Exhibit 10.1

 

EXECUTION VERSION

 

SALE AND SERVICING AGREEMENT

Dated as of December 12, 2006

among

INDYMAC BANK, F.S.B.

(Seller and Servicer)

INDYMAC ABS, INC.

(Depositor)

INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST,

SERIES 2006-H4

(Trust)

and

DEUTSCHE BANK NATIONAL TRUST COMPANY

(Indenture Trustee)

 

 

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ARTICLE I. DEFINITIONS Section    1.01               Definitions    2  Section 
  1.02               Other Definitional Provisions    31  Section    1.03       
       Interest Calculations    32  ARTICLE II. CONVEYANCE OF THE MORTGAGE LOANS
Section    2.01               Conveyance of the Mortgage Loans    32  Section   
2.02               Acceptance by Indenture Trustee, Review of Documentation   
38  Section    2.03               Representations and Warranties Regarding the
Seller, the Depositor                         and the Servicer    39  Section   
2.04               Representations and Warranties of the Seller Regarding the
Mortgage                         Loans    42  Section    2.05             
 Substitution of Mortgage Loans    50  Section    2.06               Tax
Treatment    51  Section    2.07               Representations, Warranties and
Covenants of the Depositor    52  ARTICLE III. ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS Section    3.01               The Servicer    53  Section   
3.02               Collection of Certain Mortgage Loan Payments    57  Section 
  3.03               Withdrawals from the Collection Account    59  Section   
3.04               Maintenance of Hazard Insurance; Property Protection
Expenses    60  Section    3.05               Maintenance of Mortgage Impairment
Insurance Policy    61  Section    3.06               Maintenance of Fidelity
Bond and Errors and Omissions Insurance    61  Section    3.07             
 Management of and Realization upon Defaulted Mortgage Loans    62  Section   
3.08               Indenture Trustee to Cooperate    63  Section    3.09       
       Servicing Compensation; Payment of Certain Expenses by Servicer    64 
Section    3.10               Annual Statement as to Compliance    64  Section 
  3.11               Assessment of Compliance and Attestation Report    65 
Section    3.12               Access to Certain Documentation and Information
Regarding the                         Mortgage Loans    67  Section    3.13     
         Early Termination Fees    67  Section    3.14               Commission
Reporting    68 

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Section    3.15    Reports of Foreclosures and Abandonments of Mortgaged
Properties,              Returns Relating to Mortgage Interest Received from
Individuals and              Returns Relating to Cancellation of Indebtedness   
72  Section    3.16    Assumption Agreements    72  Section    3.17    Payment
of Taxes, Insurance and Other Charges    72  Section    3.18    Servicing
Advances    73  Section    3.19    Allocation of Charge-Off Amounts    73 
ARTICLE IV. INSURER Section    4.01    Claims upon the Policy    73  Section   
4.02    Effect of Payments by the Insurer; Subrogation    74  ARTICLE V.
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS; RIGHTS OF      NOTEHOLDERS
Section    5.01    Distributions    75  Section    5.02    Calculation of the
Note Rate    77  Section    5.03    Servicing Certificate and Statement to
Noteholders    77  Section    5.04    Other Receipts    79  Section    5.05   
Payment Account    79  Section    5.06    Reserve Account    80  Section   
5.07    The Certificate Account    80  Section    5.08    Rapid Amortization
Event    81  Section    5.09    Indenture Trustee Fees and Indemnification
Expenses    83  ARTICLE VI. THE SELLER, THE SERVICER AND THE DEPOSITOR Section 
  6.01    Liability of the Seller, the Servicer and the Depositor    83 
Section    6.02    Merger or Consolidation of, or Assumption of the Obligations
of, the              Seller, the Servicer or the Depositor    83  Section   
6.03    Limitation on Liability of the Seller, the Depositor, the Servicer and 
            Others    84  Section    6.04    Servicer Not to Resign    85 
Section    6.05    Delegation of Duties    85  Section    6.06   
Indemnification of the Trust by the Servicer    85  ARTICLE VII. SERVICER
TERMINATION

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Section    7.01    Events of Servicer Termination    86  Section    7.02   
Indenture Trustee to Act; Appointment of Successor    88  Section    7.03   
Waiver of Defaults    89  Section    7.04    Notification to Noteholders    90 
ARTICLE VIII. TERMINATION Section    8.01    Termination    90  ARTICLE IX. THE
INDENTURE TRUSTEE Section    9.01    Indenture Trustee Not Liable for the Notes
or Mortgage Loans    92  Section    9.02    Indenture Trustee May Own Notes   
92  Section    9.03    Indenture Trustee’s Fees and Expenses    92  ARTICLE X.
MISCELLANEOUS PROVISIONS Section    10.01    Amendment    93  Section    10.02 
  Recordation of Agreement    95  Section    10.03    Duration of Agreement   
95  Section    10.04    Governing Law    95  Section    10.05    Notices    95 
Section    10.06    Severability of Provisions    95  Section    10.07    No
Partnership    96  Section    10.08    Counterparts    96  Section    10.09   
Successors and Assigns    96  Section    10.10    Headings    96  Section   
10.11    Reports to Rating Agencies    96  Section    10.12    Inconsistencies
Among Transaction Documents    97  Section    10.13    Rights of the Insurer to
Exercise Rights of Noteholders    97  Section    10.14    Enforceability Rights
of the Indenture Trustee    97  Section    10.15    Matters Regarding the Trust 
  97  Section    10.16    Reports to Insurer    97  Section    10.17    Matters
Regarding the Indenture Trustee    97  Section    10.18    Limitation of Owner
Trustee Liability    98 

 

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EXHIBITS      EXHIBIT A    Mortgage Loan Schedule  EXHIBIT B    List of
Servicing Officers  EXHIBIT C    Form of Annual Officer’s Certificate  EXHIBIT
D    Form of Advance Notice  EXHIBIT E    Form of Mortgage Note  EXHIBIT F   
Form of Mortgage  EXHIBIT G    Specimen of the Policy  EXHIBIT H    Form of Lost
Note Affidavit  EXHIBIT I    Form of Request for Release  EXHIBIT J    Form of
Initial Certification  EXHIBIT K    Form of Interim Certification  EXHIBIT L   
Form of Final Certification  EXHIBIT M    Form of Certification to be Provided
by the Depositor with Form 10-K  EXHIBIT N    Indenture Trustee’s Officer’s
Certificate  EXHIBIT O    Originators’ Appraisal Matrix  EXHIBIT P    Servicing
Criteria  EXHIBIT Q    Form of Statement to Noteholders  EXHIBIT R    Form 10-D,
Form 8-K and Form 10-K Reporting Responsibility 

 

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This Sale and Servicing Agreement (the “Agreement”) is entered into effective as
of December 12, 2006 among INDYMAC BANK, F.S.B., a federal savings bank, as
seller (in such capacity, the “Seller”), and as servicer (in such capacity, the
“Servicer”), INDYMAC ABS, INC., a Delaware corporation, as the depositor (the
“Depositor”), INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES
2006-H4, a Delaware statutory trust (the “Trust”), and DEUTSCHE BANK NATIONAL
TRUST COMPANY, a national banking association, as Indenture Trustee on behalf of
the Noteholders (in such capacity, the “Indenture Trustee”).

 

PRELIMINARY STATEMENT

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

The following table sets forth the Note Rate, Initial Note Principal Amount and
minimum denomination for the Notes issued pursuant to the Indenture.

Note Rate

Initial Note
Principal Amount

Minimum
Denominations

(1)

$650,000,000

$250,000

_______________

(1)

The Note Rate with respect to any Payment Date (and the related Interest Accrual
Period) for the Notes is the per annum rate equal to the lesser of (i) LIBOR
plus 0.14% and (ii) the Maximum Rate for such Payment Date.

 

 

 

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ARTICLE I.

 

DEFINITIONS

Section 1.01      Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
meanings specified in this Article.

Accelerated Principal Payment: With respect to any Payment Date a payment
received as a payment of principal by the Noteholders for the purpose of
increasing the Overcollateralization Amount, and to be paid from the Excess
Cashflow, and equal to for any Payment Date the lesser of (x) the amount of the
Excess Cashflow and (y) the Overcollateralization Deficiency Amount for such
Payment Date.

Accepted Servicing Practices: The Servicer’s normal servicing practices in
servicing and administering revolving home equity line of credit mortgage loans
for its own account, which in general will conform to the mortgage servicing
practices of prudent mortgage lending institutions which service for their own
account, mortgage loans of the same type as the Mortgage Loans in the
jurisdictions in which the related Mortgaged Properties are located.

Accountant’s Opinion: A written opinion of the Servicer’s internal accountants,
delivered and acceptable to the Indenture Trustee.

Accrual Period: With respect to each Mortgage Loan and Due Date, the period from
and including the preceding Due Date to but not including such Due Date.

Additional Balance: As to any Mortgage Loan and day, the aggregate amount of all
Draws conveyed to the Trust pursuant to Section 2.01(a).

Additional Balance Advance Amount: As to any Payment Date during the Managed
Amortization Period, the excess, if any, of (i) the aggregate principal amount
of all Additional Balances created during the Collection Period relating to such
Payment Date over (ii) the Principal Collections in respect of the Mortgage
Loans received during the Collection Period relating to such Payment Date.

Administration Agreement: The Administration Agreement dated as of December 21,
2006 among the Issuer, the Administrator, the Owner Trustee and the Depositor,
as may be amended or supplemented from time to time.

Advance Notice: A notice to the Class L Certificateholder substantially in the
form of Exhibit D.

Affiliate: With respect to any Person, any other Person controlling, controlled
by or under common control with such Person. For purposes of this definition,
“control” means the

 

 

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power to direct the management and policies of a Person, directly or indirectly,
whether through ownership of voting securities, by contract or otherwise and
“controlling” and “controlled” shall have meanings correlative to the foregoing.

Aggregate Draw Amount: As of any day during the Managed Amortization Period, the
sum of (x) the Floating Allocation Percentage of the aggregate principal balance
of all Draws on such day and (y) the amount of any Daily Draw Deficits remaining
from the preceding day of the related Collection Period (if such preceding day
is not within the related Collection Period, the Daily Draw Deficit from the
preceding day shall be zero).

Agreement: This Sale and Servicing Agreement and all amendments hereof and
supplements hereto.

Anniversary Year: Means the one-year period beginning on the Closing Date and
ending on the first anniversary thereof, and each subsequent one-year period
beginning on the day after the end of the preceding Anniversary Year and ending
on the next succeeding anniversary of the Closing Date.

Appraised Value: The appraised value of a Mortgaged Property based upon the
appraisal made by or for the originator, in compliance with the Servicer’s
underwriting criteria (which criteria may permit an electronic appraisal or
other abbreviated appraisal process), in each case at the time of the
origination of the related Mortgage Loan or, if new appraisals are obtained, the
appraised value based upon the most recent appraisal.

Assessment of Compliance: As defined in Section 3.11.

Assignment of Mortgage: With respect to any Mortgage, an assignment, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction in which the related Mortgaged Property is located to effect
the sale of the Mortgage to the Indenture Trustee, on behalf of the Trust, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering the Mortgage Loans secured by Mortgaged
Properties located in the same jurisdiction.

Available Funds: With respect to any Payment Date, the sum of (i) the Principal
Collections for the related Collection Period, (ii) the Interest Collections for
the related Collection Period, (iii) Early Termination Fees recovered from any
Mortgagor during the related Collection Period and (iv) any other amounts
remitted by the Servicer with respect to that Payment Date on the Servicer
Remittance Date pursuant to Section 3.03(ii).

Book-Entry Note: Any Note registered in the name of the Depository or its
nominee, ownership of a security entitlement with respect to which is reflected
on the books of the Depository or on the books of a Person maintaining an
account with such Depository (directly or as an indirect participant in
accordance with the rules of such Depository).

 

 

 

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Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of New York or California or the city
in which the Corporate Trust Office or the office of the Insurer is located are
required or authorized by law to be closed.

Certificate Account: The account maintained by the Administrator pursuant to
Section 5.07

Certificate Principal Balance: The Class Principal Balance of the Class B
Certificates, the Class Principal Balance of the Class L Certificates or the
Class Principal Balance of the Class R Certificates, as applicable.

Certificate Register and Certificate Registrar: The register which provides for
the registration of the Certificates and the registration of transfers of
Certificates, which shall be maintained by the Indenture Trustee, as Certificate
Registrar.

Certificateholders: The holders of the Class B Certificates, the Class L
Certificates or the Class R Certificates.

Certificates: The Class B Certificates, Class L Certificates and Class R
Certificates.

Charge-Off Amount: With respect to any Charged-Off HELOC under clause (i) of the
definition thereof, the amount of the Principal Balance that has been written
down (including, for any Mortgage Loan that became a Liquidated Mortgage Loan
during the related Collection Period, any unrecovered portion of its Principal
Balance that is written down during that Collection Period after giving effect
to the Net Liquidation Proceeds applied in reduction of the Principal Balance of
such Mortgage Loan) and with respect to any Charged-Off HELOC that became a
Charged-Off HELOC during the related Collection Period under clause (ii) of the
definition thereof, the entire Principal Balance of such Mortgage Loan minus the
Appraised Value of the related Mortgaged Property reduced by the principal
balance of any senior mortgage loan also secured by such Mortgaged Property.

Charged-Off HELOC: Means (i) a Mortgage Loan with a Principal Balance that has
been written down on the Servicer’s servicing system in accordance with its
policies and procedures (including, any Mortgage Loan that became a Liquidated
Mortgage Loan during the related Collection Period, and had an unrecovered
portion of its related Principal Balance written down during that Collection
Period) and (ii) any Mortgage Loan that is more than 180 days past due.

Class: The Notes and all Certificates bearing the same class designation.

Class B Certificate: A Certificate, substantially in the form of Exhibit A-1 to
the Trust Agreement.

 

 

 

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Class L Certificate: A Certificate, substantially in the form of Exhibit A-2 to
the Trust Agreement.

Class L Interest: The beneficial ownership interest in the assets of the Trust
not represented by the Class B Certificate and the Class R Certificate and is
evidenced by the Class L Certificate.

Class L Interest Collections: With respect to any Payment Date and the Class L
Certificate, an amount equal to the Interest Collections allocable to such
Payment Date times the Class L Percentage.

Class L Percentage: For any Payment Date, 100% minus the Floating Allocation
Percentage for such Payment Date.

Class R Certificate: A Residual Certificate, substantially in the form of
Exhibit A-3 to the Trust Agreement.

Class Principal Balance: With respect to the Class L Certificates and any
Payment Date during the Managed Amortization Period, the sum of the Additional
Balance Advance Amount for such Payment Date and any prior Payment Date, less
(x) the sum of the amount, calculated for such Payment Date and any prior
Payment Date, equal to all Charge-off Amounts for such Payment Date multiplied
by the Class L Percentage for such Payment Date, and (y) distributions to such
Class pursuant to Section 3.11 of the Trust Agreement representing principal
payments on the Mortgage Loans for such Payment Date and any prior Payment Date.
With respect to the Class L Certificates and any Payment Date during the Rapid
Amortization Period, the sum of (a) the Class Principal Balance of the Class L
Certificates on the last Payment Date prior to the commencement of the Rapid
Amortization Period (after giving effect to the payment of all distributions,
and the allocation of Charge-Off Amounts on such Payment Date) plus (b) the
aggregate amount of Draws conveyed to the Issuer during the Rapid Amortization
Period, less (x) the sum of the amount, calculated for such Payment Date and any
prior Payment Date during the Rapid Amortization Period, equal to all Charge-off
Amounts for such Payment Dates multiplied by the Class L Percentage and (y)
distributions to such Class pursuant to Section 3.11 of the Trust Agreement
representing principal payments on the Mortgage Loans during the Rapid
Amortization Period.

With respect to the Class B Certificates and any Payment Date, an amount equal
to the excess of the Invested Amount on the last day of the related Collection
Period (after taking into account all Interest Collections and Principal
Collections for such Payment Date) over the sum of the aggregate Note Principal
Amount of the Notes immediately prior to such Payment Date.

With respect to the Class R Certificates and any Payment Date, zero.

Close of Business: With respect to any Business Day, 5:00 p.m. (New York time).

 

 

 

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Closing Date: December 21, 2006.

Code: The Internal Revenue Code of 1986, as amended from time to time, and
Treasury Regulations promulgated thereunder.

Collection Account: The custodial account or accounts created and maintained for
the benefit of the Noteholders, the Certificateholders and the Insurer pursuant
to Section 3.02(b).

Collection Period: With respect to any Payment Date and Mortgage Loan, the 12th
day of the calendar month immediately preceding such Payment Date to the 11th
day of the calendar month of such Payment Date.

Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage Loan the sum
of the Credit Limit of such Mortgage Loan at the time such Mortgage Loan was
originated or at the time such Mortgage Loan is modified pursuant to
Section 3.01(h) and the outstanding principal balance of any Senior Liens as of
the date of origination of the Mortgage Loan, divided by (i) in the case of a
purchase, the lesser of the selling price of the Mortgaged Property or its
Appraised Value at the time of sale, or (ii) in the case of a refinance, the
Appraised Value of the Mortgaged Property at the time of the refinance.

Commission: The Securities and Exchange Commission.

Controlling Party: The Insurer, so long as the Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer and no Insurer Default
shall have occurred and be continuing, and the Majority Securityholders, after
the Notes are no longer Outstanding and no Reimbursement Amounts are due and
owing to the Insurer or for so long as an Insurer Default shall have occurred
and is continuing.

Conveyed Assets: As defined in Section 2.01(a).

Corporate Trust Office: The principal office of the Indenture Trustee at which
at any particular time its corporate business shall be administered, which
office on the Closing Date is located at 1761 East Saint Andrew Place, Santa
Ana, California 92705-4934, Attention: IN06H4 or with respect to the Certificate
Registrar, the designated office for presentment and surrender of Certificates
for registration, transfer or exchange thereof located at DB Services Tennessee,
648 Grassmere Road, Nashville, Tennessee 37211, Attn: Transfer Unit.

Credit Limit: As to any Mortgage Loan, the maximum principal balance permitted
under the terms of the related Mortgage Note.

Credit Line Agreement: The Mortgage Note.

Cut-off Date: As to any Mortgage Loan, the close of business on December 12,
2006.

 

 

 

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Cut-off Date Pool Balance: $650,002,683.

Cut-off Date Principal Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof as of the Cut-off Date (or as of the applicable date
of substitution with respect to an Eligible Substitute Mortgage Loan pursuant to
Section 2.02 or 2.05).

Daily Draw Deficit: As of any day during any Collection Period preceding the
commencement of the Rapid Amortization Period, the excess, if any, of the
Aggregate Draw Amount on such day over the Floating Allocation Percentage of
Principal Collections in respect of the Mortgage Loans received during such
Collection Period and remaining on deposit in the Collection Account.

Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or substitution
by the Seller pursuant to Section 2.02 or 2.05.

Deferred Interest: With respect to the Notes and any Payment Date, the excess,
if any, of interest due at the applicable Formula Note Rate over interest due at
the applicable Note Rate.

Deficiency Amount: As defined in the Policy.

Definitive Notes: As defined in the Indenture.

Delinquent Mortgage Loan and Delinquent: A Mortgage Loan is a Delinquent
Mortgage Loan if the Monthly Payment due thereon is not received by the close of
business on the Due Date in accordance with the related Mortgage Note and until
such delinquency is subsequently cured.

Depositor: IndyMac ABS Inc., a Delaware corporation.

Depositor Certification: As defined in Section 3.14(e).

Depository: The initial Depository shall be The Depository Trust Company, the
nominee of which is Cede & Co. The Depository shall at all times be a “clearing
corporation” as defined in Section 8-102(a)(5) of the UCC of the State of New
York.

Depository Agreement: The agreement dated as of December 21, 2006, among the
Indenture Trustee, acting on behalf of the Trust, and The Depository Trust
Company, as the initial Depository, relating to the Book-Entry Notes.

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

 

 

 

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Determination Date: With respect to any Payment Date, the date which is five (5)
Business Days prior to such Payment Date.

Distribution Report: As defined in Section 3.14.

Draw: With respect to any Mortgage Loan, an additional borrowing by the related
Mortgagor subsequent to the Cut-off Date in accordance with the related Mortgage
Note.

Draw Period: With respect to any Mortgage Loan, the period during which the
related Mortgagor is permitted to make Draws.

Due Date: With respect to any Mortgage Loan and any Monthly Payment, the date on
which such Monthly Payment is due from the related Mortgagor.

Early Termination Fee: As to a Mortgage Loan, any charge owed by a Mortgagor in
connection with the termination of the related Credit Line Agreement within a
specified period following the origination of such Mortgage Loan.

Eligible Account: Any of (i) an account or accounts maintained with a federal or
state chartered depository institution or trust company the short-term unsecured
debt obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of
Moody’s or Fitch and one of the two highest short-term ratings of Standard &
Poor’s, if Standard & Poor’s is a Rating Agency at the time any amounts are held
on deposit therein, or (ii) an account or accounts in a depository institution
or trust company in which such accounts are insured by the FDIC (to the limits
established by the FDIC) and the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
the Indenture Trustee and to each Rating Agency, the Noteholders have a claim
with respect to the funds in such account or a perfected first priority security
interest against any collateral (which shall be limited to Eligible Investments)
securing such funds that is superior to claims of any other depositors or
creditors of the depository institution or trust company in which such account
is maintained, or (iii) a trust account or accounts maintained with (a) the
trust department of a federal or state chartered depository institution or (b) a
trust company, acting in its fiduciary capacity, or (iv) any other account
acceptable to each Rating Agency. Eligible Accounts may bear interest, and may
include, if otherwise qualified under this definition, accounts maintained with
the Indenture Trustee.

Eligible Institution: Shall mean (1) any depository institution (which may be
the Indenture Trustee) organized under the laws of the United States or any one
of the States thereof, including the District of Columbia (or any domestic
branch of a foreign bank) which at all times (a) has a short-term unsecured debt
rating of “P-1” by Moody’s, (b) has a short-term unsecured debt rating of “A-1”
by Standard & Poor’s and (c) has its accounts fully insured by the FDIC or
maintains trust accounts in a fiduciary capacity, or (2) any other institution
that is acceptable to each Rating Agency; provided, however, that if such other
institution does not satisfy the rating

 

 

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criteria set forth in clause (1), such other institution shall also be
acceptable to the Insurer. If so qualified, the Indenture Trustee or the
Servicer may be considered an Eligible Institution for the purposes of this
definition.

Eligible Investments: One or more of the following:

(i) obligations of or guaranteed as to principal and interest by the
United States or any agency or instrumentality thereof when such obligations are
backed by the full faith and credit of the United States;

(ii) repurchase agreements on obligations specified in clause (i) maturing not
more than one month from the date of acquisition thereof, provided that the
unsecured obligations of the party agreeing to repurchase such obligations are
at the time rated by each Rating Agency in its highest short-term rating
available;

(iii) federal funds, certificates of deposit, demand deposits, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days or a remaining maturity of more than 30
days) denominated in United States dollars of any U.S. depository institution or
trust company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution or trust
company; provided that the debt obligations of such depository institution or
trust company (or, if the only Rating Agency is Standard & Poor's, in the case
of the principal depository institution in a depository institution holding
company, debt obligations of the depository institution holding company) at the
date of acquisition thereof have been rated by each Rating Agency in its highest
short-term rating available; and provided further that, if the only Rating
Agency is Standard & Poor's and if the depository or trust company is a
principal subsidiary of a bank holding company and the debt obligations of such
subsidiary are not separately rated, the applicable rating shall be that of the
bank holding company; and, provided further that, if the original maturity of
such short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term rating of such
institution shall be A-1+ in the case of Standard & Poor's if Standard & Poor's
is the Rating Agency;

(iv) commercial paper and demand notes (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been rated by
each Rating Agency in its highest short-term rating available; provided that
such commercial paper shall have a remaining maturity of not more than 30 days;

(v) a money market fund or a qualified investment fund rated by each Rating
Agency in its highest long-term rating available; and

(vi) other obligations or securities that are acceptable to each Rating Agency
and the Insurer as an Eligible Investment hereunder and will not reduce the
rating assigned to the

 

 

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Notes by such Rating Agency below the lower of the then-current rating or the
rating assigned to such Notes as of the Closing Date by such Rating Agency, as
evidenced in writing;

provided, however, no instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations. References herein to the highest rating available on unsecured
long-term debt shall mean AAA in the case of Standard & Poor's and Fitch and Aaa
in the case of Moody's, and references herein to the highest rating available on
unsecured commercial paper and short-term debt obligations shall mean A-1 in the
case of Standard & Poor's, P-1 in the case of Moody's and either A-1 by Standard
& Poor's, P-1 by Moody's or F-1 by Fitch in the case of Fitch; provided,
however, that any Eligible Investment that is a short-term debt obligation rated
A-1 by Standard & Poor's must satisfy the following additional conditions: (i)
the total amount of debt from A-1 issuers must be limited to the investment of
monthly principal and interest payments (assuming fully amortizing collateral);
(ii) the total amount of A-1 investments must not represent more than 20% of the
aggregate outstanding Note Principal Amount of the Notes and each investment
must not mature beyond 30 days; and (iii) if the investments may be liquidated
prior to their maturity or are being relied on to meet a certain yield, interest
must be tied to a single interest rate index plus a single fixed spread (if any)
and must move proportionately with that index.

Eligible Substitute Mortgage Loan: With respect to Mortgage Loans, a Mortgage
Loan substituted by the Seller for a Mortgage Loan that constitutes a Defective
Mortgage Loan which must, on the date of such substitution, (i) have an
outstanding Principal Balance that is approximately equal to the Principal
Balance of such Defective Mortgage Loan; (ii) have a Loan Rate not less than the
Loan Rate of the Defective Mortgage Loan and not more than 1% in excess of the
Loan Rate of such Defective Mortgage Loan; (iii) have a Loan Rate Cap based on
the Index, determined in accordance with then current underwriting standards;
(iv) have a Margin that is not less than the Margin of the Defective Mortgage
Loan and not more than 1% in excess of the Margin for the Defective Mortgage
Loan; (v) have a Mortgage of the same or higher level of priority as the
Mortgage relating to the Defective Mortgage Loan at the time such Mortgage was
transferred to the Trust; (vi) have a maturity not later than the Final
Scheduled Payment Date; (vii) comply with each representation and warranty set
forth in Section 2.04 (deemed to be made as of the date of substitution);
(viii) have an original Combined Loan-to-Value Ratio not greater than that of
the Defective Mortgage Loan; and (ix) have a Mortgagor that has a credit score
at least equal to that of the Mortgagor under the Defective Mortgage Loan.

More than one Eligible Substitute Mortgage Loan may be substituted for a
Defective Mortgage Loan if such Eligible Substitute Mortgage Loans meet the
foregoing attributes in the aggregate.

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

 

 

 

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Errors and Omissions Insurance Policy: As defined in Section 3.06.

Event of Servicer Termination: As defined in Section 7.01.

Excess Cashflow: With respect to any Payment Date, the Floating Allocation
Percentage of Net Available Funds for such Payment Date which remain on deposit
in the Payment Account after taking into account the payments on such Payment
Date listed in clauses (i) through (v) of Section 5.01(a)(I).

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

Expense Fee Rate: Is an amount equal to the sum of (i) the Servicing Fee Rate,
(ii) the fees of the Owner Trustee, (iii) a per annum rate equal to a fraction,
the numerator of which is the product of (a) 12 and (b) payments to the
Indenture Trustee in respect of the Indenture Trustee Expense Amount and the
denominator of which is the Pool Balance at the beginning of the related
Collection Period and (iv) the product of (a) the rate at which the Insurer
Premium is calculated and (b) a fraction, the numerator of which is the Note
Principal Amount of the Notes immediately before the Payment Date and the
denominator of which is the Pool Balance at the beginning of the related
Collection Period.

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

FDIC: The Federal Deposit Insurance Corporation and any successor thereto.

Fidelity Bond: As defined in Section 3.06.

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 Servicer pursuant to or as contemplated by Sections 2.02, 2.04, 2.05,
3.07 or 8.01), a determination made by the Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared by
a Servicing Officer, of each Final Recovery Determination made thereby.

Final Scheduled Payment Date: The Payment Date in March 2037, whereby the
Holders of the Notes shall be entitled to receive a payment of principal in an
amount equal to the Note Principal Amount of the Notes and any accrued and
unpaid interest thereon.

Fiscal Agent: As defined in the Policy with respect to the Insurer.

 

 

 

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Floating Allocation Percentage: With respect to any Payment Date, the percentage
equivalent of a fraction the numerator of which is the Invested Amount for the
preceding Payment Date (or in the case of the first Payment Date, the Initial
Invested Amount) and the denominator of which is the Pool Balance at the end of
the Collection Period preceding the previous Payment Date (or in the case of the
first Payment Date, the Cut-off Date Pool Balance), provided such percentage
shall not be greater than 100%.

Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the amount, if
any, by which (i) the related aggregate Net Recoveries exceed (ii) the related
Principal Balance (without giving effect to any reduction thereto in respect of
any prior Charge-Off Amounts) immediately prior to receipt of the final
Recoveries plus accrued and unpaid interest thereon at the applicable Loan Rate
from the date interest was last paid through the date of receipt of the final
Recoveries.

Formula Note Rate: With respect to the Notes and any Interest Accrual Period,
the per annum rate equal to LIBOR plus 0.14%.

Holders: The holders of the Notes, the Class B Certificates, the Class L
Certificates or the Class R Certificates.

Indenture: The Indenture, dated as of December 21, 2006, between the Issuer and
the Indenture Trustee, as such may be amended, modified or supplemented from
time to time.

Indenture Trustee: Deutsche Bank National Trust Company, a national banking
association, as Indenture Trustee under this Agreement, or any successor
Indenture Trustee appointed in accordance with this agreement.

Indenture Trustee Expense Amount: Means, any costs, expenses or liabilities
reimbursable to the Indenture Trustee to the extent provided in the Indenture;
provided, however, such reimbursable amounts may not exceed $20,000 on any
Payment Date or $150,000 during any Anniversary Year (excluding, for this
purpose, costs and expenses of the indenture trustee incurred in connection with
any transfer of servicing following a default by the Servicer). In the event
that the Indenture Trustee incurs reimbursable amounts in excess of $150,000, it
may seek reimbursement for such amounts in subsequent Anniversary Years, but
(subject to the immediately preceding sentence) in no event shall more than
$150,000 be reimbursed to the Indenture Trustee per Anniversary Year.

Indenture Trustee Fee: An amount equal to 0.005% per annum of the outstanding
Principal Balance of each Mortgage Loan.

Index: Means the Prime Rate.

Initial Invested Amount: $650,000,000.

 

 

 

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Initial LIBOR Rate: 5.35000%.

Initial Note Principal Amount: $650,000,000.

Insurance and Indemnity Agreement or Insurance Agreement: The Insurance and
Indemnity Agreement dated as of December 21, 2006 among the Indenture Trustee,
the Insurer, the Depositor and the Seller and Servicer, including any amendments
and supplements thereto in accordance with the terms thereof.

Insurance Agreement Event of Default: For purposes of Section 7.01 hereunder,
and notwithstanding the definition of the same set forth in the Insurance and
Indemnity Agreement, the occurrence of one or more of the following events:

(a)  Any representation or warranty (other than a representation or warranty in
respect of the Mortgage Loans contained in Section 3.01 of the Mortgage Loan
Purchase Agreement or Section 2.04 of the Sale and Servicing Agreement, so long
as the party breaching such representation or warranty shall have performed its
obligations with respect thereto in accordance with the Mortgage Loan Purchase
Agreement or the Sale and Servicing Agreement, as the case may be) made by the
Sponsor, the Seller, the Servicer, the Depositor or the Trust under the
Insurance and Indemnity Agreement or under any other Transaction Document, or in
any certificate furnished under the Insurance and Indemnity Agreement or under
any other Transaction Document, shall prove to be untrue or incomplete in any
material respect; provided, however, that if the Sponsor, the Seller, the
Servicer, the Depositor or the Trust effectively cures any such defects in any
representation or warranty under any Transaction Document or certificate or
report furnished under any Transaction Document, within the time period
specified in the related document as the cure period therefor, such defect shall
not in and of itself constitute an Insurance Agreement Event of Default;

(b)  (i) The Sponsor, the Seller, the Servicer, the Depositor or the Trust shall
fail to pay when due any amount payable by the Sponsor, the Seller, the
Servicer, the Depositor or the Trust unless such amounts are paid in full within
the cure period therefor, respectively, under the Insurance and Indemnity
Agreement or (ii) a legislative body has enacted any law that declares or a
court of competent jurisdiction shall find or rule that the Insurance Agreement
or any other Transaction Document are not valid and binding on the Sponsor, the
Seller, the Servicer, the Depositor or the Trust;

(c)  Any failure on the part of the Sponsor, the Seller, the Servicer, the
Depositor or the Trust duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Sponsor, the Seller, the
Servicer, the Depositor or the Trust contained in the Insurance and Indemnity
Agreement or in any other Transaction Document which continues unremedied beyond
any cure period provided therein, or, in the case of the Insurance and Indemnity
Agreement, for a period of 30 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Sponsor, the Seller, the Servicer, the Depositor or the Trust by the Insurer
(with a copy to the Indenture

 

 

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Trustee) or by the Indenture Trustee (with a copy to the Insurer). Such failure
shall not constitute an Insurance Agreement Event of Default hereunder, if
within such 30-day period the Sponsor, the Seller, the Servicer, the Depositor
or the Trust, as the case may be, shall have given notice to the Insurer of
corrective action it proposes to take, which corrective action is agreed, in
writing by the Insurer to be satisfactory and the Sponsor, the Seller, the
Servicer, the Depositor or the Trust shall thereafter pursue such corrective
action diligently until such default is cured;

(d)  A decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state insolvency or similar law or the appointment of a conservator
or receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Sponsor, the Seller or the Servicer and such decree or
order shall have remained in force undischarged or unstayed for a period of 90
consecutive days;

(e)  The Sponsor, the Seller or the Servicer shall consent to the appointment of
a conservator or receiver or liquidator or other similar official in any
involuntary insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings of or relating to the Sponsor, the Seller or
the Servicer or of or relating to all or substantially all of its property and
if the Sponsor, the Seller or the Servicer, shall fail to take appropriate
action resulting in the withdrawal or dismissal of such proceeding within 60
Business Days; or

(f)  The Sponsor, the Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of or otherwise voluntarily commence a case or proceeding under any
applicable insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations.

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

Insured Payments: As defined in the Policy with respect to the Notes and each
Payment Date.

Insurer: MBIA Insurance Corporation., a stock insurance corporation incorporated
under the laws of the State of New York.

Insurer Default: The failure by the Insurer to make a payment required under the
Policy in accordance with the terms thereof.

 

 

 

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Interest Accrual Period: with respect to each Payment Date will be the period
from and including the preceding Payment Date (or, in the case of the first
Payment Date, from the Closing Date) to, but excluding the current Payment Date.

