing Agreement, the Servicerwill comply with all applicable state and federal laws and shall service andadminister the Contracts by employing such procedures (including collection

 

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## procedures) and degree ofcare, in each case consistent with prudent industry standards, as arecustomarily employed by the Servicer in servicing and administering motorvehicle retail installment sales contracts and notes owned or serviced by theServicer comparable to the Contracts. In performing such duties, so long asFirst Investors Servicing Corporation is the Servicer (i) it shall complywith the Collection Policy, and (ii) it shall not make any materialamendment to such Collection Policy without the prior written consent of theInsurer (provided that no Insurer Default shall have occurred and becontinuing) 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 Servicer shall maintain or cause to bemaintained such books of account and other records as will enable the Issuerand the Insurer to determine the status of each Contract and any InsurancePolicy relating thereto.

##  

## 2.20.                        Inspection.

##  

### (a)                                  At all timesduring the term hereof, the Servicer shall afford the Issuer, the Insurer, theBack-up Servicer and the Indenture Trustee and their authorized agents, uponthree Business Days’ prior written notice, reasonable access during normalbusiness hours to the Servicer’s records and files relating to the Contractsand the Collateral and will cause its personnel to assist in any examination ofsuch records 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 thestandards represented to exist as to each Contract in this ServicingAgreement.  Nothing herein shall requirethe Issuer, the Insurer, the Back-up Servicer or the Indenture Trustee toconduct any inspection pursuant to this Section. Such parties may, with theServicer’s consent, which shall not be unreasonably withheld or delayed,discuss the affairs, finances and accounts of the Servicer with the Servicer’sindependent accountants, provided that an officer of the Servicer shall havethe 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 IndentureTrustee regarding the Obligors and the Contracts, whether upon exercise of itsrights under this Section 2.20 or otherwise, shall be maintained bythe Issuer, the Insurer, the Back-up Servicer or the Indenture Trustee inconfidence and shall not be disclosed to any other Person, except as otherwiserequired by applicable 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 Servicerand the Insurer and their agents and representatives shall at all times havefull and 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 bestefforts to ensure that its representatives retain in strict confidence and willnot disclose without the prior written consent of the Back-up Servicer any orall of such information practices, books, correspondence and records furnishedto it and (b) it will not, and it will use its best efforts (in the caseof the Insurer, consistent with Section 2.02 of the Insurance Agreement)to ensure that its agents and representatives will not, make any use whatsoever(other than for purposes contemplated by this Agreement) of any of suchinformation practices, computer tapes books, correspondence and records withoutthe prior written 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 theirrating of the related Notes or the implied rating of the facility.

###  

## 2.21.                        Enforcement.

##  

### (a)                                  The Servicerwill, consistent with the standard of care required by Section 2.18hereof, act with respect to the Contracts and the Insurance Policies in suchmanner as will, in the reasonable judgment of the Servicer, maximize the amountto be received by the Indenture Trustee with respect thereto.

###  

### (b)                                 The Servicershall to the extent consistent with the servicing standards set forth in Section 2.18,including the Collection Policy, or at the written direction of the Insurer,sue to enforce or collect upon the Contracts and the Insurance Policies(including unpaid claims), in its own name, if possible, or as agent for theIssuer or the Indenture Trustee. If the Servicer commences a legal proceedingto enforce a Contract or an Insurance Policy, the act of commencement shall bedeemed to be an automatic assignment of the Contract and the related rightsunder the Insurance Policies by the Issuer to the Servicer for purposes ofcollection only. If, however, in any enforcement suit or legal proceeding it isheld that the Servicer may not enforce a Contract or an Insurance Policy on thegrounds that it is not a real party in interest or a holder entitled to enforcethe Contract or the Insurance Policy, the Issuer shall, at the Servicer’srequest, assign the Contract or the Insurance Policy to the Servicer to thelimited extent

 

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### necessary to enforce theContract or the Insurance Policy, or take such steps as the Issuer deemsnecessary to enforce the Contract or the Insurance Policy, including bringingsuit 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 Section 2.18hereof.  In exercising such recourserights, the Servicer is hereby authorized on the Issuer’s behalf to reassignthe Contract and to deliver the certificate of title to the Financed Vehicle tothe person against whom recourse exists at the price set forth in the documentcreating 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.  Uponpayment in full on any Contract, the Servicer shall notify the Custodian priorto the next succeeding Determination Date by a written request for the releaseof such Contract (which shall include a statement of an officer of the Servicerto the effect that all amounts received in connection with such payment in fullwhich are required to be deposited in the Collection Account pursuant to Sections3.02 and 3.03 hereof have been so deposited).

##  

## 2.23.                        Duties ofBack-up Servicer.

##  

### (a)                                  The Back-up Servicerwill 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 SuccessorServicer is appointed by the Insurer, service the Contracts upon receipt ofwritten notice 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 theBack-up Servicer shall be entitled to request of and receive from the IndentureTrustee and the Servicer, as appropriate, all information necessary to conducttests or make reports in a timely manner as specified below and, except asotherwise specified herein, the Back-up Servicer shall be entitled to assumefor all purposes that the information received by it is true, correct andcomplete, and the Back-up Servicer shall be fully protected in relying uponsuch information without any independent investigation or audit to prove thefacts stated therein. The Back-up Servicer shall utilize such methods as itdeems reasonable and necessary to reconcile information provided by theServicer with the cash balances 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.

###  

Inaddition, the Back-up Servicer shall confirm that the Delinquency Ratio, theaverage Delinquency Ratio for any three Collection Periods and the CumulativeNet Loss Rate as set forth in the Monthly Servicer Report, are accurate basedsolely on a comparison to 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 ofDuties by Back-up Servicer.  At any time following the assumption ofduties of the Servicer by the Back-up Servicer or the designation of aSuccessor Servicer pursuant to Section 2.01(c), the Servicer shall,at the Indenture Trustee’s or the Insurer’s request, (A) assemble all ofthe records relating to the Collateral including all Contract Files, and shallmake the same available to the Indenture Trustee and the Insurer at a placeselected by the Indenture Trustee and the Insurer or its designee, and (B) segregateall cash, checks and other instruments received by it from time to timeconstituting collections of Collateral in a manner acceptable to the IndentureTrustee and the Insurer and shall promptly upon receipt but no later than twoBusiness Days after receipt, remit all such cash, checks and instruments, dulyendorsed

 

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## or with duly executedinstruments of transfer, to the lockbox account maintained by the Lockbox Bankor its designee.

##  

## 2.25.                        Errors andOmissions Insurance.  TheServicer has obtained, and shall continue to maintain in full force and effect,errors and omissions insurance and employee theft insurance of a type and insuch amount as is customary for servicers engaged in the business of servicingautomobile contracts. The scope of such insurance coverage shall include theacts and omissions of Subservicers or, if that is not the case with respect toany Subservicer, the Servicer shall require such Subservicer to maintain suchinsurance or a bond substantially equivalent thereto. Annually, or morefrequently upon request of the Issuer, the Insurer, the Indenture Trustee orthe Back-up Servicer, the Servicer shall cause to be delivered to the IndentureTrustee a certification evidencing coverage 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-up Servicer nor the Servicershall have any duties, obligations or responsibilities other than thosespecifically expressed and set forth herein and no implied obligations of theBack-up Servicer or the Servicer shall be read into this Servicing Agreement. Neitherthe Back-up Servicer nor the Servicer nor any of their respective directors,officers, agents or employees shall be liable to any Person, including, withoutlimitation, the Servicer or the Back-up Servicer, as the case may be, or theIssuer, the Insurer, the Indenture Trustee or the Noteholders in connectionwith this Servicing Agreement, except for the breach of any of itsrepresentations and warranties or obligations under this Servicing Agreement orfor the negligence, bad faith or willful misconduct of the Back-up Servicer orthe Servicer, as the case may be, or any of their respective officers,directors, agents or employees. The Back-up Servicer may rely on and shall beprotected in acting upon, or in refraining from acting in accordance with, anyresolution, officer’s certificate, certificate of auditors or any othercertificate, instrument, opinion, report, notice, request, consent, order,appraisal, bond or other paper or document reasonably believed by it to begenuine and correct and to have been signed or presented by the proper personor persons. Without limiting the foregoing, the Back-up Servicer (i) mayconsult with legal counsel (including the Indenture Trustee’s or the Back-upServicer’s), independent public accountants and other experts selected by itwith reasonable care and shall not be liable for any action reasonably taken oromitted to be taken by it in accordance with the advice of such counsel,accountants or experts, (ii) shall not be responsible to the Issuer, theInsurer, the Servicer, the Indenture Trustee or any other Person for anyrecitals, statements, warranties or representations made in or in connectionwith this Servicing Agreement, the Transaction Documents or any otheragreement, document or instrument executed in connection therewith by any otherPerson, (iii) shall not be responsible for the actions or omissions of anyother Person, including, without limitation, the Servicer, the Seller, theIssuer, the Insurer, the Indenture Trustee and the Noteholders unless such actor omission was caused by an act or omission of the Back-up Servicer, (iv) exceptas provided in this Servicing Agreement or any Transaction Document, shall nothave any duty to ascertain or to inquire as to the performance or observance ofany of the terms, covenants or conditions of the Indenture or any otherTransaction 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 theServicer, (v) except as otherwise provided herein, shall not be chargedwith the knowledge of any breach of representation or warranty by any otherPerson, or the failure of any other Person to comply with its obligations,hereunder or under any other Transaction Document, or of the occurrence of anyEvent of Servicing Termination unless a responsible officer of the Back-upServicer has received written notice of the same from the Servicer, the Insureror the Indenture Trustee, as the case may be, or otherwise has actual knowledgeof such breach or Event of Servicing Termination, (vi) shall not beresponsible to any Person for the due execution, legality, validity andenforceability against the other parties of this Servicing Agreement and (vii) shallincur no liability under or in respect of this Servicing Agreement by actingupon any notice (including notice by telephone), consent, certificate or otherinstrument or writing (which may be telex or telecopy) reasonably believed byit to be genuine and signed, sent or communicated by the proper party orparties.

