PEOPLE’S CHOICE HOME LOAN SECURITIES CORP. Depositor WELLS FARGO BANK, N.A. Master Servicer and Securities Administrator HSBC BANK USA, NATIONAL ASSOCIATION Trustee EMC MORTGAGE CORPORATION Servicer PEOPLE’S CHOICE HOME LOAN, INC. Seller and Subservicer

PEOPLE’S CHOICE HOME LOAN SECURITIES CORP. Depositor WELLS FARGO BANK, N.A. Master Servicer and Securities Administrator HSBC BANK USA, NATIONAL ASSOCIATION Trustee EMC MORTGAGE CORPORATION Servicer PEOPLE’S CHOICE HOME LOAN, INC. Seller and Subservicer

Document Metadata

Table of Contents

Exhibit 4.1.1

PEOPLE’S CHOICE HOME LOAN SECURITIES CORP.

Depositor

XXXXX FARGO BANK, N.A.

Master Servicer and Securities Administrator

HSBC BANK USA, NATIONAL ASSOCIATION

Trustee

EMC MORTGAGE CORPORATION

Servicer

PEOPLE’S CHOICE HOME LOAN, INC.

Seller and Subservicer

POOLING AND SERVICING AGREEMENT

Dated as of July 1, 2006

People’s Financial Realty Mortgage Securities Trust, Series 2006-1

Mortgage Pass-Through Certificates, Series 2006-1

TABLE OF CONTENTS


ARTICLE I DEFINITIONS		14

SECTION 1.01	Defined Terms.	14

ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES		84

SECTION 2.01	Conveyance of the Mortgage Loans.	84
SECTION 2.02	Acceptance of REMIC I by Trustee.	85
SECTION 2.03	Repurchase or Substitution of Mortgage Loans.	86
SECTION 2.04	Representations and Warranties of the Master Servicer.	88
SECTION 2.05	Representations and Warranties of the Depositor.	89
SECTION 2.06	Representations and Warranties of the Servicer.	91
SECTION 2.07	Representations and Warranties of the Subservicer.	92
SECTION 2.08	[Reserved].	93
SECTION 2.09	Conveyance of the REMIC Regular Interests; Acceptance of REMICs by the Trustee.	93
SECTION 2.10	Establishment of the Trust.	93

ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS		93

SECTION 3.01	Master Servicer.	93
SECTION 3.02	Master Servicer Oversight of Specified Subservicer Actions.	94
SECTION 3.03	REMIC-Related Covenants.	95
SECTION 3.04	Monitoring of Servicer.	96
SECTION 3.05	Power to Act; Procedures.	97
SECTION 3.06	Fidelity Bond.	98
SECTION 3.07	Due-on-Sale Clauses; Assumption Agreements.	98
SECTION 3.08	Release of Mortgage Files.	98
SECTION 3.09	Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.	100
SECTION 3.10	Standard Hazard Insurance and Flood Insurance Policies.	100
SECTION 3.11	Presentment of Claims and Collection of Proceeds.	101
SECTION 3.12	[Reserved].	101
SECTION 3.13	Trustee to Retain Possession of Certain Insurance Policies and Documents.	101
SECTION 3.14	Realization Upon Defaulted Mortgage Loans.	102
SECTION 3.15	Compensation for the Master Servicer.	102
SECTION 3.16	REO Property.	102
SECTION 3.17	Prepayment Charges.	103
SECTION 3.18	Assumption of Role of Servicer by Subservicer.	103
SECTION 3.19	UCC.	103
SECTION 3.20	[Reserved.]	104
SECTION 3.21	P&I Advances.	104
SECTION 3.22	Compensating Interest Payments.	104

-i-


ARTICLE IV ACCOUNTS		104

SECTION 4.01	Custodial Accounts.	104
SECTION 4.02	[Reserved].	106
SECTION 4.03	Collection Account.	106
SECTION 4.04	Distribution Account.	106
SECTION 4.05	Permitted Withdrawals and Transfers from the Distribution Account.	107
SECTION 4.06	Basis Risk Shortfall Reserve Account.	109

ARTICLE V DISTRIBUTIONS TO CERTIFICATEHOLDERS		111

SECTION 5.01	Distributions.	111
SECTION 5.02	Statements to Certificateholders.	119
SECTION 5.03	[Reserved].	121
SECTION 5.04	Allocation of Realized Losses.	121
SECTION 5.05	REMIC Distributions and Allocation of Losses.	123
SECTION 5.06	Supplemental Interest Trust.	131
SECTION 5.07	Tax Treatment of Swap Payments and Swap Termination Payments.	133
SECTION 5.08	Special Derivative Contracts.	134
SECTION 5.09	Compliance with Withholding Requirements.	134

ARTICLE VI THE CERTIFICATES		135

SECTION 6.01	The Certificates.	135
SECTION 6.02	Registration of Transfer and Exchange of Certificates.	137
SECTION 6.03	Mutilated, Destroyed, Lost or Stolen Certificates.	143
SECTION 6.04	Persons Deemed Owners.	143
SECTION 6.05	Certain Available Information.	144

ARTICLE VII THE DEPOSITOR AND THE MASTER SERVICER		144

SECTION 7.01	Liability of the Depositor and the Master Servicer.	144
SECTION 7.02	Merger or Consolidation of the Depositor or the Master Servicer.	145
SECTION 7.03	Limitation on Liability of the Depositor, the Master Servicer and Others.	145
SECTION 7.04	Limitation on Resignation of the Master Servicer.	146
SECTION 7.05	Assignment of Master Servicing.	146
SECTION 7.06	Rights of the Depositor in Respect of the Master Servicer.	147

ARTICLE VIII DEFAULT		148

SECTION 8.01	Events of Default.	148
SECTION 8.02	Trustee to Act; Appointment of Successor.	149
SECTION 8.03	Notification to Certificateholders.	151
SECTION 8.04	Waiver of Event of Default.	152

-ii-


ARTICLE IX CONCERNING THE TRUSTEE AND THE SECURITIES ADMINISTRATOR		152

SECTION 9.01	Duties of Trustee and Securities Administrator.	152
SECTION 9.02	Certain Matters Affecting Trustee and Securities Administrator.	153
SECTION 9.03	Trustee and Securities Administrator not Liable for Certificates or Mortgage Loans.	156
SECTION 9.04	Trustee and Securities Administrator May Own Certificates.	156
SECTION 9.05	Fees and Expenses of Trustee and Securities Administrator.	156
SECTION 9.06	Eligibility Requirements for Trustee and Securities Administrator.	157
SECTION 9.07	Resignation and Removal of Trustee and Securities Administrator.	158
SECTION 9.08	Successor Trustee or Securities Administrator.	159
SECTION 9.09	Merger or Consolidation of Trustee or Securities Administrator.	160
SECTION 9.10	Appointment of Co-Trustee or Separate Trustee.	160
SECTION 9.11	Appointment of Office or Agency.	161
SECTION 9.12	Representations and Warranties.	161

ARTICLE X XXXXXXXXXXX		000

XXXXXXX 00.00	Xxxxxxxxxxx Xxxx Xxxxxxxxxx or Liquidation of All Mortgage Loans.	162
SECTION 10.02	Additional Termination Requirements.	164

ARTICLE XI REMIC PROVISIONS		165

SECTION 11.01	REMIC Administration.	165
SECTION 11.02	Prohibited Transactions and Activities.	167
SECTION 11.03	Indemnification.	168

ARTICLE XII EXCHANGE ACT REPORTING		168

SECTION 12.01	Reporting on Form 10-D.	168
SECTION 12.02	Reporting on Form 10-K.	170
SECTION 12.03	Reporting on Form 8-K.	172
SECTION 12.04	De-Listing; Amendments and Late Filing.	173
SECTION 12.05	Annual Statement of Compliance.	174
SECTION 12.06	Annual Assessment of Compliance.	175
SECTION 12.07	Annual Attestation Report.	176
SECTION 12.08	Annual Xxxxxxxx-Xxxxx Certification.	177
SECTION 12.09	Notices under this Article XII.	177
SECTION 12.10	Additional Information.	177
SECTION 12.11	Intention of the Parties and Interpretation.	178
SECTION 12.12	Indemnification.	178

-iii-


ARTICLE XIII MISCELLANEOUS PROVISIONS		179

SECTION 13.01	Amendment.	179
SECTION 13.02	Recordation of Agreement; Counterparts.	180
SECTION 13.03	Limitation on Rights of Certificateholders.	180
SECTION 13.04	Governing Law.	181
SECTION 13.05	Notices.	181
SECTION 13.06	Severability of Provisions.	182
SECTION 13.07	Notice to Rating Agencies.	182
SECTION 13.08	Article and Section References.	183
SECTION 13.09	Grant of Security Interest.	183
SECTION 13.10	Survival of Indemnification.	184
SECTION 13.11	Third-Party Beneficiaries.	184

-iv-


Exhibits

Exhibit A-1		Form of Class [ A ] Certificate
Exhibit A-2		Form of Class M[ ] Certificate
Exhibit A-3A		Form of Class B1 Certificate
Exhibit A-3B		Form of Class B2 Certificate
Exhibit A-4		Form of Class C Certificate
Exhibit A-5		Form of Class P Certificate
Exhibit A-6		Form of Class R Certificate
Exhibit B-1		Form of Transferor Representation Letter and Form of Transferee Representation Letter in Connection with Transfer of Certificates Pursuant to Rule 144A Under the Securities Act
Exhibit B-2		Form of Transferor Representation Letter and Form of Transferee Representation Letter in Connection with Transfer of Certificates Pursuant to Rule 501(a) Under the Securities Act
Exhibit B-3		Form of Transfer Affidavit and Agreement and Form of Transferor Affidavit in Connection with Transfer of Class R Certificates
Exhibit C		Custodial Agreement
Exhibit D		Mortgage Loan Purchase Agreement
Exhibit E		Servicing Agreement
Exhibit F		Additional Form 10-D Disclosure
Exhibit G		Additional Form 10-K Disclosure
Exhibit H		Form 8-K Disclosure Information
Exhibit I		Additional Disclosure Notification
Exhibit J		Form of Backup Certification
Exhibit K		Relevant Servicing Criteria

Schedule 1		Mortgage Loan Schedule
Schedule 2		Prepayment Charge Schedule

-v-

POOLING AND SERVICING AGREEMENT

This Pooling and Servicing Agreement is dated and effective as of July 1, 2006, among People’s Choice Home Loan Securities Corp., as depositor (the “Depositor”), Xxxxx Fargo Bank, N.A., as master servicer and securities administrator (the “Master Servicer” and the “Securities Administrator,” respectively), HSBC Bank USA, National Association, as trustee (the “Trustee”), EMC Mortgage Corporation, as servicer (the “Servicer”), and People’s Choice Home Loan, Inc., as subservicer and as seller (the “Subservicer” and the “Seller,” respectively).

PRELIMINARY STATEMENT:

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

REMIC I

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the Mortgage Loans and certain other related assets subject to this Agreement (but exclusive of the Basis Risk Shortfall Reserve Account, the Servicer Prepayment Charge Payment Amounts, the Swap Agreement, the Interest Rate Cap Agreement, the Swap Account and the Supplemental Interest Trust) as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC I.” The Class R-I Interest will be the sole class of “residual interests” in REMIC I for purposes of the REMIC Provisions (as defined herein). The following table irrevocably sets forth the designation, the REMIC I Remittance Rate, the initial Uncertificated Balance and, solely for purposes of satisfying Treasury regulation Section 1.860G-l(a)(4)(iii), the “latest possible maturity date” for each of the REMIC I Regular Interests (as defined herein). None of the REMIC I Regular Interests will be certificated.


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
I	Variable	⁽²⁾	$	2.00	September 25, 2036
I-1-A	Variable	⁽²⁾	$	2,900,408.98	September 25, 2036
I-1-B	Variable	⁽²⁾	$	2,900,408.98	September 25, 2036
I-2-A	Variable	⁽²⁾	$	3,717,916.34	September 25, 2036
I-2-B	Variable	⁽²⁾	$	3,717,916.34	September 25, 2036
I-3-A	Variable	⁽²⁾	$	4,714,364.66	September 25, 2036
I-3-B	Variable	⁽²⁾	$	4,714,364.66	September 25, 2036
I-4-A	Variable	⁽²⁾	$	5,146,152.00	September 25, 2036

-1-


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
I-4-B	Variable	⁽²⁾	$	5,146,152.00	September 25, 2036
I-5-A	Variable	⁽²⁾	$	5,577,939.35	September 25, 2036
I-5-B	Variable	⁽²⁾	$	5,577,939.35	September 25, 2036
I-6-A	Variable	⁽²⁾	$	6,009,726.69	September 25, 2036
I-6-B	Variable	⁽²⁾	$	6,009,726.69	September 25, 2036
I-7-A	Variable	⁽²⁾	$	6,441,514.04	September 25, 2036
I-7-B	Variable	⁽²⁾	$	6,441,514.04	September 25, 2036
I-8-A	Variable	⁽²⁾	$	7,592,017.04	September 25, 2036
I-8-B	Variable	⁽²⁾	$	7,592,017.04	September 25, 2036
I-9-A	Variable	⁽²⁾	$	8,066,491.12	September 25, 2036
I-9-B	Variable	⁽²⁾	$	8,066,491.12	September 25, 2036
I-10-A	Variable	⁽²⁾	$	8,124,764.30	September 25, 2036
I-10-B	Variable	⁽²⁾	$	8,124,764.30	September 25, 2036
I-11-A	Variable	⁽²⁾	$	7,958,416.92	September 25, 2036
I-11-B	Variable	⁽²⁾	$	7,958,416.92	September 25, 2036
I-12-A	Variable	⁽²⁾	$	7,845,911.79	September 25, 2036
I-12-B	Variable	⁽²⁾	$	7,845,911.79	September 25, 2036
I-13-A	Variable	⁽²⁾	$	7,608,325.52	September 25, 2036
I-13-B	Variable	⁽²⁾	$	7,608,325.52	September 25, 2036
I-14-A	Variable	⁽²⁾	$	7,168,381.33	September 25, 2036
I-14-B	Variable	⁽²⁾	$	7,168,381.33	September 25, 2036
I-15-A	Variable	⁽²⁾	$	7,585,566.19	September 25, 2036
I-15-B	Variable	⁽²⁾	$	7,585,566.19	September 25, 2036
I-16-A	Variable	⁽²⁾	$	7,821,280.94	September 25, 2036
I-16-B	Variable	⁽²⁾	$	7,821,280.94	September 25, 2036
I-17-A	Variable	⁽²⁾	$	10,861,629.23	September 25, 2036
I-17-B	Variable	⁽²⁾	$	10,861,629.23	September 25, 2036
I-18-A	Variable	⁽²⁾	$	10,258,285.93	September 25, 2036
I-18-B	Variable	⁽²⁾	$	10,258,285.93	September 25, 2036
I-19-A	Variable	⁽²⁾	$	9,633,515.37	September 25, 2036
I-19-B	Variable	⁽²⁾	$	9,633,515.37	September 25, 2036
I-20-A	Variable	⁽²⁾	$	9,048,348.07	September 25, 2036
I-20-B	Variable	⁽²⁾	$	9,048,348.07	September 25, 2036
I-21-A	Variable	⁽²⁾	$	8,502,673.56	September 25, 2036
I-21-B	Variable	⁽²⁾	$	8,502,673.56	September 25, 2036
I-22-A	Variable	⁽²⁾	$	7,971,882.94	September 25, 2036
I-22-B	Variable	⁽²⁾	$	7,971,882.94	September 25, 2036
I-23-A	Variable	⁽²⁾	$	32,741,486.17	September 25, 2036
I-23-B	Variable	⁽²⁾	$	32,741,486.17	September 25, 2036
I-24-A	Variable	⁽²⁾	$	5,636,884.81	September 25, 2036
I-24-B	Variable	⁽²⁾	$	5,636,884.81	September 25, 2036
I-25-A	Variable	⁽²⁾	$	5,298,713.68	September 25, 2036
I-25-B	Variable	⁽²⁾	$	5,298,713.68	September 25, 2036

-2-


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
I-26-A	Variable	⁽²⁾	$	4,983,018.59	September 25, 2036
I-26-B	Variable	⁽²⁾	$	4,983,018.59	September 25, 2036
I-27-A	Variable	⁽²⁾	$	4,699,106.15	September 25, 2036
I-27-B	Variable	⁽²⁾	$	4,699,106.15	September 25, 2036
I-28-A	Variable	⁽²⁾	$	2,787,328.52	September 25, 2036
I-28-B	Variable	⁽²⁾	$	2,787,328.52	September 25, 2036
I-29-A	Variable	⁽²⁾	$	2,660,663.45	September 25, 2036
I-29-B	Variable	⁽²⁾	$	2,660,663.45	September 25, 2036
I-30-A	Variable	⁽²⁾	$	2,567,633.16	September 25, 2036
I-30-B	Variable	⁽²⁾	$	2,567,633.16	September 25, 2036
I-31-A	Variable	⁽²⁾	$	2,478,425.56	September 25, 2036
I-31-B	Variable	⁽²⁾	$	2,478,425.56	September 25, 2036
I-32-A	Variable	⁽²⁾	$	2,392,386.28	September 25, 2036
I-32-B	Variable	⁽²⁾	$	2,392,386.28	September 25, 2036
I-33-A	Variable	⁽²⁾	$	2,309,388.69	September 25, 2036
I-33-B	Variable	⁽²⁾	$	2,309,388.69	September 25, 2036
I-34-A	Variable	⁽²⁾	$	2,229,216.09	September 25, 2036
I-34-B	Variable	⁽²⁾	$	2,229,216.09	September 25, 2036
I-35-A	Variable	⁽²⁾	$	2,151,881.42	September 25, 2036
I-35-B	Variable	⁽²⁾	$	2,151,881.42	September 25, 2036
I-36-A	Variable	⁽²⁾	$	2,077,412.08	September 25, 2036
I-36-B	Variable	⁽²⁾	$	2,077,412.08	September 25, 2036
I-37-A	Variable	⁽²⁾	$	2,004,722.68	September 25, 2036
I-37-B	Variable	⁽²⁾	$	2,004,722.68	September 25, 2036
I-38-A	Variable	⁽²⁾	$	1,926,827.03	September 25, 2036
I-38-B	Variable	⁽²⁾	$	1,926,827.03	September 25, 2036
I-39-A	Variable	⁽²⁾	$	1,855,395.85	September 25, 2036
I-39-B	Variable	⁽²⁾	$	1,855,395.85	September 25, 2036
I-40-A	Variable	⁽²⁾	$	1,791,894.57	September 25, 2036
I-40-B	Variable	⁽²⁾	$	1,791,894.57	September 25, 2036
I-41-A	Variable	⁽²⁾	$	1,731,012.12	September 25, 2036
I-41-B	Variable	⁽²⁾	$	1,731,012.12	September 25, 2036
I-42-A	Variable	⁽²⁾	$	1,672,207.42	September 25, 2036
I-42-B	Variable	⁽²⁾	$	1,672,207.42	September 25, 2036
I-43-A	Variable	⁽²⁾	$	1,615,408.69	September 25, 2036
I-43-B	Variable	⁽²⁾	$	1,615,408,69	September 25, 2036
I-44-A	Variable	⁽²⁾	$	1,560,547.19	September 25, 2036
I-44-B	Variable	⁽²⁾	$	1,560,547.19	September 25, 2036
I-45-A	Variable	⁽²⁾	$	1,507,556.56	September 25, 2036
I-45-B	Variable	⁽²⁾	$	1,507,556.56	September 25, 2036
I-46-A	Variable	⁽²⁾	$	1,456,372.73	September 25, 2036
I-46-B	Variable	⁽²⁾	$	1,456,372.73	September 25, 2036
I-47-A	Variable	⁽²⁾	$	1,406,933.81	September 25, 2036
I-47-B	Variable	⁽²⁾	$	1,406,933.81	September 25, 2036
I-48-A	Variable	⁽²⁾	$	1,359,180.08	September 25, 2036
I-48-B	Variable	⁽²⁾	$	1,359,180.08	September 25, 2036

-3-


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date (1)
I-49-A	Variable	⁽²⁾	$	1,313,053.84	September 25, 2036
I-49-B	Variable	⁽²⁾	$	1,313,053.84	September 25, 2036
I-50-A	Variable	⁽²⁾	$	1,268,499.36	September 25, 2036
I-50-B	Variable	⁽²⁾	$	1,268,499.36	September 25, 2036
I-51-A	Variable	⁽²⁾	$	1,225,462.87	September 25, 2036
I-51-B	Variable	⁽²⁾	$	1,225,462.87	September 25, 2036
I-52-A	Variable	⁽²⁾	$	1,183,892.43	September 25, 2036
I-52-B	Variable	⁽²⁾	$	1,183,892.43	September 25, 2036
I-53-A	Variable	⁽²⁾	$	1,143,737.86	September 25, 2036
I-53-B	Variable	⁽²⁾	$	1,143,737.86	September 25, 2036
I-54-A	Variable	⁽²⁾	$	1,104,950.75	September 25, 2036
I-54-B	Variable	⁽²⁾	$	1,104,950.75	September 25, 2036
I-55-A	Variable	⁽²⁾	$	1,067,484.30	September 25, 2036
I-55-B	Variable	⁽²⁾	$	1,067,484.30	September 25, 2036
I-56-A	Variable	⁽²⁾	$	1,031,293.37	September 25, 2036
I-56-B	Variable	⁽²⁾	$	1,031,293.37	September 25, 2036
I-57-A	Variable	⁽²⁾	$	996,322.49	September 25, 2036
I-57-B	Variable	⁽²⁾	$	996,322.49	September 25, 2036
I-58-A	Variable	⁽²⁾	$	964,607.25	September 25, 2036
I-58-B	Variable	⁽²⁾	$	964,607.25	September 25, 2036
I-59-A	Variable	⁽²⁾	$	19,237,142.96	September 25, 2036
I-59-B	Variable	⁽²⁾	$	19,237,142.96	September 25, 2036

Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date (1)
II	Variable	⁽²⁾	$	2.00	September 25, 2036
II-1-A	Variable	⁽²⁾	$	2,186,412.74	September 25, 2036
II-1-B	Variable	⁽²⁾	$	2,186,412.74	September 25, 2036
II-2-A	Variable	⁽²⁾	$	2,802,673.90	September 25, 2036
II-2-B	Variable	⁽²⁾	$	2,802,673.90	September 25, 2036
II-3-A	Variable	⁽²⁾	$	3,553,825.75	September 25, 2036
II-3-B	Variable	⁽²⁾	$	3,553,825.75	September 25, 2036
II-4-A	Variable	⁽²⁾	$	3,879,319.66	September 25, 2036
II-4-B	Variable	⁽²⁾	$	3,879,319.66	September 25, 2036
II-5-A	Variable	⁽²⁾	$	4,204,813.57	September 25, 2036
II-5-B	Variable	⁽²⁾	$	4,204,813.57	September 25, 2036
II-6-A	Variable	⁽²⁾	$	4,530,307.48	September 25, 2036
II-6-B	Variable	⁽²⁾	$	4,530,307.48	September 25, 2036
II-7-A	Variable	⁽²⁾	$	4,855,801.39	September 25, 2036
II-7-B	Variable	⁽²⁾	$	4,855,801.39	September 25, 2036
II-8-A	Variable	⁽²⁾	$	5,723,084.14	September 25, 2036
II-8-B	Variable	⁽²⁾	$	5,723,084.14	September 25, 2036

-4-


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
II-9-A	Variable	⁽²⁾	$	6,080,756.56	September 25, 2036
II-9-B	Variable	⁽²⁾	$	6,080,756.56	September 25, 2036
II-10-A	Variable	⁽²⁾	$	6,124,684.59	September 25, 2036
II-10-B	Variable	⁽²⁾	$	6,124,684.59	September 25, 2036
II-11-A	Variable	⁽²⁾	$	5,999,287.07	September 25, 2036
II-11-B	Variable	⁽²⁾	$	5,999,287.07	September 25, 2036
II-12-A	Variable	⁽²⁾	$	5,914,477.42	September 25, 2036
II-12-B	Variable	⁽²⁾	$	5,914,477.42	September 25, 2036
II-13-A	Variable	⁽²⁾	$	5,735,377.96	September 25, 2036
II-13-B	Variable	⁽²⁾	$	5,735,377.96	September 25, 2036
II-14-A	Variable	⁽²⁾	$	5,403,735.18	September 25, 2036
II-14-B	Variable	⁽²⁾	$	5,403,735.18	September 25, 2036
II-15-A	Variable	⁽²⁾	$	5,718,221.31	September 25, 2036
II-15-B	Variable	⁽²⁾	$	5,718,221.31	September 25, 2036
II-16-A	Variable	⁽²⁾	$	5,895,909.97	September 25, 2036
II-16-B	Variable	⁽²⁾	$	5,895,909.97	September 25, 2036
II-17-A	Variable	⁽²⁾	$	8,187,813.29	September 25, 2036
II-17-B	Variable	⁽²⁾	$	8,187,813.29	September 25, 2036
II-18-A	Variable	⁽²⁾	$	7,732,995.50	September 25, 2036
II-18-B	Variable	⁽²⁾	$	7,732,995.50	September 25, 2036
II-19-A	Variable	⁽²⁾	$	7,262,025.21	September 25, 2036
II-19-B	Variable	⁽²⁾	$	7,262,025.21	September 25, 2036
II-20-A	Variable	⁽²⁾	$	6,820,909.01	September 25, 2036
II-20-B	Variable	⁽²⁾	$	6,820,909.01	September 25, 2036
II-21-A	Variable	⁽²⁾	$	6,409,563.63	September 25, 2036
II-21-B	Variable	⁽²⁾	$	6,409,563.63	September 25, 2036
II-22-A	Variable	⁽²⁾	$	6,009,438.16	September 25, 2036
II-22-B	Variable	⁽²⁾	$	6,009,438.16	September 25, 2036
II-23-A	Variable	⁽²⁾	$	24,681,488.39	September 25, 2036
II-23-B	Variable	⁽²⁾	$	24,681,488.39	September 25, 2036
II-24-A	Variable	⁽²⁾	$	4,249,248.38	September 25, 2036
II-24-B	Variable	⁽²⁾	$	4,249,248.38	September 25, 2036
II-25-A	Variable	⁽²⁾	$	3,994,325.11	September 25, 2036
II-25-B	Variable	⁽²⁾	$	3,994,325.11	September 25, 2036
II-26-A	Variable	⁽²⁾	$	3,756,344.93	September 25, 2036
II-26-B	Variable	⁽²⁾	$	3,756,344.93	September 25, 2036
II-27-A	Variable	⁽²⁾	$	3,542,323.44	September 25, 2036
II-27-B	Variable	⁽²⁾	$	3,542,323.44	September 25, 2036
II-28-A	Variable	⁽²⁾	$	2,101,169.63	September 25, 2036
II-28-B	Variable	⁽²⁾	$	2,101,169.63	September 25, 2036
II-29-A	Variable	⁽²⁾	$	2,005,685.81	September 25, 2036
II-29-B	Variable	⁽²⁾	$	2,005,685.81	September 25, 2036
II-30-A	Variable	⁽²⁾	$	1,935,556.86	September 25, 2036
II-30-B	Variable	⁽²⁾	$	1,935,556.86	September 25, 2036

-5-


Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
II-31-A	Variable	⁽²⁾	$	1,868,309.56	September 25, 2036
II-31-B	Variable	⁽²⁾	$	1,868,309.56	September 25, 2036
II-32-A	Variable	⁽²⁾	$	1,803,450.64	September 25, 2036
II-32-B	Variable	⁽²⁾	$	1,803,450.64	September 25, 2036
II-33-A	Variable	⁽²⁾	$	1,740,884.63	September 25, 2036
II-33-B	Variable	⁽²⁾	$	1,740,884.63	September 25, 2036
II-34-A	Variable	⁽²⁾	$	1,680,448.19	September 25, 2036
II-34-B	Variable	⁽²⁾	$	1,680,448.19	September 25, 2036
II-35-A	Variable	⁽²⁾	$	1,622,151.06	September 25, 2036
II-35-B	Variable	⁽²⁾	$	1,622,151.06	September 25, 2036
II-36-A	Variable	⁽²⁾	$	1,566,013.89	September 25, 2036
II-36-B	Variable	⁽²⁾	$	1,566,013.89	September 25, 2036
II-37-A	Variable	⁽²⁾	$	1,511,218.49	September 25, 2036
II-37-B	Variable	⁽²⁾	$	1,511,218.49	September 25, 2036
II-38-A	Variable	⁽²⁾	$	1,452,498.48	September 25, 2036
II-38-B	Variable	⁽²⁾	$	1,452,498.48	September 25, 2036
II-39-A	Variable	⁽²⁾	$	1,398,651.57	September 25, 2036
II-39-B	Variable	⁽²⁾	$	1,398,651.57	September 25, 2036
II-40-A	Variable	⁽²⁾	$	1,350,782.45	September 25, 2036
II-40-B	Variable	⁽²⁾	$	1,350,782.45	September 25, 2036
II-41-A	Variable	⁽²⁾	$	1,304,887.48	September 25, 2036
II-41-B	Variable	⁽²⁾	$	1,304,887.48	September 25, 2036
II-42-A	Variable	⁽²⁾	$	1,260,558.79	September 25, 2036
II-42-B	Variable	⁽²⁾	$	1,260,558.79	September 25, 2036
II-43-A	Variable	⁽²⁾	$	1,217,742.24	September 25, 2036
II-43-B	Variable	⁽²⁾	$	1,217,742.24	September 25, 2036
II-44-A	Variable	⁽²⁾	$	1,176,386.04	September 25, 2036
II-44-B	Variable	⁽²⁾	$	1,176,386.04	September 25, 2036
II-45-A	Variable	⁽²⁾	$	1,136,440.16	September 25, 2036
II-45-B	Variable	⁽²⁾	$	1,136,440.16	September 25, 2036
II-46-A	Variable	⁽²⁾	$	1,097,856.29	September 25, 2036
II-46-B	Variable	⁽²⁾	$	1,097,856.29	September 25, 2036
II-47-A	Variable	⁽²⁾	$	1,060,587.80	September 25, 2036
II-47-B	Variable	⁽²⁾	$	1,060,587.80	September 25, 2036
II-48-A	Variable	⁽²⁾	$	1,024,589.64	September 25, 2036
II-48-B	Variable	⁽²⁾	$	1,024,589.64	September 25, 2036
II-49-A	Variable	⁽²⁾	$	989,818.32	September 25, 2036
II-49-B	Variable	⁽²⁾	$	989,818.32	September 25, 2036
II-50-A	Variable	⁽²⁾	$	956,231.86	September 25, 2036
II-50-B	Variable	⁽²⁾	$	956,231.86	September 25, 2036
II-51-A	Variable	⁽²⁾	$	923,789.70	September 25, 2036
II-51-B	Variable	⁽²⁾	$	923,789.70	September 25, 2036
II-52-A	Variable	⁽²⁾	$	892,452.68	September 25, 2036
II-52-B	Variable	⁽²⁾	$	892,452.68	September 25, 2036
II-53-A	Variable	⁽²⁾	$	862,183.00	September 25, 2036
II-53-B	Variable	⁽²⁾	$	862,183.00	September 25, 2036

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Designation	REMIC I Remittance Rate		Initial Uncertificated Balance		Latest Possible Maturity Date ⁽¹⁾
II-54-A	Variable	⁽²⁾	$	832,944.14	September 25, 2036
II-54-B	Variable	⁽²⁾	$	832,944.14	September 25, 2036
II-55-A	Variable	⁽²⁾	$	804,700.84	September 25, 2036
II-55-B	Variable	⁽²⁾	$	804,700.84	September 25, 2036
II-56-A	Variable	⁽²⁾	$	777,419.06	September 25, 2036
II-56-B	Variable	⁽²⁾	$	777,419.06	September 25, 2036
II-57-A	Variable	⁽²⁾	$	751,056.99	September 25, 2036
II-57-B	Variable	⁽²⁾	$	751,056.99	September 25, 2036
II-59-A	Variable	⁽²⁾	$	727,149.11	September 25, 2036
II-59-A	Variable	⁽²⁾	$	727,149.11	September 25, 2036
II-59-A	Variable	⁽²⁾	$	14,501,520.13	September 25, 2036
II-59-B	Variable	⁽²⁾	$	14,501,520.13	September 25, 2036

⁽¹⁾	Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date immediately following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for each REMIC I Regular Interest.

