Exhibit 10.3

EXECUTION

 

HMB ACCEPTANCE CORP., as Depositor

WELLS FARGO BANK, N.A.,

as Securities Administrator and Master Servicer

HOMEBANC MORTGAGE CORPORATION, as Seller and Servicer

WILMINGTON TRUST COMPANY, as Delaware Trustee

and

U.S. BANK NATIONAL ASSOCIATION, as Trustee

 

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POOLING AND SERVICING AGREEMENT

Dated as of March 1, 2006

 

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HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

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TABLE OF CONTENTS

 

        Page ARTICLE I DEFINITIONS Section 1.01.   Definitions   7 Section 1.02.
  Calculations With Respect to the Mortgage Loans   38 Section 1.03.  
Calculations With Respect to Accrued Interest   39 ARTICLE IA ORGANIZATION OF
TRUST Section 1A.01.   Name of Trust   39 Section 1A.02.   Office   39 Section
1A.03.   Declaration of Trust   39 Section 1A.04.   Purpose and Powers   39
Section 1A.05.   Liability of the Certificateholders   40 Section 1A.06.   Title
To Trust Property   40 Section 1A.07.   Situs of Trust   40 Section 1A.08.   The
Delaware Trustee   40 Section 1A.09   Separateness Provisions   42 Section 1A.10
  Assets of the Trust   43 ARTICLE II CONVEYANCE OF MORTGAGE LOANS Section 2.01.
  Creation and Declaration of Trust; Conveyance of Mortgage Loans.   43 Section
2.02.   Acceptance of Trust Estate; Review of Documentation   46 Section 2.03.  
Grant Clause.   48 Section 2.04.   Covenant of Seller with Respect to
Certificates.   50

 

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ARTICLE III REPRESENTATIONS AND WARRANTIES

Section 3.01.

  Representations and Warranties of the Depositor and the Seller   50

Section 3.02.

  Discovery of Breach   52

Section 3.03.

  Repurchase, Purchase or Substitution of Mortgage Loans   52 ARTICLE IV
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS BY THE SERVICER

Section 4.01.

  Servicer to Perform Servicing Responsibilities.   54

Section 4.02.

  Servicing of the Mortgage Loans   54

Section 4.03.

  Payments to the Master Servicer   67

Section 4.04.

  General Servicing Procedures.   70

Section 4.05.

  Representations, Warranties and Agreements.   71

Section 4.06.

  The Servicer.   74

Section 4.07.

  Termination for Cause   76

Section 4.08.

  Successor to Servicer   78

Section 4.09.

  Subservicers and Subservicing Agreements.   79 ARTICLE V

ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS BY THE

MASTER SERVICER AND THE SECURITIES ADMINISTRATOR

Section 5.01.

  Duties of the Master Servicer; Representations and Warranties   80

Section 5.02.

  Master Servicer Fidelity Bond and Master Servicer Errors and Omissions
Insurance Policy.   82

Section 5.03.

  Master Servicer’s Financial Statements and Related Information   83

Section 5.04.

  Power to Act; Procedures.   83

Section 5.05.

  Enforcement of Servicer’s and Master Servicer’s Obligations   84

Section 5.06.

  Collection Account.   85

Section 5.07.

  Application of Funds in the Collection Account   86

Section 5.08.

  Reports to Trustee and Certificateholders.   88

Section 5.09.

  Termination of Servicer; Successor Servicers.   92

Section 5.10.

  Master Servicer Liable for Enforcement   93

Section 5.11.

  Assumption of Master Servicing by Trustee.   93

Section 5.12.

  Release of Mortgage Files.   93

 

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Section 5.13.

  Documents, Records and Funds in Possession of Master Servicer to be Held for
Trustee.   95

Section 5.14.

  Opinion   96

Section 5.15.

  Trustee To Retain Possession of Certain Insurance Policies and Documents   96

Section 5.16.

  Compensation to the Master Servicer   96

Section 5.17.

  Merger or Consolidation   97

Section 5.18.

  Resignation of Master Servicer   97

Section 5.19.

  Assignment or Delegation of Duties by the Master Servicer   97

Section 5.20.

  Limitation on Liability of the Master Servicer and Others.   97

Section 5.21.

  Indemnification; Third Party Claims   98

Section 5.22.

  Alternative Index   99

Section 5.23.

  Transfer of Servicing   99

Section 5.24.

  Compliance with Safeguarding Customer Information Requirements   100

Section 5.25.

  REO Property.   100 ARTICLE VI THE CERTIFICATES; DEPOSITS AND DISTRIBUTIONS TO
HOLDERS OF CERTIFICATES

Section 6.01.

  The Certificates.   101

Section 6.02.

  Certificate Register; Registration of Transfer and Exchange of Certificates.  
102

Section 6.03.

  Mutilated, Destroyed, Lost or Stolen Certificates.   106

Section 6.04.

  Persons Deemed Owners.   107

Section 6.05.

  Access to List of Certificateholders’ Names and Addresses.   107

Section 6.06.

  Maintenance of Office or Agency.   107

Section 6.07.

  The Certificate Account.   107

Section 6.08.

  Distributions from the Certificate Account   108

Section 6.09.

  Allocation of Losses.   114

Section 6.10.

  Control of the Trust Accounts   114

Section 6.11.

  Monthly Advances by Master Servicer and Servicer   118 ARTICLE VII THE TRUSTEE
AND THE SECURITIES ADMINISTRATOR

Section 7.01.

  Duties of Trustee and the Securities Administrator.   118

Section 7.02.

  Certain Matters Affecting the Trustee and the Securities Administrator.   120

Section 7.03.

  Neither Trustee nor Securities Administrator Liable for Certificates or
Mortgage Loans.   122

Section 7.04.

  Trustee and Securities Administrator May Own Certificates.   122

Section 7.05.

  Fees and Expenses of the Trustee, the Securities Administrator and Others.  
122

Section 7.06.

  Eligibility Requirements for the Trustee and the Securities Administrator.  
123

 

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Section 7.07.

  Resignation and Removal of Trustee or Securities Administrator.   123

Section 7.08.

  Successor Trustee or Securities Administrator.   124

Section 7.09.

  Merger or Consolidation of Trustee or Securities Administrator.   125

Section 7.10.

  Appointment of Co-Trustee or Separate Trustee.   125

Section 7.11.

  Tax Matters.   126

Section 7.12.

  REMIC-Related Covenants.   127 ARTICLE VIII ANNUAL COMPLIANCE MATTERS

Section 8.01.

  Assessments of Compliance and Attestation Reports.   128

Section 8.02.

  Annual Compliance Statement.   129

Section 8.03.

  Sarbanes-Oxley Certification.   130

Section 8.04.

  Reports Filed with Securities and Exchange Commission.   130

Section 8.05.

  Additional Information.   135

Section 8.06.

  Intention of the Parties and Interpretation.   135

Section 8.07.

  Indemnification.   136 ARTICLE IX MASTER SERVICER EVENTS OF DEFAULT

Section 9.01.

  Master Servicer Events of Default; Trustee To Act; Appointment of Successor  
137

Section 9.02.

  Additional Remedies of Trustee Upon Event of Default   141

Section 9.03.

  Waiver of Defaults   141

Section 9.04.

  Notification to Holders   141

Section 9.05.

  Directions by Certificateholders and Duties of Trustee During Master Servicer
Event of Default   141

Section 9.06.

  Action Upon Certain Failures of the Master Servicer and Upon Master Servicer
Event of Default   142 ARTICLE X TERMINATION

Section 10.01.

  Termination   142

Section 10.02.

  Termination Prior to Maturity Date; Optional Redemption   142

Section 10.03.

  Certain Notices upon Final Distribution   143

Section 10.04.

  Additional Termination Requirements.   143

 

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ARTICLE XI REMIC ADMINISTRATION

Section 11.01.

  REMIC Administration.   144

Section 11.02.

  Prohibited Transactions and Activities.   146

Section 11.03.

  Indemnification with Respect to Certain Taxes and Loss of REMIC Status.   146
ARTICLE XII MISCELLANEOUS PROVISIONS

Section 12.01.

  Binding Nature of Agreement; Assignment   147

Section 12.02.

  Entire Agreement   147

Section 12.03.

  Amendment.   147

Section 12.04.

  Acts of Certificateholders   148

Section 12.05.

  Recordation of Agreement   148

Section 12.06.

  Governing Law; Submission to Jurisdiction   148

Section 12.07.

  Notices   149

Section 12.08.

  Severability of Provisions   151

Section 12.09.

  Indulgences; No Waivers   151

Section 12.10.

  Headings Not To Affect Interpretation   151

Section 12.11.

  Benefits of Agreement   152

Section 12.12.

  Special Notices to the Rating Agencies.   152

Section 12.13.

  Counterparts   152

 

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ATTACHMENTS

 

Exhibit A

   Forms of Certificates

Exhibit B-1

  

Form of Transferor Certificate

Exhibit B-2

  

Form of Investment Letter

Exhibit B-3

  

Form of Rule 144A Letter

Exhibit B-4

  

ERISA Affidavit

Exhibit B-5

  

Residual Transfer Affidavit

Exhibit B-6

  

Residual Transferee Affidavit

Exhibit C

  

Custodial Account Letter Agreement

Exhibit D

  

Escrow Account Letter Agreement

Exhibit E

  

Standard Layout For Monthly Defaulted Loan Report

Exhibit F

  

Relevant Servicing Criteria

Exhibit G

  

Back-up Certification

Exhibit H

  

Additional 10-D Disclosure

Exhibit I

  

Additional 10-K Disclosure

Exhibit J

  

Form 8-K Disclosure

Exhibit K

  

Additional Disclosure Notification

Exhibit L

  

Servicing Fee Schedule

Exhibit M

  

Form of Certificate of Trust

Schedule A

  

Mortgage Loan Schedule

 

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This POOLING AND SERVICING AGREEMENT, dated as of March 1, 2006 (this
“Agreement” or this “Pooling and Servicing Agreement”), is by and among HMB
ACCEPTANCE CORP., a Delaware corporation, as depositor (the “Depositor”), U.S.
BANK NATIONAL ASSOCIATION, as trustee (the “Trustee”), WELLS FARGO BANK, N.A.,
as securities administrator (in such capacity, the “Securities Administrator”)
and master servicer (in such capacity, the “Master Servicer”), HOMEBANC MORTGAGE
CORPORATION, a Georgia corporation, as seller (in such capacity, the “Seller”)
and as servicer (in such capacity, the “Servicer”) and WILMINGTON TRUST COMPANY,
a Delaware banking corporation, as Delaware trustee (the “Delaware Trustee”).

PRELIMINARY STATEMENT

The Depositor has acquired the Mortgage Loans from the Seller, and at the
Closing Date is the owner of the Mortgage Loans and the other property being
conveyed by it to the Trustee hereunder for inclusion in the Trust Estate. On
the Closing Date, the Depositor will acquire the Certificates from the Trust, as
consideration for its transfer to the Trust of the Mortgage Loans and the other
property constituting the Trust Estate. The Depositor has duly authorized the
execution and delivery of this Agreement to provide for the conveyance to the
Trustee of the Mortgage Loans and the other property constituting the Trust
Estate. All covenants and agreements made by the Seller in the Mortgage Loan
Purchase Agreement and by the Depositor, the Master Servicer, the Servicer, the
Securities Administrator and the Trustee herein with respect to the Mortgage
Loans and the other property constituting the Trust Estate are for the benefit
of the Holders from time to time of the Certificates. The Depositor, the
Trustee, the Master Servicer, the Servicer and the Securities Administrator are
entering into this Agreement, and the Trustee is accepting the Trust Estate, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.

As provided herein, an election shall be made that portions of the Trust Fund be
treated for federal income tax purposes as comprising three real estate mortgage
investment conduits under Section 860D of the Code (each a “REMIC” or, in the
alternative, REMIC 1, REMIC 2 and REMIC 3 (REMIC 3 also being referred to as the
“Upper Tier REMIC”)). Any inconsistencies or ambiguities in this Agreement or in
the administration of this Agreement shall be resolved in a manner that
preserves the validity of such REMIC elections.

Each Certificate, other than the Class X and Class R Certificates, represents
ownership of a regular interest in the Upper Tier REMIC for purposes of the
REMIC Provisions. The Class X Certificates represent ownership of two regular
interests in the Upper Tier REMIC as described in note 3 of the table below for
such REMIC. The Class R Certificate represents ownership of the sole Class of
residual interest in each REMIC for purposes of the REMIC Provisions.

The Upper Tier REMIC shall hold as its assets the several Classes of
uncertificated Lower Tier Interests in REMIC 2, other than the Class LT2-R
Interest, and each such Lower Tier Interest is hereby designated as a regular
interest in REMIC 2 for purposes of the REMIC Provisions. REMIC 2 shall hold as
its assets the several Classes of uncertificated Lower Tier Interests in REMIC
1, other than the Class LT1-R Interest, and each such Lower Tier Interest is
hereby designated as a regular interest in REMIC 1 for purposes of the REMIC
Provisions. REMIC 1 shall hold as its assets the property of the Trust Fund
other than the Lower Tier Interests in REMIC 1.

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

REMIC 1

The following table sets forth (or describes) the Class designation, interest
rate, and initial principal amount for each Class of REMIC 1 Lower Tier
Interests.

 

REMIC 1 Lower Tier Class Designation

   REMIC 1 Lower
Tier Interest Rate   Initial Class
Principal Amount

LT1-1-Senior

   (1)   $ 31,099,000

LT1-1-Sub

   (1)   $ 2,072,885

LT1-2-Senior

   (2)   $ 98,863,000

LT1-2-Sub

   (2)   $ 6,591,193

LT1-3-Senior

   (3)   $ 249,713,000

LT1-3-Sub

   (3)   $ 16,647,673

LT1-4-Senior

   (4)   $ 48,425,000

LT1-4-Sub

   (4)   $ 3,228,490

LT1-R

   (5)     (5)

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(1) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 1 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 1
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(2) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 1 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 2
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(3) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 1 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 3
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(4) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 1 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 4
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(5) The Class LT1-R Interest is the sole class of residual interest in REMIC 1.
It does not have an interest rate or a principal balance.

