Popular ABS, Inc. Depositor Equity One, Inc., a Delaware corporation A Seller and the Servicer Equity One, Incorporated Equity One, Inc., a Minnesota corporation Equity One Consumer Loan Company, Inc., a New Hampshire corporation and Popular Financial...

Popular ABS, Inc.

Depositor

Equity One, Inc., a Delaware corporation

A Seller and the Servicer

Equity One, Incorporated

Equity One, Inc., a Minnesota corporation

Equity One Consumer Loan Company, Inc., a New Hampshire corporation

and

Popular Financial Services, LLC

Sellers

and

The Bank of New York

Trustee

___________________________________

POOLING AND SERVICING AGREEMENT

Dated as of November 1, 2006

__________________________________

MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-E

TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT	1

ARTICLE I DEFINITIONS	11

40 YEAR LOANS	11
60+ DAY DELINQUENT LOAN	11
ADDITION NOTICE	11
ADJUSTED MORTGAGE RATE	11
ADJUSTED NET MORTGAGE RATE	11
ADVANCE	11
AGGREGATE CLASS B EARLY DISTRIBUTION AMOUNT	11
AGGREGATE TRUST FUND PRINCIPAL BALANCE	11
AGREEMENT	11
AMOUNT HELD FOR FUTURE DISTRIBUTION	11
APPLIED REALIZED LOSS AMOUNT	12
AVAILABLE FUNDS	12
AVM	12
BALLOON LOANS	12
BANKRUPTCY CODE	12
BASIC PRINCIPAL DISTRIBUTION AMOUNT	12
BENEFICIAL OWNER	12
BOOK-ENTRY CERTIFICATES	12
BORROWER RETENTION LOAN	12
BUSINESS DAY	12
CAP ACCOUNT	13
CAP AGREEMENT	13
CAP CLASS B-1 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS B-2 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS B-3 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS M-3 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS M-4 REALIZED LOSS AMORTIZATION AMOUNT	13
CAP CLASS M-5 REALIZED LOSS AMORTIZATION AMOUNT	14
CAP CLASS M-6 REALIZED LOSS AMORTIZATION AMOUNT	14
CAP COUNTERPARTY	14
CAP DISTRIBUTION AMOUNT	14
CAP EXTRA PRINCIPAL DISTRIBUTION AMOUNT	14
CAP NOTIONAL BALANCE	14
CAP STATED TERMINATION	14
CAP UNPAID REALIZED LOSS AMOUNT	14
CERTIFICATES	14
CERTIFICATE ACCOUNT	14
CERTIFICATE BALANCE	15
CERTIFICATEHOLDER OR HOLDER	15
CERTIFICATE REGISTER	15
CERTIFICATE REGISTRAR	15
CLASS	15
CLASS A-1 CERTIFICATE	15
CLASS A-2 CERTIFICATE	15
CLASS A-3 CERTIFICATE	15

CLASS B-1 APPLIED REALIZED LOSS AMOUNT	15
CLASS B-1 CERTIFICATE	16
CLASS B-1 PRINCIPAL DISTRIBUTION AMOUNT	16
CLASS B-1 REALIZED LOSS AMORTIZATION AMOUNT	16
CLASS B-2 APPLIED REALIZED LOSS AMOUNT	16
CLASS B-2 CERTIFICATE	16
CLASS B-2 PRINCIPAL DISTRIBUTION AMOUNT	16
CLASS B-2 REALIZED LOSS AMORTIZATION AMOUNT	17
CLASS B-3 APPLIED REALIZED LOSS AMOUNT	17
CLASS B-3 CERTIFICATE	17
CLASS B-3 PRINCIPAL DISTRIBUTION AMOUNT	17
CLASS B-3 REALIZED LOSS AMORTIZATION AMOUNT	17
CLASS CERTIFICATE BALANCE	18
CLASS I SHORTFALLS	18
CLASS INTEREST SHORTFALL	18
CLASS M-1 APPLIED REALIZED LOSS AMOUNT	18
CLASS M-1 CERTIFICATE	18
CLASS M-1 PRINCIPAL DISTRIBUTION AMOUNT	18
CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT	18
CLASS M-2 APPLIED REALIZED LOSS AMOUNT	19
CLASS M-2 CERTIFICATE	19
CLASS M-2 PRINCIPAL DISTRIBUTION AMOUNT	19
CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT	19
CLASS M-3 APPLIED REALIZED LOSS AMOUNT	19
CLASS M-3 CERTIFICATE	19
CLASS M-3 PRINCIPAL DISTRIBUTION AMOUNT	19
CLASS M-3 REALIZED LOSS AMORTIZATION AMOUNT	20
CLASS M-4 APPLIED REALIZED LOSS AMOUNT	20
CLASS M-4 CERTIFICATE	20
CLASS M-4 PRINCIPAL DISTRIBUTION AMOUNT	20
CLASS M-4 REALIZED LOSS AMORTIZATION AMOUNT	20
CLASS M-5 APPLIED REALIZED LOSS AMOUNT	20
CLASS M-5 CERTIFICATE	21
CLASS M-5 PRINCIPAL DISTRIBUTION AMOUNT	21
CLASS M-5 REALIZED LOSS AMORTIZATION AMOUNT	21
CLASS M-6 APPLIED REALIZED LOSS AMOUNT	21
CLASS M-6 CERTIFICATE	21
CLASS M-6 PRINCIPAL DISTRIBUTION AMOUNT	21
CLASS M-6 REALIZED LOSS AMORTIZATION AMOUNT	22
CLASS R CERTIFICATES	22
CLASS UNPAID INTEREST AMOUNTS	22
CLASS X CERTIFICATE	22
CLOSING DATE	22
CLOSING PLACE	22
CODE	22
COLLATERAL	22
COLLATERAL VALUE	22
COMBINED LOAN-TO-VALUE RATIO	23
COMMISSION	23
CORPORATE TRUST OFFICE	23
CORRESPONDING CLASS	23
CUSTODIAL AGREEMENT	23
CUSTODIAN	23

CUT-OFF DATE	23
CUT-OFF DATE PRINCIPAL BALANCE	23
DEFECTIVE LOAN	23
DEFICIENT VALUATION	24
DEFINITIVE CERTIFICATES	24
DELETED LOAN	24
DENOMINATION	24
DEPOSITOR	24
DEPOSITORY	24
DEPOSITORY PARTICIPANT	24
DETERMINATION DATE	24
DISTRIBUTION ACCOUNT	24
DISTRIBUTION ACCOUNT DEPOSIT DATE	24
DISTRIBUTION DATE	24
DUE DATE	24
DUE PERIOD	25
ELIGIBLE ACCOUNT	25
EQUITY ONE-DELAWARE	25
EQUITY ONE-MINNESOTA	25
EQUITY ONE-NEW HAMPSHIRE	25
EQUITY ONE-PENNSYLVANIA	25
ERISA	25
ERISA QUALIFYING UNDERWRITING	25
ERISA-RESTRICTED CERTIFICATE	25
ESCROW ACCOUNT	25
EVENT OF DEFAULT	26
EXCESS CASHFLOW REALIZED LOSS AMORTIZATION XXXXXX	00
XXXXXXXX XXX	26
EXCESS PROCEEDS	26
EXCLUDED TRUST ASSETS	26
EXPENSE RATE	26
EXTERNAL TRUST	26
EXTRA PRINCIPAL DISTRIBUTION AMOUNT	26
FDIC	26
FHLMC	26
FINAL MATURITY DEFICIENCY	27
FINAL MATURITY RESERVE FUND	27
FINAL MATURITY RESERVE FUND ADDITION AMOUNT	27
FINAL MATURITY RESERVE FUND ADDITION RATE	27
FIRREA	27
FIXED SWAP PAYMENT	27
FLOATING SWAP PAYMENT	27
FMRF DISTRIBUTION AMOUNT	27
FNMA	27
FUNDING PERIOD	27
INDIRECT PARTICIPANT	27
INITIAL CERTIFICATE ACCOUNT DEPOSIT	28
INITIAL AGGREGATE TRUST FUND PRINCIPAL BALANCE	28
INITIAL CERTIFICATE ACCOUNT DEPOSIT	28
INITIAL CUT-OFF DATE	28
INITIAL CUT-OFF DATE POOL PRINCIPAL BALANCE	28
INITIAL CUT-OFF DATE PRINCIPAL BALANCE	28
INITIAL LOANS	28

iii

INSURANCE POLICY	28
INSURANCE PROCEEDS	28
INSURED EXPENSES	28
INTEREST ACCRUAL PERIOD	28
INTEREST DISTRIBUTION AMOUNT	28
INTEREST REMITTANCE AMOUNT	29
INVESTMENT LETTER	29
LATEST POSSIBLE MATURITY DATE	29
LAST SCHEDULED DISTRIBUTION DATE	29
LIBOR	29
LIBOR DETERMINATION DATE	29
LIQUIDATED LOAN	29
LIQUIDATION PROCEEDS	29
LOANS	29
LOAN SCHEDULE	30
MAJORITY IN INTEREST	30
MERS (R)	30
MERS (R) SYSTEM	30
MIN	30
MOM LOAN	30
MONTHLY EXCESS CASHFLOW AMOUNT	30
MONTHLY EXCESS INTEREST AMOUNT	30
MONTHLY STATEMENT	31
XXXXX’X	31
MORTGAGE	31
MORTGAGED PROPERTY	31
MORTGAGE FILE	31
MORTGAGE NOTE	31
MORTGAGE RATE	31
MORTGAGOR	31
NET PREPAYMENT INTEREST SHORTFALLS	31
NET REALIZED LOSSES	31
NET RECOVERY REALIZED LOSSES	31
NET SWAP PAYMENT	31
NET WAC CAP	32
NET WAC CAP ACCOUNT	32
NET WAC CAP CARRYOVER	32
NET WAC RATE	32
NONRECOVERABLE ADVANCE	32
NOTICE OF FINAL DISTRIBUTION	32
OFFERED CERTIFICATES	32
OFFICER’S CERTIFICATE	32
OPINION OF COUNSEL	33
OPTIONAL TERMINATION DATE	33
OPTIONAL TERMINATION	33
ORIGINAL LOAN	33
ORIGINAL PRE-FUNDED AMOUNT	33
OTS	33
OUTSTANDING	33
OUTSTANDING LOAN	33
OVERCOLLATERALIZATION AMOUNT	33
OVERCOLLATERALIZATION DEFICIENCY	33
OVERCOLLATERALIZATION RELEASE AMOUNT	34

OWNERSHIP INTEREST	34
PASS-THROUGH RATE	34
PAYING AGENT	34
PERCENTAGE INTEREST	34
PERMITTED INVESTMENTS	34
PERMITTED TRANSFEREE	35
PERSON	35
PLAN	36
POOL PRINCIPAL BALANCE	36
POPULAR FINANCIAL	36
PRELIMINARY PROSPECTUS SUPPLEMENT	36
POST-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT	36
PRE-FUNDED AMOUNT	36
PRE-FUNDING ACCOUNT	36
PRE-FUNDING EARNINGS	36
PRE-STEPDOWN REMAINING PRINCIPAL DISTRIBUTION AMOUNT	36
PREPAYMENT INTEREST EXCESS	36
PREPAYMENT INTEREST SHORTFALL	36
PREPAYMENT PERIOD	36
PRIMARY MORTGAGE INSURANCE POLICY	37
PRINCIPAL DISTRIBUTION AMOUNT	37
PRINCIPAL PREPAYMENT	37
PRINCIPAL PREPAYMENT IN FULL	37
PRINCIPAL REMITTANCE AMOUNT	37
PROSPECTUS SUPPLEMENT	37
PUBLICLY OFFERED CERTIFICATES	37
PURCHASE PRICE	37
PTCE	38
RATING AGENCY	38
REALIZED LOSS AMOUNT	38
REALIZED LOSSES	38
REALIZED LOSS AMORTIZATION AMOUNT	38
RECORD DATE	38
RECOVERY	39
REFERENCE BANKS	39
REGULATION AB	39
REFINANCE LOAN	39
RELIEF ACT	39
RELIEF ACT REDUCTIONS	39
REMAINING EXCESS INTEREST AMOUNT	39
REMAINING INTEREST REMITTANCE AMOUNT	39
REMAINING OVERCOLLATERALIZATION RELEASE AMOUNT	39
REMAINING PRINCIPAL DISTRIBUTION AMOUNT	39
REMIC	40
REMIC 1	40
REMIC 1 REGULAR INTEREST	40
REMIC 2	40
REMIC 3 NET WAC CAP	40
REMIC 2 REGULAR INTEREST	40
REMIC 3	40
REMIC 3 REGULAR INTEREST	40
REMIC 4 REGULAR INTEREST	40
REMIC CHANGE OF LAW	40

