Document:

ex10-2.htm

    Exhibit 10.2

     

    BARCLAYS
      BANK PLC,

     

    Agent,

     

    PHH
      MORTGAGE CORPORATION

     

    Seller
      and Servicer,

     

    and

     

    PHH
      CORPORATION,

     

    Guarantor

     

    AMENDED
      AND RESTATED SERVICING AGREEMENT

     

    dated
      as of October 29, 2007

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

       
      

              Page

      
        	
                ARTICLE I

              	
                DEFINITIONS

              	
                1

              
	 	 	 
	
                ARTICLE II

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

              	
                1

              
	
                Section
                  2.1

              	
                Possession
                  of Mortgage Loan Files; Maintenance of Mortgage Loan Files

              	
                1

              
	
                Section
                  2.2

              	
                Books
                  and Records; Transfers of Eligible Mortgage Loans; Custodial
                  Agreement

              	
                2

              
	
                Section
                  2.3

              	
                Servicer
                  Daily Calculation of Collateral Values and Aggregate Margin Value;
                  Agent
                  Calculation of Collateral Value and Aggregate Margin Value

              	
                3

              
	
                Section
                  2.4

              	
                Protection
                  of Ownership Interest of the Agent (on behalf of the
                  Principals)

              	
                3

              
	
                Section
                  2.5

              	
                Fees

              	
                4

              
	
                Section
                  2.6

              	
                Payments
                  and Computations, Etc

              	
                4

              
	 	 	 
	
                ARTICLE III

              	
                REPRESENTATIONS
                  AND WARRANTIES; COVENANTS; REMEDIES AND BREACH

              	
                4

              
	
                Section
                  3.1

              	
                Representations
                  and Warranties of The Company

              	
                4

              
	
                Section
                  3.2

              	
                [Reserved]

              	
                7

              
	
                Section
                  3.3

              	
                Remedies
                  for Breach of Representations and Warranties

              	
                7

              
	
                Section
                  3.4

              	
                Covenants

              	
                7

              
	 	 	 
	
                ARTICLE IV

              	
                ADMINISTRATION
                  AND SERVICING OF ELIGIBLE LOANS

              	
                8

              
	
                Section
                  4.1

              	
                The
                  Company to Act as Servicer; Servicing and Administration of the
                  Eligible
                  Mortgage Loans

              	
                8

              
	
                Section
                  4.2

              	
                Sales
                  and Securitizations

              	
                10

              
	
                Section
                  4.3

              	
                Liquidation
                  of Eligible Mortgage Loans

              	
                10

              
	
                Section
                  4.4

              	
                Collection
                  of Eligible Mortgage Loan Payments

              	
                10

              
	
                Section
                  4.5

              	
                Establishment
                  of, and Deposits to, Funding Account and Collection
                  Account

              	
                11

              
	
                Section
                  4.6

              	
                Permitted
                  Withdrawals From Margin Call Account

              	
                11

              
	
                Section
                  4.7

              	
                Establishment
                  of, and Deposits to, Escrow Account

              	
                11

              
	
                Section
                  4.8

              	
                Permitted
                  Withdrawals From Escrow Account

              	
                12

              
	
                Section
                  4.9

              	
                Payment
                  of Taxes, Insurance and Other Charges

              	
                13

              
	
                Section
                  4.10

              	
                Protection
                  of Accounts; Investment of Funds

              	
                13

              
	
                Section
                  4.11

              	
                Maintenance
                  of Hazard Insurance

              	
                13

              
	
                Section
                  4.12

              	
                Maintenance
                  of Mortgage Impairment Insurance

              	
                15

              
	
                Section
                  4.13

              	
                Maintenance
                  of Fidelity Bond and Errors and Omissions Insurance

              	
                15

              
	
                Section
                  4.14

              	
                Inspections

              	
                15

              
	
                Section
                  4.15

              	
                Restoration
                  of Mortgaged Property

              	
                15

              
	
                Section
                  4.16

              	
                Maintenance
                  of PMI Policy; Claims

              	
                16

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        TABLE
          OF CONTENTS
                  (continued)      
      

                  Page

        

         

      

      
        	
                Section
                  4.17

              	
                Title,
                  Management and Disposition of REO Property

              	
                17

              
	
                Section
                  4.18

              	
                Daily
                  Servicer Reports

              	
                17

              
	
                Section
                  4.19

              	
                Real
                  Estate Owned Reports

              	
                18

              
	
                Section
                  4.20

              	
                Liquidation
                  Reports

              	
                18

              
	
                Section
                  4.21

              	
                Reports
                  of Foreclosures and Abandonments of Mortgaged Property

              	
                18

              
	 	 	 
	
                ARTICLE V

              	
                GENERAL
                  SERVICING PROCEDURES

              	
                18

              
	
                Section
                  5.1

              	
                Transfers
                  of Mortgaged Property

              	
                18

              
	
                Section
                  5.2

              	
                Satisfaction
                  of Mortgages and Release of Mortgage Loan Files

              	
                19

              
	
                Section
                  5.3

              	
                Servicing
                  Compensation

              	
                19

              
	
                Section
                  5.4

              	
                Annual
                  Statement as to Compliance

              	
                19

              
	
                Section
                  5.5

              	
                Annual
                  Independent Public Accountants’ Servicing Report; Audited
                  Financials

              	
                20

              
	
                Section
                  5.6

              	
                Right
                  to Examine Servicer Records

              	
                21

              
	 	 	 
	
                ARTICLE VI

              	
                REPURCHASE
                  OBLIGATION

              	
                21

              
	
                Section
                  6.1

              	
                Servicer’s
                  Purchase Obligations

              	
                21

              
	 	 	 
	
                ARTICLE VII

              	
                SERVICER
                  TO COOPERATE

              	
                21

              
	
                Section
                  7.1

              	
                Provision
                  of Information

              	
                21

              
	 	 	 
	
                ARTICLE VIII

              	
                THE
                  SERVICER

              	
                22

              
	
                Section
                  8.1

              	
                Indemnification
                  of Third-Party Claims

              	
                22

              
	
                Section
                  8.2

              	
                Corporate
                  Existence of the Servicer

              	
                22

              
	
                Section
                  8.3

              	
                Limitation
                  on Liability of Servicer and Others

              	
                22

              
	
                Section
                  8.4

              	
                Limitation
                  on Resignation and Assignment by the Servicer

              	
                23

              
	
                Section
                  8.5

              	
                Limitation
                  on Assignment of Right

              	
                23

              
	 	 	 
	
                ARTICLE IX

              	
                SERVICER
                  DEFAULT

              	
                23

              
	
                Section
                  9.1

              	
                Servicer
                  Default

              	
                23

              
	
                Section
                  9.2

              	
                Waiver
                  of Defaults

              	
                25

              
	 	 	 
	
                ARTICLE X

              	
                TERMINATION
                  AND LIQUIDATION

              	
                26

              
	
                Section
                  10.1

              	
                Termination
                  of Agreement

              	
                26

              
	
                Section
                  10.2

              	
                Termination
                  of Servicing With Respect to Any Eligible Mortgage Loan

              	
                26

              
	 	 	 
	
                ARTICLE XI

              	
                [RESERVED]

              	
                26

              
	 	 	 
	
                ARTICLE XII

              	
                MISCELLANEOUS
                  PROVISIONS

              	
                26

              
	
                Section
                  12.1

              	
                Successor
                  to Servicer

              	
                26

              
	
                Section
                  12.2

              	
                Amendment

              	
                27

              
	
                Section
                  12.3

              	
                Governing
                  Law

              	
                27

              

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        TABLE
          OF CONTENTS
                  (continued)      
      

                  Page

           

        

      

      
        	
                Section
                  12.4

              	
                Duration
                  of Agreement

              	
                27

              
	
                Section
                  12.5

              	
                Notices

              	
                28

              
	
                Section
                  12.6

              	
                Severability
                  of Provisions

              	
                28

              
	
                Section
                  12.7

              	
                Relationship
                  of Parties

              	
                28

              
	
                Section
                  12.8

              	
                Execution;
                  Successors and Assigns

              	
                28

              
	
                Section
                  12.9

              	
                Recordation
                  of Assignments of Mortgage

              	
                28

              
	
                Section
                  12.10

              	
                [RESERVED]

              	
                29

              
	
                Section
                  12.11

              	
                [RESERVED]

              	
                29

              
	
                Section
                  12.12

              	
                Waiver
                  of Offset

              	
                29

              
	 	 	 
	
                ARTICLE XIII

              	
                PHH
                  CORPORATION GUARANTEE

              	
                29

              
	
                Section
                  13.1

              	
                Guarantee
                  of Seller’s Representations and Warranties, Servicer’s Performance and
                  Payment Obligations

              	
                29

              

      

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

 

    THIS
      AMENDED AND RESTATED SERVICING AGREEMENT, dated as of October 29,
      2007 (as amended, supplemented or otherwise modified and in effect from time
      to
      time, this “Agreement”), among PHH Mortgage Corporation, a New Jersey
      corporation (the “Company”), as Seller (in such capacity, the
“Seller”) and as Servicer (in such capacity, the “Servicer”),
      Barclays Bank PLC, as Agent (the “Agent”), and PHH Corporation, a
      Maryland corporation, as Performance Guarantor of the Servicer’s obligations
      (the “Performance Guarantor”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      the Seller, the Agent and the other parties from time to time thereto are
      parties to that certain Sixth Amended and Restated Master Repurchase Agreement,
      dated as of the date hereof (as amended, supplemented or otherwise modified
      and
      in effect from time to time, “Repurchase Agreement”) pursuant to which
      such parties have prescribed the manner of sale of each Eligible Mortgage Loan
      and the Related Security;

     

    WHEREAS,
      the parties hereto have entered into that certain Servicing Agreement, dated
      as
      of October 30, 2006 (as amended, supplemented or otherwise modified prior to
      the
      date hereof, the “Original Servicing Agreement”) which prescribes the
      management, control and servicing of the mortgage loans purchased under the
      Repurchase Agreement and the guaranty by the Performance Guarantor of the
      performance of the obligations of the Servicer;

     

    WHEREAS,
      the parties hereto desire to amend and restate the Original Servicing
      Agreement in its entirety and contemporaneously therewith enter into the other
      Transaction Documents (as such term is defined in the Repurchase Agreement)
      to
      prescribe for the management, control and servicing of the Eligible Mortgage
      Loans and the guaranty by the Performance Guarantor of the performance of the
      obligations of the Servicer.  Upon the effectiveness of this
      Agreement, each reference to the Original Servicing Agreement in any other
      document, instrument or agreement shall mean and be a reference to this
      Agreement.  Nothing contained herein, unless expressly herein stated
      to the contrary, is intended to amend, modify or otherwise affect any other
      instrument, document or agreement executed and/or delivered in connection with
      the Original Servicing Agreement; and

     

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

     

    ARTICLE I

     

    DEFINITIONS

     

    Capitalized
      terms used, but not otherwise defined herein, are used as defined in the
      Repurchase Agreement.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE II

     

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

     

    Section
      2.1  Possession
      of Mortgage Loan Files; Maintenance of Mortgage Loan Files.

     

    Pursuant
      to Section 2.2(b), Seller shall deliver each Mortgage Note, including
      Mortgage Notes on Wet Funded Loans, to the Custodian as soon as practicable,
      but
      in any event within 10 calendar days of the purchase (or if such 10th calendar
      day is not a Business Day, then on the immediately succeeding Business Day)
      by
      the Agent and, if any Mortgage Note is not delivered within 10 calendar days
      of
      the purchase (or if such 10th calendar day is not a Business Day, then on the
      immediately succeeding Business Day) by the Agent, it shall be repurchased
      on
      such 10th calendar day (or if such 10th calendar day is not a Business Day,
      then
      on the immediately succeeding Business Day) by Seller at the Repurchase
      Price.  The Seller shall deliver the related Loan Documents to the
      Servicer and the contents of each Mortgage Loan File shall be held in trust
      by
      the Servicer for the benefit of the Principals.  The possession of
      each Mortgage Loan File by the Servicer is at the will of the Agent for the
      sole
      purpose of servicing the related Eligible Mortgage Loan and such retention
      and
      possession by the Servicer is in a custodial capacity only.  Upon the
      sale of the Eligible Mortgage Loans, each Mortgage Note, the related Mortgage,
      the Related Security and all Collections and the related Mortgage Loan File
      shall vest immediately in the Agent (on behalf of the Principals), and the
      ownership of all records and documents with respect to the related Eligible
      Mortgage Loan prepared by or which come into the possession of the Servicer
      shall vest immediately in the Agent (on behalf of the Principals) and shall
      be
      retained and maintained by the Servicer, in trust, at the will of the Agent
      (on
      behalf of the Principals) and only in such custodial capacity.  The
      Servicer’s master data processing records shall be marked appropriately to
      reflect clearly the transfer of the related Eligible Mortgage Loans to the
      Agent
      (on behalf of the Principals).  The Custodian shall only release its
      custody of the contents of any Mortgage Loan File in its possession in
      accordance with the Custodial Agreement.