⁽²⁾	Calculated in accordance with the definition of “REMIC I Remittance Rate” herein.

-7-

REMIC II

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC II.” The Class R-II Interest will evidence the sole class of “residual interests” in REMIC II for purposes of the REMIC Provisions. The following table irrevocably sets forth the designation, the REMIC II Remittance Rate, the initial Uncertificated Balance and, solely for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for each of the REMIC II Regular Interests. None of the REMIC II Regular Interests shall be certificated.


Designation	Initial Uncertificated Balance		REMIC II Remittance Rate			Latest Possible Maturity Date⁽¹⁾
II-LTAA	Variable	⁽²⁾	$	491,552,088.11		September 25, 2036
II-LT1A1	Variable	⁽²⁾	$	1,084,275.00		September 25, 2036
II-LT1A2	Variable	⁽²⁾	$	636,850.00		September 25, 2036
II-LT1A3	Variable	⁽²⁾	$	322,200.00		September 25, 2036
II-LT1A4	Variable	⁽²⁾	$	206,020.00		September 25, 2036
II-LT2A1	Variable	⁽²⁾	$	847,805.00		September 25, 2036
II-LT2A2	Variable	⁽²⁾	$	847,805.00		September 25, 2036
II-LTM1	Variable	⁽²⁾	$	183,080.00		September 25, 2036
II-LTM2	Variable	⁽²⁾	$	168,030.00		September 25, 2036
II-LTM3	Variable	⁽²⁾	$	100,315.00		September 25, 2036
II-LTM4	Variable	⁽²⁾	$	90,285.00		September 25, 2036
II-LTM5	Variable	⁽²⁾	$	82,760.00		September 25, 2036
II-LTM6	Variable	⁽²⁾	$	77,745.00		September 25, 2036
II-LTM7	Variable	⁽²⁾	$	72,730.00		September 25, 2036
II-LTM8	Variable	⁽²⁾	$	62,700.00		September 25, 2036
II-LTM9	Variable	⁽²⁾	$	32,605.00		September 25, 2036
II-LTM10	Variable	⁽²⁾	$	60,190.00		September 25, 2036
II-LTZZ	Variable	⁽²⁾	$	5,015,841.29		September 25, 2036
II-LTP	Variable	⁽²⁾	$	100.00		September 25, 2036
II-LTB1	Variable	⁽²⁾	$	45,140.00		September 25, 2036
II-LTB2	Variable	⁽²⁾	$	95,300.00		September 25, 2036
II-LTIO	Variable	⁽²⁾		(3	)	September 25, 2036
II-LT1SUB	Variable	⁽²⁾	$	12,211.81		September 25, 2036
II-LT1GRP	Variable	⁽²⁾	$	57,198.71		September 25, 2036
II-LT2SUB	Variable	⁽²⁾	$	9,205.86		September 25, 2036
II-LT2GRP	Variable	⁽²⁾	$	43,118.06		September 25, 2036
II-LTXX	Variable	⁽²⁾	$	501,462,129.95		September 25, 2036

⁽¹⁾	Solely for purposes of Treasury Regulations Section 1.860G-1(a)(4)(iii), the Distribution Date in the month following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for each REMIC II Regular Interest.

⁽²⁾	Calculated in accordance with the definition of “REMIC II Remittance Rate” herein.

⁽³⁾	REMIC II Regular Interest II-LTIO will not have a principal balance, but will accrue interest on its Uncertificated Notional Amount.

-8-

REMIC III

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the REMIC II Regular Interests as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC III.” The Class R-III Interest represents the sole class of “residual interests” in REMIC III for purposes of the REMIC Provisions.

The following table sets forth the Class designation, Certificate Rate and Initial Certificate Principal Balance, Uncertificated Balance or Notional Amount for each Class of REMIC III Regular Interests comprising the “regular interest” in REMIC III for purposes of the REMIC Provisions.


Designation	Initial Certificate Principal Balance			Certificate Rate		Latest Possible Maturity Date ⁽²⁾
1A1	$	216,855,000		(1	)	September 25, 2036
1A2	$	127,370,000		(1	)	September 25, 2036
1A3	$	64,440,000		(1	)	September 25, 2036
1A4	$	41,204,000		(1	)	September 25, 2036
2A1	$	169,561,000		(1	)	September 25, 2036
2A2	$	169,561,000		(1	)	September 25, 2036
M1	$	36,616,000		(1	)	September 25, 2036
M2	$	33,606,000		(1	)	September 25, 2036
M3	$	20,063,000		(1	)	September 25, 2036
M4	$	18,057,000		(1	)	September 25, 2036
M5	$	16,552,000		(1	)	September 25, 2036
M6	$	15,549,000		(1	)	September 25, 2036
M7	$	14,546,000		(1	)	September 25, 2036
M8	$	12,540,000		(1	)	September 25, 2036
M9	$	6,521,000		(1	)	September 25, 2036
M10	$	12,038,000		(1	)	September 25, 2036
B1	$	9,028,000		(1	)	September 25, 2036
B2	$	19,060,000		(1	)	September 25, 2036
C	$	N/A				September 25, 2036
P	$	100				September 25, 2036
SWAP-IO INTEREST		(3	)	(3	)	September 25, 2036

⁽¹⁾

Calculated in accordance with the Certificate Rate of the corresponding Class of Certificates. For purposes of the REMIC Provisions, with respect to each REMIC III Regular Interest listed above, each reference to a Net WAC Cap in the applicable Certificate Rate shall be deemed to be a reference to the REMIC III Net WAC Rate; therefore, on any Distribution Date on which the Certificate Rate for the Class of Certificates exceeds the REMIC III Net WAC Rate, interest accruals based on such excess shall be treated as having been paid from the Basis Risk Shortfall Reserve Account or the Supplemental Interest Trust, as applicable. On any Distribution Date on which the Certificate Rate on a Class of Certificates is based on the applicable Net WAC Cap, the

-9-

amount of interest that would have accrued on such Class of Certificates if the REMIC III Net WAC Rate were substituted for the applicable Net WAC Cap shall be treated as having been paid by the related Class of Certificates to the Supplemental Interest Trust, all pursuant to and as further provided in Sections 5.06 and 5.07 herein.

⁽²⁾	Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the Distribution Date immediately following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for each REMIC III Regular Interest.

⁽³⁾	The Class SWAP-IO Interest will not have a Certificate Rate or a Certificate Principal Balance, but will be entitled to 100% of the amounts distributed on REMIC II Regular Interest II-LTIO. The Class Swap-IO Interest will be uncertificated.

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

-10-

REMIC IV

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the Class C Interest as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC IV” The Class RX-IV Interest represents the sole class of “residual interests” in REMIC IV for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class designation, Certificate Rate and initial Certificate Principal Balance for the Class C Certificates that represents a “regular interest” in REMIC IV created hereunder:

Class Designation

Certificate Rate

Initial

Certificate Principal

Balance

Latest Possible

Maturity Date⁽¹⁾

Class C Certificate

Variable⁽²⁾

N/A

September 25, 2036

⁽¹⁾	Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date immediately following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for the Class C Certificates.

⁽²⁾	The Class C Certificates will receive 100% of amounts received in respect of the Class C Interest.

-11-

REMIC V

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the Class P Interest as a REMIC for federal income tax purposes, and such segregated pool of assets will be designated as “REMIC V.” The Class RX-V Interest represents the sole class of “residual interests” in REMIC V for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class designation, Certificate Rate and initial Certificate Principal Balance for the Class P Certificates that represents a “regular interest” in REMIC V created hereunder:

⁽¹⁾	Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date immediately following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for the Class P Certificates.

⁽²⁾	The Class P Certificates will receive 100% of amounts received in respect of the Class P Interest.

-12-

REMIC VI

As provided herein, the Securities Administrator will elect to treat the segregated pool of assets consisting of the Class SWAP-IO Interest as a REMIC for federal income tax purposes, and such segregated pool of assets shall be designated as “REMIC VI.” The Class RX-VI Interest represents the sole class of “residual interests” in REMIC VI for purposes of the REMIC Provisions.

The following table sets forth (or describes) the Class designation, the Certificate Rate, the initial aggregate Certificate Principal Balance and, for purposes of satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the “latest possible maturity date” for the indicated REMIC VI Regular Interest, which will be uncertificated.


Designation	Certificate Rate	Initial Aggregate Certificate Principal Balance	Latest Possible Maturity Date⁽¹⁾
SWAP-IO	Variable⁽²⁾	N/A	September 25, 2006

⁽¹⁾	For purposes of Section 1.860G-1(a)(4)(iii) of the Treasury regulations, the Distribution Date immediately following the maturity date for the Mortgage Loan with the latest maturity date has been designated as the “latest possible maturity date” for REMIC VI Regular Interest SWAP-IO.

⁽²⁾	The REMIC VI Class SWAP-IO Interest shall receive 100% of amounts received in respect of the REMIC III Class SWAP-IO Interest.

As of the Cut-off Date, the Group 1 Mortgage Loans had an aggregate Stated Principal Balance equal to approximately $571,987,128 and the Group 2 Mortgage Loans had an aggregate Stated Principal Balance equal to approximately $431,180,600.

-13-

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

ARTICLE I

DEFINITIONS

SECTION 1.01 Defined Terms.

Whenever used in this Agreement, including, without limitation, in the Preliminary Statement hereto, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Article. Unless otherwise specified, all calculations described herein shall be made on the basis of a 360-day year consisting of twelve 30-day months.

“10-K Filing Deadline”: As defined in Section 12.02(a).

“Accepted Master Servicing Practices”: With respect to any Mortgage Loan, as applicable, either (a) those customary mortgage master servicing practices of prudent mortgage servicing institutions that master service mortgage loans of the same type and quality as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located, to the extent applicable to the Master Servicer (except in its capacity as successor to a servicer hereunder), or (b) as provided in Section 3.01 hereof, but in no event below the standard set forth in clause (a).

“Accepted Servicing Practices”: With respect to any Mortgage Loan, as applicable, those customary mortgage servicing practices of prudent mortgage servicing institutions that service mortgage loans of the same type and quality as such Mortgage Loan in the jurisdiction where the related Mortgaged Property is located, as provided in the Servicing Agreement, to the extent applicable to the Servicer or the Subservicer.

“Account”: The Collection Account, the Basis Risk Shortfall Reserve Account, the Swap Account, the Cap Account or the Distribution Account, as the context may require.

“Accrual Period”: For any Class of LIBOR Certificates, the period from and including the preceding Distribution Date (or, in the case of the first Distribution Date, from and including the Closing Date) to and including the day prior to the current Distribution Date. With respect to any Distribution Date and the Class C Interest, the Class C Certificates, the REMIC I Regular Interests and the REMIC II Regular Interests, the one-month period ending on the last day of the calendar month immediately preceding the month in which such Distribution Date occurs.

“Accrued Certificate Interest”: With respect to any Class A, Class B, Class C or Class M Certificate and each Distribution Date, interest accrued during the related Accrual Period at the Certificate Rate for such Certificate for such Distribution Date on the Certificate Principal Balance, in the case of the Class A, Class B or Class M Certificates, or on the Notional

-14-

Amount in the case of the Class C Certificates, of such Certificate immediately prior to such Distribution Date. The Class P Certificates are not entitled to distributions in respect of interest and, accordingly, will not accrue interest. All distributions of interest on the LIBOR Certificates will be calculated on the basis of a 360-day year and the actual number of days in the applicable Accrual Period. All distributions of interest on the Class C Certificates will be based on a 360-day year consisting of twelve 30-day months.

“Additional Disclosure Notification”: As defined in Section 12.01(b).

“Additional Form 10-D Disclosure”: As defined in Section 12.01(a).

“Additional Form 10-K Disclosure”: As defined in Section 12.02(a).

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

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

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

“Agreement”: This Pooling and Servicing Agreement, including all exhibits and schedules hereto and all amendments hereof and supplements hereto.

“Annual Expenses”: For any Distribution Date, an amount equal to the sum of the Servicing Fee, plus any expenses and indemnities for which such parties reimbursed themselves out of the Distribution Account, subject to an annual limitation on certain expenses and indemnities of $150,000 for the Trustee and of $250,000 for the Master Servicer, the Securities Administrator and the Custodian; provided, however, that such cap shall not apply to any expenses, costs or liabilities incurred by the Master Servicer in connection with assuming primary servicing responsibilities with respect to the Mortgage Loans.

“Applicable Credit Rating”: For any long-term deposit or security, a credit rating of AAA in the case of S&P, AAA in the case of Fitch, or Aaa in the case of Xxxxx’x. For any short-term deposit or security, a rating of A-l+ in the case of S&P, F1+ in the case of Fitch, if rated by Fitch, or P-1 in the case of Xxxxx’x.

“Applied Realized Loss Amount”: With respect to the Class B Certificates and Class M Certificates and any Distribution Date, an amount equal to the sum of any Realized Loss allocated to that Class of Certificates on that Distribution Date and any Applied Realized Loss Amount for that Class remaining unpaid from any previous Distribution Date.

-15-

“Assignment”: With respect to non-MERs loans, an assignment of Mortgage, notice of transfer or equivalent instrument, in recordable form, which is sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect of record the sale of the Mortgage, which assignment, notice of transfer or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law.

“Back-up Certification”: As defined in Section 12.08(a).

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

“Basic Principal Distribution Amount”: For any Distribution Date, the excess, if any, of (a) the Principal Funds for such Distribution Date, over (b) the Overcollateralization Release Amount.

“Basis Risk Shortfall”: For any Class of Certificates on any Distribution Date where clause (ii) of the definition of Certificate Rate is less than the lesser of clauses (i) and (iii) of such definition, the excess, if any, of (x) the aggregate Accrued Certificate Interest thereon for such Distribution Date calculated pursuant to the lesser of clause (i) and (iii) of such definition of Certificate Rate over (y) Accrued Certificate Interest on such Class. For federal income tax purposes, each application of an applicable Net WAC Cap shall be an application of the REMIC III Net WAC Rate for purposes of calculating the amount of Basis Risk Shortfall.

“Basis Risk Shortfall Carryforward Amount”: For each Class of Certificates and any Distribution Date, as determined separately for each such Class of Certificates, an amount equal to the aggregate amount of Basis Risk Shortfall for such Certificates on such Distribution Date, plus any unpaid Basis Risk Shortfall for each Class of Certificates from prior Distribution Dates, plus interest thereon at the related Certificate Rate (without regard to the applicable Net WAC Cap) for such Distribution Date, to the extent previously unreimbursed.

“Basis Risk Shortfall Reserve Account”: The trust account established by the Securities Administrator pursuant to Section 4.06 hereof.

“Book-Entry Certificates”: The Class A, Class B and Class M Certificates, for so long as the Certificates of such Class shall be registered in the name of the Depository or its nominee.

“Book-Entry Custodian”: The custodian appointed pursuant to Section 6.01(b).

“Business Day”: With respect to any Distribution Date determination, any day other than (a) a Saturday or a Sunday or (b) a day on which the New York Stock Exchange or Federal Reserve is closed or on which banking institutions in the jurisdiction in which the Master Servicer or Securities Administrator is located are authorized or obligated by law or executive

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order to be closed. With respect to any other determination, any day other than (a) a Saturday or a Sunday or (b) a day on which the New York Stock Exchange or Federal Reserve is closed or on which banking institutions in the jurisdiction in which the Master Servicer, Securities Administrator, Servicer or Subservicer is located are authorized or obligated by law or executive order to be closed.

“Cap Account”: The trust account or accounts created and maintained by the Supplemental Interest Trust Trustee pursuant to Section 5.06 in the name of the Supplemental Interest Trust Trustee as provided therein. Funds in the the Cap Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. The Cap Account must be an Eligible Account.

“Certificate”: Any one of People’s Choice Financial Realty Mortgage Securities Trust, Series 2006-1, Mortgage Pass-Through Certificates, Series 2006-1, Class 1A1, Class 1A2, Class 1A3, Class 1A4, Class 2A1, Class 2A2, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10, Class B1, Class B2, Class C, Class P, Class R and Class RX, each of which is issued under this Agreement.

“Certificate Factor”: With respect to any Class of Certificates (other than the Residual Certificates) as of any Distribution Date, a fraction, expressed as a decimal carried to no less than six places, the numerator of which is the aggregate Certificate Principal Balance (or Notional Amount, in the case of the Class C Certificates) of such Class of Certificates on such Distribution Date (after giving effect to any distributions of principal and Applied Realized Loss Amounts resulting in reduction of the Certificate Principal Balance (or Notional Amount, in the case of the Class C Certificates) of such Class of Certificates to be made on such Distribution Date), and the denominator of which is the initial aggregate Certificate Principal Balance (or Notional Amount, in the case of the Class C Certificates) of such Class of Certificates as of the Closing Date.

“Certificate Margin”: With respect to each Class of Offered Certificates, the per annum rate set forth in the following table:


Class	For Purposes of Defining “Marker Rate”	Prior to the Step-Up Date (%)	On and After the Step-Up Date (%)
1A1	II-LT1A1	0.070	0.140
1A2	II-LT1A2	0.130	0.260
1A3	II-LT1A3	0.160	0.320
1A4	II-LT1A4	0.240	0.480
2A1	II-LT2A1	0.140	0.280
2A2	II-LT2A2	0.140	0.280
M1	II-LTM1	0.290	0.435
M2	II-LTM2	0.310	0.465
M3	II-LTM3	0.330	0.495

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Class	For Purposes of Defining “Marker Rate”	Prior to the Step-Up Date (%)	On and After the Step-Up Date (%)
M4	II-LTM4	0.360	0.540
M5	II-LTM5	0.390	0.585
M6	II-LTM6	0.470	0.705
M7	II-LTM7	1.000	1.500
M8	II-LTM8	1.200	1.800
M9	II-LTM9	2.050	3.075
M10	II-LTM10	2.500	3.750
B1	II-LTB1	2.500	3.750
B2	II-LTB2	1.900	2.850

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

“Certificate Principal Balance”: With respect to each Class A, Class B, Class M or Class P Certificate as of any date of determination, the Certificate Principal Balance of such Certificate on the Distribution Date immediately prior to such date of determination, increased by any Subsequent Recoveries allocated thereto, minus all distributions allocable to principal made thereon and Applied Realized Loss Amounts allocated thereto, if any, on such immediately prior Distribution Date (or, in the case of any date of determination up to and including the first Distribution Date, the initial Certificate Principal Balance of such Certificate, as stated on the face thereof). With respect to each Class C Certificate, and solely for federal income tax purposes, as of any date of determination, an amount equal to the Percentage Interest evidenced by such Certificate times the excess, if any, of (a) the then aggregate Uncertificated Balances of the REMIC II Regular Interests over (b) the then aggregate Certificate Principal Balances of the Class A, Class B, Class M and Class P Certificates then outstanding. The aggregate initial Certificate Principal Balance of each Class of Regular Certificates is set forth in the Preliminary Statement hereto.

“Certificate Rate”: With respect to the Class A, B and M Certificates, a per annum rate equal to the least of (i) One-Month LIBOR plus the applicable Certificate Margin, (ii) the applicable Net WAC Cap and (iii) the applicable Net Maximum Mortgage Rate.

With respect to the Class C Interest and any Distribution Date, a per annum rate equal to the percentage equivalent of a fraction, the numerator of which is the sum of the amounts calculated pursuant to clauses (A) through (U) below, and the denominator of which is the aggregate of the Uncertificated Balances of REMIC II Regular Interest II-LTAA, REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II

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Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2 and REMIC II Regular Interest II-LTZZ. For purposes of calculating the Certificate Rate for the Class C Interest, the numerator is equal to the sum of the following components:

(A) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTAA minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTAA;

(B) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT1A1 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT1A1;

(C) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT1A2 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT1A2;

(D) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT1A3 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT1A3;

(E) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT1A4 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT1A4;

(F) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT2A1 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT2A1;

(G) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LT2A2 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LT2A2;

(H) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM1 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM1;

(I) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM2 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM2;

(J) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM3 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM3;

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(K) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM4 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM4;

(L) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM5 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM5;

(M) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM6 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM6;

(N) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM7 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM7;

(O) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM8 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM8;

(P) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM9 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM9;

(Q) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTM10 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTM10;

(R) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTB1 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTB1;

(S) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTB2 minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTB2;

(T) the Uncertificated REMIC II Remittance Rate for REMIC II Regular Interest II-LTZZ minus the Marker Rate, applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTZZ; and

(U) 100% of the interest on REMIC II Regular Interest II-LTP at the Uncertificated REMIC II Remittance Rate for REMIC II-LTP applied to an amount equal to the Uncertificated Balance of REMIC II Regular Interest II-LTP.

For federal income tax purposes, the Certificate Rate for the Class C Certificates shall be an amount equal to 100% of the amounts distributable to the Class C Interest issued by REMIC III for such Distribution Date.

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For federal income tax purposes, the Certificate Rate for the Class SWAP-IO Interest shall be an amount equal to 100% of the amounts distributable to REMIC II Regular Interest II-LTIO for such Distribution Date.

“Certificate Register”: The register maintained pursuant to Section 6.02.

“Certificateholder” or “Holder”: The Person in whose name a Certificate is registered in the Certificate Register, except that a Disqualified Organization or a Non-United States Person shall not be a Holder of a Residual Certificate for any purposes hereof, and solely for the purposes of giving any consent pursuant to this Agreement, any Certificate registered in the name of or beneficially owned by the Depositor, the Seller, the Master Servicer, the Securities Administrator, the Trustee, the Servicer, the Subservicer or any Affiliate thereof shall be deemed not to be outstanding and the Voting Rights to which it is entitled shall not be taken into account in determining whether the requisite percentage of Voting Rights necessary to effect any such consent has been obtained, except as otherwise provided in Section 13.01. The Trustee and the Securities Administrator may conclusively rely upon a certificate of the Depositor, the Seller, the Master Servicer, the Servicer, the Subservicer or the Securities Administrator in determining whether a Certificate is held by an Affiliate thereof. All references herein to “Holders” or “Certificateholders” shall reflect the rights of Certificate Owners as they may indirectly exercise such rights through the Depository and participating members thereof, except as otherwise specified herein; provided, however, that the Trustee and the Securities Administrator shall be required to recognize as a “Holder” or “Certificateholder” only the Person in whose name a Certificate is registered in the Certificate Register.

“Certification Parties”: As defined in Section 12.08(a).

“Certifying Person”: As defined in Section 12.08(a).

“Class”: Collectively, all of the Certificates bearing the same class designation.

“Class 1A Certificates”: The Class 1A1, Class 1A2, Class 1A3 and Class 1A4 Certificates.

“Class 1A Principal Distribution Priority”: Shall have the meaning given such term in Section 5.01(d)(i)(A)(2) hereof.

“Class 2A Certificates”: The Class 2A1 and Class 2A2 Certificates.

“Class A Certificates”: The Class 1A and the Class 2A Certificates. Each Class A Certificate will represent (i) the corresponding REMIC III Regular Interest for purposes of the REMIC Provisions, (ii) the right to receive any related Basis Risk Shortfall Carryforward Amounts and (iii) the obligation to pay the Class SWAP-IO Distribution Amount.

“Class B Certificates”: The Class B1 and Class B2 Certificates. Each Class B Certificate will represent (i) the corresponding REMIC III Regular Interest for purposes of the REMIC Provisions, (ii) the right to receive any related Basis Risk Shortfall Carryforward Amounts and (iii) the obligation to pay the Class SWAP-IO Distribution Amount.

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“Class B1 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A and Class M Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class B1 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 96.20% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class B2 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M and Class B1 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M and Class B1 Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class B2 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class C Certificate”: The Class C Certificates will represent (i) a REMIC “regular interest” for purposes of the REMIC Provisions, (ii) the obligation to pay any related Basis Risk Shortfall Carryforward Amounts and Swap Termination Payments, (iii) the obligation to pay the Class SWAP-IO Distribution Amount and (iv) the right to receive amounts in respect of the Basis Risk Shortfall Reserve Account and the Supplemental Interest Trust.

“Class C Distributable Amount”: With respect to any Distribution Date, the amount of interest that has accrued on the Class C Notional Amount but that has not been distributed prior to such date. In addition such amount shall include the initial Overcollateralized Amount to the extent such amount has not been distributed on an earlier Distribution Date as part of the Overcollateralization Release Amount.

“Class C Interest”: The Class C Interest will represent (i) the corresponding REMIC III Regular Interest for purposes of the REMIC Provisions, (ii) the obligation to pay any related Basis Risk Shortfall Carryforward Amounts and Swap Termination Payments and (iii) the obligation to pay the Class SWAP-IO Distribution Amount and (iv) the right to receive amounts in respect of the Basis Risk Shortfall Reserve Account and the Supplemental Interest Trust.

“Class M Certificates”: The Class M1 , Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9 and Class M10 Certificates. Each Class M Certificate will represent (i) the corresponding REMIC III Regular Interest for purposes of the REMIC Provisions, (ii) the right to receive any related Basis Risk Shortfall Carryforward Amounts and (iii) the obligation to pay the Class SWAP-IO Distribution Amount.

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“Class M Principal Distribution Amount”: The sum of the Class M1 Principal Distribution Amount, Class M2 Principal Distribution Amount, Class M3 Principal Distribution Amount, Class M4 Principal Distribution Amount, Class M5 Principal Distribution Amount, Class M6 Principal Distribution Amount, Class M7 Principal Distribution Amount, Class M8 Principal Distribution Amount, Class M9 Principal Distribution Amount and Class M10 Principal Distribution Amount.

“Class M1 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A Certificates (after taking into account the distribution of the Senior Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M1 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 64.60% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M2 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A and Class M1 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1 Principal Distribution Amount on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M2 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 71.30% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M3 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1 and Class M2 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1 and Class M2 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M3 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 75.30% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

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“Class M4 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2 and Class M3 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2 and Class M3 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M4 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 78.90% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M5 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3 and Class M4 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3 and Class M4 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M5 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 82.20% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M6 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3, Class M4 and Class M5 (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3, Class M4 and Class M5 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M6 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 85.30% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M7 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3, Class M4, Class M5 and Class M6 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3, Class M4, Class M5 and Class M6 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M7 Certificates immediately prior to such Distribution Date over (y) the

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lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 88.20% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M8 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6 and Class M7 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6 and Class M7 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M8 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 90.70% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M9 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7 and Class M8 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7 and Class M8 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M9 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 92.00% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

“Class M10 Principal Distribution Amount”: For any applicable Distribution Date on or after the Stepdown Date as long as a Trigger Event has not occurred with respect to such Distribution Date, an amount equal to the excess (if any) of (x) the sum of (i) the aggregate Certificate Principal Balance of the Class A, Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8 and Class M9 Certificates (after taking into account the distribution of the Senior Principal Distribution Amount and the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8 and Class M9 Principal Distribution Amounts on such Distribution Date) and (ii) the Certificate Principal Balance of the Class M10 Certificates immediately prior to such Distribution Date over (y) the lesser of (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date multiplied by approximately 94.40% and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (ii) the Overcollateralization Floor.

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“Class P Certificate”: The Class P Certificates will represent an interest in the rights of the Class P Interest and will represent a “regular interest” in REMIC V for purposes of the REMIC Provisions.

“Class P Interest”: The Class P Interest will represent a “regular interest” in REMIC III for purposes of the REMIC Provisions.

“Class R Certificates”: The Class R and Class RX Certificates.

“Class R-I Interest”: The uncertificated residual interest in REMIC I for purposes of the REMIC Provisions.

“Class R-II Interest”: The uncertificated residual interest in REMIC II for purposes of the REMIC Provisions.

“Class R-III Interest”: The uncertificated residual interest in REMIC III for purposes of the REMIC Provisions.

“Class RX-IV Interest”: The uncertificated residual interest in REMIC IV for purposes of the REMIC Provisions.

“Class RX-V Interest”: The uncertificated residual interest in REMIC V for purposes of the REMIC Provisions.

“Class RX-VI Interest”: The uncertificated residual interest in REMIC VI for purposes of the REMIC Provisions.

“Class SWAP-IO Distribution Amount”: As defined in Section 5.06 hereof. For purposes of clarity, the Class SWAP-IO Distribution Amount for any Distribution Date shall equal the amount payable to the Supplemental Interest Trust on such Distribution Date in excess of the amount payable on the Class SWAP-IO Interest on such Distribution Date, all as further provided in Sections 5.06 and 5.07 hereof.

“Clearstream”: Clearstream Banking, société anonyme, formerly known as Cedelbank SA.

“Closing Date”: August 9, 2006.

“Code”: The Internal Revenue Code of 1986, as amended from time to time.

“Collection Account”: The account or accounts created and maintained, or caused to be created and maintained, by the Servicer or the Subservicer pursuant to the Servicing Agreement.

“Commission”: The Securities and Exchange Commission.

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“Compensating Interest”: With respect to any Distribution Date, any payments made by the Master Servicer, the Servicer or the Subservicer from its own funds to cover Prepayment Interest Shortfalls, up to an amount equal to the Servicing Fee or Master Servicing Compensation, as applicable, received with respect to the related Due Period.

“Corporate Trust Office”: The principal corporate trust office of the Trustee, which office at the date of the execution of this instrument is located at HSBC Bank USA, National Association, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: CTLA-Structured Finance, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Depositor, the Master Servicer and the Securities Administrator. The office of the Securities Administrator, which for purposes of Certificate transfers and surrender is located at Xxxxx Fargo Bank, N.A., Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000, Attention: Corporate Trust Services (PFRMS 2006-1), and for all other purposes is located at Xxxxx Xxxxx Xxxx, X.X., X.X. Xxx 00, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Services (PFRMS 2006-1) (or for overnight deliveries, at 0000 Xxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Services (PFRMS 2006-1)).

“Corresponding Certificate”: With respect to each REMIC II Regular Interest listed below, as follows:


REMIC II Regular Interest		Class
REMIC II Regular Interest II-LT1A1		1A1
REMIC II Regular Interest II-LT1A2		1A2
REMIC II Regular Interest II-LT1A3		1A3
REMIC II Regular Interest II-LT1A4		1A4
REMIC II Regular Interest II-LT2A1		2A1
REMIC II Regular Interest II-LT2A2		2A2
REMIC II Regular Interest II-LTM1		M1
REMIC II Regular Interest II-LTM2		M2
REMIC II Regular Interest II-LTM3		M3
REMIC II Regular Interest II-LTM4		M4
REMIC II Regular Interest II-LTM5		M5
REMIC II Regular Interest II-LTM6		M6
REMIC II Regular Interest II-LTM7		M7
REMIC II Regular Interest II-LTM8		M8
REMIC II Regular Interest II-LTM9		M9
REMIC II Regular Interest II-LTM10		M10
REMIC II Regular Interest II-LTB1		B1
REMIC II Regular Interest II-LTB2		B2
REMIC II Regular Interest II-LTP		P

“Custodial Account”: As defined in the Servicing Agreement.