REMIC PROVISIONS	40
REO PROPERTY	40
REQUEST FOR RELEASE	40
REQUIRED INSURANCE POLICY	41
RESPONSIBLE OFFICER	41
RULE 144A LETTER	41
SCHEDULED PAYMENT	41
SECOND LIEN LOAN	41
SECURITIES ACT	41
SELLERS	41
SENIOR CERTIFICATES	41
SENIOR ENHANCEMENT PERCENTAGE	41
SENIOR PRINCIPAL DISTRIBUTION AMOUNT	41
SENIOR SPECIFIED ENHANCEMENT PERCENTAGE	41
SERVICER	42
SERVICER ADVANCE DATE	42
SERVICING ADVANCES	42
SERVICING AMOUNT	42
SERVICING CRITERIA	42
SERVICING FEE	42
SERVICING FEE RATE	42
SERVICING OFFICER	42
S&P	42
STARTUP DAY	42
STATED PRINCIPAL BALANCE	42
STEPDOWN DATE	43
SUBORDINATE CERTIFICATES	43
SUBSEQUENT LOANS	43
SUBSEQUENT TRANSFER AGREEMENT	43
SUBSEQUENT TRANSFER DATE	43
SUBSERVICER	43
SUBSTITUTE LOAN	43
SUBSTITUTION ADJUSTMENT AMOUNT	43
SWAP ACCOUNT	43
SWAP AGREEMENT	43
SWAP CLASS B-1 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS B-2 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS B-3 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-1 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-2 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-3 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-4 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-5 REALIZED LOSS AMORTIZATION AMOUNT	44
SWAP CLASS M-6 REALIZED LOSS AMORTIZATION AMOUNT	45
SWAP COUNTERPARTY	45
SWAP COUNTERPARTY TRIGGER EVENT	45
SWAP DISTRIBUTION AMOUNT	45
SWAP EARLY TERMINATION	45
SWAP EXTRA PRINCIPAL DISTRIBUTION AMOUNT	45
SWAP LIBOR	45
SWAP NOTIONAL BALANCE	45
SWAP REALIZED LOSS AMORTIZATION AMOUNT	45
SWAP STATED TERMINATION	46

SWAP UNPAID REALIZED LOSS AMOUNT	46
SWAP TERMINATION PAYMENT	46
TARGETED OVERCOLLATERALIZATION AMOUNT	46
TAX MATTERS PERSON	46
TAX MATTERS PERSON CERTIFICATE	46
TERMINATION PRICE	46
TRANSFER	46
TRANSFER AFFIDAVIT	46
TRANSFEROR CERTIFICATE	46
TRIGGER EVENT	46
TRUSTEE	48
TRUSTEE FEE	48
TRUSTEE FEE RATE	48
TRUST FUND	48
TRUSTEE PERMITTED WITHDRAWAL AMOUNT	49
UNPAID REALIZED LOSS AMOUNT	49
UNDERWRITER EXEMPTION	49
UNDERWRITERS	49
UNUTILIZED FUNDING AMOUNT	49
VOTING RIGHTS	49

ARTICLE II CONVEYANCE OF LOANS; REPRESENTATIONS AND WARRANTIES	49

SECTION 2.01. CONVEYANCE OF LOANS.	49
SECTION 2.02. ACCEPTANCE BY TRUSTEE OF THE TRUST FUND.	52
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLERS AND THE SERVICER.	54
SECTION 2.03A. ADDITIONAL OBLIGATIONS OF EQUITY ONE-DELAWARE.	56
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AS TO THE LOANS	56
SECTION 2.05. DELIVERY OF OPINION OF COUNSEL IN CONNECTION WITH SUBSTITUTIONS.	56
SECTION 2.06. EXECUTION AND DELIVERY OF CERTIFICATES.	57
SECTION 2.07. REMIC MATTERS.	57
SECTION 2.08. COVENANTS OF THE SERVICER.	58
SECTION 2.09. SUBSEQUENT TRANSFERS.	58
SECTION 2.10. MANDATORY PREPAYMENT.	61

ARTICLE III ADMINISTRATION AND SERVICING OF LOANS	61

SECTION 3.01. SERVICER TO SERVICE LOANS.	61
SECTION 3.02. SUBSERVICING; ENFORCEMENT OF THE OBLIGATIONS OF SERVICERS.	62
SECTION 3.03. RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF THE SERVICER.	62
SECTION 3.04. TRUSTEE TO ACT AS SERVICER.	63
SECTION 3.05. COLLECTION OF LOAN PAYMENTS; CERTIFICATE ACCOUNT; DISTRIBUTION ACCOUNT.	63
SECTION 3.06. PAYMENT OF TAXES, ASSESSMENTS, HAZARD INSURANCE PREMIUMS AND SIMILAR ITEMS; ESCROW ACCOUNTS.	65
SECTION 3.07. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE LOANS.	66
SECTION 3.08. PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT AND DISTRIBUTION ACCOUNT.	66
SECTION 3.09. MAINTENANCE OF HAZARD INSURANCE; MAINTENANCE OF PRIMARY INSURANCE POLICIES.	67
SECTION 3.10. ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION AGREEMENTS.	68
SECTION 3.11. REALIZATION UPON DEFAULTED LOANS; REPURCHASE AND SALE OF CERTAIN LOANS.	69

vii

SECTION 3.12. DOCUMENTS, RECORDS AND FUNDS IN POSSESSION OF SERVICER TO BE HELD FOR THE TRUSTEE.	71
SECTION 3.13. SERVICING COMPENSATION.	71
SECTION 3.14. ACCESS TO CERTAIN DOCUMENTATION.	71
SECTION 3.15. ANNUAL STATEMENT AS TO COMPLIANCE.	72
SECTION 3.16. SERVICER’S ANNUAL SERVICING STATEMENT; INDEPENDENT PUBLIC ACCOUNTANTS’ ATTESTATION.	72
SECTION 3.17. ERRORS AND OMISSIONS INSURANCE; FIDELITY BONDS.	73
SECTION 3.18. ENGAGEMENT BY SERVICER OF AFFILIATES OR THIRD PARTY VENDORS.	73
SECTION 3.19. DELINQUENT LOANS.	73

ARTICLE IIIA RESERVE FUNDS AND EXTERNAL TRUST	74

SECTION 3A.01. SWAP ACCOUNT AND SWAP AGREEMENT.	74
SECTION 3A.02. CAP ACCOUNT AND CAP AGREEMENT.	75
SECTION 3A.03. THE FINAL MATURITY RESERVE FUND.	76
SECTION 3A.04. NET WAC CAP ACCOUNT	77
SECTION 3A.05. EXTERNAL TRUST	77
SECTION 3A.06. PRE-FUNDING ACCOUNT.	78

ARTICLE IV DISTRIBUTIONS AND ADVANCES BY THE SERVICER	79

SECTION 4.01. ADVANCES.	79
SECTION 4.02. PRIORITIES OF DISTRIBUTION AND ALLOCATION.	79
SECTION 4.02A. RECOVERIES.	92
SECTION 4.03. MONTHLY STATEMENTS TO CERTIFICATEHOLDERS.	92
SECTION 4.04. REPORTING.	96
SECTION 5.01. THE CERTIFICATES.	96
SECTION 5.02. CERTIFICATE REGISTER; REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.	97
SECTION 5.03. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.	101
SECTION 5.04. PERSONS DEEMED OWNERS.	101
SECTION 5.05. ACCESS TO LIST OF CERTIFICATEHOLDERS’ NAMES AND ADDRESSES.	101
SECTION 5.06. MAINTENANCE OF OFFICE OR AGENCY.	101

ARTICLE VI THE DEPOSITOR AND THE SERVICER	102

SECTION 6.01. RESPECTIVE LIABILITIES OF THE DEPOSITOR AND THE SERVICER.	102
SECTION 6.02. MERGER OR CONSOLIDATION OF THE DEPOSITOR OR THE SERVICER.	102
SECTION 6.03. LIMITATION ON LIABILITY OF THE DEPOSITOR, THE SELLERS, THE SERVICER AND OTHERS.	102
SECTION 6.04. LIMITATION ON RESIGNATION OF SERVICER.	103
SECTION 6.05. INDEMNIFICATION.	103

ARTICLE VII DEFAULT	103

SECTION 7.01. EVENTS OF DEFAULT.	103
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.	105
SECTION 7.03. NOTIFICATION TO CERTIFICATEHOLDERS.	106
SECTION 7.04. SURVIVABILITY OF SERVICER LIABILITIES.	106

ARTICLE VIII CONCERNING THE TRUSTEE	106

SECTION 8.01. DUTIES OF TRUSTEE.	106
SECTION 8.02 CERTAIN MATTERS AFFECTING THE TRUSTEE.	107
SECTION 8.03. TRUSTEE NOT LIABLE FOR CERTIFICATES OR LOANS.	109
SECTION 8.04. TRUSTEE MAY OWN CERTIFICATES.	109
SECTION 8.05. TRUSTEE’S FEES AND EXPENSES.	109

viii

SECTION 8.06. ELIGIBILITY REQUIREMENTS FOR TRUSTEE.	110
SECTION 8.07. RESIGNATION AND REMOVAL OF TRUSTEE.	110
SECTION 8.08. SUCCESSOR TRUSTEE.	111
SECTION 8.09. MERGER OR CONSOLIDATION OF TRUSTEE.	111
SECTION 8.10. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.	111
SECTION 8.11. TAX MATTERS.	112
SECTION 8.12. PERIODIC FILINGS.	114
SECTION 8.13. APPOINTMENT OF CUSTODIANS.	114
SECTION 8.14. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES.	114
SECTION 8.15. SUITS FOR ENFORCEMENT.	115
SECTION 8.16. TRUSTEE’S ANNUAL SERVICING STATEMENT; INDEPENDENT PUBLIC ACCOUNTANTS’ ATTESTATION.	115
SECTION 8.17. ENGAGEMENT BY TRUSTEE OF AFFILIATES OR THIRD PARTIES.	116
SECTION 8.18. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.	116
SECTION 8.19. DERIVATIVE TRANSACTIONS.	116

ARTICLE IX TERMINATION	117

SECTION 9.01. TERMINATION UPON LIQUIDATION OR PURCHASE OF ALL LOANS.	117
SECTION 9.02. FINAL DISTRIBUTION ON THE CERTIFICATES.	117
SECTION 9.03. ADDITIONAL TERMINATION REQUIREMENTS.	118

ARTICLE X MISCELLANEOUS PROVISIONS	119

SECTION 10.01. AMENDMENT.	119
SECTION 10.02. RECORDATION OF AGREEMENT; COUNTERPARTS.	120
SECTION 10.03. GOVERNING LAW.	120
SECTION 10.04. INTENTION OF PARTIES.	121
SECTION 10.05. NOTICES.	122
SECTION 10.06. SEVERABILITY OF PROVISIONS.	123
SECTION 10.07. ASSIGNMENT.	123
SECTION 10.08. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.	123
SECTION 10.09. INSPECTION AND AUDIT RIGHTS.	124
SECTION 10.10. CERTIFICATES NONASSESSABLE AND FULLY PAID.	124
SECTION 10.11. THE CLOSING.	124
SECTION 10.12. INTERPRETATION.	125
SECTION 10.13. MATERIAL LITIGATION; AFFILIATIONS.	125
SECTION 10.14. NO PARTNERSHIP.	125
SECTION 10.15. PROTECTION OF ASSETS.	125
SECTION 10.16. EXECUTION OF SWAP AGREEMENT AND CAP AGREEMENT.	125

SCHEDULE I	S-I-1

SCHEDULE IIA	S-IIA-1

SCHEDULE IIB	S-IIB-1

SCHEDULE IIC	S-IIC-1

SCHEDULE IID	S-IID-1

SCHEDULE IIE	S-IIE-1

SCHEDULE IIF	S-IIF-1

SCHEDULE IIX	S-IIX-1

SCHEDULE IIIA	S-IIIA-1

SCHEDULE IIIB	S-IIIB-1

SCHEDULE IIIC	S-IIIC-1

SCHEDULE IIID	S-IIID-1

SCHEDULE IIIE	S-IIIE-1

SCHEDULE IIIF	S-IIIF-1

SCHEDULE IV	IV-1

SCHEDULE V	V-1

SCHEDULE VI	VI-1

SCHEDULE VII	VII-1

EXHIBIT X-0	X-0-0

XXXXXXX X-0	X-0-0

XXXXXXX X-0	X-0-0

XXXXXXX X-0	X-0-0

XXXXXXX B-1	B-1-1

EXHIBIT X-0	X-0-0

XXXXXXX X	X-0

XXXXXXX X	X-0

EXHIBIT E	E-1

EXHIBIT F	F-1

EXHIBIT G	X-0

XXXXXXX X	X-0

XXXXXXX I	I-1

EXHIBIT J	J-1

EXHIBIT X	X-1

EXHIBIT L	L-1

EXHIBIT M	M-1

EXHIBIT N	N-1

EXHIBIT O	O-1

EXHIBIT P	P-1

THIS POOLING AND SERVICING AGREEMENT, dated as of November 1, 2006, by and among Popular ABS, Inc., a Delaware corporation, as depositor (the “Depositor”), Equity One, Inc., a Delaware corporation, as a seller (in such capacity, “Equity One-Delaware”) and as servicer (in such capacity, the “Servicer”), Equity One, Incorporated, a Pennsylvania corporation (“Equity One-Pennsylvania”), Popular Financial Services, LLC, a Delaware limited liability company (“Popular Financial”), Equity One Consumer Loan Company, Inc. a New Hampshire corporation (“Equity One-New Hampshire”), Equity One, Inc., a Minnesota corporation (“Equity One-Minnesota” and, together with Equity One-Delaware, Equity One-Pennsylvania and Popular Financial, the “Sellers”), and The Bank of New York, a New York banking corporation, as trustee (the “Trustee”).

WITNESSETH THAT

In consideration of the mutual agreements herein contained, the parties hereto agree as follows:

PRELIMINARY STATEMENT

The Depositor is the owner of the Trust Fund that is hereby conveyed to the Trustee in return for the Certificates. As provided herein, an election shall be made that the Trust Fund (exclusive of (i) the Swap Agreement, (ii) the Swap Account, (iii) the Net WAC Cap Account, (iv) the Cap Agreement, (v) the Cap Account, (vi) the Final Maturity Reserve Fund, (vii) the Pre-Funding Account and (viii) the External Trust (collectively, the “Excluded Trust Assets”)) be treated for federal income tax purposes as comprising four real estate mortgage investment conduits under Section 860D of the Code (each a “REMIC” or, in the alternative “REMIC 1,” “REMIC 2,” “REMIC 3,” and REMIC 4). 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.

