SERVICER RESIGNATION, APPOINTMENT, ASSUMPTION AND AMENDMENT AGREEMENT

 

                                                                       EXHIBIT 4

 

 

    SERVICER RESIGNATION, APPOINTMENT, ASSUMPTION AND AMENDMENT AGREEMENT

 

               MORGAN STANLEY ABS CAPITAL I INC. TRUST 2003-HE1

 

      THIS SERVICER RESIGNATION, APPOINTMENT, ASSUMPTION AND AMENDMENT

AGREEMENT, dated as of December 1, 2004 (the "Agreement"), is by and among

MORGAN STANLEY ABS CAPITAL I INC. ("Depositor"), THE PROVIDENT BANK

("Provident"), CHASE MANHATTAN MORTGAGE CORPORATION ("Chase"; Provident and

Chase each a "Servicer" and, collectively, the "Servicers"), LITTON LOAN

SERVICING LP ("Litton," or "Successor Servicer"), and DEUTSCHE BANK NATIONAL

TRUST COMPANY, as trustee ("Trustee"):

 

                              W I T N E S S E T H:

 

      WHEREAS, the MORGAN STANLEY ABS CAPITAL I INC. TRUST 2003-HE1 (the

"Trust") was created pursuant to the Pooling and Servicing Agreement identified

on Schedule 1.1.A hereto (as amended from time to time, the "Servicing

Agreement") among Depositor, the Servicers and Trustee;

 

      WHEREAS, Provident is a Servicer under the Servicing Agreement;

 

      WHEREAS, Provident desires to resign as a Servicer pursuant to Section

6.04 of the Servicing Agreement and have Litton appointed as a successor

Servicer in accordance with provisions of that Section;

 

      WHEREAS, the Trustee and the Depositor desire to accept the resignation of

Provident as a Servicer, and acknowledge the succession of Litton to Provident

as a Servicer pursuant to Sections 6.04 and 10.01 of the Servicing Agreement;

and

 

      WHEREAS, the parties hereto desire to amend the Servicing Agreement

pursuant to Section 10.01 thereof to better effectuate the replacement of

Provident as a Servicer as provided herein.

 

      NOW THEREFORE, for and in consideration of good and valuable

consideration, the receipt and sufficiency of which are hereby acknowledged, and

of the mutual covenants herein contained, the parties hereto hereby agree as

follows:

 

      1. Resignation, Assignment and Appointment of Servicer. (a) Provident

hereby (i) proposes that Litton be appointed as a successor Servicer to

Provident under the Servicing Agreement and the other Transaction Documents (if

any), (ii) resigns from its duties as a Servicer under the Servicing Agreement

and the other Transaction Documents (if any), effective on the Closing Date, and

(iii) irrevocably assigns and otherwise conveys to Litton, effective on the

Closing Date, all of its right, title and interest in and to any and all of its

rights as a Servicer under the Servicing Agreement and the other Transaction

Documents (if any).

 

