exv10w37






Exhibit 10.37









Mortgage Selling and Servicing Contract



This contract establishes your contractual relationship with Fannie Mae and states the terms
and conditions of selling and servicing mortgages on our behalf. Your application package must
include two signed originals of this form: one for us to keep and the other for us to complete and
return to you upon approving your application.




Instructions



Once you have read this contract to ensure your understanding of its terms, you are ready to
complete the “signature page” (page 22), as follows:





	 	•	 	Complete all fields above the line “Federal National Mortgage Association.”
	 
	 	•	 	For “Lender,” enter your company name exactly as you entered it on the Application
for Fannie Mae Approval to avoid confusion. (i.e., If you abbreviate it on the
application form, use the same abbreviation on this form.)
	 
	 	•	 	Have this form signed by an individual who is listed as a principal of your company on
the Authorization for Verification of Credit and Business References (Form 1001).





 









 





	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	Mortgage
Selling and
Servicing
Contract
	 	I	 	General Information	 	1
	 	 	 	 	 	 
	 	II	 	Eligibility Requirements for Lenders	 	2
	 	 	 	 	 	 
	 	III	 	Sale of Mortgages and Participation Interests	 	3
	 	 	 	 	 	 
	 	IV	 	Sale of Mortgages and Participation Interests—Lender's Warranties	 	3
	 	 	 	 	 	 
	 	V	 	Servicing Mortgages	 	7
	 	 	 	 	 	 
	 	VI	 	Assignment, Consideration and Continuance	 	9
	 	 	 	 	 	 
	 	VII	 	Assigning Mortgage Servicing	 	10
	 	 	 	 	 	 
	 	VIII	 	Breaches of Contract	 	10
	 	 	 	 	 	 
	 	IX	 	Termination of Contract	 	12
	 	 	 	 	 	 
	 	X	 	Continuance of Responsibilities or Liabilities	 	15
	 	 	 	 	 	 
	 	XI	 	Participation Interests—Special Provisions	 	15
	 	 	 	 	 	 
	 	XII	 	Notice	 	17
	 	 	 	 	 	 
	 	XIII	 	Prior Agreements	 	18
	 	 	 	 	 	 
	 	XIV	 	Severability and Enforcement	 	18
	 	 	 	 	 	 
	 	XV	 	Captions	 	18
	 	 	 	 	 	 
	 	XVI	 	Scope of Contract	 	18
	 	 	 	 	 	 
	 	XVII	 	Signatures and Date	 	19






Page 1 of 19








 





	 	 	 

	Mortgage

Selling and

Servicing

Contract

	 	This contract for selling and servicing mortgages (the “Contract”) is between the Mortgage
Lender (the “Lender”) that signs this document and the Federal National Mortgage
Association (“Fannie Mae”, “we”, “our”, “us”), a corporation organized and existing under
the laws of the United States.
	 
	 	 
	I
General Information
	 
	 	 
	 

	 	This section contains important basic information about the Contract, which we are
permitted to enter into under authority of Title III of the National Housing Act (12 U.S.C.
1716, et. seq.), which is also known as the Federal National Mortgage Association Charter
Act.
	 
	 	 
	A.

Purpose of

Contract

	 	The purpose of this Contract is:



•     to establish the Lender as an approved seller of mortgages and participation
interests to us;

	 
	 	 
	 

	 	•     to provide the terms and conditions of the sales;

	 
	 	 
	 

	 	•     to establish the Lender as an approved servicer of mortgages we have purchased or
in which we have purchased a participation interest; and

	 
	 	 
	 

	 	•     to provide the terms and conditions of servicing.

	 
	 	 
	B.

Consideration

	 	In consideration of the purpose of this Contract and of all the provisions and mutual
promises contained in it, the Lender and Fannie Mae agree to all that this Contract
contains.
	 
	 	 
	C.

Our Guides

	 	We issue Fannie Mae’s Guides to Lenders (our “Guides”) and furnish them to the Lender.
These Guides are:
	 
	 	 
	 

	 	•     Selling;

	 
	 	 
	 

	 	•     Servicing; and

	 
	 	 
	 

	 	•     Multifamily.

	 
	 	 
	 

	 	Whenever there is a reference to the Guides in this Contract, it means the Guides as they
exist now and as they may be amended or supplemented in writing. We may amend or supplement
them, at our sole discretion, by furnishing amendments or supplementary matter to the
Lender.
	 
	 	 
	 

	 	The term “Guides” also includes anything that, in whole or in part, supersedes or is
substituted for the Guides.
	 
	 	 
	D.

Important

Definitions

	 	Anywhere the words that appear below are used in this Contract, the following definitions
apply:


1. “Mortgage” —A loan, evidenced by a note, bond or other instrument of indebtedness. The
loan is secured by a mortgage, deed of trust, deed to secure debt or other instrument of
security that applies to property. “Mortgage” includes such instruments of indebtedness and
security, together with
	 
	 	 
	 

	 	•     the evidence of title;

	 
	 	 
	 

	 	•     the chattel mortgage or security agreement and financing statement; and

	 
	 	 
	 

	 	•     all other documents, instruments and papers pertaining to the loan.

	 
	 	 
	 

	 	2. “FHA/VA Mortgage”— A mortgage insured or guaranteed in whole or in part by the Federal
Housing Administration or Veterans Administration.
	 
	 	 
	 

	 	3. “Conventional
Mortgage”— A mortgage other than an FHA/VA mortgage, which Fannie Mae is
authorized to purchase under the Federal National Mortgage Association Charter Act.






Page 2 of 19









 






	 	 	 

	 
	 	4. “Property” or
“Mortgaged Property”—The property that is now subject to a mortgage, or
was subject to such mortgage, where the mortgage has been foreclosed or possession or title
to the property has been taken by Fannie Mae or on our behalf.
	 
	 	 
	 
	 	5. “Participation Interest” or “Participation Interest in Mortgages” — An undivided
interest in mortgages, specified in the applicable participation certificate that is
evidence of such interest. A “participation interest” or “participation interest in
mortgages” consists of a specified percentage of the principal (and a like percentage of
all rights and benefits of the mortgagee or equivalent party under such mortgage) together
with a specified yield on it.
	 
	 	 
	II Eligibility Requirements For Lenders
	 
	 	 
	 
	 	For us to purchase mortgages or participation interests from a Lender, the Lender must
meet the eligibility requirements specified in this section.
	 
	 	 
	A.

General


	 	These are the general requirements the Lender must meet to be eligible to sell us mortgages
or participation interests or service mortgages for us:
	Requirements
	 	

1. Meet Fannie Mae Standards. The Lender must have as two of its principal business
purposes:
	 
	 	 
	 

	 	•     making mortgages of the type that we will purchase entirely or purchase
participation interest in under this Contract; and

	 
	 	 
	 

	 	•     servicing such mortgages.

	 
	 	 
	 
	 	In addition, the Lender, in our judgment, must have at all times the capacity to originate
and sell to us mortgages and participation interests that meet our purchase standards and
the standards generally imposed by private institutional mortgage investors, and must at
all times have the capacity to service such mortgages for us under those standards.
	 
