MH I S O W -2-8-12.docx

SECTION C – DESCRIPTION/SPECIFICATION/STATEMENT OF WORK

C.1 BACKGROUND

Since 1986 Ginnie Mae has defaulted manufactured housing issuers and by so doing assumed the issuer responsibility for over 2.2 billion in mortgage/installment loan contracts (loans). The Ginnie Mae held portfolios covered under this contract consist of 488 loans totaling approximately $3.5 million, as of January 31, 2012.

Ginnie Mae reserves the right to sell any or all of its portfolio during the period of this contract.

C.2 STATEMENT OF WORK

C.2.A Transition In (Line Item 0001)

As part of its proposal, the contractor shall provide a detailed plan describing how they will transition all services to be provided under this Master Subservicer contract from Ginnie Mae's current Master Subservicer to its own operation. The transition plan shall detail all specific actions that need to be taken and their expected completion dates. First, the transition plan shall identify critical implementation issues and elaborate on how the contractor will address such issues. Second, the transition plan shall be comprehensive and assure Ginnie Mae that the work can be transitioned to the contractor Offeror within 90 days of contract award. Third, the transition plan shall be implemented and completed with no reduction in service to Ginnie Mae or its issuer community. Following award of this contract, the contractor shall maintain an updated termination transition plan that provides for the orderly transition of the work performed under this contract.

C.2.B General Elements:

Loan Servicing Operations (Line Item 0002)

The Contractor shall be prepared, capable and staffed to perform the complete range of services expected of a Ginnie Mae issuer. The services include, but are not limited to servicing current, delinquent and defaulted loans, both pooled and non-pooled including enforcement and foreclosure/repossession or replevin (repossession) services, management and disposition of acquired properties, preparation and submission of insurance claims to FHA and VA reports to Ginnie Mae. In addition to the standard reports required by the Ginnie Mae Mortgage-Backed Securities Guide 5500.3, the Contractor shall prepare and submit timely and accurate reports to Ginnie Mae as required in Exhibits 3, 5 and 6.

If the Contractor determines that the funds available in the Principal and Interest Custodial Account(s) are not sufficient to make full, timely payments to security holders, the Contractor shall provide Ginnie Mae timely notice of the amount needed to be advanced and Ginnie Mae will handle the transfer of funds outside of this contract. All moneys collected, including advances after providing for security holder payments, shall be returned by wire to Ginnie Mae.

In the case of new defaults only, the Contractor shall make its best efforts to recertify all pools within 12 months of transfer. Upon assuming control of either the existing defaulted portfolio, or a newly defaulted portfolio, the Contractor shall make its best efforts in completing the final certification of all pools not final certified. This must be accomplished within 12 months of physically taking control of the portfolio.

The Contractor shall meet with Ginnie Mae in Washington, DC for semi-annual status updates. Additional meetings may be required in Washington, DC to discuss special issues.

Ginnie Mae reserves the right, in its sole discretion, to offer for sale assets being serviced by the Contractor at any time. The Contractor shall assist in these sales. This assistance may include, among other things, the capability to provide customized reports or files to Ginnie Mae, the provision of a contact person to provide reports needed by prospective purchasers and to arrange meetings with key managers, to provide relevant computer tapes, standardized reports, reconciliation of accounts, to ensure the availability of files for use during due diligence reviews, assisting in the actual transfer of servicing, and providing security holder registers, records, terminals, facilities for due diligence and other necessary assistance.

Business Operation Assessment (Line Item 0004)

The contractor shall review the performance risks associated with this contract in light of the heightened security risk.

Specific Services (Line Item 0002)

1. The Contractor shall service the installment loan contracts or mortgages in accordance with relevant FHA and VA regulations, Ginnie Mae Guide 5500.3 and instructions from the Mortgage-Backed Securities Monitoring Division and the Office of Finance. Industry standards shall prevail to the extent that the enumerated regulations and Guide do not address a particular servicing situation. This includes timely payment to security holders, vigorous collection of delinquent accounts, determining when work out agreements are feasible options, and analyzing delinquent accounts to determine repossession is appropriate. The goals throughout this process are to maximize claim payments and other recoveries, and to minimize program losses.

