EXHIBIT 10.1
WHOLE LOAN SERVICING AGREEMENT
THIS AGREEMENT made this 1st day of December, 1997, (the "Agreement"), is
made in the State of Alabama by and between Regions Mortgage, Inc., a
wholly-owned subsidiary of Regions Bank, ("RMI", the "Servicer"), and Palmetto
Federal Savings Bank of South Carolina, a wholly-owned subsidiary of PALFED,
Inc., ("Palmetto", the "Owner"), for mutual consideration herein evidenced.
Whereas, pursuant to that certain Agreement and Plan of Merger dates as of
September 23, 1997 (the "Merger Agreement") between PALFED, Inc. ("PALFED") and
Regions Financial Corporation ("Regions"), Regions is acquiring all of the
issued and outstanding stock of PALFED.
Whereas, Sub-Servicer is engaged in the business activity of servicing
residential mortgages.
Whereas, Sub-Servicer has the capacity and the ability to service such
mortgages.
Whereas, the Owner desires Sub-Servicer, from time to time, to assume
responsibility for servicing residential mortgages and Sub-Servicer is
agreeable thereto.
Whereas, this Agreement governs the servicing of real estate mortgage loans
previously originated and serviced by Owner, and Owner now desires to transfer
such servicing duties to RMI.
Whereas, Owner warrants to RMI that the loans transferred under this
Agreement were made in compliance with all governmental laws and regulations of
whatever nature, and that the loans have been serviced in accordance with such
laws and regulations, and that Owner will hold RMI harmless from any and all
claims of whatever nature that may arise from the making or servicing of these
loans prior to the date of actual transfer of servicing from Owner to RMI.
Now, therefore, in consideration of the mutual recitals and covenants set forth
herein, and for good and valuable consideration as recited herein, the Parties
hereby warrant, covenant and agree as follows:
ARTICLE I
Definitions
Section 1.01. "Guaranteed Loan" means a loan that is guaranteed, including
a guarantee to repurchase, in whole or in part, or as to which a commitment to
guarantee has been made under the provisions, as time to time amended, of the
following:
(a) the Servicemen's Readjustment Act of 1994, or Chapter 37 to Title
38, United States Code;
(b) Section 221 or 222 of the Foreign Assistance Act of 1961;
(c) the Small Business Act; and ,
(d) the Rural Development Act of 1972.
Section 1.02. "Insured Loan" means a loan which is insured, in whole or in
part, by a private mortgage insurance company, other insurers or as to which a
commitment for any such insurance has been made under the provisions, as time to
time amended, of the National Housing Act of 1944, or Chapter 37 of Title 38,
United States Code.
Section 1.03. "Insured Institution" includes a federal savings and loan
association, a savings bank, a building and loan, savings and loan, or homestead
association, or a cooperative
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bank, whose accounts are insured by a state or national bank, or a savings
bank whose accounts are insured by the Federal Deposit Insurance Corporation
("FDIC").
Section 1.04. "Loan" and "Loans" include adjustable loans, and security
deeds, trust deeds, and deeds of trust relating to adjustable loans.
Section 1.05. "Loan Debtor" and "Loan Debtors" mean mortgagors, trustors
of trust deeds and deeds of trust, and the grantors or any security deeds
relating to adjustable loans.
Section 1.06. "Servicer" means the firm designated to be responsible for
doing the actual servicing and administration of the loans sold under this
Agreement.
ARTICLE II
Administration and Servicing of the Loan
Section 2.01. Identification of Servicer. The Servicer of the servicing
transferred pursuant to this Agreement is Regions Mortgage, Inc. ("RMI").
Section 2.02. Servicer's and Loan Debtor's Compliance with Law. RMI
hereby represents and warrants that it will comply with, and that it will use
its best efforts to cause each Loan Debtor to comply with, all applicable state
and federal laws, rules and regulations, or requirements of the private mortgage
insurance companies, including those requiring the giving of notices. Where
applicable, RMI warrants that it will comply with the following:
(a) the National Housing Act of 1934, as from time to time amended,
and with all applicable rules and regulations issued thereunder;
and,
(b) the requirements of private mortgage insurance companies,
including the giving of all notices and the submitting of all
claims required to be given or submitted to the Federal Housing
Administration, the Veterans Administration, or to the private
mortgage insurance company to the end that the full benefit of
either the Federal Housing Administration insurance, the guaranty
of the United States of America, or the private mortgage
insurance will inure to Owner.