	 	 
	 
	 	2. Have Qualified Staff and Adequate Facilities. The Lender must, at all times, have
employees who are well trained and qualified to perform the functions required of the
Lender under this Contract.
	 
	 	 
	 
	 	In addition, the Lender must maintain facilities that are adequate to perform its functions
under this Contract.
	 
	 	 
	 
	 	3. Maintain Fidelity Bonds and Errors and Omissions Coverage. The Lender must maintain,
at its own expense, a fidelity bond and errors and omissions insurance, as required by our
Guides.
	 
	 	 
	 
	 	4. Report Basic Changes. The Lender must notify us promptly in writing of any changes
that occur in its principal purpose, activities, staffing or facilities.
	 
	 	 
	B.

Ownership And

Status Of Lender
	 	When we approve a Lender, one of the major considerations is the information the Lender has
provided about the eligibility, qualifications and financial status of the Lender and its
owners.
	 
	 	Consequently, the Lender must give us immediate notice of a change in its status or
ownership, including any:
	 
	 	 
	 
	 	•     sale or transfer of a majority interest in it;

	 
	 	 
	 

	 	•     merger;

	 
	 	 
	 

	 	•     consolidation; or

	 
	 	 
	 

	 	•     change
in legal structure.







Page 3 of 19









 






	 	 	 

	C.

Finances


	 	In order to remain an approved Lender under this Contract, the Lender must meet our current
net worth requirements. These requirements are contained in our Guides.
	 
	 	 
	 

	 	The required net worth must be maintained in the form of assets acceptable to us.
	 
	 	 
	 

	 	The Lender must give us a copy of its annual financial statements and any other related
information that we may require.
	 
	 	 
	D.

Access To

Lender’s Records

	 	The Lender agrees to permit our employees or designated representatives to examine or audit
records or accounts relating to mortgages or participation interests sold or serviced under
this Contract. All records relative to the Lender’s continued eligibility to sell or
service mortgages under this Contract may also be examined or audited. Any examination or
audit made on our behalf will be conducted during regular business hours unless the Lender
agrees otherwise.
	 
	 	 
	III Sale of Mortgages and Participation Interests
	 
	 	 
	 

	 	This section contains the basic rules governing our purchase of mortgages and
participation interests.
	 
	 	 
	A.


	 	Purchases of mortgages and participation interests will be governed by:
	What Governs

Purchases

	 	

•     our written commitment to purchase;

	 
	 	 
	 

	 	•     our Guides, including all amendments in effect on the day we make our written
commitment; and

	 
	 	 
	 

	 	•     this Contract.

	 
	 	 
	B.

What We

Purchase

	 	The mortgages or participation interests that we purchase must meet the requirements found
in our Guides on the day we make our written commitment.
	 
	 	 
	C. Lender’s

Obligation

To Purchase

Fannie Mae Stock

	 	If our Guides require, the Lender will promptly purchase our common stock each time it
delivers a mortgage or participation interest to us. The amount of stock to be purchased
and the procedures for buying it are also found in our Guides.
	 
	 	 
	D. Fannie Mae Has

No Obligation To

Purchase

	 	The fact that we have signed this Contract does not mean that we must make a commitment to
purchase any mortgage or participation interest from the Lender.
	 
	 	 
	IV Sale Of Mortgages And Participation Interests — Lender’s Warranties
	 
	 	 
	 

	 	The Lender makes certain warranties to us.
	 
	 	 
	 

	 	These warranties:
	 
	 	 
	 

	 	•     apply to each mortgage sold to us in its entirety;

	 
	 	 
	 

	 	•     apply to each mortgage in which a participation interest is sold to us;

	 
	 	 
	 

	 	•     are made as of the date transfer is made to us;

	 
	 	 
	 

	 	•     continue after the purchase of the mortgage or participation interest;

	 
	 	 
	 

	 	•     continue after payment by us of the purchase price to the Lender; and

	 
	 	 
	 

	 	•     are for our benefit as well as the benefit of our successors and assigns.

	 
	 	 
	 

	 	Warranties may be waived, but only by us in writing.
	 
	 	 
	A.

Specific

Warranties

	 	Following are the specific warranties made by the Lender.



1. Mortgage Meets Requirements. The mortgage conforms to all the applicable requirements
in our Guides and this Contract.







Page 4 of 19












 





	 	 	 

	 

	 	2. Lender Authorized To Do Business. The Lender and any other party that held the
mortgage were, at all times during which the holder held the mortgage, authorized to
transact business in the jurisdiction where the property is located.
	 
	 	 
	 

	 	However, if the Lender or any other party that held the mortgage was not authorized to do
business in the jurisdiction where the property is located, then the warranty is made that
none of the following activities of the Lender or other parties constituted doing business
in that jurisdiction:
	 
	 	 
	 

	 	•     lending the mortgage funds;

	 
	 	 
	 

	 	•     acquiring the mortgage;

	 
	 	 
	 

	 	•     holding the mortgage; or

	 
	 	 
	 

	 	•     transferring the mortgage in whole or to the extent of a participation interest.

	 
	 	 
	 

	 	3. Lender Has Full Right To Sell And Assign. The Lender is the sole owner and holder of
the mortgage and has full right and authority to sell and assign it, or a participation
interest in it, to us. In addition, the Lender’s right to sell or assign is not subject to
any other party’s interest or to an agreement with any other party.
	 
	 	 
	 

	 	4. Lender’s Lien On Property. The mortgage, whether represented by the Lender as the
first lien or as the second lien, is a valid and subsisting lien on the property described
in it.
	 
	 	 
	 

	 	If the mortgage is represented by the Lender as the first lien, the property is free and
clear of all encumbrances and liens having priority over it except for liens for real
estate taxes, and liens for special assessments, that are not yet due and payable.
	 
	 	 
	 

	 	If the mortgage is represented by the Lender as the second lien, the property is free and
clear of all encumbrances and liens having priority over it except for one properly
recorded first mortgage lien, real estate taxes and liens of special assessments not yet
due and payable.
	 
	 	 
	 

	 	Any security agreement, chattel mortgage or equivalent document that is related to the
mortgage and that is held by the Lender or delivered to us, is a valid and subsisting lien
on the property described in such document, of the same priority as the mortgage.
	 
	 	 
	 

	 	The Lender has full right and authority to sell or assign each lien to us or to an extent
that is proportionate to our participation interest.
	 
	 	 
	 

	 	5. Documents Are Valid And Enforceable. The mortgage and any security agreements, chattel
mortgages, or equivalent documents relating to it have been properly signed, are valid, and
their terms may be enforced by us, our successors and assigns, subject only to bankruptcy
laws, Soldiers’ and Sailors’ Relief Acts, laws relating to administering decedents’ estate,
and general principles of equity.
	 
	 	 
	 

	 	6. Property Not Subject To Liens. The Property is free and clear of all mechanics’ liens,
materialmen’s liens or similar types of liens. There are no rights outstanding that could
result in any of such liens being imposed on the property.
	 
