EXHIBIT 10.14
SERVICING AGREEMENT
by and between
Imperial Credit Mortgage Holdings, Inc.
and
ICI Funding Corporation
INDEX
Section Page
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1. Definitions.................................................... 1
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2. Servicing Documents............................................ 7
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3. General Duties of the Servicer................................. 8
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4. Servicing Compensation and Expenses............................ 17
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5. Repurchase of Defective Mortgage Loans......................... 18
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6. Contribution of Mortgage Loans or Undivided Interests Therein.. 19
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7. Termination and Liabilities.................................... 20
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8. Representations and Warranties; Covenants of Servicer.......... 23
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9. Indemnification................................................ 27
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10. Miscellaneous.................................................. 27
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT, entered into as of this day of
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November, 1995, is made effective as of the effective date of the initial public
offering of Common Stock on a Registration Form S-11 of Imperial Credit Mortgage
Holdings, Inc., a Maryland corporation (the "Company"), by and between the
Company and ICI Funding Corporation, a California corporation (the "Servicer").
WHEREAS, the Company and the Servicer desire that the Servicer service
certain of the Mortgage Loans owned by the Company;
WHEREAS, the Servicer is engaged in the business of servicing Mortgage
Loans for investors; and
WHEREAS, the Company and the Servicer desire to execute this Agreement
to define the rights, duties and obligations of the Servicer to the Company.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, promises and agreements herein contained, the parties hereto agree as
follows;
1. Definitions. Whenever used in this Agreement, the following words
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and phrases, unless the context otherwise requires, shall have the following
meanings:
"Agreement" means this Servicing Agreement, as same may be amended
from time to time.
"Appraisal" means an appraisal of a Residence conducted in accordance
with generally accepted standards by a Qualified Appraiser.
"Appraised Value" means the value of a Residence as determined through
an Appraisal.
"Assumption and Release Agreement" means a written agreement entered
into pursuant to paragraph 3(m) hereof.
"Business Day" means any day of the week other than Saturday, Sunday
or a day which shall be in the State of
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California a legal holiday or a day on which banking institutions in the
State of California are authorized or obligated by law of executed to close.
"Commitment" means the document pursuant to which the Company has
agreed to purchase Mortgage Loans from the Servicer.
"Company Designee" means the person or entity designated by the
Company from time to time to perform, or assist in the performance of, certain
of the Company's duties and obligations under this Agreement.
"Conforming Mortgage Loan" means any Mortgage Loan that qualifies for
purchase by government-sponsored entities such as FNMA and FHLMC.
"Conventional Mortgage Loan" means a Mortgage Loan which is not
insured by the FHA or guaranteed by the VA.
"Curtailments and Prepaid Installments Report" means the report, in
the form prescribed from time to time by the Company, to be provided by the
Servicer pursuant to paragraph 3(f) hereof.
"Custodial Account" means a non-interest bearing account maintained by
the Servicer pursuant to paragraph 3(c) hereof, into which all Revenues shall be
deposited.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, insolvency, rearrangement, moratorium,
reorganization or similar debtor or relief laws affecting the rights of
creditors generally from time to time in effect.
"Defective Mortgage Loan" shall mean any Mortgage Loan required to be
purchased pursuant to Section 5.
"Escrow Account" means an account maintained by the Servicer pursuant
to paragraph 3(c) hereof, into which all Escrow Payments shall be deposited.
"Escrow Payments" means all moneys collected, or required hereunder to
be collected, by the Servicer to obtain or maintain mortgage insurance and fire,
flood and other hazard insurance or for payment of fees, assessments or taxes or
other
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governmental or similar charges customarily required to be escrowed with
respect to Mortgage Loans or Residences.
"Expense Advance" means an advance of funds, other than a Monthly
Advance, required hereunder to be made by the Servicer which in the judgement of
the Company is an appropriate expenditure made or to be made by the Servicer in
connection with the performance of its duties to service the Mortgage Loans,
including advances to pay all reasonable expenditures related to foreclosure
proceedings, all reasonable expenditures related to the defense of any lawsuit
to defend title to any property acquired as a result of a foreclosure and all
expenses incurred in making repairs to any property subject to a Mortgage, all
advances by the Servicer due to deficiencies in the amount of Escrow Payments
received by the Servicer and all other advances to pay expenses for any other
purposes, but excluding those advances described in paragraph 4(b)(ii) hereof.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FHA" means the Federal Housing Administration of the Department of
Housing and Urban Development of the United States of America, or any successor
thereto.
"FHA Insurance" means insurance on mortgage loans presently issued by
the FHA under the National Housing Act of 1934, as amended.
"FHLMC" means the Federal Home Loan Mortgage Corporation, or any
successor thereto.
"Flood Insurance Policy" means a policy of insurance issued by the
Department of Housing and Urban Development of the United States of America
pursuant to the National Flood Insurance Act of 1968, as amended, or any other
policy conforming to FNMA requirements and providing similar coverage against
loss sustained by floods.
"FNMA" means the Federal National Mortgage Association, or any
successor thereto.
"Foreclosure Remittance Summary" means the report, in the form
prescribed from time to time by the Company, to be provided by the Servicer
pursuant to paragraph 3(c) hereof.
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"GNMA" means the Government National Mortgage Association, or any
successor thereto.
"Government Obligations" means direct general obligations of, or
obligations, the payment of the principal and interest of which are
unconditionally guaranteed by, the United States of America.
"ICIFC" means ICI Funding Corporation, a California corporation.
"Insurance Proceeds" means payments received with respect to the
Mortgage Loans under any insurance policy required to be maintained under this
Agreement.
"Law" or "Laws" means all applicable statutes, laws, ordinances,
regulations, orders, writs, injunctions or decrees of the United States, or any
agency thereof, or any state, or political subdivision or any agency thereof, or
any court of competent jurisdiction.
"Liquidation Proceeds" means amounts (other than Insurance Proceeds)
received in connection with the liquidation of defaulted Mortgage Loans, whether
through a trustee's sale, foreclosure sale, condemnation, taking under power of
eminent domain, conveyance in lieu of foreclosure or condemnation, or otherwise.
"Liquidation Schedule" means the report, in the form prescribed from
time to time by the Company, to be provided by the Servicer pursuant to
paragraph 3(c) hereof.
"Loan Purchase and Administrative Services Agreement" means an
agreement between the Company and ICIFC which, among other things, provides for
ICIFC's monitoring and administering of the servicing of Mortgage Loans by the
Servicer on behalf of the Company.
"Loan Servicing Guidelines" means, with respect to Conforming Mortgage
Loans, the guidelines established by FNMA and FHLMC for the servicing of
Conforming Mortgage Loans which are eligible for sale to FNMA and FHLMC, as the
same may be amended from time to time and as may be modified by the Company in
connection with those Non-Conforming Mortgage Loans which are not eligible for
sale to FNMA and FHLMC.
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"Monthly Advance" means with respect to any calendar month, the
aggregate amount of payments of principal and interest on the Mortgage Loans
which were due and payable on or before the first day of such month and which
were delinquent as of the close of business on the Business Day next preceding
the Remittance Date of such month (excluding from delinquent interest an amount
equal to the lesser of the amount of delinquent interest or the related
Servicing Fee), less any portion thereof which, if advanced, would constitute a
Nonrecoverable Advance.
"Mortgage" means the instrument securing a Mortgage Loan which creates
a first lien on a Residence, subject only to Permitted Encumbrances, and which
shall be in the form prescribed from time to time by the Company.
"Mortgage Documents" means the documents pertaining to a particular
Mortgage Loan.
"Mortgage Loan" means any Conforming Mortgage Loan or Non-Conforming
Mortgage Loan evidenced by a Mortgage Note which is secured by the related
Mortgage for (i) financing the purchase by the Mortgagor of a Residence, or (ii)
if permitted by the Company, the refinancing of existing indebtedness secured by
the Residence, and which loan, in either case, has been purchased by the Company
and serviced under this Agreement.
"Mortgage Note" means the promissory note executed by a Mortgagor to
evidence such Mortgagor's obligation to repay the Mortgage Loan which shall, in
the case of a Conventional Mortgage Loan, be in the form prescribed from time to
time by the Company.
"Mortgagor" means the obligor(s) on a Mortgage Note, and/or a
subsequent owner of a Residence who has acquired same and assumed the Mortgage
Loan pursuant to paragraph 3(m) hereof.