Interest Collections: with respect to any Payment Date, is equal to the sum of
(a) all payments by or on behalf of mortgagors and any other amounts
constituting interest, including the portion of Net Liquidation Proceeds and
Insurance Proceeds allocated to interest pursuant to the terms of the related
Mortgage Note (excluding the fees or late charges or similar administrative fees
paid by Mortgagors) collected during the related Collection Period and all
Recoveries, less the Servicing Fee for the related Collection Period and (b) the
interest portion of (i) the purchase price paid for a Mortgage Loan repurchased
by the Seller during the related Collection Period, (ii) any Substitution
Amounts in respect of an Eligible Substitute Mortgage Loan which is substituted
by the Seller during the related Collection Period for a removed Mortgage Loan,
and (iii) the Optional Redemption Price in connection with any Optional
Redemption of the Notes during the related Collection Period. The terms of the
related Mortgage Note shall determine the portion of each payment in respect of
such Mortgage Loan that constitutes principal or interest.

Interest Payment Amount: With respect to the Notes and any Payment Date, (x) the
Note Rate applicable to such Payment Date multiplied by (y) the Note Principal
Amount immediately prior to such Payment Date multiplied by (z) a fraction, the
numerator of which is the actual number of days in the related Interest Accrual
Period and the denominator of which is 360.

Invested Amount: On any Payment Date, is the Invested Amount for the preceding
Payment Date (or in the case of the First Payment Date, the Initial Invested
Amount) reduced by (i) the Floating Allocation Percentage of Principal
Collections for such Payment Date and (ii) the Investor Charge-Off Amounts for
such Payment Date.

Investor Charge-Off Amount: For any Payment Date, the Charge-Off Amounts
incurred during the related Collection Period multiplied by the Floating
Allocation Percentage for such Payment Date.

Late Payment Rate: For any Payment Date, the lesser of (a) the greater of (i)
the rate of interest, as it is publicly announced by Citibank, N.A., as its
prime rate (any change in such prime rate of interest to be effective on the
date such change is announced by Citibank, N.A.), plus 2% per annum and (ii) the
then applicable highest rate of interest on the Notes and (b) the maximum rate
permissible under applicable usury or similar laws limiting interest rates, as
determined by the Insurer. The Late Payment Rate shall be computed on the basis
of the actual number of days elapsed over a year of 360 days.

LIBOR: With respect to the first Interest Accrual Period, the Initial LIBOR
Rate. With respect to each subsequent Interest Accrual Period, a per annum rate
determined on the LIBOR Determination Date in the following manner by the
Indenture Trustee on the basis of the “Interest Settlement Rate” set by the
British Bankers’ Association (the “BBA”) for one-month

 

 

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United States dollar deposits, as such rates appear on the Telerate Page 3750,
as of 11:00 a.m. (London time) on such LIBOR Determination Date.

(a)  If on such a LIBOR Determination Date, the BBA’s Interest Settlement Rate
does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time), or if
the Telerate Page 3750 is not available on such date, the Indenture Trustee will
obtain such rate from Reuters’ “page LIBOR 01” or Bloomberg’s page “BBAM”. If
such rate is not published for such LIBOR Determination Date, LIBOR for such
date will be the most recently published Interest Settlement Rate. In the event
that the BBA no longer sets an Interest Settlement Rate, the Indenture Trustee
will designate an alternative index that has performed, or that the Indenture
Trustee expects to perform, in a manner substantially similar to the BBA’s
Interest Settlement Rate.

(b)  The establishment of LIBOR by the Indenture Trustee and the Indenture
Trustee’s subsequent calculation of the Note Rate for the relevant Interest
Accrual Period, in the absence of manifest error, will be final and binding.

LIBOR Business Day: Any day on which banking institutions in the State of New
York or in the city of London, England are open for conducting transactions in
foreign currency and exchange.

LIBOR Determination Date: With respect to any Interest Period, the second LIBOR
Business Day preceding the first day of such Interest Period.

Lien: Any lien, charge, mortgage, claim, participation interest, equity, pledge
or security interest of any nature, encumbrances or right of others.

Liquidation Expenses: Expenses that are incurred by the Servicer in connection
with the liquidation of any defaulted Mortgage Loan and are not recoverable
under the applicable primary mortgage insurance policy, if any, including,
without limitation, foreclosure and rehabilitation expenses, legal expenses and
unreimbursed amounts, if any, expended pursuant to Sections 3.07 or 3.08.

Liquidated Mortgage Loan: Any Mortgage Loan as to which the Servicer has made a
Final Recovery Determination.

Liquidation Event: With respect to any Mortgage Loan, any of the following
events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made as to such Mortgage Loan or (iii) such Mortgage Loan is
removed from the Trust Fund by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Sections 2.02, 2.04, 2.05 3.07 or 8.01. 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 sold or purchased pursuant
to Sections 3.07(a) or 8.01.

 

 

 

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Liquidation Proceeds: The amount (other than amounts received in respect of the
rental of any REO Property prior to REO Disposition) received by the Servicer in
connection with (i) the taking of all or a part of a Mortgaged Property by
exercise of the power of eminent domain or condemnation, (ii) the liquidation of
a defaulted Mortgage Loan by means of a trustee’s foreclosure sale or otherwise
or (iii) the repurchase, substitution or sale of a Mortgage Loan or an
REO Property pursuant to or as contemplated by Sections 2.02, 2.04, 2.05, 3.07
or 8.01.

Loan Rate: With respect to any Mortgage Loan as of any day, the variable
interest rate applicable under the related Mortgage Note.

Loan Rate Cap: With respect to any Mortgage Loan, the lesser of (i) the maximum
Loan Rate permitted by the related Mortgage Note over the life of the Mortgage
Loan, and (ii) the applicable state usury ceiling.

Lost Note Affidavit: An affidavit in the form of Exhibit H.

Majority Securityholders: During the period that any Notes are outstanding, the
holder or holders of in excess of 50% of the Note Principal Amount of the Notes;
and thereafter, the holders of the Certificates (voting collectively as a single
class).

Managed Amortization Period: With respect to the Notes, the period commencing on
the first Payment Date and ending on the earlier to occur of (x) the 120th
Payment Date and (y) the Payment Date which immediately follows the occurrence
of a Rapid Amortization Trigger Event.

Margin: With respect to each Mortgage Loan, the fixed percentage amount set
forth in the related Credit Line Agreement which amount is added to the Prime
Rate in accordance with the terms of such Credit Line Agreement to determine the
Loan Rate for such Mortgage Loan, subject to the Loan Rate Cap.

Material Adverse Change: As defined in the Insurance and Indemnity Agreement.

Maximum Principal Payment: With respect the Notes, (i) during the Managed
Amortization Period, the Net Principal Collections with respect to such Payment
Date, and (ii) during the Rapid Amortization Period, the Floating Allocation
Percentage of Principal Collections for such Payment Date.

Maximum Rate: With respect to the Notes on any Payment Date, the quotient of (A)
the excess of (x) the Interest Collections for that Payment Date over (y) the
sum of (i) the fees of the Owner Trustee for that Payment Date; (ii) payments to
the Indenture Trustee in respect of the Indenture Trustee Expense Amount; (iii)
the Indenture Trustee Fee; and (iv) the Premium Amount payable to the Insurer on
that Payment Date divided by (B) the product of (x) the Pool

 

 

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Balance on the first day of the related Collection Period, and (y) a fraction,
the numerator of which is the actual number of days in the related Interest
Accrual Period for the Notes and the denominator of which is 360.

MERS: Mortgage Electronic Registration Systems, Inc., a Delaware corporation, or
any successor in interest thereto.

MERS Mortgage Loan: Any Mortgage Loan as to which the related Mortgage, or an
Assignment of Mortgage, has been or will be recorded in the name of MERS, as
nominee for the holder from time to time of the Credit Line Agreement.

Monthly Payment: With respect to a Mortgage Loan, the scheduled monthly payment
of principal and/or interest required to be made by a Mortgagor on such Mortgage
Loan.

Moody’s: Moody’s Investors Service, Inc., or any successor thereto.

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

Mortgage File: The mortgage documents listed in Section 2.01(e)(i) and (ii),
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.

Mortgage Loan: Each of the home equity line of credit mortgage loans that is
transferred and assigned to the Trust pursuant to Sections 2.01 and 2.05,
together with the Related Documents, exclusive of home equity line of credit
mortgage loans that are transferred to the Seller, from time to time pursuant to
Sections 2.02 and 2.05.

Mortgage Loan Purchase Agreement: The mortgage loan purchase agreement, dated as
of December 21, 2006, between the Seller and the Depositor, relating to the sale
of the Mortgage Loans from the Seller to the Depositor.

Mortgage Loan Schedule: With respect to the Cut-off Date, the schedule of
Mortgage Loans constituting assets of the Trust and thereafter as amended or
supplemented pursuant to the terms hereof. The Mortgage Loan Schedule is the
schedule set forth herein as Exhibit A, which schedule sets forth as to each
Mortgage Loan: (i) the Cut-off Date Principal Balance, (ii) the loan number,
(iii) the Credit Limit, (iv) the CLTV as of the date of the origination of the
related Mortgage Loan, (v) occupancy and loan purpose, (vi) the Loan Rate as of
the Cut-off Date, (vii) the Margin, (viii) the type of property, (ix) the
debt-to-income ratio, (x) the credit score, (xi) the Originator, (xii) the Loan
Rate Cap, (xiii) documentation type, (xiv) zip code, (xv) term of the draw
period, (xvi) lien position, (xvii) maximum rate, (xviii) original term, (xix)
remaining term, and (xx) any related Early Termination Fee.

 

 

 

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Mortgage Note: With respect to a Mortgage Loan, the related credit line account
agreement executed by the related Mortgager and any amendment or modification
thereof.

Mortgaged Property: With respect to each Mortgage Loan, the underlying real
property, including improvements thereon.

Mortgagee: With respect to any Mortgage Loan as of any date of determination,
the holder of the related Mortgage Note and any related Mortgage as of such
date.

Mortgagor: With respect to any Mortgage Loan, the obligor or obligors under the
related Mortgage Note.

Net Available Funds: With respect to each Payment Date, the excess of (A) the
Available Funds for that Payment Date, over (B) the sum of (i) the payment of
the Indenture Trustee Expense Amount, (ii) the payment of the Indenture Trustee
Fee, (iii) the payment to the Owner Trustee of its fee for services rendered
pursuant to the Trust Agreement, (iv) all Early Termination Fees (which are
distributable only to the Class L Certificates), and (v) during the Managed
Amortization Period, the amount of Principal Collections for that Payment Date
applied to purchase additional Draws under the Mortgage Loans.

Net Charge-Off Amount: With respect to any Mortgage Loan, the Charge-Off Amount,
less any Net Recoveries with respect to such Mortgage Loan.

Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or any
other disposition of related Mortgaged Property (including REO Property), the
related Liquidation Proceeds net of Servicing Advances, Servicing Fees and any
other accrued and unpaid servicing fees received and retained in connection with
the liquidation of such Mortgage Loan or Mortgaged Property.

Net Loan Rate: With respect to any Mortgage Loan on any day, the Loan Rate less
the Expense Fee Rate.

Net Principal Collections: With respect to the Mortgage Loans and any Payment
Date, an amount equal the positive difference between (x) the Floating
Allocation Percentage of Principal Collections with respect to such Payment Date
and (y) the Floating Allocation Percentage of the aggregate principal amount of
all Additional Balances arising during the related Collection Period; provided,
however, that in no event will Net Principal Collections be less than zero with
respect to any Payment Date.

Net Recoveries: With respect to any Charged-Off HELOC, Recoveries net of
unreimbursed Servicing Fees with respect thereto.

Non-MERS Mortgage Loan: Any Mortgage Loan other than a MERS Mortgage Loan.

 

 

 

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Nonrecoverable Advance: Any Advance previously made or proposed to be made by
the Servicer in respect of a Mortgage Loan which, in the good faith judgment of
the Servicer, will not, or, in the case of a proposed Advance, would not, be
ultimately recoverable by the Servicer from related late collections, Insurance
Proceeds, Liquidation Proceeds or proceeds from the disposition of any
REO Property. To the extent that any Mortgagor is not obligated under the
related Mortgage documents to pay or reimburse any portion of any Servicing
Advances that are outstanding with respect to the related Mortgage Loan as a
result of a modification of such Mortgage Loan by the Servicer, which forgives
amounts which the Servicer or Subservicer had previously advanced, and the
Servicer determines that no other source of payment or reimbursement for such
advances is available to it, such Servicing Advances shall be deemed to be
Nonrecoverable Advances. The determination by the Master Servicer that it has
made a Nonrecoverable Advance or that any proposed Advance would constitute a
Nonrecoverable Advance, shall be evidenced by an Officer’s Certificate delivered
to the Company, the Indenture Trustee and the Insurer.

Note: Any Note designated as an “Asset-Backed Note” on the face thereof,
substantially in the form of Exhibit A to the Indenture.

Noteholder: Any owner of the Notes, as shown on the Note Register.

Note Principal Amount: With respect to any date, the Initial Note Principal
Amount, less the amount of all principal distributions previously distributed
with respect to the Notes.

Note Principal Payment Amount: With respect to each Payment Date, (a) prior to
the Stepdown Date or if a Trigger Event is in effect or a Rapid Amortization
Trigger Event has occurred, the Principal Payment Amount for such Payment Date
and (b) on or after the Stepdown Date unless a Trigger Event is in effect or a
Rapid Amortization Trigger Event has occurred, the lesser of (A) the excess of
(i) the Note Principal Amount of the Notes immediately prior to the applicable
Payment Date over (ii) the Note Target Amount for such Payment Date and (B) the
Principal Payment Amount for such Payment Date.

Note Rate: With respect to any Payment Date, the lesser of the Formula Note Rate
and the Maximum Rate for such Payment Date.

Note Register and Note Registrar: The register which provides for the
registration of the Notes and the registration of transfers of the Notes, which
shall be maintained by the Indenture Trustee, as Note Registrar.

Note Target Amount: For each Payment Date, the lesser of (a) the product of
(i) 95.50% and (ii) the Invested Amount for such Payment Date and (b) the excess
if any of (i) the Invested Amount for such Payment Date over (ii) 0.50% of the
Initial Invested Amount.

Officer’s Certificate: A certificate signed by the President, an Executive Vice
President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant

 

 

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Treasurer, Cashier, Assistant Cashier, Controller or Assistant Controller of the
Servicer, Seller or the Depositor, as the case may be, and delivered to the
Indenture Trustee and the Insurer.

Opinion of Counsel: A written opinion of counsel, who may be in-house counsel
for the Servicer (or its affiliate), the Depositor (or its affiliate), the
Seller (or its affiliate) or the Depositor (or its affiliate) (except that any
opinion pursuant to Section 2.01 or 6.04 or relating to taxation or otherwise as
required by the Insurer must be an opinion of independent outside counsel) and
who, in the case of opinions delivered to the Insurer, the Indenture Trustee and
the Rating Agency, is reasonably acceptable to each of them.

Optional Redemption Date: As defined in Section 8.01(b) of this Agreement.

Optional Redemption Holder: The Servicer.

Optional Redemption Price: An amount equal to the greater of: (a) the sum of (i)
the aggregate outstanding Principal Balance of each Mortgage Loan, plus accrued
interest at the applicable Loan Rate, (ii) any costs and damages incurred by the
Trust in connection with a violation of any applicable federal, state or local
predatory or abusive lending law, (iii) the lesser of (A) the fair market value
of all other property being purchased and (B) the unpaid Principal Balance of
the related Mortgage Loan that was secured by such property and (iv) any
unreimbursed Servicing Advances, unreimbursed expenses and any unpaid fees due
to the Servicer, the Insurer (including premiums and Reimbursement Amounts), the
Indenture Trustee and the Owner Trustee for the related Payment Date and (b) the
sum of (i) the Note Principal Amount of the Notes with interest due thereon
(including Deferred Interest), (ii) any costs and damages incurred by the Trust
in connection with a violation of any federal, state or local predatory or
abusive lending laws, (iii) any unreimbursed Servicing Advances, unreimbursed
expenses and any unpaid fees due to the Servicers, the Insurer, the Indenture
Trustee, and the Owner Trustee and (iv) any Reimbursement Amounts.

Originator: With respect to each Mortgage Loan sold by the Seller, the
originator of such Mortgage Loan as specified in the Mortgage Loan Schedule.

Outstanding: The meaning specified in the Indenture.

Overcollateralization Amount: With respect to the Notes and any Payment Date,
the excess, if any, of (x) the Invested Amount for that Payment Date over (y)
the sum of the Note Principal Amount of the Notes as of such Payment Date (after
taking into account any reductions to such Note Principal Amount resulting from
payments made pursuant to clauses (iii), (iv) and (vi) of Section 5.01(a)(I) of
this Agreement on such Payment Date).

Overcollateralization Deficiency Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (i) the Specified Overcollateralization
Amount for such Payment Date over (ii) the Overcollateralization Amount for such
Payment Date.

 

 

 

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Overcollateralization Deficit: With respect to the Notes and any Payment Date,
the amount, if any, by which (a) the Note Principal Amount of the Notes, after
taking into account the payment to the Holders of the Notes of all principal
from all sources other than the Policy on such Payment Date, exceeds (b) the
Invested Amount for such Payment Date (without taking into account any payment
made under the Policy).

Overcollateralization Reduction Amount: With respect to the Notes and any
Payment Date, the excess, if any, of (i) the Overcollateralization Amount for
such Payment Date over (ii) the Specified Overcollateralization Amount for such
Payment Date, assuming that the Maximum Principal Payment has been distributed
to the Noteholders on such Payment Date.

Owner Trustee: Wilmington Trust Company, a Delaware banking corporation, not in
its individual capacity but solely as owner trustee under the Trust Agreement,
and any successor owner trustee under the Trust Agreement appointed in
accordance with the terms thereof.

Payment Account: The segregated non-interest bearing trust account established
by the Indenture Trustee pursuant to Section 5.05.

Payment Date: The 25th day of each month or, if such day is not a Business Day,
then the next Business Day, beginning in January 2007.

Permitted Activities: The activities allowed under Paragraph 35 of SFAS 140.

Percentage Interest: With respect to the Notes, the percentage obtained by
dividing the principal denomination of such Note by the aggregate of the
principal denominations of all Notes. With respect to a Certificate, the
percentage set forth on the face of such Certificate.

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

Plan: An employee benefit plan or other retirement arrangement which is subject
to Section 406 of ERISA and/or Section 4975 of the Code or any entity whose
underlying assets include such plan’s or arrangement’s assets by reason of their
investment in the entity.

Policy: The financial guaranty insurance policy (No.490190) with respect to the
Notes and all endorsements thereto, if any, dated the Closing Date, issued by
the Insurer for the benefit of the Holders of the Notes, a copy of which is
attached hereto as Exhibit G.

Pool Balance: With respect to any date, the aggregate of the Principal Balances
of all of the Mortgage Loans as of such date.

Preference Amount: As defined in the Policy.

 

 

 

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Premium Amount: The premium payable to the Insurer for the Policy pursuant to
the Premium Letter.

Premium Letter: The premium letter between the Insurer, the Indenture Trustee
and the other parties thereto dated December 21, 2006.

Prime Rate: As of any date, the prime rate of the United States money center
commercial banks as published in the latest edition of The Wall Street Journal,
Northeast Edition.

Principal Balance: As of any date of determination and any Mortgage Loan, an
amount equal to the Cut-off Date Principal Balance of the Mortgage Loan, plus
(i) any Additional Balances transferred to the trust in respect of the Mortgage
Loan, minus (ii) all collections credited against the principal balance of the
Mortgage Loan in accordance with the related Credit Line Agreement prior to that
day, and minus (iii) all prior related Charge-Off Amounts. For purposes of this
definition, a Liquidated Mortgage Loan will have a Principal Balance equal to
the Principal Balance of that Mortgage Loan prior to the final recovery of
liquidation proceeds and a Principal Balance of zero thereafter.

Principal Collections: with respect to any Payment Date, is equal to the sum of
amounts allocated to principal collected during the related Collection Period,
the portion of Net Liquidation Proceeds and Insurance Proceeds allocated to
principal pursuant to the terms of the Credit Line Agreements, any amounts
allocable to principal with respect to any Mortgage Loans that are repurchased
out of the trust, the principal portion of any Substitution Amount and the
principal portion of any Optional Redemption Price.

Principal Payment Amount: With respect to the Notes on any Payment Date, the
excess of (a) the Maximum Principal Payment over (b) the Overcollateralization
Reduction Amount, if any, in each case, with respect to such Payment Date.

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

Purchase Price: An amount equal to the principal balance of the Mortgage Loan at
the time of any transfer Pursuant to Sections 2.03 or 2.04 plus (a) the greater
of (i) accrued and unpaid interest at the applicable mortgage loan rate net of
the servicing fee to the date of repurchase and (ii) 30 days’ interest, computed
at the applicable mortgage loan rate and (b) any expenses incurred by the trust
as a result of the defect, including any costs and damages actually incurred and
paid by or on behalf of the trust in connection with any violation of such
mortgage loan of any predatory or abusive lending laws.

Purchaser: The Depositor, as purchasers of the Mortgage Loans under the Mortgage
Loan Purchase Agreement.

 

 

 

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Qualifying SPE: As set forth in SFAS 140.

Rapid Amortization Event: As defined in Section 5.08.

Rapid Amortization Period: The period commencing on the day immediately
following the end of the Managed Amortization Period and continuing until the
termination of the Trust pursuant to Section 8.01.

Rapid Amortization Trigger Event: A “Rapid Amortization Trigger Event” shall
occur if a Rapid Amortization Event is declared to have occurred or has occurred
automatically as set forth in Section 5.08.

Rating Agency: Any statistical credit rating agency, or its successor, that
rated the Notes at the request of the Depositor at the time of the initial
issuance of the Notes. If such agency or a successor is no longer in existence,
“Rating Agency” shall be such statistical credit rating agency, or other
comparable Person, designated by the Servicer and the Insurer, notice of which
designation shall be given to the Indenture Trustee. References herein to the
highest short term unsecured rating category of a Rating Agency shall mean
“A-1+” or better in the case of Standard & Poor’s and “P-1” or better in the
case of Moody’s and in the case of any other Rating Agency shall mean the
ratings such other Rating Agency deems equivalent to the foregoing ratings.
References herein to the highest long-term rating category of a Rating Agency
shall mean “AAA” in the case of Standard & Poor’s and “Aaa” in the case of
Moody’s and in the case of any other Rating Agency, the rating such other Rating
Agency deems equivalent to the foregoing ratings.

Ratings: The ratings initially assigned to the Notes and the Certificates by the
Rating Agencies, as evidenced by letters from the Rating Agencies.

Record Date: With respect to the Notes for so long as the Notes are held in
book-entry form, the Business Day immediately preceding the related Payment Date
following the date on which Definitive Notes are issued for the Notes, and with
respect to any other Class of Certificates, the last Business Day of the
calendar month preceding the month in which the related Payment Date occurs

Recordation Event: Any of (i) the long-term senior unsecured debt rating of the
Seller (or any successor in interest thereto) is reduced to below “BBB-” by
Standard & Poor’s, (ii) an Event of Servicer Termination has occurred and is
continuing, or (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Servicer; provided, that any Recordation Event may be waived by
the Insurer (so long as the Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer and no Insurer Default has occurred and is
continuing) by its providing written notice of such waiver to the Servicer and
the Indenture Trustee; and (iv) at the written request of the Insurer (so long
as the Notes are Outstanding or any Reimbursement Amounts remain due and owing
to the Insurer and no Insurer Default has occurred and is continuing) to the
Indenture Trustee to cause the Custodian to record

 

 

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Assignments of Mortgages because the Insurer has determined, in the exercise of
its reasonable judgment, that such recordation is necessary to protect the
Insurer’s interest with respect to such Mortgage Loans because (a) a Material
Adverse Change with respect to the Seller or the Servicer has occurred, (b) the
Insurer has been so advised by counsel as a result of a change that occurred
after the Closing Date in applicable law or the interpretation thereof or (c)
with respect to a particular Mortgage Loan, the insolvency of the related
Mortgagor.

Recoveries: With respect to a Charged-Off HELOC, the proceeds (including
Released Mortgaged Property Proceeds but not including amounts drawn under the
Policy) received by the Servicer in connection with such Charged-Off HELOC minus
related Servicing Advances and any amount due the holder of any Senior Lien that
has not been previously paid.

Reference Banks: Three major banks that are engaged in the London interbank
market, selected by the Servicer and identified in writing to the Indenture
Trustee.

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.

Reimbursement Amount: As to any Payment Date with respect to the Notes, the sum
of (x)(i) all Insured Payments paid by the Insurer, but for which the Insurer
has not been reimbursed prior to such Payment Date pursuant to
Section 5.01(a)(I)(v) of this Agreement, plus (ii) interest accrued on such
Insured Payments not previously repaid calculated at the Late Payment Rate from
the date the Indenture Trustee received the related Insured Payments and (y),
without duplication, (i) any other amounts then due and owing to the Insurer
under the Insurance Agreement but for which the Insurer has not been paid or
reimbursed prior to such Payment Date, plus (ii) interest on such amounts at the
Late Payment Rate.

Related Documents: With respect to each Mortgage Loan, the documents listed in
Section 2.01(e)(ii)(B) through (D).

Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds received
by the Servicer in connection with (a) a taking of an entire Mortgaged Property
by exercise of the power of eminent domain or condemnation or (b) any release of
part of the Mortgaged Property from the lien of the related Mortgage, whether by
partial condemnation, sale or otherwise, which are not released to the Mortgagor
in accordance with (i) applicable law, (ii) mortgage servicing standards
employed by the Servicer in servicing home equity line of credit mortgage loans
for its own account and (iii) this Agreement.

Relief Act: The Servicemembers Civil Relief Act, as amended.

 

 

 

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Relief Act Interest Shortfall: With respect to any Payment Date, for any
Mortgage Loan with respect to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Collection Period or
(without duplication) any earlier Collection Period as a result of the
application of the Relief Act, the amount by which (i) interest collectible on
such Mortgage Loan during each such Collection Period is less than (ii) one
month’s interest on the Stated Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.

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

REO Account: The account or accounts maintained by the Servicer in respect of an
REO Property pursuant to Section 3.07.

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 Loan 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 Payment Date in
such calendar month.

REO Principal Amortization: With respect to any REO Property, for any calendar
month, the excess, if any, of (a) the aggregate of all amounts received in
respect of such REO Property during such calendar month, whether in the form of
rental income, sale proceeds (including, without limitation, that portion of the
Optional Redemption Price paid in connection with a purchase of all of the
Mortgage Loans and REO Properties pursuant to Section 8.01 that is allocable to
such REO Property) or otherwise, net of any portion of such amounts (i) payable
pursuant to Section 3.07 in respect of the proper operation, management and
maintenance of such REO Property or (ii) payable or reimbursable to the Servicer
pursuant to Section 3.07 for unpaid Servicing Fees in respect of the related
Mortgage Loan and unreimbursed Servicing Advances, over (b) the REO Imputed
Interest in respect of such REO Property for such calendar month.

REO Property: A Mortgaged Property that is acquired by the Trust in foreclosure
or by deed in lieu of foreclosure.

Reserve Account: The account designated as the “Reserve Account” and established
pursuant to Section 5.06 hereof.

Residual Certificate: The Class L or Class R Certificate, as applicable.

 

 

 

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Residual Certificateholder: Any holder of a Residual Certificate.

Responsible Officer: With respect to the Indenture Trustee, any Managing
Director, any Director, any Vice President, any Assistant Vice President, any
Associate, any Assistant Secretary, any Trust Officer, or any other officer of
the Indenture Trustee customarily performing functions similar to those
performed by any of the above designated officers who at such time shall be
officers to whom with respect to a particular matter, the matter is referred
because of such officer’s knowledge of and familiarity with the particular
subject and who has direct responsibility for administration of this Agreement.
When used with respect to a Seller, the Depositor or the Servicer, the Chief
Executive Officer or any Vice President, Assistant Vice President, Treasurer,
Assistant Treasurer, Cashier, Assistant Cashier or any Secretary or Assistant
Secretary.

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

Securityholders: The Noteholders and the Certificateholders.

Seller: IndyMac Bank, F.S.B., a federal savings bank, as seller under the
Mortgage Loan Purchase Agreement.

Senior Lien: With respect to any Mortgage Loan that is not a first priority
lien, the mortgage loan or mortgage loans relating to the corresponding
Mortgaged Property having priority senior to that of such Mortgage Loan.

Servicer: IndyMac Bank, F.S.B., a federal savings bank, as Servicer, or any
successor hereunder appointed in accordance with the terms hereof.

Servicer Employees: As defined in Section 3.06.

Servicer Remittance Date: With respect to any Payment Date, the Business Day
prior to such Payment Date.

Servicing Advances: All reasonable and customary unanticipated “out of pocket”
costs and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, and (iv) compliance with the
obligations under Sections 3.04, 3.07 or 3.17 hereunder; provided however, that
such obligation with respect to any related Mortgage Loan shall cease if the
Servicer determines, in its sole discretion, that Servicing Advances with
respect to such Mortgage Loan are or would be Nonrecoverable Advances.

Servicing Certificate: As defined in Section 5.03(a).

 

 

 

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Servicing Fee: With respect to any Payment Date and Mortgage Loans, the product
of (i) the Servicing Fee Rate, (ii) the aggregate Principal Balance of Mortgage
Loans as of the opening of business on the first day of the related Collection
Period (or at the Cut-off Date with respect to the first Payment Date), and
(iii) 1/12; a portion of such Servicing Fee may be retained by a Sub-Servicer as
its servicing compensation.

Servicing Fee Rate: 0.50% per annum, with respect to Mortgage Loans.

Servicing Officer: Any officer of the Servicer involved in, or responsible for,
the administration and servicing of the Mortgage Loans whose name and specimen
signature appear on a list of servicing officers furnished to the Indenture
Trustee (with a copy to the Insurer) by the Servicer on the Closing Date, as
such list may be amended from time to time, initially set forth in Exhibit B.

SFAS 140: Statement of Financial Accounting Standards No. 140 of the Financial
Accounting Standards Board, as in effect on the date hereof.

60+ Day Delinquent Mortgage Loan: For any Collection Period, any Mortgage Loan
that is (i) more than 60 days delinquent, (ii) for which the related Mortgagor
has filed for bankruptcy protection or is otherwise the subject of a bankruptcy
or similar insolvency preceding, (iii) that is in foreclosure, or (iv) with
respect to which the related Mortgaged Property is characterized as REO Property
as of the end of such Collection Period.

Six Month Rolling Delinquency Rate: With respect to any Payment Date on and
after the sixth Payment Date, the average of the Principal Balances of 60+ Day
Delinquent Mortgage Loans for the related Collection Period and the five
preceding Collection Periods divided by the Pool Balance, in each case on the
last day of those Collection Periods, respectively.

Specified Overcollateralization Amount: On any Payment Date prior to the
Stepdown Date, is an amount equal to 2.25% of the Initial Invested Amount and on
any Payment Date on or after the Stepdown Date is an amount equal to the greater
of (i) 0.50% of the Initial Invested Amount and (ii) 4.50% of the Invested
Amount for such Payment Date.

Sponsor: IndyMac Bank, F.S.B., a federal savings bank.

Stated Principal Balance: With respect to any Mortgage Loan: (a) as of any date
of determination up to but not including the Payment Date on which the proceeds,
if any, of a Liquidation Event with respect to such Mortgage Loan would be
distributed, the outstanding Stated Principal Balance of such Mortgage Loan as
of the Cut-off Date, as shown in the Mortgage Loan Schedule, plus any Additional
Balances transferred to the trust in respect of the Mortgage Loan, minus the sum
of (i) the principal portion of each Monthly Payment due on a Due Date
subsequent to the Cut-off Date, (ii) the portion of all Principal Prepayments
received after the Cut-off Date, to the extent paid pursuant to Section 5.01 on
or before such date of determination, (iii) all Liquidation Proceeds and
Insurance Proceeds allocable to Principal to the

 

 

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extent paid pursuant to Section 5.01 on or before such date of determination,
and (iv) any Charge-off Amount incurred with respect thereto during or prior to
the Collection Period for the most recent Payment Date coinciding with or
preceding such date of determination; and (b) as of any date of determination
coinciding with or subsequent to the Payment Date on which the proceeds, if any,
of a Liquidation Event with respect to such Mortgage Loan would be paid, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Payment Date on which the proceeds, if any, of a Liquidation
Event with respect to such REO Property would be paid, an amount (not less than
zero) equal to the Stated Principal Balance of the related Mortgage Loan as of
the date on which such REO Property was acquired on behalf of the Trust Fund,
minus the aggregate amount of REO Principal Amortization in respect of such
REO Property for all previously ended calendar months, to the extent paid
pursuant to Section 5.01 on or before such date of determination; and (b) as of
any date of determination coinciding with or subsequent to the Payment on which
the proceeds, if any, of a Liquidation Event with respect to such REO Property
would be paid, zero.

Statement to Noteholders: As defined in Section 5.03(b).

Stepdown Date: With respect to the Notes, the later to occur of (a) the 31st
Payment Date and (b) the first Payment Date following the Payment Date on which
the Overcollateralization Amount is greater than or equal to 4.50% of the
Invested Amount on that Payment Date.

Subsequent Recoveries: As of any Payment Date, amounts received by the Servicer
(net of any related expenses permitted to be reimbursed to the Servicer)
specifically related to a Charged-Off HELOC.

Subservicer: Any Person with whom the Servicer has entered into a Subservicing
Agreement and who satisfies the requirements set forth in Section 3.01(a) in
respect of the qualification of a Subservicer.

Subservicing Agreement: Any agreement between the Servicer and any Subservicer
relating to subservicing and/or administration of certain Mortgage Loans as
provided in Section 3.01, a copy of which shall be delivered, along with any
modifications thereto, to the Indenture Trustee and the Insurer.

Substitution Adjustment: As to any date on which a substitution occurs pursuant
to Section 2.05, the sum of (a) the excess of (i) the aggregate Principal
Balances of all Defective Mortgage Loans to be replaced by Eligible Substitute
Mortgage Loans (after application of principal payments received on or before
the date of substitution of any Eligible Substitute Mortgage Loans as of the
date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
(accruing at the Loan Rate for such Defective Mortgage Loan) on such excess
through the Collection Period relating to the Payment Date for which such
Substitution Adjustment will be included as part of Available Funds and (y) 30
days’ interest on such excess calculated on a 360-day year in each case at the
Loan Rate (or Loan Rate net of the Servicing Fee Rate if the related Seller is
the

 

 

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Servicer) and (c) if the Servicer is not the related Seller the amount of any
unreimbursed Servicing Advances made by the Servicer with respect to such
Defective Mortgage Loan and (d) the amounts referred to in clause (b) of the
definition of Purchase Price in respect of such Defective Mortgage Loan.

