ASSET BACKED SECURITIES CORPORATION Depositor DLJ MORTGAGE CAPITAL, INC. Seller SAXON MORTGAGE SERVICES, INC. Servicer and Trustee POOLING AND SERVICING AGREEMENT Dated as of February 1, 2005 Asset Backed Securities Corporation Home Equity Loan Trust,...

ASSET BACKED SECURITIES CORPORATION

Depositor

DLJ MORTGAGE CAPITAL, INC.

Seller

SAXON MORTGAGE SERVICES, INC.

Servicer

and

U.S. BANK NATIONAL ASSOCIATION

Trustee

_________________________________________

POOLING AND SERVICING AGREEMENT

Dated as of February 1, 2005

_________________________________________

Asset Backed Securities Corporation Home Equity Loan Trust, Series 2005-HE1

Asset Backed Pass-Through Certificates, Series 2005-HE1

Table of Contents

Page

ARTICLE I

DEFINITIONS

SECTION 1.01.

Defined Terms.

SECTION 1.02.

Allocation of Certain Interest Shortfalls.

SECTION 1.03.

Designation of Interests in REMIC

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS; ORIGINAL

ISSUANCE OF CERTIFICATES

SECTION 2.01.

Conveyance of Mortgage Loans.

SECTION 2.02.

Acceptance of REMIC I by the Trustee.

SECTION 2.03.

Repurchase or Substitution of Mortgage Loans by an

Originator, the Seller or the Depositor; Payment of

Prepayment Premiums in the Event of Breach.

SECTION 2.04.

Representations and Warranties of the Depositor.

SECTION 2.05.

Representations, Warranties and Covenants of the

Servicer and the Seller.

SECTION 2.06.

Issuance of the R-I Residual Interest.

SECTION 2.07.

Conveyance of REMIC I Regular Interests; Acceptance

of REMIC II by the Trustee.

SECTION 2.08.

Conveyance of REMIC II Regular Interests; Acceptance of

REMIC III by the Trustee.

SECTION 2.09.

Conveyance of REMIC III Regular Interests; Acceptance of

REMIC IV by the Trustee.

SECTION 2.10.

Conveyance of REMIC IV Regular Interests; Acceptance of

REMIC V by the Trustee.

ARTICLE III

ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

SECTION 3.01.

Servicer to Act as Servicer.

SECTION 3.02.

Sub-Servicing Agreements Between the Servicer and

Sub-Servicers.

SECTION 3.03.

Successor Sub-Servicers.

SECTION 3.04.

Liability of the Servicer.

SECTION 3.05.

No Contractual Relationship Between Sub-Servicers and

Trustee or Certificateholders.

SECTION 3.06.

Assumption or Termination of Sub-Servicing Agreements

by Trustee.

SECTION 3.07.

Collection of Certain Mortgage Loan Payments.

SECTION 3.08.

Sub-Servicing Accounts.

SECTION 3.09.

Collection of Taxes, Assessments and Similar Items;

Servicing Accounts.

SECTION 3.10.

Collection Account and Distribution Account.

SECTION 3.11.

Withdrawals from the Collection Account and

Distribution Account.

SECTION 3.12.

Investment of Funds in the Collection Account, the REO

Account and the Distribution Account.

SECTION 3.13.

[Reserved].

SECTION 3.14.

Maintenance of Hazard Insurance and Errors and Omissions

and Fidelity Coverage.

SECTION 3.15.

Enforcement of Due-On-Sale Clauses; Assumption Agreements.

SECTION 3.16.

Realization Upon Defaulted Mortgage Loans.

SECTION 3.17.

Trustee to Cooperate; Release of Mortgage Files.

SECTION 3.18.

Servicing Compensation.

SECTION 3.19.

Reports to the Trustee; Collection Account Statements and

Other Reporting Obligations.

SECTION 3.20.

Statement as to Compliance.

SECTION 3.21.

Independent Public Accountants’ Servicing Report.

SECTION 3.22.

Access to Certain Documentation.

SECTION 3.23.

Title, Management and Disposition of REO Property.

SECTION 3.24.

Obligations of the Servicer in Respect of Prepayment

Interest Shortfalls.

SECTION 3.25.

Obligations of the Servicer in Respect of Mortgage Rates and

Monthly Payments.

SECTION 3.26.

Net WAC Reserve Fund; Yield Maintenance Agreements.

SECTION 3.27.

[Reserved].

100

SECTION 3.28.

Advance Facility.

100

ARTICLE IV

PAYMENTS TO CERTIFICATEHOLDERS

SECTION 4.01.

Distributions.

103

SECTION 4.02.

Statements to Certificateholders.

112

SECTION 4.03.

Remittance Reports; P&I Advances.

118

SECTION 4.04.

Allocation of Realized Losses.

118

SECTION 4.05.

Compliance with Withholding Requirements.

120

SECTION 4.06.

Commission Reporting.

120

SECTION 4.07.

Early Termination Fund.

122

ARTICLE V

THE CERTIFICATES

SECTION 5.01.

The Certificates.

122

SECTION 5.02.

Registration of Transfer and Exchange of Certificates.

126

SECTION 5.03.

Mutilated, Destroyed, Lost or Stolen Certificates.

130

SECTION 5.04.

Persons Deemed Owners.

130

SECTION 5.05.

Certain Available Information.

130

ARTICLE VI

THE DEPOSITOR AND THE SERVICER

SECTION 6.01.

Liability of the Depositor, the Seller and the Servicer.

130

SECTION 6.02.

Merger or Consolidation of the Depositor, the Seller or the Servicer.

130

SECTION 6.03.

Limitation on Liability of the Depositor, the Seller, the

Servicer and Others.

134

SECTION 6.04.

Limitation on Resignation of the Servicer.

134

SECTION 6.05.

Rights of the Depositor, the Seller and the Trustee in

Respect of the Servicer.

134

ARTICLE

VII DEFAULT

SECTION 7.01.

Servicer Events of Default.

134

SECTION 7.02.

Trustee to Act; Appointment of Successor.

136

SECTION 7.03.

Notification to Certificateholders.

139

SECTION 7.04.

Waiver of Servicer Events of Default.

139

ARTICLE VIII

CONCERNING THE TRUSTEE

SECTION 8.01.

Duties of Trustee.

139

SECTION 8.02.

Certain Matters Affecting the Trustee.

139

SECTION 8.03.

Trustee Not Liable for Certificates or Mortgage Loans.

140

SECTION 8.04.

Trustee May Own Certificates.

140

SECTION 8.05.

Fees and Expenses of the Trustee.

141

SECTION 8.06.

Eligibility Requirements for Trustee.

148

SECTION 8.07.

Resignation and Removal of the Trustee.

148

SECTION 8.08.

Successor Trustee.

148

SECTION 8.09.

Merger or Consolidation of Trustee.

148

SECTION 8.10.

Appointment of Co-Trustee or Separate Trustee.

148

SECTION 8.11.

Appointment of Custodians.

148

SECTION 8.12.

Appointment of Office or Agency.

148

SECTION 8.13.

Representations and Warranties of the Trustee.

148

SECTION 8.14.

Yield Maintenance Agreement.

148

ARTICLE IX

TERMINATION

SECTION 9.01.

Termination Upon Repurchase or Liquidation of All

Mortgage Loans.

148

SECTION 9.02.

Additional Termination Requirements.

148

ARTICLE X

REMIC PROVISIONS

SECTION 10.01.

REMIC Administration.

154

SECTION 10.02.

Prohibited Transactions and Activities.

154

SECTION 10.03.

Servicer and Trustee Indemnification.

154

ARTICLE XI

MISCELLANEOUS PROVISIONS

SECTION 11.01.

Amendment.

154

SECTION 11.02.

Recordation of Agreement; Counterparts.

154

SECTION 11.03.

Limitation on Rights of Certificateholders.

155

SECTION 11.04.

Governing Law.

155

SECTION 11.05.

Notices.

156

SECTION 11.06.

Severability of Provisions.

156

SECTION 11.07.

Notice to Rating Agencies and the Counterparty.

156

SECTION 11.08.

Article and Section References.

157

SECTION 11.09.

Third Party Rights.

158

SECTION 11.10.

Grant of Security Interest.

158

SECTION 11.11.

Protection of Assets.

158

SECTION 11.12.

Non-Solicitation

159

Exhibits

Exhibit A-1

Form of Class A Certificate

Exhibit A-2

Form of Mezzanine Certificate

Exhibit A-3

[Reserved]

Exhibit A-4

[Reserved]

Exhibit A-5

Form of Class X Certificate

Exhibit A-6

Form of Class P Certificate

Exhibit A-7

[Reserved]

Exhibit A-8

[Reserved]

Exhibit A-9

[Reserved]

Exhibit A-10

Form of Class R Certificate

Exhibit B

[Reserved]

Exhibit C-1

Form of Trust Receipt and Initial Certification

Exhibit C-2

Form of Trustee Receipt and Final Certification

Exhibit D

Form of Mortgage Loan Purchase Agreement

Exhibit E-1

Form of Request for Release

Exhibit E-2

[Reserved]

Exhibit F-1

Forms of Transferor/Transferee Representation Letter

Exhibit F-2

Form of Transfer Affidavit and Agreement

Exhibit G

Form of ERISA Certification

Exhibit H

Form of Depositor Certification

Exhibit I

Form of Trustee Certification

Exhibit J

Form of Servicer Certification

Schedules

Schedule 1

Mortgage Loan Schedule

Schedule 2

Prepayment Premium Schedule

This Pooling and Servicing Agreement, is dated and effective as of February 1, 2005, among ASSET BACKED SECURITIES CORPORATION, as Depositor, DLJ MORTGAGE CAPITAL, INC., as Seller, SAXON MORTGAGE SERVICES, INC., as Servicer and U.S. BANK NATIONAL ASSOCIATION, as Trustee.

PRELIMINARY STATEMENT:

The Depositor intends to sell pass-through certificates (collectively, the “Certificates”), to be issued hereunder in multiple classes, which in the aggregate will evidence the entire beneficial ownership interest in multiple REMICs (as defined herein) created hereunder. The Trust Fund will consist of a segregated pool of assets consisting of the Mortgage Loans and certain other related assets subject to this Agreement.

As of the Cut-off Date, the Mortgage Loans had an aggregate Stated Principal Balance equal to $1,139,825,653.75.

Set forth below are designations of Classes of Certificates to the categories used herein.

Book-Entry Certificates	All Classes of Certificates other than the Physical Certificates.
Class A Certificates	Class A1, Class A2, Class A3, Class A4, Class A5 and Class A6 Certificates.
Class P Certificates	Class P Certificates.
ERISA-Restricted Certificates	Non-Offered Certificates and any Certificates that do not satisfy the applicable ratings requirement under the Underwriter’s Exemption.
LIBOR Certificates	Class A and Mezzanine Certificates.
Mezzanine Certificates	Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10 and Class M11 Certificates.
Non-Offered Certificates	Class M11, Class X, Class P and Residual Certificates.
Offered Certificates	Class A and Offered Subordinate Certificates.
Offered Subordinate Certificates	Mezzanine Certificates (other than the Class M11 Certificates).
Physical Certificates	Class X, Class P and Residual Certificates.
Regular Certificates	All Classes of Certificates other than the Residual Certificates.
Residual Certificates	Class R Certificates.
Senior Certificates	Class A Certificates.
Subordinate Certificates	Class X Certificates, Residual Certificates and Mezzanine Certificates.

In consideration of the mutual agreements herein contained, the Depositor, the Seller, the Servicer and the Trustee agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.

Defined Terms.

Whenever used in this Agreement, including, without limitation, in the Preliminary Statement hereto, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article.

“Accepted Servicing Practices”: With respect to any Mortgage Loan, those mortgage servicing practices of prudent mortgage lending institutions which service mortgage loans of the same type as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located.

“Adjustable Rate Mortgage Loan”: Each of the Mortgage Loans identified in the Mortgage Loan Schedule as having a Mortgage Rate that is subject to adjustment.

“Adjustable Rate PPC”: 100% Adjustable Rate PPC means a CPR of 4.00% per annum of the then unpaid principal balance of a Mortgage Loan in the first month of the life of such Mortgage Loan and an additional approximately 2.1818% (precisely 24/11 expressed as a percentage) per annum in each month thereafter until the 12th month, remaining at 28% per annum in each month thereafter until the 24th month, then beginning in the 25th month, remaining at 55% per annum in each month thereafter until the 28th month and in each month thereafter during the life of such Mortgage Loan, a CPR of 35% per annum.

“Adjustment Date”: With respect to each Adjustable Rate Mortgage Loan, the day of the month on which the Mortgage Rate of such Mortgage Loan changes pursuant to the related Mortgage Note. The first Adjustment Date following the Cut-off Date as to each Adjustable Rate Mortgage Loan is set forth in the Mortgage Loan Schedule.

“Advance Facility”: As defined in Section 3.28(a) herein.

“Advance Facility Notice”: As defined in Section 3.28(b) herein.

“Advance Facility Trustee”: As defined in Section 3.28(b) herein.

“Advance Reimbursement Amounts”: As defined in Section 3.28(a) herein.

“Advancing Person”: As defined in Section 3.28(a) herein.

“Affiliate”: With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Aggregate Collateral Balance”: As of any date of determination will be equal to the aggregate Stated Principal Balance of the Mortgage Loans and any REO Properties owned by the Trust.

“Aggregate Strip Amount”: The sum of Subgroup 1 Strip Amount, the Subgroup 2 Strip Amount and the Subordinate Strip Amount for such Distribution Date.

“Agreement”: This Pooling and Servicing Agreement and all amendments hereof and supplements hereto.

“Applicable Regulations”: As to any Mortgage Loan, all federal, state and local laws, statutes, rules and regulations applicable thereto.

“Allocated Realized Loss Amount”: With respect to any Distribution Date and any class of Mezzanine Certificates or the Class A2 Certificates, the amount by which (A) any Realized Losses allocated to any such Class of Certificates on any Distribution Date pursuant to Section 4.04 exceeds the sum of (B) (i) any additions to the Certificate Principal Balance pursuant to Section 4.04(d) on such Distribution Date or any previous Distribution Date and (ii) the aggregate of the amounts paid in respect of reimbursement of Allocated Realized Loss Amounts pursuant to Section 4.01(a)(3) on previous Distribution Dates.

“Assignment”: An assignment of Mortgage, notice of transfer or equivalent instrument, in recordable form (excepting therefrom, if applicable, the mortgage recordation information which has not been required pursuant to Section 2.01 hereof or returned by the applicable recorder’s office and/or the assignee’s name), which is sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect of record the sale of the Mortgage, which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law.

“Assignment and Assumption Agreement”: That certain assignment and assumption agreement dated as of the Cut-off Date, by and between the Seller, as assignor and the Depositor, as assignee, relating to the Mortgage Loans.

“Available Distribution Amount”: With respect to any Distribution Date, an amount equal to (1) the sum of (a) the aggregate of the amounts on deposit in the Collection Account and Distribution Account as of the close of business on the related Determination Date, (b) the aggregate of any amounts received in respect of an REO Property withdrawn from any REO Account and deposited in the Distribution Account for such Distribution Date pursuant to Section 3.23, (c) the aggregate of any amounts deposited in the Distribution Account by the Servicer in respect of Prepayment Interest Shortfalls for such Distribution Date pursuant to Section 3.24 and (d) the aggregate of any P&I Advances made by the Servicer for such Distribution Date pursuant to Section 4.03 reduced (to not less than zero) by (2) the portion of the amount described in clause (1)(a) above that represents (i) Monthly Payments on the Mortgage Loans received from a Mortgagor on or prior to the Determination Date but due during any Due Period subsequent to the related Due Period, (ii) Principal Prepayments on the Mortgage Loans received after the related Prepayment Period (together with any interest payments received with such Principal Prepayments to the extent they represent the payment of interest accrued on the Mortgage Loans during a period subsequent to the related Prepayment Period), (iii) Liquidation Proceeds, Insurance Proceeds and proceeds from repurchases of and substitutions for Mortgage Loans, if any, received in respect of such Mortgage Loans after the calendar month preceding the month of such Distribution Date, (iv) amounts reimbursable or payable to the Depositor, the Originators, the Servicer, the Trustee or any Sub-Servicer pursuant to Section 3.11 or Section 3.12 or otherwise payable in respect of Extraordinary Trust Fund Expenses, (v) amounts deposited in the Collection Account or the Distribution Account in error, and (vi) the amount of any Prepayment Premiums collected by the Servicer in connection with the voluntary Principal Prepayment in full of any of the Mortgage Loans or the Servicer Prepayment Premium Payment Amount.

“Bankruptcy Code”: The Bankruptcy Reform Act of 1978 (Title 11 of the United States Code), as amended.

“Bankruptcy Loss”: With respect to any Mortgage Loan, a Realized Loss resulting from a Deficient Valuation (i.e. “principal cramdown”) or Debt Service Reduction (i.e., “interest cramdown”).

“Basic Principal Distribution Amount”: With respect to any Distribution Date the amounts in clauses (b)(i) – (iv) of the definition of Principal Distribution Amount.

“Book-Entry Certificate”: As specified in the Preliminary Statement.

“Book-Entry Custodian”: The custodian appointed pursuant to Section 5.01 herein.

“Business Day”: Any day other than a Saturday, a Sunday or a day on which banking or savings and loan institutions in the State of California, the State of New York, the State of Delaware, the State of Minnesota or the cities in which the Corporate Trust Office of the Trustee is located, are authorized or obligated by law or executive order to be closed.

“Carryover Termination Payment”: For any Distribution Date, the portion of any Termination Payment payable by the Trust to the Counterparty previously due on a prior Distribution Date that remains unpaid on such Distribution Date plus interest thereon at the Default Rate for the period from the date such Termination Payment was due but unpaid to but excluding the date such amount has been paid (such interest to be compounded daily).

“Certificate”: Any one of the certificates issued under this Agreement in substantially the forms attached hereto as Exhibit X-0, Xxxxxxx X-0, Exhibit X-0, Xxxxxxx X-0 and Exhibit A-10.

“Certificate Factor”: With respect to any Class of LIBOR Certificates as of any Distribution Date, a fraction, expressed as a decimal carried to six places, the numerator of which is the aggregate Certificate Principal Balance of such Class of Certificates on such Distribution Date (after giving effect to any distributions of principal and allocations of Realized Losses in reduction of the Certificate Principal Balance of such Class of Certificates to be made on such Distribution Date), and the denominator of which is the initial Original Certificate Principal Balance of such Class of Certificates as of the Closing Date.

“Certificate Margin”: As to any Class of LIBOR Certificates, the respective amount set forth below:

	Certificate Margin
Class	(1)	(2)
A1	0.3025%		0.6050%
A2	0.3400%		0.6800%
A3	0.2900%		0.5800%
A4	0.1500%		0.3000%
A5	0.2800%		0.5600%
A6	0.3700%		0.7400%
M1	0.5000%		0.7500%
M2	0.5300%		0.7950%
M3	0.5800%		0.8700%
M4	0.8500%		1.2750%
M5	0.9000%		1.3500%
M6	1.0000%		1.5000%
M7	1.5500%		2.3250%
M8	1.6500%		2.4750%
M9	2.3500%		3.5250%
M10	3.0000%		4.5000%
M11	3.0000%		4.5000%

(1)

To and including the Optional Termination Date.

(2)

After the Optional Termination Date.

“Certificate Owner”: With respect to a Book-Entry Certificate, the Person who is the beneficial owner of such Certificate as reflected on the books of the Depository or on the books of a Depository Participant or on the books of an indirect participating brokerage firm for which a Depository Participant acts as agent.

“Certificate Principal Balance”: With respect to any Class of Certificates, other than the Class R and Class X Certificates, as of any Distribution Date, the Original Certificate Principal Balance reduced by the sum of (a) all amounts actually distributed in respect of principal of such Class and (b) with respect to the Mezzanine Certificates and the Class A2 Certificates, any reductions in their respective Certificate Principal Balances deemed to have occurred in connection with allocations of Realized Losses on all prior Distribution Dates pursuant to Section 4.04(b) plus any increase to a Certificate Principal Balance pursuant to Section 4.04(d).

“Certificate Register” and “Certificate Registrar”: The register maintained and the registrar appointed pursuant to Section 5.02 herein.

“Certificateholder” or “Holder”: The Person in whose name a Certificate is registered in the Certificate Register, except that a Disqualified Organization or a Non-United States Person shall not be a Holder of a Residual Certificate for any purposes hereof and, solely for the purposes of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor or the Servicer or any Affiliate thereof shall be deemed not to be outstanding and the Voting Rights to which it is entitled shall not be taken into account in determining whether the requisite percentage of Voting Rights necessary to effect any such consent has been obtained, except as otherwise provided in Section 11.01. The Trustee may conclusively rely upon a certificate of the Depositor or the Servicer in determining whether a Certificate is held by an Affiliate thereof. All references herein to “Holders” or “Certificateholders” shall reflect the rights of Certificate Owners as they may indirectly exercise such rights through the Depository and participating members thereof, except as otherwise specified herein; provided, however, that the Trustee shall be required to recognize as a “Holder” or “Certificateholder” only the Person in whose name a Certificate is registered in the Certificate Register.

“Charged-off Mortgage Loan”: As defined in Section 3.01 herein.

“Class”: All of the Certificates bearing the same class designation as set forth in the Preliminary Statement.

“Class A Principal Distribution Amount”: For any Distribution Date (a) prior to the Stepdown Date or (b) on which a Trigger Event is in effect, is an amount equal to the Principal Distribution Amount for such Distribution Date. For any Distribution Date (a) on or after the Stepdown Date or (b) on which a Trigger Event is not in effect, the excess of (x) the aggregate Certificate Principal Balance of the Class A Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 58.40% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class Exemption”: A class exemption granted by the U.S. Department of Labor, which provides relief from certain of the prohibited transaction provisions of ERISA and the related excise tax provisions of the Code.

“Class M1 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M1 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 66.50% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M2 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the related Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date) and (iii) the Certificate Principal Balance of the Class M2 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 72.70% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M3 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date) and (iv) the Certificate Principal Balance of the Class M3 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 76.50% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M4 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date) and (v) the Certificate Principal Balance of the Class M4 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 79.90% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M5 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date) and (vi) the Certificate Principal Balance of the Class M5 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 83.10% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M6 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date) and (vii) the Certificate Principal Balance of the Class M6 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 86.20% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M7 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M6 Certificates (after taking into account the payment of the Class M6 Principal Distribution Amount on such Distribution Date) and (viii) the Certificate Principal Balance of the Class M7 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 88.70% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M8 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M6 Certificates (after taking into account the payment of the Class M6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M7 Certificates (after taking into account the payment of the Class M7 Principal Distribution Amount on such Distribution Date) and (ix) the Certificate Principal Balance of the Class M8 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 90.90% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M9 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M6 Certificates (after taking into account the payment of the Class M6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M7 Certificates (after taking into account the payment of the Class M7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal Balance of the Class M8 Certificates (after taking into account the payment of the Class M8 Principal Distribution Amount on such Distribution Date) and (x) the Certificate Principal Balance of the Class M9 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 93.00% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M10 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M6 Certificates (after taking into account the payment of the Class M6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M7 Certificates (after taking into account the payment of the Class M7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal Balance of the Class M8 Certificates (after taking into account the payment of the Class M8 Principal Distribution Amount on such Distribution Date), (x) the Certificate Principal Balance of the Class M9 Certificates (after taking into account the payment of the Class M9 Principal Distribution Amount on such Distribution Date) and (xi) the Certificate Principal Balance of the Class M10 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 94.60% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class M11 Principal Distribution Amount”: With respect to any Distribution Date, the excess of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the payment of the Class A Principal Distribution Amount on such Distribution Date), (ii) the Certificate Principal Balance of the Class M1 Certificates (after taking into account the payment of the Class M1 Principal Distribution Amount on such Distribution Date), (iii) the Certificate Principal Balance of the Class M2 Certificates (after taking into account the payment of the Class M2 Principal Distribution Amount on such Distribution Date), (iv) the Certificate Principal Balance of the Class M3 Certificates (after taking into account the payment of the Class M3 Principal Distribution Amount on such Distribution Date), (v) the Certificate Principal Balance of the Class M4 Certificates (after taking into account the payment of the Class M4 Principal Distribution Amount on such Distribution Date), (vi) the Certificate Principal Balance of the Class M5 Certificates (after taking into account the payment of the Class M5 Principal Distribution Amount on such Distribution Date), (vii) the Certificate Principal Balance of the Class M6 Certificates (after taking into account the payment of the Class M6 Principal Distribution Amount on such Distribution Date), (viii) the Certificate Principal Balance of the Class M7 Certificates (after taking into account the payment of the Class M7 Principal Distribution Amount on such Distribution Date), (ix) the Certificate Principal Balance of the Class M8 Certificates (after taking into account the payment of the Class M8 Principal Distribution Amount on such Distribution Date), (x) the Certificate Principal Balance of the Class M9 Certificates (after taking into account the payment of the Class M9 Principal Distribution Amount on such Distribution Date), (xi) the Certificate Principal Balance of the Class M10 Certificates (after taking into account the payment of the Class M10 Principal Distribution Amount on such Distribution Date) and (xii) the Certificate Principal Balance of the Class M11 Certificates immediately prior to such Distribution Date over (y) the lesser of (A) the product of (i) 97.00% and (ii) the Aggregate Collateral Balance as of the last day of the related Due Period and (B) the Aggregate Collateral Balance as of the last day of the related Due Period minus $5,699,128.

“Class X Distribution Amount”: With respect to any Distribution Date the sum of (i) the Overcollateralization Release Amount for that Distribution Date, if any, and (ii) the product of (x) a notional amount, equal to the aggregate Stated Principal Balance of the Mortgage Loans as of the first day of the month of such Distribution Date (after giving effect to Monthly Payments of principal due on such date), and (y) the Pass-Through Rate for such Class for such Distribution Date as set forth in footnote (2) to “Master REMIC” under Section 1.03 herein, less (iii) distributions made pursuant to Section 4.01(a)(3)(i)-(xxxvii) on such Distribution Date.

“Closing Date”: February 4, 2005.

“Code”: The Internal Revenue Code of 1986, including any successor or amendatory provisions.

“Collection Account”: The account or accounts created and maintained by the Servicer pursuant to Section 3.10(a), which shall be entitled “Saxon Mortgage Services, Inc., as Servicer for U.S. Bank National Association, as Trustee, in trust for the registered holders of Asset Backed Securities Corporation Home Equity Loan Trust 2005-HE1, Series 2005-HE1”. The Collection Account must be an Eligible Account.

“Commission”: The Securities and Exchange Commission.

“Compensating Interest”: As defined in Section 3.24 herein.

“Controlling Person”: The Holders of the majority Percentage Interest of the Class X Certificates.

“Corporate Trust Office”: The principal corporate trust office of the Trustee at which at any particular time its corporate trust business in connection with this Agreement shall be administered, which offices at the date of the execution of this instrument is located at 00 Xxxxxxxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx, 00000-0000, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Depositor and the Servicer.

“Corresponding Classes of Certificates”: With respect to each REMIC Regular Interest, any Class of Certificates appearing opposite such REMIC Regular Interest in Section 1.03 hereof.

“Counterparty”: Credit Suisse First Boston International, or any successor in interest thereto under the Yield Maintenance Agreements.

“CPR”: A prepayment assumption that represents an annualized constant assumed rate of prepayment each month of a pool of mortgage loans relative to its outstanding principal balance for the life of such pool.

“Credit Enhancement Percentage”: For any Distribution Date, the percentage obtained by dividing (x) the sum of (i) the aggregate Certificate Principal Balance of the Mezzanine Certificates (after giving effect to the distribution of the Principal Distribution Amount on such Distribution Date) and (ii) the Overcollateralization Amount (after giving effect to the distribution of the Principal Distribution Amount on such Distribution Date) by (y) the Aggregate Collateral Balance as of the last day of the related Due Period.

“Credit Repositories”: Each of Equifax, Transunion, and Experian, or their respective successors in interest.

“Custodian”: A custodian that is appointed pursuant to a Custodial Agreement. Any Custodian so appointed shall act as agent on behalf of the Trustee, and shall be compensated by the Trustee. The Trustee shall remain at all times responsible under the terms of this Agreement, notwithstanding the fact that certain duties have been assigned to a Custodian.

“Custodial Agreement”: Any custodial agreement between the Trustee and the related Custodian providing for the safekeeping of any documents or instruments referred to in Section 2.01 on behalf of the Certificateholders.

“Custodial File”: A Mortgage File held by a Custodian on behalf of the Trustee.

“Cut-off Date”: With respect to each Mortgage Loan (other than a Qualified Substitute Mortgage Loan), February 1, 2005. With respect to all Qualified Substitute Mortgage Loans, their respective dates of substitution. References herein to the “Cut-off Date,” when used with respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates for such Mortgage Loans.

“Debt Service Reduction”: With respect to any Mortgage Loan, a reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of competent jurisdiction in a proceeding under the Bankruptcy Code, except such a reduction resulting from a Deficient Valuation.

“Default Rate”: As defined in the related Yield Maintenance Agreement.

“Deficient Valuation”: With respect to any Mortgage Loan, a valuation of the related Mortgaged Property by a court of competent jurisdiction in an amount less than the then outstanding principal balance of the Mortgage Loan, which valuation results from a proceeding initiated under the Bankruptcy Code.

“Definitive Certificates”: As defined in Section 5.01(b) herein.

“Deleted Mortgage Loan”: A Mortgage Loan replaced or to be replaced by a Qualified Substitute Mortgage Loan.

“Delinquency Percentage”: With respect to the last day of a Due Period, the percentage equivalent of a fraction, the numerator of which is the aggregate Stated Principal Balance of all Mortgage Loans that, as of the last day of the previous calendar month, are 60 or more days Delinquent, are in foreclosure, have been converted to REO Properties or have been discharged by reason of bankruptcy, and the denominator of which is the aggregate Stated Principal Balance of the Mortgage Loans and REO Properties as of the last day of the previous calendar month.

“Delinquent”: A Mortgage Loan is “Delinquent” if any Monthly Payment due on a Due Date is not made by the close of business on the next scheduled Due Date for that Mortgage Loan (including all foreclosures, bankruptcies and REO Properties). A Mortgage Loan is “30 days Delinquent” if the Monthly Payment has not been received by the close of business on the corresponding day of the month immediately succeeding the month in which that Monthly Payment was due or, if there was no corresponding date (e.g., as when a 30-day month follows a 31-day month in which the payment was due on the 31st day of that month), then on the last day of that immediately succeeding month; and similarly for “60 days Delinquent” and “90 days Delinquent,” etc.

“Depositor”: Asset Backed Securities Corporation, a Delaware corporation, or its successor in interest.

“Depositor Certification”: As defined in Section 4.06(b) herein, a form of which is attached hereto as Exhibit H.

“Depository”: The Depository Trust Company, or any successor Depository hereafter named. The nominee of the initial Depository, for purposes of registering those Certificates that are to be Book-Entry Certificates, is CEDE & Co. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(a)(5) of the Uniform Commercial Code of the State of New York and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

“Depository Institution”: Any depository institution or trust company, including the Trustee, that (a) is incorporated under the laws of the United States of America or any State thereof, (b) is subject to supervision and examination by federal or state banking authorities and (c) has outstanding unsecured commercial paper or other short-term unsecured debt obligations that are rated “F-1” by Fitch (if rated by Fitch), “A-1” by S&P and “P-1” by Xxxxx’x (or comparable ratings if Fitch, S&P and Xxxxx’x are not the Rating Agencies).

“Depository Participant”: A broker, dealer, bank or other financial institution or other Person for whom from time to time a Depository effects book-entry transfers and pledges of securities deposited with the Depository.

“Determination Date”: With respect to each Distribution Date, the 15th day of the calendar month in which such Distribution Date occurs or, if such 15th day is not a Business Day, the Business Day immediately preceding such 15th day.

“Directly Operate”: With respect to any REO Property, the furnishing or rendering of services to the tenants thereof, the management or operation of such REO Property, the holding of such REO Property primarily for sale to customers, the performance of any construction work thereon or any use of such REO Property in a trade or business conducted by the Trust Fund other than through an Independent Contractor; provided, however, that the Trustee (or the Servicer on behalf of the Trustee) shall not be considered to Directly Operate an REO Property solely because the Trustee (or the Servicer on behalf of the Trustee) establishes rental terms, chooses tenants, enters into or renews leases, deals with taxes and insurance, or makes decisions as to repairs or capital expenditures with respect to such REO Property.

“Disqualified Organization”: Any of the following: (i) the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing (other than an instrumentality which is a corporation if all of its activities are subject to tax and, except for Xxxxxxx Mac, a majority of its board of directors is not selected by such governmental unit), (ii) any foreign government, any international organization, or any agency or instrumentality of any of the foregoing, (iii) any organization (other than certain farmers’ cooperatives described in Section 521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on unrelated business taxable income), (iv) rural electric and telephone cooperatives described in Section 1381(a)(2)(C) of the Code, (v) an “electing large partnership” within the meaning of Section 775 of the Code and (vi) any other Person so designated by the Trustee based upon an Opinion of Counsel that the holding of an Ownership Interest in a Residual Certificate by such Person may cause any REMIC created hereunder, or any Person having an Ownership Interest in any Class of Certificates (other than such Person) to incur a liability for any federal tax imposed under the Code that would not otherwise be imposed but for the Transfer of an Ownership Interest in a Residual Certificate to such Person. The terms “United States,” “State” and “international organization” shall have the meanings set forth in Section 7701 of the Code or successor provisions.