"New Loans Report" means the report, in the form prescribed from time
to time by the Company, to be provided by the Servicer pursuant to paragraph
3(f) hereof.
"Non-Conforming Mortgage Loan" means any mortgage loan that does not
qualify for purchase by government-sponsored entities such as FNMA and FHLMC.
"Nonrecoverable Advance" means any advance of funds which, in the good
faith judgement of the Servicer with the con-
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currence of the Company, will not ultimately be recoverable by the Servicer form
Insurance Proceeds, Liquidation Proceeds, the Mortgagor or otherwise.
"Officer" means any duly authorized officer of the Servicer involved
in, or responsible for, the servicing of the Mortgage Loans whose name appears
on a list furnished to the Company by the Servicer, as such list may be amended
from time to time.
"Permitted Encumbrances" means the liens resulting from current real
property taxes and assessments and only those covenants, conditions and
restrictions, rights of way, easements and other exceptions which are accepted
by FNMA and FHLMC on Mortgage Loans sold to GNMA or FHLMC and which are
customarily acceptable to lending institutions generally or to which like
properties are commonly subject and which do not materially affect the value or
marketability of the Residences.
"Primary Mortgage Insurance Policy" means a policy of mortgage
guaranty insurance issued by a Qualified Mortgage Insurer.
"Principal Prepayment" means any Mortgagor payment or other recovery
of principal on a Mortgage Loan which is not applied by the Servicer during the
month of receipt to a scheduled payment under the Mortgage Loan and the portion
of any Insurance Proceeds, Liquidation Proceeds or other collections
representing similar payments.
"PUD" means a parcel of real property which contains buildings or
other improvements owned and maintained by a homeowner's association,
corporation or trust of the benefit of Mortgagors which own individual
residential units on such parcel of land and such association, corporation or
trust requires automatic, nonseverable ownership by each owner and impose
mandatory assessments on all such owners for the maintenance and for the common
use and enjoyment of all such owners.
"Qualified Appraiser" means an appraiser who would be used by the
Servicer of the origination of a residential mortgage loan.
"Qualified Mortgage Insurer" means a private mortgage insurer
specified in the Loan Servicing Guidelines.
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"Qualified Standard Hazard Insurer" means an insurer issuing a
standard hazard insurance policy insuring a Residence, which insurer is licensed
and qualified to do business in the state where the Residence is located and is
an approved or acceptable insurer for mortgage loans which are sold to or
serviced for FNMA and FHLMC.
"Remittance Date" means the 18th day of each calendar month.
"Representations and Warranties" means the representations and
warranties required by FNMA and FHLMC to be made by Servicer with respect to
Mortgage Loans eligible for sale to such entities, as the same may be amended
from time to time, and as may be modified by the Company in connection with Non-
Conforming Mortgage Loans which are not eligible for sale to FNMA and FHLMC.
"Residence" means a single family (one to four units) residential
house or PUD.
"Revenues" means all moneys received by the Servicer representing
principal and interest payments on Mortgage Loans, including Principal
Prepayments, together with interest thereon at the rate specified in the
Mortgage Note to the date of prepayment (excluding, however, prepayment
penalties, which are deemed to be the property of the Company), Insurance
Proceeds, condemnation proceeds or proceeds received in connection with a taking
under power of eminent domain or a conveyance in lieu of condemnation and
Liquidation Proceeds.
"Sales price" means, with respect to a Residence, the price at which
such Residence was sold.
"Servicer Delinquency Report" means the report, in the form prescribed
from time to time by the Company, to be provided by the Servicer pursuant to
paragraph 3(f) hereof.
"Servicer Foreclosure Recommendation" means the report, in the form
prescribed from time to time by the Company, to be provided by the Servicer
pursuant to paragraph 3(e) hereof.
"Servicer Foreclosure Status Report" means the report, in the form
prescribed from time to time by the Company, to be provided by the Servicer
pursuant to paragraph 3(c) hereof.
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"Servicer Remittance Reconciliation" means the report, in the form
prescribed from time to time by the Company, to be provided by the Servicer
pursuant to paragraph 3(c) hereof.
"Servicing Fee" means a fee which may be retained by the Servicer with
respect to each Mortgage Loan as provided in paragraph 4(a) hereof, in a monthly
amount of not less than 25 basis points or greater than 50 basis points of the
outstanding principal balance of such Mortgage Loan on the day prior to each
scheduled monthly payment date or such amount as is allowable by
any nationally recognized statistical rating agency rating the mortgage
collateralized bonds proposed to be secured by such Mortgage Loans. Servicing
fees will [generally] be as follows: (i) fixed rate servicing will be 25 basis
points, (ii) adjustable rate servicing will be 37.5 basis points and (iii) "B"
and "C" mortgage loans will be 50 basis points.
"Standard Hazard Insurance Policy" means a hazard insurance policy
required to be maintained with respect to each Mortgage Loan pursuant to
paragraph 3(g) hereof.
"Trial Balance" means the report, in the form prescribed from time to
time by the Company, to be provided by the Servicer pursuant to paragraph 3(f)
hereof.
"VA" means the Veterans Administration of the United States of
America, or any successor thereto.
"VA Guaranty" means a guaranty of a mortgage loan by the VA under the
Servicemen's Readjustment Act of 1944, as amended.
2. Servicing Documents.
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(a) Possession of Mortgage Loan Files. The Company shall deliver, or
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cause to be delivered, to the Servicer those documents reasonably requested by
the Servicer of each Mortgage Loan the Company desires the Servicer to service
under this Agreement, not less than 15 days prior to the date the next payment
under such Mortgage Loan is due. The Servicer shall review the documents upon
receipt thereof to determine whether they are sufficient for the Servicer to
perform its obligations hereunder and shall promptly notify the Company of any
deficiency. The Servicer may microfilm all or any part of each Mortgage Loan
file including, without limitation, copies of any
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insurance policies. The contents of each Mortgage Loan file delivered to the
Servicer are and shall be held by the Servicer for the benefit of the Company as
the owner thereof for the sole purpose of servicing the related Mortgage Loan,
and such retention by the Servicer is in a custodial capacity only. The
ownership of each Mortgage Note, the Mortgage and the other contents of the
related Mortgage Loan file is vested in the Company and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of the Servicer shall immediately vest in the
Company and shall be retained and maintained by the Servicer at the will of the
Company in such custodial capacity only. The Servicer's records shall be
appropriately marked to clearly reflect the ownership of the related Mortgage
Loan by the Company. The Servicer shall release its custody of the consents of
any Mortgage Loan file only in accordance with written instructions from the
Company, except that where such release is required as incidental to the
Servicer's servicing of the Mortgage Loans or is in connection with a repurchase
of a Defective Mortgage Loan, such written instructions shall not be required.
In addition, the Servicer shall destroy or redeliver to the Company all
documents comprising each Mortgage Loan file, whether in microfilm form or
otherwise, as directed by the Company.
(b) Books and Records. Record title in the name of the Servicer to
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each Mortgage and the related Mortgage Note shall be retained by the Servicer
for the sole purpose of facilitating the servicing of the Mortgage Loans. All
rights arising out of the Mortgage Loans including, but not limited to, all
funds received on or in connection with a Mortgage Loan shall be received and
held by the Servicer for the benefit of the Company as the owner of the Mortgage
Loans.
(c) Cooperation; Release of Mortgage Loan Files. Upon the payment in
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full of any 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 will immediately notify the Company by a certification (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment have been or will be so
received) and shall request delivery to it of the related Mortgage Loan file to
the extent that the Servicer does not already have possession of all documents
in such file. The Company agrees, upon receipt of such certification and
request, promptly to release the related Mortgage Loan
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file to the Servicer. Upon any such payment in full, the Servicer is authorized
to execute an instrument of satisfaction regarding such Mortgage or to procure
from the trustee under the deed of trust which secured the Mortgage Note a deed
of full reconveyance covering the property encumbered by such deed of trust, as
the case may be, which instrument of satisfaction or deed of reconveyance shall
be recorded by the Servicer if required by Law and be delivered to the person or
persons entitled thereto. The Company agrees from time to time and as
appropriate for the servicing or foreclosure of any Mortgage Loan, upon request
of the Servicer and delivery to the Company of a trust receipt, to release the
related Mortgage Loan file to the Servicer and execute such documents as shall
be necessary to the prosecution of any proceedings relating to the servicing or
foreclosure of any Mortgage Loan. Such trust receipt shall obligate the Servicer
to return the Mortgage Loan file to the Company when the need therefor by the
Servicer no longer exists unless the Mortgage Loan shall be liquidated, in which
case, upon receipt of a certificate of the Servicer similar to that hereinabove
specified, the trust receipt shall be released to the Servicer.