2. The Contractor shall file required Mortgage-Backed Securities reports to Ginnie Mae’s agents, and accounting reports to the MBS Monitoring Division and the Office of Finance.

3. The Contractor shall proactively seek opportunities to reduce costs associated with the servicing and repossession activities and advise and recommend to Ginnie Mae the improved or alternate methods.

4. The Contractor shall establish P&I and T&I bank accounts in accordance with the Ginnie Mae letter agreements. Once these bank accounts are established, Ginnie Mae will transfer the P&I and T&I funds from the defaulted Ginnie Mae issuer or prior Subservicer to the Contractor. The established P&I and T&I bank accounts and the Contractor may transfer custodial documents with prior written approval by Ginnie Mae. In accordance with Paragraphs VI (A) and (B) of HUD Form 11726 no document custodian should impose a fee for releasing pool documents if the Custodian elects to relocate the documents within a reasonable period following Ginnie Mae’s declaration of default.

5. The Contractor shall establish custodial bank accounts pursuant to Letter Agreement Forms HUD 11709 and 11720 for all funds related to Ginnie Mae’s defaulted portfolios, and loans repurchased from the portfolios. The Contractor shall not use a disbursement account for withdrawals of P&I and T&I unless such accounts are established pursuant to Letter Agreement Forms 11709 and 11720. Corporate accounts shall not be used for any moneys received including advances or any disbursements. The Contractor shall reconcile the P&I custodial account(s) with the HUD 11710A and 11710D accounting reports each month.

6. If the Contractor determines that available funds in the P&I accounts are not sufficient to make full, timely payment to security holders, the Contractor shall notify Ginnie Mae of the amount needed to be advanced on or before the 11th day of the month by a signed original Form Number MHPR-1 for Ginnie Mae I pools, and on or before the 11th day of the month by a signed original Form Number MHPR-2 for Ginnie Mae II pools. Ginnie Mae will wire funds to the P&I Custodian Accounts in time for the payment of Ginnie Mae I security holders on the 15th day of the month and Ginnie Mae II security holders on the 20th day of the month. Despite the provision in the Ginnie Mae Guide that allows the Ginnie Mae paying agent to be paid by check or wire in Ginnie Mae I pools, the Contractor shall make such payments by wire. All money collections, including advances after providing for security holder payments, are to be returned by wire to Ginnie Mae as of the close of business on the 20th of each month for Ginnie Mae I and the 25th of each month for Ginnie Mae II. The Contractor shall perform a semi-annual review of the accuracy of its estimation process to ensure that the appropriate amount of funds have been requested from Ginnie Mae. The initial review must be completed within six (6) months of the takeover of a portfolio from a defaulted Ginnie Mae issuer and the results of each review shall be submitted to the Office of Finance in Ginnie Mae within thirty (30) days of completion.

7. The Contractor shall establish policies and procedures to ensure that P&I and T&I payments that cannot be delivered, or are returned undelivered, are deposited into the respective Ginnie Mae defaulted portfolio’s P&I or T&I accounts, as appropriate. The Contractor shall establish explicit policies, which require a diligent effort to locate the payee. Security holder payments, which remain outstanding for a period in excess of six months of the payment date, shall be sent to Ginnie Mae’s Central Paying and Transfer Agent pursuant to the Ginnie Mae Guide 5500.3.

8. Gross claim proceeds received from FHA and VA must be wired directly to Ginnie Mae by the third business day of the month following receipt of the claim. Sales proceeds resulting from the sale of the repossessed properties shall also be wired directly to Ginnie Mae by the third business day of the month following receipt. The Contractor may not obtain reimbursement from the claim proceeds.