RMI warrants that it will forward copies of all such notices or claims to Owner
if requested by Owner.
Section 2.03. Collection, Remittance and Accounting Warranties. Until the
principal and interest of each loan sold hereunder is paid in full, RMI warrants
that it shall:
(a) Proceed diligently to collect all payments due under the terms of
each loan as they become due;
(b) Keep a complete, accurate and separate account of and properly
apply all sums collected by it from the Loan Debtor on account of
each loan sold hereunder for principal and interest, taxes,
assessments and other public charges, hazard insurance premiums
and FHA insurance or mortgage insurance premiums, and any and all
other expenses and expenditures;
(c) Deposit all funds received in behalf of the loans sold under this
Agreement in a segregated trust or custodial demand deposit
account in a federally insured institution. Such account shall
be held by RMI as trustee or custodian which shall maintain
detailed records to show the respective interests of each
individual Loan Debtor in the account. Each such account shall
be established and maintained in a manner which complies with the
applicable rules and regulations of the FDIC;
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(d) From the funds so deposited,
(i) Pay promptly to the proper parties when and if due the FHA
insurance premiums, mortgage insurance premiums, taxes,
special assessments, ground rents, and premiums of hazard
insurance policies, and
(ii) On or before the 25th of each month and the 5th of each
month deliver to Owner or Owner's representative all amounts
of principal and interest collected under the loan.
(e) Provide to Owner a certification that the loans have been
serviced properly and in accordance with this Agreement and
customery practices in the mortgage industry.
Additionally, Owner will certify that all insurance, taxes, MIP
premiums, PMI premiums, etc., have been paid properly and
promptly and that all receipts have been posted properly and
promptly.
Section 2.04. Loan and Other Prepayments. RMI warrants that it will not
accept any prepayment of mortgage principal on any loan sold hereunder except as
authorized by applicable law and regulations, and provided by the terms of the
applicable mortgage instrument. Funds received on the account of the Loan
Debtor for the purpose of paying taxes, assessments, insurance premiums, or
other similar purpose will be retained and disbursed by RMI.
Section 2.05. Loan Adjustments. If the loan is an adjustable rate, it is
agreed by Owner that RMI is authorized and required to make loan adjustments in
compliance with this Agreement. Until the principal and interest of each loan
sold hereunder is paid in full, RMI warrants that it shall make loan adjustments
in compliance with the loan contract and applicable regulatory lending
requirements, and which reflect the movements of the applicable loan adjustment
index, combination or indices or moving average of index values, formula or
schedule. The applicable loan adjustments shall be implemented in accordance
with applicable lending regulations and loan contract. RMI shall execute and
deliver all appropriate notices required by the applicable lending regulations
and loan contract regarding such loan adjustments including but not by way of
limitation: timely notification to the Owner, or to the Owner's successors or
assigns, of all applicable data and information regarding such adjustments, and
new schedules of Owner's pro rata share of collections of principal and
interest. If the Loan Debtor on any loan hereunder is in default at the time
such notices are executed and delivered to such Loan Debtor, RMI shall timely
execute and deliver to such Loan Debtor notice that all contractual rights under
the applicable loan contract in regard to such default are reserved even though
the loan in adjusted.