     (b) The parties hereto, subject to the requirements of Section 5 hereof,

hereby consent to the resignation of Provident as a Servicer and the appointment

of Litton as a Servicer to replace Provident, find such appointment to be

acceptable and hereby acknowledge that pursuant to Sections 6.04 and 10.01 of

the Servicing Agreement, Litton has been designated as a Servicer under the

Transaction Documents for all purposes from and after the Closing Date. Neither

the Trustee nor the Successor Servicer shall have any responsibility or

obligation for any act or omission of the predecessor Servicer. Subject to the

terms of the Servicing Agreement, as clarified below (including without

limitation any indemnification obligations contained in Sections 6.05 and 8.12

thereof and the standards of care set forth in Section 3.01(a) thereof, as

clarified below, which the parties hereto expressly agree shall survive

Provident's resignation as Servicer with respect to any actions or omissions by

Provident prior to the Closing Date), from and after the Closing Date, Provident

shall be released from and shall have no further obligations as Servicer under

the Transaction Documents. For purposes of clarity, the language contained in

Section 3.01(a) of the Servicing Agreement to the effect that (a) the Servicer

shall service and administer the Mortgage Loans in accordance with the terms of

the Servicing Agreement and the respective Mortgage Loans, and, to the extent

consistent with such terms, in the same manner in which it services and

administers similar mortgage loans for its own portfolio, giving due

consideration to customary and usual standards of practice of mortgage lenders

and loan servicers administering similar mortgage loans and (b) the Servicer

shall service and administer the Mortgage Loans in accordance with applicable

state and federal law, shall be deemed to require that, in the context of the

transfer of servicing effectuated by this Agreement (and in order to be in

strict compliance with the provisions of the Servicing Agreement), each of

Provident and Litton, severally, shall be required (i) to take such actions in

connection with such servicing transfer as are required by applicable state and

federal law and (ii) subject to clause (i), to conduct itself in connection with

such transfer in a manner consistent with the standards and practices usually

employed by it in effecting servicing transfers of mortgage loans similar to the

Mortgage Loans, giving due consideration to the customary and usual standards of

practice of mortgage lenders and loan servicers engaged in servicing transfers

of servicing obligations related to mortgage loans similar to the Mortgage

Loans. Additionally, each of Provident and Litton shall: (A) reasonably

cooperate with Depositor and Trustee in connection with the Trust's satisfying

the reporting requirements under the Securities Exchange Act of 1934, as

amended, and (B) provide the information, letters, reports, and/or

certifications required to be provided by a Servicer pursuant to Sections 3.22,

3.23 and 8.12 of the Servicing Agreement; in each case, with respect to the

periods during which Provident or Litton, as applicable, served or is serving as

Servicer.

 

     (c) Litton hereby (i) accepts the assignment of rights as a Servicer by

Provident, (ii) accepts the appointment as a Servicer under the Servicing

Agreement and the other Transaction Documents (if any), and (iii) assumes and

agrees to discharge the due and punctual performance and observance of each

covenant and condition to be performed and observed by a Servicer under the

Servicing Agreement and the other Transaction Documents (if any), in each case,

from and after the Closing Date.

 

     (d) Promptly following the Closing Date, each account that, pursuant to the

terms of the Transaction Documents, is required to be established and maintained

by Provident as a Servicer shall thereafter be moved to and maintained by the

Successor Servicer at Wachovia Bank National Association; provided, however,

that such accounts shall continue to be required to satisfy all requirements for

such accounts under the Transaction Documents. This Agreement shall be deemed to

satisfy any and all requirements contained in any Transaction Document for

notice of change in any such account.

 

      2. Amendments to Servicing Agreement. Effective as of the Closing Date,

the Servicing Agreement is hereby amended as follows:

 

      (a)    Article I of the Servicing Agreement is hereby amended to add the

following definition:

 

            Successor Servicer: Litton Loan Servicing LP, as successor servicer

            pursuant to that certain Servicer Resignation, Appointment,

            Assumption and Amendment Agreement dated as of December 1, 2004,

            among The Provident Bank, Litton Loan Servicing LP, Chase Manhattan

            Mortgage Corporation, the Depositor, and the Trustee.

 

      (b) Subsection 3.02(a)(ii) of the Servicing Agreement shall be deleted in

its entirety and replaced with the following:

 

            "(ii) an institution approved as a Title II Nonsupervised Lender by

            the Federal Housing Administration or an institution that has

            deposit accounts insured by the FDIC."

 

      (c)    Section 10.07 of the Servicing Agreement is amended as follows:

 

      (i)    The first sentence of Section 10.07 is hereby amended to read in its

            entirety as follows:

 

            "(a) Notwithstanding anything to the contrary contained herein,

            except as provided in Section 6.02, this Agreement may not be

            assigned by a Servicer without the prior written consent of the

            Trustee and the Depositor; provided, however, each Servicer is

            hereby authorized to enter into an Advance Facility which complies

            with Section 10.07(b) or Section 10.07(c), as applicable.