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“Custodial Agreement”: The Custodial Agreement dated as of July 1, 2006, among the Trustee, the Depositor, the Custodian, the Master Servicer, the Servicer, the Subservicer and the Securities Administrator, attached hereto as Exhibit C, as such agreement may be amended or supplemented from time to time, or any other custodial agreement entered into after the date hereof with respect to any Mortgage Loan subject to this Agreement.

“Custodian”: Xxxxx Fargo or any other custodian appointed under any custodial agreement entered into after the date of this Agreement.

“Cut-off Date”: The cut-off date will be July 1, 2006, except with respect to any Mortgage Loan originated after such date, in which case the cut-off date for such Mortgage Loan will be its date of origination.

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

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

“Definitive Certificates”: As defined in Section 6.01(b).

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

“Delinquency Rate”: For any month, the fraction, expressed as a percentage, the numerator of which is the aggregate outstanding principal balance of all Mortgage Loans 60 or more days delinquent measured pursuant to the OTS method (including all Mortgage Loans in foreclosure, Mortgage Loans subject to bankruptcy proceedings and REO properties) as of the close of business on the last day of such month, and the denominator of which is the aggregate Stated Principal Balance of the Mortgage Loans as of the close of business on the last day of such month (not including any Liquidated Mortgage Loans as of the end of the related Prepayment Period).

“Depositor”: People’s Choice Home Loan Securities Corp., a Delaware corporation, or its successor in interest.

“Depository”: The Depository Trust Company, or any successor Depository hereafter named. The nominee of the initial Depository, for purposes of registering those Certificates that are to be Book-Entry Certificates, is Cede & Co. The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(3) of the Uniform Commercial Code of the State of New York and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended.

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“Depository Institution”: Any depository institution or trust company, including the Trustee, that (a) is incorporated under the laws of the United States of America or any State thereof, (b) is subject to supervision and examination by federal or state banking authorities and (c) has outstanding unsecured commercial paper or other short-term unsecured debt obligations (or, in the case of a depository institution that is the principal subsidiary of a holding company, such holding company has unsecured commercial paper or other short-term unsecured debt obligations) that are rated at least A-1+ by S&P and P-1 by Xxxxx’x (or, if such Rating Agencies are no longer rating the Offered Certificates, comparable ratings by any other nationally recognized statistical rating agency then rating the Offered Certificates).

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

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

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

“Distribution Account”: The trust account or accounts created and maintained by the Securities Administrator pursuant to Section 4.04(a) in the name of the Securities Administrator for the benefit of the Certificateholders and designated “Xxxxx Fargo Bank, N.A., in trust for registered Holders of People’s Financial Realty Mortgage Securities Trust, Series 2006-1, Mortgage Pass-Through Certificates, Series 2006-1.” Funds in the Distribution Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. The Distribution Account must be an Eligible Account.

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“Distribution Account Deposit Date”: The Business Day prior to each Distribution Date.

“Distribution Date”: The 25th day of any month, or if such 25th day is not a Business Day, the Business Day immediately following such 25th day, commencing in August 2006.

“Due Date”: With respect to each Distribution Date, the day of the month on which the Monthly Payment is due on a Mortgage Loan during the related Due Period, exclusive of any days of grace.

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

“Eligible Account”: Any of (a) an account or accounts maintained with a Depository Institution, (b) an account or accounts the deposits in which are fully insured by the FDIC or (c) a trust account or accounts maintained with a federal depository institution or state chartered depository institution acting in its fiduciary capacity. Eligible Accounts may bear interest.

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

“ERISA Restricted Certificate”: Any of the Class R, Class C or Class P Certificates and any Certificate that no longer meets the applicable rating requirements of an Underwriter’s Exemption.

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

“Event of Default”: One or more of the events described in Section 8.01.

“Excess Liquidation Proceeds”: To the extent that such amount is not required by law to be paid to the related Mortgagor, the amount, if any, by which Liquidation Proceeds with respect to a Liquidated Mortgage Loan exceed the sum of (a) the outstanding principal balance of such Mortgage Loan and accrued but unpaid interest at the related Mortgage Rate through the last day of the month in which the related Liquidation Date occurs, (b) related Liquidation Expenses (including Liquidation Expenses that are payable therefrom to the Subservicer, the Servicer or the Master Servicer in accordance with the Servicing Agreement or this Agreement) and (c) unreimbursed advances by the Subservicer, the Servicer or the Master Servicer and Monthly Advances.

“Extra Principal Distribution Amount”: With respect to any Distribution Date, the lesser of (i) the excess, if any, of (a) the Overcollateralization Target Amount over the Overcollateralization Amount on such Distribution Date (after taking into account distributions to the Offered Certificates of the Basic Principal Distribution Amount on such Distribution Date), and (ii) the Net Monthly Excess Cashflow Amount for such Distribution Date.

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“Extraordinary Trust Fund Expense”: Any amounts payable or reimbursable to the Trustee, the Master Servicer, the Securities Administrator, the Depositor, the Custodian or any director, officer, employee or agent of any such Person from the Trust Fund pursuant to the terms of this Agreement in excess of their respective compensation provided for herein, Annual Expenses and any amounts payable from the Distribution Account in respect of taxes pursuant to Section 11.01(g)(iv).

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

“Final Recovery Determination”: With respect to any defaulted Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property purchased by the Seller or the Terminator pursuant to or as contemplated by Section 2.03 or Section 10.01), a determination made by the Servicer or the Subservicer that all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries that the Servicer or the Subservicer, in its reasonable good faith judgment, expects to be finally recoverable in respect thereof have been so recovered, which determination shall be evidenced by a certificate of a Servicing Officer delivered to the Master Servicer and maintained in its records.

“Fitch”: Fitch Ratings or any successor in interest.

“Form 8K Disclosure Information”: As defined in section12.03(a).

“Fixed Payer Rate”: The fixed rate payable with respect to the Swap Agreement and each of the first 59 Distribution Dates, which is 5.67%.

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

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

“Group 1 Loans”: Those Mortgage Loans identified on the Mortgage Loan Schedule as Group 1 Loans.

“Group 1 Net Maximum Mortgage Rate”: With respect to any Distribution Date and the Class 1A Certificates, a per annum rate equal to (a) the weighted average of the Net Maximum Mortgage Rates for the Group 1 Loans, weighted on the basis of the aggregate Stated Principal Balances of the Group 1 Loans as of the beginning of the related Due Period (adjusted for principal prepayments distributed on the immediately preceding Distribution Date) less (b) the annualized percentage equivalent of a fraction, (i) the numerator of which is any net swap payment (including any swap termination payment other than those triggered by a Swap Provider

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Trigger Event) made to the Swap Provider allocable to the Group 1 Loans and (ii) the denominator of which is the aggregate Stated Principal Balance of the Group 1 Loans (adjusted to an effective rate reflecting the accrual of interest on an actual/360 basis).

“Group 1 Net WAC Cap”: With respect to any Distribution Date and the Class 1A Certificates, a per annum rate equal to (a) the weighted average of the Net Mortgage Rates of the Group 1 Loans, weighted on the basis of the aggregate Stated Principal Balances of the Group 1 Loans as of the beginning of the related Due Period (adjusted for principal prepayments distributed on the immediately preceding Distribution Date) less (b) the annualized percentage equivalent of a fraction, (i) the numerator of which is any net swap payment (including any swap termination payment other than those triggered by a Swap Provider Trigger Event) made to the Swap Provider allocable to the Group 1 Loans and (ii) the denominator of which is the aggregate Stated Principal Balance of the Group 1 Loans (adjusted to an effective rate reflecting the accrual of interest on an actual/360 basis).

“Group 1 Percentage”: With respect to the Group 1 Loans and any Distribution Date, the percentage obtained by dividing (a) the aggregate Stated Principal Balance of the Group 1 Loans as of the beginning of the related Due Period by (b) the aggregate Stated Principal Balance of all the Mortgage Loans as of the beginning of the related Due Period.

“Group 2 Loans”: Those Mortgage Loans identified on the Mortgage Loan Schedule as Group 2 Loans.

“Group 2 Net Maximum Mortgage Rate”: With respect to any Distribution Date and the Class 2A Certificates, a per annum rate equal to (a) the weighted average of the Net Maximum Mortgage Rates for the Group 2 Loans, weighted on the basis of the aggregate Stated Principal Balances of the Group 2 Loans as of the beginning of the related Due Period (adjusted for principal prepayments distributed on the immediately preceding Distribution Date) less (b) the annualized percentage equivalent of a fraction, (i) the numerator of which is any net swap payment (including any swap termination payment other than those triggered by a Swap Provider Trigger Event) made to the Swap Provider allocable to the Group 2 Loans and (ii) the denominator of which is the aggregate Stated Principal Balance of the Group 2 Loans (adjusted to an effective rate reflecting the accrual of interest on an actual/360 basis).

“Group 2 Net WAC Cap” With respect to any Distribution Date and the Class 2A Certificates, a per annum rate equal to (a) the weighted average of the Net Mortgage Rates of the Group 2 Loans, weighted on the basis of the aggregate Stated Principal Balances of the Group 2 Loans as of the beginning of the related Due Period (adjusted for principal prepayments distributed on the immediately preceding Distribution Date) less (b) the annualized percentage equivalent of a fraction, (i) the numerator of which is any net swap payment (including any swap termination payment other than those triggered by a Swap Provider Trigger Event) made to the Swap Provider allocable to the Group 2 Loans and (ii) the denominator of which is the aggregate Stated Principal Balance of the Group 2 Loans (adjusted to an effective rate reflecting the accrual of interest on an actual/360 basis).

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“Group 2 Percentage”: With respect to the Group 2 Loans and any Distribution Date, the percentage obtained by dividing (a) the aggregate Stated Principal Balance of the Group 2 Loans as of the beginning of the related Due Period by (b) the aggregate Stated Principal Balance of all the Mortgage Loans as of the beginning of the related Due Period.

“Group Subordinate Amount”: With respect to either Loan Group and any Distribution Date, the excess of (a) the aggregate Stated Principal Balance of the mortgage loans in such Loan Group as of the previous Distribution Date (adjusted for principal prepayments distributed on the immediately preceding Distribution Date) over (b) the aggregate Certificate Principal Balance of the Class A Certificates related to such Loan Group immediately prior to such Distribution Date.

“Independent”: When used with respect to any accountant, a Person who is “independent” within the meaning of Rule 2-01(B) of the Securities and Exchange Commission’s Regulation S-X. When used with respect to any specified other Person, any such Person who (a) is in fact independent of the Depositor, the Master Servicer, the Securities Administrator, the Seller, the Servicer, the Subservicer and their respective Affiliates, (b) does not have any direct financial interest in or any material indirect financial interest in the Depositor, the Master Servicer, the Securities Administrator, the Seller, the Servicer, the Subservicer or any Affiliate thereof, and (c) is not connected with the Depositor, the Master Servicer, the Securities Administrator, the Seller, the Servicer, the Subservicer or any Affiliate thereof as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, however, that a Person shall not fail to be Independent of the Depositor, the Master Servicer, the Securities Administrator, the Seller, the Servicer, the Subservicer or any Affiliate thereof merely because such Person is the beneficial owner of 1% or less of any class of securities issued by the Depositor, the Master Servicer, the Securities Administrator, the Seller, the Servicer, the Subservicer or any Affiliate thereof, as the case may be.

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

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“Index”: As of any Adjustment Date, the index applicable to the determination of the Mortgage Rate on each Adjustable Rate Mortgage Loan will generally be the average of the interbank offered rates for six-month United States dollar deposits in the London market as published in The Wall Street Journal and, in most cases, as most recently available as 45 days prior to such Adjustment Date.

“Insurance Proceeds”: Proceeds of any title policy, hazard policy or other insurance policy covering a Mortgage Loan or the related Mortgaged Property, to the extent such proceeds are not to be applied to the restoration of the related Mortgaged Property or released to the Mortgagor or a senior lienholder in accordance with Accepted Servicing Practices, subject to the terms and conditions of the related Mortgage Note and Mortgage.

“Interest Carryforward Amount”: With respect to any Distribution Date and any Class A, Class B or Class M Certificate, the sum of (a) the amount, if any, by which (i) the Accrued Certificate Interest for such Class as of the immediately preceding Distribution Date exceeded (ii) the actual amount distributed on such Class in respect of interest on such immediately preceding Distribution Date and (b) the amount of any Interest Carryforward Amount for such Class remaining unpaid from the previous Distribution Date, plus accrued interest on such sum calculated at the related Certificate Rate for the most recently ended Accrual Period.

“Interest Determination Date”: With respect to the first Accrual Period, the second London Business Day preceding the Closing Date, and with respect to each Accrual Period thereafter, the second London Business Day preceding the related Distribution Date.

“Interest Funds”: For any Distribution Date, (a) the sum of (i) all interest received by the Securities Administrator with respect to the related Due Period (whether collected or advanced) and available in the Distribution Account on that Distribution Date, (ii) all compensating interest paid with respect to any mortgage loans that prepaid during the related Prepayment Period and (iii) the portion of any purchase price or other amount paid with respect to the mortgage loans allocable to interest; less (b) any Annual Expenses payable to any party to this Agreement on that Distribution Date.

“Interest Rate Cap Agreement”: The interest rate cap agreement between the Supplemental Interest Trust Trustee and the Interest Rate Cap Provider for the benefit of the Certificates.

“Interest Rate Cap Agreement Available Amount”: With respect to any Distribution Date on or after the commencement of the Interest Rate Cap Agreement and on or prior to the termination thereof, the amount, if any, payable by the Interest Rate Cap Provider under the Interest Rate Cap Agreement available for distribution to the Offered Certificates shall equal the product of (a) the Interest Rate Cap Agreement notional amount for that Cap Distribution Date, (b) the excess, if any, of (i) One-Month LIBOR for such Determination Date over (ii) 6.00% (the strike rate) for such Cap Distribution Date, and (c) the actual number of days in the related accrual period divided by 360.

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“Interest Rate Cap Notional Amount”: Shown below are the scheduled notional amounts for the Interest Rate Cap Agreement:


Period	Notional Amount ($)	Period	Notional Amount ($)
1	N/A	32	25,314,522.52
2	N/A	33	22,597,730.24
3	N/A	34	20,055,772.47
4	N/A	35	17,679,037.34
5	N/A	36	15,458,775.30
6	N/A	37	13,387,115.75
7	N/A	38	20,418,998.09
8	N/A	39	23,699,978.79
9	N/A	40	22,362,382.69
10	N/A	41	21,131,069.37
11	N/A	42	20,001,444.03
12	N/A	43	18,967,590.64
13	2,048,775.29	44	18,024,603.52
14	4,097,550.58	45	17,166,499.10
15	6,146,325.86	46	16,388,111.06
16	8,195,101.15	47	15,684,651.68
17	10,243,876.44	48	15,051,581.77
18	12,292,651.73	49	14,484,598.67
19	14,341,427.01	50	13,979,647.78
20	16,390,202.30	51	13,532,867.84
21	18,438,977.59	52	13,140,570.18
22	20,487,752.88	53	12,721,184.72
23	22,536,528.16	54	12,220,041.76
24	24,585,303.45	55	11,772,240.25
25	28,638,266.93	56	N/A
26	32,221,804.57	57	N/A
27	35,327,361.00	58	N/A
28	38,040,013.23	59	N/A
29	34,624,503.14	60	N/A
30	31,318,190.12
31	28,215,861.01

“Interest Rate Cap Provider”: The Bank of New York.

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

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“LIBOR Certificates”: The Class A, Class B and Class M Certificates.

“Liquidated Mortgage Loan”: Any defaulted Mortgage Loan as to which the Subservicer, the Servicer or the Master Servicer has determined that all amounts it expects to recover from or on account of such Mortgage Loan have been recovered.

“Liquidation Date”: With respect to any Liquidated Mortgage Loan, the date on which the Master Servicer, the Servicer or the Subservicer has certified that such Mortgage Loan has become a Liquidated Mortgage Loan.

“Liquidation Event”; With respect to any Mortgage Loan, any of the following events: (a) such Mortgage Loan is paid in full, (b) a Final Recovery Determination is made as to such Mortgage Loan, or (c) such Mortgage Loan is removed from the Trust Fund by reason of its being purchased, sold or replaced pursuant to or as contemplated by Section 2.03 or Section 10.01. With respect to any REO Property, either of the following events: (i) a Final Recovery Determination is made as to such REO Property or (ii) such REO Property is removed from the Trust Fund by reason of its being purchased pursuant to Section 10.01.

“Liquidation Expenses”: With respect to a Mortgage Loan in liquidation, unreimbursed expenses paid or incurred by or for the account of the Master Servicer, the Servicer or the Subservicer in connection with the liquidation of such Mortgage Loan and the related Mortgage Property, such expenses including (a) property protection expenses, (b) property sales expenses, (c) foreclosure and sale costs, including court costs and reasonable attorneys’ fees, and (d) similar expenses reasonably paid or incurred in connection with liquidation.

“Liquidation Proceeds”; The amount (other than Insurance Proceeds, amounts received in respect of the rental of any REO Property prior to REO Disposition, or required to be released to a Mortgagor or a senior lienholder in accordance with applicable law or the terms of the related Mortgage Loan Documents) received by the Servicer or the Subservicer in connection with (a) the taking of all or a part of a Mortgaged Property by exercise of the power of eminent domain or condemnation (other than amounts required to be released to the Mortgagor or a senior lienholder), (b) the liquidation of a defaulted Mortgage Loan through a sale by the Servicer or the Subservicer, trustee’s sale, foreclosure sale or otherwise or (c) the repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant to or as contemplated by Section 2.03 or Section 10.01.

“Loan Group”: Either of Loan Group 1 or Loan Group 2.

“Loan Group 1”: The loan group consisting of Group 1 Loans.

“Loan Group 2”: The loan group consisting of Group 2 Loans.

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“Loan-to-Value Ratio”: With respect to any Mortgage Loan at any given time, the percentage equivalent of a fraction, (a) the numerator of which is the then outstanding principal balance of the Mortgage Loan plus the outstanding principal balance of any Mortgage Loan senior to the Mortgage Loan and secured by the same Mortgaged Property, and (b) the denominator of which equals (i) in the case of any Mortgage Loan that is not a refinanced, modified or converted Mortgage Loan, (A) the lesser of (I) the appraised value of the related Mortgaged Property determined pursuant to an appraisal conducted by a Qualified Appraiser obtained at origination of the Mortgage Loan, if any, and (II) the sales price for the related Mortgaged Property or (B) if the related Mortgaged Property has been appraised by a Qualified Appraiser subsequent to origination, the value thereof determined pursuant to such subsequent appraisal, or (ii) in the case of a refinanced, modified or converted Mortgage Loan, the lesser of (A) the appraised value of the related Mortgaged Property determined at origination pursuant to the most recent appraisal conducted by a Qualified Appraiser at the time of origination of the Mortgage Loan or subsequent to origination or (B) the sales price of the related Mortgaged Property or, if the Mortgage Loan is not a rate-and-term refinance Mortgage Loan and if the related Mortgaged Property was owned for a relatively short period of time prior to refinancing, modification or conversion, the sum of the sales price of the related Mortgaged Property plus the added value of any improvements.

“London Business Day”: Any day other than (a) a Saturday or a Sunday or (b) a day on which banking institutions in the City of London are authorized or obligated by law or executive order to be closed.

“Marker Rate”: With respect to the Class C Interest and any Distribution Date, a per annum rate equal to two times the weighted average of the REMIC II Remittance Rate for each of REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2 and REMIC II Regular Interest II-LTZZ, with the rate on each such REMIC II Regular Interest (other than REMIC II Regular Interest II-LTZZ) subject to a cap equal to the Certificate Rate of the Corresponding Class (determined by substituting the REMIC III Net WAC Rate for the applicable Net WAC Rate) for the purpose of this calculation for such Distribution Date and with the rate on REMIC II Regular Interest II-LTZZ subject to a cap of zero for the purpose of this calculation; provided however, that the cap for each such REMIC II Regular Interest shall be multiplied by a fraction the numerator of which is the actual number of days in the related Accrual Period and the denominator of which is 30.

“Master Servicer”: As of the Closing Date, Xxxxx Fargo, and thereafter, its successors in interest who meet the qualifications set forth in this Agreement. The Master Servicer and the Securities Administrator shall at all times be the same Person.

“Master Servicer Compensation”: As defined in Section 3.15.

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“Master Servicing Officer”: Any supervisory or management officer of the Master Servicer involved in or responsible for the administration and master servicing of Mortgage Loans included in the Trust Fund, whose name appears on a list of master servicing officers appearing in an Officer’s Certificate furnished by the Master Servicer to the Trustee, in which certificate the Master Servicer certifies that such officers are in supervisory or management roles, as such list may be amended from time to time.

“Maximum II-LTZZ Uncertificated Interest Deferral Amount”: With respect to any Distribution Date, the excess of (a) accrued interest at the REMIC II Remittance Rate applicable to REMIC II Regular Interest II-LTZZ for such Distribution Date on a balance equal to the Uncertificated Balance of REMIC II Regular Interest II-LTZZ minus the REMIC II Overcollateralized Amount, in each case for such Distribution Date, over (b) Uncertificated Interest on REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2 or REMIC II Regular Interest II-LTZZ, for such Distribution Date, with the rate on each such REMIC II Regular Interest subject to a cap equal to the Certificate Rate of the Corresponding Class (determined by substituting the REMIC III Net WAC Rate for the applicable Net WAC Rate) for the purpose of this calculation for such Distribution Date; provided however, that the caps on each such REMIC II Regular Interest shall be multiplied by a fraction the numerator of which is the actual number of days in the related Accrual Period and the denominator of which is 30.

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

“MERS”: Mortgage Electronic Registration Systems, Inc., a corporation organized and existing under the laws of the State of Delaware, or any successor thereto.

“MERS® System”: The system of recording transfers of Mortgages electronically maintained by MERS.

“MIN”: The Mortgage Identification Number for Mortgage Loans registered with MERS on the MERS® System.

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

“MOM Loan”: With respect to any Mortgage Loan, MERS acting as the mortgagee of such Mortgage Loan, solely as nominee for the originator of such Mortgage Loan and its successors and assigns, at the origination thereof, or as nominee for any subsequent assignee of the originator pursuant to an Assignment to MERS.

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

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

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

“Mortgage File”: The Mortgage Loan Documents pertaining to a particular Mortgage Loan.

“Mortgage Loan”: Each mortgage loan transferred and assigned to the Trustee and for which the Mortgage Loan Documents have been delivered to the Custodian pursuant to the Custodial Agreement, as held from time to time as a part of the Trust Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.

“Mortgage Loan Documents”: The documents evidencing or relating to each Mortgage Loan delivered to the Custodian under the Custodial Agreement on behalf of the Trustee.

“Mortgage Loan Purchase Agreement”: Shall mean the Mortgage Loan Purchase Agreement, dated as of July 1, 2006, among the Depositor and the Seller, attached hereto as Exhibit D.

“Mortgage Loan Schedule”: As of any date, the list of Mortgage Loans included in REMIC I on such date, separately identifying the Group 1 and Group 2 Mortgage Loans, attached hereto as Schedule 1. The Depositor shall deliver or cause the delivery of the initial Mortgage Loan Schedule to the Master Servicer, the Custodian and the Trustee on the Closing Date. The Mortgage Loan Schedule shall set forth the following information with respect to each Mortgage Loan:

(a) the loan number;

(b) the city, state and ZIP code of the Mortgaged Property;

(d) the Servicing Fee Rate;

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(e) the Net Mortgage Rate;

(f) the original term to maturity;

(g) the maturity date;

(h) the stated remaining term to maturity;

(i) the original principal balance;

(j) the first payment due date;

(k) the monthly payment in effect as of the Cut-off Date;

(l) the Cut-off Date principal balance;

(m) the Loan-to-Value Ratio at origination;

(n) the paid-through date of the Mortgage Loan;

(o) the issuer of any Primary Mortgage Insurance Policy;

(p) the Index and the Gross Margin;

(q) the Maximum Mortgage Rate;

(r) the Minimum Mortgage Rate;

(s) the interest adjustment date frequency and payment date frequency; and

(t) the number of days delinquent, if any.

The Mortgage Loan Schedule shall also set forth the total number of Mortgage Loans, the total of each of the amounts described under (i) and (l) above for all of the Mortgage Loans, the weighted average by principal balance of each of the rates described under (c), (d) and (e) above for all of the Mortgage Loans and the weighted average remaining term to maturity by unpaid principal balance as of the Cut-off Date for all of the Mortgage Loans.

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

“Mortgage Rate”: With respect to each Mortgage Loan, the annual rate at which interest accrues on such Mortgage Loan from time to time in accordance with the provisions of the related Mortgage Note, which rate with respect to each Adjustable Rate Mortgage Loan (a) as of any date of determination until the first Adjustment Date following the Cut-off Date shall be the rate set forth in the Mortgage Loan Schedule as the Mortgage Rate in effect immediately following the Cut-off Date and (b) as of any date of determination thereafter shall be the rate as adjusted on the most recent Adjustment Date equal to the sum, rounded to the nearest 0.125% as

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provided in the Mortgage Note, of the Index, as most recently available as of a date prior to the Adjustment Date as set forth in the related Mortgage Note, plus the related Gross Margin; provided that the Mortgage Rate on such Adjustable Rate Mortgage Loan on any Adjustment Date shall never be more than the lesser of (i) the sum of the Mortgage Rate in effect immediately prior to the Adjustment Date plus the related Periodic Rate Cap, if any, and (ii) the related Maximum Mortgage Rate, and shall never be less than the greater of (A) the Mortgage Rate in effect immediately prior to the Adjustment Date less the Periodic Rate Cap, if any, and (B) the related Minimum Mortgage Rate. With respect to each Mortgage Loan that becomes an REO Property, as of any date of determination, the annual rate determined in accordance with the immediately preceding sentence as of the date such Mortgage Loan became an REO Property.

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

“Mortgagor”: The obligor on a Mortgage Note.

“Net Liquidation Proceeds”: Any Liquidation Proceeds net of unreimbursed advances by the Servicer or the Subservicer, P&I Advances, expenses incurred by the Servicer or the Subservicer in connection with the liquidation of such Mortgage Loan and the related Mortgaged Property, and any other amounts payable to the Servicer or the Subservicer under the Servicing Agreement.

“Net Maximum Mortgage Rate”: For any Distribution Date with respect to each Mortgage Loan, the applicable fixed or lifetime maximum mortgage interest rate, as specified on the related Mortgage Note, less the Servicing Fee Rate.

“Net Monthly Excess Cashflow”: With respect to any Distribution Date, the sum of (a) any Overcollateralization Release Amount for such Distribution Date and (b) the excess of (i) the Interest Funds for such Distribution Date over (ii) the sum for such Distribution Date of (A) the aggregate Accrued Certificate Interest, (B) the aggregate Interest Carryforward Amounts less amounts payable to the Trustee Servicer, Subservicer, Master Servicer or Custodian, but without duplication of any amounts already deducted from Interest Funds and (C) any portion of the Basic Principal Distribution Amount remaining after payment of all amounts pursuant to Section 5.01(d).

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

“Net Swap Payment”: With respect to any Distribution Date, any net payment (other than a Swap Termination Payment) payable by the Trust to the Swap Provider on the related Fixed Rate Payer Payment Date (as defined in the Swap Agreement).

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“Net WAC Cap”: With respect to the Class A1 Certificates, the Group 1 Net WAC Cap, with respect to the Class A2 Certificates, the Group 2 Net WAC Cap, and with respect to the Subordinate Certificates, the Subordinate Net WAC Cap.

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

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

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

“Notional Amount”: With respect to the Class C Certificate and REMIC IV Class C Interest, a notional amount equal to the aggregate principal balance of the REMIC II Regular Interests other than REMIC II Regular Interest II-LTP.

“Offered Certificates”: The Class A, Class B1 and Class M Certificates, collectively.

“Officer’s Certificate”: A certificate signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a vice president (however denominated), or by the Treasurer, the Secretary, or one of the assistant treasurers or assistant secretaries of the Master Servicer, the Seller or the Depositor, as applicable.

“One-Month LIBOR”: With respect to the LIBOR Certificates, REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1 and REMIC II Regular Interest II-LTB2 and any Accrual Period therefor, the rate determined by the Securities Administrator on the related Interest Determination Date on the basis of the offered rate for one-month United States dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London time) on such Interest Determination Date; provided that if such rate does not appear on Telerate Page 3750, the rate for such date will be determined on the basis of the offered rates of the Reference Banks for one-month United States dollar deposits, as of 11:00 a.m. (London time) on such

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Interest Determination Date. In such event, the Securities Administrator will request the principal London office of each of the Reference Banks to provide a quotation of its rate. If on such Interest Determination Date, two or more Reference Banks provide such offered quotations, One-Month LIBOR for the related Accrual Period shall be the arithmetic mean of such offered quotations (rounded upwards if necessary to the nearest whole multiple of 1/16). If on such Interest Determination Date, fewer than two Reference Banks provide such offered quotations, One-Month LIBOR for the related Accrual Period shall be the higher of (a) LIBOR as determined on the previous Interest Determination Date and (b) the Reserve Interest Rate. Notwithstanding the foregoing, if, under the priorities described above, LIBOR for an Interest Determination Date would be based on LIBOR for the previous Interest Determination Date for the third consecutive Interest Determination Date, the Securities Administrator shall select an alternative comparable index (over which the Securities Administrator has no control), used for determining one-month Eurodollar lending rates that is calculated and published (or otherwise made available) by an independent party. The establishment of One-Month LIBOR by the Securities Administrator and the Securities Administrator’s subsequent calculation of the Certificate and Remittance Rates for the relevant Accrual Period, shall, in the absence of manifest error, be final and binding.

“Opinion of Counsel”: A written opinion of counsel, who may, without limitation, be salaried counsel for the Depositor, the Seller, the Securities Administrator or the Master Servicer, acceptable to the Trustee, except that any opinion of counsel relating to (a) the qualification of any Trust REMIC as a REMIC or (b) compliance with the REMIC Provisions must be an opinion of Independent counsel.

“Overcollateralization Deficiency Amount”: With respect to any Distribution Date, the amount, if any, by which the Overcollateralization Target Amount exceeds the Overcollateralized Amount on such Distribution Date (after giving effect to distributions in respect of the Basic Principal Distribution Amount on such Distribution Date).

“Overcollateralization Floor”: With respect to any Distribution Date, 0.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

“Overcollateralization Release Amount”: With respect to any Distribution Date, will equal the lesser of (a) the Principal Funds for such Distribution Date and (b) the amount, if any, by which the Overcollateralized Amount (assuming for purposes of this definition only, that 100% of the Principal Funds are distributed as principal on the Certificates on such Distribution Date) exceeds the Overcollateralization Target Amount on such Distribution Date.

“Overcollateralization Target Amount”: Prior to the Stepdown Date, 2.80% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date. On or after the Stepdown Date, 5.60% of the then-current aggregate Stated Principal Balance of the Mortgage Loans, subject to the Overcollateralization Floor; provided, however, that if a Trigger Event is in effect on the related Distribution Date, the Overcollateralization Target Amount will be the same as the Overcollateralization Target Amount on the preceding Distribution Date (i.e. no stepdown will occur).