##  

Itis agreed and understood that the Back-up Servicer is responsible for providingthe services described in Section 2.23 only in accordance with theinformation as shall have been timely supplied to it by the Servicer, theIndenture Trustee or the Collection Account Depository, as the case may be. TheBack-up Servicer shall incur no liability for any failure by the Servicer, theIndenture Trustee or the Collection Account Depository to furnish informationrequired of it, nor shall the Back-up Servicer be responsible for the contentor accuracy of any information provided to it by any such Person, unlessrequired by the Transaction Documents to do so. Except as may be expresslyprovided herein or in the Indenture, the Back-up Servicer shall have no duty tosupervise, investigate or audit any records or activities of the Servicer withrespect to the 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.

 

TheBack-up Servicer shall not be required to expend or risk its own funds orotherwise incur financial liability in the performance of any of its dutieshereunder, or in the exercise of any of its rights or powers, if the repaymentof such funds or adequate written indemnity against such risk or liability isnot reasonably assured to it in writing prior to the expenditure or risk ofsuch funds or incurrence of financial liability.

 

## 2.27.                        Re-Liening.  Upon the occurrence of a Re-Liening Trigger,the Insurer may instruct the Servicer to take or cause to be taken such actionsas may, in the judgment of the Insurer or its counsel, be necessary to perfector re-perfect the security interests in the Financed Vehicles in the name ofthe Indenture Trustee by amending the title documents relating to such FinancedVehicles or by such other reasonable means as may, in the judgment of theInsurer or its counsel, be necessary or prudent. The Servicer shall take orcause to be taken such actions and the fees and expenses arising as a result ofthe occurrence of a Re-Liening Trigger related to such perfection orre-perfection shall be reimbursed as provided in Section 3.5(d)(viii) ofthe Sale and Allocation Agreement. The Servicer agrees to take all actionnecessary therefor, including the preparation, execution and delivery of allsuch documents as may be requested by the Indenture Trustee or the Insurer inconnection therewith. The Servicer shall grant to the Successor Servicer anirrevocable power of attorney, pursuant to which the Servicer shall appoint theSuccessor Servicer as its attorney-in-fact, such appointment being coupled withan interest, to take any and all steps required to be performed by it pursuantto this Section 2.27 including execution of certificates of titleor any other documents in the name and stead of the Servicer. If at any time aPerson other than First Investors Servicing Corporation becomes the Servicer,First Investors

 

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## Servicing Corporation shallgrant to such Successor Servicer, promptly after its appointment as such, apower of attorney as described in the preceding sentence.

##  

## 2.28.                        Repurchase byServicer Upon Breach.  The Seller,the Insurer, the Servicer or the Issuer, as the case may be, shall inform theparties to this Agreement promptly, in writing, upon the discovery of anybreach or failure to be true of the representations and warranties made by theServicer pursuant to this Agreement. If such breach or failure shall not havebeen cured by the close of business on the last day of the Collection Periodwhich includes the thirtieth (30th) day after the date on which the Servicerbecomes aware of, or receives written notice from the Seller, the Insurer orthe Issuer of, such breach or failure, and such breach or failure materiallyand adversely affects the interest of the Issuer or the Insurer in a Contract,the Servicer shall repurchase such Contract from the Issuer on the Business Daynext preceding the Payment Date immediately following such Collection Period.In consideration of the repurchase of a Contract hereunder, the Servicer shallremit the Purchase Amount of such Contract in the manner specified in Section 3.4of the Sale and Allocation Agreement. The sole remedy of the Issuer, theIndenture Trustee, the Insurer (except as otherwise specified in the InsuranceAgreement), and the Noteholders with respect to a breach or failure to be trueof the representations and warranties made by the Servicer pursuant to thisAgreement shall be to require the Servicer to repurchase Contracts pursuant tothis Section 2.28. Neither the Owner Trustee nor the IndentureTrustee shall have any duty to conduct an affirmative investigation as to theoccurrence of any condition requiring the repurchase of any Contract pursuantto this Section 2.28 or the eligibility of any Contract forpurposes of this Agreement.

##  

## 2.29.                        Liability ofSuccessor Servicer. Notwithstanding anything contained in this Agreement to the contrary,Wells Fargo Bank, National Association as Successor Servicer is authorized toaccept and reasonably rely on all of the accounting, records (includingcomputer records) and work of the prior Servicer relating to the Contracts(collectively, the “Predecessor Servicer Work Product”) without anyaudit or other examination thereof, and Wells Fargo Bank, National Associationshall have no duty, responsibility, obligation or liability for the acts andomissions of the prior Servicer; provided, however, that WellsFargo Bank, National Association will provide notice to the Indenture Trusteeand the Insurer if it discovers any defective or inaccurate data.  If any error, inaccuracy, omission orincorrect or non-standard practice or procedure (collectively, “Errors”)exist in any Predecessor Servicer Work Product and such Errors make itmaterially more difficult to service or should cause or materially contributeto Wells Fargo Bank, National Association making or continuing any Errors(collectively,”Continued Errors”), Wells Fargo Bank, NationalAssociation shall provide notice of such circumstances to the Indenture Trusteeand the Insurer and shall have no duty, responsibility, obligation or liabilityfor such Continued Errors; provided, however, that Wells FargoBank, National Association agrees to use its best efforts to prevent furtherContinued Errors.  In the event thatWells Fargo Bank, National Association becomes aware of Errors or ContinuedErrors, Wells Fargo Bank, National Association shall, with the prior consent ofthe Indenture Trustee and the Insurer, use its best efforts to reconstruct andreconcile such data as is commercially reasonable to correct such Errors andContinued Errors and to prevent future Continued Errors.  Wells Fargo Bank, National Association shallbe entitled to recover its costs thereby expended from the Servicer and, to theextent 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 has been established pursuant to theSale and Allocation Agreement the Collection Account in the name of theIndenture Trustee for the benefit of the Noteholders and the Insurer.

##  

## 3.02.                        Collections.  The Servicer shall remit or cause aSubservicer to remit first, to a lockbox account maintained with the LockboxBank and second, to the Collection Account described in Section 3.03hereof, and to no other account, as soon as practicable, but in no event laterthan the Collection Account Depository’s close of business two Business Daysafter receipt thereof in the lockbox, all Collections received during theCollection Period, in respect of a Contract being serviced by the Servicer, andall payments or other amounts, if any, made by or on behalf of an Obligor orreceived by the Servicer with respect to any Contract.

##  

## 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 Servicer hereby represents,warrants and covenants to the Back-up Servicer, the Issuer, the Insurer, theNoteholders and the Indenture Trustee that as of the date of this ServicingAgreement:

##  

### (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 theServicer’s certificate of incorporation or bylaws or constitute a default (oran event which, with notice or lapse of time, or both, would constitute adefault) under, or result in the breach of, any Transaction Document or anyother contract, loan, lease, credit agreement or any other agreement orinstrument to which the Servicer is a party or which may be applicable to theServicer 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 constitutes a valid,legal and binding obligation of the Servicer, enforceable in accordance withits terms, subject to applicable bankruptcy, insolvency, reorganization, moratoriumand other laws affecting the enforcement of creditors’ rights generally and togeneral 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 would materiallyand adversely affect the condition (financial or other) or operations of theServicer or its properties or might have consequences that would affect theperformance 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 Servicer hereby represents,warrants and covenants to the Issuer, the Insurer, the Noteholders, theServicer and the Indenture Trustee that as of the date hereof or as of suchdate 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 the Back-upServicer 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 aviolation with respect to, any applicable order or decree of any court or anyorder, regulation or demand of any federal, state, municipal or governmentalagency, 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 hereby represents, warrants andcovenants to the Back-up Servicer, the Servicer, the Noteholders, the Insurerand the Indenture Trustee that as of the date of this Servicing Agreement or asof 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 orconsent of any Person, do not and will not conflict with any material provisionof the organizational documents of the Issuer, and do not and will not conflictwith or result in a breach which would constitute a material default under anyagreement binding upon or applicable to it or such of its property which ismaterial to it, or any law or governmental regulation or court decreeapplicable to it or such material property, and this Servicing Agreement is thelegal, valid and binding obligation of the Issuer enforceable in accordancewith its terms except as the same may be limited by insolvency, bankruptcy,reorganization or other laws relating to or affecting the enforcement ofcreditors’ 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 ofRepresentations and Warranties.  The representations and warranties set forthin this Article IV are continuous and shall survive the date ofthis Servicing 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) intowhich the Servicer may be merged or consolidated, (b) which may resultfrom any merger or consolidation to which the Servicer shall be a party, (c) whichmay succeed to the properties and assets of the Servicer substantially as awhole, or (d) which may succeed to the duties and obligations of theServicer under this Servicing Agreement following the resignation of theServicer subject to Section 2.01 hereof, which Person executes anagreement of assumption to perform every obligation of the Servicer hereunder,shall be the successor to the Servicer under this Servicing Agreement with theprior written consent of the Insurer (if no Insurer Default shall have occurredand be continuing) and without further act on the part of any of the parties tothis Servicing Agreement; provided, however, that (i) writtennotice of such merger, consolidation or assumption of liabilities shall bedelivered by the Servicer to the Insurer and the Noteholders, (ii) immediatelyafter giving effect to such transaction, no Event of Servicing Termination (asdefined in Section 5.01), and no event which, after notice or lapseof time, or both, would become an Event of Servicing Termination shall haveoccurred or be continuing, (iii) no Event of Default, Event of ServicingTermination or Re-Liening Trigger would occur as a result of such merger,consolidation or assumption of liability, (iv) the Servicer shall havedelivered to the Issuer, the Insurer, the Back-up Servicer and the IndentureTrustee an officer’s certificate and an Opinion of Counsel each stating thatsuch consolidation, merger, succession or resignation and such agreement ofassumption comply with this Section 4.05 and that all conditions precedentprovided for in this Servicing Agreement relating to such transaction have beencomplied with and (v) the Servicer shall have delivered to the Issuer, theInsurer, the Back-up Servicer and the Indenture Trustee an Opinion of Counseleither (A) stating that, in the opinion of such counsel, all financingstatements, continuation statements and amendments and notations oncertificates of title thereto have been executed and 