3. General Duties of the Servicer. The Servicer acknowledges that
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all servicing rights to the Mortgage Loans serviced hereunder belong to the
Company. The parties agree that, subject to the provisions of paragraphs 3(1),
6 and 7 hereof, the Servicer shall service the Mortgage Loans, in the manner and
on the terms and conditions specified in the Commitment relating to such
Mortgage Loans and as set forth below:
(a) Power and Authority. The Servicer shall have full power and
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authority, acting alone, to do and perform any and all things which it may deem
necessary or desirable to carry out its servicing responsibilities hereunder,
unless contrary to the express provisions of this Agreement. It is understood
and agreed that the Servicer shall perform its duties as an independent
contractor and not as an agent or regular employee of the Company; that the
Servicer shall use its own equipment and employees; that the Servicer shall
exercise control over the details of its work; and that the Servicer shall be
free to pursue other job opportunities in its field. The Servicer shall have no
authority expressed or implied, to act in any manner or by any means, for or on
behalf of the Company in its capacity as Servicer, except as expressly set forth
in this Agreement.
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(b) Standards of Servicing.
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(i) The Servicer agrees to service, as required hereunder, the
Mortgage Loans in accordance with the Loan Servicing Guidelines, which are
incorporated by reference as though set forth in full herein, and this
Agreement. The Servicer agrees that the Company may modify the Loan
Servicing Guidelines from time to time and that after notification to the
Servicer of any such modifications, the Servicer will comply with the Loan
Servicing Guidelines as so modified, but in no event will the Loan
Servicing Guidelines be modified so as to make Conforming Mortgage Loans,
which would otherwise be eligible, ineligible for sale to FNMA and FHLMC.
(ii) The Servicer shall perform all services and duties with
respect to the Mortgage Loans in accordance with the standards of practice,
diligence, prudence and competence maintained by the mortgage banking
industry in the servicing of mortgage loans, to the extent such standards
are not contrary to the Loan Servicing Guidelines or this Agreement. At
all times while the Servicer is servicing Mortgage Loans under this
Agreement the Servicer shall maintain adequate facilities to perform its
obligations in accordance with such standards, including, but not limited
to, the ability to generate complete and accurate servicing reports.
(iii) The Company may enter into agreements from time to time,
such as the Loan Purchase and Administrative Services Agreement, to provide
for the monitoring and administering of the servicing of Mortgage Loans by
the Servicer under this Agreement and other servicers under similar
agreements as set forth in Section 3(l) hereof.
(c) Collection of Revenues and Escrow Payments.
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(i) The Servicer shall instruct each Mortgagor that checks, money
orders or other remittances in payment of his Mortgage Loan must be paid to
the order of the Servicer servicing such Mortgage Loans. All moneys
collected by the Servicer pertaining to the Mortgage Loans may be deposited
temporarily into a clearing account maintained by the Servicer. Within one
Business Day, the Servicer, after deduction of its Servicing Fee, shall
with-
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draw from the clearing account all amounts representing Escrow Payments
which shall be applied in accordance with Section 3 (c)(vi), and all
amounts representing Revenues received by the Servicer on behalf of the
Company in accordance with the terms of this Agreement which shall be
promptly deposited in a Custodial Account, subject to withdrawal on demand
of the Company at any time. The deposits in such Custodial Account as well
as any clearing account shall be fully insured by the FDIC.
(ii) The Servicer shall remit by wire to the Company, on or
before the Remittance Date, all amounts in the Custodial Account plus an
amount equal to the Monthly Advance, if any, except that: (A) any
Principal Prepayments and any prepayment of interest which represent
scheduled future monthly installments of principal and interest may be
retained in the Custodial Account and may be remitted by the Servicer as if
they were received on the scheduled due dates of such installments; (B) any
Insurance Proceeds shall be held in the Custodial Account pending the
determination of whether such moneys shall be applied to the repair of the
related property or constitute Principal Prepayments; (C) any other amounts
representing Principal Prepayments together with interest thereon at the
rate specified in the Mortgage Note through the last day of the month of
receipt, shall be remitted immediately upon receipt of such Principal
Prepayments or, at the option of the Company, on the Remittance Date in the
month following the month of receipt of such Principal Prepayments; and (D)
prior to making the monthly remittance to the Company, the Servicer may,
subject to its rights to retain late payment charges in accordance with
Paragraph 4(a), withdraw any amounts from the Custodial Account
representing late payments of principal and interest with respect to which
the Servicer has made a Monthly Advance or representing late payment
penalties collected by the Servicer, which funds shall be released from the
terms and provisions of this Agreement and may be retained by the Servicer.
If the Remittance Date is not a Business Day, the Servicer shall make its
remittance on the next preceding Business Day.
(iii) The Servicer must make all Monthly Advances. In the event
that the Servicer excludes any amount from a Monthly Advance on the grounds
that inclusion of such amount would constitute a Nonrecoverable Advance,
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the Servicer shall indicate in writing the reasons therefor and shall
provide such writing to the Company with its Servicer Remittance
Reconciliation. The Company shall provide written notice to the Servicer if
the Company does not agree with the Servicer that such amount would
constitute a Nonrecoverable Advance. If the Company's notice indicates
disagreement with the Servicer's determination, the Servicer shall advance
additional amounts as indicated by the Company on or before the next
Remittance Date. If the Servicer fails to make such additional advance, or
any portion thereof, on or before the next Remittance Date, the Company
shall terminate all of the Servicer's rights and obligations under this
Agreement as provided in paragraph 7 hereof.
(iv) After making any Monthly Advance, the Servicer may submit a
request to the Company for reimbursement therefor. If the Servicer (A)
fails to remit any scheduled payment of principal and/or interest on the
grounds that such remittance would constitute a Nonrecoverable Advance or
obtains payment with respect to an amount of principal and/or interest from
Insurance Proceeds or Liquidation Proceeds and (B) also receives payment
thereof from the Mortgagor or otherwise, the Servicer shall immediately
forward to the Company the amount of the payment received from the
Mortgagor or other source.
(v) The Servicer shall provide the Company (A) for each payment
of a Mortgage Loan in full by the Mortgagor, through foreclosure or
otherwise, with a Liquidation Schedule and, if applicable, a Foreclosure
Remittance Summary and (B) with a Servicer Remittance Reconciliation on or
before the fifth Business Day of each calendar month.
(vi) All moneys received as Escrow Payments by the Servicer shall
be held by the Servicer for the benefit of the Company and the applicable
Mortgagor and, after an initial deposit into its clearing account in
accordance with paragraph 3(c)(i), shall be held by the Servicer in the
Escrow Account, consisting of such account or accounts as the Servicer is
required to maintain for like payments made with respect to Mortgages which
are being serviced for FNMA or FHLMC, pending application of such moneys
pursuant to paragraph 3(d) hereof. The Servicer shall maintain a record
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of the source of each Escrow Payment and the total of such payments on
deposit from each Mortgagor. The Escrow Account shall be an account or
accounts fully insured by the FDIC. Interest earned, if any, on the Escrow
Payments held by the Servicer shall not be required to be paid or credited
to the Mortgagor unless required by Law.
(d) Collection of Taxes, Assessments and Similar Items. The Servicer
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shall hold for the benefit of the Company and the respective Mortgagors for
which it services Mortgage Loans hereunder all moneys received by it
representing Escrow Payments. The Servicer shall, from time to time, obtain
bills for all such items and effect payments thereof with checks drawn on the
Escrow Account maintained by it, prior to the applicable penalty or
termination date. In the event that any Mortgagor's Escrow Account is
insufficient for a payment required to be made from such account, the Servicer
shall make an Expense Advance by depositing into the Escrow Account moneys
sufficient to cause the required payment to be made. All moneys advanced by
the Servicer for payment of any item for which an escrow is required under the
Mortgage shall be added to the amount owing under the Mortgage Loan and may be
recovered by the Servicer from the Mortgagor in the manner provided in the Loan
Servicing Guidelines. The Servicer shall maintain adequate records of proof of
payment of all such items. In case of a refund of a premium on a prepaid
insurance policy, such refund shall be credited to the Mortgagor's Escrow
Account except with respect to a cancellation, termination or transfer of such
policy in which case the premium shall be refunded to the Mortgagor.