“Distribution Account”: The trust account or accounts created and maintained by the Trustee pursuant to Section 3.10(b) which shall be entitled “Distribution Account, U.S. Bank National Association, as Trustee, in trust for the registered holders of Asset Backed Securities Corporation Home Equity Loan Trust 2005-HE1, Series 2005-HE1”. The Distribution Account must be an Eligible Account.

“Distribution Date”: The 25th day of any month, or if such 25th day is not a Business Day, the Business Day immediately following such 25th day, commencing in March 2005.

“DBRS”: Dominion Bond Rating Service, Inc., or its successor in interest.

“Due Date”: With respect to each Distribution Date and each Mortgage Loan (a) that has a Monthly Payment due on the first day of the month, the first day of the month and (b) that has a Monthly Payment due on a day other than the first day of the month, such Mortgage Loan will be treated as if the Monthly Payment is due on the first day of the immediately succeeding month, in each case, exclusive of any days of grace in the related Due Period.

“Due Period”: With respect to any Distribution Date, the period commencing on the second day of the month immediately preceding the month in which such Distribution Date occurs and ending on the first day of the month in which such Distribution Date occurs.

“Early Termination Date”: As defined in the related Yield Maintenance Agreement.

“Early Termination Fund”: The separate Eligible Account created and initially maintained by the Trustee pursuant to Section 4.07 in the name of the Trustee for the benefit of the Certificateholders and designated “U.S. Bank National Association, in trust for registered holders of Asset Backed Securities Corporation, Asset Backed Pass-Through Certificates, Series 2005-HE1.” The Early Termination Fund shall not be part of any REMIC. Funds in the Early Termination Fund shall be held in trust for the Class X Certificateholders for the uses and purposes set forth in this Agreement.

“XXXXX”: The Commission’s Electronic Data Gathering and Retrieval System.

“Eligible Account”: Either (1) an account or accounts maintained with a federal or state-chartered Depository Institution or trust company acceptable to the Rating Agencies and shall be: (a) commercial paper, short-term debt obligation, or other short-term deposits rated at least “A-1+” by S&P, “F-1+” by Fitch (if rated by Fitch) and “R-1” by DBRS (if rated by DBRS) if the deposits are to be held in the account for less than 30 days; or (b) long term unsecured debt obligations rated at least “AA-” by S&P if the deposits are to be held in the account more than 30 days; following a downgrade, withdrawal, or suspension of such institution’s rating, each account should promptly (and in any case within not more than 10 calendar days) be moved to a qualifying institution or to one or more segregated trust accounts in the trust department of such institution, if permitted; or (2) a segregated trust account or accounts maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal Regulation Section 9.10(b), which, in either case, has corporate trust powers, acting in its fiduciary capacity. Eligible Accounts may bear interest.

“ERISA”: The Employee Retirement Income Security Act of 1974, as amended.

“ERISA-Qualifying Underwriting”: A best efforts or firm commitment underwriting or private placement that meets the requirements (without regard to the ratings requirements) of an Underwriter’s Exemption.

“Estate in Real Property”: A fee simple estate in a parcel of land.

“Excess Overcollateralization Amount”: With respect to any Distribution Date, the excess, if any, of (i) the Overcollateralization Amount for such Distribution Date (assuming that 100% of the Principal Remittance Amount is applied as a principal payment on such Distribution Date) over (ii) the Overcollateralization Target Amount for such Distribution Date.

“Exchange Act”: The Securities Exchange Act of 1934, as amended.

“Extraordinary Trust Fund Expense”: Any amounts reimbursable to the Trustee, or any director, officer, employee or agent of the Trustee, from the Trust Fund pursuant to Section 2.02, 2.03, 7.01(c) or 8.05(a) and any amounts payable from the Distribution Account in respect of taxes pursuant to Section 10.01(g)(iii), any amounts payable from the Distribution Account in respect of any REMIC administration pursuant to Section 10.01(c).

“Xxxxxx Xxx”: Xxxxxx Xxx, formerly known as Federal National Mortgage Association, or any successor thereto.

“FDIC”: Federal Deposit Insurance Corporation or any successor thereto.

“Federal Funds Rate”: The interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

“Final Distribution Date”: The Distribution Date in March 2035.

“Final Recovery Determination”: With respect to any defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property purchased by the Seller, the Depositor or the Servicer, as the case may be, pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01, as applicable), a determination made by the Servicer that all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries which the Servicer, in its reasonable good faith judgment, expects to be finally recoverable in respect thereof have been so recovered. The Servicer shall maintain records, prepared by a Servicing Officer, of each Final Recovery Determination made thereby.

“First Lien”: With respect to any second lien Mortgage Loan, the mortgage loan relating to the corresponding Mortgaged Property having a first priority lien.

“Fitch”: Fitch Ratings, or its successor in interest thereto.

“Fixed Rate Mortgage Loan”: Each of the Mortgage Loans identified in the Mortgage Loan Schedule as having a Mortgage Rate that is fixed.

“Fixed Rate PPC”: 100% Fixed Rate PPC means a CPR of 4.00% per annum of the then unpaid principal balance of a Mortgage Loan in the first month of the life of such Mortgage Loan and an additional approximately 1.4545% (precisely 16/11 expressed as a percentage) per annum in each month thereafter until the 12th month, and then beginning in the 12th month and in each month thereafter during the life of such Mortgage Loan, a CPR of 20% per annum.

“Formula Rate”: As to any Class of LIBOR Certificates and any Distribution Date, the sum of One-Month LIBOR and the applicable Certificate Margin.

“Xxxxxxx Mac”: Xxxxxxx Mac, formerly known as Federal Home Loan Mortgage Corporation, or any successor thereto.

“Gross Margin”: With respect to each Adjustable Rate Mortgage Loan, the fixed percentage set forth in the related Mortgage Note that is added to the Index on each Adjustment Date in accordance with the terms of the related Mortgage Note used to determine the Mortgage Rate for such Mortgage Loan.

“Independent”: When used with respect to any specified Person, any such Person who (a) is in fact independent of the Depositor, the Servicer and their respective Affiliates, (b) does not have any direct financial interest in or any material indirect financial interest in the Depositor, the Servicer or any Affiliate thereof, and (c) is not connected with the Depositor, the Servicer or any Affiliate thereof as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, however, that a Person shall not fail to be Independent of the Depositor, the Servicer or any Affiliate thereof merely because such Person is the beneficial owner of 1% or less of any Class of securities issued by the Depositor or the Servicer or any Affiliate thereof, as the case may be.

“Independent Contractor”: Either (i) any Person (other than the Servicer) that would be an “independent contractor” with respect to the Trust Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund were a real estate investment trust (except that the ownership tests set forth in that section shall be considered to be met by any Person that owns, directly or indirectly, 35% or more of any Class of Certificates), so long as the Trust Fund does not receive or derive any income from such Person and provided that the relationship between such Person and the Trust Fund is at arm’s length, all within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other Person (including the Servicer) if the Trustee has received an Opinion of Counsel to the effect that the taking of any action in respect of any REO Property by such Person, subject to any conditions therein specified, that is otherwise herein contemplated to be taken by an Independent Contractor will not cause such REO Property to cease to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code (determined without regard to the exception applicable for purposes of Section 860D(a) of the Code), or cause any income realized in respect of such REO Property to fail to qualify as Rents from Real Property.

“Index”: With respect to each Adjustable Rate Mortgage Loan and each related Adjustment Date, the index as specified in the related Mortgage Note.

“Insurance Proceeds”: Proceeds of any title policy, hazard policy or other insurance policy covering a Mortgage Loan, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor in accordance with the procedures that the Servicer would follow in servicing Mortgage Loans held for its own account, subject to the terms and conditions of the related Mortgage Note and Mortgage.

“Interest Accrual Period”: With respect to any Distribution Date and the LIBOR Certificates, will be the actual number of days (based on a 360-day year) included in the period commencing on the immediately preceding Distribution Date (or, in the case of the first such Interest Accrual Period, commencing on the Closing Date) and ending on the day immediately preceding such Distribution Date.

“Interest Determination Date”: With respect to the LIBOR Certificates and any Interest Accrual Period therefor, the second London Business Day preceding the commencement of such Interest Accrual Period.

“Interest Remittance Amount”: With respect to any Distribution Date, the sum of the Subgroup 1 Interest Remittance Amount and the Subgroup 2 Interest Remittance Amount.

“Late Collections”: With respect to any Mortgage Loan and any Due Period, all amounts received subsequent to the Determination Date immediately following such Due Period, whether as late payments of Monthly Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late payments or collections of principal and/or interest due (without regard to any acceleration of payments under the related Mortgage and Mortgage Note) but Delinquent for such Due Period and not previously recovered.

“LIBOR Certificates”: As specified in the Preliminary Statement.

“Liquidation Event”: With respect to any Mortgage Loan, any of the following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery Determination is made as to such Mortgage Loan; (iii) such Mortgage Loan is removed from the Trust Fund by reason of its being purchased, sold or replaced pursuant to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section 9.01; or (iv) such Mortgage Loan becomes a Charged-off Mortgage Loan. With respect to any REO Property, either of the following events: (i) a Final Recovery Determination is made as to such REO Property; or (ii) such REO Property is removed from the Trust Fund by reason of its being purchased pursuant to Section 9.01.

“Liquidation Proceeds”: The amount (other than Insurance Proceeds, Recoveries or amounts received in respect of the rental of any REO Property prior to REO Disposition) received by the Servicer in connection with (i) the taking of all or a part of a Mortgaged Property by exercise of the power of eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage Loan through a trustee’s sale, foreclosure sale or otherwise, or (iii) the repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03, Section 3.16(c), Section 3.23 or Section 9.01.

“Loan-to-Value Ratio” or “LTV”: With respect to any first lien Mortgage Loan and as of any date of determination, the fraction, expressed as a percentage, the numerator of which is the principal balance of the related Mortgage Loan at such date and the denominator of which is the Value of the related Mortgaged Property. With respect to any second lien Mortgage Loan and as of any date of determination, the fraction, expressed as a percentage, the numerator of which is the sum of (a) the principal balance of the related Mortgage Loan at the date of origination plus (b) the principal balance of the related First Lien at the date of origination of such mortgage loan and the denominator of which is the Value of the related Mortgaged Property.

“London Business Day”: Any day on which banks in the City of London and The City of New York are open and conducting transactions in United States dollars.

“Master REMIC”: As defined in Section 1.03 of this Agreement.

“Maximum Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the percentage set forth in the related Mortgage Note as the maximum Mortgage Rate thereunder.

“Minimum Mortgage Rate”: With respect to each Adjustable Rate Mortgage Loan, the greater of (a) the Gross Margin set forth in the related Mortgage Note and (b) the percentage set forth in the related Mortgage Note as the minimum Mortgage Rate thereunder.

“Monthly Interest Distributable Amount”: With respect to any Distribution Date and each Class of Certificates, other than the Class P, Class R and Class X Certificates, an amount equal to the amount of interest accrued during the related Interest Accrual Period at the related Pass-Through Rate on the Certificate Principal Balance or Notional Amount of such Class of Certificates immediately prior to such Distribution Date, in each case, reduced by any Net Prepayment Interest Shortfalls allocated to such Class of Certificates and any Relief Act Interest Shortfalls allocated to such Class of Certificates, in each such case, as such shortfalls are allocated pursuant to Section 1.02 herein.

“Monthly Payment”: With respect to any Mortgage Loan, the scheduled monthly payment of principal and interest on such Mortgage Loan which is payable by the related Mortgagor from time to time under the related Mortgage Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction in the amount of interest collectible from the related Mortgagor pursuant to the Relief Act; (b) without giving effect to any extension granted or agreed to by the Servicer pursuant to Section 3.07(a); and (c) on the assumption that all other amounts, if any, due under such Mortgage Loan are paid when due.

“Moody’s”: Xxxxx’x Investors Service, Inc. or its successor in interest.

“Mortgage”: The mortgage, deed of trust or other instrument creating a first or second lien on, or first or second priority security interest in, a Mortgaged Property securing a Mortgage Note.

“Mortgage File”: The mortgage documents listed in Section 2.01 pertaining to a particular Mortgage Loan and any additional documents required to be added to the Mortgage File pursuant to this Agreement.

“Mortgage Loan”: Either a WMC Mortgage Loan or a New Century Mortgage Loan, as the context requires.

“Mortgage Loan Purchase Agreement”: Either the (i) New Century Mortgage Loan Purchase Agreement or (ii) WMC Mortgage Loan Purchase Agreement, as the context requires.

“Mortgage Loan Schedule”: As of any date, the list of Mortgage Loans included in the Trust Fund on such date, attached hereto as Schedule 1. The Mortgage Loan Schedule shall set forth by Subgroup the following information with respect to each Mortgage Loan in such Subgroup:

(i)

the Mortgagor’s name, the Originator and the related Originator’s Mortgage Loan identifying number;

(ii)

the street address of the Mortgaged Property including the state and zip code;

(iii)

a code indicating whether the Mortgaged Property is owner-occupied;

(iv)

the type of Residential Dwelling constituting the Mortgaged Property;

(v)

the original months to maturity;

(vi)

the Loan-to-Value Ratio, at origination;

(vii)

the Mortgage Rate in effect immediately following the Cut-off Date;

(viii)

the date on which the first Monthly Payment was due on the Mortgage Loan;

(ix)

the stated maturity date of such Mortgage Loan and of the related First Lien, if applicable;

(x)

the amount of the Monthly Payment (a) at origination and (b) due on the first Due Date after the Cut-off Date;

(xi)

the last Due Date on which a Monthly Payment was actually applied to the unpaid Stated Principal Balance;

(xii)

the original principal amount of the Mortgage Loan and the original principal balance of the related First Lien, if applicable, as of the date of origination;

(xiii)

the Stated Principal Balance of the Mortgage Loan and the Stated Principal Balance of the related First Lien, if applicable, as of the close of business on the Cut-off Date;

(xiv)

with respect to each Adjustable Rate Mortgage Loan, the applicable Index and Gross Margin;

(xv)

a code indicating the purpose of the Mortgage Loan (i.e., purchase financing, rate/term refinancing, cash-out refinancing);

(xvi)

with respect to each Adjustable Rate Mortgage Loan, the Maximum Mortgage Rate;

(xvii)

with respect to each Adjustable Rate Mortgage Loan, the Minimum Mortgage Rate;

(xviii)

the Mortgage Rate at origination;

(xix)

with respect to each Adjustable Rate Mortgage Loan, the Periodic Rate Cap and the maximum first Adjustment Date Mortgage Rate adjustment;

(xx)

a code indicating the documentation program;

(xxi)

with respect to each Adjustable Rate Mortgage Loan, the first Adjustment Date immediately following the Cut-off Date and the Adjustment Date frequency;

(xxii)

the Value of the Mortgaged Property;

(xxiii)

the sale price of the Mortgaged Property, if applicable;

(xxiv)

the related Originator’s risk grade and the FICO or other credit score;

(xxv)

the actual interest “paid to date” of the Mortgage Loan as of the Cut-off Date;

(xxvi)

the number of years any Prepayment Premium is in effect;

(xxvii)

the loan type (e.g. fixed, adjustable; 2/28, 2/28 IO, 3/27, 3/27 IO, 5/25, 5/25 IO, etc.);

(xxviii)

the actual unpaid principal balance of the Mortgage Loan as of the Cut-off Date;

(xxix)

a code indicating whether such Mortgage Loan is a Subgroup 1 Mortgage Loan or a Subgroup 2 Mortgage Loan;

(xxx)

a code indicating whether the Mortgage Loan is a second lien Mortgage Loan; and

(xxxi)

a code indicating whether the Mortgage Loan is subject to a Prepayment Premium, if any.

The Mortgage Loan Schedule shall set forth the following information with respect to the Mortgage Loans in the aggregate as of the Cut-off Date: (1) the number of Mortgage Loans; (2) the current principal balance of the Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage Loans; and (4) the weighted average maturity of the Mortgage Loans. The Mortgage Loan Schedule shall set forth the aggregate Stated Principal Balance of the Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to time by the Depositor in accordance with the provisions of this Agreement. With respect to any Qualified Substitute Mortgage Loan, the Cut-off Date shall refer to the related Cut-off Date for such Mortgage Loan, determined in accordance with the definition of Cut-off Date herein.

“Mortgage Note”: The original executed note or other evidence of the indebtedness of a Mortgagor under a Mortgage Loan.

“Mortgage Pool”: The pool of Mortgage Loans, identified on Schedule 1 from time to time, and any REO Properties acquired in respect thereof.

“Mortgage Rate”: With respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note. With respect to each Mortgage Loan that becomes an REO Property, as of any date of determination, the annual rate determined in accordance with the immediately preceding sentence as of the date such Mortgage Loan became an REO Property.

“Mortgaged Property”: The underlying property securing a Mortgage Loan, including any REO Property, consisting of an Estate in Real Property or a leasehold interest improved by a Residential Dwelling.

“Mortgagor”: The obligor on a Mortgage Note.

“NC Capital”: NC Capital Corporation, a California corporation, or its successor in interest.

“Net Liquidation Proceeds”: With respect to any liquidation of a Mortgage Loan or any other disposition of related Mortgaged Property (including REO Property), the related Liquidation Proceeds, net of P&I Advances, Servicing Advances, Servicing Fees and any other fees, received and retained in connection with the liquidation of such Mortgage Loan or Mortgaged Property in accordance with the terms of this Agreement.

“Net Monthly Excess Cashflow”: With respect to any Distribution Date, an amount equal to the sum of (i) any Overcollateralization Release Amount for such Distribution Date and (ii) the positive excess of (x) the Available Distribution Amount for such Distribution Date over (y) the sum for such Distribution Date of (A) the Monthly Interest Distributable Amounts for the Senior Certificates, Mezzanine Certificates and any Aggregate Strip Amount, each pursuant to Section 4.01(a)(1), (B) the Unpaid Interest Shortfall Amounts for the Class A Certificates and (C) the Principal Remittance Amount.

“Net Mortgage Rate”: With respect to any Mortgage Loan (or the related REO Property) as of any date of determination, a per annum rate of interest equal to the then applicable Mortgage Rate for such Mortgage Loan minus the Servicing Fee Rate.

“Net Prepayment Interest Shortfall”: With respect to any Distribution Date, the excess, if any, of any Prepayment Interest Shortfalls for such date over the related Compensating Interest.

“Net WAC Rate”: The Subgroup 1 Net WAC Rate, the Subgroup 2 Net WAC Rate or the Subordinate Net WAC Rate, as applicable.

“Net WAC Rate Carryover Amount”: For any Distribution Date on which the Pass-Through Rate for any Class of LIBOR Certificates is equal to the related Net WAC Rate, an amount equal to the sum of (i) the excess of (x) the amount of interest such Class accrued for such Distribution Date at the related Formula Rate, over (y) the amount of interest such Class accrued for such Distribution Date at the related Net WAC Rate and (ii) the unpaid portion of any Net WAC Rate Carryover Amount from the prior Distribution Date together with interest accrued on such unpaid portion for the most recently ended Interest Accrual Period at the Formula Rate applicable for such Class for such Interest Accrual Period.

“Net WAC Reserve Fund”: The Eligible Account established pursuant to Section 3.26.

“New Century”: New Century Mortgage Corporation, a California corporation, or its successor in interest.

“New Century Mortgage Loan”: Each mortgage loan originated or acquired by New Century that is transferred and assigned to the Trustee pursuant to Section 2.01 or Section 2.03(c) of this Agreement, as held from time to time as a part of the Trust Fund; the New Century Mortgage Loans so held being identified in the Mortgage Loan Schedule, including each REO Property unless the context otherwise requires.

“New Century Mortgage Loan Purchase Agreement”: The agreement among NC Capital, New Century and DLJ Mortgage Capital, Inc., regarding the sale of the New Century Mortgage Loans by NC Capital to the Seller.

“New Century Reconstitution Agreement”: That certain reconstitution agreement dated as of the Closing Date by and among the Seller, the Depositor and NC Capital related to the New Century Mortgage Loan Purchase Agreement.

“New Lease”: Any lease of REO Property entered into on behalf of the Trust Fund, including any lease renewed or extended on behalf of the Trust Fund, if the Trust Fund has the right to renegotiate the terms of such lease.

“Nonrecoverable P&I Advance”: Any P&I Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property that, in the good faith business judgment of the Servicer using Accepted Servicing Practices, will not or, in the case of a proposed P&I Advance, would not be ultimately recoverable from related Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

“Nonrecoverable Servicing Advance”: Any Servicing Advance previously made or proposed to be made in respect of a Mortgage Loan or REO Property that, in the good faith business judgment of the Servicer using Accepted Servicing Practices, will not or, in the case of a proposed Servicing Advance, would not be ultimately recoverable from related Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as provided herein.

“Non-United States Person”: Any Person other than a United States Person.

“Offered Certificates”: As defined in the Preliminary Statement.

“Offered Subordinate Certificates”: As specified in the Preliminary Statement.

“Officers’ Certificate”: With respect to the Depositor and the Seller, a certificate signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a vice president (however denominated) or an authorized agent, and by the Treasurer, the Secretary, or one of the assistant treasurers or assistant secretaries of the Depositor or Seller, as applicable. With respect to the Servicer, any officer who is authorized to act for the Servicer in matters relating to this Agreement, and whose action is binding upon the Servicer, initially including those individuals whose names appear on the list of authorized officers delivered at the closing.

“One-Month LIBOR”: With respect to the LIBOR Certificates and any Interest Accrual Period therefor, the rate determined by the Trustee on the related Interest Determination Date (or with respect to the initial Interest Accrual Period, on the Closing Date based on information available on the related Interest Determination Date) on the basis of the offered rate for one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination Date; provided that if such rate does not appear on Telerate Page 3750, the rate for such date will be determined on the basis of the offered rates of the Reference Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such Interest Determination Date. In such event, the Trustee will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If on such Interest Determination Date, two or more Reference Banks provide such offered quotations, One-Month LIBOR for the related Interest Accrual Period shall be the arithmetic mean of such offered quotations (rounded upwards if necessary to the nearest whole multiple of 1/16%). If on such Interest Determination Date, fewer than two Reference Banks provide such offered quotations, One-Month LIBOR for the related Interest Accrual Period shall be the higher of (i) One-Month LIBOR as determined on the previous Interest Determination Date and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the priorities described above, One-Month LIBOR for an Interest Determination Date would be based on One-Month LIBOR for the previous Interest Determination Date for the third consecutive Interest Determination Date, the Trustee shall select an alternative comparable index (over which the Trustee has no control), used for determining one-month Eurodollar lending rates that is calculated and published (or otherwise made available) by an independent party.

“Operative Documents”: This Agreement, each Mortgage Loan Purchase Agreement, each Reconstitution Agreement, the Assignment and Assumption Agreement and any other documents related hereto or thereto.

“Opinion of Counsel”: A written opinion of counsel, who may, without limitation, be salaried counsel for the Depositor or the Servicer and which shall be acceptable to the Trustee (which acceptance shall not be unreasonably withheld), except that any opinion of counsel relating to (a) the qualification of any REMIC created hereunder or (b) compliance with the REMIC Provisions must be an opinion of Independent counsel.

“Optional Termination Date”: The first Distribution Date that the Servicer shall be permitted to purchase the Mortgage Loans and REO Properties pursuant to Section 9.01(b).

“Original Certificate Principal Balance”: With respect to any Class of Certificates, other than the Class R and Class X Certificates, the Certificate Principal Balance thereof on the Closing Date and as specified in Section 1.03 hereof.

“Originator”: Either New Century or WMC, as the context requires; provided that, with respect to the cure, repurchase or substitution obligations of New Century under Section 2.03, the “Originator” shall mean NC Capital.

“Outsourcer”: As defined in Section 3.02(c) herein.

“Overcollateralization Amount”: As of any Distribution Date, the excess, if any, of (a) the aggregate Stated Principal Balances of the Mortgage Loans and REO Properties as of the last day of the related Due Period for such Distribution Date over (b) the sum of the aggregate Certificate Principal Balances of the Class A, Mezzanine and Class P Certificates as of such Distribution Date (after taking into account the payment of the amounts described in clauses (b)(i) through (iv) of the definition of Principal Distribution Amount on such Distribution Date).

“Overcollateralization Deficiency Amount”: With respect to any Distribution Date, the excess, if any, of (a) the Overcollateralization Target Amount applicable to such Distribution Date over (b) the Overcollateralization Amount applicable to such Distribution Date (assuming that 100% of the Principal Remittance Amount is applied as a payment of principal on such Distribution Date).

“Overcollateralization Increase Amount”: With respect to any Distribution Date, the lesser of (a) the Overcollateralization Deficiency Amount for such Distribution Date and (b) Net Monthly Excess Cash Flow available for distribution on that Distribution Date pursuant to Section 4.01(a)(3)(i).

“Overcollateralization Release Amount”: With respect to any Distribution Date, an amount equal to the lesser of (a) the Excess Overcollateralization Amount and (b) the Principal Remittance Amount for such Distribution Date.

“Overcollateralization Target Amount”: With respect to any Distribution Date (1) prior to the Stepdown Date, 1.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date, (2) on or after the Stepdown Date provided a Trigger Event is not in effect, the greater of (x) 3.00% of the aggregate Stated Principal Balance of the Mortgage Loans as of the last day of the related Due Period and (y) $5,699,128, and (3) on or after the Stepdown Date if a Trigger Event is in effect, the Overcollateralization Target Amount for the immediately preceding Distribution Date.

“Ownership Interest”: As to any Certificate, any ownership or security interest in such Certificate, including any interest in such Certificate as the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee.

“Pass-Through Rate”: For any Distribution Date and any Class of LIBOR Certificates, the lesser of (i) the related Formula Rate and (ii) the related Net WAC Rate for such Distribution Date. For any Distribution Date and the Class X Certificates, the rate set forth for the Class X Certificates in footnote (2) to “Master REMIC” under section 1.03 herein.

“Percentage Interest”: As to any Certificate, either the percentage set forth on the face thereof or the percentage obtained by dividing the initial Certificate Principal Balance or initial Notional Amount represented by such Certificate by the aggregate initial Certificate Principal Balance or aggregate initial Notional Amount of all of the Certificates of such Class.

“Periodic Rate Cap”: With respect to each Adjustable Rate Mortgage Loan and any Adjustment Date therefor, the fixed percentage set forth in the related Mortgage Note, which is the maximum amount by which the Mortgage Rate for such Mortgage Loan may increase or decrease (without regard to the Maximum Mortgage Rate or the Minimum Mortgage Rate) on such Adjustment Date from the Mortgage Rate in effect immediately prior to such Adjustment Date.

“Permitted Investments”: Any one or more of the following obligations or securities acquired at a purchase price of not greater than par, regardless of whether issued by the Depositor, the Servicer, the Trustee or any of their respective Affiliates:

(a)

direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States;

(b)

demand and time deposits in, certificates of deposit of, or bankers’ acceptances (which shall each have an original maturity of not more than 90 days and, in the case of bankers’ acceptances, shall in no event have an original maturity of more than 365 days or a remaining maturity of more than 30 days) denominated in United States dollars that are rated in the highest ratings categories by each Rating Agency and issued by any Depository Institution;

(c)

repurchase obligations with respect to any security described in clause (a) above entered into with a Depository Institution (acting as principal);

(d)

securities bearing interest or sold at a discount that are issued by any corporation incorporated under the laws of the United States of America or any state thereof and that are rated by each Rating Agency that rates such securities in its highest long-term unsecured rating category at the time of such investment or contractual commitment providing for such investment;

(e)

commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than 30 days after the date of acquisition thereof) that is rated by each Rating Agency that rates such securities in its highest short-term unsecured debt rating available at the time of such investment;

(f)

units of money market funds, including money market funds managed or advised by the Trustee or an Affiliate thereof, that have been rated “AAA” by Fitch (if rated by Fitch), “Aaa” by Moody’s (if rated by Moody’s) and “AAA” by S&P (if rated by S&P); and

(g)

if previously confirmed in writing to the Trustee, any other demand, money market or time deposit, or any other obligation, security or investment, as may be acceptable to the Rating Agencies as a permitted investment of funds backing securities having ratings equivalent to its highest initial rating of the Class A Certificates; provided, however, that any Permitted Investment pursuant to this clause (g) which solely contains a short-term rating shall be a Permitted Investment rated in the highest category for such short-term rating;

provided, however, that no instrument described hereunder shall evidence either the right to receive (a) only interest with respect to the obligations underlying such instrument or (b) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument provide a yield to maturity at par greater than 120% of the yield to maturity at par of the underlying obligations.

“Permitted Transferee”: Any Transferee of a Residual Certificate other than a Disqualified Organization or Non-United States Person.

“Person”: Any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

“P&I Advance”: As to any Mortgage Loan or REO Property, any advance made by the Servicer in respect of any Distribution Date representing the aggregate of all payments of principal and interest, net of the Servicing Fee, that were due during the related Due Period on the related Mortgage Loans and that were Delinquent on the related Determination Date, plus certain amounts representing assumed payments not covered by any current net income on the Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure as determined pursuant to Section 4.03. The Servicer will not be required to make any Nonrecoverable P&I Advances as described in Section 4.03.

“Plan”: Any employee benefit plan (as defined in Section 3(3) of ERISA) or other plan as defined in Section 4975(e)(1) of the Code that is subject to Title I of ERISA or Section 4975 of the Code, or any entity deemed to hold the plan assets of the foregoing.

“Pool Principal Balance”: As of any Distribution Date, the aggregate Stated Principal Balance of the Mortgage Loans.

“Prepayment Assumption”: With respect to the (i) Fixed Rate Mortgage Loans, 115% Fixed Rate PPC and (ii) the Adjustable Rate Mortgage Loans, 100% Adjustable Rate PPC.

“Prepayment Interest Shortfall”: With respect to any Determination Date, for each Mortgage Loan that was during the related Prepayment Period subject to a Principal Prepayment in full (other than a Principal Prepayment in full during that portion of the related Prepayment Period occurring between the first day of the calendar month in which the such Determination Date occurs and the last day of such Prepayment Period) that was applied by the Servicer to reduce the outstanding principal balance of such Mortgage Loan on a date preceding the Due Date in the succeeding Prepayment Period, an amount equal to the product of (a) the Net Mortgage Rate for such Mortgage Loan, (b) the amount of the Principal Prepayment for such Mortgage Loan, (c) 1/360 and (d) the number of days commencing on the date on which the prepayment is applied and ending on the last day of the calendar month preceding the month of such Determination Date. The obligations of the Servicer in respect of any Prepayment Interest Shortfall are set forth in Section 3.24.

“Prepayment Period”: With respect to any Distribution Date, is (i) with respect to Principal Prepayments in full, the period beginning on the sixteenth day of the calendar month preceding the month of such Distribution Date and ending on the fifteenth day of the month of such Distribution Date and (ii) with respect to Principal Prepayments in part, the calendar month preceding the month of such Distribution Date, except with respect to the first Distribution Date, the Prepayment Period for all prepayments will commence on January 22, 2005 and January 26, 2005 with respect to the New Century Mortgage Loans and the WMC Mortgage Loans, respectively.

“Prepayment Premium”: With respect to any Mortgage Loan and Prepayment Period, any prepayment premium, penalty or charge collected by the Servicer from a Mortgagor in connection with any voluntary Principal Prepayment and held from time to time as a part of the Trust Fund. The Servicer shall calculate, in good faith using Accepted Servicing Practices, the amount of any Prepayment Premium solely pursuant to the terms of the related Mortgage Note.

“Prepayment Premium Schedule”: As of the Cut-off Date, a list attached hereto as Schedule 2 (including the Prepayment Premium Summary attached thereto) in an electronic format, setting forth the following information with respect to each Prepayment Premium:

(i)

the related Originator and the Mortgage Loan identifying number;

(ii)

a code indicating the type of Prepayment Premium;

(iii)

the state of origination of the related Mortgage Loan;

(iv)

the date on which the first monthly payment was due on the related Mortgage Loan;

(v)

the term of the related Prepayment Premium;

(vi)

the principal balance of the related Mortgage Loan as of the Cut-off Date; and

(vii)

such other information as is reasonably requested by the Trustee.

Upon notice to the Trustee, the Servicer shall amend the Prepayment Premium Schedule (i) if the Servicer has waived a Prepayment Premium or (ii) upon the substitution of any Mortgage Loan. The Servicer shall furnish a copy of the amended Prepayment Premium Schedule to the Trustee. With respect to a waived Prepayment Premium, the Servicer may deliver to the Trustee an Officer’s Certificate as described in Section 3.07(b) in lieu of an amended Prepayment Premium Schedule.

“Prime Rate”: The rate of interest equal to the prime rate as reported in The Wall Street Journal.