     

    Section
      2.2  Books
      and Records; Transfers of Eligible Mortgage Loans; Custodial
      Agreement.

     

    (a)  From
      and
      after each related Purchase Date, all rights arising with respect to the
      Eligible Mortgage Loans transferred (not including (i) servicing rights
      with respect to the Eligible Mortgage Loans, which shall be retained by the
      Servicer subject to the terms of the Repurchase Agreement or (ii) the
      Seller’s obligation to fund future advances for any HELOC pursuant to the
      related Home Equity Line Agreement up to the Credit Limit) pursuant to any
      Transaction Notice including but not limited to all funds received on or in
      connection with the Eligible Mortgage Loans, shall be received and held by
      the
      Servicer in trust for the benefit of the Agent (on behalf of the Principals
      and
      shall be applied in accordance with Section 6 of the Repurchase
      Agreement).  Pursuant to the Custodial Agreement, the Custodian shall
      hold all of the Mortgage Notes as described in such Custodial
      Agreement.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

    The
      Servicer shall be responsible for maintaining, and shall maintain, a complete
      set of books and records for each Eligible Mortgage Loan which shall be marked
      clearly to reflect the transfer of each Eligible Mortgage Loan to the Agent
      (on
      behalf of the Principals).  In particular, the Servicer shall maintain
      in its possession, available for inspection by the Agent, the Principals or
      their respective designees, evidence of compliance with applicable laws, rules
      and regulations. To the extent that original documents are not required for
      purposes of realization of Liquidation Proceeds, Insurance Proceeds, VA Guaranty
      Proceeds, FHA Proceeds or Securitization proceeds, documents maintained by
      the
      Servicer may be in the form of microfilm or microfiche or such other reliable
      means of recreating original documents, including but not limited to, optical
      imagery techniques so long as the Servicer complies with the requirements of
      the
      Guidelines.

     

    The
      Servicer shall maintain with respect to each Eligible Mortgage Loan and shall
      make available for inspection, upon reasonable advance notice, at the offices
      of
      the Servicer during normal business hours by the Agent, any Principal or any
      of
      their respective designees the related Mortgage Loan File during the time the
      Agent retains ownership of an Eligible Mortgage Loan and thereafter in
      accordance with applicable laws and regulations.

     

    (b)  Pursuant
      to the Custodial Agreement, the Seller shall deliver each Mortgage Note,
      including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as
      practicable, but in any event within 10 calendar days of the purchase (or if
      such 10th calendar day is not a Business Day, then on the immediately succeeding
      Business Day) by the Agent and, if any Mortgage Note is not delivered within
      10
      calendar days of the purchase (or if such 10th calendar day is not a Business
      Day, then on the immediately succeeding Business Day) by the Agent, it shall
      be
      repurchased on such 10th calendar day (or if such 10th calendar day is not
      a
      Business Day, then on the immediately succeeding Business Day) by Seller at
      the
      Repurchase Price.  The Custodian shall hold all Mortgage Notes in
      trust as agent for the Agent (on behalf of the Principals).

     

    Section
      2.3  Servicer
      Daily Calculation of Collateral Values and Aggregate Margin Value; Agent
      Calculation of Collateral Value and Aggregate Margin Value.

     

    (a)  The
      Servicer shall, before 4 p.m. (eastern time) on each Business Day, provide
      a transmission of the Collateral Value and Aggregate Margin Value of the
      Eligible Mortgage Loans at such time to the Agent.  Such transmission
      shall be in a form mutually agreed upon by the Servicer and the Agent at such
      times in all material respects.

     

    (b)  The
      Agent
      shall provide, at least once per calendar month, but as often as the Agent
      deems
      necessary, before noon (eastern time) on any Business Day, a transmission of
      the
      aggregate Collateral Value of the Eligible Mortgage Loans (as determined by
      the
      Agent or its designee) and the Aggregate Margin Value (as determined by the
      Agent or its designee) at such time to the Servicer.  Such
      transmission shall be in a form mutually agreed upon by the Agent and the
      Servicer at such times in all material respects.  In connection with
      the foregoing, the Servicer shall promptly deliver to the Agent (for its use
      and
      for use by any third party that the Agent selects to calculate the aggregate
      Collateral Value and the Aggregate Margin Value) any books, records, documents,
      data tapes or diskettes or other information relating to the Eligible Mortgage
      Loans as the Agent may reasonably request.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Section
      2.4  Protection
      of Ownership Interest of the Agent (on behalf of the
      Principals).

     

    The
      Servicer agrees that it will from time to time, at its expense, promptly execute
      and deliver all instruments and documents and take all actions as may be
      necessary or as the Agent may reasonably request in order to perfect or protect
      the interest of the Agent (on behalf of the Principals) in the Eligible Mortgage
      Loans or to enable the Agent or the Principals to exercise or enforce any of
      their respective rights hereunder.  Without limiting the foregoing,
      the Seller will upon the request of the Agent or any of the Principals, in
      order
      to accurately reflect any assignment, transfer and conveyance transaction under
      the Repurchase Agreement, authorize and file such financing or continuation
      statements or amendments thereto or assignments thereof  as may be
      requested by the Agent or any of the Principals.  The Servicer shall
      upon request of the Agent or any of the Principals obtain such additional search
      reports as the Agent or any of the Principals shall request.  To the
      fullest extent permitted by applicable law, the Agent shall be permitted to
      file
      continuation statements and amendments thereto and assignments thereof without
      the Seller’s signature.  Carbon, photographic or other reproduction of
      this Agreement or any financing statement shall be sufficient as a financing
      statement.

     

    The
      Servicer agrees that it will at its expense, on or prior to the related Purchase
      Date indicate clearly and unambiguously in its master data processing records
      that the Eligible Mortgage Loans have been conveyed to the Agent, for the
      benefit of the Principals pursuant to the Repurchase Agreement.  The
      Servicer further agrees to deliver to the Agent a computer file or microfiche
      list containing a true and complete list of all such Eligible Mortgage Loans,
      identified by loan number and by Outstanding Principal Balance as of the related
      Purchase Date.  The Servicer agrees to deliver to the Agent within
      five (5) Business Days of the request therefor by the Agent  a
      computer file or microfiche list containing a true and complete list of all
      Eligible Mortgage Loans in existence as of the last day of the prior Due Period,
      identified by loan number and by Outstanding Principal Balance as of the last
      day of the prior Due Period.  The Servicer agrees, on behalf of the
      Seller, at its own expense, by the end of each Due Period in which any Eligible
      Mortgage Loans have been originated to indicate clearly and unambiguously in
      its
      master data processing records that the Eligible Mortgage Loans created have
      been conveyed to the Agent, for the benefit of the Principals, pursuant to
      the
      Repurchase Agreement.

     

    Section
      2.5  Fees.

     

    The
      Seller shall pay the non-refundable fees set forth in the Fee
      Letter.  Any of the fees described in the Fee Letter which are accrued
      but unpaid on the Termination Date shall be paid in full by the Seller on the
      Termination Date.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Section
      2.6  Payments
      and Computations, Etc.

     

    All
      per
      annum fees payable under this Agreement shall be calculated for the actual
      days
      elapsed on the basis of a 360-day year.  All amounts to be paid or
      deposited by the Seller or the Servicer hereunder shall be paid or deposited
      in
      accordance with the terms hereof in immediately available funds no later than
      2:00 p.m. (eastern time) on the day when due; if such amounts are payable
      to any Principal or Principals they shall be paid or deposited in the Funding
      Account unless otherwise notified by the Agent.  The Seller shall, to
      the extent permitted by Law, pay to the Agent for the account of each Principal
      upon demand of the Agent, interest on all amounts not paid or deposited when
      due
      to the Agent for the account of each Principal hereunder at a rate equal to
      the
      Default Rate.  All computations of interest hereunder shall be made on
      the basis of a year of 360 days for the actual number of days (including the
      first but excluding the last day) elapsed other than computations of interest
      calculated by reference to the Base Rate which shall be calculated on the basis
      of a 365- or 366- day year, as applicable.

     

    ARTICLE III

     

    REPRESENTATIONS
      AND WARRANTIES; COVENANTS; REMEDIES AND BREACH

     

    Section
      3.1  Representations
      and Warranties of The Company.

     

    The
      Company, as Seller and Servicer, represents and warrants to the Agent (and
      for
      the benefit of the Principals) that as of each applicable Purchase Date and
      as
      of the date of the sale or Securitization of each Eligible Mortgage
      Loan:

     

    (a)  Due
      Organization and Authority.  The Company is duly organized,
      validly existing and in good standing under the laws of New Jersey and has
      all
      licenses necessary to carry on its business as now being conducted and is
      licensed, qualified and in good standing in each state where a Mortgaged
      Property is located if required to conduct business of the type conducted by
      it,
      and in any event the Company is in compliance with the laws of any such state
      to
      the extent necessary to ensure the enforceability of any Eligible Mortgage
      Loan
      sold hereunder and the servicing of any such Eligible Mortgage Loan in
      accordance with the terms of this Agreement and any Transaction Notice; the
      Company has the full power and authority to execute and deliver this Agreement
      and any Transaction Notice and to perform its obligations in accordance herewith
      and therewith; the execution, delivery and performance of this Agreement and
      any
      Transaction Notice by the Company and the consummation of the transactions
      contemplated hereby and thereby have been duly and validly authorized by the
      Company; all requisite corporate action has been taken by the Company to make
      this Agreement and any Transaction Notice valid and binding upon the Company
      in
      accordance with its terms; this Agreement and any Transaction Notice each
      evidences the valid, binding and enforceable obligation of the Company, except
      that (i) the enforceability thereof may be limited by bankruptcy,
      insolvency, moratorium, receivership and other similar laws relating to
      creditors’ rights generally and (ii) the remedy of specific performance and
      injunctive and other forms of equitable relief may be subject to equitable
      defenses and to the discretion of the court before which any proceeding
      therefore may be brought.

     

    (b)  Ordinary
      Course of Business.  The consummation of the transactions
      contemplated by this Agreement are in the ordinary course of business of the
      Company, and the transfer, assignment and conveyance of the Mortgage Notes
      and
      the Mortgages by the Company pursuant to this Agreement are not subject to
      the
      bulk transfer or any similar statutory provisions in effect in any applicable
      jurisdiction.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

     

    (c)  No
      Conflicts.  Neither the execution and delivery of this Agreement
      or any Transaction Notice, the acquisition of Eligible Mortgage Loans by the
      Company, the sale of Eligible Mortgage Loans to the Agent (on behalf of the
      Principals) or the transactions contemplated hereby or thereby, nor the
      fulfillment of or compliance with the terms and conditions of this Agreement
      or
      any Transaction Notice, will conflict with or result in a breach of any of
      the
      terms, conditions or provisions of the Company’s charter or by-laws or any
      material agreement or instrument to which the Company is now a party or by
      which
      it is bound, or constitute a default or result in an acceleration under any
      of
      the foregoing, or result in the violation in any material respect of any
      applicable law, rule, regulation, order, judgment or decree to which the Company
      or its property is subject, or impair the ability of the Agent (on behalf of
      the
      Principals) to realize on the Eligible Mortgage Loans in any material respect,
      or impair the value of the Eligible Mortgage Loans in any material respect,
      or
      impair in any material respect the ability of the Agent (on behalf of the
      Principals) to realize the full mortgage insurance benefits (i) of the FHA
      Mortgage Insurance Contract with respect to FHA Loans; (ii) of the VA Loan
      Guaranty Certificate with respect to VA Loans; or (iii) other insurance
      benefits accruing pursuant to this Agreement, including but not limited to
      any
      PMI Policy.

     

    (d)  Ability
      to Service.  The Company is an Approved Seller/Servicer of
      Eligible Mortgage Loans for at least two of GNMA, FNMA and FHLMC with the
      facilities, procedures, and experienced personnel necessary for the servicing
      of
      Eligible Mortgage Loans.  The Company is in good standing to sell
      mortgage loans to and service mortgage loans for at least two of GNMA, FNMA
      and
      FHLMC and no event has occurred, including but not limited to a change in
      insurance coverage, which would make the Company unable to comply with the
      eligibility requirements in all material respects of at least two of GNMA,
      FNMA
      and FHLMC.  As of each Purchase Date, the Company is an FHA Approved
      Mortgagee and a VA Approved Lender and has the facilities, procedures, and
      experienced personnel necessary for the servicing of mortgage loans of the
      same
      type as the Eligible Mortgage Loans.  As of each Purchase Date, the
      Company is in good standing to service mortgage loans for FHA and VA, and no
      event has occurred, including but not limited to a change in insurance coverage,
      which would make the Company unable to comply with FHA or VA eligibility
      requirements in all material respects.