 

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## filed (or authorized andfiled, as applicable) that are necessary fully to preserve and protect theinterest of the Issuer, the Noteholders, the Insurer and the Indenture Trusteein the Contracts and the Financed Vehicles, and reciting the details of suchfilings, or (B) stating that, in the opinion of such counsel, no suchaction shall be necessary to preserve and protect such interest.

##  

# ARTICLE VDEFAULT, REMEDIES AND INDEMNITY

#  

## 5.01.                        Event ofServicing Termination.  Anyof the following acts or occurrences shall constitute an “Event of ServicingTermination” under this Servicing Agreement:

##  

### (a)                                  any failure bythe Servicer to make any payment, transfer or deposit due under any TransactionDocument on the date such payment, transfer or deposit 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, orany 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 fail 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 (as defined in the Indenture) with respect to the Servicer occurs whichhas not been waived by the Insurer or, if an Insurer Default has occurred andis continuing, Noteholders evidencing not less than 51% of the Class ANote Balance;

###  

### (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 givenin writing 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 bythe Servicer of such Termination Notice, all authority, power, duties,obligations and responsibilities of the Servicer under this ServicingAgreement, whether with respect to the Contracts, or otherwise, automaticallyshall pass to, be vested in and become obligations and responsibilities of theBack-up Servicer (or such other Successor Servicer appointed in accordanceherewith); provided, however, that the Successor Servicer shallhave no liability with respect to any obligation which was required to beperformed by the terminated Servicer prior to the date that the SuccessorServicer becomes the Servicer or any claim based on any alleged action orinaction of the terminated Servicer. The Successor Servicer is authorized andempowered by this Agreement to execute and deliver, on behalf of the terminatedServicer, as attorney-in-fact or otherwise, any and all documents and otherinstruments and to do or accomplish all other acts or things necessary orappropriate to effect the purposes of such Termination Notice, whether tocomplete the transfer and endorsement of the Contracts and related documents toshow the Issuer or the Indenture Trustee as lienholder or secured party on therelated title documents, or otherwise. The terminated Servicer agrees tocooperate with the Successor Servicer in effecting the termination of theresponsibilities and rights of the terminated Servicer under this ServicingAgreement, including, without limitation, the transfer to the SuccessorServicer for administration by it of all cash amounts that shall at the time beheld by the terminated Servicer for deposit, or have been deposited by theterminated

 

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### Servicer, in the CollectionAccount or thereafter received with respect to the Contracts and the deliveryto the Successor Servicer of all Servicer Files, collection records and acomputer tape in readable form as of the most recent Business Day containingall information 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), theSuccessor Servicer 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 Section 5.02(a),the Back-up Servicer (unless the Insurer shall have exercised its optionpursuant to the following paragraph to appoint an alternate Successor Servicer)shall be the successor in all respects to the Servicer in its capacity asservicer under this Servicing Agreement and the transactions set forth orprovided for in this Servicing Agreement, and shall be subject to all therights, responsibilities, restrictions, duties, liabilities and termination provisionsrelating thereto placed on the Servicer by the terms and provisions of thisServicing Agreement except as otherwise stated herein. The Issuer and suchsuccessor shall take such action, consistent with this Servicing Agreement, asshall be necessary to effectuate any such succession. If a Successor Serviceris acting as Servicer hereunder, it shall only be subject to termination under Section 5.02upon the occurrence of any Event of Servicing Termination with respect to suchSuccessor 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)shall have no liability to the Issuer, the Indenture Trustee, the Person thenserving as Back-up Servicer, any Noteholder or any other Person if it does so.If a Successor Servicer is not chosen within 90 calendar days after the receiptby the 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

 

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### Servicer, the Back-upServicer shall not be relieved of its duties as Back-up Servicer hereunder.Within 30 days of termination of the Servicer, if such termination causes achange in the address to which Obligor payments are to be sent, the SuccessorServicer shall send, or cause to be sent, to each Obligor, a written notice ofthe name and mailing address of the Successor Servicer to which payments on theContracts are 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 aspossible appoint a Successor Back-up Servicer following delivery of aTermination Notice with respect to the Back-up Servicer. If the Insurer orIndenture Trustee, as applicable, shall fail to approve a Successor Back-upServicer within 30 days of the date of a Termination Notice, the IndentureTrustee may petition a court of competent jurisdiction for the appointment of aSuccessor Back-up Servicer that is an Eligible Servicer.  Notwithstanding the above, the IndentureTrustee shall, 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 liabilitywith respect to any obligation which was required to be performed by theterminated Servicer prior to the date that the Successor Servicer becomes theServicer or any claim of a third party based on any alleged action or inactionof the terminated Servicer, (ii) no obligation to perform any repurchaseor advancing obligations, if any, of the Servicer, (iii) no obligation topay any taxes required to be paid by the Servicer, (iv) no obligation topay any of the fees and expenses of any other party involved in thistransaction and (v) no liability or obligation with respect to anyServicer indemnification obligations of any prior servicer including theoriginal servicer. The indemnification obligations of the Backup Servicer, uponbecoming a Successor Servicer, are expressly limited to matters arising fromthe gross negligence or willful misconduct of the Backup Servicer in its roleas 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

 

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### has occurred and iscontinuing, Noteholders evidencing not less than 51% of the Class A NoteBalance.

###  

## 5.03.                        Indemnity bythe Servicer.  TheServicer shall be liable to the Issuer, the Insurer, the Indenture Trustee, theHolders of the Class A Notes, the Owner Trustee, the Paying Agent andCertificate Registrar under the Trust Agreement and the Back-up Servicer(collectively, the “Indemnified Parties”) to the extent of thefollowing:

##  

### (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.

###  

THEFOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH SECTION 5.03LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR INPART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE ORIN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY INDEMNIFIEDPARTY.

 

### (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 original Servicer.

###  

## 5.04.                        Procedure forIndemnification. Notwithstanding anything to the contrary in this Servicing Agreement, inthe event that an Indemnified Party is entitled to indemnification pursuant tothe terms of this Servicing Agreement, such Indemnified Party shall promptlynotify the Person against whom such indemnity may be sought (hereinafter calledthe “Indemnifying Party”) in writing and the Indemnifying Party, uponrequest of the Indemnified Party, shall retain counsel reasonably satisfactoryto the Indemnified Party or, at the Indemnified Party’s option,

 

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## such Indemnified Party mayselect its own counsel with the consent of the Indemnifying Party, whichconsent shall not be unreasonably withheld or delayed, to represent theIndemnified Party and any others the Indemnified Party may designate in suchproceeding and shall pay the reasonable fees and disbursements of such counselrelated to such proceeding. It is understood that the Indemnifying Party shallnot, in connection with any proceeding or related proceedings in the samejurisdiction, be liable for the reasonable fees and expenses of more than oneseparate firm at any one time (in addition to any local counsel) for all suchIndemnified Parties (unless necessary because of conflicts of interest), andall such fees and expenses shall be reimbursed as they are incurred. Such firmshall be designated in writing by the Indemnified Party. The Indemnifying Partyshall not be liable for any settlement of any proceeding effected without itswritten consent, which consent shall not be unreasonably withheld or delayed,but if settled 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-upServicer shall not be liable to the Servicer, the Issuer, the Insurer, theIndenture Trustee or the Noteholders (i) by reason of any act, contract ortransaction performed in good faith by the Back-up Servicer pursuant to thisServicing Agreement nor shall it be liable for any loss resulting therefrom orfor any lost profit derived therefrom or any errors in judgment, so long assuch act, contract or transaction shall, at the time at which it was performedor entered into, have been reasonable and prudent under the circumstances andshall have conformed in all material respects to the express provisions of thisServicing Agreement or (ii) for any action taken or for errors in judgmentcommitted directly resulting from fraud, negligence or willful misconduct ofthe Seller, the Issuer, the Servicer, the Insurer, the Indenture Trustee or theNoteholders.