(e) The Servicer to Conduct Foreclosures. The Servicer shall be
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responsible for determining the necessity of instituting foreclosure action with
respect to any Mortgage Loan which it is servicing. The Servicer shall submit
its recommendation, accompanied by a Servicer Foreclosure Recommendation, to the
Company, at such time as, in the opinion of the Servicer, foreclosure of a
Mortgage Loan shall be necessary. If the Company approves of such
recommendation, the Company will notify the Servicer, and the Mortgage Documents
shall be released by the Company to the Servicer upon request therefor. The
Servicer shall, within 21 days following any such release by the Company of the
Mortgage Documents, either complete the foreclosure and liquidation of the
Mortgage Loan as provided in this Agreement, or return the Mortgage Note to the
Company. All foreclosures shall be conducted by the Servicer in accordance with
the Loan
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Servicing Guidelines, this Agreement and all requirements of FHA, VA or
any other insurance or guarantor providing insurance on or a guaranty of such
Mortgage Loan. The Servicer shall select the counsel to conduct foreclosure,
subject to the right of the Company to notify the Servicer that any particular
counsel is unacceptable. The Servicer shall take such action as is appropriate
during the foreclosure to maintain the mortgaged property in as good a condition
as it was when foreclosure proceedings commenced, ordinary wear and tear
accepted, and subject to the Loan Servicing Guidelines, shall assist the Company
in preserving, rehabilitating and/or selling any property received through a
foreclosure action, upon request by the Company, and, to the extent necessary,
in retaining an independent contractor to manage such property after
foreclosure. In the event that the Company rejects the Servicer's
recommendation, the Servicer shall continue to service the Mortgage Loan in
accordance with the delinquency procedures under the Loan Servicing Guidelines.
(f) Delinquency and Special Reports. On or before the fifth Business
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Day of each month, the Servicer shall provide to the Company a Servicer
Delinquency Report which shall report each Mortgage Loan which was, as of the
last day of the preceding month, delinquent. The Servicer shall also provide
the Company with a Servicer Foreclosure Recommendation/Individual
Delinquency Report as to each Mortgage Loan which was, as of the last day of the
preceding month, delinquent for 60 days or more, reporting the Servicer's
recommendation, if any. On or before the fifth Business Day of each month, the
Servicer shall also provide to the Company a New Loans Report, a Curtailments
and Prepaid Installments Report and a Servicer Foreclosure Status Report which
shall report, with respect to each Mortgage Loan which is in foreclosure
proceedings, the progress and anticipated timing for consummation of such
proceedings. In addition, on or before the fifth Business Day of each month,
the Servicer shall provide to the Company: (A) the Trial Balance of the Mortgage
Loans and of the Escrow Payments relating to the Mortgage Loans held by the
Servicer in each Custodial Account and Escrow Account, respectively; (B) a
reconciliation of the Servicer's Custodial Account and Escrow Account; and (C) a
copy of the most recent statement for each Custodial Account and Escrow Account
rendered by the institution with whom such accounts are maintained. The
Servicer shall also provide to the Company, and such other persons as may from
time to time be designated by the Company to receive same, such other reports or
information
15
regarding the Mortgage Loans being serviced by the Servicer hereunder as may be
reasonably requested by any of them.
(g) Maintenance of Standard Hazard Insurance. The Servicer shall
----------------------------------------
require that each Mortgagor obtain and maintain for each Mortgage Loan a
Standard Hazard Insurance Policy and, where necessary, a Flood Insurance Policy
on the Residence which is issued by a Qualified Standard Hazard Insurer and
which in full compliance with all applicable requirements of the FHA, VA or
Qualified Mortgage Insurer insuring or guaranteeing such Mortgage Loan. Such
policy shall be in an amount which is not less than the maximum insurable value
(i.e., replacement value without deduction for depreciation) of the property
securing the Mortgage Loan or 90% of the principal balance owing on such
Mortgage Loan, whichever is less, provided that at the time the Company
purchases the Mortgage Loan the amount shall not be less than 90% of the
principal amount of such Mortgage Loan. In all events, such coverage shall be in
an amount sufficient to ensure that the Company could not become a coinsurer
under the terms and conditions of the applicable policy, and such coverage shall
be at least as protective as fire and extended coverage, insuring the Company as
mortgagee under a standard mortgagee clause to the full extent of its interest
in the Residence. Such policies shall not be cancelable by the Qualified
Standard Hazard Insurer without 10 days prior notice to the Servicer. If
directed by the Company, the Servicer shall retain custody of such policies and
renewals thereof or microfilm copies thereof, as agent of the Company, and
annually shall issue a certificate to the Company certifying that the above
requirements have been met. The Servicer's obligation to require such insurance
to be maintained shall be absolute, regardless of any failure or refusal by any
Mortgagor to pay in timely fashion the premium due thereon, and the Servicer
agrees with respect to the Mortgage Loans serviced by it to indemnify and hold
the Company harmless against any loss suffered as a result of the absence of
hazard insurance or the lack of hazard insurance sufficient in amount to protect
the Company's interest with respect to any Residence. Compliance with paragraph
3(i) hereof by the Servicer shall be deemed compliance by the Servicer with its
financial obligations under this paragraph 3(g) to the extent that the insurance
maintained under paragraph 3(i) provides for the payment of such obligations.
The Servicer shall use due diligence to ascertain any loss or damage
to the property securing the Mortgage Loan and upon obtaining knowledge thereof
shall immediately notify the
16
Company and the qualified Standard Hazard Insurer concerned. Except as otherwise
provided by a Mortgage Loan insured under a private program, each such policy
shall provide for payment to the Company in the event of loss, and payments for
losses under any such policy shall be collected by the Servicer and held in
trust in accordance with paragraph 3(c) hereof until disbursed as instructed by
the Company or remitted as a Principal Prepayment pursuant to Paragraph 3(c)
hereof. The Servicer may, with respect to checks and payments issued under such
policies which do not exceed Five Thousand Dollar ($5,000), or such higher
amount as may be specified from time to time by the Company in accordance with
prudent mortgage investment standards, deposit such checks on behalf of the
Company into the Servicer's Custodial Account. The Servicer shall have no
authority to make any agreement with respect to the restoration or
rehabilitation of property damaged by fire or other casualty, except when the
amount of the loss is less than Five Thousand Dollars ($5,000), or such other
designated amount as provided hereinabove, subject to any applicable
requirements of FNMA and FHLMC with respect to disbursements of insurance
proceeds. The Servicer shall receive no compensation, in addition to that
provided in paragraph 4(a) hereof, for its services pursuant to this paragraph
3(g).
(h) Maintenance of Mortgage Single Interest Hazard Insurance. The
--------------------------------------------------------
Servicer may maintain a mortgage single interest hazard insurance policy with
sufficient coverage to provide hazard insurance on any property securing a
Mortgage Loan having no Standard Hazard Insurance Policy, in an amount at least
equal to the coverage required pursuant to paragraph 3(g) hereof and providing
for the payment of any deductible amount by the Servicer or the Mortgagor, and
naming the Company as insured. All premiums advanced by the Servicer in
maintaining any such insurance shall be added to the amount owing under the
Mortgage Loan where the terms of the Mortgage Loan so permit. Any amounts
collected by the Servicer under any such policy relating to claims regarding the
Mortgage Loans (other than amounts to be applied to the restoration or repair of
the property securing the related Mortgage Loan in the manner set forth in
paragraph 3(g) hereof) shall be remitted to the Company.
(i) Maintenance of Primary Mortgage Insurance. The Servicer shall
-----------------------------------------
cause to be maintained with respect to each Conventional Mortgage Loan serviced
by it, a Primary Mortgage Insurance Policy issued by a Qualified Mortgage
Insurer, insuring the payment of such Mortgage Loan, to the extent that the
17
principal amount thereof as of the date such Mortgage Loan is originated and
funded exceeds 30% of the Appraised Value or Sales Price (whichever is less) of
the Residence, in an amount so that the uninsured portion of such Mortgage Loan
does not exceed 75% of the Appraised Value of Sales Price (whichever is less).
All premiums advanced by the Servicer in maintaining any such insurance shall be
collected by the Servicer from the Mortgagor or, to the extent permitted by Law,
added to the amount owing under the Mortgage Loan. Subject to the provisions of
paragraph 3(c) hereof, any amounts collected by the Servicer under any such
policy shall be remitted to the Company.