9. At the recommendation of the Contractor and with the GTR’s prior approval, loans may be modified or refinanced by the Contractor. Modifications of loans bought out of pools shall be handled as Concurrent Date Pools with no internal reserves, if repooled.

10. The Contractor shall conduct a sample review of the files and records received from any newly defaulted issuer, including the documents held by the document custodian and the financial information received from the defaulted issuer. The purpose of this review shall be to ascertain the status of the loans and pools to begin stabilizing the loan servicing and loan administration and to identify any missing or defective documents or other items. The review and report shall be provided to the GTR within 45 days of the default.

11. The Contractor shall furnish to the GTR during the term of the contract such periodic, special, or other reports or information, whether or not provided for herein, as shall be necessary, reasonable, and appropriate in respect to Ginnie Mae in its capacity as guarantor, or otherwise in respect to the purpose of this contract, provided that all such reports or information shall be as provided by and in accordance with applicable instructions and directions issued by the GTR. The Contractor shall provide to Ginnie Mae accounting reports that include activity for the previous month and year-to-date activities no later than the fifth (5th) calendar day of each month, or the next business day if the 5th is not a business day.

12. The Contractor shall refer all eligible debt to the Department of Treasury for Cross Servicing or Offset, or to the Department of Justice as appropriate for debt collection. The Contractor shall manage new default cases as well as collect on debt owed to Ginnie Mae from old cases that went into default under prior Master Subservicer’s. The Contractor shall also respond to and collect from borrowers that contact it regarding deficiency judgments obtained under the prior process that may not be eligible for referral. All debt referrals and collections shall be in compliance with the applicable government requirements. The Contractor shall not compromise on any amounts due without prior written approval of the compromise from the GTR.

13. The contractor shall service the installment loan contracts or mortgages in accordance with relevant FHA and VA regulations, Ginnie Mae Guide 5500.3, and instructions from the MBS Monitoring Division and the Office of Finance. Industry standards shall prevail to the extent that the enumerated regulations and guide do not address a particular servicing situation. This includes timely payment to security holders, vigorous collection of delinquent accounts, determining when workout agreements are feasible options, and analyzing delinquent accounts to determine when referrals for repossession are appropriate. The goals throughout this process are to maximize claim payments and other recoveries, and to minimize program losses.

14. The Contractor shall provide to Ginnie Mae quarterly litigation reports in the form supplied in Exhibit 3 hereto, as of March 31, June 30, September 30 and December 31. Such reports shall state the case name, briefly describe the nature of the case, where filed. and who is representing Ginnie Mae’s interests. The reports will state the ongoing total costs incurred in the separate categories of foreclosures/repossessions, and bankruptcy actions.

C.2.B SPECIFIC SERVICES (Line Item 0003)

1. The Contractor shall dispose of repossessed units as expeditiously as possible ensuring that all VA appraisals have been obtained and that unreasonably high appraisals are appealed. FHA appraisals should only be obtained when FHA reserves are available to pay claims.

2. The Contractor shall expeditiously file claims with the FHA and VA properly monitoring individual status of filings and appealing the denial of claims when appropriate. The Contractor shall report the deficiency amounts resulting from repossessions with the respective credit bureaus. If FHA reserves become exhausted, the Contractor shall file streamlined claims in accordance with the Title I Lender and Service Newsletter dated August 27, 1999, in order to abate the insurance premiums on defaulted loans.

3. Unless otherwise directed by the GTR, the Contractor shall, using funds provided outside of this contract from Ginnie Mae, repurchase a loan out of a pool when it has been determined that there is little, if any likelihood of a delinquent loan being brought current. It is Ginnie Mae’s policy not to wait until sale or receipt of claim to repurchase a loan out of a pool.