Each Offered Certificate represents ownership of a regular interest in REMIC 4 for purposes of the REMIC Provisions. In addition, each Offered Certificate represents (i) the right to receive payments with respect to any Net WAC Cap Carryover and (ii) the obligation to pay Class I Shortfalls.

The Class R Certificate represents ownership of the sole Class of residual interest in each of REMIC 1, REMIC 2, REMIC 3, and REMIC 4.

The Class X Certificate represents ownership of five regular interests in REMIC 4 as described in footnote (14) to the table for REMIC 4 as well as ownership of the Excluded Trust Assets and the obligation to make Net Swap Payments to the Swap Counterparty and the obligation to make payments in respect of Net WAC Cap Carryover with respect to the Offered Certificates.

REMIC 4 shall hold as assets the uncertificated lower tier interests in REMIC 3, other than the Class R-3 interest, and each such lower tier interest is hereby designated as a regular interest in REMIC 3. REMIC 3 shall hold as its assets the uncertificated lower tier interests in REMIC 2, other than the Class R-2 interest, and each such lower tier interest is hereby designated as a regular interest in REMIC 2. REMIC 2 shall hold as its assets the uncertificated lower tier interests in REMIC 1, other than the Class R-1 interest, and each such lower tier interest is hereby designated as a regular interest in REMIC 1. REMIC 1 shall hold as its assets the property of the Trust Fund other than the lower tier interests in REMIC 1, REMIC 2, and REMIC 3 and the Excluded Trust Assets.

The startup day for each REMIC created hereby for purposes of the REMIC Provisions is the Closing Date. In addition, for purposes of the REMIC Provisions, the latest possible maturity date for each regular interest in each REMIC created hereby is the Latest Possible Maturity Date.

REMIC 1

The following table sets forth the designations, initial principal balances, and interest rates for each interest in REMIC 1, each of which (other than the Class R-1 Interest) is hereby designated as a regular interest in REMIC 1 (the “REMIC 1 Regular Interests”):

Class Designation	Initial Principal Balance	Interest Rate
Class LT-Initial	$ 199,546,454.95	(1)
Class LT-PF	$ 66,453,545.05	(2)
Class LT-X	(3)	(3)
Class R-1	(4)	(4)

(1) For any of the first three Distribution Dates only (and the related Interest Accrual Periods) and the Class LT-Initial Interests, a per annum rate equal to the weighted average of the Adjusted Net Mortgage Rates of the Initial Loans as of the first day of the related Due Period, and for every Distribution Date (and related Interest Accrual Period) thereafter, the Net WAC Rate (without adjustment for the Final Maturity Reserve Fund Addition Rate).

(2) For any of the first three Distribution Dates only (and the related Interest Accrual Periods) and the Class LT-PF Interests, 0.00%, and for each Distribution Date (and related Interest Accrual Period) thereafter, the Net WAC Rate (without adjustment for the Final Maturity Reserve Fund Addition Rate).

(3) The Class LT-X Interest is an interest only interest that does not have a principal balance but that is, for each of the first three Distribution Dates only, entitled to 100% of the interest paid on each Subsequent Loan for the related Due Period, and thereafter shall not be entitled to any distributions.

(4) The Class R-1 interest shall not have a principal amount and shall not bear interest. The Class R-1 interest is hereby designated as the sole class of residual interest in REMIC 1.

On each Distribution Date, the Trustee shall distribute the aggregate Interest Remittance Amount first to pay fees and expenses of the trust, other than any Net Swap Payment owed to the Swap Counterparty, and then with respect to each of the REMIC 1 Regular Interests based on the above-described interest rates.

On each Distribution Date, the Trustee shall distribute the Principal Remittance Amount first to the LT-Initial Interest until its principal balance equals the aggregate of the Stated Principal Balances of the Initial Loans as of the close of the related Due Period, and then any remaining amount to the LT-PF Interest. All Realized Losses on the Mortgage Loans shall be allocated among the REMIC 1 Regular Interests in the same manner in which principal is distributed.

REMIC 2

The following table sets forth the designations, initial principal balances, and interest rates for each interest in REMIC 2, each of which (other than the Class R-2 Interest) is hereby designated as a regular interest in REMIC 2 (the “REMIC 2 Regular Interests”):

Class Designation	Initial Principal Balance	Interest Rate
Class LT-F1	$ 2,331,433.78	(1)
Class LT-V1	$ 2,331,433.78	(2)
Class LT-F2	$ 2,904,013.91	(1)

Class Designation	Initial Principal Balance	Interest Rate
Class LT-V2	$ 2,904,013.91	(2)
Class LT-F3	$ 2,904,066.03	(1)
Class LT-V3	$ 2,904,066.03	(2)
Class LT-F4	$ 2,943,099.59	(1)
Class LT-V4	$ 2,943,099.59	(2)
Class LT-F5	$ 2,909,881.90	(1)
Class LT-V5	$ 2,909,881.90	(2)
Class LT-F6	$ 2,933,012.82	(1)
Class LT-V6	$ 2,933,012.82	(2)
Class LT-F7	$ 2,920,138.15	(1)
Class LT-V7	$ 2,920,138.15	(2)
Class LT-F8	$ 2,943,382.16	(1)
Class LT-V8	$ 2,943,382.16	(2)
Class LT-F9	$ 2,931,572.43	(1)
Class LT-V9	$ 2,931,572.43	(2)
Class LT-F10	$ 2,885,012.51	(1)
Class LT-V10	$ 2,885,012.51	(2)
Class LT-F11	$ 2,849,084.49	(1)
Class LT-V11	$ 2,849,084.49	(2)
Class LT-F12	$ 2,763,561.11	(1)
Class LT-V12	$ 2,763,561.11	(2)
Class LT-F13	$ 2,711,186.93	(1)
Class LT-V13	$ 2,711,186.93	(2)
Class LT-F14	$ 2,630,030.53	(1)
Class LT-V14	$ 2,630,030.53	(2)
Class LT-F15	$ 2,565,769.06	(1)
Class LT-V15	$ 2,565,769.06	(2)
Class LT-F16	$ 2,529,299.53	(1)
Class LT-V16	$ 2,529,299.53	(2)
Class LT-F17	$ 2,442,296.11	(1)
Class LT-V17	$ 2,442,296.11	(2)
Class LT-F18	$ 2,396,157.24	(1)
Class LT-V18	$ 2,396,157.24	(2)
Class LT-F19	$ 2,325,026.60	(1)
Class LT-V19	$ 2,325,026.60	(2)
Class LT-F20	$ 2,281,157.63	(1)
Class LT-V20	$ 2,281,157.63	(2)
Class LT-F21	$ 2,213,666.49	(1)
Class LT-V21	$ 2,213,666.49	(2)
Class LT-F22	$ 2,160,402.76	(1)
Class LT-V22	$ 2,160,402.76	(2)
Class LT-F23	$ 12,805,587.52	(1)
Class LT-V23	$ 12,805,587.52	(2)
Class LT-F24	$ 15,611,661.80	(1)
Class LT-V24	$ 15,611,661.80	(2)
Class LT-F25	$ 11,040,541.60	(1)
Class LT-V25	$ 11,040,541.60	(2)
Class LT-F26	$ 673,791.41	(1)
Class LT-V26	$ 673,791.41	(2)
Class LT-F27	$ 659,882.50	(1)
Class LT-V27	$ 659,882.50	(2)

Class Designation	Initial Principal Balance	Interest Rate
Class LT-F28	$ 646,267.46	(1)
Class LT-V28	$ 646,267.46	(2)
Class LT-F29	$ 632,939.90	(1)
Class LT-V29	$ 632,939.90	(2)
Class LT-F30	$ 619,893.54	(1)
Class LT-V30	$ 619,893.54	(2)
Class LT-F31	$ 607,122.28	(1)
Class LT-V31	$ 607,122.28	(2)
Class LT-F32	$ 594,620.15	(1)
Class LT-V32	$ 594,620.15	(2)
Class LT-F33	$ 582,381.30	(1)
Class LT-V33	$ 582,381.30	(2)
Class LT-F34	$ 570,400.02	(1)
Class LT-V34	$ 570,400.02	(2)
Class LT-F35	$ 558,670.72	(1)
Class LT-V35	$ 558,670.72	(2)
Class LT-F36	$ 547,187.96	(1)
Class LT-V36	$ 547,187.96	(2)
Class LT-F37	$ 535,946.39	(1)
Class LT-V37	$ 535,946.39	(2)
Class LT-F38	$ 524,940.79	(1)
Class LT-V38	$ 524,940.79	(2)
Class LT-F39	$ 514,166.08	(1)
Class LT-V39	$ 514,166.08	(2)
Class LT-F40	$ 503,617.26	(1)
Class LT-V40	$ 503,617.26	(2)
Class LT-F41	$ 493,289.46	(1)
Class LT-V41	$ 493,289.46	(2)
Class LT-F42	$ 483,177.90	(1)
Class LT-V42	$ 483,177.90	(2)
Class LT-F43	$ 473,277.95	(1)
Class LT-V43	$ 473,277.95	(2)
Class LT-F44	$ 463,585.03	(1)
Class LT-V44	$ 463,585.03	(2)
Class LT-F45	$ 454,094.70	(1)
Class LT-V45	$ 454,094.70	(2)
Class LT-F46	$ 444,802.59	(1)
Class LT-V46	$ 444,802.59	(2)
Class LT-F47	$ 435,704.45	(1)
Class LT-V47	$ 435,704.45	(2)
Class LT-F48	$ 426,796.13	(1)
Class LT-V48	$ 426,796.13	(2)
Class LT-F49	$ 418,073.54	(1)
Class LT-V49	$ 418,073.54	(2)
Class LT-F50	$ 409,532.70	(1)
Class LT-V50	$ 409,532.70	(2)
Class LT-F51	$ 401,169.73	(1)
Class LT-V51	$ 401,169.73	(2)
Class LT-F52	$ 392,980.81	(1)
Class LT-V52	$ 392,980.81	(2)
Class LT-F53	$ 384,962.22	(1)
Class LT-V53	$ 384,962.22	(2)

Class Designation	Initial Principal Balance	Interest Rate
Class LT-F54	$ 377,110.34	(1)
Class LT-V54	$ 377,110.34	(2)
Class LT-F55	$ 369,421.57	(1)
Class LT-V55	$ 369,421.57	(2)
Class LT-F56	$ 361,892.47	(1)
Class LT-V56	$ 361,892.47	(2)
Class LT-F57	$ 354,519.59	(1)
Class LT-V57	$ 354,519.59	(2)
Class LT-F58	$ 606,810.33	(1)
Class LT-V58	$ 606,810.33	(2)
Class LT-F59	$ 16,550,928.10	(1)
Class LT-V59	$ 16,550,928.10	(2)
Class LT-A	$ 3,990,000.00	(3)
Class LT2-X	(4)	(4)
Class R-2	(5)	(5)

___________________________

(1)

For any Distribution Date (and the related Interest Accrual Period) the interest rate for each of these REMIC 2 Regular Interests shall be the lesser of (i) the product of (a) the Fixed Rate, as that term is defined in the Swap Agreement, multiplied by (b) in the case of the first Distribution Date only, the quotient of 52 divided by 30, and for each Distribution Date thereafter, two, and (ii) the product of (a) the weighted average of the interest rates on the REMIC 1 Regular Interests (other than the Class LT-X Interest) weighted on the basis of their principal balances as of the first day of the related Interest Accrual Period multiplied by (b) two.

(2)

For any Distribution Date (and the related Interest Accrual Period) the interest rate for each of these REMIC 2 Regular Interests shall be the excess, if any, of (i) the product of (a) the weighted average of the interest rates on the REMIC 1 Regular Interests (other than the Class LT-X Interest) weighted on the basis of their principal balances as of the first day of the related Interest Accrual Period multiplied by (b) two, over (ii) the product of (a) the Fixed Rate, as that term is defined in the Swap Agreement, multiplied by (b) for the first Distribution Date only, the quotient of 52 divided by 30, and for each Distribution Date thereafter, two.

(3)

For any Distribution Date (and the related Interest Accrual Period), the weighted average of the interest rates on the REMIC 1 Regular Interests (other than the Class LT-X Interest) weighted on the basis of their principal balances as of the first day of the related Interest Accrual Period.

(4)

The Class LT2-X Interest is an interest only interest that does not have a principal balance. For any Distribution Date, the Class LT2-X Interest shall be entitled to all amounts distributed with respect to the Class LT-X Interest in REMIC 1.

(5)

The Class R-2 interest shall not have a principal amount and shall not bear interest. The Class R-2 interest is hereby designated as the sole class of residual interest in REMIC 2.

On each Distribution Date, the Trustee shall distribute the aggregate amount distributable as interest on the REMIC 1 Regular Interests with respect to each of the REMIC 2 Regular Interests based on the above-described interest rates.

On each Distribution Date, the Trustee shall distribute the aggregate amount distributable as principal on the REMIC 1 Regular Interests sequentially to the REMIC 2 Regular Interests, first to the Class LT- A Interest until its principal balance is reduced to zero, and then in ascending order of their numerical designation, and, with respect to each pair of REMIC 2 Regular Interests having the same numerical designation, in equal amounts to each such interest, until the principal balance of each such interest is reduced to zero. All losses on the Mortgage Loans shall be allocated among the REMIC 2 Regular Interests in the same manner that principal distributions are allocated.