Section 2.06. Loan Debtor's Failure to Perform. RMI warrants that in the
event any Loan Debtor fails to make a payment to RMI required to be made under
the terms of the applicable loan that RMI will notify Owner of such fact within
thirty (30) days after the payment shall have become due and payable, and RMI
will conduct due diligence to ascertain, and forthwith will notify Owner, of the
failure of any Loan Debtor to perform any other obligation under the applicable
loan, and also of any of the following which might come to the attention of RMI
, and in RMI's opinion material in fact and circumstances:
(a) the vacancy of or any change in the occupancy of any premises
securing a loan sold under this Agreement;
(b) the sale or transfer of any such premises;
(c) the death, bankruptcy, insolvency or other disability of any Loan
Debtor which might impair ability to repay the loan;
(d) any loss or damage to any such premises, in which event, in
addition to notifying Owner, RMI shall see to it that the
insurance companies
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concerned are promptly notified and proper claim made to
insurance company; and/or,
(e) any lack of repair or any other deterioration or waste suffered
or committed in respect to the premises securing the loan.
It is understood, however, that no notice need be given to the Owner of any
facts other than those of which RMI shall have actual notice, and those of which
RMI would, except for its negligence, have had notice.
Section 2.07. Foreclosure of Other Acquisition of Security Property. RMI
warrants that it will upon the request and under the direction of Owner process
the following:
(a) the foreclosure or other acquisition of the property securing a
loan sold hereunder;
(b) the transfer of such property to the FHA or VA where appropriate;
and,
(c) the collection of any applicable mortgage insurance.
Pending completion of these steps, RMI will protect such property from
waste and vandalism.
At the option of Owner, Owner may assign such mortgage to RMI which will
then conduct all such proceedings in its own name, promptly thereafter assigning
or conveying to the Owner any title, equity or other property or right acquired
by such proceedings. RMI warrants that it will have title to the property
conveyed in the name designated by Owner. Owner agrees to reimburse RMI for
its reasonable attorney's fees. In the case of voluntary deed in lieu of
foreclosure, and purchase by Owner, or for its account, RMI warrants that it
will protect the security property so owned. RMI warrants that it will manage,
operate, improve, rent and sell such real estate with notice to and the consent
of the Owner. All these operations shall be on terms and as determined and
directed by Owner. Upon the sale of such security property, on terms as
specified by Owner, if payments are deferred and payable under a loan contract,
RMI warrants that it will service such loan until completely liquidated, upon
the terms provided for the servicing of loans herein.
Section 2.08. Custody of Insurance Policies. RMI warrants that it shall
hold for Owner's account such insurance records required for servicing and shall
be responsible for the procurement of insurance records required for servicing.
Section 2.09. Records Maintenance. RMI warrants that it will keep records
satisfactory to Owner and keep records in accordance with standard accounting
and servicing procedures, pertaining to each loan sold hereunder, and such
records shall be the property of Owner and upon termination of this Agreement
shall be delivered to Owner.
Section 2.10. Other Servicer Duties. Until the principal and interest of
each loan sold hereunder is paid in full, RMI warrants that it shall perform
such other customary duties, furnish such reports and execute such other
documents in connection with its duties hereunder as Owner from time to time
reasonably may require. RMI shall be reasonably compensated for additional
duties and reports based upon the additional cost incurred by RMI in connection
with such request.
Section 2.11. Servicer's Fees. RMI shall retain as full compensation for
all services performed hereunder the earned portion of the servicing fee of 1/4
of 1% for fixed rate mortgages and 3/8 of 1% for adjustable rate mortgages. RMI
also shall retain any loan assumption fees, late charges, and other
miscellaneous fees collected from the Loan Debtor pursuant to the terms of the
loan, or any other HUD or VA allowable fees. No additional compensation shall
be payable to RMI provided that:
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(a) Sub-Servicer will be fully reimbursed for all foreclosure and
liquidation expenses related to the foreclosure and REO process.
(b) in the event Owner sells all or any part of its interest in the
loans covered by this Agreement to a third party or parties,
including the sale of participation ownership interest therein
(whether such resales are by Owner or Owner's successors or
assigns), then an additional service fee equal to the servicing
fee computed as provided hereinabove payable by each such
subsequent buyer thereof, and such fee shall be deducted from
each monthly remittance to each such subsequent buyer.
Section 2.13. Other Warranties and Representations. RMI warrants that it
will not waive, modify, release or consent to postponement on the part of the
Loan Debtor of any term or provision of the loan contract without the written
consent of Owner.