“Principal Distribution Amount”: With respect to any Distribution Date, the lesser of:

(a)

the excess of the Available Distribution Amount over the amount payable on the Certificates pursuant to Section 4.01(a)(1)(i) – (xiii); and

(b)

the sum of

(i)

the principal portion of each Monthly Payment on the Mortgage Loans due during the related Due Period, whether or not received on or prior to the related Determination Date;

(ii)

the Stated Principal Balance of any Mortgage Loan that was purchased during the calendar month preceding the month of such Distribution Date pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01 and the amount of any shortfall deposited in the Collection Account in connection with the substitution of a Deleted Mortgage Loan pursuant to Section 2.03 during the calendar month preceding the month of such Distribution Date;

(iii)

the principal portion of all other unscheduled collections in respect of Insurance Proceeds, Liquidation Proceeds and REO Principal Amortization received during the calendar month preceding the month of such Distribution Date, net of any portion thereof that represents a recovery of principal for which an advance was made by the Servicer pursuant to Section 4.03 in respect of a preceding Distribution Date and any Recoveries received during the calendar month preceding the month of such Distribution Date;

(iv)

the principal portion of all unscheduled collections in respect of Principal Prepayments received during the related Prepayment Period; and

(v)

the amount of any Overcollateralization Increase Amount for such Distribution Date to the extent covered by Net Monthly Excess Cashflow for such Distribution Date;

minus:

(c)

the amount of any Overcollateralization Release Amount for such Distribution Date.

“Principal Prepayment”: Any payment of principal made by the Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due Date and which is not accompanied by an amount of interest (without regard to any Prepayment Premium that may have been collected by the Servicer in connection with such payment of principal) representing the full amount of scheduled interest due on any Due Date in any month or months subsequent to the month of prepayment.

“Principal Remittance Amount”: With respect to any Distribution Date, that portion of the Available Distribution Amount equal to the sum of (i) all scheduled payments of principal collected or advanced on the Mortgage Loans by the Servicer that were due during the related Due Period, (ii) the principal portion of all Principal Prepayments of the Mortgage Loans, if any, applied by the Servicer during the related Prepayment Period, (iii) the principal portion of all related Net Liquidation Proceeds, Insurance Proceeds and Recoveries received during the calendar month preceding the month of such Distribution Date, (iv) that portion of the Purchase Price representing principal of any purchased or repurchased Mortgage Loan, deposited to the Collection Account during the calendar month preceding the month of such Distribution Date, (v) the principal portion of the amount of any shortfall deposited in the Collection Account in connection with the substitution of a Deleted Mortgage Loan pursuant to Section 2.03 during the calendar month preceding the month of such Distribution Date and (vi) on the Distribution Date on which the Trust is to be terminated in accordance with this Agreement, that portion of the Termination Price in respect of principal.

“PTCE”: A Prohibited Transaction Class Exemption.

“Purchase Price”: With respect to any Mortgage Loan or REO Property to be purchased pursuant to or as contemplated by Section 2.03, Section 3.16(c) or Section 9.01, and as calculated and confirmed in an Officers’ Certificate from the Servicer to the Trustee, an amount equal to the sum of (i) 100% of the Stated Principal Balance thereof as of the date of purchase (or such other price as provided in Section 9.01), (ii) in the case of (x) a Mortgage Loan, accrued interest on such Stated Principal Balance at the applicable Mortgage Rate in effect from time to time from the Due Date as to which interest was last covered by a payment by the Mortgagor or an advance by the Servicer through the end of the calendar month in which the purchase is to be effected and (y) an REO Property, the sum of (1) accrued interest on such Stated Principal Balance at the applicable Mortgage Rate in effect from time to time from the Due Date as to which interest was last covered by a payment by the Mortgagor or an advance by the Servicer through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, plus (2) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such purchase is to be effected, net of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances that as of the date of purchase had been distributed as or to cover REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed Servicing Advances and P&I Advances and any unpaid Servicing Fees allocable to such Mortgage Loan or REO Property and any P&I Advances previously reimbursed to the Servicer pursuant to Section 3.11(a)(vi) (except in the case of a purchase by the Servicer), (iv) any amounts previously withdrawn from the Collection Account in respect of such Mortgage Loan or REO Property pursuant to Section 3.11(a)(ix) and Section 3.16(b), (v) in the case of a Mortgage Loan required to be purchased pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the Servicer or the Trustee in respect of the breach or defect giving rise to the purchase obligation and (vi) in the case of a Mortgage Loan required to be purchased pursuant to Section 2.03, any costs and damages actually incurred and paid by or on behalf of the Trust in connection with any violation by such Mortgage Loan of (i) the representation and warranties set forth in Section 2.05(b)(vii) or (viii) of this Agreement, (ii) Section 2(i)(viii) of Schedule B to the related Reconstitution Agreement or (iii) the representations and warranties made in Schedule B to the related Reconstitution Agreement, as applicable, in connection with “high-cost” home loans or a mortgage loan’s compliance with applicable law, including any predatory or abusive lending laws.

“Qualified Substitute Mortgage Loan”: A Mortgage Loan substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the date of such substitution, (i) have an outstanding principal balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of and not more than 5% less than the Stated Principal Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month during which the substitution occurs, (ii) have a Mortgage Rate not less than (and not more than one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan, (iii) with respect to each Adjustable Rate Mortgage Loan have a Maximum Mortgage Rate not less than the Maximum Mortgage Rate on the Deleted Mortgage Loan, (iv) with respect to each Adjustable Rate Mortgage Loan have a Minimum Mortgage Rate not less than the Minimum Mortgage Rate of the Deleted Mortgage Loan, (v) with respect to each Adjustable Rate Mortgage Loan have a Gross Margin equal to or greater than the Gross Margin of the Deleted Mortgage Loan, (vi) with respect to each Adjustable Rate Mortgage Loan, adjust in accordance with the Index and have a next Adjustment Date not more than two months later than the next Adjustment Date on the Deleted Mortgage Loan, and have the same intervals between Adjustment Dates as the Deleted Mortgage Loan, (vii) have a remaining term to maturity not greater than (and not more than one year less than) that of the Deleted Mortgage Loan, (viii) have the same Due Date as the Due Date on the Deleted Mortgage Loan, (ix) have a Loan-to-Value Ratio as of the date of substitution equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (x) have a risk grading certified by the Seller at least equal to the risk grading assigned on the Deleted Mortgage Loan, (xi) have been underwritten or reunderwritten by the related Originator in accordance with the same underwriting criteria and guidelines as the Mortgage Loans being replaced, (xii) be of the same or better credit quality as the Mortgage Loan being replaced, (xiii) have a lien priority equal to or superior to that of the Deleted Mortgage Loan, (xiv) be secured by the same property type as the Deleted Mortgage Loan and (xv) conform to each representation and warranty in the applicable Mortgage Loan Purchase Agreement and the related Reconstitution Agreement. In the event that one or more Mortgage Loans are substituted for one or more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be determined on the basis of aggregate principal balances, the Mortgage Rates described in clause (ii) hereof shall be determined on the basis of weighted average Mortgage Rates, the terms described in clause (vii) hereof shall be determined on the basis of weighted average remaining term to maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be satisfied as to each such Mortgage Loan, the risk gradings described in clause (x) hereof shall be satisfied as to each such Mortgage Loan and, except to the extent otherwise provided in this sentence, the representations and warranties described in clause (xv) hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

“Rating Agency or Rating Agencies”: S&P, Xxxxx’x, DBRS and Fitch or their successors. If such agencies or their successors are no longer in existence, “Rating Agencies” shall be such nationally recognized statistical rating agencies, or other comparable Persons, designated by the Depositor, notice of which designation shall be given to the Trustee and the Servicer.

“Realized Loss”: With respect to each Mortgage Loan as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (i) the unpaid principal balance of such Mortgage Loan as of the commencement of the calendar month in which the Final Recovery Determination was made, plus (ii) accrued interest from the Due Date as to which interest was last paid by the Mortgagor through the end of the calendar month in which such Final Recovery Determination was made, calculated in the case of each calendar month during such period (A) at an annual rate equal to the annual rate at which interest was then accruing on such Mortgage Loan and (B) on a principal amount equal to the Stated Principal Balance of such Mortgage Loan as of the close of business on the Distribution Date during such calendar month, plus (iii) any amounts previously withdrawn from the Collection Account in respect of such Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (iv) the proceeds, if any, received in respect of such Mortgage Loan during the calendar month in which such Final Recovery Determination was made, net of amounts that are payable therefrom to the Servicer with respect to such Mortgage Loan pursuant to Section 3.11(a)(iii).

With respect to any REO Property as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (i) the unpaid principal balance of the related Mortgage Loan as of the date of acquisition of such REO Property on behalf of the Trust Fund, plus (ii) accrued interest from the Due Date as to which interest was last paid by the Mortgagor in respect of the related Mortgage Loan through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, calculated in the case of each calendar month during such period (A) at an annual rate equal to the annual rate at which interest was then accruing on the related Mortgage Loan and (B) on a principal amount equal to the Stated Principal Balance of the related Mortgage Loan as of the close of business on the Distribution Date during such calendar month, plus (iii) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such Final Recovery Determination was made, plus (iv) any amounts previously withdrawn from the Collection Account in respect of the related Mortgage Loan pursuant to Section 3.11(a)(ix) and Section 3.16(b), minus (v) the aggregate of all P&I Advances made by the Servicer in respect of such REO Property or the related Mortgage Loan for which the Servicer has been or, in connection with such Final Recovery Determination, will be reimbursed pursuant to Section 3.23 out of rental income, Insurance Proceeds and Liquidation Proceeds received in respect of such REO Property, minus (vi) the total of all net rental income, Insurance Proceeds and Liquidation Proceeds received in respect of such REO Property that has been, or in connection with such Final Recovery Determination, will be transferred to the Distribution Account pursuant to Section 3.23.

With respect to each Mortgage Loan that has become the subject of a Deficient Valuation, the difference between the principal balance of such Mortgage Loan outstanding immediately prior to such Deficient Valuation and the principal balance of such Mortgage Loan as reduced by the Deficient Valuation.

With respect to each Mortgage Loan that has become the subject of a Debt Service Reduction, the portion, if any, of the reduction in each affected Monthly Payment attributable to a reduction in the Mortgage Rate imposed by a court of competent jurisdiction. Each such Realized Loss shall be deemed to have been incurred on the Due Date for each affected Monthly Payment.

“Realized Loss Percentage”: For purposes of the Servicer Termination Test, the percentage produced by the following calculation: (i) the aggregate amount of cumulative Realized Losses incurred on the Mortgage Loans since the Cut-off Date through the last day of the related Due Period, minus (ii) any amount received with respect to Realized Losses on the Mortgage Loans subsequent to a Final Recovery Determination being made with respect to the Mortgage Loans, divided by (iii) the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date; provided however, that for purposes of this definition, the term “Realized Losses” shall not include Debt Service Reductions or Deficient Valuations.

“Reconstitution Agreement”: Either, the (i) New Century Reconstitution Agreement or (ii) WMC Reconstitution Agreement, as the context requires.

“Record Date”: With respect to any Distribution Date and any Definitive Certificates, the close of business on the last Business Day of the month immediately preceding the month in which such applicable Distribution Date occurs. With respect to any Distribution Date and the Offered Certificates and the Class M11 Certificates (other than any Definitive Certificates), the Business Day prior to such Distribution Date.

“Recovery”: With respect to any Liquidated Mortgage Loan, an amount received in respect of principal on such Mortgage Loan which has previously been allocated as a Realized Loss to a Class or Classes of Certificates net of reimbursable expenses.

“Reference Banks”: Deutsche Bank, Barclays Bank PLC, The Tokyo Mitsubishi Bank and National Westminster Bank PLC and their successors in interest; provided, however, that if any of the foregoing banks are not able to serve as a Reference Bank, then any leading banks selected by the Trustee which are engaged in transactions in Eurodollar deposits in the international Eurocurrency market (i) with an established place of business in London, (ii) not controlling, under the control of or under common control with the Depositor or any Affiliate thereof and (iii) which have been designated as such by the Trustee.

“Refinanced Mortgage Loan”: A Mortgage Loan the proceeds of which were not used to purchase the related Mortgaged Property.

“Regular Certificate”: As specified in the Preliminary Statement.

“Regular Interest”: A “regular interest” in a REMIC within the meaning of Section 860G(a)(1) of the Code.

“Relief Act”: The Servicemembers Civil Relief Act or any similar state or local law.

“Relief Act Interest Shortfall”: With respect to any Distribution Date and any Mortgage Loan, any reduction in the amount of interest collectible on such Mortgage Loan for the most recently ended calendar month as a result of the application of the Relief Act.

“REMIC”: A “real estate mortgage investment conduit” within the meaning of Section 860D of the Code.

“REMIC I”: The segregated pool of assets subject hereto, constituting the primary trust created hereby and to be administered hereunder, with respect to which a REMIC election is to be made, consisting of (i) such Mortgage Loans as from time to time are subject to this Agreement, together with the Mortgage Files relating thereto, and together with all collections thereon and proceeds thereof, (ii) any REO Property, together with all collections thereon and proceeds thereof, (iii) the Trustee’s rights with respect to the Mortgage Loans under all insurance policies required to be maintained pursuant to this Agreement and any proceeds thereof, (iv) the Depositor’s rights under each Mortgage Loan Purchase Agreement and each Reconstitution Agreement (including any security interest created thereby) and (v) the Collection Account (other than any amounts representing any Servicer Prepayment Premium Payment Amount), the Distribution Account (other than any amounts representing any Servicer Prepayment Premium Payment Amount) and any REO Account and such assets that are deposited therein from time to time and any investments thereof, together with any and all income, proceeds and payments with respect thereto. Notwithstanding the foregoing, however, REMIC I specifically excludes all payments and other collections of principal and interest due on the Mortgage Loans on or before the Cut-off Date and all Prepayment Premiums payable in connection with Principal Prepayments made on or before the Cut-off Date, the Net WAC Reserve Fund and the Yield Maintenance Agreements.

“REMIC II”: The segregated pool of assets consisting of all of the REMIC I Regular Interests conveyed in trust to the Trustee for the benefit of REMIC III, as holder of the REMIC II Regular Interests, and the R-II interest pursuant to Section 2.07, and all amounts deposited therein, with respect to which a separate REMIC election is to be made.

“REMIC II Regular Interest”: Any of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a “regular interest” in REMIC II.

“REMIC III”: The segregated pool of assets consisting of all of the REMIC II Regular Interests conveyed in trust to the Trustee for the benefit of REMIC IV, as holder of the REMIC III Regular Interests, and the R-III interest pursuant to Section 2.08, and all amounts deposited therein, with respect to which a separate REMIC election is to be made.

“REMIC III Regular Interest”: Any of the separate non-certificated beneficial ownership interests in REMIC III issued hereunder and designated as a “regular interest” in REMIC III.

“REMIC IV”: The segregated pool of assets consisting of all of the REMIC III Regular Interests conveyed in trust to the Trustee for the benefit of REMIC V, as holder of the REMIC IV Regular Interests, and the R-IV interest pursuant to Section 2.09, and all amounts deposited therein, with respect to which a separate REMIC election is to be made.

“REMIC IV Accretion Directed Class”: As set forth in the Section 1.03 under the heading entitled “REMIC III.”

“REMIC IV Regular Interest”: Any of the separate non-certificated beneficial ownership interests in REMIC IV issued hereunder and designated as a “regular interest” in REMIC IV.

“REMIC V”: The segregated pool of assets consisting of all of the REMIC IV Regular Interests conveyed in trust to the Trustee for the benefit of the Certificateholders pursuant to Section 2.10 and all amounts deposited therein, with respect to which a separate REMIC election is to be made.

“REMIC Provisions”: Provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Section 860A through 860G of the Code, and related provisions, and proposed, temporary and final regulations and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time.

“Remittance Report”: A report in form mutually agreed to between the Trustee and the Servicer on a magnetic disk or tape or in electronic format prepared by the Servicer pursuant to Section 4.03 with such additions, deletions and modifications as agreed to by the Trustee and the Servicer.

“Rents from Real Property”: With respect to any REO Property, gross income of the character described in Section 856(d) of the Code as being included in the term “rents from real property.”

“REO Account”: Each of the accounts maintained, or caused to be maintained, by the Servicer in respect of an REO Property pursuant to Section 3.23.

“REO Disposition”: The sale or other disposition of an REO Property on behalf of the Trust Fund.

“REO Imputed Interest”: As to any REO Property, for any calendar month during which such REO Property was at any time part of the Trust Fund, one month’s interest at the applicable Mortgage Rate on the Stated Principal Balance of such REO Property (or, in the case of the first such calendar month, of the related Mortgage Loan, if appropriate) as of the close of business on the Distribution Date in such calendar month.

“REO Principal Amortization”: With respect to any REO Property, for any calendar month, the excess, if any, of (a) the aggregate of all amounts received in respect of such REO Property during such calendar month, whether in the form of rental income, sale proceeds (including, without limitation, that portion of the Termination Price paid in connection with a purchase of all of the Mortgage Loans and REO Properties pursuant to Section 9.01 that is allocable to such REO Property) or otherwise, net of any portion of such amounts (i) payable pursuant to Section 3.23(c) in respect of the proper operation, management and maintenance of such REO Property or (ii) payable or reimbursable to the Servicer pursuant to Section 3.23(d) for unpaid Servicing Fees in respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I Advances in respect of such REO Property or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO Property for such calendar month.

“REO Property”: A Mortgaged Property acquired by the Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as described in Section 3.23.

“Request for Release”: A release signed by a Servicing Officer, or in a mutually agreeable electronic format which will, in lieu of a signature on its face, originate from a Servicing Officer, in the form of Exhibit E-1 attached hereto.

“Required Net WAC Reserve Fund Deposit”: With respect to any Distribution Date the excess, if any, of (i) $1,000 over (ii) the amount of funds on deposit in the Net WAC Reserve Fund prior to deposits thereto on such Distribution Date.

“Reserve Interest Rate”: With respect to any Interest Determination Date, the rate per annum that the Trustee determines to be either (i) the arithmetic mean (rounded upwards if necessary to the nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates which New York City banks selected by the Trustee are quoting on the relevant Interest Determination Date to the principal London offices of leading banks in the London interbank market or (ii) in the event that the Trustee can determine no such arithmetic mean, the lowest one-month U.S. dollar lending rate which New York City banks selected by the Trustee are quoting on such Interest Determination Date to leading European banks.

“Residential Dwelling”: Any one of the following: (i) an attached or detached one-family dwelling, (ii) an attached or detached two- to four-family dwelling, (iii) an attached or detached one-family dwelling unit in a condominium project, (iv) an attached or detached one-family dwelling in a planned unit development, none of which is a cooperative or mobile home (as defined in 00 Xxxxxx Xxxxxx Code, Section 5402(6)), or (v) a manufactured home.

“Residual Certificates”: As specified in the Preliminary Statement.

“Residual Interest”: The sole class of “residual interests” in a REMIC within the meaning of Section 860G(a)(2) of the Code.

“Responsible Officer”: When used with respect to the Trustee, the President, any vice president, any assistant vice president, the Secretary, any assistant secretary, the Treasurer, any assistant treasurer, any trust officer or assistant trust officer, the Controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and, with respect to a particular matter, to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“S&P”: Standard and Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., or its successor in interest.

“Seller”: DLJ Mortgage Capital, Inc., or its successor in interest, in its capacity as seller.

“Servicer”: Saxon Mortgage Services, Inc., or any successor servicer appointed as herein provided, in its capacity as servicer hereunder.

“Servicer Certification”: As defined in Section 4.06(d) herein, a form of which is attached hereto as Exhibit J.

“Servicer Event of Default”: One or more of the events described in Section 7.01(a) herein.

“Servicer Prepayment Premium Payment Amount”: The amounts payable by the Servicer in respect of any waived Prepayment Premiums pursuant to Section 2.03(b)(ii).

“Servicer Remittance Date”: With respect to any Distribution Date, 1:00 p.m. New York time on the 21st day of each month or, if such 21st day is not a Business Day, the Business Day immediately following such 21st day.

“Servicer Termination Test”: With respect to any Distribution Date, the Servicer will fail the Servicer Termination Test if the Realized Loss Percentage for the Mortgage Loans exceeds the applicable percentages set forth below with respect to such Distribution Date:

Distribution Date Occurring In	Percentage
March 2008 through February 2009	3.00%
March 2009 through February 2010	4.75%
March 2010 through February 2011	6.25%
March 2011 and thereafter	7.00%

“Servicing Account”: The account or accounts created and maintained pursuant to Section 3.09.

“Servicing Advances”: The reasonable “out-of-pocket” costs and expenses incurred by the Servicer in the performance of its servicing obligations (including the reasonable fees of counsel) in connection with a default, delinquency or other unanticipated event, including, but not limited to, the cost of (i) the inspection, preservation, restoration and protection of a Mortgaged Property, (ii) any enforcement or judicial proceedings, including foreclosures, in respect of a particular Mortgage Loan, (iii) the reasonable fees in connection with the management and liquidation of any REO Property (including default management and similar services, appraisal services and real estate broker services), (iv) the performance of its obligations under Section 3.01, Section 3.09, Section 3.13, Section 3.14, Section 3.16 and Section 3.23, and (v) locating documents missing from the Mortgage File or Servicing File. Servicing Advances also include any reasonable “out-of-pocket” cost and expenses (including legal fees) incurred by the Servicer in connection with executing and recording instruments of satisfaction, deeds of reconveyance or Assignments of Mortgage to the extent not recovered from the Mortgagor or otherwise payable under this Agreement. The Servicer shall not be required to make any Nonrecoverable Servicing Advances.

“Servicing Fee”: With respect to each Mortgage Loan and for any calendar month, an amount equal to one month’s interest at the Servicing Fee Rate on the same principal amount on which interest on such Mortgage Loan accrues for such calendar month, subject to reduction as provided in Section 3.24. A portion of such Servicing Fee may be retained by any Sub-Servicer as its servicing compensation.

“Servicing Fee Rate”: 0.50% per annum.

“Servicing File”: With respect to each Mortgage Loan, the Servicing File for such Mortgage Loan shall consist of copies of each item required to be in the Mortgage File (for the avoidance of doubt, the original of each such document shall be maintained in the Mortgage File for such Mortgage Loan unless otherwise permitted to be released in accordance with this Agreement) and the following documents listed below.

(i)

Residential loan application.

(ii)

Mortgage Loan closing statement.

(iii)

Verification of employment and income, if applicable.

(iv)

Verification of acceptable evidence of source and amount of downpayment.

(v)

Credit report on Mortgagor.

(vi)

Residential appraisal report.

(vii)

Photograph of the Mortgaged Property.

(viii)

Survey of the Mortgaged Property.

(ix)

Copy of each instrument necessary to complete identification of any exception set forth in the exception schedule in the title policy, i.e., map or plat, restrictions, easements, sewer agreements, home association declarations, etc.

(x)

All required disclosure statements.

(xi)

If required in an appraisal, termite report, structural engineer’s report, water potability and septic certification.

(xii)

Sales Contract, if applicable.

“Servicing Officer”: Any employee of the Servicer involved in, or responsible for, the administration and servicing of the Mortgage Loans, whose name and specimen signature appear on a list of Servicing Officers furnished by the Servicer to the Trustee and the Depositor on the Closing Date, as such list may from time to time be amended.

“Single Certificate”: With respect to any Class of Certificates (other than the Class P Certificates and the Residual Certificates), a hypothetical Certificate of such Class evidencing a Percentage Interest for such Class corresponding to an initial Certificate Principal Balance or Notional Amount of $1,000. With respect to the Class P Certificates and the Residual Certificates, a hypothetical Certificate of such Class evidencing a 20% Percentage Interest in such Class.

“Special Servicer”: As defined in Section 3.16(e) herein.

“Startup Day”: With respect to each REMIC formed hereby, the day designated as such pursuant to Section 10.01(b) hereof.

“Stated Principal Balance”: With respect to any Mortgage Loan: (a) as of any date of determination up to but not including the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan would be distributed, the principal balance of such Mortgage Loan as of the Cut-off Date, as shown in the Mortgage Loan Schedule, minus the sum of (i) the principal portion of each Monthly Payment due on a Due Date subsequent to the Cut-off Date, to the extent received from the Mortgagor or advanced by the Servicer and distributed pursuant to Section 4.01 on or before such date of determination, (ii) all Principal Prepayments received after the Cut-off Date, to the extent distributed pursuant to Section 4.01 on or before such date of determination, (iii) all Liquidation Proceeds and Insurance Proceeds applied by the Servicer as recoveries of principal in accordance with the provisions of Section 3.16, to the extent distributed pursuant to Section 4.01 on or before such date of determination and (iv) any Realized Loss incurred with respect thereto as a result of a Deficient Valuation or Debt Service Reduction made during or prior to the Prepayment Period for the most recent Distribution Date coinciding with or preceding such date of determination; and (b) as of any date of determination coinciding with or subsequent to the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan would be distributed, zero. With respect to any REO Property: (a) as of any date of determination up to but not including the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such REO Property would be distributed, an amount (not less than zero) equal to the Stated Principal Balance of the related Mortgage Loan as of the date on which such REO Property was acquired on behalf of the Trust Fund, minus the sum of (i) if such REO Property was acquired before the Distribution Date in any calendar month, the principal portion of the Monthly Payment due on the Due Date in the calendar month of acquisition, to the extent advanced by the Servicer and distributed pursuant to Section 4.01 on or before such date of determination, and (ii) the aggregate amount of REO Principal Amortization in respect of such REO Property for all previously ended calendar months, to the extent distributed pursuant to Section 4.01 on or before such date of determination; and (b) as of any date of determination coinciding with or subsequent to the Distribution Date on which the proceeds, if any, of a Liquidation Event with respect to such REO Property would be distributed, zero.

“Stepdown Date”: The earlier to occur of (1) the Distribution Date on which the aggregate Certificate Principal Balance of the Class A Certificates has been reduced to zero and (2) the later to occur of (x) the Distribution Date occurring in March 2008 and (y) the first Distribution Date on which the Credit Enhancement Percentage (calculated for this purpose after giving effect to payments or other recoveries in respect of the Mortgage Loans during the related Due Period but before giving effect to distributions on the Certificates on such Distribution Date) is greater than 41.60%.

“Strip Amount”: The Subgroup 1 Strip Amount, the Subgroup 2 Strip Amount or the Subordinate Strip Amount, as applicable.

“Subgroup”: Either Subgroup 1 or Subgroup 2, as applicable.

“Subgroup 1”: Those certain Mortgage Loans identified as belonging to Subgroup 1 on the Mortgage Loan Schedule.

“Subgroup 1 Certificates”: The Class A1 and Class A2 Certificates.

“Subgroup 1 Interest Remittance Amount”: With respect to any Distribution Date, that portion of the Available Distribution Amount for such Distribution Date attributable to interest received or advanced with respect to the Subgroup 1 Mortgage Loans and to Compensating Interest paid by the Servicer with respect to the Subgroup 1 Mortgage Loans.

“Subgroup 1 Mortgage Loans”: The Mortgage Loans relating to Subgroup 1.

“Subgroup 1 Net WAC Rate”: With respect to the Subgroup 1 Certificates and any Distribution Date (and any corresponding REMIC interest created pursuant to Section 1.03 hereof), a per annum rate (subject to adjustment based on the actual number of days elapsed in the related Interest Accrual Period) equal to the difference between (A) the weighted average Mortgage Rates of the Subgroup 1 Mortgage Loans as of the first day of the month preceding the month of such Distribution Date, weighted on the basis of the related Stated Principal Balances as of such date (subject to adjustment for prepayments received and distributed in the month prior to that Distribution Date) and (B) the sum of (1) the Servicing Fee Rate for the Subgroup 1 Mortgage Loans and (2) the Subgroup 1 Strip Amount for such Distribution Date, multiplied by a fraction, the numerator of which is twelve and the denominator of which is the aggregate outstanding Stated Principal Balance of the Subgroup 1 Mortgage Loans as of the first day of the month preceding the month of such Distribution Date (subject to adjustment for prepayments received and distributed in the month prior to that Distribution Date) (expressed as a percentage).

“Subgroup 1 Percentage”: With respect to any Distribution Date, will equal the percentage equivalent of a fraction, the numerator of which is the Subgroup 1 Principal Remittance Amount for such Distribution Date and the denominator of which is the Principal Remittance Amount for such Distribution Date.

“Subgroup 1 Principal Distribution Amount”: With respect to any Distribution Date, the product of (i) the Subgroup 1 Percentage for such Distribution Date and (ii) the Class A Principal Distribution Amount for such Distribution Date.

“Subgroup 1 Principal Remittance Amount”: With respect to any Distribution Date, means, the portion of the Principal Remittance Amount for such Distribution Date derived from the Subgroup 1 Mortgage Loans.

“Subgroup 1 Strip Amount”: With respect to the Subgroup 1 Yield Maintenance Agreement and any Distribution Date on or after the Distribution Date in April 2005 to and including the Distribution Date in September 2007, the product of (a) one-twelfth of 0.0180% and (b) the applicable Yield Maintenance Agreement Notional Amount for that Distribution Date and the Subgroup 1 Yield Maintenance Agreement, and after the Distribution Date in September 2007, zero.

“Subgroup 1 Yield Maintenance Agreement”: The interest rate yield maintenance agreement relating to the Subgroup 1 Certificates consisting of a 1992 ISDA Master Agreement (Multicurrency-Cross Border) and a Schedule dated as of the Closing Date and an ISDA Credit Support Annex (Bilateral Form-New York Law) and the related Confirmation thereto, between the Trustee on behalf of the Trust and the Counterparty, as such agreement may be amended and supplemented in accordance with its terms and any replacement interest yield maintenance agreement acceptable to the Depositor and the Trustee.

“Subgroup 2”: Those certain Mortgage Loans identified as belonging to Subgroup 2 on the Mortgage Loan Schedule.

“Subgroup 2 Certificates”: The Class A3, Class A4, Class A5 and Class A6 Certificates.

“Subgroup 2 Interest Remittance Amount”: With respect to any Distribution Date, that portion of the Available Distribution Amount for such Distribution Date attributable to interest received or advanced with respect to the Subgroup 2 Mortgage Loans and to Compensating Interest paid by the Servicer with respect to the Subgroup 2 Mortgage Loans.

“Subgroup 2 Mortgage Loans”: The Mortgage Loans relating to Subgroup 2.

“Subgroup 2 Net WAC Rate”: With respect to the Subgroup 2 Certificates and any Distribution Date (and any corresponding REMIC interest created pursuant to Section 1.03 hereof), a per annum rate (subject to adjustment based on the actual number of days elapsed in the related Interest Accrual Period) equal to the difference between (A) the weighted average Mortgage Rates of the Subgroup 2 Mortgage Loans as of the first day of the month preceding the month of such Distribution Date, weighted on the basis of the related Stated Principal Balances as of such date (subject to adjustment for prepayments received and distributed in the month prior to that Distribution Date) and (B) the sum of (1) the Servicing Fee Rate for the Subgroup 2 Mortgage Loans and (2) the Subgroup 2 Strip Amount for such Distribution Date, multiplied by a fraction, the numerator of which is twelve and the denominator of which is the aggregate outstanding Stated Principal Balance of the Subgroup 2 Mortgage Loans as of the first day of the month preceding the month of such Distribution Date (subject to adjustment for prepayments received and distributed in the month prior to that Distribution Date) (expressed as a percentage).

“Subgroup 2 Percentage”: With respect to any Distribution Date, will equal the percentage equivalent of a fraction, the numerator of which is the Subgroup 2 Principal Remittance Amount for such Distribution Date and the denominator of which is the Principal Remittance Amount for such Distribution Date.

“Subgroup 2 Principal Distribution Amount”: With respect to any Distribution Date, the product of (i) the Subgroup 2 Percentage for such Distribution Date and (ii) the Class A Principal Distribution Amount for such Distribution Date.

“Subgroup 2 Principal Remittance Amount”: With respect to any Distribution Date, means, the portion of the Principal Remittance Amount for such Distribution Date derived from the Subgroup 2 Mortgage Loans.

“Subgroup 2 Strip Amount”: With respect to the Subgroup 2 Yield Maintenance Agreement and any Distribution Date on or after the Distribution Date in April 2005 to and including the Distribution Date in September 2007, the product of (a) one-twelfth of 0.0138% and (b) the applicable Yield Maintenance Agreement Notional Amount for that Distribution Date and the Subgroup 2 Yield Maintenance Agreement, and after the Distribution Date in September 2007, zero.

“Subgroup 2 Yield Maintenance Agreement”: The interest rate yield maintenance agreement relating to the Subgroup 2 Certificates consisting of a 1992 ISDA Master Agreement (Multicurrency-Cross Border) and a Schedule dated as of the Closing Date and an ISDA Credit Support Annex (Bilateral Form-New York Law) and the related Confirmation thereto, between the Trustee on behalf of the Trust and the Counterparty, as such agreement may be amended and supplemented in accordance with its terms and any replacement interest yield maintenance agreement acceptable to the Depositor and the Trustee.

“Subgroup Subordinate Amount” With respect to any Subgroup and any Distribution Date is the aggregate Stated Principal Balance of such Subgroup as of the first day of the month preceding the month of such Distribution Date (subject to adjustment for prepayments received and distributed in the month prior to that Distribution Date) minus the aggregate Certificate Principal Balance of the related Class or Classes of Class A Certificates.