	 	 
	 

	 	This warranty is not made if the Lender furnishes us with title insurance that gives us
substantially the same protection as this warranty.
	 
	 	 
	 

	 	7. Title Insurance. There is a mortgage title insurance policy, or other title evidence
acceptable to us, on the property. The title insurance policy is on a current ALTA form (or
other generally acceptable form) issued by a generally acceptable insurance company.
	 
	 	 
	 

	 	The title insurance insures (or the other title evidence protects) us or the Lender and its
successors and assigns, as holding a lien of the priority warranted in “4. Lender’s Lien
On Property.”
	 
	 	 
	 

	 	8. Modification Or Subordination Of Mortgage. The Lender has not done any of the






Page 5 of 19









 






	 	 	 

	 
	 	 
	 

	 	following:
	 
	 	 
	 

	 	•     materially modified the mortgage;

	 
	 	 
	 

	 	•     satisfied or cancelled the mortgage in whole or in part;

	 
	 	 
	 

	 	•     subordinated the mortgage in whole or in part, unless it is represented to us as a second mortgage;

	 
	 	 
	 

	 	•     released the property in whole or in part from the mortgage lien; or

	 
	 	 
	 

	 	•     signed any release, cancellation, modification or satisfaction of the mortgage.

	 
	 	 
	 

	 	This warranty is not made if any of the things just mentioned have been done but have been
expressly brought to our attention in a letter before we make payment to the Lender. The
letter must be acknowledged by us in writing.
	 
	 	 
	 

	 	9. Mortgage In Good Standing. There are no defaults under the mortgage, and all of the
following that have become due and payable have been paid or an escrow of funds sufficient
to pay them has been established:
	 
	 	 
	 

	 	•     taxes;

	 
	 	 
	 

	 	•     government assessments;

	 
	 	 
	 

	 	•     insurance premiums;

	 
	 	 
	 

	 	•     water, sewer and municipal charges;

	 
	 	 
	 

	 	•     leasehold payments; or

	 
	 	 
	 

	 	•     ground rents.

	 
	 	 
	 

	 	10. Advances. The Lender has not made or knowingly received from others, any direct or
indirect advance of funds in connection with the loan transaction on behalf of the borrower
except as provided in our Guides. This warranty does not cover payment of interest from the
earlier of:
	 
	 	 
	 

	 	•     the date of the mortgage note; or

	 
	 	 
	 

	 	•     the date on which the mortgage proceeds were disbursed to

	 
	 	 
	 

	 	•     the date one month before the first installment of principal and interest on the mortgage is due.

	 
	 	 
	 

	 	11. Property Conforms To Zoning Laws. The Lender has no knowledge that any improvement to
the property is in violation of any applicable zoning law or regulation.
	 
	 	 
	 

	 	12. Property Intact. The property is not damaged by fire, wind or other cause of loss.
There are no proceedings pending for the partial or total condemnation of the property.
	 
	 	 
	 

	 	13. Improvements. Any improvements that are included in the appraised value of the
property are totally within the property’s boundaries and building restriction lines. No
improvements on adjoining property encroach on the mortgaged property unless FHA or VA
regulations or our Guides permit such an encroachment.
	 
	 	 
	 

	 	14. Mortgage Not Usurious. The mortgage is not usurious and either meets or is exempt
from any usury laws or regulations.
	 
	 	 
	 

	 	15. Compliance With Consumer Protection Laws. The Lender has complied with any applicable
federal or state laws, regulations or other requirements on consumer credit, equal credit
opportunity and truth-in-lending.
	 
	 	 
	 

	 	16. Property Is Insured. A casualty insurance policy on the property is in effect. It is
written by a generally acceptable insurance company and provides fire and extended






Page 6 of 19









 






	 	 	 

	 

	 	coverages for an amount at least equal to the amount required by our Guides.
	 
	 	 
	 

	 	A flood insurance policy is in effect on the property if any part of it is in an area
listed in the Federal Register by the Federal Emergency Management Agency as an area with
special flood hazards, and if insurance is available. The flood insurance is written by a
generally acceptable insurance company, meets current guidelines of the Federal Insurance
Administration, and is for an amount at least equal to the amount required by our Guides.
	 
	 	 
	 

	 	The Lender will make sure the required insurance is maintained as long as it services the
mortgage. Any policy mentioned in this warranty contains a standard mortgage clause that
names us or the Lender and its successors and assigns as mortgagee.
	 
	 	 
	 

	 	17. Mortgage Is Acceptable Investment. The Lender knows of nothing involving the
mortgage, the property, the mortgagor or the mortgagor’s credit standing that can
reasonably be expected to:
	 
	 	 
	 

	 	•     cause private institutional investors to regard the mortgage as an unacceptable investment;

	 
	 	 
	 

	 	•     cause the mortgage to become delinquent; or

	 
	 	 
	 

	 	•     adversely affect the mortgage’s value or marketability.

	 
	 	 
	 

	 	18. Mortgage Insurance Or Guaranty In Force. If the Lender represents that the mortgage
is insured or guaranteed under the National Housing Act as amended, or under the
Servicemen’s Readjustment Act of 1944 as amended, or by a contract with a mortgage
insurance company, the insurance or guaranty is in full force. In addition, the Lender has
complied with all applicable provisions and related regulations of the Act, or the
insurance contract, that covers the mortgage.
	 
	 	 
	 

	 	19. Adjustable Mortgages. If the mortgage provides that the interest rate or the
principal balance of the mortgage may be adjusted, all of the terms of the mortgage may be
enforced by us, our successors and assigns.
	 
	 	 
	 

	 	These adjustments will not affect the priority of the lien warranted in “4. Lender’s Lien
On Property.”
	 
	 	 
	 

	 	20. Participation Information Is Correct. All the information and statements in any
participation certificate that the Lender delivers to us are complete, correct and true.
	 
	 	 
	B.

Consequences Of

Untrue Warranties

— Repurchase

	 	We may require the Lender to repurchase a mortgage or participation interest sold to us if
any warranty made by the Lender about the mortgage or participation interest is untrue
(whether the warranty is in this Contract or was made at our specific request).
	 

	 	We may require repurchase whether or not the Lender had actual knowledge of the untruth. We
may also enforce any other available remedy.
	 
	 	 
	 

	 	The Lender must pay us the repurchase price within 30 days of our demand. The repurchase
price, as provided in our Guides, will not be adjusted because the Lender paid us fees or
charges or subscribed to our capital stock.
	 
	 	 
	C.

Consequences Of

Untrue Warranties

— Termination

Of Contract

	 	While untrue warranties about a particular mortgage or participation interest may be the
basis for requiring repurchase of the particular mortgage or participation interest, there
can be additional consequences. They may also give rise to responsibilities of the Lender
under “D. Indemnification For Breach Of Warranty; Holding Us Harmless.” In addition, untrue
warranties can, under certain circumstances, be treated as a breach of contract that could
result in the withdrawal of our approval of a Lender and the termination of this Contract
(details are contained in Sections VIII and IX).







Page 7 of 19












 





	 	 	 

	D.