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“Overcollateralized Amount”: For any Distribution Date, the amount, if any, by which (a) the aggregate Stated Principal Balance of the Mortgage Loans in respect of such Distribution Date exceeds (b) the aggregate Certificate Principal Balance of the LIBOR Certificates and the Class P Certificate as of such Distribution Date (after giving effect to distributions in respect of the Basic Principal Distribution Amount on such Distribution Date).

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

“P&I Advance”: As to any Mortgage Loan or REO Property, any advance made by the Servicer or the Subservicer in respect of any Determination Date pursuant to the Servicing Agreement or the Subservicing Agreement, as applicable, or in respect of any Distribution Date by a successor servicer (including the Master Servicer) pursuant to Section 8.02 (which advances shall not include principal or interest shortfalls due to bankruptcy proceedings or application of the Relief Act and shall be net of the Servicing Fee or the Subservicing Fee, as applicable).

“PCHLI”: People’s Choice Home Loan, Inc.

“Percentage Interest”: With respect to any Class of Certificates (other than the Residual Certificates), the undivided percentage ownership in such Class evidenced by such Certificate, expressed as a percentage, the numerator of which is the initial Certificate Principal Balance represented by such Certificate and the denominator of which is the aggregate initial Certificate Principal Balance or Notional Amount of all of the Certificates of such Class. The Certificates are issuable only in minimum Percentage Interests corresponding to minimum initial Certificate Principal Balances of $100,000 and integral multiples of $1.00 in excess thereof.

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

“Permitted Investments”: Any one or more of the following obligations or securities held for the benefit of the Certificateholders, provided that any bank or securities account otherwise permitted to be used by the Servicer or the Subservicer hereunder may be held by “[Servicer or Subservicer] f/b/o Holders of People’s Choice Financial Realty Mortgage Securities Trust, Mortgage Pass-Through Certificates, Series 2006-1”:

(a) direct obligations of, and obligations the timely payment of which are fully guaranteed by the United States of America or any agency or instrumentality of the United States of America the obligations of which are backed by the full faith and credit of the United States of America;

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(b) (i) demand or time deposits, federal funds or bankers’ acceptances issued by any depository institution or trust company incorporated under the laws of the United States of America or any state thereof (including the Trustee, Securities Administrator or the Master Servicer or its Affiliates acting in its commercial banking capacity) and subject to supervision and examination by federal and/or state banking authorities, provided that the commercial paper and/or the short-term debt rating and/or the long-term unsecured debt obligations of such depository institution or trust company at the time of such investment or contractual commitment providing for such investment have the Applicable Credit Rating or better from the Rating Agencies and (ii) any other demand or time deposit or certificate of deposit that is fully insured by the Federal Deposit Insurance Corporation;

(c) repurchase obligations with respect to (i) any security described in clause (a) above or (ii) any other security issued or guaranteed by an agency or instrumentality of the United States of America, the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (b)(i);

(d) securities bearing interest or sold at a discount issued by any corporation (including the Trustee, Securities Administrator or the Master Servicer or its Affiliates) incorporated under the laws of the United States of America or any state thereof that have the Applicable Credit Rating or better from the Rating Agencies at the time of such investment or contractual commitment providing for such investment; provided, however, that securities issued by any particular corporation will not be Permitted Investments to the extent that investments therein will cause the then outstanding principal amount of securities issued by such corporation and held as part of the Trust to exceed 10% of the aggregate outstanding principal balances of all the Mortgage Loans and Permitted Investments held as part of the Trust as determined by the Master Servicer;

(e) commercial paper (including both non-interest-bearing discount obligations and interest-bearing obligations payable on demand or on a specified date not more than one year after the date of issuance thereof) having the Applicable Credit Rating or better from the Rating Agencies at the time of such investment;

(f) a Reinvestment Agreement issued by any bank, insurance company or other corporation or entity;

(g) any other demand, money market or time deposit, obligation, security or investment as may be acceptable to the Rating Agencies as evidenced in writing by the Rating Agencies to the Securities Administrator; and

(h) interests in any money-market fund (including any such fund managed or advised by the Trustee or the Master Servicer or any affiliate thereof), which, at the date of acquisition of the interests in such fund and throughout the time such interests are held in such fund, has the highest applicable long-term rating by each Rating Agency or such lower rating as will not result in the downgrading or withdrawal of the ratings then assigned to the Certificates by each Rating Agency;

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provided, however, that no instrument or security shall be a Permitted Investment if such instrument or security evidences a right to receive only interest payments with respect to the obligations underlying such instrument or if such security provides for payment of both principal and interest with a yield to maturity in excess of 120% of the yield to maturity at par or if such instrument or security is purchased at a price greater than par as determined by the Master Servicer.

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

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

“Plan”: Any employee benefit plan or certain other retirement plans and arrangements, including individual retirement accounts and annuities, Xxxxx plans and bank collective investment funds and insurance company general or separate accounts in which such plans, accounts or arrangements are invested, that are subject to ERISA or Section 4975 of the Code.

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

“Prepayment Assumption”: A prepayment assumption of 100% assumes, (i) with respect to the adjustable-rate Mortgage Loans, 5.0% CPR in month 1, building to 30.0% by month 12, 30.0% CPR for months 12 through 22, 60.0% CPR for months 23 through 27, decreasing linearly to 35.0% in month 30 and remaining at 35.0% thereafter; and (ii) with respect to the fixed-rate Mortgage Loans, 4.6% CPR in month 1, building to 23.0% CPR by month 12, and, on and after month 13, 23.0% CPR.

“Prepayment Charge”: With respect to any Principal Prepayment, any prepayment premium, penalty or charge payable by a Mortgagor in connection with any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related Mortgage Note.

“Prepayment Charge Schedule”: As of any date, the list of Mortgage Loans providing for a Prepayment Charge included in the Trust Fund on such date, attached hereto as Schedule 2 (including the prepayment charge summary attached thereto). The Depositor shall deliver or cause the delivery of the Prepayment Charge Schedule to the Master Servicer and the Trustee on the Closing Date. The Prepayment Charge Schedule shall set forth the following information with respect to each Prepayment Charge:

(a) the Mortgage Loan identifying number;

(b) a code indicating the type of Prepayment Charge;

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(d) the term of the related Prepayment Charge;

(e) the original Stated Principal Balance of the related Mortgage Loan; and

(f) the Stated Principal Balance of the related Mortgage Loan as of the Cut-off Date.

“Prepayment Interest Excess”: With respect to any Distribution Date, for each Mortgage Loan that was the subject of a Principal Prepayment in full during the portion of the related Prepayment Period beginning on the first day of the calendar month in which such Distribution Date occurs and ending on the 15^th day of the calendar month in which such Distribution Date occurs, an amount equal to interest (to the extent received) at the applicable Net Mortgage Rate on the amount of such Principal Prepayment for the number of days commencing on the first day of the calendar month in which such Distribution Date occurs and ending on the last date through which interest is collected from the related mortgagor. References to Principal Prepayments include any unscheduled receipts of principal with respect to a Mortgage Loan (including as a result of a liquidation).

“Prepayment Interest Shortfall”: With respect to any Distribution Date and any Mortgage Loan that was subject to (i) a Principal Prepayment in full during the portion of the related Prepayment Period for Principal Prepayments in full beginning on the 16^th day of the calendar month before the calendar month in which such Distribution Date occurs and ending on the last day of such preceding calendar month or (ii) a Principal Prepayment in part during the related Prepayment Period for Principal Prepayments in part, an amount equal to the difference between (a) interest actually received in the related Prepayment Period as a result of such Principal Prepayment in full or Principal Prepayment in part on such Mortgage Loan and (b) the scheduled interest portion of the monthly payment of such Mortgage Loan, adjusted to the applicable Net Mortgage Rate. References to Principal Prepayments include any unscheduled receipts of principal with respect to a Mortgage Loan (including as a result of a liquidation).

“Prepayment Period”: With respect to any Distribution Date, (i) for Principal Prepayments in full (including as a result of a liquidation) the period beginning on the 16^th day of the calendar month immediately preceding the month in which such Distribution Date occurs, or the Cut-off Date in the case of the first Prepayment Period, and ending on the 15^th day of the calendar month in which such Distribution Date occurs, and (ii) for Principal Prepayments in part, the calendar month preceding the calendar month in which such Distribution Date occurs. References to Principal Prepayments include any unscheduled receipts of principal with respect to a Mortgage Loan (including as a result of a liquidation).

“Principal Prepayment”: Any voluntary payment of principal made by the Mortgagor on a Mortgage Loan which such payment is received in advance of its scheduled Due Date and is not accompanied by an amount of interest representing the full amount of scheduled interest due on any Due Date in any month or months subsequent to the month of prepayment.

“Principal Funds”: For any Distribution Date and any Loan Group or the mortgage loans in the aggregate, as applicable, (a) the sum of (i) the principal portion of all

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Monthly Payments on the related Mortgage Loans due on the related Due Date, to the extent received or advanced; (ii) the principal portion of all proceeds of the repurchase of a mortgage loan in the related Loan Group (or, in the case of a substitution, certain amounts representing a principal adjustment) as required by the Mortgage Loan Purchase Agreement during the preceding calendar month; (iii) the principal portion of all other unscheduled collections received during the preceding calendar month in respect of the related mortgage loans, including full and partial prepayments, the proceeds of any repurchase of such mortgage loans or termination of the trust by the Seller or holder of the Class R Certificates, Liquidation Proceeds and Insurance Proceeds, including any amounts recovered with respect to a mortgage loan subsequent to the liquidation or charge-off of such mortgage loan, in each case to the extent applied as recoveries of principal; net of (b) Annual Expenses payable to any party to the Pooling and Servicing Agreement on that Distribution Date(to the extent not reimbursed from Interest Funds).

“Purchase Price”: With respect to any Mortgage Loan or REO Property to be purchased pursuant to or as contemplated by Section 2.03 or Section 10.01, an amount equal to the sum of (a) 100% of the Stated Principal Balance thereof as of the date of purchase (or such other price as provided in Section 10.01), (b) in the case of (i) a Mortgage Loan, accrued interest on such Stated Principal Balance at the applicable Net Mortgage Rate in effect from time to time from the Due Date as to which interest was last covered by a payment by the Mortgagor or a P&I Advance by the Servicer or the Subservicer, which payment or P&I Advance had, as of the date of purchase, been distributed pursuant to Section 5.01, through the end of the calendar month in which the purchase is to be effected and (ii) an REO Property, the sum of (A) accrued interest on such Stated Principal Balance at the applicable Net Mortgage Rate in effect from time to time from the Due Date as to which interest was last covered by a payment by the Mortgagor or a P&I Advance by the Servicer or the Subservicer through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, plus (B) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such purchase is to be effected, net of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds and P&I Advances that, as of the date of purchase, had been distributed as or to cover REO Imputed Interest pursuant to Section 5.01, (c) any unreimbursed Servicing Advances and P&I Advances (including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) and any unpaid Master Servicing compensation or Servicing Fees allocable to such Mortgage Loan or REO Property, (d) any amounts previously withdrawn from the Collection Account pursuant to the Servicing Agreement and (e) in the case of a Mortgage Loan required to be purchased pursuant to Section 2.03, expenses reasonably incurred or to be incurred by the Trustee in respect of the breach or defect giving rise to the purchase obligation and any costs and damages incurred by the Trust Fund and the Trustee in connection with any violation by any such Mortgage Loan of any predatory or abusive lending law.

“Qualified Appraiser”: An appraiser, who provides or provided an appraisal of a mortgaged property, who had no interest, direct or indirect, in the mortgaged property or in any loan made on the security thereof and whose compensation is or was not affected by the approval or disapproval of the related Mortgage Loan, which appraiser and the appraisal made by such appraiser both satisfy the requirements of Title XI of the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated.

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“Qualified Substitute Mortgage Loan”: A Mortgage Loan substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement, which must, on the date of such substitution, (a) have a Stated Principal Balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of the Stated Principal Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month during which the substitution occurs, (b) have a Mortgage Rate not less than (and not more than one percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan, (c) have a remaining term to maturity not greater than (and not more than one year less than) that of the Deleted Mortgage Loan, (d) have a Loan-to-Value Ratio as of the date of substitution equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (e) be a “qualified mortgage” as defined in the REMIC Provisions and (f) conform to each representation and warranty set forth in the Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage Loan. In the event that one or more mortgage loans are substituted for one or more Deleted Mortgage Loans, the amounts described in clause (a) hereof shall be determined on the basis of aggregate principal balances, the Mortgage Rates described in clause (b) hereof shall be determined on the basis of weighted average Mortgage Rates, the terms described in clause (c) hereof shall be determined on the basis of weighted average remaining term to maturity, the Loan-to-Value Ratios described in clause (d) hereof shall be satisfied as to each such mortgage loan, except to the extent otherwise provided in this sentence and the representations and warranties described in clause (e) hereof must be satisfied as to each Qualified Substitute Mortgage Loan or in the aggregate, as the case may be.

“Rate/Term Refinancing”: A Refinanced Mortgage Loan, the proceeds of which are not more than a nominal amount in excess of the existing first-mortgage loan and any subordinate mortgage loan on the related Mortgaged Property and related closing costs and were used exclusively (except for such nominal amount) to satisfy the then existing first-mortgage loan and any subordinate mortgage loan of the Mortgagor on the related Mortgaged Property and to pay related closing costs.

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

“Realized Loss”: With respect to each Mortgage Loan as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (a) the unpaid principal balance of such Mortgage Loan as of the commencement of the calendar month in which the Final Recovery Determination was made, plus (b) accrued interest from the Due Date as to which interest was last paid by the Mortgagor through the end of the calendar month in which such Final Recovery Determination was made, calculated in the case of each calendar month during such period (i) at an annual rate equal to the annual rate at which interest was then accruing on such Mortgage Loan and (ii) on a principal amount equal to the Stated Principal Balance of such Mortgage Loan as of the close of business on the Distribution Date during such

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calendar month, plus (c) any amounts previously withdrawn from the Collection Account in respect of such Mortgage Loan pursuant to the Servicing Agreement, minus (d) the proceeds, if any, received in respect of such Mortgage Loan during the calendar month in which such Final Recovery Determination was made, net of amounts that are payable therefrom to the Servicer and/or the Subservicer with respect to such Mortgage Loan.

With respect to any REO Property as to which a Final Recovery Determination has been made, an amount (not less than zero) equal to (a) the unpaid principal balance of the related Mortgage Loan as of the date of acquisition of such REO Property on behalf of REMIC I, plus (b) accrued interest from the Due Date as to which interest was last paid by the Mortgagor in respect of the related Mortgage Loan through the end of the calendar month immediately preceding the calendar month in which such REO Property was acquired, calculated in the case of each calendar month during such period (i) at an annual rate equal to the annual rate at which interest was then accruing on the related Mortgage Loan and (ii) on a principal amount equal to the Stated Principal Balance of the related Mortgage Loan as of the close of business on the Distribution Date during such calendar month, plus (c) REO Imputed Interest for such REO Property for each calendar month commencing with the calendar month in which such REO Property was acquired and ending with the calendar month in which such Final Recovery Determination was made, minus (d) the aggregate of all P&I Advances and Servicing Advances (in the case of Servicing Advances, without duplication of amounts netted out of the rental income, Insurance Proceeds and Liquidation Proceeds described in clause (e) below) made by the Servicer or the Subservicer in respect of such REO Property or the related Mortgage Loan for which the Servicer or the Subservicer has been or, in connection with such Final Recovery Determination, will be reimbursed in accordance with the Servicing Agreement out of rental income, Insurance Proceeds and Liquidation Proceeds received in respect of such REO Property, minus (e) the total of all net rental income, Insurance Proceeds and Liquidation Proceeds received in respect of such REO Property that has been, or in connection with such Final Recovery Determination, will be transferred to the Distribution Account pursuant to Section 4.04.

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

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

“Record Date”: With respect to each Distribution Date and the Class A, Class B and Class M Certificates, the Business Day immediately preceding such Distribution Date for so long as such Certificates are Book-Entry Certificates. With respect to each Distribution Date and any other Class of Certificates, including any Definitive Certificates, the last day of the calendar month immediately preceding the month in which such Distribution Date occurs.

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“Reference Banks”: Any leading banks, selected by the Securities Administrator, that are engaged in transactions in Eurodollar deposits in the International Eurocurrency market (a) with an established place of business in London, (b) not controlling, under the control of or under common control with the Depositor or any Affiliate thereof and (c) that have been designated as such by the Securities Administrator.

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

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

“Regulation AB”: Subpart 229.1100 – Asset Backed Securities (Regulation AB), 17 C.F.R. §§ 229.1100—229.1123, as such may be amended from time to time and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the Commission or as may be provided by the Commission or its staff from time to time.

“Reinvestment Agreements”: One or more reinvestment agreements, acceptable to the Rating Agencies, from a bank, insurance company or other corporation or entity (including the Trustee).

“REMIC I Group 1 Regular Interests”: REMIC I Regular Interest I-1-A through REMIC I Regular Interest I-59-B as designated in the Preliminary Statement hereto.

“REMIC I Group 2 Regular Interests”: REMIC I Regular Interest II-1-A through REMIC I Regular Interest II-59-B as designated in the Preliminary Statement hereto.

“REMIC I Regular Interest”: Any of the separate non-certificated beneficial ownership interests in REMIC I issued hereunder and designated as a Regular Interest in REMIC I. Each REMIC I Regular Interest shall accrue interest at the related REMIC I Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto. The designations for the respective REMIC I Regular Interests are set forth in the Preliminary Statement hereto. The REMIC I Regular Interests consist of the REMIC I Group 1 Regular Interests and the REMIC I Group 2 Regular Interests.

“REMIC I Remittance Rate”: With respect to REMIC I Regular Interest I, a per annum rate equal to the weighted average of the Net Mortgage Rates of the Group 1 Mortgage Loans. With respect to each REMIC I Group 1 Regular Interest ending with the designation “A”, a per annum rate equal to the weighted average of the Net Mortgage Rates of the Group 1 Mortgage Loans multiplied by 2, subject to a maximum rate of 11.34%. With respect to each REMIC I Group 1 Regular Interest ending with the designation “B”, the greater of (x) a per annum rate equal to the excess, if any, of (i) 2 multiplied by the weighted average of the Net Mortgage Rates of the Group 1 Mortgage Loans over (ii) 11.34% and (y) 0.00%. With respect to

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REMIC I Regular Interest II, a per annum rate equal to the weighted average of the Net Mortgage Rates of the Group 2 Mortgage Loans. With respect to each REMIC I Group 2 Regular Interest ending with the designation “A”, a per annum rate equal to the weighted average of the Net Mortgage Rates of the Group 2 Mortgage Loans multiplied by 2, subject to a maximum rate of 11.34%. With respect to each REMIC I Group 2 Regular Interest ending with the designation “B”, the greater of (x) a per annum rate equal to the excess, if any, of (i) 2 multiplied by the weighted average of the Expense Adjusted Net Mortgage Rates of the Group 2 Mortgage Loans over (ii) 11.34% and (y) 0.00%.

“REMIC II Interest Loss Allocation Amount”: With respect to any Distribution Date, an amount equal to (a) the product of (i) 50% of the sum of the Pool Balance and related REO Properties then outstanding and (ii) the REMIC II Remittance Rate for REMIC II Regular Interest II-LT2AA minus the Marker Rate, divided by (b) 12.

“REMIC II Marker Allocation Percentage”: 50% of any amount payable or loss attributable from the Mortgage Loans, which shall be allocated to REMIC II Regular Interest II-LTAA, REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1 and REMIC II Regular Interest II-LTB2, REMIC II Regular Interest LTZZ and REMIC II Regular Interest II-LTP.

“REMIC II Overcollateralization Target Amount”: 0.50% of the Targeted Overcollateralization Amount.

“REMIC II Overcollateralized Amount”: With respect to any date of determination, (i) 0.50% of the aggregate Uncertificated Balances of the REMIC II Regular Interests minus (ii) the aggregate of the Uncertificated Balances of REMIC II Regular Interest LT1A1, REMIC II Regular Interest LT1A2, REMIC II Regular Interest LT2A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2 and REMIC II Regular Interest II-LTP, in each case as of such date of determination.

“REMIC II Principal Loss Allocation Amount”: With respect to any Distribution Date, an amount equal to (a) the product of (i) 50% of the Pool Balance and related REO Properties then outstanding and (ii) 1 minus a fraction, the numerator of which is two times the aggregate of the Uncertificated Balances of REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-

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LT1A4, REMIC I Regular Xxxxxxxx X-XX0X0, REMIC I Regular Xxxxxxxx X-XX0X0, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest LTB1 and REMIC II Regular Interest LTB2, and the denominator of which is the aggregate of the Uncertificated Balances of REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC I Regular Xxxxxxxx X-XX0X0, REMIC I Regular Xxxxxxxx X-XX0X0, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10 and REMIC II Regular Interest II-LTZZ.

“REMIC II Regular Interest II-LTAA”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTAA shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT1A1”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1A1 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT1A2”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1A2 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT1A3”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1A3 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

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“REMIC II Regular Interest II-LT1A4”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1A4 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT2A1”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT2A1 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT2A2”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT2A2 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM1”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM1 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM2”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM2 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM3”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM3 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

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“REMIC II Regular Interest II-LTM4”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM4 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM5”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM5 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM6”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM6 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM7”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM7 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM8”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM8 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM9”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM9 shall

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accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTM10”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTM10 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTB1”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTB1 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTB2”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTB2 shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTP”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTP shall accrue interest at the related Uncertificated REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTIO”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTIO shall accrue interest at the related REMIC II Remittance Rate in effect from time to time subject to the terms and conditions hereof, based on its Uncertificated Balance.

“REMIC II Regular Interest II-LTZZ”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTZZ shall

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accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT1SUB”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1SUB shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT1GRP”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT1GRP shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT2SUB”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT2SUB shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LT2GRP”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LT2GRP shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

“REMIC II Regular Interest II-LTXX”: One of the separate non-certificated beneficial ownership interests in REMIC II issued hereunder and designated as a regular interest in REMIC II for purposes of the REMIC Provisions. REMIC II Regular Interest II-LTXX shall accrue interest at the related REMIC II Remittance Rate in effect from time to time, and shall be entitled to distributions of principal, subject to the terms and conditions hereof, in an aggregate amount equal to its initial Uncertificated Balance as set forth in the Preliminary Statement hereto.

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“REMIC II Regular Interests”: REMIC II Regular Interest II-LTAA, REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2, REMIC II Regular Interest II-LTP, REMIC II Regular Interest II-LTIO, REMIC II Regular Interest II-LTZZ, REMIC II Regular Interest II-LT1SUB, REMIC II Regular Interest II-LT1GRP, REMIC II Regular Interest II-LT2SUB, REMIC II Regular Interest II-LT2GRP, and REMIC II Regular Interest LTXX.

“REMIC II Remittance Rate”: With respect to REMIC II Regular Interest II-LTAA, REMIC II Regular Interest II-LT1A1, REMIC II Regular Interest II-LT1A2, REMIC II Regular Interest II-LT1A3, REMIC II Regular Interest II-LT1A4, REMIC II Regular Interest II-LT2A1, REMIC II Regular Interest II-LT2A2, REMIC II Regular Interest II-LTM1, REMIC II Regular Interest II-LTM2, REMIC II Regular Interest II-LTM3, REMIC II Regular Interest II-LTM4, REMIC II Regular Interest II-LTM5, REMIC II Regular Interest II-LTM6, REMIC II Regular Interest II-LTM7, REMIC II Regular Interest II-LTM8, REMIC II Regular Interest II-LTM9, REMIC II Regular Interest II-LTM10, REMIC II Regular Interest II-LTB1, REMIC II Regular Interest II-LTB2, REMIC II Regular Interest II-LTZZ, REMIC II Regular Interest II-LTP, REMIC II Regular Interest II-LT1SUB, REMIC II Regular Interest II-LT2SUB and REMIC II Regular Interest II-LTXX, a per annum rate (but not less than zero) equal to the weighted average of: (x) with respect to REMIC I Regular Interest I, REMIC I Regular Interest II and each REMIC I Regular Interest ending with the designation “B”, the weighted average of the REMIC I Remittance Rates for such REMIC I Regular Interests, weighted on the basis of the Uncertificated Balances of such REMIC I Regular Interests for each such Distribution Date and (y) with respect to REMIC I Regular Interests ending with the designation “A”, for each Distribution Date listed below, the weighted average of the rates listed below for each such REMIC I Regular Interest listed below, weighted on the basis of the Uncertificated Balances of each such REMIC I Regular Interest for each such Distribution Date:


Distribution Date	REMIC I Regular Interest	Rate

1	I-1-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

2	I-2-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-2-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate REMIC I Remittance Rate

	I-1-A	REMIC I Remittance Rate

	II-1-A	REMIC I Remittance Rate

3	I-3-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-3-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-2-A	REMIC I Remittance Rate

	II-1-A and II-2-A	REMIC I Remittance Rate

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Distribution Date	REMIC I Regular Interest	Rate

4	I-4-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-4-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-3-A	REMIC I Remittance Rate

	II-1-A through II-3-A	REMIC I Remittance Rate

5	I-5-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-5-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-4-A	REMIC I Remittance Rate

	II-1-A through II-4-A	REMIC I Remittance Rate

6	I-6-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-6-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-5-A	REMIC I Remittance Rate

	II-1-A through II-5-A	REMIC I Remittance Rate

7	I-7-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-7-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-6-A	REMIC I Remittance Rate

	II-1-A through II-6-A	REMIC I Remittance Rate

8	I-8-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-8-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-7-A	REMIC I Remittance Rate

	II-1-A through II-7-A	REMIC I Remittance Rate

9	I-9-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-9-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-8-A	REMIC I Remittance Rate

	II-1-A through II-8-A	REMIC I Remittance Rate

10	I-10-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-10-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-9-A	REMIC I Remittance Rate

	II-1-A through II-9-A	REMIC I Remittance Rate

11	I-11-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-11-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-10-A	REMIC I Remittance Rate

	II-1-A through II-10-A	REMIC I Remittance Rate

12	I-12-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-12-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-11-A	REMIC I Remittance Rate

	II-1-A through II-11-A	REMIC I Remittance Rate

13	I-13-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-13-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-12-A	REMIC I Remittance Rate

	II-1-A through II-12-A	REMIC I Remittance Rate

14	I-14-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-14-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-13-A	REMIC I Remittance Rate

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Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-13-A	REMIC I Remittance Rate

15	I-15-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-15-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-14-A	REMIC I Remittance Rate

	II-1-A through II-14-A	REMIC I Remittance Rate

16	I-16-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-16-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-15-A	REMIC I Remittance Rate

	II-1-A through II-15-A	REMIC I Remittance Rate

17	I-17-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-17-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-16-A	REMIC I Remittance Rate

	II-1-A through II-16-A	REMIC I Remittance Rate

18	I-18-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-18-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-17-A	REMIC I Remittance Rate

	II-1-A through II-17-A	REMIC I Remittance Rate

19	I-19-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-19-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-18-A	REMIC I Remittance Rate

	II-1-A through II-18-A	REMIC I Remittance Rate

20	I-20-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-20-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-19-A	REMIC I Remittance Rate

	II-1-A through II-19-A	REMIC I Remittance Rate

21	I-21-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-21-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-20-A	REMIC I Remittance Rate

	II-1-A through II-20-A	REMIC I Remittance Rate

22	I-22-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-22-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-21-A	REMIC I Remittance Rate

	II-1-A through II-21-A	REMIC I Remittance Rate

23	I-23-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-23-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-22-A	REMIC I Remittance Rate

	II-1-A through II-22-A	REMIC I Remittance Rate

24	I-24-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-24-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-23-A	REMIC I Remittance Rate
	II-1-A through II-23-A	REMIC I Remittance Rate
25	I-25-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-25-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-24-A	REMIC I Remittance Rate

-60-


Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-24-A	REMIC I Remittance Rate

26	I-26-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-26-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-25-A	REMIC I Remittance Rate

	II-1-A through II-25-A	REMIC I Remittance Rate

27	I-27-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-27-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-26-A	REMIC I Remittance Rate

	II-1-A through II-26-A	REMIC I Remittance Rate

28	I-28-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-28-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-27-A	REMIC I Remittance Rate

	II-1-A through II-27-A	REMIC I Remittance Rate

29	I-29-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-29-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-28-A	REMIC I Remittance Rate

	II-1-A through II-28-A	REMIC I Remittance Rate

30	I-30-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-30-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-29-A	REMIC I Remittance Rate

	II-1-A through II-29-A	REMIC I Remittance Rate

31	I-31-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-31-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-30-A	REMIC I Remittance Rate

	II-1-A through II-30-A	REMIC I Remittance Rate

32	I-32-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-32-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-31-A	REMIC I Remittance Rate

	II-1-A through II-31-A	REMIC I Remittance Rate

33	I-33-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-33-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-32-A	REMIC I Remittance Rate

	II-1-A through II-32-A	REMIC I Remittance Rate

34	I-34-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-34-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-33-A	REMIC I Remittance Rate

	II-1-A through II-33-A	REMIC I Remittance Rate

35	I-35-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-35-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-34-A	REMIC I Remittance Rate

	II-1-A through II-34-A	REMIC I Remittance Rate

36	I-36-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-36-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-35-A	REMIC I Remittance Rate

-61-


Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-35-A	REMIC I Remittance Rate

37	I-37-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-37-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-36-A	REMIC I Remittance Rate

	II-1-A through II-36-A	REMIC I Remittance Rate

38	I-38-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-38-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-37-A	REMIC I Remittance Rate

	II-1-A through II-37-A	REMIC I Remittance Rate

39	I-39-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-39-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-38-A	REMIC I Remittance Rate

	II-1-A through II-38-A	REMIC I Remittance Rate

40	I-40-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-40-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-39-A	REMIC I Remittance Rate

	II-1-A through II-39-A	REMIC I Remittance Rate

41	I-41-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-41-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-40-A	REMIC I Remittance Rate

	II-1-A through II-40-A	REMIC I Remittance Rate

42	I-42-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-42-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-41-A	REMIC I Remittance Rate

	II-1-A through II-41-A	REMIC I Remittance Rate

43	I-43-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-43-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-42-A	REMIC I Remittance Rate

	II-1-A through II-42-A	REMIC I Remittance Rate

44	I-44-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-44-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-43-A	REMIC I Remittance Rate

	II-1-A through II-43-A	REMIC I Remittance Rate

45	I-45-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-45-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-44-A	REMIC I Remittance Rate

	II-1-A through II-44-A	REMIC I Remittance Rate

46	I-46-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-46-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-45-A	REMIC I Remittance Rate

	II-1-A through II-45-A	REMIC I Remittance Rate

47	I-47-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-47-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-46-A	REMIC I Remittance Rate

-62-


Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-46-A	REMIC I Remittance Rate

48	I-48-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-48-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-47-A	REMIC I Remittance Rate

	II-1-A through II-47-A	REMIC I Remittance Rate

49	I-49-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-49-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-48-A	REMIC I Remittance Rate

	II-1-A through II-48-A	REMIC I Remittance Rate

50	I-50-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-50-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-49-A	REMIC I Remittance Rate

	II-1-A through II-49-A	REMIC I Remittance Rate

51	I-51-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-51-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-50-A	REMIC I Remittance Rate