REMIC 3

The following table sets forth the designations, principal balances and interest rates for each interest in REMIC 3, each of which (other than the Class R-3 interest) is hereby designated as a regular interest in REMIC 3 (the “REMIC 3 Regular Interests”):

REMIC 3 Lower Tier Class Designation	REMIC 3 Lower Tier Interest Rate	Initial Class Principal Amount	Corresponding Class of Certificate(s)
Class LT-A1	(1)	$ 59,660,500.00	Class A1
Class LT-A2	(1)	$ 21,309,000.00	Class A2
Class LT-A3	(1)	$ 10,933,500.00	Class A3
Class LT-M1	(1)	$ 14,297,500.00	Class M1
Class LT-M2	(1)	$ 8,512,000.00	Class M2
Class LT-M3	(1)	$ 2,194,500.00	Class M3
Class LT-M4	(1)	$ 2,327,500.00	Class M4
Class LT-M5	(1)	$ 1,729,000.00	Class M5
Class LT-M6	(1)	$ 2,061,500.00	Class M6
Class LT-B1	(1)	$ 2,327,500.00	Class B1
Class LT-B2	(1)	$ 2,194,500.00	Class B2
Class LT-B3	(1)	$ 3,458,000.00	Class B3
Class LT-Accrual	(1)	$ 134,995,000.00	N/A
Class LT-Reserve-IO	(2)	(2)	N/A
Class LT-Swap-IO	(3)	(3)	N/A
Class LT3-X	(4)	(4)	N/A
Class R-2	(5)	(5)	N/A

__________________________

(1)

For any Distribution Date (and the related Interest Accrual Period) the interest rate for each of these REMIC 3 Regular Interests is a per annum rate equal to the weighted average of the interest rates on the REMIC 2 Regular Interests (other than the Class LT2-X Interest), weighted on the basis of their principal balances as of the first day of the related Interest Accrual Period, provided, however, that: (i) for any Distribution Date on which the Class LT-Swap-IO Interest is entitled to a portion of the interest accruals on a REMIC 2 Regular Interest having an “F” in its class designation, as described in footnote three below, such weighted average shall be computed by first subjecting the rate on such REMIC 2 Regular Interest to a cap equal to the product of (a) Swap LIBOR (determined pursuant to the Swap Agreement) multiplied by (b) 2 multiplied by (c) the quotient of the actual number of days in the Interest Accrual Period divided by 30; and (ii) for each Distribution Date on and after the Distribution Date in December 2016, the interest rate on each REMIC 2 Regular Interest shall be first reduced by the Final Maturity Reserve Fund Addition Rate.

(2)

The Class LT-Reserve-IO is and interest-only class that does not have a principal balance. The Class LT-Reserve-IO has a notional balance that will at all times equal the sum of the principal balances of the REMIC 1 Regular Interests and it shall accrue interest at a fixed rate of 0.00% for each Distribution Date (and the related Interest Accrual Period) on or before the Distribution Date in December 2016, and for each Distribution Date on and after the Distribution Date in December 2016, shall accrue interest at a fixed rate equal to the Final Maturity Reserve Fund Addition Rate.

(3)

The Class LT-Swap-IO is an interest-only class that does not have a principal balance. For only those Distribution Dates listed in the first column in the table below, the Class LT-Swap-IO shall be entitled to interest accrued on the REMIC 2 Regular Interests listed in second column in the table below at a per annum rate equal to the excess, if any, of (i) the interest rate for such REMIC 2 Regular Interest for such Distribution Date over (ii) the product of (a) Swap LIBOR (determined pursuant to the Swap Agreement) multiplied by (b) 2 multiplied by (c) the quotient of the actual number of days in the Interest Accrual Period divided by 30.

Distribution Dates*	REMIC 1 Class Designation
1	Class LT-F1
1-2	Class LT-F2
1-3	Class LT-F3
1-4	Class LT-F4
1-5	Class LT-F5
1-6	Class LT-F6
1-7	Class LT-F7
1-8	Class LT-F8
1-9	Class LT-F9
1-10	Class LT-F10
1-11	Class LT-F11
1-12	Class LT-F12
1-13	Class LT-F13
1-14	Class LT-F14
1-15	Class LT-F15
1-16	Class LT-F16
1-17	Class LT-F17
1-18	Class LT-F18
1-19	Class LT-F19
1-20	Class LT-F20
1-21	Class LT-F21
1-22	Class LT-F22
1-23	Class LT-F23
1-24	Class LT-F24
1-25	Class LT-F25
1-26	Class LT-F26
1-27	Class LT-F27
1-28	Class LT-F28
1-29	Class LT-F29
1-30	Class LT-F30
1-31	Class LT-F31
1-32	Class LT-F32
1-33	Class LT-F33
1-34	Class LT-F34
1-35	Class LT-F35
1-36	Class LT-F36
1-37	Class LT-F37
1-38	Class LT-F38
1-39	Class LT-F39
1-40	Class LT-F40
1-41	Class LT-F41
1-42	Class LT-F42
1-43	Class LT-F43
1-44	Class LT-F44

Distribution Dates*	REMIC 1 Class Designation
1-45	Class LT-F45
1-46	Class LT-F46
1-47	Class LT-F47
1-48	Class LT-F48
1-49	Class LT-F49
1-50	Class LT-F50
1-51	Class LT-F51
1-52	Class LT-F52
1-53	Class LT-F53
1-54	Class LT-F54
1-55	Class LT-F55
1-56	Class LT-F56
1-57	Class LT-F57
1-58	Class LT-F58
1-59	Class LT-F59

*Refers to the Distribution Date set forth in the Swap Maximum Notional Balance Schedule set forth at Exhibit L attached hereto.

(4)

The Class LT3-X Interest is an interest only interest that does not have a principal balance. For any Distribution Date, the Class LT3-X Interest shall be entitled to all amounts distributed with respect to the Class LT-2X Interest in REMIC 2.

(5)

The Class R-3 interest is the sole class of residual interests in REMIC 3. It does not have an interest rate or a principal balance.

On each Distribution Date, interest shall be distributed on the REMIC 3 Regular Interests based on the above-described interest rates, provided, however, that interest that accrues on the Class LT-Accrual Interest shall be deferred in the amount required to make distributions under priority (a) below. Any interest so deferred shall itself bear interest at the interest rate for the Class LT-Accrual Interest. An amount equal to the interest so deferred shall be distributed as additional principal on the other REMIC 3 Regular Interests having a principal balance in the manner described under priority (a) below.

On each Distribution Date principal shall be distributed, and Realized Losses shall be allocated, among the Lower Tier Interests in REMIC 3 in the following order of priority:

(a)

First, to the Class LT-A1, Class LT-A2, Class LT-A3, Class LT-M1, Class LT-M2, Class LT-M3, Class LT-M4, Class LT-M5, Class LT-M6, Class LT-B1, Class LT-B2, and Class LT-B3 Interests until the principal balance of each such REMIC 3 Regular Interest equals one-half of the Class Certificate Balance of the Corresponding Class of Certificates immediately after such Distribution Date; and

(b)

Second, to the Class LT-Accrual Interests, any remaining amounts.

REMIC 4

The following table sets forth characteristics of the Certificates, each of which, except for the Class R Certificates, represents ownership of a “regular interest” in REMIC 4 as well as certain contractual rights and obligations, together with the minimum denominations and integral multiples in excess thereof in which such Classes shall be issuable (except that one Certificate of each Class of Certificates may be issued in a different amount and, in addition, one Class R Certificate representing the Tax Matters Person Certificate may be issued in a different amount):

	Initial Class Certificate Balance	Pass-Through Rate(1)	Minimum Denomination	Integral Multiples in Excess of Minimum
Class A-1	$ 119,321,000.00	LIBOR + 0.090% (2)	$25,000	$1
Class A-2	$ 42,618,000.00	LIBOR + 0.150% (3)	$25,000	$1
Class A-3	$ 21,867,000.00	LIBOR + 0.210% (4)	$25,000	$1
Class M-1	$ 28,595,000.00	LIBOR + 0.280% (5)	$25,000	$1
Class M-2	$ 17,024,000.00	LIBOR + 0.350% (6)	$25,000	$1
Class M-3	$ 4,389,000.00	LIBOR + 0.370% (7)	$25,000	$1
Class M-4	$ 4,655,000.00	LIBOR + 0.700% (8)	$25,000	$1
Class M-5	$ 3,458,000.00	LIBOR + 0.870% (9)	$25,000	$1
Class M-6	$ 4,123,000.00	LIBOR + 1.900% (10)	$25,000	$1
Class B-1	$ 4,655,000.00	LIBOR + 2.000% (11)	$25,000	$1
Class B-2	$ 4,389,000.00	LIBOR + 2.000% (12)	$25,000	$1
Class B-3	$ 6,916,000.00	LIBOR + 2.000% (13)	$25,000	$1
Class X	(14)	(14)	N/A	N/A
Class R	$0	N/A	N/A	N/A

⁽¹⁾

As to any Distribution Date, this rate shall equal the lesser of (a) the lesser of (i) the rate per annum set forth above and (ii) 14.00%, and (b) the Net WAC Cap. For purposes of the REMIC Provisions, the reference to Net WAC Cap in the preceding sentence shall be deemed to be a reference to the REMIC 3 Net WAC Cap. For any Distribution Date on which the Pass-Through Rate for any Class of Certificates is based on the Net WAC Cap, the amount of interest that would have been distributable on such Class if the REMIC 3 Net WAC Cap had been substituted for the Net WAC Cap shall be treated as having actually been paid to the Holders of such Class and then deposited by such Holders into the Swap Account. If for any Distribution Date, the Pass-Through Rate for any Class of Certificates exceeds the REMIC 3 Net WAC Cap, payments based on such excess shall be deemed to have been made from the Net WAC Cap Account.

⁽²⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.180%.

⁽³⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.300%.

⁽⁴⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.420%.

⁽⁵⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.420%.

⁽⁶⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.525%.

⁽⁷⁾

After the Optional Termination Date, this rate will increase to LIBOR + 0.555%.

⁽⁸⁾

After the Optional Termination Date, this rate will increase to LIBOR +1.050%.

⁽⁹⁾

After the Optional Termination Date, this rate will increase to LIBOR + 1.305%.

⁽¹⁰⁾

After the Optional Termination Date, this rate will increase to LIBOR + 2.850%.

⁽¹¹⁾

After the Optional Termination Date, this rate will increase to LIBOR + 3.000%.

⁽¹²⁾

After the Optional Termination Date, this rate will increase to LIBOR + 3.000%.

⁽¹³⁾

After the Optional Termination Date, this rate will increase to LIBOR + 3.000%.

⁽¹⁴⁾

For purposes of the REMIC Provisions, the Class X Certificates shall have an initial principal balance of $3,990,000.00 (initial overcollateralization amount), and the right to receive distributions of such amount in the form of Overcollateralization Release Amounts represents a regular interest in the REMIC 4. The Class X Certificate shall also comprise 4 notional components, each of which represents a regular interest in REMIC 4. The first such component has a notional balance that will at all times equal the aggregate of the principal balances of the REMIC 3 Regular Interests, and, for each Distribution Date (and the related Accrual Period) this notional component shall bear interest at a per annum rate equal to the excess, if any, of (i) (a) the weighted average of the interest rates on the REMIC 3 Regular Interests (other than the Class LT-Reserve-IO interest, the LT3-X Interests, and the LT-Swap-IO interest), over (ii) the product of (a) the weighted average of the interest rates on the REMIC 3 Regular Interests (other than the Class LT-Reserve-IO Interest, Class LT3-X Interest and Class LT-Swap-IO Interest ), computed for this purpose by subjecting the rate on the Class LT-Accrual interest to a cap of 0.00%, and by subjecting the rate on each of the other REMIC 3 Regular Interests to a cap equal to the pass through rate on its Corresponding Class of Certificates (assuming that REMIC 3 Net WAC Cap was substituted for Net WAC Cap in the definition of Pass-Through Rate for such Class) multiplied by (b) two (2) multiplied by (c) the quotient of the actual number of days in the Interest Accrual Period divided by thirty (30). The second notional component represents the right to receive all distributions in respect of the Class LT-Reserve-IO interest in REMIC 3. The third notional component represent the right to receive all distributions in respect of the Class LT-Swap IO in REMIC 3. The fourth notional component represents the right to receive all distributions on the Class LT3-X Interest. For purposes of the REMIC Provisions, the Class X Certificate shall represent beneficial ownership of the Excluded Trust Assets.

In calculating interest accrued for any Interest Accrual Period on any Class of Certificates, other than the Class X Certificates, an actual/360 day-count convention shall be used. In calculating interest accrued on the Class X Certificates and any REMIC 1 Regular Interests, REMIC 2 Regular Interests, or REMIC 3 Regular Interests, a 30/360 day-count convention shall be used.

ARTICLE I

DEFINITIONS

Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, shall have the following meanings:

40 Year Loans

Loans that have forty (40) year original terms to maturity.

60+ Day Delinquent Loan

As of any Distribution Date, each Loan with respect to which any portion of a Scheduled Payment is, as of the last day of the calendar month immediately preceding that Distribution Date, 60 days or more contractually past due (assuming 30 day months), each Loan in foreclosure, all REO Property and each Loan for which the Mortgagor has filed for bankruptcy after the Closing Date.

Addition Notice

For any date during the Funding Period, a written notice given to the Rating Agencies and the Trustee pursuant to Section 2.09(b) hereof.

Adjusted Mortgage Rate

As to each Loan, and at any time, the per annum rate equal to the Mortgage Rate less the Servicing Fee Rate.

Adjusted Net Mortgage Rate

As to each Loan, and at any time, the per annum rate equal to the Mortgage Rate less the related Expense Rate.

Advance

The payment required to be made by the Servicer with respect to any Distribution Date pursuant to Section 4.01, the amount of any such payment being equal to the aggregate of payments of principal and interest (net of the Servicing Fee) on the Loans that were due on such Loans’ respective Due Dates in the related Due Period and not received as of the close of business on the Determination Date in the month of such Distribution Date, other than the aggregate amount of any such delinquent payments that the Servicer, in its good faith judgment, has determined would not be recoverable out of Insurance Proceeds, Liquidation Proceeds or otherwise from the related Loans.