Substitution Date: As defined in Section 2.05(b).

Supplemental Mortgage Loan Schedule: As defined in Section 2.05(b).

Telerate Page 3750: The display designated as page 3750 on the Moneyline
Telerate Service (or such other page as may replace page 3750 on that service
for the purpose of displaying London interbank offered rates of major banks).

Transaction Documents: This Agreement, the Mortgage Loan Purchase Agreement, the
Indenture, the Insurance and Indemnity Agreement, the Trust Agreement, the
Administration Agreement and the Premium Letter.

Trigger Event: With respect to any Payment Date, will be in effect if:

(a)   the sum of the Investor Charge-Off Amounts for that Payment Date and all
prior Payment Dates, expressed as a percentage of the Initial Invested Amount,
is greater than

(i) with respect to the first Payment Date to and including the 48th Payment
Date, 1.75%,

(ii) with respect to the 49th Payment Date to and including the 60th Payment
Date, 2.50%,

(iii) with respect to the 61st Payment Date to and including the 72nd Payment
Date, 3.00%, and

(iv) with respect to the 73rd Payment Date and thereafter, 3.25% or

(b)   the Six Month Rolling Delinquency Rate for such Payment Date is greater
than 3.50%.

Trust, Trust Estate or Trust Fund: IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H4, a Delaware statutory trust, established
pursuant to the Trust Agreement, the corpus of which consists of the Mortgage
Loans and Mortgage Files, such other assets as shall from time to time be
identified as deposited in the Trust Accounts in accordance with this Agreement,
property that secured a Mortgage Loan and that has become REO Property, the
interest of the Seller in certain hazard insurance policies maintained by the
Mortgagors or the

 

 

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Servicer in respect of the Mortgage Loans, the Depositor’s rights under the
Mortgage Loan Purchase Agreement and all proceeds of the foregoing.

Trust Accounts: The Collection Account, the Certificate Account, the Payment
Account and the Reserve Account.

Trust Agreement: The Trust Agreement, dated as of December 6, 2006, among the
Depositor and the Owner Trustee, as amended and restated as of December 21,
2006, among the Administrator, the Depositor and the Owner Trustee.

UCC: The Uniform Commercial Code, as amended from time to time, as in effect in
any specified jurisdiction.

Uninsured Cause: Any cause of damage to a Mortgaged Property such that the
complete restoration of such property is not fully reimbursable by the insurance
policies required to be maintained pursuant to Section 3.04 hereof.

Utilization Rate: As of any date, the percentage of the line of credit relating
to a Mortgage Loan that has been drawn upon.

Section 1.02        Other Definitional Provisions.

(a)   Capitalized terms used herein and not otherwise defined herein have the
meanings assigned to them in the Indenture and the Trust Agreement, as
applicable.

(b)   All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

(c)   As used in this Agreement and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.

(d)   The words “hereof,” “herein,” “hereunder” and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; Article, Section, Schedule and Exhibit
references contained in this Agreement

 

 

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are references to Articles, Sections, Schedules and Exhibits in or to this
Agreement unless otherwise specified; and the term “including” shall mean
“including without limitation.”

(e)   The definitions contained in this Agreement are applicable to the singular
as well as the plural forms of such terms and to the masculine as well as to the
feminine genders of such terms.

(f)    Any agreement, instrument or statute defined or referred to herein or in
any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.

Section 1.03        Interest Calculations.

All calculations of interest that are made in respect of the Principal Balance
of a Mortgage Loan shall be made on a daily basis using a 365-day year and the
actual number of days elapsed. All calculations of interest that are made in
respect of the Notes and the Certificates, shall be calculated on the basis of a
360 day year and the actual number of days elapsed in the related Interest
Accrual Period. The calculation of the Premium Amount, the Owner Trustee Fee and
the Indenture Trustee Fee shall be made on the basis of the actual number of
days in each Collection Period divided by 360. All dollar amounts calculated
hereunder shall be rounded to the nearest penny with one-half of one penny being
rounded up.

ARTICLE II.

 

CONVEYANCE OF THE MORTGAGE LOANS

Section 2.01        Conveyance of the Mortgage Loans.

(a)   The Depositor, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey to the
Trust, without recourse (subject to Sections 2.02 and 2.04) all of its right,
title and interest in and to (i) each Mortgage Loan listed on the Mortgage Loan
Schedule on the Closing Date and the related Mortgage File (including the
related Mortgage Note and Mortgage), including its Cut-off Date Principal
Balance (including all rights of the Depositor pursuant to the Mortgage Loan
Purchase Agreement to purchase Additional Balances resulting from Draws made
pursuant to the related Mortgage Note prior to the termination of this
Agreement) and all related collections in respect of such Mortgage Loan received
after the Cut-off Date (excluding scheduled interest payments due on or prior to
the Cut-off Date); (ii) related property that secured a Mortgage Loan and which
has been acquired by foreclosure or deed in lieu of foreclosure; (iii) its
rights under any related insurance policies maintained in respect of the
Mortgage Loans (including any Insurance Proceeds) provided, however, that
neither the Indenture Trustee nor the Trust assumes any obligation under any
Mortgage Note for the funding of future Draws to the Mortgagor thereunder, and
neither the

 

 

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Indenture Trustee nor the Trust will be obligated or permitted to fund any such
future Draws; and (vi) any and all proceeds of the foregoing (collectively, the
“Conveyed Assets”). Additional Balances shall be included in the related
Principal Balance transferred to the Trust pursuant to this Section 2.01 and
therefore will be part of the corpus of the Trust.

The Seller, the Depositor and the Trust agree to take or cause to be taken such
actions (including without limitation the filing of the UCC-1 financing
statements in the States of California, in the case of the Seller, and the State
of Delaware, in the case of the Depositor (which shall have been filed on or
before the Closing Date) describing the Cut-off Date Principal Balances and
Additional Balances related to the Mortgage Loans, and naming the Seller as
debtor and the Depositor as secured party, in the case of the Seller, and naming
the Depositor as debtor and the Trust as secured party, in the case of the
Depositor, and any amendments to such UCC-1 financing statements required to
reflect a change in the name or corporate structure of the Seller, the
Depositor, or the Trust, as the case may be, or the filing of any additional
financing statement due to the change in the jurisdiction of formation of the
Seller, the Depositor or the Trust, as the case may be, within 30 days of any
event necessitating such filing) as are necessary to perfect and protect the
Depositor’s interest in the case of the Seller and the Trust and the Insurer’s
interest in the case of the Depositor, in each case describing Cut-off Date
Principal Balance and the Additional Balances related to the Mortgage Loans, the
remainder of the trust estate and the proceeds thereof. In addition, the
Servicer agrees to file continuation statements with respect to such UCC-1
financing statements as required and as long as this Agreement remains
outstanding with such authorization and information as may be necessary to make
such filing to be provided by the applicable parties.

In the event any loss is suffered by the Insurer or the Indenture Trustee, on
behalf of the Trust, in respect of any Mortgage Loan, as a result of a failure
by the Seller or the Depositor to file the UCC-1 financing statements when
required to perfect or maintain the perfection of the Indenture Trustee’s
security interest hereunder and afford it first priority, the Seller shall, on
the Business Day next preceding the Payment Date in the month following the
Collection Period during which such loss occurred, purchase such Mortgage Loan.
Such purchase shall be accomplished in the same manner as set forth in
Section 2.02.

In addition, on or prior to the Closing Date, the Depositor shall cause the
Insurer to deliver the Policy to the Indenture Trustee, for the benefit of the
Noteholders.

(b)   In exchange for the transfer of the Mortgage Loans on the Closing Date,
the Class B, Class L and Class R Certificates shall be issued to or at the
direction of the Depositor.

(c)   In consideration of the sale of any Additional Balance from the Depositor
to the Trust on any day, the Trust shall pay or cause to be paid to the
Depositor or its designee an amount equal to the aggregate principal balances of
the related Draws on such day. The Trust shall fund the amount specified in the
preceding sentence in one of the following ways, as applicable: (i) with respect
to any Collection Period preceding the commencement of the Rapid Amortization
Period, (a) on each day during such Collection Period, a cash payment, to the
extent then available from the Floating Allocation Percentage of Principal
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Mortgage Loans received during such Collection Period and remaining on deposit
in the Collection Account, in an amount equal to the Aggregate Draw Amount on
such day, and (b) on the last day of such Collection Period, to the extent there
exists an Additional Balance Advance Amount for such Collection Period, an
increase in the Class Principal Balance of the Class L Certificate, equal to
such Additional Balance Advance Amount, and (ii) for any day on and after the
first day of the Collection Period in which the commencement of the Rapid
Amortization Period occurs, and any Collection Period thereafter, an increase in
the Class Principal Balance of the Class L Certificate in an amount equal to the
aggregate principal balance of Additional Balances on such day.

(d)   Prior to the last day of each Collection Period preceding the commencement
of the Rapid Amortization Period, the Holder of the Class L Certificate shall
purchase the Additional Balance Advance Amount for the related Payment Date, if
any, and the Seller shall deliver to the Indenture Trustee and the Holder of the
Class L Certificates two Business Days prior to the following Servicer
Remittance Date an Advance Notice including the aggregate amount of the expected
Additional Balance Advance Amount for that date. Upon receipt of such notice and
in any event no later than two Business Days prior to the following Payment
Date, the Holder of the Class L Certificate shall make an advance to the Trust
in the amount specified in such Advance Notice by depositing such amount into
the Reserve Account. The Indenture Trustee shall cause such amount to be
remitted to the Seller on such following Payment Date. In addition, on and after
the first day of the Collection Period in which the commencement of the Rapid
Amortization Period occurs, the Holder of the Class L Certificate shall purchase
Additional Balances that are transferred to the Trust (as such Additional
Balances are conveyed and in the amounts specified by the Servicer) by
depositing into the Reserve Account the amount of the Draws relating to such
Additional Balances, which amount shall be disbursed by the Indenture Trustee to
the Seller. The Class Principal Balance of the Class L Certificates will be
increased by the amount of any such purchased Additional Balance Advance Amounts
or Additional Balances, as applicable, as described in Section 2.01(c) above.

(e) (i)   In connection with such transfer, assignment, sale and conveyance by
the Depositor will deliver or have delivered to, and deposit with, the Indenture
Trustee (or its designee), on or before the Closing Date, the Mortgage Loan
Schedule in computer readable format.

(ii)   In connection with such transfer, assignment, sale and conveyance by the
Depositor, the Depositor shall cause the Seller to deliver to and deposit with
the Indenture Trustee (x) the Mortgage Note in respect of each Mortgage Loan and
(y) the Related Documents within 90 days following the occurrence of the Closing
Date. The Mortgage Note and the Related Documents shall be in the following
form:

(A)  the original Mortgage Note, endorsed in blank, or a copy of such original
Mortgage Note with an accompanying Lost Note Affidavit;

(B)  the original Assignment of Mortgage, from the Seller either in blank or to
“Deutsche Bank National Trust Company, as Indenture Trustee for

 

 

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IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4 under the
Sale and Servicing Agreement dated December 12, 2006,” which assignment shall be
in form and substance acceptable for recording;

(C)  the original Mortgage, with evidence of recording thereon, provided that if
the original Mortgage has been delivered for recording to the appropriate public
recording office of the jurisdiction in which the Mortgaged Property is located
but has not yet been returned to the Seller by such recording office, the Seller
shall deliver to the Indenture Trustee a certified true copy of such original
Mortgage so certified by or on behalf of the Seller, together with a certificate
by or on behalf of the Seller certifying that such original Mortgage has been so
delivered to such recording office; in all such instances, the Seller shall
deliver or cause to be delivered the original recorded Mortgage to the Indenture
Trustee promptly upon receipt of the original recorded Mortgage;

(D)  intervening assignments, if any, with evidence of recording thereon,
provided that if such intervening assignment has been delivered for recording to
the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller by
such recording office, the Seller shall deliver to the Indenture Trustee a
certified true copy of such intervening assignment so certified by the Seller,
together with a certificate by or on behalf of the Seller certifying that such
intervening assignment has been so delivered to such recording office; in all
such instances, the Seller shall deliver or cause to be delivered the original
intervening assignment to the Indenture Trustee promptly upon receipt of the
original intervening assignment; and

(E)  originals of all assumption and modification agreements, if any,

provided, however, that as to any Mortgage Loan, if as evidenced by an Opinion
of Counsel delivered to and in form and substance satisfactory to the Indenture
Trustee, the Insurer, and the Rating Agencies (x) an optical image or other
representation of the related document specified in clause (e)(ii)(C) above is
enforceable in the relevant jurisdictions to the same extent as the original of
such document and (y) such optical image or other representation does not impair
the ability of an owner of such Mortgage Loan to transfer or perfect its
interest in such Mortgage Loan, such optical image or other representation may
be delivered as required in clause (e)(ii).

The Seller and the Depositor each hereby confirms to the Indenture Trustee and
the Insurer that it has made the appropriate entries in its general accounting
records, to indicate that such Mortgage Loans have been sold to the Depositor by
the Seller, and sold by the Depositor to the Trust. The Servicer hereby confirms
to the Indenture Trustee and the Insurer that it has clearly and unambiguously
made appropriate entries in its general accounting records indicating

 

 

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that such Mortgage Loans constitute part of the Trust and are serviced by it on
behalf of the Trust in accordance with the terms hereof.

The Seller shall deliver to the Indenture Trustee, as initial custodian and
bailee for the benefit of the Trust, the documents and instruments listed above
in this clause (e).

The Assignments of Mortgage will be held by the Indenture Trustee, subject to
the conditions provided below in clause (f).

(f)    It is the express intent of the parties hereto that the conveyance of the
Mortgage Loans and the other property described above by the Depositor to the
Trust, as provided in this Agreement be, and be construed as, a sale of all of
the Depositor’s right, title and interest in the Mortgage Loans and the other
property described above by the Depositor to the Trust. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans and the other property described above by the Depositor to the Trust to
secure a debt or other obligation of the Depositor. However, in the event that,
notwithstanding the intent of the parties, the Mortgage Loans and the other
property described above are held to be property of the Depositor, or if for any
reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans and the other property described above, then, (x) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the UCC; and (y) the Depositor hereby grants to the Trust a security
interest in and to all of the Depositor’s right, title, and interest, whether
now owned or hereafter acquired, in and to the Conveyed Assets.

The possession by the Indenture Trustee or its designee, of Mortgage Files,
including the Mortgage Notes and the Mortgages and such other goods, letters of
credit, advices of credit, instruments, money, documents, chattel paper
(tangible and electronic) or certificated securities in accordance with the
terms of this Agreement shall be deemed to be “possession by the secured party,”
or possession by a purchaser or a person designated by him or her, for purposes
of perfecting the security interest pursuant to the UCC (including, without
limitation, Sections 9-313, 8-313 or 8-321 thereof); and notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed to be notifications to, or
acknowledgments, receipts or confirmations from, securities intermediaries,
bailees or agents of, or persons holding for, the Indenture Trustee or its
designee, as applicable, for the purpose of perfecting such security interest
under applicable law. The Seller, the Servicer and the Depositor shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans and the proceeds thereof, such security interest would be deemed
to be a perfected security interest of first priority under applicable law and
will be maintained as such throughout the term of the Agreement. In connection
herewith, the Trust shall have all of the rights and remedies of a secured party
and creditor under the UCC. Notwithstanding the foregoing, in taking such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans and the proceeds thereof, such
security interest would be deemed to be a perfected security interest of first
priority under applicable law, and maintaining such throughout the term of this
Agreement.

 

 

 

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(g)  On the Closing Date, the Indenture Trustee, will, for the benefit of
Noteholders and the Insurer, review each Mortgage Loan and the related Mortgage
File to ascertain that all required documents set forth in
Section 2.01(e)(ii)(A) have been received and shall deliver to the Depositor,
the Servicer, and the Insurer an initial certification (the “Initial
Certification”) in the form annexed hereto as Exhibit J to the effect that as to
each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan prepaid in full or any specifically identified in such certification as not
covered by such certification), all of the applicable documents specified in
Section 2.01(e)(ii)(A) are in its possession. Within 90 days after the Closing
Date, the Indenture Trustee, will, for the benefit of Noteholders and the
Insurer, review each Mortgage File to ascertain that all required documents set
forth in Section 2.01(e)(ii) have been received and appear on their face to
contain the requisite signatures by or on behalf of the respective parties
thereto, and shall deliver to the Depositor, the Servicer and the Insurer an
interim certification (the “Interim Certification”) in the form annexed hereto
as Exhibit K to the effect that, as to each Mortgage Loan listed in the Mortgage
Loan Schedule (other than any Mortgage Loan prepaid in full or any specifically
identified in such certification as not covered by such certification), (i) all
of the applicable documents specified in Section 2.01(e) are in its possession
and (ii) such documents have been reviewed by it and appear to relate to such
Mortgage Loan. The Indenture Trustee shall determine whether such documents are
executed and endorsed, but shall be under no duty or obligation to inspect,
review or examine any such documents, instruments, certificates or other papers
to determine that the same are valid, binding, legally effective, properly
endorsed, genuine, enforceable or appropriate for the represented purpose or
that they have actually been recorded or are in recordable form or that they are
other than what they purport to be on their face. The Indenture Trustee shall
not have any responsibility for verifying the genuineness or the legal
effectiveness of or authority for any signatures of or on behalf of any party or
endorser.

(h)  If in the course of the review described in paragraph (g) above the
Indenture Trustee discovers any document or documents constituting a part of a
Mortgage File that is missing, does not appear regular on its face (i.e., is
mutilated, damaged, defaced, torn or otherwise physically altered) or appears to
be unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, as
applicable (each, a “Material Defect”), the Indenture Trustee, upon discovering
such Material Defect shall promptly identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to each of the
Depositor and the Servicer and give notice thereof to the Seller.

(i)  Within 180 days following the Closing Date, the Indenture Trustee shall
deliver to the Depositor, the Servicer and the Insurer a final certification
(the “Final Certification”) substantially in the form attached as Exhibit L
evidencing the completeness of the Mortgage Files in its possession or control,
with any exceptions noted thereto.

(j)  Nothing in this Agreement shall be construed to constitute an assumption by
the Trust Estate, the Indenture Trustee, the Administrator, any Custodian or the
Noteholders of any unsatisfied duty, claim or other liability on any Mortgage
Loan or to any Mortgagor. The Indenture Trustee shall have no responsibility for
reviewing any Mortgage File except as expressly provided in this Section 2.01.
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the Indenture Trustee shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form (except, if not assigned to the Indenture
Trustee or endorsed in blank, to determine if the Indenture Trustee is the
assignee or endorsee), whether any document has been recorded in accordance with
the requirements of any applicable jurisdiction, or whether a blanket assignment
is permitted in any applicable jurisdiction, whether any Person executing any
document is authorized to do so or whether any signature thereon is genuine, but
shall only be required to determine whether a document has been executed, that
it appears regular on its face and is related to such Mortgage Loan, and, upon
the return of such document from the county recorder’s office in accordance with
this section, that it purports to be recorded.

(k)  The Indenture Trustee shall have the right to appoint a custodian to act on
its behalf with respect to its obligations under Section 2.01(g) through (i).

(l)  (i)  Upon the occurrence of a Recordation Event, the Indenture Trustee
shall within 90 days of such Recordation Event submit, at the expense of the
Seller, to the appropriate recording offices Assignments of Mortgage to the
Indenture Trustee on behalf of the Trust, which may be blanket assignments if
permitted by applicable law, for the Mortgage Loans. In lieu of recording any
such Assignments of Mortgage, the Servicer may provide to the Indenture Trustee
and the Insurer an Opinion of Counsel in a form reasonably acceptable to the
Owner Trustee, Indenture Trustee and the Insurer, to the effect that recordation
of an Assignment of Mortgage in the state where the related Mortgaged Property
is located is not necessary to protect the interests of the Owner Trustee, the
Indenture Trustee or the Securityholders in the related Mortgage. In the event
that any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Indenture Trustee shall promptly prepare, at the expense of
the Seller, a substitute Assignment of Mortgage or cure such defect, as the case
may be, and thereafter the Indenture Trustee shall, at the expense of the
Seller, submit each such Assignment of Mortgage for recording.

(ii)  With respect to each MERS Mortgage Loan, the Servicer shall, at the
expense of the Depositor, take such actions as are necessary to cause the
Indenture Trustee to be clearly identified as the owner of each such Mortgage
Loan on the records of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS.

Section 2.02        Acceptance by Indenture Trustee, Review of Documentation.

(a)  The Indenture Trustee hereby acknowledges the issuance of the Policy by the
Insurer for the benefit of the Noteholders and the sale and assignment of the
Mortgage Loans, and, subject to the review provided for in Section 2.01, and
declares that, when delivered to the Indenture Trustee in accordance with
Section 2.01(e), the Indenture Trustee will hold the documents constituting the
Mortgage Files and that all amounts received by it under the Indenture in trust,
upon the terms herein set forth, for the use and benefit of all present and
future Noteholders and the Insurer.

 

 

 

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(b)   If the Seller is given notice under Section 2.01(h) and if the Seller does
not correct or cure the omission or defect within the 90-day period specified in
Section 2.01(h), the Seller shall purchase the Mortgage Loan from the Trust or
substitute an Eligible Substitute Mortgage Loan, as provided in Section 2.05,
for such Mortgage Loan. Any such purchase by the Seller shall be at the Purchase
Price and in each case shall be accomplished in the manner set forth in
Section 2.04. It is understood and agreed that the obligation of the Seller to
purchase any Mortgage Loan or substitute an Eligible Substitute Mortgage Loan
for such Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy against the Seller
respecting such defect or omission available to the Insurer, the Noteholders,
the Indenture Trustee or the Certificateholders.

The Servicer, promptly following the transfer of (i) a Mortgage Loan with a
Material Defect or (ii) an Eligible Substitute Mortgage Loan to the Indenture
Trustee pursuant to this Section and Section 2.05, as the case may be, shall
amend the Mortgage Loan Schedule and make appropriate entries in its general
account records to reflect such transfer and the addition of any Eligible
Substitute Mortgage Loan, if applicable.

Section 2.03             Representations and Warranties Regarding the Seller,
the Depositor and the Servicer.

(a)   The Seller, the Depositor and the Servicer each represents and warrants as
to itself to the parties hereto and the Insurer that, as of the Closing Date:

(i)    Each of the Seller, the Depositor and the Servicer is duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of organization and has the power and authority to own its assets
and to transact the business in which it is currently engaged. Each of the
Seller, the Depositor and the Servicer is duly qualified to do business and is
in good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
(a) its business, properties, assets or condition (financial or other), (b) its
performance of its obligations under this Agreement, (c) the value or
marketability of the Mortgage Loans or (d) the ability to foreclose on the
related Mortgaged Properties;

(ii)    Each of the Seller, the Depositor and the Servicer has the power and
authority to make, execute, deliver and perform this Agreement and to consummate
all of the transactions contemplated under this Agreement, and has taken all
necessary action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute its
legal, valid and binding obligation enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by the availability of equitable
remedies;

 

 

 

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(iii)     Each of the Seller, the Depositor and the Servicer holds all necessary
licenses, certificates and permits from all government authorities necessary for
conducting its business as it is presently conducted. Neither the Seller, the
Depositor, nor the Servicer is required to obtain the consent of any other party
or any consent, license, approval or authorization from, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or filed, as the case
may be, prior to the Closing Date;

(iv)    The execution, delivery and performance of this Agreement by each of the
Seller, the Depositor and the Servicer will not conflict with or result in a
breach of, or constitute a default under, any provision of its charter
documents, or constitute a material breach of or result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties
pursuant to, any mortgage, indenture, contract or any other agreement to which
it is a party or by which it may be bound;

(v)    No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Seller, the Depositor or the
Servicer contains any untrue statement of a material fact or omits to state any
material fact necessary to make the certificate, statement or report not
misleading;

(vi)    The transactions contemplated by this Agreement are in the ordinary
course of the Seller’s, the Depositor’s and the Servicer’s business;

(vii)    None of the Seller, the Depositor nor the Servicer is insolvent, nor
will the Seller, the Depositor or the Servicer be made insolvent by the transfer
of the Mortgage Loans, nor are the Seller, the Depositor or the Servicer aware
of any pending insolvency;

(viii)    None of the Seller, the Depositor or the Servicer is in violation of,
and the execution and delivery of this Agreement by it and its performance and
compliance with the terms of this Agreement will not constitute a violation with
respect to, any provision of any existing law, any order or decree of any court
or any order or regulation of any federal, state, municipal or governmental
agency having jurisdiction over the Seller, the Depositor or the Servicer, which
violation would materially and adversely affect the Seller’s, the Depositor’s or
the Servicer’s ability to perform or meet any of their respective obligations
under this Agreement;

(ix)    There are no actions or proceedings against, or investigations of it,
pending or, to the best of its knowledge, threatened, before any court,
administrative agency or other tribunal (A) that, if determined adversely, would
prohibit the Seller, the Depositor or the Servicer from entering into this
Agreement, (B) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement or (C) that, if

 

 

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determined adversely, would prohibit or materially and adversely affect the
Seller’s, the Depositor’s and the Servicer’s performance of any of their
respective obligations under, or the validity or enforceability of, this
Agreement;

(x) The Servicer represents and warrants that the collection practices used by
the Servicer with respect to the Mortgage Loans have been, in all material
respects, legal, proper, prudent and customary in the home equity mortgage
servicing business and in accordance with Accepted Servicing Practices;

(xi) The Servicer represents and warrants that it believes that the Servicing
Fee Rate provides a reasonable level of base compensation to the Servicer for
servicing the Mortgage Loans on the terms set forth herein;

(xii) The Seller represents and warrants that it did not sell the Mortgage Loans
to the Depositor, and the Depositor represents and warrants that it did not sell
the Mortgage Loans to the Trust, in each case, with any intent to hinder, delay
or defraud any of its creditors; and neither the Seller nor the Depositor will
be rendered insolvent as a result of their sales under the Mortgage Loan
Purchase Agreement and this Agreement, as applicable;

(xiii) The Seller and the Depositor each represents and warrants that it
acquired title to the Mortgage Loans in good faith, without notice of any
adverse claim;

(xiv) The Seller and the Depositor each represents and warrants that the
transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by
the Seller and the Depositor pursuant to the Mortgage Loan Purchase Agreement
and this Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction;

(xv) The Seller represents, warrants and covenants that so long as the Notes
remain outstanding, this Agreement shall be treated as an official record of the
Seller within the meaning of Section 13(e) of the Federal Deposit Insurance Act
(12 U.S.C. Section 1823(e));

(xvi) The Seller and the Depositor each represents and warrants that it has
caused the filing of all appropriate financing statements in the proper filing
office in the appropriate jurisdictions under applicable law in order to perfect
the security interest in the Mortgage Loans sold to the Depositor and
transferred to the Indenture Trustee on behalf of the Trust, respectively,
pursuant to the Mortgage Loan Purchase Agreement and this Agreement;

(xvii) This Agreement creates a valid and continuing security interest (as
defined in the applicable Uniform Commercial Code) in the Mortgage Loans in
favor of the Noteholders and the Certificateholders, which security interest is
prior to all other liens, and is enforceable as such as against creditors of and
purchasers from the Seller;

 

 

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(xviii)  Each of the Seller and the Depositor has caused or will have caused,
within ten days, the filing of all appropriate financing statements in the
proper filing office in the appropriate jurisdictions under applicable law in
order to perfect the security interest in the Mortgage Loans granted to the
Depositor and the Indenture Trustee, respectively, under the Mortgage Loan
Purchase Agreement and hereunder; and

(b)   The representations and warranties set forth in Section 2.03(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affect the interests of the Indenture Trustee, the Noteholders, the
Certificateholders, the Depositor or the Insurer, the Person discovering such
breach shall give prompt written notice to the other parties and to the Insurer.
Within 60 days of its discovery or its receipt of notice of breach, or, with the
prior written consent of the Insurer, such longer period specified in such
consent, the Seller, the Depositor or the Servicer, as appropriate, shall cure
such breach in all material respects.

Section 2.04     Representations and Warranties of the Seller Regarding the
Mortgage Loans.

(a)   The Seller hereby represents and warrants to the Depositor and the
Insurer, and the Depositor hereby assigns its rights with respect to such
representations and warranties to the Trust, the Indenture Trustee on behalf of
the Noteholders and the Certificateholders and the Insurer as follows as of the
Closing Date, and with respect to each Eligible Substitute Mortgage Loan, as of
the date of such substitution (and to the extent expressly stated therein as of
such other time):

(i) The information with respect to each Mortgage Loan set forth in the Mortgage
Loan Schedule is complete, true and correct in all material respects as of the
Closing Date;

(ii) As of the Closing Date, for each Mortgage Loan, the related Mortgage File
contains the documents and instruments referred to in Section 2.01(e)(ii);

(iii) Each Mortgaged Property relating to a Mortgage Loan is improved by a
residential dwelling, which does not include cooperatives or mobile homes and
does not constitute other than real property under state law;

(iv) Each Mortgage Loan is being serviced by the Servicer or one or more
Subservicers according to Accepted Servicing Practices;

(v) Each Mortgage Note provides for (a) Monthly Payments which are at least
equal to accrued interest during such Accrual Period and (b) at the maturity of
the related Mortgage Loan, payment in full of the principal balance of such
Mortgage Note;

 

 

 

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(vi) The Mortgage Notes related to Mortgage Loans bear a variable Loan Rate and
there is only one original of each such Mortgage Note;

(vii) Each Mortgage is a valid and subsisting first or second lien of record on
the Mortgaged Property subject, in the case of any second Mortgage Loan, only to
a Senior Lien or Senior Liens on such Mortgaged Property and subject in all
cases to the exceptions to title set forth in the title insurance policy, if
any, with respect to the related Mortgage Loan, which exceptions are generally
acceptable to second mortgage lending companies (or first mortgage lending
companies in the case of first lien Mortgage Loans), and such other exceptions
to which similar properties are commonly subject and which do not individually,
or in the aggregate, materially and adversely affect the benefits of the
security intended to be provided by such Mortgage;

(viii) No Mortgage Note and related Mortgage has been assigned or pledged and
immediately prior to the transfer and assignment contemplated in the Mortgage
Loan Purchase Agreement, the Seller held good, marketable and indefeasible title
to, and was the sole owner and holder of, each Mortgage Loan subject to no
Liens; the Seller has full right and authority under all governmental and
regulatory bodies having jurisdiction over the Seller, subject to no interest or
participation of, or agreement with, any party, to sell and assign the same
pursuant to the Mortgage Loan Purchase Agreement; and immediately upon the
transfer and assignment therein contemplated, the Seller shall have transferred
all of its right, title and interest in and to each Mortgage Loan to the
Purchaser (or its assignee) and the Purchaser (or its assignee) will hold good,
equitable, and when recorded, marketable title to, and be the sole owner of,
each Mortgage Loan subject to no Liens; without limiting the generality of the
foregoing, the Seller has taken all steps necessary to effect the release of
each Mortgage Loan from any lien thereon held by a Federal Home Loan Bank;

(ix) None of the Mortgage Loans is subject to a bankruptcy proceeding;

(x) As of the Cut-off Date, none of the Mortgage Loans was more than 30 days
Delinquent;

(xi) No Mortgage Loan is subject to any right of rescission, set off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of any Mortgage Note or Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the Mortgage unenforceable
in whole or in part, or subject to any right of rescission, set off,
counterclaim or defense, including the defense of usury, and no such right of
rescission, set off, counterclaim or defense has been asserted with respect
thereto;

(xii)  There is no mechanics’ lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal or
coordinate with,

 

 

 

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the lien of the related Mortgage, and no rights are outstanding that under law
could give rise to such a lien except those which are insured against by the
title insurance policy;

(xiii) (a) Each Mortgage Loan at the time it was made complied with, and each
Mortgage Loan at all times was serviced in compliance with, in each case, in all
material respects, applicable state, local and federal laws and regulations,
including, without limitation, usury, equal credit opportunity, consumer credit,
applicable predatory and abusive lending laws, truth in lending and disclosure
laws and (b) no Mortgage Loan is classified as (1) a “high cost” loan under the
Home Ownership and Equity Protection Act of 1994 or (2) a “high cost,”
“threshold,” “covered,” “predatory” or similar loan under any other applicable
state, federal or local law which applies to mortgage loans originated by a
state-chartered bank or any state or local law, rule or regulation applicable to
the Mortgage Loans (or a similar classified loan using different terminology
under a law imposing heightened regulatory scrutiny or additional legal
liability for residential mortgage loans having high interest rates, points
and/or fees);

(xiv) (a) No Mortgage Loan is a “High Cost Loan” or “Covered Loan,” as
applicable (as such terms are defined in Standard & Poor’s LEVELS® Version 5.7
Glossary Revised, Appendix E), (b) no Mortgage Loan originated on or after
October 1, 2002 through March 6, 2003 is governed by the Georgia Fair Lending
Act and (c) no Mortgage Loan originated in the State of Illinois is governed by
the Illinois Interest Act (815 ILCS 205);

(xv) The improvements upon each Mortgaged Property relating to Mortgage Loans
are covered by a valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage described in Sections 3.04 and 3.05;

(xvi) A flood insurance policy is in effect with respect to each Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 3.04 or 3.05, if and to the extent required by
Sections 3.04 or 3.05;

(xvii) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the related Mortgagor and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), and all parties to
each Mortgage Loan and the Mortgagee had full legal capacity to execute all
Mortgage Loan documents and to convey the estate therein purported to be
conveyed. To the best of the Seller’s knowledge, there was no fraud involved in
the origination of any Mortgage Loan by the mortgagee or by the Mortgagor, any
appraiser or any other party involved in the origination of the Mortgage Loan;

 

 

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(xviii) As of the Closing Date, approximately 92.95% of the Mortgage Loans
(measured by the Cut-off Date Pool Balance) are secured by Mortgaged Properties
that are owner-occupied residences, based on representations by the related
Mortgagors made by such Mortgagors at origination.