	II-1-Aand II-50-A	REMIC I Remittance Rate

52	I-52-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-52-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-51-A	REMIC I Remittance Rate

	II-1-Aand II-51-A	REMIC I Remittance Rate

53	I-53-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-53-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-52-A	REMIC I Remittance Rate

	II-1-Aand II-52-A	REMIC I Remittance Rate

54	I-54-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-54-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-53-A	REMIC I Remittance Rate

	II-1-Aand II-53-A	REMIC I Remittance Rate

55	I-55-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-55-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-54-A	REMIC I Remittance Rate

	II-1-Aand II-54-A	REMIC I Remittance Rate

56	I-56-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-56-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-55-A	REMIC I Remittance Rate

	II-1-Aand II-55-A	REMIC I Remittance Rate

57	I-57-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-57-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A and I-56-A	REMIC I Remittance Rate

	II-1-Aand II-56-A	REMIC I Remittance Rate

58	I-58-A tand I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-58-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	I-1-A through I-57-A	REMIC I Remittance Rate

-63-


Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-57-A	REMIC I Remittance Rate
59	I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-58-A	REMIC I Remittance Rate
	II-1-A through II-58-A	REMIC I Remittance Rate
thereafter	I-1-A through I-59-A	REMIC I Remittance Rate
	II-1-A through II-59-A	REMIC I Remittance Rate

With respect to REMIC II Regular Interest II-LT1GRP, a per annum rate (but not less than zero) equal to the weighted average of (x) with respect to REMIC I Regular Interest I and REMIC I Group 1 Regular Interests ending with the designation “B”, the weighted average of the REMIC I Remittance Rates for such REMIC I Regular Interests, weighted on the basis of the Uncertificated Balances of each such REMIC I Regular Interest for each such Distribution Date and (y) with respect to REMIC I Group 1 Regular Interests ending with the designation “A,” for each Distribution Date listed below, the weighted average of the rates listed below for such REMIC I Regular Interests listed below, weighted on the basis of the Uncertificated Balances of each such REMIC I Regular Interest for each such Distribution Date:


Distribution Date	REMIC I Regular Interest	Rate
1	I-1-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

2	I-2-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A	REMIC I Remittance Rate

3	I-3-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A and I-2-A	REMIC I Remittance Rate

4	I-4-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-3-A	REMIC I Remittance Rate

5	I-5-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-4-A	REMIC I Remittance Rate

6	I-6-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-5-A	REMIC I Remittance Rate

7	I-7-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-6-A	REMIC I Remittance Rate

8	I-8-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-7-A	REMIC I Remittance Rate

9	I-9-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-8-A	REMIC I Remittance Rate

10	I-10-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-9-A	REMIC I Remittance Rate

-64-


Distribution Date	REMIC I Regular Interest	Rate
11	I-11-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-10-A	REMIC I Remittance Rate

12	I-12-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-11-A	REMIC I Remittance Rate

13	I-13-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-12-A	REMIC I Remittance Rate

14	I-14-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-13-A	REMIC I Remittance Rate

15	I-15-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-14-A	REMIC I Remittance Rate

16	I-16-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-15-A	REMIC I Remittance Rate

17	I-17-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-16-A	REMIC I Remittance Rate

18	I-18-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-17-A	REMIC I Remittance Rate

19	I-19-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-18-A	REMIC I Remittance Rate

20	I-20-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-19-A	REMIC I Remittance Rate

21	I-21-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-20-A	REMIC I Remittance Rate

22	I-22-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-21-A	REMIC I Remittance Rate

23	I-23-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-22-A	REMIC I Remittance Rate

24	I-24-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-23-A	REMIC I Remittance Rate

25	I-25-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-24-A	REMIC I Remittance Rate

26	I-26-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-25-A	REMIC I Remittance Rate

27	I-27-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

-65-


Distribution Date	REMIC I Regular Interest	Rate
	I-1-A through I-26-A	REMIC I Remittance Rate

28	I-28-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-27-A	REMIC I Remittance Rate

29	I-29-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-28-A	REMIC I Remittance Rate

30	I-30-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-29-A	REMIC I Remittance Rate

31	I-31-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-30-A	REMIC I Remittance Rate

32	I-32-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-31-A	REMIC I Remittance Rate

33	I-33-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-32-A	REMIC I Remittance Rate

34	I-34-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-33-A	REMIC I Remittance Rate

35	I-35-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-34-A	REMIC I Remittance Rate

36	I-36-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-35-A	REMIC I Remittance Rate

37	I-37-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-36-A	REMIC I Remittance Rate

38	I-38-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-37-A	REMIC I Remittance Rate

39	I-39-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-38-A	REMIC I Remittance Rate

40	I-40-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-39-A	REMIC I Remittance Rate

41	I-41-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-40-A	REMIC I Remittance Rate

42	I-42-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-41-A	REMIC I Remittance Rate

43	I-43-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-42-A	REMIC I Remittance Rate

-66-


Distribution Date	REMIC I Regular Interest	Rate
44	I-44-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-43-A	REMIC I Remittance Rate

45	I-45-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-44-A	REMIC I Remittance Rate

46	I-46-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-45-A	REMIC I Remittance Rate

47	I-47-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-46-A	REMIC I Remittance Rate

48	I-48-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-47-A	REMIC I Remittance Rate

49	I-49-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-48-A	REMIC I Remittance Rate

50	I-50-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-49-A	REMIC I Remittance Rate

51	I-51-A and I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-50-A	REMIC I Remittance Rate

52	I-52-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-51-A	REMIC I Remittance Rate

53	I-53-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-52-A	REMIC I Remittance Rate

54	I-54-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-53-A	REMIC I Remittance Rate

55	I-55-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-54-A	REMIC I Remittance Rate

56	I-56-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-55-A	REMIC I Remittance Rate

57	I-57-A through I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-56-A	REMIC I Remittance Rate

58	I-58-A and I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-57-A	REMIC I Remittance Rate

59	I-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	I-1-A through I-58-A	REMIC I Remittance Rate

thereafter	I-1-A through I-59-A	REMIC I Remittance Rate

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With respect to REMIC II Regular Interest II-LT2GRP, a per annum rate (but not less than zero) equal to the weighted average of (x) with respect to REMIC I Regular Interest II and REMIC I Group 2 Regular Interests ending with the designation “B”, the weighted average of the REMIC I Remittance Rates for such REMIC I Regular Interests, weighted on the basis of the Uncertificated Balances of each such REMIC I Regular Interest for each such Distribution Date and (y) with respect to REMIC I Group 2 Regular Interests ending with the designation “A”, for each Distribution Date listed below, the weighted average of the rates listed below for such REMIC I Regular Interests listed below, weighted on the basis of the Uncertificated Balances of each such REMIC I Regular Interest for each such Distribution Date:


Distribution Date	REMIC I Regular Interest	Rate
1	II-1-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

2	II-2-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A	REMIC I Remittance Rate

3	II-3-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A and II-2-A	REMIC I Remittance Rate

4	II-4-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-3-A	REMIC I Remittance Rate

5	II-5-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-4-A	REMIC I Remittance Rate

6	II-6-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-5-A	REMIC I Remittance Rate

7	II-7-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-6-A	REMIC I Remittance Rate

8	II-8-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-7-A	REMIC I Remittance Rate

9	II-9-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-8-A	REMIC I Remittance Rate

10	II-10-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-9-A	REMIC I Remittance Rate

11	II-11-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-10-A	REMIC I Remittance Rate

12	II-12-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-11-A	REMIC I Remittance Rate

13	II-13-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

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Distribution Date	REMIC I Regular Interest	Rate
	II-1-A through II-12-A	REMIC I Remittance Rate

14	II-14-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-13-A	REMIC I Remittance Rate

15	II-15-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-14-A	REMIC I Remittance Rate

16	II-16-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-15-A	REMIC I Remittance Rate

17	II-17-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-16-A	REMIC I Remittance Rate

18	II-18-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-17-A	REMIC I Remittance Rate

19	II-19-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-18-A	REMIC I Remittance Rate

20	II-20-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-19-A	REMIC I Remittance Rate

21	II-21-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-20-A	REMIC I Remittance Rate

22	II-22-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-21-A	REMIC I Remittance Rate

23	II-23-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-22-A	REMIC I Remittance Rate

24	II-24-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-23-A	REMIC I Remittance Rate

25	II-25-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-24-A	REMIC I Remittance Rate

26	II-26-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-25-A	REMIC I Remittance Rate

27	II-27-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-26-A	REMIC I Remittance Rate

28	II-28-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-27-A	REMIC I Remittance Rate

29	II-29-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate
	II-1-A through II-28-A	REMIC I Remittance Rate

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Distribution Date	REMIC I Regular Interest	Rate
30	II-30-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-29-A	REMIC I Remittance Rate

31	II-31-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-30-A	REMIC I Remittance Rate

32	II-32-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-31-A	REMIC I Remittance Rate

33	II-33-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-32-A	REMIC I Remittance Rate

34	II-34-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-33-A	REMIC I Remittance Rate

35	II-35-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-34-A	REMIC I Remittance Rate

36	II-36-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-35-A	REMIC I Remittance Rate

37	II-37-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-36-A	REMIC I Remittance Rate

38	II-38-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-37-A	REMIC I Remittance Rate

39	II-39-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-38-A	REMIC I Remittance Rate

40	II-40-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-39-A	REMIC I Remittance Rate

41	II-41-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-40-A	REMIC I Remittance Rate

42	II-42-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-41-A	REMIC I Remittance Rate

43	II-43-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-42-A	REMIC I Remittance Rate

44	II-44-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-43-A	REMIC I Remittance Rate

45	II-45-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-44-A	REMIC I Remittance Rate

46	II-46-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-45-A	REMIC I Remittance Rate

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Distribution Date	REMIC I Regular Interest	Rate
47	II-47-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-46-A	REMIC I Remittance Rate

48	II-48-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-47-A	REMIC I Remittance Rate

49	II-49-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-48-A	REMIC I Remittance Rate

50	II-50-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-49-A	REMIC I Remittance Rate

51	II-51-A and II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-50-A	REMIC I Remittance Rate

52	II-52-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-51-A	REMIC I Remittance Rate

53	II-53-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-52-A	REMIC I Remittance Rate

54	II-54-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-53-A	REMIC I Remittance Rate

55	II-55-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-54-A	REMIC I Remittance Rate

56	II-56-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-55-A	REMIC I Remittance Rate

57	II-57-A and II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-56-A	REMIC I Remittance Rate

58	II-58-A through II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-57-A	REMIC I Remittance Rate

59	II-59-A	2 multiplied by Swap LIBOR, subject to a maximum rate of REMIC I Remittance Rate

	II-1-A through II-58-A	REMIC I Remittance Rate

thereafter	II-1-A through II-59-A	REMIC I Remittance Rate

With respect to REMIC II Regular Interest II-LTIO, and (i) the first Distribution Date through the 58th Distribution Date, the excess of (x) the weighted average of the REMIC I Remittance Rates for REMIC I Regular Interests including the designation “A,” over (y) 2 multiplied by Swap LIBOR and (ii) thereafter, 0.00%.

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“REMIC II Sub WAC Allocation Percentage”: 50% of any amount payable from or loss attributable to the Mortgage Loans, which shall be allocated to REMIC II Regular Interest II-LT1SUB, REMIC II Regular Interest II-LT1GRP, REMIC II Regular Interest II-LT2SUB, REMIC II Regular Interest II-LT2GRP and REMIC II Regular Interest II-LTXX.

“REMIC II Subordinated Balance Ratio”: The ratio among the Uncertificated Balances of each REMIC II Regular Interest ending with the designation “SUB,” equal to the ratio between, with respect to each such REMIC II Regular Interest, the excess of (x) the aggregate Stated Principal Balance of the Mortgage Loans in the related Loan Group over (y) the current Class Certificate Balance of the Senior Certificates in the related Loan Group.

“REMIC III Net WAC Rate”: For any Distribution Date with respect to the REMIC III Regular Interests and for purposes of calculating the Marker Rate, the Maximum II-LTZZ Uncertificated Interest Deferral Amount and Basis Risk Shortfall, the weighted average (adjusted for the actual number of days elapsed in the related Interest Accrual Period) of the REMIC II Remittance Rate on the REMIC II Regular Interests (other than the Class II-LTIO Interest), weighted on the basis of the Uncertificated Balance of each such REMIC II Regular Interest divided by (ii) an amount equal to (a) 30, divided by (b) the actual number of days in the Accrual Period.

“REMIC III Regular Interest”: Any of the regular interests in REMIC III the ownership of which is represented by the LIBOR Certificates and the Class C Interest, the Class P Interest and the Class SWAP-IO Interest.

“REMIC III Uncertificated Regular Interest”: The Class C Interest, the Class P Interest and the Class Swap-IO Interest.

“REMIC Provisions”: Provisions of the federal income tax law relating to real estate mortgage investment conduits which appear at Section 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and regulations and rulings promulgated thereunder, as the foregoing may be in effect from time to time.”Rents from Real Property”: With respect to any REO Property, gross income of the character described in Section 856(d) of the Code as being included in the term “rents from real property.”

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

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

“REO Principal Amortization”: With respect to any REO Property, for any calendar month, the excess, if any, of (a) the aggregate of all amounts received in respect of such REO Property during such calendar month, whether in the form of rental income, sale proceeds

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(including, without limitation, that portion of the Termination Price paid in connection with a purchase of all of the Mortgage Loans and REO Properties pursuant to Section 10.01 that is allocable to such REO Property) or otherwise, net of any portion of such amounts (i) payable in respect of the proper operation, management and maintenance of such REO Property or (ii) payable or reimbursable to the Servicer or the Subservicer in accordance with the Servicing Agreement for unpaid Servicing Fees and/or Subservicing Fees in respect of the related Mortgage Loan and unreimbursed Servicing Advances and P&I Advances in respect of such REO Property or the related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO Property for such calendar month.

“REO Property”: A Mortgaged Property acquired by the Servicer on behalf of the Trust through foreclosure or deed-in-lieu of foreclosure, in accordance with the Servicing Agreement.

“Reportable Event”: As defined in Section 12.03(a).

“Reporting Servicer”: As defined in Section 12.02(a).

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

“Residential Dwelling”: Any one of the following: (a) a detached one-family dwelling, (b) a detached two- to four-family dwelling, (c) a one-family dwelling unit in a Xxxxxx Xxx eligible condominium project, (d) a manufactured home or (e) a detached one-family dwelling in a planned unit development, none of which is a co-operative or mobile home.

“Residual Certificate”: Any one of the Class R and Class RX Certificates.

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

“Responsible Officer”: When used with respect to the Trustee or the Securities Administrator, any officer of the Trustee or the Securities Administrator having direct responsibility for the administration of this Agreement and, with respect to a particular matter, to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Sarbanes Certifying Party”: The Master Servicer.

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“Xxxxxxxx-Xxxxx Act”: The Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations of the Commission promulgated thereunder (including any interpretations thereof by the Commission’s staff).

“Xxxxxxxx-Xxxxx Certification”: A written certification signed by an officer of the Master Servicer that complies with (a) the Xxxxxxxx-Xxxxx Act, as amended from time to time, and (b) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect from time to time; provided that if, after the Closing Date (i) the Xxxxxxxx-Xxxxx Act is amended, (ii) the Rules referred to in clause (b) are modified or superceded by any subsequent statement, rule or regulation of the Commission or any statement of a division thereof, or (iii) any future releases, rules and regulations are published by the Commission from time to time pursuant to the Xxxxxxxx-Xxxxx Act, which in any such case affects the form or substance of the required certification and results in the required certification being, in the reasonable judgment of the Master Servicer, materially more onerous that then form of the required certification as of the Closing Date, the Xxxxxxxx-Xxxxx Certification shall be as agreed to by the Master Servicer, the Depositor and the Seller following a negotiation in good faith to determine how to comply with any such new requirements.

“S&P”: Standard and Poor’s, a division of The XxXxxx-Xxxx Companies, Inc.

“Securities Act”: The Securities Act of 1933, as amended.

“Securities Administrator”: As of the Closing Date, Xxxxx Fargo, and thereafter, its successors in interest that meet the qualifications set forth in this Agreement. The Securities Administrator and the Master Servicer shall at all times be the same Person.

“Seller”: PCHLI, or its successor in interest, in its capacity as seller under the Mortgage Loan Purchase Agreement.

“Senior Enhancement Percentage”: For any Distribution Date, the percentage obtained by dividing (a) the sum of (i) the aggregate Certificate Principal Balance of the Class B Certificates and Class M Certificates and (ii) the related Overcollateralized Amount, in each case prior to the distribution of the Principal Distribution Amount on such Distribution Date, by (b) the aggregate Stated Principal Balance of the Mortgage Loans after giving effect to distributions to be made on that Distribution Date.

“Senior Principal Distribution Amount”: For any Distribution Date on or after the Stepdown Date and as long as a Trigger Event is not in effect, the lesser of (i) the Basic Principal Distribution Amount and (ii) the amount by which the aggregate Certificate Principal Balance of the Class A Certificates exceeds the Senior Target Amount.

“Senior Target Amount”: For any Distribution Date, the lesser of (a) the product of (i) 57.30% and (ii) the aggregate Stated Principal Balance of the Mortgage Loans and (b) the amount, if any, by which (i) the aggregate Stated Principal Balance of the Mortgage Loans exceeds (ii) 0.50% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

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“Servicer”: EMC Mortgage Corporation, or any successor thereto, in its capacity as Servicer under the Servicing Agreement.

“Servicer Prepayment Charge Payment Amounts”: Prepayment Charges paid by the Servicer (or Subservicer) as a result of its improper waiver of such Prepayment Charges.

“Servicer Remittance Date”: With respect to any Mortgage Loan, the 18th day of any month, or if such 18th day is not a Business Day, the first Business Day immediately following such 18th day.

“Servicing Advances”: The customary and reasonable “out-of-pocket” costs and expenses incurred by the Servicer or the Subservicer in connection with a default, delinquency or other unanticipated event by the Servicer or the Subservicer in the performance of its servicing obligations, including, but not limited to, the cost of (a) the preservation, restoration and protection of a Mortgaged Property, (b) any enforcement or judicial proceedings, including but not limited to foreclosures, in respect of a particular Mortgage Loan, (c) the management (including reasonable fees in connection therewith) and liquidation of any REO Property, (d) obtaining or correcting any legal documentation required to be included in the Mortgage Files and reasonably necessary for the Servicer or the Subservicer to perform its obligations under the Servicing Agreement or the Subservicing Agreement, as applicable, and (e) such other amounts as are due to the Servicer or the Subservicer to the extent provided in the Servicing Agreement or the Subservicing Agreement, as applicable. Servicing Advances also include any reasonable “out-of-pocket” cost and expenses (including legal fees) incurred by the Servicer or the Subservicer in connection with executing and recording instruments of satisfaction, deeds of reconveyance or Assignments to the extent not recovered from the Mortgagor or otherwise payable under the Servicing Agreement. Neither the Servicer nor the Subservicer (nor any successor thereto) shall be required to make any Nonrecoverable Servicing Advances.

“Servicing Agreement”: The Servicing Agreement, dated as of July 1, 2006, among the Servicer, the Master Servicer, the Subservicer and the Trustee.

“Servicing Criteria”: The criteria set forth in paragraph (d) of Item 1122 Regulation AB.

“Servicing Fee”: With respect to each Mortgage Loan and for any calendar month, an amount equal to one-twelfth of the product of the Servicing Fee Rate multiplied by the Stated Principal Balance of the Mortgage Loans as of the Distribution Date in the preceding calendar month. The Servicing Fee is payable solely from collections of interest on the Mortgage Loans.

“Servicing Fee Rate”: On each Mortgage Loan, 0.50% per annum, comprised of the Servicer’s fee rate of 0.03% per annum plus the Subservicer’s fee rate of 0.47% per annum, which includes the portion thereof that the Subservicer is required to remit to the Seller pursuant to the Subservicing Agreement.

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“Servicing Function Participant”: Any Subservicer or Subcontractor of a Servicer, the Master Servicer, the Trustee, the Custodian or the Securities Administrator, respectively.

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

“Single Certificate”: With respect to any Class of Certificates (other than the Residual Certificates), a hypothetical Certificate of such Class evidencing a Percentage Interest for such Class corresponding to an initial Certificate Principal Balance of $1,000. With respect to the Residual Certificates, a hypothetical Certificate of such Class evidencing a 100% Percentage Interest in such Class.

“Special Derivative Contract”: Any ISDA Master Agreement, together with the related Schedule and Confirmation, entered into by the Supplemental Interest Trust Trustee and a Special Derivative Counterparty in accordance with Section 5.08 of this Agreement.

“Special Derivative Counterparty”: Any counterparty to a Special Derivative Contract as provided in Section 5.08 of this Agreement.

“Sponsor”: People’s Choice Financial Corporation.

“Startup Day”: With respect to each Trust REMIC, the day designated as such pursuant to Section 11.01(b) hereof.

“Stated Principal Balance”: With respect to any Mortgage Loan: (a) as of the Cut-off Date, the outstanding principal balance of such Mortgage Loan as of such date, net of the principal portion of all unpaid Monthly Payments, if any, due on or before such date; (b) as of any Due Date subsequent to the Cut-off Date up to and including the Due Date in the calendar month in which a Liquidation Event occurs with respect to such Mortgage Loan, the Stated Principal Balance of such Mortgage Loan as of the Cut-off Date, minus the sum of (i) the principal portion of each Monthly Payment due on or before such Due Date but subsequent to the Cut-off Date, whether or not received, (ii) all Principal Prepayments received before such Due Date but after the Cut-off Date, (iii) the principal portion of all Liquidation Proceeds and Insurance Proceeds received before such Due Date but after the Cut-off Date, net of any portion thereof that represents principal due (without regard to any acceleration of payments under the related Mortgage and Mortgage Note) on a Due Date occurring on or before the date on which such proceeds were received and (iv) any Realized Loss incurred with respect thereto as a result of a Deficient Valuation occurring before such Due Date, but only to the extent such Realized Loss represents a reduction in the portion of principal of such Mortgage Loan not yet due (without regard to any acceleration of payments under the related Mortgage and Mortgage Note) as of the date of such Deficient Valuation; and (c) as of any Due Date subsequent to the

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occurrence of a Liquidation Event with respect to such Mortgage Loan, zero. With respect to any REO Property: (i) as of any Due Date subsequent to the date of its acquisition on behalf of the Trust Fund up to and including the Due Date in the calendar month in which a Liquidation Event occurs with respect to such REO Property, an amount (not less than zero) equal to the Stated Principal Balance of the related Mortgage Loan as of the Due Date in the calendar month in which such REO Property was acquired, minus the aggregate amount of REO Principal Amortization, if any, in respect of REO Property for all previously ended calendar months; and (ii) as of any Due Date subsequent to the occurrence of a Liquidation Event with respect to such REO Property, zero.

“Step-Up Date”: The first Distribution Date following the first month in which the aggregate Stated Principal Balance of the Mortgage Loans, and properties acquired in respect thereof, remaining in the trust has been reduced to less than or equal to 10% of the aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date.

“Stepdown Date”: The earlier to occur of (a) the first Distribution Date on which the aggregate Certificate Principal Balance of the Class A Certificates has been reduced to zero and (b) the later to occur of (i) the Distribution Date in August 2009, and (ii) the first Distribution Date on which the Senior Enhancement Percentage is greater than or equal to 42.70%.

“Subcontractor”: Any vendor, subcontractor or other Person that is not responsible for the overall servicing of Mortgage Loans but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of any Servicer (or a Subservicer of any Servicer), the Master Servicer, the Trustee, the Custodian or the Securities Administrator.

“Subordinate Certificates”: The Class M Certificates and the Class B Certificates.

“Subordinate Net Maximum Mortgage Rate”: With respect to any Distribution Date, the weighted average of the Group 1 Net Maximum Mortgage Rate and the Group 2 Net Maximum Mortgage Rate, weighted, in each case, based on the applicable Group Subordinate Amount for such Distribution Date.

“Subordinate Net WAC Cap”: With respect to any Distribution Date, the weighted average of the Group 1 Net WAC Cap and the Group 2 Net WAC Cap, weighted in each case based on the applicable Group Subordinate Amount for such Distribution Date.

“Subsequent Recoveries”: Any Liquidation Proceeds (net of amounts owed to the Servicer or Master Servicer with respect to the related Mortgage Loan) received after the final liquidation of a Mortgage Loan.

“Subservicer”: Any Person that services Mortgage Loans on behalf of a Servicer and is responsible for the performance (whether directly or through subservicers or Subcontractors) of servicing functions required to be performed under this Agreement, the Servicing Agreement, the Subservicing Agreement or any sub-servicing agreement identified in

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Item 1122(d) of Regulation AB. Initially, PCHLI will serve as Subservicer, performing the duties of the Subservicer under the Subservicing Agreement, and “Subservicer” includes PCHLI’s successors in interest and permitted assigns and any other subservicer that may be appointed in the future to replace PCHLI in such capacity.

“Subservicing Agreement”: That certain subservicing agreement, dated as of July 1, 2006, between the Servicer and the Subservicer, as the same may be amended, supplemented, restated or replaced from time to time.

“Subservicing Fee”: With respect to each Mortgage Loan and for any calendar month, an amount equal to one-twelfth of the product of the Subservicing Fee Rate multiplied by the Stated Principal Balance of the Mortgage Loans as of the Distribution Date in the preceding calendar month.

“Subservicing Fee Rate”: With respect to any Mortgage Loan, 0.47% per annum.

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

“Superior Lien”: With respect to any second lien Mortgage Loan, any other mortgage loan that is not a Mortgage Loan relating to the corresponding Mortgaged Property that creates a lien on such Mortgaged Property that is senior to such second lien Mortgage Loan.

“Supplemental Interest Trust”: That certain supplemental interest trust formed pursuant to Section 4.02 hereof.

“Supplemental Interest Trust Trustee”: Xxxxx Fargo Bank, N.A..

“Swap Account”: The trust account or accounts created and maintained by the Supplemental Interest Trust Trustee pursuant to Section 5.06 in the name of the Supplemental Interest Trust Trustee as provided therein. Funds in the Swap Account shall be held in trust for the Certificateholders for the uses and purposes set forth in this Agreement. The Swap Account must be an Eligible Account.

“Swap Agreement”: The interest rate swap agreement between the Supplemental Interest Trust Trustee and the Swap Provider for the benefit of the Offered Certificates.

“Swap LIBOR”: A per annum rate equal to the floating rate payable by the Swap Provider under the Swap Agreement.

“Swap Provider”: The Bank of New York.

“Swap Provider Trigger Event”: An event of default under the Swap Agreement with respect to which the Swap Provider is a defaulting party or a termination event under the Swap Agreement with respect to which the Swap Provider is the sole affected party.

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“Swap Notional Amounts”: The scheduled notional amounts of the Swap Agreement are shown in the following table:


Period		Notional Amount ($)
1		1,003,167,728.82
2		992,994,081.38
3		979,952,900.90
4		963,416,520.09
5		945,365,576.77
6		925,800,070.94
7		904,720,002.60
8		882,125,371.74
9		855,495,169.38
10		827,200,674.02
11		798,701,776.24
12		770,786,368.26
13		743,265,589.84
14		716,578,182.88
15		691,433,949.87
16		664,826,374.87
17		637,391,993.05
18		599,293,108.01
19		563,310,545.16
20		529,519,464.00
21		497,780,949.84
22		467,956,475.47
23		439,993,833.26
24		325,147,884.14
25		305,375,617.75
26		286,789,540.18
27		269,310,813.14
28		252,827,953.96
29		243,050,957.66
30		233,718,259.14
31		224,711,879.09
32		216,018,408.84
33		207,626,735.01
34		199,526,188.38
35		191,706,859.81
36		184,158,794.85
37		176,871,942.91
38		169,840,060.57
39		163,081,409.56
40		156,573,314.71
41		150,287,960.67
42		144,216,161.47
43		138,350,629.05
44		132,684,327.19
45		127,210,460.74
46		121,922,467.31
47		116,814,009.27
48		111,878,966.05
49		107,111,426.62
50		102,505,682.30
51		98,056,219.86
52		93,757,714.71
53		89,605,024.49
54		85,593,182.76
55		81,717,392.99
56		77,973,022.72
57		74,355,597.87
58		70,860,838.92
59		67,477,326.19

“Swap Termination Payment”: Any payment payable by the Trust or the Swap Provider upon termination of the Swap Agreement as a result of an Event of Default (as defined in the Swap Agreement) or a Termination Event (as defined in the Swap Agreement).

“Tax Returns”: The federal income tax return on Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed on behalf of the Trust REMICs under the REMIC Provisions, together with any and all other information reports or returns that may be required to

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be furnished to the Certificateholders or filed with the Internal Revenue Service or any other governmental taxing authority under any applicable provisions of federal, state or local tax laws.

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

“Termination Price”: As defined in Section 10.01.

“Terminator”: As defined in Section 10.01.

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

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

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

“Trigger Event”: A Trigger Event will have occurred if the three-month rolling average of the Delinquency Rate for the three prior Due Periods equals or exceeds 37.47% of the Senior Enhancement Percentage or if the cumulative Realized Losses exceed the following percentages of the Cut-off Date aggregate Stated Principal Balance of the Mortgage Loans on the respective Distribution Date:

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Distribution Date		Percentage
25 – 36		1.60% for the first month, plus an additional 1/12^th of 1.95% for each month thereafter
37 – 48		3.55% for the first month, plus an additional 1/12^th of 1.70% for each month thereafter
49 – 60		5.25% for the first month, plus an additional 1/12^th of 1.50% for each month thereafter
61 – 72		6.75% for the first month, plus an additional 1/12^th of 0.75% for each month thereafter
73+		7.50%

“Trust”: People’s Choice Financial Realty Mortgage Securities Trust, Series 2006-01, the trust created hereunder.

“Trust Fund”: Collectively, all of the assets of the REMICs and the Basis Risk Shortfall Reserve Account and any amounts on deposit therein and any proceeds thereof and the Prepayment Charges, provided that the Interest Rate Cap Agreement and the Swap Agreement shall be held by the Supplemental Interest Trust Trustee on behalf of the Seller and shall not be part of the Trust Fund.

“Trust REMIC”: Any of REMIC I, REMIC II, REMIC III, REMIC IV, REMIC V or REMIC VI.

“Trustee”: HSBC Bank USA, National Association, a national banking association, its successor in interest, or any successor trustee appointed as herein provided.

“Uncertificated Accrued Interest”: With respect to each REMIC I Regular Interest or REMIC II Regular Interest on each Distribution Date, an amount equal to one month’s interest at the related REMIC I or REMIC II Remittance Rate on the Uncertificated Balance or Uncertificated Notional Amount of such REMIC I Regular Interest or REMIC II Regular Interest. With respect to each Uncertificated REMIC III Regular Interest on each Distribution Date, an amount equal to one month’s interest at the related “Certificate Rate” designated in the Preliminary Statement on the related Certificate Principal Balance, Uncertificated Notional Amount, or Notional Amount, as applicable. In each case, Uncertificated Accrued Interest will be reduced by any Prepayment Interest Shortfalls and Relief Act Interest Shortfalls (allocated to such REMIC I Regular Interest, REMIC II Regular Interest, or REMIC III Regular Interest based on their respective entitlements to interest irrespective of any Prepayment Interest Shortfalls and Relief Act Interest Shortfalls for such Distribution Date).