Aggregate Class B Early Distribution Amount

As of any Distribution Date, the aggregate sum of all amounts paid to the Class B-1, Class B-2 and Class B-3 Certificates on prior Distribution Dates pursuant to clauses (xxxii) through (xxxvii) of Section 4.02(d).

Aggregate Trust Fund Principal Balance

As of any date of determination, the sum of the Pre-Funded Amount and the Pool Principal Balance, each as of such date of determination.

Agreement

This Pooling and Servicing Agreement, together with all of the exhibits and schedules hereto, and all amendments or supplements of any of the foregoing.

Amount Held for Future Distribution

As to any Distribution Date and the Offered Certificates, the aggregate amount held in the Certificate Account at the close of business on the related Determination Date on account of (a) Principal Prepayments, Liquidation Proceeds and Recoveries received after the Prepayment Period corresponding to such Distribution Date and (b) all Scheduled Payments due after the Loans’ respective Due Dates in the related Due Period.

Applied Realized Loss Amount

With respect to (a) the Class M-1 Certificates, the Class M-1 Applied Realized Loss Amount, (b) the Class M-2 Certificates, the Class M-2 Applied Realized Loss Amount, (c) the Class M-3 Certificates, the Class M-3 Applied Realized Loss Amount, (d) the Class M-4 Certificates, the Class M-4 Applied Realized Loss Amount, (e) the Class M-5 Certificates, the Class M-5 Applied Realized Loss Amount, (f) the Class M-6 Certificates, the Class M-6 Applied Realized Loss Amount, (g) the Class B-1 Certificates, the Class B-1 Applied Realized Loss Amount, (h) the Class B-2 Certificates, the Class B-2 Applied Realized Loss Amount and (i) the Class B-3 Certificates, the Class B-3 Applied Realized Loss Amount.

Available Funds

As to any Distribution Date, the sum of (a) the aggregate amount held in the Certificate Account at the close of business on the related Determination Date net of the Amount Held for Future Distribution and net of amounts permitted to be withdrawn from the Certificate Account pursuant to clauses (i)-(viii), inclusive, of Section 3.08(a) and amounts permitted to be withdrawn from the Distribution Account pursuant to clauses (i) and (ii) of Section 3.08(b), (b) the amount of the related Advance, if any, (c) the aggregate of the Purchase Prices and Substitution Adjustment Amounts received on or before the related Distribution Account Deposit Date, (d) with respect to the initial Distribution Date, the Initial Certificate Account Deposit and (e) on the Distribution Date immediately following the end of the Funding Period, the Unutilized Funding Amount, if any.

AVM

Automated Valuation Model.

Balloon Loans

Loans with balloon payments.

Bankruptcy Code

The United States Bankruptcy Reform Act of 1978, as amended, and related rules promulgated thereunder.

Basic Principal Distribution Amount

With respect to any Distribution Date, the amount by which (a) the Principal Remittance Amount for that Distribution Date exceeds (b) the Overcollateralization Release Amount, if any, for that Distribution Date.

Beneficial Owner

With respect to any Book-Entry Certificate, the Person who is the beneficial owner of such Book-Entry Certificate.

Book-Entry Certificates

The Offered Certificates.

Borrower Retention Loan

A Refinance Loan, which is not a Second Lien Loan, for which a Seller obtained at the origination of such Loan a title search in lieu of a title insurance policy.

Business Day

Any day other than (a) a Saturday or a Sunday or (b) a day on which banking institutions in New York City, or in the city where the chief executive office of the Servicer is located, are authorized or obligated by law or executive order to be closed.

Cap Account

The account established and maintained by the Trustee pursuant to Section 3A.02.

Cap Agreement

The letter agreement dated as of December 7, 2006 (including the ISDA Master Agreement, the Schedule and the Credit Support Annex incorporated by reference therein) which letter agreement constitutes a “Confirmation” as referenced therein bearing the reference number FXPOP6C1, relating to the Transaction thereunder, by and between the Cap Counterparty and the Trustee not in its individual capacity, but solely as trustee of the External Trust relating to the Popular ABS, Inc. Mortgage Pass-Through Certificates, Series 2006-E.

Cap Class B-1 Realized Loss Amortization Amount

As to the Class B-1 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class B-1 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxviii) of the Section 4.02(f) for that Distribution Date.

Cap Class B-2 Realized Loss Amortization Amount

As to the Class B-2 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class B-2 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxix) of Section 4.02(f) for that Distribution Date.

Cap Class B-3 Realized Loss Amortization Amount

As to the Class B-3 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class B-3 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxx) of the Section 4.02(f) for that Distribution Date.

Cap Class M-1 Realized Loss Amortization Amount

As to the Class M-1 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-1 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxii) of the Section 4.02(f) for that Distribution Date.

Cap Class M-2 Realized Loss Amortization Amount

As to the Class M-2 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-2 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxiii) of the Section 4.02(f) for that Distribution Date.

Cap Class M-3 Realized Loss Amortization Amount

As to the Class M-3 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-3 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxiv) of the Section 4.02(f) for that Distribution Date.

Cap Class M-4 Realized Loss Amortization Amount

As to the Class M-4 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-4 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxv) of the Section 4.02(f) for that Distribution Date.

Cap Class M-5 Realized Loss Amortization Amount

As to the Class M-5 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-5 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxvi) of the Section 4.02(f) for that Distribution Date.

Cap Class M-6 Realized Loss Amortization Amount

As to the Class M-6 Certificates and as of any Distribution Date, the lesser of (a) the Cap Unpaid Realized Loss Amount for the Class M-6 Certificates as of that Distribution Date and (b) the excess of (i) the Cap Distribution Amount over (ii) the sum of the amounts described in clauses (i) through (xxvii) of the Section 4.02(f) for that Distribution Date.

Cap Counterparty

Bear Xxxxxxx Financial Products Inc.

Cap Distribution Amount

As defined in Section 4.02(f).

Cap Extra Principal Distribution Amount

As of any Distribution Date, the lesser of (a) the remaining Cap Distribution Amount after making all of the distributions in clauses (i) through (xx) of Section 4.02(f), (b) the Overcollateralization Deficiency for that Distribution Date, calculated after giving effect to the funding of the Extra Principal Distribution Amount pursuant to clause (iii) of Section 4.02(d) and the funding of the Swap Extra Principal Distribution Amount pursuant to clause (xxiii) of Section 4.02(e) and (c) the excess of (i) the aggregate amount of Realized Losses for that Distribution Date and Realized Losses for all prior Distribution Dates (other than Realized Losses applied in reduction of the Class Certificate Balance of one or more classes of Subordinate Certificates) over (ii) the aggregate amount distributed pursuant to clause (xxiii) of Section 4.02(e) and clause (xxi) of Section 4.02(f) on all prior Distribution Dates.

Cap Notional Balance

As of any Distribution Date, the notional balance specified under the Cap Agreement for that Distribution Date.

Cap Stated Termination

November 25, 2013, subject to the Following Business Day Convention (as such term is defined in the Cap Agreement).

Cap Unpaid Realized Loss Amount

For any class of Subordinate Certificates and as to any Distribution Date, the excess of (a) the Unpaid Realized Loss Amount with respect to that class for that Distribution Date over (b) the sum of (i) the Excess Cashflow Realized Loss Amortization Amount paid to that Class pursuant to Section 4.02(d) on that Distribution Date and (ii) the Swap Realized Loss Amortization Amount paid to that Class pursuant to Section 4.02(e) on that Distribution Date.

Certificates

The Offered Certificates, the Class R Certificates and the Class X Certificates.

Certificate Account

The separate Eligible Account created and maintained by the Servicer pursuant to Section 3.05 with a depository institution in the name of the Servicer for the benefit of the Trustee on behalf of the Certificateholders and designated “Certificate Account, Equity One, Inc., as trustee for the registered holders of Popular ABS, Inc., Mortgage Pass-Through Certificates Series 2006-E.”

Certificate Balance

With respect to any Offered Certificate at any time, the maximum dollar amount of principal to which the Holder thereof is then entitled hereunder, such amount being equal to the Denomination thereof reduced by the sum of (a) all amounts previously distributed to that Offered Certificate as payments of principal, and (b) with respect to any Subordinate Certificate, that Subordinate Certificate’s pro rata share of the cumulative amount of Applied Realized Loss Amounts with respect to such Class for all prior Distribution Dates.

Certificateholder or Holder

The person in whose name a Certificate is registered in the Certificate Register, except that, solely for the purpose of giving any consent pursuant to this Agreement, any Certificate registered in the name of the Depositor or any affiliate of the Depositor shall be deemed not to be Outstanding and the Percentage Interest evidenced thereby shall not be taken into account in determining whether the requisite amount of Percentage Interests necessary to effect such consent has been obtained; provided, however, that if any such Person (including the Depositor) owns 100% of the Percentage Interests evidenced by a Class of Certificates, such Certificates shall be deemed to be Outstanding for purposes of any provision hereof that requires the consent of the Holders of Certificates of a particular Class as a condition to the taking of any action hereunder. The Trustee is entitled to rely conclusively on a certification of the Depositor or any affiliate of the Depositor in determining which Certificates are registered in the name of an affiliate of the Depositor.

Certificate Register

The register maintained pursuant to Section 5.02.

Certificate Registrar

The Bank of New York and its successors and, if a successor certificate registrar is appointed hereunder, such successor.

Class

All Certificates bearing the same class designation as set forth in the Preliminary Statement.

Class A-1 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-1 and designated as a Class A-1 Certificate.

Class A-2 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-1 and designated as a Class A-2 Certificate.

Class A-3 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-1 and designated as a Class A-3 Certificate.

Class B-1 Applied Realized Loss Amount

As to the Class B-1 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class B-1 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amortization Amount, in each case as of that Distribution Date.

Class B-1 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-4 and designated as a Class B-1 Certificate.

Class B-1 Principal Distribution Amount

As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of the Class Certificate Balances of the Senior Certificates (after taking into account the payment of the Senior Principal Distribution Amount on that Distribution Date), (ii) the Class Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on that Distribution Date), (iii) the Class Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the Class Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on that Distribution Date), (v) the Class Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on that Distribution Date), (vi) the Class Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on that Distribution Date), (vii) the Class Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on that Distribution Date) and (viii) the Class Certificate Balance of the Class B-1 Certificates immediately prior to that Distribution Date over (b) the lesser of (i) the product of (A) 88.50% and (B) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period and (ii) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period minus the product of (A) 0.50% and (B) the Initial Aggregate Trust Fund Principal Balance.

Class B-1 Realized Loss Amortization Amount

As to the Class B-1 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class B-1 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xxiii) of Section 4.02(d) for that Distribution Date.

Class B-2 Applied Realized Loss Amount

As to the Class B-2 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class B-2 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the Class B-3 Applied Realized Loss Amortization Amount as of that Distribution Date.

Class B-2 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-4 and designated as a Class B-2 Certificate.

Class B-2 Principal Distribution Amount

As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of the Class Certificate Balances of the Senior Certificates (after taking into account the payment of the Senior Principal Distribution Amount on that Distribution Date), (ii) the Class Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on that Distribution Date), (iii) the Class Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the Class Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on that Distribution Date), (v) the Class Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on that Distribution Date), (vi) the Class Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on that Distribution Date), (vii) the Class Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on that Distribution Date), (viii) the Class Certificate Balance of the Class B-1 Certificates (after taking into account the payment of the Class B-1 Principal Distribution Amount on that Distribution Date) and (ix) the Class Certificate Balance of the Class B-2 Certificates immediately prior to that Distribution Date over (b) the lesser of (i) the product of (A) 91.80% and (B) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period and (ii) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period minus the product of (A) 0.50% and (B) the Initial Aggregate Trust Fund Principal Balance.

Class B-2 Realized Loss Amortization Amount

As to the Class B-2 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class B-2 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xxvi) of Section 4.02(d) for that Distribution Date.

Class B-3 Applied Realized Loss Amount

As to the Class B-3 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class B-3 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the Realized Loss Amount as of that Distribution Date.

Class B-3 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-4 and designated as a Class B-3 Certificate.

Class B-3 Principal Distribution Amount

As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of the Class Certificate Balances of the Senior Certificates (after taking into account the payment of the Senior Principal Distribution Amount on that Distribution Date), (ii) the Class Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on that Distribution Date), (iii) the Class Certificate Balance of the Class M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the Class Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on that Distribution Date), (v) the Class Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on that Distribution Date), (vi) the Class Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on that Distribution Date), (vii) the Class Certificate Balance of the Class M-6 Certificates (after taking into account the payment of the Class M-6 Principal Distribution Amount on that Distribution Date), (viii) the Class Certificate Balance of the Class B-1 Certificates (after taking into account the payment of the Class B-1 Principal Distribution Amount on that Distribution Date), (ix) the Class Certificate Balance of the Class B-2 Certificates (after taking into account the payment of the Class B-2 Principal Distribution Amount on that Distribution Date) and (x) the Class Certificate Balance of the Class B-3 Certificates immediately prior to that Distribution Date over (b) the lesser of (i) the product of (A) 97.00% and (B) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period and (ii) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period minus the product of (A) 0.50% and (B) the Initial Aggregate Trust Fund Principal Balance.

Class B-3 Realized Loss Amortization Amount

As to the Class B-3 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class B-3 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xxix) of Section 4.02(d) for that Distribution Date.

Class Certificate Balance

With respect to any Class of Offered Certificates and as to any Distribution Date, the aggregate of the Certificate Balances of all Certificates of such Class as of such date. The Class Certificate Balance of the Class R Certificates shall be zero.