On each Distribution Date, the Trustee shall first pay or charge as an expense
of REMIC 1 all expenses of the Trust for such Distribution Date.

On each Distribution Date, the Trustee shall distribute the remaining Interest
Funds for each Mortgage Pool to the related Lower Tier Interests in REMIC 1 at
the rates described above,

 

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pro rata, based on the amount of interest accrued on each such Lower Tier
Interest for the related Accrual Period. On each Distribution Date, the Trustee
shall distribute the remaining Principal Distribution Amount for each Mortgage
Pool first, to the related Lower Tier Interest with the term “Senior” in its
Class designation until the Class Principal Amount of such Lower Tier Interest
equals the aggregate Class Principal Amount of each Senior Certificate related
to such Mortgage Pool, and second, to the related Lower Tier Interest with the
term “Sub” in its Class designation.

All losses on the Mortgage Loans shall be allocated among the Lower Tier
Interests in REMIC 1 in the same manner that principal distributions are
allocated.

REMIC 2

The following table sets forth (or describes) the Class designation, interest
rate, and initial principal amount for each Class of REMIC 2 Lower Tier
Interests.

 

REMIC 2 Lower Tier Class Designation

   REMIC 2 Lower
Tier Interest Rate   Initial Class
Principal Amount   Corresponding
Class of
Certificates

LT2-1-A-1

   (5)   $ 6,997,275.00   1-A-1

LT2-1-A-2

   (5)   $ 777,475.00   1-A-2

LT2-2-A-1

   (5)   $ 22,244,250.00   2-A-1

LT2-2-A-2

   (5)   $ 2,471,500.00   2-A-2

LT2-3-A-1

   (5)   $ 42,523,250.00   3-A-1

LT2-3-A-2

   (5)   $ 13,662,250.00   3-A-2

LT2-3-A-3

   (5)   $ 6,242,750.00   3-A-3

LT2-4-A-1

   (5)   $ 10,895,750.00   4-A-1

LT2-4-A-2

   (5)   $ 1,210,500.00   4-A-2

LT2-M-1

   (5)   $ 3,516,250.00   M-1

LT2-M-2

   (5)   $ 1,518,250.00   M-2

LT2-B-1

   (5)   $ 901,750.00   B-1

LT2-Pool-1

   (1)   $ 8,272,242.40   N/A

LT2-PSA-1

   (1)   $ 20,728.85   N/A

LT2-Pool-2

   (2)   $ 26,297,636.32   N/A

LT2-PSA-2

   (2)   $ 65,911.93   N/A

LT2-Pool-3

   (3)   $ 66,423,691.52   N/A

LT2-PSA-3

   (3)   $ 166,476.73   N/A

LT2-Pool-4

   (4)   $ 12,881,087.60   N/A

LT2-PSA-4

   (4)   $ 32,284.90   N/A

LT2-Q

   (5)   $ 229,518,930.75   N/A

Class LT2-R

   (6)     (6)   N/A

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(1) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 2 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 1
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

 

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(2) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 2 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 2
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(3) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 2 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 3
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(4) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 2 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Pool 4
Mortgage Loans as of the first day of the related Collection Period (adjusted
for any prepayment received after such first day and distributed on a prior
Distribution Date).

(5) The interest rate with respect to any Distribution Date (and the related
Accrual Period) for each of these REMIC 2 Lower Tier Interests is a per annum
rate equal to the weighted average of the Net Mortgage Rates of the Mortgage
Loans as of the first day of the related Collection Period (adjusted for any
prepayment received after such first day and distributed on a prior Distribution
Date).

(6) The Class LT2-R Interest is the sole Class of residual interest in REMIC 2.
It does not have an interest rate or a principal balance.

On each Distribution Date, the Trustee shall distribute the remaining Interest
Remittance Amount to the Lower Tier Interests in REMIC 2 at the rates described
above, pro rata, based on the amount of interest accrued on each such Lower Tier
Interest for the related Accrual Period, provided however, that interest that
accrues on the Class LT2-Q Interest shall be deferred in an amount necessary to
make the principal distributions described under priorities (a) through
(k) below for such Distribution Date. Any interest so deferred shall itself bear
interest at the interest rate for the Class LT2-Q Interest.

On each Distribution Date, the Trustee shall distribute the Principal
Distribution Amount to the Lower Tier Interests in REMIC 2 in the following
order of priority:

 

  (a) First, to the Class LT2-PSA-1 Interest until its Class Principal Amount
equals one percent of the Pool Subordinate Amount for Pool 1 immediately after
such Distribution Date;

 

  (b) Second, to the Class LT2-PSA-2 Interest until its Class Principal Amount
equals one percent of the Pool Subordinate Amount for Pool 2 immediately after
such Distribution Date;

 

  (c) Third, to the Class LT2-PSA-3 Interest until its Class Principal Amount
equals one percent of the Pool Subordinate Amount for Pool 3 immediately after
such Distribution Date;

 

  (d) Fourth, to the Class LT2-PSA-4 Interest until its Class Principal Amount
equals one percent of the Pool Subordinate Amount for Pool 4 immediately after
such Distribution Date;

 

  (e) Fifth, to the Class LT2-PSA-1, Class LT2-PSA-2, Class LT2-PSA-3 or Class
LT2-PSA-4 Interest the minimum amount necessary to cause the ratio of the Class

 

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Principal Amount of such Lower Tier Interest to the other Lower Tier Interest to
equal the ratio of the Pool Subordinate Amount of the Pool related to such Lower
Tier Interest to the Pool Subordinate Amount related to the other Lower Tier
Interest;

 

  (f) Sixth, to the Class LT2-Pool-1 Interest until the aggregate Class
Principal Amount of the Class LT2-Pool-1 and the Class LT2-PSA-1 Interests
equals one-quarter of the Pool Balance of the Mortgage Loans in Pool 1
immediately after such Distribution Date;

 

  (g) Seventh, to the Class LT2-Pool-2 Interest until the aggregate Class
Principal Amount of the Class LT2-Pool-2 and the Class LT2-PSA-2 Interests
equals one-quarter of the Pool Balance of the Mortgage Loans in Pool 2
immediately after such Distribution Date;

 

  (h) Eighth, to the Class LT2-Pool-3 Interest until the aggregate Class
Principal Amount of the Class LT2-Pool-3 and the Class LT2-PSA-3 Interests
equals one-quarter of the Pool Balance of the Mortgage Loans in Pool 3
immediately after such Distribution Date;

 

  (i) Ninth, to the Class LT2-Pool-4 Interest until the aggregate Class
Principal Amount of the Class LT2-Pool-4 and the Class LT2-PSA-4 Interests
equals one-quarter of the Pool Balance of the Mortgage Loans in Pool 4
immediately after such Distribution Date;

 

  (j) Tenth, to each Lower Tier Interest having the letter “A” in its
designation until the Class Principal Amount of each such Lower Tier Interest
equals one-quarter of the Class Principal Amount of the Corresponding Class of
Certificates for such Interest immediately after such Distribution Date;

 

  (k) Eleventh, sequentially, to the Class LT2-M-1, Class LT2-M-2 and Class
LT2-B-1 Interests until the Class Principal Amount of each such Interest equals
one-quarter of the Class Principal Amount of its Corresponding Class of
Certificates immediately after such Distribution Date; and

 

  (l) Finally, to the Class LT2-Q Interest, any remaining amounts.

All losses on the Mortgage Loans shall be allocated among the Lower Tier
Interests in REMIC 2 in the same manner that principal distributions are
allocated.

REMIC 3

The following table sets forth (or describes) the Class designation, Certificate
Interest Rate, initial Class Principal Amount and minimum denomination for each
Class of Certificates comprising interests in the Trust Fund created hereunder.
Each Certificate, other than the Class R Certificates represents ownership of
regular interests in the Upper Tier REMIC.

 

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Class Designation

   Interest Rate   Initial Class
Principal Amount ($)   Minimum
Denomination

Class 1-A-1

   (1)   $ 27,989,100.00   $ 100,000.00

Class 1-A-2

   (1)   $ 3,109,900.00   $ 100,000.00

Class 2-A-1

   (1)   $ 88,977,000.00   $ 100,000.00

Class 2-A-2

   (1)   $ 9,886,000.00   $ 100,000.00

Class 3-A-1

   (1)   $ 170,093,000.00   $ 100,000.00

Class 3-A-2

   (1)   $ 54,649,000.00   $ 100,000.00

Class 3-A-3

   (1)   $ 24,971,000.00   $ 100,000.00

Class 4-A-1

   (1)   $ 43,583,000.00   $ 100,000.00

Class 4-A-2

   (1)   $ 4,842,000.00   $ 100,000.00

Class M-1

   (2)   $ 14,065,000.00   $ 100,000.00

Class M-2

   (2)   $ 6,073,000.00   $ 100,000.00

Class B-1

   (2)   $ 3,607,000.00   $ 100,000.00

Class X

   (3)     (5)     (5)

Class R

   (4)     (4)     (4)

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(1) The Certificate Interest Rate with respect to any Distribution Date (and the
related Accrual Period) for each Class of Senior Certificates is a per annum
rate equal to the weighted average Net Mortgage Rate of the Mortgage Loans in
the related Mortgage Pool, weighted on the basis of the Scheduled Principal
Balances of such Mortgage Loans, minus 0.15%.

(2) The Certificate Interest Rate with respect to any Distribution Date (and the
related Accrual Period) for each Class of Subordinate Certificates is a per
annum rate equal to the weighted average of the weighted average Net Mortgage
Rate of the Mortgage Loans in each Mortgage Pool minus 0.15%, weighted on the
basis of the excess, if any, of the aggregate Scheduled Principal Balance of the
Mortgage Loans in each Mortgage Pool as of the related Due Date over the
aggregate Class Principal Amount of the related Senior Certificates immediately
before the such Distribution Date (such excess, the “Pool Subordinate Amount”).

(3) The Class X Certificates shall have an initial principal balance of
$4,795,241.74 and represent a regular interest in the Upper Tier REMIC. The
Class X Certificates also comprise a notional component, which is also a regular
interest in the Upper Tier REMIC. The notional component has a notional
principal balance that at all times will equal the aggregate of the principal
balances of the regular interests in REMIC 2 (i.e., the Pool Balance). For each
Distribution Date (and the related Accrual Period), the notional component shall
bear interest at a rate equal to the excess of (a) the weighted average of the
interest rates on the regular interests in REMIC 2, weighted on the basis of the
principal balance of each such Lower Tier Interest over (b) the Adjusted Lower
Tier WAC. For any Distribution Date, interest that accrues on the notional
component of the Class X Certificates shall be deferred to the extent of any
increase in the Overcollateralization Amount on such date. Such deferred
interest shall not itself bear interest.

(4) The Class R Certificate will be issued without a Certificate Principal
Amount and will not bear interest at a stated rate. The Class R Certificate
represents ownership of the residual interest in the Upper Tier REMIC, as well
as ownership of the Class LT1-R and Class LT2-R Interests. The Class R
Certificate will be issued as a single Certificate evidencing the entire
Percentage Interest in such Class.

(5) The Class X Certificates will be issued in minimum Percentage Interests of
10%.

As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled Principal
Balance of $456,640,240.74.

 

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

ARTICLE I

DEFINITIONS

Section 1.01. Definitions. The following words and phrases, unless the context
otherwise requires, shall have the following meanings:

Accepted Servicing Practices: With respect to any Mortgage Loan, those mortgage
loan servicing practices (including collection procedures) of prudent mortgage
banking institutions which service mortgage loans of the same type as such
Mortgage Loan in the jurisdiction where the related Mortgaged Property is
located, and which are in accordance with Fannie Mae servicing practices and
procedures, for MBS pool mortgages, as defined in the Fannie Mae Guides
including future updates.

Accountant: A Person engaged in the practice of accounting who (except when this
Agreement provides that an Accountant must be Independent) may be employed by or
affiliated with the Depositor or an Affiliate of the Depositor.

Accounts: Any or all of the Custodial Accounts, the Escrow Accounts, the
Collection Account, the Certificate Account and any other accounts created or
maintained by the Master Servicer, the Securities Administrator or the Servicer
pursuant to this Agreement.

Accrual Period: With respect to any Distribution Date and any Class of
Certificates and each Class of Lower Tier Interests, the calendar month
immediately preceding the month in which such Distribution Date occurs.

Additional Disclosure Notification: As defined in Section 8.04(a).

Additional Form 10-D Disclosure: As defined in Section 8.04(a).

Additional Form 10-K Disclosure: As defined in Section 8.04(b).

Additional Servicer: Each affiliate of a Servicer that Services any of the
Mortgage Loans and each Person that is not an affiliate of any Servicer that
Services 10% or more of the Mortgage Loans.

Adjusted Lower Tier WAC: For any Distribution Date (and the related Accrual
Period), an amount equal to (i) four, multiplied by (ii) the weighted average of
the interest rates for such Distribution Date for the Class LT2-1-A-1, Class
LT2-1-A-2, Class LT2-2-A-1, Class LT2-2-A-2, Class LT2-3-A-1, Class LT2-3-A-2,
Class LT2-3-A-3, Class LT2-4-A-1, Class LT2-4-A-2, Class LT2-M-1, Class LT2-M-2,
Class LT2-B-1, Class LT2-Pool-1, Class LT2-PSA-1, Class LT2-Pool-2, Class
LT2-PSA-2, Class LT2-Pool-3, Class LT2-PSA-3, Class LT2-Pool-4, Class LT2-PSA-4
and Class LT2-Q Interests, weighted in proportion to their Class Principal
Amounts

 

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as of the beginning of the related Accrual Period and computed by subjecting the
rate on each of the Class LT2-Pool-1, Class LT2-PSA-1, Class LT2-Pool-2, Class
LT2-PSA-2, Class LT2-Pool-3, Class LT2-PSA-3, Class LT2-Pool-4, Class LT2-PSA-4
and Class LT2-Q Interests to a cap of 0.00%, and by subjecting the rate on each
of the remaining Lower-Tier Interests to a cap that corresponds to the
Certificate Interest Rate for the Corresponding Class of Certificates, provided,
however, that for each Class of Certificates (other than the Class X and Class R
Certificates), the Certificate Interest Rate shall be multiplied by an amount
equal to (a) the actual number of days in the Accrual Period, divided by (b) 30.