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“Uncertificated Balance”: The amount of any REMIC Regular Interest (other than REMIC II Regular Interest II-LTIO and the Class SWAP-IO Interest) outstanding as of any date of determination. As of the Closing Date, the Uncertificated Balance of each REMIC Regular Interest (other than REMIC II Regular Interest II-LTIO and the Class SWAP-IO Interest or other than as specified in the following paragraphs) shall equal the amount set forth in the Preliminary Statement hereto as its initial uncertificated balance. On each Distribution Date, the Uncertificated Balance of each REMIC Regular Interest (other than REMIC II Regular Interest II-LTIO and the Class SWAP-IO Interest) shall be reduced by all distributions of principal made on such REMIC Regular Interest on such Distribution Date pursuant to Section 4.08 and, if and to the extent necessary and appropriate, shall be further reduced on such Distribution Date by Realized Losses as provided in Section 4.08. The Uncertificated Balance of REMIC II Regular Interest II-LTZZ shall be increased by interest deferrals as provided in Section 4.08. The Uncertificated Balance of each REMIC Regular Interest shall never be less than zero.

“Uncertificated Lower-Tier Interest”: Any of the REMIC I Regular Interests, REMIC II Regular Interests or Uncertificated REMIC III Regular Interests.

“Uncertificated Notional Amount”: With respect to REMIC II Regular Interest II-LTIO and each Distribution Date listed below, a notional amount equal to the aggregate Uncertificated Balances of the REMIC I Regular Interests ending with the designation “A” listed below:


Distribution Date		REMIC I Regular Interests
1		I-1-A through X-00-X
0		X-0-X xxxxxxx X-00-X
0		X-0-X through X-00-X
0		X-0-X xxxxxxx X-00-X
0		X-0-X through X-00-X
0		X-0-X xxxxxxx X-00-X
0		X-0-X through X-00-X
0		X-0-X xxxxxxx X-00-X
0		X-0-X through I-59-A
10		I-10-A through I-59-A
11		I-11-A through I-59-A
12		I-12-A through I-59-A
13		I-13-A through I-59-A
14		I-14-A through I-59-A
15		I-15-A through I-59-A
16		I-16-A through I-59-A
17		I-17-A through I-59-A
18		I-18-A through I-59-A
19		I-19-A through I-59-A
20		I-20-A through I-59-A
21		I-21-A through I-59-A
22		I-22-A through I-59-A
23		I-23-A through I-59-A
24		I-24-A through I-59-A
25		I-25-A through I-59-A
26		I-26-A through I-59-A

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Distribution Date		REMIC I Regular Interests
27		I-27-A through I-59-A
28		I-28-A through I-59-A
29		I-29-A through I-59-A
30		I-30-A through I-59-A
31		I-31-A through I-59-A
32		I-32-A through I-59-A
33		I-33-A through I-59-A
34		I-34-A through I-59-A
35		I-35-A through I-59-A
36		I-36-A through I-59-A
37		I-37-A through I-59-A
38		I-38-A through I-59-A
39		I-39-A through I-59-A
40		I-40-A through I-59-A
41		I-41-A through I-59-A
42		I-42-A through I-59-A
43		I-43-A through I-59-A
44		I-44-A through I-59-A
45		I-45-A through I-59-A
46		I-46-A through I-59-A
47		I-47-A through I-59-A
48		I-48-A through I-59-A
49		I-49-A through I-59-A
50		I-50-A through I-59-A
51		I-51-A through I-59-A
52		I-52-A through I-59-A
53		I-53-A through I-59-A
54		I-54-A through I-59-A
55		I-55-A through I-59-A
56		I-56-A through I-59-A
57		I-57-A through I-59-A
58		I-58-A and I-59-A
59		I-59-A
Thereafter		$0.00

With respect to the Class SWAP-IO Interest and any Distribution Date, an amount equal to the Uncertificated Notional Amount of REMIC II Regular Interest II-LTIO.

“Underwriter’s Exemption”: An exemption listed in footnote 1 of, and amended by, Prohibited Transaction Exemption 2002-41, 67 Fed. Reg. 54487 (2002), or any successor exemption.

“Uninsured Cause”: Any cause of damage to a Mortgaged Property or related REO Property such that the complete restoration of such Mortgaged Property or related REO Property is not fully reimbursable by the hazard insurance policies required to be maintained pursuant to the Servicing Agreement, without regard to whether or not such policy is maintained.

“United States Person”: A citizen or resident of the United States, a corporation, partnership or other entity created or organized in, or under the laws of, the United States or any political subdivision thereof (except, in the case of a partnership, to the extent provided in regulations); provided that, for purposes solely of the restrictions on the transfer of any Class R Certificate, no partnership or other entity treated as a partnership for United States federal income tax purposes shall be treated as a United States Person unless all persons that own an

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interest in such partnership either directly or through any entity that is not a corporation for United States federal income tax purposes are required to be United States Persons, or an estate whose income is subject to United States federal income tax regardless of its source, or 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 the authority to control all substantial decisions of the trust. To the extent prescribed in regulations by the Secretary of the Treasury, a trust that was in existence on August 20, 1996 (other than a trust treated as owned by the grantor under subpart E of part I of subchapter J of chapter I of the Code) and that was treated as a United States person on August 20, 1996 may elect to continue to be treated as a United States person notwithstanding the previous sentence. The term “United States” shall have the meaning set forth in Section 7701 of the Code.

“Voting Rights”: The portion of the voting rights of all of the Certificates that is allocated to any such Certificate. With respect to any date of determination, 97% of all Voting Rights will be allocated among the Holders of the Class A, Class M and Class B Certificates in proportion to the then outstanding Certificate Principal Balances of their respective Certificates, 1% of all Voting Rights will be allocated among the Holders of the Class C Certificates, 1% of all Voting Rights will be allocated among the Holders of the Class P Certificates and 1% of all Voting Rights will be allocated among the Holders of the Class R Certificates. The Voting Rights allocated to each Class of Certificate shall be allocated among Holders of each such Class in accordance with their respective Percentage Interests as of the most recent Record Date.

“Xxxxx Fargo”: Xxxxx Fargo Bank, N.A., or any successor thereto.

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS;

ORIGINAL ISSUANCE OF CERTIFICATES

SECTION 2.01 Conveyance of the Mortgage Loans.

(a) The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee, on behalf of the Trust, without recourse, for the benefit of the Certificateholders, all the right, title and interest of the Depositor, including any security interest therein for the benefit of the Depositor, in and to the Mortgage Loans identified on the Mortgage Loan Schedule, the rights of the Depositor under the Mortgage Loan Purchase Agreement (including, without limitation, the right to enforce the obligations of the other parties thereto thereunder), and all other assets included or to be included in the Trust. Such assignment includes all interest and principal received by the Depositor on or with respect to the Mortgage Loans (other than payments of principal and interest due on such Mortgage Loans on or before the Cut-off Date). The Depositor herewith delivers to the Trustee an executed copy of the Mortgage Loan Purchase Agreement.

(b) In connection with such transfer and assignment, the Depositor does hereby deliver to and deposit with the Custodian, pursuant to the Custodial Agreement, the documents with respect to each Mortgage Loan as described under Section 2 of the Custodial Agreement

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(the “Mortgage Loan Documents”). In connection with such delivery and as further described in the Custodial Agreement, the Custodian will be required to review such Mortgage Loan Documents and deliver to the Trustee, the Depositor and the Seller certifications (in the forms attached to the Custodial Agreement) with respect to such review with exceptions noted thereon. In addition, under the Custodial Agreement, the Seller will be required to cure certain defects with respect to the Mortgage Loan Documents for the related Mortgage Loans after the delivery thereof by the Depositor to the Custodian, as more particularly set forth therein.

(c) Notwithstanding anything to the contrary contained herein, the parties hereto acknowledge that the functions of the Trustee with respect to the custody, acceptance, inspection and release of the Mortgage Files, including, but not limited to, certain insurance policies and documents contemplated by Section 3.10 and preparation and delivery of the certifications, shall be performed by the Custodian pursuant to the terms and conditions of the Custodial Agreement.

(d) The Trust shall have the capacity, power and authority, and the Trustee on behalf of the Trust is hereby authorized, to accept the sale, transfer, assignment, set over and conveyance by the Depositor to the Trust of all the right, title and interest of the Depositor in and to the Trust Fund (including, without limitation, the Mortgage Loans) pursuant to Section 2.01(a).

(e) The parties hereby acknowledge and agree that the execution and delivery of the Swap Agreement and the Interest Rate Cap Agreement by the Supplementnal Interest Trust Trustee, on behalf of the Trust, was authorized and is hereby ratified and confirmed. The Supplemental Interest Trust Trustee hereby acknowledges receipt of the Rate Cap Agreement and the Swap Agreement, including all schedules and confirmations thereto.

(f) The Depositor, the Seller and the Trustee agree that it is not intended that any Mortgage Loan be conveyed to the Trust that is either (i) a “High-Cost Home Loan,” as defined in the New Jersey Home Ownership Act effective November 27, 2003, (ii) a “High-Cost Home Loan,” as defined in the New Mexico Home Loan Protection Act effective January 1, 2004, (iii) a “High Cost Home Mortgage Loan,” as defined in the Massachusetts Predatory Home Loan Practices Act effective November 7, 2004, or (iv) a “High-Cost Home Loan,” as defined by the Indiana High Cost Home Loan Law effective January 1, 2005.

SECTION 2.02 Acceptance of REMIC I by Trustee.

The Trustee acknowledges receipt, subject to the provisions of Section 2.01 hereof and Section 2 of the Custodial Agreement, of the Mortgage Loan Documents and all other assets included in “REMIC I” pursuant to the Preliminary Statement and declares that it holds (or the Custodian on its behalf holds) and will hold such documents and the other documents delivered to it constituting a Mortgage Loan Document and that it holds (or the Custodian on its behalf holds) or will hold all such assets and such other assets included in the definition of “REMIC I” in trust for the exclusive use and benefit of all present and future Certificateholders.

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SECTION 2.03 Repurchase or Substitution of Mortgage Loans.

(a) Upon discovery or receipt of notice of any materially defective document in, or that a document is missing from, a Mortgage File or of a breach by the Seller of any representation, warranty or covenant under the Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that materially and adversely affects the value of such Mortgage Loan or the interest therein of the Certificateholders, the Trustee shall promptly notify the Seller of such defect, missing document or breach and request that the Seller deliver such missing document or cure such defect or breach within 60 days from the date that the Seller was notified of such missing document, defect or breach, and if the Seller does not deliver such missing document or cure such defect or breach in all material respects during such period, the Trustee shall enforce the obligations of the Seller under the Mortgage Loan Purchase Agreement to repurchase such Mortgage Loan from the Trust Fund, at the Purchase Price, within 90 days after the date on which the Seller was notified of such missing document, defect or breach, if and to the extent that the Seller is obligated to do so under the Mortgage Loan Purchase Agreement. The Purchase Price for the repurchased Mortgage Loan shall be remitted to the Master Servicer for deposit in the Distribution Account, and the Trustee, upon receipt of written certification from the Master Servicer of such deposit, shall release or cause the Custodian (upon receipt of a request for release in the form attached to the Custodial Agreement) to release to the Seller the related Mortgage File, and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as the Seller shall furnish to it and as shall be necessary to vest in the Seller any Mortgage Loan released pursuant hereto, and the Trustee shall not have any further responsibility with regard to such Mortgage File. In lieu of repurchasing any such Mortgage Loan as provided above, if so provided in the Mortgage Loan Purchase Agreement, the Seller may cause such Mortgage Loan to be removed from the Trust Fund (in which case it shall become a Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans in the manner and subject to the limitations set forth in Section 2.03(b). It is understood and agreed that the obligation of the Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as to which a document is missing, a material defect in a constituent document exists or as to which such a breach has occurred and is continuing shall constitute the sole remedy respecting such omission, defect or breach available to the Trustee and the Certificateholders.

(b) Any substitution of Qualified Substitute Mortgage Loans for Deleted Mortgage Loans made pursuant to Section 2.03(a) or 2.03(c) must be effected prior to the date that is two years after the Startup Day for REMIC I.

As to any Deleted Mortgage Loan for which the Seller substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution shall be effected by the Seller delivering to the Trustee or the Custodian on behalf of the Trustee, for such Qualified Substitute Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee and such other documents and agreements, with all necessary endorsements thereon, as are required by Section 2 of the Custodial Agreement, as applicable, together with an Officers’ Certificate providing that each such Qualified Substitute Mortgage Loan satisfies the definition thereof and specifying the Substitution Shortfall Amount (as described below), if any, in connection with such substitution. The Custodian on behalf of the Trustee shall acknowledge receipt of such Qualified Substitute

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Mortgage Loan or Loans and, within ten Business Days thereafter, review such documents and deliver to the Depositor and the Trustee, with respect to such Qualified Substitute Mortgage Loan or Loans, an Initial Certification (pursuant to and as defined in the Custodial Agreement), with any applicable exceptions noted thereon. Within one year of the date of substitution, the Custodian, on behalf of the Trustee, shall deliver to the Depositor and the Trustee a final certification pursuant to the Custodial Agreement with respect to such Qualified Substitute Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the month of substitution are not part of REMIC I and will be retained by the Seller. For the month of substitution, distributions to Certificateholders will reflect the Monthly Payment due on such Deleted Mortgage Loan on or before the Due Date in the month of substitution, and the Seller shall thereafter be entitled to retain all amounts subsequently received in respect of such Deleted Mortgage Loan. The Depositor shall give or cause to be given written notice to the Certificateholders that such substitution has taken place, shall amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of this Agreement and the substitution of the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of such amended Mortgage Loan Schedule to the Trustee. Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall constitute part of the Trust Fund and shall be subject in all respects to the terms of this Agreement and the Mortgage Loan Purchase Agreement including all applicable representations and warranties thereof included herein or in the Mortgage Loan Purchase Agreement.

For any month in which the Seller substitutes one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will determine the amount (the “Substitution Shortfall Amount”), if any, by which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds the aggregate of, as to each such Qualified Substitute Mortgage Loan, the Stated Principal Balance thereof as of the date of substitution, together with one month’s interest on such Stated Principal Balance at the applicable Net Mortgage Rate, plus all outstanding P&I Advances and Servicing Advances (including Nonrecoverable P&I Advances and Nonrecoverable Servicing Advances) related thereto. On the date of such substitution, the Seller will deliver or cause to be delivered to the Master Servicer for deposit in the Collection Account an amount equal to the Substitution Shortfall Amount, if any, and the Trustee or the Custodian on behalf of the Trustee, upon receipt of the related Qualified Substitute Mortgage Loan or Loans, upon receipt of a request for release in the form attached to the Custodial Agreement and certification by the Master Servicer of such deposit, shall release to the Seller the related Mortgage File or Files and the Trustee shall execute and deliver such instruments of transfer or assignment, in each case without recourse, representation or warranty, as the Seller shall deliver to it and as shall be necessary to vest therein any Deleted Mortgage Loan released pursuant hereto.

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

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(c) Upon discovery by the Depositor, the Seller, the Trustee, the Master Servicer, the Servicer, the Subservicer or the Securities Administrator that any Mortgage Loan does not constitute a “qualified mortgage” within the meaning of Section 860G(a)(3) of the Code, the party discovering such fact shall within two Business Days give written notice thereof to the other parties. In connection therewith, the Seller shall repurchase or substitute one or more Qualified Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the earlier of discovery or receipt of such notice with respect to such affected Mortgage Loan. Such repurchase or substitution shall be made by (i) the Seller if the affected Mortgage Loan’s status as a non-qualified mortgage is or results from a breach of any representation, warranty or covenant made by the Seller under the Mortgage Loan Purchase Agreement or (ii) the Depositor, if the affected Mortgage Loan’s status as a non-qualified mortgage is a breach of no representation or warranty. Any such repurchase or substitution shall be made in the same manner as set forth in Section 2.03(a). The Trustee shall reconvey to the Seller the Mortgage Loan to be released pursuant hereto in the same manner, and on the same terms and conditions, as it would a Mortgage Loan repurchased for breach of a representation or warranty.

(d) With respect to a breach of the representations made pursuant to clauses (xxxiii) through (li) of Section 3.1(b) of the Mortgage Loan Purchase Agreement, the Seller shall be required to take the actions set forth in this Section 2.03.

SECTION 2.04 Representations and Warranties of the Master Servicer.

The Master Servicer hereby represents, warrants and covenants to the other parties hereto that:

(a) The Master Servicer is a national banking association, duly formed, validly existing and in good standing under the laws of the United States of America and is duly authorized and qualified to transact any and all business contemplated by this Agreement to be conducted by the Master Servicer;

(b) The Master Servicer has the full power and authority to conduct its business as presently conducted by it and to execute, deliver and perform, and to enter into and consummate, all transactions contemplated by this Agreement. The Master Servicer has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement, and this Agreement, assuming due authorization, execution and delivery by the other parties hereto, constitutes a legal, valid and binding obligation of the Master Servicer, enforceable against it in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity;

(c) The execution and delivery of this Agreement by the Master Servicer, the consummation by the Master Servicer of any other of the transactions herein contemplated, and the fulfillment of or compliance with the terms hereof are in the ordinary course of business of

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the Master Servicer and will not (i) result in a breach of any term or provision of charter and by-laws of the Master Servicer or (ii) conflict with, result in a material breach, violation or acceleration of, or result in a default under, the terms of any other material agreement or instrument to which the Master Servicer is a party or by which it may be bound, or any statute, order or regulation applicable to the Master Servicer of any court, regulatory body, administrative agency or governmental body having jurisdiction over the Master Servicer; and the Master Servicer is not a party to, bound by, or in breach or violation of any indenture or other agreement or instrument, or subject to or in violation of any statute, order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over it, which materially and adversely affects or, to the Master Servicer’s knowledge, would in the future materially and adversely affect, (A) the ability of the Master Servicer to perform its obligations under this Agreement or (B) the business, operations, financial condition, properties or assets of the Master Servicer taken as a whole;

(d) The Master Servicer does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant made by it and contained in this Agreement;

(e) No litigation is pending against the Master Servicer that would materially and adversely affect the execution, delivery or enforceability of this Agreement or the ability of the Master Servicer to perform any of its other obligations hereunder in accordance with the terms hereof;

(f) There are no actions or proceedings against, or investigations known to it of, the Master Servicer before any court, administrative or other tribunal (i) that might prohibit its entering into this Agreement, (ii) seeking to prevent the consummation of the transactions contemplated by this Agreement or (iii) that might prohibit or materially and adversely affect the performance by the Master Servicer of its obligations under, or validity or enforceability of, this Agreement; and

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

SECTION 2.05 Representations and Warranties of the Depositor.

The Depositor hereby represents and warrants to the other parties hereto that:

(a) The Depositor (i) is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and (ii) is qualified and in good standing as a foreign corporation to do business in each jurisdiction where such qualification is necessary, except where the failure so to qualify would not reasonably be expected to have a material adverse effect on the Depositor’s business as presently conducted or on the Depositor’s ability to enter into this Agreement and to consummate the transactions contemplated hereby;

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

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

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

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

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

(g) Immediately prior to the transfer and assignment to the Trust, each Mortgage Note and each Mortgage were not subject to an assignment or pledge, and the Depositor had good and marketable title to and was the sole owner thereof and had full right to transfer and sell such Mortgage Loan to the Trust free and clear of any encumbrance, equity, lien, pledge, charge, claim or security interest.

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SECTION 2.06 Representations and Warranties of the Servicer.

The Servicer hereby represents and warrants to the other parties hereto:

(a) The Servicer is a corporation validly existing and in good standing under the laws of the State of Delaware and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by the Servicer, and in any event the Servicer is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of the Mortgage Loan and the servicing of such Mortgage Loan in accordance with the terms of this Agreement; the Servicer has the full corporate power and authority to execute and deliver this Agreement and to perform in accordance herewith; the execution, delivery and performance of this Agreement by the Servicer and the consummation of the transactions contemplated hereby have been duly and validly authorized; this Agreement evidences the valid, binding and enforceable obligation of the Servicer; and all requisite corporate action has been taken by the Servicer to make this Agreement valid and binding upon the Servicer in accordance with its terms;

(b) The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Servicer, who is in the business of servicing subprime mortgage loans;

(c) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Servicer, threatened against the Servicer which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Servicer, or in any material impairment of the right or ability of the Servicer to carry on its business substantially as now conducted, or in any material liability on the part of the Servicer, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be contemplated herein, or which would be likely to impair materially the ability of the Servicer to perform under the terms of this Agreement;

(d) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Servicer of or compliance by the Servicer with this Agreement, or if required, such approval has been obtained prior to the date hereof.;

(e) The Servicer is an approved seller/servicer of conventional residential mortgage loans for Xxxxxx Xxx or an approved servicer of conventional mortgage loans for Xxxxxxx Mac, with the facilities, procedures, and experienced personnel necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. The Servicer is in good standing to service mortgage loans for Xxxxxx Xxx or Xxxxxxx Mac, and no event has occurred, including but not limited to a change in insurance coverage, which would make the Servicer unable to service the Mortgage Loans in accordance with this Agreement;the execution and delivery by the Servicer of this Agreement have been duly authorized by all necessary corporate action on the part of the Servicer; and neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof, will conflict with or result in a breach of, or constitute a default under, any of the provisions of any law, governmental rule, regulation, judgment, decree or order binding on the

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Servicer or its properties or the articles of incorporation or by-laws of the Servicer, except those conflicts, breaches or defaults that would not reasonably be expected to have a material adverse effect on the Servicer’s ability to enter into this Agreement and to consummate the transactions contemplated hereby.

SECTION 2.07 Representations and Warranties of the Subservicer.

The Subservicer hereby represents and warrants to the other parties:

(a) The Subservicer is a corporation validly existing and in good standing under the laws of the State of Wyoming and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by the Subservicer, and in any event the Subservicer is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of the Mortgage Loan and the servicing of such Mortgage Loan in accordance with the terms of this Agreement; the Subservicer has the full corporate power and authority to execute and deliver this Agreement and to perform in accordance herewith; the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by the Subservicer and the consummation of the transactions contemplated hereby have been duly and validly authorized; this Agreement evidences the valid, binding and enforceable obligation of the Subservicer; and all requisite corporate action has been taken by the Subservicer to make this Agreement valid and binding upon the Subservicer in accordance with its terms;

(b) The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Subservicer, who is in the business of servicing subprime mortgage loans;

(c) There is no action, suit, proceeding or investigation pending or, to the best knowledge of the Subservicer, threatened against the Subservicer which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Subservicer, or in any material impairment of the right or ability of the Subservicer to carry on its business substantially as now conducted, or in any material liability on the part of the Subservicer, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be contemplated herein, or which would be likely to impair materially the ability of the Subservicer to perform under the terms of this Agreement;

(d) No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Subservicer of or compliance by the Subservicer with this Agreement, or if required, such approval has been obtained prior to the date hereof;

(e) The Subservicer is an approved seller/servicer of conventional residential mortgage loans for Xxxxxx Mae or an approved servicer of conventional mortgage loans for

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Xxxxxxx Mac, with the facilities, procedures, and experienced personnel necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. The Subservicer is in good standing to service mortgage loans for Xxxxxx Mae or Xxxxxxx Mac, and no event has occurred, including but not limited to a change in insurance coverage, which would make the Subservicer unable to service the Mortgage Loans in accordance with this Agreement.

SECTION 2.08 [Reserved].

SECTION 2.09 Conveyance of the REMIC Regular Interests; Acceptance of REMICs by the Trustee.

The Depositor, concurrently with the execution and delivery hereof, does hereby transfer, assign, set over and otherwise convey to the Trustee, without recourse all the right, title and interest of the Depositor in and to the Regular Interests in the Trust REMICs (other than the Certificates) for the benefit of the Certificateholders. The Trustee acknowledges receipt of such Regular Interests and declares that it holds and will hold the same in trust for the exclusive use and benefit of all present and future Certificateholders.

SECTION 2.10 Establishment of the Trust.

The Depositor does hereby establish, pursuant to the further provisions of this Agreement and the laws of the State of New York, an express trust to be known, for convenience, as “People’s Financial Realty Mortgage Securities Trust, Series 2006-1” and does hereby appoint HSBC Bank, USA, National Association, as Trustee in accordance with the provisions of this Agreement.

ARTICLE III

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

SECTION 3.01 Master Servicer.

The Master Servicer shall supervise, monitor and oversee the obligations of the Servicer to service and administer the Mortgage Loans in accordance with the terms of the Servicing Agreement and shall have full power and authority to do any and all things that it may deem necessary or desirable in connection with such master servicing and administration. In performing its obligations hereunder, the Master Servicer shall act in a manner consistent with Accepted Master Servicing Practices. Furthermore, the Master Servicer shall oversee and consult with the Servicer and the Subservicer as necessary from time to time to carry out the Master Servicer’s obligations hereunder, shall receive, review and evaluate all reports, information and other data provided to the Master Servicer by the Servicer or the Subservicer and shall cause the Servicer and the Subservicer to perform and observe the covenants, obligations and conditions to be performed or observed by the Servicer and the Subservicer under the Servicing Agreement. The Master Servicer shall independently and separately monitor the Servicer’s and the Subservicer’s servicing activities with respect to the Mortgage Loans, reconcile the results of such monitoring with such information provided in the previous sentence

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on a monthly basis and coordinate corrective adjustments to the Servicer’s, the Subservicer’s and Master Servicer’s records, and based on such reconciled and corrected information, the Master Servicer shall provide such information to the Securities Administrator as shall be necessary in order for it to prepare the statements specified in Section 5.02 hereof, and prepare any other information and statements required to be forwarded by the Master Servicer hereunder. The Master Servicer shall reconcile the results of its Mortgage Loan monitoring with the actual remittances of the Servicer or the Subservicer pursuant to the Servicing Agreement.

The Trustee shall furnish the Servicer, the Subservicer and the Master Servicer with any powers of attorney and other documents in form reasonably acceptable to it necessary or appropriate to enable the Servicer, the Subservicer and the Master Servicer to service and administer the related Mortgage Loans and REO Property. The Trustee shall not be liable for the Servicer’s, the Subservicer’s or the Master Servicer’s use or misuse of such powers of attorney.

Upon reasonable prior written request and during normal business hours at the office of the Trustee, the Trustee shall provide the Certificateholders with access to the records and documentation in possession of the Trustee regarding the related Mortgage Loans and REO Property and the servicing thereof. The Trustee shall allow representatives of these entities to photocopy any of the records and documentation and shall provide equipment for that purpose at a charge that covers the Trustee’s actual costs.

The Trustee shall execute and deliver to the Servicer, the Subservicer or the Master Servicer, as applicable, based on the requesting party, any court pleadings, requests for trustee’s sale or other documents necessary or reasonably desirable to (a) the foreclosure or trustee’s sale with respect to a Mortgaged Property; (b) any legal action brought to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage; (c) obtain a deficiency judgment against the Mortgagor; and (d) enforce any other rights or remedies provided by the Mortgage Note or Mortgage or otherwise available at law or equity.

All references to the Servicer herein shall be deemed to refer equally to the Subservicer, for so long as, and to the extent that, the Subservicer is performing the duties of the Servicer pursuant to the Subservicing Agreement.

SECTION 3.02 Master Servicer Oversight of Specified Subservicer Actions.

As long as the Subservicer is performing the primary servicing of the Mortgage Loans pursuant to the Subservicing Agreement, the Master Servicer shall oversee the following Subservicer actions and decisions as described below, and the Subservicer shall request Master Servicer approval of such decisions as described below:

(a) Loss mitigation:

(i) Review and approve all repayment and/or forbearance plans involving terms of greater than six months;

(ii) Approval of short sales; and

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(iii) Approval of deed in lieu decisions;

(b) Approval of all REO listing values;

(d) Approval of foreclosure timeline, if the Subservicer proposes a timeline different from the timeline required by Xxxxxx Xxx, except that approval need not be obtained for re-projections due to legal matters that arise in the course of foreclosure (e.g., county delays in setting sale dates, proof of service of process, contested matters, title claims, legal issues such as temporary restraining orders and bankruptcy filings);

(e) Approval of settlements pursued in the context of a contested judicial foreclosures;

(f) Review and recalculation of net realized losses on Mortgage Loans, including review of supporting documentation supplied by the Subservicer; and

(g) Oversight of filing of hazard insurance claims for amounts greater than $10,000.

The Subservicer shall request the Master Servicer’s approval of any decision concerning the foregoing matters, by delivering to the Master Servicer a written or electronic notice stating the Subservicer’s proposed action (“Subservicer Request”). The Subservicer shall supplement any Subservicer Request with additional related information reasonably requested by the Master Servicer. If the Master Servicer does not approve, reject or modify a proposal made by the Subservicer within two Business Days after its receipt of a Subservicer Request, the Subservicer shall submit an electronic “Escalation Notice” (a notice sent to three Master Servicing Officers in the Master Servicer’s servicing operations). After the Master Servicer has received the Escalation Notice, if the Master Servicer does not respond within three Business Days, then the Subservicer Request shall be deemed approved. The Master Servicer shall be deemed to have received any notice under this Section 3.02 if the Subservicer has e-mailed that notice to a Master Servicing Officer (or the three designated Master Servicing Officers, for an Escalation Notice) of the Master Servicer and the sending computer confirms delivery of the e-mail. Such receipt shall be deemed to have occurred on the following Business Day if it is received after 4:00 PM Eastern Time on a Business Day. By the Closing Date, and from time to time afterwards, the Master Servicer shall designate, by written notice to the attention of Subservicer’s “Servicing Manager,” the three Master Servicing Officers to whom the Escalation Notice should be sent and their facsimile numbers and e-mail addresses.

SECTION 3.03 REMIC-Related Covenants.

For as long as each REMIC shall exist, the Trustee and the Securities Administrator shall act in accordance herewith to treat such REMIC as a REMIC, and the Trustee and the Securities Administrator shall comply with any directions of the Seller, the Servicer or the Master Servicer to assure such continuing treatment. In particular, neither the

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Trustee nor the Securities Administrator shall (a) sell or permit the sale of all or any portion of the Mortgage Loans or of any investment of deposits in an Account unless such sale is as a result of a repurchase of the Mortgage Loans pursuant to this Agreement or the Trustee and Securities Administrator have received a REMIC Opinion prepared at the expense of the Trust Fund; and (b) other than with respect to a substitution pursuant to the Mortgage Loan Purchase Agreements or Section 2.03 of this Agreement, as applicable, accept any contribution to any REMIC after the Startup Day without receipt of a Opinion of Counsel stating that such contribution will not result in an Adverse REMIC Event as defined in Section 11.01(f).

SECTION 3.04 Monitoring of Servicer.

(a) The Master Servicer shall be responsible for reporting to the Trustee and the Depositor any non-compliance by the Servicer with its duties, itself or undertaken through the Subservicer under the Servicing Agreement. In the review of the Servicer’s and the Subservicer’s activities, the Master Servicer may rely upon an officer’s certificate of the Servicer (or similar document signed by an officer of the Servicer) with regard to the Servicer’s or the Subservicer’s compliance with the terms of the Servicing Agreement. In the event that the Master Servicer, in its judgment, determines that the Servicer should be terminated in accordance with the Servicing Agreement or that a notice should be sent pursuant to the Servicing Agreement with respect to the occurrence of an event that, unless cured, would constitute grounds for such termination, the Master Servicer shall notify the Depositor and the Trustee thereof, and the Master Servicer shall issue such notice or take such other action as it deems appropriate.