“Subordinate Certificates”: As defined in the Preliminary Statement.

“Subordinate Net WAC Rate”: With respect to the Mezzanine Certificates and any Distribution Date (and any corresponding REMIC interest created pursuant to Section 1.03 hereof), a per annum rate (subject to adjustment based on the actual number of days elapsed in the related Interest Accrual Period) equal to the difference between (A) the weighted average of the Subgroup 1 Net WAC Rate and the Subgroup 2 Net WAC Rate, weighted in proportion to the related Subgroup Subordinate Amount and (B) the Subordinate Strip Amount for such Distribution Date, multiplied by a fraction, the numerator of which is twelve and the denominator of which is the aggregate of the Subgroup Subordinate Amounts for such Distribution Date (expressed as a percentage).

“Subordinate Strip Amount”: With respect to the Subordinate Yield Maintenance Agreement and any Distribution Date on or after the Distribution Date in April 2005 to and including the Distribution Date in September 2007, the product of (a) one-twelfth of 0.0240% and (b) the applicable Yield Maintenance Agreement Notional Amount for that Distribution Date and the Subordinate Yield Maintenance Agreement, and after the Distribution Date in September 2007, zero.

“Subordinate Yield Maintenance Agreement”: The interest rate yield maintenance agreement relating to the Mezzanine Certificates consisting of a 1992 ISDA Master Agreement (Multicurrency-Cross Border) and a Schedule dated as of the Closing Date and an ISDA Credit Support Annex (Bilateral Form-New York Law) and the related Confirmation thereto, between the Trustee on behalf of the Trust and the Counterparty, as such agreement may be amended and supplemented in accordance with its terms and any replacement interest yield maintenance agreement acceptable to the Depositor and the Trustee.

“Sub-Servicer”: Any Person with which the Servicer has entered into a Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer pursuant to Section 3.02.

“Sub-Servicing Account”: An account established by a Sub-Servicer which meets the requirements set forth in Section 3.08 and is otherwise acceptable to the Servicer.

“Sub-Servicing Agreement”: The written contract between the Servicer and a Sub-Servicer relating to servicing and administration of certain Mortgage Loans as provided in Section 3.02.

“Substitution Shortfall Amount”: As defined in Section 2.03(c) herein.

“Tax Returns”: Each federal income tax return on Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed on behalf of the Trust Fund due to its classification as multiple REMICs under the REMIC Provisions, together with any and all other information reports or returns that may be required to be furnished to the Certificateholders or filed with the Internal Revenue Service or any other governmental taxing authority under any applicable provisions of federal, state or local tax laws.

“Telerate Page 3750”: The display designated as page “3750” on the Dow Xxxxx Telerate Capital Markets Report (or such other page as may replace page 3750 on that report for the purpose of displaying London interbank offered rates of major banks).

“Termination Payment”: The amount, if any, payable in respect of an Early Termination Date (as defined in the Yield Maintenance Agreement) and determined pursuant to Section 6 of the related Yield Maintenance Agreement.

“Termination Price”: As defined in Section 9.01 herein.

“Transfer”: Any direct or indirect transfer, sale, pledge, hypothecation, or other form of assignment of any Ownership Interest in a Certificate.

“Transferee”: Any Person who is acquiring by Transfer any Ownership Interest in a Certificate.

“Transferor”: Any Person who is disposing by Transfer of any Ownership Interest in a Certificate.

“Trigger Event”: A Trigger Event has occurred with respect to any Distribution Date on or after the Stepdown Date if (i) the Delinquency Percentage exceeds 38% of the Credit Enhancement Percentage for such Distribution Date or (ii) the cumulative Realized Losses as a percentage of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date is greater than the percentage set forth in the following table:

Range of Distribution Dates	Percentage*
March 2008 - February 2009	3.00%
March 2009 - February 2010	4.75%
March 2010 - February 2011	6.25%
March 2011 and thereafter	7.00%

_______________________

The percentages set forth in the table above are the percentages applicable for the first Distribution Date in the corresponding range of Distribution Dates. The percentage for each succeeding Distribution Date in a range increases incrementally by 1/12 of the positive difference between the percentage applicable to the first Distribution Date in that range and the percentage applicable to the first Distribution Date in the succeeding range.

“Trust”: Asset Backed Securities Corporation Home Equity Loan Trust, Series 2005-HE1, the trust created under this Agreement.

“Trust Fund”: The corpus of the trust created hereunder consisting of (i) the Mortgage Loans and all interest and principal received on or with respect thereto after the related Cut-off Date, other than such amounts which were due on the Mortgage Loans on or before the related Cut-off Date, (ii) the Collection Account, the Distribution Account and the Net WAC Reserve Fund and all amounts deposited therein pursuant to the applicable provisions of this Agreement (including, without limitation, amounts received from the Seller on the Closing Date which shall be deposited by the Trustee in the Collection Account pursuant to Section 2.01), (iii) the Depositor’s rights under each Mortgage Loan Purchase Agreement, the Assignment and Assumption Agreement and each Reconstitution Agreement, (iv) the Trust’s rights under the Yield Maintenance Agreements, (v) property that secured a Mortgage Loan and has been acquired by foreclosure, deed-in-lieu of foreclosure or otherwise and (vi) all proceeds of the conversion, voluntary or involuntary, of any of the foregoing.

“Trustee”: U.S. Bank National Association, a national banking association, not in its individual capacity, but solely in its capacity as Trustee for the benefit of the Certificateholders under this Agreement, or its successor in interest, or any successor trustee appointed as herein provided.

“Trustee Certification”: As defined in Section 4.06(d) herein.

“Underwriter”: Credit Suisse First Boston LLC.

“Underwriter’s Exemption”: Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (2002), as amended (or any successor thereto), or any substantially similar administrative exemption granted by the U.S. Department of Labor.

“Uninsured Cause”: Any cause of damage to a Mortgaged Property such that the complete restoration of such property is not fully reimbursable by the hazard insurance policies required to be maintained pursuant to Section 3.14.

“United States Person”: A “United States person” within the meaning set forth in Section 7701 of the Code.

“Unpaid Interest Shortfall Amount”: For (i) the first Distribution Date and with respect to the Senior Certificates and the Mezzanine Certificates, zero, and for such Class of Certificates and any Distribution Date after the first Distribution Date, the amount, if any, by which (a) the sum of (1) the Monthly Interest Distributable Amount for such Class of Certificates for the immediately preceding Distribution Date and (2) the outstanding Unpaid Interest Shortfall Amount, if any, for such Class of Certificates for such preceding Distribution Date exceeds (b) the aggregate amount distributed on such Class of Certificates in respect of interest on such preceding Distribution Date, plus interest on the amount of interest due but not paid on the Class of Certificates on such preceding Distribution Date, to the extent permitted by law, at the Pass-Through Rate on such Distribution Date for such Class of Certificates for the related Accrual Period.

“Value”: With respect to any Mortgaged Property related to a Mortgage Loan, the lesser of (i) the lesser of (a) the value thereof as determined by an appraisal made for the related Originator of the Mortgage Loan at the time of origination of the Mortgage Loan by an appraiser who met the minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and (b) the value thereof as determined by a review appraisal conducted by the related Originator in the event any such review appraisal determines an appraised value more than ten percent (10%) lower than the value thereof as determined by the appraisal referred to in clause (i)(a) above in the case of a Mortgage Loan with an LTV less than or equal to eighty percent (80%), or more than five percent (5%) lower than the value thereof as determined by the appraisal referred to in clause (i)(a) above, in the case of a Mortgage Loan with an LTV greater than eighty percent (80%), as determined by an appraisal referred to in clause (i)(a), and (ii) the purchase price paid for the related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage Loan, provided, however, (A) in the case of a Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely upon the lesser of (1) the value determined by an appraisal made for the related Originator of such Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgage Loan by an appraiser who met the minimum requirements of Xxxxxx Mae and Xxxxxxx Mac and (2) the value thereof as determined by a review appraisal conducted by the related Originator in the event any such review appraisal determines an appraised value more than ten percent (10%) lower than the value thereof as determined by the appraisal referred to in clause (ii)(A)(1) above, in the case of a Mortgage Loan with an LTV less than or equal to eighty percent (80%), or more than five percent (5%) lower than the value thereof as determined by the appraisal referred to in clause (ii)(a)(1) above, in the case of a Mortgage Loan with an LTV greater than eighty percent (80%), as determined by the appraisal referred to in clause (ii)(A)(1) and (B) in the case of a Mortgage Loan originated in connection with a “lease-option purchase”, such value of the Mortgaged Property is based on the lower of the value determined by an appraisal made for the related Originator of such Mortgage Loan at the time or origination or the sale price of such Mortgaged Property if the “lease option purchase price” was set less than 12 months prior to origination, and is based on the value determined by an appraisal made for the related Originator of such Mortgage Loan at the time of origination if the “lease option purchase price” was set 12 months or more prior to origination.

“Voting Rights”: The portion of the voting rights of all of the Certificates that is allocated to any Certificate. With respect to any date of determination, 97% of all voting rights will be allocated among all Holders of the Offered Certificates in proportion to their then outstanding Certificate Principal Balances, 1% of all voting rights will be allocated among the Holders of the Class X Certificates; 1% of all voting rights will be allocated among the Holders of the Class P Certificates, and 1% of all voting rights will be allocated among Holders of the Residual Certificates. Voting Rights allocated to a Class shall be allocated among the Certificates of such Class in proportion to the outstanding Percentage Interests evidenced by their respective Certificates.

“Yield Maintenance Agreement”: The Subgroup 1 Yield Maintenance Agreement, Subgroup 2 Yield Maintenance Agreement and the Subordinate Yield Maintenance Agreement, as applicable.

“Yield Maintenance Agreement Notional Amount”: With respect to each Yield Maintenance Agreement, the notional amount indicated in the “Additional Terms” section of the Confirmation for the related Yield Maintenance Agreement.

“WMC”: WMC Mortgage Corp., or its successor in interest.

“WMC Mortgage Loan”: Each mortgage loan originated or acquired by WMC that is transferred and assigned to the Trustee pursuant to Section 2.01 or Section 2.03(c) of this Agreement, as held from time to time as a part of the Trust Fund; the WMC Mortgage Loans so held being identified in the Mortgage Loan Schedule, including each REO Property unless the context otherwise requires.

“WMC Mortgage Loan Purchase Agreement”: The agreement among WMC and DLJ Mortgage Capital, Inc., regarding the sale of the WMC Mortgage Loans by WMC to the Seller, as the context requires.

“WMC Reconstitution Agreement”: That certain reconstitution agreement dated as of the Closing Date by and among the Seller, the Depositor and WMC related to the WMC Mortgage Loan Purchase Agreement.

SECTION 1.02.

Allocation of Certain Interest Shortfalls.

For purposes of calculating the amount of the Monthly Interest Distributable Amount for the Senior and Subordinate Certificates for any Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls (to the extent not covered by payments by the Servicer pursuant to Section 3.24) and any Relief Act Interest Shortfall incurred in respect of the Mortgage Loans for any Distribution Date shall be allocated to the Class X Certificates in reduction of the Class X Distribution Amount and thereafter, among the Class A Certificates and the other Classes of Subordinate Certificates on a pro rata basis based on such Monthly Interest Distributable Amount prior to giving effect to any such reduction.

SECTION 1.03.

Designation of Interests in REMIC

(a)

Designation of Interests in REMIC.

The Trustee shall elect that each of REMIC I, REMIC II, REMIC III, REMIC IV and REMIC V be treated as a REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in this Agreement or in the administration of this Agreement shall be resolved in a manner that preserves the validity of such REMIC elections. The assets of REMIC I shall include the Mortgage Loans, the accounts (other than the Net WAC Reserve Fund), any REO Property, and any proceeds of the foregoing. The REMIC I Regular Interests shall constitute the assets of REMIC II. The REMIC II Regular Interests shall constitute the assets of REMIC III. The REMIC III Regular Interests shall constitute the assets of REMIC IV. The REMIC IV Regular Interests shall constitute the assets of REMIC V (the “Master REMIC”).

REMIC I:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC I, each of which (other than the R-I interest) is hereby designated as a regular interest in REMIC I (the “REMIC I Regular Interests”):

REMIC Interest	Initial Principal Balance of REMIC Interest	Interest Rate	Corresponding REMIC II Interest	Distribution Date of Rate Change	Yield Maintenance Agreement Notional Amount
T1-A-SG1	(1)	(2)	N/A	N/A	N/A
T1-A-SG2	(3)	(4)	N/A	N/A	N/A
T1-SA-SG1(1)	$ 76,141.92	(2)	T2-SA-SG1-IO(1)	5/2005	$ 485,851,390
T1-SA-SG1(2)	$ 90,344.41	(2)	T2-SA-SG1-IO(2)	6/2005	479,760,037
T1-SA-SG1(3)	$ 104,381.67	(2)	T2-SA-SG1-IO(3)	7/2005	472,532,484
T1-SA-SG1(4)	$ 118,173.18	(2)	T2-SA-SG1-IO(4)	8/2005	464,181,950
T1-SA-SG1(5)	$ 131,639.58	(2)	T2-SA-SG1-IO(5)	9/2005	454,728,095
T1-SA-SG1(6)	$ 144,699.41	(2)	T2-SA-SG1-IO(6)	10/2005	444,196,929
T1-SA-SG1(7)	$ 157,272.44	(2)	T2-SA-SG1-IO(7)	11/2005	432,620,976
T1-SA-SG1(8)	$ 169,279.79	(2)	T2-SA-SG1-IO(8)	12/2005	420,039,180
T1-SA-SG1(9)	$ 180,548.58	(2)	T2-SA-SG1-IO(9)	1/2006	406,496,797
T1-SA-SG1(10)	$ 175,689.47	(2)	T2-SA-SG1-IO(10)	2/2006	392,052,911
T1-SA-SG1(11)	$ 170,961.49	(2)	T2-SA- SG1-IO(11)	3/2006	377,997,753
T1-SA-SG1(12)	$ 166,360.62	(2)	T2-SA- SG1-IO(12)	4/2006	364,320,834
T1-SA-SG1(13)	$ 161,883.45	(2)	T2-SA- SG1-IO(13)	5/2006	351,011,984
T1-SA-SG1(14)	$ 157,526.66	(2)	T2-SA- SG1-IO(14)	7/2006	338,061,308
T1-SA-SG1(15)	$ 153,287.00	(2)	T2-SA- SG1-IO(15)	8/2006	325,459,175
T1-SA-SG1(16)	$ 149,161.07	(2)	T2-SA- SG1-IO(16)	9/2006	313,196,216
T1-SA-SG1(17)	$ 145,146.33	(2)	T2-SA- SG1-IO(17)	10/2006	301,263,330
T1-SA-SG1(18)	$ 141,239.54	(2)	T2-SA- SG1-IO(18)	11/2006	289,651,624
T1-SA-SG1(19)	$ 137,437.78	(2)	T2-SA- SG1-IO(19)	12/2006	278,352,461
T1-SA-SG1(20)	$ 133,738.24	(2)	T2-SA- SG1-IO(20)	1/2007	267,357,438
T1-SA-SG1(21)	$ 130,239.82	(2)	T2-SA- SG1-IO(21)	2/2007	256,658,379
T1-SA-SG1(22)	$ 272,685.25	(2)	T2-SA- SG1-IO(22)	3/2007	246,239,194
T1-SA-SG1(23)	$ 255,711.89	(2)	T2-SA- SG1-IO(23)	4/2007	224,424,373
T1-SA-SG1(24)	$ 239,823.29	(2)	T2-SA- SG1-IO(24)	5/2007	203,967,422
T1-SA-SG1(25)	$ 224,889.09	(2)	T2-SA- SG1-IO(25)	6/2007	184,781,559
T1-SA-SG1(26)	$ 123,695.48	(2)	T2-SA- SG1-IO(26)	7/2007	166,790,432
T1-SA-SG1(27)	$ 119,478.80	(2)	T2-SA- SG1-IO(27)	8/2007	156,894,794
T1-SA-SG1(28)	$ 115,306.71	(2)	T2-SA- SG1-IO(28)	9/2007	147,336,490
T1-SA-SG1(29)	$ 111,383.25	(2)	T2-SA- SG1-IO(29)	10/2007	138,111,954
T1-SA-SG1(30)	$ 107,595.17	(2)	T2-SA- SG1-IO(30)	11/2007	129,201,294
T1-SA-SG1(31)	$ 103,937.76	(2)	T2-SA- SG1-IO(31)	12/2007	120,593,680
T1-SA-SG1(32)	$ 100,406.46	(2)	T2-SA-SG1-IO(32)	1/2008	112,278,659
T1-SA-SG1(33)	$ 96,996.88	(2)	T2-SA-SG1-IO(33)	2/2008	104,246,142
T1-SA-SG1(34)	$ 93,682.95	(2)	T2-SA-SG1-IO(34)	3/2008	96,486,392
T1-SA-SG1(35)	$ 90,505.79	(2)	T2-SA-SG1-IO(35)	4/2008	88,991,755
T1-SA-SG1(36)	$ 1,021,891.15	(2)(5)	T2-SA-SG1-IO(36)	7/2008	81,751,292
T1-SA-SG2(1)	$ 49,856.09	(4)	T2-SA-SG2-IO(1)	5/2005	$ 407,901,617
T1-SA-SG2(2)	$ 59,258.12	(4)	T2-SA-SG2-IO(2)	6/2005	402,916,008
T1-SA-SG2(3)	$ 68,555.43	(4)	T2-SA-SG2-IO(3)	7/2005	396,990,196
T1-SA-SG2(4)	$ 77,695.81	(4)	T2-SA-SG2-IO(4)	8/2005	390,134,654
T1-SA-SG2(5)	$ 86,626.55	(4)	T2-SA- SG2-IO(5)	9/2005	382,365,072
T1-SA-SG2(6)	$ 95,294.76	(4)	T2-SA- SG2-IO(6)	10/2005	373,702,418
T1-SA-SG2(7)	$ 103,647.93	(4)	T2-SA- SG2-IO(7)	11/2005	364,172,942
T1-SA-SG2(8)	$ 111,634.37	(4)	T2-SA- SG2-IO(8)	12/2005	353,808,149
T1-SA-SG2(9)	$ 118,837.78	(4)	T2-SA- SG2-IO(9)	1/2006	342,644,712
T1-SA-SG2(10)	$ 115,707.30	(4)	T2-SA- SG2-IO(10)	2/2006	330,760,934
T1-SA-SG1(11)	$ 112,652.53	(4)	T2-SA- SG2-IO(11)	3/2006	319,190,204
T1-SA-SG2(12)	$ 109,678.62	(4)	T2-SA- SG2-IO(12)	4/2006	307,924,951
T1-SA-SG2(13)	$ 106,783.42	(4)	T2-SA- SG2-IO(13)	5/2006	296,957,089
T1-SA-SG2(14)	$ 103,964.84	(4)	T2-SA- SG2-IO(14)	6/2006	286,278,748
T1-SA-SG2(15)	$ 101,220.84	(4)	T2-SA- SG2-IO(15)	7/2006	275,882,264
T1-SA-SG2(16)	$ 98,549.46	(4)	T2-SA- SG2-IO(16)	8/2006	265,760,180
T1-SA-SG2(17)	$ 95,948.76	(4)	T2-SA- SG2-IO(17)	9/2006	255,905,233
T1-SA-SG2(18)	$ 93,416.87	(4)	T2-SA- SG2-IO(18)	10/2006	246,310,357
T1-SA-SG2(19)	$ 90,951.96	(4)	T2-SA- SG2-IO(19)	11/2006	236,968,670
T1-SA-SG2(20)	$ 88,552.25	(4)	T2-SA- SG2-IO(20)	12/2006	227,873,475
T1-SA-SG2(21)	$ 89,974.71	(4)	T2-SA- SG2-IO(21)	1/2007	219,018,250
T1-SA-SG2(22)	$ 175,067.47	(4)	T2-SA- SG2-IO(22)	2/2007	210,020,779
T1-SA-SG2(23)	$ 164,495.78	(4)	T2-SA- SG2-IO(23)	3/2007	192,514,032
T1-SA-SG2(24)	$ 154,517.16	(4)	T2-SA- SG2-IO(24)	4/2007	176,064,454
T1-SA-SG2(25)	$ 142,925.71	(4)	T2-SA- SG2-IO(25)	5/2007	160,612,738
T1-SA-SG2(26)	$ 82,152.92	(4)	T1-SA-SG2-IO(26)	6/2007	146,320,167
T1-SA-SG2(27)	$ 79,376.94	(4)	T1-SA-SG2-IO(27)	7/2007	138,104,875
T1-SA-SG2(28)	$ 76,659.17	(4)	T1-SA-SG2-IO(28)	8/2007	130,167,181
T1-SA-SG2(29)	$ 74,120.25	(4)	T1-SA-SG2-IO(29)	9/2007	122,501,264
T1-SA-SG2(30)	$ 71,667.34	(4)	T1-SA-SG2-IO(30)	10/2007	115,089,239
T1-SA-SG2(31)	$ 69,297.47	(4)	T1-SA-SG2-IO(31)	11/2007	107,922,504
T1-SA-SG2(32)	$ 67,007.79	(4)	T1-SA-SG2-IO(32)	12/2007	100,992,757
T1-SA-SG2(33)	$ 64,795.68	(4)	T1-SA-SG2-IO(33)	1/2008	94,291,978
T1-SA-SG2(34)	$ 62,665.14	(4)	T1-SA-SG2-IO(34))	2/2008	87,812,410
T1-SA-SG2(35)	$ 60,599.13	(4)	T1-SA-SG2-IO(35)	3/2008	81,545,896
T1-SA-SG2(36)	$ 754,859.83	(4)(6)	T1-SA-SG2-IO(36)	7/2008	75,485,983
R-I	(7)	(7)	N/A	N/A	N/A

(1)

This interest shall have an initial principal balance equal to (i) the aggregate principal balance of the Mortgage Loans in Subgroup 1 less (ii) the aggregate principal balance of the T1-SA-SG1 interests.

(2)

The T1-A-SG1 interest and each T1-SA-SG1 interest shall bear interest at a per annum rate equal to the weighted average Net Mortgage Rate of the Mortgage Loans in Subgroup 1, weighted on the basis of the outstanding principal balances of such Mortgage Loans as of the beginning of the preceding calendar month and adjusted to take into account any distribution of principal in such preceding calendar month to the extent such principal was reflected in the outstanding principal balances as of the beginning of such preceding calendar month.

(3)

This interest shall have an initial principal balance equal to (i) the aggregate principal balance of the Mortgage Loans in Subgroup 2 less (ii) the aggregate principal balance of the T1-SA-SG2 interests.

(4)

The T1-A-SG2 interest and each T1-SA-SG2 interest shall bear interest at a per annum rate equal to the weighted average Net Mortgage Rate of the Mortgage Loans in Subgroup 2, weighted on the basis of the outstanding principal balances of such Mortgage Loans as of the beginning of the preceding calendar month and adjusted to take into account any distribution of principal in such preceding calendar month to the extent such principal was reflected in the outstanding principal balances as of the beginning of such preceding calendar month.

(5)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 1.

(6)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 2.

(7)

The R-I interest shall not have a principal amount and shall not bear interest. The R-I interest is hereby designated as the sole class of residual interest in REMIC I.

On each Distribution Date, all Realized Losses and all payments of principal shall be allocated in the following order of priority:

With respect to such amounts relating to the Mortgage Loans in Subgroup 1:

(i)

First, to the T1-A-SG1 interest until such interest is reduced to zero, and

(ii)

Second, to the outstanding T1-SA-SG1 interest with the lowest numerical denomination until such interest is reduced to zero.

With respect to such amounts relating to the Mortgage Loans in Subgroup 2:

(i)

First, to the T1-A-SG2 interest until such interest is reduced to zero, and

(ii)

Second, to the outstanding T1-SA-SG2 interest with the lowest numerical denomination until such interest is reduced to zero.

The aggregate initial principal balance of the T1-SA-SG1 interests was established to equal approximately 1/80th of the Yield Maintenance Agreement Notional Amount and a T1-SA-SG1 interest was created to equal approximately 1/80th of each reduction in the Yield Maintenance Agreement Notional Amount.

The aggregate initial principal balance of the T1-SA-SG2 interests was established to equal approximately 1/100th of the Yield Maintenance Agreement Notional Amount and a T1-SA-SG2 interest was created to equal approximately 1/100th of each reduction in the Yield Maintenance Agreement Notional Amount.

REMIC II:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC II, each of which (other than the R-II interest) is hereby designated as a regular interest in REMIC II (the “REMIC II Regular Interests”):

REMIC Interest	Initial Principal Balance of REMIC Interest	Interest Rate	Corresponding Class of Certificates
T2-A-SG1-Senior	$ 490,800,000.00	(1)(5)	A1, A2
T2-A-SG1-Sub	$ 128,914,951.68	(1)	N/A
T2-A-SG2-Senior	$ 411,942,000.00	(2)(6)	X0, X0, X0, X0
X0-X-XX0-Xxx	$ 108,168,702.07	(2)	N/A
T2-SA-SG1	(3)	(3)	N/A
T2-SA-SG2	(4)	(4)	N/A
R-II	(7)	(7)	N/A

(1)

This interest shall bear interest at a per annum rate equal to the weighted average of the interest rates of the interests in REMIC I with the term “SG1” in their class designation, provided that the interest rate of any such interest in REMIC I shall be reduced by 1.440% for each Distribution Date on which interest is distributable on the Corresponding REMIC II interest relating to such interest.

(2)

This interest shall bear interest at a per annum rate equal to the weighted average of the interest rates of the interests in REMIC I with the term “SG2” in their class designation, provided that the interest rate of any such interest in REMIC I shall be reduced by 1.138% for each Distribution Date on which interest is distributable on the Corresponding REMIC II interest relating to such interest.

(3)

The T2-SA-SG1 interest shall represent 36 REMIC regular interests, each of which appears under the heading “Corresponding REMIC II Interest” in the table designating the interests in REMIC I above. Each such regular interest shall be entitled to receive, on each Distribution Date before the applicable Distribution Date of Rate Change, interest that accrues on the REMIC I interest to which it corresponds at a per annum rate equal to 1.440%, provided that, on the first Distribution Date, no interest shall be distributable on any such regular interest. The rate of 1.440% is equal to 80 times 0.0180%, which corresponds to establishing the T1-SA-SG1 interests as having aggregate principal balances equal to approximately 1/80th of the Yield Maintenance Agreement Notional Amount. On and after the applicable Distribution Date of Rate Change for a Corresponding REMIC II interest, such Corresponding REMIC II interest shall not be entitled to receive any interest.

(4)

The T2-SA-SG2 interest shall represent 36 REMIC regular interests, each of which appears under the heading “Corresponding REMIC II Interest” in the table designating the interests in REMIC I above. Each such regular interest shall be entitled to receive, on each Distribution Date before the applicable Distribution Date of Rate Change, interest that accrues on the REMIC I interest to which it corresponds at a per annum rate equal to 1.380%, provided that, on the first Distribution Date, no interest shall be distributable on any such regular interest. The rate of 1.380% is equal to 100 times 0.0138%, which corresponds to establishing the T1-SA-SG2 interests as having aggregate principal balances equal to approximately 1/100th of the Yield Maintenance Agreement Notional Amount. On and after the applicable Distribution Date of Rate Change for a Corresponding REMIC II interest, such Corresponding REMIC II interest shall not be entitled to receive any interest.

(5)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 1.

(6)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 2.

(7)

The R-II interest shall not have a principal amount and shall not bear interest. The R-II interest is hereby designated as the sole class of residual interest in REMIC II.

On each Distribution Date, all Realized Losses and all payments of principal shall be allocated in the following order of priority:

With respect to such amounts relating to the Mortgage Loans in Subgroup 1:

(i)

First, to the T2-A-SG1-Senior interest until the principal balance of such interest equals the aggregate principal balance of the Class A1 and Class A2 Certificates as of such Distribution Date, and

(ii)

Second, to the T2-SA-SG1-Sub interest until such interest is reduced to zero.

With respect to such amounts relating to the Mortgage Loans in Subgroup 2:

(i)

First, to the T2-A-SG1-Senior interest until the principal balance of such interest equals the aggregate principal balance of the Class A3, Class A4, Class A5 and Class A6 Certificates as of such Distribution Date, and

(ii)

Second, to the outstanding T2-SA-SG2-Sub interest until such interest is reduced to zero.

REMIC III:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC III, each of which (other than the R-III interest) is hereby designated as a regular interest in REMIC III (the “REMIC III Regular Interests”):

REMIC Interests	Initial Principal Balance	Interest Rate	Distribution Date of Rate Change	Corresponding REMIC IV Interest
T3-A-SG1-Senior	$ 490,800,000.00	(1)(6)	N/A	N/A
T3-A-SG2-Senior	$ 411,942,000.00	(2)(7)	N/A	N/A
T3-A-Sub-A1	$ 144,039.25	(3)	4/2008	T4-A-SG2-Sub-1
T3-A-Sub-A2	$ 241,055.08	(3)	5/2008	T4-A-SG2-Sub-2
T3-A-Sub-A3	$ 233,000.52	(3)	6/2008	T4-A-SG2-Sub-3
T3-A-Sub-A4	$ 3,781,645.15	(3)	7/2008	T4-A-SG2-Sub-4
T3-A-Sub-B	$ 232,683,913.75	(3)	N/A	N/A
T3-SA-SG1	(4)	(4)	N/A	N/A
T3-SA-SG2	(5)	(5)	N/A	N/A
R-III	(8)	(8)	N/A	N/A

(1)

This interest shall bear interest at the same rate as the T2-A-SG1-Senior interest.

(2)

This interest shall bear interest at the same rate as the T2-A-SG2-Senior interest.

(3)

This interest shall bear interest at a per annum rate equal to the weighted average of the interest rates of the interests in REMIC II with the term “Sub” in their class designation.

(4)

The T3-SA-SG1 interest shall not have a principal balance, but shall be entitled to receive, on each Distribution Date, 100% of the interest distributable on the T2-SA-SG1 interest on such Distribution Date.

(5)

The T3-SA-SG2 interest shall not have a principal balance, but shall be entitled to receive, on each Distribution Date, 100% of the interest distributable on the T2-SA-SG2 interest on such Distribution Date.

(6)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 1.

(7)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans in Subgroup 2.

(8)

The R-III interest shall not have a principal amount and shall not bear interest. The R-III interest is hereby designated as the sole class of residual interest in REMIC III.

On each Distribution Date, all Realized Losses and all payments of principal shall be allocated in the following order of priority:

(i)

With respect to such amounts relating to the T2-A-SG-1 interest, to the T3-A-SG1-Senior interest until such interest is reduced to zero.

(ii)

With respect to such amounts relating to the T2-A-SG-2 interest, to the T3-A-SG2-Senior interest until such interest is reduced to zero.

(iii)

With respect to the remaining amounts:

First, to the T3-A-Sub-B interest until the principal balance of such interest until such interest is reduced to zero; and

Second, to the outstanding T3-A-Sub-A Interest with the lowest numerical denomination until the principal balance of such interest is reduced to zero.

REMIC IV:

The following table sets forth the designations, principal balances, and interest rates for each interest in REMIC IV, each of which (other than the R-IV interest) is hereby designated as a regular interest in REMIC IV (the “REMIC IV Regular Interests”):

REMIC Interests	Initial Balance	Interest Rate	Corresponding Class of REMIC V Interest
T4-A1 (1)	¼ Corresponding Class balance	Subgroup 1 Net WAC Rate	A1
T4-A2 (1)	¼ Corresponding Class balance	Subgroup 1 Net WAC Rate	A2
T4-A3 (1)	¼ Corresponding Class balance	Subgroup 2 Net WAC Rate	A3
T4-A4 (1)	¼ Corresponding Class balance	Subgroup 2 Net WAC Rate	A4
T4-A5 (1)	¼ Corresponding Class balance	Subgroup 2 Net WAC Rate	A5
T4-A6 (1)	¼ Corresponding Class balance	Subgroup 2 Net WAC Rate	A6
T4-M1 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M1
T4-M2 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M2
T4-M3 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M3
T4-M4 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M4
T4-M5 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M5
T4-M6 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M6
T4-M7 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M7
T4-M8 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M8
T4-M9 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M9
T4-M10 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	M10
T4-M11 (1)	¼ Corresponding Class balance	Subordinate Net WAC Rate	X00
X0-XX0-Xxxx	$ 121,410,850.48	Subgroup 0 Xxx XXX Xxxx	X/X
X0-XX0-XXX	$ 1,289,149.52	Subgroup 1 Net WAC Rate	N/A
T4-SG2-Pool	$ 101,903,812.98	Subgroup 0 Xxx XXX Xxxx	X/X
X0-XX0-XXX	$ 1,081,687.02	Subgroup 2 Net WAC Rate	N/A
T4-Sub-Pool	$ 63,545,076.88	Subordinate Net WAC Rate	N/A
T4-Accrual Interest (2)	(7)	(8)	N/A
T4-SA-SG1	(3)	(3)	N/A
T4-SA-SG2	(4)	(4)	N/A
T4-SA-SG-Sub	(5)	(5)	N/A
R-IV	(6)	(6)	N/A

(1)

This interest is a REMIC IV Accretion Directed Class.