Adjustment Date: With respect to any Mortgage Loan, the date on which an
adjustment is made to the Monthly Payment to correspond to an adjustment in the
related Mortgage Note.

Adverse REMIC Event: Either (i) loss of status as a REMIC, within the meaning of
Section 860D of the Code, for any group of assets identified as a REMIC in the
Preliminary Statement to this Agreement, or (ii) imposition of any tax,
including the tax imposed under Section 860F(a)(1) on prohibited transactions,
and the tax imposed under Section 860G(d) on certain contributions to a REMIC,
on any REMIC created hereunder to the extent such tax would be payable from
assets held as part of the Trust Estate.

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

Aggregate Pool Balance: As of any date of determination, an amount equal to the
aggregate of the Pool Balances of Pool 1, Pool 2, Pool 3 and Pool 4 on such
date.

Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.

Ancillary Income: All income derived from the Mortgage Loans, excluding
Servicing Fees attributable to the Mortgage Loans and other amounts treated as
payment proceeds of the Mortgage Loans, including but not limited to, late
charges, fees received with respect to checks or bank drafts returned by the
related bank for non-sufficient funds, assumption fees, optional insurance
administrative fees and all other incidental fees and charges.

Applied Loss Amount: With respect to any Distribution Date, the amount, if any,
by which (x) the aggregate Certificate Principal Amount of the Certificates
after giving effect to all distributions on such Distribution Date, but before
giving effect to any application of the Applied Loss Amount with respect to such
date, exceeds (y) the Aggregate Pool Balance for such Distribution Date.

Appraised Value: With respect to any Mortgaged Property, the value thereof as
determined by an appraisal made for the originator of the Mortgage Loan at the
time of origination of the Mortgage Loan by an appraiser who met the
requirements of the Servicer and Fannie Mae, or as determined by use of an
automated valuation model.

 

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

Authorized Officer: Any Person who may execute an Officer’s Certificate on
behalf of the Trust.

Back-up Certification: As defined in Section 8.03.

Bankruptcy: As to any Person, the making of an assignment for the benefit of
creditors, the filing of a voluntary petition in bankruptcy, adjudication as a
bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the Bankruptcy Code, or any other similar state laws.

Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.

Bankruptcy Loss: Any loss resulting from a bankruptcy court, in connection with
a personal bankruptcy of a borrower, (1) establishing the value of a Mortgaged
Property at an amount less than the Outstanding Principal Balance of the
Mortgage Loan secured by such Mortgaged Property or (2) reducing the amount of
the Monthly Payment on the related Mortgage Loan, in each case, as reported by
the Servicer to the Master Servicer.

Book-Entry Certificates: Beneficial interests in Certificates designated as
“Book-Entry Certificates” in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 6.02; provided, that after the occurrence of a condition
whereupon Definitive Certificates are to be issued to Certificate Owners, such
Book-Entry Certificates shall no longer be “Book-Entry Certificates.” In no
event shall the Residual Certificates be designated as Book-Entry Certificates.

Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day on
which banking institutions in New York, New York or, if other than New York, the
city in which the Corporate Trust Office of the Trustee is located, or the
States of Delaware, Georgia, Maryland, Massachusetts, Minnesota or Texas are
authorized or obligated by law or executive order to be closed.

Carryforward Interest: With respect to any Distribution Date and each Class of
Senior or Subordinate Certificates, the sum of (i) the amount, if any, by which
(x) the sum of (A) Current Interest for such Class for the immediately preceding
Distribution Date and (B) any unpaid

 

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Carryforward Interest for such Class from previous Distribution Dates exceeds
(y) the amount distributed in respect of interest on such Class on such
immediately preceding Distribution Date, and (ii) interest on such amount for
the related Accrual Period at the applicable Certificate Interest Rate.

Certificate: Any one of the certificates signed and countersigned by the
Securities Administrator in substantially the forms attached hereto as Exhibit
A.

Certificate Account: The account maintained by the Securities Administrator in
accordance with the provisions of Section 6.07.

Certificate Interest Rate: With respect to each Distribution Date and each Class
of Senior Certificates, the weighted average Net Mortgage Rate of the Mortgage
Loans in the related Mortgage Pool, weighted on the basis of the Scheduled
Principal Balances of the related Mortgage Loans, minus 0.15%. With respect to
each Distribution Date and each Class of Subordinate Certificates, the weighted
average of the per annum interest rate determined for each Mortgage Pool
pursuant to the preceding sentence, weighted on the basis of the excess, if any,
of the aggregate Scheduled Principal Balance of the Mortgage Loans in each
Mortgage Pool as of the related Due Date over the aggregate Class Principal
Amount of the Senior Certificates related to such Mortgage Pool immediately
before the related Distribution Date.

Certificate of Trust: The certificate of trust filed with the Delaware Secretary
of State in respect of the Trust pursuant to Section 3810 of the DSTS.

Certificate Owner: With respect to a Book-Entry Certificate, the Person who is
the owner of such Book-Entry Certificate, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).

Certificate Principal Amount: With respect to any Senior or Subordinate
Certificate, the initial Certificate Principal Amount thereof on the Closing
Date, less the amount of all principal distributions previously distributed with
respect to such Certificate and any Applied Loss Amount previously allocated to
such Certificate; provided, however, that on each Distribution Date on which a
Subsequent Recovery is distributed, the Certificate Principal Amount of any
Certificate whose Certificate Principal Amount has previously been reduced by
application of Applied Loss Amounts will be increased, in order of seniority, by
an amount (to be applied pro rata to all Certificates of such Class) equal to
the lesser of (1) any Deferred Amount for each such Class immediately prior to
such Distribution Date and (2) the total amount of any Subsequent Recovery
distributed on such Distribution Date to Certificateholders, after application
(for this purpose) to any more senior Classes of Certificates. The Class X and
Class R Certificates are issued without Certificate Principal Amounts.

Certificate Register and Certificate Registrar: The register maintained and the
registrar appointed pursuant to Section 6.02.

Certificateholder: The meaning provided in the definition of “Holder.”

 

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Certification Parties: As defined in Section 8.03.

Certifying Person: As defined in Section 8.03.

Civil Relief Act: The Servicemembers Civil Relief Act, as such may be amended
from time to time, and any similar state or local laws.

Class: All Certificates and, in the case of REMIC 1 and REMIC 2, all Lower Tier
Interests, bearing the same class designation.

Class A Principal Distribution Amount: With respect to any Distribution Date on
or after the Stepdown Date, as long as a Trigger Event has not occurred with
respect to such Distribution Date, an amount equal to the excess of (x) the
aggregate Class Principal Amount of the Senior Certificates immediately prior to
such Distribution Date over (y) the Class A Target Amount.

Class A Target Amount: The lesser of (A) the product of (i) 87.30% and (ii) the
aggregate Scheduled Principal Balance of the Mortgage Loans as of the last day
of the related Collection Period and (B) the aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Collection
Period minus the Overcollateralization Floor.

Class B-1 Principal Distribution Amount: With respect to any Distribution Date
on or after the Stepdown Date, as long as a Trigger Event has not occurred with
respect to such Distribution Date, an amount equal to the lesser of (x) the
remaining Principal Distribution Amount for that Distribution Date after payment
of the Class A Principal Distribution Amount, the Class M-1 Principal
Distribution Amount and the Class M-2 Principal Distribution Amount and (y) the
excess, if any, of (A) the sum of (1) the aggregate Class Principal Amount of
the Senior Certificates (after taking into account the payment of the Class A
Principal Distribution Amount for such Distribution Date), (2) the Class
Principal Amount of the Class M-1 Certificates (after taking into account the
payment of the Class M-1 Principal Distribution Amount for such Distribution
Date), (3) the Class Principal Amount of the Class M-2 Certificates (after
taking into account the payment of the Class M-2 Principal Distribution Amount
for such Distribution Date) and (4) the Class Principal Amount of the Class B-1
Certificates immediately prior to such Distribution Date, over (B) the Class B-1
Target Amount.

Class B-1 Target Amount: The lesser of (a) the product of (i) approximately
97.70% and (ii) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Collection Period, and (b) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Collection Period minus the Overcollateralization Floor.

Class M-1 Principal Distribution Amount: With respect to any Distribution Date
on or after the Stepdown Date, as long as a Trigger Event has not occurred with
respect to such Distribution Date, an amount equal to the lesser of (x) the
remaining Principal Distribution Amount for that Distribution Date after payment
of the Class A Principal Distribution Amount and (y) the excess, if any, of
(A) the sum of (1) the aggregate Class Principal Amount of the Senior
Certificates (after taking into account the payment of the Class A Principal
Distribution Amount for such Distribution Date) and (2) the Class Principal
Amount of the Class M-1 Certificates immediately prior to such Distribution
Date, over (B) the Class M-1 Target Amount.

 

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Class M-1 Target Amount: The lesser of (a) the product of (i) approximately
93.46% and (ii) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Collection Period, and (b) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Collection Period minus the Overcollateralization Floor.

Class M-2 Principal Distribution Amount: With respect to any Distribution Date
on or after the Stepdown Date, as long as a Trigger Event has not occurred with
respect to such Distribution Date, an amount equal to the lesser of (x) the
remaining Principal Distribution Amount for that Distribution Date after payment
of the Class A Principal Distribution Amount and the Class M-1 Principal
Distribution Amount and (y) the excess, if any, of (A) the sum of (1) the
aggregate Class Principal Amount of the Senior Certificates (after taking into
account the payment of the Class A Principal Distribution Amount for such
Distribution Date), (2) the Class Principal Amount of the Class M-1 Certificates
(after taking into account the payment of the Class M-1 Principal Distribution
Amount for such Distribution Date) and (3) the Class Principal Amount of the
Class M-2 Certificates immediately prior to such Distribution Date, over (B) the
Class M-2 Target Amount.

Class M-2 Target Amount: The lesser of (a) the product of (i) approximately
96.12% and (ii) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the last day of the related Collection Period, and (b) the aggregate
Scheduled Principal Balance of the Mortgage Loans as of the last day of the
related Collection Period minus the Overcollateralization Floor.

Class Principal Amount: With respect to each Class of Certificates (other than
the Class X and Class R Certificates), the aggregate Certificate Principal
Amount of all Certificates of that Class. With respect to the Class X and Class
R Certificates, zero. With respect to any Lower Tier Interest, the initial Class
Principal Amount as shown or described in the table set forth in the Preliminary
Statement to this Agreement for the issuing REMIC, as reduced by principal
distributed with respect to such Lower Tier Interest and Realized Losses
allocated to such Lower Tier Interest.

Class R Certificate: Each Class R Certificate executed by the Securities
Administrator, and authenticated and delivered by the Certificate Registrar,
substantially in the form annexed hereto as Exhibit A and evidencing the
ownership of the Class LT1-R Interest, the Class LT2-R Interest and the residual
interest in the Upper Tier REMIC.

Class X Distributable Amount: With respect to any Distribution Date, the amount
of interest that has accrued on the Class X Notional Amount, as described in the
Preliminary Statement, but that has not been distributed prior to such date. In
addition, such amount shall include the initial Overcollateralization Amount of
$4,795,241.74 to the extent such amount has not been distributed on an earlier
Distribution Date as part of the Overcollateralization Release Amount.

Class X Notional Amount: With respect to any Distribution Date (and the related
Accrual Period) the aggregate principal balance of the regular interests in
REMIC 2 as specified in the Preliminary Statement hereto.

 

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Clearing Agency: An organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act, as amended. As of the Closing Date, the
Clearing Agency shall be The Depository Trust Company.

Closing Date: March 31, 2006.

Code: The Internal Revenue Code of 1986, as amended.

Collection Account: A separate account maintained by the Master Servicer
established in the name of the Trustee and for the benefit of the
Certificateholders pursuant to Section 5.06.

Collection Period: With respect to any Distribution Date, the one-month period
commencing on the second day of the calendar month immediately preceding the
month in which such Distribution Date occurs and ending on the first day of the
month in which such Distribution Date occurs.

Commission: The United States Securities and Exchange Commission.

Compensating Interest Payment: With respect to any Distribution Date, payments
made by the Servicer or the Master Servicer in an amount equal to the lesser of
(x) the aggregate Prepayment Interest Shortfall Amount with respect to such
Distribution Date and (y) the aggregate Servicing Fee payable to the Servicer or
the aggregate master servicing compensation payable to the Master Servicer, as
applicable, in respect of such Distribution Date.

Condemnation Proceeds: All awards of settlements in respect of a Mortgaged
Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation, to the extent not required to be
released to a Mortgagor in accordance with the terms of the related mortgage
loan documents.

Control: The meaning specified in Section 8-106 of the Delaware UCC.

Corporate Trust Office: With respect to (i) the Securities Administrator and the
Certificate Registrar, the principal corporate trust office of the Securities
Administrator which, for purposes of presentment of Certificates for transfer
and exchange and final payment, is located at Wells Fargo Bank, N.A., Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479, and for all other
purposes is located at P.O. Box 98, Columbia, Maryland 21046 (or for overnight
deliveries, at 9062 Old Annapolis Road, Columbia, Maryland 21045), Attention:
Client Manager (HomeBanc 2006-1); and (iii) the Trustee, the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of execution of this Agreement is
located at One Federal Street, 3rd Floor, Boston, Massachusetts 02110,
Attention: Corporate Trust Office Trust Services/HomeBanc 2006-1, or at such
other address as the Trustee may designate from time to time by notice to the
Certificateholders, or the principal corporate trust office of any successor
Trustee at the address designated by such successor Trustee by notice to the
Certificateholders.

Corresponding Class: The Class of Certificates that corresponds to a class of
interests in REMIC 2 as provided in the Preliminary Statement.

 

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Cumulative Loss Trigger Event: A Cumulative Loss Trigger Event shall have
occurred with respect to any Distribution Date beginning in April 2009 if the
fraction, expressed as a percentage, obtained by dividing (x) the aggregate
amount of Realized Losses incurred on the Mortgage Loans from the Cut-off Date
through the last day of the related Collection Period by (y) the Cut-off Date
Balance, exceeds the applicable percentage described below with respect to such
Distribution Date:

 

Distribution Date

   Loss Percentage  

April 2008 through March 2009

   0.65 %

April 2009 through March 2010

   0.75 %

April 2010 through March 2011

   1.00 %

April 2011 through March 2012

   1.25 %

April 2012 and thereafter

   1.40 %

Current Interest: With respect to each Class of Certificates (other than the
Class X and Class R Certificates) and any Distribution Date, the aggregate
amount of interest accrued at the applicable Certificate Interest Rate during
the related Accrual Period on the Class Principal Amount of such Class
immediately prior to such Distribution Date.