(b) The Master Servicer, for the benefit of the Trustee and the Certificateholders, shall enforce the obligations of the Servicer under the Servicing Agreement, and in the event that the Servicer fails to perform its obligations, itself or through the Subservicer, in accordance with the Servicing Agreement, subject to the preceding paragraph, shall terminate the rights and obligations of the Servicer thereunder and act as servicer of the related Mortgage Loans or cause the Trustee to enter into a new Servicing Agreement with a successor servicer selected by the Master Servicer; provided, however, that it is understood and acknowledged by the parties hereto that there will be a period of transition (not to exceed 90 days) before the actual servicing functions can be fully transferred to such successor servicer, if the primary servicing is being transferred. Such enforcement, including, without limitation, the legal prosecution of claims, termination of the Servicing Agreement and the pursuit of other appropriate remedies, shall be in such form and carried out to such an extent and at such time as the Master Servicer, in its good-faith business judgment, would require were it the owner of the related Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at its own expense; provided that the Master Servicer shall not be required to prosecute or defend any legal action except to the extent that the Master Servicer shall have received reasonable indemnity for its costs and expenses in pursuing such action.

(c) To the extent that the costs and expenses of the Master Servicer related to any termination of the Servicer, appointment of a successor servicer or the transfer and assumption of servicing by the Master Servicer with respect to the Servicing Agreement (including, without limitation, (i) all out-of-pocket legal costs and expenses and all due diligence costs and expenses

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associated with an evaluation of the potential termination of the Servicer as a result of an event of default by the Servicer and (ii) all costs and expenses associated with the complete transfer of servicing, including all servicing files and all servicing data and the completion, correction or manipulation of such servicing data as may be required by the successor servicer to correct any errors or insufficiencies in the servicing data or otherwise to enable the successor servicer to service the Mortgage Loans in accordance with the Servicing Agreement) are not fully and timely reimbursed by the terminated Servicer or the Subservicer, the Master Servicer shall be entitled to reimbursement of such costs and expenses from the Distribution Account pursuant to Section 4.05 of this Agreement.

(d) The Master Servicer shall require the Servicer to comply, itself or through the Subservicer, with the remittance requirements and other obligations set forth in the Servicing Agreement.

(e) If the Master Servicer acts as Servicer, it will not assume liability for the representations and warranties of the servicer, if any, that it replaces.

(f) The Subservicer may not be terminated except pursuant to the terms of the Subservicing Agreement. A successor servicer shall assume the role of the Servicer under the Subservicing Agreement, as well as under the Servicing Agreement.

SECTION 3.05 Power to Act; Procedures.

The Master Servicer shall master service the Mortgage Loans and shall have full power and authority, subject to the REMIC Provisions and the provisions of Article XI, to do any and all things that it may deem necessary or desirable in connection with the master servicing and administration of the Mortgage Loans, including but not limited to the power and authority (a) to execute and deliver, on behalf of the Certificateholders and the Trustee, customary consents or waivers and other instruments and documents, (b) to consent to transfers of any Mortgaged Property and assumptions of the Mortgage Notes and related Mortgages, (c) to collect any Insurance Proceeds and Liquidation Proceeds and (d) to effectuate foreclosure or other conversion of the ownership of the Mortgaged Property securing any Mortgage Loan, in each case, in accordance with the provisions of this Agreement and the Servicing Agreement, as applicable; provided, however, that the Master Servicer shall not (and, consistent with its responsibilities under Section 3.02 and Section 3.04, shall not permit the Servicer or the Subservicer to) knowingly or intentionally take any action or fail to take (or fail to cause to be taken) any action reasonably within its control and the scope of duties more specifically set forth herein, that, under the REMIC Provisions, if taken or not taken, as the case may be, would cause any REMIC to fail to qualify as a REMIC or result in the imposition of a tax upon the Trust Fund (including but not limited to the tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the Code) unless the Master Servicer has received an Opinion of Counsel (but not at the expense of the Master Servicer) to the effect that the contemplated action will not would cause any REMIC to fail to qualify as a REMIC or result in the imposition of a tax upon any REMIC, as the case may be. The Trustee shall furnish the Master Servicer, upon written request from a Master Servicing Officer, with any powers of attorney prepared and delivered to it and reasonably acceptable to it

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by empowering the Master Servicer or the Servicer or Subservicer to execute and deliver instruments of satisfaction or cancellation, or of partial or full release or discharge, and to foreclose upon or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in any court action relating to the Mortgage Loans or the Mortgaged Property, in accordance with the Servicing Agreement and this Agreement, and the Trustee shall execute and deliver such other documents prepared and delivered to it and reasonably acceptable to it, as the Master Servicer may request to enable the Master Servicer to master service and administer the Mortgage Loans and carry out its duties hereunder, in each case in accordance with Accepted Master Servicing Practices, and the Trustee shall have no liability for misuse of any such powers of attorney by the Master Servicer or the Servicer or Subservicer and shall be indemnified by the Master Servicer or the Servicer or Subservicer, as applicable, for any cost, liability or expense incurred by the Trustee in connection with such Person’s use or misuse of any such power of attorney. If the Master Servicer or the Trustee has been advised that it is likely that the laws of the state in which action is to be taken prohibit such action if taken in the name of the Trustee or that the Trustee would be adversely affected under the “doing business” or tax laws of such state if such action is taken in its name, the Master Servicer shall join with the Trustee in the appointment of a co-trustee pursuant to Section 9.10. In the performance of its duties hereunder, the Master Servicer shall be an independent contractor and shall not, except in those instances where it is taking action in the name of the Trustee, be deemed to be the agent of the Trustee.

SECTION 3.06 Fidelity Bond.

The Master Servicer, at its expense, shall maintain in effect a blanket fidelity bond and an errors and omissions insurance policy, affording coverage with respect to all directors, officers, employees and other Persons acting on such Master Servicer’s behalf and covering errors and omissions in the performance of the Master Servicer’s obligations hereunder. The errors and omissions insurance policy and the fidelity bond shall be in such form and amount generally acceptable for entities serving as master servicers or trustees.

SECTION 3.07 Due-on-Sale Clauses; Assumption Agreements.

To the extent provided in the Servicing Agreement, to the extent Mortgage Loans contain enforceable due-on-sale clauses, the Master Servicer shall cause the Servicer or the Subservicer to enforce such clauses in accordance with the Servicing Agreement. If applicable law prohibits the enforcement of a due-on-sale clause or such clause is otherwise not enforced in accordance with the Servicing Agreement and, as a consequence, a Mortgage Loan is assumed, the original Mortgagor may be released from liability in accordance with the Servicing Agreement.

SECTION 3.08 Release of Mortgage Files.

(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon the receipt by the Servicer or the Subservicer of a notification that payment in full has been escrowed in a manner customary for such purposes for payment to Certificateholders on the next Distribution Date, the Servicer or the Subservicer will, if required under the Servicing Agreement, promptly furnish to the Trustee two copies of a certification substantially in the form

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of Exhibit D to the Servicing Agreement, signed by a Servicing Officer, or in a mutually agreeable electronic format that will, in lieu of a signature on its face, originate from a Servicing Officer (which certification shall include a statement to the effect that all amounts received in connection with such payment that are required to be deposited in the Custodial Account maintained by the Servicer or the Subservicer pursuant to the Servicing Agreement have been so deposited) and shall request that the Trustee deliver or cause the Custodian to deliver to the Servicer or the Subservicer the related Mortgage File. Upon receipt of such certification and request, the Trustee shall promptly release or cause the Custodian to release the related Mortgage File to the Servicer or the Subservicer and the Trustee shall have no further responsibility with regard to such Mortgage File. Upon any such payment in full, the Servicer or the Subservicer, as the case may be, is authorized to give, as agent for the Trustee, as the mortgagee under the related Mortgage, an instrument of satisfaction (or Assignment without recourse) regarding the related Mortgaged Property, which instrument of satisfaction or assignment, as the case may be, shall be delivered to the Person or Persons entitled thereto against receipt therefor of such payment, it being understood and agreed that no expenses incurred in connection with such instrument of satisfaction or assignment, as the case may be, shall be chargeable to the Custodial Account.

(b) From time to time and as appropriate for the servicing or foreclosure of any Mortgage Loan and in accordance with the Servicing Agreement, the Trustee shall execute such documents as shall be prepared and furnished to the Trustee by the Subservicer, the Servicer or the Master Servicer (in form reasonably acceptable to the Trustee) and as are necessary to the prosecution of any such proceedings. The Trustee shall, upon the request of the Subservicer, the Servicer or the Master Servicer and delivery to the Trustee of two copies of a request for release signed by a Servicing Officer or Master Servicing Officer, as applicable, substantially in the form of Exhibit D to the Servicing Agreement (or in a mutually agreeable electronic format that will, in lieu of a signature on its face, originate from a Servicing Officer or Master Servicing Officer, as applicable), release or cause the Custodian to release the related Mortgage File held in its or the Custodian’s possession or control to the Subservicer, the Servicer or the Master Servicer, as applicable. The Subservicer, the Servicer or the Master Servicer shall be obligated to return the Mortgage File to the Trustee or the Custodian when the need therefor by the Subservicer, the Servicer or the Master Servicer, as it reasonably determines, no longer exists, unless (i) the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been deposited into the Custodial Account, in which case, upon receipt of a certificate of a Servicing Officer or Master Servicing Officer, as applicable, similar to that hereinabove specified, the Mortgage File shall be released by the Trustee or the Custodian to the Subservicer, the Servicer or the Master Servicer, or (ii) such documents have been delivered to an attorney, or to a public trustee or other public official as required by law, for purposes of initiating or pursuing legal action or other proceedings for the foreclosure of the Mortgaged Property either judicially or non-judicially, and the Servicer or the Subservicer has delivered to the Custodian a certificate of a Servicing Officer or Master Servicing Officer, as applicable, certifying as to the name and address of the Person to whom such documents were delivered and the purpose or purposes of such delivery.

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SECTION 3.09 Documents, Records and Funds in Possession of Master Servicer To Be Held for Trustee.

(a) The Master Servicer shall transmit and the Servicer and the Subservicer (to the extent required by the Servicing Agreement) shall transmit to the Trustee such documents and instruments coming into the possession of the Master Servicer or the Servicer or the Subservicer from time to time as are required by the terms hereof, or in the case of the Servicer or the Subservicer, the Servicing Agreement, to be delivered to the Trustee. Any funds received by the Master Servicer, the Servicer or the Subservicer in respect of any Mortgage Loan or that otherwise are collected by the Master Servicer, the Servicer or the Subservicer as Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan shall be held for the benefit of the Trustee subject to the Master Servicer’s right to retain or withdraw from the Distribution Account the Master Servicer Compensation and other amounts provided in this Agreement, the right of the Servicer to receive its Servicing Fee net of the Subservicing Fee, and the right of the Subservicer to retain or withdraw its Subservicing Fee and the rights of the Servicer and the Subservicer to retain or withdraw from the Custodial Account other amounts as provided in the Servicing Agreement. The Master Servicer, the Servicer and the Subservicer shall provide access to information and documentation regarding the Mortgage Loans to the Trust, the Trustee, and their respective agents and accountants at any time upon reasonable request and during normal business hours, and to Certificateholders that are savings and loan associations, banks or insurance companies, the Office of Thrift Supervision, the FDIC and the supervisory agents and examiners of such Office and Corporation or examiners of any other federal or state banking or insurance regulatory authority if so required by applicable regulations of the Office of Thrift Supervision or other regulatory authority, such access to be afforded without charge but only upon reasonable request in writing and during normal business hours at the offices of the Master Servicer, the Servicer or the Subservicer, as the case may be, designated by such Person. In fulfilling such a request, none of the Master Servicer, the Servicer or the Subservicer shall be responsible for determining the sufficiency of such information.

(b) All Mortgage Files and funds collected, held by, or under the control of the Master Servicer, in respect of any Mortgage Loans, whether from the collection of principal and interest payments or from Liquidation Proceeds or Insurance Proceeds, shall be held by the Master Servicer for and on behalf of the Trustee and the Certificateholders; provided, however, that the Master Servicer, the Servicer and the Subservicer shall be entitled to setoff against, and deduct from, any such funds any amounts that are properly due and payable to the Master Servicer, the Servicer or the Subservicer under this Agreement or the Servicing Agreement.

SECTION 3.10 Standard Hazard Insurance and Flood Insurance Policies.

(a) For each Mortgage Loan, the Master Servicer shall enforce any obligation of the Servicer under the Servicing Agreement to maintain or cause to be maintained standard fire and casualty insurance and, where applicable, flood insurance, all in accordance with the provisions of the Servicing Agreement. It is understood and agreed that such insurance shall be issued by insurers meeting the eligibility requirements set forth in the Servicing Agreement and that no earthquake or other additional insurance is to be required of any Mortgagor or to be maintained on property acquired in respect of a defaulted loan, other than pursuant to such applicable laws and regulations as shall at any time be in force and as shall require such additional insurance.

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(b) Any amounts collected by the Master Servicer, or remitted to the Master Servicer by the Servicer or the Subservicer after collection, under any insurance policies (other than amounts to be applied to the restoration or repair of the property subject to the related Mortgage or released to the Mortgagor in accordance with the Servicing Agreement) shall be deposited into the Distribution Account, subject to withdrawal pursuant to this Agreement. Any cost incurred by the Master Servicer in maintaining any such insurance, if the Mortgagor defaults in its obligation to do so, shall be added to the amount owing under the Mortgage Loan where the terms of the Mortgage Loan so permit; provided, however, that the addition of any such cost shall not be taken into account for purposes of calculating the distributions to be made to Certificateholders and shall be recoverable by the Master Servicer pursuant to this Agreement.

SECTION 3.11 Presentment of Claims and Collection of Proceeds.

The Master Servicer shall cause the Servicer or the Subservicer (to the extent required under the Servicing Agreement) to prepare and present on behalf of the Trustee and the Certificateholders all claims under any insurance policies with respect to the Mortgage Loans and take such actions (including the negotiation, settlement, compromise or enforcement of the insured’s claim) as shall be necessary to realize recovery under such policies. Any proceeds disbursed to the Master Servicer (or disbursed to the Servicer or the Subservicer and remitted to the Master Servicer) in respect of such policies, bonds or contracts shall be promptly deposited in the Distribution Account upon receipt, except that any amounts realized that are to be applied to the repair or restoration of the related Mortgaged Property as a condition precedent to the presentation of claims on the related Mortgage Loan to the insurer under any applicable insurance policy need not be so deposited (or remitted).

SECTION 3.12 [Reserved].

SECTION 3.13 Trustee to Retain Possession of Certain Insurance Policies and Documents.

The Trustee shall retain or shall cause the Custodian to retain possession and custody of the originals (to the extent available) of any Primary Mortgage Insurance Policies or certificate of insurance, if applicable, and any certificates of renewal as to the foregoing as may be issued from time to time as contemplated by this Agreement. Until all amounts distributable in respect of the Certificates have been distributed in full, the Trustee shall also retain, or shall cause the Custodian to retain, possession and custody of each Mortgage File in accordance with and subject to the terms and conditions of this Agreement. The Master Servicer shall promptly deliver or cause to be delivered to the Trustee (or the Custodian, on behalf of the Trustee) upon the execution or receipt thereof the originals of any Primary Mortgage Insurance Policies, any certificates of renewal and such other documents or instruments that constitute portions of the Mortgage File that come into the possession of the Master Servicer from time to time.

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SECTION 3.14 Realization Upon Defaulted Mortgage Loans.

For each Mortgage Loan that comes into and continues in default and as to which no satisfactory arrangements can be made for collection of delinquent payments, the Master Servicer shall cause the Servicer or the Subservicer (to the extent required under the Servicing Agreement) to either (a) foreclose upon, repossess or otherwise comparably convert the ownership of Mortgaged Properties securing such Mortgage Loans, all in accordance with the Servicing Agreement or (b) as an alternative to foreclosure, sell such defaulted Mortgage Loans at fair market value to third parties, if the Servicer or the Subservicer reasonably believes that such sale would maximize proceeds to the Trust Fund (on a present value basis) with respect to those Mortgage Loans. The Servicer or the Subservicer shall be responsible for all costs and expenses incurred by it in any such proceedings or sale; provided, however, that such costs and expenses will be recoverable as Servicing Advances by the Servicer or the Subservicer as contemplated in Section 4.05(a)(ii) of this Agreement.

SECTION 3.15 Compensation for the Master Servicer.

On each Distribution Date, the Master Servicer will be entitled to the income and gain realized from any investment of funds in the Collection Account and the Distribution Account, pursuant to Article 4.04(d), for the performance of its activities hereunder (the “Master Servicer Compensation”).

SECTION 3.16 REO Property.

(a) In the event the Trust Fund acquires ownership of any REO Property in respect of any related Mortgage Loan, the deed or certificate of sale shall be issued to the Trustee, or to its nominee, on behalf of the related Certificateholders. The Servicer or Subservicer, as the case may be, shall sell any REO Property as expeditiously as possible and in accordance with the provisions of this Agreement and the Servicing Agreement. Further, the Servicer or Subservicer, as the case may be, shall sell, any REO Property prior to three years after the end of the calendar year of its acquisition by the Trust, unless (i) the Trustee shall have been supplied by the Servicer with an Opinion of Counsel to the effect that the holding by the Trust Fund of such REO Property subsequent to such three-year period will not result in the imposition of taxes on “prohibited transactions” of any REMIC hereunder as defined in section 860F of the Code or cause any REMIC hereunder to fail to qualify as a REMIC at any time that any Certificates are outstanding, in which case the Trust Fund may continue to hold such Mortgaged Property (subject to any conditions contained in such Opinion of Counsel) or (ii) the Servicer shall have applied for, prior to the expiration of such three-year period, an extension of such three-year period in the manner contemplated by Section 856(e)(3) of the Code, in which case the three-year period shall be extended by the applicable extension period. The Servicer or Subservicer, as the case may be, shall protect and conserve, such REO Property in the manner and to the extent provided in the Servicing Agreement, in accordance with the REMIC Provisions and in a manner that does not result in a tax on “net income from foreclosure property” or cause such REO Property to fail to qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code.

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(b) The Master Servicer shall cause the Servicer to deposit all funds collected and received in connection with the operation of any REO Property in the Collection Account.

SECTION 3.17 Prepayment Charges.

(a) To the extent consistent with the terms of this Agreement, the Servicer may waive (or permit a Subservicer to waive) a Prepayment Charge only under the following circumstances: (i) such waiver relates to a default or a reasonably foreseeable default and would, in the reasonable judgment of the Servicer, maximize recovery of total proceeds, taking into account the value of such Prepayment Charge and the related Mortgage Loan or (ii) such waiver is required under state or federal law. The Servicer shall not waive any Prepayment Charge unless it is waived in accordance with this Section 3.17(a).

(b) If the Servicer waives any Prepayment Charge other than as permitted under Section 3.17(a) above, the Servicer shall deposit the amount of such Prepayment Charge into the Custodial Account (such amount, the “Servicer Prepayment Charge Payment Amount”). The Servicer shall pay the amount of such Prepayment Charge for the benefit of the Trust (or any assignee of the Trust) by depositing such amount into the Custodial Account at the time that the amount prepaid on the related Mortgage Loan is required to be deposited into the Custodial Account.

SECTION 3.18 Assumption of Role of Servicer by Subservicer.

The Subservicer may request the Servicer to assign its rights and obligations under the Servicing Agreement to the Subservicer, and upon such request, the Servicer shall resign and assign such rights and obligations to the Subservicer, and the Master Servicer shall approve such a resignation by the Servicer and assignment to and assumption by the Subservicer of the rights and obligations of the Servicer under the Servicing Agreement if (a) the Subservicer has been assigned a primary subprime mortgage loan servicer rating by each Rating Agency, (b) each Rating Agency has delivered to the Master Servicer a letter confirming that such resignation, assignment and assumption will not, in and of itself, result in a withdrawal, reduction or qualification of any rating then assigned by such Rating Agency to any Class of the Certificates, and (c) either (i) EMC Mortgage Corporation shall have been acting as Servicer for at least 24 months and shall have received aggregate servicing compensation pursuant to the Servicing Agreement of at least $500,000 or (ii) the primary subprime servicer rating of the Servicer has been reduced to “Below Average” or its equivalent by any Rating Agency.

SECTION 3.19 UCC.

The Depositor shall inform the Trustee in writing of any Uniform Commercial Code financing statements that were filed on the Closing Date in connection with the Trust Fund with stamped recorded copies of such financing statements to be delivered to the Trustee promptly upon receipt by the Depositor. If directed by the Depositor in writing, the Trustee will execute any continuation statements prepared by the Depositor and deliver them as directed solely at the expense of the Depositor. The Depositor shall file any financing statements or amendments thereto required by any change in the Uniform Commercial Code.

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SECTION 3.20 [Reserved.]

SECTION 3.21 P&I Advances.

If the Scheduled Payment on a Mortgage Loan that was due on a related Due Date is delinquent other than as a result of application of the Relief Act and for which the Servicer or the Subservicer was required to make an advance pursuant to the Servicing Agreement exceeds the amount deposited in the Distribution Account that will be used for an advance with respect to such Mortgage Loan, the Master Servicer (solely in its capacity as successor servicer) will deposit in the Distribution Account, not later than the related Distribution Date, an amount equal to such deficiency, net of the Servicing Fee for such Mortgage Loan, except to the extent the Master Servicer determines any such advance to be a Nonrecoverable Advance. Subject to the foregoing, the Master Servicer (solely in its capacity as successor servicer) shall continue to make such advances through the date that the Servicer is required to do so under the Servicing Agreement. If the Master Servicer deems an advance to be a Nonrecoverable P&I Advance, on the Distribution Date, the Master Servicer shall present an Officer’s Certificate to the Securities Administrator (a) stating that the Master Servicer elects not to make a P&I Advance in a stated amount and (b) detailing the reason it deems the advance to be a Nonrecoverable Advance.

SECTION 3.22 Compensating Interest Payments.

The Master Servicer shall deposit in the Distribution Account not later than each Distribution Account Deposit Date an amount equal to the lesser of (a) the sum of the aggregate amounts required to be paid by the Servicer under the Servicing Agreement with respect to subclauses (a) and (b) of the definition of Prepayment Interest Shortfalls with respect to the Mortgage Loans for the related Prepayment Period, and not so paid by the Servicer and (ii) the Master Servicing Compensation for such Distribution Date (such amount, the “Compensating Interest Payment”). The Master Servicer shall not be entitled to any reimbursement of any Compensating Interest Payment.

ARTICLE IV

ACCOUNTS

SECTION 4.01 Custodial Accounts.

(a) The Master Servicer shall enforce the obligation of the Servicer to establish and maintain, or cause the Subservicer to establish and maintain, a Custodial Account in accordance with the Servicing Agreement, with records to be kept with respect thereto on a Mortgage-Loan-by-Mortgage-Loan basis, into which account shall be deposited within two Business Days of receipt, all collections of principal and interest on any Mortgage Loan and any REO Property received by the Servicer or the Subservicer, including Principal Prepayments, Insurance Proceeds, Prepayment Charges, Liquidation Proceeds and advances made from the Servicer’s or the Subservicer’s own funds (less subservicing compensation as permitted by the Servicing Agreement in the case of the Subservicer) and all other amounts to be deposited in the Custodial Account. The Custodial Account shall be an Eligible Account. Each of the Servicer

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and the Subservicer is hereby authorized to make withdrawals from and deposits to the Custodial Account for purposes required or permitted by this Agreement. To the extent provided in the Servicing Agreement, the Custodial Account shall be held by a Depository Institution and segregated on the books of such institution for the benefit of the Certificateholders.

(b) To the extent provided in the Servicing Agreement, amounts on deposit in the Custodial Account may be invested in Permitted Investments and, except as provided in the preceding paragraph, shall not be commingled with any other funds. Such Permitted Investments shall mature, or shall be subject to redemption or withdrawal, no later than the date on which such funds are required to be withdrawn for deposit in the Distribution Account, and such funds shall be held until required for such deposit. The income earned from Permitted Investments made pursuant to this Section 4.01 shall be paid to the Servicer or the Subservicer under the Servicing Agreement, and the risk of loss of moneys required to be distributed to the Certificateholders resulting from such investments shall be borne by and be the risk of the Servicer or the Subservicer. The Servicer or the Subservicer (to the extent required by the Servicing Agreement) shall deposit the amount of any such loss in the Custodial Account within two Business Days of receipt of notification of such loss but not later than the second Business Day prior to the Distribution Date on which the moneys so invested are required to be distributed to the Certificateholders.

(c) On or before each Servicer Remittance Date, the Servicer or the Subservicer shall withdraw or shall cause to be withdrawn from its Custodial Account and shall remit the same to the Master Servicer for immediate deposit into the Collection Account amounts representing the following collections and payments (other than with respect to principal of or interest on the Mortgage Loans due on or before the Cut-off Date):

(i) Monthly Payments received or any related portion thereof advanced by the Servicer or the Subservicer pursuant to the Servicing Agreement that were due on or before the related Due Date, net of the amount thereof comprising the Servicing Fee or any fees with respect to any lender-paid primary mortgage insurance policy;

(ii) Principal Prepayments in full, Prepayment Charges and any Liquidation Proceeds received by the Servicer with respect to the Mortgage Loans in the related Prepayment Period, with interest to the date of prepayment or liquidation, net of the amount thereof comprising the Servicing Fee;

(iii) Principal Prepayments in part received by the Servicer or the Subservicer for the Mortgage Loans in the related Prepayment Period; and

(iv) Any amount to be used as a P&I Advance.

(d) Withdrawals may be made by the Subservicer and the Servicer, as the case may be, from the Custodial Account only for the purposes permitted pursuant to the Servicing Agreement.

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SECTION 4.02 [Reserved].

SECTION 4.03 Collection Account.

The Master Servicer shall establish and maintain, for the benefit of the Certificateholders, the Collection Account, which may be a sub-account of the Distribution Account.

SECTION 4.04 Distribution Account.

(a) The Securities Administrator shall establish and maintain, for the benefit of the Certificateholders, the Distribution Account as a segregated trust account or accounts. The Master Servicer shall remit to the Securities Administrator amounts it receives pursuant to Section 4.01(c) hereof. Such remittance may be accomplished by deposit of such funds into the Distribution Account. The Securities Administrator will deposit into the Distribution Account the following amounts, as identified and received by the Securities Administrator:

(i) Any amounts withdrawn from the Custodial Account pursuant to Section 4.01(c) of this Agreement;

(ii) Any Monthly Advance and any Compensating Interest Payments made by the Master Servicer;

(iii) Any Insurance Proceeds or Net Liquidation Proceeds received by or on behalf of the Securities Administrator or which were not deposited in the Custodial Account;

(iv) The Purchase Price with respect to any Mortgage Loans purchased by the Seller pursuant to the Mortgage Loan Purchase Agreement, any amounts that are to be treated, pursuant to this Agreement, as the payment of a Purchase Price in connection with the tender of a Qualified Substitute Mortgage Loan by the Seller and the Purchase Price with respect to any Mortgage Loans purchased by the Servicer or the Subservicer pursuant to Section 2.03 hereof;

(v) Any amounts required to be deposited by the Master Servicer with respect to losses on investments of deposits in the Distribution Account; and

(vi) Any other amounts received by or on behalf of the Securities Administrator and required to be deposited in the Distribution Account pursuant to this Agreement.

(b) The requirements for crediting the Distribution Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of (i) late payment charges or assumption, tax service, statement account or payoff, substitution, satisfaction, release and other like fees and charges and (ii) the items enumerated in Sections 4.05(a)(i), (ii), (iii), (iv), (vi), (vii), (viii), (ix), (x), (xi) and (xii) of this Agreement need not be remitted by the Master Servicer to the Securities Administrator or by the Servicer or the

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Subservicer to the Master Servicer for deposit in the Distribution Account. In the event that the Master Servicer shall remit or cause to be remitted to the Securities Administrator for deposit to the Distribution Account any amount not required to be credited thereto, the Securities Administrator, upon receipt of a written request therefor signed by a Master Servicing Officer, shall promptly transfer such amount to the Master Servicer, any provision herein to the contrary notwithstanding.

(c) The Distribution Account shall constitute a trust account of the Trust Fund segregated on the books of the Securities Administrator and held by the Securities Administrator in trust, and the Distribution Account and the funds deposited therein shall not be subject to, and shall be protected from, all claims, liens and encumbrances of any creditors or depositors of the Securities Administrator (whether made directly or indirectly through a liquidator or receiver of the Securities Administrator). The Distribution Account shall be an Eligible Account.

(d) The amount at any time credited to the Distribution Account shall be (i) held in cash or (ii) invested, but only in Permitted Investments, as directed by Master Servicer. All Permitted Investments shall mature or be subject to redemption or withdrawal on or before, and shall be held until, the next succeeding Distribution Date if the obligor for such Permitted Investment is the Securities Administrator, or if such obligor is any other Person, the Business Day preceding such Distribution Date. All investment earnings on amounts on deposit in the Distribution Account or benefit from funds uninvested therein from time to time shall be for the account of the Master Servicer. The Securities Administrator shall remit all investment earnings from the Distribution Account to the Master Servicer on each Distribution Date. If there is any loss on a Permitted Investment, the Master Servicer shall remit the amount of the loss to the Securities Administrator, who shall deposit such amount in the Distribution Account.

(e) The Securities Administrator or its Affiliates are permitted to receive additional compensation that could be deemed to be in the Securities Administrator’s economic self-interest for (i) serving as investment advisor, administrator, shareholder, servicing agent, custodian or sub-custodian with respect to certain of the Permitted Investments, (ii) using Affiliates to effect transactions in certain Permitted Investments and (iii) effecting transactions in certain Permitted Investments. Such compensation shall not be considered an amount that is reimbursable or payable pursuant to Section 4.05 hereof.

(f) The Securities Administrator is authorized to make withdrawals from the Distribution Account (the order set forth hereafter not constituting an order of priority for such withdrawals) (i) to make payments on the Certificates as provided herein, (ii) to pay or reimburse to the Trustee all Annual Expenses and Extraordinary Trust Fund Expenses and (iii) to withdraw any amounts deposited in the Distribution Account in error, each in accordance with the terms hereof.

SECTION 4.05 Permitted Withdrawals and Transfers from the Distribution Account.