(xix) The terms of the Mortgage Note and the Mortgage have not been impaired,
altered or modified in any material respect, except by a written instrument
which has been recorded or is in the process of being recorded and which has
been or will be held by the Seller or delivered to the Indenture Trustee in
accordance with the provisions of this Agreement. The substance of any such
alteration or modification is reflected on the related Mortgage Loan Schedule
and was approved, if required, by the related primary mortgage guaranty insurer,
if any. Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Seller, or are in the process of being recorded;

(xx) As of the Closing Date, no Mortgage has been satisfied, cancelled or
subordinated, in whole, or rescinded, and no instrument of release or waiver has
been executed in connection with any Mortgage Loan, and no Mortgage has been
released in whole or in part, in either case, that would have a material adverse
affect on the related Mortgage Loan;

(xxi) There is no proceeding pending or threatened for the total or partial
condemnation of any Mortgaged Property, nor is such a proceeding currently
occurring, and as of the Cut-off Date and the Closing Date, each Mortgaged
Property is in good repair and is free of damage by waste, fire, earthquake or
earth movement, flood, tornado, hurricane or other casualty that would affect
adversely the value of the Mortgaged Property as security for the related
Mortgage Loan or the use for which the premises were intended;

(xxii) All of the improvements which were included for the purpose of
determining the Appraised Value of the Mortgaged Property lie wholly within the
boundaries and building restriction lines of such property, and no improvements
on adjoining properties encroach upon the Mortgaged Property;

(xxiii) No improvement located on or being part of the Mortgaged Property is in
violation of any applicable zoning law or regulation and all inspections,
licenses and certificates required to be made or issued with respect to all
occupied portions of the Mortgaged Property, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities;

(xxiv) All costs, fees and expenses incurred in making or closing or recording
the Mortgage Loans were paid, and no Mortgagor is entitled to any refund of any
such amount paid or due under the related Mortgage or Mortgage Note;

 

 

 

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(xxv) No Mortgage Note is or was secured by any collateral, pledged account or
other security except the lien of the corresponding Mortgage;

(xxvi) There is no obligation on the part of the Seller or any other party to
make payments in addition to those made by the Mortgagor;

(xxvii) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Trust, the Indenture Trustee or the
Noteholders to the Indenture Trustee under the deed of trust, except in
connection with a trustee’s sale after default by the Mortgagor;

(xxviii) No Mortgage Loan has a shared appreciation feature, or other contingent
interest feature;

(xxix) There is no delinquent tax or assessment lien or judgment on any
Mortgaged Property;

(xxx) Each Mortgage contains customary and enforceable provisions which, subject
to clause (xvii) above, render the rights and remedies of the holder thereof
adequate for the realization against the related Mortgaged Property of the
benefits of the security, including (A) in the case of a Mortgage designated as
a deed of trust, by trustee’s sale and (B) otherwise by judicial or non-judicial
foreclosure, as applicable in the relevant jurisdiction;

(xxxi) Each Mortergage contains a customary provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related security for the Mortgage Loan is sold without the prior consent of
the mortgagee thereunder;

(xxxii) Except as set forth in clause (x) above, there is no default, breach,
violation or event of acceleration existing under any Mortgage or the related
Mortgage Note and no event which, with the passage of time or with notice and
the expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and the Seller has not waived any default,
breach, violation or event of accelation;

(xxxiii) All parties to the Mortgage Note and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage and each Mortgage Note and Mortgage
have been duly and properly executed by such parties;

 

 

 

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(xxxiv) All of the Mortgage Loans were originated in all material respects in
accordance with the applicable Originator’s underwriting criteria in effect at
the time of origination;

(xxxv) The Mortgage Loans were not selected by the Seller for inclusion in the
Trust on any basis intended to adversely affect the Trust, the Noteholders the
Certificateholders or the Insurer; and each Mortgage Note and Mortgage is in
substantially one of the forms attached as Exhibit E and Exhibit F;

(xxxvi) As of the Cut-off Date, approximately 1.08% of the Mortgage Loans
(measured by the Cut-off Date Pool Balance) were secured by Mortgaged Properties
that had a Combined Loan to Value Ratio of more than 100%;

(xxxvii) Each Mortgage Loan was originated by the Originator listed on the
Mortgage Loan Schedule and was acquired in the ordinary course of business by
the Seller;

(xxxviii) As of the Closing Date, the Seller has not received a notice of
default of a Senior Lien which has not been cured;

(xxxix) Each of the documents and instruments included in a Mortgage File
referred to in Section 2.01(e)(ii)(A) and (C) through (D) is, and at such time
as Assignments of Mortgage are required to have been prepared, such Assignments
of Mortgage will have been, duly executed and in due and proper form and each
such document or instrument is or will be in a form generally acceptable to
prudent institutional mortgage lenders that regularly originate or purchase
mortgage loans similar to the Mortgage Loans;

(xl) The Conveyed Assets constitute either “instruments” or “general
intangibles” within the meaning of the New York UCC;

(xli) All consents and approvals required by the terms of each Mortgage Loan to
the sale of such Mortgage Loan to the Purchaser under the Mortgage Loan Purchase
Agreement have been obtained;

(xlii)  Other than the security interest granted by the Seller to the Purchaser
pursuant to the Mortgage Loan Purchase Agreement and other than any security
interest which shall have been released immediately prior to the consummation of
the transactions contemplated hereby, the Seller has not pledged, assigned,
released, sold, granted a security interest in, or otherwise conveyed any of the
Mortgage Loans. The Seller has not authorized the filing of and is not aware of
any financing statements against the Seller that include a description of
collateral covering the Mortgage Loans other than any financing statement
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Purchaser under the Mortgage Loan Purchase Agreement. The Seller is not aware of
any judgment or tax lien filings against the Seller;

(xliii) The Servicer has in its possession all original copies of the Mortgage
Notes that constitute or evidence the Mortgage Loans. The Mortgage Notes that
constitute or evidence the Mortgage Loans do not have any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed to any
Person other than the Purchaser. All financing statements filed or to be filed
in favor of the Purchaser in connection herewith describing the Mortgage Loans
contain a statement to the following effect: “A purchase of or security interest
in any collateral described in this financing statement will violate the rights
of the Indenture Trustee;”

(xliv) As of the Closing Date, no Mortgage Loans are subject to assumption or
modification agreements that are not included in the related Mortgage File;

(xlv) Each Mortgage Loan contains an appraisal conforming to the standards of
the applicable Originator as described on Exhibit O to this Agreement; and

(xlvi) No Mortgage Loan contains “subsidized buydown,” graduated payment or
convertible loan features; and

(xlvii) Each Mortgage Loan constitutes a “qualified mortgage” within the meaning
of Section 860G(a)(3) of the Code.

It is understood and agreed that each of the foregoing representations and
warranties of the Seller may not be waived and shall survive the issuance of the
Notes.

(b)   With respect to the representations and warranties set forth in this
Section that are made to the best of the Seller’s knowledge or as to which the
Seller has no knowledge, if it is discovered by the Seller, the Depositor, the
Servicer, the Owner Trustee, the Insurer or the Indenture Trustee (in the case
of the Indenture Trustee, upon a Responsible Officer of the Indenture Trustee
obtaining actual knowledge) that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the related Mortgage Loan then, notwithstanding the Seller’s lack of
knowledge with respect to the substance of such representation and warranty
being inaccurate at the time the representation or warranty was made, such
inaccuracy shall be deemed a breach of the applicable representation or
warranty.

(c)    It is understood and agreed that the representations and warranties set
forth in this Section shall survive the transfer of the Mortgage Loans to the
Trust and the termination of the rights and obligations of the Servicer pursuant
to Section 6.04 or 7.01 herein. Upon discovery by the Seller, the Depositor, the
Servicer, the Owner Trustee, the Insurer or the Indenture Trustee (in the case
of the Indenture Trustee, upon a Responsible Officer of the Indenture Trustee
obtaining actual knowledge) of a breach of any of the foregoing representations
and warranties,

 

 

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which materially and adversely affects the value of the related Mortgage Loan or
the interests of the Trust, the Noteholders, the Certificateholders or the
Insurer in the related Mortgage Loan, the party discovering such breach shall
give prompt written notice to the other parties and the Insurer. Any breach of
the representations and warranties in Section 2.03(a)(xiii) and (xiv) shall be
deemed to affect materially and adversely the value of the related Mortgage Loan
or the interests of the Trust, the Noteholders, the Certificateholders or the
Insurer in the related Mortgage Loan. Within 90 days of its discovery or its
receipt of notice of breach, the Seller shall use all reasonable efforts to cure
such breach in all material respects and if such breach is not cured by the end
of such 90-day period, the Seller shall purchase such Mortgage Loan from the
Trust or substitute an Eligible Substitute Mortgage Loan for such Mortgage Loan
on the Determination Date in the month following the month in which such 90-day
period expired at the Purchase Price of such Mortgage Loan or, in the case of a
substitution, in accordance with Section 2.05. The Purchase Price and any
Substitution Adjustments for the purchased Mortgage Loan shall be remitted to
the Servicer for deposit in the Collection Account on the Determination Date
immediately following such 90-day period, as certified by the Seller to the
Indenture Trustee; provided that the Servicer shall remit to the Indenture
Trustee, who shall then remit to the Insurer, the portion of the amount, if any,
of the Purchase Price referred to in clause (b) of the definition thereof to the
extent such amount is incurred by or imposed on the Insurer. It is understood
and agreed that the obligation of the Seller to purchase any Mortgage Loan or
substitute an Eligible Substitute Mortgage Loan for such Mortgage Loan as to
which a material defect in or omission of a constituent document exists shall
constitute the sole remedy against the Seller respecting such defect or omission
available to the Insurer, the Noteholders, the Indenture Trustee or the
Certificateholders.

The Servicer, promptly following the transfer of (i) a Defective Mortgage Loan
from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to this
Section and Section 2.05, as the case may be, shall amend the Mortgage Loan
Schedule through a Supplemental Mortgage Loan Schedule and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable. It is understood and
agreed that the obligation of the Seller to cure, substitute or purchase any
Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Seller respecting such breach available
to the Noteholders, the Insurer and the Indenture Trustee on behalf of the
Noteholders and the Certificateholders in respect of their respective interests
in the Trust.

(d)   Upon discovery by the Seller, the Depositor, the Servicer, the Owner
Trustee, the Insurer or the Indenture Trustee (in the case of the Indenture
Trustee, upon a Responsible Officer of the Indenture Trustee obtaining actual
knowledge) 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
breach shall give prompt written notice to the other parties and the Insurer. In
connection therewith, the Indenture Trustee shall require the Seller, at the
Seller’s option, to either (i) substitute, if the conditions in Section 2.05
with respect to substitutions are satisfied, an Eligible Substitute Mortgage
Loan for the affected Mortgage Loan, or (ii) repurchase the affected Mortgage
Loan within ninety (90) days of such discovery in the same manner as it would a
Mortgage Loan for a breach of representation or warranty made pursuant to
Section 2.04. The Indenture Trustee shall reconvey to the Seller the Mortgage
Loan to be released pursuant hereto

 

 

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in the same manner, and on the same terms, as it would a Mortgage Loan
repurchased for breach of a representation or warranty contained in
Section 2.04.

Section 2.05     Substitution of Mortgage Loans.

(a)   On a Determination Date which is on or before the date on which the Seller
would otherwise be required to repurchase a Mortgage Loan under Section 2.02 or
2.04, the Seller may deliver to the Trust one or more Eligible Substitute
Mortgage Loans in substitution for any one or more of the Defective Mortgage
Loans which the Seller would otherwise be required to repurchase pursuant to
Sections 2.02 or 2.04, provided that no substitution pursuant to Section 2.02 or
2.04 shall be made more than two years after the Closing Date unless the Seller
delivers to the Indenture Trustee and the Insurer (so long as the Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer) an
Opinion of Counsel, which Opinion of Counsel shall not be at the expense of
either the Indenture Trustee or the Trust Fund, addressed to the Indenture
Trustee and the Insurer (so long as the Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer), to the effect that
such substitution will not (i) result in the imposition of the tax on
“prohibited transactions” on the Trust Fund or contributions after the Startup
Date, as defined in Sections 860F(a)(2) and 860G(D) of the Code, respectively,
or (ii) cause any REMIC created under the Trust Agreement to fail to qualify as
a REMIC at any time that any Notes are outstanding. A substitution pursuant to
Section 2.02 or 2.04 that is made within two years after the Closing Date to
replace a “defective obligation” within the meaning of Section 860G(a)(4) of the
Code shall not require the Seller to deliver to the Indenture Trustee an Opinion
of Counsel. In connection with any such substitution, the Seller shall calculate
the Substitution Adjustment, if any, and shall deposit such amount to the
Collection Account by 12:00 p.m. New York City time on the third Business Day
prior to the Payment Date in the month succeeding the calendar month in which
the related cure period expired.

(b)   The Seller shall notify the Servicer, the Insurer and the Indenture
Trustee in writing not less than five Business Days before the related
Determination Date which is on or before the date on which the Seller would
otherwise be required to repurchase such Mortgage Loan pursuant to Section 2.02
or 2.04 of its intention to effect a substitution under this Section 2.05. On
such Determination Date (the “Substitution Date”), the Seller shall deliver to
the Insurer, the Servicer, the Depositor and the Indenture Trustee (1) a list of
the Eligible Substitute Mortgage Loans to be substituted for the Defective
Mortgage Loans, (2) a list of the Defective Mortgage Loans to be substituted for
by such Eligible Substitute Mortgage Loans, (3) if such substitution is more
than two years after the Closing Date, an Opinion of Counsel that the
substitution of the Eligible Substitute Mortgage Loans will not (A) result in
the imposition of the tax on “prohibited transactions” on the Trust or (B) cause
any REMIC created under the Trust Agreement to fail to qualify as a REMIC at any
time the Notes are outstanding, (4) an Officer’s Certificate (A) stating that no
Event of Servicer Termination shall have occurred and be continuing, (B) stating
that all conditions precedent to such substitution specified in subsection (a)
have been satisfied and attaching as an exhibit a supplemental Mortgage Loan
schedule (the “Supplemental Mortgage Loan Schedule”) setting forth the same type
of information as appears on the Mortgage Loan Schedule and representing as to
the accuracy thereof and (C) confirming that the representations

 

 

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and warranties contained in Section 2.04 are true and correct in all material
respects with respect to the Eligible Substitute Mortgage Loans on and as of
such Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this
Section 2.05 and (5) a certificate stating that cash in the amount of the
related Substitution Adjustment, if any, has been deposited to the Collection
Account; provided that the Servicer shall remit to the Indenture Trustee, who
shall then remit to the Insurer, the portion of the amount, if any, of the
Substitution Adjustment referred to in clause (d) of the definition thereof to
the extent such amount is incurred by the Insurer. Upon receipt of the
foregoing, the Indenture Trustee shall release such Defective Mortgage Loan to
the Trust and the Trust shall release such Defective Mortgage Loans to the
Seller without recourse, representation or warranty.

(c)   Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) above and the transfer of such Eligible Substitute Mortgage
Loans to the Indenture Trustee pursuant to Section 2.05(a), Exhibit A to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related substitution date, as the case may be,
as to such Eligible Substitute Mortgage Loans.

(d)   As to any Eligible Substitute Mortgage Loan or Loans, the Seller shall
cause to be delivered to the Indenture Trustee with respect to such Eligible
Substitute Mortgage Loan or Loans such documents and agreements as are required
to be held by the Indenture Trustee in accordance with Section 2.01. For any
Collection Period during which the Seller purchases one or more Defective
Mortgage Loans, the Servicer shall determine the amount that shall be deposited
by the Seller in the Collection Account at the time of substitution. Any amounts
received in respect of the Eligible Substitute Mortgage Loan during the
Collection Period in which the circumstances giving rise to such substitution
occur shall not be a part of the Trust and shall not be deposited by the
Servicer in the Collection Account. All amounts received by the Servicer during
the Collection Period in which the circumstances giving rise to such
substitution occur in respect of any Defective Mortgage Loan so removed by the
Indenture Trustee shall be deposited by the Servicer in the Collection Account.
Upon such substitution, the Eligible Substitute Mortgage Loan shall be subject
to the terms of this Agreement in all respects, and the Seller shall be deemed
to have made with respect to such Eligible Substitute Mortgage Loan, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 2.04. The procedures applied by the Seller in selecting each Eligible
Substitute Mortgage Loan shall not be materially adverse to the interests of the
Indenture Trustee, the Noteholders, the Certificateholders or the Insurer.

Section 2.06      Tax Treatment. The Trust shall be treated as comprising two
segregated accounts each of which will be a real estate mortgage investment
conduit (each a “REMIC” or, in the alternative, the “Lower Tier REMIC” and the
“Upper Tier REMIC”); each of the Notes and the Class B Certificates shall
represent ownership of a regular interest in the Upper Tier

 

 

 

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REMIC; the Class L Certificate shall represent the sole class of residual
interest in the Lower Tier REMIC; and the Class R Certificate represents
ownership of the sole class of residual interest in the Upper Tier REMIC.

Section 2.07      Representations, Warranties and Covenants of the Depositor.

(a)   The Depositor represents and warrants to the Depositor, the Trust and the
Indenture Trustee on behalf of the Noteholders, the Certificateholders and the
Insurer as follows:

(i) This Agreement constitutes a legal, valid and binding obligation of the
Depositor, enforceable against the Depositor in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization moratorium or other similar laws now or hereafter in effect
affecting the enforcement of creditors’ rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);

(ii) Immediately prior to the transfer by the Depositor to the Trust of each
Mortgage Loan, the Depositor had good and equitable title to each Mortgage Loan
(insofar as such title was conveyed to it by the Depositor) acquired in good
faith and subject to no prior lien, claim, participation interest, mortgage,
security interest, pledge, charge or other encumbrance or other interest of any
nature;

(iii) As of the Closing Date, the Depositor has transferred all right, title and
interest in the Mortgage Loans to the Trust;

(iv) The Depositor has not transferred the Mortgage Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors;

(v) The Depositor has been duly organized and is validly existing as a
corporation in good standing under the laws of Delaware, with full power and
authority to own its assets and conduct its business as presently being
conducted and the Depositor will not change its jurisdiction of organizations
without prior notice to the Rating Agencies, the Servicer, the Indenture Trustee
and the Insurer;

(vi) Other than the security interest granted to the Indenture Trustee
hereunder, the Depositor has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Mortgage Loans. The Depositor has
not authorized the filing of and is not aware of any financing statements
against the Depositor that include a description of collateral covering the
Mortgage Loans other than any financing statement relating to the security
interest granted to the Indenture Trustee hereunder or that has been terminated.
The Depositor is not aware of any judgment or tax lien filings against the
Depositor;

 

 

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(vii) The transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Depositor pursuant to this Agreement are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction; and

(viii) The Depositor represents and warrants that it has caused the filing of
all appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the security
interest in the Mortgage Loans transferred to the Indenture Trustee on behalf of
the Trust, pursuant to this Agreement.

It is understood and agreed that the representations and warranties set forth in
(i) through (viii) above shall survive the transfer of the Mortgage Loans to the
Trust.

(b) The Depositor represents and covenants to the parties hereto and the Insurer
that:

(i) Other than the security interest granted by the Depositor to the Trust under
this Agreement, the Depositor has not pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Mortgage Loans. The
Depositor has not authorized the filing of and is not aware of any financing
statements against the Depositor that includes a description of collateral
covering the Mortgage Loans other than any financing statement relating to the
security interest granted to the Trust under this Agreement. The Depositor is
not aware of any judgment or tax lien filings against the Depositor;

(ii)  The Depositor will not engage in any activity that would result in a
downgrading of the Notes without regard to the Policy; and

(iii) The Depositor’s location under the applicable UCC is in Delaware and it
will not change its principal place of business or its jurisdiction of
organization without prior notice to the Rating Agencies, the Servicer, the
Indenture Trustee and the Insurer.

ARTICLE III.

 

ADMINISTRATION AND SERVICING OF MORTGAGE LOANS

Section 3.01    The Servicer.

(a) The Servicer, as independent contract servicer, shall service and administer
the Mortgage Loans in accordance with Accepted Servicing Practices and shall
have full power and authority, acting alone, to do any and all things in
connection with such servicing and administration which the Servicer may deem
necessary or desirable and consistent with the terms of this Agreement. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with Card Management Corporation and First Data
Resources, Inc. and any other institution which (i) is in compliance with the
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enable it to perform its obligations under such Subservicing Agreement, and (ii)
(x) has been designated an approved Seller-Servicer by Freddie Mac or Fannie Mae
for first and second mortgage loans or (y) is an affiliate of the Servicer or
(z) is otherwise approved by the Insurer. The Servicer shall give written notice
to the Insurer and the Indenture Trustee prior to the appointment of any
Subservicer. Any such Subservicing Agreement shall be consistent with and not
violate the provisions of this Agreement and shall be in form and substance
acceptable to the Insurer. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor subservicer which
qualifies hereunder.

(b)   Notwithstanding any Subservicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Mortgage Loans. For
purposes of this Agreement, the Servicer shall be deemed to have received
payments on Mortgage Loans when the Subservicer has received such payments. The
Servicer shall be entitled to enter into any agreement with a Subservicer for
indemnification of the Servicer by such Subservicer, and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.

(c)   Any Subservicing Agreement that may be entered into and any transactions
or services relating to the Mortgage Loans involving a Subservicer in its
capacity as such and not as an originator shall be deemed to be between the
Subservicer and the Servicer alone, and the Depositor, the Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Subservicer except as set forth in
Section 3.01(d) herein. The Servicer shall be solely liable for all fees owed by
it to any Subservicer irrespective of whether the Servicer’s compensation
pursuant to this Agreement is sufficient to pay such fees.

(d)   In the event the Servicer shall for any reason no longer be the Servicer
(including by reason of an Event of Servicer Termination), the Indenture Trustee
or its designee approved by the Insurer or a successor Servicer under
Section 7.02(a) shall thereupon assume all of the rights and obligations of the
Servicer under each Subservicing Agreement that the Servicer may have entered
into, unless the Indenture Trustee or designee approved by the Insurer or any
successor Servicer elects to terminate any Subservicing Agreement (except with
respect to Subservicing Agreements that only allow for termination of the
related Subservicer for cause or require a termination fee for termination
without cause) in accordance with the terms of such Subservicing Agreement. The
Indenture Trustee shall not be responsible for any termination fees under any
Subservicing Agreement. In no event shall any Subservicing Agreement require the
Insurer or the Indenture Trustee as Successor Servicer to pay compensation to a
Subservicer or order the termination of such Subservicer. Any fee payable or
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termination will be payable by the outgoing Servicer. If the Indenture Trustee
does not terminate a Subservicing Agreement, the Indenture Trustee, its designee
or a successor Servicer shall be deemed to have assumed all of the Servicer’s
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the Subservicing Agreements
with regard to events that occurred prior to the date the Servicer ceased to be
the Servicer hereunder. The Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Indenture Trustee,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.

(e)   No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall, for the purposes of payments to the Noteholders and
distributions to the Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trust, each Noteholder and each Certificateholder, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Servicer and requested in writing, the Indenture Trustee shall furnish the
Servicer and, if directed by a Servicing Officer, any Subservicer with any
powers of attorney and other documents reasonably necessary or appropriate to
enable the Servicer and any such Subservicer to carry out its servicing and
administrative duties under this Agreement.

(f)    On and after such time as the Indenture Trustee receives the resignation
of, or notice of the removal of, the Servicer from its rights and obligations
under this Agreement, and with respect to resignation pursuant to Section 6.04
herein, after receipt by the Indenture Trustee and the Insurer of the Opinion of
Counsel required pursuant to Section 6.04, the Indenture Trustee, if it so
elects, and with the consent of the Insurer, shall assume all of the rights and
obligations of the Servicer, subject to Section 7.02 herein. The Servicer shall
at its expense, deliver to the Indenture Trustee, all documents and records
relating to the Mortgage Loans and an accounting of amounts collected and held
by the Servicer and otherwise use its best efforts to effect the orderly and
efficient transfer of servicing rights and obligations to the assuming party.

The defaulting Servicer agrees to cooperate with the Indenture Trustee and any
successor servicer in effecting the termination of the defaulting Servicer’s
responsibilities and rights hereunder as Servicer including, without limitation,
notifying each Subservicer of the assignment of the servicing function and
providing the Indenture Trustee or its designee all documents and records in
electronic or other form reasonably requested by it to enable the Indenture
Trustee or its designee to assume the defaulting Servicer’s functions hereunder
and the transfer to the Indenture Trustee for administration by it of all
amounts which shall at the time be or should have been deposited by the
defaulting Servicer in the Collection Account maintained by such defaulting
Servicer and any other account or fund maintained with respect to the Notes or

 

 

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thereafter received with respect to the Mortgage Loans. The Servicer being
terminated (unless such Servicer is the Indenture Trustee, in which case the
initial Servicer) shall bear all costs of a servicing transfer, including but
not limited to those of the Indenture Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending the Transaction Documents,
if necessary.

The Indenture Trustee shall be entitled to be reimbursed from the Servicer (or
by the Trust pursuant to Section 5.01(a)(I)(ix), if the Servicer is unable to
fulfill its obligations hereunder) for all costs associated with the transfer of
servicing from the predecessor Servicer, including, without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
reasonably required by the Indenture Trustee to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Indenture
Trustee or other successor Servicer to service the Mortgage Loans properly and
effectively. If the terminated Servicer does not pay such reimbursement within
thirty (30) days of its receipt of an invoice therefore, such reimbursement
shall be an expense of the Indenture Trustee pursuant to Section 5.01(a)(I)(ix);
provided that the terminated Servicer unless the terminated Servicer is the
Indenture Trustee shall reimburse the Trust for any such expense incurred by the
Trust.

(g)   The Servicer shall deliver a list of Servicing Officers to the Indenture
Trustee and the Insurer on or before the Closing Date and shall revise such list
from time to time, as appropriate, and shall deliver all revisions promptly to
the Indenture Trustee and the Insurer.

(h)   Except as is set forth in the following sentence, the Servicer may not
modify any Mortgage Loan unless that Mortgage Loan is in default or if default
is reasonably foreseeable, and if the Servicer has determined the modification
of that Mortgage Loan to be in the best interests of the Noteholders and the
Insurer. In addition, the Servicer may modify a Mortgage Loan that is not in
default and default is not reasonably foreseeable if it has delivered to the
Indenture Trustee and the Insurer (so long as the Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer) an Opinion of Counsel
to the effect that such modification would not cause any REMIC created under the
Trust Agreement to fail to qualify as a REMIC or result in the imposition of any
prohibited transaction tax; provided it complies with accepted servicing
practices of prudent mortgage loan servicers and no rate modification is greater
than 0.25% per annum on any Mortgage Loan, and provided that the modification
does not materially and adversely affect the interests of the Noteholders, the
Certificateholders or the Insurer (taking into account the aggregate effect of
all previous modifications to date).

The Servicer’s ability to permit or effect servicing modifications contemplated
by this clause (h) of Section 3.01 shall be subject to the following
limitations:

 

 

 

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(i) Any amounts added to the credit limit of a Mortgage Loan will be required to
be fully amortized over the remaining term, or the extended term, of the
Mortgage Loan.

(ii) The final maturity of any Mortgage Loan may not be extended beyond the
third Payment Date prior to the Final Scheduled Payment Date.

(iii) The aggregate current principal balance of all Mortgage Loans subject to
modifications can be no more than 3.5% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date, but this limit may be increased from time
to time with the consent of the Insurer.

(iv) The Servicer covenants and agrees to indemnify the Trust Fund against any
liability for any taxes (including prohibited transaction taxes) and any related
interest, additions, and penalties imposed on the Trust Fund established
hereunder as a result of any modification of a Mortgage Loan effected pursuant
to this Section 3.01.

(v) With respect to any Mortgage Loan that is modified to increase the Credit
Limit thereof resulting in a higher Combined Loan-to-Value Ratio, (i) the
aggregate Principal Balance of all Mortgage Loans so modified shall not exceed
10% of the Cut-off Date Principal Balance, and (ii) the increased Combined
Loan-to-Value Ratio for any Mortgage Loan so modified may not exceed 100%;
provided, in any case, the limitation set forth in clause (iii) above has been
satisfied in connection with any such modification.

(vi) The aggregate current principal balance of all Mortgage Loans that can have
a Margin decrease applied to them can be no more than 10% of the aggregate
principal balance of the Mortgage Loans as of the Cut-off Date.

(i) If the Mortgage relating to a Mortgage Loan was not subject to a Senior Lien
on the Cut-off Date, then the Servicer may not consent to the placing of a lien
senior to that of the Mortgage on the related Mortgaged Property. If the
Mortgage relating to a Mortgage Loan was subject to a Senior Lien on the Cut-off
Date, then the Servicer may consent to the refinancing of such prior Senior Lien
after obtaining an appraisal of the Mortgaged Property provided that such
refinancing (i) either (x) does not result in the Combined Loan-to-Value Ratio
of such Mortgage Loan exceeding the Combined Loan-to-Value Ratio of such
Mortgage Loan prior to such refinancing; or (y) does not result in the Combined
Loan-to-Value Ratio of such Mortgage Loan exceeding the Combined Loan-to Value
Ratio that would have permitted such Mortgage Loan to remain in the same pricing
category in connection with the Servicer’s underwriting criteria; and (ii) does
not result in the Combined Loan-to-Value Ratio of such Mortgage Loan exceeding
100%.

Section 3.02     Collection of Certain Mortgage Loan Payments.

(a) The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans and shall, to the
extent such procedures shall be consistent with this Agreement, follow such
collection procedures as it follows with respect to mortgage loans in its
servicing portfolio comparable to the Mortgage Loans. Consistent with the
foregoing, and without limiting the generality of the foregoing, the Servicer
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(i) subject to Section 3.13, waive any Early Termination Fee or late payment
charge or any assumption fees or other fees which may be collected in the
ordinary course of servicing such Mortgage Loan, (ii) arrange with a Mortgagor a
schedule for the payment of principal and interest due and unpaid; provided that
such arrangement is consistent with the Servicer’s policies with respect to the
mortgage loans it owns or services; provided, further, that notwithstanding such
arrangement such Mortgage Loans will be included in the monthly information
delivered by the Servicer to the Indenture Trustee and the Insurer pursuant to
Section 5.03 herein.

(b)   The Servicer shall establish and maintain an Eligible Account (the
“Collection Account”) entitled “Deutsche Bank National Trust Company, in trust
for the registered holders of IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H4.” The Servicer shall notify the Indenture Trustee of the
Eligible Institution with which the Collection Account is maintained. The
Servicer shall, on the Closing Date, deposit any amounts representing payments
on and any collections in respect of the Mortgage Loans received after the
Cut-off Date (excluding scheduled interest payments due on or prior to the
Cut-off Date) and prior to the Closing Date, and thereafter, subject to
Section 3.02(c), deposit within two Business Days following receipt thereof, the
following payments and collections received or made by it (without duplication)
to the Collection Account:

(i) all payments received by the Servicer after the Cut-off Date on account of
principal on the Mortgage Loans;

(ii) all payments, net of related Servicing Fees, received by the Servicer after
the Cut-off Date on account of interest on the Mortgage Loans;

(iii) all Insurance Proceeds and Liquidation Proceeds;

(iv) all Net Recoveries;

(v) all Early Termination Fees;

(vi) any amounts required to be deposited pursuant to Section 3.07 in connection
with any REO Property;

(vii) the Purchase Price of any Mortgage Loan and the amount of any Substitution
Adjustment paid by a Seller during the related Collection Period pursuant to
Sections 2.02, 2.04 and 2.05;

(viii) all Released Mortgaged Property Proceeds; and

(ix) any amount required to be deposited therein pursuant to Section 3.02(c)
herein;

 

 

 

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The foregoing requirements respecting deposits to the Collection Account are
exclusive, it being understood that, without limiting the generality of the
foregoing, the Servicer need not deposit in the Collection Account amounts
representing fees (including annual fees, assumption fees, modification fees,
insufficient funds charges and other ancillary income) or late charge penalties
payable by Mortgagors or amounts received by the Servicer for the accounts of
Mortgagors for application toward the payment of taxes, insurance premiums,
assessments and similar items.

(c)   The Servicer shall use its best efforts to cause the institution
maintaining the Collection Account to invest only the Interest Collections on
deposit in the Collection Account attributable to the Mortgage Loans in Eligible
Investments which shall mature not later than the Servicer Remittance Date next
following the date of such investment and which shall not be sold or disposed of
prior to their maturities. All income and gain realized from any such investment
shall be for the benefit of the Servicer as additional servicing compensation
and shall be subject to its withdrawal or order from time to time. The amount of
any losses incurred in respect of any such investments attributable to the
investment of amounts in respect of the Mortgage Loans shall be deposited in the
Collection Account by the Servicer out of its own funds immediately as realized
without any right of reimbursement.

Section 3.03      Withdrawals from the Collection Account. The Servicer shall
withdraw or cause to be withdrawn funds from the Collection Account for the
stated purposes in the following order of priority:

(i) to reimburse the Servicer for any accrued and unpaid Servicing Fees;

(ii) on each Servicer Remittance Date, to transfer the following amounts to the
Indenture Trustee for deposit in the Payment Account:

(A) the portion of the Interest Collections and Principal Collections for the
related Collection Period then in the Collection Account;

(B) any amounts required to be deposited pursuant to Section 3.07 in connection
with any REO Property;

(C) any amounts to be paid in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 9.01;

(iii) to withdraw any amount received from a Mortgagor that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code 11 U.S.C. 101 et seq., as amended
in accordance with a final, nonappealable order of a court having competent
jurisdiction;

 

 

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(iv) to pay the Servicer as servicing compensation (in addition to the Servicing
Fee) on the Servicer Remittance Date any interest earned on funds deposited in
the Collection Account;

(v)  to withdraw any funds deposited in the Collection Account that were not
required to be deposited therein or were deposited therein in error and to pay
such funds to the appropriate Person, including collections received on any
Defective Mortgage Loan that has been repurchased by the Seller pursuant to
Section 2.04 or substituted for by the Seller pursuant to Section 2.05 that
should be paid to the Seller pursuant to Article II;

(vi) to pay the Servicer the servicing compensation for the related Collection
Period that it is entitled to receive pursuant to Section 3.09 herein;

(vii) to reimburse the Servicer for any Servicing Advance previously made which
the Servicer has determined to be a Nonrecoverable Advance;

(viii) to withdraw funds necessary for the conservation and disposition of
REO Property pursuant to Section 3.07 to the extent not advanced by the
Servicer; and

(ix) to clear and terminate the Collection Account upon the termination of this
Agreement.

Prior to making any withdrawal from the Collection Account pursuant to subclause
(vii), the Servicer shall have delivered to the Indenture Trustee and the
Insurer a certificate of a Servicing Officer indicating the amount of any
previous Servicing Advance determined by the Servicer to be a Nonrecoverable
Advance and identifying the related Mortgage Loans(s), and their respective
portions of such Nonrecoverable Advance.

Section 3.04     Maintenance of Hazard Insurance; Property Protection Expenses.
The Servicer verifies the existence at the origination of each Mortgage Loan
fire and hazard insurance naming the Servicer or its designee as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time, (ii) the combined principal balance owing on
such Mortgage Loan and any mortgage loan senior to such Mortgage Loan and (iii)
the minimum amount required to compensate for damage or loss on a replacement
cost basis. The Servicer shall also maintain on property acquired upon
foreclosure, or by deed in lieu of foreclosure, fire and hazard insurance with
extended coverage in an amount which is at least equal to the lesser of (i) the
maximum insurable value from time to time of the improvements which are a part
of such property, (ii) the combined principal balance owing on such Mortgage
Loan and any mortgage loan senior to such Mortgage Loan at the time of such
foreclosure, or deed in lieu of foreclosure plus accrued interest and the
good-faith estimate of the Servicer of related Servicing Advances to be incurred
in connection therewith. Amounts collected by the Servicer under any such
policies shall be deposited in the Collection Account to the extent called

 

 

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for by Section 3.02. In cases in which any Mortgaged Property is located in an
area identified in a federally designated flood area, the hazard insurance to be
maintained for the related Mortgage Loan shall include flood insurance to the
extent such flood insurance is available and the Servicer has determined such
insurance to be necessary in accordance with Accepted Servicing Practices of
prudent lending institutions. All such flood insurance shall be in amounts not
less than the lesser of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Reform Act of 1994, as amended. The Servicer shall be
under no obligation to require that any Mortgagor maintain earthquake or other
additional insurance and shall be under no obligation itself to maintain any
such additional insurance on property acquired in respect of a Mortgage 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.