Custodial Account: The separate custodial account (other than an Escrow Account)
established and maintained by the Servicer pursuant to Section 4.02(d) of this
Agreement.

Custodial Agreement: The custodial agreement dated as of March 1, 2006, relating
to the custody of certain of the Mortgage Loans, among the Custodian, the Master
Servicer, the Depositor and the Trustee.

Custodian: The custodian appointed pursuant to the Custodial Agreement, and any
successor thereto. The initial Custodian is JPMorgan Chase Bank, National
Association.

Custodian Fee: The annual ongoing fee payable by the Master Servicer on behalf
of the Trust to the Custodian from income on funds held in the Collection
Account as provided in Section 5.07 and pursuant to the terms of the separate
fee letter agreement for HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through
Certificates.

Cut-off Date: March 1, 2006.

Cut-off Date Balance: $456,640,240.74.

Deferred Amount: With respect to any Distribution Date and each Class of the
Senior and Subordinate Certificates, the amount by which (x) the aggregate of
Applied Loss Amounts previously applied in reduction of the Class Principal
Amount thereof pursuant to Section 6.09 hereof exceeds (y) the sum of (1) the
aggregate of amounts previously reimbursed in respect thereof and (2) the amount
by which the Class Principal Amount of such Certificate has been increased due
to any Subsequent Recovery.

 

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Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
Mortgaged Property by a court of competent jurisdiction in an amount less than
the unpaid principal balance of the Mortgage Loan secured by such Mortgaged
Property.

Definitive Certificate: A Certificate of any Class issued in definitive, fully
registered, certificated form.

Delaware Trustee: Wilmington Trust Company, not in its individual capacity but
solely as trustee, and its successors and assigns.

Delaware Trustee Fee: The annual ongoing fee payable by the Master Servicer on
behalf of the Trust to the Delaware Trustee from income on funds held in the
Collection Account.

Delaware UCC: The Uniform Commercial Code as in effect in the State of Delaware.

Deleted Mortgage Loan: A Mortgage Loan that is repurchased from the Trust Estate
pursuant to the terms hereof or as to which one or more Qualifying Substitute
Mortgage Loans are substituted therefor.

Delinquency Event: A Delinquency Event shall have occurred with respect to any
Distribution Date if the Rolling Three Month Delinquency Rate as of the last day
of the immediately preceding calendar month equals or exceeds 36% of the Senior
Enhancement Percentage for the prior Distribution Date.

Delinquency Rate: With respect to any calendar month, the fraction, expressed as
a percentage, the numerator of which is the aggregate Scheduled Principal
Balance of all Mortgage Loans 60 days Delinquent or more (including all
foreclosures, bankruptcies and REO Properties) as of the close of business on
the last day of such month and as reported by the Servicer to the Master
Servicer, and the denominator of which is the Pool Balance as of the close of
business on the last day of such month.

Delinquent: For reporting purposes, in accordance with the MBA method, a
Mortgage Loan is “delinquent” when any payment contractually due thereon has not
been made by the close of business on the Due Date therefor. Such Mortgage Loan
is “30 days Delinquent” if such payment has not been received by the close of
business on the corresponding day of the month immediately succeeding the month
in which such payment was first due, or, if there is no such corresponding day
(e.g., as when a 30-day month follows a 31-day month in which a payment was due
on the 31st day of such month), then on the last day of such immediately
succeeding month. Similarly for “60 days Delinquent” and the second immediately
succeeding month and “90 days Delinquent” and the third immediately succeeding
month.

Depositor: HMB Acceptance Corp., a Delaware corporation.

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

 

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Depository Agreement: The agreement dated March 31, 2006, between the Trust and
The Depository Trust Company, as the initial Clearing Agency, relating to the
Book-Entry Certificates.

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

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

Disqualified Non-U.S. Person: With respect to a Class R Certificate, any
Non-U.S. Person or agent thereof other than (i) a Non-U.S. Person that holds the
Class R Certificate in connection with the conduct of a trade or business within
the United States and has furnished the transferor and the Securities
Administrator with an effective IRS Form W-8ECI or (ii) a Non-U.S. Person that
has delivered to both the transferor and the Securities Administrator an opinion
of a nationally recognized tax counsel to the effect that the transfer of the
Class R Certificate to it is in accordance with the requirements of the Code and
the regulations promulgated thereunder and that such transfer of the Class R
Certificate will not be disregarded for federal income tax purposes.

Disqualified Organization: A “disqualified organization” as defined in
Section 860E(e)(5) of the Code.

Distribution Date: The 25th day of each month or, if such 25th day is not a
Business Day, the next succeeding Business Day, commencing in April 2006.

Due Date: With respect to each Mortgage Loan, the day of the month each Monthly
Payment is due.

Eligible Account: Either (i) an account or accounts maintained with a federal or
state chartered depository institution or trust company that complies with the
definition of Eligible Institution or (ii) an account or accounts the deposits
in which are insured by the FDIC to the limits established by such corporation,
provided that any such deposits not so insured shall be maintained in an account
at a depository institution or trust company whose commercial paper or other
short term debt obligations (or, in the case of a depository institution or
trust company which is the principal subsidiary of a holding company, the
commercial paper or other short term debt or deposit obligations of such holding
company or depository institution, as the case may be) have been rated by each
Rating Agency in its highest short-term rating category, or (iii) a segregated
trust account or accounts (which shall be a “special deposit account”)
maintained with the Securities Administrator or any other federal or state
chartered depository institution or trust company, acting in its fiduciary
capacity, in a manner acceptable to the Rating Agencies. Eligible Accounts may
bear interest.

 

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Eligible Institution: Any of the following:

(i) An institution whose:

(A) commercial paper, short-term debt obligations, or other short-term deposits
are rated at least “A-1+” and “P-1” or long-term unsecured debt obligations are
rated at least “AA-” or “Aa3” by S&P and Moody’s, respectively (or assigned
comparable ratings by the other Rating Agencies), if the amounts on deposit are
to be held in the account for no more than 365 days; or

(B) commercial paper, short-term debt obligations, demand deposits, or other
short-term deposits are rated at least “A-2” and “P-1” by S&P and Moody’s,
respectively (or assigned comparable ratings by the other Rating Agencies), if
the amounts on deposit are to be held in the account for no more than 30 days
and are not intended to be used as credit enhancement. Upon the loss of the
required rating set forth in this clause (ii), the accounts shall be transferred
immediately to accounts which have the required rating. Furthermore, commingling
by the Servicer is acceptable at the A-2 and P-1 rating level if the Servicer is
a bank, thrift or depository and provided the Servicer has the capability to
immediately segregate funds and commence remittance to an Eligible Account upon
a downgrade; or

(ii) the corporate trust department of a federal depositor institution or
state-chartered depositor institution subject to regulations regarding fiduciary
funds on deposit similar to Title 12 of the U.S. Code of Federal Regulation
Section 9.10(b), which, in either case, has corporate trust powers and is acting
in its fiduciary capacity.

Eligible Investments: Any one or more of the following obligations or
securities:

(i) direct obligations of, and obligations fully guaranteed as to timely payment
of principal and interest by, the United States of America or any agency or
instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America (“Direct
Obligations”);

(ii) federal funds, or demand and time deposits in, certificates of deposits of,
or bankers’ acceptances issued by, any depository institution or trust company
(including U.S. subsidiaries of foreign depositories and the Trustee or the
Securities Administrator or any agent of the Trustee or the Securities
Administrator, acting in its respective commercial capacity) incorporated or
organized under the laws of the United States of America or any state thereof
and subject to supervision and examination by federal or state banking
authorities, so long as at the time of investment or the contractual commitment
providing for such investment the commercial paper or other short-term debt
obligations of such depository institution or trust company (or, in the case of
a depository institution or trust company which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt or deposit
obligations of such holding company or deposit institution, as the case may be)
have been rated by each Rating Agency in its highest short-term rating category
or one of its two highest long-term rating categories;

(iii) repurchase agreements collateralized by Direct Obligations or securities
guaranteed by Ginnie Mae, Fannie Mae or Freddie Mac with any registered
broker/dealer subject to Securities Investors’ Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated by each
Rating Agency in its highest short-term rating category, provided that both
parties to the transaction treat it as a secured borrowing under FAS 140.

 

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(iv) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state thereof
which have a credit rating from each Rating Agency, at the time of investment or
the contractual commitment providing for such investment, at least equal to one
of the two highest long-term credit rating categories of each Rating Agency;
provided, however, that securities issued by any particular corporation will not
be Eligible Investments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by such corporation and
held as part of the Trust Estate to exceed 20% of the sum of the Pool Balance
and the aggregate principal amount of all Eligible Investments in the Collection
Account; provided, further, that such securities will not be Eligible
Investments if they are published as being under review with negative
implications from any Rating Agency;

(v) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than 180 days after the date of issuance thereof) rated by each Rating
Agency in its highest short-term rating category;

(vi) a Qualified GIC;

(vii) certificates or receipts representing direct ownership interests in future
interest or principal payments on obligations of the United States of America or
its agencies or instrumentalities (which obligations are backed by the full
faith and credit of the United States of America) held by a custodian in
safekeeping on behalf of the holders of such receipts; and

(viii) any other demand, money market, common trust fund or time deposit or
obligation, or interest-bearing or other security or investment (including those
managed or advised by the Trustee, the Master Servicer, the Securities
Administrator, or any Affiliate thereof), provided that the security or
investment is with the limitations of paragraph 35.c(6) of FAS 140 and (A) rated
in the highest rating category by each Rating Agency or (B) that would not
adversely affect the then current rating assigned by each Rating Agency of any
of the Certificates. Such investments in this subsection (viii) may include
money market mutual funds or common trust fund, including any fund for which
Wells Fargo Bank, N.A. (the “Bank”) in its capacity other than as the Master
Servicer, the Securities Administrator or an affiliate thereof serves as an
investment advisor, administrator, shareholder servicing agent, and/or custodian
or subcustodian, notwithstanding that (x) the Bank, the Trustee, the Master
Servicer or any affiliate thereof charges and collects fees and expenses from
such funds for services rendered, (y) the Bank, the Trustee, the Securities
Administrator, the Master Servicer or any affiliate thereof charges and collects
fees and expenses for services rendered pursuant to this Agreement, and
(z) services performed for such funds and pursuant to this Agreement may
converge at any time. The Bank or an affiliate thereof is specifically
authorized to charge and collect from the Trust Estate such fees as are
collected from all investors in such funds for services rendered to such funds
(but not to exceed investment earnings thereon);

 

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provided, however, that no such instrument shall be an Eligible Investment if
such instrument evidences either (i) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (ii) 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 of greater than 120% of the yield to
maturity at par of such underlying obligations, provided that any such
investment will be a “permitted investment” within the meaning of
Section 860G(a)(5) of the Code.

Entitlement Holder: The meaning specified in Section 8-102(a)(7) of the Delaware
UCC.

Entitlement Order: The meaning specified in Section 8-102(a)(8) of the Delaware
UCC (i.e., generally, orders directing the transfer or redemption of any
Financial Asset).

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

ERISA-Qualifying Underwriting: A best efforts or firm commitment underwriting or
private placement that meets the requirements of an Underwriter’s Exemption.

ERISA-Restricted Certificates: Each of the Class M-2, Class B-1, Class X and
Class R Certificates and any Certificate that is not rated at least either
“BBB-” or “Ba3” at the time of its acquisition.

Errors and Omissions Insurance: Errors and Omissions Insurance to be maintained
by the Servicer in accordance with Section 4.02.

Escrow Account: The separate escrow account (other than a Custodial Account)
established and maintained by the Servicer pursuant to Section 4.02(f) of this
Agreement.

Escrow Payments: With respect to any Mortgage Loan, the amounts constituting
ground rents, taxes, assessments, water rates, sewer rents, municipal charges,
mortgage insurance premiums, fire and hazard insurance premiums, condominium
charges, and any other payments required to be escrowed by the Mortgagor with
the mortgagee pursuant to the Mortgage or any other document.

Event of Default: Any Master Servicer Event of Default or Servicer Event of
Default.

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

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

Fannie Mae Guide(s): The Fannie Mae Selling Guide and the Fannie Mae Servicing
Guide and all amendments or additions thereto.

FAS 140: Statement of Financial Accounting Standards No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.

 

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

FHA Regulations: Regulations promulgated by HUD under the National Housing Act,
codified in 24 Code of Federal Regulations, and other HUD issuances relating to
FHA loans, including the related handbooks, circulars, notices and mortgagee
letters.

Final Scheduled Distribution Date: With respect to each Class of Certificates,
the Distribution Date occurring in April 2037.

Financial Asset: The meaning specified in Section 8-102(a) of the Delaware UCC.

FHA: United States Federal Housing Administration.

Final Certification: As defined in Section 2.02(c).

Fitch: Fitch, Inc., or any successor in interest.

Form 8-K Disclosure Information: As defined in Section 8.04(c).

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

Ginnie Mae: The Government National Mortgage Association, a wholly owned
corporate instrumentality of the United States within HUD.

Gross Margin: With respect to a Mortgage Loan, a fixed percentage amount
specified in the related mortgage note that is added to an index to determine
the related Mortgage Rate.

Group 1 Certificates: The Class 1-A-1 and Class 1-A-2 Certificates.

Group 2 Certificates: The Class 2-A-1 and Class 2-A-2 Certificates.

Group 3 Certificates: The Class 3-A-1, Class 3-A-2 and Class 3-A-3 Certificates.

Group 4 Certificates: The Class 4-A-1 and Class 4-A-2 Certificates.

Guidelines: As defined in Section 4.02(p).