Class I Shortfalls

As defined in Section 2.07 hereof. For purposes of clarity, the aggregate Class I Shortfall for any Distribution Date shall equal the amount payable to the Swap Counterparty on such Distribution Date in excess of the sum of the amounts payable with respect to the Class LT-Swap-IO and Class LT3-X Interests in REMIC 3 on such Distribution Date. With respect to any Class of Offered Certificates, such shortfall will on any Distribution Date equal the excess, if any, of the amount of interest that would have accrued on such Class for the related Interest Accrual Period had its Pass-Through Rate been determined by substituting the REMIC 3 Net WAC Cap for the Net WAC Cap over the amount of interest actually accrued on such Class for such Accrual Period.

Class Interest Shortfall

As to any Distribution Date and any Class of Offered Certificates, the amount by which the amount described in the definition of Interest Distribution Amount for such Class exceeds the amount of interest actually distributed on such Class on such Distribution Date.

Class M-1 Applied Realized Loss Amount

As to the Class M-1 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-1 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class M-2 Applied Realized Loss Amount, the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied Realized Loss Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-1 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-1 Certificate.

Class M-1 Principal Distribution Amount

Class M-1 Realized Loss Amortization Amount

As to the Class M-1 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-1 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (v) of Section 4.02(d) for that Distribution Date.

Class M-2 Applied Realized Loss Amount

As to the Class M-2 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-2 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class M-3 Applied Realized Loss Amount, the Class M-4 Applied Realized Loss Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-2 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-2 Certificate.

Class M-2 Principal Distribution Amount

Class M-2 Realized Loss Amortization Amount

As to the Class M-2 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-2 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (viii) of Section 4.02(d) for that Distribution Date.

Class M-3 Applied Realized Loss Amount

As to the Class M-3 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-3 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class M-4 Applied Realized Loss Amount, the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-3 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-3 Certificate.

Class M-3 Principal Distribution Amount

Class M-3 Realized Loss Amortization Amount

As to the Class M-3 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-3 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xi) of Section 4.02(d) for that Distribution Date.

Class M-4 Applied Realized Loss Amount

As to the Class M-4 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-4 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class M-5 Applied Realized Loss Amount, the Class M-6 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-4 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-4 Certificate.

Class M-4 Principal Distribution Amount

Class M-4 Realized Loss Amortization Amount

As to the Class M-4 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-4 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xiv) of Section 4.02(d) for that Distribution Date.

Class M-5 Applied Realized Loss Amount

As to the Class M-5 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-5 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class M-6 Applied Realized Loss Amount, the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-5 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-5 Certificate.

Class M-5 Principal Distribution Amount

Class M-5 Realized Loss Amortization Amount

As to the Class M-5 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-5 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xvii) of Section 4.02(d) for that Distribution Date.

Class M-6 Applied Realized Loss Amount

As to the Class M-6 Certificates and as of any Distribution Date, the lesser of (a) the Class Certificate Balance thereof (after taking into account the distribution of the Principal Distribution Amount on that Distribution Date, but prior to the application of the Class M-6 Applied Realized Loss Amount, if any, on that Distribution Date) and (b) the excess of (i) the Realized Loss Amount as of that Distribution Date over (ii) the sum of the Class B-1 Applied Realized Loss Amount, the Class B-2 Applied Realized Loss Amount and the Class B-3 Applied Realized Loss Amount, in each case as of that Distribution Date.

Class M-6 Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit A-3 and designated as a Class M-6 Certificate.

Class M-6 Principal Distribution Amount

As of any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the excess of (a) the sum of (i) the sum of the Class Certificate Balances of the Senior Certificates (after taking into account the payment of the Senior Principal Distribution Amount on that Distribution Date), (ii) the Class Certificate Balance of the Class M-1 Certificates (after taking into account the payment of the Class M-1 Principal Distribution Amount on that Distribution Date), (iii) the Class Certificate Balance of the M-2 Certificates (after taking into account the payment of the Class M-2 Principal Distribution Amount on that Distribution Date), (iv) the Class Certificate Balance of the Class M-3 Certificates (after taking into account the payment of the Class M-3 Principal Distribution Amount on that Distribution Date), (v) the Class Certificate Balance of the Class M-4 Certificates (after taking into account the payment of the Class M-4 Principal Distribution Amount on that Distribution Date), (vi) the Class Certificate Balance of the Class M-5 Certificates (after taking into account the payment of the Class M-5 Principal Distribution Amount on that Distribution Date) and (vii) the Class Certificate Balance of the Class M-6 Certificates immediately prior to that Distribution Date over (b) the lesser of (i) the product of (A) 85.00% and (B) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period and (ii) the Aggregate Trust Fund Principal Balance as of the last day of the related Due Period minus the product of (A) 0.50% and (B) the Initial Aggregate Trust Fund Principal Balance.

Class M-6 Realized Loss Amortization Amount

As to the Class M-6 Certificates and as of any Distribution Date, the lesser of (a) the Unpaid Realized Loss Amount for the Class M-6 Certificates as of that Distribution Date and (b) the excess of (i) the Monthly Excess Cashflow Amount over (ii) the sum of the amounts described in clauses (i) through (xx) of Section 4.02(d) for that Distribution Date.

Class R Certificates

The certificates representing the single “residual interest” in each of REMIC 1, REMIC 2 and REMIC 3, substantially in the form attached hereto as Exhibit B-1.

Class Unpaid Interest Amounts

As to any Distribution Date and any Class of Offered Certificates, the amount by which the aggregate Class Interest Shortfalls for such Class on prior Distribution Dates exceeds the amount of Class Unpaid Interest Amounts distributed on such Class on prior Distribution Dates plus interest on such amount at the related Pass-Through Rate.

Class X Certificate

Any Certificate executed and authenticated by the Trustee substantially in the form attached hereto as Exhibit B-2 and designated as a Class X Certificate.

Closing Date

December 7, 2006.

Closing Place

The offices of Stradley, Ronon, Xxxxxxx & Xxxxx, LLP, 0000 Xxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.

Code

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

Collateral

The assets constituting the Loans, the Mortgage Files, the Trust Fund and the External Trust, and any and all contractual, legal, equitable or other rights in connection therewith, and all proceeds thereof (but not including payments of interest and principal due and payable with respect to the Loans on or before the Cut-off Date).

Collateral Value

With respect to any Loan, other than Refinance Loans, an amount equal to the lesser of (a) the appraised value of the related Mortgaged Property based on an appraisal obtained by the originator from an independent fee appraiser at the time of the origination of such Loan, and (b) if the Loan was originated either in connection with the acquisition of the Mortgaged Property by the borrower or within one year after acquisition of the Mortgaged Property by the borrower, the purchase price paid by such borrower for the Mortgaged Property. In the case of Refinance Loans (a) that are not Borrower Retention Loans, the Collateral Value is the appraised value of the Mortgaged Property based upon the appraisal obtained at the time of refinancing and (b) that are Borrower Retention Loans, the Collateral Value is the value of the mortgaged property determined as follows (i) if the Refinance Loan is not a cash-out refinance mortgage loan, the value of the mortgaged property is typically determined using an existing appraisal that is no more than twenty-four months old; however, if the existing appraisal is more than twenty-four months old, the value of the mortgaged property based on the existing appraisal is validated through the use of an AVM at the time of the refinancing, and if the AVM evidences that the value of the mortgage property has materially declined, a new appraisal is required at the time of refinancing, and the value of the mortgaged property is determined using this new appraisal, and (ii) if the Refinance Loan is a cash-out refinance mortgage loan, the value of the mortgaged property is determined using an existing appraisal that is no more than twenty-four months old, and the existing appraisal value is validated through the use of an AVM at the time of the refinancing; if the AVM evidences that the value of the mortgaged property has materially declined, or if the existing appraisal is more than twenty-four months old, a new appraisal is required at the time of refinancing, and the value of the mortgaged property is determined using this new appraisal.

Combined Loan-to-Value Ratio

With respect to any Loan and as to any date of determination, the fraction, expressed as a percentage, the numerator of which is the principal balance of such Loan at the date of origination plus, in the case of a Second Lien Loan, the outstanding principal balance of the related first lien mortgage loan on the date of origination of such Second Lien Loan, and the denominator of which is the Collateral Value of the related Mortgaged Property.

Commission

The Securities and Exchange Commission.

Corporate Trust Office

The designated office of the Trustee in the State of New York at which (a) its corporate trust business with respect to this Agreement shall be administered is located at The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxxxx 0X, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured Finance Services, Popular ABS 2006-E and (b) Certificates may be presented for transfer and exchange and for purposes of presentment and surrender for the final distributions thereon is located at 0000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx Xxxxx 00000 Attention: Structured Finance Transfer Department, Popular ABS 2006-E, or such other address as the Trustee shall notify the Depositor, the Servicer, the Sellers and the Certificateholders.

Corresponding Class

As defined in the Preliminary Statement.

Custodial Agreement

As defined in Section 8.13.

Custodian

As defined in Section 8.13.

Cut-off Date

With respect to the Initial Loans, the Initial Cut-off Date. With respect to any Subsequent Loan, the date designated as the Cut-off Date in the related Subsequent Transfer Agreement.

Cut-off Date Principal Balance

As to any Initial Loan, the Intial Cut-off Date Principal Balance and as to any Subsequent Loan, the Stated Principal Balance thereof as of the close of business on the related Cut-off Date.

Defective Loan

Any Loan which is required to be repurchased pursuant to Section 2.02 or 2.03.

Deficient Valuation

With respect to any 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 Loan, which valuation results from a proceeding initiated under the Bankruptcy Code.

Definitive Certificates

Any Certificate issued in lieu of a Book-Entry Certificate pursuant to Section 5.02(e).

Deleted Loan

As defined in Section 2.03(c).

Denomination

With respect to each Offered Certificate, Class X Certificate or Class R Certificate, the amount set forth on the face thereof as the “Initial Certificate Balance of this Certificate” or the “Percentage Interest.”

Depositor

Popular ABS, Inc., a Delaware corporation, or its successor in interest.

Depository

The initial Depository shall be The Depository Trust Company, the nominee of which is Cede & Co., as the registered Holder of the Book-Entry Certificates. 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.

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

As to any Distribution Date, the 21st day of each month or, if such day is not a Business Day, the next preceding Business Day; provided, however, that the Determination Date in each month will be at least two Business Days preceding the related Distribution Date.

Distribution Account

The separate Eligible Account created and maintained by the Trustee pursuant to Section 3.05 in the name of the Trustee for the benefit of the Certificateholders and designated “Distribution Account, The Bank of New York, as trustee for the registered holders of Popular ABS, Inc. Mortgage Pass-Through Certificates, Series 2006-E.” Funds in the Distribution Account shall be held uninvested in trust for the Certificateholders for the uses and purposes set forth in this Agreement.

Distribution Account Deposit Date

As to any Distribution Date, 9:00 a.m. New York City time on the Business Day immediately preceding such Distribution Date.

Distribution Date

The 25th day of each calendar month after the initial issuance of the Certificates, or if such day is not a Business Day, the next succeeding Business Day, commencing on December 26, 2006.

Due Date

With respect to any Loan, the date on which scheduled payments of interest and/or principal are due thereon, which date is a set day, but not necessarily the first day, of each month.

Due Period

With respect to any Distribution Date, the period beginning on the second day of the calendar month preceding the calendar month in which that Distribution Date occurs and ending at the close of business on the first day of the month in which that Distribution Date occurs.

Eligible Account

Any of (a) an account or accounts maintained with a federal or state chartered depository institution or trust company, the short-term unsecured debt obligations of which (or, in the case of a depository institution or trust company that is the principal subsidiary of a holding company, the debt obligations of such holding company) have the highest short-term ratings of each Rating Agency at the time any amounts are held on deposit therein, or (b) an account or accounts in a depository institution or trust company in which such accounts are insured by the FDIC (to the limits established by the FDIC) and the uninsured deposits in which accounts are otherwise secured such that, as evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating Agency, the Certificateholders have a claim with respect to the funds in such account or a perfected first priority security interest against any collateral (which shall be limited to Permitted Investments) securing such funds that is superior to claims of any other depositors or creditors of the depository institution or trust company in which such account is maintained, or (c) a trust account or accounts maintained with (i) the trust department of a federal or state chartered depository institution or (ii) a trust company, acting in its fiduciary capacity or (d) any other account acceptable to each Rating Agency, as evidenced by a letter from such Rating Agency to the Trustee, without reduction or withdrawal of the then current ratings of the Certificates. Eligible Accounts may bear interest, and may include, if otherwise qualified under this definition, accounts maintained with the Trustee.

Equity One-Delaware

Equity One, Inc., a Delaware corporation.

Equity One-Minnesota

Equity One, Inc., a Minnesota corporation.

Equity One-New Hampshire

Equity One Consumer Loan Company, Inc., a New Hampshire corporation.

Equity One-Pennsylvania

Equity One, Incorporated, a Pennsylvania corporation.

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 requirement or other requirements that the securities or the investor must satisfy) of the Underwriter Exemption, or any substantially similar administrative exemption granted by the U.S. Department of Labor.

ERISA-Restricted Certificate

Any of the Class B-2 Certificates, Class B-3 Certificates, Class X Certificates or Class R Certificates; any Certificate of a Class that ceases to satisfy the applicable rating requirements of the Underwriter Exemption.

Escrow Account

The Eligible Account or Eligible Accounts established and maintained by the Servicer pursuant to Section 3.06(a).

Event of Default

As defined in Section 7.01.