(2)

This interest shall also be entitled to all Prepayment Premiums received in respect of the Mortgage Loans.

(3)

The T4-SA-SG1 interest shall not have a principal balance, but shall be entitled to receive, on each Distribution Date, 100% of the interest distributable on the T3-SA-SG1 interest on such Distribution Date.

(4)

The T4-SA-SG2 interest shall not have a principal balance, but shall be entitled to receive, on each Distribution Date, 100% of the interest distributable on the T3-SA-SG2 interest on such Distribution Date.

(5)

The T4-SA-SG-Sub interest shall represent 4 REMIC regular interests, each of appears under the heading “Corresponding REMIC IV Interest” in the table designating the interests in REMIC III above. Each regular interest shall be entitled to receive, on each Distribution Date before the applicable Distribution Date Rate of Change, interest that accrues on the REMIC III Interest to which it corresponds at a per annum rate equal to 1.200%, provided that, on the first Distribution Date, no interest shall be distributable on any such regular interest. The rate of 1.200% is equal to 50 times 0.0240%, which corresponds to establishing the T3-SG2-Sub interests as having aggregate principal balances equal to approximately 1/50th of the Yield Maintenance Agreement Notional Amount. On and after the applicable Distribution Date of Rate Change for a Corresponding REMIC IV interest, such Corresponding REMIC IV interest shall not be entitled to receive any interest.

(6)

The R-IV interest shall not have a principal amount and shall not bear interest. The R-IV interest is hereby designated as the sole class of residual interest in REMIC IV.

(7)

This interest shall have an initial principal balance equal to the aggregate principal balance of all the Mortgage Loans as of the Cut-off Date minus the aggregate initial principal balance of each other regular interest in REMIC IV.

(8)

This interest shall bear interest at the weighted average rate of the interest rates of the regular interests in REMIC III, other than any interest that is an interest-only regular interest.

On each Distribution Date, interest shall be distributed with respect to the interests in REMIC IV based on the above-described interest rates, provided however, that interest that accrues on the T4-Accural Interest shall be deferred to the extent necessary to make the distributions of principal described below. Any interest so deferred shall itself bear interest at the interest rate for the T4-Accural Interest.

On each Distribution Date the principal distributed on the REMIC III interests (together with an amount equal to the interest deferred on the T4-Accural Interest for such Distribution Date) shall be distributed, and Realized Losses shall be allocated, among the interests in REMIC IV in the following order of priority:

(a)

First, to the T4-SG1-PSA interest until its outstanding principal amount equals one percent of the Group Subordinate Amount for Subgroup 1 immediately after such Distribution Date;

(b)

Second, to the T4-SG2-PSA interest until its outstanding principal amount equals one percent of the Group Subordinate Amount for Subgroup 2 immediately after such Distribution Date;

(c)

Third, to each remaining interest in REMIC IV having a Corresponding Class in REMIC V until the outstanding principal amount of each such interest equals one-quarter of the outstanding principal amount of the Corresponding Class of Certificates for such interest immediately after such Distribution Date;

(d)

Fourth, to the T4-SG1-Pool Interest until the aggregate principal balance of such interest, the T4-SG1-PSA interest, the T4-A1 interest, and the T4-A2 interest equals one half of the outstanding principal balance of the T3-A-SG1-Senior interest immediately after such Distribution Date;

(e)

Fifth, to the T4-SG2-Pool Interest until the aggregate principal balance of such interest, the T4-SG2-PSA interest, the T4-A3 interest, the T4-A4 interest, the T4-A5 interest and the T4-A6 interest equals one half of the outstanding principal balance of the T3-A-SG2-Senior interest immediately after such Distribution Date;

(f)

Sixth, to the T4-Sub-PSA interest until its outstanding principal amount equals (i) one-half of the aggregate outstanding principal amount of each interest in REMIC III having the term “Sub” in its class designation immediately after such Distribution Date minus (ii) the aggregate outstanding principal amount of each remaining interest in REMIC IV having the letter “M” in its class designation; and

(g)

Finally, to the T4-Accural Interest, any remaining amounts.

Master REMIC:

The following table sets forth characteristics of the Certificates, each of which, except for the Class R Certificates, is hereby designated as a “regular interest” in the Master REMIC:

Class	Original Certificate Principal Balance	Pass-Through Rate
Class A1	$392,600,000	(1)
Class A2	$98,200,000	(1)
Class A3	$182,160,000	(1)
Class A4	$102,000,000	(1)
Class A5	$112,400,000	(1)
Class A6	$15,382,000	(1)
Class M1	$46,163,000	(1)
Class M2	$35,335,000	(1)
Class M3	$21,657,000	(1)
Class M4	$19,377,000	(1)
Class M5	$18,237,000	(1)
Class M6	$17,667,000	(1)
Class M7	$14,248,000	(1)
Class M8	$12,538,000	(1)
Class M9	$11,968,000	(1)
Class M10	$9,119,000	(1)
Class M11	$13,678,000	(1)
Class X	(2)	(2)
Class P	$100	(3)
Strip Amount	(4)	(4)
Class R (5)	N/A	N/A

(1)

The lesser of the related Formula Rate and the Net WAC Rate. Any entitlement to Net WAC Rate Carryover Amounts shall not be an obligation of any REMIC created hereunder.

(2)

The Class X Certificates have a notional balance equal to the aggregate Stated Principal Balance of the Mortgage Loans. The initial interest rate of the Class X Certificate shall be a rate sufficient to cause all net interest from the Mortgage Loans to accrue on the Class X Certificate that is in excess of the amount of interest that accrues on the Class A Certificates, Class M Certificates and the Strip Amount. For any Distribution Date, the Pass-Through Rate in respect of the Class X Certificates shall be the excess of: (i) the weighted average of the interest rates of the REMIC IV Regular Interests (other than any such interest that is an interest-only regular interest) over (ii) the product of: (A) four and (B) the weighted average Pass-Through Rate of the REMIC IV Accretion Directed Classes and each REMIC IV Regular Interest having the letters “PSA” or the word “Pool” in its designation, and the T4-Accrual Interest, where the T4-Accrual Interest and each interest having the letters “PSA” or the word “Pool” in its designation is subject to a cap equal to zero and each REMIC IV Accretion Directed Class is subject to a cap equal to the Pass-Through Rate on its Corresponding Class. The Class X Certificates shall also be entitled to principal equal to the excess of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date (less $100.00) over the aggregate Certificate Principal Balance of the Class A Certificates and Class M Certificates as of the Closing Date. Such principal balance shall not bear interest.

(3)

The Class P Certificates shall not be entitled to payments of interest, but shall be entitled to receive all Prepayment Premiums in respect of the Mortgage Loans.

(4)

The Strip Amount shall be a REMIC regular interest of REMIC V. The Strip Amount shall not have a principal balance, but shall receive 100% of the amount received from the X0-XX-XX0, X0-XX-XX0, and T4-SA-SG-Sub interests.

(5)

REMIC V shall also issue the R-V interest, which shall not have a principal amount and shall not bear interest. The R-V interest is hereby designated as the sole class of residual interest in REMIC V. The Class R Certificates shall represent the beneficial ownership of the R-I, R-II, R-III, R-IV and R-V interests.

The foregoing REMIC structure is intended to cause all of the cash from the Mortgage Loans to flow through to REMIC V as cash flow on a REMIC regular interest, without creating any shortfall, actual or potential (other than for credit losses), to any REMIC regular interest. To the extent that the structure is believed to diverge from such intention, the party identifying any ambiguity or drafting error shall notify the other parties hereto, and the parties hereto shall attempt to resolve such ambiguity or correct such drafting error in accordance with Section 11.01 to accomplish such intention.

The Trustee shall account for the amount, if any, that the amount distributed with respect to the Aggregate Strip Amount is less than the amount the Trust is required to pay under the Yield Maintenance Agreements as a payment to the Class X Certificates and a payment by the Class X Certificates on the Yield Maintenance Agreements for all federal tax purposes. Any Realized Losses on the Mortgage Loans borne by the Class X Certificates shall be accounted for consistent with its right to receive funds to make payments on the Yield Maintenance Agreements.

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES

SECTION 2.01.

Conveyance of Mortgage Loans.

(a)

The Depositor, as of the date of this Agreement, does hereby establish the Trust, and, concurrently with the delivery of this Agreement, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse for the benefit of the Certificateholders all the right, title and interest of the Depositor, including any security interest therein for the benefit of the Depositor, in and to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of the Depositor under the Assignment and Assumption Agreement, each Mortgage Loan Purchase Agreement and each Reconstitution Agreement, and all other assets included or to be included in the Trust Fund. Such assignment includes all interest and principal received by the Seller, the Depositor or the Servicer on or with respect to the Mortgage Loans (other than payments of principal and interest due on such Mortgage Loans on or before the Cut-off Date) including Principal Prepayments, and interest thereon, received after January 22, 2005 and January 26, 2005 with respect to the New Century Mortgage Loans and the WMC Mortgage Loans, respectively, by the Seller, the Depositor or the Servicer on or with respect to the Mortgage Loans. The Depositor herewith delivers to the Trustee an executed copy of each Reconstitution Agreement. In addition, on or prior to the Closing Date, the Trustee shall execute the Yield Maintenance Agreements and the Depositor hereby directs the Trustee to do so. With respect to any Mortgage Loan that does not have a first payment date during the Due Period related to the first Distribution Date, the Depositor shall deposit into the Distribution Account on or before the Servicer Remittance Date relating to the first Distribution Date, an amount equal to one month’s interest at the related Net Mortgage Rate on the Cut-off Date Principal Balance of such Mortgage Loan.

If the assignment and transfer of the Mortgage Loans and the other property specified in this Section 2.01 from the Depositor to the Trustee pursuant to this Agreement is held or deemed not to be a sale or is held or deemed to be a pledge of security for a loan, the Depositor intends that the rights and obligations of the parties shall be established pursuant to the terms of this Agreement and that, in such event, (i) the Depositor shall be deemed to have granted and does hereby grant to the Trustee as of the Closing Date a perfected, first priority security interest in the entire right, title and interest of the Depositor in and to the Mortgage Loans and all other property conveyed to the Trust Fund pursuant to this Section 2.01 and all proceeds thereof, and (ii) this Agreement shall constitute a security agreement under applicable law.

In connection with such transfer and assignment, the Depositor does hereby deliver to, and deposit with the Trustee or the Custodian, as applicable, a copy of the related Mortgage Loan Schedule in an electronic, machine readable medium, and the following documents or instruments with respect to each Mortgage Loan so transferred and assigned (each, a “Mortgage File”):

(i)

the original Mortgage Note, endorsed in blank or in the following form: “Pay to the order of U.S. Bank National Association, as Trustee under the applicable agreement, without recourse,” with all prior and intervening endorsements showing a complete chain of endorsement from the related Originator to the Person so endorsing to the Trustee or a copy of such original Mortgage Note with an accompanying lost note affidavit executed by the Seller;

(ii)

the original Mortgage with evidence of recording thereon, and a copy, certified by the appropriate recording office, of the recorded power of attorney, if the Mortgage was executed pursuant to a power of attorney, with evidence of recording thereon;

(iii)

an original Assignment of the Mortgage in blank;

(iv)

the original recorded Assignment or Assignments of the Mortgage showing a complete chain of assignment from the related Originator to the Person assigning the Mortgage to the Trustee or in blank;

(v)

the original or copies of each assumption, modification, written assurance or substitution agreement, if any; and

(vi)

with respect to any first lien Mortgage Loan, the original lender’s title insurance policy, if available, together with all endorsements or riders which were issued with or subsequent to the issuance of such policy, insuring the priority of the Mortgage as a first lien on the Mortgaged Property represented therein as a fee interest vested in the Mortgagor, or in the event such original title policy is unavailable, a written commitment or uniform binder or preliminary report of title issued by the title insurance or escrow company, if available.

Notwithstanding the foregoing, the Trustee, if applicable, acknowledges receipt of items listed under clause (v) above only to the extent that it has received a written schedule of the items to be delivered to the Trustee or the Custodian pursuant to such clause (v).

The Depositor hereby represents that, on the Closing Date (i) no more than 1% of the Mortgage Loans by Stated Principal Balance as of the Cut-off Date may have lost note affidavits in lieu of the original Mortgage Notes and (ii) the Depositor shall cause the related Originator to deliver to the Trustee or the Custodian, as applicable, a copy of the original Mortgage Note for each Mortgage Loan with respect to which a lost note affidavit is delivered.

If any of the documents referred to in clauses (ii), (iii), (iv) or (v) above in this Section 2.01(a) has as of the Closing Date been submitted for recording but either (x) has not been returned from the applicable public recording office or (y) has been lost or such public recording office has retained the original of such document, the obligations of the Depositor to deliver such documents shall be deemed to be satisfied upon (1) delivery to the Trustee or the Custodian, as applicable, of a copy of each such document certified by the related Originator, in the case of (x) above or the applicable public recording office in the case of (y) above to be a true and complete copy of the original that was submitted for recording and (2) if such copy is certified by the related Originator or delivery to the Trustee or the Custodian, as applicable, promptly upon receipt thereof of either the original or a copy of such document certified by the applicable public recording office to be a true and complete copy of the original. If the original lender’s title insurance policy was not delivered pursuant to clause (vii) above in this Section 2.01(a), the Depositor shall deliver or cause to be delivered to the Trustee or the Custodian, as applicable, promptly after receipt thereof, the original lender’s title insurance policy, if available. The Depositor shall deliver or cause to be delivered to the Trustee or the Custodian, as applicable, promptly upon receipt thereof any other original documents constituting a part of a Mortgage File received with respect to any Mortgage Loan, including, but not limited to, any original documents evidencing an assumption or modification of any Mortgage Loan.

All original documents relating to the Mortgage Loans that are not delivered to the Trustee or the Custodian, as applicable, are and shall be held by or on behalf of the Depositor or the Servicer, as the case may be, in trust for the benefit of the Trustee on behalf of the Certificateholders. In the event that any such original document is required pursuant to the terms of this Section to be a part of a Mortgage File, such document shall be delivered promptly to the Trustee or the Custodian, as applicable. Any such original document delivered to or held by the Depositor that is not required pursuant to the terms of this Section to be a part of a Mortgage File, shall be delivered promptly to the Servicer.

The Depositor shall deliver or cause the related Originator, the Trustee or the Custodian to deliver to the Servicer copies of all trailing documents required to be included in the Servicing File at the same time the originals or certified copies thereof are delivered to the Trustee or Custodian, as applicable, which documents shall include, but are not limited to, the mortgagee policy of title insurance and any Mortgage Loan documents upon return from the recording office. The Servicer shall not be responsible for any custodial fees other than costs incurred in obtaining such documents, and the Servicer shall be entitled to reimbursement from the Seller for any reasonable costs incurred in obtaining such documents.

(b)

It is agreed and understood by the Depositor, the Seller, the Servicer and the Trustee that it is not intended that any Mortgage Loan be included in the Trust Fund that is a “High-Cost Home Loan” as defined by the Home Ownership and Equity Protection Act of 1994 or any other applicable predatory lending laws, including, but not limited to (i) a “High-Cost Home Loan” as defined in the New Jersey Home Ownership Act effective November 27, 2003, (ii) a “High-Cost Home Loan” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004, (iii) a “High Cost Home Mortgage Loan” as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004 or (iv) a “High-Cost Home Loan” as defined by the Indiana High Cost Home Loan Law effective January 1, 2005.

SECTION 2.02.

Acceptance of REMIC I by the Trustee.

Subject to the provisions of Section 2.01 and subject to any exceptions noted on the exception report described in the next paragraph below, the Trustee or the Custodian acknowledges receipt of the documents referred to in Section 2.01 (other than such documents described in Section 2.01(a)(iv)) above and all other assets included under clauses (i), (iii), (iv) and (v) of the definition of “REMIC I” (to the extent of amounts deposited into the Distribution Account) and declares that the Trustee or the Custodian, as applicable, holds and will hold such documents and the other documents delivered to it constituting the Mortgage File on behalf of the Trust, and that it holds or will hold all such assets and such other assets included in the definition of “REMIC I” in trust for the exclusive use and benefit of all present and future Certificateholders. The Trustee also acknowledges receipt of the amounts on deposit in the Net WAC Reserve Fund in trust for the exclusive use and benefit of all present and future Certificateholders.

The Trustee agrees on or before the Closing Date, for the benefit of the Certificateholders, to review, or cause the Custodian to review, each Mortgage File and to certify, or cause the Custodian to certify, to the Depositor, the Seller, the Servicer and the Trustee in substantially the form attached hereto as Exhibit C-1. It is herein acknowledged that, in conducting such review, neither the Trustee nor the Custodian was under any duty or obligation (i) to inspect, review or examine any such documents, instruments, certificates or other papers to determine whether they are genuine, enforceable, or appropriate for the represented purpose (including with respect to Section 2.01(a)(vi), whether such title insurance policy insures the priority of the Mortgage as a first lien) or whether they have actually been recorded or that they are other than what they purport to be on their face or (ii) to determine whether any Mortgage File should include any of the documents specified in Section 2.01(a)(iv).

Prior to the first anniversary date of this Agreement, the Trustee shall cause the Custodian to deliver to the Depositor, the Trustee, the Seller and the Servicer a final certification in the form annexed hereto as Exhibit C-2 evidencing the completeness of the Mortgage Files, with any applicable exceptions noted thereon.

If in the process of reviewing the Mortgage Files and making or preparing, as the case may be, the certifications referred to above, the Trustee or the Custodian finds any document or documents constituting a part of a Mortgage File to be missing or defective in any material respect, at the conclusion of its review the Trustee shall so notify the Depositor, the Seller and the Servicer. In addition, upon the discovery by the Depositor, the Servicer, the Custodian or the Trustee of a breach of any of the representations and warranties made by an Originator or the Seller in the related Mortgage Loan Purchase Agreement or this Agreement, respectively, in respect of any Mortgage Loan which materially adversely affects such Mortgage Loan or the interests of the related Certificateholders in such Mortgage Loan, the party discovering such breach shall give prompt written notice to the other parties.

Enforcement of each Mortgage Loan Purchase Agreement or this Agreement against the related Originator or the Seller, respectively, shall be effected by the Trustee. The Trustee shall pay the costs of such enforcement at its own expense, and shall be reimbursed therefor only (i) from a general recovery resulting from such enforcement, to the extent, if any, that such recovery exceeds all amounts due in respect of the related Mortgage Loans or (ii) from a specific recovery of costs, expenses or attorneys’ fees against the Person against which such enforcement is directed; provided, however, if the sources of reimbursement described in clauses (i) and (ii) are insufficient, the Trustee may seek reimbursement for any remaining unreimbursed costs of such enforcement from the Trust Fund as an Extraordinary Trust Fund Expense.

SECTION 2.03.

Repurchase or Substitution of Mortgage Loans by an Originator, the Seller or the Depositor; Payment of Prepayment Premiums in the Event of Breach.

(a)

(i)Upon discovery by any of the parties hereto or receipt of notice by a Responsible Officer in the Corporate Trust Office of the Trustee of any materially defective document in, or that a document is missing from, the Mortgage File or of the breach by an Originator of any representation, warranty or covenant under the related Mortgage Loan Purchase Agreement or the related Reconstitution Agreement in respect of any Mortgage Loan that materially adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders (in the case of any such representation or warranty made in the related Mortgage Loan Purchase Agreement or the related Reconstitution Agreement to the knowledge or the best of knowledge of the related Originator as to which such Originator has no knowledge, without regard to such Originator’s lack of knowledge with respect to the substance of such representation or warranty being inaccurate at the time it was made), the Trustee shall promptly notify the Seller and the Servicer of such defect, missing document or breach and cause the related Originator to deliver such missing document or cure such defect or breach within 90 days from the date such Originator was notified of such missing document, defect or breach; provided that such missing document was not previously delivered to the Custodian by such Originator under the related Mortgage Loan Purchase Agreement and the related Reconstitution Agreement. Notwithstanding the foregoing, if applicable, any breach by an Originator of the Xxxxxxx Mac Representations (as defined and set forth in the related Reconstitution Agreement) shall be deemed to materially and adversely affect the interests of the Certificateholders in that Mortgage Loan. If an Originator does not deliver such missing document or cure such defect or breach in all material respects during such period, the Trustee shall enforce the obligations of such Originator under the related Mortgage Loan Purchase Agreement and the related Reconstitution Agreement to repurchase such Mortgage Loan from the Trust Fund at the Purchase Price, to the extent that such Originator is obligated to do so under the related Mortgage Loan Purchase Agreement and the related Reconstitution Agreement. In the event that an Originator shall fail to cure the applicable breach or repurchase a Mortgage Loan in accordance with the preceding sentence, the Seller shall do so. The Purchase Price for the repurchased Mortgage Loan shall be deposited in the Distribution Account, and the Trustee, upon receipt of such deposit, shall release or cause the Custodian to release to the related Originator or the Seller, as the case may be, the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, (provided, however, that in the instruments of transfer or assignment, the Trustee shall represent and warrant to the related Originator or the Seller, as applicable, that the repurchased Mortgage Loan is free and clear of any encumbrance, equity, lien, pledge, charge, claim or security interest created by the Trustee and its successors, assigns and transferees), as the related Originator or the Seller, as applicable, shall furnish to it and as shall be necessary to vest in the related Originator or the Seller, as the case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall have no further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above, if so provided in the related Mortgage Loan Purchase Agreement, the related Reconstitution Agreement or this Agreement, the related Originator or the Seller, as applicable, may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(c). It is understood and agreed that the obligation of the related Originator or the Seller, as applicable, to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Trustee on behalf of the Certificateholders.

(ii)

Upon discovery by any of the parties hereto or receipt of notice by a Responsible Officer in the Corporate Trust Office of the Trustee of any breach by the Seller of any representation, warranty or covenant made by the Seller in Section 2.05(b)(vii) through (viii) in respect of any Mortgage Loan that materially adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders (in the case of any such representation or warranty made to the knowledge or the best of knowledge of the Seller as to which the Seller has no knowledge, without regard to the Seller’s lack of knowledge with respect to the substance of such representation or warranty being inaccurate at the time it was made), the Trustee shall promptly notify the Seller and the Servicer of such breach and cause the Seller to cure such breach within 90 days from the date the Seller was notified of such breach. If the Seller fails to cure such breach in all material respects during such period, the Seller shall repurchase such Mortgage Loan from the Trust Fund at the Purchase Price. In the event that the Seller shall fail to cure the applicable breach or repurchase a Mortgage Loan in accordance with the preceding sentence, the Depositor shall do so. The Purchase Price for the repurchased Mortgage Loan shall be deposited in the Distribution Account, and the Trustee, upon receipt of such deposit, shall release or cause the Custodian to release to the Seller or the Depositor, as the case may be, the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, (provided, however, that in the instruments of transfer or assignment, the Trustee shall represent and warrant to the related Originator or the Depositor, as applicable, that the repurchased Mortgage Loan is free and clear of any encumbrance, equity, lien, pledge, charge, claim or security interest created by the Trustee and its successors, assigns and transferees), as the Seller or the Depositor, as applicable, shall furnish to it and as shall be necessary to vest in the Seller or the Depositor, as the case may be, any Mortgage Loan released pursuant hereto, and the Trustee shall have no further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above, if so provided in the related Mortgage Loan Purchase Agreement, the related Reconstitution Agreement or this Agreement, the Seller or the Depositor, as applicable, may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(c). It is understood and agreed that the obligation of the Seller or the Depositor, as applicable, to cure or to repurchase (or to substitute for) any Mortgage Loan as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such breach available to the Trustee on behalf of the Certificateholders.

(b)

(i)

As promptly as practicable (and no later than 90 days) after the earlier of discovery by the Servicer or receipt of notice by the Servicer of the breach of any representation, warranty or covenant of the Servicer set forth in Section 2.05(a) which materially and adversely affects the interests of the Certificateholders in any Mortgage Loan, the Servicer shall cure such breach in all material respects.

(ii)

If the covenant made by the Servicer in Section 2.05(a)(vii) is breached and remains uncured, the Servicer shall pay into the Collection Account the amount of the waived Prepayment Premium. If the Servicer shall fail to make any payment required pursuant to this Section 2.03(b)(ii), either the Trustee or the Seller may enforce such obligation.

(c)

Any substitution of Qualified Substitute Mortgage Loans for Deleted Mortgage Loans made pursuant to Section 2.03(a) must be effected prior to the date that is two years after the Closing Date for the Trust Fund.

As to any Deleted Mortgage Loan for which the related Originator, the Seller or the Depositor substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected by such Originator, the Seller or the Depositor, as the case may be, delivering to the Trustee, or the Custodian on behalf of the Trustee, as applicable, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 2.01, together with an Officers’ Certificate providing that each such Qualified Substitute Mortgage Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The Trustee or the Custodian, as applicable, shall acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans and, within ten Business Days thereafter, review such documents as specified in Section 2.02 and deliver to the Trustee (if delivered by the Custodian), the Depositor, the Seller and the Servicer, with respect to such Qualified Substitute Mortgage Loan or Loans, a certification substantially in the form attached hereto as Exhibit C-1, with any applicable exceptions noted thereon. Within one year of the date of substitution, the Trustee or the Custodian shall deliver to the Trustee (if delivered by the Custodian), the Depositor, the Seller and the Servicer a certification substantially in the form of Exhibit C-2 hereto with respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the month of substitution are not part of the Trust Fund and will be retained by the related Originator, the Seller or the Depositor, as the case may be. For the month of substitution, distributions to Certificateholders will reflect the Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in the month of substitution, and the related Originator, the Seller or the Depositor, as the case may be, shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage Loan. The Trustee shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, and the Servicer shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of this Agreement and the substitution of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the Trustee in an electronic format. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute part of the Mortgage Pool and part of the related Subgroup and shall be subject in all respects to the terms of this Agreement, including, in the case of a substitution effected by the related Originator or the Seller, all applicable representations and warranties thereof included in the related Mortgage Loan Purchase Agreement or this Agreement, respectively, and in the case of a substitution effected by the Depositor, all applicable representations and warranties thereof set forth in Section 2.04.

For any month in which the related Originator, the Seller or the Depositor substitutes one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer will determine the amount (the “Substitution Shortfall Amount”), if any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan, the Stated Principal Balance thereof as of the date of substitution, together with one month’s interest on such Stated Principal Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances and any costs and damages actually incurred and paid by or on behalf of the Trust in connection with any violation by such Mortgage Loan of (i) the representations and warranties set forth in Section 2.05(b)(vii) or (viii) of this Agreement, (ii) Section 2(a)(viii) of Schedule B to the related Reconstitution Agreement or (iii) the representations and warranties made in connection with “high-cost” home loans or any predatory or abusive lending laws in Schedule B to the related Reconstitution Agreement, as applicable. On the date of such substitution, which shall be on or prior to the next succeeding Determination Date, the related Originator, the Seller or the Depositor, as the case may be, will deliver or cause to be delivered to the Servicer for deposit in the Collection Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans and certification by the Servicer of such deposit, shall release to the related Originator or the Depositor, as the case may be, the related Mortgage File or Files and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as the related Originator, the Seller or the Depositor, as the case may be, shall deliver to it and as shall be reasonably necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

In addition, the related Originator, the Seller or the Depositor, as the case may be, shall obtain at its own expense and deliver to the Trustee an Opinion of Counsel to the effect that such substitution will not cause (a) any federal tax to be imposed on any of the REMICs, created hereunder, including without limitation, any federal tax imposed on “prohibited transactions” under Section 860F(a)(1) of the Code or on “contributions after the startup date” under Section 860G(d)(1) of the Code, or (b) any REMIC hereunder to fail to qualify as a REMIC at any time that any Certificate is outstanding.

(d)

Upon discovery by the Depositor, the Servicer or the Trustee that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, the related Originator, the Seller or the Depositor, as the case may be, shall repurchase or, subject to the limitations set forth in Section 2.03(c), substitute one or more Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of discovery or receipt of such notice with respect to such affected Mortgage Loan. The Depositor shall cause such repurchase or substitution to be made by (i) the related Originator, if the affected Mortgage Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by such Originator under the applicable Mortgage Loan Purchase Agreement, (ii) the Depositor, if the affected Mortgage Loan’s status as a non-qualified mortgage is a breach of any representation or warranty of the Depositor set forth in Section 2.04, or if its status as a non-qualified mortgage is a breach of any representation or warranty (other than a representation and warranty of the related Originator or the Seller) or (iii) the Seller, if the affected Mortgage Loan’s status as a non-qualified mortgage is a breach of any representation or warranty of the Seller set forth in Section 2.05(b)(vii) or (viii), or if its status as a non-qualified mortgage is a breach of any representation or warranty (other than a representation and warranty of the related Originator or the Depositor). Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.03(a). The Trustee shall reconvey to the related Originator, the Seller or the Depositor, as the case may be, the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty.

SECTION 2.04.

Representations and Warranties of the Depositor.

The Depositor hereby represents, warrants and covenants to the Trustee and the Servicer that as of the Closing Date:

(i)

The Depositor is a corporation duly formed and validly existing under the laws governing its creation and existence, is in compliance with the laws of each state in which any Mortgaged Property or the Depositor is located or doing business and is in good standing in each jurisdiction in which the nature of its business, or the properties owned or leased by it make such qualification necessary. The Depositor has all requisite authority to own and operate its properties, to carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge its obligations under this Agreement and the other Operative Documents to which it is a party.

(ii)

The execution and delivery of this Agreement and the other Operative Documents to which it is a party by the Depositor and its performance and compliance with the terms of this Agreement and the other Operative Documents to which it is a party have been duly authorized by all necessary corporate action on the part of the Depositor and will not violate the Depositor’s Charter or Bylaws or constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, or result in a breach of, any material contract, agreement or other instrument to which the Depositor is a party or by which the Depositor is bound or violate any statute or any order, rule or regulation of any court, governmental agency or body or other tribunal having jurisdiction over the Depositor or any of its properties.

(iii)

This Agreement and the other Operative Documents to which the Depositor is a party, assuming due authorization, execution and delivery by the other parties hereto and thereto, each constitutes a valid, legal and binding obligation of the Depositor, enforceable against it in accordance with the terms hereof and thereof, except as the enforcement hereof and thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law).

(iv)

The Depositor 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 could materially and adversely affect the condition (financial or other) or operations of the Depositor or its properties or the consequences of which could materially and adversely affect its performance hereunder and under the other Operative Documents to which the Depositor is a party.

(v)

No litigation, proceeding or investigation is pending with respect to which the Depositor has received service of process or, to the best of the Depositor’s knowledge, threatened against the Depositor which litigation, proceeding or investigation might have consequences that would prohibit its entering into this Agreement or any other Operative Documents to which it is a party or that would materially and adversely affect the condition (financial or otherwise) or operations of the Depositor or its properties or might have consequences that would materially and adversely affect the validity or enforceability of the Mortgage Loans, the issuance of the Certificates or the Depositor’s performance hereunder and under the other Operative Documents to which the Depositor is a party.

(vi)

[Reserved].

(vii)

Immediately prior to the sale and assignment by the Depositor to the Trustee on behalf of the Trust Fund of each Mortgage Loan, the Depositor had good and equitable title to each Mortgage Loan subject to no prior lien (except, with respect to any second lien Mortgage Loan, the related First Lien), claim, participation interest, mortgage, security interest, pledge, charge or other encumbrance or other interest of any nature.

(viii)

As of the Closing Date, the Depositor has transferred all right, title and interest in the Mortgage Loans to the Trustee on behalf of the Trust Fund.

(ix)

The Depositor is solvent and will not be made insolvent by the transfer of the Mortgage Loans, and the Depositor is not aware of any impending insolvency. The Depositor has not transferred the Mortgage Loans to the Trustee on behalf of the Trust Fund with any intent to hinder, delay or defraud any of its creditors.

(x)

All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency (other than any such actions, approvals, etc. under any state securities laws, real estate syndication or “Blue Sky” statutes, as to which the Depositor makes no such representation or warranty), that are necessary or advisable in connection with the purchase and sale of the Certificates and the execution and delivery by the Depositor of the Operative Documents to which it is a party, have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize the consummation of the transactions contemplated by this Agreement and the other Operative Documents on the part of the Depositor and the performance by the Depositor of its obligations under this Agreement and such of the other Operative Documents to which it is a party.

(xi)

The transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by the Depositor hereunder are not subject to the bulk transfer laws of any similar statutory provisions in effect in any applicable jurisdiction.

SECTION 2.05.

Representations, Warranties and Covenants of the Servicer and the Seller.