Holder or Certificateholder: The registered owner of any Certificate as recorded
on the books of the Certificate Registrar except that, solely for the purposes
of taking any action or giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor, the Trustee, the Securities
Administrator, the Master Servicer, the Servicer, any Subservicer retained by
the Servicer, or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Trustee and
the Securities Administrator shall be protected in relying upon any such
consent, only Certificates which a

 

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Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the
Depositor, the Securities Administrator, the Master Servicer or the Servicer in
determining whether any Certificates are registered to an Affiliate of the
Depositor, the Securities Administrator, the Master Servicer or the Servicer.

HUD: The United States Department of Housing and Urban Development, or any
successor thereto and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.

Independent: When used with respect to any Accountants, a Person who is
“independent” within the meaning of Rule 2-01(b) of the Securities and Exchange
Commission’s Regulation S-X. When used with respect to any other Person, a
Person who (a) is in fact independent of another specified Person and any
Affiliate of such other Person, (b) does not have any material direct financial
interest in such other Person or any Affiliate of such other Person, and (c) is
not connected with such other Person or any Affiliate of such other Person as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.

Index: Either the Six-Month LIBOR Index or the One-Year LIBOR Index.

Initial Certification: As defined in Section 2.02(a).

Initial Deposit: $554,821

Initial Purchase Date: The first Distribution Date following the month in which
the Pool Balance is initially reduced to less than 10% of the Cut-off Date
Balance.

Insurance Policy: Any primary mortgage insurance policy, standard hazard
insurance policy, flood insurance policy, earthquake insurance policy or title
insurance policy relating to the Mortgage Loans or the Mortgaged Properties, to
be in effect as of the Closing Date or thereafter during the term of this
Agreement.

Insurance Proceeds: Any amounts paid by an insurer under a primary mortgage
insurance policy, any standard hazard insurance policy, flood insurance policy,
title insurance policy or any other insurance policy relating to the Mortgage
Loans or related mortgaged properties other than amounts to cover expenses
incurred by the Servicer in connection with procuring such proceeds, applied to
the restoration and repair of the related Mortgaged Property or to be paid to
the borrower pursuant to the related Mortgage Note or state law.

Interest Funds: With respect to any Distribution Date and any Mortgage Pool, the
sum of (1) all interest received or advanced by the Servicer or the Master
Servicer for the related Collection Period and available in the Certificate
Account on that Distribution Date with respect to the related Mortgage Loans,
(2) all Compensating Interest Payments paid with respect to the related Mortgage
Loans that were prepaid during the related Prepayment Period, (3) the portion of
any purchase price or other amount paid with respect to the Mortgage Loans
allocable to interest and (4) with respect to the Distribution Date in April
2006, the Initial Deposit; net of any fees or other amounts reimbursable to the
Master Servicer, the Servicer, the Securities Administrator, the Delaware
Trustee, the Trustee and the Custodian as provided in the Operative Agreements
to the extent allocable to that Mortgage Pool.

 

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Interim Certification: As defined in Section 2.02(b).

Item 1122 Responsible Party: As defined in Section 8.07.

Latest Possible Maturity Date: The Distribution Date occurring in April 2042.

Lender Paid Mortgage Insurance Rate: The Lender Paid Mortgage Insurance Rate
shall be a rate per annum equal to the percentage shown on the Mortgage Loan
Schedule.

Lender Primary Mortgage Insurance Policy or LPMI Policy: Any Primary Mortgage
Insurance Policy for which premiums are paid by the Servicer.

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

Liquidation Expenses: Expenses that are incurred by the Master Servicer or the
Servicer, as applicable, 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 4.02(c), 4.02(j) or 4.02(o).

Liquidation Proceeds: Cash received in connection with the liquidation of a
defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage
Loan, trustee’s sale, foreclosure sale, payment in full, discounted payoff or
otherwise, or the sale of the related REO Property, if the Mortgaged Property is
acquired in satisfaction of the Mortgage Loan.

Loan-to-Value Ratio: With respect to a Mortgage Loan, at any time, the ratio,
expressed as a percentage, of the principal balance of such Mortgage Loan as of
the applicable date of determination, to (a) in the case of a purchase, the
lesser of the sale price of the Mortgaged Property and its appraised value at
the time of sale or (b) in the case of a refinancing or modification, the
appraised value of the Mortgaged Property at the time of the refinancing or
modification.

Lower Tier Interest: As provided in the Preliminary Statement.

Majority Certificateholders: Until such time as the sum of the Class Principal
Amounts of all Classes of Certificates (other than the Class R and Class X
Certificates) has been reduced to zero, the holder or holders of in excess of
50% of the aggregate Class Principal Amount of all Classes of Certificates; and
thereafter, the holder of the Class R Certificate.

Margin: With respect to each adjustable rate Mortgage Loan, the fixed percentage
amount set forth in each related Mortgage Note which is added to the Index in
order to determine the related Mortgage Rate, as set forth in the Mortgage Loan
Schedule.

 

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Master Servicer: Wells Fargo Bank, N.A., or any successor in interest, or if any
successor master servicer shall be appointed as herein provided, then such
successor master servicer.

Master Servicer Errors and Omission Insurance Policy: Any errors and omission
insurance policy required to be obtained by the Master Servicer satisfying the
requirements of Section 5.02.

Master Servicer Event of Default: Any one of the conditions or circumstances
enumerated in Section 9.01(a).

Master Servicer Fidelity Bond: Any fidelity bond to be maintained by the
Servicer in accordance with Section 5.02.

Master Servicer Remittance Date: With respect to each Distribution Date, the
Business Day immediately preceding such Distribution Date.

Material Defect: With respect to any Mortgage Loan, as defined in
Section 2.02(c) hereof.

Maximum Mortgage Rate: The maximum level to which a Mortgage Rate can adjust in
accordance with its terms, regardless of changes in the Index.

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 Mortgage Note.

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

Minimum Lifetime Mortgage Rate: The minimum level to which a Mortgage Rate can
adjust in accordance with its terms, regardless of changes in the Index.

Monthly Advance: An advance made by the Servicer pursuant to Section 4.03(c) or
the Master Servicer pursuant to Section 6.11, as applicable, with respect to
delinquent payments of principal and interest on the Mortgage Loans, adjusted to
the related Net Mortgage Rate.

Monthly Excess Cashflow: With respect to any Distribution Date, the sum of
(1) the Overcollateralization Release Amount for such date, (2) Monthly Excess
Interest for such date and (3) the Monthly Excess Principal for such date.

Monthly Excess Interest: With respect to any Distribution Date, the amount of
Interest Funds remaining after application pursuant to clauses (a) of
Section 6.08.

 

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Monthly Excess Principal: With respect to any Distribution Date, the Principal
Distribution Amount remaining after application pursuant to any of clause (b) of
Section 6.08.

Monthly Payment: With respect to any Mortgage Loan and any month, the scheduled
payment or payments of principal and interest due during such month on such
Mortgage Loan, which either is payable by a mortgagor in such month under the
related mortgage note, or in the case of any Mortgaged Property acquired through
foreclosure or deed-in-lieu of foreclosure, would otherwise have been payable
under the related Mortgage Note, in each case, as reduced by any Bankruptcy
Loss.

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

Mortgage: A mortgage, deed of trust or other instrument encumbering a fee simple
interest in real property securing a Mortgage Note.

Mortgage Bankers’ Blanket Bond: The fidelity bond developed by the Mortgage
Bankers Association of America and its members used to protect a mortgage
lender/servicer against errors and omissions, mortgage impairment and losses
arising from the dishonest, fraudulent and criminal acts of its management and
employees.

Mortgage File: The mortgage documents listed in Section 2.01(b) pertaining to a
particular Mortgage Loan required to be delivered to the Trustee (or the
Custodian) pursuant to this Agreement.

Mortgage Loan: The conventional, adjustable rate, first lien residential
mortgage loans sold by the Seller to the Depositor pursuant to the Mortgage Loan
Purchase Agreement and subsequently transferred by the Depositor to the Trust
Estate pursuant to this Agreement.

Mortgage Loan Documents: As defined in Section 2.01(b).

Mortgage Loan Purchase Agreement: The mortgage loan purchase agreement dated as
of March 1, 2006, between the Seller and the Depositor.

Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which shall
identify each Mortgage Loan, as such schedule may be amended from time to time
to reflect the addition of Mortgage Loans to, or the deletion of Mortgage Loans
from, the Trust. The Depositor shall be responsible for providing the Master
Servicer and the Custodian on behalf of the Trustee with all amendments to the
Mortgage Loan Schedule.

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

Mortgage Pool: A pool of Mortgage Loans in the Trust Estate, including Pool 1,
Pool 2, Pool 3 and Pool 4.

Mortgage Rate: With respect to any Mortgage Loan, its applicable interest rate
determined as provided in the related mortgage note, as reduced by any Relief
Act Reduction.

 

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Mortgaged Property: With respect to any Mortgage Loan, the underlying real
property securing such Mortgage Loan.

Mortgagor: The obligor on a Mortgage Note.

Net Liquidation Proceeds: All amounts, net of (1) unreimbursed expenses and
(2) unreimbursed Monthly Advances and Servicing Advances, received and retained
in connection with the liquidation of defaulted Mortgage Loans, through
Insurance Proceeds or Condemnation Proceeds, by foreclosure or otherwise,
together with any net proceeds received on a monthly basis with respect to any
Mortgaged Properties acquired by foreclosure or deed in lieu of foreclosure.

Net Mortgage Rate: With respect to any Mortgage Loan at any time, the Mortgage
Rate thereof reduced by the Servicing Fee Rate for such Mortgage Loan.

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

Non-Permitted Transferee: A Person other than a Permitted Transferee.

Nonrecoverable Advance: Any advance previously made by the Servicer pursuant to
Section 4.03(c) or by the Master Servicer pursuant to Section 6.11 or any
Servicing Advance which, in the good faith judgment of the Servicer or the
Master Servicer, as applicable, may not be ultimately recoverable by the
Servicer or the Master Servicer from Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or otherwise. The determination by the Servicer or the
Master Servicer, as applicable, that it has made a Nonrecoverable Advance, shall
be evidenced by an Officer’s Certificate of the Servicer or the Master Servicer,
as applicable, delivered to the Trustee and the Master Servicer (in the case of
the Servicer) and detailing the reasons for such determination

Offering Document: The Prospectus.

Officer’s Certificate: A certificate signed by the Chairman of the Board, any
Vice Chairman, the President, any Executive Vice President, any Senior Vice
President, any Vice President or any Assistant Vice President of a Person.

One-Year LIBOR Index: The interbank offered rates for twelve-month United States
dollar deposits in the London market, calculated as provided in the related
mortgage note.

Operative Agreements: This Agreement, the Mortgage Loan Purchase Agreement, the
Custodial Agreement, the Depository Agreement and each other document
contemplated by any of the foregoing to which the Depositor, the Seller, the
Master Servicer, the Servicer, the Securities Administrator, the Delaware
Trustee, the Trustee or the Custodian is a party.

Opinion of Counsel: A written opinion of counsel, reasonably acceptable in form
and substance to the Seller, the Securities Administrator, the Trustee and/or
the Master Servicer, as applicable, and who may be in-house or outside counsel
to the Seller, the Servicer, the Depositor, the Master Servicer, the Securities
Administrator or the Trustee but which must be Independent outside counsel with
respect to any such opinion of counsel concerning federal income tax or ERISA
matters.

 

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Original Trust Agreement: The trust agreement, dated as of March 24, 2006, among
the Depositor, the Trustee and the Delaware Trustee.

Outstanding Principal Balance: With respect to a Mortgage Loan, the principal
balance of such Mortgage Loan remaining to be paid by the borrower or, in the
case of an REO Property, the principal balance of the related Mortgage Loan
remaining to be paid by the borrower at the time such property was acquired by
or on behalf of the Trust.

Overcollateralization Amount: With respect to any Distribution Date, the amount,
if any, by which (1) the aggregate Scheduled Principal Balance of the Mortgage
Loans exceeds (2) the aggregate Class Principal Amount of the Senior and
Subordinate Certificates as of such Distribution Date after giving effect to the
reduction on such Distribution Date of the Class Principal Amounts of the Senior
and Subordinate Certificates resulting from the distribution of Principal Funds
for each Mortgage Pool on such Distribution Date.

Overcollateralization Deficiency: With respect to any Distribution Date, the
amount, if any, by which (1) the Overcollateralization Target Amount for such
Distribution Date exceeds (2) the Overcollateralization Amount for such
Distribution Date, calculated for this purpose after giving effect to the
reduction on such Distribution Date of the Class Principal Amounts of the
Certificates resulting from the payment of Principal Funds for each Mortgage
Pool on such Distribution Date.

Overcollateralization Floor: Approximately 0.35% of the Cut-off Date Balance.

Overcollateralization Release Amount: With respect to any Distribution Date, the
lesser of (x) the aggregate Principal Funds for all Mortgage Pools for such
Distribution Date and (y) the excess, if any, of (1) the Overcollateralization
Amount for such Distribution Date (assuming that 100% of such Principal Funds is
applied as a principal; payment on such Distribution Date) over (2) the
Overcollateralization Target Amount for such Distribution Date (with the amount
determined pursuant to this clause (y) deemed to be $0 if the
Overcollateralization Amount is less than or equal to the Overcollateralization
Target Amount on that Distribution Date).

Overcollateralization Target Amount: With respect to any Distribution Date
(a) prior to the Stepdown Date, approximately 1.15% of the aggregate Scheduled
Principal Balance of the Mortgage Loans as of the Cut-off Date, (b) on or after
the Stepdown Date and if a Trigger Event is not in effect, the greater of
(i) approximately 2.30% of the then current aggregate Scheduled Principal
Balance of the Mortgage Loans as of the last day of the related Collection
Period and (ii) the Overcollateralization Floor and (c) on or after the Stepdown
Date and if a Trigger Event is in effect, the Overcollateralization Target
Amount for the immediately preceding Distribution Date.

 

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

Payahead: Any Monthly Payment intended by the related borrower to be applied in
a Collection Period subsequent to the Collection Period in which such payment
was received.

Paying Agent: Initially, the Securities Administrator, in its capacity as paying
agent under this Agreement, or any successor to the Securities Administrator in
such capacity.

PCAOB means the Public Company Accounting Oversight Board.

