Exhibit 10.6


 


AMENDMENT
NO. 1


 


TO FLOW
SERVICING AGREEMENT


 


Amendment
No. 1 to Flow Servicing Agreement, dated as of March 3, 2010 (the “Amendment”), by and between PennyMac Operating Partnership,
L.P., a Delaware limited partnership (the “Operating Partnership”),
and PennyMac Loan Services, LLC, a Delaware limited liability company ( the “Servicer”).


 


RECITALS


 


WHEREAS,
the Operating Partnership and the Servicer are parties to that certain Flow
Servicing Agreement, dated as of August 4, 2009 (the “Existing
Flow Servicing Agreement” and, as amended by the Amendment, the “Flow Servicing Agreement”). 
Capitalized terms used but not otherwise defined herein shall have the
meanings given to them in the Existing Flow Servicing Agreement.


 


WHEREAS,
the Operating Partnership and the Servicer have agreed, subject to the terms
and conditions of this Amendment, that the Existing Flow Servicing Agreement be
amended to reflect certain agreed upon revisions to the terms of the Existing
Flow Servicing Agreement.


 


NOW,
THEREFORE, in consideration of the mutual premises and mutual obligations set
forth herein, the Operating Partnership and the Servicer hereby agree that the
Existing Flow Servicing Agreement is hereby amended as follows:


 


SECTION 1.                                Definitions.  Section 1.01 of the Existing Flow
Servicing Agreement is hereby amended by deleting the definition of “REO
Marketing Fee” and adding the following definitions in the correct
alphabetical order:


 


“Deed in Lieu Fee:  With respect to each Mortgaged Property, the
title to which is acquired by deed in lieu of foreclosure, the Deed in Lieu Fee
as set forth in Exhibit 9.”


 


“Liquidation Fee:  With respect to each sale of an REO Property
or each discounted payoff accepted by the Servicer in satisfaction of a
defaulted Mortgage Loan, the Liquidation Fee as set forth in Exhibit 9.”


 


SECTION 2.                                Servicing.  Section 2.15 of the Existing Flow
Servicing Agreement is hereby amended as follows:


 


(a)                                  By adding the following sentence at the
end of the first paragraph:  “Where title
is acquired by deed in lieu of foreclosure, Owner shall pay to Servicer the
Deed in Lieu Fee.”;


 


(b)                                 By deleting the second sentence in the
second paragraph;


 

















 


(c)                                  By deleting the third paragraph in its
entirety; and


 


(d)                                 By adding the following sentence at the end
of the fourth paragraph (after giving effect to the deletion of the third
paragraph as set forth in Section 2(c) above):  “In addition, for the sale of each REO
Property, Owner shall pay to Servicer the Liquidation Fee.”


 


SECTION 3.                                General
Servicing Procedures.  Section 4.02
of the Existing Flow Servicing Agreement is hereby amended by deleting the
first paragraph thereof in its entirety and replacing it with the following:


 


“Upon the payment in full of any Mortgage
Loan (or such lesser amount in connection with a discounted payoff accepted by
the Servicer with respect to a defaulted Mortgage Loan), or the receipt by the
Servicer of a notification that such payment will be escrowed in a manner
customary for such purposes, the Servicer shall notify the Owner in the Monthly
Remittance Advice as provided in Section 3.02, and may request the
release of any Mortgage Loan Documents from the Owner in accordance with this Section 4.02.  The Servicer shall obtain discharge of the
related Mortgage Loan as of record within any related time limit required by
applicable law (unless prevented from complying as a result of the failure of
the local recording office to comply with its obligations on a timely
basis).  For each discounted payoff
accepted by the Servicer with respect to a defaulted Mortgage Loan, Owner shall
pay to Servicer the Liquidation Fee.”


 


SECTION 4.                                Exhibits. Exhibit 9
of the Existing Flow Servicing Agreement is hereby amended by deleting it in
its entirety and replacing it with the form attached hereto as Exhibit A.


 


SECTION 5.                                Conditions
Precedent.  This
Amendment shall become effective as of the date first set forth above (the “Amendment Effective Date”), subject to the satisfaction of
the following conditions precedent:


 


5.1                                 Delivered
Documents.  On the
Amendment Effective Date, each party shall have received the following
documents, each of which shall be satisfactory to such party in form and
substance:


 


(a)                                  this Amendment, executed and delivered by
duly authorized officers of the Operating Partnership and the Servicer; and


 


(b)                                 such other documents as such party or
counsel to such party may reasonably request.


 


SECTION 6.                                Representations
and Warranties. Each party represents that it is in compliance in
all material respects with all the terms and provisions set forth in the
Existing Flow Servicing Agreement on its part to be observed or performed.


 

















 


SECTION 7.                                Limited Effect.  Except as expressly amended and modified by
this Amendment, the Existing Flow Servicing Agreement shall continue to be, and
shall remain, in full force and effect in accordance with its terms.


 


SECTION 8.                                GOVERNING
LAW.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.


 


SECTION 9.                                Counterparts.  This Amendment may be executed in one or more
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed, shall constitute one and the same agreement.


 


SECTION 10.                          Conflicts.  The parties hereto agree that in the event
there is any conflict between the terms of this Amendment, and the terms of the
Existing Flow Servicing Agreement, the provisions of this Amendment shall
control.


