Collection and Payment Agreement
Basic Information
Date:
Borrower:
Borrower’s Mailing Address:
Lender:
Lender’s Mailing Address:
Collection Agent:
Collection Agent’s Mailing Address:
Prior Note
Date:
Original principal amount:
Maker:
Payee:
Holder:
Holder’s mailing address:
Maturity date:
[Terms:]
Secured by deed of trust
Date:
Recorded in:
Wraparound Note
Date:
Original principal amount:
Maker: Borrower
Payee: Lender
Maturity date:
[Terms:]
Secured by Wraparound Deed of Trust
Date:
Recorded in:
Property (including any improvements):
Particulars of the Agreement
Day of month by which Borrower’s deposit must be made:
Date of first deposit:
Amount of deposit for escrow account under Wraparound Note:
Monthly principal and interest due on Wraparound Note:
Collection Agent’s fee:
Monthly principal and interest due on Prior Note:
Amount of deposit for escrow account under Prior Note:
Clauses and Covenants
Lender has sold the Property to Borrower, and as partial consideration Borrower has executed and delivered to Lender the Wraparound Note, a copy of which is attached to this agreement. Lender is required to make payments to Holder of the Prior Note, a copy of which is attached to this agreement, according to its terms. Borrower, Lender, and Collection Agent enter into this agreement to facilitate payment of both notes.
A.Borrower’s Duties
A.1.Borrower will deposit in Lender’s account with Collection Agent on or before each monthly due date an amount equal to the required monthly installment of principal and interest due under the Wraparound Note plus any required monthly payment to the tax and insurance escrow account.
A.2.Borrower will promptly submit to Collection Agent and Lender copies of bills for ad valorem taxes on the Property and for insurance policy premiums on the Property if Borrower receives such bills.
A.3.Borrower will pay Collection Agent one-half of the annual fee for its services as specified below. Borrower also agrees to reimburse Collection Agent for any extraordinary expenses incurred as a result of Borrower’s delinquency or default in making deposits.
B.Lender’s Duties
B.1.Before the time specified for Borrower to make the first deposit, Lender will open a special account with Collection Agent and will notify Borrower of any information relevant to making deposits to the account.
B.2.Lender will pay Collection Agent one-half of the annual fee for its services as specified below.
B.3.Lender will notify Borrower and Collection Agent of any adjustment in the amount of the monthly escrow account payment that may become necessary.
C.Collection Agent’s Duties
C.1.Within [number] business days after each of Borrower’s monthly deposits to Lender’s special account, Collection Agent will pay on behalf of Lender the required payments due on the Prior Note.
C.2.After paying all amounts then due under the Prior Note, Collection Agent will pay or credit the remaining balance to Lender each month.
C.3.Collection Agent will promptly forward to Lender and Borrower copies of its documents transmitting all payments.
C.4.Unless specified otherwise in this agreement, on termination of this agreement Collection Agent will pay any amounts in Lender’s special account to Lender.
D.General Provisions
D.1.No interest will be paid on funds in Lender’s account.
D.2.This agreement will terminate on the occurrence of any of the following events or conditions:
a.The full and final payment of either the Wraparound Note or the Prior Note.
b.Written notice from Lender and Borrower to Collection Agent. Collection Agent will then transfer all amounts in Lender’s account to any successor Collection Agent and be released from further liability. If Lender and Borrower fail to appoint a successor collection agent within thirty days, Collection Agent is unconditionally authorized to deposit the balance of the account with a court of proper jurisdiction.
c.Acceleration of maturity of the Wraparound Note by Lender. In this event, Lender may terminate this agreement by giving notice to Collection Agent and Borrower.
d.Collection Agent’s resignation. Collection Agent may resign by giving Borrower and Lender written notice at least thirty days before the effective date of the resignation. On such resignation, the balance of the account will be transferred according to written instructions from Borrower and Lender. If Collection Agent does not receive written instructions within thirty days after mailing the notice, Collection Agent is unconditionally authorized to deposit the balance of the account with a court of proper jurisdiction.
D.3.Any notice required or permitted under this agreement must be in writing. Any notice required by this agreement will be deemed to be given (whether received or not) the earlier of receipt or three business days after being deposited with the United States Postal Service, postage prepaid, certified mail, return receipt requested, and addressed to the intended recipient at the address shown in this agreement. Notice may also be given by regular mail, personal delivery, courier delivery, or e-mail and will be effective when received. Any address for notice may be changed by written notice given as provided herein.
D.4.Collection Agent may rely on any document that it reasonably believes to be authentic in making any delivery of money under this agreement. Collection Agent is not liable for harm resulting from any of its acts or omissions unless the acts or omissions constitute willful misconduct or gross negligence. Borrower and Lender agree that Collection Agent’s liabilities and obligations are strictly limited to those enumerated in this agreement. Borrower and Lender also indemnify Collection Agent against all liability, loss, and expense that Collection Agent may incur in exercising any authority granted to it by this agreement.
D.5.This agreement binds, benefits, and may be enforced by the successors in interest of the parties.
D.6.When the context requires, singular nouns and pronouns include the plural.
[Name of borrower]
[Name of lender]
[Name of collection agent]