     

    (e)  Reasonable
      Servicing Fee.  The Servicer acknowledges and agrees that the
      Servicing Fee represents reasonable compensation for performing such services
      as
      compensation for the servicing and administration and arranging for the sale
      or
      Securitization of the Eligible Mortgage Loans pursuant to this Agreement and,
      if
      paid shall be treated by the Servicer, for accounting and tax purposes, as
      compensation for the servicing and administration of the Eligible Mortgage
      Loans
      pursuant to this Agreement.  As of the date hereof, the Seller does
      not, and is not expected at a later date to, pay any Servicing Fee to any
      Servicer party hereto on the date this Servicing Agreement was first executed
      and delivered.  However, the Seller is expected to pay Servicing Fees
      to any Servicer who is not an Affiliate of the Seller.

     

     

     

    
      
        
        

      

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

     

    (g)  No
      Consent Required.  No consent, approval, authorization or order of
      any court or governmental agency or body including, without limitation, HUD,
      FHA
      or VA, is required for the execution, delivery and performance by the Company
      of
      or compliance by it with this Agreement or any Transaction Notice or the sale
      of
      the Eligible Mortgage Loans, or if required, such consent, approval or
      authorization has been obtained.

     

    (h)  No
      Untrue Information.  Neither this Agreement, any Transaction
      Notice nor any statement, report or other document prepared by the Seller or
      to
      be prepared by the Company pursuant to this Agreement or any other Transaction
      Document or in connection with the transactions contemplated hereby or thereby
      contains any untrue statement of a material fact relating to the Company or
      the
      Eligible Mortgage Loans or omits to state a fact necessary to make the
      statements herein or therein not materially misleading.

     

    (i)  Ability
      to Perform.  The Company does not believe, nor does it have any
      reason or cause to believe, that it cannot perform each and every covenant
      contained in this Agreement and each other Transaction Document in all material
      respects.  The Company is solvent and the sale of the Eligible
      Mortgage Loans is not undertaken to hinder, delay or defraud any of the
      Company’s creditors.

     

    Section
      3.2  [Reserved].

     

    Section
      3.3  Remedies
      for Breach of Representations and Warranties.

     

    It
      is
      understood and agreed that the representations and warranties set forth in
      Section 3.1 shall survive the sale of the Eligible Mortgage Loans to the
      Agent (on behalf of the Principals) and the delivery of the Loan Documents
      to
      the Servicer and delivery of the Mortgage Notes to the Custodian and shall
      inure
      to the benefit of the Agent (on behalf of the Principals) notwithstanding any
      restrictive or qualified endorsement on any Mortgage Note or Assignment of
      Mortgage or the examination or failure to examine any Mortgage Loan
      File.  Upon discovery by either the Seller, the Servicer or the Agent
      (on behalf of the Principals) of a breach of any of the foregoing
      representations and warranties which materially and adversely affects the value
      of the Eligible Mortgage Loans or the interest of the Agent (on behalf of the
      Principals) (or which materially and adversely affects the interest of the
      Agent
      (on behalf of the Principals) in the related Eligible Mortgage Loan in the
      case
      of a representation and warranty relating to a particular Eligible Mortgage
      Loan), the party discovering such breach shall give prompt written notice to
      the
      other, the Agent and the Principals.

     

     

    
      
        
        

      

      
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    Section
      3.4  Covenants.

     

    (a)  Licenses.  The
      Servicer shall maintain its qualifications to do business and all licenses
      necessary to perform its obligations hereunder.

     

    (b)  Servicing
      Standards/Sales and Securitizations.  The Servicer will administer
      and service Eligible Mortgage Loans, and arrange for the sale and Securitization
      of Eligible Mortgage Loans, in accordance with the terms of this Agreement,
      the
      Mortgage Notes and Accepted Servicing Practices.

     

    (c)  Delivery
      of Mortgage Note.  The Servicer shall deliver each Mortgage Note,
      including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as
      practicable, but in any event within 10 calendar days of the purchase (or if
      such 10th calendar day is not a Business Day, then on the immediately succeeding
      Business Day) by the Agent and, if any Mortgage Note is not delivered within
      10
      calendar days of the purchase (or if such 10th calendar day is not a Business
      Day, then on the immediately succeeding Business Day) by the Agent, it shall
      be
      repurchased on such 10th calendar day (or if such 10th calendar day is not
      a
      Business Day, then on the immediately succeeding Business Day) by Servicer
      at
      the Repurchase Price.

     

    (d)  Assignment.  The
      Servicer shall assign to the Agent all right, title and interest of the Company
      under the Additional Collateral Transaction Agreement with respect to Additional
      Collateral Mortgage Loans transferred.

     

    (e)  Back-up
      Servicer.  On or prior to November 30, 2007, the Servicer shall
      have appointed a back-up servicer, who shall be mutually satisfactory to Agent
      and the Servicer, and such back-up servicer, the Servicer and Agent shall have
      executed and delivered the Back-up Servicing Agreement (as such term is defined
      in the Repurchase Agreement), together with any other documents, certificates
      and opinions incidental thereto, unless such date is extended in writing by
      Agent in its reasonable discretion.

     

    (f)  [Reserved].

     

    (g)  Financial
      Covenants.  For so long as any amount shall remain outstanding or
      unpaid under the Repurchase Agreement, unless the Required Principals shall
      otherwise consent in writing, the Company shall not, directly or indirectly,
      (i) permit PHH Corporation’s Consolidated Net Worth on the last day of any
      fiscal quarter to be less than the sum of (A) $1,000,000,000 plus
      (B) 25% of Consolidated Net Income, if positive, for each fiscal quarter
      ended after December 31, 2004; or (ii) permit, at any time, the ratio
      of Indebtedness of PHH Corporation and its Subsidiaries to Tangible Net Worth
      to
      exceed 10.0 to 1.0.

     

     

    
      
        
        

      

      
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    ARTICLE IV

     

    ADMINISTRATION
      AND SERVICING OF ELIGIBLE LOANS

     

    Section
      4.1  The
      Company to Act as Servicer; Servicing and Administration of the Eligible
      Mortgage Loans.

     

    (a)  The
      Company, as an independent contractor and owner of the servicing rights to
      the
      Eligible Mortgage Loans, shall diligently service and administer the Eligible
      Mortgage Loans, and shall comply with the Eligibility Criteria, the Portfolio
      Criteria, Portfolio Aging Limitations and Wet Funded Loan Limitation, in the
      best interest of and for the benefit of the Agent and the Principals in
      accordance with applicable law, the terms of this Agreement and the terms of
      the
      respective Eligible Mortgage Loans, with a view to the maximization of timely
      recovery of principal and interest on the Mortgage Notes.  Except to
      the extent that this Agreement provides for a contrary specific course of
      action, the Servicer will be required to service and administer the Eligible
      Mortgage Loans (y) in the same manner in which, and with the same care,
      skill, prudence and diligence with which it services and administers similar
      mortgage loans for other third-party portfolios, giving due consideration to
      customary and usual standards of practice of prudent institutional residential
      mortgage loan servicers used with respect to loans comparable to the Eligible
      Mortgage Loans, or (z) in the same manner in which, and with the same care,
      skill, prudence and diligence with which, it services and administers similar
      mortgage loans which it owns, whichever standard of care is higher, and taking
      into account its other obligations under this Agreement, but without regard
      to
      (i) any other relationship that Servicer, any sub-servicer or any affiliate
      of the Servicer or any sub-servicer may have with the borrowers or any affiliate
      of such borrowers; (ii) the ownership of any interest in an Eligible
      Mortgage Loan by the Servicer or any affiliate; (iii) the Servicer’s
      obligations to incur servicing expenses with respect to the Eligible Mortgage
      Loans; (iv) the Servicer’s or any sub-servicer’s right to receive
      compensation for its services under this Agreement or with respect to any
      particular transaction; or (v) the ownership, servicing or management for
      others by the Servicer or any sub-servicer of any other mortgage loans or
      property.  The Servicer shall maintain its qualification to do
      business and all licenses necessary to perform its obligations
      hereunder.

     

    (b)  The
      Servicer shall be obligated to service and administer the Eligible Mortgage
      Loans.  The Servicer may enter into additional servicing or
      sub-servicing agreements with third parties with respect to any of its
      respective obligations hereunder, provided that any such agreement shall be
      consistent with the provisions of this Agreement and no sub-servicer (or its
      agent or subcontractors) shall grant any modification, waiver or amendment
      to
      any Eligible Mortgage Loan without the approval of the
      Servicer.  Notwithstanding any servicing or sub-servicing agreement,
      any of the provisions of this Agreement relating to agreements or arrangements
      between the Servicer and any Person acting as servicer or sub-servicer (or
      its
      agents or subcontractors) or any reference to action taken through any Person
      acting as servicer or sub-servicer or otherwise, the Servicer shall remain
      obligated and primarily liable to the Agent (on behalf of the Principals) for
      the servicing and administering of the Eligible Mortgage Loans and arranging
      for
      the sale and Securitization of the Eligible Mortgage Loans in accordance with
      the provisions of this Agreement without diminution of such obligation or
      liability by virtue of such servicing or sub-servicing agreements or
      arrangements or by virtue of indemnification from any Person acting as servicer
      or sub-servicer (or its agents or subcontractors) to the same extent and under
      the same terms and conditions as if the Servicer alone were engaging in such
      activities.  In the event the Servicer is a sub-servicer, the Agent
      (on behalf of the Principals) shall be entitled to proceed directly against
      the
      Servicer as sub-servicer to enforce the Servicer’s obligations to the Agent (on
      behalf of the Principals).

     

     

     

    
      
        
        

      

      
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    (c)  Subject
      to the above-described servicing standards, the further provisions of this
      Agreement, including but not limited to the Wet Funded Loan Limitation, the
      Eligibility Criteria, the Portfolio Criteria and Portfolio Aging Limitation,
      and
      the terms of the respective Eligible Mortgage Loans, the Servicer shall have
      full power and authority, acting alone, to do or cause to be done any and all
      things in connection with such servicing and administration that it may deem
      necessary or desirable in connection with the servicing and administration
      of
      the Eligible Mortgage Loans.  Without limiting the generality of the
      foregoing, the Servicer is hereby authorized and empowered to  waive,
      modify or vary any term of any Eligible Mortgage Loan or consent to the
      postponement of compliance with any such term or in any manner grant indulgence
      to any Borrower if in the Servicer’s reasonable and prudent determination such
      waiver, modification, postponement or indulgence is not materially adverse
      to
      the Agent or any of the Principals; provided, however, that the Servicer shall
      not make any future advances to a Borrower with respect to an Eligible Mortgage
      Loan and (unless the Borrower is in default with respect to the Eligible
      Mortgage Loan or such default is, in the judgment of the Servicer, imminent)
      the
      Servicer shall not permit any modification with respect to any Eligible Mortgage
      Loan that would change the interest rate for the related Mortgage, defer or
      forgive the payment of principal or interest, reduce or increase the outstanding
      principal balance (except for actual payments of principal), release any
      collateral from the Eligible Mortgage Loan or change the final maturity date
      on
      such Eligible Mortgage Loan.  Without limiting the generality of the
      foregoing, the Servicer shall continue, and is hereby authorized and empowered,
      to execute and deliver on behalf of itself and the Agent all instruments of
      satisfaction or cancellation, or of partial or full release, discharge and
      all
      other comparable instruments, with respect to the Eligible Mortgage Loans and
      with respect to the Mortgaged Properties.  If reasonably required by
      the Servicer, the Principals shall furnish the Servicer with any powers of
      attorney, in recordable form, and other documents necessary or appropriate
      to
      enable the Servicer to carry out its servicing and administrative duties under
      this Agreement.

     

    Section
      4.2  Sales
      and Securitizations.

     

    Subject
      to the servicing standards described in Section 4.1, the Servicer shall
      have full power and authority, acting alone, to do or cause to be done any
      and
      all things in connection with such servicing and administration that it may
      deem
      necessary and desirable in connection with the sale and/or Securitization of
      Eligible Mortgage Loans with the Seller or third-party purchasers.  In
      connection with any Securitization of Eligible Mortgage Loans, in the event
      the
      Agent (on behalf of the Principals) receives securities from the Securitization
      Vehicle in exchange for the Eligible Mortgage Loans subject to such
      Securitization (“Securitization Securities”), the Servicer shall, on
      behalf of the Agent (on behalf of the Principals), arrange for the sale of
      such
      Securitization Securities.  The Servicer shall use its best efforts to
      realize for the Agent (on behalf of the Principals) the market value for the
      Securitization Securities but shall have no liability to the Principals with
      respect to any Securitization or Securitization Security provided that the
      Servicer arranges for such Securitization or sale in good faith in accordance
      with the procedures utilized by the Servicer in connection with any
      Securitization and Securitization Securities held for its own
      account.  The share of the proceeds of sale of any Securitization
      Security due the Principals and the proceeds of sale of any whole loan will
      be
      remitted to the Collection Account for application in accordance with the
      Repurchase Agreement.