4. The Contractor shall obtain prior approval from Ginnie Mae before repossessing any unit if the repossession will exceed the amount shown in Exhibit 2. After examining the collateral, the Contractor shall determine whether to refurbish the unit prior to sale. The Contractor shall consider the likelihood of fully recovering the refurbishment cost in the sale of the unit, as well as any jurisdictional requirements on minimum habitability standards. The Contractor shall obtain approval from the GTR prior to beginning refurbishment. Insured sales must comply with FHA and VA requirements on uninsured sales. Ginnie Mae will provide in writing a minimum percentage of appraised value that it will accept as the net sales price in REO transactions. The net sales price is the gross sales price less broker’s commissions, closing costs, and other seller concessions and sales expenses. The GTR must approve in writing any proposed sales for less that the minimum percentage before the sale. The Contractor is authorized to relocate repossessed units to any destination not exceeding 200 miles from the point of origin. Any proposed relocation to a destination greater than 200 miles from the point of origin must be approved by the GTR in advance.

5. The Contractor shall take all steps necessary and appropriate to confirm or record Ginnie Mae’s ownership of the loans including the correction of title defects.

6. The Contractor shall collect all late fees due from borrowers under the loan contracts or mortgage. The Contractor shall remit all amounts monthly to Ginnie Mae.

7. On uninsured loans or where reserves have been exhausted, the Contractor shall not repossess the collateral unless the property valued is sufficient to justify such action.

8. The Contractor shall submit all write-off requests to the GTR for prior written approval.

C.2.B SPECIFIC SERVICES (Line Item 0004)

9. The Contractor shall review the performance risks associated with this contract in light of the possible heightened security risk. The Contractor shall provide a written report of the assessment that addresses the following items:

a. Loss of business enterprise

b. Concentration of expertise in one site

c. Availability of alternate business sites

d. Disaster Recovery preparedness

e. Primary and secondary back-up sites

f. Management tracking and accessibility of vital records

g. IT System backup procedures

h. Communication protocol with stakeholders

i. Disaster preparedness of staff

j. Ability to perform travel requirements under this contract

C.2.B SPECIFIC SERVICES (Line Item 0005)

Unless otherwise directed by the GTR, the contractor shall submit invoices from third party vendors for work required as part of the contractor’s servicing of the portfolio. Example of these reimbursable items rare not limited to the following: Legal fees, travel, storage cost, maintenance repairs, and appraisals.

Transition-out (Line Item 0206)

The Contractor shall:

A Upon exercising this option item, transition the contract to the new contractor. The transition out to the new contractor shall occur within three months.

B. Be available to provide additional transition services to assist the new contractor for a period of up to three months following the transition to ensure uninterrupted performance to Ginnie Mae. The transition plan shall:

C.3.B Definitions

The following terms shall have the meanings stated unless modified by mutual agreement of the parties:

1. Default: Any occurrence outlined in Sections 8.01, 8.02 or 8.03 in the Guaranty Agreement.

2. Default Manual: The procedural guide for Contractor’s to follow during the preparation, execution and follow-up of an issuer default.

3. Foreclosure, Repossession or Replevin (Repossession): The process of removing the rights to property ownership because of mortgage default in which case the loan is liquidated by repossession of the property.

4. Ginnie Mae Advances: Funds outside of this contract which will be equal to the amount required to satisfy Ginnie Mae security holders minus funds actually available for a specific monthly payment.

5. Ginnie Mae Guide(s): Ginnie Mae Handbook 5500.3.

6. Mortgage/Installment Loan Contracts (Loans): Those mortgage/installment loan contracts including all documents evidencing and or securing such loans and all documents in connection with the administration and servicing of such loans and in those instances where the security for such loans has been or is acquired through foreclosure/repossession, all real property and personal property which was or is received in any enforcement action with respect to such loans which are part of the collateral for the Mortgage Pools.

7. Mortgage/Installment Loan Contract Pools (Pools): An assemblage of mortgages installment loan contracts brought together to back an issuance of securities.

8. Performing Loan: A loan serviced by Contractor under this contract, upon which at least 95 percent of the scheduled principal, interest, and applicable taxes and insurance is received in a given month. Loans or contracts that have been referred to the U.S. Department of Treasury shall be considered performing loans.