 

            (b) Each Servicer is hereby authorized to enter into an Advance

            Facility under which (1) the Servicer sells, assigns or pledges to

            an Advancing Person the Servicer's rights under this Agreement to be

            reimbursed for any P&I Advances or Servicing Advances and/or (2) an

            Advancing Person agrees to fund some or all P&I Advances or

            Servicing Advances required to be made by the Servicer pursuant to

            this Agreement."

 

      (ii)   The remaining portion of existing Section 10.07 shall continue to

            exist in its current form, as the remaining portion of clause (b),

            immediately following the first sentence of clause (b) described

            above; provided that the reference to "this Section 10.07" in the

            last paragraph thereof shall be amended to read "this Section

            10.07(b)."

 

      (iii) A new clause (c) is added to Section 10.07 of the Servicing

            Agreement, immediately following the last sentence of existing

            Section 10.07, which shall read in its entirety as follows:

 

            "(c) For so long as Litton is a Servicer hereunder, Litton is hereby

             also authorized to enter into an Advance Facility that complies

             with the requirements of this Section 10.07(c) in lieu of the

             requirements of Section 10.07(b). The requirements are as follows:

 

                  (i) Litton is hereby authorized to enter into an Advance

            Facility, the documentation for which complies with Sections

            10.07(c)(ii), (c)(iii) and (c)(v) below, under which (A) the

            Servicer assigns or pledges its rights under this Agreement to be

            reimbursed for any or all Advances and/or Servicing Advances to (1)

            a Person, which may be a special-purpose bankruptcy-remote entity

            (an "SPV"), (2) a Person, which may simultaneously assign or pledge

            such rights to an SPV or (3) a lender (a "Lender"), which, in the

            case of any Person or SPV of the type described in either of the

            preceding clauses (1) or (2), may directly or through other

            assignees and/or pledgees, assign or pledge such rights to a Person

            which may include a trustee acting on behalf of holders of debt

            instruments (any such Person or any such Lender, an "Advance

            Financing Person"), and/or (B) an Advance Financing Person agrees to

            fund all of the P&I Advances and/or Servicing Advances required to

            be made by Litton pursuant to this Agreement. No consent of the

            Trustee, Certificateholders or any other party shall be required

            before Litton may enter into an Advance Facility nor shall the

            Trustee or the Certificateholders be a third party beneficiary of

            any obligation of an Advance Financing Person to Litton.

             Notwithstanding the existence of any Advance Facility under which an

            Advance Financing Person agrees to fund P&I Advances and/or

            Servicing Advances, (A) Litton (i) shall remain obligated pursuant

            to this Agreement to make P&I Advances and/or Servicing Advances

            pursuant to and as required by this Agreement and (ii) shall not be

            relieved of such obligations by virtue of such Advance Facility and

            (B) neither the Advance Financing Person nor the Litton Assignee (as

            hereinafter defined) shall have (i) any right to proceed against or

            otherwise contact any Mortgagor for the purpose of collecting any

            payment that may be due with respect to any related Mortgage Loan or

            enforcing any covenant of such Mortgagor under the related Mortgage

            Loan documents or (ii) any rights under or in respect of this

            Agreement that are any greater than the rights of Litton hereunder.

 