##  

## 5.06.                        Notification.  Upon discovery of the occurrence of any Eventof Servicing Termination, after the expiration of any applicable grace period,the Servicer or the Back-up Servicer shall give written notice of theoccurrence of an Event of Servicing Termination to the Insurer, the IndentureTrustee, and the Owner Trustee. Unless the Insurer or, if an Insurer Defaulthas occurred and is continuing, Noteholders evidencing not less than 51% of theClass A Note Balance, gives written notice to the Servicer or the Back-upServicer, as the case may be, within seven Business Days of receipt of suchnotice from the Servicer or the Back-up Servicer that the Insurer orNoteholders evidencing not less than 51% of the Class A Note Balance, asthe case may be, have waived such Event of Servicing Termination, the Serviceror the Back-up Servicer, as the case may be, shall then give notice in writingto the Rating Agencies, the Issuer and any other Persons identified on a listprovided to the Servicer or the Back-up Servicer, as the case may be, by theIssuer as such list may be amended from time to time, and the Indenture Trusteeshall give notice to the Noteholders.

##  

## 5.07.                        Waiver of Eventof Defaults.  The Insureror the Indenture Trustee at the direction of Noteholders evidencing not less than51% of the Class A Note Balance (with the prior written consent of theInsurer if no Insurer Default shall have occurred and be continuing) may waiveany Event of Servicing Termination, except for an Event of ServicingTermination arising by virtue of a default in making any required deposits toor payments from the Collection Account, the Note Payment Accounts or theReserve Account in accordance with this Servicing Agreement. Notwithstandingthe preceding sentence, the Insurer (if no Insurer Default shall have

 

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## occurred and be continuing)may, on behalf of all Noteholders, waive any Event of Servicing Termination.Upon any such waiver of an Event of Servicing Termination, such default shallcease to exist, and any default arising therefrom shall be deemed to have beenremedied for every purpose of this Servicing Agreement. No such waiver shallextend to any subsequent or other default or impair any right consequentthereon except to the extent expressly so waived.

##  

## 5.08.                        Survival.  The agreements in Section 5.03shall survive the termination of the Indenture, the removal, resignation orreplacement of the Servicer and the payment in full of the Notes.

##  

## 5.09.                        Servicer andBack-up Servicer Not to Resign.  Subject to the provisions of Section 5.02,neither the Servicer nor the Back-up Servicer shall resign from the obligationsand duties imposed on it by this Servicing Agreement as Servicer or Back-upServicer except upon a determination that by reason of a change in legalrequirements the performance of its duties under this Servicing Agreement wouldcause it to be in violation of such legal requirements in a manner which wouldhave a material adverse effect on the Servicer or the Back-up Servicer, as the casemay be, and the Insurer does not elect to waive the obligations of the Serviceror the Back-up Servicer, as the case may be, to perform the duties which renderit legally unable to act or to delegate those duties to another Person. Anysuch determination permitting the resignation of the Servicer or Back-upServicer shall be evidenced by an opinion of counsel to such effect deliveredand acceptable to the Issuer, the Indenture Trustee, and the Insurer. Noresignation of the Servicer shall become effective until the Back-up Serviceror an entity acceptable to the Insurer (if no Insurer Default shall haveoccurred and be continuing) shall have assumed the responsibilities andobligations of the Servicer. No resignation of the Back-up Servicer shallbecome effective until an entity acceptable to the Insurer shall have assumedthe responsibilities and obligations of the Back-up Servicer; provided, however,that in the event a successor Back-up Servicer is not appointed within 60 daysafter the Back-up Servicer has given notice of its resignation and has providedthe opinion of counsel required by this Section 5.09, the Back-upServicer may petition a court of competent jurisdiction for its removal.

##  

# ARTICLE VITERMINATION OF AGREEMENT

#  

## 6.01.                        Term.  This Servicing Agreement shall remain ineffect until termination of the Indenture.

##  

## 6.02.                        Effect ofTermination.  Upontermination of this Servicing Agreement, the Servicer shall, at the directionof the Issuer, promptly deliver to the Issuer or its designee all ServicerFiles and any related files and correspondence in its possession as are relatedto the management of the Contracts and the services provided hereunder.

##  

## 6.03.                        Transfer ofServicing.  Upontermination of this Servicing Agreement, the Servicer shall cooperate in thetransfer of the Servicer Files. Any matters pending at the effectivetermination date will continue to be processed in an orderly and timelyfashion; it being intended, however, that responsibility for the Contractsshall transfer as quickly as practicable and in any event within thirty daysafter the termination date.

 

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# ARTICLE VIIMISCELLANEOUS PROVISIONS

#  

## 7.01.                        Amendment.  This Servicing Agreement may only be amendedby mutual written consent of the parties hereto and with the prior writtenconsent of the Insurer and Noteholders evidencing not less than 51% of the Class ANote Balance. No amendment made to the Sale and Allocation Agreement or theIndenture, without the Back-up Servicer’s or the Servicer’s written consent,shall be effective as to the Back-up Servicer or the Servicer, respectively, tothe extent such amendment is disadvantageous in any respect to the Back-upServicer or the Servicer, respectively. The Rating Agencies and any otherPersons identified on a list provided to the Issuer, as such list may beamended from time to time, shall be given by the Issuer prior notice of anyproposed amendment to the Servicing Agreement, the Sale and AllocationAgreement or the Indenture and, upon any such amendment, shall promptly beprovided by the Issuer a copy of any such amendment.

##  

## 7.02.                        Waivers.  The provisions of this Servicing Agreementmay only be waived by written consent of the Insurer or, if an Insurer Defaulthas occurred and is continuing, Noteholders evidencing not less than 51% of theClass A Note Balance, and the parties hereto. The failure of any party atany time to require performance by the other of any provision of this ServicingAgreement shall in no way affect that party’s right to enforce such provision,nor shall the waiver by any party of any breach of any provision of thisServicing Agreement be taken or held to be a waiver of any further breach ofthe same provision or any other provision.

##  

## 7.03.                        Notices.  All notices, requests, consents and othercommunications hereunder shall be in writing and shall be delivered personallyor mailed by first-class registered or certified mail, postage prepaid, or bytelephonic facsimile transmission and overnight delivery service, postageprepaid, in any case addressed as follows:

##  

To theServicer:

 

FirstInvestors Servicing Corporation

c/oFirst Investors Financial Services, Inc.

675Bering, Suite 710

Houston,Texas 77057

Attention:Bennie H. Duck

Telephone:(713) 977-2600

Fax:(713) 260-0028

 

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To theIndenture Trustee/Back-up Servicer:

 

WellsFargo Bank, National Association

MACN9311-161

SixthStreet and Marquette Avenue

Minneapolis,Minnesota 55479

Attention:Corporate Trust Services – Asset-Backed Administration

Telephone:(612) 667-8058

Fax:(612) 667-3464

 

To theIssuer:

 

FirstInvestors Auto Owner Trust 2005-A

c/oWells Fargo Delaware Trust Company, as Owner Trustee

919North Market Street, Suite 700

Wilmington,Delaware 19801

Attention:Corporate Trust Administration, Ann Dukart

Telephone:(302) 575-2004

Fax:(302) 575-2006

 

To theRating Agencies:

 

Moody’sInvestors Service, Inc.

99Church Street, 4th FloorNew York, New York 10007Attn: Yan Yan

ServicerReports@moodys.com

 

Withan additional copy to:

 

Moody’sInvestors Service, Inc.

99Church Street, 4th Floor

NewYork, New York 10007

Attn:ABS Monitoring Department

 

Standard &Poor’s

55Water Street

NewYork, New York 10041

Attention:David Bleakley

Phone:(212) 438-2404

Fax:(212) 438-2649

 

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To theInsurer:

 

MBIAInsurance Corporation

113King Street

Armonk,New York 10504

Attention:Insured Portfolio Management-

StructuredFinance (IPM-SF)

Phone:(914) 273-4545

Fax:(914) 765-3810

 

Suchnotice, request, consent or other communication shall be deemed given when sodelivered, or if mailed, two days after deposit with the U.S. Postal Service.

 

## 7.04.                        Severability ofProvisions.  If one ormore of the provisions of this Servicing Agreement shall be held invalid forany reason, such provisions shall be deemed severable from the remainingprovisions of this Servicing Agreement and shall in no way affect the validityor enforceability of such remaining provisions. To the extent permitted by law,the parties hereto hereby waive any law which renders any provision of thisServicing Agreement prohibited or unenforceable.

##  

## 7.05.                        RightsCumulative.  All rightsand remedies under this Servicing Agreement are cumulative, and none isintended to be exclusive of another. No delay or omission in insisting upon thestrict observance or performance of any provision of this Servicing Agreement,or in exercising any right or remedy, shall be construed as a waiver orrelinquishment of such provision, nor shall it impair such right or remedy.Every right and remedy may be exercised from time to time and as often asdeemed expedient.