Indemnification

For Breach Of

Warranty;

Holding Us Harmless

	 	If there is a breach of warranty under this Contract, the Lender, at our request, will
indemnify us and hold us harmless against any related losses, damages, judgments or legal
expenses.
	 
	 	 
	V Servicing Mortgages
	 
	 	 
	

A.

Servicing Duties

Of The Lender

	 	This section contains the basic rules governing the servicing of mortgages that we purchase, or in which we purchase a participation interest.
	 	 
	 	The servicing duties of the Lender are:
	 	 
	 	1. Scope Of Duties. The Lender will diligently perform all duties that are necessary or
incident to the servicing of:
	 
	 	 
	 

	 	•     all mortgages it is servicing for us on the date this Contract takes effect; and

	 
	 	 
	 

	 	•     all other mortgages that the Lender is required to service by the terms of this Contract or any other existing or future agreement between us and the Lender.

	 
	 	 
	 

	 	2. Mortgages To Be Serviced. Any mortgage we have purchased from the Lender, or in which
we have purchased a participation interest from the Lender, will be serviced by the Lender
for us according to the terms of this Contract, unless:
	 
	 	 
	 

	 	•     the mortgage is not within any category of those that are required by our Guide to be serviced; or

	 
	 	 
	 

	 	•     we give the Lender written notification or consent that mortgage to be purchased by us will not be serviced by the Lender.

	 
	 	 
	 

	 	3. Service According To Guides. Any mortgage serviced under this Contract, which we own
or in which we have purchased a participation interest, must be serviced by the Lender
according to the provisions in our Guides that are in effect on the date of this Contract
or as amended in the future. This is true regardless of when:
	 
	 	 
	 

	 	•     the mortgage was originated;

	 
	 	 
	 

	 	•     the mortgage or a participation interest in it was transferred to us; or

	 
	 	 
	 

	 	•     the Lender began servicing the mortgage.

	 
	 	 
	 

	 	The Lender will also follow other reasonable instructions we give it and must strictly
follow accepted industry standards when servicing a mortgage for us.
	 
	 	 
	 

	 	4. Service At Lender’s Own Expense. The cost of servicing will be the Lender’s unless our
Guides expressly provide otherwise.
	 
	 	 
	 

	 	5. Special Responsibilities In Foreclosures. Among the other duties that may be assigned
to the Lender through our special instructions or under the terms of our Guides is the
responsibility to manage and appropriately dispose of property when a mortgage it is
servicing for us has been foreclosed, or possession or title has been taken by us or on our
behalf.
	 
	 	 
	 

	 	The Lender must manage and dispose of the property according to the terms of the mortgage
and our Guides.
	 
	 	 
	 

	 	6. Service Until Need Ends. The Lender must service each mortgage continuously from the
date its servicing duties begin until:
	 
	 	 
	 

	 	•     the mortgage’s principal and interest have been paid in full;

	 
	 	 
	 

	 	•     the mortgage has been liquidated and the mortgaged property properly disposed of (if the Lender is required to do these things); or







Page 8 of 19









 






	 	 	 

	 

	 	•     the Lender’s servicing duties are terminated according to Section IX of this Contract.

	 
	 	 
	B.

Compensation

	 	The Lender’s compensation for servicing mortgages, including the management and disposal of
properties, under this Contract is specified in our Guides.
	 
	 	 
	 

	 	We may change the Lender’s compensation by modifying our Guides at any time. However, such
a change will not affect mortgages that we have purchased or committed to purchase before
the date of the change.
	 
	 	 
	C.

Ownership

Of Records

	 	All mortgage records reasonably required to document or properly service any mortgage we
own in its entirety are our property at all times. This is true whether or not the Lender
developed or originated them.
	 

	 	The following are considered mortgage records:
	 
	 	 
	 

	 	•     all mortgage documents;

	 
	 	 
	 

	 	•     tax receipts;

	 
	 	 
	 

	 	•     insurance policies;

	 
	 	 
	 

	 	•     insurance premium receipts;

	 
	 	 
	 

	 	•     ledger sheets;

	 
	 	 
	 

	 	•     payment records;

	 
	 	 
	 

	 	•     insurance claim files and correspondence;

	 
	 	 
	 

	 	•     foreclosure files and correspondence;

	 
	 	 
	 

	 	•     current and historical data files; and

	 
	 	 
	 

	 	•     all other papers and records.

	 
	 	 
	 

	 	1. Lender As Custodian. The mortgage records belong to us. The Lender can have possession
of the mortgage records only with our approval, and the Lender is acting as our custodian.
This is true whether the Lender receives the mortgage records from an outside source or
prepares them itself.
	 
	 	 
	 

	 	2. Delivery. When we ask for any mortgage records in writing, the Lender will deliver
them to us or someone we choose. The Lender must also send us a list that identifies each
mortgage, and must give us other information we request to identify the mortgages
delivered.
	 
	 	 
	 

	 	We will not be required to sign or deliver any trust receipts before the Lender delivers
the mortgage records we have requested.
	 
	 	 
	 

	 	If we ask the Lender in writing for reproductions of any mortgage records the Lender
microfilmed or condensed, the Lender will reproduce them promptly at no cost to us or the
party to whom we want them delivered.
	 
	 	 
	 

	 	3. Joint Ownership. If we own a participation interest in a mortgage, the other owners
and we own the mortgage records jointly. For these mortgages, the Lender possesses the
mortgage records as a custodian for the joint owners.
	 
	 	 
	 

	 	If we ask for copies of the mortgage records and servicing information about any such
mortgages, the Lender will furnish them. Or, if we need any mortgage records for legal
evidence or other purposes, the Lender will release them to us for a reasonable time.
	 
	 	 
	D.

Agreement To
Indemnify And

Hold Harmless

	 	The Lender will indemnify us and hold us harmless against all losses, damages, judgments or
legal expenses that result from its failure in any way to perform its services and duties
in connection with servicing mortgages or managing or disposing of property according to
this Contract or our Guides.






Page 9 of 19









 






	 	 	 

	 

	 	If any private entity or governmental agency sues us, makes a claim against us or starts a
proceeding against us based on the Lender’s acts or omissions in servicing mortgages or
managing or disposing of property, the Lender’s obligation to indemnify and hold us
harmless must be met regardless of whether the suit, claim or proceeding has merit or not.
	 
	 	 
	 

	 	The Lender’s obligation does not apply, however, if during a suit, claim or proceeding, we
give the Lender express written instructions and as a result of the Lender following them
we suffer losses, damages, judgments or legal expenses.
	 
	 	 
	E.

Ownership Of

Our Stock

	 	If our Guides require, the Lender will continuously own our common stock in connection with
all mortgages it services under this Contract. The amount of stock to be owned will be
established by our Guides as they were in existence on the date the Lender started
servicing the applicable mortgages.
	 
	 	 
	VI Assignment, Consideration And Continuance
	 
	 	 
	 

	 	This section describes our requirements covering assignment of, consideration for and
continuance of this Contract.
	 
	 	 
	A.