Excess Cashflow Realized Loss Amortization Amount

With respect to, (a) the Class M-1 Certificates, the Class M-1 Realized Loss Amortization Amount, (b) the Class M-2 Certificates, the Class M-2 Realized Loss Amortization Amount, (c) the Class M-3 Certificates, the Class M-3 Realized Loss Amortization Amount, (d) the Class M-4 Certificates, the Class M-4 Realized Loss Amortization Amount, (e) the Class M-5 Certificates, the Class M-5 Realized Loss Amortization Amount, (f) the Class M-6 Certificates, the Class M-6 Realized Loss Amortization Amount, (g) the Class B-1 Certificates, the Class B-1 Realized Loss Amortization Amount, (h) the Class B-2 Certificates, the Class B-2 Realized Loss Amortization Amount and (i) the Class B-3 Certificates, the Class B-3 Realized Loss Amortization Amount.

Exchange Act

The Securities Exchange Act of 1934, as amended.

Excess Proceeds

With respect to any Liquidated Loan, the amount, if any, by which the sum of any Liquidation Proceeds of such Loan received in the calendar month in which such Loan became a Liquidated Loan, net of any amounts previously reimbursed to the Servicer as Nonrecoverable Advance(s) with respect to such Loan pursuant to Section 3.08(a)(iii), exceeds (a) the unpaid principal balance of such Liquidated Loan as of the Due Date in the calendar month in which such Loan became a Liquidated Loan plus (b) accrued interest at the Mortgage Rate from the Due Date as to which interest was last paid or advanced (and not reimbursed) to Certificateholders up to the Due Date in the calendar month in which such Loan became a Liquidated Loan.

Excess Termination Amount

As defined in Section 9.02.

Excluded Trust Assets

As defined in the Preliminary Statement.

Expense Rate

As to each Loan, the sum of (a) the Servicing Fee Rate, (b) the Trustee Fee Rate and (c) on the Distribution Date in December 2016 (the 121st Distribution Date) and each Distribution Date thereafter, the Final Maturity Reserve Fund Addition Rate.

External Trust

As defined in Section 3A.05.

Extra Principal Distribution Amount

As of any Distribution Date, the lesser of (a) the Monthly Excess Interest Amount for that Distribution Date and (b) the Overcollateralization Deficiency for that Distribution Date.

FDIC

The Federal Deposit Insurance Corporation, or any successor thereto.

FHLMC

The Federal Home Loan Mortgage Corporation, a corporate instrumentality of the United States created and existing under Title III of the Emergency Home Finance Act of 1970, as amended, or any successor thereto.

Final Maturity Deficiency

With respect to any Distribution Date, if (a) the aggregate principal balance of 40 Year Loans as of the last day of the related Due Period exceeds (b) the notional balance for that Distribution Date set forth on the schedule attached hereto as Exhibit O.

Final Maturity Reserve Fund

The account established and maintained by the Trustee pursuant to Section 3A.03.

Final Maturity Reserve Fund Addition Amount

(a) For any Distribution Date prior to the Distribution Date in December 2016 (the 121st Distribution Date), zero, and (b) for the Distribution Date in December 2016 and each Distribution Date thereafter, if a Final Maturity Deficiency exists, an amount equal to the product of (i) one-twelfth of the Final Maturity Reserve Fund Addition Rate and (ii) the aggregate principal balance of the Loans as of the first day of the related Due Period.

Final Maturity Reserve Fund Addition Rate

As to any Distribution Date, a per annum rate equal to the product of (a) 0.80% and (b) the quotient of (i) the aggregate principal balance of 40 Year Loans as of the first day of the first Due Period following the Due Period in which the Funding Period ends, divided by (ii) the aggregate principal balance of the Loans as of the first day of the first Due Period following the Due Period in which the Funding Period ends.

FIRREA

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Fixed Swap Payment

As to any Distribution Date, a fixed amount equal to the product of (a) the Fixed Rate (as defined in the Swap Agreement), (b) the Swap Notional Balance and (c) a fraction, the numerator of which is 30 (or, for the first Fixed Rate Payer Payment Date, the number of days elapsed from the Closing Date to but excluding the first Fixed Rate Payer Payment Date), and the denominator of which is 360.

Floating Swap Payment

As to any Distribution Date, a floating amount equal to the product of (a) Swap LIBOR, (b) the Swap Notional Balance and (c) a fraction, the numerator of which is the actual number of days elapsed from and including the previous Floating Rate Payer Payment Date (as defined in the Swap Agreement) to but excluding the current Floating Rate Payer Payment Date (or, for the first Floating Rate Payer Payment Date, the actual number of days elapsed from the Closing Date to but excluding the first Floating Rate Payer Payment Date), and the denominator of which is 360.

FMRF Distribution Amount

As defined in Section 4.02(i).

FNMA

Xxxxxx Xxx, a federally chartered and privately owned corporation organized and existing under the Federal National Mortgage Association Charter Act, or any successor thereto.

Funding Period

The period commencing on the Closing Date and ending on the earlier to occur of (i) the date on which any Event of Default occurs, (ii) the date on which the Pre-Funded Amount is less than $1,000,000 or (iii) February 6, 2007.

Indirect Participant

A broker, dealer, bank or other financial institution or other Person that clears through or maintains a custodial relationship with a Depository Participant.

Initial Certificate Account Deposit

As defined in Section 2.01(a).

Initial Aggregate Trust Fund Principal Balance

The sum of (a) the Initial Cut-off Date Pool Principal Balance and (b) the Original Pre-Funded Amount.

Initial Certificate Account Deposit

As defined in Section 2.01(a).

Initial Cut-off Date

November 1, 2006.

Initial Cut-off Date Pool Principal Balance

The aggregate of the Initial Cut-off Date Principal Balances of the Initial Loans ($199,546,454.95).

Initial Cut-off Date Principal Balance

As to any Loan, the Stated Principal Balance thereof as of the close of business on October 31, 2006 giving effect to scheduled payments of principal and interest due on November 1, 2006, whether or not those scheduled payments have been made.

Initial Loans

The mortgage loans identified on the Loan Schedule as of the Closing Date.

Insurance Policy

With respect to any Loan included in the Trust Fund, any insurance policy, and including all riders and endorsements thereto in effect, including any replacement policy or policies for any Insurance Policies.

Insurance Proceeds

Proceeds paid by an insurer pursuant to any Insurance Policy, in each case other than any amount included in such Insurance Proceeds in respect of Insured Expenses.

Insured Expenses

Expenses covered by an Insurance Policy.

Interest Accrual Period

With respect to the Offered Certificates and any Distribution Date, the period commencing on the Distribution Date in the calendar month prior to the month of such Distribution Date (or on the Closing Date with respect to the first Distribution Date) and ending on the day preceding such Distribution Date. With respect to the Class X Certificates and each of the REMIC 1 Regular Interests, REMIC 2 Regular Interests and REMIC 3 Regular Interests and any Distribution Date, the calendar month preceding such Distribution Date.

Interest Distribution Amount

With respect to any Distribution Date and each Class of the Offered Certificates, the amount of interest accrued during the related Interest Accrual Period at the Pass-Through Rate for such Class on the related Class Certificate Balance, reduced by such Class’ pro rata share of the amount of (a) Net Prepayment Interest Shortfalls and (b) Relief Act Reductions incurred on the Loans during the related Due Period (each such Class’ pro rata share to be based on the amount of interest to which such Class would have been entitled notwithstanding such Net Prepayment Interest Shortfalls and Relief Act Reductions).

Interest Remittance Amount

With respect to any Determination Date, the sum, without duplication, of (a) all interest collected or advanced on the Loans during the related Due Period and (b) the portion of any Substitution Adjustment Amount, Termination Price, Purchase Price, or Liquidation Proceeds, relating to interest and received during the related Prepayment Period.

Investment Letter

As defined in Section 5.02(b).

Latest Possible Maturity Date

The Distribution Date following the third anniversary of the scheduled maturity date of the Loan having the latest scheduled maturity date as of the Cut-off Date.

Last Scheduled Distribution Date

The Distribution Date in January 2037.

LIBOR

As of any LIBOR Determination Date, the London interbank offered rate for one-month United States dollar deposits which appears in the Moneyline Telerate Page 3750 as of 11:00 a.m., London time, on that date. If the rate does not appear on Moneyline Telerate Page 3750, the rate for that day will be determined on the basis of the rates at which deposits in United States dollars are offered by the Reference Banks at approximately 11:00 a.m. (London time), on that day to prime banks in the London interbank market. The Trustee will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If at least two quotations are provided, the rate for that day will be the arithmetic mean of the quotations (rounded upwards if necessary to the nearest whole multiple of 1/16%). If fewer than two quotations are provided as requested, the rate for that day will be the arithmetic mean of the rates quoted by major banks in New York City, selected by the Trustee in consultation with the Servicer, at approximately 11:00 a.m. (New York City time) on that day for loans in United States dollars to leading European banks.

LIBOR Determination Date

With respect to any Interest Accrual Period for the Offered Certificates, the second London business day preceding the commencement of such Interest Accrual Period. For purposes of determining LIBOR, a “London business day” is any day on which dealings in deposits of United States dollars are transacted in the London interbank market.

Liquidated Loan

With respect to any Distribution Date, a defaulted Loan (including any REO Property) that was liquidated in the related Prepayment Period Date and as to which the Servicer has determined (in accordance with this Agreement) that it has received all amounts it expects to receive in connection with the liquidation of such Loan, including the final disposition of an REO Property.

Liquidation Proceeds

Amounts, including Insurance Proceeds, received in connection with the partial or complete liquidation of defaulted Loans, whether through trustee’s sale, foreclosure sale or otherwise or amounts received in connection with any condemnation or partial release of a Mortgaged Property and any other proceeds received in connection with an REO Property other than Recoveries, less the Servicing Amount applicable to such defaulted Loans.

Loans

The Initial Loans and the Subsequent Loans.

Loan Schedule

As of any date, the list of Loans included in the Trust Fund on such date, attached hereto as Schedule I (as from time to time amended by the Servicer to reflect the addition of Substitute Loans and Subsequent Loans and the deletion of Deleted Loans pursuant to the provisions of this Agreement), setting forth the following information with respect to each Loan:

(a)

the loan number;

(b)

the Mortgagor’s name and the state in which the Mortgaged Property is located, including the zip code;

(c)

the maturity date;

(d)

the Cut-off Date Principal Balance;

(e)

the first payment date of the Loan;

(f)

lien position (either first or second);

(g)

the Scheduled Payment in effect as of the Cut-off Date;

(h)

the current Mortgage Rate;

(i)

the principal balance of the Loan at origination; and

(j)

if applicable, the MIN assigned to such Loan.

Majority in Interest

As to each Class of Offered Certificates, the Holders of Certificates of such Class evidencing, in the aggregate, at least 51% of the Percentage Interests evidenced by all Certificates of such Class.

MERS (R)

Mortgage Electronic Registration Systems, Inc., or its successors in interest.

MERS (R) System

That certain electronic registry system maintained by MERSCORP, Inc., or its successors

in interest.

MIN

The Mortgage Identification Number assigned by MERS (R) to a MOM Loan.

MOM Loan

Any Loan as to which MERS (R) is acting as mortgagee solely as nominee for the

originator of such Loan and its successors and assigns.

Monthly Excess Cashflow Amount

The sum of the Monthly Excess Interest Amount, the Overcollateralization Release Amount and the Remaining Principal Distribution Amount.

Monthly Excess Interest Amount

As to any Distribution Date, an amount equal to any Remaining Interest Remittance Amount remaining after the distributions set forth in clauses (ii)(A) through (ii)(I) of Section 4.02(a).

Monthly Statement

The statement prepared by the Trustee pursuant to Section 4.03.

Moody’s

Xxxxx’x Investors Service, Inc., or any successor thereto. For purposes of Section 10.05(b) the address for notices to Moody’s shall be Xxxxx’x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Residential Mortgage Monitoring Department, or such other address as Moody’s may hereafter furnish to the Depositor or the Servicer.

Mortgage

The mortgage, deed of trust or other instrument creating a first lien on an estate in fee simple or leasehold interest in real property securing a Mortgage Note.

Mortgaged Property

The underlying property securing a Loan.

Mortgage File

The mortgage documents listed in Section 2.01 hereof pertaining to a particular Loan and any additional documents delivered to the Trustee to be added to the Mortgage File pursuant to this Agreement.

Mortgage Note

The original executed note or other evidence of indebtedness evidencing the indebtedness of a Mortgagor under a Loan, together with any amendment or modification thereto.

Mortgage Rate

The annual rate of interest borne by a Mortgage Note as set forth therein.

Mortgagor

The obligor(s) on a Mortgage Note.

Net Prepayment Interest Shortfalls

As to any Distribution Date, the amount by which the aggregate of Prepayment Interest Shortfalls during the related Prepayment Period exceeds an amount equal to the aggregate Servicing Fee for such Distribution Date before reduction of the Servicing Fee in respect of such Prepayment Interest Shortfalls.

Net Realized Losses

For any Class of Subordinated Certificates and any Distribution Date, the excess of (a) the amount of unreimbursed Realized Losses previously allocated to that Class over (b) the sum of (i) the amount of any increases to the Class Certificate Balance of that Class pursuant to Section 4.02A due to Recoveries and (ii) Realized Loss Amortization Amounts previously distributed to such Class.

Net Recovery Realized Losses

For any Class of Subordinated Certificates and any Distribution Date, the excess of Net Realized Losses for such Distribution Date over the Realized Loss Amortization Amount distributed to that Class on that Distribution Date.

Net Swap Payment

As to any Distribution Date in the case of payments to be made by (a) the External Trust to the Swap Counterparty, the excess, if any, of, (i) the Fixed Swap Payment over (ii) the Floating Swap Payment and (b) the Swap Counterparty to the External Trust, the excess, if any, of (i) the Floating Swap Payment over (ii) the Fixed Swap Payment.