(a) The Securities Administrator will, from time to time, on demand of the Master Servicer, make or cause to be made such withdrawals or transfers from the Distribution Account

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as the Master Servicer has designated for such transfer or withdrawal pursuant to this Agreement and the Servicing Agreement or as the Securities Administrator has instructed hereunder for the following purposes (limited, in the case of amounts due the Master Servicer, to those amounts not withdrawn from the Distribution Account, as certified by the Securities Administrator in accordance with the terms of this Agreement but not in any order of priority):

(i) to reimburse the Master Servicer, the Servicer or the Subservicer for any Monthly Advance of its own funds (to the extent not already reimbursed from the Custodial Account), the right of the Master Servicer, the Servicer or the Subservicer to reimbursement pursuant to this subclause (i) being limited to amounts received on a particular Mortgage Loan (including, for this purpose, the Purchase Price therefor, Insurance Proceeds and Liquidation Proceeds) that represent late payments or recoveries of the principal of or interest on such Mortgage Loan respecting that such P&I Advance was made by such Person;

(ii) to reimburse the Master Servicer, the Servicer or the Subservicer from Insurance Proceeds or Liquidation Proceeds relating to a particular Mortgage Loan for Servicing Advances made by the Master Servicer, the Servicer or the Subservicer in good faith in connection with the restoration of the related Mortgaged Property that was damaged by an Uninsured Cause or in connection with the liquidation of such Mortgage Loan (to the extent not already reimbursed from the Custodial Account);

(iii) to reimburse the Master Servicer, the Servicer or the Subservicer from Insurance Proceeds relating to a particular Mortgage Loan for Servicing Advances made by such Person with respect to such Mortgage Loan (to the extent not already reimbursed from the Custodial Account) and to reimburse the Master Servicer, the Servicer or the Subservicer from Liquidation Proceeds from a particular Mortgage Loan for Servicing Advances in the nature of Liquidation Expenses incurred by such entity with respect to such Mortgage Loan (to the extent not already reimbursed from the Custodial Account); provided that the Master Servicer shall not be entitled to reimbursement for Liquidation Expenses with respect to a Mortgage Loan to the extent that (A) any amounts with respect to such Mortgage Loan were paid as Excess Liquidation Proceeds pursuant to clause (viii) of this Section 4.05(a) to the Master Servicer; and (B) such Liquidation Expenses were not included in the computation of such Excess Liquidation Proceeds;

(iv) to reimburse the Master Servicer, the Servicer or the Subservicer for Servicing Advances made by such Person with respect to the Mortgage Loans (to the extent not already reimbursed from the Custodial Account), and the right to reimbursement pursuant to this subclause being limited to amounts received on the related Mortgage Loan (including, for this purpose, the Purchase Price therefor, Insurance Proceeds and Liquidation Proceeds) that represent late recoveries of the payments for which such advances were made;

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(v) to reimburse the Master Servicer, the Servicer or the Subservicer for any Monthly Advance or Servicing Advance made by such Person (to the extent not already reimbursed from the Custodial Account), after a Realized Loss has been allocated with respect to the related Mortgage Loan if the P&I Advance or Servicing Advance has not been reimbursed pursuant to clauses (i) and (iv) above;

(vi) to pay the Master Servicer as set forth in Section 4.04(d) of this Agreement; provided, however, that the Master Servicer shall be obligated to pay from its own funds any amounts that it is required to pay under Section 5.03 hereof;

(vii) to reimburse the Master Servicer for expenses, costs and liabilities incurred by and reimbursable to it pursuant to Section 3.04(c) hereof (which reimbursement shall not be subject to any annual limitation), to the extent that the Master Servicer has not already reimbursed itself for such amounts from the Distribution Account;

(viii) to reimburse or pay the Servicer or the Subservicer any such amounts as are due thereto under the Servicing Agreement and have not been retained by or paid to the Servicer or the Subservicer, to the extent provided in the Servicing Agreement;

(ix) to reimburse or pay the Trustee, the Master Servicer, the Securities Administrator and the Custodian for Annual Expenses;

(x) to remove amounts deposited in error; and

(xi) to clear and terminate the Distribution Account pursuant to this Agreement.

(b) The Master Servicer shall keep and maintain separate accounting, on a Mortgage-Loan-by-Mortgage-Loan basis, for the purpose of accounting for any reimbursement from the Distribution Account pursuant to subclauses (i) through (iv) of Section 4.05(a) or with respect to any such amounts that would have been covered by such subclauses had the amounts not been retained by the Master Servicer without being deposited in the Distribution Account.

SECTION 4.06 Basis Risk Shortfall Reserve Account.

(a) No later than the Closing Date, the Securities Administrator shall establish and maintain a separate, segregated trust account entitled “Basis Risk Shortfall Reserve Account, Xxxxx Fargo Bank, N.A., in trust for the registered Holders of People’s Financial Realty Mortgage Securities Trust, Series 2006-1, Mortgage Pass-Through Certificates, Series 2006-1.” On the Closing Date, the Depositor will deposit or cause to be deposited into the Basis Risk Shortfall Reserve Account $210,000.

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(b) Amounts in the Basis Risk Shortfall Reserve Account will be available to reimburse any outstanding Basis Risk Shortfall Carryforward Amount outstanding on the Class M7, Class M8, Class M9, Class M10 and Class B Certificates, after giving effect to all other distributions on each Distribution Date. Such reimbursements will be paid sequentially to the Class M Certificates and then to the Class B Certificates, in alphanumeric order.

(c) On the Distribution Date on which the aggregate Certificate Principal Balances of the Class B Certificates have been reduced to zero, any amounts remaining on deposit in the Basis Risk Shortfall Reserve Account will be paid to the Holder of the Class C Certificates.

(d) The Basis Risk Shortfall Reserve Account will be an asset of the Supplemental Interest Trust but not of any REMIC, and any payments to Certificateholders of Basis Risk Shortfall Carryforward Amounts will not be payments with respect to a “regular interest” in a REMIC within the meaning of Code Section 860(G)(a)(1). The Basis Risk Shortfall Reserve Account will be an “outside reserve fund” within the meaning of Treas. Reg. § 1.860G-2(h).

(e) At the direction of the Holders of a majority in Percentage Interest in the Class C Certificates, the Securities Administrator shall direct any depository institution maintaining the Basis Risk Shortfall Reserve Account to invest the funds in such account in one or more investments bearing interest or sold at a discount and maturing, unless payable on demand, (i) no later than the Business Day immediately preceding the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if a Person other than the Securities Administrator or an Affiliate manages or advises such investment, and (ii) no later than the date on which such funds are required to be withdrawn from such account pursuant to this Agreement, if the Securities Administrator or an Affiliate manages or advises such investment. All income and gain earned upon such investment shall be deposited into the Basis Risk Shortfall Reserve Account. In no event shall the Securities Administrator be liable for any investments made pursuant to this clause (f). If the Holders of a majority Percentage Interest in the Class C Certificates fail to provide investment instructions, funds on deposit in the Basis Risk Shortfall Reserve Account shall be held uninvested by the Securities Administrator without liability for interest or compensation.

(f) For federal tax return and information reporting, the value of the right of the Holders of Class M7, Class M8, Class M9, Class M10 and Class B Certificates to receive payments from the Basis Risk Shortfall Reserve Account in respect of any Basis Risk Shortfall Carryforward Amount may be obtained from the Master Servicer upon request to the extent such information is provided to the Master Servicer by the Depositor or the Underwriters. The initial value of such right shall be zero.

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ARTICLE V

DISTRIBUTIONS TO CERTIFICATEHOLDERS

SECTION 5.01 Distributions.

(a) On each Distribution Date, Interest Funds for Loan Group 1 for such date will be paid in the following order of priority:

(i) to the Swap Provider, the Group 1 Percentage of any Net Swap Payment or Swap Termination Payment owed to the Swap Provider pursuant to the Swap Agreement in the event that the Trust is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

(ii) to the Swap Provider (after giving effect to the payment of the Interest Funds for Loan Group 2), the unpaid Group 2 Percentage of any Net Swap Payment or Swap Termination Payment owed to the Swap Provider pursuant to the Swap Agreement in the event that the Trust is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

(iii) pro rata, to the Class 1A1, Class 1A2, Class 1A3 and Class 1A4 Certificates, Accrued Certificate Interest thereon and any Interest Carryforward Amount for such Distribution Date;

(iv) pro rata, to the Class 2A1 and Class 2A2 Certificates (after giving effect to the payment of the Interest Funds for Loan Group 2), the unpaid Accrued Certificate Interest thereon and any Interest Carryforward Amount for such Distribution Date; and

(v) for application pursuant to clause (c) below, any Interest Funds for Loan Group 1 remaining undistributed for such Distribution Date.

(b) On each Distribution Date, the Interest Funds for Loan Group 2 for such date will be paid in the following order of priority:

(i) to the Swap Provider, the Group 2 Percentage of any Net Swap Payment or Swap Termination Payment owed to the Swap Provider pursuant to the Swap Agreement in the event that the Trust is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

(ii) to the Swap Provider (after giving effect to the payment of the Group 1 Interest Funds), the unpaid Group 1 Percentage of any Net Swap Payment or Swap Termination Payment owed to the Swap Provider pursuant to the Swap Agreement in the event that the Trust is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

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(iii) pro rata, to the Class 2A1 and Class 2A2 Certificates, Accrued Certificate Interest thereon and any Interest Carryforward Amount for such Distribution Date;

(iv) pro rata, to the Class 1A1, Class 1A2, Class 1A3 and Class 1A4 Certificates (after giving effect to the payment of the Interest Funds for Group 1), the unpaid Accrued Certificate Interest thereon and any Interest Carryforward Amount for such Distribution Date; and

(v) for application pursuant to clause (c) below, any Interest Funds for Loan Group 2 remaining undistributed for such Distribution Date.

(c) On each Distribution Date, the aggregate of any remaining Interest Funds from clauses (a)(v) and (b)(v) above, respectively, will be paid in the following order of priority:

(i) sequentially, to the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10, Class B1 and Class B2 Certificates, Accrued Certificate Interest and any Interest Carryforward Amount for such Distribution Date;

(ii) to the Trustee, the Servicer, the Subservicer, the Master Servicer and the Securities Administrator, any previously unreimbursed extraordinary costs, liabilities and expenses, in excess of any cap on the Annual Expenses for which such parties were allowed to reimburse themselves pursuant to the pooling and servicing agreement; and

(iii) for application as part of Net Monthly Excess Cashflow for such Distribution Date, to be allocated as described under subsection (e) below.

(d) On each Distribution Date, the Basic Principal Distribution Amount will be distributed in the following order of priority, in each case, to the extent of funds remaining:

(i) Prior to the Stepdown Date, or if a Trigger Event is in effect:

(A) The Principal Funds attributable to Loan Group 1, as follows:

(1) to the Swap Provider, to the extent not previously paid from Interest Funds, the Group 1 Percentage of any Net Swap Payment or Swap Termination Payment and, to the extent not paid from Interest Funds or the Principal Funds attributable to Loan Group 2, the Group 2 Percentage of any Net Swap Payment or Swap Termination Payment, owed to the Swap Provider pursuant to the Swap Agreement in the event that the Issuing Entity is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

(2) sequentially, to the Class 1A1, Class 1A2, Class 1A3 and Class 1A4 Certificates, in that order, until the Certificate Principal Balance

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of each such Class has been reduced to zero; provided, however, that if the aggregate of the Certificate Principal Balances of the Class M and Class B Certificates has been reduced to zero, principal will be distributed pro rata on the Class 1A Certificates (this entire clause (2), the “Class 1A Principal Distribution Priority”); and

(3) pro rata, to the Class 2A1 and Class 2A2 Certificates (after giving effect to the distribution of the Principal Funds attributable to Loan Group 2), until the Certificate Principal Balance of each such Class has been reduced to zero;

(B) The Principal Funds attributable to Loan Group 2, as follows:

(1) to the Swap Provider, to the extent not previously paid from Interest Funds, the Group 2 Percentage of any Net Swap Payment or Swap Termination Payment and, to the extent not paid from Interest Funds or the Principal Funds attributable to Loan Group 1, the Group 1 Percentage of any Net Swap Payment or Swap Termination Payment, owed to the Swap Provider pursuant to the Swap Agreement in the event that the Issuing Entity is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

(2) pro rata, to the Class 2A1 and Class 2A2 Certificates, until the Certificate Principal Balance of each such Class has been reduced to zero; and

(3) to the Class 1A Certificates (after giving effect to the Principal Funds attributable to Loan Group 1), in accordance with the Class 1A Principal Distribution Priority, until the Certificate Principal Balance of each such Class has been reduced to zero;

(1) sequentially, to the Class M1, Class M2, Class M3, Class M4, Class M5, Class M6, Class M7, Class M8, Class M9, Class M10, Class B1 and Class B2 Certificates, in that order, until the Certificate Principal Balance of each such Class has been reduced to zero; and

(2) for application as part of Net Monthly Excess Cashflow for such Distribution Date, to be allocated as described under subsection (e) below.

(ii) On or after the Stepdown Date, if no Trigger Event is in effect, the Principal Funds, as follows:

(A) to the Swap Provider, to the extent not previously paid from Interest Funds, any Net Swap Payment or swap termination owed to the Swap Provider pursuant to the Swap Agreement in the event that the Trust is the defaulting party or an affected party (each as defined in the Swap Agreement) under the Swap Agreement;

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(B) to the Class 1A Certificates, in accordance with the Class 1A Principal Distribution Priority (from the Basic Principal Distribution Amount attributable to Loan Group 1, except as provided below), and to the Class 2A1 and Class 2A2 Certificates, pro rata (from the Basic Principal Distribution Amount attributable to Loan Group 2, except as provided below), in each case, an amount equal to the lesser of (x) the Basic Principal Distribution Amount attributable to the related Loan Group for such Distribution Date and (y) the Group 1 Percentage or the Group 2 Percentage, as applicable, of the Senior Principal Distribution Amount, until the Certificate Principal Balance of each such Class or Classes has been reduced to zero; provided, however, that to the extent that the Basic Principal Distribution Amount attributable to a Loan Group exceeds the related Group Percentage of the Senior Principal Distribution Amount, such excess shall be applied to the Class or Classes of Class A Certificates related to the other Loan Group (in accordance with the Class 1A Principal Distribution Priority with respect to the Class 1A Certificates and pro rata with respect to the Class 2A Certificates), but in an amount not to exceed the Senior Principal Distribution Amount for such Distribution Date (as limited by clauses (x) and (y) of this clause (B) on such Distribution Date);

(C) to the Class M1 Certificates, the Class M1 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(D) to the Class M2 Certificates, the Class M2 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(E) to the Class M3 Certificates, the Class M3 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(F) to the Class M4 Certificates, the Class M4 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(G) to the Class M5 Certificates, the Class M5 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(H) to the Class M6 Certificates, the Class M6 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(I) to the Class M7 Certificates, the Class M7 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(J) to the Class M8 Certificates, the Class M8 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(K) to the Class M9 Certificates, the Class M9 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

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(L) to the Class M10 Certificates, the Class M10 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(M) to the Class B1 Certificates, the Class B1 Principal Distribution Amount, until the Certificate Principal Balance thereof has been reduced to zero;

(N) to the Class B2 Certificates until their Certificate Principal Balance thereof has been reduced to zero; and

(O) for application as part of Net Monthly Excess Cashflow for such Distribution Date, to be allocated as described under subsection (e) below.

(e) With respect to any Distribution Date, any Net Monthly Excess Cashflow in respect of the Mortgage Loans in each Loan Group shall be paid as follows:

(i) first, to the Class B2 Certificates, until the Certificate Principal Balance thereof has been reduced to zero, second, to the Class B1 Certificates, until the Certificate Principal Balance thereof has been reduced to zero, and, thereafter, to the Class A and Class M Certificates, an amount equal to any Extra Principal Distribution Amount, distributable as part of the Principal Distribution Amount in the same manner and order of priority as described under subsection (d) above;

(ii) sequentially, to the Class M Certificates, in the order of their alphanumeric designations, to reimburse previously unreimbursed Applied Realized Loss Amount for such Class;

(iii) sequentially, to the Class B Certificates, in the order of their alphanumeric designations, to reimburse previously unreimbursed Applied Realized Loss Amount for such Class;

(iv) concurrently, on a pro rata basis, to the Class A Certificates, based on the amount of any remaining Basis Risk Shortfall Carryforward Amounts, in an amount equal to any remaining Basis Risk Shortfall Carryforward Amount for such Class or Classes;

(v) sequentially, to the Class M Certificates, in the order of their alphanumeric designations, to reimburse their respective remaining Basis Risk Shortfall Carryforward Amounts;

(vi) sequentially, to the Class B Certificates, in the order of their alphanumeric designations, to reimburse their respective remaining Basis Risk Shortfall Carryforward Amounts;

(vii) to fund any unpaid Swap Termination Payment payable by the Trust to the Swap Provider (including any amount remaining unpaid from prior Distribution Dates) (only if the Swap Provider is the defaulting party or the sole affected party (each as defined in the Swap Agreement));

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(viii) to the Class C Certificates (in respect of the Class C Interest), the Class C Distributable Amount; and

(ix) to the Class R and Class RX Certificates, any amounts remaining.

(f) On any Distribution Date, after all distributions have been made as described above under subsections (a) through (e), funds in the Supplemental Interest Trust with respect to the Swap Agreement and the Interest Rate Cap Agreement will be distributed in the following order of priority:

(i) to the Swap Provider, all Net Swap Payments, if any, owed to the Swap Provider for such Distribution Date;

(ii) to the Swap Provider, any Swap Termination Payment, other than a defaulted Swap Termination Payment, if any, owed to the Swap Provider;

(iii) to the Class A Certificates, pro rata, any remaining Accrued Certificate Interest and any Interest Carryforward Amounts for such Distribution Date, then to the Class M Certificates, sequentially in alphanumeric order, any remaining Accrued Certificate Interest and any Interest Carryforward Amounts for such Distribution Date, and then to the Class B Certificates, sequentially in alphanumeric order, any remaining Accrued Certificate Interest and any Interest Carryforward Amounts for such Distribution Date;

(iv) first, to the Class B2 Certificates, until their principal balance has been reduced to zero, and, second, to the Class B1 Certificates, until their principal balance has been reduced to zero, and, thereafter, to the Class A Certificates and Class M Certificates, in the same manner and order of priority as described under subsection (d) above, an amount equal to the amount needed to maintain the Overcollateralized Amount at the highest Overcollateralized Amount as of any preceding Distribution Date;

(v) to the Class M Certificates, sequentially in alphanumeric order, any previously unreimbursed Allocated Realized Loss Amount for any such Class;

(vi) to the Class B Certificates, sequentially in alphanumeric order, any previously unreimbursed Allocated Realized Loss Amount for any such Class;

(vii) to the Class A Certificates, concurrently in proportion to their respective Basis Risk Shortfall Carryforward Amounts after giving effect to distributions already made on such Distribution Date, any remaining Basis Risk Shortfall Carryforward Amounts;

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(viii) to the Class M Certificates, sequentially in alphanumeric order, any remaining Basis Risk Shortfall Carryforward Amounts;

(ix) to the Class B Certificates, sequentially in alphanumeric order, any remaining Basis Risk Shortfall Carryforward Amounts;

(x) to the Swap Provider, any defaulted Swap Termination Payment, to the extent not already paid; and

(xi) to the Class C Certificates, any remaining amounts.

The aggregate amount distributed under clauses (iv), (v) and (vi) above on such Distribution Date, when added to the aggregate amount distributed under clauses (iv), (v) and (vi) above on all prior Distribution Dates, will not be permitted to exceed the aggregate amount of Realized Losses incurred since the Cut-off Date through the last day of the related Prepayment Period (reduced by the aggregate amount of Subsequent Recoveries received since the Cut-off Date through the last day of the related Prepayment Period).

(g) On each Distribution Date, the Securities Administrator shall withdraw any amounts then on deposit in the Distribution Account that represent Prepayment Charges to be distributed as follows:

(i) first to the Class B2 Certificates, until their Certificate Principal Balance has been reduced to zero; then

(ii) to the Class B1 Certificates, until their Certificate Principal Balance has been reduced to zero; and

(iii) finally, to the Class P Certificates.

(h) All distributions made with respect to each Class of Certificates on each Distribution Date shall be allocated pro rata among the outstanding Certificates in such Class based on their respective Percentage Interests. Payments in respect of each Class of Certificates on each Distribution Date will be made to the Holders of the respective Class of record on the related Record Date (except as otherwise provided respecting the final distribution on such Class), based on the aggregate Percentage Interest represented by their respective Certificates and shall be made by wire-transfer of immediately available funds to the account of any such Holder at a bank or other entity having appropriate facilities therefor, if such Holder shall have so notified the Securities Administrator in writing at least five Business Days prior to the Record Date immediately prior to such Distribution Date and is the registered owner of Certificates having an initial aggregate Certificate Principal Balance or Notional Amount, as applicable, that is in excess of the lesser of (i) $1,000,000 or (ii) two-thirds of the initial Certificate Principal Balance or Notional Amount, as applicable, of such Class of Certificates, or otherwise by check mailed by first-class mail to the address of such Holder appearing in the Certificate Register. The final distribution on each Certificate will be made in like manner, but only upon presentment and surrender of such Certificate at the Corporate Trust Office of the Securities Administrator or such other location specified in the notice to Certificateholders of such final distribution.

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Each distribution with respect to a Book-Entry Certificate shall be paid to the Depository, as Holder thereof, and the Depository shall be responsible for crediting the amount of such distribution to the accounts of its Depository Participants in accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such distribution to the Certificate Owners that it represents and to each indirect participating brokerage firm (a “brokerage firm” or “indirect participating firm”) for which it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the Certificateholders that it represents. None of the Trustee, the Depositor, the Securities Administrator or the Master Servicer shall have any responsibility therefor except as otherwise provided by this Agreement or applicable law.

(i) The rights of the Certificateholders to receive distributions in respect of the Certificates, and all interests of the Certificateholders in such distributions, shall be as set forth in this Agreement. None of the Holders of any Class of Certificates, the Trustee, the Securities Administrator or the Master Servicer shall in any way be responsible or liable to the Holders of any other Class of Certificates in respect of amounts properly previously distributed on the Certificates.

(j) Except as otherwise provided in Section 10.01, whenever the Securities Administrator expects that the final distribution with respect to any Class of Certificates will be made on the next Distribution Date, the Securities Administrator shall, no later than three days before the related Distribution Date, mail to each Holder on such date of such Class of Certificates a notice to the effect that:

(i) the Securities Administrator expects that the final distribution with respect to such Class of Certificates will be made on such Distribution Date but only upon presentation and surrender of such Certificates at the office of the Securities Administrator therein specified, and

(ii) no interest shall accrue on such Certificates from and after the end of the related Accrual Period.

Any funds not distributed to any Holder or Holders of Certificates of such Class on such Distribution Date because of the failure of such Holder or Holders to tender their Certificates shall, on such date, be set aside and held in trust by the Securities Administrator and credited to the account of the appropriate non-tendering Holder or Holders. If any Certificates as to which notice has been given pursuant to this Section shall not have been surrendered for cancellation within six months after the time specified in such notice, the Securities Administrator shall mail a second notice to the remaining non-tendering Certificateholders to surrender their Certificates for cancellation in order to receive the final distribution with respect thereto. If within one year after the second notice all such Certificates shall not have been surrendered for cancellation, the Securities Administrator shall, directly or through an agent, mail a final notice to the remaining non-tendering Certificateholders concerning surrender of their Certificates but shall continue to hold any remaining funds for the benefit of non-tendering

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Certificateholders. The costs and expenses of maintaining the funds in trust and of contacting such Certificateholders shall be paid out of the assets remaining in such trust fund. If within one year after the final notice any such Certificates shall not have been surrendered for cancellation, the Securities Administrator shall pay to the Depositor all such amounts, and all rights of non-tendering Certificateholders in or to such amounts shall thereupon cease. No interest shall accrue or be payable to any Certificateholder on any amount held in trust by the Securities Administrator as a result of such Certificateholder’s failure to surrender its Certificate(s) on the final Distribution Date for final payment thereof in accordance with this Section. Any such amounts held in trust by the Securities Administrator shall be held uninvested in an Eligible Account.

(k) Notwithstanding anything to the contrary herein, (i) in no event shall the Certificate Principal Balance of a Class A, Class B or Class M Certificate be reduced more than once in respect of any particular amount both (A) allocated to such Certificate in respect of Realized Losses pursuant to Section 5.04 hereof and (B) distributed to the Holder of such Certificate in reduction of the Certificate Principal Balance thereof pursuant to this Section from Net Monthly Excess Cashflow, and (ii) in no event shall the Uncertificated Balance of a REMIC Regular Interest be reduced more than once in respect of any particular amount both (A) allocated to such REMIC Regular Interest in respect of Realized Losses pursuant to Section 5.04 hereof and (B) distributed on such REMIC Regular Interest in reduction of the Uncertificated Balance thereof pursuant to this Section.

SECTION 5.02 Statements to Certificateholders.

On each Distribution Date, the Securities Administrator (based on the information provided by the Master Servicer for such Distribution Date and information provided by the Supplemental Interest Trust Trustee or the Interest Rate Cap Provider and Swap Provider with respect to payments made pursuant to such agreements) shall make available to the Trustee, the Depositor, and each Holder of the Certificates, a statement as to the distributions made on such Distribution Date setting forth:

(a) the amount of the related distribution to Holders of each Class of Certificates allocable to principal;

(b) the amount of such distribution to Holders of each Class of Certificates allocable to interest;

(d) the Prepayment Interest Shortfall for any Class of Certificates;

(e) the Certificate Principal Balance of each Class of Certificates, after giving effect to the distribution of principal on such Distribution Date;

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(f) the amount of the Servicing Fee paid to or retained by the Servicer and the Subservicer;

(g) the Certificate Rate for each Class of Certificates for such Distribution Date;

(h) the amount of Advances included in the distribution on such Distribution Date;

(i) the amount of any Extra Principal Distribution Amount distributed;

(j) the amount of any Prepayment Charges distributed;

(k) the cumulative amount of Realized Losses to date, in the aggregate;

(l) the amount of Realized Losses with respect to such Distribution Date, in the aggregate and the amount of any Applied Loss Amounts in respect of each Certificate on any Distribution Date;

(m) the amount of any expenses reimbursed to the Trustee, the Master Servicer, the Securities Administrator or the Custodian;

(n) using the OTS methodology, the number and aggregate principal amounts of Mortgage Loans (i) delinquent (not including any Liquidated Mortgage Loans as of the end of the related Prepayment Period) (A) 31 to 60 days, (B) 61 to 90 days and (C) 91 or more days, and (ii) in foreclosure and delinquent (A) 31 to 60 days, (B) 61 to 90 days and (C) 91 or more days, in each case as of the close of business on the last day of the calendar month preceding such Distribution Date, in the aggregate and with respect to the Group 1 Loans and the Group 2 Loans;

(o) with respect to Mortgage Loans that became REO Properties during the preceding calendar month, the number and aggregate Stated Principal Balance of such Mortgage Loans as of the close of business on the Determination Date;

(p) whether a Trigger Event has occurred;

(q) the total number and principal balance of any REO Properties as of the close of business on the related Determination Date, in the aggregate; and

(r) to the extent such information is provided to the Master Servicer by the Servicer or Subservicer, the number of Mortgage Loans with respect to which the related borrower’s obligation to repay interest on a monthly basis has been suspended or reduced pursuant to the Servicemembers Civil Relief Act or the California Military and Veterans Code, as amended; and the amount of interest not required to be paid with respect to any such Mortgage Loans during the related Due Period as a result of such reductions, in the aggregate and with respect to the Group 1 Loans and the Group 2 Loans.

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The Securities Administrator may make available, each month, to any interested party, the monthly statement to Holders of Certificates via the Securities Administrator’s Website located at xxx.xxxxxxx.xxx. Assistance in using the Website can be obtained by calling the Securities Administrator’s customer service desk at (000) 000-0000. The Subservicer shall make its monthly reports available, each month, on its Website located at xxxx://xxx.xxxxxxxxxxxxxxxxxx.xxx. Parties that are unable to use either Website are entitled to have a paper copy mailed to them via first-class mail by calling the Securities Administrator or the Subservicer, as applicable, and requesting a copy. The Securities Administrator will have the right to change the way such reports are distributed in order to make such distributions more convenient and/or more accessible, and the Securities Administrator will provide timely and adequate notification to such parties regarding any such changes.

In the case of information furnished pursuant to subclauses (a) and (b) above, the amounts shall be expressed as a dollar amount per Single Certificate of the relevant Class.

In addition, within a reasonable period of time after the end of each calendar year, the Securities Administrator will prepare and deliver to each Certificateholder of record during the previous calendar year a statement containing information necessary to enable Certificateholders to prepare their tax returns. Such statements will not have been examined and reported upon by an independent public accountant.

The Securities Administrator shall, upon request, furnish to each Certificateholder during the term of this Agreement, such periodic, special, or other reports or information, whether or not provided for herein, as shall be reasonable with respect to the Certificateholder, as applicable, or otherwise with respect to the purposes of this Agreement, all such reports or information to be provided at the expense of the Certificateholder, in accordance with such reasonable and explicit instructions and directions as the Certificateholder may provide.

On each Distribution Date, the Securities Administrator shall provide to Bloomberg Financial Markets, L.P. (“Bloomberg”) CUSIP-level factors for each Class of Certificates as of such Distribution Date, using a format and media mutually acceptable to the Securities Administrator and Bloomberg.

SECTION 5.03 [Reserved].

SECTION 5.04 Allocation of Realized Losses.

(a) All Realized Losses on the Mortgage Loans allocated to any REMIC I Regular Interest pursuant to Section 5.04(b) shall be allocated by the Securities Administrator on each Distribution Date in the following order:

(i) to Net Monthly Excess Cashflow;

(ii) to the Class C Certificates;

(iii) to the Class B2 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

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(iv) to the Class B1 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(v) to the Class M10 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(vi) to the Class M9 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(vii) to the Class M8 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(viii) to the Class M7 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(ix) to the Class M6 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(x) to the Class M5 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(xi) to the Class M4 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(xii) to the Class M3 Certificates, until the Certificate Principal Balance thereof has been reduced to zero;

(xiii) to the Class M2 Certificates, until the Certificate Principal Balance thereof has been reduced to zero; and

(xiv) to the Class M1 Certificates, until the Certificate Principal Balance thereof has been reduced to zero.

(b) Any allocation of a Realized Loss to a Certificate will be made by reducing the Certificate Principal Balance thereof by the amount so allocated as of the Distribution Date in the month following the calendar month in which such Realized Loss was incurred, unless such allocation occurs during the first 15 days of a calendar month, in which case it will be allocated in the same month. Notwithstanding anything to the contrary herein, in no event will the Certificate Principal Balance of any Certificate be reduced more than once in respect of any particular amount both (x) allocable to such Certificate in respect of Realized Losses and (y) payable as principal to the Holder of such Certificate from Net Monthly Excess Cashflow.

(c) If, because of Subsequent Recoveries, the amount of a Realized Loss is reduced, the amount of such Subsequent Recoveries will be applied to increase the Certificate Principal Balance of the Class of Class M Certificates or Class B Certificates with the highest payment priority to which Realized Losses have been allocated, but not by more than the amount of Realized Losses previously allocated to that Class of Certificates. The amount of any

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remaining Subsequent Recoveries will be applied to increase the Certificate Principal Balance of the Class of Certificates with the next highest payment priority, up to the amount of such Realized Losses previously allocated to that Class of Certificates, and so on. Holders of such Certificates will not be entitled to any payment in respect of Accrued Certificate Interest on the amount of such increases for any Accrual Period preceding the Distribution Date on which such increase occurs. Any such increases shall be applied to the Certificate Principal Balance of each Certificate of such Class in accordance with its respective Percentage Interest.

(d) All Realized Losses and all other losses allocated to a Class of Certificates hereunder will be allocated among the Certificates of such Class in proportion to the Percentage Interests evidenced thereby.

SECTION 5.05 REMIC Distributions and Allocation of Losses.

(a) On each Distribution Date, the Securities Administrator shall be deemed to cause in the following order of priority, the following amounts to be distributed to REMIC II on account of the REMIC I Regular Interests or withdrawn from the Distribution Account and distributed to the Holders of the Class R Certificates (in respect of the Class R-I Interest), as the case may be:

(i) With respect to Loan Group 1:

(A) to Holders of REMIC I Regular Interest I and each of REMIC I Regular

Class Designation

Certificate Rate

Initial

Certificate Principal

Balance

Latest Possible

Maturity Date⁽¹⁾

Class P Certificate

September 25, 2036