Assignment

	 	Because the relationships created by this Contract are personal, the Lender may not,
without our prior written approval, assign:
	 
	 	 
	 

	 	•     this Contract under any circumstances, either voluntarily or involuntarily, by operation of law, or otherwise; or

	 
	 	 
	 

	 	•     its responsibility for servicing individual mortgages we own or in which we have a participation interest. (See Section VII of this Contract for required procedures governing assignments of servicing).

	 
	 	 
	B.

Limited Value

Of Contract

To Lender

	 	The Lender acknowledges that it has paid us no monetary consideration for making it an
approved mortgage seller or servicer, except an application fee to reimburse us for the
expenses of reviewing its application.
	 
	 	 
	 	 	The Lender also agrees that, except for the purchase of mortgages, the servicing of
mortgages, or any fee for the termination of this Contract, this Contract has no value to
the Lender.
	 
	 	 
	C.

Requirements

For Continuance

	 	The Lender’s right to continue selling and servicing mortgages under this Contract depends
on, among other things, its continuing to meet the eligibility requirements in Section II
of this Contract.
	 
	 	 
	VII Assigning Mortgage Servicing
	 
	 	 
	 

	 	The Lender may not assign its responsibility for servicing all or any part of the
mortgages that it is servicing for us without first obtaining our written consent.
	 
	 	 
	 

	 	Any Lender to which servicing is assigned must:
	 
	 	 
	 

	 	•     be acceptable to us; and

	 
	 	 
	 

	 	•     sign a Mortgage Selling and Servicing Contract with us.

	 
	 	 
	 

	 	We may require that the Lender and transferee lender sign documents and take other
reasonable steps to perfect the assignment.
	 
	 	 
	VIII Breaches Of Contract
	 
	 	 
	 

	 	The Lender’s taking certain actions, or failing to take certain actions, can be
treated by us as a breach of contract. A breach of contract can lead to a termination of
the Contract. Termination is provided for in detail in Section IX.
	 
	 	 
	A.
Specific

Breaches Of

Contract

	 	Breaches of this Contract include the following:
	 	 
	 	1. Harm, Damage, Loss Or Untrue Warranties. It is a breach if any act or omission of the
Lender in connection with the origination and sale to us of any mortgage or participation
interest causes us harm, damage or loss. It is also a breach if the Lender sells us any
mortgage or participation interest knowing that any of the mortgage warranties are untrue
(these warranties are listed in Section IV A).






Page 10 of 19









 






	 	 	 

	 

	 	2. Failure To Comply With This Contract Or Our Guides. It is a breach if the Lender does
not comply with this Contract or our Guides through any act or omission, including, without
limitation, the following:
	 
	 	 
	 

	 	•     failure to establish and maintain accounts for our funds or mortgagors’ funds as
required by our Guides;

	 
	 	 
	 

	 	•     use of our or mortgagors’ funds in any manner other than that permitted by our
Guides, including the Lender’s failure to deposit all mortgage funds if, when, and to the
extent required by our Guides;

	 
	 	 
	 

	 	•     failure to remit all funds, due to us within the time periods required by our Guides;

	 
	 	 
	 

	 	•     failure to make or ensure, according to the provisions of each mortgage or of
applicable laws or regulations, proper and timely payment of all:

	 
	 	 
	 

	 	—     taxes;

	 
	 	 
	 

	 	—     assessments;

	 
	 	 
	 

	 	—     leasehold payments;

	 
	 	 
	 

	 	—     ground rents;

	 
	 	 
	 

	 	—     insurance premiums (including premiums of casualty, liability and mortgage insurance and other forms of required insurance);

	 
	 	 
	 

	 	—     required interest on escrow funds; and

	 
	 	 
	 

	 	—     other required payments with respect to any mortgage (including mortgaged property) serviced;

	 
	 	 
	 
	 	unless the Lender is relieved of these responsibilities by the express provisions of our
Guides, or by our written instructions that relate to a particular mortgage or property;

	 
	 	 
	 

	 	•     failure to renew or ensure renewal of any required insurance policy on any mortgage
(including mortgaged property) serviced under this Contract;

	 
	 	 
	 

	 	•     failure to maintain adequate and accurate accounting records and mortgage servicing
records for the mortgages, or to maintain proper identification of the applicable loan
files and mortgage records that prove our outstanding participation interests;

	 
	 	 
	 

	 	•     failure to submit adequate and accurate accounting and mortgage servicing reports
within the time required by our Guides; or

	 
	 	 
	 

	 	•     failure to take prompt and diligent action under applicable law or regulation to
collect past due sums on mortgages, or to take any other diligent action described in our
Guides that we reasonably require for mortgages in default.

	 
	 	 
	 

	 	3. Failure To Properly Foreclose Or Liquidate. Where a mortgage is in default and the
Lender is required or has decided to foreclose or liquidate it, it is a breach if the
Lender fails to take prompt and diligent action consistent with applicable law or
regulations to foreclose on or otherwise appropriately liquidate such mortgage and to
perform all incident actions. It is a breach whether or not the failure results from the
acts or omissions of an attorney, trustee or other person or entity the Lender chooses to
effect foreclosure or liquidation.
	 
	 	 
	 

	 	4. Failure To Properly Manage, Dispose Of, Or Effect Proper Conveyance Of Title. It is a
breach if any mortgage serviced under this Contract has been foreclosed or the possession
or title to the property has been taken by us or on our behalf, or on behalf of






Page 11 of 19









 






	 	 	 

	 

	 	other owners of a participation interest in the mortgage, and the Lender:
	 
	 	 
	 

	 	•     fails to properly manage, dispose of or effect proper conveyance of title to the mortgaged property; or

	 
	 	 
	 

	 	•     fails to do the above in accordance with this Contract, our Guides, and any pertinent laws, regulations, or mortgage insurance policies or contracts.

	 
	 	 
	 

	 	5. Lender’s Financial Ability Impaired. It is a breach if there is a change in the
Lender’s financial status that, in our opinion, materially and adversely affects the
Lender’s ability to satisfactorily service mortgages.
	 
	 	 
	 

	 	Changes of this type include:
	 
	 	 
	 

	 	•     the Lender’s insolvency;

	 
	 	 
	 

	 	•     adjudication of the Lender as a bankrupt;

	 
	 	 
	 

	 	•     appointment of a receiver for the Lender; or

	 
	 	 
	 

	 	•     the Lender’s execution of a general assignment for the benefit of its creditors.

	 
	 	 
	 

	 	If any such change does take place:
	 
	 	 
	 

	 	•     no interest in this Contract will be considered an asset or liability of the Lender or of its successors or assigns; and

	 
	 	 
	 

	 	•     no interest in this Contract will pass by operation of law without our consent.

	 
	 	 
	 

	 	6. Failure To Obtain Our Prior Written Consent. It is a breach if the Lender fails to
obtain our prior written consent for:
	 
	 	 
	 

	 	•     a sale of the majority interest in the Lender; or

	 
	 	 
	 

	 	•     a change in its corporate status or structure.