9. Principal and Interest Custodial Account (P & I): The non-interest bearing account that an issuer maintains with a financial institution, by letter agreement HUD Form 11709, into which account the issuer deposits principal and interest collected from individual mortgagors for loans included in Ginnie Mae pools.

10. Servicing Fee: The fee paid to the Contractor’s for the complete range of services provided under the contract.

11. Taxes and Insurance Custodial Account (T & I): An account that an issuer maintains with a financial institution by letter agreement, HUD Form 11720, into which account the issuer places funds to be used to pay real estate or personal property taxes and hazard insurance premiums on the property pledged as collateral for the loans.

12. Non-Performing Loans: A loan or contract serviced by the Contractor under this contract, upon which less than ninety-five percent (95%) of the scheduled principal and interest (and taxes and insurance when applicable) is received in a given month an the debt has not been satisfied, i.e., paid in full, written off.

13. Abandonment: The relinquishment of interest in the collateral (housing units), but not the remaining debt. Remaining debt on abandoned collateral shall be referred to the U.S. Department of Treasury for collection under the Debt Collection Act of 1982 (Public Law 97-365) as amended by the Debt Collection Improvement Act of 1996 (Public Law 104-349).

C.4 Covenants

1. Covenants of Ginnie Mae:

a. To enable the Contractor to perform their duties, Ginnie Mae will designate and appoint the Contractor as its agent and grant to the Contractor the powers of a limited and/or special attorney-in-fact for Ginnie Mae. (See Exhibit 1); and

b. Any prior approvals to be granted by Ginnie Mae pursuant to the terms of this contract shall be given by Ginnie Mae or its duly authorized representative as soon as practicable or within such periods as specifically may be set forth in this contract, with such approvals not being unreasonably denied. Further, if such approvals cannot be granted, Ginnie Mae or it duly authorized representative, as soon as possbile, shall report to Contractor the basis for denial.

2. Covenants of the contractor:

a. The Contractor shall use generally accepted industry practices in conducting the services to be rendered to Ginnie Mae pursuant to the terms of this contract;

b. Item 0004 and, if exercised, Option Items 0104, and 0204: The Contractor shall maintain servicing documents with respect to the portfolios serviced for Ginnie Mae pursuant to this Contract in accordance with the requirements of the Ginnie Mae Guide 5500.3 at such locations as the Contractor and GTR may deem appropriate;

c. With respect to any discretionary authority granted to the Contractor in the conduct of its functions as a Contractor, the Contractor shall apply sound business judgment under the conditions and circumstances then prevailing;

d. The Contractor shall not assign or delegate any of its rights or responsibilities hereunder to another Contractor without the written consent of the GTR, provided, however, the foregoing shall not preclude the Contractor from utilizing any agents or representatives in furtherance of its obligations hereunder; and

e. The Contractor shall exercise at least the same degree of care in servicing the loans and pools that it exercises with respect to the servicing and administration of loans and pools for the Contractor’s own account and service the loans and pools in compliance with the Ginnie Mae Guide 5500.3 and this Contract.

C.5 Contractor Subservicing Program (Line Item 0002)

Ginnie Mae will transfer the portfolio of the existing Contractor to this contract on a mutually agreeable date. Transfer of the initial default portfolio and all subsequent default portfolios shall include taking possession of all ADP transfers and taking possession and control of files, records, custodial bank(s), custodial files, notices to installment sales contract holders or any other parties, computer and system conversions.

C.6 Additional Terms and Conditions

1. The Contractor as Ginnie Mae agent, shall:

a. Comply with all relevant FHA, VA and Treasury regulations, handbooks and other guidelines. If, however, the terms and conditions of this contract are inconsistent with the terms of such regulations, handbooks, or guidelines, the terms and conditions of this Contract shall govern.

b. Perform all functions relating to management of all assets acquired by Ginnie Mae. This shall include but not be limited to, negotiating on behalf of Ginnie Mae with prior owners of manufactured housing units who have contacted Ginnie Mae or the Contractor and who are attempting to clear deficiency judgments resulting from earlier repossessions.