     

     

     

    
      
        
        

      

      
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    All
      mortgage loans not sold or transferred pursuant to a sale or Securitization
      shall continue to be serviced in accordance with the terms of this
      Agreement.

     

    Section
      4.3  Liquidation
      of Eligible Mortgage Loans.

     

    In
      the
      event that any payment due under any Eligible Mortgage Loan is not paid when
      the
      payment becomes due and payable, or in the event that the Borrower fails to
      perform any other covenant or obligation under the Eligible Mortgage Loan and
      such failure continues beyond any applicable grace period, the Servicer shall
      take such action as (1) the Servicer would take under similar circumstances
      with respect to a similar Eligible Mortgage Loan held for its own account for
      investment, (2) shall be consistent with Accepted Servicing Practices,
      (3) the Servicer shall determine in accordance with Accepted Servicing
      Practices to be in the best interest of the Agent and the Principals, and
      (4) is consistent with the related PMI Policy, if any; provided,
however, any Defaulted Loan will be sold by the Servicer on behalf
      of the
      Principals as soon as practicable after becoming a Defaulted Loan.

     

    Section
      4.4  Collection
      of Eligible Mortgage Loan Payments.

     

    The
      Servicer shall proceed diligently, in accordance with Accepted Servicing
      Practices, to collect all payments called for under the terms and provisions
      of
      the Eligible Mortgage Loans it is obligated to service hereunder and shall
      follow such collection procedures as are consistent with the Transaction
      Documents (including without limitation, the servicing standards set forth
      in
      Section 4.1 hereof).  The Servicer shall ascertain and estimate,
      in accordance with Accepted Servicing Practices, Escrow Payments and all other
      charges that will become due and payable with respect to the Eligible Mortgage
      Loans and the Mortgaged Property, to the end that the installments payable
      by
      the Borrowers will be sufficient to pay such charges as and when they become
      due
      and payable.  The Servicer shall segregate and hold all payments
      received by it separate and apart from any of its funds and general assets
      and
      in trust for the Principals and shall apply such payments as provided in the
      Repurchase Agreement.  The accounts established by the Servicer
      pursuant to this Article IV may include any number of sub-accounts for
      convenience in administering the Eligible Mortgage Loans.

     

     

     

    
      
        
        

      

      
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    Section
      4.5  Establishment
      of, and Deposits to, Funding Account and Collection Account.

     

    The
      Servicer shall establish single, segregated trust accounts which shall be
      designated as the Funding Account and the Collection Account, respectively,
      which shall be held in trust in the name of the Agent for the benefit of the
      Principals and which shall be subject to Blocked Account Control Agreements,
      into which the Servicer shall from time to time deposit, within two Business
      Days of the receipt thereof, and retain therein, all Collections.  The
      Funding Account and the Collection Account shall be established with a Qualified
      Depository acceptable to the Agent.  Any funds deposited in the
      Funding Account and the Collection Account shall at all times be fully insured
      to the full extent permitted under applicable law.  Any interest
      earnings on amounts on deposit from time to time in the Funding Account and
      the
      Collection Account shall be remitted to the Servicer in accordance with such
      arrangements, as shall be agreed upon by the Servicer and the Agent;
provided that the Servicer shall deposit promptly from its own funds to
      the Funding Account or the Collection Account, as applicable, an amount equal
      to
      any loss incurred with respect to an investment of funds in the Funding Account
      or the Collection Account, as applicable.

     

    Section
      4.6  Permitted
      Withdrawals From Margin Call Account.

     

    (a)  In
      connection with any withdrawals of amounts deposited by the Servicer into the
      Margin Call Account by mistake or overpayment or as otherwise required to make
      adjustments to amounts deposited therein in accordance with ordinary and normal
      servicing adjustments the Servicer shall provide the Agent with a written
      request, including such information with respect to such withdrawals as such
      Agent may reasonably request to justify such withdrawal.  Upon
      approval by the Agent of such request, the Agent shall authorize the withdrawal
      of such amount from such account; provided that if such request is for an amount
      less than $10,000 and the aggregate amount withdrawn from such account under
      this proviso in the current Due Period is less than $50,000, such withdrawal
      may
      be made without approval from the Agent.

     

    (b)  The
      proceeds of any sales and Securitizations, the Repurchase Price of any Eligible
      Mortgage Loans and any other amounts payable in connection with the repurchase
      to the Seller or Servicer of any Eligible Mortgage Loan and repayments in full
      of Eligible Mortgage Loans shall be deposited directly into the Funding Account
      on the same day of receipt for application in accordance with the Repurchase
      Agreement.

     

    Section
      4.7  Establishment
      of, and Deposits to, Escrow Account.

     

    The
      Servicer shall segregate and hold all funds collected and received pursuant
      to
      an Eligible Mortgage Loan constituting Escrow Payments separate and apart from
      any of its own funds and general assets and shall establish and maintain one
      or
      more Escrow Accounts, in the form of time deposit or demand accounts, in a
      manner which shall provide maximum available insurance
      thereunder.  Funds deposited in any Escrow Account may be invested by
      the Servicer which shall be entitled to any investment income therefrom except
      as otherwise required by law.  Funds deposited in any Escrow Account
      may be drawn on by the Servicer in accordance with Section 4.8
      hereof.

     

     

    
      
        
        

      

      
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    The
      Servicer shall deposit in such Escrow Account within two Business Days of
      receipt thereof and retain therein (a) all Escrow Payments collected on
      account of the Eligible Mortgage Loans, for the purpose of effecting timely
      payment of any such items as required under the terms of this Agreement and
      the
      other Transaction Documents; and (b) all amounts representing Insurance
      Proceeds or Condemnation Proceeds which are to be applied to the restoration
      or
      repair of any Mortgaged Property.

     

    The
      Servicer shall make withdrawals from any Escrow Account only to effect such
      payments as are required under this Agreement, as set forth in Section 4.8
      hereof.  To the extent required by law, the Servicer shall pay
      interest on escrowed funds to the Borrower notwithstanding that such Escrow
      Account may be non-interest bearing or that interest paid thereon is
      insufficient for such purposes.

     

    The
      Seller shall deposit to the Escrow Account an amount equal to all Escrow
      Payments, Insurance Proceeds and Condemnation Proceeds collected on account
      of
      each Eligible Mortgage Loan and held by the Seller as of the date of the
      transfer of such Eligible Mortgage Loan to the Agent (on behalf of the
      Principals).

     

    Section
      4.8  Permitted
      Withdrawals From Escrow Account.

     

    Withdrawals
      from any Escrow Account may be made by the Servicer only:

     

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

     

    (b)  To
      reimburse the Servicer for any servicing advances made by the Servicer pursuant
      to Section 4.9 hereof with respect to a related Eligible Mortgage Loan, but
      only from amounts received on the related Eligible Mortgage Loan which represent
      late collections of Escrow Payments thereunder;

     

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

     

    (d)  For
      application to restoration or repair of the Mortgaged Property in accordance
      with the procedures outlined in Section 4.15 hereof; and

     

    (e)  To
      pay to
      the Borrower, to the extent required by law, any interest paid on the funds
      deposited in the Escrow Account.

     

    Section
      4.9  Payment
      of Taxes, Insurance and Other Charges.

     

    With
      respect to each Eligible Mortgage Loan, the Servicer shall maintain accurate
      records reflecting the status of ground rents, taxes, assessments, water rates,
      sewer rents, and other charges which are or may become a lien upon the Mortgaged
      Property and the status of PMI Policy premiums, if any, and fire and hazard
      insurance coverage and shall obtain, from time to time, all bills for the
      payment of such charges (including renewal premiums) and shall effect payment
      thereof prior to the applicable penalty or termination date, employing for
      such
      purpose deposits of the Borrower in the Escrow Account which shall have been
      estimated and accumulated by the Servicer in amounts sufficient for such
      purposes, as allowed under the terms of the Mortgage.  To the extent
      that a Mortgage does not provide for Escrow Payments, the Servicer shall
      determine that any such payments are made by the Borrower at the time they
      first
      become due.  The Servicer assumes full responsibility for the timely
      payment of all such bills and shall effect timely payment of all such charges
      irrespective of each Borrower’s faithful performance in the payment of an
      Eligible Mortgage Loan or the making of the Escrow Payments, and the Servicer
      shall make such payments.

     

     

    
      
        
        

      

      
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    Section
      4.10  Protection
      of Accounts; Investment of Funds.

     

    Amounts
      on deposit in the Margin Call Account may at the option of the Seller be
      invested in Eligible Investments; provided that in the event that amounts on
      deposit in each such account (which shall be properly titled to insure the
      funds
      in such account on a loan-by-loan basis) exceed the amount fully insured by
      the
      FDIC (the “Insured Amount”) the Servicer shall be obligated to invest the
      excess amount over the Insured Amount in Eligible Investments on the next
      Business Day as such excess amount becomes present in the Margin Call
      Account.  Monies held in the Margin Call Account shall be invested in
      Eligible Investments having maturities of no greater than one day; provided,
      that if there are no Short-Term Notes then outstanding, monies held in each
      such
      account shall be invested in Eligible Investments having maturities of no
      greater than 30 days.  If a Termination Event has not occurred and is
      not continuing, earnings on all such Eligible Investments (after deducting
      any
      losses), if any, shall be paid to the Seller.  All such Eligible
      Investments shall be made in the name of, and shall be payable to, the
      Agent.

     

    Section
      4.11  Maintenance
      of Hazard Insurance.

     

    The
      Servicer shall cause to be maintained for each Eligible Mortgage Loan (other
      than HELOCs and Closed End Second Mortgage Loans) hazard insurance such that
      all
      buildings upon the Mortgaged Property are insured by a generally acceptable
      insurer rated A:VI or better in the current Best’s Key Rating Guide
      (“Best’s”) against loss by fire, hazards of extended coverage and such
      other hazards as are customary in the area where the Mortgaged Property is
      located, in an amount which is at least equal to the lesser of (i) the
      maximum insurable value of the improvements securing such Eligible Mortgage
      Loan
      and (ii) the greater of (a) the outstanding principal balance of the
      Eligible Mortgage Loan and (b) an amount such that the proceeds thereof
      shall be sufficient to prevent the Borrower or the loss payee from becoming
      a
      co-insurer.

     

    If
      upon
      origination or acquisition of the Eligible Mortgage Loan, the related Mortgaged
      Property was located in an area identified in the Federal Register by the
      Federal Emergency Management Agency as having special flood hazards (and such
      flood insurance has been made available) the Servicer shall cause to be in
      effect a flood insurance policy meeting the requirements of the current
      guidelines of the Flood Insurance Administration with a generally acceptable
      insurance carrier rated A:VI or better in Best’s in an amount representing
      coverage equal to the lesser of (i) the minimum amount required, under the
      terms of coverage, to compensate for any damage or loss on a replacement cost
      basis (or the unpaid balance of the mortgage if replacement cost coverage is
      not
      available for the type of building insured) and (ii) the maximum amount of
      insurance which is available under the Flood Disaster Protection Act of 1973,
      as
      amended.  If at any time during the term of the Eligible Mortgage
      Loan, the Servicer determines in accordance with applicable law and pursuant
      to
      the Guidelines that a Mortgaged Property is located in a special flood hazard
      area and is not covered by flood insurance or is covered in an amount less
      than
      the amount required by the Flood Disaster Protection Act of 1973, as amended,
      the Servicer shall notify the related Borrower that the Borrower must obtain
      such flood insurance coverage, and if said Borrower fails to obtain the required
      flood insurance coverage within forty-five (45) days after such notification,
      the Servicer shall immediately force place the required flood insurance on
      the
      Borrower’s behalf.

     

     

    
      
        
        

      

      
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    The
      Servicer shall cause to be maintained on each Mortgaged Property such additional
      insurance as may be required pursuant to such applicable laws and regulations
      as
      shall at any time be in force and as shall require such additional insurance,
      or
      pursuant to the requirements of any private mortgage guaranty insurer, or as
      may
      be required to conform with Accepted Servicing Practices.

     

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

     

    The
      Servicer shall not interfere with the Borrower’s freedom of choice in selecting
      either his insurance carrier or agent; provided, however, that the Servicer
      shall not accept any such insurance policies from insurance companies unless
      such companies are rated A:VI or better in Best’s and are licensed to do
      business in the jurisdiction in which the Mortgaged Property is
      located.  The Servicer shall determine that such policies provide
      sufficient risk coverage and amounts, that they insure the property owner,
      and
      that they properly describe the property address.  The Servicer shall
      furnish to the Borrower a formal notice of expiration of any such insurance
      in
      sufficient time for the Borrower to arrange for renewal coverage by the
      expiration date.

     

    Pursuant
      to Section 4.5 hereof, any amounts collected by the Servicer under any such
      policies (other than amounts to be deposited in any Escrow Account and applied
      to the restoration or repair of the related Mortgaged Property, or property
      acquired in liquidation of the Eligible Mortgage Loan, or to be released to
      the
      Borrower, in accordance with Accepted Servicing Practices as specified in
      Section 4.15 hereof) shall be deposited in the Collection
      Account.