	 
	 	 
	 

	 	7. Failure To Comply With This Contract Or Our Guides. It is a breach if the Lender fails
at any time to meet our standards for eligible mortgage sellers or servicers so that, in
our opinion, the Lender’s ability to comply with this Contract or our Guides is adversely
affected
	 
	 	 
	 

	 	8. Court Findings Against Lender Or Principal Officers. It is a breach if:
	 
	 	 
	 

	 	•     a court of competent jurisdiction finds that the Lender or any of its principal officers has committed an act of civil fraud; or

	 
	 	 
	 

	 	•     the Lender or any of its principal officers is convicted of any criminal act
related to the Lender’s lending or mortgage selling or servicing activities or that, in our
opinion, adversely affects the Lender’s reputation or our reputation or interests.

	 
	 	 
	B.

Actions

To Correct

A Breach

	 	If there is a breach of contract by the Lender, we will have the right to take any
reasonable action to have any breach corrected by the Lender before we exercise any right
we have to terminate this Contract in whole or in part; however, we are not required to try
to have a breach corrected before termination.
	 

	 	Any forebearance by us in exercising our right to terminate this Contract in whole or in
part will not be a waiver of any present or future right we have under this Contract to so
terminate it.
	 
	 	 
	IX Termination of Contract
	 
	 	 
	 

	 	The reason why this Contract may be terminated and the ways in which this may be done
are outlined in this section. When the Contract is terminated, the entire relationship
between the Lender and us ends (with certain exceptions that are explained in this
section).







Page 12 of 19











 





	 	 	 

	A.

Termination

By Either Party

Of Mortgage

Selling

Arrangements

	 	The provisions of this Contract covering the sale of mortgages or participation interests
under this Contract may be terminated by the Lender or by us, with or without cause, by
giving notice to the other party. Notice of termination may be given at any time but must
conform to Section XII of this Contract.


Termination is effective immediately upon notice of termination, unless the notice
specifies later termination.
	 
	 	 
	 

	 	Termination will not affect any outstanding commitments we have made to purchase mortgages
or participation interests from the Lender. However, if the Lender has breached this
Contract, we may declare any or all outstanding commitments void.
	 
	 	 
	B.

Termination

By Lender Of

Mortgage

Servicing

Arrangements For

Wholly-Owned

Mortgages

	 	The Lender may terminate the provisions of this Contract covering the servicing of
mortgages we entirely own by giving us notice at any time. Notice must conform to Section
XII of this Contract.


Termination is effective the last day of the third calendar month after the calendar month
in which notice is given.


If the Lender terminates this Contract in whole or in part, we will not pay the Lender a
termination fee.
	 
	 	 
	C.

Termination

By Us Of

Servicing

Arrangements For
 Wholly-Owned

Mortgages

	 	We may terminate the provisions of this Contract covering the servicing under this Contract
of any or all mortgages that we entirely own. This may be done by following the procedures
outlined below.


1. Termination Without Cause. We may terminate servicing for any reason, by giving the
Lender notice of the termination. If we do so, the provisions of this Contract covering
the servicing of the affected mortgages will automatically terminate on the thirtieth day
following the day our notice is given. Whenever we do this (and the termination is not
because of any breach by the Lender as described in Section IX C2) we will pay the Lender,
for each mortgage on which servicing is terminated, a lump-sum termination fee as provided
in a. below. However, whenever we terminate solely in order to transfer the servicing to
another Lender, and there has been no sale of our interest in the affected mortgages, the
provisions of b. below will apply.
	 
	 	 
	 

	 	a. Termination Fee. The termination fee will be an amount equal to twice the Lender’s
annualized servicing compensation, at the rate of compensation that is in effect for the
mortgage as of the date of the termination, applied against the unpaid principal balance of
the mortgage as of such date.
	 
	 	 
	 

	 	For purposes of determining the termination fee:
	 
	 	 
	 

	 	•     The Lender’s servicing compensation consists of the servicing fee at the Applicable
Servicing Rate plus any previously agreed upon excess yield that the Lender is permitted to
retail on the applicable mortgage.

	 
	 	 
	 

	 	•     “Applicable Servicing Rate” means the rate of the servicing fee for the servicing
of the mortgage, expressed as an annualized fractional percentage.

	 
	 	 
	 

	 	[Refer to appropriate sections of our Guides for more detailed information regarding the
computation of termination fees.]
	 
	 	 
	 

	 	b. Termination To Effect Transfer. Whenever we terminate servicing solely in order to
transfer servicing of the mortgages to another Lender, and there has been no sale of our
interest in the mortgages, we will give the Lender notice of the required transfer. Within
the 90-day period immediately following the date our notice is given, the Lender may
arrange for the sale of the servicing to another Fannie Mae-approved Lender in good
standing that, in our judgment will properly service the mortgages to be transferred.
Within the 90-day period, the Lender will give notice of any proposed sale to us, together
with all related information. The sale of servicing is conditioned upon our approval,
which will not be unreasonably withheld. Any resulting transfer of servicing will be






Page 13 of 19









 






	 	 	 

	 

	 	completed not later than 60 days after our approval of the transfer; and
	 
	 	 
	 

	 	•     the Lender will be entitled to the proceeds of the sale of servicing and will bear
all costs and expenses related to the sale and transfer of servicing;

	 
	 	 
	 

	 	•     the Lender will not pay us a transfer fee;

	 
	 	 
	 

	 	•     we will not pay the Lender a termination fee;

	 
	 	 
	 

	 	•     we may require the purchaser of the servicing to assume any or all warranties that
were made to us in connection with the sale to us of the affected mortgages; and

	 
	 	 
	 

	 	•     the purchaser of the servicing will succeed to the Lender’s obligations, rights and
servicing compensation, under the provisions of this Contract covering the servicing of the
affected mortgages. For all of the affected mortgages that we purchased under a net-yield
contract, the servicing compensation will include the specified minimum servicing fee, plus
the Lender’s share of that portion of the yield which exceeds the stated net yield, as
provided under the commitment contract.

	 
	 	 
	 

	 	[Refer to appropriate sections of our Guides for more detailed information regarding the
computation of the Lender’s servicing compensation.]
	 
	 	 
	 

	 	If at the end of the 90-day period following our notice, the Lender has not arranged to
sell and transfer the servicing of the affected mortgages to another Lender acceptable to
us and given us the required notice, the provisions of this Contract covering the servicing
of the mortgages will automatically terminate on the fifteenth day following the end of the
90-day period, and we will transfer the servicing to a Lender of our choice. In such a
case, we will pay the Lender, for each mortgage on which servicing is terminated, a
termination fee computed as provided under a. above. We will deduct from the termination
fee paid to the Lender a transfer fee that is the greater of $500.00 or 1/100 of 1% of the
aggregate unpaid principal balance of all of the affected mortgages on which servicing is
transferred.
	 
	 	 
	 

	 	c. General Criteria For Termination Fees. Notwithstanding anything to the contrary in this
Contract, we may change the amount of termination fee that we pay, or other provisions of
this Section IX Cl, from time to time, by changing the appropriate provisions of our
Guides. However, such a change will not affect mortgages that we have purchased or that we
have committed to purchase before the date of the change.
	 