Percentage Interest: With respect to any Certificate, its percentage interest in
the undivided beneficial ownership interest in the assets of the Trust evidenced
by all Certificates of the same Class as such Certificate. With respect to any
Certificate other than the Class X or Class R Certificates, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
thereof divided by the initial Class Principal Amount of all Certificates of the
same Class. With respect to the Class X and Class R Certificates, the Percentage
Interest evidenced thereby shall be as specified on the face thereof, or
otherwise be equal to 100%.

Periodic Cap: With respect to each Mortgage Loan, the maximum adjustment that
can be made to the Mortgage Rate on each Adjustment Date in accordance with its
terms, regardless of changes in the Index.

Permitted Transferee: Any Person other than (i) the United States, any State or
political subdivision thereof, or any agency or instrumentality of any of the
foregoing, (ii) a foreign government, international organization or any agency
or instrumentality of either of the foregoing, (iii) an organization (except
certain farmers’ cooperatives described in Section 521 of the Code) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Section 860E(c)(1) of the Code) with respect to any
Residual Certificate, (iv) rural electric and telephone cooperatives described
in Section 1381(a)(2)(C) of the Code, (v) a Person that is a Disqualified
Non-U.S. Person or a U.S. Person with respect to whom income from a Residual
Certificate is attributable to a foreign permanent establishment or fixed base,
within the meaning of an applicable income tax treaty, of such Person or any
other U.S. Person, (vi) an “electing large partnership” within the meaning of
Section 775 of the Code and (vii) any other Person so designated by the
Depositor based upon an Opinion of Counsel that the Transfer of an Ownership
Interest in a Residual Certificate to such Person may cause any REMIC to fail to
qualify as a REMIC at any time that the Certificates are outstanding. The terms
“United States”, “State” and “international organization” shall have the
meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of Freddie Mac, a majority
of its board of directors is not selected by such government unit.

 

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

Pool 1: The aggregate of the Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.

Pool 2: The aggregate of the Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.

Pool 3: The aggregate of the Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 3.

Pool 4: The aggregate of the Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 4.

Pool Balance: With respect to each Mortgage Pool, as of any date of
determination, the aggregate Scheduled Principal Balance of the Mortgage Loans
in that Mortgage Pool as of such date.

Pool Percentage: With respect to each Mortgage Pool and any Distribution Date,
the fraction, expressed as a percentage, the numerator of which is the Pool
Balance for such Mortgage Pool for such date and the denominator of which is the
Aggregate Pool Balance for such date.

Prepayment Interest Shortfall: The amount by which one month’s interest at the
Mortgage Rate (as reduced by the Servicing Fee Rate) on a Mortgage Loan as to
which a voluntary prepayment has been made exceeds the amount of interest
actually received in connection with such prepayment.

Prepayment Period: With respect to any Distribution Date, the immediately
preceding calendar month.

Primary Mortgage Insurance Policy: Any primary mortgage guaranty insurance
policy issued in connection with a Mortgage Loan which provides compensation to
a Mortgage Note holder in the event of default by the obligor under such
Mortgage Note or the related Mortgage, or any replacement policy therefor
through the related Accrual Period for such Class relating to a Distribution
Date.

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

Principal Distribution Amount: With respect to any Distribution Date and any
Mortgage Pool, the Principal Funds for such Mortgage Pool for such Distribution
Date minus (b) the Overcollateralization Release Amount attributable to such
Mortgage Pool (based on the Pool Percentage).

 

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Principal Funds: With respect to any Distribution Date and any Mortgage Pool,
the sum of (1) the principal portion of all scheduled monthly payments on the
related Mortgage Loans due on the related Due Date, to the extent received or
advanced; (2) the principal portion of all proceeds of the repurchase of a
Mortgage Loan from that Mortgage Pool (or, in the case of a substitution,
certain amounts representing a principal adjustment) as required by the Mortgage
Loan Purchase Agreement during the preceding calendar month; and (3) the
principal portion of all other unscheduled collections received during the
preceding calendar month in respect of the related Mortgage Loans, including
full and partial prepayments, the proceeds of any purchase of Mortgage Loans by
the Seller or the Servicer, Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds; net of any fees payable to, and other amounts reimbursable
to, the Master Servicer, the Servicer, the Securities Administrator, the
Delaware Trustee, the Trustee and the Custodian as provided in the Operative
Agreements (to the extent not reimbursed from Interest Funds) to the extent
allocable to that Mortgage Pool.

Principal Prepayment: Any payment or other recovery of principal on a Mortgage
Loan which is received in advance of its scheduled Due Date to the extent that
it is not accompanied by an amount as to interest representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment, including Insurance Proceeds and Repurchase Proceeds, but
excluding the principal portion of Net Liquidation Proceeds received at the time
a mortgage loan becomes a Liquidated Mortgage Loan.

Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.

Prospectus: The prospectus supplement dated March 29, 2006, together with the
accompanying prospectus dated March 28, 2006, relating to the Class 1-A-1, Class
1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class 3-A-2, Class 3-A-3, Class
4-A-1 and Class 4-A-2 Certificates.

Purchase Price: With respect to the purchase of a Mortgage Loan or related REO
Property pursuant to this Agreement, an amount equal to the sum of (a) 100% of
the unpaid principal balance of such Mortgage Loan, (b) accrued interest thereon
at the applicable Mortgage Rate, from the date as to which interest was last
paid to (but not including) the Due Date in the Collection Period immediately
preceding the related Distribution Date, (c) the amount of any costs and damages
incurred by the Trust in connection with any violation of any applicable
federal, state or local predatory or abusive lending law in connection with the
origination of such Mortgage Loan and (d) the fair market value of all other
property being purchased. The Servicer and the Master Servicer shall be
reimbursed from the Purchase Price for any Mortgage Loan or related REO Property
for any Monthly Advances and Servicing Advances made or other amounts advanced
with respect to such Mortgage Loan that are reimbursable to the Servicer or the
Master Servicer under this Agreement, together with any accrued and unpaid
compensation due to the Servicer or the Master Servicer hereunder.

Qualified GIC: A guaranteed investment contract or surety bond providing for the
investment of funds in the Collection Account and insuring a minimum, fixed or
floating rate of return on investments of such funds, which contract or surety
bond shall:

(i) be an obligation of an insurance company or other corporation whose
long-term debt is rated by each Rating Agency in one of its two highest rating
categories or, if such insurance company has no long-term debt, whose claims
paying ability is rated by each Rating Agency in one of its two highest rating
categories, and whose short-term debt is rated by each Rating Agency in its
highest rating category;

 

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(ii) provide that the Master Servicer on behalf of the Trustee may exercise all
of the rights under such contract or surety bond without the necessity of taking
any action by any other Person;

(iii) provide that if at any time the then current credit standing of the
obligor under such guaranteed investment contract is such that continued
investment pursuant to such contract of funds would result in a downgrading of
any rating of the Certificates, the Securities Administrator shall terminate
such contract without penalty and be entitled to the return of all funds
previously invested thereunder, together with accrued interest thereon at the
interest rate provided under such contract to the date of delivery of such funds
to the Securities Administrator;

(iv) provide that the Trustee’s interest therein shall be transferable to any
successor trustee hereunder; and

(v) provide that the funds reinvested thereunder and accrued interest thereon be
returnable to the Collection Account not later than the Business Day prior to
any Distribution Date.

Qualified Insurer: An insurance company duly qualified as such under the laws of
the states in which the related Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided and whose claims paying ability is
rated by each Rating Agency in its highest rating category or whose selection as
an insurer will not adversely affect the rating of the Certificates.

Qualifying Substitute Mortgage Loan: A mortgage loan (i) which has an
Outstanding Principal Balance not greater nor materially less than the Mortgage
Loan for which it is to be substituted; (ii) which has a Mortgage Rate and Net
Mortgage Rate not less than, and not materially greater than, such Mortgage
Loan; (iii) which has a maturity date not materially earlier or later than such
Mortgage Loan and not later than the latest maturity date of any Mortgage Loan;
(iv) which is of the same property type and occupancy type as such Mortgage
Loan; (v) with respect to a Mortgage Loan, which has a Loan-to-Value Ratio not
greater than the Loan-to-Value Ratio of such Mortgage Loan; (vi) which is
current in payment of principal and interest as of the date of substitution;
(vii) as to which the payment terms do not vary in any material respect from the
payment terms of the Mortgage Loan for which it is to be substituted and
(viii) which has a Gross Margin and Maximum Mortgage Rate no less than those of
such Mortgage Loan, has the same Index and interval between Adjustment Dates as
such Mortgage Loan, and a Minimum Lifetime Mortgage Rate no lower than that of
such Mortgage Loan.

Rating Agency: Each of Moody’s and S&P.

 

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Realized Loss: With respect to a Mortgage Loan is (1) a Bankruptcy Loss or
(2) as to any Liquidated Mortgage Loan, the unpaid principal balance thereof
plus accrued and unpaid interest thereon at the related Mortgage Rate through
the last day of the month of liquidation less the Net Liquidation Proceeds with
respect to such Mortgage Loan and the related Mortgaged Property.

Record Date: For each class of Certificates and each Distribution Date, will be
the close of business on the last Business Day of the calendar month preceding
such Distribution Date.

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 clarifications and interpretations 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.

Related Class A Principal Distribution Amount: For each Mortgage Pool and for
any Distribution Date on or after the Stepdown Date and for as long as a Trigger
Event is not in effect, an amount equal to the lesser of (x) the aggregate Class
Principal Amount of the Group 1 Certificates (with respect to Pool 1), the
aggregate Class Principal Amount of the Group 2 Certificates (with respect to
Pool 2), the aggregate Class Principal Amount of the Group 3 Certificates (with
respect to Pool 3) or the aggregate Class Principal Amount of the Group 4
Certificates (with respect to Pool 4), immediately prior to that Distribution
Date and (y) the product of (a) the Class A Principal Distribution Amount and
(b) the related Senior Proportionate Percentage, in each case for such date.

Related Senior Clean-up Amount: With respect to any Mortgage Pool and a Senior
Clean-up Event, an amount equal to the aggregate outstanding Class Principal
Amount of the related group of Senior Certificates as of such date after giving
effect to the distribution of Principal Funds relating to such Mortgage Pool.

Related Senior Priority: With respect to the Group 1 Certificates,
Section 6.08(b)(i)(1). With respect to the Group 2 Certificates,
Section 6.08(b)(i)(2). With respect to the Group 3 Certificates,
Section 6.08(b)(i)(3). With respect to the Group 4 Certificates,
Section 6.08(b)(i)(4).

Relevant Servicing Criteria: The Servicing Criteria applicable to each party, as
set forth on Exhibit F attached hereto. Multiple parties can have responsibility
for the same Relevant Servicing Criteria. With respect to a Servicing Function
Participant engaged by the Master Servicer, the Securities Administrator, the
Custodian or the Servicer, the term “Relevant Servicing Criteria” may refer to a
portion of the Relevant Servicing Criteria applicable to such parties.

Relevant UCC: The Uniform Commercial Code as in effect in the applicable
jurisdiction.

 

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Relief Act Reduction: With respect to a Mortgage Loan, a reduction of the
applicable Mortgage Rate by application of the Servicemembers Civil Relief Act
or similar state or local laws.

REMIC: Each pool of assets in the Trust Estate designated as a REMIC pursuant to
the Preliminary Statement.

REMIC 1: As described in the Preliminary Statement.

REMIC 2: As described in the Preliminary Statement.

REMIC 3: As described in the Preliminary Statement.

REMIC Provisions: The provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at sections 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.

REO Property: A Mortgaged Property acquired by the Servicer through foreclosure
or deed-in-lieu of foreclosure in connection with a defaulted Mortgage Loan or
otherwise treated as having been acquired pursuant to the REMIC Provisions.

Reportable Event: As defined in Section 8.04(c).

Reporting Servicer: As defined in Section 8.04(b).

Repurchase Proceeds: The purchase price proceeds in connection with any
repurchase of a Mortgage Loan by the Seller and any cash deposit in connection
with the substitution of a Mortgage Loan.

Request for Release: A request for release in the form attached as Exhibit Seven
to the Custodial Agreement.

Residual Certificate: The Class R Certificate.

Responsible Officer: Any vice president, any assistant vice president, any
assistant secretary, any associate, any assistant treasurer, or any other
officer of the Trustee or the Securities Administrator, as applicable,
customarily performing functions similar to those performed by any of the
above-designated officers and, in each case, having direct responsibility for
the administration of the Operative Agreements and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer’s knowledge of and familiarity with the particular subject.

Restricted Certificates: Each of the Class M-2, Class B-1, Class X and Class R
Certificates.

 

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Rolling Three Month Delinquency Rate: With respect to any Distribution Date, the
average of the Delinquency Rates for each of the three (or one and two, in the
case of the first and second Distribution Dates, respectively) immediately
preceding calendar months.

Rule 144A: Rule 144A of the Securities Act.

S&P: Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., or any
successor in interest.

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

Sarbanes-Oxley Certification: A written certification covering the activities of
all Servicing Function Participants and signed by an officer of the Master
Servicer that complies with (i) the Sarbanes-Oxley Act of 2002, as amended from
time to time, and (ii) Exchange Act Rules 13a-14(d) and 15d-14(d), as in effect
from time to time; provided that if, after the Closing Date (a) the
Sarbanes-Oxley Act of 2002 is amended, (b) the rules referred to in clause
(ii) are modified or superseded by any subsequent statement, rule or regulation
of the Commission or any statement of a division thereof, or (c) any future
releases, rules and regulations are published by the Securities and Exchange
Commission from time to time pursuant to the Sarbanes-Oxley Act of 2002, which
in any such case affects the form or substance of the required certification and
results in the required certification being, in the reasonable judgment of the
Master Servicer, materially more onerous than the form of the required
certification as of the Closing Date, the Sarbanes-Oxley Certification shall be
as agreed to by the Master Servicer, the Depositor and the Seller following a
negotiation in good faith to determine how to comply with any such new
requirements.

Scheduled Principal Balance: With respect to any Mortgage Loan and any
Distribution Date (1) the unpaid principal balance of such mortgage loan as of
the close of business on the related Due Date (giving effect to the principal
payment to be made on such Due Date and irrespective of any delinquency in its
payment), as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
or similar proceeding occurring after the Cut-off Date (other than a Deficient
Valuation) or any moratorium or similar waiver or grace period) less (2) any
Principal Prepayments and the principal portion of any Net Liquidation Proceeds
received during or prior to the immediately preceding Prepayment Period;
provided that the Scheduled Principal Balance of any Liquidated Mortgage Loan is
zero.