##  

## 7.06.                        No Offset.  Prior to the termination of this ServicingAgreement, the obligations of the Back-up Servicer and the Servicer under thisServicing Agreement shall not be subject to any defense, counterclaim or rightof offset which the Back-up Servicer or the Servicer may have against the otheror against the Issuer, the Seller, the Insurer, any Noteholder or the IndentureTrustee, whether in respect of this Servicing Agreement, any Contract orotherwise.

##  

## 7.07.                        Inspection andAudit Rights.  TheServicer agrees that, upon prior written notice, it will permit the Issuer, theInsurer, the Back-up Servicer, or the Indenture Trustee and their respectiverepresentatives, during the Servicer’s normal business hours, to examine theServicer Files, all the books of account, records, reports and other papers ofthe Servicer relating to the Contracts, to make copies and extracts therefrom,to cause such books to be audited by independent public accountants selected bythe Issuer, and to discuss its affairs, finances and accounts relating to theContracts with its officers, employees and independent certified publicaccountants, all at such reasonable times and as often as may be reasonablyrequested. Any expense incident to the exercise by the Issuer, the Insurer orthe Indenture Trustee of any right under this Section 7.07 shall beborne by the Servicer. The Servicer shall allow such examination within two (2) BusinessDays of receipt of the required notice if so requested by the requesting party.

 

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## 7.08.                        Powers ofAttorney.  The Issuershall, from time to time, provide to the employees of the Servicer and theIndenture Trustee limited, revocable powers of attorney or other such writtenauthorizations as may be appropriate to enable the Servicer and the IndentureTrustee to perform its respective obligations under this Servicing Agreementand the Indenture; provided, however, that the Issuer shall notbe required to provide such powers with respect to any matter for which theIssuer does not have authority to perform itself.

##  

## 7.09.                        Assignment andBinding Effect.  Except withrespect to the pledge of its rights under this Servicing Agreement by theIssuer to the Indenture Trustee pursuant to the Indenture and as expresslyprovided herein, this Servicing Agreement may be assigned by the Issuer onlywith the written consent of the parties hereto and the Insurer or, if anInsurer Default has occurred and is continuing, Noteholders evidencing not lessthan 51% of the Class A Note Balance; however, in the event of anassignment, all provisions of this Servicing Agreement shall be binding upon andinure to the benefit of the respective successors and assigns of the partieshereto.

##  

## 7.10.                        Captions.  The article, paragraph and other headingscontained in this Servicing Agreement are for reference purposes only, andshall not limit or otherwise affect the meaning hereof.

##  

## 7.11.                        Counterparts.  This Servicing Agreement may be executed inany number of counterparts, each of which counterparts shall be deemed to be anoriginal, and such counterparts shall constitute but one and the sameinstrument.

##  

## 7.12.                        Governing Law.  This Servicing Agreement shall be deemedentered into under and shall be governed by and interpreted in accordance withthe laws of the State of New York without reference to its conflict of lawprovisions, and the obligations, rights and remedieis of the parties hereundershall be deterimined in accordance with such laws.

##  

## 7.13.                        Parties.  Except as set forth in Section 7.16hereof, this Servicing Agreement shall inure solely to the benefit of and shallbe binding upon the parties hereto, and their respective successors, legalrepresentatives and assigns, and no other Person shall have or be construed tohave any equitable right, remedy or claim under or in respect of or by virtueof this Servicing Agreement or any provision contained herein.

##  

## 7.14.                        Relationship ofthe Parties.  Therelationship of the parties to this Servicing Agreement is that of independentcontractors. Neither this Servicing Agreement nor any of the activitiescontemplated hereby shall be deemed to create any partnership, joint venture,agency or employer/employee relationship among the Back-up Servicer, theServicer and the Issuer.

##  

## 7.15.                        No BankruptcyPetition Against the Issuer or Depositor.  The Back-up Servicer, the Servicer and theIndenture Trustee agree that, prior to the date that is one year and one dayafter the payment in full of the Notes, none of them will institute against orjoin any other Person in instituting against, the Issuer or the Depositor, anybankruptcy, reorganization, arrangement, insolvency or liquidation proceedingsor other proceedings under the laws of the United States or any state of theUnited States. This Section 7.15 shall survive the termination ofthis Servicing Agreement.

 

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## 7.16.                        Third PartyBeneficiaries.  ThisServicing Agreement shall inure to the benefit of the Noteholders and theInsurer and their respective successors and assigns. Without limiting thegenerality of the foregoing, all covenants and agreements in this ServicingAgreement which expressly confer rights upon the Insurer or the Noteholdersshall be for the benefit of and run directly to them, and each shall beentitled to rely on and enforce such covenants to the same extent as if it werea party hereto.  Notwithstanding theforegoing, the Noteholder shall have no rights to enforce the provisions ofthis Servicing Agreement so long as there is no Insurer Default that hasoccurred and is continuing.

##  

## 7.17.                        OtherAgreements.  TheServicer and the Back-up Servicer will not be obligated or bound by anyprovision or term of any other agreement, including the Indenture and the Saleand Allocation Agreement, except to the extent, and only to the extent,expressly stated herein or therein.

##  

## 7.18.                        Purchase andSubsequent Pledge.  TheServicer hereby acknowledges that the Issuer will acquire the Contracts and theother items included in the Collateral pursuant to the Sale and AllocationAgreement and will pledge the Contracts and the other items included in theCollateral along with the Issuer’s rights under this Servicing Agreement, theContribution Agreement and the Sale and Allocation Agreement to the IndentureTrustee for the benefit of the Noteholders and the Insurer pursuant to theterms of the Indenture, and that the representations and warranties containedin the Contribution Agreement, Sale and Allocation Agreement, this ServicingAgreement and the Indenture and the rights of the Issuer under the Indenture,this Servicing Agreement, the Contribution Agreement and the Sale and AllocationAgreement are intended to benefit the Noteholders and the Insurer.

##  

## 7.19.                        Exercise ofRights by Insurer.  All rightsgranted to the Insurer pursuant to this Servicing Agreement shall terminateduring the pendency of an Insurer Default and during such time the Insurer’srights may be exercised by Noteholders evidencing not less than 51% of the Class ANote Balance; provided, however, the Insurer’s rights shall bereinstated in full, immediately upon the cure of such Insurer Default.

##  

## 7.20.                        Limitation ofLiability. Notwithstanding any other provision herein or elsewhere, this ServicingAgreement has been executed and delivered by Wells Fargo Delaware TrustCompany, not in its individual capacity, but solely in its capacity as OwnerTrustee of the Issuer, in no event shall Wells Fargo Delaware Trust Company orthe Owner Trustee have any liability in respect of the representations,warranties, or obligations of the Issuer hereunder or under any otherTransaction Document and for all purposes of this Agreement and each otherTransaction Document the Owner Trustee and Wells Fargo Delaware Trust Companyshall be entitled to the benefits of the Trust Agreement.

##  

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

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INWITNESS WHEREOF, the Issuer, the Back-up Servicer, the Servicer, the Custodianand the Indenture Trustee have caused this Servicing Agreement to be dulyexecuted by their respective authorized officers as of the date and year firstabove written.

 
|   | First Investors  Auto Owner Trust 2005-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 Agreement Signature Page

 

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**SCHEDULE I**

** **

** **

**FIRST INVESTORS FINANCIALSERVICES**

** **

**RETAIL COLLECTION POLICY &OPERATING PROCEDURES**

** **

March 2003

 

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| **First Investors Financial Services** | ** ** | **Office Operating Procedures** |
|----------------------------------------|------------|---------------------------------|

 

**Retail Collection Policy**

 

**Preface**

 

This procedure explains the First Investors Financial(FIFS) policy for collections.  Inaddition, this section explains the various methods to be employed byoffice personnel to maximize collection efforts; FIFS complies with the FairDebt Collection Practices Act and all applicable state and federal laws andregulations.  (For specific requirementsor specific state legislation refer to Legal Procedures.)

 

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

 

**Office Responsibilities**

 

The office goals are:

 

•                                          Successfuland profitable liquidation of accounts receivables;

 

•                                          Tomaintain client satisfaction- which leads to repeat business.

 

The office can meet these objectives by establishingtimely and effective collection practices.

 

The importance of immediate follow-up on a delinquentaccount cannot be over-emphasized.  Thelater in the delinquency cycle a customer is contacted, the fewer options areavailable to FIFS and the customer.

 

Profitability on an account is effected by more thanthe potential loss on repossession.  Anaccount that must be contacted every month for payment is incrementally lessprofitable than an account that pays “as agreed,” even though all payments aremade in both cases.

 

**Collections Unit Organization**

 

FIFS organizes the collection department by utilizingan online (auto dialer system) and offline system 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 intotwo departments.  The front-line collectiongroup handles accounts under 30 days past due. Back-end collectors handle accounts over 30 days past due untilresolution ( i.e. account brought

 

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current, paid-in-full, repossessed or forwarded to a specialty unitsuch as bankruptcy or litigation).

 

**Account Distribution**

 

The basis of the FIFS collection philosophy is thatall past due accounts not already awaiting resolution or another specificstrategy, will be reviewed for daily activity. This is the minimum requirement, but collectors are encouraged to followup as often as conditions warrant. Daily Routine will be governed by eachcollection department to ensure best coverage and delinquency management forall past due accounts.