Section 3.05      Maintenance of Mortgage Impairment Insurance Policy. In the
event that the Servicer shall obtain and maintain a blanket insurance policy
consistent with Accepted Servicing Practices, insuring against fire and hazards
of extended coverage on all of the Mortgage Loans, then, to the extent such
insurance policy names the Servicer or its designee as loss payee and provides
coverage in an amount equal to the aggregate unpaid principal balance on the
Mortgage Loans without coinsurance, and otherwise complies with the requirements
of Section 3.04, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under
Section 3.04. Upon the request of the Insurer or the Indenture Trustee, the
Servicer shall cause to be delivered to the Insurer or the Indenture Trustee, as
the case may be, a certified true copy of such insurance policy. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself, the Indenture
Trustee, the Insurer and the Trust, claims under any such insurance policy in a
timely fashion in accordance with the terms of such insurance policy.

If such insurance policy contains a deductible clause, the Servicer shall, in
the event that there shall not have been maintained on the related Mortgage
Property an insurance policy comply with this Section, and there shall have been
a loss that would have been covered by such insurance policy, deposit into the
Collection Account the amount not otherwise payable under such insurance policy
because of such deductible clause.

Section 3.06      Maintenance of Fidelity Bond and Errors and Omissions
Insurance. The Servicer shall maintain with responsible companies, at its own
expense, a blanket fidelity bond (“Fidelity Bond”) and an errors and omissions
insurance policy (“Errors and Omissions Insurance Policy”), with broad coverage
on all officers, employees or other persons acting in any capacity requiring
such persons to handle funds, money, documents or papers relating to the related
Mortgage Loans (“Servicer Employees”). Any such Fidelity Bond and Errors and
Omissions Insurance Policy may contain a deductible clause on terms
substantially equivalent to those commercially available and maintained by
comparable servicers. Any such Fidelity Bond and Errors and Omissions Insurance
Policy shall be in the form of the Mortgage Banker’s Blanket Bond and shall
protect and insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of the Servicer
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Fidelity Bond and Errors and Omissions Insurance Policy also shall protect and
insure the Servicer against losses in connection with the release or
satisfaction of a related Mortgage Loan without having obtained payment in full
of the indebtedness secured thereby. No provision of this Section 3.06 requiring
such Fidelity Bond and Errors and Omissions Insurance Policy shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. The minimum coverage under any such bond and insurance policy shall
be at least equal to the corresponding amounts required by Fannie Mae. Upon the
request of the Indenture Trustee or the Insurer, the Servicer shall cause to be
delivered to the Indenture Trustee or the Insurer a certificate of insurance of
the insurer and the surety including a statement from the surety.

Section 3.07    Management of and Realization upon Defaulted Mortgage Loans.

(a)   Management of REO Property. In the event the Trust acquires ownership of
any REO Property in respect of any Mortgage Loan, the deed or certificate of
sale shall be issued to the Indenture Trustee, or to its nominee, on behalf of
the Securityholders. The Servicer shall use its reasonable best efforts to sell,
any REO Property as expeditiously as possible and in accordance with the
provisions of this Agreement, as applicable, but in all events within the time
period, and subject to the conditions set forth in Section 5.09 and prior to the
close of the third taxable year after its acquisition by the Trust unless the
Indenture Trustee and (so long as any Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) the Insurer shall have been supplied with an Opinion of
Counsel to the effect that the holding by the Trust of such REO Property
subsequent to such three-year period will not result in the imposition of taxes
on “prohibited transactions” of any REMIC created under the Trust Agreement as
defined in section 860F of the Code or cause any REMIC created hereunder to fail
to qualify as a REMIC at any time that any Notes or Certificates are
Outstanding, in which case the Trust may continue to hold such REO Property
(subject to any conditions contained in such Opinion of Counsel and the other
requirements of this Section 3.07(a)). Pursuant to its efforts to sell such
REO Property, the Servicer shall protect and conserve, such REO Property in the
manner and to such extent required by this Agreement, subject to Section 5.09
hereof. The decision of the Servicer to foreclose, or to continue the
foreclosure process, on a defaulted Mortgage Loan shall be subject to a
determination by the Servicer that the related Mortgaged Property will not fail
to qualify as “foreclosure property” within meaning of Section 860G(a)(8) of the
Code and that the proceeds of such foreclosure would more likely than not exceed
the costs and expenses of bringing such a proceeding and liquidating the
REO Property expected to be obtained through such foreclosure. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Trust shall be rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Trust in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as “foreclosure property” within the meaning of Section 860G(a)(8) of
the Code or (ii) subject any REMIC created under the Trust Agreement to the
imposition of any federal, state or local income taxes on the income earned from
such Mortgaged Property, unless the Servicer has agreed to in demnify and hold
harmless the Trust and the Trust Estate with respect to the imposition of any
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 The Servicer shall cause to be deposited, within the time period specified in
Section 3.02(b), as applicable, in the Collection Account, all revenues net of
Servicing Advances received with respect to the related REO Property and shall
retain, or cause to be withdrawn therefrom, funds necessary for the proper
operation, management and maintenance of the REO Property and the fees of any
managing agent acting on behalf of the Servicer.

The disposition of REO Property shall be carried out by the Servicer for cash at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Noteholders, the Certificateholders, the Trust and the
Insurer and, as soon as practicable thereafter, the expenses of such sale shall
be paid. The cash proceeds of the sale of the REO Property shall be promptly
deposited in the Collection Account, pursuant to Section 3.02(b), as applicable,
net of any related unreimbursed Servicing Advances (without duplication of
amounts paid pursuant to Section 3.03(vi)), payable to the Servicer in
accordance with Section 3.03, for payment in accordance with Section 5.01
herein.

(b)   Realization Upon Defaulted Mortgage Loans. The Servicer shall foreclose
upon or otherwise comparably convert to ownership Mortgaged Properties securing
such of the Mortgage Loans as come into and continue in default when no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.01, subject to the provisions contained in the second
succeeding paragraph of this Section 3.07 and only if the Servicer determines
that there is sufficient equity in the related Mortgaged Property to justify
such foreclosure. In connection with foreclosure or other conversion, the
Servicer will follow Accepted Servicing Practices, including the practice that
the Servicer will not be required to expend its own funds in connection with
foreclosure or other conversion, correction of default on a related senior
mortgage loan or restoration of any Mortgaged Property unless, in its sole
judgment, foreclosure, correction or restoration will increase net liquidation
proceeds and that, in the event that the related Mortgaged Property shall have
suffered damage from an Uninsured Cause, the Servicer shall not be required to
expend its own funds toward the restoration of such Mortgaged Property unless it
shall determine in its discretion that such restoration will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself for
such expenses.

In the event that title to any Mortgaged Property is acquired in foreclosure or
by deed in lieu of foreclosure, the deed or certificate of sale shall be issued
to the Indenture Trustee or its nominee on behalf of the Trust and the Insurer.

If the Servicer has actual knowledge that a Mortgaged Property which the
Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within 1 mile of any site with environmental or hazardous
waste risks, the Servicer will notify the Insurer prior to acquiring the
Mortgaged Property and shall not take any action without prior written approval
of the Insurer.

Section 3.08     Indenture Trustee to Cooperate. Upon the payment in full of any
Mortgage Loan, the Servicer is authorized to execute (on behalf of the Indenture
Trustee pursuant to the authorization contained in Section 3.01(f) if the
related Assignment of Mortgage has been recorded) an instrument of satisfaction
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instrument of satisfaction shall be recorded by the Servicer if required by
applicable law and be delivered to the Person entitled thereto. It is understood
and agreed that no expenses incurred in connection with such instrument of
satisfaction or transfer shall be reimbursed from amounts deposited in the
Collection Account. If the Indenture Trustee is holding any portion of the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Indenture Trustee shall, upon request of
the Servicer and delivery to the Indenture Trustee of a request for release, in
the form attached hereto as Exhibit I, signed by a Servicing Officer, release
the related portion of the Mortgage File to the Servicer, and the Indenture
Trustee shall execute such documents, at the expense of and in the forms
provided by the Servicer, as shall be necessary for the prosecution of any such
proceedings or the taking of other servicing actions. Such Request for Release
shall obligate the Servicer to return the portion of the Mortgage File released
to it to the Indenture Trustee when the need therefor by the Servicer no longer
exists unless the Mortgage Loan shall be liquidated, in which case, upon receipt
of a certificate of a Servicing Officer similar to that hereinabove specified
(including a certification that the Servicer has deposited the proceeds of such
liquidated Mortgage Loan in the Collection Account), a copy of the Request for
Release shall be released by the Indenture Trustee to the Servicer.

In order to facilitate the foreclosure of the Mortgage securing any Mortgage
Loan that is in default following recordation of the related Assignment of
Mortgage in accordance with the provisions hereof, the Indenture Trustee shall,
if so requested in writing by the Servicer execute an appropriate assignment in
the form provided to the Trust and the Indenture Trustee by the Servicer to
assign such Mortgage Loan for the purpose of collection to the Servicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only) and, upon such assignment, such assignee for
collection will thereupon bring all required actions in its own name and
otherwise enforce the terms of the Mortgage Loan and deposit or credit the Net
Recoveries received with respect thereto in the Collection Account. In the event
that all delinquent payments due under any such Mortgage Loan are paid by the
Mortgagor and any other defaults are cured then the assignee for collection
shall promptly reassign such Mortgage Loan to the Indenture Trustee and return
it to the place where the related Mortgage File was being maintained.

Section 3.09      Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to retain the Servicing Fee in
accordance with Section 3.02 as compensation for its services in connection with
servicing the Mortgage Loans. Moreover, additional servicing compensation in the
form of late payment charges or other receipts not considered interest or
principal payments under the Mortgage Notes and Foreclosure Profits shall be
retained by the Servicer. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder (including payment of
all other fees and expenses not expressly stated hereunder to be for the account
of the Trust) and shall not be entitled to reimbursement therefor except as
specifically provided herein.

Section 3.10     Annual Statement as to Compliance. The Servicer shall deliver
to the Indenture Trustee (via electronic mail to DBSEC.Notifications@db.com),
the Depositor, the Insurer (so long as the Notes are Outstanding or any
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owing to the Insurer) and the Rating Agencies on or before March 15 of each
year, commencing in 2007, unless and until a Form 15 Suspension Notice shall
have been filed an officer’s certificate, an officer’s certificate in the form
of Exhibit C hereof, certifying that with respect to the period ending December
31st of the prior year: (i) the Servicer or such Servicing Officer, as
applicable, has reviewed the activities of the Servicer during the preceding
calendar year or portion thereof and its performance under this Agreement and
(ii) to the best of the Servicer’s or such Servicing Officer’s knowledge, as
applicable based on such review, the Servicer has performed and fulfilled its
duties, responsibilities and obligations under this Agreement in all material
respects throughout such year, or, if there has been a default in the
fulfillment of any such duties, responsibilities or obligations, specifying each
such default known to such Servicing Officer and the nature and status thereof.
Copies of any such statement shall be provided by the Indenture Trustee to any
Noteholder and to any Person identified to the Indenture Trustee as a
prospective transferee of a Note, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Indenture
Trustee. In addition to the foregoing, the Servicer will, to the extent
reasonable, give any other servicing information required by the Commission
pursuant to applicable law. The Servicer shall indemnify and hold harmless the
Depositor and its officers, directors and Affiliates from and against any actual
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments and other costs and expenses that such Person
may sustain based upon a breach of the Servicer’s obligations under this
Section 3.10.

Section 3.11    Assessment of Compliance and Attestation Report.

The Servicer shall service and administer the Mortgage Loans in accordance with
all requirements of the Servicing Criteria applicable to the Servicer (as set
forth in Exhibit P hereto). Pursuant to Rules 13a-18 and 15d-18 of the Exchange
Act and Item 1122 of Regulation AB, the Servicer, unless a Form 15 Suspension
Notice shall have been filed, shall deliver to the Indenture Trustee and the
Insurer (so long as the Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer), via electronic mail to
DBSEC.Notifications@db.com, on or before March 15th of each calendar year
beginning in 2007, a report regarding the Servicer’s assessment of compliance
(an “Assessment of Compliance”) with the Servicing Criteria during the preceding
calendar year. The Assessment of Compliance must be reasonably satisfactory to
the Indenture Trustee, and as set forth in Regulation AB, the Assessment of
Compliance must contain the following:

(a) A statement by such officer of its responsibility for assessing compliance
with the Servicing Criteria applicable to the Servicer;

(b) A statement by such officer that such officer used the Servicing Criteria,
and which will also be attached to the Assessment of Compliance, to assess
compliance with the Servicing Criteria applicable to the Servicer;

(c) An assessment by such officer of the Servicer’s compliance with the
applicable Servicing Criteria for the period consisting of the preceding
calendar year, including disclosure of any material instance of noncompliance
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which assessment shall be based on the activities it performs with respect to
asset-backed securities transactions taken as a whole involving the Servicer,
that are backed by the same asset type as the Mortgage Loans;

(d) A statement that a registered public accounting firm has issued an
attestation report on the Servicer’s Assessment of Compliance for the period
consisting of the preceding calendar year; and

(e) A statement as to which of the Servicing Criteria, if any, are not
applicable to the Servicer, which statement shall be based on the activities it
performs with respect to asset-backed securities transactions taken as a whole
involving the Servicer, that are backed by the same asset type as the Mortgage
Loans.

Such report at a minimum shall address each of the Servicing Criteria specified
on Exhibit P hereto which are indicated as applicable to the Servicer.

On or before March 15th of each calendar year beginning in 2007, the Servicer
shall furnish to the Indenture Trustee and the Insurer (so long as the Notes are
Outstanding or any Reimbursement Amounts remain due and owing to the Insurer) a
report (an “Attestation Report”) by a registered public accounting firm that
attests to, and reports on, the Assessment of Compliance made by the Servicer,
as required by Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122(b) of
Regulation AB, which Attestation Report must be made in accordance with
standards for attestation reports issued or adopted by the Public Company
Accounting Oversight Board.

The Servicer shall cause and any Subservicer, and each subcontractor determined
by the Servicer to be “participating in the servicing function” within the
meaning of Item 1122 of Regulation AB, to deliver to the Indenture Trustee and
the Depositor an Assessment of Compliance and Attestation Report as and when
provided above.

Such Assessment of Compliance, as to any Subservicer, shall at a minimum address
each of the Servicing Criteria specified on Exhibit P hereto which are indicated
as applicable to any “primary servicer.” Notwithstanding the foregoing, as to
any subcontractor, an Assessment of Compliance is not required to be delivered
unless it is required as part of a Form 10-K with respect to the Trust Fund.

If the Servicer cannot deliver any Assessment of Compliance or Attestation
Report by March 15th of such year, the Indenture Trustee, at its sole option,
may permit a cure period for the Servicer to deliver such Assessment of
Compliance or Attestation Report, but in no event later than March 25th of such
year.

Failure of the Servicer to timely comply with this Section 3.11 may be deemed an
Event of Servicer Termination. The Indenture Trustee shall, with the consent of
the Depositor, in addition to whatever rights the Indenture Trustee may have
under this Agreement and at law or equity or to damages, including injunctive
relief and specific performance, give notice to Noteholders and the Insurer (so
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Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing) that each has ten Business Days to object. If no such
objection is received, the Indenture Trustee shall immediately terminate all the
rights and obligations of the Servicer under this Agreement and in and to the
Mortgage Loans and the proceeds thereof without compensating the Servicer for
the same. This paragraph shall supersede any other provision in this Agreement
or any other agreement to the contrary.

The Indenture Trustee shall also provide an Assessment of Compliance and
Attestation Report, as and when provided above, which shall at a minimum address
each of the Servicing Criteria specified on Exhibit P hereto which are indicated
as applicable to the “trustee.”

Section 3.12     Access to Certain Documentation and Information Regarding the
Mortgage Loans. The Servicer shall provide to the Indenture Trustee, the
Insurer, Noteholders that are federally insured savings and loan associations,
the Office of Thrift Supervision, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC, such access being afforded without charge but
only upon reasonable request and during normal business hours at the offices of
the Servicer. Nothing in this Section 3.12 shall derogate from the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Servicer to provide access as
provided in this Section 3.12 as a result of such obligation shall not
constitute a breach of this Section 3.12; provided that the Servicer makes
reasonable efforts to provide such information without violation of law.

Section 3.13     Early Termination Fees

(a) Servicer shall not waive any part of any Early Termination Fee unless the
waiver relates to a default or a reasonably foreseeable default, the collection
of any Early Termination Fee would violate any relevant law or regulation or the
waiving of the Early Termination Fee would otherwise benefit the Trust Fund and
it is expected that the waiver would maximize recovery of total proceeds taking
into account the value of the Early Termination Fee and related Mortgage Loan
and doing so is standard and customary in servicing similar Mortgage Loans
(including any waiver of a Early Termination Fee in connection with a
refinancing of a Mortgage Loan that is related to a default or a reasonably
foreseeable default). The Servicer shall not waive a Early Termination Fee in
connection with a refinancing of a Mortgage Loan that is not related to a
default or a reasonably foreseeable default.

(c) The Seller represents and warrants to the Depositor and the Indenture
Trustee, as of the Closing Date, that the information in the Mortgage Loan
Schedule (including the attached Early Termination Fee summary) is complete and
accurate in all material respects at the dates as of which the information is
furnished and each Early Termination Fee is permissible and enforceable in
accordance with its terms under applicable state law.

(d) Upon discovery by the Seller or a Responsible Officer of the Indenture
Trustee of a breach of the foregoing clause (b) that materially and adversely
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the Class L Certificate to any Early Termination Fee, the party discovering the
breach shall give prompt written notice to the other parties. Within sixty (60)
days of the earlier of discovery by the Servicer or receipt of notice by the
Servicer of breach, the Servicer shall cure the breach in all material respects
or shall pay into the Collection Account the amount of the scheduled Early
Termination Fee, less any amount previously collected and paid by the Servicer
into the Collection Account. If the covenant made by the Servicer in clause (a)
above is breached, the Servicer must pay into the Collection Account the amount
of the waived Early Termination Fee.

Section 3.14    Commission Reporting.

(a) Unless and until a Form 15 Suspension Notice shall have been filed, the
Indenture Trustee shall, within 15 days after each Distribution Date and in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System (“EDGAR”), a Distribution Report on Form
10-D (the “Distribution Report”) with a copy of the statement to be furnished by
the Indenture Trustee to the Noteholders for such Distribution Date and, if
applicable, including the information required by each of the items set forth in
Part II thereof, subject to the receipt of the information set forth in (f)
below, in the case of information not required to be provided by the Indenture
Trustee.

(b) The Indenture Trustee shall prepare each Distribution Report and, no later
than 5 Business Days prior to the date on which such Distribution Report is
required to be filed, deliver a copy of such Distribution Report to the
Depositor for review. No later than the Business Day following the receipt
thereof, the Depositor shall notify the Indenture Trustee of any changes to made
to the Distribution Report. The Indenture Trustee shall make any changes thereto
requested by the Depositor and deliver the final Distribution Report to the
Depositor for signature no later than three Business Days prior to the date on
which such Distribution Report must be filed by the Indenture Trustee in
accordance with clause (a) above. The Depositor shall execute the final
Distribution Report and deliver the same to the Indenture Trustee via electronic
mail to DBSEC.Notifications@db.com or facsimile no later than the Business Day
following receipt of the same (which, unless not received within such time frame
from the Indenture Trustee, shall be no later than two Business Days prior to
the date on which the Distribution Report is required to be filed), with an
original executed hard copy to follow by overnight mail. With respect to the
Distribution Report to be filed following the first Distribution Date, the
Depositor shall prepare and execute such Distribution Report and, no later than
5 Business Days prior to the date on which such Distribution Report is required
to be filed, deliver a copy of such Distribution Report to the Indenture
Trustee. The Indenture Trustee shall attach thereto the Statement to Noteholders
furnished by the Indenture Trustee to the Certificateholders for such
Distribution Date and file such Distribution Report in accordance with clause
(a) above.

(c) The Depositor shall prepare and file Current Reports on Form 8-K, as and
when required.

(d)  Prior to January 30th of the first year in which the Indenture Trustee is
able to do so under applicable law, the Indenture Trustee shall, in accordance
with industry standards, file a Form 15 Suspension Notice with respect to the
Trust Fund.

 

 

 

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(e)   Prior to (x) March 15, 2007 and (y) unless and until a Form 15 Suspension
Notice shall have been filed, prior to March 15th of each year thereafter, the
Servicer shall provide the Indenture Trustee with an Annual Compliance
Statement, together with a copy of the Assessment of Compliance and Attestation
Report to be delivered by the Servicer pursuant to Sections 3.10 and 3.11. Prior
to (x) March 31, 2007 and (y) unless and until a Form 15 Suspension Notice shall
have been filed, March 31 of each year thereafter, the Indenture Trustee shall,
subject to subsection (e) below, file a Form 10-K, with respect to the Trust
Fund. The Indenture Trustee shall prepare each Form 10-K and, no later than 5
Business Days prior to the date on which such Form 10-K is required to be filed,
deliver a copy of such Form 10-K to the Depositor for review. No later than the
second Business Day following the receipt thereof, the Depositor shall notify
the Indenture Trustee of any changes to made to the Form 10-K. The Indenture
Trustee shall make any changes thereto requested by the Depositor and deliver
the final Form 10-K to the Depositor for signature no later than three Business
Days prior to the date on which such Form 10-K must be filed by the Indenture
Trustee in accordance with this clause (d). The Depositor shall execute the
final Form 10-K and deliver the same to the Indenture Trustee via electronic
mail to DBSEC.Notification@db.com or facsimile no later than Business Day
following receipt of the same (which, unless not received within such time frame
from the Indenture Trustee, shall be no later than two Business Days prior to
the date on which the From 10-K is required to be filed), with an original
executed hard copy to follow by overnight mail. Such Form 10-K shall include the
Assessment of Compliance, Attestation Report, Annual Compliance Statements and
other documentation provided by the Servicer, Subservicer and Indenture Trustee
pursuant to Sections 3.10 and 3.11 and a certification in the form attached
hereto as Exhibit M (the “Depositor Certification”), which shall be signed by
the senior officer of the Depositor in charge of securitization.

(f)    As to each item of information required to be included in any Form 10-D,
Form 8-K or Form 10-K, the Indenture Trustee's or Depositor’s obligation to
include the information in the applicable report is subject to receipt from the
entity that is indicated in Exhibit R as the responsible party for providing
that information, if other than the Indenture Trustee or the Depositor, as
applicable, as and when required as described above. Each of the Indenture
Trustee, the Servicer and the Depositor, as applicable, hereby agree to notify
and provide to the Indenture Trustee and the Depositor all information that is
required to be included in any Form 10-D, Form 8-K or Form 10-K, with respect to
which that entity is indicated in Exhibit R as the responsible party for
providing that information. In the case of information to be included in the
From 10-D, such information shall be delivered to the Indenture Trustee via
email to DBSEC.Notifications@db.com no later than no later than 5 calendar days
following each Distribution Date. In the case of information to be included in
the Form 8-K, such information shall be delivered to the Depositor no later than
no later 2 Business Days following the occurrence of a reportable event. In the
case of information to be included in the From 10-K, such information, other
than the documentation provided pursuant to Sections 3.10, 3.11 and 3.14(f),
shall be delivered to the Indenture Trustee via email to
DBSEC.Notifications@db.com no later than no later than (x) March 1, 2007 and (y)
unless and until a Form 15 Suspension Notice shall have been filed, March 1 of
each year thereafter. The Servicer shall be responsible for determining the pool
concentration applicable to any subservicer or originator at any time, for
purposes of disclosure as required by Items 1117 and 1119 of Regulation AB. The
Indenture

 

 

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 Trustee shall provide electronic or paper copies of all Form 10-D, 8-K and 10-K
filings free of charge to any Certificateholder upon request.

(g)   Unless and until a Form 15 Suspension Notice shall have been filed, the
Indenture Trustee shall sign a certification (in the form attached hereto as
Exhibit N) for the benefit of the Depositor and its officers, directors and
Affiliates. The Indenture Trustee's certification shall be delivered to the
Depositor by no later than March 18 of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Depositor Certification to the Indenture Trustee for filing no later
than March 20 of each year (or if such day is not a Business Day, the
immediately preceding Business Day).

(h)   The Indenture Trustee shall indemnify and hold harmless the Depositor and
its officers, directors and Affiliates from and against any losses, damages,
penalties, fines, forfeitures, reasonable and necessary legal fees and related
costs, judgments and other costs and expenses arising out of or based upon (i) a
breach of the Indenture Trustee’s obligations under this Section 3.14 or
Section 3.11 or (ii) any material misstatement or omission contained in any
information provided by the Indenture Trustee including, without limitation, in
the certification provided by the Indenture Trustee in the form of Exhibit N or
the Assessment of Compliance provided pursuant to Section 3.11. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Depositor, then the Indenture Trustee, in connection with (i) a
breach of the Indenture Trustee’s obligations under this Section 3.14,
Section 3.11 or (ii) any material misstatement or omission contained in any
information provided by the Indenture Trustee including, without limitation, in
the certification provided by the Indenture Trustee in the form of Exhibit N, or
in the Assessment of Compliance provided pursuant to Section 3.11, agrees that
it shall contribute to the amount paid or payable by the Depositor as a result
of the losses, claims, damages or liabilities of the Depositor in such
proportion as is appropriate to reflect the relative fault of the Depositor on
the one hand and the Indenture Trustee on the other. This indemnification shall
survive the termination of this Agreement or the termination of any party to
this Agreement.

(i)    The Servicer shall indemnify and hold harmless the Depositor, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses that such Person may sustain based upon (i) a breach of the
Servicer’s obligations under Sections 3.10, 3.11 or 3.14 or (ii) any material
misstatement or omission contained in any information provided by the Servicer
including, without limitation, in the information provided pursuant to
Sections 3.10 and 3.11. This indemnification shall survive the termination of
this Agreement or the termination of any party to this Agreement.

(j)    The Depositor shall indemnify and hold harmless the Servicer, the
Indenture Trustee and their respective officers, directors and Affiliates from
and against any actual losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses that such Person may sustain based upon (i) a breach of the
Depositor’s obligations under this Section 3.14 or (ii) any material
misstatement or omission contained in any information provided by the Depositor.

 

 

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(k)   The Indenture Trustee will have no duty or liability to verify the
accuracy or sufficiency of any information not prepared by it included in any
Form 10-D, Form 10-K or Form 8-K.  The Indenture Trustee shall have no liability
with respect to any failure to properly file any Form 10-D or 10-K resulting
from or relating to the Depositor's failure to timely comply with the provisions
of this section.  Nothing herein shall be construed to require the Indenture
Trustee or any officer, director or Affiliate thereof to sign any Form 10-D,
Form 10-K or Form 8-K. Copies of all reports filed by the Indenture Trustee
under the Exchange Act shall be sent to the Depositor electronically or at the
address set forth herein. Fees and expenses incurred by the Indenture Trustee in
connection with this Section 3.14 shall not be reimbursable from the Trust Fund.

(l)    Upon any filing with the Commission, the Indenture Trustee shall promptly
deliver to the Depositor a copy of any executed report, statement or
information.

(m)    To the extent that, following the Closing Date, the Depositor certifies
that reports and certifications differing from those required under this
Section 3.14 are necessary to comply with the reporting requirements under the
Exchange Act, the parties hereto hereby agree that each will reasonably
cooperate to amend the provisions of this Section 3.14(b) in order to comply
with such amended reporting requirements and such amendment of this
Section 3.14. Any such amendment may result in the reduction of the reports
executed by and filed on behalf of the Depositor under the Exchange Act.
Notwithstanding the foregoing, the Indenture Trustee shall not be obligated to
enter into any amendment pursuant to this Section that adversely affects its
obligations and immunities under this Agreement in any material respect.

(n)   Each of the parties acknowledges and agrees that the purpose of
Sections 3.10, 3.11 and this Section 3.14 of this Agreement is to facilitate
compliance by the Depositor with the provisions of Regulation AB. Therefor, each
of the parties agree that (a) the obligations of the parties hereunder shall be
interpreted in such a manner as to accomplish that purpose, (b) the parties’
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance in respect
of the requirements of Regulation AB, (c) the parties shall comply with
reasonable requests made by the Depositor for delivery of additional or
different information as the Depositor may determine in good faith is necessary
to comply with the provisions of Regulation AB, and (d) no amendment of this
Agreement shall be required to effect any such changes in the parties’
obligations as are necessary to accommodate evolving interpretations of the
provisions of Regulation AB.

 

 

 

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Section 3.15     Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall, beginning
in 2007, make annual reports of foreclosures and abandonments of any Mortgaged
Property. The Servicer shall file or cause to be filed reports relating to each
instance occurring during the previous calendar year in which the Servicer (i)
on behalf of the Trust acquires an interest in any Mortgaged Property through
foreclosure or other comparable conversion in full or partial satisfaction of a
Mortgage Loan or (ii) knows or has reason to know that any Mortgaged Property
has been abandoned. The reports shall be in form and substance sufficient to
meet the reporting requirements imposed by Sections 6050J, 6050H and 6050P of
the Code.

Section 3.16     Assumption Agreements. When a Mortgaged Property has been or is
about to be conveyed by the Mortgagor, the Servicer shall, to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its right to
accelerate the maturity of the related Mortgage Loan under any “due-on-sale”
clause contained in the related Mortgage or Mortgage Note; provided, however,
that the Servicer shall not exercise any such right if the “due-on-sale” clause,
in the reasonable belief of the Servicer, is not enforceable under applicable
law. In such event, the Servicer shall enter into an assumption and modification
agreement with the person to whom such property has been or is about to be
conveyed, provided that pursuant to which assumption agreement, such person
shall become liable under the Mortgage Note and, unless prohibited by applicable
law, the Mortgagor shall remain liable thereon and, in connection with such
assumption, no material term of the Mortgage Note may be changed. The Servicer,
in accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans, is also authorized to enter into a substitution
of liability whereby such person is substituted as mortgagor and becomes liable
under the Mortgage Note. The Servicer shall notify the Indenture Trustee and the
Insurer in writing that any such substitution or assumption agreement has been
completed, and add such agreement to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. In connection
with any assumption or substitution agreement entered into pursuant to this
Section 3.16, the Servicer shall not change the Loan Rate or the Monthly
Payment, defer or forgive the payment of principal or interest, reduce the
outstanding principal amount or extend the final maturity date on such Mortgage
Loan.

Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.

Section 3.17     Payment of Taxes, Insurance and Other Charges. With respect to
each Mortgage Loan, the Servicer shall not be required to maintain records
relating to payment of taxes. The Servicer will ensure that payment of hazard
insurance premiums and real estate taxes with respect to the Mortgage Loans are
made and will make Servicing Advances with respect to required payments of
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avoid the loss of a Mortgaged Property due to a tax sale or the foreclosure
thereof as a result of a tax lien.

Section 3.18    Servicing Advances. Notwithstanding anything herein to the
contrary, no Servicing Advance shall be required to be made hereunder by the
Servicer if such Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Servicing Advance, if made, would constitute a
Nonrecoverable Advance, shall be evidenced by an Officer’s Certificate of the
Servicer delivered to the Depositor, the Indenture Trustee and the Insurer.

Section 3.19    Allocation of Charge-Off Amounts.

(a)   On each Payment Date, the Servicer shall calculate the amount of
Charge-off Amounts for the preceding Collection Period, and shall include such
calculation in its Servicing Certificate.

(b)   On each Payment Date, the Investor Charge-off Amounts for such Payment
Date shall be allocated as follows:

(i)  first, to Excess Cashflow until the Excess Cashflow is reduced to zero; and

(ii)  second, to the Overcollateralization Amount until the
Overcollateralization Amount is reduced to zero.

(c)   Investor Charge-off Amounts shall not be allocated to the Notes on any
Payment Date.

ARTICLE IV.

 

INSURER

Section 4.01    Claims upon the Policy.

(a)   As soon as possible, and in no event later than 10:00 a.m. New York City
time on the second Business Day immediately preceding the Payment Date, the
Indenture Trustee shall furnish the Insurer and the Servicer with a completed
notice in the form set forth as Exhibit A to the Policy (the “Notice”) in the
event that the Insured Payment for such Payment Date is an amount greater than
zero. The Notice shall specify the amount of the Insured Payment and shall
constitute a claim for an Insured Payment pursuant to the Policy. Upon receipt
of an Insured Payment on behalf of the Holders of the Notes under the Policy,
the Indenture Trustee shall deposit such Insured Payment in the Payment Account
and shall distribute such Insured Payment on the Payment Date or on the date of
receipt by the Indenture Trustee, if received after the Payment Date, to the
Noteholders as a payment of interest or principal, as the case may be.

 

 

 

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(b)   The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid from moneys received under the Policy. The
Insurer shall have the right to inspect such records at reasonable times during
normal business hours of the Indenture Trustee upon four Business Days’ prior
written notice to the Indenture Trustee.

(c)   Subject to the terms of the Policy, if a payment of principal or interest
previously paid to a Noteholder is voided under any applicable bankruptcy,
insolvency, receivership or similar law in an insolvency proceeding, and as a
result, the Indenture Trustee is required to return such voided payment, or any
portion of such voided payment, made in respect of the Notes, the Indenture
Trustee or any Holder shall furnish to the Fiscal Agent for the Insurer (i) a
certified copy of the order requiring the return of a preference payment, (ii)
an opinion of counsel satisfactory to the Insurer that such order is final and
not subject to appeal, (iii) an assignment in such form as is reasonably
required by the Insurer, irrevocably assigning to the Insurer all rights and
claims of the Holder relating to or arising under the Notes against the debtor
which made such preference payment or otherwise with respect to such preference
payment and (iv) appropriate instruments to effect the appointment of the
Insurer as agent for such Holder in any legal proceeding related to such
preference payment, such instruments being in a form satisfactory to the
Insurer; provided, that if such documents are received by the Fiscal Agent for
the Insurer after 12:00 p.m., New York City time, on such Business Day, they
will be deemed to be received on the following Business Day. Such payments shall
be disbursed to the receiver or trustee in bankruptcy named in the final order
of the court exercising jurisdiction on behalf of the Holder and not to any
Holder directly unless such Holder has returned principal or interest paid on
the Notes to such receiver or trustee in bankruptcy, in which case such payment
shall be disbursed to such Holder. The Indenture Trustee is not permitted to
make a claim on the Trust or on any Noteholder for payments made to any
Noteholder which are characterized as preference payments by any bankruptcy
court having jurisdiction over any bankrupt Mortgagor unless ordered to do so by
such bankruptcy court.