     

    Section
      4.12  Maintenance
      of Mortgage Impairment Insurance.

     

    If
      the
      Servicer shall obtain and maintain a blanket policy insuring against losses
      arising from fire and hazards covered under extended coverage on all of the
      Eligible Mortgage Loans, then, to the extent such policy provides coverage
      in an
      amount equal to the amount required pursuant to Section 4.11 hereof and
      otherwise complies with all other requirements of Section 4.11, it shall
      conclusively be deemed to have satisfied its obligations as set forth in such
      Section 4.11.  Any amounts collected by the Servicer under any
      such policy relating to an Eligible Mortgage Loan shall be deposited in the
      Collection Account.  Such policy may contain a deductible clause, in
      which case, in the event that there shall not have been maintained on the
      related Mortgaged Property a policy complying with Section 4.11 hereof, and
      there shall have been a loss which would have been covered by such policy,
      the
      Servicer shall deposit in the Collection Account at the time of such loss the
      amount not otherwise payable under the blanket policy because of such deductible
      clause, such amount to be deposited from the Servicer’s funds, without
      reimbursement therefor.  Upon request of the Agent, the Servicer shall
      cause to be delivered to the Agent a certified true copy of such
      policy.

     

     

    
      
        
        

      

      
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    Section
      4.13  Maintenance
      of Fidelity Bond and Errors and Omissions Insurance.

     

    The
      Servicer shall maintain with responsible companies, at its own expense, a
      blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad
      coverage on all officers, employees or other persons acting in any capacity
      requiring such persons to handle funds, money, documents or papers relating
      to
      the Eligible Mortgage Loans (“Company Employees”).  Any such
      Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form
      of
      the Mortgage Banker’s Blanket Bond and shall protect and insure the Servicer
      against losses, including forgery, theft, embezzlement, fraud, errors and
      omissions and negligent acts of such Company Employees.  Such Fidelity
      Bond and Errors and Omissions Insurance Policy also shall protect and insure
      the
      Servicer against losses in connection with the release or satisfaction of an
      Eligible Mortgage Loan without having obtained payment in full of the
      indebtedness secured thereby.  No provision of this Section 4.13
      requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall
      diminish or relieve the Servicer from its duties and obligations as set forth
      in
      this Agreement.  The minimum coverage under any such bond and
      insurance policy shall be at least equal to the corresponding amounts required
      by the Guidelines.  Upon the request of the Agent, the Servicer shall
      cause to be delivered to the Agent a certified true copy of such fidelity bond
      and insurance policy.

     

    Section
      4.14  Inspections.

     

    The
      Servicer shall inspect the Mortgaged Property as often as deemed necessary
      by
      the Servicer to assure itself that the value of the Mortgaged Property is being
      preserved.

     

    Section
      4.15  Restoration
      of Mortgaged Property.

     

    The
      Servicer need not obtain the approval of the Agent or the Principals prior
      to
      releasing any Insurance Proceeds or Condemnation Proceeds to the Borrower to
      be
      applied to the restoration or repair of the Mortgaged Property if such release
      is in accordance with Accepted Servicing Practices.  At a minimum, the
      Servicer shall comply with the following conditions in connection with any
      such
      release of Insurance Proceeds or Condemnation Proceeds:

     

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

     

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

     

     

    
      
        
        

      

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

     

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

     

    Section
      4.16  Maintenance
      of PMI Policy; Claims.

     

    Except
      where the Guidelines exempt certain Eligible Mortgage Loans from this
      requirement, for each Eligible Mortgage Loan (other than FHA Loans, VA Loans,
      Uninsured Loans, HELOCs and Closed End Second Mortgage Loans) with a
      Loan-to-Value Ratio in excess of 80%, the Servicer shall, without any cost
      to
      the Agent or any Principal, maintain or cause the Borrower to maintain in full
      force and effect a PMI Policy insuring that portion of the Eligible Mortgage
      Loan in excess of 80% of value, and shall pay or shall cause the Borrower to
      pay
      the premium thereon on a timely basis, until the Loan-to-Value Ratio of such
      Eligible Mortgage Loan is reduced to 80% or less.  In the event that
      such PMI Policy shall be terminated, the Servicer shall, prior to any such
      termination, obtain from another Qualified Insurer a comparable replacement
      policy, with a total coverage equal to the remaining coverage of such terminated
      PMI Policy.  If the insurer shall cease to be a Qualified Insurer, the
      Servicer shall determine whether recoveries under the PMI Policy are jeopardized
      for reasons related to the financial condition of such insurer, it being
      understood that the Servicer shall in no event have any responsibility or
      liability for any failure to recover under the PMI Policy for such
      reason.  If the Servicer determines that recoveries are so
      jeopardized, it shall notify the Agent and the Borrower, if required, and obtain
      from another Qualified Insurer a replacement insurance policy.  The
      Servicer shall not take any action which would result in noncoverage under
      any
      applicable PMI Policy of any loss which, but for the actions of the Servicer,
      would have been covered thereunder.  In connection with any assumption
      or substitution agreement entered into or to be entered into pursuant to
      Section 5.1 hereof, the Servicer shall promptly notify the insurer under
      the related PMI Policy, if any, of such assumption or substitution of liability
      in accordance with the terms of such PMI Policy and shall take all actions
      which
      may be required by such insurer as a condition to the continuation of coverage
      under such PMI Policy.  If such PMI Policy is terminated as a result
      of such assumption or substitution of liability, the Servicer shall obtain
      a
      replacement PMI Policy as provided above.

     

    In
      connection with its activities as Servicer, the Servicer agrees to prepare
      and
      present claims to the insurer under any PMI Policy in a timely fashion in
      accordance with the terms of such PMI Policy and, in this regard, to take such
      action as shall be necessary to permit recovery under any PMI Policy respecting
      a Defaulted Loan.  Pursuant to Section 4.5 hereof, any amounts
      collected by the Servicer under any PMI Policy shall be deposited in the
      Collection Account, subject to withdrawal pursuant to Section 4.6
      hereof.

     

    Section
      4.17  Title,
      Management and Disposition of REO Property.

     

    In
      the
      event that title to any Mortgaged Property is acquired in foreclosure or by
      deed
      in lieu of foreclosure, the deed or certificate of sale shall be taken in the
      name of the Servicer as agent for the Agent, or in the event the Servicer is
      not
      authorized or permitted to hold title to real property in the state where the
      REO Property is located, or would be adversely affected under the “doing
      business” or tax laws of such state by so holding title, the deed or certificate
      of sale shall be taken in the name of such Person or Persons as shall be
      reasonably acceptable to the Agent. The Person or Persons holding such title
      other than the Servicer shall acknowledge in writing that such title is being
      held as nominee for the Servicer.

     

     

     

    
      
        
        

      

      
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    The
      Servicer shall manage, conserve, protect and operate each REO Property for
      the
      Principals solely for the purpose of its prompt disposition and
      sale.  The Servicer, either itself or through an agent selected by the
      Servicer, shall manage, conserve, protect and operate the REO Property in the
      manner that it manages, conserves, protects and operates other foreclosed
      property for its own account, and in the  manner that similar property
      in the locality as the REO Property is managed.  The Servicer shall
      attempt to sell the Eligible Mortgage Loan on such terms and conditions as
      the
      Servicer deems to be in the best interest of the Agent and the
      Principals.  The Servicer shall dispose of the REO Property in
      accordance with Accepted Servicing Practices as soon as possible.

     

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

     

    The
      disposition of REO Property shall be carried out by the Servicer at such price
      and, upon such terms and conditions, as the Servicer deems to be in the best
      interest of the Agent and the Principals.  The proceeds of sale of the
      REO Property shall be promptly deposited in the Collection Account.

     

    Section
      4.18  Daily
      Servicer Reports.

     

    On
      a
      daily basis, the Servicer shall prepare and forward to the Agent, the Custodian
      and each Principal (i) a report, substantially in the form of
      Exhibit D (a “Daily Servicer Report”), as of the close of business
      on the immediately preceding Business Day (which shall include, without
      limitation, (a) the aggregate Outstanding Principal Balance of the Eligible
      Mortgage Loans, (b) Collections on the Eligible Mortgage Loans,
      (c) the aggregate Outstanding Principal Balance of Delinquent Loans and
      Defaulted Loans and (d) the yield on the Eligible Mortgage Loans,
      (e) the Aggregate Purchase Price, (f) the Aggregate Margin Value,
      (g) the amount on deposit in the Margin Call Account, if any, and
      (h) the amount of repayment of maturing related Short-Term Notes, if any,
      as of the date of such Daily Servicer Report), (ii) an updated Daily Loan
      Inventory and (iii) if requested by the Agent, a listing of all Eligible
      Mortgage Loans together with an aging of such Eligible Mortgage Loans and such
      other information concerning actual historical collections experience and other
      matters as the Agent may reasonably request.

     

    The
      Seller shall, or shall cause the Servicer to, furnish to the Agent at any time
      and from time to time, such other or further information in respect of the
      Eligible Mortgage Loans, the Seller and the Borrowers as the Agent may
      reasonably request.

     

     

    
      
        
        

      

      
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    Section
      4.19  Real
      Estate Owned Reports.

     

    The
      Servicer shall furnish to the Agent on a monthly basis an REO Property report
      in
      form and substance satisfactory to the Agent, together with such other
      information as the Agent shall reasonably request.

     

    Section
      4.20  Liquidation
      Reports.

     

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

     

    Section
      4.21  Reports
      of Foreclosures and Abandonments of Mortgaged Property.

     

    Following
      the foreclosure sale or abandonment of any Mortgaged Property, the Servicer
      shall report such foreclosure or abandonment as required pursuant to
      Section 5050J of the Code.

     

    ARTICLE V

     

    GENERAL
      SERVICING PROCEDURES

     

    Section
      5.1  Transfers
      of Mortgaged Property.

     

    The
      Servicer shall enforce any “due-on-sale” provision in accordance with Accepted
      Servicing Practices and applicable law contained in any Mortgage or Mortgage
      Note and to deny assumption by the Person to whom the Mortgaged Property has
      been or is about to be sold whether by absolute conveyance or by contract of
      sale, and whether or not the Borrower remains liable on the Mortgage and the
      Mortgage Note.  When the Mortgaged Property has been conveyed by the
      Borrower, the Servicer shall, to the extent it has knowledge of such conveyance,
      exercise its rights to accelerate the maturity of such Eligible Mortgage Loan
      under the “due-on-sale” clause applicable thereto; provided,
however, that the Servicer shall not exercise such rights if prohibited
      by law from doing so or if the exercise of such rights would impair or threaten
      to impair any recovery under the related PMI Policy, if any.

     

    If
      the
      Servicer reasonably believes it is unable under applicable law to enforce such
      “due-on-sale” clause, the Servicer shall enter into (i) an assumption and
      modification agreement with the person to whom such property has been conveyed,
      pursuant to which such person becomes liable under the Mortgage Note and the
      original Borrower remains liable thereon or (ii) in the event that the
      Servicer is unable under applicable law to require that the original Borrower
      remain liable under the Mortgage Note and the Servicer has the prior consent
      of
      the primary mortgage guaranty insurer, a substitution of liability agreement
      with the purchaser of the Mortgaged Property pursuant to which the original
      Borrower is released from liability and the purchaser of the Mortgaged Property
      is substituted as Borrower and becomes liable under the Mortgage
      Note.

     

     

    
      
        
        

      

      
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    Section
      5.2  Satisfaction
      of Mortgages and Release of Mortgage Loan Files.

     

    Upon
      the
      payment in full of any Eligible Mortgage Loan, or the receipt by the Servicer
      of
      a notification that payment in full will be escrowed in a manner customary
      for
      such purposes, the Servicer shall notify the Agent.

     

    If
      the
      Servicer satisfies or releases a Mortgage without first having obtained payment
      in full of the indebtedness secured by the Mortgage or should the Servicer
      otherwise prejudice any rights the Agent or the Principals may have under the
      mortgage instruments, upon written demand of the Agent, the Servicer shall
      repurchase the related Eligible Mortgage Loan at the Repurchase Price by deposit
      thereof in the Funding Account within two Business Days of receipt of such
      demand by the Agent for application in reduction of the Aggregate Purchase
      Price.  The Servicer shall maintain the Fidelity Bond and Errors and
      Omissions Insurance Policy as provided for in Section 4.13 hereof insuring
      the Servicer against any loss it may sustain with respect to any Eligible
      Mortgage Loan not satisfied in accordance with the procedures set forth
      herein.

     

    Section
      5.3  Servicing
      Compensation.