(j) Maintenance of Fidelity Bond and Errors and Omissions Insurance.
---------------------------------------------------------------
The Servicer hereby agrees to obtain and maintain in full force and effect
throughout the term of this Agreement, at its own expense, and shall furnish the
Company satisfactory evidence of, a blanket fidelity bond and an errors and
omissions insurance policy covering the Servicer's officers, employees and any
other persons acting on behalf of the Servicer in its capacity as the Servicer
with regard to the Mortgage Loans. The amount of coverage shall be at least
equal to the highest amount of coverage that would be required by FNMA or FHLMC
with respect to the Servicer if the Servicer were servicing the Mortgage Loans
for FNMA or FHLMC. In the event that any such bond or policy shall cease to be
in effect, the Servicer shall obtain from an issuer or insurer licensed in each
applicable jurisdiction and acceptable to the Company a comparable replacement
bond or policy, as the case may be. Any amounts collected under such bond or
policy relating to the Servicer's activities in originating or servicing the
Mortgage Loans shall be remitted to the Company. No provision of this paragraph
3(j) shall operate to diminish, restrict or otherwise limit the Servicer's
responsibilities and obligations as set forth in this Agreement.
(k) Annual Reports. On or before 120 days after the end of the
--------------
Servicer's fiscal year, the Servicer, at its expense, shall furnish to the
Company (A) an opinion by a firm of independent certified public accountants on
the financial position of the Servicer at the end of its fiscal year, and the
results of operations and changes in financial position of the Servicer for such
year then ended on the basis of an examination conducted in accordance with
generally accepted auditing standards and (B) a statement from the independent
certified public accountants concerning compliance with servicing standards on
the basis of an examination conducted substantially in compli-
18
ance with the audit program for mortgages serviced for FNMA or FHLMC, the United
States Department of Housing and Urban Development Mortgagee Audit Standards or
the Uniform Single Audit Program for Mortgage Bankers, except for (1) such
exceptions as such firm shall believe to be immaterial and (2) such other
exceptions as shall be set forth in such statement.
On or before the 60th day succeeding each anniversary of this
Agreement, the Servicer shall provide to the Company a statement with respect to
all Mortgage Loans being serviced by it certified by an Officer to the effect
that (A) all insurance is being maintained, is fully paid and complies with this
Agreement, (B) all taxes have been paid as and when due, (C) all inspections
have been made if and to the extent required by this Agreement and (D) analysis
has been made of each Mortgage Loan to ensure sufficient moneys are being
collected in escrow for the current year or, if any such certifications cannot
be made, specifying the reasons therefor and what curative action is being
taken.
On or before the 60th day succeeding each anniversary of this
Agreement, the Servicer shall forward to the Company an annual statement,
certified by an Officer, certifying that, to the best of his knowledge upon
reasonable investigation, the Servicer's servicing of the Mortgage Loans has
been conducted in compliance with this Agreement except for (A) such exceptions
as such Officer shall believe to be immaterial and (B) such other exceptions as
shall be set forth in such statement. Contemporaneously with such annual
statement, the Servicer shall also deliver to the company a certificate of an
Officer stating that (X) a review of the activities of the Servicer during the
preceding year with respect to performance under this Agreement has been made
under such Officer's supervision and (Y) to the best of such Officer's
knowledge, based on such review, there is, as of such date, no default by the
Servicer in the fulfillment of any of its obligations under this Agreement, or
if there is any such default known to such Officer, specifying each such default
and the nature and status thereof.
(l) Assignment of Servicing or Subservicing Obligations. At any time
---------------------------------------------------
during the term of this Agreement, the Servicer may, with the prior written
consent of the Company, assign its servicing obligations pursuant to this
Agreement. Any agreement to assign servicing obligations shall provide that the
assignee, must assume the servicing obligations of this Agreement
19
with respect to the assigned Mortgage Loans for the same Servicing Fee that
would otherwise have been paid to the assignor. Furthermore, ICIFC and the
Company agree that ICIFC may enter into subcontract agreements with any third
party, pursuant to which such third party will provide such of the servicing
duties required hereunder as ICIFC deems necessary. Provided, however, that no
such arrangement, either by assignment of this Agreement or by a subcontract
agreement, as the case may be, between ICIFC and any third party shall relieve
ICIFC of any of its duties or obligations hereunder.
(m) Assumptions. If a Mortgage Loan contains a "due-on-sale" clause,
-----------
the Servicer will enforce such clause in the manner set forth in this paragraph
3(m), unless otherwise provided in the Commitment relating to such Mortgage Loan
or instructed by the Company. The Servicer is not authorized to approve an
assumption request from any Mortgagor in connection with a transfer of a
Residence subject to a Mortgage Loan unless (A) an Assumption and Release
Agreement is entered into by the person to whom the Residence is to be or has
been conveyed which provides for the assumption of the indebtedness by such
person, (B) the person to whom the Residence is to be or has been conveyed meets
the requirements of all insurers providing insurance on the Mortgage Loan and
(C) the Mortgage Loan shall continue to be insured or guaranteed under any
applicable insurance policies described in paragraphs 3(g), (h), (i) and (j)
hereof. In connection with any sale or transfer of a Residence within the terms
of the "due-on-sale" clause, the Servicer shall determine the qualifications of
the person to whom the property securing the Mortgage Loan is to be conveyed and
shall, if such person is found to be qualified to assume the Mortgage Loan under
the above stated provisions of this paragraph 3(m), obtain the Company's consent
to such release of the Mortgagor and prepare an Assumption and Release Agreement
meeting the requirements of the Loan Servicing Guidelines and the certifications
as may be required by the Company from time to time. The Servicer shall deliver
a certificate, executed by an Officer, to the Company at the time of a transfer
of a Residence in connection with which the Mortgagor is being released pursuant
to this paragraph 3(m) to the effect that the release of the Mortgagor and the
Assumption and Release Agreement prepared in connection therewith meet the terms
of this paragraph 3(m), including that the person to whom the Residence is
conveyed satisfies all of the Company's credit and underwriting standards. The
Assumption and Release Agreement with such certificate and relevant
certifications shall be
20
delivered to the Company, inserted in the related Mortgage Loan file and
thereafter be deemed a Mortgage Document.
(n) The Servicer to Satisfy Insurance and Guaranty Requirements. The
-----------------------------------------------------------
Servicer shall be responsible for causing all applicable requirements of the
FHA, VA, Qualified Mortgage Insurer and Qualified Standard Hazard Insurer to be
satisfied with respect to any Mortgage Loan which has such insurance or guaranty
so that the full benefits of such insurance or guaranty will inure to the
Company. The Servicer shall use its best efforts to obtain compliance by the
Mortgagor or any assignee permitted by paragraph 3(m) hereof with all applicable
provisions and requirements of such insurance or guaranty in order to maintain
such insurance or guaranty in full force and effect. Subject to the provisions
of paragraph 3(c) hereof, any amounts collected by the Servicer under any such
insurance or guaranty shall be remitted to the Company.
4. Servicing Compensation and Expenses.
-----------------------------------
(a) Servicing Fee. As compensation for its activities hereunder and
-------------
in consideration for servicing the Mortgage Loans for which it is responsible,
the Servicer shall retain, and the Company consents to the Servicer retaining
from Mortgagor payments received by it, the Servicing Fee earned by it. The
Servicing Fee shall be considered to be earned for any particular month with
respect to each Mortgage Loan for which the payment of all interest and
principal due for such month has been received by the Servicer from the
Mortgagor and has been remitted by the Servicer to the Company. In addition,
except as limited by Law and available funds, the Servicer shall be entitled to
additional reimbursement for expenses incurred by the Servicer in connection
with the receipt of Insurance Proceeds or Liquidation Proceeds upon requisition
therefor, which requisition shall be submitted to the Company in accordance with
paragraph 4(b)(ii) hereof. Additional servicing compensation in the form of late
payment charges, penalties and assumption fees or otherwise, if any, may be paid
to or retained by the Servicer to the extent provided for in the Mortgage Note
and permitted by Law and to the extent not contrary to the terms of this
Agreement.
(b) Liability of the Servicer for Expenses.