2. The Contractor is not assuming any risk or the issuer responsibility for the pools except as set forth in this contract.

3. The Contractor shall deposit collection of the loan-servicing fee directly into the P&I account. The Contractor shall calculate the gross servicing fee for the previous month and remit it to Ginnie Mae within the first three business days of each month. (Line Item 0002)

4. Ginnie Mae will cause the defaulted issuer or its existing agent or document custodian to release to the Contractor all loan files, ledger cards, and other records pertaining to the loans and pools, the registration records, and other information with respect to the Ginnie Mae Mortgage-Backed Securities issued for the pools, all records of payment made to security holders of such Ginnie Mae Mortgage-Backed Securities, the accounts and all records with respect to all P&I and T&I custodial accounts, all other custodial accounts and all other funds, assets, certificates of deposit, records, and information pertaining to such loans and or pools. The Contractor shall receive all such property and information for the purpose of performing its duties under this contract (Line Item 0002)

5. At the end of the contract term (completion or termination) the Contractor shall complete the processing and collection of insurance or guarantee claims for loans where the claims have already been filed. The Contractor shall remit all claim proceeds to Ginnie Mae within 5 business days of receipt. (Line Item 0003)

6. The Contractor shall buy out of the pool (using funds provided outside of this contract), any loan determined to be ineligible or defective and not curable pursuant to instructions in the Ginnie Mae Guide 5500.3. (Line Item 0002)

7. The government reserves the right to audit the Contractor during the term of this contract or any extension thereof and for a three (3) year period after the last payment is made under this contract.

8. The Contractor agrees not to use or permit use of confidential information obtained as a result of this contract for private gain for itself or any other person by direct action on its part or by counsel, recommendation or suggestion to another person. The Contractor shall take all reasonable measurers to avoid unintentional or inadvertent disclosure of confidential information to any unauthorized person. Upon any such disclosure, the government may avail itself of all potential remedies.

9. All notices required under this contract must be in writing and shall be delivered, emailed, faxed or mailed to the GTR and or Contracting Officer for this contract.

10. The government, in its sole discretion, reserves the right to use government counsel or retain private counsel as circumstances dictate for cases where the contractor is representing Ginnie Mae’s interest.

11. The title conveyed and to be used by the Contractor when acting in the capacity of the Contractor is: Contractor for the Government National Mortgage Association.

12. Except for late fees, the contractor may receive ancillary income associated with work performed under this contract. The contractor may retain assumption fees, NSF fees, fax fees, and similar charges from borrowers as compensation for providing these services.

13. Ginnie Mae will bear all exposure and risk of loss in connection with any losses, costs, claims, actions, or demands, including all reasonable expenses and all reasonable attorney fees actually incurred by the contractor relating to the pools arising from omissions or actions taken by former issuers or any other predecessor in title or interest. Furthermore, Ginnie Mae will bear all exposure and risk of loss in connection with any claims, actions or demands other than claims, actions or demands arising from the bad faith, negligence or misconduct of the contractor. The contractor shall have no liability for failure to service the loans included with the pools in accordance with applicable Ginnie Mae Guide 5500.3 if such failure arises from receipt by the contractor of inaccurate or incomplete loan and file documentation from any prior servicer.

14. The contractor agrees to and shall indemnify and hold harmless Ginnie Mae and all of its officers, employees, and agents against any demands, losses, claims, damages, causes of action, or other legal proceedings, penalties, fines, forfeiture, judgments, liens, costs, liabilities, and/or expenses including reasonable attorneys fees and related costs which result from any act or omission constituting fraud, negligence or willful misconduct by an agent or employee of the contractor or any action taken by or on behalf of the contractor relating to any of the loans which is not permitted by the provisions of this contract.