     

    As
      compensation for its services hereunder, the Servicer shall be entitled to
      the
      Servicing Fee.  If the Servicer or an affiliate thereof ceases to be
      the Servicer, the Agent and such successor Servicer may agree to amend such
      Servicing Fee (but not to exceed an amount equal to 110% of the aggregate
      reasonable costs and expenses incurred by such successor Servicer in connection
      with performance of its obligations as Servicer hereunder).  The
      Servicing Fee shall be payable only from Collections pursuant to and in
      accordance with the terms of Section 6 of the Repurchase
      Agreement.  To the extent such Collections are not sufficient to pay
      the Servicing Fee in full, none of the Agent or any Principal shall have any
      liability for such deficiency.  Each Servicer shall be required to pay
      all expense incurred by it in connection with its servicing activities hereunder
      and shall not be entitled to reimbursement therefor except as specifically
      provided herein.

     

    Section
      5.4  Annual
      Statement as to Compliance.

     

    The
      Servicer shall deliver to the Agent and each Bank Principal, on or before
      April 5 each year beginning in April 2008, an Officer’s Certificate,
      stating that (i) a review of the activities of the Servicer during the
      preceding fiscal year ended December 31 and of performance under this
      Agreement has been made under such officer’s supervision, (ii) the Servicer
      has complied with the provisions of Article II and Article IV hereof,
      and (iii) to the best of such officer’s knowledge, based on such review,
      the Servicer has fulfilled its obligations in all material respects under this
      Agreement throughout such year, or, if there has been a default in the
      fulfillment of any such obligation, specifying each such default known to such
      officer and the nature and status thereof and the action being taken by the
      Servicer to cure such default.

     

    Section
      5.5  Annual
      Independent Public Accountants’ Servicing Report; Audited
      Financials.

     

    (a)  On
      the
      Effective Date and on or before or before April 6 of each year beginning in
      April 2008, the Servicer, at its expense, shall cause a firm of nationally
      recognized independent public accountants which is a member of the American
      Institute of Certified Public Accountants (or such other accountants acceptable
      to the Agent) to furnish a report to the Agent and each Bank Principal stating
      that such firm has examined PHH Mortgage’s overall servicing operation in
      accordance with the minimum standards identified in the Mortgage Bankers
      Association of America’s Uniform Single Attestation Program for Mortgage Bankers
      (USAP), and stating such firm’s conclusions relating thereto.

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    (b)  The
      Performance Guarantor shall furnish or cause to be furnished to the Agent and
      each Bank Principal, as soon as available, and in any event within 100 days
      after the end of each fiscal year of PHH Corporation subsequent to its 2007
      fiscal year, the following financial statements:  (i) either
      (A) consolidated statements of income (or operations) and consolidated
      statements of cash flows and changes in stockholders’ equity of PHH Corporation
      and its Consolidated Subsidiaries for such year and the related consolidated
      balance sheets as at the end of such year, or (B) the Form 10-K filed by
      PHH Corporation with the Securities and Exchange Commission and (ii) if not
      included in such Form 10-K, an opinion of independent certified public
      accountants of recognized national standing, which opinion shall state that
      said
      consolidated financial statements present fairly the consolidated financial
      position and results of operations of PHH Corporation and its Consolidated
      Subsidiaries as of the end of such fiscal year and that such financial
      statements were prepared in accordance with GAAP applied consistently throughout
      the periods reflected therein and with prior periods.

     

    (c)  The
      financial statements of PHH Corporation and its Consolidated Subsidiaries for
      the fiscal quarter ending September 30, 2007 shall be furnished no later
      than November 30, 2007.  The Performance Guarantor shall furnish or
      cause to be furnished to the Agent and each Bank Principal, as soon as is
      practicable, and in any event within 60 days after the end of each of the first
      three fiscal quarters of each fiscal year subsequent to the fiscal quarter
      ended
      on December 31, 2007, either (i) the Form 10-Q filed by PHH
      Corporation with the Securities and Exchange Commission or (ii) the
      unaudited consolidated balance sheet of PHH Corporation and its Consolidated
      Subsidiaries, as of the end of such fiscal quarter, and the related unaudited
      consolidated statements of income and cash flows for such quarter and for the
      period from the beginning of the then current fiscal year to the end of such
      fiscal quarter and the corresponding figures as of the end of the preceding
      fiscal year, and for the corresponding period in the preceding fiscal year,
      in
      each case, together with a certificate (substantially in the form of
      Exhibit C to this Agreement) signed by the chief financial officer, the
      chief accounting officer or a vice president responsible for financial
      administration of PHH Corporation to the effect that such financial statements,
      while not examined by independent public accountants, reflect, in his\her
      opinion and in the opinion of PHH Corporation, all adjustments necessary to
      present fairly the consolidated financial position of PHH Corporation and its
      Consolidated Subsidiaries, as of the end of the fiscal quarter, and the
      consolidated results of their operations for the quarter then ended, in
      conformity with GAAP consistently applied, subject only to year-end audit
      adjustments and to the absence of footnote disclosure.

     

     

    
      
        
        

      

      
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    Section
      5.6  Right
      to Examine Servicer Records.

     

    The
      Agent
      shall each have the right to reasonable access to the books, records, or other
      information of the Servicer, whether held by the Servicer or by another on
      its
      behalf, with respect to or concerning this Agreement or the Eligible Mortgage
      Loans, during regular business hours or at such other times as may be reasonable
      under applicable circumstances, upon reasonable advance notice.

     

    ARTICLE VI

     

    REPURCHASE
      OBLIGATION

     

    Section
      6.1  Servicer’s
      Purchase Obligations.

     

    Upon
      receipt by the Servicer of notice from the Agent of a breach of any
      representation or warranty of it contained in this Agreement or any action
      resulting in prejudice to the Principals in accordance with Section 5.2
      hereof, the Servicer shall promptly notify the Seller and shall, at the
      direction of the Agent use its best efforts to cure and correct any such breach,
      and, in the event such breach is not cured and corrected within the applicable
      grace period, if any, the Servicer shall repurchase the related Eligible
      Mortgage Loan at the Repurchase Price.

     

    Upon
      deposit by the Servicer of the Repurchase Price in the Funding Account, the
      Servicer shall arrange for the repurchase of Eligible Mortgage Loans adversely
      affected by such breach, and the delivery from the Custodian of any documents
      constituting the Mortgage Loan Files for such repurchased mortgage
      loans.  In the event of a repurchase, the Servicer shall,
      simultaneously with such repurchase, give written notice to the Seller and
      the
      Agent that such repurchase has taken place, and amend the Mortgage Loan
      Schedule to reflect the subtraction of the repurchased Eligible Mortgage
      Loan from the Repurchase Agreement.

     

    ARTICLE VII

     

    SERVICER
      TO COOPERATE

     

    Section
      7.1  Provision
      of Information.

     

    During
      the term of this Agreement and the other Transaction Documents, the Servicer
      shall furnish to the Agent such periodic, special, or other reports or
      information, including the Daily Servicer Report required to be delivered to
      the
      Agent, the Bank Principals and the Custodian on each Payment Date, and copies
      or
      originals of any documents contained in the Mortgage Loan File for each Eligible
      Mortgage Loan, whether or not provided for herein, as shall be necessary,
      reasonable, or appropriate with respect to the Principals.  All such
      reports, documents or information shall be provided by and in accordance with
      all reasonable instructions and directions which the Agent may
      give.

     

    The
      Servicer shall execute and deliver all such instruments and take all such action
      as the Agent and the Custodian may reasonably request from time to time, in
      order to effectuate the purposes and to carry out the terms of this
      Agreement.

     

     

    
      
        
        

      

      
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    ARTICLE VIII

     

    THE
      SERVICER

     

    Section
      8.1  Indemnification
      of Third-Party Claims.

     

    The
      Servicer agrees to indemnify and hold harmless each of the Principals and the
      Agent against any and all claims, losses, penalties, fines, forfeitures,
      reasonable legal fees and related costs, judgments, and any other costs, fees
      and expenses that they may sustain in any way related to the failure of the
      Servicer to perform its duties and service the mortgage loans in strict
      compliance with the terms of this Agreement or for any losses related to the
      investment of funds in the Escrow Account.  The Servicer shall
      immediately notify the Agent if a claim is made by a third party with respect
      to
      this Agreement or the mortgage loans and the Servicer shall assume the defense
      of any such claim and pay all expenses in connection therewith, including
      counsel fees, and promptly pay, discharge and satisfy any judgment or decree
      which may be entered against the Principals and the Agent in respect of such
      claim.  The Servicer’s indemnification obligation pursuant to this
      Section 8.1 shall survive the termination of this Agreement.

     

    Section
      8.2  Corporate
      Existence of the Servicer.

     

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

     

    Section
      8.3  Limitation
      on Liability of Servicer and Others.

     

    Neither
      the Servicer nor any of the directors, officers, employees or agents of the
      Servicer shall be under any liability to the Agent or any Principal for any
      action taken or for refraining from the taking of any action in good faith
      pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any
      such
      person against any breach of warranties or representations made herein, or
      failure to perform its obligations in compliance with any standard of care
      set
      forth in this Agreement, or any liability which would otherwise be imposed
      by
      reason of any breach of the terms and conditions of this
      Agreement.  The Servicer and any director, officer, employee or agent
      of the Servicer may rely in good faith on any document which it in good faith
      reasonably believes to be genuine and have been adopted or signed by the proper
      authorities respecting any matters arising hereunder.  The Servicer
      shall not be under any obligation to appear in, prosecute or defend any legal
      action which is not incidental to its duties to service the Eligible Mortgage
      Loans in accordance with this Agreement and which in its opinion may involve
      it
      in any expense or liability; provided, however, that the Servicer may, with
      the
      consent of the Required Principals undertake any such action which it may deem
      necessary or desirable with respect to this Agreement and the rights and duties
      of the parties hereto.  In such event, the Servicer shall be entitled
      to reimbursement from the Agent of the reasonable legal expenses and costs
      of
      such action.

     

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    Section
      8.4  Limitation
      on Resignation and Assignment by the Servicer.

     

    The
      Agent
      and the Principals have entered into this Agreement and the other Transaction
      Documents to which they are a party with the Company, as Servicer, in reliance
      upon the representations as to the adequacy of its servicing facilities, plant,
      personnel, records and procedures, its integrity, reputation and financial
      standing, and the continuance thereof.  The Servicer shall not resign
      from the obligations and duties hereby imposed on it as to any Eligible Mortgage
      Loan except by consent of the Required Principals and the Agent or upon the
      determination that its duties hereunder are no longer permissible under
      applicable law and such incapacity cannot reasonably be cured by the
      Servicer.  Notice of any such determination permitting the resignation
      of the Servicer shall be delivered to the Agent and each Bank Principal and
      any
      such determination shall evidenced by an Opinion of Counsel to such effect
      delivered to the Agent (on behalf of the Principals) which Opinion of Counsel
      shall be in form and substance acceptable to the Agent.  No such
      resignation shall become effective until a successor shall have assumed the
      Servicer’s responsibilities and obligations hereunder in the manner provided in
      Section 12.1 hereof.

     

    Section
      8.5  Limitation
      on Assignment of Right.

     

    Except
      pursuant to a resignation approved pursuant to Section 8.4 hereof, the
      Servicer shall not assign, sell or otherwise transfer its right to receive
      any
      payments (including the Servicing Fee) hereunder.

     

    ARTICLE IX

     

    SERVICER
      DEFAULT

     

    Section
      9.1  Servicer
      Default.