Net WAC Cap

As to any Distribution Date, the per annum rate equal to the product of (a) the excess if any, of (i) the Net WAC Rate, over (ii) the percentage equivalent of the quotient obtained by dividing (A) the product of (1) the sum of (x) the Net Swap Payment, if any, owed to the Swap Counterparty for that Distribution Date and (y) the Swap Termination Payment (other than any Swap Termination Payment resulting from a Swap Counterparty Trigger Event), if any, owed to the Swap Counterparty for that Distribution Date, and (2) 12, by (B) the sum of (x) the aggregate principal balance of the Loans as of the first day of the related Due Period and (y) the amount on deposit in the Pre-Funding Account immediately prior to that Distribution Date, and (b) the quotient obtained by dividing 30 by the actual number of days elapsed in the related Interest Accrual Period.

Net WAC Cap Account

The account established and maintained pursuant to Section 3A.04.

Net WAC Cap Carryover

With respect to any Class of the Offered Certificates and any Distribution Date, the sum of (a) the excess, if any, of the Interest Distribution Amount for such Class for such Distribution Date, calculated at its Pass-Through Rate (without regard to the Net WAC Cap), over the actual Interest Distribution Amount for such Class for such Distribution Date, and (b) any related Net WAC Cap Carryover remaining unpaid from the prior Distribution Date, together with interest accrued thereon at its Pass-Through Rate (without regard to the Net WAC Cap) during the related Interest Accrual Period.

Net WAC Rate

With respect to (a) the first three Distribution Dates, a per annum rate equal to the product of (i) the weighted average of the Adjusted Net Mortgage Rates of all Outstanding Loans, such weighted average to be calculated based on the principal balances of such Outstanding Loans as of the first day of the related Due Period, and (ii) the quotient of (A) the aggregate principal balance, as of the first day of the related Due Period, of the Outstanding Loans with scheduled payments that are included in determining Available Funds for that Distribution Date divided by (B) the sum of (x) the aggregate principal balance of the Outstanding Loans as of the first day of the related Due Period and (y) the amount on deposit in the Pre-Funding Account immediately prior to that Distribution Date, and (b) the fourth Distribution Date and each Distribution Date thereafter, a per annum rate equal to the weighted average of the Adjusted Net Mortgage Rates of all Outstanding Loans, such weighted average to be calculated based on the principal balances of such Outstanding Loans as of the first day of the related Due Period.

Nonrecoverable Advance

Any portion of an Advance previously made or proposed to be made by the Servicer that, in the good faith judgment of the Servicer, will not be ultimately recoverable by the Servicer from the related Mortgagor, related Liquidation Proceeds or otherwise.

Notice of Final Distribution

The notice to be provided pursuant to Section 9.02 to the effect that final distribution on any of the Certificates shall be made only upon presentation and surrender thereof.

Offered Certificates

The Senior Certificates and the Subordinate Certificates.

Officer’s Certificate

A certificate (a) signed by the Chairman of the Board, the Vice Chairman of the Board, the President, a Managing Director, a Vice President (however denominated), an Assistant Vice President, the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the Depositor or the Servicer, or (b), if provided for in this Agreement, signed by a Servicing Officer, as the case may be, and delivered to the Depositor and the Trustee, as the case may be, as required by this Agreement.

Opinion of Counsel

A written opinion of counsel, who may be counsel for the Depositor or the Servicer, including, in-house counsel, reasonably acceptable to the Trustee; provided, however, that with respect to the interpretation or application of the REMIC Provisions, such counsel must (a) in fact be independent of the Depositor and the Servicer, (b) not have any direct financial interest in the Depositor or the Servicer or in any affiliate of either, and (c) not be connected with the Depositor or the Servicer as an officer, employee, promoter, underwriter, trustee, partner, director or person performing similar functions.

Optional Termination Date

The first Distribution Date following the date on which the Optional Termination may be exercised by the Servicer.

Optional Termination

The termination of the trust created hereunder in connection with the purchase of the Loans pursuant to Section 9.01(a) hereof.

Original Loan

The mortgage loan refinanced in connection with the origination of a Refinance Loan.

Original Pre-Funded Amount

$66,453,545.05.

OTS

The Office of Thrift Supervision.

Outstanding

With respect to the Certificates as of any date of determination, all Certificates theretofore executed and authenticated under this Agreement except (a) Certificates theretofore canceled by the Trustee or delivered to the Trustee for cancellation; and (b) Certificates in exchange for which or in lieu of which other Certificates have been executed and delivered by the Trustee pursuant to this Agreement.

Outstanding Loan

As of any Due Date, a Loan with a Stated Principal Balance greater than zero, which was not the subject of a Principal Prepayment in Full prior to such Due Date and which did not become a Liquidated Loan prior to such Due Date.

Overcollateralization Amount

As of any Distribution Date, (a) the Aggregate Trust Fund Principal Balance as of the last day of the immediately preceding Due Period minus (b) the aggregate Class Certificate Balance of all Classes of Offered Certificates (after taking into account all distributions of principal on that Distribution Date).

Overcollateralization Deficiency

As of any Distribution Date, the excess, if any, of (a) the Targeted Overcollateralization Amount for that Distribution Date over (b) the Overcollateralization Amount for that Distribution Date, calculated for this purpose after taking into account the reduction on that Distribution Date of the Class Certificate Balances of all Classes of Offered Certificates resulting from the distribution of the related Basic Principal Distribution Amount on that Distribution Date, but prior to taking into account any Applied Realized Loss Amounts on that Distribution Date.

Overcollateralization Release Amount

With respect to any Distribution Date on or after the Stepdown Date on which a Trigger Event is not in effect, the lesser of (a) the Principal Remittance Amount for that Distribution Date and (b) the excess, if any, of (i) the Overcollateralization Amount for that Distribution Date, assuming that 100% of the Principal Remittance Amount is applied as a principal payment on the Certificates on that Distribution Date, over (ii) the Targeted Overcollateralization Amount for that Distribution Date. With respect to any Distribution Date before the Stepdown Date or on which a Trigger Event is in effect, the Overcollateralization Release Amount will be zero.

Ownership Interest

As to any Class R Certificate, any ownership 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.

Pass-Through Rate

With respect to each Class of Certificates, as set forth in the Preliminary Statement.

Paying Agent

The Bank of New York and its successors and, if a successor paying agent is appointed hereunder, such successor.

Percentage Interest

As to any Offered Certificate, the percentage interest evidenced thereby in distributions required to be made to such Offered Certificate, such percentage interest being set forth on the face thereof or equal to the percentage obtained by dividing the Denomination of such Certificate by the aggregate of the Denominations of all Certificates of the same Class. With respect to the Class X Certificates and the Class R Certificates, the “Percentage Interest” specified on the face thereof.

Permitted Investments

(a) obligations of the United States or any agency thereof, provided such obligations are backed by the full faith and credit of the United States; (b) general obligations of or obligations guaranteed by any state of the United States or the District of Columbia receiving the highest long-term debt rating of each Rating Agency rating the Offered Certificates, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Offered Certificates by each such Rating Agency; (c) commercial or finance company paper which is then receiving the highest commercial or finance company paper rating of each such Rating Agency, or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Offered Certificates by each such Rating Agency; (d) certificates of deposit, demand or time deposits, or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States or of any state thereof and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or long term unsecured debt obligations of such depository institution or trust company (or in the case of the principal depository institution in a holding company system, the commercial paper or long-term unsecured debt obligations of such holding company, but only if Xxxxx’x is not a Rating Agency) are then rated one of the two highest long-term and the highest short-term ratings of each such Rating Agency for such securities, or such lower ratings as will not result in the downgrading or withdrawal of the rating then assigned to the Offered Certificates by any such Rating Agency; (e) demand or time deposits or certificates of deposit issued by any bank or trust company or savings institution to the extent that such deposits are fully insured by the FDIC; (f) guaranteed reinvestment agreements issued by any bank, insurance company or other corporation containing, at the time of the issuance of such agreements, such terms and conditions as will not result in the downgrading or withdrawal of the rating then assigned to the Offered Certificates by any such Rating Agency; (g) repurchase obligations with respect to any security described in clauses (a) and (b) above, in either case entered into with a depository institution or trust company (acting as principal) described in clause (d) above; (h) securities (other than stripped bonds, stripped coupons or instruments sold at a purchase price in excess of 115% of the face amount thereof) bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States or any state thereof which, at the time of such investment, have one of the two highest ratings of each such Rating Agency (except if the Rating Agency is Moody’s or S&P, the rating shall be the highest commercial paper rating of Moody’s or S&P, as applicable, for such securities), or such lower rating as will not result in the downgrading or withdrawal of the rating then assigned to the Offered Certificates by any such Rating Agency, as evidenced by a signed writing delivered by each such Rating Agency; (i) interests in any money market fund which at the date of acquisition of the interests in the fund and throughout the time those interests are held in the fund has the highest applicable rating of each such Rating Agency or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Offered Certificates by each such Rating Agency; (j) short term investment funds sponsored by any trust company or national banking association incorporated under the laws of the United States or any state thereof which on the date of acquisition has been rated by each such Rating Agency in its highest applicable rating category or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Offered Certificates by each such Rating Agency; and (k) such other investments having a specified stated maturity and bearing interest or sold at a discount acceptable to each such Rating Agency as will not result in the downgrading or withdrawal of the rating then assigned to the Offered Certificates by any Rating Agency, as evidenced by a signed writing to such effect delivered by each such Rating Agency; provided that no such instrument shall be a Permitted Investment if such instrument evidences the right to receive interest only payments with respect to the obligations underlying such instrument.

Permitted Transferee

Any person other than (a) the United States, any State or political subdivision thereof, or any agency or instrumentality of any of the foregoing, (b) a foreign government, International Organization or any agency or instrumentality of either of the foregoing, (c) an organization (except certain farmers’ cooperatives described in section 521 of the Code) which is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by section 511 of the Code on unrelated business taxable income) on any excess inclusions (as defined in section 860E(c)(l) of the Code) with respect to any Class R Certificate, (d) rural electric and telephone cooperatives described in section 1381(a)(2)(C) of the Code, (e) a Person that is not (i) a citizen or resident of the United States, (ii) a corporation or partnership (or other entity properly treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate whose income from sources without the United States is includible in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States, or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States Persons have authority to control all substantial decisions of the trust, unless such Person listed in clause (i), (ii), (iii) or (iv) above has furnished the transferor and the Trustee with a duly completed Internal Revenue Service Form W-8ECI and (f) any other Person so designated by the Depositor based upon an Opinion of Counsel that the Transfer of an Ownership Interest in a Class R Certificate to such Person may cause any REMIC hereunder to fail to qualify as one or more REMICs at any time that the Certificates are outstanding. The terms “United States,” “State” and “International Organization” shall have the meanings set forth in section 7701 of the Code or successor provisions. A corporation will not be treated as an instrumentality of the United States or of any State or political subdivision thereof for these purposes if all of its activities are subject to tax and, with the exception of the Federal Home Loan Mortgage Corporation, a majority of its board of directors is not selected by such government unit.

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.

Plan

As defined in Section 5.02(a).

Pool Principal Balance

With respect to any Distribution Date, the aggregate of the Stated Principal Balances of the Loans that were Outstanding Loans (including Loans in foreclosure and REO Properties) on their Due Dates in the related Due Period.

Popular Financial

Popular Financial Services, LLC, a Delaware limited liability company.

Preliminary Prospectus Supplement

The Preliminary Prospectus Supplement dated November 21, 2006, relating to the Publicly Offered Certificates.

Post-Stepdown Remaining Principal Distribution Amount

With respect to any Distribution Date is an amount equal to the Principal Distribution Amount remaining after giving effect to the distributions set forth in clause (i) of Section 4.02(c) hereof.

Pre-Funded Amount

With respect to any date, the amount on deposit in the Pre-Funding Account as of such date (net of any Pre-Funding Earnings earned up to such date and not previously distributed to the Depositor).

Pre-Funding Account

The separate Eligible Account created and maintained by the Trustee pursuant to Section 3A.06 in the name of the Trustee for the benefit of the Holders of the Offered Certificates and designated “Pre-Funding Account, The Bank of New York, as trustee for the registered holders of Popular ABS, Inc. Mortgage Pass-Through Certificates, Series 2006-E.”

Pre-Funding Earnings

With respect to any date, the actual amounts earned up to such date on amounts on deposit in the Pre-Funding Account and not previously distributed to the Depositor.

Pre-Stepdown Remaining Principal Distribution Amount

With respect to any Distribution Date is an amount equal to the Principal Distribution Amount remaining after giving effect to the distributions set forth in clause (i) of Section 4.02(b) hereof.

Prepayment Interest Excess

As to any Principal Prepayment on a Loan received by the Servicer subsequent to its Due Date in the related Prepayment Period, all amounts paid by the related Mortgagor in respect of interest on such Principal Prepayment that are intended to cover the period on and after the Due Date. All Prepayment Interest Excess shall be paid to the Servicer as additional servicing compensation.

Prepayment Interest Shortfall

As to any Distribution Date and any Principal Prepayment on a Loan received by the Servicer on or before its Due Date in the related Prepayment Period, the amount, if any, by which one month’s interest at the related Adjusted Mortgage Rate on such Principal Prepayment, exceeds the amount of interest paid in connection with such Principal Prepayment.

Prepayment Period

With respect to any Distribution Date, the calendar month preceding the month of that Distribution Date.

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Table of Contents

Popular ABS, Inc. Depositor Equity One, Inc., a Delaware corporation A Seller and the Servicer Equity One, Incorporated Equity One, Inc., a Minnesota corporation Equity One Consumer Loan Company, Inc., a New Hampshire corporation and Popular Financial...