(a)

The Servicer hereby represents, warrants and covenants to the Trustee, the Seller and the Depositor that as of the Closing Date or as of such date specifically provided herein:

(i)

The Servicer is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by the Servicer in any state in which a Mortgaged Property related to a Mortgage Loan is located or is otherwise not required under applicable law to effect such qualification and, in any event, is in compliance with the doing business laws of any such State, to the extent necessary to ensure its ability to enforce each Mortgage Loan serviced and to service the Mortgage Loans in accordance with the terms of this Agreement;

(ii)

The Servicer has the full power and authority to service each Mortgage Loan which the Servicer is required to service hereunder, and to execute, deliver and perform, and to enter into and consummate the transactions contemplated by this Agreement and has duly authorized by all necessary action on the part of the Servicer the execution, delivery and performance of this Agreement; and this Agreement, assuming the due authorization, execution and delivery thereof by the Depositor, the Seller and the Trustee, constitutes a legal, valid and binding obligation of the Servicer, enforceable against the Servicer in accordance with its terms, except to the extent that (a) the enforceability hereof may be limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors’ rights generally and (b) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to the equitable defenses and to the discretion of the court before which any proceeding therefor may be brought;

(iii)

The execution and delivery of this Agreement by the Servicer, the servicing of the Mortgage Loans by the Servicer hereunder, the consummation by the Servicer of any other of the transactions herein contemplated, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of the Servicer and will not (A) result in a breach of any term or provision of the organizational documents of the Servicer or (B) conflict with, result in a breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which the Servicer is a party or by which it may be bound, or any statute, order or regulation applicable to the Servicer of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Servicer; and the Servicer is not a party to, bound by, or in breach or violation of any indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which materially and adversely affects or, to the Servicer’s knowledge, would in the future materially and adversely affect, (x) the ability of the Servicer to perform its obligations under this Agreement or (y) the business, operations, financial condition, properties or assets of the Servicer taken as a whole;

(iv)

The Servicer is an approved servicer for Xxxxxx Mae and Xxxxxxx Mac in good standing, and no event has occurred, including but not limited to a change in insurance coverage, that would make the Servicer unable to comply with Xxxxxx Mae or Xxxxxxx Mac eligibility requirements or which would require notification to Xxxxxx Mae or Xxxxxxx Mac;

(v)

No litigation is pending or, to the best knowledge of the Servicer, threatened against the Servicer that would materially and adversely affect the execution, delivery or enforceability of this Agreement or the ability of the Servicer to service the Mortgage Loans or to perform any of its other obligations hereunder in accordance with the terms hereof;

(vi)

No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Servicer of, or compliance by the Servicer with, this Agreement or the consummation by the Servicer of the transactions contemplated by this Agreement, except for such consents, approvals, authorizations or orders, if any, that have been obtained prior to the Closing Date;

(vii)

The Servicer will not waive any Prepayment Premium or part of a Prepayment Premium unless such waiver would, in the reasonable opinion of the Servicer, maximize recovery of total proceeds taking into account the value of such Prepayment Premium and related Mortgage Loan and doing so is standard and customary in servicing mortgage loans similar to the Mortgage Loans (including any waiver of a Prepayment Premium in connection with a refinancing of a Mortgage Loan that is related to a default or an imminent default), and in no event will it waive a Prepayment Premium in connection with a refinancing of a Mortgage Loan that is not related to a default or an imminent default. Notwithstanding the previous sentence, if the Servicer determines that any Prepayment Premium is not legally enforceable under the circumstances in which the related Principal Prepayment occurs, then the Servicer shall not be required to attempt to collect the applicable Prepayment Premium, and shall have no liability or obligation with respect to such Prepayment Premium pursuant to Section 2.03(b)(ii) hereof;

(viii)

For each Mortgage Loan, the Servicer will accurately, fully and in a timely manner report its borrower credit files to each of the Credit Repositories; and

(ix)

The Servicer shall review the Mortgage Loan documents in accordance with its customary servicing procedures to verify the existence of all documents necessary to enforce any Prepayment Premiums. If the Servicer cannot verify the existence of such documents it shall immediately notify the related Originator, the Seller and the Depositor. Upon receipt of such notice, the related Originator shall provide the Servicer with any outstanding documents required to verify the existence of the Prepayment Premium. In the event the Servicer is unable to verify the existence of Prepayment Premium, the Servicer shall not be obligated to pay such Prepayment Premiums into the Collection Account.

(b)

The Seller hereby represents, warrants and covenants to the Trustee, the Servicer and the Depositor that as of the Closing Date or as of such date specifically provided herein:

(i)

The Seller is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation;

(ii)

The Seller has full corporate power to own its property, to carry on its business as presently conducted and to enter into and perform its obligations under this Agreement;

(iii)

The execution and delivery by the Seller of this Agreement have been duly authorized by all necessary corporate action on the part of the Seller; and neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on the Seller or its properties or the certificate of incorporation or by-laws of the Seller, except those conflicts, breaches or defaults which would not reasonably be expected to have a material adverse effect on the Seller’s ability to enter into this Agreement and to consummate the transactions contemplated hereby;

(iv)

The execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions contemplated hereby do not require the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any state, federal or other governmental authority or agency, except those consents, approvals, notices, registrations or other actions as have already been obtained, given or made and, in connection with the recordation of the Mortgages, powers of attorney or assignments of Mortgages not yet completed;

(v)

This Agreement has been duly executed and delivered by the Seller and, assuming due authorization, execution and delivery by the Trustee, the Servicer and the Depositor, constitutes a valid and binding obligation of the Seller, enforceable against it in accordance with its terms (subject to applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally);

(vi)

There are no actions, litigation, suits or proceedings pending or, to the best knowledge of the Seller, threatened against the Seller before or by any court, administrative agency, arbitrator or governmental body (i) with respect to any of the transactions contemplated by this Agreement or (ii) with respect to any other matter which in the judgment of the Seller if determined adversely to the Seller would reasonably be expected to materially and adversely affect the Seller’s ability to perform its obligations under this Agreement; and the Seller is not in default with respect to any order of any court, administrative agency, arbitrator or governmental body so as to materially and adversely affect the transactions contemplated by this Agreement;

(vii)

Each Mortgage Loan at the time is was made complied in all material respects with applicable federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity, disclosure and predatory and abusive lending laws applicable to the Mortgage Loan; and

(viii)

None of the Mortgage Loans included in the transaction are “high cost”, “covered” or similarly classified loans as defined by the applicable federal, state or local predatory and abusive lending laws nor is any loan a High Cost Loan or Covered Loan, as applicable (as such terms are defined in the then current Standard & Poor’s LEVELS® Glossary which is now Version 5.6 Revised, Appendix E) and no mortgage loan originated on or after October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending Act.

(c)

It is understood and agreed that the representations, warranties and covenants set forth in this Section 2.05 shall survive delivery of the Mortgage Files to the Trustee, and shall inure to the benefit of the Seller (with respect to Section 2.05(a)), the Servicer (with respect to Section 2.05(b)), the Trustee and the Depositor. Upon discovery by any of the Depositor, the Seller, the Servicer or the Trustee of a breach of any of the foregoing representations, warranties and covenants which materially and adversely affects the value of any Mortgage Loan, Prepayment Premium or the interests therein of the Certificateholders, the party discovering such breach shall give prompt written notice (but in no event later than two Business Days following such discovery) to the other such parties. The obligation of the Servicer set forth in Section 2.03(b) to cure breaches (or, in the case of Section 2.05(a)(vii), to pay the amount of the waived Prepayment Premium) shall constitute the sole remedy against the Servicer available to the Certificateholders, the Depositor, the Seller or the Trustee on behalf of the Certificateholders respecting a breach of the representations, warranties and covenants contained in this Section 2.05. In the event of a breach of the representations and warranties in Section 2.05(b) (vii) or (viii), the Seller shall be obligated to cure such breach or repurchase such Mortgage Loan at the Purchase Price in accordance with Section 2.03(a)(ii).

SECTION 2.06.

Issuance of the R-I Residual Interest.

The Trustee acknowledges the assignment to it of the Mortgage Loans and the delivery to it or to the Custodian on its behalf, as applicable, of the Mortgage Files, subject to the provisions of Section 2.01 and Section 2.02, together with the assignment to the Trustee of all other assets included in REMIC I, receipt of which is hereby acknowledged. The R-I residual interest, together with the REMIC I Regular Interests, constitute the entire beneficial ownership interest in REMIC I.

SECTION 2.07.

Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by the Trustee.

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse all the right, title and interest of the Depositor in and to the REMIC I Regular Interests for the benefit of the REMIC II Regular Interests and the R-II residual interest. The Trustee acknowledges receipt of the REMIC I Regular Interests and declares that it holds and will hold the same in trust for the exclusive use and benefit of REMIC II.

SECTION 2.08.

Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by the Trustee.

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse all the right, title and interest of the Depositor in and to the REMIC II Regular Interests for the benefit of the REMIC III Regular Interests and R-III residual interest. The Trustee acknowledges receipt of the REMIC II Regular Interests and declares that it holds and will hold the same in trust for the exclusive use and benefit of REMIC III.

SECTION 2.09.

Conveyance of REMIC III Regular Interests; Acceptance of REMIC IV by the Trustee.

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse all the right, title and interest of the Depositor in and to the REMIC III Regular Interests for the benefit of the REMIC IV Regular Interests and the R-IV residual interest. The Trustee acknowledges receipt of the REMIC III Regular Interests and declares that it holds and will hold the same in trust for the exclusive use and benefit REMIC IV.

SECTION 2.10.

Conveyance of REMIC IV Regular Interests; Acceptance of REMIC V by the Trustee.

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee without recourse all the right, title and interest of the Depositor in and to the REMIC IV Regular Interests for the benefit of the Regular Certificateholders and the R-V residual interest. The Trustee acknowledges receipt of the REMIC IV Regular Interests and declares that it holds and will hold the same in trust for the exclusive use and benefit REMIC V.

ARTICLE III

ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS

SECTION 3.01.

Servicer to Act as Servicer.

The Servicer shall service and administer the Mortgage Loans on behalf of the Trust Fund and in the best interests of and for the benefit of the Certificateholders (as determined by the Servicer in accordance with Accepted Servicing Practices) in accordance with the terms of this Agreement, the Mortgage Loans and Accepted Servicing Practices but without regard to:

(i)

any relationship that the Servicer, any related Sub-Servicer or any Affiliate of the Servicer or any related Sub-Servicer may have with the related Mortgagor;

(ii)

the ownership or non-ownership of any Certificate by the Servicer or any Affiliate of the Servicer;

(iii)

the Servicer’s obligation to make P&I Advances or Servicing Advances; or

(iv)

the Servicer’s or any related Sub-Servicer’s right to receive compensation for its services hereunder or with respect to any particular transaction.

To the extent consistent with the foregoing, the Servicer shall seek to maximize the timely and complete recovery of principal and interest on the Mortgage Notes. Subject only to the above-described servicing standards and the terms of this Agreement and of the respective Mortgage Loans, the Servicer shall have full power and authority, acting alone or through a Sub-Servicer or Sub-Servicers, as the case may be, as provided in Section 3.02, to do or cause to be done any and all things in connection with such servicing and administration which it may deem necessary or desirable. Without limiting the generality of the foregoing, the Servicer in the name of the Trust is hereby authorized and empowered by the Trustee when the Servicer believes it appropriate in its best judgment in accordance with the servicing standards set forth above, to execute and deliver, on behalf of the Certificateholders and the Trust Fund, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge, and all other comparable instruments, with respect to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of foreclosure so as to convert the ownership of such properties, and to hold or cause to be held title to such properties, on behalf of the Trust Fund and Certificateholders. Subject to Section 6.03, the Servicer shall represent and protect the interests of the Trust Fund in the same manner as it protect its own interests in mortgage loans in its own portfolio with respect to any claim, proceeding or litigation regarding the Mortgage Loans. The Servicer shall service and administer the Mortgage Loans in accordance with applicable law and shall provide to the Mortgagors any reports required to be provided to them thereby. The Servicer shall also comply in the performance of this Agreement with all reasonable rules and requirements of each insurer under any standard hazard insurance policy. Within fifteen (15) days of the Closing Date, but subject to Section 3.17, the Trustee shall execute and furnish to the Servicer and any Sub-Servicer such documents as are necessary or appropriate to enable the Servicer or any Sub-Servicer to carry out their servicing and administrative duties hereunder, and the Trustee hereby grants to the Servicer and each Sub-Servicer a special or limited power of attorney to carry out such duties including a power of attorney for each county in which a related Mortgaged Property is located to enable the Servicer to take title and dispose of the related Mortgaged Properties after foreclosure on behalf of the Trustee and the Certificateholders. The Trustee shall execute a separate power of attorney in favor of the Servicer to the extent furnished to the Trustee by the Servicer and/or each Sub-Servicer for the purposes described herein to the extent necessary or desirable to enable the Servicer to perform its duties hereunder.

Subject to Section 3.09 hereof, in accordance with the standards of the preceding paragraph, and provided that the Servicer shall not be required make any non recoverable Servicing Advance, the Servicer shall advance or cause to be advanced funds as necessary for the purpose of effecting the timely payment of taxes and assessments on the Mortgaged Properties, which advances shall be Servicing Advances reimbursable in the first instance from related collections from the Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11. Any cost incurred by the Servicer or by a Sub-Servicer in effecting the timely payment of taxes and assessments on a Mortgaged Property shall not, for the purpose of calculating distributions to Certificateholders, be added to the unpaid principal balance of the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.

Notwithstanding anything in this Agreement to the contrary, the Servicer may not make any future advances with respect to a related Mortgage Loan (except as provided in Section 4.03) nor shall the Servicer (i) except as provided in Section 3.07, when the related Mortgagor is in default with respect to such Mortgage Loan or such default is, in the judgment of the Servicer, reasonably foreseeable, permit any modification with respect to any related Mortgage Loan that would change the related Mortgage Rate, reduce or increase the principal balance (except for reductions resulting from actual payments of principal) or change the final maturity date on such Mortgage Loan or (ii) permit any modification, waiver or amendment of any term of any related Mortgage Loan that would both (A) effect an exchange or reissuance of such Mortgage Loan under Section 1001 of the Code (or final, temporary or proposed Treasury regulations promulgated thereunder) and (B) cause any REMIC to fail to qualify as a REMIC under the Code or the imposition of any tax on “prohibited transactions” or “contributions after the startup date” under the REMIC Provisions.

The Servicer, in its sole discretion, may charge off such Mortgage Loan if it has made a Final Recovery Determination in good faith with respect thereto (each such Mortgage Loan, a “Charged-off Mortgage Loan”). Any such Charged-off Mortgage Loan shall be treated as a liquidated Mortgage Loan. The Servicer shall have no obligation to make any P&I Advances or Servicing Advances with respect to any Charged-off Mortgage Loan and shall not be entitled to the Servicing Fee with respect to such Charged-off Mortgage Loan for the period following the date on which such Mortgage Loan was charged off. Any Liquidation Proceeds received in connection with any recoveries received with respect to such Charged-off Mortgage Loan shall be deposited in the Collection Account pursuant to Section 3.10.

In the event that the Mortgage Loan Documents relating to any Mortgage Loan contain provisions requiring the related Mortgagor to submit to binding arbitration any disputes arising in connection with such Mortgage Loan, the Servicer shall be entitled to waive any such provisions on behalf of the Trust and to send written notice of such waiver to the related Mortgagor, although the Mortgagor may still require arbitration of such disputes at its option.

The Servicer may delegate its responsibilities under this Agreement; provided, however, that no such delegation shall release the Servicer from the responsibilities or liabilities arising under this Agreement.

SECTION 3.02.

Sub-Servicing Agreements Between the Servicer and Sub-Servicers.

(a)

The Servicer may enter into Sub-Servicing Agreements (provided that such agreements would not result in a withdrawal or a downgrading by any Rating Agency of the ratings on any Class of Certificates, as evidenced by a letter to that effect delivered by each Rating Agency to the Depositor and the Trustee) with one or more Sub-Servicers, for the servicing and administration of the related Mortgage Loans. The Trustee is hereby authorized to acknowledge, at the request of the Servicer, any Sub-Servicing Agreement that meets the requirements applicable to Sub-Servicing Agreements set forth in this Agreement and that is otherwise permitted under this Agreement.

Each Sub-Servicer shall be (i) authorized to transact business in the state or states in which the related Mortgaged Properties it is to service are situated, if and to the extent required by applicable law to enable such Sub-Servicer to perform its obligations hereunder and under the related Sub-Servicing Agreement, (ii) an institution approved as a mortgage loan originator by the Federal Housing Administration or an institution the deposit accounts in which are insured by the FDIC and (iii) a Xxxxxxx Mac or Xxxxxx Mae approved mortgage servicer. Each Sub-Servicing Agreement must impose on the related Sub-Servicer requirements conforming to the provisions set forth in Section 3.08 and provide for servicing of the related Mortgage Loans consistent with the terms of this Agreement. The Servicer will examine each Sub-Servicing Agreement to which the Servicer is a party and will be familiar with the terms thereof. The terms of any Sub-Servicing Agreement will not be inconsistent with any of the provisions of this Agreement. The Servicer and Sub-Servicer may enter into and make amendments to the applicable Sub-Servicing Agreement or enter into different forms of Sub-Servicing Agreements; provided, however, that any such amendments or different forms shall be consistent with and not violate the provisions of this Agreement, and that no such amendment or different form shall be made or entered into which could be reasonably expected to be materially adverse to the interests of the Certificateholders, without the consent of the Holders of Certificates entitled to at least 66% of the Voting Rights. Any variation without the consent of the Holders of Certificates entitled to at least 66% of the Voting Rights from the provisions set forth in Section 3.08 relating to insurance or priority requirements of Sub-Servicing Accounts, or credits and charges to the Sub-Servicing Accounts or the timing and amount of remittances by a Sub-Servicer to the Servicer, are conclusively deemed to be inconsistent with this Agreement and therefore prohibited. The Servicer shall deliver to the Trustee copies of all Sub-Servicing Agreements, and any amendments or modifications thereof, promptly upon the Servicer’s execution and delivery of such instruments.

Any Sub-Servicing Agreement and any other transactions or services relating to the Mortgage Loans involving a Sub-Servicer shall be deemed to be between the Sub-Servicer and the Servicer alone, and the Depositor and the Trustee shall have no obligations, duties or liabilities with respect to a Sub-Servicer including no obligation, duty or liability of the Depositor or Trustee, to pay a Sub-Servicer’s fees and expenses.

For purposes of this Agreement, the Servicer shall be deemed to have received any collections, recoveries or payments with respect to the related Mortgage Loans that are received by a related Sub-Servicer regardless of whether such payments are remitted by the Sub-Servicer to the Servicer.

(b)

As part of its servicing activities hereunder, the Servicer (except as otherwise provided in the last sentence of this paragraph), for the benefit of the Trust Fund and the Certificateholders, shall enforce the obligations of each Sub-Servicer servicing the related Mortgage Loans under the related Sub-Servicing Agreement, including, without limitation, any obligation to make advances in respect of Delinquent payments as required by the applicable Sub-Servicing Agreement. Such enforcement, including, without limitation, the legal prosecution of claims, termination of Sub-Servicing Agreements, and the pursuit of other appropriate remedies, shall be in such form and carried out to such an extent and at such time as the Servicer, in its good faith business judgment, would require were it the owner of the related Mortgage Loans. The Servicer, as applicable, shall pay the costs of such enforcement at its own expense, and shall be reimbursed therefor only (i) from a general recovery resulting from such enforcement, to the extent, if any, that such recovery exceeds all amounts due in respect of the related Mortgage Loans or (ii) from a specific recovery of costs, expenses or attorneys’ fees against the party against whom such enforcement is directed.

The Servicer shall pay all fees, expenses or penalties necessary in order to terminate the rights and responsibilities of its Sub-Servicer from the Servicer’s own funds without any right of reimbursement from the Depositor, the Trustee, or the Collection Account.

(c)

Notwithstanding the foregoing, the Servicer shall be entitled to outsource one or more separate servicing functions to a Person (each, an “Outsourcer”) that does not meet the eligibility requirements for a Sub-Servicer, so long as such outsourcing does not constitute the delegation of the Servicer’s obligation to perform all or substantially all of the servicing of the related Mortgage Loans to such Outsourcer. In such event, the use by the Servicer of any such Outsourcer shall not release the Servicer from any of its obligations hereunder and the Servicer shall remain responsible hereunder for all acts and omissions of such Outsourcer as fully as if such acts and omissions were those of the Servicer, and the Servicer shall pay all fees and expenses of the Outsourcer from its own funds.

SECTION 3.03.

Successor Sub-Servicers.

The Servicer shall be entitled to terminate any Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer pursuant to the related Sub-Servicing Agreement in accordance with the terms and conditions of such Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed simultaneously by the Servicer without any act or deed on the part of such Sub-Servicer or the Servicer, and the Servicer either shall service directly the related Mortgage Loans or shall enter into a Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under Section 3.02.

Any Sub-Servicing Agreement shall include the provision that such agreement may be immediately terminated by the Trustee without fee, in accordance with the terms of this Agreement, in the event that the Servicer (or the Trustee, if then acting as Servicer) shall, for any reason, no longer be the Servicer (including termination due to a Servicer Event of Default).

SECTION 3.04.

Liability of the Servicer.

Notwithstanding any Sub-Servicing Agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Servicer and a Sub-Servicer or reference to actions taken through a Sub-Servicer or otherwise (including, without limitation, Section 3.02(c) and the first paragraph of Section 3.18), the Servicer shall remain obligated and primarily liable to the Trust Fund and the Certificateholders for the servicing and administering of the related Mortgage Loans in accordance with the provisions of Section 3.01 without diminution of such obligation or liability by virtue of such Sub-Servicing Agreements or arrangements or by virtue of indemnification from the related Sub-Servicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the related Mortgage Loans. The Servicer shall be entitled to enter into any agreement with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer and nothing contained in this Agreement shall be deemed to limit or modify such indemnification; provided that no such indemnification shall be an expense of the Trust.

SECTION 3.05.

No Contractual Relationship Between Sub-Servicers and Trustee or Certificateholders.

Any Sub-Servicing Agreement that may be entered into and any transactions or services relating to the Mortgage Loans involving a Sub-Servicer in its capacity as such shall be deemed to be between the related Sub-Servicer and the Servicer alone, and the Trustee and Certificateholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to the related Sub-Servicer except as set forth in Section 3.06. The Servicer shall be solely liable for all fees owed by it to any related Sub-Servicer, irrespective of whether the Servicer’s compensation pursuant to this Agreement is sufficient to pay such fees.

SECTION 3.06.

Assumption or Termination of Sub-Servicing Agreements by Trustee.

In the event that the Servicer shall for any reason no longer be the Servicer (including by reason of the occurrence of a Servicer Event of Default), the Trustee or its designee shall thereupon assume all of the rights and obligations of the Servicer subject to Section 7.02 under each Sub-Servicing Agreement that the Servicer may have entered into, unless the Trustee elects to terminate any Sub-Servicing Agreement in accordance with its terms as provided in Section 3.03. Upon such assumption, the Trustee, its designee or the successor servicer for the Trustee appointed pursuant to Section 7.02 shall be deemed, subject to Section 3.03, to have assumed all of the Servicer’s interest therein and to have replaced the Servicer as a party to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing Agreement had been assigned to the assuming party, except that (i) the Servicer shall not thereby be relieved of any liability or obligations under any related Sub-Servicing Agreement that arose before it ceased to be the Servicer and (ii) none of the Trustee, its designee or any successor servicer shall be deemed to have assumed any liability or obligation of the Servicer that arose before it ceased to be the Servicer.

The Servicer at its expense shall, upon request of the Trustee, deliver to the assuming party all documents and records relating to each Sub-Servicing Agreement and the Mortgage Loans then being serviced and an accounting of amounts collected and held by or on behalf of it, and otherwise use its best efforts to effect the orderly and efficient transfer of the related Sub-Servicing Agreements to the assuming party.

SECTION 3.07.

Collection of Certain Mortgage Loan Payments.

(a)

The Servicer shall make reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans, and shall, to the extent such procedures shall be consistent with this Agreement and the terms and provisions of any applicable insurance policies, follow such collection procedures as it would follow with respect to mortgage loans comparable to the Mortgage Loans and held for its own account. Consistent with the foregoing, the Servicer may in its discretion (i) waive any late payment charge or, if applicable, any penalty interest, or (ii) extend the due dates for the Monthly Payments due on a Mortgage Note for a period of not greater than 180 days; provided that any extension pursuant to clause (ii) above shall not affect the amortization schedule of any Mortgage Loan for purposes of any computation hereunder, except as provided below and provided further that unless the Mortgage Note is in default or default is reasonably foreseeable, an opinion of tax counsel has been obtained to the effect that such extension will not cause an Adverse REMIC Event. In the event of any such arrangement pursuant to clause (ii) above, the Servicer shall make timely P&I Advances on such Mortgage Loan during such extension pursuant to Section 4.03 and in accordance with the amortization schedule of such Mortgage Loan without modification thereof by reason of such arrangements, subject to Section 4.03(d) pursuant to which the Servicer shall not be required to make any such P&I Advances that are Nonrecoverable P&I Advances. Notwithstanding the foregoing, in the event that a Mortgage Loan is in default or, in the judgment of the Servicer, such default is reasonably foreseeable, the Servicer, consistent with the standards set forth in Section 3.01, may also waive, modify or vary any term of such Mortgage Loan (including modifications that would change the related Mortgage Rate, forgive the payment of principal or interest or extend the final maturity date of such Mortgage Loan), accept payment from the related Mortgagor of an amount less than the Stated Principal Balance in final satisfaction of such Mortgage Loan or consent to the postponement of strict compliance with any such term or otherwise grant indulgence to any related Mortgagor.

(b)

Notwithstanding anything herein to the contrary, the Servicer may waive a Prepayment Premium pursuant to the conditions set forth in Section 2.05(a)(vii). With respect to any such waiver of a Prepayment Premium, the Servicer shall deliver to the Trustee an Officer’s Certificate stating that the conditions set forth in Section 2.05(a)(vii) have been met with respect to the related Mortgage Loan.

(c)

Notwithstanding any provision in this Agreement to the contrary, in the event the Prepayment Premium payable under the terms of the Mortgage Note is less than the amount of the Prepayment Premium set forth in the Mortgage Loan Schedule, the Prepayment Premium Schedule or other information provided to the Servicer, the Servicer shall not have liability or obligation with respect to such difference, and in addition the Servicer shall not have any liability or obligation to pay the amount of any uncollected Prepayment Premium if the failure to collect such amount is the direct result of inaccurate or incomplete information on the Mortgage Loan Schedule.

SECTION 3.08.

Sub-Servicing Accounts.

In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant to a Sub-Servicing Agreement, the related Sub-Servicer will be required to establish and maintain one or more accounts (each such account or accounts, a “Sub-Servicing Account”). Each Sub-Servicing Account shall be an Eligible Account. Each Sub-Servicer shall deposit in the clearing account (which account must be an Eligible Account) in which it customarily deposits payments and collections on mortgage loans in connection with its mortgage loan servicing activities on a daily basis, and in no event more than one Business Day after such Sub-Servicer’s receipt thereof, all proceeds of the related Mortgage Loans received by such Sub-Servicer less its servicing compensation to the extent permitted by the related Sub-Servicing Agreement, and shall thereafter deposit such amounts in the related Sub-Servicing Account, in no event more than two Business Days after the deposit of such funds into the clearing account. Each Sub-Servicer shall thereafter deposit such proceeds in the Collection Account or remit such proceeds to the Servicer for deposit in the Collection Account not later than two Business Days after the deposit of such amounts in the related Sub-Servicing Account. For purposes of this Agreement, the Servicer shall be deemed to have received payments on the related Mortgage Loans when the related Sub-Servicer receives such payments.

SECTION 3.09.

Collection of Taxes, Assessments and Similar Items; Servicing Accounts.

The Servicer shall establish and maintain, or cause to be established and maintained, one or more accounts (each such account or accounts, a “Servicing Account”). The Servicing Accounts shall be Eligible Accounts. The Servicer shall deposit in the clearing account (which account must be an Eligible Account) in which it customarily deposits payments and collections on mortgage loans in connection with its mortgage loan servicing activities on a daily basis, and in no event more than one Business Day after the Servicer’s receipt thereof, all collections from the Mortgagors (or related advances from a related Sub-Servicer) for the payment of taxes, assessments, hazard insurance premiums and comparable items for the account of the Mortgagors (“Escrow Payments”) collected on account of the Mortgage Loans and shall thereafter deposit such Escrow Payments in the related Servicing Accounts, in no event more than two Business Days after the deposit of good funds in the clearing account, for the purpose of effecting the payment of any such items as required under the terms of this Agreement. Withdrawals of amounts from a Servicing Account may be made only to (i) effect payment of taxes, assessments, hazard insurance premiums, and comparable items; (ii) reimburse the Servicer (or a Sub-Servicer to the extent provided in the related Sub-Servicing Agreement) out of related collections for any advances made pursuant to Section 3.01 (with respect to taxes and assessments) and Section 3.14 (with respect to hazard insurance); (iii) refund to Mortgagors any sums as may be determined to be overages; (iv) pay interest to the Servicer or, if required and as described below, to Mortgagors on balances in the Servicing Account; (v) clear and terminate the Servicing Account at the termination of the Servicer’s obligations and responsibilities in respect of the Mortgage Loans under this Agreement in accordance with Article IX or (vi) recover amounts deposited in error. As part of its servicing duties, the Servicer or Sub-Servicer shall pay to the Mortgagors interest on funds in the Servicing Accounts, to the extent required by law and, to the extent that interest earned on funds in the Servicing Accounts is insufficient, to pay such interest from its or their own funds, without any reimbursement therefor. The Servicer will be responsible for the administration of the Servicing Accounts and will be obligated to make Servicing Advances to the Servicing Account in respect of its obligations under this Section 3.09, reimbursable from the Servicing Accounts or Collection Account, when and as necessary to avoid the lapse of insurance coverage on the Mortgaged Property, or which the Servicer knows, or in the exercise of the required standard of care of the Servicer hereunder should know, is necessary to avoid the loss of the Mortgaged Property due to a tax sale or the foreclosure as a result of a tax lien.

SECTION 3.10.

Collection Account and Distribution Account.

(a)

On behalf of the Trust Fund, the Servicer shall establish and maintain, or cause to be established and maintained, one or more accounts (each such account or accounts, a “Collection Account”), held in trust for the benefit of the Trustee and the Certificateholders. On behalf of the Trust Fund, the Servicer shall deposit or cause to be deposited in the related clearing account (which account must be an Eligible Account) in which it customarily deposits payments and collections on mortgage loans in connection with its mortgage loan servicing activities on a daily basis, and in no event more than one Business Day after the Servicer’s receipt thereof, and shall thereafter deposit in the Collection Account, in no event more than two Business Days after the deposit of good funds into the clearing account, as and when received or as otherwise required hereunder, the following payments and collections received or made by it subsequent to the related Cut-off Date (other than in respect of principal or interest on the Mortgage Loans due on or before the related Cut-off Date, or payments (other than Principal Prepayments) received by it on or prior to the related Cut-off Date but allocable to a Due Period subsequent thereto):

(i)

all payments on account of principal, including Principal Prepayments, on the Mortgage Loans;

(ii)

all payments on account of interest (net of the Servicing Fee) on each Mortgage Loan;

(iii)

all Insurance Proceeds and Net Liquidation Proceeds (other than proceeds collected in respect of any particular REO Property and amounts paid by the Servicer in connection with a purchase of the Mortgage Loans and REO Properties pursuant to Section 9.01);

(iv)

any amounts required to be deposited pursuant to Section 3.12 in connection with any losses realized on Permitted Investments with respect to funds held in the Collection Account;

(v)

any amounts required to be deposited by the Servicer pursuant to the second paragraph of Section 3.14(a) in respect of any blanket policy deductibles;

(vi)

all proceeds of any Mortgage Loan repurchased or purchased in accordance with Section 2.03, Section 3.16(c) or Section 9.01 and all Servicer Prepayment Premium Payment Amounts pursuant to Section 2.03(b)(ii);

(vii)

all Substitution Shortfall Amounts; and

(viii)

all Prepayment Premiums collected by the Servicer.

For purposes of the immediately preceding sentence, the Cut-off Date with respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date of substitution.

The foregoing requirements for deposit in the Collection Accounts shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of late payment charges, non sufficient funds fees, reconveyance fees, assumption fees and other similar fees and charges (other than Prepayment Premiums) need not be deposited by the Servicer in the Collection Account and shall, upon collection, belong to the Servicer as additional compensation for its servicing activities. In the event the Servicer shall deposit in the Collection Account any amount not required to be deposited therein, it may at any time withdraw such amount from the Collection Account, any provision herein to the contrary notwithstanding.