     

    Each
      of
      the following shall constitute a “Servicer Default” on the part of the
      Servicer:

     

    (a)  Any
      failure by the Servicer or the Performance Guarantor to observe or perform
      any
      of the terms, covenants or agreements on the part of the Servicer set forth
      in
      this Agreement (other than those which are incapable of cure) which continues
      unremedied for a period of thirty (30) days after the earlier of the date on
      which the Servicer or the Performance Guarantor has actual knowledge or written
      notice of such failure;

     

    (b)  Any
      representation, warranty, statement or certification made by the Servicer or
      the
      Performance Guarantor shall prove to have been materially incorrect as of the
      time when made, and which continues to be materially incorrect for thirty (30)
      days after the earlier of the date on which the Servicer or the Performance
      Guarantor has actual knowledge or written notice of such
      inaccuracy;

     

    (c)  Any
      failure by the Servicer to maintain any required licenses to do business in
      any
      jurisdiction where the Mortgaged Property is located, except where such failure
      could not reasonably be expected to result in a material adverse effect or
      any
      failure by the Servicer to be an Approved Seller/Servicer for any two of FNMA,
      GNMA or FHLMC;

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

     

    (d)  Application
      for the appointment of a conservator or receiver or liquidator in any
      insolvency, readjustment of debt, including bankruptcy, marshalling of assets
      and liabilities or similar proceedings, or for the winding-up or liquidation
      of
      its affairs, shall have been entered against the Servicer and a decree or order
      shall have remained in force undischarged or unstayed for a period of 60
      days;

     

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

     

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

     

    (g)  the
      Servicer or the Performance Guarantor enters into a consent agreement or
      otherwise agrees in writing with any federal or state regulatory agency or
      authority to restrict its activities, if the default of such agreement by the
      Servicer or the Performance Guarantor entitles such applicable federal or state
      agency to place the Servicer in receivership or conservatorship;

     

    (h)  failure
      of the Servicer to deposit into the Funding Account on or before 2 Business
      Days
      after the date of sale or Securitization of an Eligible Mortgage Loan the
      proceeds of any such sale or Securitization;

     

    (i)  on
      or
      prior to November 30, 2007, the Servicer shall have failed to either (x) appoint
      a back-up servicer satisfactory to Agent, or (y) enter into the Back-up
      Servicing Agreement (as such term is defined in the Repurchase Agreement),
      and
      such date has not been extended in writing by Agent;

     

    (j)  (i)
      the
      Servicer, Performance Guarantor or any of their respective Subsidiaries shall
      fail to (x) pay any Indebtedness or Interest Rate Protection Agreements
      where the amount or amounts of such Indebtedness or Interest Rate Protection
      Agreement exceeds $50,000,000 (or its equivalent thereof in any other currency)
      in the aggregate; or (y) perform any other term, provision or condition
      with respect to any Indebtedness or Interest Rate Protection Agreements of
      greater than $50,000,000 (or its equivalent thereof in any other currency),
      which failure results in such Indebtedness becoming due prior to the scheduled
      date of maturity thereof or enables or permits the holder or holders of such
      Indebtedness or any trustee or agent on its or their behalf to cause such
      Indebtedness to become due, or to require the prepayment (other than by a
      regularly scheduled payment), repurchase, redemption or defeasance thereof,
      prior to the scheduled date of maturity thereof; or (ii) any other
      circumstance shall arise (other than the mere passage of time) by reason of
      which the Servicer, the Performance Guarantor or any of their respective
      Subsidiaries is required to redeem or repurchase, or offer to holders the
      opportunity to have redeemed or repurchased, any such Indebtedness or Interest
      Rate Protection Agreement where the amount or amounts of such Indebtedness
      or
      Interest Rate Protection Agreement exceeds $50,000,000 (or its equivalent
      thereof in any other currency) in the aggregate;

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

     

    (k)  at
      any
      time the Delinquency Ratio shall be greater than five percent (5%) of the
      Aggregate Purchase Price at such time;

     

    (l)  any
      financial covenant of PHH Corporation contained in Section 3.4(g) shall not
      be satisfied; or

     

    (m)  the
      failure on the part of the Servicer to make any payment or deposit required
      under this Agreement or any other Transaction Document on or before 2 Business
      Days after the date such payment or deposit is required to be made.

     

    In
      each
      and every such case, so long as a Servicer Default shall not have been remedied,
      in addition to whatsoever rights the Agent and the Principals may have at law
      or
      in equity to damages, including injunctive relief and specific performance,
      the
      Agent, by notice in writing to the Servicer may terminate all of the rights
      and
      obligations of the Servicer under this Agreement and in and to the Eligible
      Mortgage Loans and the proceeds thereof other than unpaid Servicing
      Fees.  The Agent will only remove the Servicer as described above upon
      the affirmative vote of the Required Principals.

     

    Upon
      receipt by the Servicer of such written notice, all authority and power of
      the
      Servicer under this Agreement, whether with respect to the Eligible Mortgage
      Loans or otherwise, shall pass to and be vested  in the successor
      appointed pursuant to Section 12.1 hereof.  Upon written request
      from the Agent, the Servicer shall prepare, execute and deliver to the successor
      entity designated by the Agent any and all documents and other instruments,
      place in such successor’s possession all Mortgage Loan Files, and do or cause to
      be done all other acts or things necessary or appropriate to effect the purposes
      of such notice of termination, including but not limited to the transfer and
      endorsement or assignment of the Eligible Mortgage Loans and related documents,
      at the Servicer’s sole expense.  The Servicer shall cooperate with
      such successor in effecting the termination of the Servicer’s responsibilities
      and rights hereunder, including without limitation, the transfer to such
      successor for administration by it of all cash amounts which shall at the time
      be credited by the Servicer to Margin Call Account or Escrow Account or
      thereafter received with respect to the Eligible Mortgage Loans.

     

    Section
      9.2  Waiver
      of Defaults.

     

    With
      the
      consent of the Required Principals, the Agent may waive any default by the
      Servicer in the performance of its obligations hereunder and its
      consequences.  Upon any waiver of a past default, such default shall
      cease to exist, and any event of default arising therefrom shall be deemed
      to
      have been remedied for every purpose of this Agreement.  No such
      waiver shall extend to any subsequent or other default or impair any right
      consequent thereon except to the extent expressly so waived.

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

     

    ARTICLE X

     

    TERMINATION
      AND LIQUIDATION

     

    Section
      10.1  Termination
      of Agreement.

     

    This
      Agreement shall terminate upon the final payment or other liquidation (or any
      advance with respect thereto) of the last Eligible Mortgage Loan sold under
      the
      Repurchase Agreement.

     

    Section
      10.2  Termination
      of Servicing With Respect to Any Eligible Mortgage Loan.

     

    This
      Agreement shall terminate with respect to any Eligible Mortgage Loan upon the
      occurrence of the following: (i) the receipt into the Funding Account of
      the proceeds of any sale or Securitization of such Eligible Mortgage Loan or
      the
      Repurchase Price or Principal Prepayment in full of such Eligible Mortgage
      Loan;
      or (ii) the effectiveness of the termination of the Company pursuant to
      Section 12.1. No termination shall become effective until a successor shall
      have assumed the Servicer’s responsibilities and obligations hereunder in the
      manner provided in Section 12.1.

     

    Upon
      written request from the Agent, the Servicer shall prepare, execute and deliver
      to the successor entity designated by the Agent any and all documents and other
      instruments, place in such successor’s possession all Mortgage Loan Files, and
      do or cause to be done all other acts or things necessary or appropriate to
      effect the purposes of such notice of termination, including but not limited
      to
      the transfer and endorsement or assignment of the Eligible Mortgage Loans and
      related documents, at the Servicer’s sole expense.  The Servicer shall
      cooperate with such successor in effecting the termination of the Servicer’s
      responsibilities and rights hereunder, including without limitation, the
      transfer to such successor for administration by it of all cash amounts which
      shall at the time be credited by the Servicer to the Funding Account, Collection
      Account or Escrow Account or thereafter received with respect to the Eligible
      Mortgage Loans.

     

    ARTICLE XI

     

    [RESERVED]

     

    ARTICLE XII

     

    MISCELLANEOUS
      PROVISIONS

     

    Section
      12.1  Successor
      to Servicer.

     

    Prior
      to
      termination of the Servicer’s responsibilities and duties under this Agreement
      pursuant to Sections 8.4 or 10.1 hereof, the Agent shall appoint a
      successor which shall succeed to all rights and assume all of the
      responsibilities, duties and liabilities of the Servicer under this Agreement
      prior to the termination of the Servicer’s responsibilities, duties and
      liabilities under this Agreement.  In connection with such appointment
      and assumption, the Agent may make such arrangements for the compensation of
      such successor out of payments on Eligible Mortgage Loans as it and such
      successor shall agree.  In the event that the Servicer’s duties,
      responsibilities and liabilities under this Agreement should be terminated
      pursuant to the aforementioned sections, the Servicer shall discharge such
      duties, responsibilities and liabilities during the period from the date it
      acquires knowledge of such termination until the effective date thereof with
      the
      degree of diligence and prudence which it is obligated to exercise under this
      Agreement and shall take no action whatsoever that might impair or prejudice
      the
      rights or financial condition of its successor.  The resignation or
      removal of the Servicer pursuant to the aforementioned Sections shall not
      become effective until a successor shall be appointed pursuant to this
      Section 12.1 and such resignation or removal shall in no event relieve the
      Servicer of the representations and warranties made pursuant to Section 3.1
      hereof and the remedies available to the Agent under Section 3.3 hereof, it
      being understood and agreed that the provisions of such Sections 3.1 and
      3.3 shall be applicable to the Servicer notwithstanding any such sale,
      assignment, resignation or termination of the Servicer, or the termination
      of
      this Agreement.

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    Any
      successor appointed as provided herein shall execute, acknowledge and deliver
      to
      the Servicer and the Agent an instrument accepting such appointment, wherein
      the
      successor shall make the representations and warranties set forth in
      Section 3.1 hereof, whereupon such successor shall become fully vested with
      all the rights, powers, duties, responsibilities, obligations and liabilities
      of
      the Servicer, with like effect as if originally named as a party to this
      Agreement.  Any termination or resignation of the Servicer or
      termination of this Agreement pursuant to Sections 8.4, or 10.1 hereof
      shall not affect any claims that the Agent or any Principal may have against
      the
      Servicer arising out of the Servicer’s actions or failure to act prior to any
      such termination or resignation.

     

    The
      Servicer shall deliver promptly to the successor Servicer the funds in the
      Margin Call Account, the Collection Account, the Funding Account and the Escrow
      Account and all Mortgage Loan Files and related documents and statements held
      by
      it hereunder and the Servicer shall account for all funds and shall execute
      and
      deliver such instruments and do such other things as may reasonably be required
      to more fully and definitively vest in the successor all such rights, powers,
      duties, responsibilities, obligations and liabilities of the
      Servicer.

     

    Section
      12.2  Amendment.

     

    This
      Agreement may only be amended with the written consent of the Seller, the Agent,
      the Required Principals, the Performance Guarantor and the
      Servicer.  The costs and expenses associated with any such amendment
      shall be borne by the Seller.

     

    Section
      12.3  Governing
      Law.

     

    This
      Agreement 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
      12.4  Duration
      of Agreement.

     

    This
      Agreement shall continue in existence and effect until terminated as herein
      provided.

     

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

     

    Section
      12.5  Notices.

     

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

     

    (i)  if
      to PHH
      Mortgage Corporation, to it at its address set forth in Section 29 of the
      Repurchase Agreement or such other address as may hereafter be furnished to
      the
      Agent in writing;

     

    (ii)  if
      to the
      Agent, to it at its address set forth in Section 29 of the Repurchase
      Agreement; and

     

    (iii)  if
      to the
      Performance Guarantor, to it at PHH Mortgage Corporation’s address set forth in
      Section 29 of the Repurchase Agreement.

     

    Section
      12.6  Severability
      of Provisions.

     

    If
      any
      one or more of the covenants, agreements, provisions or terms of this Agreement
      shall be held invalid for any reason whatsoever, then such covenants,
      agreements, provisions or terms shall be deemed severable from the remaining
      covenants, agreements, provisions or terms of this Agreement and shall in no
      way
      affect the validity or enforceability of the other provisions of this
      Agreement

     

    Section
      12.7  Relationship
      of Parties.

     

    Nothing
      herein contained shall be deemed or construed to create a partnership or joint
      venture between the parties hereto and the services of the Servicer shall be
      rendered as an independent contractor and not as agent for the Agent or any
      Principal.

     

    Section
      12.8  Execution;
      Successors and Assigns.

     

    This
      Agreement may be executed in one or more counterparts and by the different
      parties hereto on separate counterparts, each of which, when so executed, shall
      be deemed to be an original; such counterparts, together, shall constitute
      one  agreement.  This Agreement shall inure to the benefit
      of and be binding upon the parties hereto and their respective successors and
      assigns; provided, however, that the rights of the Principals to an indemnity
      from the Servicer pursuant to Section 3.3 hereof are not assignable and
      shall inure only to the benefit of the Principals and to no other
      Person.

     

    Section
      12.9  Recordation
      of Assignments of Mortgage.

     

    To
      the
      extent permitted by applicable law, each of the Assignments of Mortgage is
      subject to recordation in all appropriate public offices for real property
      records in all the counties or other comparable jurisdictions in which any
      or
      all of the Mortgaged Properties are situated, and in any other appropriate
      public recording office or elsewhere, such recordation to be effected at the
      Servicer’s expense in the event recordation is either necessary under applicable
      law or requested by the Agent at its sole option.

     

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

     

    Section
      12.10  [RESERVED].

     

    Section
      12.11  [RESERVED].

     

    Section
      12.12  Waiver
      of Offset.

     

    The
      Servicer agrees to deliver to the Agent (for itself and for the benefit of
      each
      Principal) all amounts required by this Agreement to be delivered by the
      Servicer to such Persons free and clear of any offset, counterclaim or other
      deduction on account of, or in respect of, any such Person to the Servicer
      hereunder.

     

    ARTICLE XIII

     

    PHH
      CORPORATION GUARANTEE

     

    Section
      13.1  Guarantee
      of Seller’s Representations and Warranties, Servicer’s Performance and Payment
      Obligations.