ARTICLE III
Sale of Loan or Participation
Interests to Third Parties
In the event Owner sells all or any part of its interests in loans covered
by this Agreement to a third party or parties, including the sale of
participation ownership interests therein, such third parties shall succeed to
all of the rights of Owner hereunder for the portion purchase and this Agreement
shall remain in full force and effect. In such event, RMI warrants that it will
remit all principal and interest installments collected under the loans directly
to such third party or parties by or before the 25th and 5th of each month,
after deduction of the service fee as provided in this Agreement. The
obligation to make direct remittances and to execute and deliver all appropriate
notices required by this Agreement to such third party or parties shall arise
upon sixty days (60) notice of such assignment delivered by such subsequent
buyers to RMI.
ARTICLE IV
Termination of This Agreement
Section 4.01. Loans Being Serviced. The Owner may, by delivering notice
to RMI, terminate this Agreement as to loans being serviced if:
(a) RMI in the sole opinion of the Owner, fails to take positive
action to correct any deficiency in the performance of its
obligations hereunder within ninety (90) days after the Owner has
given RMI written notice of such deficiency; or
(b) RMI becomes insolvent or bankrupt or is placed under
conservatorship or receivership, whether state or federal; or
(c) RMI assigns or attempts to assign its rights and obligations
hereunder, without the written consent of Owner; or
(d) If acquisition of Owner by Regions is not completed by April 30,
1998, in accordance with the Merger Agreement. Should PALFED and
Regions extend the Merger Agreement, this agreement shall
automatically be modified to continue in effect for the same
period as the Merger Agreement; or
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Section 4.02. Future Acceptance of Loans. This Agreement may be
terminated as to the future acceptance of loans by either party at any time upon
delivering sixty (60) days written notice of termination to the other party, but
such termination shall not in any respect change or modify the obligation of RMI
with respect to the servicing of loans already accepted, and RMI shall continue
to be responsible for the servicing of such loans unless Owner shall act to
terminate this Agreement in accordance with the provisions contained herein.
Section 4.03. Servicer's Duties. Upon termination of this Agreement, RMI
warrants that it will account for and turn over to Owner all funds collected
under each loans sold hereunder, less only the compensation then due RMI, and
deliver to Owner all records and documents that it may have in its possession
relating to each such loans within sixty (60) days from date of termination.
ARTICLE V
Miscellaneous Provisions
Section 5.01. Appointment or Trustees and/or Foreclosure Attorneys. It is
agreed by Owner and RMI that the appointment of any trustees and/or foreclosure
attorneys under any trust deeds, deeds of trust, and/or Mortgages shall be
subject to the approval of Owner.
Section 5.02. Effect of ARTICLE and Section headings. The ARTICLE and
section headings are for convenience only and shall not affect the construction
of this Agreement.
Section 5.03. Document Contains Entire Agreement. This document contains
the entire agreement between the parties hereto and cannot be modified in any
respect except by an agreement in writing signed by all the parties. The
invalidity of any portion of this Agreement shall in no way affect the balance
thereof. This Agreement shall remain in effect until Owner's interest in all of
the loans sold hereunder, including the underlying security, are liquidated
completely.
IN WITNESS WHEREOF, each party has caused its corporate seal to be affixed
hereto and this instrument to be signed in its corporate name on its behalf by
its proper officials duly authorized.
This 5th day of December, 1997.
PAMLETTO FEDERAL SAVGINS BANK
OF SOUTH CAROLINA, Owner ATTEST
BY: /s/ Darrell R. Rains BY: /s/ Howard M. Hickey, Jr.
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_ Darrell R. Rains Howard M. Hickey, Jr.
ITS: EVP and CFO ITS: Secretary
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(SEAL)
REGIONS MORTGAGE, INC., Servicer ATTEST
BY: /s/ A. H. Hethcox, Jr. BY: /s/ Debra Meefer
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ITS: Executive Vice President ITS: Vice President
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(SEAL)
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