 

**Account Tracking**

 

FIFS uses an automated collection system that tracksall delinquent accounts.  The system isextremely flexible and allows FIFS maximum ability to organize collectionfollow-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 to manage on a daily basis.  The accounts are randomly distributed to eachqueue based on delinquency level and ASR experience.  Accounts remain with the assigned collectoruntil a point is reached requiring designation of another ASR or department.

 

**Telephone Collection Concept**

 

Emphasis is placed on the use of the telephone as theprimary tool for customer contact.  It isthe most effective collection tool. Telephone contact is quick and provides immediate results.  Poor follow-up results in the loss of revenueand 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.

 

**The Collection Call**

 

An effective collection call is made up of a series oflogical steps.  These steps assure thatall the information needed from customers is obtained, while also meeting allof FIFS legal and ethical requirements.

 

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The steps of an effective collection call are listedand described below.  Always follow andcomplete the steps as the customer and the nature of the individual calldictate.  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** | ** ** |

 

**Step One – 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

 

**Specialnote:**  Maintain a professional toneand always maintain control of conversation.

 

**Step Two – 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

 

**Specialnote:**  Tone reflects sincere empathyfor the customer and his/her situation.

 

**Step Three - Negotiate**

 

•                                          Overcomeobjections

•                                          Identifyall customer benefits

•                                          Createa solution

•                                          Obtaincustomer commitment

 

**Specialnote:**  Listen to what the customer issaying. Emphasize customer benefits such as: to eliminates additional action, stop collection calls and notices, andpromotes good CBR rating.

 

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**Step Four – 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 thelocation of and who is in possession of our collateral.**

 

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 bereminded that there is no grace period and to allow for mailing time.**

 

If the customer has not mailed a payment to bring theloan current, arrangements for bringing the account current should bemade.  Arrangements for all past duemonies as well as future payments should be set-up by the collector and agreedupon by the customer.  **On all collection calls the reason for delinquency (RFD) should bediscussed and noted.**

 

The ASR should attempt to use urgency payments on allpast due payments.  Western Union QuickCollect should be the main source of urgency suggested (express mail is anothergood 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.**

 

**Working with the Customer**

 

Proper account handling is critical to the success ofFirst Investors Financial Services.  Thefirst step in providing quality account servicing is to recognize who thecustomer is.  Virtually every person whomwe come in contact with while acting as a FIFS employee is our customer.  The next step is to understand the elementsthat comprise Quality Customer Service – service that not only meets, but alsoexceeds our customers’ expectations.

 

**The Three C’s**

 

Quality Customer Service consist of three basicelements:

 

•                                          Competence

•                                          Concern

•                                          Courtesy

 

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**Competence**

 

The ability to deliver quality customer servicedepends on the employee’s competence – having the knowledge and skill necessaryto do the job properly.

 

Simply having job knowledge and skills is just thestarting point.  Each employee must also *demonstrate* to both internal and external customers thathe/she can do the job- that the employee can deliver on our promise of qualitycustomer service.  Few things are morefrustrating to a customer than dealing with a company whose employees lackcompetence.  When competence is missingin a customer contact, the customer doubts the ability of the employee toprovide 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.  Itis important to understand that whatever a person’s job, our customers expectemployees to know how to perform the skills for which they are responsible inquick and efficiently manner.

 

2.                                       **Demonstrate knowledge of FIFS, its policies and procedures.**  To the customer, each employee is FIFS.Therefore, employees will often be in the position of having to explain companypolicies and procedures in a way that makes them sound logical andcustomer-oriented, rather than arbitrary. This includes understanding your own span of authority.  Know when it is appropriate to get othersinvolved when helping customers (i.e. when customers request exceptions tosettlement policy requirements).

 

3.                                       **Provide complete information.**  Customers expect that FIFS will provide allthe information they will reasonably need about its’ processes, procedures andpolicies.  It is every employee’sresponsibility to know these things and to be able to tell the customer whatthey need to know.  We should never leaveit up to the customer to discover things on his or her own.

 

4.                                       **Know where to get information.**  Another requirement of competency is to knowwhat resources to consult, whether those resources are manuals or fellowemployees.  An employee is not expectedto know everything.  Even the mostdemanding customers will understand that the person they’re speaking with maynot have the answer to a problem, as long as an answer can be obtained within atimely fashion.

 

**Show concern.**  All customers want to feel the companies theydeal with have a genuine concern for them and their needs.  Without concern, the positive impressioncreated by Competence will quickly disappear. When concern is missing, customers feel like they are just a number andare not valued.  Showing concern involvesfollowing a few simple guidelines:

 

1.                                       **Project a warm, friendly presence.**  A smile goes a long way toward makingcustomer’s feel that their concerns really matter.  That may seem obvious when dealing with a

 

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customer face-to-face, but itis equally true over the telephone. Studies have shown that when people smilewhile talking on the telephone, the person on the other end of the line “hearsthe smile” in their voice.  An addedbenefit is that smiling tends to make a person more relaxed and less stressed.

 

2.                                       **Use the customer’s name.** All people like to be recognized andrespected.  One simple way to showrespect and recognition of customers as individuals with their own uniqueidentity is by using their names.  Whenusing customers’ names, do so at times when it is natural.  Do not use names so frequently that itbecomes forced or insincere.  A good rule ofthumb is to try to use the customer’s name two to three times during aconversation.

 

3.                                       **Express empathy.** Empathy is the ability for the ASR to put him/herself in the “customers’shoes” – to show understanding of their points of views and concerns.  Expressing empathy requires careful listeningto what the customer says, and sincere understanding of his/her underlyingfeelings of frustration, fear, or anger. A simple “I’m sorry that happened” when mistakes occur goes a long waytoward defusing customer anger, and shows that the ASR understands the customer’spoint of view.  It is possible to show weunderstand a customer’s problem without accepting fault on the part of thecompany.

 

4.                                       **Take responsibility for customer satisfaction.**  When contact is made with a customer, the ASR’sjob is not finished until the customer’s needs have been met.  If the ASR can not personally satisfy theneed, the customer should be directed to someone who can.  Also, when the ASR is presented with aproblem that the customer perceives to be “our” fault, it is extremelyimportant to avoid blaming someone else in the company.  We all “own” customer problems and blamingothers simply appears to the customer as “passing the buck”.  Whatever agreement is made with a customer besure that the agreement is carried through and followed-up as stated.

 

5.                                       **The ASR should give the customer their undivided attention.**  No one is more important than thecustomer.  No office activity is moreimportant than a conversation with a customer. To make sure customers get this message loudly and clearly, the ASR willneed to take precautions to ensure that when serving a customer, they keepinterruptions 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 leave the customer to obtain information,clearly explain where you are going, and how long it will take.

 

**Courtesy**

 

Practicing courtesy towards a customer sounds likesimple common sense.  Who would beintentionally rude to a customer?  However,one’s behavior can sometimes appear discourteous 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 amatter of following rules of etiquette designed to show respect.

 

**Greet and respond to customers quickly andproperly.**  It is commoncourtesy that the ASR responds quickly and properly to any customer who callson the telephone. Remember that customers are not interruptions.  Taking care of customers is our primaryjob.  If the person who normally greetscustomers is not available, the ASR should take it upon his/herself to greetthe customer.

 

**When using the customers’ name, use their titleand last name.**  Forexample, “Good afternoon, Mr. Marks.” Do not address customers by their first names.

 

**Listen to customers.**  Listening without interrupting may be themost important element of quality customer service.  Listening to customers is a matter ofrespect.  It is virtually impossible toshow concern, demonstrate competence, or practice courtesy if the ASR does notfirst listen to what the customer has to say.

 

Listening to customers goes beyond hearing what theyhave to say.  An important part oflistening is to assure customers that they are being listened to.  **This means that the ASRneeds to actively listen.** Questions should be asked to get customers to explain situationsfully.  Summarize what the customers saysto show that they are understood.  Oncethe ASR has demonstrated active listening, it will be possible to expressempathy, take responsibility for customer satisfaction, and provide completeinformation.

 

**Ensure the customers’ understanding.**  In order to ensure that the ASR hassuccessfully handled a customer’s request or need to its resolution, Thecollector should discuss the interaction with the customer.  **Unless both the ASR andthe customer come away from the contact with the same understanding of what hasoccurred or been decided, 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 to your banker about a consolidation loanso that we can get your account settled.”

 

**Know and use telephone etiquette.**  The majority of contacts with customers occurvia telephone, so it is essential to know and use the rules of telephoneetiquette.

 

**Telephone Etiquette**

 

**Be professional.**  Talk in a friendly tone and control your rateof speech.

 

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

 

•                                          **Answer promptly.** Answer calls between the first and third ring.  Generally, the optimal point to answer isafter the second ring.

 

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•                                          **Greet the caller.** When answering the telephone say: “Thank you for calling FIFS. This is [your name], how may I help you?”  This will usually cause the customer toprovide the information you need to be able to respond, either by helping thecustomer yourself, or by directing the call to the appropriate person.

 

•                                          **Handle or direct the call.** Either handle the call yourself or direct the call to the employee whocan best serve the customer’s needs. Identify the caller and obtain the account number when appropriate.

 

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

 

Request and obtain caller’spermission to put them on hold.  **For example,** “It will take a minute to look up your paymentinformation.  Will you please hold?”