     

    For
      value
      received, and in consideration of the financial accommodation accorded to the
      Company by the Agent and the Principals under the Transaction Documents, PHH
      Corporation (the “Performance Guarantor”) hereby fully, unconditionally,
      and irrevocably guarantees to the Agent, each Principal, the holders of all
      the
      holders of the Short-Term Notes and the APA Purchasers (i) with respect to
      the Seller, the representations and warranties set forth herein and in the
      other
      Transaction Documents, and (ii) as to the Servicer, the due performance of,
      and punctual payment of all amounts payable by, the Company, in its capacity
      as
      Servicer under this Agreement and the other Transaction Documents when and
      as
      such obligations hereunder shall become due and, in the case of any payments,
      payable.  The Performance Guarantor will ensure the performance and
      payment of every act, duty, obligation, agreement and responsibility of the
      Servicer set forth herein.

     

    In
      case
      of the failure or inability of (i) the Seller, regarding its obligations
      pursuant to Section 3.3 hereof with respect to a breach of a representation
      or warranty made in any Transaction Document, (iii) the Seller, with
      respect to its obligations pursuant to Section 2.2(b) and 3.5 hereof and
      (iii) the Servicer to punctually perform any such act, duty, obligation,
      responsibility or agreement or to pay punctually any such amounts, the
      Performance Guarantor hereby agrees, upon written demand by the Agent, to,
      as
      applicable, (i) perform any such act, duty, obligation, responsibility or
      agreement and (ii) pay or cause to be paid any such amount, punctually when
      and as the same shall become due and, in the case of any payment, payable
      (exclusive of any grace period).

     

    (a)  Performance
      Guarantor hereby agrees that its obligations under this Section 13.1
      constitute a guarantee of performance and payment when due and not of
      collection.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

     

     

    (b)  Performance
      Guarantor hereby agrees that its obligations under this Section 13.1 shall
      be unconditional, irrespective of the validity, regularity or enforceability
      of
      this Agreement or any other Transaction Document against the Company, the
      absence of any action to enforce the Company’s obligations under any Transaction
      Document, any waiver or consent by the Agent, and Principal or any APA Purchaser
      with respect to any provisions thereof, the entry by the Company and the Agent
      and the Principals into additional transactions under the Repurchase Agreement
      or any other circumstance which might otherwise constitute a legal or equitable
      discharge or defense of a guarantor (other than the defenses of statute of
      limitations or payment, which are not waived); provided, however, that
      Performance Guarantor shall be entitled to exercise any right that the Servicer
      could have exercised under any Transaction Document to cure any default in
      respect of its obligations thereunder or to set-off, counterclaim or withhold
      payment in respect of any event of default or potential event of default in
      respect of the Agent or any Principal or any Affiliate, but only to the extent
      such right is provided to the Company under the applicable Transaction
      Document.  The Performance Guarantor acknowledges that the Servicer
      and the Agent (for and on behalf of the Principals) may from time to time enter
      into one or more transactions pursuant to the Repurchase Agreement and agrees
      that the obligations of the Performance Guarantor under this Section 13.1
      will upon the execution of any such transaction extend to all such transactions
      without the taking of further action by the Performance Guarantor.

     

    (c)  The
      Performance Guarantor hereby waives (i) promptness, diligence, presentment,
      demand of payment, protest, order and, except as set forth in paragraph (a)
      hereof, notice of any kind in connection with any Transaction Document and
      this
      Section 13.1, or (ii) any requirement that the Agent, any Principal or
      any APA Purchaser exhaust any right to take any action against the Company
      or
      any other person prior to or contemporaneously with proceeding to exercise
      any
      right against the Performance Guarantor under this
      Section 13.1.

     

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

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

     

    
      	 	
              PHH
                MORTGAGE CORPORATION, as 

              Seller
                and Servicer

               

               

              By:   /s/
                Mark E. Johnson

              Name:
                Mark E. Johnson

              Title:
                Vice President and Treasurer

            
	 	 
	 	 

    

    

     

     

    
      
        
          Amended
            and Restated Servicing

          Agreement
            (PHH Mortgage)

        

      

      
        S-1

        
          

        

      

      
        
        

      

    

    
 

     

    
      	 	
              PHH
                CORPORATION, solely in its capacity as Performance
                Guarantor

               

              By: /s/
                Terence Edwards

              Name:
                Terence Edwards

              Title:   President
                and CEO

               

            
	 	 
	 	 

    

    

     

     

     

    
      
        
          Amended
            and Restated Servicing

          Agreement (PHH Mortgage)

        

      

      
        S-2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              BARCLAYS
                BANK PLC, as Agent

               

              By: /s/
                Pierre Duleyrie

              Name:
                Pierre Duleyrie

              Title:  Director

            

    

    

     

     

     

     

     

     

     

     

    
      Amended
        and Restated Servicing

      Agreement
        (PHH Mortgage)

    

     

    S-3ex10-3.htm

     

    Exhibit
      10.3

    SECOND
      AMENDMENT

     

    SECOND
      AMENDMENT, dated as of November 2, 2007 (this “Amendment”), to the
      Amended and Restated Competitive Advance and Revolving Credit Agreement, dated
      as of January 6, 2006 (the “Credit Agreement”), among PHH Corporation, a
      Maryland corporation (the “Borrower”), PHH Vehicle Management Services,
      Inc., a Canadian corporation (the “Canadian Subsidiary Borrower”),
      Citicorp USA, Inc., as Syndication Agent, The Bank of Nova Scotia (the
“Canadian Lender”) and Wachovia Bank, National Association, as
      Co-Documentation Agents, and JPMorgan Chase Bank, N.A., as Administrative
      Agent.

     

    W
      I T
      N E S S E T H :

    

    WHEREAS,
      the Borrower, the Lenders and the Administrative Agent are parties to the Credit
      Agreement;

     

    WHEREAS,
      the Borrower has requested that a certain provision of the Credit Agreement
      be
      amended as set forth herein; and

     

    WHEREAS,
      the Lenders are willing to agree to such amendment on the terms set forth
      herein;

     

    NOW,
      THEREFORE, in consideration of the premises contained herein, the parties hereto
      agree as follows:

     

    1.           Defined
      Terms.  Unless otherwise defined herein, capitalized terms shall
      have the meanings given to them in the Credit Agreement.

     

    2.           Amendment
      to Section 6.1(i).  Section 6.1(i) of the Credit Agreement is
      hereby amended by deleting therefrom the following: “, if the aggregate
      principal amount of all such Indebtedness does not exceed
      $1,150,000,000”.

     

    3.           Amendment
      Fee. The Borrower shall pay to Administrative Agent for the account of each
      Lender that executes and delivers a counterpart to this Amendment on or before
      3:00 P.M. EST November 2, 2007, an amendment fee equal to 0.03% of the
      outstanding principal amount of such Lender’s Revolving
      Commitments.

     

    4.           Representations
      and Warranties.  On and as of the date hereof, the Borrower hereby
      confirms, reaffirms and restates the representations and warranties set forth
      in
      Section 3 of the Credit Agreement mutatismutandis, except to the
      extent that such representations and warranties (i) are the subject of that
      certain Waiver, dated as of December 21, 2006, to the Credit Agreement or (ii)
      expressly relate to a specific earlier date in which case the Borrower hereby
      confirms, reaffirms and restates such representations and warranties as of
      such
      earlier date.

     

    5.           Effectiveness
      of Amendment.  This Amendment shall become effective as of the
      date the Administrative Agent shall have received counterparts of this Amendment
      duly executed by the Borrower and the Required Lenders.

     

    6.           Continuing
      Effect; No Other Amendments.  Except as expressly provided herein,
      all of the terms and provisions of the Credit Agreement are and shall remain
      in
      full force and effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.           Expenses.  The
      Borrower agrees to pay and reimburse the Administrative Agent for all of its
      reasonable costs and out-of-pocket expenses incurred in connection with the
      preparation and delivery of this Amendment, including, without limitation,
      the
      reasonable fees and disbursements of counsel to the Administrative
      Agent.

     

    8.           Counterparts.  This
      Amendment may be executed in any number of counterparts by the parties hereto
      (including by facsimile or electronic transmission), each of which counterparts
      when so executed shall be an original, but all the counterparts shall together
      constitute one and the same instrument.

     

    9.           GOVERNING
      LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
      INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     

    

    

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        2

        
          

        

      

      
        
        

      

    

    
      IN
        WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
        executed as of the day and the year first above written.

       

      PHH
        CORPORATION, as the Borrower

      

      

      By:
          /s/ Mark E.
        Johnson                                                                

             Name:
        Mark E. Johnson

             Title:    Vice
        President and Treasurer

      

      PHH
        VEHICLE MANAGEMENT SERVICES, INC., as the Canadian Borrower

      

      

      By:
          /s/ Mark E.
        Johnson                                                                

       Name:
        Mark E. Johnson

       Title:    Vice
        President and Treasurer

      

      JPMORGAN
        CHASE BANK, N.A., as Administrative Agent

      

      

      By:  /s/John
        J.
        Coffey                                                      

      Name:
        John J. Coffey

      Title:   Managing
        Director

      

      

      THE
        BANK
        OF NOVA SCOTIA, as the Canadian Lender

      

      

      By:  /s/Todd
        Meller                                                      

      Name:
        Todd Meller

      Title:   Managing
        Director

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      ABN
        AMRO
        Bank N.V.

      

      

      By:    /s/
        Andrew C.
        Salerno                                                                           

      Name:
        Andrew C. Salerno

      Title:  Director

      

      By:    /s/
        Michael
        DeMarco                                                                           

      Name:
        Michael DeMarco

      Title:  Vice
        President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
 

      BANK
        OF
        COMMUNICATIONS CO., LTD.

      NEW
        YORK
        BRANCH

      

      

      By:    /s/
        Shelby He

      Name:
        Shelby He

      Title:
        Deputy General
        Manager

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      BARCLAYS
        BANK PLC

      

      

      By:    /s/
        Nicholas
        Bell                                                                

      Name:
        Nicholas Bell

      Title:  Director

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      CALYON
        NEW YORK BRANCH

      

      

      By:    /s/
        Walter Hay Buckley

      Name:
        Walter Jay Buckley

      Title:
        Managing Director

      

      By:    /s/
        Sebastian Rocco

      Name:
        Sebastian Rocco

      Title:
        Managing Director

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
 

      CIBC
        INC.

      

      

      By:    /s/
        Dominic J.
        Sorresso                                                                           

      Name:  Dominic
        J.
        Sorresso

      Title:
        Executive
        Director

      

      CIBC
        World Markets Corp.

      Authorized
        Signatory

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

       

      CITIBANK,
        N.A.

      

      

      By:    /s/
        Thomas A.
        Neville                                                                           

      Name:
        Thomas A. Neville

      Title:
        Attorney-in-Fact

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      CITICORP
        USA, Inc.

      

      

      By:    /s/
        Andrew L.
        Kreeger                                                                           

      Name:
        Andrew L. Kreeger

      Title:
        Vice President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      DEUTSCHE
        BANK AG NEW YORK BRANCH

      

      

      By:    /s/
        Richard
        Herder                                                                           

      Name:
        Richard Herder

      Title:
        Managing Director

      

      By:    /s/
        Melissa
        Curry                                                                

      Name:
        Melissa Curry

      Title:
        Vice President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      HSBC
        Bank
        (USA), N.A.

      

      

      By:    /s/
        Vince
        Clark                                                                

      Name:
        Vince Clark

      Title:
        Senior Vice
        President

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Manufacturers
        & Traders Trust Company

      

      

      By:    /s/
        Laurel L.B. Magruder

      Name:
        Laurel L.B.
        Magruder

      Title:   Vice
        President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      MELLON
        BANK, N.A., as Lender

      

      

      By:    /s/
        Donald G. Cassidy, Jr.

      Name:
        Donald G. Cassidy,
        Jr.

      Title:  Senior
        Vice
        President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

       

      MERRIL
        LYNCH BANK USA

      

      

      By:    /s/
        Louis
        Alder                                                                           

      Name:
        Louis Alder

      Title:  Director

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

       

      THE
        NORTHERN TRUST COMPANY

      

      

      By:    /s/
        Peter J.
        Hallan                                                                           

      Name:
        Peter J. Hallan

      Title:
        Vice President

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      Royal
        Bank of Canada

      

      

      By:    /s/
        Howard
        Lee                                                                

      Name:
        Howard Lee

      Title:
        Authorized
        Signatory

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      THE
        ROYAL
        BANK OF SCOTLAND PLC

      

      

      By:    /s/
        Angela
        Reilly                                                                

      Name:
        Angela Reilly

      Title:
        Managing Director

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

       

      UBS
        LOAN
        FINANCE LLC

      

      

      By:    /s/
        Irja R.
        Otsa                                                                

      Name:
        Irja R. Otsa

      Title:
        Associate
        Director

      

      By:    /s/
        David B.
        Julie                                                                           

      Name:
        David B. Julie

      Title:
        Associate
        Director

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
 

      Wachovia
        Bank, National Association

      

      

      By:    /s/
        Karin E.
        Samuel                                                                           

      Name:
        Karin E. Samuel

      Title:
        Vice President

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