(b)

On behalf of the Trust Fund, the Trustee shall establish and maintain one or more accounts (such account or accounts, the “Distribution Account”), held in trust for the benefit of the Trust Fund and the Certificateholders. On behalf of the Trust Fund, the Servicer shall deliver to the Trustee in immediately available funds for deposit in the Distribution Account on or by the close of business New York time (i) on the Servicer Remittance Date, that portion of the Available Distribution Amount (calculated without regard to the references in clause (2) of the definition thereof to amounts that may be withdrawn from the Distribution Account) for the related Distribution Date then on deposit in the Collection Account, the amount of all Prepayment Premiums on the Mortgage Loans collected by the Servicer in connection with the voluntary Principal Prepayment in full or in part of any of the Mortgage Loans and any Servicer Prepayment Premium Payment Amounts then on deposit in the Collection Account (other than any such Prepayment Premiums received after the related Prepayment Period), and (ii) on each Business Day as of the commencement of which the balance on deposit in the Collection Account exceeds $75,000 following any withdrawals pursuant to the next succeeding sentence, the amount of such excess, but only if the Collection Account constitutes an Eligible Account solely pursuant to clause (ii) of the definition of “Eligible Account.” If the balance on deposit in the Collection Account exceeds $75,000 as of the commencement of business on any Business Day and the Collection Account constitutes an Eligible Account solely pursuant to clause (ii) of the definition of “Eligible Account,” the Servicer shall, on or by the close of business New York time on such Business Day, withdraw from the Collection Account any and all amounts payable or reimbursable to itself, the Depositor, the Trustee, the Seller or any Sub-Servicer pursuant to Section 3.11 and shall pay such amounts to the Persons entitled thereto. If the Servicer fails to remit to the Trustee for distribution to the Certificateholders any payment, including any P&I Advance to be made by the Servicer on the Servicer Remittance Date (without regard to any grace period), the Servicer shall pay to the Trustee, for the account of the Trustee, interest on such late remittance from and including the Servicer Remittance Date to but excluding the date on which such remittance is made, at an annual rate equal to the Federal Funds Rate plus one percentage point (but in no event greater than the maximum permitted by law).

(c)

Funds in the Collection Account and the Distribution Account may be invested in Permitted Investments in accordance with the provisions set forth in Section 3.12. The Servicer shall give notice to the Trustee and the Depositor of the location of the Collection Account maintained by it when established and prior to any change thereof. The Trustee shall give notice to the Servicer and the Depositor of the location of the Distribution Account when established and prior to any change thereof.

(d)

Funds held in a Collection Account at any time may be delivered by the Servicer to the Trustee for deposit in an account (which may be the Distribution Account and must satisfy the standards for the Distribution Account as set forth in the definition thereof) and for all purposes of this Agreement shall be deemed to be a part of such Collection Account until the Servicer Remittance Date when such amounts are required to be deposited into the Distribution Account; provided, however, that the Trustee shall have the sole authority to withdraw any funds held pursuant to this subsection (d). In the event that the Servicer shall deliver to the Trustee for deposit in the Distribution Account any amount not required to be deposited therein, it may at any time request that the Trustee withdraw such amount from the Distribution Account and remit to it any such amount, any provision herein to the contrary notwithstanding. In addition, the Servicer shall deliver to the Trustee from time to time for deposit and in any event shall remit all such amounts no later than the Servicer Remittance Date, and the Trustee shall so deposit, in the Distribution Account:

(i)

any P&I Advances, as required pursuant to Section 4.03;

(ii)

any amounts required to be deposited pursuant to Section 3.23(d) or (f) in connection with any REO Property;

(iii)

any amounts to be paid by the Servicer in connection with a purchase of the Mortgage Loans and REO Properties pursuant to Section 9.01; and

(iv)

any related amounts required to be deposited pursuant to Section 3.24 in connection with any Prepayment Interest Shortfalls.

SECTION 3.11.

Withdrawals from the Collection Account and Distribution Account.

(a)

The Servicer shall, from time to time, make withdrawals from the Collection Account for any of the following purposes or as described in Section 4.03:

(i)

to remit to the Trustee for deposit in the Distribution Account the amounts required to be so remitted pursuant to Section 3.10(b) or permitted to be so remitted pursuant to the first sentence of Section 3.10(d);

(ii)

subject to Section 3.16(d), to reimburse itself for, without duplication, (a) P&I Advances, but only to the extent of amounts received which represent Late Collections (net of the Servicing Fees) of Monthly Payments, Liquidation Proceeds, condemnation proceeds or Insurance Proceeds on the Mortgage Loans with respect to which such P&I Advances were made in accordance with the provisions of Section 4.03 or (b) any xxxxxxxxxxxx X&X Advances remaining after the Final Recovery Determination of a Mortgage Loan that are Nonrecoverable P&I Advances not otherwise recoverable pursuant to subsection (ii)(a) hereof;

(iii)

subject to Section 3.16(d), to pay itself or any Sub-Servicer (a) any unpaid Servicing Fees or (b) any unreimbursed Servicing Advances with respect to each Mortgage Loan, but only to the extent of any Late Collections, Liquidation Proceeds, condemnation proceeds, Insurance Proceeds or other amounts as may be collected by the Servicer from a Mortgagor, or otherwise received with respect to such Mortgage Loan or (c) any unreimbursed Servicing Advances made remaining after the Final Recovery Determination of a Mortgage Loan that are Nonrecoverable Servicing Advances, but only to the extent that Late Collections, Liquidation Proceeds, condemnation proceeds and Insurance Proceeds received with respect to such Mortgage Loan are insufficient to reimburse the Servicer or any related Sub-Servicer for Servicing Advances;

(iv)

to pay itself as servicing compensation (in addition to the Servicing Fee) on the Servicer Remittance Date any interest or investment income earned on funds deposited in the Collection Account pursuant to Section 3.12(b);

(v)

to pay itself, the Originators, the Seller or the Depositor, as the case may be, with respect to each Mortgage Loan that has previously been purchased or replaced pursuant to Section 2.03 or Section 3.16(c), as applicable, all amounts received thereon subsequent to the date of purchase or substitution, as the case may be;

(vi)

to reimburse itself (A) for any P&I Advance or Servicing Advance previously made which the Servicer has determined to be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance in accordance with the provisions of Section 4.03 and (B) any unpaid Servicing Fees to the extent not recoverable from Liquidation Proceeds, Insurance Proceeds or other amounts received with respect to the related Mortgage Loans under Section 3.11(a)(iii);

(vii)

to reimburse itself, the Depositor or the Seller for expenses incurred by or reimbursable to the Servicer, the Seller or the Depositor, as the case may be, pursuant to Section 6.03;

(viii)

to reimburse itself or the Trustee, as the case may be, for expenses reasonably incurred in respect of the breach or defect giving rise to the purchase obligation under Section 2.03 or Section 2.04 of this Agreement that were included in the Purchase Price of the Mortgage Loan, including any expenses arising out of the enforcement of the purchase obligation;

(ix)

to pay, or to reimburse itself for advances in respect of, expenses incurred in connection with any Mortgage Loan pursuant to Section 3.16(b);

(x)

to withdraw funds deposited in error or for which amounts previously deposited are returned unpaid by the related Mortgagor and to clear and terminate the Collection Account pursuant to Section 9.01; and

(xi)

to pay to itself any interest income earned on funds deposited in the Collection Account pursuant to Section 3.12(b).

The Servicer shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from the Collection Account, to the extent held by or on behalf of it, pursuant to subclauses (ii), (iii), (v), (vi), (viii) and (ix) above. The Servicer shall provide written notification to the Trustee on or prior to the next succeeding Servicer Remittance Date, upon making any withdrawals from the Collection Account pursuant to subclause (vii) above.

(b)

The Trustee shall, from time to time, make withdrawals from the Distribution Account, for any of the following purposes, without priority:

(i)

to make distributions to Certificateholders and the Depositor in accordance with Section 4.01;

(ii)

to pay any Extraordinary Trust Fund Expenses;

(iii)

[Reserved];

(iv)

to reimburse itself pursuant to Section 7.01 to the extent such amounts in Section 7.01 were not reimbursed by the Servicer;

(v)

to pay any amounts in respect of taxes pursuant to Section 10.01(g)(iii);

(vi)

to remit to the Servicer any amount deposited in the Distribution Account by the Servicer but not required to be deposited therein in accordance with Section 3.10(b) or (d);

(vii)

to clear and terminate the Distribution Account pursuant to Section 9.01; and

(viii)

to pay to itself any interest income earned on funds deposited in the Distribution Account pursuant to Section 3.12(c).

SECTION 3.12.

Investment of Funds in the Collection Account, the REO Account and the Distribution Account.

(a)

The Servicer may direct any depository institution maintaining the Collection Account and any REO Account (for purposes of this Section 3.12, each an “Investment Account”), and the Trustee, in its individual capacity, may direct any depository institution maintaining the Distribution Account (for purposes of this Section 3.12, also an “Investment Account”), to invest the funds in such Investment Account in one or more Permitted Investments bearing interest or sold at a discount, and maturing, unless payable on demand, (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if a Person other than the Trustee is the obligor thereon and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if the Trustee is the obligor thereon. All such Permitted Investments shall be held to maturity, unless payable on demand. Any investment of funds in an Investment Account shall be made in the name of the Trustee (in its capacity as such) or in the name of a nominee of the Trustee, in each case, for the benefit of the Certificateholders. The Trustee shall be entitled to sole control (except with respect to investment direction of funds held in the Collection Account and any REO Account and any income and gain realized thereon) over each such investment, and any certificate or other instrument evidencing any such investment shall be delivered directly to the Trustee or its agent, together with any document of transfer necessary to transfer title to such investment to the Trustee or its nominee. In the event amounts on deposit in an Investment Account are at any time invested in a Permitted Investment payable on demand, the Trustee shall:

(1)

consistent with any notice required to be given thereunder, demand that payment thereon be made on the last day such Permitted Investment may otherwise mature hereunder in an amount equal to the lesser of (1) all amounts then payable thereunder and (2) the amount required to be withdrawn on such date; and

(2)

demand payment of all amounts due thereunder promptly upon determination by a Responsible Officer of the Trustee that such Permitted Investment would not constitute a Permitted Investment in respect of funds thereafter on deposit in the Investment Account.

(b)

All income and gain realized from the investment of funds deposited in the Collection Account and any REO Account held by or on behalf of the Servicer, shall be for the benefit of the Servicer and shall be subject to its withdrawal in accordance with Section 3.11 or Section 3.23, as applicable. The Servicer shall deposit in the Collection Account or any REO Account, as applicable, from its own funds, the amount of any loss of principal incurred in respect of any such Permitted Investment made with funds in the Collection Account or REO Account immediately upon realization of such loss.

(c)

All income and gain realized from the investment of funds deposited in the Distribution Account held by or on behalf of the Trustee shall be for the benefit of the Trustee and shall be subject to withdrawal by the Trustee at any time. The Trustee shall deposit in the Distribution Account from its own funds, the amount of any loss of principal incurred in respect of any such Permitted Investment made with funds in such accounts immediately upon realization of such loss.

(d)

Except as otherwise expressly provided in this Agreement, if any default occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any other performance required under any Permitted Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(v), upon the request of the Holders of Certificates representing more than 50% of the Voting Rights allocated to any Class of Certificates, shall take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings.

SECTION 3.13.

[Reserved].

SECTION 3.14.

Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage.

(a)

The Servicer shall cause to be maintained for each Mortgage Loan fire insurance with extended coverage on the related Mortgaged Property in an amount which is at least equal to the least of (i) the then current principal balance of such Mortgage Loan, (ii) the amount necessary to fully compensate for any damage or loss to the improvements that are a part of such property on a replacement cost basis and (iii) the maximum insurable value of the improvements which are a part of such Mortgaged Property, in each case in an amount not less than such amount as is necessary to avoid the application of any coinsurance clause contained in the related hazard insurance policy. The Servicer shall also cause to be maintained fire insurance with extended coverage on each REO Property in an amount which is at least equal to the lesser of (i) the maximum insurable value of the improvements which are a part of such property and (ii) the outstanding principal balance of the related Mortgage Loan at the time it became an REO Property, plus accrued interest at the related Mortgage Rate and related Servicing Advances. The Servicer will comply in the performance of this Agreement with all reasonable rules and requirements of each insurer under any such hazard policies. Any amounts to be collected by the Servicer under any such policies (other than amounts to be applied to the restoration or repair of the property subject to the related Mortgage Loan or amounts to be released to the related Mortgagor in accordance with the procedures that the Servicer would follow in servicing loans held for its own account, subject to the terms and conditions of the related Mortgage Loan and related Mortgage Note) shall be deposited in the Collection Account, subject to withdrawal pursuant to Section 3.11, if received in respect of a Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to Section 3.23, if received in respect of an REO Property. Any cost incurred by the Servicer in maintaining any such insurance shall not, for the purpose of calculating distributions to Certificateholders, be added to the unpaid principal balance of the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit. Any insurance premiums not paid by the related Mortgagor and advanced by the Servicer shall constitute a Servicing Advance. It is understood and agreed that no earthquake or other additional insurance is to be required of any Mortgagor other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance. If the Mortgaged Property or REO Property is at any time in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards and flood insurance has been made available, the Servicer will cause to be maintained a flood insurance policy in respect thereof. Such flood insurance shall be in an amount equal to the lesser of (i) the unpaid principal balance of the related Mortgage Loan and (ii) the maximum amount of such insurance available for the related Mortgaged Property under the national flood insurance program (assuming that the area in which such Mortgaged Property is located is participating in such program).

In the event that the Servicer shall obtain and maintain a blanket policy with an insurer that generally would be acceptable under Xxxxxx Xxx or Xxxxxxx Mac servicing guidelines insuring against hazard losses on all of the Mortgage Loans, it shall conclusively be deemed to have satisfied its obligations as set forth in the first two sentences of this Section 3.14, it being understood and agreed that such policy may contain a deductible clause, in which case the Servicer shall, in the event that there shall not have been maintained on the related Mortgaged Property or related REO Property a policy complying with the first two sentences of this Section 3.14, and there shall have been one or more losses which would have been covered by such policy, deposit to the Collection Account from its own funds the amount not otherwise payable under the blanket policy because of such deductible clause. In connection with its activities as administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare and present, on behalf of itself, the Trustee and Certificateholders, claims under any such blanket policy in a timely fashion in accordance with the terms of such policy.

(b)

The Servicer shall keep in force during the term of this Agreement a policy or policies of insurance covering errors and omissions for failure in the performance of the Servicer’s obligations under this Agreement, which policy or policies shall be in such form and amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx Mac if it were the purchaser of the Mortgage Loans, unless the Servicer has obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall also maintain a fidelity bond in the form and amount that would meet the requirements of Xxxxxx Mae or Xxxxxxx Mac, unless the Servicer has obtained a waiver of such requirements from Xxxxxx Mae or Xxxxxxx Mac. The Servicer shall provide the Trustee (upon its reasonable request) with copies of or evidence of any such insurance policies and fidelity bond. The Servicer shall be deemed to have complied with this provision if an Affiliate of the Servicer has such errors and omissions and fidelity bond coverage and, by the terms of such insurance policy or fidelity bond, the coverage afforded thereunder extends to the Servicer. Any such errors and omissions policy and fidelity bond shall by its terms not be cancelable without thirty days’ prior written notice to the Trustee. The Servicer shall also cause each Sub-Servicer to maintain a comparable policy of insurance covering errors and omissions and a fidelity bond meeting such requirements.

SECTION 3.15.

Enforcement of Due-On-Sale Clauses; Assumption Agreements.

The Servicer will, to the extent it has knowledge of any conveyance or prospective conveyance of any Mortgaged Property by any Mortgagor (whether by absolute conveyance or by contract of sale, and whether or not such Mortgagor remains or is to remain liable under the applicable Mortgage Note and/or the related Mortgage), exercise its rights to accelerate the maturity of such Mortgage Loan under the “due-on-sale” clause, if any, applicable thereto; provided, however, that the Servicer shall not be required to take such action if in its sole business judgment the Servicer believes it is not in the best interests of the Trust Fund and shall not exercise any such rights if prohibited by law from doing so. If the Servicer reasonably believes it is unable under applicable law to enforce such “due-on-sale” clause, or if any of the other conditions set forth in the proviso to the preceding sentence apply, the Servicer will enter into an assumption and modification agreement from or with the person to whom such property has been conveyed or is proposed to be conveyed, pursuant to which such person becomes liable under the related Mortgage Note and, to the extent permitted by applicable state law, the related Mortgagor remains liable thereon. The Servicer is also authorized to enter into a substitution of liability agreement with such person, pursuant to which the original related Mortgagor is released from liability and such person is substituted as the Mortgagor and becomes liable under the related Mortgage Note, provided that no such substitution shall be effective unless such person satisfies the underwriting criteria of the Servicer and such substitution is in the best interests of the Certificateholders, as determined by the Servicer. In connection with any assumption, modification or substitution, the Servicer shall apply such underwriting standards and follow such practices and procedures as shall be normal and usual in its general mortgage servicing activities. The Servicer shall not take or enter into any assumption and modification agreement, however, unless (to the extent practicable in the circumstances) it shall have received confirmation, in writing, of the continued effectiveness of any applicable hazard insurance policy, or a new policy meeting the requirements of this Section is obtained. Any fee collected by the Servicer in respect of an assumption, modification or substitution of liability agreement will be retained by the Servicer as additional servicing compensation. In connection with any such assumption, no material term of the related Mortgage Note (including but not limited to the related Mortgage Rate and the amount of the related Monthly Payment) may be amended or modified, except as otherwise required pursuant to the terms thereof. The Servicer shall notify the Trustee or the Custodian, as applicable, that any such substitution, modification or assumption agreement has been completed by forwarding to the Trustee or Custodian, as applicable, the executed original of such substitution, modification or assumption agreement, which document shall be added to the related Mortgage File and shall, for all purposes, be considered a part of such Mortgage File to the same extent as all other documents and instruments constituting a part thereof. Notwithstanding the foregoing, the Servicer may enforce the due on sale clause, or the assumption and modification, or the substitution if it reasonably believes that it is in the best interest of the Trust Fund.

Notwithstanding the foregoing paragraph or any other provision of this Agreement, the Servicer shall not be deemed to be in default, breach or any other violation of its obligations hereunder by reason of any assumption of a Mortgage Loan by operation of law or by the terms of the related Mortgage Note or any assumption which the Servicer may be restricted by law from preventing, for any reason whatever. For purposes of this Section 3.15, the term “assumption” is deemed to also include a sale (of the Mortgaged Property) subject to the Mortgage that is not accompanied by an assumption or substitution of liability agreement.

SECTION 3.16.

Realization Upon Defaulted Mortgage Loans.

(a)

The Servicer shall use its commercially reasonable efforts consistent with the servicing standard set forth in Section 3.01, to foreclose upon or otherwise comparably convert the ownership of properties securing such of the Mortgage Loans (including selling any such Mortgage Loan rather than converting the ownership of the related properties if such sale would maximize the timely and complete recovery of principal and interest on the related Mortgage Note in accordance with the servicing standard set forth in Section 3.01) as come into and continue in default and as to which no satisfactory arrangements can be made for collection of Delinquent payments pursuant to Section 3.07. The Servicer shall be responsible for all costs and expenses incurred by it in any such proceedings; provided, however, that such costs and expenses will be recoverable as Servicing Advances or Nonrecoverable Servicing Advances by the Servicer as contemplated in Section 3.11 and Section 3.23. The foregoing is subject to the provision that, in any case in which a Mortgaged Property shall have suffered damage from an Uninsured Cause, the Servicer shall not be required to expend its own funds toward the restoration of such property unless it shall determine in its sole and absolute discretion that such restoration will increase the proceeds of liquidation of the related Mortgage Loan after reimbursement to itself for such expenses.

(b)

Notwithstanding the foregoing provisions of this Section 3.16 or any other provision of this Agreement, with respect to any Mortgage Loan as to which the Servicer has received actual notice of, or has actual knowledge of, the presence of any toxic or hazardous substance on the related Mortgaged Property, the Servicer shall not, on behalf of the Trust Fund, either (i) obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or otherwise or (ii) otherwise acquire possession of, or take any other action with respect to, such Mortgaged Property, if, as a result of any such action, the Trustee, the Trust Fund or the Certificateholders would be considered to hold title to, to be a “mortgagee-in-possession” of, or to be an “owner” or “operator” of such Mortgaged Property within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended from time to time, or any comparable law, unless the Servicer has also previously determined, based on its reasonable judgment and a report prepared by a Person who regularly conducts environmental audits using customary industry standards, that:

(1)

such Mortgaged Property is in compliance with applicable environmental laws or, if not, that it would be in the best economic interest of the Trust Fund to take such actions as are necessary to bring such Mortgaged Property into compliance therewith; and

(2)

there are no circumstances present at such Mortgaged Property relating to the use, management or disposal of any hazardous substances, hazardous materials, hazardous wastes, or petroleum-based materials for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any federal, state or local law or regulation, or that if any such materials are present for which such action could be required, that it would be in the best economic interest of the Trust Fund to take such actions with respect to such affected Mortgaged Property.

The cost of the environmental audit report contemplated by this Section 3.16 shall be advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor from the Collection Account as provided in Section 3.11(a)(ix), such right of reimbursement being prior to the rights of Certificateholders to receive any amount in the Collection Account received in respect of the affected Mortgage Loan or other Mortgage Loans. It is understood by the parties hereto that any such advance will be deemed a Servicing Advance.

If the Servicer determines, as described above, that it is in the best economic interest of the Trust Fund to take such actions as are necessary to bring any such Mortgaged Property into compliance with applicable environmental laws, or to take such action with respect to the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous wastes or petroleum-based materials affecting any such Mortgaged Property, then the Servicer shall take such action as it deems to be in the best economic interest of the Trust Fund. The cost of any such compliance, containment, cleanup or remediation shall be advanced by the Servicer, subject to the Servicer’s right to be reimbursed therefor from the Collection Account as provided in Section 3.11(a)(ix), such right of reimbursement being prior to the rights of Certificateholders to receive any amount in the Collection Account received in respect of the affected Mortgage Loan or other Mortgage Loans. It is understood by the parties hereto that any such advance will be deemed a Servicing Advance.

(c)

The Servicer may, at its option, purchase from the Trust Fund any Mortgage Loan or related REO Property that is 90 days or more Delinquent, which the Servicer determines in good faith will otherwise become subject to foreclosure proceedings (evidence of such determination to be delivered in writing to the Trustee prior to purchase), at a price equal to the Purchase Price; provided, however, that the Servicer shall purchase any such Mortgage Loans or related REO Properties on the basis of delinquency, purchasing the most Delinquent Mortgage Loans or related REO Properties first. The Purchase Price for any Mortgage Loan or related REO Property purchased hereunder shall be deposited in the Collection Account, and the Trustee, upon receipt of written certification from the Servicer of such deposit, shall release or cause to be released to the Servicer the related Mortgage File and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, as the Servicer shall furnish and as shall be necessary to vest in the Servicer title to any Mortgage Loan or related REO Property released pursuant hereto. The Holder of the Class X Certificate may exercise such option if the Servicer declines to do so under the same terms and conditions applicable to the Servicer under this Section 3.16(c).

(d)

Proceeds received (other than the Prepayment Premiums received) in connection with any Final Recovery Determination, as well as any recovery resulting from a partial collection of Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan, will be applied in the following order of priority: first, to reimburse the Servicer or any Sub-Servicer for any related unreimbursed Servicing Advances and P&I Advances and to pay any unpaid Servicing Fees, pursuant to Section 3.11(a)(ii) or (a)(iii); second, to accrued and unpaid interest on the related Mortgage Loan, to the date of the Final Recovery Determination, or to the Due Date prior to the Distribution Date on which such amounts are to be distributed if not in connection with a Final Recovery Determination; and third, as a recovery of principal of such Mortgage Loan. If the amount of the recovery so allocated to interest is less than the full amount of accrued and unpaid interest due on such Mortgage Loan, the amount of such recovery will be allocated by the Servicer as follows: first, to unpaid Servicing Fees; and second, to the balance of the interest then due and owing. The portion of the recovery so allocated to unpaid Servicing Fees shall be reimbursed to the Servicer or any related Sub-Servicer pursuant to Section 3.11(a)(iii).

(e)

The Servicer may (but is not obligated to) enter into a special servicing agreement with an unaffiliated holder of a 100% Percentage Interest of the most junior Class of Subordinate Certificates (the “Special Servicer”), subject to each Rating Agency’s acknowledgment that the ratings of the Certificates in effect immediately prior to the entering into such agreement would not be qualified, downgraded or withdrawn and the Certificates would not be placed on credit review status (except for possible upgrading) as a result of such agreement. Any such agreement may contain provisions whereby such Special Servicer may (i) instruct the Servicer to commence or delay foreclosure proceedings with respect to delinquent Mortgage Loans and will contain provisions for the deposit of cash with the Servicer by the holder that would be available for distribution to Certificateholders if Liquidation Proceeds are less than they otherwise may have been had the Servicer acted in accordance with its normal procedures, (ii) purchase delinquent Mortgage Loans from the Trust Fund immediately prior to the commencement of foreclosure proceedings at a price equal to the Purchase Price, and/or (iii) assume all of the servicing rights and obligations with respect to delinquent Mortgage Loans so long as such Holder (A) meets the requirements for a Sub-servicer set forth in Section 3.02(a), (B) will service such Mortgage Loans in accordance with this Agreement and (C) the Servicer has the right to transfer such servicing rights without the payment of any compensation to a Sub-servicer.

(f)

The Special Servicer, at its option, may (but is not obligated to) purchase from the Trust Fund, (a) any Mortgage Loan that is delinquent in payment 90 or more days or (b) any related Mortgage Loan with respect to which there has been initiated legal action or other proceedings for the foreclosure of the related Mortgaged Property either judicially or non-judicially, in each case, provided that the Servicer has the right to transfer the related servicing rights without the payment of any compensation to a Sub-servicer. Any such purchase shall be made by the Special Servicer with its own funds at a price equal to the Purchase Price for such Mortgage Loan. The Servicer shall be entitled to reimbursement from the Special Servicer for all expenses incurred by it in connection with the transfer of any Mortgage Loan to the Special Servicer pursuant to this Section 3.16(f). The Special Servicer shall notify the Servicer in writing at least 30 days prior to any purchase of Mortgage Loans pursuant to this Section 3.16(f).

SECTION 3.17.

Trustee to Cooperate; Release of Mortgage Files.

(a)

Upon the payment in full of any Mortgage Loan, or the receipt by the Servicer of a notification that payment in full shall be escrowed in a manner customary for such purposes, the Servicer will promptly (or the Trustee may, in the event the Servicer does not so act) notify the Trustee or the Custodian, as applicable, by a certification in the form of Exhibit E-1 (which certification shall include a statement to the effect that all amounts received or to be received in connection with such payment which are required to be deposited in the Collection Account pursuant to Section 3.10 have been or will be so deposited) signed by a Servicing Officer and shall request delivery to the Servicer of the related Mortgage File. Upon receipt of such certification and request, the Trustee or the Custodian, as applicable, shall, within five Business Days, release or cause the release and mailing by overnight mail of the related Mortgage File to the Servicer. Except as otherwise provided herein, no expenses incurred in connection with any instrument of satisfaction or deed of reconveyance shall be chargeable to the Collection Account or the Distribution Account; such expenses incurred by the Trustee or the Custodian shall be paid by the Trustee and reimburseable from the Trust Fund as an Extraordinary Trust Fund Expense.

(b)

From time to time and as appropriate for the servicing or foreclosure of any Mortgage Loan, including, for this purpose, collection under any insurance policy relating to the Mortgage Loans, the Trustee shall, upon request of the Servicer and delivery to the Trustee or the Custodian, if permitted by the related Custodial Agreement, of a Request for Release in the form of Exhibit E-1, cause the release of the related Mortgage File to the Servicer, and the Trustee shall, at the direction of the Servicer, execute such documents as shall be necessary to the prosecution of any such proceedings and the Servicer shall retain such Mortgage File in trust for the benefit of the Certificateholders. Such Request for Release shall obligate the Servicer to return each and every document previously requested from such Mortgage File to the Trustee or the Custodian when the need therefor by the Servicer no longer exists, unless the related Mortgage Loan has been liquidated and the Liquidation Proceeds relating to such Mortgage Loan have been deposited in the Collection Account or the related Mortgage File or such document has been delivered to an attorney, or to a public trustee or other public official as required by law, for purposes of initiating or pursuing legal action or other proceedings for the foreclosure of the related Mortgaged Property either judicially or non-judicially, and the Servicer has delivered to the Trustee a certificate of a Servicing Officer certifying as to the name and address of the Person to which such Mortgage File or such document was delivered and the purpose or purposes of such delivery. Upon receipt of a certificate of such Servicing Officer stating that such Mortgage Loan was liquidated and that all amounts received or to be received in connection with such liquidation that are required to be deposited into the Collection Account have been so deposited, or that such Mortgage Loan has become an REO Property, such Mortgage Loan shall be released by the Trustee or the Custodian to the Servicer or its designee.

(c)

Upon written certification of a Servicing Officer, the Trustee shall execute and deliver to the Servicer any court pleadings, requests for trustee’s sale or other documents reasonably necessary to the foreclosure or trustee’s sale in respect of a Mortgaged Property or to any legal action brought to obtain judgment against any Mortgagor on the related Mortgage Note or related Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or rights provided by such Mortgage Note or Mortgage or otherwise available at law or in equity, or shall execute and deliver to the Servicer a power of attorney sufficient to authorize the Servicer or a Sub-Servicer to execute such documents on its behalf, provided that the Trustee shall be obligated to execute the documents identified above if necessary to enable the Servicer or a Sub-Servicer to perform their respective duties hereunder. Each such certification shall include a request that such pleadings or documents be executed by the Trustee and a statement as to the reason such documents or pleadings are required and that the execution thereof by the Trustee and delivery thereof by the Trustee or the Custodian, as applicable, will not invalidate or otherwise affect the lien of the related Mortgage, except for the termination of such a lien upon completion of the foreclosure or trustee’s sale.

SECTION 3.18.

Servicing Compensation.

As compensation for the activities of the Servicer hereunder, the Servicer shall be entitled to the Servicing Fee with respect to each Mortgage Loan payable solely from payments of interest in respect of such Mortgage Loan, subject to Section 3.24. In addition, the Servicer shall be entitled to recover unpaid Servicing Fees out of Late Collections, Insurance Proceeds, condemnation proceeds or Liquidation Proceeds and as otherwise permitted by Section 3.11(a) and out of amounts derived from the operation and sale of an REO Property to the extent permitted by Section 3.23. Except as expressly provided in Sections 6.04 and 7.02 herein, the right to receive the Servicing Fee may not be transferred in whole or in part except in connection with the transfer of all of the Servicer’s responsibilities and obligations under this Agreement; provided, however, that the Servicer may pay from the related Servicing Fee any amounts due to a related Sub-Servicer pursuant to a Sub-Servicing Agreement entered into under Section 3.02; provided further that the Servicer may assign a portion of its Servicing Fee to an affiliate of the Servicer in connection with the ownership by such affiliate of the servicing rights attributable to the Mortgage Loans (provided that any right, title or interest of such affiliate in such portion of the Servicing Fee shall be subject to termination of the Servicer in accordance with the terms of this Agreement).

Additional servicing compensation in the form of assumption or modification fees, late payment charges, insufficient funds fees, reconveyance fees and other ancillary fees (other than Prepayment Premiums) shall be retained by the Servicer (subject to Section 3.24) only to the extent such fees or charges are received by the Servicer. The Servicer shall also be entitled pursuant to Section 3.11(a)(iv) to withdraw from the Collection Account, and pursuant to Section 3.23(b) to withdraw from any REO Account, as additional servicing compensation, interest or other income earned on deposits therein, subject to Section 3.12 and Section 3.24. The Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder (including premiums for the insurance required by Section 3.14, to the extent such premiums are not paid by the related Mortgagors or by a related Sub-Servicer, it being understood however, that payment of such premiums by the Servicer shall constitute Servicing Advances), servicing compensation of any Sub-Servicer and to the extent provided herein in Section 8.05, the indemnification of the Trustee, and shall not be entitled to reimbursement therefor except as specifically provided herein.

SECTION 3.19.

Reports to the Trustee; Collection Account Statements and Other Reporting Obligations.

Not later than thirty days after each Distribution Date, the Servicer shall forward to the Trustee and the Depositor a statement prepared by the Servicer setting forth the status of the Collection Account as of the close of business on such Distribution Date and showing, for the period covered by such statement, the aggregate amount of deposits into and withdrawals from the Collection Account of each category of deposit specified in Section 3.10(a) and each category of withdrawal specified in Section 3.11(a). Such statement may be in the form of the then current Xxxxxx Xxx Monthly Accounting Report for its Guaranteed Mortgage Pass-Through Program with appropriate additions and changes, and shall also include information as to the aggregate of the outstanding principal balances of all of the Mortgage Loans as of the last day of the calendar month immediately preceding such Distribution Date. Copies of such statement shall be provided by the Trustee to any Certificateholder and to any Person identified to the Trustee as a prospective transferee of a Certificate, upon request and at the expense of the requesting party, provided such statement is delivered by the Servicer to the Trustee. The Trustee shall have no responsibility to review or reconcile the information in such statements. In addition, to the extent not prohibited by applicable law the Servicer shall provide to the Trustee for purposes of forwarding to the holder of the Residual Certificates, such statement and all other loan level information relating to the Mortgage Loans that the Holder of the Residual Certificates may reasonably request, provided, however, that such request will be at the expense of such Holder of the Residual Certificates.

SECTION 3.20.

Statement as to Compliance.

SECTION 3.21.

Independent Public Accountants’ Servicing Report.