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

Securities Administrator: Wells Fargo Bank, N.A., not in its individual capacity
but solely as securities administrator, or any successor in interest.

Securities Intermediary: The Person acting as Securities Intermediary under this
Agreement (which is the Securities Administrator), its successor in interest,
and any successor Securities Intermediary appointed pursuant to Section 6.10.

 

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Security Entitlement: The meaning specified in Section 8-102(a)(17) of the New
York UCC.

Seller: HomeBanc Mortgage Corporation.

Senior Certificates: The Group 1 Certificates, the Group 2 Certificates, the
Group 3 Certificates and the Group 4 Certificates.

Senior Clean-up Event: A Senior Clean-up Event will have occurred with respect
to any Distribution Date and group of Senior Certificates if the aggregate
Outstanding Principal Balance of the Mortgage Loans in the related Mortgage Pool
have been reduced to zero and the aggregate Class Principal Amount of such
Senior Certificates is greater than zero after giving effect to the distribution
of Principal Funds relating to such Mortgage Pool.

Senior Enhancement Percentage: With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the sum of the
aggregate Class Principal Amount of the Subordinate Certificates and the
Overcollateralization Amount (which, for purposes of this definition only, will
not be less than zero) after giving effect to distributions on such Distribution
Date, and the denominator of which is the Aggregate Pool Balance for such
Distribution Date.

Senior Proportionate Percentage: With respect to Pool 1 and for any Distribution
Date, the fraction, expressed as a percentage, the numerator of which is the
Principal Funds for Pool 1 for such Distribution Date and the denominator of
which is the aggregate of the Principal Funds for Pool 1, Pool 2, Pool 3 and
Pool 4 for such Distribution Date. With respect to Pool 2 and for any
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Principal Funds for Pool 2 for such Distribution Date and the
denominator of which is the aggregate of the Principal Funds for Pool 1, Pool 2,
Pool 3 and Pool 4 for such Distribution Date. With respect to Pool 3 and for any
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Principal Funds for Pool 3 for such Distribution Date and the
denominator of which is the aggregate of the Principal Funds for Pool 1, Pool 2,
Pool 3 and Pool 4 for such Distribution Date. With respect to Pool 4 and for any
Distribution Date, the fraction, expressed as a percentage, the numerator of
which is the Principal Funds for Pool 4 for such Distribution Date and the
denominator of which is the aggregate of the Principal Funds for Pool 1, Pool 2,
Pool 3 and Pool 4 for such Distribution Date.

Servicer: HomeBanc Mortgage Corporation, or its successor in interest or assigns
or any successor to the Servicer under this Agreement as herein provided.

Servicer Errors and Omission Insurance Policy: Any errors and omission insurance
policy required to be obtained by the Servicer satisfying the requirements of
Section 4.02(l).

Servicer Event of Default: Any one of the conditions or circumstances enumerated
in Section 4.07 with respect to the Servicer.

Servicer Fidelity Bond: Any fidelity bond to be maintained by the Servicer in
accordance with Section 4.02(l).

 

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Servicer Remittance Date: The 18th day of any month, or if such 18th day is not
a Business Day, the first Business Day immediately preceding such 18th day.

Service(s)(ing): In accordance with Regulation AB, the act of servicing and
administering the Mortgage Loans or any other assets of the Trust Estate by an
entity that meets the definition of “servicer” set forth in Item 1101 of
Regulation AB and is subject to the disclosure requirements set forth in 1108 of
Regulation AB. Any uncapitalized occurrence of this term shall have the meaning
commonly understood by participants in the residential mortgage-backed
securitization market.

Servicing Account: The custodial account maintained by the Servicer on behalf of
the Trust for collection of principal and interest on the Mortgage Loans.

Servicing Advances: All reasonable and customary “out-of-pocket” costs and
expenses, including costs and expenses of foreclosures (including reasonable
attorneys’ fees and disbursements) incurred in the performance by the Servicer
of its servicing obligations, including, but not limited to, the cost of (1) the
preservation, restoration, inspection and protection of the Mortgaged
Properties, (2) any enforcement or judicial proceedings and (3) the management
and liquidation of Mortgaged Properties acquired in satisfaction of the related
mortgage.

Servicing Criteria: The criteria set forth in paragraph (d) of Item 1122 of
Regulation AB, as such may be amended from time to time.

Servicing Fee: The monthly fee calculated at the Servicing Fee Rate on the
Outstanding Principal Balance of each Mortgage Loan, including any Liquidated
Mortgage Loan.

Servicing Fee Rate: With respect to any Mortgage Loan, the corresponding
servicing fee rate set forth on the schedule in Exhibit L.

Servicing File: With respect to each Mortgage Loan, the file retained by the
Servicer, which may be in electronic media so long as original documents are not
required for purposes of realization of Liquidation Proceeds, Condemnation
Proceeds or Insurance Proceeds, consisting of all documents in the Mortgage File
which are not delivered to the Custodian, the originals of such mortgage loan
documents which are held in trust for the Trustee by the Servicer.

Servicing Function Participant: Any Subservicer or Subcontractor, other than the
Servicer, the Master Servicer, the Trustee, the Custodian and the Securities
Administrator, that is participating in the servicing function within the
meaning of Regulation AB, unless such Person’s activities relate only to 5% or
less of the Mortgage Loans.

Servicing Officer: Any officer of the Servicer involved in or responsible for,
the administration and servicing of the Mortgage Loans whose name appears on a
list of servicing officers furnished by the Servicer to the Master Servicer upon
request, as such list may from time to time be amended.

 

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Six-Month LIBOR Index: The interbank offered rates for six-month United States
dollar deposits in the London market, calculated as provided in the related
mortgage note.

Stepdown Date: The earlier to occur of (i) the first Distribution Date following
the Distribution Date on which the aggregate Class Principal Amount of the
Senior Certificates has been reduced to zero and (ii) the later to occur of
(a) the Distribution Date occurring in April 2009 and (b) the first Distribution
Date on which the Senior Enhancement Percentage (calculated for this purpose
after giving effect to payments or other recoveries in respect of the Mortgage
Loans during the related Collection Period but before giving effect to
distributions on the Certificates on such Distribution Date) is greater than or
equal to approximately 12.50%.

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

Subordinate Certificates: The Class M-1, Class M-2 and Class B-1 Certificates.

Subservicer: Any Person that (i) services Mortgage Loans on behalf of the
Servicer, the Master Servicer, the Securities Administrator, the Trustee or the
Custodian and (ii) is responsible for the performance (whether directly or
through subservicers or Subcontractors) of Servicing functions required to be
performed under this Agreement, any related Servicing Agreement or any
sub-servicing agreement that are identified in Item 1122(d) of Regulation AB.

Subsequent Recovery: Any amount recovered by a Servicer or the Master Servicer
with respect to a Liquidated Mortgage Loan with respect to which a Realized Loss
was incurred after the liquidation or disposition of such Mortgage Loan.

Substitution Amount: The amount, if any, by which the Scheduled Principal
Balance of a Deleted Mortgage Loan exceeds the Scheduled Principal Balance of
the related Qualifying Substitute Mortgage Loan, or aggregate Scheduled
Principal Balance, if applicable, plus unpaid interest thereon, any related
unpaid Monthly Advances or Servicing Advances or unpaid Servicing Fees and the
amount of any costs and damages incurred by the Trust associated with a
violation of any applicable federal, state or local predatory or abusive lending
law in connection with the origination of such Deleted Mortgage Loan.

Tax Matters Person: The “tax matters person” as specified in the REMIC
Provisions.

Termination Price: The sum, as calculated by the Servicer, of (a) 100% of the
aggregate Outstanding Principal Balance of the Mortgage Loans, plus accrued
interest thereon at the applicable Mortgage Rate, (b) the fair market value of
the REO Property and all other property being purchased, (c) any unreimbursed
Servicing Advances, (d) any costs and damages incurred by the Trust as a result
of violation of any applicable federal, state or local predatory or abusive
lending law in connection with the origination of any Mortgage Loan and (e) all
other amounts to be paid or reimbursed to the Master Servicer, the Securities
Administrator, the Delaware Trustee, the Trustee and the Custodian under the
Operative Agreements.

 

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10-K Filing Deadline: As defined in Section 8.04(b).

Title Insurance Policy: A title insurance policy maintained with respect to a
Mortgage Loan.

Trigger Event: A Trigger Event shall have occurred with respect to any
Distribution Date if (a) a Delinquency Event has occurred for such Distribution
Date or (b) a Cumulative Loss Trigger Event has occurred for such Distribution
Date.

Trust: HomeBanc Mortgage Trust 2006-1, the Delaware statutory trust governed
hereunder.

Trust Account Property: The Trust Accounts, all amounts and investments held
from time to time in the Trust Accounts (whether in the form of deposit
accounts, physical property, book-entry securities, uncertificated securities,
securities entitlements, investment property or otherwise) and all proceeds of
the foregoing.

Trust Accounts: The Collection Account and the Certificate Account.

Trust Estate: The assets of the Trust, which assets consist of all accounts,
accounts receivable, contract rights, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of deposit, goods,
notes, drafts, letters of credit, advices of credit, investment property,
uncertificated securities claims and rights to payment of any and every kind
consisting of, arising from or relating to any of the following: (a) the
Mortgage Loans listed in the Mortgage Loan Schedule, and interest and principal
due and payable thereon after the Cut-off Date, but not including interest and
principal due and payable on any Mortgage Loans on or before the Cut-off Date,
together with the Mortgage Files relating to such Mortgage Loans; (b) any
Insurance Proceeds, REO Property, Liquidation Proceeds and other recoveries (in
each case, subject to clause (a) above), (c) the Trust Accounts, the Servicing
Account, any Custodial Account, any Escrow Account and all amounts deposited
therein pursuant to the applicable provisions of this Agreement, (d) any
Insurance Policies, (e) the rights of the Depositor under the Mortgage Loan
Purchase Agreement, and (f) all income, revenues, issues, products, revisions,
substitutions, replacements, profits, rents and all cash and non-cash proceeds
of the foregoing.

Trustee: U.S. Bank National Association, not in its individual capacity but
solely as Trustee, or any successor in interest.

Trustee Fee: The annual on-going fee payable by the Master Servicer on behalf of
the Trust to the Trustee from income on funds held in the Collection Account as
provided in Section 5.07 and pursuant to the terms of the separate fee letter
agreement for HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates.

UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.

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

 

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Underwriters: J.P. Morgan Securities Inc. and Bear, Stearns & Co. Inc.

Upper Tier REMIC: REMIC 3.

U.S. Person: (i) A citizen or resident of the United States; (ii) a corporation
(or entity treated as a corporation for tax purposes) created or organized in
the United States or under the laws of the United States or of any State
thereof, including, for this purpose, the District of Columbia; (iii) a
partnership (or entity treated as a partnership for tax purposes) organized in
the United States or under the laws of the United States or of any State
thereof, including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control substantial decisions of the trust.
Notwithstanding the last clause of the preceding sentence, to the extent
provided in Treasury regulations, certain trusts in existence on August 20,
1996, and treated as U.S. Persons prior to such date, may elect to continue to
be U.S. Persons.

Voting Interests: The portion of the voting rights of all the Certificates that
is allocated to any Certificate for purposes of the voting provisions of this
Agreement. At all times during the term of this Agreement, 99% of all Voting
Interests shall be allocated to the Senior Certificates and the Subordinate
Certificates; provided, however, that no Voting Interests shall be allocated to
any Certificate held by the Seller or an Affiliate of the Seller for any vote
relating to (a) changing the permitted activities of the Trust, (b) amending the
definition of “Eligible Investments” or (c) amending the definition of “Trust
Estate.” Voting Interests shall be allocated among such Certificates based on
the product of (i) 99% and (ii) the fraction, expressed as a percentage, the
numerator of which is the aggregate Class Principal Amount of all Certificates
then outstanding and the denominator of which is the Pool Balance then
outstanding. The remainder of the Voting Interests not otherwise allocated below
shall be allocated to the Class R Certificate. At all times during the term of
this Agreement, 1% of all Voting Interests shall be allocated to the Class X
Certificates, while they remain outstanding; provided, however, that no Voting
Interests shall be allocated to the Class X Certificate if it is held by the
Seller or an Affiliate of the Seller for any vote relating to (a) changing the
permitted activities of the Trust, (b) amending the definition of “Eligible
Investments” or (c) amending the definition of “Trust Estate.” Voting Interests
shall be allocated among the other Classes of Certificates (and among the
Certificates within each such Class) in proportion to their Class Principal
Amounts (or Certificate Principal Amounts) or Percentage Interests.

Section 1.02. Calculations With Respect to the Mortgage Loans. Calculations
required to be made pursuant to this Agreement with respect to any Mortgage Loan
in the Trust Estate shall be made based upon current information as to the terms
of the Mortgage Loans and reports of payments received from the Mortgagor on
such Mortgage Loans provided by the Servicer to the Master Servicer.

 

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Section 1.03. Calculations With Respect to Accrued Interest. Accrued interest,
if any, on any Certificate shall be calculated based upon a 360-day year
consisting of twelve 30-day months.

ARTICLE IA

ORGANIZATION OF TRUST

Section 1A.01. Name of Trust. The name of the Trust formed under the Original
Trust Agreement and the Certificate of Trust is “HomeBanc Mortgage Trust
2006-1,” in which name the Trustee may conduct the business and affairs of the
Trust, make and execute contracts and agreements on behalf of the Trust and sue
and be sued.

Section 1A.02. Office. The office of the Trust shall be in care of the Trustee.
The office of the Trust shall be located at its Corporate Trust Office, or at
such other address as the Trustee may designate by written notice to the
Certificateholders, each Rating Agency and the other parties to this Agreement.