(d)   Any amounts received by the Indenture Trustee pursuant to the Policy in
respect of the Notes shall be deposited to the Payment Account and be used
solely to make a payment to the Noteholders.

Section 4.02      Effect of Payments by the Insurer; Subrogation. Anything
herein to the contrary notwithstanding, any payment with respect to principal of
or interest on any of the Notes which are made with moneys received pursuant to
the terms of the Policy shall not be considered payment of such Notes, as
applicable, from the Trust and shall not result in the payment of or the
provision for the payment of the principal of or interest on such Notes, as
applicable, within the meaning of Section 5.01 herein. The Seller, the
Depositor, the Servicer and the Indenture Trustee acknowledge, and each Holder
by its acceptance of a Note agrees, that without the need for any further action
on the part of the Insurer, the Seller, the Depositor, the Servicer, the
Indenture Trustee or the Certificate Registrar (a) to the extent the Insurer
makes payments, directly or indirectly, on account of principal of or interest
on any Notes to the Holders of such Notes, the Insurer will be fully subrogated
to the rights of such Holders to receive such principal and interest, as
applicable, from the Trust and (b) the Insurer shall be paid

 

 

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such principal and interest but only from the sources and in the manner provided
herein and in the Insurance Agreement for the payment of such principal and
interest.

The Indenture Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Insurer for action to preserve or enforce the
Insurer’s rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders of the Notes as otherwise set forth
herein.

ARTICLE V.

 

PRIORITY OF DISTRIBUTIONS; STATEMENTS TO

NOTEHOLDERS; RIGHTS OF NOTEHOLDERS

Section 5.01    Distributions.

(a)   Distributions on the Notes and Certificates. On each Payment Date, the
Indenture Trustee, shall distribute out of the Payment Account, Available Funds
net of the Servicing Fee (which shall be paid or withdrawn by the Servicer),
payment to the Owner Trustee for services rendered pursuant to the Trust
Agreement (which shall be paid to the Owner Trustee), Early Termination Fees
(which are distributable only to the holders of the Class L Certificates), the
Indenture Trustee Expense Amount (which shall be paid to the Indenture Trustee),
the following amounts and in the following order of priority to the following
Persons (based on the information set forth in the Servicing Certificate):

I.   From Net Available Funds, the Floating Allocation Percentage of the
Interest Collections and the Maximum Principal Payment:

(i) to the Insurer, the Premium Amount with respect to the Notes for such
Payment Date;

(ii) to the Noteholders, the Interest Payment Amount with respect to the Notes
for such Payment Date;

(iii) to the Noteholders, the Note Principal Payment Amount for such Payment
Date, until the Note Principal Amount of the Notes has been reduced to zero;

(iv) to the Noteholders, as a payment of principal, in the following order, (a)
the Investor Charge-Off Amounts for that Payment Date and (b) the Investor
Charge-Off Amounts for all preceding Payment Dates that were not subsequently
funded by the Floating Allocation Percentage of the Interest Collections,
overcollateralization or draws under the Policy in respect of an
Overcollateralization Deficit until the Note Principal Amount of the Notes has
been reduced to zero;

 

 

 

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(v) to the Insurer, the Reimbursement Amount, if any, then due to it;

(vi) to the Noteholders, the Accelerated Principal Payment for the Notes on such
Payment Date, if any until the Note Principal Amount of the Notes has been
reduced to zero;

(vii) to the Servicer, to pay certain amounts that may be required to be paid to
the Servicer (including expenses associated with the transition to any new
servicer) and not previously reimbursed pursuant to the terms of this Agreement;

(viii) to the Noteholders to pay current Deferred Interest and any previously
unreimbursed Deferred Interest for any prior Payment Date and interest thereon
at the Note Rate (determined for this purpose without regard to the Maximum
Rate);

(ix) pari passu, (a) to the Indenture Trustee, any unreimbursed expenses due and
owing to the Indenture Trustee and not otherwise previously paid on such Payment
Date, and (b) to the Owner Trustee, any unpaid fees and unreimbursed expenses
due and owing to the Owner Trustee and not otherwise previously paid on such
Payment Date; and

(x)   to the Holders of each applicable class of Certificates, any amount
remaining on deposit in the Payment Account.

II.  To the Owner Trustee, amounts remaining in the Payment Account after all
amounts distributable under Section 5.01(a)(I) have been made, to be deposited
in the Certificate Account for payment to the Certificateholders as set forth in
Section 3.11 of the Trust Agreement.

(b)  Early Termination Fees. On each Distribution Date, an amount equal to all
Early Termination Fees received during the related Collection Period together
with the amounts paid in respect thereof pursuant to Section 3.13 will be
distributed to the holders of the Class L Certificates. The payment of the
foregoing amounts to the Holders of the Class L Certificates shall not reduce
the Certificate Principal Balances thereof.

(c)  Method of Distribution. The Indenture Trustee shall make payments and
distributions in respect of a Payment Date to the Noteholders and the
Certificateholders of record on the related Record Date (other than as provided
in Section 8.01 respecting the final payment) by check or money order mailed to
such Noteholders and Certificateholders at the address appearing in the Note
Register and the Certificate Register, respectively, or upon written request by
a Noteholder or Certificateholder, as applicable, delivered to the Indenture
Trustee at least five Business Days prior to such Record Date, by wire transfer,
or by such other means of payment as such Noteholder or Certificateholder and
the Indenture Trustee shall agree. Distributions among Noteholders and the
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Percentage Interests evidenced by the Notes held by such Noteholder and the
Percentage Interests evidenced by the Certificates held by such
Certificateholders.

(d)  Payments on Book-Entry Notes. Each payment with respect to a Book-Entry
Note shall be paid to the Depository, which shall credit the amount of such
payment to the accounts of its Depository Participants in accordance with its
normal procedures. Each Depository Participant shall be responsible for
disbursing such payment to the Notes 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 Note Owners that it represents. All such credits and
disbursements with respect to a Book-Entry Note are to be made by the Depository
and the Depository Participants in accordance with the provisions of the Notes.
None of the Indenture Trustee, the Note Registrar, the Seller, the Insurer, the
Trust or the Servicer shall have any responsibility therefor except as otherwise
provided by applicable law.

Section 5.02     Calculation of the Note Rate. With respect to the Notes, on the
second LIBOR Business Day immediately preceding each Payment Date, the Indenture
Trustee shall determine LIBOR for the Interest Period commencing on such Payment
Date and inform the Servicer (at the facsimile number given to the Indenture
Trustee in writing) of such rates. On or prior to each Payment Date, the
Indenture Trustee shall determine the applicable Note Rate for the following
Interest Accrual Period.

Section 5.03    Servicing Certificate and Statement to Noteholders.

(a)   Not later than 12:00 noon, New York time, on the Determination Date prior
to the related Payment Date, the Servicer shall deliver to the Indenture
Trustee, the Paying Agent, the Insurer (so long as the Notes are Outstanding or
any Reimbursement Amounts remain due and owing to the Insurer) and the Depositor
an electronic file, in the form agreed to by the Servicer and the Indenture
Trustee, containing the information needed to determine the payments to be made
pursuant to Section 5.01, the information needed by the Indenture Trustee to
complete the Statement to Noteholders with respect to the Mortgage Loans on an
aggregate basis as of the end of the preceding Collection Period and such other
information as the Indenture Trustee shall reasonably require (the “Servicing
Certificate”).

(b)   Not later than 12:00 noon, New York time, on each Payment Date, the
Indenture Trustee shall make available on its website to the Depositor, the
Insurer (so long as the Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer), the Servicer, the Paying Agent, and the
Insurer, a statement (the “Statement to Noteholders”) containing the information
set forth in Exhibit Q with respect to such Payment Date:

The Indenture Trustee shall make available the Statement to Noteholders via its
website (https://www.TSS.db.com/invr) on the related Payment Date. The Indenture
Trustee may fully and conclusively rely upon and shall have no liability with
respect to information provided by the Servicer.

 

 

 

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(b)  Within 90 days, or such shorter period as may be required by statute or
regulation, after the end of each calendar year, the Indenture Trustee shall
have prepared and shall make available to each Person who at any time during the
calendar year was a Noteholder or Certificateholder of record, and make
available to Security Owners (identified as such by the Clearing Agency) in
accordance with applicable regulations, a report summarizing the items provided
to the such Noteholders or Certificateholders pursuant to Section 5.03(a) on an
annual basis as may be required to enable such Holders to prepare their federal
income tax returns. Such information shall include the amount of original issue
discount accrued on each Class of Securities and information regarding the
expenses of the Issuer. The Servicer shall provide the Indenture Trustee with
such information as is necessary for the Indenture Trustee to prepare such
reports.

The Indenture Trustee shall furnish any other information that is required by
the Code and regulations thereunder to be made available to the Noteholders or
Certificateholders. The Servicer shall provide the Indenture Trustee with such
information as is necessary for the Indenture Trustee to prepare such reports
(and the Indenture Trustee may rely solely upon such information).

(c)  The Indenture Trustee shall furnish to each Noteholder, Certificateholder
and to the Insurer (if requested in writing), during the term of this Agreement,
such periodic, special or other reports or information (so long as the Indenture
Trustee has such information), whether or not provided for herein, as shall be
necessary, reasonable or appropriate with respect to the Noteholder,
Certificateholder or the Insurer, as the case may be, or otherwise with respect
to the purposes of this Agreement, all such reports or information to be
provided by and in accordance with such applicable instructions and directions
(if requested in writing) as the Noteholder, Certificateholder or the Insurer,
as the case may be, may reasonably require; provided that the Indenture Trustee
shall be entitled to be reimbursed by such Noteholder, Certificateholder or the
Insurer, as the case may be, for its fees and actual expenses associated with
providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.

 

 

 

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(d)          Reports and computer tapes furnished by the Servicer pursuant to
this Agreement shall be deemed confidential and of a proprietary nature, and
shall not be copied or distributed except to the extent provided in this
Agreement and to the extent required by law or to the Rating Agencies, the
Depositor, the Insurer’s attorneys, reinsurers, parent, regulators, liquidity
providers and auditors and to the extent the Servicer instructs the Indenture
Trustee in writing to furnish information regarding the Trust or the Mortgage
Loans to third-party information providers; notwithstanding anything herein to
the contrary, the foregoing shall not be construed to prohibit (i) disclosure of
any and all information that is or becomes publicly known, or information
obtained by Indenture Trustee from sources other than the other parties hereto,
(ii) disclosure of any and all information (A) if required to do so by any
applicable law, rule or regulation, (B) to any government agency or regulatory
body having or claiming authority to regulate or oversee any respects of
Indenture Trustee’s business or that of its affiliates, (C) pursuant to any
subpoena, civil investigative demand or similar demand or request of any court,
regulatory authority, arbitrator or arbitration to which Indenture Trustee or
any affiliate or an officer, director, employer or shareholder thereof is a
party or (D) to any affiliate, independent or internal auditor, agent, employee
or attorney of Indenture Trustee having a need to know the same, provided that
the Indenture Trustee advises such recipient of the confidential nature of the
information being disclosed or (iii) any other disclosure authorized by the
Transaction Documents, the Depositor, the Seller or the Servicer. No Person
entitled to receive copies of such reports or tapes or lists of Noteholders or
Certificateholders shall use the information therein for the purpose of
soliciting the customers of the Seller or for any other purpose except as set
forth in this Agreement.

Section 5.04     Other Receipts. To the extent that the Indenture Trustee
receives any amounts on behalf of the Trust that are not otherwise part of the
Interest Collections or Principal Collections or Insured Payments, the Indenture
Trustee shall distribute such amounts to the Servicer on the following Payment
Date.

Section 5.05      Payment Account. The Indenture Trustee shall establish a
separate non-interest bearing trust account (the “Payment Account”) designated
“Deutsche Bank National Trust Company, as Indenture Trustee, in trust for the
registered holders of the IndyMac Asset-Backed Notes, Series 2006-H4.” The
Payment Account shall be an Eligible Account. The Indenture Trustee shall invest
or cause the institution maintaining the Payment Account to invest the funds in
the Payment Account, other than any funds that were drawn on the Policy in
respect of Insured Payments, in Eligible Investments designated in the name of
the Indenture Trustee for the benefit of the Noteholders, which shall mature or
be payable on demand or on or prior to such Payment Date. All income and gain
realized from any such investment shall be for the benefit of the Indenture
Trustee and shall be subject to its withdrawal or order from time to time. The
amount of any losses incurred in respect of any such investments shall be
deposited in the Payment Account by the Indenture Trustee out of its own funds
immediately as realized without any right of reimbursement. The Indenture
Trustee shall deposit any amounts representing payments on and any collections
in respect of the Mortgage Loans received by it immediately following receipt
thereof to the Payment Account including, without limitation, all amounts (i)
withdrawn by the Servicer from the Collection Account pursuant to Section 3.03
herein for deposit to the Payment Account, (ii) any amount, required to be
deposited by the Indenture Trustee in connection with any losses on funds in the
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(to the extent paid to the Indenture Trustee) and (iii) drawn under the Policy
in respect of Insured Payments.

Section 5.06      Reserve Account

(a)           The Indenture Trustee shall establish and maintain an account (the
“Reserve Account”) entitled “Reserve Account, Deutsche Bank National Trust
Company, as Indenture Trustee, in trust for the benefit of the Holders of the
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4
Asset-Backed Certificates, Class L” The Reserve Account shall be an Eligible
Account.

(b)          If the existing Reserve Account ceases to be an Eligible Account,
the Indenture Trustee shall establish a new Reserve Account that is an Eligible
Account within 10 Business Days and transfer all funds and investment property
on deposit in such existing Reserve Account into such new Reserve Account. The
Reserve Account shall relate solely to the Notes and the Certificates and funds
therein shall be held separate and apart from and shall not be commingled with
any other monies including, without limitation, other monies of the Indenture
Trustee held under this Agreement. The Indenture Trustee shall make withdrawals
from the Reserve Account only for the following purposes:

(i)           to pay such amounts required to be paid pursuant to
Section 2.01(d) of this Agreement; and

(ii)          to withdraw amounts deposited in the Reserve Account in error.

(a)       The Administrator, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Owner Trustee on behalf of the
Certificateholders an account (the “Certificate Account”) entitled “Certificate
Account, Deutsche Bank National Trust Company, as Administrator, in trust for
the holders of IndyMac Home Equity Mortgage Loan-Asset Backed Trust Series
2006-H4, Certificates.”

(b)       On each Payment Date, the Indenture Trustee shall withdraw from the
Payment Account all amounts required to be deposited in the Certificate Account
pursuant to Section 5.01 and remit such amount to the Owner Trustee or the
Administrator for deposit into the Certificate Account. On each Payment Date,
the Owner Trustee or the Administrator shall distribute all amounts on deposit
in the Certificate Account to the Certificateholders in respect of the
Certificates as provided in the Trust Agreement. On the Payment Date on which
the Note Principal Amount is reduced to zero, the Administrator shall distribute
all amounts remaining on deposit in the Certificate Account to the
Certificateholders in respect of the Certificates in order to clear and
terminate the Certificate Account in connection with the termination of this
Agreement.

 

 

 

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(c)          All distributions made on the Certificates shall be made by wire
transfer of immediately available funds to the account of such
Certificateholders. The final distribution on the Certificates will be made in
like manner, but only upon presentment and surrender of such Certificates at the
location specified in the notice to the Certificateholders of such final
distribution.

Section 5.08      Rapid Amortization Event. The occurrence of any one of the
following events (each, a “Rapid Amortization Event”):

(a)   default in the payment of any interest on the Notes when the same becomes
due and payable or the failure to pay any installment of principal on the Notes
in accordance with Section 5.01 and such default continues for a period of two
Business Days, or a failure to pay the entire Note Principal Amount of the Notes
when the same becomes due and payable under the Indenture or on the Final
Scheduled Payment Date.

(b)   failure on the part of the Issuer, the Depositor, the Seller or the
Servicer, as the case may be, to observe or perform in any material respect any
other material covenants or agreements set forth in the Mortgage Loan Purchase
Agreement, this Agreement, the Indenture or the Trust Agreement, as the case may
be, which failure materially and adversely affects the Noteholders or the
Insurer and which continues unremedied for a period of 30 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given to the Issuer, the Depositor, the Servicer, or the Seller, as
the case may be, by the Indenture Trustee, or to the Issuer, the Depositor, the
Servicer, or the Seller, as the case may be, by the Indenture Trustee or the
Insurer in accordance with Section 11.04 of the Indenture;

(c)   the Trust or the Depositor files a petition to take advantage or otherwise
voluntarily commences a case or proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar statute;

(d)   a decree or order of a court of agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator or other similar official in any
bankruptcy, insolvency or similar proceedings for the winding-up or liquidation
of its affairs, is entered against the Trust or the Depositor;

(e)   the Trust becomes subject to regulation by the SEC as an “investment
company” within the meaning of the Investment Company Act of 1940, as amended;

(f)  any draw under the Policy remains unreimbursed for greater than 90 days;

(g)   the Trust loses its status as one or more REMICs and such loss in status
results in the imposition of an entity level tax on the Trust; or

 

 

 

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(h)   the rights and obligations of the Servicer under this Agreement are
terminated by the Insurer following an Insurance Agreement Event of Default or
an Event of Servicer Termination has occurred.

In the case of any event described in clauses (a), (b), (e), (f), (g) or (h)
above, a Rapid Amortization Event will be deemed to have occurred only if, after
the applicable grace period, if any, described in this Agreement, the Insurer,
or if any Insurer Default has occurred and is continuing, the Indenture Trustee
or Holders holding Notes evidencing more than 50% of the Note Principal Amount
of the Notes, by written notice to the Trust, the Insurer, the Seller and the
Servicer (and to the Indenture Trustee, if given by the Noteholders or the
Insurer) declare that a Rapid Amortization Event has occurred as of the date of
such notice.

If a Rapid Amortization Event occurs due to the occurrence of an event described
in either clause (c) or (d) above, a Rapid Amortization Event will automatically
occur.

The Indenture Trustee or the Servicer will be obligated to provide notice to the
Insurer of the occurrence of an event described in clauses (a) through (h)
above.

Following the occurrence of a Rapid Amortization Trigger Event, the Insurer (so
long as the Notes are Outstanding or any Reimbursement Amounts remain due and
owing to the Insurer and no Insurer Default has occurred and is continuing)
shall have the right to direct the Indenture Trustee, and the Indenture Trustee
or its designated agent shall have the right if an Insurer Default has occurred
and is continuing, to sell, dispose of or otherwise liquidate the Collateral
with respect to the Mortgage Loans in a commercially reasonable manner and on
commercially reasonable terms.

With respect to the Notes, the net proceeds of such sale will be paid

(i)    first, pro rata to the Indenture Trustee, the Indenture Trustee Expense
Amount (without regard to the caps included in the definition of Indenture
Trustee Expense Amount) and to the Owner Trustee any unpaid fees due and owing
to it,

(ii)  second, the Floating Allocation Percentage of any remaining sale proceeds,
to the Holders of the Notes, insofar as may be necessary to reduce the Note
Principal Amount, together with all accrued and unpaid interest due thereon, to
zero,

(iii) third, the Floating Allocation Percentage of any remaining sale proceeds,
to reimburse the Insurer to the extent of unreimbursed draws under the Policy
and other amounts owing to the Insurer, including the Premium Amount,

(iv) fourth, pro rata to the Indenture Trustee and the Owner Trustee, any
unreimbursed expenses due and owing to them, and

 

 

 

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(v)   fifth, to the Owner Trustee, for deposit into the Certificate Account and
distribution to the Certificateholders as set forth in Section 3.11 of the Trust
Agreement.

In addition to the consequences of a Rapid Amortization Event discussed above,
if the Seller, the Depositor or the Servicer or any other their respective
affiliates voluntarily files a bankruptcy petition or goes into liquidation or
any person is appointed a receiver or bankruptcy trustee of such entity, on the
day of any such filing or appointment with respect to (i) the Seller, or any of
its Subsidiaries or Affiliates, no further Additional Balances will be
transferred to the Issuer and the Seller, the Depositor or the Servicer, as
applicable, will promptly give notice of any such filing or appointment to the
Indenture Trustee and the Insurer (so long as the Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer), (ii) the Servicer or
any of its Subsidiaries or Affiliates, no further Additional Balances relating
to Mortgage Loans serviced by such Servicer will be transferred to the Issuer
and such Servicer will promptly give notice to the Indenture Trustee and the
Insurer (so long as the Notes are Outstanding or any Reimbursement Amounts
remain due and owing to the Insurer) of any such filing or appointment and (iii)
the Depositor or any of its Subsidiaries or Affiliates, the Depositor will
promptly give notice of any such filing or appointment to the Indenture Trustee.
Within 15 days, the Indenture Trustee shall notify the Holders of the Notes of
the occurrence of such event.

Upon the occurrence of a Rapid Amortization Trigger Event, the Seller shall only
receive payments in respect of the purchase price for any Additional Balance
from the Reserve Account, funded by the Holder of the Class L Certificate. The
Holder of the Class L Certificate will be reimbursed for such payments to the
extent of available funds distributed on the Class L Certificate.

Section 5.09     Indenture Trustee Fees and Indemnification Expenses. The
Indenture Trustee shall be entitled to receive the Indenture Trustee Fee on each
Payment Date. The Indenture Trustee also shall be entitled to receive payment of
all expenses and indemnities due to it pursuant to Section 9.03.

ARTICLE VI.

 

THE SELLER, THE SERVICER AND THE DEPOSITOR

Section 6.01     Liability of the Seller, the Servicer and the Depositor. The
Seller, the Depositor and the Servicer shall be liable in accordance herewith
only to the extent of the obligations specifically imposed upon and undertaken
by the Seller, the Depositor or Servicer, as the case may be, herein.

Section 6.02     Merger or Consolidation of, or Assumption of the Obligations
of, the Seller, the Servicer or the Depositor. Any corporation into which the
Seller, the Servicer or the Depositor may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
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any corporation succeeding to the business of a Seller, the Servicer or the
Depositor shall be the successor of the Seller, the Servicer or the Depositor,
as the case may be, hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor Servicer shall
satisfy all the requirements of Section 7.02 with respect to the qualifications
of a successor Servicer, and such merger, conversion or consolidation could not
be reasonably expected to result in a Material Adverse Change with respect to
the Servicer, unless approved by the Insurer (which approval shall not be
unreasonably withheld).

Section 6.03     Limitation on Liability of the Seller, the Depositor, the
Servicer and Others. None of the Seller, the Depositor or the Servicer nor any
of the directors or officers or employees or agents of the Seller, the Depositor
or the Servicer shall be under any liability to the Trust, the Noteholders or
the Certificateholders for any action taken or for refraining from the taking of
any action by the Seller, the Depositor or the Servicer in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Seller, the Depositor or the Servicer or any
such Person against any liability which would otherwise be imposed by reason of
its willful misfeasance, bad faith or negligence in the performance of duties of
the Seller, the Depositor or the Servicer or by reason of its reckless disregard
of its obligations and duties of the Seller, the Depositor or the Servicer
hereunder; provided, further, that this provision shall not be construed to
entitle the Seller, the Depositor or the Servicer to indemnity in the event that
amounts advanced by the Seller, the Depositor or the Servicer to retire any
senior lien exceeding Net Recoveries realized with respect to the related
Mortgage Loan. The Seller, the Depositor or the Servicer and any director or
officer or employee or agent of the Seller, the Depositor or the Servicer may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. The Seller,
the Depositor or the Servicer and any director or officer or employee or agent
of the Seller, the Depositor or the Servicer shall be indemnified by the Trust
and held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Notes or the
Certificates, other than any loss, liability or expense related to any specific
Mortgage Loan or Mortgage Loans (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Agreement) and any loss,
liability or expense incurred by reason of its willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder; and such amounts shall be payable
only pursuant to Section 5.01. None of the Seller, the Depositor or the Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
that is not incidental to their respective duties hereunder and which in its
opinion may involve it in any expense or liability; provided, however, the
Seller, the Depositor or the Servicer may with the consent of the Insurer (which
consent shall not be unreasonably withheld) undertake any such action which it
may deem necessary or desirable in respect of this Agreement, and the rights and
duties of the parties hereto and the interests of the Noteholders hereunder. In
such event, the reasonable legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Servicer shall be entitled to be reimbursed therefor only pursuant
to Section 5.01. The Servicer’s right to indemnity or reimbursement pursuant to
this Section 6.03 shall survive any resignation or termination of the Servicer
pursuant to Section 6.04 or 7.01 below with respect to any losses,

 

 

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expenses, costs or liabilities arising prior to such resignation or termination
(or arising from events that occurred prior to such resignation or termination).

Section 6.04      Servicer Not to Resign. Subject to the provisions of
Section 6.02 above, the Servicer shall not resign from the obligations and
duties hereby imposed on it except (i) upon determination that the performance
of its obligations or duties hereunder are no longer permissible under
applicable law or are in material conflict by reason of applicable law with any
other activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer in writing and such proposed
successor servicer is reasonably acceptable to the Indenture Trustee; (b) each
Rating Agency shall have delivered a letter to the Indenture Trustee prior to
the appointment of the successor servicer stating that the proposed appointment
of such successor servicer as Servicer hereunder will not result in the
reduction or withdrawal of the then current rating of the Notes without regard
to the Policy; and (c) such proposed successor servicer is reasonably acceptable
to the Insurer, as evidenced by a letter to the Indenture Trustee; provided,
however, that no such resignation by the Servicer shall become effective until
such successor servicer or, in the case of (i) above, the Indenture Trustee
shall have assumed the Servicer’s responsibilities and obligations hereunder or
the Indenture Trustee shall have designated a successor servicer in accordance
with Section 7.02 below. Any such resignation shall not relieve the Servicer of
responsibility for any of the obligations specified in Sections 7.01 and 7.02
below as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Indenture Trustee and the Insurer.

Section 6.05      Delegation of Duties. In the ordinary course of business, the
Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01 herein. Such
delegation shall not relieve the Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04 above. The Servicer shall provide
the Insurer and the Indenture Trustee with written notice prior to the
delegation of any of its duties to any Person other than any of the Servicer’s
Affiliates or their respective successors and assigns (provided that the
Servicer may retain agents and contractors in accordance with Acceptable
Servicing Practices), and the Insurer shall have consented to the appointment of
any Subservicer to the extent required by Section 3.01 hereof.

Section 6.06     Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust, the Indenture Trustee and the
Insurer and its officers, directors, agents and employees from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer’s willful misfeasance, bad faith or gross negligence in the
performance of its activities in servicing or administering the Mortgage Loans
pursuant to this Agreement, including, but not limited to, any judgment, award,
settlement, reasonable fees of, counsel of its selection and other costs or
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with the defense of any actual or threatened action, proceeding or claim related
to the Servicer’s misfeasance, bad faith or gross negligence. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this
Section 6.06 shall survive termination of the Agreement or the earlier of the
resignation or removal of the Indenture Trustee.

ARTICLE VII.

 

SERVICER TERMINATION

 

Section 7.01

Events of Servicer Termination.

(a)   If any one of the following events (each, an “Event of Servicer
Termination”) shall occur and be continuing:

(i)           Any failure by the Servicer to furnish to the Indenture Trustee
the Mortgage Loan data sufficient to prepare the reports described in
Sections 3.19 or 5.03 which continues unremedied for a period of two (2)
Business Days after the date upon which written notice of such failure shall
have been given to the Servicer by the Indenture Trustee or to the Servicer and
the Indenture Trustee by the Insurer (so long as the Notes are Outstanding or
any Reimbursement Amounts remain due and owing to the Insurer and no Insurer
Default has occurred and is continuing) and, if (i) the Notes are no longer
Outstanding and no amounts remain due and owing to the Insurer or (ii) an
Insurer Default has occurred and is continuing, by Holders of not less than 25%
of the Note Principal Amount of the Notes; or

(ii)          Any failure on the part of the Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Servicer contained in this Agreement which continues unremedied for a period
of 30 days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Indenture
Trustee or to the Servicer and the Indenture Trustee by the Majority
Securityholders or the Insurer; or

(iii)        The Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities, voluntary liquidation or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all of its
property; or

(iv)         The Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations; or

(v)          The Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another
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entity to consolidate or merge into it, such that the resulting entity does not
meet the criteria for a successor servicer as specified herein; or

(vi)         If a representation or warranty set forth in Section 2.03 hereof
shall prove to be incorrect as of the time made in any respect that materially
and adversely affects the interests of the Securityholders or the Insurer, and
the circumstance or condition in respect of which such representation or
warranty was incorrect shall not have been eliminated or cured within 30 days
after the date on which written notice of such incorrect representation or
warranty shall have been given to the Servicer by the Indenture Trustee, or to
the Servicer and the Indenture Trustee by the Controlling Party; or

(vii)       A sale or pledge of any of the rights of the Servicer hereunder or
an assignment of this Agreement by the Servicer or a delegation of the rights or
duties of the Servicer hereunder shall have occurred in any manner not otherwise
permitted hereunder and without the prior written consent of the Controlling
Party; or

(viii)      After receipt of notice from the Indenture Trustee, any failure of
the Servicer to remit to the Indenture Trustee any payment required to be made
to the Indenture Trustee for the benefit of Noteholders and the
Certificateholders or to the Insurer under the terms of this Agreement on any
Servicer Remittance Date which failure continues unremedied for a period of two
(2) Business Days after the date upon which notice of such failure shall have
been given to the Servicer by the Indenture Trustee or the Insurer (so long as
the Notes are Outstanding or any Reimbursement Amounts remain due and owing to
the Insurer and no Insurer Default has occurred and is continuing).

If an Event of Servicer Termination described in clauses (i) through (viii) of
this Section 7.01 shall occur, then, in each and every case, subject to
applicable law, so long as any such Event of Servicer Termination shall not have
been remedied within any period of time prescribed by this Section 7.01, the
Indenture Trustee, by notice in writing to the Servicer may, with the consent of
the Insurer, and shall at the direction of the Insurer (or if an Insurer Default
has occurred and is continuing, at the direction of the Noteholders evidencing
not less than 66-2/3% of the aggregate Note Principal Amount of the Notes),
terminate all of the rights and obligations of the Servicer hereunder and in and
to the Mortgage Loans and the proceeds thereof.

On or after the receipt by the Servicer of such written notice, all authority
and power of the Servicer, and only in its capacity as Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass
to and be vested in the Indenture Trustee pursuant to and under the terms of
this Agreement; and the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the defaulting Servicer as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents or otherwise. The
defaulting Servicer agrees to cooperate with the Indenture Trustee in effecting
the termination of the defaulting Servicer’s responsibilities and rights
hereunder as Servicer including, without limitation, notifying the Subservicers
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servicing function and providing the Indenture Trustee or its designee all
documents and records in electronic or other form reasonably requested by it to
enable the Indenture Trustee or its designee to assume the defaulting Servicer’s
functions hereunder and the transfer to the Indenture Trustee for administration
by it of all amounts which shall at the time be or should have been deposited by
the defaulting Servicer in the Collection Account maintained by such defaulting
Servicer and any other account or fund maintained with respect to the Securities
or thereafter received with respect to the Mortgage Loans. The Servicer being
terminated shall bear all costs of a servicing transfer, including but not
limited to those of the Indenture Trustee reasonably allocable to specific
employees and overhead, legal fees and expenses, accounting and financial
consulting fees and expenses, and costs of amending the Agreement, if necessary.

Notwithstanding any termination of the Servicer hereunder, the Servicer shall be
entitled to receive, on a first in-first out basis, out of any late collection
of a Monthly Payment on a Mortgage Loan that was due prior to the notice
terminating the Servicer’s rights and obligations as the Servicer hereunder and
received after such notice, that portion of the Servicing Fee thereof or any
unreimbursed Servicing Advance made by the terminated Servicer relating to such
Mortgage Loan; provided however such right of reimbursement shall be net of any
amounts owed by the terminated Servicer and required to be reimbursed pursuant
to Section 3.01(f) hereof.

(b)   In addition, upon the occurrence of any Insurance Agreement Event of
Default, as defined herein, and upon the direction of the Insurer in connection
therewith (so long as the Notes are outstanding or Reimbursement Amounts remain
due and owing to the Insurer and no Insurer Default has occurred and is
continuing), the Indenture Trustee shall terminate the rights and
responsibilities of the Servicer hereunder and shall appoint a successor
Servicer in accordance with the provisions of Section 7.02.

 

Section 7.02

Indenture Trustee to Act; Appointment of Successor.

(a)   On and after the time the Servicer receives a notice of termination
pursuant to Section 7.01 or resigns pursuant to 6.04 herein, the Indenture
Trustee or a previously agreed upon successor Servicer shall be the successor in
all respects to the Servicer in its capacity as servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties and liabilities relating thereto placed on the
Servicer by the terms and provisions hereof. As compensation therefor, the
Indenture Trustee shall be entitled to such compensation as the Servicer would
have been entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, (i) if the Indenture Trustee is unwilling to act as
successor Servicer, or (ii) if the Indenture Trustee is legally unable so to
act, the Indenture Trustee shall appoint or petition a court of competent
jurisdiction to appoint, or the Insurer can direct the Indenture Trustee to
appoint or petition a court of competent jurisdiction for the appointment of,
any established housing and home finance institution, bank or other mortgage
loan or home equity loan servicer having a net worth of not less than
$50,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or liabilities of the Servicer
hereunder; provided that any such successor Servicer shall be acceptable to the
Insurer, as evidenced by the Insurer’s prior written consent (which consent

 

 

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shall not be unreasonably withheld); and provided, further, that the appointment
of any such successor Servicer will not result in the qualification, reduction
or withdrawal of the ratings assigned to the Notes by the Rating Agencies.
Pending appointment of a successor to the Servicer hereunder, unless the
Indenture Trustee is prohibited by law from so acting, the Indenture Trustee
shall act in such capacity as hereinabove provided. Notwithstanding anything
herein to the contrary, in no event shall the Indenture Trustee be held liable
for any Servicing Fee or for any differential in the amount necessary to induce
any successor servicer to act as successor servicer under this Agreement and the
transactions set forth or provided for therein. In connection with such
appointment and assumption, the successor shall be entitled to receive
compensation out of payments on Mortgage Loans in an amount equal to the
compensation which the Servicer would otherwise have received pursuant to
Section 3.09 herein (or such lesser compensation as the Indenture Trustee and
such successor may agree). The appointment of a successor Servicer shall not
affect any liability of the predecessor Servicer which may have arisen under
this Agreement prior to its termination as Servicer to pay any deductible under
any insurance policy obtained and maintained pursuant to Section 3.05 herein or
to indemnify the Trust and the Indenture Trustee pursuant to Section 6.06), nor
shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.