--------------------------------------
(i) The Servicer shall be required to pay all expenses incurred
by it in connection with its servicing
21
activities hereunder and shall not be entitled to reimbursement therefor,
except as specifically provided in paragraph 4(b)(ii) hereof or as
otherwise authorized under the Loan Servicing Guidelines. The Servicer also
agrees to pay: (A) all costs or expenses resulting from failure by the
Servicer to timely file claims for losses relating to Mortgage Loans
(including the failure to file claims under the insurance policies or the
bond referred to in paragraphs 3(g), (h), (i) and (j) hereof); (B) all
costs and expenses resulting from failure by the Servicer to foreclose
Mortgages relating to deficient Mortgage Loans in a manner consistent with
paragraph 3(e) hereof; and (C) all costs and expenses incurred by the
Company in connection with replacing the Servicer as a servicer of Mortgage
Loans in the event of default of the Servicer under the terms and
provisions of this Agreement. Unless the Loan Servicing Guidelines
otherwise require, the Servicer shall, prior to expending any moneys of an
extraordinary amount which may be reimbursable under paragraph 4(b)(ii)
hereof, submit a request for reimbursement or an estimate of expenses
anticipated to be incurred to the Company.
(ii) The Servicer shall be required to make all Expense Advances.
After making any Expense Advance, the Servicer may submit a request to the
Company for reimbursement therefor. If the Servicer is reimbursed for any
such Expense Advance and also recovers all or any portion of such amounts
from payments by or on behalf of a Mortgagor or otherwise, the Servicer
shall immediately forward such recovered amounts to the Company.
5. Repurchase of Defective Mortgage Loans. By executing this
--------------------------------------
Agreement the Servicer makes the Representations and Warranties to the Company
concerning the Mortgage Loans it services for the Company. In the event the
Servicer fails to make any Representation or Warranty, or any Representation or
Warranty made by the Servicer is false or untrue, the Company may request the
Servicer to repurchase, and the Servicer shall repurchase the related Mortgage
Loan whether or not such Mortgage Loan is in default. The price which the
Servicer will pay the Company for any such Defective Mortgage Loan shall be
equal to the unpaid principal balance of the Defective Mortgage Loan as of the
date of purchase, (i) plus all interest accrued but not paid on such Defective
Mortgage Loan from the date of purchase by the Company through the date of
purchase by the Servicer, (ii) less any pre-
22
paid but unaccrued interest on the Defective Mortgage Loan through the
date preceding the purchase date, (iii) plus any disbursements, including but
not limited to reasonable fees and out-of-pocket expenses of counsel, incurred
by the Company in enforcing the Servicer to purchase such Defective Pledged
Loan.
6. Contribution of Mortgage Loans or Undivided Interests
-----------------------------------------------------
Therein.
-------
(a) Collateralized Mortgage Obligations. The Servicer
-----------------------------------
acknowledges that the Mortgage Loans may be used to secure the issuance of
collateralized mortgage obligations or other mortgage collateralized bonds
which may require the retained servicing of such Mortgage Loans to be
performed in a manner and on terms other than as set forth in this
Agreement. In such event, the Servicer agrees to enter into new servicing
arrangements with the Company and/or a trustee acting on behalf of the
holders of the collateralized mortgage obligations or mortgage
collateralized bonds so long as the compensation to the Servicer is at
least equivalent to the Servicing Fee payable to it hereunder with respect
to such Mortgage Loans. Upon the execution of any such new servicing
agreement, this Agreement shall terminate as to the Mortgage Loans subject
thereto.
(b) Sales to a Trustee. The Servicer acknowledges that the
------------------
Company may sell undivided interests in Mortgage Loans for the issuance of
pass-through mortgage certificates which may require the servicing of such
Mortgage Loans to be performed in a manner and on terms other than as set
forth in this Agreement. In such event, the Servicer agrees to enter into
servicing arrangements with the Company or a trustee acting on behalf of
the holders of the pass-through certificates so long as the compensation to
the Servicer is at least equivalent to the Servicing Fee payable to it
hereunder with respect to such Mortgage Loans. Upon the execution of any
such new servicing agreement, this Agreement shall terminate as to the
Mortgage Loans subject thereto.
(c) Partial Assignments. The Company and the Servicer
-------------------
acknowledge and agree that the Company may make partial assignments of this
Agreement at any time and from time to time in connection with the pooling
of mortgage loans being serviced hereunder and the assignment of undivided
interests therein to a third party, or in connection with the enforcement
of this Agreement. In the event that, pursuant to the terms and conditions
of
23
any applicable pooling and administration agreement, a portion of this
Agreement so assigned is terminated, such termination shall not cause a
termination of the remaining portion(s) of this Agreement not assigned or
assigned and subject to a different pooling and administration agreement.
7. Termination and Liabilities.
---------------------------
(a) The Servicer Not to Resign. The Servicer shall not have the
--------------------------
right to resign from the duties and obligations hereby imposed on it or to
assign or transfer such duties and obligations or any of its rights
hereunder, except as provided in paragraph 3(1) hereof.
(b) Termination of the Servicer with Cause. Upon the happening
--------------------------------------
of any one or more of the following events the Company may, without payment
of any penalty, terminate all of the Servicer's rights and obligations
under this Agreement with respect to all Mortgage Loans:
(i) Failure of the Servicer to remit to the Company pursuant to
paragraph 3(c) hereof any Revenues received by the Servicer, failure of the
Servicer to make any Monthly Advances or Expense Advances, including any
failure to make Monthly Advances following any notice of disagreement as
provided in Section 3(c)(iii), as required by this Agreement or failure of
the Servicer to make any other advance of funds at the time and in the
manner required by this Agreement.
(ii) A representation or warranty of the Servicer to the Company
shall be false in any material respect.
(iii) Failure of the Servicer to duly observe or perform in any
material respect any other covenant, condition or agreement contained in
the Loan Servicing Guidelines of this Agreement and required thereby or
hereby to be observed or performed by the Servicer, other than as referred
to in paragraphs 7(b)(i) and (ii) hereof, for a period of 30 days after a
written notice to the Servicer from the Company has been sent specifying
such failure and requesting that it be remedied; provided, however, that if
the failure states in the notice cannot be corrected within the applicable
period, the Company shall consent to a
24
reasonable extension of time if corrective action is instituted by the
Servicer within the applicable period and diligently pursued until fully
corrected; provided further, that if the Company determines that such
failure cannot be corrected within such period, the Company may immediately
terminate the Servicer pursuant to this paragraph 7(b)(iii).
(iv) There is entered an order for relief or similar decree or
other with respect to the Servicer by a court having jurisdiction in the
premises in an involuntary case under the federal bankruptcy laws as now or
hereafter constituted or under any applicable federal or state bankruptcy,
insolvency or other similar laws or the Servicer (1) ceases or admits in
writing its inability to pay its debts as they become due and payable, or
makes a general assignment for the benefit of, or enters into any
composition or arrangement with, creditors; (ii) applies for, or consents
(by admission of material allegations of a petition or otherwise) to the
appointment of a receiver, trustee, assignee, custodian, liquidator or
sequestrator (or other similar official) of the Servicer or of any
substantial part of its properties or assets, or authorizes such an
application or consent, or proceedings seeking such appointment are
commenced without such authorization, consent or application against the
Servicer and continue undismissed for 60 days; (iii) authorizes or files a
voluntary petition in bankruptcy, or applies for or consents (by admission
of material allegations of a petition or otherwise) to the application of
any bankruptcy, reorganization, arrangement, readjustment of debt,
insolvency, dissolution, liquidation or other similar law of any
jurisdiction, or authorizes such application or consent, or proceedings to
such end are instituted against the Servicer without such authorization,
application or consent and are approved as properly instituted and remain
undismissed for 60 days or results in adjudication of bankruptcy or
insolvency; or (iv) permits or suffers all or any substantial part of its
properties or assets to be sequestered or attained by court order and the
order remains undismissed for 60 days.
(v) The Servicer fails to maintain delinquency rates on
Conforming Mortgage Loans in which the Company has an interest at a level
below that of other FHLMC
25
and FNMA servicers servicing mortgages of the same type in the same general
geographical area.
(vi) The Servicer fails to maintain delinquency rates on Non-
Conforming Mortgage Loans in which the Company has an interest at a level
below that of Non-Conforming Mortgage Loan servicers servicing mortgages of
the same type in the same geographical area.
(vii) The consolidation or merger by the Servicer into another
entity or the permission by the Servicer for one or more other entities to
consolidate or merge with or merge into it without the prior written
consent of the Company.
If any of the events specified in paragraph 7(b)(iv) above shall
occur, the Servicer shall give written notice of such occurrence to the
company within two days of the happening of such event.