 

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

 

•                                          **When picking up a call that was on hold, thank the customer forholding.**  **For example,**“Thank you for holding, Mr. Carr.  Ihave 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 another employee for handling: Tell the callersthe first and last name of the person whom they will be speaking.  **For example,** “Mr. Carr,I’ll be transferring you to Marge Sands.

 

•                                          **Thank the customer.**

 

**Use the holds skill to transfer the call**

 

Tell the employee the caller’s name and the reason forthe call.  For example, “Marge, I have Mr. Carron the line.  He wants to know about thesettlement 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 thecaller your name (must be done within the first 60 seconds of a call)

 

3)  Restate the purpose of the call.

 

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**For example,** “ Hello, Mr. Carr.  This is Marge Sands.  I understand you have a question about theletter you received this morning.”  Thislets the caller know that the ASR has been informed of the reason for theircall.

 

•                                          **Take messages.**  Alwaystry to take care of the caller or direct the call to someone who can doso.  When it is not possible, takecomplete and accurate messages.  Followthese 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.

 

**Forexample,** “Stawiarski” would be correctly spelled onthe message and then the phonetic spelling, “Stavarski”, would be noted inparentheses.

 

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

 

•                                          **Thank the customer for calling.**

 

**Voice Quality**

 

When the ASR talks to someone over the telephone,personality is conveyed entirely through voice. Because we do not have the advantage of facial expression and bodylanguage when speaking on the phone, our voice needs to communicate warmth,friendliness, and a desire to be of service to all callers.  If the ASR is smiling, the smile will bereflected in his/her voice by a friendly tone. If the ASR is slouched in their chair, their voice is likely to have anindifferent, lackadaisical quality, instead of sounding 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, eventhough the caller can’t see the smile. ASR’s should sit up straight, and focus attention to the caller.

 

**Voice Quality**

 

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 ASRshould 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 theASR speaks much faster than the customer does, the customer may get theimpression that rushing to them off the telephone.  Speaking slower than the customer, on theother hand, can give the impression that the ASR is unsure or perhaps bored anddo 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 makesthe 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 run on words or “swallow”word endings.

 

**Reasons for Delinquency**

 

There are two things to keep in mind about customerswith delinquent accounts.  First,customers whose accounts have become delinquent and have had their accountplaced with our office are not our adversaries. These are the same people who we investigated and to whom we extendedcredit not long ago based on the facts that this customer had the ability andthe 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 mutualbenefit.

 

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

 

**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 orbills.  Also, a customer who does nothandle his or her money well many incur more debt than can be reasonablymanaged with available resources.

 

**Vehicle Purchase Dispute –**Sometimes,customers encounter problems with the vehicle they purchased.  When this occurs, customers will often stoppaying 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.

 

**Helping Find Solutions**

 

While all of these circumstances are regrettable, mostare temporary.  Even in cases ofbankruptcy or death, it is possible to collect on the account.  Generally, we will find that customers wouldlike to repay their obligations if they could only figure out how to do it inlight of their altered 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 includesfinding the reason behind why the are not paying, and letting the customer knowthat FIFS wants to help them solve the problem. 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.  Todo this, the ASR must keep account records up to date, anticipate problemswhenever possible, and communicate with customers frequently to ensure promisesare kept.

 

Objective is to educate the customer and resolvedelinquency.  There are several practicesto remember while you work towards resolution.

 

•                                          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 tothe 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 a reference, the ASR should attempt toupdate the customer’s file, verifying home address, telephone and anyemployment information.  A call backnumber should be left 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 givepermission, document it clearly in the notes.

 

*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.  A neighbor should only verify our customer’saddress.

 

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

 

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.  Thesystem automatically assigns the current date and time.  The note should recap the results of thecontact.

 

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

 

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

 

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**The office must avoid conducting telephoneactivities, which fall into the following 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.  In that case, discussion of the account is **not** permissible since it couldembarrass the customer and violate federal and/or state privacy laws.

 

3.                                       **Calls making a variety of threats** -Threats should never be made, stated, or implied.  Discussions of the possibility ofrepossession might be considered a form of threat and should not be used insuch manner.  Repossession is and shouldbe the last resort.  Unless FIFS is readyand has the present intent to take legal action, this possibility should not bementioned.

 

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

 

5.                                       **Calls falsely saying that legal process is aboutto be served** - Unless FIFS is ready, willing, and has thepresent intent to take legal action, this possibility should not bementioned.  Threats should 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 at place of employment if it actually known,or if there is any such reason to know that the customer’s employer prohibitssuch calls or if restricted by state 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 be contacted if the attorneyso agrees, or the attorney does not respond within a reasonable time.  In general, five business days are themaximum amount of time necessary to make the determination unless legal counselhas 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 informationprovided on specific accounts to a credit bureau or to the selling dealer isnot 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 includesthe failure to communicate that an account 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 thatlocal counsel initiates legal action only 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 phone call is of an “urgent”nature is prohibited.  (Refer to theapplicable state(s) in Legal Procedure).

 

*We should not use phrases such as: “urgent”, “very important”, “We have good news, it is imperative thatyou call us back...”  A phone messageshould include the collector’s name, company name, phone number and extensiononly.

 

•                                          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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**Attitude Towards Customers**

 

Treat all customers in a fair and equitablemanner.  Delinquent customers need, andare entitled to receive, helpful assistance in a courteous manner.  This is not only the best way to conduct business,but also the most effective way to collect delinquent accounts.  A customer may overreact to even the mostbusinesslike collection contact by raising their voice or using profanelanguage.  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 determinestheir images, their images (mental practice) determines their actions and theiractions determine reality.

 

The ASR spends a big part of their day talking about moneywith people that they have never seen or spoken to before. Contact with them isbrief, and yet they need something important from them – money.  In this kind of delicate situation, the wrongassumptions can cause problems.

 

The thing to do after a difficult conversation with acustomer is wall off that call.  In otherwords, do what needs to do to done to let 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 as uncooperativeas the last one.

 

**Past Due 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 that are available for thecolector to send out on past due accounts. These letters have a range ofurgency to them, and are generated through our computer system.

 

•                                          **Form Notices and Form Letters**

 

Several series of printed form letters designed to fit various types ofcollection situations are available for use to reinforce other collectionactivity and not as a substitute.

 

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**Individually Written Letters**

 

We should only use pre-approved letters on company letterhead.  Any individually composed letter must besigned by a department Manager before forwarding to customer.

 

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

 

Notifying the co-buyer or guarantor of the default is necessary andshould result in strengthening follow-up as the co-buyer or guarantor would beinterested in protecting his/her interest. Every possible consideration should be extended to the second party.  Some states require written notice to co-buyersand guarantors in order to hold them liable for the account. See LegalProcedures.

 

**Pre-Repossession Notice/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 regularmail unless otherwise specified by state regulation.

 

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 thedefault.  During this period, the branchwill 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.

 

**Selecting Accounts 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 curenotice may cause payment or result in voluntary 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 ofthe notice will preclude a claim by the customer that, by accepting previouspayments on a late basis, FIFS had established a pattern of conduct leading thecustomer to believe that FIFS should continue to accept late payments withoutexercising its contractual remedies.

 

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

 

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

 

**Customer Contact**

 

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

 

This section will highlight some of thesefeatures and explain how they facilitate customer contact.  For further detail or additional explanationrefer 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.  Your opening statement sets the tone for theentire 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 to my records you are past due onyour account with us and now due for $500. What time 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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**Account Review**

 

The ASR will review their queue on a daily basis andattempt to work all accounts.  If anaccount cannot or should not be called by that ASR, it should be assigned tothe individual or party who can contact the customer.

 

Manager and Supervisor reviews – Accounts worked by anASR will be randomly selected and reviewed by management staff.  These account reviews will ensure thataccounts are being handled by the guidelines set by this policy manual anddepartmental standards.  These reviewswill be completed on a weekly basis.

 

**Telephone Communication Principles**

 

When the ASR is talking on the telephone, the customeris forming a mental picture of them. Therefore, it is important that the ASR get a “smile” into theirvoice.  Remember that the customer is thereason that we are in business.  So,maintain enthusiasm, a positive attitude, and open mind.

 
| 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 will help to fullycomprehend our customer’s needs.  Do notassume or guess.

 

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**Making Silence Work to Your Advantage**

 

The ASR needs to use a pause in their openingstatement in the conversations.  They canexpress this opening statement in many different ways, but all of them need tobe 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 in the 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 anopportunity to digest what was said and think 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 theconversation.  The ASR will have greaterpower over the call if the customer know this from the start.

 

**Fact Finding 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 somequestions to ask the customer to help find a way 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, carloans, 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 questionswill help the ASR work with the customer on arrangements and also to let themknow that we want to help them with their situation.  The more information we obtain the betterchance we have in collecting the account.

 

**Discuss Budget and Negotiate**

 

Telephone collecting is sales.  The ASR must be creative and convince thecustomer why he should pay you and not someone else.  The more imaginative creditor will get themoney.  The customer must be convincedthat his account is the most important thing right now.  If he thinks that he is just another numberto FIFS, he is more likely not to pay. In addition, as in any other sales interaction, the ASR should neverallow his words or your manner to reflect that slightest uncertainty about theeventual outcome.