(b)   Any successor, including the Indenture Trustee, to the Servicer as
servicer shall during the term of its service as servicer (i) continue to
service and administer the Mortgage Loans for the benefit of the Trust, and (ii)
maintain in force an insurance policy or policies of insurance covering errors
and omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer maintained as of the date hereof, as the same may have
been increased from time to time. No successor servicer shall have the right to
retain and commingle payments on, and collections in respect of, the Mortgage
Loans with its own funds pursuant to Section 3.02(c) unless (i) consented to in
writing by the Insurer and (ii) such commingling will not result in a downgrade,
qualification or withdrawal of the then current ratings of the Notes, without
regard to the Policy, as evidenced in writing by each Rating Agency.

Section 7.03     Waiver of Defaults. While the Notes are outstanding, the
Insurer or the Majority Securityholders with the consent of the Insurer (so long
as the Notes are Outstanding or any Reimbursement Amounts remain due and owing
to the Insurer and no Insurer Default has occurred and is continuing) may by
written notice to the Indenture Trustee, on behalf of such Noteholders, waive
any events permitting removal of the Servicer as servicer pursuant to this
Article VII, provided, however, that the Insurer and the Majority
Securityholders may not waive a default in making a required payment on a Note
without the consent of 100% of the Holders of such Notes. Upon any waiver of a
past default, such default shall cease to exist and any Event of Servicer
Termination arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto except to the extent
expressly so waived. Notice of any such waiver shall be given by the Indenture
Trustee to the Rating Agencies.

 

 

 

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Once the Notes are no longer outstanding and no Reimbursement Amounts are then
due and owing to the Insurer and no Insurer Default has occurred and is
continuing, the Majority Securityholders may by written notice to the Indenture
Trustee, on behalf of all Noteholders, waive any events permitting removal of
the Servicer as servicer pursuant to this Article VII. Upon any waiver of a past
default, such default shall cease to exist and any Event of Servicer Termination
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Indenture Trustee to the Rating
Agencies.

Section 7.04     Notification to Noteholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04 above, the Indenture Trustee shall give prompt written notice
thereof to the Noteholders at their respective addresses appearing in the Note
Register, the Insurer and each Rating Agency.

ARTICLE VIII.

 

TERMINATION

 

Section 8.01

Termination.

(a)   The respective obligations and responsibilities of the Seller, the
Servicer, the Depositor and the Indenture Trustee created hereby (other than the
obligation of the Indenture Trustee to make certain payments to the Noteholders
and distributions to the Certificateholders after the Final Scheduled Payment
Date, the indemnity obligations of the Servicer and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Indenture Trustee of the later of (A) payment in full of all
amounts owing to the Insurer unless the Insurer shall otherwise consent and (B)
the earliest of (i) the final payment or other liquidation of the last Mortgage
Loan remaining in the Trust; (ii) the optional purchase by the Servicer of the
Mortgage Loans as described below and (iii) the Final Scheduled Payment Date.

(b)   On any Payment Date on which the Note Principal Amount, prior to giving
effect to payments on such date, is less than or equal to 10% of the aggregate
Initial Note Principal Amount (such date, the “Optional Redemption Date”), the
Servicer may, at its option, terminate this Agreement, subject to (i) the
consent of the Insurer if such termination will cause a draw on the Policy and
(ii) no Reimbursement Amounts remaining due to the Insurer under the Insurance
Agreement, by purchasing, on such Payment Date, all of the outstanding Mortgage
Loans and all other property remaining in the Trust. The purchase price will
equal the Optional Redemption Price.

In connection with any such purchase pursuant to the preceding paragraph, the
Servicer shall deposit in the Payment Account all amounts then on deposit in the
Collection Account (less

 

 

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amounts permitted to be withdrawn by the Servicer pursuant to Section 3.03),
which deposit shall be deemed to have occurred immediately preceding such
purchase.

Any such purchase shall be accomplished by deposit into the Payment Account on
the Determination Date before such Payment Date of the Optional Redemption
Price.

(c)   Notice of any termination, specifying the Payment Date (which shall be a
date that would otherwise be a Payment Date) upon which the Noteholders may
surrender their Notes to the Indenture Trustee for payment of the final payment
and cancellation, shall be given promptly by the Indenture Trustee (upon receipt
of written directions from the Servicer, if the Servicer is exercising its right
to purchase the Mortgage Loans, given not later than the first day of the month
preceding the month of such final payment) to the Insurer and to the Servicer by
letter to such parties not earlier than the 15th day and not later than the 25th
day of the month next preceding the month of such final payment specifying (i)
the Payment Date upon which final payment on the Notes will be made upon
presentation and surrender of the Notes at the office or agency of the Indenture
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Payment Date is not
applicable, payments being made only upon presentation and surrender of the
Notes at the office or agency of the Indenture Trustee therein specified.

(d)   Upon presentation and surrender of the Notes and the Certificates, the
Indenture Trustee shall cause to be paid to the Holders of the Notes and the
Certificates on the Payment Date for such final payment, in proportion to the
Percentage Interests and to the extent that funds are available for such
purpose, an amount equal to the amount required to be paid to the Noteholders
and the Certificateholders in the order of priority specified in and otherwise
pursuant to Section 5.01 for such Payment Date. On the final Payment Date, all
amounts on deposit in the Payment Account shall be applied in accordance with
Sections 5.01(a) and (b).

(e)   In the event that all of the Noteholders and the Certificateholders shall
not surrender their Notes or Certificates for final payment and cancellation on
or before such final Payment Date, the Indenture Trustee shall promptly
following such date cause all funds in the Payment Account not paid or
distributed in final payment to such Noteholder or Certificateholders to be
withdrawn therefrom and credited to the remaining Noteholders or
Certificateholders by depositing such funds in a separate non-interest bearing
trust account (which funds shall be held uninvested) for the benefit of such
Noteholders or Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Indenture Trustee (in
any other case) shall give a second written notice to the remaining Noteholders
or Certificateholders to surrender their Notes or Certificates for cancellation
and receive the final payment with respect thereto.

(f)   Upon payment of all amounts owed under the Policy and cancellation of the
Notes, the Indenture Trustee shall provide the Insurer notice of cancellation of
the Notes and surrender the Policy to the Insurer.

 

 

 

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ARTICLE IX.

 

THE INDENTURE TRUSTEE

Section 9.01     Indenture Trustee Not Liable for the Notes or Mortgage Loans.
The recitals contained herein and in the Notes shall be taken as the statements
of the Servicer and the Seller, as the case may be, and the Indenture Trustee
assumes no responsibility for their correctness. The Indenture Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Notes or of any Mortgage Loan or related document, other than with respect to
the Indenture Trustee’s execution and authentication of the Notes. The Indenture
Trustee shall not be accountable for the use or application by the Servicer of
any funds paid to the Servicer in respect of the Mortgage Loans or deposited in
or withdrawn from the Collection Account by the Servicer.

Except as provided in Section 2.01(e) and 2.01(l), the Indenture Trustee shall
have no responsibility for filing or recording any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder (unless
the Indenture Trustee shall have become the successor Servicer).

The Indenture Trustee executes the Notes not in its individual capacity but
solely as Indenture Trustee of the Trust created by this Agreement, in the
exercise of the powers and authority conferred and vested in it by this
Agreement. Each of the undertakings and agreements made on the part of the
Indenture Trustee on behalf of the Trust in the Notes is made and intended not
as a personal undertaking or agreement by the Indenture Trustee but is made and
intended for the purpose of binding only the Trust.

Notwithstanding anything to the contrary herein, in connection with its
activities provided for in this Agreement, the Indenture Trustee shall be
entitled to the same rights, protections, immunities and indemnities afforded to
it under the terms of the Indenture.

Section 9.02      Indenture Trustee May Own Notes. The Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of the Notes
and may transact business with the Seller, the Servicer and their affiliates,
with the same rights as it would have if it were not the Indenture Trustee.

Section 9.03     Indenture Trustee’s Fees and Expenses. Subject to the side
letter, dated December 21, 2006, among the Indenture Trustee, the Seller and the
Servicer, the Indenture Trustee Fee shall be paid to the Indenture Trustee, as
compensation for its activities hereunder, pursuant to Section 5.01. The
Indenture Trustee and any director, officer, employee or agent of the Indenture
Trustee shall be indemnified by the Seller and held harmless against any loss,
liability or expense (including reasonable attorney’s fees and expenses)
incurred in connection with any claim or legal action relating to (a) this
Agreement or the Insurance and Indemnity Agreement, (b) the Notes, or (c) the
performance of any of the Indenture Trustee’s duties hereunder, other than any
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faith or negligence in the performance of any of the Indenture Trustee’s duties
hereunder or incurred by reason of any action of the Indenture Trustee taken at
the direction of the Insurer or (i) if the Notes are no longer Outstanding and
no Reimbursement Amounts remain due and owing to the Insurer or (ii) an Insurer
Default has occurred and is continuing, the Noteholders. Such indemnity shall
survive the termination of this Agreement or the resignation or removal of the
Indenture Trustee hereunder. Without limiting the foregoing, the Seller
covenants and agrees, and except for any such expense, disbursement or advance
as may arise from the Indenture Trustee’s negligence, bad faith or willful
misconduct, to pay or reimburse the Indenture Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Indenture Trustee
in accordance with any of the provisions of this Agreement with respect to: (A)
the reasonable compensation and the expenses and disbursements of its counsel
not associated with the closing of the issuance of the Notes, (B) the reasonable
compensation, expenses and disbursements of any accountant, engineer or
appraiser that is not regularly employed by the Indenture Trustee, to the extent
that the Indenture Trustee must engage such persons to perform acts or services
hereunder, (C) printing and engraving expenses in connection with preparing any
Definitive Notes and (D) any other reasonable expenses incurred other than in
the ordinary course of its business by the Indenture Trustee in connection with
its duties hereunder. Except as otherwise provided herein, the Indenture Trustee
shall not be entitled to payment or reimbursement for any routine ongoing
expenses incurred by the Indenture Trustee in the ordinary course of its duties
as Indenture Trustee hereunder or for any other expenses.

ARTICLE X.

 

MISCELLANEOUS PROVISIONS

 

Section 10.01

Amendment

(a)   This Agreement may be amended from time to time by the Depositor, the
Issuer, the Servicer, the Indenture Trustee, without notice to or the consent of
any of the Holders of the Notes and the Holder of the Certificates, but (so long
as the Notes are Outstanding or any Reimbursement Amounts remain due and owing
to the Insurer and no Insurer Default has occurred and is continuing) with the
consent of the Insurer, (i) to cure any ambiguity, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Securities, the Issuer or this Agreement in any
Prospectus or Offering Document, or to correct or supplement any provision
herein which may be inconsistent with any other provisions herein or in any
other Transaction Document, (iii) to make any other provisions with respect to
matters or questions arising under this Agreement or (iv) to add, delete, or
amend any provisions to the extent necessary or desirable to comply with any
requirements imposed by the Code, ERISA and their related regulations. No such
amendment effected pursuant to the preceding sentence shall, as evidenced by an
Opinion of Counsel (which shall be an expense of the party requesting such
amendment and shall not be an expense of the Trust) and addressed to the Insurer
(so long as the Notes are Outstanding or any Reimbursement Amounts remain due
and owing to the Insurer), adversely affect the tax status of the REMICs created
by the Trust Agreement, nor shall such amendment adversely affect in any
material respect the interests of any Holder. Prior to entering into any
amendment without the consent of

 

 

93

 

 

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Holders pursuant to this paragraph, the Indenture Trustee may require an Opinion
of Counsel which shall also be addressed to the Insurer (so long as the Notes
are Outstanding or any Reimbursement Amounts remain due and owing to the
Insurer) (at the expense of the party requesting such amendment) to the effect
that such amendment is permitted under this paragraph. Any such amendment shall
be deemed not to adversely affect in any material respect any Holder and the
opinion to such effect will not be required to be given, if the Indenture
Trustee receives written confirmation from each Rating Agency that such
amendment will not cause such Rating Agency to reduce the then current rating
assigned to the Notes without taking into account the Policy.

(b)   This Agreement may also be amended from time to time by the Depositor, the
Issuer, the Servicer and the Indenture Trustee with the consent of the Holders
of not less than 66-2/3% of the Note Principal Amount of the Notes, the Insurer
(so long as the Notes are Outstanding or any Reimbursement Amounts remain due
and owing to the Insurer) and of the Holders of not less than 66-2/3% of the
Class Principal Balance of the Certificates for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders;
provided, however, that no such amendment shall be made unless the Indenture
Trustee and the Insurer (so long as the Notes are Outstanding or any
Reimbursement Amounts remain due and owing to the Insurer) receive an Opinion of
Counsel (which shall be an expense of the party requesting such amendment and
shall not be an expense of the Trust), to the effect that such amendment will
now adversely affect the tax status of the REMICs created by the Trust
Agreement; provided, further, that no such amendment may (i) reduce in any
manner the amount of, or delay the timing of, payments which are required to be
distributed on any Class of Securities or the Insurer, without the consent of
the Holders of such Class or the Insurer (so long as the Notes are Outstanding
or Reimbursement Amounts remain due and owing to the Insurer) or (ii) reduce the
aforesaid percentages of Note Principal Amount of Notes or Class Principal
Balance of Certificates, the Holders of which are required to consent to any
such amendment without the consent of the Holders of 100% of the Note Principal
Amount of the Notes and 100% of the Class Principal Balance of the Certificates
affected thereby. For purposes of this paragraph, references to “Holder” or
“Holders” shall be deemed to include, in the case of Book-Entry Notes, the
related Note Owners.

(c)   Promptly after the execution of any such amendment, the Indenture Trustee
shall furnish written notification of the substance of such amendment to each
Holder, the Insurer (so long as the Notes are Outstanding or any Reimbursement
Amounts remain due and owing to the Insurer and no Insurer Default has occurred
and is continuing), the Depositor and to each Rating Agency.

(d)   It shall not be necessary for the consent of Holders under this
Section 10.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Holders shall be subject to such reasonable regulations as
the Indenture Trustee may prescribe.

 

 

 

94

 

 

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Section 10.02    Recordation of Agreement. To the extent permitted by applicable
law, this Agreement, or a memorandum thereof if permitted under applicable law,
is subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions in which any or
all of the Mortgaged Properties are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Servicer’s expense on direction of the Indenture Trustee acting
at the direction of the Controlling Party, but only when accompanied by an
opinion of counsel delivered by counsel to the Controlling Party to the effect
that such recordation materially and beneficially affects the interests of the
Noteholders or is necessary for the administration or servicing of the Mortgage
Loans.

Section 10.03   Duration of Agreement. This Agreement shall continue in
existence and effect until terminated as herein provided.

Section 10.04   Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN
SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

Section 10.05   Notices. All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by overnight mail, certified mail or registered mail,
postage prepaid, to: (i) in the case of the Seller, the Depositor and the
Servicer, c/o IndyMac Bank, F.S.B., 3465 East Foothill Boulevard, Pasadena,
California 91101, Attention: Treasurer, (ii) in the case of the Indenture
Trustee or the Trust, at the Corporate Trust Office, (iii) in the case of the
Insurer, MBIA Insurance Corporation., 113 King Street, Armonk, New York 10504,
Attention: IPM-SF, (iv) in the case of Moody’s, 99 Church Street, 6th Floor, New
York, New York 10007 Attention: Residential Mortgage Monitoring, (v) in the case
of Standard & Poor’s, 55 Water Street, New York, New York 10041, (vi) in the
case of the Noteholders, as set forth in the Note Register, and (vii) in the
case of the Certificateholders, as set forth in the Certificate Register. Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Noteholders and the Certificateholders shall be effective upon mailing or
personal delivery.

Section 10.06  Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be held invalid for any
reason whatsoever, then such covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants, agreements, provisions or terms
of this Agreement and shall in no way affect the validity or enforceability of
the other covenants, agreements, provisions or terms of this Agreement.

 

 

 

95

 

 

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Section 10.07    No Partnership. Nothing herein contained shall be deemed or
construed to create any partnership or joint venture between the parties hereto
and the services of the Servicer shall be rendered as an independent contractor.

Section 10.08  Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same Agreement.

Section 10.09    Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the Servicer, the Seller, the Depositor, the
Trust, the Indenture Trustee, the Noteholders and the Certificateholders and
their respective successors and permitted assigns. The Insurer is an express
third party beneficiary of this Agreement.

Section 10.10   Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

Section 10.11   Reports to Rating Agencies. The Indenture Trustee shall provide
to each Rating Agency, upon request, copies of statements, reports and notices,
to the extent received or prepared by the Servicer hereunder, as follows:

(i) copies of amendments to this Agreement;

(ii) notice of any substitution or repurchase of any Mortgage Loans;

(iii) notice of any termination, replacement, succession, merger or
consolidation of either the Servicer or the Trust;

(iv) notice of final payment on the Notes;

(v) notice of any Event of Servicer Termination;

(vi) copies of the annual independent auditor’s report delivered pursuant to
Section 3.11 herein, and copies of any compliance reports delivered by the
Servicer hereunder pursuant to Section 3.10 herein; and

(vii) via access to the Indenture Trustee's website, copies of any Statement to
Noteholders pursuant to Section 5.03 herein.

 

 

 

96

 

 

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Section 10.12  Inconsistencies Among Transaction Documents. In the event certain
provisions of a Transaction Document conflict with the provisions of this Sale
and Servicing Agreement, the parties hereto agree that the provisions of this
Sale and Servicing Agreement shall be controlling.

Section 10.13   Rights of the Insurer to Exercise Rights of Noteholders. By
accepting its Note, each Noteholder agrees that unless an Insurer Default
exists, the Insurer shall have the right to exercise all rights of the
Noteholders as specified under this Agreement as if it were a party hereto
without any further consent of the Noteholders. Any right conferred to the
Insurer hereunder shall be suspended and shall run to the benefit of the
Noteholders during any period in which there exists an Insurer Default.

Section 10.14   Enforceability Rights of the Indenture Trustee. All rights
conferred and remedies made available to the Indenture Trustee under this
Agreement may be exercised and enforced by the Controlling Party.

Section 10.15   Matters Regarding the Trust. The Trust's power and authority to
effect transactions shall be limited to such transactions specifically provided
for in this Agreement or the Transaction Documents.

Section 10.16   Reports to Insurer. The Seller, the Servicer and the Indenture
Trustee, as applicable, shall provide copies to the Insurer of all statements,
reports and notices delivered under this agreement to any other party hereto,
any Rating Agency or any Noteholder.

Section 10.17   Matters Regarding the Indenture Trustee. It is expressly
understood and agreed by the parties that (a) this Agreement is executed and
delivered by Deutsche Bank National Trust Company, not individually or
personally, but solely as Indenture Trustee, in the exercise of the powers and
authority conferred and vested in it, pursuant to the Trust Agreement, (b) each
of the representations, undertakings and agreements herein made on the part of
the Trust is made and intended not as personal representations, undertakings and
agreements by Deutsche Bank National Trust Company but is made and intended for
the purpose for binding only the Trust, (c) nothing herein contained shall be
construed as creating any liability on Deutsche Bank National Trust Company,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under the parties
hereto, and (d) under no circumstances shall Deutsche Bank National Trust
Company be personally liable for the payment of any indebtedness or expenses of
the Trust or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trust under this
Agreement or any other related documents. The Indenture Trustee shall be
entitled to the same rights, protections, immunities and indemnities afforded to
it under the Indenture and the Administration Agreement.

 

 

 

97

 

 

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Section 10.18   Limitation of Owner Trustee Liability. It is expressly
understood and agreed by the parties that (a) this document is executed and
delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee, in the exercise of the powers and authority conferred
and vested in it, pursuant to the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
person claiming by, through or under the parties hereto, and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or any other related documents.

[SIGNATURE PAGES FOLLOW]

 

 

98

 

 

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IN WITNESS WHEREOF, the following have caused their names to be signed by their
respective officers thereunto duly authorized, as of the day and year first
above written, to this Sale and Servicing Agreement.

  INDYMAC ABS, INC., as Depositor           By:
/s/  
Jill Jacobson   Name: Jill Jacobson   Title: Vice President

 

  DEUTSCHE BANK NATIONAL TRUST COMPANY,
not in its individual capacity, but solely as Indenture Trustee           By:
/s/  
Amy Stoddard   Name: Amy Stoddard   Title: Authorized Signer

 

  INDYMAC BANK, F.S.B.,
as Servicer and Seller           By:
/s/  
Andy Sciandra   Name: Andy Sciandra   Title: Senior Vice President

 

  INDYMAC HOME EQUITY MORTGAGE LOAN
ASSET-BACKED TRUST, SERIES 2006-H4,
as the Trust           By:
 
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee        

  By:
/s/  
J. Christopher Murphy   Name: J. Christopher Murphy   Title: Financial Services
Officer

 

 

 

 

S-1

IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H4
Sale and Servicing Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

STATE OF CALIFORNIA

)

 

 

) ss.:

COUNTY OF LOS ANGELES

)

 

 

BEFORE ME, on December 21, 2006, the undersigned authority, a Notary Public, on
this day personally appeared Jill Jacobson, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and acknowledged
to me that the same was the act of the said IndyMac ABS, Inc., as Depositor, and
that he/she executed the same as the act of such corporation for the purposes
and consideration therein expressed, and in the capacity therein stated.

          /s/ Evan Fitzsimon                              

Notary Public, State of California

 

 

 

N-1

IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

STATE OF CALIFORNIA   )

 

) ss.:

COUNTY OF ORANGE

)

 

 

BEFORE ME, on December 15, 2006, the undersigned authority, a Notary Public, on
this day personally appeared Amy Stoddard, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and acknowledged
to me that the same was the act of the said Deutsche Bank National Trust
Company, as Indenture Trustee of IndyMac Home Equity Mortgage Loan Asset-Backed
Trust, Series 2006-H4, and that he/she executed the same as the act of such
national banking association for the purposes and consideration therein
expressed, and in the capacity therein stated.

          /s/ David Johnson                              

Notary Public, State of California

 

 

 

N-2

IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement

 

 

--------------------------------------------------------------------------------

 

 

STATE OF CALIFORNIA   )

 

) ss.:

COUNTY OF LOS ANGELES

)

 

 

BEFORE ME, on December 21, 2006, the undersigned authority, a Notary Public, on
this day personally appeared Andy Sciandra, known to me to be the person and
officer whose name is subscribed to the foregoing instrument, and acknowledged
to me that the same was the act of the said IndyMac Bank, F.S.B., as Seller and
Servicer, and that he/she executed the same as the act of such federal savings
bank for the purposes and consideration therein expressed, and in the capacity
therein stated.

          /s/ Evan Fitzsimon                              

Notary Public, State of California

 

 

 

N-3

IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement

 

 

--------------------------------------------------------------------------------

 

 

 

STATE OF DELAWARE     )

 

) ss.:

COUNTY OF NEW CASTLE

)

 

 

BEFORE ME, on December 15, 2006, the undersigned authority, a Notary Public, on
this day personally appeared J. Christopher Murphy, known to me to be the person
and officer whose name is subscribed to the foregoing instrument, and
acknowledged to me that the same was the act of the said Wilmington Trust
Company, not in its individual capacity but solely as owner trustee, and that
he/she executed the same as the act of such Delaware banking corporation for the
purposes and consideration therein expressed, and in the capacity therein
stated.

          /s/ Amanda E. Burger                                    

Notary Public, State of Delaware

 

 

 

N-4

IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H3
Sale and Servicing Agreement

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT A

MORTGAGE LOAN SCHEDULE

[On file with Indenture Trustee]

 

 

 

A-1

 

 

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EXHIBIT B

LIST OF SERVICING OFFICERS

To:

Deutsche Bank National Trust Company

AUTHORIZED SERVICING OFFICER CERTIFICATE

Listed below are those individuals authorized to provide Deutsche Bank National
Trust Company with written instructions relating to the IndyMac Home Equity
Mortgage Loan Asset Backed Trust, Series 2006-H4 transaction. Deutsche Bank
National Trust Company is Indenture Trustee for this transaction.

Name

Title

 

Specimen Signature

 

Gary Clark

 

 

Tara Hatanaka

 

 

Athena Chan

 

 

Barbara Perez

 

 

Robert Abramian

 

 

Nilesh Patel

 

 

Tom Kucera

 

 

Jesse Acosta

 

 

 

 

 

 

B-1

 

 

--------------------------------------------------------------------------------

 

 

Carla Wise

 

 

Emily Gillula

 

 

Yvette Gilmore

 

            By:       Name:
Title:
Date:          

 

 

 

 

B-2

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT C

FORM OF ANNUAL OFFICER’S CERTIFICATE

INDYMAC BANK, F.S.B.

INDYMAC HOME EQUITY MORTGAGE LOAN ASSET-BACKED TRUST, SERIES 2006-H4

The undersigned, a duly authorized representative of IndyMac Bank, F.S.B.
(“IndyMac Bank”), pursuant to the Sale and Servicing Agreement, dated as of
December 12, 2006 (the “Agreement”), among IndyMac ABS, Inc., a Delaware
corporation, as depositor, IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H4 (the “Trust”), IndyMac Bank, F.S.B., a federally chartered bank,
as seller and servicer (in such capacity, the “Seller” and “Servicer”), and
Deutsche Bank National Trust Company, a national banking association, as
Indenture Trustee on behalf of the Noteholders (in such capacity, the “Indenture
Trustee”), does hereby certify that:

IndyMac Bank is, as of the date hereof, the Servicer under the Agreement.
Capitalized terms used in this Certificate have their respective meanings as set
forth in the Agreement.

 

1.

The undersigned is a Servicing Officer who is duly authorized pursuant to the
Agreement to execute and deliver this Certificate to the Indenture Trustee.

 

2.

A review of the activities of the Servicer during the twelve months [or such
shorter period in the year after the Closing Date] ended [DATE], and of its
performance under the Agreement, was conducted under my supervision.

 

3.

Based on such review, the Servicer has, to the best of my knowledge, performed
in all material respects its obligations under the Agreement throughout the
twelve months [or such shorter period in the year after the Closing Date] ended
[DATE], and no default in the performance of such obligations has occurred or is
continuing except as set forth in paragraph 5 below.

 

4.

The following is a description of each default in the performance of the
Servicer’s obligations under the provisions of the Agreement known to me to have
been made by the Servicer during the twelve months [or such shorter period in
the year after the Closing Date] ended [DATE], which sets forth in detail
(i) the nature of each such default, (ii) the action taken by the Servicer, if
any, to remedy each such default and (iii) the current status of each such
default.

 

 

 

C-1

 

--------------------------------------------------------------------------------

 

 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this
_____ day of __________ 200___.

  INDYMAC BANK, F.S.B.
as Servicer           By:
 
      [Name]:       [Title]:  

 

 

C-2

 

--------------------------------------------------------------------------------

 

 

EXHIBIT D

FORM OF ADVANCE NOTICE

 

 

 

Date

[Addressed to Holder of the Class L Certificates]

In connection with that certain Sale and Servicing Agreement dated as of
December 12, 2006 by and among IndyMac ABS, Inc., as Depositor, Deutsche Bank
National Trust Company, as Indenture Trustee, IndyMac Bank, F.S.B, as Seller and
Servicer, and IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H4, as Issuer (the “Sale and Servicing Agreement”), the undersigned
Servicer hereby requests that you make an advance to the Trust in the amount of
$___________ (such amount to be deposited into the Reserve Account) no later
than the date two Business Days prior to the next Payment Date in accordance
with Section 2.01(d) of the Sale and Servicing Agreement, in respect of the
following Draw[s]:

Loan no.:

Date of Draw:

Amount of Draw:

Loan no.:

Date of Draw:

Amount of Draw:

 

Total amount of Draws:

 

 

Amount of total covered by Principal Collections:

 

 

 

D-1

 

 

 

--------------------------------------------------------------------------------

 

 

Capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement.

  INDYMAC BANK, F.S.B.
as Servicer           By:
 
      Name:       Title:  

 

cc:

Deutsche Bank National Trust Company
1761 East St. Andrew Place
Santa Ana, California 92705-4934

 

 

 

 

D-2

 

--------------------------------------------------------------------------------

 

 

 

EXHIBIT E

FORM OF MORTGAGE NOTE

[On file with Servicer]

 

 

E-1

 

--------------------------------------------------------------------------------

 

 

EXHIBIT F

FORM OF MORTGAGE

[On file with Servicer]

 

 

F-1

 

--------------------------------------------------------------------------------

 

 

EXHIBIT G

SPECIMEN OF THE POLICY

(See attached)

 

 

G-1

 

--------------------------------------------------------------------------------

 

 

EXHIBIT H

FORM OF LOST NOTE AFFIDAVIT

AFFIDAVIT OF LOST CERTIFICATE

 

STATE OF

)

 

 

) ss.:

 

COUNTY OF

)

 

_______(name)______________________, __________(address)__________________,
being duly sworn, deposes and says:

1.            that he is a __________________________ of   assignor  

2.            that           (assignor)          ___________________ is the
owner and holder of a (type of mortgage               ) loan in the present
principal amount of                              securing the premises known as
           (premises                );

3.            (a) that          (assignor)               , after having
conducted a diligent investigation in its records and files, has been unable to
locate the following original certificate and believes that said original
certificate has been lost, misfiled, misplaced or destroyed due to a clerical
error:

a certificate in the original sum of ____________________________________ made
by                                  , to                             , under
date of                                    ;

(b) this affidavit is being delivered simultaneously with a copy of the original
certificate listed above;

4.              that said certificate and the related mortgage have not been
paid off, satisfied, assigned, transferred, encumbered, endorsed, pledged,
hypothecated, or otherwise disposed of;

5.              that no other person, firm, corporation or other entity has any
right, title, interest or claim in said certificate
except                    (assignor)                    ;

6.              that it is the intention and understanding
of          (assignor)              to the right, title and interest in the said
assign certificate and mortgage to                                            ;

 

 

 

H-1

 

--------------------------------------------------------------------------------

 

 

7.              that              (assignor)                     covenants and
agrees (a) promptly to deliver to          (assignee)                     the
original certificate if it is subsequently found, and (b) to indemnify and hold
harmless (assignee) and its successors and assigns from and against any and all
costs, expenses and monetary losses arising as a result of
                    (assignor 6;s)          failure to deliver said original
certificate to   (assignee)      ;

8.              that this Affidavit is made to induce
                                to accept an assignment of the certificate and
mortgage described herein.

                                                                       

Name:

Title:

Sworn to before me this

______ day of _____________________, __________.

 

 

H-2

 

--------------------------------------------------------------------------------

 

 

EXHIBIT I

FORM OF REQUEST FOR RELEASE

[DATE]

Deutsche Bank National Trust Company

1761 E. St Andrew Place

Santa Ana, CA 92705

Attention:

 

Re:

IndyMac Residential Asset-Backed Notes, Series 2006-H4

Gentlemen:

In connection with the administration of the Mortgage Loans held by you as
Indenture Trustee under the Sale and Servicing Agreement, dated as of December
12, 2006, among IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series
2006-H4, IndyMac ABS, Inc., as Depositor, IndyMac Bank, F.S.B., as Seller and
Servicer, and you, as Indenture Trustee (the “Sale and Servicing Agreement”), we
hereby request a release of the Mortgage File held by you as Indenture Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.

Loan No.:

Reason for requesting file:

_______

1.

Mortgage Loan paid in full. (The Servicer hereby certifies that all amounts
received in connection with the payment in full of the Mortgage Loan which are
required to be deposited in the Collection Account pursuant to Section 3.02 of
the Sale and Servicing Agreement have been so deposited).

_______

2.

The Mortgage Loan is being foreclosed.

_______

3.

The Mortgage Loan is being re financed by another depository institution. (The
Servicer hereby certifies that all amounts received in connection with the
payment in full of the Mortgage Loan which are required to be deposited in the
Collection Account pursuant to Section 3.02 of the Sale and Servicing Agreement
have been so deposited).

_______

4.

Other (Describe).

 

 

 

I-1

 

--------------------------------------------------------------------------------

 

 

The undersigned acknowledges that the above Mortgage File will be held by the
undersigned in accordance with the provisions of the Sale and Servicing
Agreement and will promptly be returned to the Indenture Trustee when the need
therefor by the Servicer no longer exists unless the Mortgage Loan has been
liquidated.

Capitalized terms used herein shall have the meanings ascribed to them in the
Sale and Servicing Agreement.

  INDYMAC BANK, F.S.B.
as Servicer           By:
 
      Name:       Title: Servicing Officer

 

 

I-2

 

--------------------------------------------------------------------------------

 

 

EXHIBIT J

FORM OF INITIAL CERTIFICATION

INITIAL CERTIFICATION

December [__], 2006

MBIA Insurance Corporation

113 King Street

Armonk, New York 10504

 

IndyMac ABS, Inc.

155 North Lake Avenue

Pasadena, CA 91101

 

IndyMac Bank, F.S.B.

155 North Lake Avenue

Pasadena, CA 91101

 

 

Re:

Sale and Servicing Agreement between IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H4, IndyMac ABS, Inc., as depositor,
IndyMac Bank, F.S.B., as seller and as servicer, and Deutsche Bank National
Trust Company, as Indenture Trustee (the “Indenture Trustee”)

Gentlemen:

In accordance with Section 2.01(g) of the above-captioned Sale and Servicing
Agreement (the “Sale and Servicing Agreement”), the undersigned, as Indenture
Trustee, hereby certifies that, as to each Mortgage Loan listed in each Mortgage
Loan Schedule (other than any Mortgage Loan listed in the attached schedule),
the original Mortgage Note, endorsed in blank, or a copy of such original
Mortgage Note with an accompanying Lost Certificate Affidavit, is in its
possession.

The undersigned has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Sale and
Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

 

 

 

J-1

 

 

--------------------------------------------------------------------------------

 

 

Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Sale and Servicing Agreement.

  Very truly yours,       DEUTSCHE BANK NATIONAL
TRUST COMPANY,
as Indenture Trustee           By:
 
      Name:       Title:  

 

 

J-2

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT K

FORM OF INTERIM CERTIFICATION

INTERIM CERTIFICATION

[Date]

MBIA Insurance Corporation

113 King Street

Armonk, New York 10504

 

IndyMac ABS, Inc.

155 North Lake Avenue

Pasadena, CA 91101

 

IndyMac Bank, F.S.B.