                   (ii) If Litton enters into an Advance Facility, Litton and the

            related Advance Financing Person shall deliver to the Trustee at the

            address set forth in Section 10.05 hereof a written notice (an

            "Advance Facility Notice"), stating (A) the identity of the Advance

            Financing Person, (B) the identity of the Person (the "Litton

            Assignee") that will, subject to satisfaction of the requirements in

            Section 10.07(c)(iii) hereof, have the right to make withdrawals

            from the Collection Account pursuant to Section 3.11 hereof to

            reimburse previously unreimbursed P&I Advances and/or Servicing

            Advances ("Advance Reimbursement Amounts") and (C) that the Advance

            Financing Person and The Litton Assignee have each been provided

            with copies of this Agreement, including this Section 10.07(c) and

            agree to be bound by the provisions of this Section 10.07(c) and

            acknowledges that its rights may be exercised only as provided, and

            subject to the conditions, herein. The Advance Facility Notice shall

            be executed by the Advance Financing Person, Litton, and the Litton

            Assignee. Advance Reimbursement Amounts (A) shall consist solely of

            amounts in respect of P&I Advances and/or Servicing Advances for

            which Litton would be permitted to reimburse itself in accordance

            with Section 3.11 hereof, assuming Litton had made the related P&I

            Advance(s) and/or Servicing Advance(s) and (B) shall not consist of

            amounts payable to a successor Servicer in accordance with Section

            3.11 hereof to the extent permitted under Section 10.07(c)(v) below.

 

                  (iii) Notwithstanding the existence of an Advance Facility,

            Litton, on behalf of the Advance Financing Person, shall be entitled

            to continue to withdraw Advance Reimbursement Amounts in accordance

             with Section 3.11 hereof. Litton's entitlement to withdraw Advance

            Reimbursement Amounts may be terminated by the Advance Financing

            Person pursuant to a written notice to the Trustee delivered in the

            manner set forth in Section 10.05 hereof. Upon receipt of a written

            notice of termination that satisfies the requirements of this

            Section 10.07(c)(iii), Litton shall no longer be entitled to

            withdraw Advance Reimbursement Amounts from the Collection Account

            and the Litton Assignee shall thereafter have the right to withdraw

            from the Collection Account all Advance Reimbursement Amounts when

            and to the extent such amounts are payable to Litton pursuant to the

            terms of Section 3.11 hereof. Notwithstanding the foregoing, and for

            the avoidance of doubt, (A) Litton and/or the Litton Assignee shall

            only be entitled to reimbursement of Advance Reimbursement Amounts

             hereunder pursuant to Section 3.11 of this Agreement and shall be

            required to return to the Trustee, for the benefit of the

            Certificateholders, all amounts, with interest, withdrawn by it in

            error or that are in excess of Litton's entitlement thereto under

            this Agreement, and shall not otherwise be entitled to make

            withdrawals of, or receive, Advance Reimbursement Amounts that shall

            be deposited in the Distribution Account pursuant to Section 3.11 or

            Section 3.07(d) hereof, and (B) none of the Trustee or the

            Certificateholders shall have any right to, or otherwise be entitled

            to, receive any Advance Reimbursement Amounts to which Litton or the

            Litton Assignee, as applicable, shall be entitled pursuant to

            Section 3.11 hereof. An Advance Facility may be terminated by the

            joint written direction of Litton and the related Advance Financing

            Person. Written notice of such termination shall be delivered to the

            Trustee in the manner set forth in Section 10.05 hereof. None of the

            Depositor or the Trustee shall, as a result of the existence of any

            Advance Facility, have any additional duty or liability with respect

            to the calculation or payment of any Advance Reimbursement Amount,

            nor, as a result of the existence of any Advance Facility, shall the

            Depositor or the Trustee have any additional responsibility,

            including without limitation, to track or monitor the administration

            of the Advance Facility or the payment of Advance Reimbursement

            Amounts to the Litton Assignee. Litton shall indemnify the

             Depositor, the Trustee, any successor Servicer and the Trust Fund

            for any claim, loss, liability or damage resulting from any claim by

            the related Advance Financing Person, except to the extent that such

            claim, loss, liability or damage resulted from or arose out of

            negligence, recklessness or willful misconduct on the part of the

            Depositor, the Trustee or any successor Servicer, as the case may

            be, or failure by the successor Servicer to remit funds as required

            by this Agreement or the commission of an act or omission to act by

            the successor Servicer and the passage of any applicable cure or

            grace period, such that an Event of Default under this Agreement

            occurs or such entity is subject to termination for cause under this

            Agreement. Litt