 

During any of the stages of collecting, an ASR shouldbe aware of the options other than just getting a payment.  Almost any collector can get one payment outof a customer, but only the truly skillful collector can help the problemcustomer back on the road to recovery. Some customers can be rehabilitated if they are handled with patienceand persistence.  Others may never berehabilitated 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 thearrangement.  Most important is theamount the customer can pay.  The ASRmust have a firm schedule of payments with definite deadlines.  Vague promises will only result in morefollow-up calls.  Our goal, of course, isto 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 havethought 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.  Only consider a partial payment when thecustomer is having problems.  Encouragepartial payments only to prevent the customer from missing a paymententirely.  We want the customer todevelop the habit of paying FIFS. Regulation of payments helps ensure continuation.  We do not want the customer to feel therelief, or benefit, of not paying us anything.

 

**Definition of 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.  The promise should be the best possiblearrangement to assure that the promise is kept. When setting up arrangements to pay with the customer the ASR shouldstrive for affordable and reasonable payment arrangements.  A reasonable arrangement would be the bestpossible payment to work towards paying the debt off.  An affordable arrangement would be a paymentthat meets our customers current income needs and would insure that thecustomer would be able to keep the promise to pay.  Keep in mind that our goal in everyconversation is to get the 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 be considereda promise to pay.  When talking to acustomer the ASR needs to make sure that they have firm and solid paymentarrangements.  The customer should givethe ASR information on the exact date of payment, the method of payment, andwhere the funds are coming from.  Thecustomer should sound confident when they agree to a promise amount.

 

**Account Update**

 

Good collection records must be kept for eachaccount.  Even if the ASR has a smallvolume of accounts, information should be recorded each and every time acontact, oral or written, is made with the customer.

 

People who owe money have a tendency to keep poorrecords.  Our good collection recordsindicate to the customer that the ASR is a professional and intends to bepaid.  Records give us credibility.  The customer must believe that this debt isthe most important matter to FIFS or he will not take the matter seriouslyhimself.

 

When noting an account it is imperative that the ASRhas documented all the information.  Thefollowing information should be in the ASRs 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 ofpayment, check, quick collect, etc...)?

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

 

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**Don’ts**

 

•                                          Donot document personal feelings or opinions in notes.

•                                          Donot note any foul language, put the customer was rude and used foul language.

•                                          Donot put verified information if you in fact did not do so.

•                                          Neverfalsify any information.

 

When contacting a customer; the personal informationshould be updated to facilitate future contact. This is to include (as appropriate) address, phone number, employername, 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, thecollector must not only talk about the delinquent payments plus accumulatedlate charges, but make it clear to the borrower that there is no grace period,that the payments are due on the due date and secure a commitment that futurepayments 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.  Once this reason is determined, the collectorwill know how to overcome the objection 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 thecustomer 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, thecustomer must be reminded that he/she is forcing FIFS to “take furthercollection action” and that until paid, the delinquency will be reported to thecredit 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.

 

**Required Items 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 the following:

 

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

 

**Special Conditions**

 

In most cases, collection follow-up results in paymentand resolution of the customer’s delinquency problem.  On occasion, however, a situation may occurwhen the customer cannot or will not pay. In this case, it is the responsibility of FIFS collection personnel toinitiate any and all possible corrective actions in a manner acceptable to FIFSaccording to policy.  Final action, suchas repossession, is not to be taken until all other means to resole have beenexhausted.  Problems/situations, whichare most often the reason the customer will not or cannot pay, are:

 

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**Disputed Accounts**

 

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 avoidtaking severe collection actions, such as repossession, until the legitimacy ofthe dispute is determined and all possible corrective actions have beenattempted.  As these accounts have highpossibility of legal action in the event we repossess prematurely, approvalmust be obtained prior to repossession.

 

**Customer Disability 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 commitmentsregarding a possible insurance claim. Refer to Procedure 12 for specific instructions.

 

**Customer Death**

 

Whenever it is determined that the customer isdeceased, contact with the representative of the Estate is done in a helpfuland tactful manner.  If applicable, letthe insurance company involved resolve any matters regarding a credit lifeinsurance claim.  Refer to Procedure 413for specific instructions.

 

**Bankruptcy**

 

All types of bankruptcies are considered specialsituations.  See BankruptcyAdministration in Procedure 417 for specific instructions.

 

**Litigation**

 

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

 

**Damaged Collateral**

 

A customer who becomes delinquent because the vehiclehas been damaged should be advised of their responsibility to continue makingpayments.  Assist the customer inexpediting 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 vehicle is a total loss see Procedure426, 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 toProcedure 418, Military Personnel, and Procedure 409, Soldiers’ and Sailors’Relief Act, for specific instructions.

 

**Devastated Areas**

 

Occasionally, a specific section of the countrywill experience a natural disaster (hurricane, flood, earthquake, etc.) thathinders customers’ ability to pay.  FirstInvestors Financial Services policy with respect to collection from customerresolves itself into observance of humanitarian principles, and furtherance ofcustomer, dealer and public good will.

 

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 communicationshould be established as promptly as circumstances permit, either byrepresentative or mail, preferably the former. Should the situation arise, specific instructions for the handling ofthese accounts will be issued.

 

**Product and Service Compliant**

 

Occasionally, a customer will claim dissatisfactionwith the product or dealer as a reason to withhold payment from FIFS.  In these instances 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 contractualobligations to FIFS are enforceable, despite the type of compliant or disputethe customer may have with a manufacturer 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 be maintainedfor the period of time the customer is without the use of the vehicle,emphasize to the customer that the responsibility to fulfill all contractualobligations, including monthly payments and insurance requirements, remain thecustomer’s responsibility, whether or not the customer has had the use of thevehicle.

 

**Indian Reservation 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.  Ifso, contact our Legal

 

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department.  Ifnot, refer to Procedure 427, Retail Repossession, for information relating toAbandonment (page 2).

 

**Collection Remedies**

 

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 no other 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 ormore of the remaining installments may by extended until the end of thecontract (an “Extension”), or the day of each month on which payments are duemay be changed (a “Due Date Change”). The customer will be required to pay an extension fee (were permitted bylaw), prior to the extension being processed. No extensions should be granted that does not solve the current orfuture inability of the customer to make payments and only puts offrepossession.

 

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 remaininginstallments.  The deferred installment(s) are extended to the next due date 30 days

 

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after the originally scheduled final maturitydate.  The due date is automaticallyextended 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 of employment must include Companyname, address where customer works and telephone 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 thecustomer, Signed Extension checklist by the Collector and Supervisor, Proof ofInsurance (if necessary), any other supporting documentation.

•                                          Customermust have full coverage auto insurance verified.

•                                          Onlyone extension is allowed for every 12 months of a loans terms.

60 months = 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 isthe responsibility of the Supervisor to verify that all the information iscompeted 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 isreceived and reviewed by the Collection Manager he/she will approve or declinethe 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 not bring the account current, a paymentand any accumulated late charges must be collected at the time of theextension.  No late charges may beassessed on any payment 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.

 

**Guidelines for Extensions and Due DatesChanges**

 

**Reasons for Granting**

 

Remedies offered should fit customer and contractscircumstances and hold a promise for a permanent solution in each case.  Do not adjust payment terms for reasons suchas adjusting delinquency ratios or simple customer preference.  If a customer has a legitimate reason forneeding a change in payment terms, consider the following factors beforegranting 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.*

 

**Extension Authority**

 

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.

 

**General Guidelines**

 

The following general rules apply to allextensions and 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

 

 

**Monthly Servicer Report**

 

**First Investors Auto Owner Trust 2005-A**

 

A-1

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EXHIBIT A-2

 

 

**Certificate of Officer**

 

**First Investors Servicing Corporation**

 

Theundersigned, a duly elected and qualified Officer of First Investors ServicingCorporation, makes this certification pursuant to Section 2.02(c) ofthe Servicing Agreement dated as of May 5, 2005 by and among FirstInvestors Auto Owner Trust 2005-A, as Issuer, Wells Fargo Bank, NationalAssociation, as Back-up Servicer and Indenture Trustee, and First InvestorsServicing Corporation, as Servicer, and does hereby certify to the best of hisknowledge that the attached Monthly Servicer Report hereby being furnished tothe Indenture Trustee pursuant to Section 2.02(c) has been preparedin accordance with the terms and conditions of the Transaction Documents, istrue and correct in all material respects and presents fairly the resultscovered 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

 

MONTHLY VERIFICATION CERTIFICATE

 

FIRST INVESTORS AUTO OWNER TRUST 2005-A

 

Date:

 

TO:                            DISTRIBUTIONLIST ATTACHED

 

RE:

 

Thiscertificate is furnished pursuant to Section 2.02(d) of the ServicingAgreement (the “Agreement”), dated May 5, 2005, by Wells Fargo Bank,National Association (the Back-up Servicer) as the Back-up Servicer for theabove-entitled issue. Terms used but not defined herein shall have the meaningsprovided in the Agreement. The Back-up Servicer has made no independentexamination of the Monthly Servicer Report beyond the review specificallyrequired in the Agreement.

 

THEUNDERSIGNED HEREBY CERTIFIES 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)                                  DelinquencyRatio

 

(iii)                               AverageDelinquency Ratio

 

(iv)                              Cumulative NetLoss Rate

 

Theforegoing certifications are delivered this [insert date].

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

 

B-1

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