Any termination as a result of any event described in paragraph
7(b) above shall be accomplished as soon as practicable by the Company so
that required advances by the Company, or its designee, as a standby
servicer shall be made on a timely basis.
(c) Termination of the servicer without Cause. The Company may
-----------------------------------------
terminate this Agreement at any time, without cause, by giving 30 days' prior
written notice to the Servicer and paying a servicing termination fee to the
Servicer equal to 1.0% of the outstanding principal balance of each Mortgage
Loan being serviced hereunder.
(d) Transfer of Servicing after Termination. Upon the effective date
---------------------------------------
of termination of the Servicer under paragraph (b) or (c), the Servicer shall
immediately deliver or cause to be delivered to the Company: (A) all moneys held
in each Custodial Account and each Escrow Account, together with an assignment
of this Agreement from the Servicer to the Company; (B) all Revenues received by
such Servicer and not theretofore remitted to Company; and (C) within 30 days of
said termination, all files, whether in paper, microfilm or microfiche form, of
the Servicer relating to the Mortgage Loans serviced by such Servicer. Nothing
in this Section 7(d) or in Section 7(e) shall restrict in any way the Company's
right to obtain monies in any
26
Custodial Account and Escrow Account and any of the Mortgage Documents granted
elsewhere in.this Agreement. The Servicer agrees to indemnify and hold the
Company harmless from any and all loss, damage and expenses (including
reasonable attorneys' fees) that any of them may incur in securing the delivery
of all files, the transfer of all escrows or the remittance of all Revenues
received by the Servicer with respect to any Mortgage Loan serviced by the
Servicer. Each party shall be responsible for their respective costs and
expenses associated with such a transfer according to industry standards for
transfer.
(e) The Servicer's Duties upon Termination. Upon receipt by the
--------------------------------------
Servicer of written notice of termination from the Company pursuant to paragraph
7(b) hereof, and upon the effective date of the notice of termination received
under paragraph (c) hereof, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Company pursuant to and under this
paragraph 7(e); and, without limiting the foregoing, the Company is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans, the Mortgage Loan files and
related documents, or otherwise. The Servicer agrees to cooperate with the
Company in effecting the termination of the Servicer's responsibilities and
rights hereunder, including without limitation, the transfer to the Company or
such other person or entity as the Company may designate, for administration,
all cash amounts which shall at the time be credited by the Servicer to each
Custodial Account and each Escrow Account or thereafter received with respect to
the Mortgage Loans.
(f) The Servicer's Excused Performance. Notwithstanding any
----------------------------------
provision in this Agreement to the contrary, there shall be no termination of,
and no liability under, this Agreement with respect to the Servicer for its
failure to duly observe or perform in any material respect any covenant,
condition or agreement contained in the Loan Servicing Guidelines or this
Agreement and required thereby or hereby to be observed or performed by the
Servicer hereunder if such failure on the part of the Servicer is directly
caused by the failure of the Company to duly observe or perform in any material
respect any covenant, condition or agreement contained in the Loan Servicing
Guidelines
27
or this Agreement and required thereby or hereby to be observed or performed by
the Company hereunder.
(g) Access to the Servicer's Records. The Company and its agents may,
--------------------------------
from time to time, and upon 48 hours notice, request the Servicer to allow the
inspection and copying of any of the Servicer's books and records pertaining to
the Mortgage Loans, and the Servicer shall allow such inspections and access to
such books and records at reasonable times during the Servicer's normal business
hours and upon reasonable terms.
(h) No Liability for Removal of the Servicer. Notwithstanding any
----------------------------------------
provision in this Agreement to the contrary, the Company shall not be liable in
any respect for the termination of the Servicer for cause or owe any duty to the
Servicer if terminated for cause.
(i) No Remedy Exclusive. No remedy herein conferred upon or reserved
-------------------
to any party is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under this Agreement or existing at law or in equity. No delay or omission to
exercise any right or power accruing under this Agreement shall impair any such
right or power, or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient.
8. Representations and Warranties; Covenants of Servicer.
-----------------------------------------------------
(a) By the Servicer. The Servicer hereby reaffirms the
---------------
representations and warranties made by it to the Company in the Commitment
relating to each Mortgage Loan serviced hereunder and, in addition, hereby
further represents and warrants to the Company that:
(i) The Servicer is a corporation, duly organized, validly
existing and in good standing under the laws governing its creation and
existence and is duly authorized and qualified to transact in each state
where the nature of its business or property requires that it be so
authorized and qualified any and all of its business, including the
business contemplated by this Agreement, and possesses all requisite
authority, power, licenses, permits and franchises to conduct any and all
business contemplated
28
by this Agreement and to comply with its obligations under the terms of
this Agreement, the performance of which have been duly authorized by all
necessary action.
(ii) Neither the execution and delivery of this Agreement
by the Servicer, nor the performance and compliance with the terms hereof
by the Servicer will (A) violate the instruments creating the Servicer or
governing its operations, (B) violate any Laws applicable to the Servicer
which could have any material adverse effect whatsoever upon the validity,
performance or enforceability of any of the terms of this Agreement or (C)
constitute a material default (or an event which, with notice or lapse of
time, or both, would constitute a material default) under, or result in the
breach of, any material contract, agreement or other instrument to which
the Servicer is a party or which may be applicable to the Servicer or any
of its assets.
(iii) The execution and delivery of this Agreement by the
Servicer in the manner contemplated herein and the performance and
compliance with the terms hereof by it do not require the consent or
approval of any governmental authority or, if such consent or approval is
required, it has been obtained, and such execution and delivery have been
duly authorized by all necessary action on the part of the Servicer.
(iv) This Agreement, and all documents and instruments
contemplated hereby which are executed and delivered by the Servicer, will,
assuming due authorization, execution and recovery by the Company,
constitute valid, legal and binding obligations of the Servicer,
enforceable in accordance with their respective terms, except as the
enforcement thereof may be limited by applicable Debtor Relief Laws or by
the equitable principles governing the right of specific performance.
(v) The Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the operation of
the Servicer or its properties or might have consequences that would affect
its performances hereunder.
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(vi) The Servicer is not a party to or bound by any
agreement or instruments or subject to any articles of incorporation,
bylaws or any other corporate restriction or any judgment, order, writ,
injunction, decree, law or regulation which now or in the future may
materially and adversely affect the ability of the Servicer to perform its
obligations under this Agreement or which required the consent of any third
person to the execution of this Agreement or the performance by the
Servicer of its obligations under this Agreement.
(vii) No litigation is pending or, to the best of the
Servicer's knowledge, threatened against the Servicer which would prohibit
its entering into this Agreement or performing its obligations under this
Agreement.
(viii) As to Conforming Mortgage Loans, the Servicer is and
will at all times be an FNMA- and FHLMC-approved Servicer and will comply
in the performance of this Agreement with all reasonable rules and
requirements of each Qualified Insurer.
(ix) The Servicer has assets in excess of its liabilities
and is able to meet its debts as they become due and payable.
(b) By the Company. The Company represents and warrants to the
--------------
Servicer that:
(i) The Company is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Maryland, is
duly qualified and in good standing to transact business as a foreign
corporation in the State of California, and possesses all requisite
authority, power, licenses, permits and franchises to conduct any and all
business contemplated by this Agreement and to comply with its obligations
under the terms of this Agreement, the performance of which have been duly
authorized by all necessary corporate action.
(ii) Neither the execution and delivery of this Agreement
by the Company, nor the performance and compliance with the terms hereof by
the Company will (A) violate the instruments creating the Company or
governing its operations, (B) violate any Laws applicable to the Company
30
which could have any material adverse effect whatsoever upon the validity,
performance or enforceability of any of the terms of this Agreement or (C)
constitute a material default (or an event which, with notice or lapse of
time, or both, would constitute a material default) under, or result in the
breach of, any material contract, agreement or other instrument to which
the Company is a party or which may be applicable to the Company or any of
its assets.
(iii) This Agreement, and all documents and instruments
contemplated hereby, which are executed and delivered by the Company, will,
assuming due authorization, execution and delivery to the Servicer,
constitute valid, legal and binding obligations of the Company, enforceable
in accordance with their respective terms, except as the enforcement
thereof may be limited by applicable Debtor Relief Laws or by the equitable
principles governing the right of specific performance.
(iv) No litigation is pending or, to the best of the
Company's knowledge, threatened against the Company which would prohibit
its entering into this Agreement or performing its obligations under the
Agreement.