155 North Lake Avenue

Pasadena, CA 91101

 

 

Re:

Sale and Servicing Agreement between IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H4, IndyMac ABS, Inc., as depositor,
IndyMac Bank, F.S.B., as seller and as servicer, and Deutsche Bank National
Trust Company, as Indenture Trustee (the “Indenture Trustee”)

Gentlemen:

In accordance with Section 2.01(g) of the above-captioned Sale and Servicing
Agreement (the “Sale and Servicing Agreement”), the undersigned, as Indenture
Trustee, hereby certifies that, as to each Mortgage Loan listed in each Mortgage
Loan Schedule (other than any Mortgage Loan listed in the attached schedule), it
has received:

(A)   the original Mortgage Note, endorsed in blank, or a copy of such original
Mortgage Note with an accompanying Lost Certificate Affidavit;

(B)   the original Assignment of Mortgage, from the Seller either in blank or to
“Deutsche Bank National Trust Company, as Indenture Trustee for IndyMac Home
Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4”, which assignment shall
be in form and substance acceptable for recording;

(C)   the original Mortgage, with evidence of recording thereon (provided that
if the original Mortgage has been delivered for recording to the appropriate
public recording office of the jurisdiction in which the Mortgaged Property is
located but has not yet been returned to the Seller by such recording

 

 

K-1

 

--------------------------------------------------------------------------------

 

office, a certified true copy of such original Mortgage so certified by or on
behalf of the Seller, together with a certificate by or on behalf of the Seller
certifying that such original Mortgage has been so delivered to such recording
office);

(D)           intervening assignments, if any, with evidence of recording
thereon (provided that if such intervening assignment has been delivered for
recording to the appropriate public recording office of the jurisdiction in
which the Mortgaged Property is located but has not yet been returned to the
Seller by such recording office, a certified true copy of such intervening
assignment so certified by the Seller, together with a certificate by or on
behalf of the Seller certifying that such intervening assignment has been so
delivered to such recording office); and

(E)           originals of all assumption and modification agreements, if any.

Based on its review and examination and only as to the foregoing documents, such
documents appear regular on their face and relate to such Mortgage Loan.

The undersigned has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Sale and
Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.

Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Sale and Servicing Agreement.

  Very truly yours,       DEUTSCHE BANK NATIONAL
TRUST COMPANY,
as Indenture Trustee           By:
 
      Name:       Title:  

 

 

 

K-2

 

--------------------------------------------------------------------------------

 

 

EXHIBIT L

FORM OF FINAL CERTIFICATION

[Date]

MBIA Insurance Corporation

113 King Street

Armonk, New York 10504

 

IndyMac ABS, Inc.

155 North Lake Avenue

Pasadena, CA 91101

 

IndyMac Bank, F.S.B.

155 North Lake Avenue

Pasadena, CA 91101

 

 

Re:

Sale and Servicing Agreement among IndyMac Home Equity Mortgage Loan
Asset-Backed Trust, Series 2006-H4, IndyMac ABS, Inc., as depositor, IndyMac
Bank, F.S.B., as seller and servicer, and Deutsche Bank National Trust Company,
as Indenture Trustee (the “Indenture Trustee”)

 

Gentlemen:

In accordance with Section 2.01(i) of the above-captioned Sale and Servicing
Agreement (the “Sale and Servicing Agreement”), the undersigned, as Indenture
Trustee, hereby certifies that as to each Mortgage Loan listed in each Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or listed on the
attached exception report) it has received:

(A)           the original Mortgage Note, endorsed in blank, or a copy of such
original Mortgage Note with an accompanying Lost Note Affidavit;

(B)           the original Assignment of Mortgage, from the Seller either in
blank or to “Deutsche Bank National Trust Company, as Indenture Trustee for
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4”, which
assignment shall be in form and substance acceptable for recording;

 

 

 

L-1

 

--------------------------------------------------------------------------------

 

 

(C)       the original Mortgage, with evidence of recording thereon, provided
that if the original Mortgage has been delivered for recording to the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located but has not yet been returned to the Seller by such
recording office, the Seller shall deliver to the Indenture Trustee a certified
true copy of such original Mortgage so certified by or on behalf of such Seller,
together with a certificate by or on behalf of such Seller certifying that such
original Mortgage has been so delivered to such recording office; in all such
instances, such Seller shall deliver or cause to be delivered the original
recorded Mortgage to the Indenture Trustee promptly upon receipt of the original
recorded Mortgage;

(D)   [reserved];

(E)     intervening assignments, if any, with evidence of recording thereon,
provided that if such intervening assignment has been delivered for recording to
the appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located but has not yet been returned to the Seller by
such recording office, the Seller shall deliver to the Indenture Trustee a
certified true copy of such intervening assignment so certified by or on behalf
of such Seller, together with a certificate by or on behalf of such Seller
certifying that such intervening assignment has been so delivered to such
recording office; in all such instances, such Seller shall deliver or cause to
be delivered the original intervening assignment to the Indenture Trustee
promptly upon receipt of the original intervening assignment; and

(F)       with respect to any Subsequent Mortgage Loans, originals of all
assumption and modification agreements, if any.

Based on its review and examination and only as to the foregoing documents,
(a) such documents appear regular on their face and related to such Mortgage
Loan, and (b) with respect to Mortgage Loans, the information set forth in the
definition of “Mortgage Loan Schedule” in Article I of the Sale and Servicing
Agreement other than items (i), (iv), (v), (vi), (viii), (ix), (x), (xi) and
(xii) accurately reflects information set forth in the related Mortgage Files.

 

 

 

L-2

 

--------------------------------------------------------------------------------

 

 

The undersigned has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the Sale and
Servicing Agreement. The undersigned makes no representations as to: (i) the
validity, legality, sufficiency, enforceability or genuineness of any of the
documents contained in each Mortgage File of any of the Mortgage Loans
identified on either Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Notwithstanding anything herein to the contrary, the undersigned has made no
determination and makes no representations as to whether (i) any endorsement is
sufficient to transfer all right, title and interest of the party so endorsing,
as noteholder or assignee thereof, in and to that Mortgage Note or (ii) any
assignment is in recordable form or sufficient to effect the assignment of and
transfer to the assignee thereof, under the Mortgage to which the assignment
relates.

Capitalized words and phrases used herein shall have the respective meanings
assigned to them in the Sale and Servicing Agreement.

 

DEUTSCHE BANK NATIONAL TRUST
COMPANY,
as Indenture Trustee

          By:
 
      Name:       Title:  

 

 

 

 

L-3

 

--------------------------------------------------------------------------------

 

 

EXHIBIT M

FORM OF CERTIFICATION TO BE PROVIDED BY THE DEPOSITOR WITH FORM 10-K

 

Re:

IndyMac ABS Inc.

IndyMac Home Equity Mortgage Loan Asset-Backed Trust,
Series 2006-H4  

 

I, [identify the certifying individual], certify that:

1.       I have reviewed this annual report on Form 10-K and all reports on
Form 10-D required to be filed in respect of the period covered by this report
on Form 10-K of Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4
(the “Exchange Act Periodic Reports”);

2.       Based on my knowledge, the Exchange Act Periodic Reports, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;

3.       Based on my knowledge, the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act Periodic Reports;

4.       Based on my knowledge and the servicer compliance statement(s) required
in this report under Item 1123 of Regulation AB and except as disclosed in the
Exchange Act Periodic Reports, the servicer(s) [has/have] fulfilled [its/their]
obligations under the servicing agreement(s) in all material respects; and;

5.       All of the reports on assessment of compliance with servicing criteria
for asset-backed securities and their related attestation reports on assessment
of compliance with servicing criteria for asset-backed securities required to be
included in this report in accordance with Item 1122 of Regulation AB and
Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
report, except as otherwise disclosed in this report. Any material instances of
noncompliance described in such reports have been disclosed in this report on
Form 10-K.

 

 

 

M-1

 

 

 

--------------------------------------------------------------------------------

 

 

In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: Deutsche Bank National
Trust Company.

Date: __________________

 

INDYMAC ABS, INC.,
as Depositor

          By:
 
      Name:       Title:  

 

 

 

M-2

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT N

INDENTURE TRUSTEE’S OFFICER’S CERTIFICATE

I, ____________________, a duly elected and acting officer of Deutsche Bank
National Trust Company (the “Indenture Trustee”) hereby certify as follows:

Reference is hereby made to the Sale and Servicing Agreement dated as of
December 12, 2006 (the “Sale and Servicing Agreement”) by and among IndyMac
Bank, F.S.B., as seller and servicer, IndyMac ABS, Inc., as depositor and
Deutsche Bank National Trust Company, as indenture trustee and supplemental
interest trustee, pursuant to which was created the IndyMac Home Equity Mortgage
Loan Asset-Backed Trust, Series 2006-H4 (the “Trust”). Capitalized terms used
herein but not defined shall have the meanings assigned to them in the Sale and
Servicing Agreement.

1.           I am an authorized officer of the Indenture Trustee and I have
reviewed this annual report on Form 10-K and all reports on Form 10-D required
to be filed in respect of the period covered by this report on Form 10-K of
IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4 (the
“Exchange Act Periodic Reports”);

2.       For purposes of this certificate, “Relevant Information” means the
information in the report on assessment of the Indenture Trustee’s compliance
with the servicing criteria set forth in Item 1122(d) of Reg AB (the “Servicing
Assessment”), the registered public accounting firm’s attestation provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Reg AB (the “Attestation Report”) applicable to the Indenture
Trustee and the Statements to Noteholders (excluding information provided, or
based on information provided, by the Servicer or any servicer) and those items
in Exhibit R attached to the Sale and Servicing Agreement which indicate the
4.03 statement or the Indenture Trustee as the responsible party during the
Relevant Year. Based on my knowledge, the Relevant Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this annual report; and

3.     Based on my knowledge, the distribution information required to be
provided by the Indenture Trustee under the Sale and Servicing Agreement is
included in the Statements to Noteholders.

4.       I am responsible for reviewing the activities performed by the
Indenture Trustee, as servicer under the Sale and Servicing Agreement during the
Relevant Year. Based upon the review required by the Sale and Servicing
Agreement and except as disclosed in the Servicing Assessment or Attestation
Report, to the best of my knowledge, the Indenture Trustee has fulfilled its
obligations under the Sale and Servicing Agreement throughout the Relevant Year.
Relevant Year shall mean 200__.

 

 

 

N-1

 

 

--------------------------------------------------------------------------------

 

 

DATED as of _____________, 200____.

  By:
 
      Name:       Title:  

 

 

N-2

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT O

ORIGINATORS’ APPRAISAL MATRIX

 

(See attached)

 

 

O-1

 

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT P

 

SERVICING CRITERIA TO BE ADDRESSED

IN ASSESSMENT OF COMPLIANCE

Servicing Criteria

Applicable Servicing Criteria

Applicable Servicing Criteria

Reference

Criteria

Servicer

Indenture Trustee

 

General Servicing Considerations

 

 

1122(d)(1)(i)

Policies and procedures are instituted to monitor any performance or other
triggers and events of default in accordance with the transaction agreements.

P

P

1122(d)(1)(ii)

If any material servicing activities are outsourced to third parties, policies
and procedures are instituted to monitor the third party’s performance and
compliance with such servicing activities.

P

P

1122(d)(1)(iii)

Any requirements in the transaction agreements to maintain a back-up servicer
for the pool assets are maintained.

 

 

1122(d)(1)(iv)

A fidelity bond and errors and omissions policy is in effect on the party
participating in the servicing function throughout the reporting period in the
amount of coverage required by and otherwise in accordance with the terms of the
transaction agreements.

 

P

 

Cash Collection and Administration

 

 

1122(d)(2)(i)

Payments on pool assets are deposited into the appropriate custodial bank
accounts and related bank clearing accounts no more than two business days
following receipt, or such other number of days specified in the transaction
agreements.

P

P

1122(d)(2)(ii)

Disbursements made via wire transfer on behalf of an obligor or to an investor
are made only by authorized personnel.

P

P

1122(d)(2)(iii)

Advances of funds or guarantees regarding collections, Cashflows or
distributions, and any interest or other fees charged for such advances, are
made, reviewed and approved as specified in the transaction agreements.

P

 

1122(d)(2)(iv)

The related accounts for the transaction, such as cash reserve accounts or
accounts established as a form of overcollateralization, are separately
maintained (e.g., with respect to commingling of cash) as set forth in the
transaction agreements.

 

P

 

 

 

 

P-1

 

 

 

--------------------------------------------------------------------------------

 

 

Servicing Criteria

Applicable Servicing Criteria

Applicable Servicing Criteria

Reference

Criteria

Servicer

Indenture Trustee

1122(d)(2)(v)

Each custodial account is maintained at a federally insured depository
institution as set forth in the transaction agreements. For purposes of this
criterion, “federally insured depository institution” with respect to a foreign
financial institution means a foreign financial institution that meets the
requirements of Rule 13k-1(b)(1) of the Securities Exchange Act.

P

P

1122(d)(2)(vi)

Unissued checks are safeguarded so as to prevent unauthorized access.

 

 

1122(d)(2)(vii)

Reconciliations are prepared on a monthly basis for all asset-backed securities
related bank accounts, including custodial accounts and related bank clearing
accounts. These reconciliations are (A) mathematically accurate; (B) prepared
within 30 calendar days after the bank statement cutoff date, or such other
number of days specified in the transaction agreements; (C) reviewed and
approved by someone other than the person who prepared the reconciliation; and
(D) contain explanations for reconciling items. These reconciling items are
resolved within 90 calendar days of their original identification, or such other
number of days specified in the transaction agreements.

P

P

 

Investor Remittances and Reporting

 

 

1122(d)(3)(i)

Reports to investors, including those to be filed with the Commission, are
maintained in accordance with the transaction agreements and applicable
Commission requirements. Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set forth in the transaction
agreements; (B) provide information calculated in accordance with the terms
specified in the transaction agreements; (C) are filed with the Commission as
required by its rules and regulations; and (D) agree with investors’ or the
trustee’s records as to the total unpaid principal balance and number of pool
assets serviced by the servicer.

 

P

1122(d)(3)(ii)

Amounts due to investors are allocated and remitted in accordance with
timeframes, distribution priority and other terms set forth in the transaction
agreements.

 

P

1122(d)(3)(iii)

Disbursements made to an investor are posted within two business days to the
servicer’s investor records, or such other number of days specified in the
transaction agreements.

 

P

1122(d)(3)(iv)

Amounts remitted to investors per the investor reports agree with cancelled
checks, or other form of payment, or custodial bank statements.

 

P

 

Pool Asset Administration

 

 

1122(d)(4)(i)

Collateral or security pool asset is maintained as required by the transaction
agreements or related asset pool documents.

 

P

 

 

 

 

P-2

 

 

--------------------------------------------------------------------------------

 

 

Servicing Criteria

Applicable Servicing Criteria

Applicable Servicing Criteria

Reference

Criteria

Servicer

Indenture Trustee

1122(d)(4)(ii)

Pool assets and related documents are safeguarded as required by the transaction
agreements

 

P

1122(d)(4)(iii)

Any additions, removals or substitutions to the asset pool are made, reviewed
and approved in accordance with any conditions or requirements in the
transaction agreements.

P

P

1122(d)(4)(iv)

Payments on pool assets, including any payoffs, made in accordance with the
related pool asset documents are posted to the servicer’s obligor records
maintained no more than two business days after receipt, or such other number of
days specified in the transaction agreements, and allocated to principal,
interest or other items (e.g., escrow) in accordance with the related pool asset
documents.

P

 

1122(d)(4)(v)

The servicer’s records regarding the pool assets agree with the servicer’s
records with respect to an obligor’s unpaid principal balance.

P

 

1122(d)(4)(vi)

Changes with respect to the terms or status of an obligor's pool asset (e.g.,
loan modifications or re-agings) are made, reviewed and approved by authorized
personnel in accordance with the transaction agreements and related pool asset
documents.

P

 

1122(d)(4)(vii)

Loss mitigation or recovery actions (e.g., forbearance plans, modifications and
deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are
initiated, conducted and concluded in accordance with the timeframes or other
requirements established by the transaction agreements.

P

 

1122(d)(4)(viii)

Records documenting collection efforts are maintained during the period a pool
asset is delinquent in accordance with the transaction agreements. Such records
are maintained on at least a monthly basis, or such other period specified in
the transaction agreements, and describe the entity’s activities in monitoring
delinquent pool assets including, for example, phone calls, letters and payment
rescheduling plans in cases where delinquency is deemed temporary (e.g., illness
or unemployment).

 

 

1122(d)(4)(ix)

Adjustments to interest rates or rates of return for pool assets with variable
rates are computed based on the related pool asset documents.

P

 

1122(d)(4)(x)

Regarding any funds held in trust for an obligor (such as escrow accounts): (A)
such funds are analyzed, in accordance with the obligor’s pool asset documents,
on at least an annual basis, or such other period specified in the transaction
agreements; (B) interest on such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents and state laws; and (C) such
funds are returned to the obligor within 30 calendar days of full repayment of
the related pool asset, or such other number of days specified in the
transaction agreements.

 

 

 

 

 

 

P-3

 

 

--------------------------------------------------------------------------------

 

Servicing Criteria

Applicable Servicing Criteria

Applicable Servicing Criteria

Reference

Criteria

Servicer

Indenture Trustee

1122(d)(4)(xi)

Payments made on behalf of an obligor (such as tax or insurance payments) are
made on or before the related penalty or expiration dates, as indicated on the
appropriate bills or notices for such payments, provided that such support has
been received by the servicer at least 30 calendar days prior to these dates, or
such other number of days specified in the transaction agreements.

 

 

1122(d)(4)(xii)

Any late payment penalties in connection with any payment to be made on behalf
of an obligor are paid from the servicer’s funds and not charged to the obligor,
unless the late payment was due to the obligor’s error or omission.

 

 

1122(d)(4)(xiii)

Disbursements made on behalf of an obligor are posted within two business days
to the obligor’s records maintained by the servicer, or such other number of
days specified in the transaction agreements.

 

 

1122(d)(4)(xiv)

Delinquencies, charge-offs and uncollectible accounts are recognized and
recorded in accordance with the transaction agreements.

P

 

 

1122(d)(4)(xv)

Any external enhancement or other support, identified in Item 1114(a)(1) through
(3) or Item 1115 of Regulation AB, is maintained as set forth in the transaction
agreements.

 

P

 

 

 

 

 

 

 

P-4

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT Q

FORM OF STATEMENT TO NOTEHOLDERS

IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H4

Statement to Noteholders

LIBOR:

_________

LIBOR Determination Date:

_________

Note Rate:

_________

Collection Period for Mortgage Loans:

_________

Interest Period:

________ - _________

Payment Date:

_________

Number of days in
Interest Period:

_________

 

 

 

I.

Pool Balance:

 

 

A.     Cut-off Date Pool Balance

$_________

 

B.     Cumulative Charge-Off Amounts (including the current Collection Period)

$_________

 

C.     Pool Balance at beginning of Collection Period

$_________

 

D.     Charge-Off Amounts incurred during the related Collection Period

$_________

 

E.      Aggregate amount of Principal Collections received during the Collection
Period

$_________

 

F.      Additional Balances (Draws) conveyed to the Trust during the related
Collection Period

$_________

 

G.     Pool Balance at end of Collection Period

$_________

 

H.     Number of Mortgage Loans outstanding at beginning of related Collection
Period

_________

 

 

 

 

Q-1

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

I.       Number of Mortgage Loans outstanding at end of related Collection
Period

_________

II.

Principal Balance of the Notes:

 

 

A.     Initial Note Principal Amount

$_________

 

B.     Note Principal Amount at beginning and end of Collection Period

$_________

III.

Invested Amount after all payments and distributions on the Payment Date:

$_________

IV.

Collections on Mortgage Loans:

 

 

A.     Aggregate amount of Interest Collections received during the related
Collection Period

$_________

 

B.     Principal Collections received during the related Collection Period

$_________

 

C.     Net Recoveries received during the related Collection Period

$_________

V.

Insured Payment:

$_________

VI.

Distributions:

 

 

A.     Premium Amount paid to the Insurer on the Payment Date

$_________

 

B.     Note Interest Payment Amount payable

$_________

 

C.     Note Interest Payment Amount for the Notes paid on the Payment Date

$_________

 

D.     Outstanding Interest Carryover Shortfall remaining after all payments on
the Payment Date

$_________

 

E.      Specified Overcollateralization Amount

$_________

 

F.      Any other amounts paid to the Insurer pursuant to the Insurance
Agreement

$_________

 

G.     Amount actually paid to Noteholders in respect of principal

$_________

VII.

Modified Loans (cumulative Collection Periods including the Current Collection
Period):

 

 

A.     Aggregate Principal Balance of Mortgage Loans modified after giving
effect to modifications

$_________

 

 

 

Q-2

 

 

--------------------------------------------------------------------------------

 

 

 

 

B.     Aggregate Credit Limit of Mortgage Loans modified on a cumulative basis
after giving effect to modifications

$_________

 

C.     Weighted average of Credit Limits of Mortgage Loans at the end of
Collection Period after giving effect to modifications

$_________

VIII.

Substitute Loans:

 

 

A.     Purchase Prices

$_________

 

B.     Substitution Adjustment

$_________

IX.

Weighted Averages:

 

 

A.     Weighted average of the Loan Rates at end of related Collection Period

$_________

 

B.     Weighted average of the Loan Rate Cap at end of related Collection Period

$_________

 

C.     Weighted average Margin at end of related Collection Period

$_________

X.

Delinquent Accounts:

 

 

 

# of Accounts

 

Principal Balance

 

A.     31-60 days delinquent

_________

$_________

 

B.     61-90 days delinquent

_________

$_________

 

C.     over 90 days delinquent

_________

$_________

 

D.     REO Properties

_________

$_________

 

E.      Foreclosures

_________

$_________

 

F.      Bankruptcies

_________

$_________

 

G.     Six Month Rolling Average

 

_________%

 

H.     Has a Trigger Event occurred?

 

_________

XI.

Rapid Amortization:

 

 

A.     Has a Rapid Amortization Event occurred?

_________

  B.      What was the Rapid Amortization Event?

_________

XII.

Allocations to Noteholders (for each $1,000 of original principal):

 

 

 

 

 

Q-3

 

 

--------------------------------------------------------------------------------

 

 

 

 

A.     Aggregate amount of Principal Collections received during the related
Collection Period

$_________

 

B.     Amount actually paid to Noteholders in respect of principal

$_________

 

C.     Interest Distribution payable to the Noteholders

$_________

 

D.     Interest Distribution for the Notes paid on the Payment Date

$_________

 

E.      Note Principal Amount after all payments on the Payment Date

$_________

 

F.      Aggregate amount of any Relief Act Interest Shortfalls

$_________

XIII

Step-Down Date:

 

 

A.         Step-Down Date Occurred?

Yes___

No___

 

B.          Step-Down Test Satisfied?

Yes___

No___

 

C.          Cumulative Net Charge-Off Amounts

$________

 

XIV

Pool Assets

 

 

 

A.    Have any material modifications, extensions or waivers to the Mortgage
Loan term, fees penalties or payments during the period?

 

________

 

B.    Have any material breaches of Mortgage Loan pool representations and
warranties or convents occurred?

 

________

 

 

 

Q-4

 

 

--------------------------------------------------------------------------------

 

 

EXHIBIT R

FORM 10-D, FORM 8-K AND FORM 10-K

REPORTING RESPONSIBILITY

 

As to each item described below, the entity indicated as the Responsible Party
shall be primarily responsible for reporting the information to the Indenture
Trustee pursuant to Section 3.14(f). If the Indenture Trustee is indicated below
as to any item, then the Indenture Trustee is primarily responsible for
obtaining that information.

Under Item 1 of Form 10-D: a) items marked “5.03 statement” are required to be
included in the periodic Distribution Date statement under Section 4.03,
provided by the Indenture Trustee based on information received from the
Servicer; and b) items marked “Form 10-D report” are required to be in the Form
10-D report but not the 4.03 statement, provided by the party indicated.
Information under all other Items of Form 10-D is to be included in the Form
10-D report.

Form

Item

Description

Responsible Party

 

10-D

Must be filed within 15 days of the distribution date for the asset-backed
securities.

1

Distribution and Pool Performance Information

 

Item 1121(a) – Distribution and Pool Performance Information

 

(1) Any applicable record dates, accrual dates, determination dates for
calculating distributions and actual distribution dates for the distribution
period.

5.03 statement

(2) Cash flows received and the sources thereof for distributions, fees and
expenses.

5.03 statement

(3) Calculated amounts and distribution of the flow of funds for the period
itemized by type and priority of payment, including:

5.03 statement

 

 

 

R-1

 

 

 

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(i) Fees or expenses accrued and paid, with an identification of the general
purpose of such fees and the party receiving such fees or expenses.

5.03 statement

(ii) Payments accrued or paid with respect to enhancement or other support
identified in Item 1114 of Regulation AB (such as insurance premiums or other
enhancement maintenance fees), with an identification of the general purpose of
such payments and the party receiving such payments.

5.03 statement

(iii) Principal, interest and other distributions accrued and paid on the
asset-backed securities by type and by class or series and any principal or
interest shortfalls or carryovers.

5.03 statement

(iv) The amount of excess cash flow or excess spread and the disposition of
excess cash flow.

5.03 statement

(4) Beginning and ending principal balances of the asset-backed securities.

5.03 statement

(5) Interest rates applicable to the pool assets and the asset-backed
securities, as applicable.

5.03 statement

(6) Beginning and ending balances of transaction accounts, such as reserve
accounts, and material account activity during the period.

5.03 statement

(7) Any amounts drawn on any credit enhancement or other support identified in
Item 1114 of Regulation AB, as applicable, and the amount of coverage remaining
under any such enhancement, if known and applicable.

5.03 statement

(8) Number and amount of pool assets at the beginning and ending of each period,
and updated pool composition information, such as weighted average coupon,
weighted average life, weighted average remaining term, pool factors and
prepayment amounts.

5.03 statement

 

Updated pool composition information fields to be as specified by Depositor from
time to time

 

 

R-2

 

 

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(9) Delinquency and loss information for the period.

In addition, describe any material changes to the information specified in Item
1100(b)(5) of Regulation AB regarding the pool assets.

5.03 statement.

 Form 10-D report: Servicer

(10) Information on the amount, terms and general purpose of any advances made
or reimbursed during the period, including the general use of funds advanced and
the general source of funds for reimbursements.

5.03 statement

(11) Any material modifications, extensions or waivers to pool asset terms,
fees, penalties or payments during the distribution period or that have
cumulatively become material over time.

5.03 statement

(12) Material breaches of pool asset representations or warranties or
transaction covenants.

5.03 statement

(13) Information on ratio, coverage or other tests used for determining any
early amortization, liquidation or other performance trigger and whether the
trigger was met.

5.03 statement

(14) Information regarding any new issuance of asset-backed securities backed by
the same asset pool,

[information regarding] any pool asset changes (other than in connection with a
pool asset converting into cash in accordance with its terms), such as additions
or removals in connection with a pre-funding or revolving period and pool asset
substitutions and repurchases (and purchase rates, if applicable), and cash
flows available for future purchases, such as the balances of any pre-funding or
revolving accounts, if applicable.

Disclose any material changes in the solicitation, credit-granting,
underwriting, origination, acquisition or pool selection criteria or procedures,
as applicable, used to originate, acquire or select the new pool assets.

Form 10-D report: Depositor

 

Form 10-D report: Servicer

 

 

 

 

Form 10-D report: Servicer

 

 

 

 

R-3

 

 

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Item 1121(b) – Pre-Funding or Revolving Period Information

Updated pool information as required under Item 1121(b).

N/A

2

Legal Proceedings

 

   

Item 1117 – Legal proceedings pending against the following entities, or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental authorities:

 

Sponsor (Seller)

 

Depositor

Seller

 

 

R-4

 

 

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  Indenture Trustee Depositor         Issuing entity Indenture Trustee        
Servicer, affiliated Servicer, other Servicer servicing 20% or more of pool
assets at time of report, other material servicers Depositor         Originator
of 20% or more of pool assets as of the Cut-off Date Servicer         Custodian
Seller           Indenture Trustee

3

Sales of Securities and Use of Proceeds

 

Information from Item 2(a) of Part II of Form 10-Q:

 

With respect to any sale of securities by the sponsor, depositor or issuing
entity, that are backed by the same asset pool or are otherwise issued by the
issuing entity, whether or not registered, provide the sales and use of proceeds
information in Item 701 of Regulation S-K. Pricing information can be omitted if
securities were not registered.

 

 

 

Depositor

 

 

 

 

R-5

 

 

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4

 

Defaults Upon Senior Securities

 

  

 

 

Information from Item 3 of Part II of Form 10-Q:

Report the occurrence of any Event of Default (after expiration of any grace
period and provision of any required notice)

 

 

Indenture Trustee

5

Submission of Matters to a Vote of Security Holders

 

Information from Item 4 of Part II of Form 10-Q

Party submitting the matter to Holders for vote

6

Significant Obligors of Pool Assets

 

Item 1112(b) – Significant Obligor Financial Information*

N/A

*This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Item.

 

7

Significant Enhancement Provider Information

 

Item 1114(b)(2) – Credit Enhancement Provider Financial Information*

Determining applicable disclosure threshold

Obtaining required financial information or effecting incorporation by reference

Depositor

 

 

 

 

R-6

 

 

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Item 1115(b) – Derivative Counterparty Financial Information*

Determining current maximum probable exposure

Determining current significance percentage

Obtaining required financial information or effecting incorporation by reference

Depositor

 

 

 

 

 

 

*This information need only be reported on the Form 10-D for the distribution
period in which updated information is required pursuant to the Items.

 

8

Other Information

 

Disclose any information required to be reported on Form 8-K during the period
covered by the Form 10-D but not reported

The Responsible Party for the applicable Form 8-K item as indicated below

9

Exhibits

 

Distribution report

Indenture Trustee

Exhibits required by Item 601 of Regulation S-K, such as material agreements

Depositor

8-K

Must be filed within four business days of an event reportable on Form 8-K.

1.01

Entry into a Material Definitive Agreement

 

Disclosure is required regarding entry into or amendment of any definitive
agreement that is material to the securitization, even if depositor is not a
party.

 

Examples: servicing agreement, custodial agreement.

Note: disclosure not required as to definitive agreements that are fully
disclosed in the prospectus

Servicer; or any of the following that is a party to the agreement if Servicer
is not: Indenture Trustee, Sponsor, Depositor

 

 

 

 

R-7

 

 

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1.02

Termination of a Material Definitive Agreement

 

Disclosure is required regarding termination of any definitive agreement that is
material to the securitization (other than expiration in accordance with its
terms), even if depositor is not a party.

 

Examples: servicing agreement, custodial agreement.

Servicer; or any of the following that is a party to the agreement if Servicer
is not: Indenture Trustee, Sponsor, Depositor

1.03

Bankruptcy or Receivership

 

Disclosure is required regarding the bankruptcy or receivership, if known to the
Depositor, with respect to any of the following:

Sponsor (Seller), Depositor, Servicer, affiliated Servicer, other Servicer
servicing 20% or more of pool assets at time of report, other material
servicers, Indenture Trustee, significant obligor, credit enhancer (10% or
more), derivatives counterparty

Depositor

2.04

Triggering Events that Accelerate or Increase a Direct Financial Obligation or
an Obligation under an Off-Balance Sheet Arrangement

 

 

 

 

 

R-8

 

 

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Includes an early amortization, performance trigger or other event, including
event of default, that would materially alter the payment priority/distribution
of cash flows/amortization schedule.

Disclosure will be made of events other than waterfall triggers which are
disclosed in the 4.03 statement

Servicer/Indenture Trustee (to the extent of actual knowledge)

3.03

Material Modification to Rights of Security Holders

 

Disclosure is required of any material modification to documents defining the
rights of Certificateholders, including the Pooling and Servicing Agreement

Indenture Trustee

5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

 

Disclosure is required of any amendment “to the governing documents of the
issuing entity”

Depositor

5.06

Change in Shell Company Status

 

[Not applicable to ABS issuers]

Depositor

6.01

ABS Informational and Computational Material

 

[Not included in reports to be filed under Section 3.18]

Depositor

6.02

Change of Servicer or Indenture Trustee

 

 

 

 

 

R-9

 

 

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Requires disclosure of any removal, replacement, substitution or addition of any
servicer, affiliated servicer, other servicer servicing 10% or more of pool
assets at time of report, other material servicers, certificate administrator or
trustee. Reg AB disclosure about any new servicer or indenture trustee is also
required.

Indenture Trustee or Servicer

6.03

Change in Credit Enhancement or Other External Support

 

Covers termination of any enhancement in manner other than by its terms, the
addition of an enhancement, or a material change in the enhancement provided.
Applies to external credit enhancements as well as derivatives. Reg AB
disclosure about any new enhancement provider is also required.

Depositor or Indenture Trustee

6.04

Failure to Make a Required Distribution

Indenture Trustee

6.05

Securities Act Updating Disclosure

 

If any material pool characteristic differs by 5% or more at the time of
issuance of the securities from the description in the final prospectus, provide
updated Reg AB disclosure about the actual asset pool.

Depositor

If there are any new servicers or originators required to be disclosed under
Regulation AB as a result of the foregoing, provide the information called for
in Items 1108 and 1110 respectively.

Depositor

7.01

Regulation FD Disclosure

Depositor

8.01

Other Events

 

    Any event, with respect to which information is not otherwise called for in
Form 8-K, that the registrant deems of importance to security holders. Depositor

 

 

 

 

R-10

 

 

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9.01

Financial Statements and Exhibits

The Responsible Party applicable to reportable event

10-K

Must be filed within 90 days of the fiscal year end for the registrant.

9B

Other Information

 

Disclose any information required to be reported on Form 8-K during the fourth
quarter covered by the Form 10-K but not reported

The Responsible Party for the applicable Form 8-K item as indicated above

15

Exhibits and Financial Statement Schedules

 

Item 1112(b) – Significant Obligor Financial Information

Servicer

Item 1114(b)(2) – Credit Enhancement Provider Financial Information

Determining applicable disclosure threshold

Obtaining required financial information or effecting incorporation by reference

 Depositor

 

 

   

Item 1115(b) – Derivative Counterparty Financial Information

Determining current maximum probable exposure

Determining current significance percentage

Obtaining required financial information or effecting incorporation by reference

Depositor

 

 

 

 

R-11

 

 

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Item 1117 – Legal proceedings pending against the following entities, or their
respective property, that is material to Certificateholders, including
proceedings known to be contemplated by governmental authorities:

 

 

Sponsor (Seller)       Depositor Seller     Indenture Trustee Depositor    
Issuing entity Indenture Trustee     Servicer, affiliated Servicer, other
Servicer servicing 20% or more of pool assets at time of report, other material
servicers Depositor     Originator of 20% or more of pool assets as of the
Cut-off Date Servicer        

 

 

 

 

R-12

 

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Item 1119 – Affiliations and relationships between the following entities, or
their respective affiliates, that are material to Certificateholders:

 

 

Sponsor (Seller)       Depositor Seller     Indenture Trustee Depositor    
Servicer, affiliated Servicer, other Servicer servicing 20% or more of pool
assets at time of report, other material servicers

Indenture Trustee (only as to affiliations between the Indenture Trustee and
such other parties listed)

    Originator Servicer     Credit Enhancer/Support Provider       Significant
Obligor  

 

 

 

 

R-13

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  Depositor       Depositor       Servicer

Item 1122 – Assessment of Compliance with Servicing Criteria

Each Party participating in the servicing function

Item 1123 – Servicer Compliance Statement

Servicer and Indenture Trustee

 

 

R-14

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