 


[SIGNATURE PAGE
FOLLOWS]


 

















 


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


 


 


	
  The Operating
  Partnership:

  	
   

  	
  PENNYMAC OPERATING PARTNERSHIP,
  L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  PennyMac GP OP, Inc.,

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Anne D. McCallion

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
  and Treasurer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Servicer:

  	
   

  	
  PENNYMAC LOAN SERVICES, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Anne D. McCallion

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President, Finance

  



 

















 


EXHIBIT A


 


EXHIBIT 9


 


TERM SHEET


 


BASE SERVICING FEE
PERCENTAGE

(per loan)


 


With
respect to each Mortgage Loan, the Base Servicing Fee Percentage for that
Mortgage Loan set forth in the Servicer’s servicing records.  The Base Servicing Fee Percentage for a
Mortgage Loan shall be determined in accordance with the written protocol
approved by (i) a majority of the independent members of the board of
Trustees of PennyMac REIT, (ii) the Owner and (iii) the Servicer.  The following factors shall be taken into
account in formulating the written protocol: 
The Base Servicing Fee Percentages shall (i) be based on the risk
characteristics of the mortgage loans in a particular pool, including the
market value of the underlying properties, creditworthiness of the borrowers,
seasoning of the mortgage loans, degree of current and expected mortgage loan
defaults, current loan-to-value ratios, borrowers’ payment history and
debt-to-income levels,  (ii) be
consistent with the assumptions used by the PennyMac REIT Manager in
determining the bid for the related portfolio of mortgage loans, (iii) be
competitive with those charged by specialty mortgage loan servicers providing
comparable services for comparable mortgage loans, and (iv) range from 30
to 100 basis points per annum on the unpaid principal balance of the related
mortgage loans.


 


OTHER KEY PARAMETERS


 




	
  Remittance Types

  	
   

  	
  Actual/Actual Basis
  during Interim Servicing Period

  
	
   

  	
   

  	
   

  
	
  Remittance Date

  	
   

  	
  See definition of
  Remittance Date

  
	
   

  	
   

  	
   

  
	
  Servicing Advances

  	
   

  	
  Servicer to be
  reimbursed monthly for all unpaid Servicing Advances incurred by Servicer in
  the prior month including Cost of Funds.

  
	
   

  	
   

  	
   

  
	
  Cost of Funds on Servicing
  Advances

  	
   

  	
  Refer to Section 3.04

  
	
   

  	
   

  	
   

  
	
  Prepayment Penalties

  	
   

  	
  Owner will retain 100%
  of the prepayment penalties.

  
	
   

  	
   

  	
   

  
	
  Late Charges Collected

  	
   

  	
  Servicer will retain
  100% of late charges collected by Servicer

  
	
   

  	
   

  	
   

  
	
  Ancillary Income

  	
   

  	
  Servicer will retain
  100% of all Ancillary Income

  
	
   

  	
   

  	
   

  
	
  Delegated Authority

  	
   

  	
  Refer to Exhibit 10

  
	
   

  	
   

  	
   

  
	
  Contract Term

  	
   

  	
  Refer to Section 6.01

  
	
   

  	
   

  	
   

  
	
  Eligible Mortgage Loan

  	
   

  	
  See definition of
  Eligible Mortgage Loan

  






 


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MISCELLANEOUS ONE-TIME AND
OTHER FEES


 


Service
Release Fee:  $500 if released within one
year of boarding; $250 if released within two years of boarding; $150 if
released thereafter


 


Deed in
Lieu Fee:  $500


 


Liquidation
Fee:  150 basis points of the gross
proceeds received in connection with either the disposition of an REO Property
or a discounted payoff accepted by the Servicer with respect to a defaulted
Mortgage Loan


 


Tax
Service Contract:  Servicer’s cost


 


Flood
Zone Service Contract:  Servicer’s cost


 


Backfill
Fee:  $15 per Mortgage File


 


MERS
Fee:  Servicer’s cost


 


Modification
Fee:  $1,000 for modifications classified
by the Servicer as full modifications (to include interest rate reductions);
$295 for modifications classified by the Servicer as simple modifications (to
include capitalization of delinquent payments)


 


To the extent the Servicer
participates in the U.S. Treasury’s Home Affordable Modification Program (or
other similar mortgage loan modification programs), the Servicer shall be
entitled to remit to Owner any incentive payments payable to mortgage loan
servicers under the program; provided, however, that with respect to any
incentive payments paid to Servicer in connection with a mortgage loan
modification for which Owner previously paid Servicer a Modification Fee
hereunder, Servicer shall reimburse Owner an amount equal to the lesser of (a) such
Modification Fee or (b) such incentive payments.


 


In the event the Servicer
effects a refinancing of a Mortgage Loan on behalf of the Owner and not through
a third party lender and the resulting Mortgage Loan is readily saleable, the
Servicer shall be entitled to retain a market-based origination fee (set, as of
the date of this Servicing Agreement, at one percent (1%) of the principal
balance of the Refinanced Mortgage Loan plus a $750 underwriting fee).  Should the Servicer originate a Mortgage Loan
to facilitate the disposition of REO Property, the Servicer shall be entitled
to retain a market-based origination fee (set, as of the date of this Servicing
Agreement, at one percent (1%) of the principal balance of the Refinanced Mortgage
Loan plus a $750 underwriting fee).  The
amount of the origination fee shall be subject to review by the Owner and the
Servicer from time to time to reflect market rates.  The Owner shall reimburse the Servicer for
any out of pocket expenses that the Servicer incurs in connection with any such
origination, including title fees, legal fees and closing costs.


 


In addition to the
Ancillary Income that the Servicer is entitled to retain pursuant to Section 4.03,
the Servicer shall be entitled to customary market-based fees and charges for
the boarding, deboarding and disposition of Mortgage Loans.


 


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