(c) Additional Covenants of the Servicer. In addition to the
------------------------------------
covenants and agreements of the Servicer set forth elsewhere in this Agreement,
the Servicer hereby covenants and agrees as follows:
(i) The Servicer will be: (A) at the time of origination and
funding of any Mortgage Loan which has FHA Insurance, and at all times
thereafter so long as the Servicer shall continue to serve in the capacity
contemplated under the terms of this Agreement, and FHA-approved mortgagee
and a FNMA approved seller and servicer of FHA-insured mortgages; (B) at
the time of the origination and funding of any Mortgage Loan which has a VA
Guaranty, and at all times thereafter so long as the Servicer shall
continue to serve in the capacity contemplated under the terms of this
Agreement, an eligible lender for mortgages guaranteed by the VA and a FHMA
approved seller and servicer of VA-guaranteed mortgages; and (C) at the
time of the origination and funding of any Conventional Mortgage Loan, and
at all times thereafter so long as the Servicer shall continue to serve in
the capacity contemplated under the
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terms of this Agreement, a FNMA and FHLMC approved seller and servicer of
Conventional Mortgage Loans.
(ii) The Servicer will comply with the following laws, rules,
requirements and publications as now in effect and as the same may
hereafter be amended, supplemented or superseded: (A) as to each FHA-
insured Mortgage Loan, with the National Housing Act of 1934, as amended
and supplemented, all rules and regulations issued thereunder and all
administrative publications; (B) as to each Mortgage Loan guaranteed by the
VA, with the Servicemen's Readjustment Act of 1944, as amended and
supplemented, all rules and regulations issued thereunder and all
administrative publications; and (C) as to each Mortgage Loan insured by a
Primary Mortgage Insurance Policy, with all rules and requirements of the
Qualified Mortgage Insurer in the performance of this Agreement.
(iii) The Servicer will comply with the provisions of:
Title VI of the Civil Rights Act of 1964; Title VIII of the Civil Rights
Act of 1968, as amended by the Housing and Community Development Act of
1974; Section 527 of the National Housing Act; The Equal Credit Opportunity
Act; The Fair Credit Reporting Act and any applicable regulations and
orders thereunder; Executive Order 11063, Equal Opportunity in Housing
issued by the President of the United States on November 20, 1962; and all
other applicable federal and state laws, regulations, and orders.
(iv) From time to time the Servicer will report, as more
fully set forth in this Agreement, information relating to the Mortgage
Loans to the Company, and such other persons as may from time to time be
designated by the Company, and will do every act and thing which may be
necessary or required to perform its duties under this Agreement.
(v) The Servicer agrees that so long as it shall continue to
serve in the capacity contemplated under the terms of this Agreement it
will remain in good standing under the Laws governing its creation and
existence and qualified under the laws of each state where such
qualification is necessary to do business in such state, will not dissolve
or otherwise dispose of all or substantially all of its assets and will not
voluntarily consolidate with or
32
merge into any other entity or permit one or more other entities to
consolidate with or merge into it without the prior written consent of the
Company;
(vi) No information, certificate of an Officer, statement
furnished in writing or report required hereunder, delivered to the Company
or any other person as may from time to time be designated by the Company
to receive same, will, to the knowledge of the Servicer delivering same,
contain any untrue statement of a material fact or omit a material fact
necessary to make the information, certificate, statement or report not
misleading.
9. Indemnification. The Servicer shall indemnify, defend and hold
----------------
harmless the Company, its directors, officers, employees, partners, agents,
successors and assigns, respectively, from and against any claim, action, loss,
damage, penalty, fine, cost, expense, or other liability, including all court
costs and attorneys' fees incurred in defending any claim or action or in
enforcing this indemnity resulting from or arising out of any breach of any
representation or warranty made by the Servicer in this Servicing Agreement or
in any certificate, document or instrument now or hereafter delivered to any of
the foregoing in connection with the transactions contemplated hereby, or from
any breach of, or failure by, the Servicer to observe or fulfill any conditions,
covenants or obligations to be observed or fulfilled by the Servicer under this
Servicing Agreement.
10. Miscellaneous.
-------------
(a) Benefit; Binding Nature. This Agreement shall inure to the
-----------------------
benefit of and be binding upon the parties hereto and their respective
successors and assigns.
(b) Notices. Any notice given under this Agreement shall be in
-------
writing and shall be sent by registered or certified mail, return receipt
requested, unless some other method of giving notice is accepted by the party to
which it is given, and shall be given by being delivered at the following
addresses of the parties hereto:
The Company: Imperial Credit Mortgage Holdings, Inc.
20371 Irvine Avenue
Santa Ana Heights, California 92707
33
Attention: Joseph R. Tomkinson,
Chief Executive Officer
The Servicer: ICI Funding Corporation
20371 Irvine Avenue
Santa Ana Heights, California 92707
Attention: Mary C. Glass,
Senior Vice President,
Operations
Either party may at any time give notice in writing to the other party
of a change of its address for the purpose of this paragraph 10(b).
(c) No Release. Termination of this Agreement shall not release
----------
either party from any responsibility or liability that occurred prior to
termination except as is expressly released by the other party in writing.
(d) Prior Agreements; Conflicts. This Agreement supersedes any prior
---------------------------
agreements and understandings between the Servicer and the Company governing the
Servicer's servicing of the Company's Mortgage Loans. This Agreement sets forth
the entire agreement between the parties hereto as to the subject matter of this
Agreement. None of the parties hereto shall be bound by any condition,
definition, warranty or representation with respect to the subject matter of
this Agreement, other than as expressly provided in this Agreement or hereafter
set forth in writing and signed by an authorized representative of the party to
be bound. Notwithstanding the foregoing, the Servicer shall comply with all of
the terms and conditions set forth in the Commitment relating to each Mortgage
Loan being serviced hereunder; and in the event of a conflict between any
Commitment and this Agreement, the terms and conditions of the Commitment shall
control.
(e) Appointment of Company Designee. The Company shall have the right
-------------------------------
to appoint a Company Designee at any time and from time to time.
(f) Governing Law. This Agreement has been made and entered into in
-------------
the State of California and the laws of said State shall govern the validity and
interpretation of this Agreement and the performance hereunder by the parties
hereto.
34
(g) Attorneys' Fees. In the event that a party brings any action or
---------------
suit against the other party by reason of any breach of any covenant or
condition on the part of either party arising out of this Agreement, the party
in whose favor final judgment shall be entered shall be entitled to have and
recover from the other party all costs and expenses of suit, including
reasonable attorneys' fees.
(h) Amendments. This Agreement shall not be amended, changed,
----------
modified, terminated or discharged in whole or in part except by an instrument
in writing signed by all parties hereto, or their respective successors or
assigns, or otherwise as provided herein.
(i) Successors and Assigns. This Agreement binds any successors
----------------------
or assigns of the parties hereto as herein provided.
(j) Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity of any other provision, and all
other provisions shall remain in full force and effect.
(k) No Joint Venture. The Servicer and the Company are not partners
----------------
or joint ventures with each other and nothing herein shall be construed to make
them such partners or joint ventures or impose any liability as such of either
of them.
(l) Number of Days. In computing the number of days from purposes of
--------------
this Agreement, all days shall be counted, including days which are not Business
Days, unless it is specifically provided that only Business Days shall be
counted. However, if the final day of any time period falls on a day which is
not a Business Day, then the final day shall be deemed to be the preceding
Business Day unless otherwise provided.
(m) Headings; Gender. The headings of the various paragraphs of this
----------------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement. Words of any gender, used in this
Agreement shall be held and construed to include any other gender, and words in
the singular shall be held and construed to include the plural, and words in the
plural shall be held and construed to include the singular, unless the Agreement
or the context otherwise requires.
35
(n) Waiver. Any forbearance by a party to this Agreement in
------
exercising any right or remedy under this Agreement or otherwise afforded by
applicable Laws shall not be a waiver of or preclude the exercise of that or any
other right or remedy.
(o) Execution in Counterparts. This Agreement may be executed in one
-------------------------
or more counterparts, any of which shall constitute an original as against any
party whose signature appears on it, and all of which shall together constitute
a single instrument. This Agreement shall become binding when one or more
counterparts, individually or taken together, bear the signatures of both
parties.
IN WITNESS WHEREOF, each party has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
IMPERIAL CREDIT MORTGAGE
HOLDINGS, INC.
By:_________________________
Name:
Title:
ICI FUNDING CORPORATION
By:_________________________
Name:
Title:
36