Not later than the earlier of (a) March 24 of each calendar year (other than the calendar year during which the Closing Date occurs) or (b) with respect to any calendar year during which the Depositor’s annual report on Form 10-K is required to be filed pursuant to Section 4.06(b), 15 calendar days before each date on which the Depositor’s annual report on Form 10-K is required to be filed pursuant to Section 4.06(b)(or if such day is not a Business Day, the immediately preceding Business Day), the Servicer, at its expense, shall cause a nationally recognized firm of independent certified public accountants to furnish to the Depositor, the Trustee and each Rating Agency a report stating that (i) it has obtained a letter of representation regarding certain matters from the management of the Servicer which includes an assertion that the Servicer has complied with certain minimum residential mortgage loan servicing standards, identified in the Uniform Single Attestation Program for Mortgage Bankers established by the Mortgage Bankers Association of America, with respect to the servicing of residential mortgage loans during the most recently completed fiscal year and (ii) on the basis of an examination conducted by such firm in accordance with standards established by the American Institute of Certified Public Accountants, such representation is fairly stated in all material respects, subject to such exceptions and other qualifications that may be appropriate. In rendering its report such firm may rely, as to matters relating to the direct servicing of residential mortgage loans by a Sub-Servicer, upon comparable reports of firms of independent certified public accountants rendered on the basis of examinations conducted in accordance with the same standards (rendered within one year of such report) with respect to such Sub-Servicer. Copies of such statement shall be provided by the Trustee to any Certificateholder upon request at the requesting party’s expense, provided that such statement is delivered by the Servicer to the Trustee. In the event such firm of independent certified public accountants requires the Trustee to agree to the procedures performed by such firm, the Servicer shall direct the Trustee in writing to so agree; it being understood and agreed that the Trustee will deliver such letter of agreement in conclusive reliance upon the direction of the Servicer, and the Trustee has not made any independent inquiry or investigation as to, and shall have no obligation or liability in respect of, the sufficiency, validity or correctness of such procedures.

SECTION 3.22.

Access to Certain Documentation.

The Servicer shall provide to the Office of Thrift Supervision, the FDIC, and any other federal or state banking or insurance regulatory authority that may exercise authority over any Certificateholder, access to the documentation regarding the Mortgage Loans under this Agreement, as may be required by applicable laws and regulations. Such access shall be afforded without charge, but only upon reasonable request and during normal business hours at the offices of the Servicer designated by it. Nothing in this Section shall limit the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Mortgagors and the failure of the Servicer to provide access as provided in this Section as a result of such obligation shall not constitute a breach of this Section. Nothing in this Section 3.22 shall require the Servicer to collect, create, collate or otherwise generate any information that it does not generate in its usual course of business. The Servicer shall not be required to make copies of or ship documents to any party unless provisions have been made for the reimbursement of the costs thereof.

SECTION 3.23.

Title, Management and Disposition of REO Property.

(a)

The deed or certificate of sale of any REO Property shall be taken in the name of the Trustee, or its nominee, in trust for the benefit of the Certificateholders, subject to applicable laws. The Trustee’s name shall be placed on the title to such REO Property solely as the Trustee hereunder and not in its individual capacity. The Servicer shall ensure that the title to such REO Property references this Agreement and the Trustee’s capacity hereunder. The Servicer, on behalf of the Trust Fund (and on behalf of the Trustee for the benefit of the Certificateholders), shall either sell any REO Property before the close of the third taxable year after the year the Trust Fund acquires ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or request from the Internal Revenue Service, no later than 60 days before the day on which the three-year grace period would otherwise expire, an extension of the three-year grace period, unless the Servicer shall have delivered to the Trustee and the Depositor an Opinion of Counsel, addressed to the Trustee and the Depositor, to the effect that the holding by the Trust Fund of such REO Property subsequent to three years after its acquisition will not result in the imposition on any REMIC created hereunder of taxes on “prohibited transactions” thereof, as defined in Section 860F of the Code, or cause any REMIC created hereunder to fail to qualify as a REMIC under Federal law at any time that any Certificates are outstanding. The Servicer shall manage, conserve, protect and operate each REO Property for the Certificateholders solely for the purpose of its prompt disposition and sale in a manner which does not cause such REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or result in the receipt by any REMIC created hereunder of any “income from non-permitted assets” within the meaning of Section 860F(a)(2)(B) of the Code, or any “net income from foreclosure property” which is subject to taxation under the REMIC Provisions.

(b)

The Servicer shall segregate and hold all funds collected and received in connection with the operation of any REO Property separate and apart from its own funds and general assets and shall establish and maintain, or cause to be established and maintained, with respect to REO Properties an account held in trust for the Trustee for the benefit of the Certificateholders (the “REO Account”), which shall be an Eligible Account. The Servicer shall be permitted to allow the Collection Account to serve as an REO Account, subject to separate ledgers for each REO Property. The Servicer shall be entitled to retain or withdraw any interest income paid on funds deposited in the REO Account.

(c)

The Servicer shall have full power and authority, subject only to the specific requirements and prohibitions of this Agreement, to do any and all things in connection with any REO Property as are consistent with the manner in which the Servicer manages and operates similar property owned by the Servicer or any of its Affiliates, all on such terms and for such period as the Servicer deems to be in the best interests of Certificateholders. In connection therewith, the Servicer shall deposit, or cause to be deposited in the clearing account (which account must be an Eligible Account) in which it customarily deposits payments and collections on mortgage loans in connection with its mortgage loan servicing activities on a daily basis, and in no event more than one Business Day after the Servicer’s receipt thereof, and shall thereafter deposit in the REO Account, in no event more than two Business Days after the deposit of such funds into the clearing account, all revenues received by it with respect to an REO Property and shall withdraw therefrom funds necessary for the proper operation, management and maintenance of such REO Property including, without limitation:

(i)

all insurance premiums due and payable in respect of such REO Property;

(ii)

all real estate taxes and assessments in respect of such REO Property that may result in the imposition of a lien thereon; and

(iii)

all costs and expenses necessary to maintain, operate and dispose of such REO Property.

To the extent that amounts on deposit in the REO Account with respect to an REO Property are insufficient for the purposes set forth in clauses (i) through (iii) above with respect to such REO Property, the Servicer shall advance from its own funds as Servicing Advances such amount as is necessary for such purposes if, but only if, the Servicer would make such advances if it owned such REO Property and if in the Servicer’s sole judgment, the payment of such amounts will be recoverable from the rental or sale of such REO Property.

Notwithstanding the foregoing, the Servicer and the Trustee shall not:

(i)

authorize the Trust Fund to enter into, renew or extend any New Lease with respect to any REO Property, if the New Lease by its terms will give rise to any income that does not constitute Rents from Real Property;

(ii)

authorize any amount to be received or accrued under any New Lease other than amounts that will constitute Rents from Real Property;

(iii)

authorize any construction on any REO Property, other than the repair or completion of a building or other improvement thereon, and then only if more than ten percent of the construction of such building or other improvement was completed before default on the related Mortgage Loan became imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or

(iv)

authorize any Person to Directly Operate any REO Property on any date more than 90 days after its date of acquisition by the Trust Fund;

unless, in any such case, the Servicer has obtained an Opinion of Counsel, provided to the Trustee, to the effect that such action will not cause such REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code at any time that it is held by the Trust Fund, in which case the Servicer may take such actions as are specified in such Opinion of Counsel.

The Servicer may contract with any Independent Contractor for the operation and management of any REO Property, provided that:

(i)

the terms and conditions of any such contract shall not be inconsistent herewith;

(ii)

any such contract shall require, or shall be administered to require, that the Independent Contractor pay all costs and expenses incurred in connection with the operation and management of such REO Property, including those listed above, and remit all related revenues (net of such costs and expenses) to the Servicer as soon as practicable, but in no event later than thirty days following the receipt thereof by such Independent Contractor;

(iii)

none of the provisions of this Section 3.23(c) relating to any such contract or to actions taken through any such Independent Contractor shall be deemed to relieve the Servicer of any of its duties and obligations to the Trustee on behalf of the Certificateholders with respect to the operation and management of any such REO Property; and

(iv)

the Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such REO Property.

The Servicer shall be entitled to enter into any agreement with any Independent Contractor performing services for it related to its duties and obligations hereunder for indemnification of the Servicer by such Independent Contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. The Servicer shall be solely liable for all fees owed by it to any such Independent Contractor, irrespective of whether the Servicer’s compensation pursuant to Section 3.18 is sufficient to pay such fees; provided, however, that to the extent that any payments made by such Independent Contractor would constitute Servicing Advances if made by the Servicer, such amounts shall be reimbursable as Servicing Advances made by the Servicer.

(d)

In addition to the withdrawals permitted under Section 3.23(c), the Servicer may from time to time make withdrawals from the REO Account for any REO Property: (i) to pay itself or any Sub-Servicer unpaid Servicing Fees in respect of the related Mortgage Loan; and (ii) to reimburse itself or any Sub-Servicer for unreimbursed Servicing Advances and P&I Advances made in respect of such REO Property or the related Mortgage Loan. On the Servicer Remittance Date, the Servicer shall withdraw from each REO Account maintained by it and deposit into the Distribution Account in accordance with Section 3.10(d)(ii), for distribution on the related Distribution Date in accordance with Section 4.01, the income from the related REO Property received during the prior calendar month, net of any withdrawals made pursuant to Section 3.23(c) or this Section 3.23(d).

(e)

Subject to the time constraints set forth in Section 3.23(a), each REO Disposition shall be carried out by the Servicer at such price and upon such terms and conditions as the Servicer shall deem necessary or advisable, as shall be normal and usual in its general servicing activities for similar properties.

(f)

The proceeds from the REO Disposition, net of any amount required by law to be remitted to the Mortgagor under the related Mortgage Loan and net of any payment or reimbursement to the Servicer or any Sub-Servicer as provided above, shall be deposited in the Distribution Account in accordance with Section 3.10(d)(ii) on the Servicer Remittance Date in the month following the receipt thereof for distribution on the related Distribution Date in accordance with Section 4.01. Any REO Disposition shall be for cash only (unless changes in the REMIC Provisions made subsequent to the Startup Day allow a sale for other consideration).

(g)

The Servicer shall file information returns with respect to the receipt of mortgage interest received in a trade or business, reports of foreclosures and abandonments of any Mortgaged Property and cancellation of indebtedness income with respect to such Mortgaged Property as required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be in form and substance sufficient to meet the reporting requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.

SECTION 3.24.

Obligations of the Servicer in Respect of Prepayment Interest Shortfalls.

The Servicer shall deliver to the Trustee for deposit into the Distribution Account not later than the close of business New York time on the Servicer Remittance Date from its own funds an amount (such amount, “Compensating Interest”) equal to the lesser of (i) the aggregate of the Prepayment Interest Shortfalls for the related Determination Date resulting solely from Principal Prepayments in full for any Mortgage Loan during the portion of the related Prepayment Period occurring between the first day of such Prepayment Period and the last day of the calendar month prior to such Distribution Date and (ii) the aggregate Servicing Fee for such Distribution Date. The Servicer shall not have the right to reimbursement for any amounts remitted to the Trustee in respect of Compensating Interest. Such amounts remitted shall be included in the Available Distribution Amount and distributed therewith on the related Distribution Date. The Servicer shall not be obligated to pay Compensating Interest with respect to Relief Act Interest Shortfalls.

SECTION 3.25.

Obligations of the Servicer in Respect of Mortgage Rates and Monthly Payments.

On each Adjustment Date, the Servicer shall make Mortgage Rate adjustments for each Adjustable Rate Mortgage Loan in compliance with the requirements of the related Mortgage and Mortgage Note and Applicable Regulations. The Servicer shall execute and deliver the notices required by each Mortgage and Mortgage Note and Applicable Regulations regarding Mortgage Rate adjustments. The Servicer shall maintain all data and information regarding such Mortgage Rate adjustments and the Servicer’s methods of implementing such Mortgage Rate adjustments and shall provide such information to the Trustee upon request.

In the event that a shortfall in any collection on or liability with respect to any Mortgage Loan results from or is attributable to adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances that were made by the Servicer in a manner not consistent with the terms of the related Mortgage Note and this Agreement, the Servicer, upon discovery or receipt of notice thereof, immediately shall deliver to the Trustee for deposit in the Distribution Account from its own funds the amount of any such shortfall and shall indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and any successor servicer in respect of any such liability. Such indemnities shall survive the termination or discharge of this Agreement. Notwithstanding the foregoing, this Section 3.25 shall not limit the ability of the Servicer to seek recovery of any such amounts from the related Mortgagor under the terms of the related Mortgage Note, as permitted by law; provided that any expenses in connection with pursuing such recovery shall not be an expense of the Trust.

SECTION 3.26.

Net WAC Reserve Fund; Yield Maintenance Agreements.

(a)

On the Closing Date, the Depositor will deposit, or cause to be deposited, into the Net WAC Reserve Fund, $1,000. On each Distribution Date as to which there is Net WAC Rate Carryover Amount for any Class of LIBOR Certificates, the Trustee is hereby directed to, and shall therefore, deposit into the Net WAC Reserve Fund an amount equal to the Net WAC Rate Carryover Amount for each affected Class of LIBOR Certificates pursuant to Section 4.01(a)(3)(xxxvii). For federal and state income tax purposes, the Class X Certificateholders will be deemed to be the owners of the Net WAC Reserve Fund and all amounts deposited into the Net WAC Reserve Fund. Any monies held in the Net WAC Reserve Fund in excess of $1,000 on any Distribution Date after giving effect to the payment of any Net WAC Rate Carryover Amount on such Distribution Date shall be distributed to the Class X Certificateholders. Amounts held in the Net WAC Reserve Fund and not distributed on any Distribution Date will be invested by the Trustee in investments identified in clause (f) of the definition of Permitted Investments having maturities on or prior to the next succeeding Distribution Date. All income and gain earned upon such investment shall be deposited into the Net WAC Reserve Fund. Upon the termination of the Trust Fund, or the payment in full of the LIBOR Certificates, all amounts remaining on deposit in the Net WAC Reserve Fund will be distributed to the Class X Certificateholders or their designees. The Net WAC Reserve Fund will be part of the Trust Fund but not part of any REMIC and any payments to the LIBOR Certificates of Net WAC Rate Carryover Amounts with respect to any Class of LIBOR Certificates will not be payments with respect to a “regular interest” in a REMIC within the meaning of Code Section 860G(a)(1). For federal tax return and information reporting, the right to receive any Net WAC Rate Carryover Amount shall be assigned the value specified in Section 10.01(l) of this Agreement.

(b)

The Depositor hereby directs the Trustee, to execute and deliver on behalf of the Trust the Yield Maintenance Agreements and authorizes the Trustee to perform its obligations thereunder on behalf of the Trust in accordance with the terms of each Yield Maintenance Agreement, including, but not limited to, amending any of the Yield Maintenance Agreements in accordance with their terms and as requested by the Counterparty to cure any ambiguity in or correct or supplement any provision of, the Yield Maintenance Agreements provided, however, that any such amendment will not have a material adverse effect to a Certificateholder as evidenced by a written confirmation from each Rating Agency that such amendment would not result in the reduction or withdrawal of the then current ratings of any outstanding Class of Certificates. The Depositor hereby authorizes and directs the Trustee to ratify on behalf of the Trust, as the Trust’s own actions, the terms agreed to by the Depositor in relation to each Yield Maintenance Agreement, as reflected in such Yield Maintenance Agreement, and the Trustee hereby so ratifies such Yield Maintenance Agreement. On the Closing Date, the Trustee shall enter into the Yield Maintenance Agreements, on behalf of the Trust, with the Counterparty. The Yield Maintenance Agreements shall be part of the Trust Fund but not part of any REMIC. The Trustee shall deposit all amounts received with respect to the Yield Maintenance Agreements in the Net WAC Reserve Fund. On each Distribution Date, to the extent required following the distribution of the Available Distribution Amount pursuant to Section 4.01 of this Agreement, the Trustee will withdraw from amounts in the Net WAC Reserve Fund to pay the LIBOR Certificates any Net WAC Rate Carryover Amounts in the following order of priority, in each case to the extent of amounts remaining in the Net WAC Reserve Fund:

(i)

from amounts paid under the Yield Maintenance Agreements, as follows:

(a)

from and to the extent of amounts in respect of the Subgroup 1 Yield Maintenance Agreement, pro rata, to the Class A1 and Class A2 Certificates, any related unpaid Net WAC Rate Carryover Amounts for such Classes,

(b)

from and to the extent of amounts in respect of the Subgroup 2 Yield Maintenance Agreement, pro rata, to the Class A3, Class A4, Class A5 and Class A6 Certificates, any related unpaid Net WAC Rate Carryover Amounts for such Classes, and

(c)

from and to the extent of amounts in respect of the Subordinate Yield Maintenance Agreement, sequentially, to the Class M1 Certificates, the Class M2 Certificates, the Class M3 Certificates, the Class M4 Certificates, the Class M5 Certificates, the Class M6 Certificates, the Class M7 Certificates, the Class M8 Certificates, the Class M9 Certificates, the Class M10 Certificates and the Class M11 Certificates, in that order, any related unpaid Net WAC Rate Carryover Amounts for such Classes,

(ii)

from and to the extent of amounts remaining in the Net WAC Reserve Fund on such Distribution Date after giving effect to the distributions in Section 3.26(b)(i) above, as follows:

(a)

to the Class A Certificates, pro rata, any remaining unpaid Net WAC Rate Carryover Amounts for such Classes, and

(b)

sequentially, to the Class M1 Certificates, the Class M2 Certificates, the Class M3 Certificates, the Class M4 Certificates, the Class M5 Certificates, the Class M6 Certificates, the Class M7 Certificates, the Class M8 Certificates, the Class M9 Certificates, the Class M10 Certificates and the Class M11 Certificates, in that order, any related remaining unpaid Net WAC Rate Carryover Amounts for such Classes.

(c)

If any payments are owed to the Counterparty, the Depositor shall direct the Trustee to request and the Trustee shall request the Counterparty to furnish IRS Form W-8ECI to the Trustee or other documentary evidence necessary to establish that no withholding is required under the Code.

(d)

[Reserved.]

(e)

Notwithstanding anything in subsection (b) of Section 3.26 to the contrary, for any Distribution Date on which there is a payment under a Yield Maintenance Agreement based on a notional balance in excess of the aggregate Class Certificate Balance of the LIBOR Certificates, the amount representing such excess payment shall not be an asset of the Trust Fund and, instead, shall be paid into and distributed out of a separate trust created by this Agreement for the benefit of the Class X Certificates and shall be distributed to the Class X Certificates pursuant to Section 4.01(a)(3)(xxxix).

SECTION 3.27.

[Reserved].

SECTION 3.28.

Advance Facility.

(a)

The Servicer is hereby authorized to enter into a financing or other facility (any such arrangement, an “Advance Facility”) under which (1) the Servicer assigns or pledges to another Person (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 and/or Servicing Advances required to be made by the Servicer pursuant to this Agreement. No consent of the Trustee, Certificateholders or any other party is required before the Servicer may enter into an Advance Facility; provided, however, that the consent of the Trustee shall be required before the Servicer may cause to be outstanding at one time more than one Advance Facility with respect to P&I Advances or more than one Advance Facility with respect to Servicing Advances. Notwithstanding the existence of any Advance Facility under which an Advancing Person agrees to fund P&I Advances and/or Servicing Advances on the Servicer’s behalf, the Servicer shall remain obligated pursuant to this Agreement to make P&I Advances and Servicing Advances pursuant to and as required by this Agreement, and shall not be relieved of such obligations by virtue of such Advance Facility. If the Servicer enters into an Advance Facility, and for so long as an Advancing Person remains entitled to receive reimbursement for any P&I Advances or Servicing Advances outstanding and previously unreimbursed pursuant to this Agreement, then the Servicer may elect by providing written notice to the Trustee not to be permitted to reimburse itself for P&I Advances and/or Servicing Advances, as applicable, pursuant to Section 3.11(a) of this Agreement, but following any such election, the Servicer shall be required to include amounts collected that would otherwise be retained by the Servicer to reimburse it for previously xxxxxxxxxxxx X&X Advances (“P&I Advance Reimbursement Amounts”) and/or previously unreimbursed Servicing Advances (“Servicing Advance Reimbursement Amounts” and together with P&I Advance Reimbursement Amounts, “Advance Reimbursement Amounts”) (in each case to the extent such type of Advance Reimbursement Amount is included in the Advance Facility) in the remittance to the Trustee made pursuant to this Agreement to the extent of amounts on deposit in the Collection Account on the Servicer Remittance Date. Notwithstanding anything to the contrary herein, in no event shall P&I Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be included in Interest Remittance Amounts or Principal Remittance Amounts or distributed to Certificateholders. The Servicer making the election set forth herein shall report to the Trustee the portions of the Advance Reimbursement Amounts that consist of P&I Advance Reimbursement Amounts and Servicing Advance Reimbursement Amounts, respectively.

(b)

If the Servicer enters into an Advance Facility and makes the election set forth in Section 3.28(a), the Servicer and the related Advancing Person shall deliver to the Trustee a written notice and payment instruction (an “Advance Facility Notice”), providing the Trustee with written payment instructions as to where to remit P&I Advance Reimbursement Amounts and/or Servicing Advance Reimbursement Amounts (each to the extent such type of Advance Reimbursement Amount is included within the Advance Facility) on subsequent Distribution Dates. The payment instruction shall require the applicable Advance Reimbursement Amounts to be distributed to the Advancing Person or to a trustee or custodian (an “Advance Facility Trustee”) designated in the Advance Facility Notice. An Advance Facility Notice may only be terminated by the joint written direction of the Servicer and the related Advancing Person (and any related Advance Facility Trustee); provided, however, that the provisions of this Section 3.28 shall cease to be applicable when all P&I Advances and Servicing Advances funded by an Advancing Person, and when all P&I Advances and Servicing Advances (the rights to be reimbursed for which have been assigned or pledged to an Advancing Person), have been repaid to the related Advancing Person in full. Under no circumstances shall the Advancing Person have the right to withdraw funds directly from the Collection Account.

(c)

Advance Reimbursement Amounts shall consist solely of amounts in respect of P&I Advances and/or Servicing Advances made with respect to the Mortgage Loans for which the Servicer would be permitted to reimburse itself in accordance with Section 3.11(a)(ii), (iii), (vi) and (ix) hereof, assuming the Servicer had made the related P&I Advance(s) and/or Servicing Advance(s). Notwithstanding the foregoing (subject to Section 3.28(a) above), no Advancing Person shall be entitled to reimbursement from funds held in the Collection Account for future distribution to Certificateholders pursuant to the provisions of Section 4.03. The Trustee shall not have any duty or liability with respect to the calculation of any Advance Reimbursement Amount and shall be entitled to rely without independent investigation on the Advance Facility Notice and on the Servicer’s report of the amount of P&I Advance Reimbursement Amounts and Servicing Advance Reimbursement Amounts that were included in the remittance from the Servicer to the Trustee pursuant to Section 3.11(a)(i). The Servicer shall maintain and provide to any successor Servicer a detailed accounting on a loan-by-loan basis as to amounts advanced by, pledged or assigned to, and reimbursed to any Advancing Person. The successor Servicer shall be entitled to rely on any such information provided by the predecessor Servicer, and the successor Servicer shall not be liable for any errors in such information.

(d)

An Advancing Person who receives an assignment or pledge of the rights to be reimbursed for P&I Advances and/or Servicing Advances, and/or whose obligations hereunder are limited to the funding of P&I Advances and/or Servicing Advances shall not be required to meet the criteria for qualification of a Sub-Servicer set forth in Section 3.02 hereof.

(e)

With respect to any Advance Facility pursuant to which the Servicer has made the election set forth in Section 3.28(a), the documentation establishing any Advance Facility shall require that Advance Reimbursement Amounts distributed with respect to each Mortgage Loan be allocated to outstanding xxxxxxxxxxxx X&X Advances or Servicing Advances (as the case may be) made with respect to that Mortgage Loan on a “first-in, first-out” (FIFO) basis. Such documentation shall also require the electing Servicer to provide to the related Advancing Person or Advance Facility Trustee loan-by-loan information with respect to each Advance Reimbursement Amount distributed by the Trustee to such Advancing Person or Advance Facility Trustee on each Distribution Date, to enable the Advancing Person or Advance Facility Trustee to make the FIFO allocation of each Advance Reimbursement Amount with respect to each Mortgage Loan. The Servicer shall remain entitled to be reimbursed by the Advancing Person or Advance Facility Trustee for all P&I Advances and Servicing Advances funded by the Servicer to the extent the related rights to be reimbursed therefor have not been assigned or pledged to an Advancing Person.

(f)

The Servicer who enters into an Advance Facility shall indemnify the Trustee, the Trust and any successor Servicer, as applicable, from and against any claims, losses, liabilities or damages resulting from any claim by the Advancing Person relating to the Advance Facility, 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 Trustee or the successor Servicer.

(g)

Any amendment to this Section 3.28 or to any other provision of this Agreement that may be necessary or appropriate to effect the terms of an Advance Facility as described generally in this Section 3.28, including amendments to add provisions relating to a successor Servicer, may be entered into by the Trustee, the Seller and the Servicer without the consent of any Certificateholder, notwithstanding anything to the contrary in Section 10.01 of or elsewhere in this Agreement.

(h)

Upon the direction of and at the expense of the Servicer, the Trustee agrees to execute such acknowledgments, certificates, and other documents provided by the Servicer recognizing the interests of any Advance Facility Trustee in such Advance Reimbursement Amounts as the Servicer may cause to be made subject to Advance Facilities pursuant to this Section 3.28, and such other documents in connection with such Advance Facilities as may be reasonably requested from time to time by any Advance Facility Trustee.

ARTICLE IV

PAYMENTS TO CERTIFICATEHOLDERS

SECTION 4.01.

Distributions.

(a)

(1)

On each Distribution Date, the Trustee shall withdraw from the Distribution Account that portion of the Available Distribution Amount equal to the Interest Remittance Amount for that Distribution Date and make the following disbursements and transfers in the following order of priority in each case, to the extent of the Interest Remittance Amount remaining for such Distribution Date:

(i)

to the Counterparty, first the Aggregate Strip Amount for such Distribution Date and then any unpaid Aggregate Strip Amount due from preceding Distribution Dates;

(ii)

first, concurrently to the Holders of each Class of Senior Certificates, applied in accordance with the allocation rules set forth in Section 4.01(f) below, the related Monthly Interest Distributable Amount, on a pro rata basis based on such Monthly Interest Distributable Amount and second, concurrently to each Class of Senior Certificates, applied in accordance with the allocation rules set forth in Section 4.01(f) below, the related Unpaid Interest Shortfall Amount, if any, for each such Class for such Distribution Date on a pro rata basis based on such Unpaid Interest Shortfall Amount.

(iii)

to the Holders of the Class M1 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(iv)

to the Holders of the Class M2 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(v)

to the Holders of the Class M3 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(vi)

to the Holders of the Class M4 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(vii)

to the Holders of the Class M5 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(viii)

to the Holders of the Class M6 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(ix)

to the Holders of the Class M7 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(x)

to the Holders of the Class M8 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(xi)

to the Holders of the Class M9 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates;

(xii)

to the Holders of the Class M10 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates; and

(xiii)

to the Holders of the Class M11 Certificates, the related Monthly Interest Distributable Amount for such Class of Certificates.

Any Interest Remittance Amount remaining undistributed after giving effect to subclause (i) through (xiii) above shall be used in determining the amount of Net Monthly Excess Cashflow, if any, for such Distribution Date.

(2)

On each Distribution Date, the Trustee shall withdraw from the Distribution Account the Principal Distribution Amount for such Distribution Date and make the following disbursements and transfers in the following order of priority in each case, to the extent of the Principal Distribution Amount remaining for such Distribution Date:

(A)

On each Distribution Date (a) prior to the Stepdown Date or (b) on which a Trigger Event is in effect, the Principal Distribution Amount shall be distributed as follows:

(i)

concurrently:

(a)

to the Holders of the Class A1 and Class A2 Certificates, pro rata, based on Certificate Principal Balances, the Subgroup 1 Principal Distribution Amount for such Distribution Date, until their respective Certificate Principal Balances have been reduced to zero; provided however, that beginning on the first Distribution Date on or after which the Mezzanine Certificates have been paid in full and the Net Monthly Excess Interest and Overcollateralization Amount for such Distribution Date are insufficient to cover Realized Losses on the Subgroup 1 Mortgage Loans, sequentially to the Class A1 and Class A2 Certificates, in that order, until their respective Certificate Principal Balances have each been reduced to zero; and

(b)

to the Holders of the Class A3, Class A4, Class A5 and Class A6 Certificates, pro rata, based on Certificate Principal Balances, the Subgroup 2 Principal Distribution Amount for such Distribution Date, until their respective Certificate Principal Balances have been reduced to zero; provided however, that the portions allocable to the Class A4, Class A5 and Class A6 Certificates shall be paid sequentially to the Class A4, Class A5 and Class A6 Certificates, in that order, until their respective Certificate Principal Balances have each been reduced to zero;

provided, after the aggregate Certificate Principal Balance of the Classes of Class A Certificates related to a Subgroup is reduced to zero, any amounts remaining available to be distributed to such Classes pursuant to the applicable subclause above will be distributed to the Classes of Class A Certificates related to a Subgroup, in accordance with the distribution rules set forth above for the related subclause (after the distribution pursuant to the applicable subclause on such Distribution Date);

(c)

to the Holders of the Class M1 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(d)

to the Holders of the Class M2 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(e)

to the Holders of the Class M3 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(f)

to the Holders of the Class M4 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(g)

to the Holders of the Class M5 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero;

(h)

to the Holders of the Class M6 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero;

(i)

to the Holders of the Class M7 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero;

(j)

to the Holders of the Class M8 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero;

(k)

to the Holders of the Class M9 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero;

(l)

to the Holders of the Class M10 Certificates, until the Certificate Principal Balance thereof has each been reduced to zero; and

(m)

to the Holders of the Class M11 Certificates, until the Certificate Principal Balance thereof has been reduced to zero.

(B)

On each Distribution Date (a) on or after the Stepdown Date and (b) on which a Trigger Event is not in effect, the Principal Distribution Amount shall be distributed as follows:

(i)

concurrently:

(a)

(b)

(c)

to the Holders of the Class M1 Certificates, the Class M1 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(d)

to the Holders of the Class M2 Certificates, the Class M2 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(e)

to the Holders of the Class M3 Certificates, the Class M3 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(f)

to the Holders of the Class M4 Certificates, the Class M4 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(g)

to the Holders of the Class M5 Certificates, the Class M5 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(h)

to the Holders of the Class M6 Certificates, the Class M6 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(i)

to the Holders of the Class M7 Certificates, the Class M7 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(j)

to the Holders of the Class M8 Certificates, the Class M8 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(k)

to the Holders of the Class M9 Certificates, the Class M9 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero;

(l)

to the Holders of the Class M10 Certificates, the Class M10 Principal Distribution Amount for such Distribution Date, until the Certificate Principal Balance thereof has been reduced to zero; and

(m)

to the Holders of the Class M11 Certificates, the Class M11 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero.

Any Principal Distribution Amount remaining undistributed after giving effect to clauses (A) and (B) above shall be used in determining the amount of Net Monthly Excess Cashflow, if any, for such Distribution Date.

(3)

On each Distribution Date, the Net Monthly Excess Cashflow shall be distributed as follows:

(i)

to the Holders of the Class or Classes of Certificates then entitled to receive distributions in respect of principal, in an amount equal to any Overcollateralization Increase Amount, payable to such Holders as part of the Principal Distribution Amount and applied in the same order of priority as payments of principal would otherwise be applied on such Distribution Date to reduce the Certificate Principal Balance of such Certificates until the aggregate Certificate Principal Balance of such Classes of Certificates is reduced to zero;

(ii)

to the Holders of the Class A2 Certificates, in an amount equal to the Allocated Realized Loss Amount allocable to such Class of Certificates;

(iii)

to the Holders of the Class M1 Certificates, any Unpaid Interest Shortfall Amount allocable to such Class of Certificates;

(iv)

to the Holders of the Class M1 Certificates, any Allocated Realized Loss Amount allocable to such Class of Certificates;

(v)

to the Holders of the Class M2 Certificates, any Unpaid Interest Shortfall Amount allocable to such Class of Certificates;

(vi)

to the Holders of the Class M2 Certificates, any Allocated Realized Loss Amount allocable to such Class of Certificates;

(vii)

to the Holders of the Class M3 Certificates, any Unpaid Interest Shortfall Amount allocable to such Class of Certificates;

(viii)

to the Holders of the Class M3 Certificates, any Allocated Realized Loss Amount allocable to such Class of Certificates;

(ix)

to the Holders of the Class M4 Certificates, any Unpaid Interest Shortfall Amount allocable to such Class of Certificates;

(x)

to the Holders of the Class M4 Certificates, any Allocated Realized Loss Amount allocable to such Class of Certificates;

(xi)

to the Holders of the Class M5 Certificates, any Unpaid Interest Shortfall Amount allocable to such Class of Certificates;

(xii)

to the Holders of the Class M5 Certificates, any Allocated Realized Loss Amount allocable to such Class of Certificates;

(xiii)

to the Holders of the Class M6 Certificates, any Unpaid Interest Shortfall Amount