	 	 
	 

	 	Our written tender of the termination fee to the Lender, or its successors or assigns, is
complete compensation for each mortgage serviced by the Lender on which servicing is
terminated. Any sums we owe the Lender for servicing prior to the termination date are not
included in the termination fee. When we pay a termination fee, the Lender will not be
entitled to the proceeds for any sale of the servicing involved.
	 
	 	 
	 

	 	2. Termination With Cause. We may terminate if the Lender breaches any agreement in this
Contract, including, without limitation, any of those breaches listed in Section
VIII A. This may be done by giving the Lender notice of termination. Notwithstanding
anything in this Contract to the contrary, if we terminate for breach, we may make it
effective immediately, and we will not pay the Lender a termination fee or proceeds from
any sale of the servicing involved. Furthermore, we will not pay a servicing termination
fee if a mortgage is repurchased by the Lender because a warranty is untrue.
	 
	 	 
	D.

Termination

By Us Of

Servicing

Arrangements

For Mortgages

In Which We

Have A

Participation

Interest

	 	If the Lender breaches any agreement in this Contract, including, without limitation, any
breach listed in Section VIII A, we may terminate the provisions of this Contract covering
the servicing of any or all mortgages in which we own a participation interest. This may be
done by giving notice of termination. Such termination may be effective immediately, and we
will not pay the Lender a termination fee.


1. Transfer Of Lender’s Powers. Upon termination, we will automatically succeed to all the
Lender’s rights in and responsibilities for servicing of the affected mortgages. We will
also have the option to exercise all the Lender’s powers relating to these mortgages, and
to designate any person or firm to exercise those powers. However, exercise of the Lender’s
powers must be consistent with the Lender’s and our respective participation interests.






Page 14 of 19









 






	 	 	 

	 

	 	The mortgage instruments for these mortgages and all related mortgage records will be
delivered to us or a party we designate. The Lender will also deliver necessary
assignments, transfers and documents of authority.
	 
	 	 
	 

	 	2. Transfer Of Servicing. If we terminate the Lender’s servicing of any such mortgages, we
are authorized to transfer the servicing of the mortgages to new servicers and pay the new
servicers a fee. The fee will apply to the total outstanding principal balance on each
mortgage, including our participation interest in each mortgage as well as the
participation interest of the Lender and of any other owner.
	 
	 	 
	 

	 	3. Liability For Fees. The Lender and all additional owners of a participation interest
will be liable for their respective shares of the servicing fee we pay. They will also be
liable for their respective shares of advances that, in our sole discretion, are required.
Advances may be required for insurance, taxes, maintenance, improvements or other necessary
outlays.
	 
	 	 
	 

	 	If the Lender or other owners fail to promptly provide their share of funds for advances,
or for any other necessary expenses, during any period, we may supply the funds. The fact
that we do this does not release the Lender or other owners from their liability. We may
deduct any amount we advance the next time we owe money to the Lender or other owners.
	 
	 	 
	E.

Rights Of

Termination

Not Impaired

	 	The exercise of a right of termination under any provision of this Contract will not impair
any further right of termination under another provision.
	 
	 	 
	X Continuance Of Responsibilities Or Liabilities
	 
	 	 
	 

	 	Responsibilities or liabilities of the Lender that exist before the termination of
this Contract will continue to exist after termination unless we expressly release the
Lender from any of them in writing. This is true whether the Contract was terminated by the
Lender or by us.
	 
	 	 
	XI Participation Interests-Special Provisions
	 
	 	 
	 

	 	This section contains special provisions that govern participation interests.
	 
	 	 
	A.

After The

Sale Of A

Participation

Interest

	 	Listed below are the consequences of the sale of a participation interest.


1. Transfer Of Undivided Interest. When the Lender sells and conveys to us a participation
interest in one or more mortgages, this is a transfer of an undivided interest in each
mortgage.
	 

	 	The sale and conveyance of the participation interest will have the same force and effect
as:
	 
	 	 
	 

	 	•     a separate assignment of each mortgage executed and delivered to us by the Lender;
and

	 
	 	 
	 

	 	•     a promissory note separately endorsed or transferred to us.

	 
	 	 
	 

	 	2. Assurance Of Our Legal Rights. If federal or state laws or regulations now, or later,
provide that the purchase of a participation interest is an extension of credit, the Lender
will take whatever additional steps we may require to assure our legal rights as a
purchaser of participation interests.
	 
	 	 
	 

	 	Such steps may include:






Page 15 of 19









 






	 	 	 

	 

	 	•     placing legends on promissory notes;

	 
	 	 
	 

	 	•     endorsing promissory notes in blank and delivering them to us; and

	 
	 	 
	 

	 	•     executing mortgage assignments in a form acceptable to us and delivering them to us.

	 
	 	 
	 

	 	3. No Partnership Or Joint Venture. Neither the simultaneous ownership of interests in one
or more mortgages nor any provision of this Contract will mean that a partnership or joint
venture exists between the Lender and us.
	 
	 	 
	B.

Payments To Us

	 	The Lender will make the following payments to us, according to our Guides, for mortgages
in which both the Lender and we own an interest:
	 
	 	 
	 

	 	1. Ratable Sharing Of Principal. The Lender will ratably share with us all mortgage
principal payments.
	 
	 	 
	 

	 	2. Participation Share Of Interest. The Lender will pay us our participation share of
interest payments up to:
	 
	 	 
	 

	 	•     an amount sufficient for us to earn our yield on each mortgage; plus

	 
	 	 
	 

	 	•     any amounts due us pursuant to this section.

	 
	 	 
	C.

Enforcement Of

Due-On-Sale

And Call Options

	 	As required by our Guides, the Lender will enforce the due-on-sale provisions and call
options in the mortgages it services for us.
	 
	 	 
	D.

Repurchase

Option

	 	The Lender will have the option to repurchase our interest in a mortgage if:


•     the Lender is required by our Guides to enforce a due-on-sale clause of a mortgage
in which the Lender and we own an interest; or

	 
	 	 
	 

	 	•     we elect to exercise a call option provision of such a mortgage.

	 
	 	 
	 

	 	If the Lender wishes to repurchase our interest in such a mortgage, it may do so by:
	 
	 	 
	 

	 	•     giving us notice of its intention to repurchase; and

	 
	 	 
	 

	 	•     paying us an amount calculated according to the provisions of our Guides.

	 
	 	 
	E.

Note Rate Increase,

Foreclosure

Expenses And

Prepayment Charges

	 	The note rate of a mortgage is stated in the participation certificate or attached loan
schedule.


1. Note Rate Increase. If, for any reason, there is an increase of the note rate of a
mortgage in which we hold a participation interest, the Lender will pay us, according to
our Guides, a percentage of the increase equal to the percentage represented by our
participation interest in the mortgage. This amount will be in addition to our yield on the
mortgage.
	 
	 	 
	 

	 	2. Foreclosure Expenses. The Lender will ratably share with us any reasonable foreclosure
and related expenses in connection with a mortgage in which we own a participation
interest.
	 
	 	 
	 

	 	3. Prepayment Charges. The Lender will ratably share with us any prepayment charges
collected for mortgages in which we own a participation interest.
	 
	 	 
	F.

Advances

	 	The Lender will not make any optional or voluntary advances to the borrower under an
open-end mortgage in which we own a participation interest.
	 
	 	 
	G.

Assignment

Or Sale Of

Participation

Interests

	 	Participation interests may be assigned either by the Lender or us, as follows:


1. By Us. Without the Lender’s consent we may assign:


•     our participation interest in any mortgage; and







Page 16 of 19









 






	 	 	 

	 

	 	•     all rights in the mortgage we own under this Contract or under any other instruments.

	 
	 	 
	 

	 	2. By Lender To Transferee. The Lender may sell or transfer all or part of any
participation interest that it owns in any mortgage under this Contract unless expressly
prohibited from doing so by our Guides.
	 
	 	 
	 

	 	This sale or transfer of participation interests is subject to the conditions below, as
well as to our Guides as they are in effect on the date of our commitment to purchase.
	 
	 	 
	 

	 	For every sale or transfer, the Lender must obtain and furnish us with properly executed
instrument by which the transferee:
	 
	 	 
	 

	 	•     agrees to be bound by the terms of this Contract; and

	 
	 	 
	 

	 	•     acknowledges our rights and interests under this Contract with respect to the
mortgage.

	 
	 	 
	 

	 	Our rights and interests that must be acknowledged include, without limitation, the right
to assess a servicing fee against the owner of each participation interest if we:
	 
	 	 
	 

	 	•     assume the servicing of the mortgage; or

	 
	 	 
	 

	 	•     transfer the servicing to a new servicer under Section IX D of this Contract.

	 
	 	 
	 

	 	The sale or transfer of a participation interest does not relieve the Lender of any
responsibility or liability under this Contract. For example, the Lender continues to be
liable for any fees and other amounts charged under Section IX D3 of this Contract against
the participation interest that is transferred. We may collect these amounts from the
Lender or from the transferee.
	 
	 	 
	 

	 	3. By Lender To Bank. The Lender may be a member of, or be required to maintain reserves
with a Federal Home Loan Bank or Federal Reserve Bank. If so, and the Lender transfers its
participation interests in any mortgage under this Contract to such a bank to secure one or
more advances, then the bank will not be deemed to have assumed the mortgage warranties
found in Section IV A.
	 
	 	 
	 

	 	Also, such a transfer to the bank will not relieve the Lender of any responsibility or
liability under this Contract.
	 
	 	 
	XII Notice
	 
	 	 
	 

	 	Whenever notice is required under this Contract, it must be given as described in this
section.
	 
	 	 
	A.

Notice Of

Termination

	 	Any notice of termination given under this Contract must be:


•     in writing;

	 
	 	 
	 

	 	•     delivered in person or sent by registered or certified mail, with a return receipt
requested; and

	 
	 	 
	 

	 	•     addressed to the party to which notice is being given.

	 
	 	 
	 

	 	Delivery and notice is given when we or the Lender mail or register the notice with any
post office.
	 
	 	 
	B.

Our Guides

And Other

Documents

	 	Our Guides, including any amendments or supplements, and any other notices, demands or
requests under this Contract or applicable law will be:


•     in writing;

	 
	 	 
	 

	 	•     delivered in person or mailed from any post office, substation, or letter box;

	 
	 	 
	 

	 	•     enclosed in a postage prepaid envelope; and







Page 17 of 19









 






	 	 	 

	 

	 	•     addressed to the Lender to which the matter is directed.

	 
	 	 
	C.


	 	For purposes of notice, the following rules apply:
	Address
	 	 
	 

	 	1. Our address is the address of our regional office given in this Contract.
	 
	 	 
	 

	 	2. The Lender’s address is that of its principal place of business given in this Contract.
	 
	 	 
	 

	 	Any change of address must be given in writing
	 
	 	 
	XIII Prior Agreements
	 
	 	 
	 

	 	This Contract supersedes any prior agreements between the Lender and us that govern
selling or servicing of mortgages and participation interests to which this Contract
relates.
	 
	 	 
	 

	 	However, this section will not release the Lender from any responsibility or liability
under any prior agreements and understandings.
	 
	 	 
	XIV Severability And Enforcement
	 
	 	 
	 

	 	If any provision of this Contract conflicts with applicable law, the other provisions
of this Contract that can be carried out without the conflicting provision will not be
affected.
	 
	 	 
	 

	 	All rights and remedies under this Contract are distinct and cumulative not only as to each
other but as to any rights or remedies afforded by law or equity. They may be exercised
together, separately or successively. These rights and remedies are for our benefit and
that of our successors and assigns.
	 
	 	 
	XV Captions
	 
	 	 
	 

	 	This Contract’s captions and headings are for convenience only and are not part of the
Contract.
	 
	 	 
	XVI Scope of Contract
	 
	 	 
	 

	 	The following provisions apply, whether or not they are contrary to other provisions
in this Contract.
	 
	 	 
	A.

Restriction

Of Lender

	 	We reserve the right to restrict the Lender’s sale or servicing of mortgages or of
participation interests to the type that the Lender and its employees have the experience
and ability to originate, sell or service.
	 
	 	 
	B.

Types Of

Mortgages

Covered

	 	This Contract covers only the sale of mortgages and participation interests and the
servicing of mortgages, within the following categories:


1-4 Unit Home Mortgages Under the First Mortgage Program







Page 18 of 19












 





	 	 	 	 	 

	XVII Signatures And Date

	 
	 	 	 	 
	 	 	By executing this Contract, the Lender and we agree to all of this
Contract’s terms and provisions. Both the Lender and we have signed and
dated this Contract below.
	 
	 	 	 	 
	 	 	This Contract takes effect on the date we sign it.
	 
	 	 	 	 
	 

	 	Lender:
	 	Centex Home Equity Corp.
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	2728 N. Harwood St.
	 

	 	 	 	 
	 

	 	 	 	(Address)
	 
	 	 	 	 
	 

	 	 	 	Dallas, Texas 75201
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Stephen C. Janawsky
	 

	 	 	 	 
	 

	 	 	 	(Authorized Signature)
	 
	 	 	 	 
	 

	 	 	 	Stephen C. Janawsky          
                   
                    
                    
 Executive Vice President
	 

	 	 	 	 
	 

	 	 	 	(Type Name and Title)
	 
	 	 	 	 
	 

	 	Date:
	 	7/23/97
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Federal National Mortgage Association
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Address)
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Robert W. Sanborn
	 

	 	 	 	 
	 

	 	 	 	(Authorized Signature)
	 
	 	 	 	 
	 

	 	 	 	Robert W. Sanborn
	 

	 	 	 	 
	 

	 	 	 	(Type Name and Title)
	 
	 	 	 	 
	 

	 	Date:
	 	7/31/97
	 

	 	 	 	 







Page 19 of 19