Section 1A.03. Declaration of Trust. Under the Original Trust Agreement and
effective as of the date hereof, the Depositor appointed U.S. Bank National
Association, as Trustee of the Trust, to have all the rights powers and duties
set forth herein. Under the Original Trust Agreement and effective as of the
date hereof, the Depositor appointed Wilmington Trust Company to act as Delaware
Trustee. It is the intention of the parties hereto that the Trust constitute a
statutory trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code
§ 3801 et seq., as the same may be amended from time to time (the “Delaware
Statutory Trust Statute” or “DSTS”), and that this Agreement amends and restates
in its entirety the Original Trust Agreement and constitutes the governing
instrument of such statutory trust. Effective as of the date hereof, the Trustee
shall have all rights, powers and duties set forth in the Delaware Statutory
Trust Statute with respect to accomplishing the purposes of the Trust (except
those duties expressly required to be performed by the Delaware Trustee
hereunder). It is hereby confirmed that the Trustee and the Delaware Trustee
were authorized to execute the Original Trust Agreement and to file a
Certificate of Trust in substantially the form of Exhibit M with the Secretary
of State of the State of Delaware, on behalf of the Trust.

Section 1A.04. Purpose and Powers. The purposes of the Trust are (i) to issue
the Certificates and to sell the Certificates to or at the direction of the
Depositor; (ii) with the proceeds of the sale of the Certificates, to purchase
the Mortgage Loans and all related assets and to pay any organizational start-up
and transactional expenses of the Trust; (iii) to enter into this Agreement and
to perform its obligations hereunder; (iv) to engage in those activities,
including entering into agreements, that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith;
and (v) subject to compliance with this Agreement, to engage in such other
activities as may be required in connection with the conservation of the assets
of the Trust and the making of distributions to the Certificateholders. The
Trust is hereby authorized to engage in the foregoing activities. The Trust
shall not engage in any activity other than in connection with the foregoing or
other than as required or authorized by the terms of this Agreement.

 

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Section 1A.05. Liability of the Certificateholders. The Certificateholders shall
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.

Section 1A.06. Title To Trust Property. Legal title to the assets of the Trust
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
to be vested in a trustee or trustees, in which case title shall be deemed to be
vested in the Trustee, a co-trustee and/or a separate trustee, as the case may
be, and in each case on behalf of the Trust. The Certificateholders shall not
have legal title to any part of the assets of the Trust. No transfer by
operation of law or otherwise of any interest of the Certificateholders shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of any part of the assets
of the Trust. The Trustee, in such capacity and in its capacity as Custodian, is
hereby authorized to hold all assets of the Trust on behalf of the Trust, for
the benefit of the Certificateholders.

Section 1A.07. Situs of Trust. The Trust will be located in the State of
Delaware and administered in the States of Delaware, Massachusetts, Maryland and
Minnesota. Nothing herein shall restrict or prohibit the Trustee from having
employees within or without the State of Delaware. The Trust may also be
qualified to do business in the State of New York.

Section 1A.08. The Delaware Trustee. (a) The Delaware Trustee is appointed to
serve as the trustee of the Trust in the State of Delaware for the sole purpose
of satisfying the requirement of Section 3807(a) of the DSTS that the Trust have
at least one trustee with a principal place of business in the State of
Delaware. It is understood and agreed by the parties hereto that the Delaware
Trustee shall have none of the duties, obligations or liabilities of the
Trustee.

(b) The duties of the Delaware Trustee shall be limited to (i) accepting legal
process served on the Trust in the State of Delaware and (ii) the execution of
any certificates required to be filed with the Secretary of State of the State
of Delaware which the Delaware Trustee is required to execute under Section 3811
of the DSTS. To the extent that, at law or in equity, the Delaware Trustee has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or the Certificateholders, it is hereby understood and agreed by the other
parties hereto that such duties and liabilities are replaced by the duties and
liabilities of the Delaware Trustee expressly set forth in this Agreement. The
Delaware Trustee shall have no liability for the acts or omissions of the
Trustee. Except as provided above, the Delaware Trustee shall not be deemed a
trustee and shall have no management responsibilities or owe any fiduciary
duties to the Trust or the Certificateholders.

(c) The Delaware Trustee may be removed by the Trustee upon 30 days prior
written notice to the Delaware Trustee. The Delaware Trustee may resign upon 30
days prior written notice to the Trustee. No resignation or removal of the
Delaware Trustee shall be effective except upon the appointment of a successor
Delaware Trustee. If no successor has been appointed within such 30 day period,
the Delaware Trustee or the Trustee may, at the expense of the Trust, petition a
court to appoint a successor Delaware Trustee.

 

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(d) Any Person into which the Delaware Trustee may be merged or with which it
may be consolidated, or any Person resulting from any merger or consolidation to
which the Delaware Trustee shall be a party, or any Person which succeeds to all
or substantially all of the corporate trust business of the Delaware Trustee,
shall be the successor Delaware Trustee under this Agreement without the
execution, delivery or filing of any paper or instrument or further act to be
done on the part of the parties hereto, except as may be required by applicable
law.

(e) The Delaware Trustee shall be entitled to all of the same rights,
protections indemnities and immunities under this Agreement and with respect to
the Trust as the Trustee. No amendment or waiver of any provision of this
Agreement which adversely affects the Delaware Trustee shall be effective
against it without its prior written consent.

The Delaware Trustee shall not be liable for the acts or omissions of the
Trustee, nor shall the Delaware Trustee be liable for supervising or monitoring
the performance and the duties and obligations of the Trustee or the Trust under
this Agreement or any related document. The Delaware Trustee shall not be
personally liable under any circumstances, except for its own willful
misconduct, bad faith or gross negligence. In particular, but not by way of
limitation:

(i) the Delaware Trustee shall not be personally liable for any error of
judgment made in good faith;

(ii) no provision of this Agreement shall require the Delaware Trustee to expend
or risk its personal funds or otherwise incur any financial liability in the
performance of its rights or powers hereunder, if the Delaware Trustee shall
have reasonable grounds for believing that the payment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or provided
to it;

(iii) under no circumstances shall the Delaware Trustee be personally liable for
any representation, warranty, covenant, agreement, or indebtedness of the Trust;

(iv) the Delaware Trustee shall not be personally responsible for or in respect
of the validity or sufficiency of this Agreement or for the due execution hereof
by any other party hereto;

(v) the Delaware Trustee shall incur no liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. The Delaware Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically prescribed herein, the Delaware
Trustee may for all purposes hereof rely on a certificate, signed by the
Trustee, the Securities Administrator or the Master Servicer, as applicable, as
to such fact or matter, and such certificate shall constitute full protection to
the Delaware Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon;

 

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(vi) in the exercise or administration of the Trust hereunder, the Delaware
Trustee (a) may act directly or through agents or attorneys pursuant to
agreements entered into with any of them, and the Delaware Trustee shall not be
liable for the default or misconduct of such agents or attorneys if such agents
or attorneys shall have been selected by the Delaware Trustee in good faith and
with due care and (b) may consult with counsel, accountants and other skilled
persons to be selected by it in good faith and with due care and employed by it,
and it shall not be liable for anything done, suffered or omitted in good faith
by it in accordance with the advice or opinion of any such counsel, accountants
or other skilled persons; and

(vii) except as expressly provided in this Section 1A.08, in accepting and
performing the trusts hereby created the Delaware Trustee acts solely as trustee
hereunder and not in its individual capacity, and all persons having any claim
against the Delaware Trustee by reason of the transactions contemplated by this
Agreement shall look only to the Trust for payment or satisfaction thereof.

(f) In the event of the appointment of a successor Delaware Trustee, such
successor shall cause an amendment to the Certificate of Trust to be filed with
the Secretary of State of the State of Delaware in accordance with
Section 3810(b) of the DSTS, indicating the change of such Delaware Trustee’s
identity. In addition, until the termination of the Trust and this Agreement,
the Delaware Trustee shall at all times fulfill the requirements of the DSTS.

(g) Upon written notification from the Securities Administrator that the Trust
has been terminated in accordance with Article X, the Delaware Trustee shall
cause the Certificate of Trust to be cancelled by filing a certificate of
cancellation with the Secretary of State of the State of Delaware in accordance
with Section 3810(d) of the DSTS.

Section 1A.09 Separateness Provisions. The Trust shall not commingle its assets
with those of any other entity. The Trust shall maintain its financial and
accounting books and records separate from those of any other entity. Except as
expressly set forth herein, the Trust shall pay its indebtedness, operating
expenses and liabilities from its own funds, and the Trust shall neither incur
any indebtedness nor pay the indebtedness, operating expenses and liabilities of
any other entity. The Trust shall not engage in any dissolution, liquidation,
consolidation, merger or sale of assets except as specifically provided for
herein. The Trust shall maintain appropriate minutes or other records of all
appropriate actions and shall maintain its office separate from the offices of
the Depositor or any of its Affiliates. The Trust shall not engage in any
business activity other than as contemplated by this Agreement and related
documentation. The Trust shall not form, or cause to be formed, any subsidiaries
and shall not own or acquire any asset other than as contemplated by this
Agreement and related documentation. Other than as contemplated by this
Agreement and related documentation, the Trust shall not follow the directions
or instructions of the Depositor. The Trust shall hold itself out as a separate
entity from the Depositor, the Certificateholders and any of their Affiliates,
conduct its own business in its own name and use stationery, invoices, checks or
other business forms under its own name and not that of any Certificateholder,
Affiliate, or other person. The Trust shall observe all formalities required
under the Delaware Statutory Trust Statute. The Trust shall not hold out its
credit as being available to satisfy the obligations of any other person or
entity. The Trust shall

 

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not acquire the obligations or securities of its Affiliates or the Seller. Other
than as contemplated by this Agreement and related documentation, the Trust
shall not pledge its assets for the benefit of any other person or entity. The
Trust shall correct any known misunderstanding regarding its separate identity.
The Trust shall not identify itself as a division of any other person or entity.
The Trust shall maintain adequate capital in light of its contemplated business
operations. The Trust shall conduct business with its affiliates on an
arm’s-length basis.

For accounting purposes, the Trust shall be treated as an entity separate and
distinct from any Certificateholder. The pricing and other material terms of all
transactions and agreements to which the Trust is a party shall be intrinsically
fair to all parties thereto. This Agreement is and shall be the only agreement
among the parties hereto with respect to the creation, operation and termination
of the Trust.

Section 1A.10 Assets of the Trust. The assets of the Trust shall be limited to
the assets described in the definition of “Trust Estate.”

ARTICLE II

CONVEYANCE OF MORTGAGE LOANS

Section 2.01. Creation and Declaration of Trust; Conveyance of Mortgage Loans.

(a) Mortgage Loans. As of the Closing Date, the Depositor concurrently with the
execution and delivery of this Agreement, does hereby transfer, assign, set
over, deposit with and otherwise convey to the Trust, without recourse, subject
to Section 3.01, in trust, all the right, title and interest of the Depositor in
and to all accounts, accounts receivable, contract rights, general intangibles,
chattel paper, instruments, documents, money, deposit accounts, certificates of
deposit, goods, notes, drafts, letters of credit, advices of credit, investment
property, uncertificated securities claims and rights to payment of any and
every kind consisting of, arising from or relating to any of the following:
(a) the Mortgage Loans listed in the Mortgage Loan Schedule, and all interest
and principal due and payable thereon after the Cut-off Date, but not including
interest and principal due and payable on any Mortgage Loans on or before the
Cut-off Date, together with the Mortgage Files relating to such Mortgage Loans,
(b) any Insurance Proceeds, REO Property, Liquidation Proceeds and other
recoveries (in each case, subject to clause (a) above), (c) all Escrow Payments,
(d) any Insurance Policies, (e) the rights of the Depositor under the Mortgage
Loan Purchase Agreement, (f) the Depositor’s security interest in any collateral
pledged to secure the Mortgage Loans, including the Mortgaged Properties, and
(g) all income, revenues, issues, products, revisions, substitutions,
replacements, profits, rents and all cash and non-cash proceeds of the foregoing
to have and to hold, in trust; and the Trustee declares that, subject to the
review provided for in Section 2.02, it has received and shall hold the Trust
Estate, as Trustee, in trust, for the benefit and use of the Certificateholders
and for the purposes and subject to the terms and conditions set forth in this
Agreement, and, concurrently with such receipt, the Trust has issued and
delivered the Certificates to or upon the order of the Depositor, in exchange
for the Mortgage Loans and the other property of the Trust Estate.

Concurrently with the execution and delivery of this Agreement, the Depositor
does hereby assign to the Trustee all of its rights and interest under the
Mortgage Loan Purchase

 

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Agreement but without delegation of any of its obligations thereunder. The
Trustee hereby accepts such assignment, and shall be entitled to exercise all
the rights of the Depositor under the Mortgage Loan Purchase Agreement as if,
for such purpose, it were the Depositor. Upon the issuance of the Certificates,
ownership in the Trust Estate shall be vested in the Trustee for the benefit of
the Certificateholders. The foregoing sale, transfer, assignment, set-over,
deposit and conveyance does not and is not intended to result in creation or
assumption by the Trustee of any obligation of the Depositor, the Seller, or any
other Person in connection with the Mortgage Loans or any other agreement or
instrument relating thereto except as specifically set forth herein.

It is agreed and understood by the Seller, the Depositor and the Trustee (and
the Depositor so represents and recognizes) that it is not intended that any
Mortgage Loan to be included in the Trust Estate be (i) a “High-Cost Home Loan”
as defined in the New Jersey Home Ownership Act effective November 27, 2003,
(ii) a “High-Cost Home Loan” as defined in the New Mexico Home Loan Protection
Act effective January 1, 2004, (iii) a “High-Cost Home Mortgage Loan” as defined
in the Massachusetts Predatory Home Loan Practices Act effective November 7,
2004 or (iv) a “High Cost Home Loan” as defined in the Indiana Home Loan
Practices Act effective January 1, 2005.

(b) In connection with such transfer and assignment of the Mortgage Loans, the
Depositor does hereby deliver to, and deposit with, or cause to be delivered to
and deposited with, the Trustee, and/or the Custodian acting on the Trustee’s
behalf, the following documents or instruments (collectively, the “Mortgage Loan
Documents”) with respect to each Mortgage Loan so transferred and assigned (as
to each, a “Mortgage File”):

(i) the original Mortgage Note, endorsed either (A) in blank or (B) to the order
of the Trustee in the form of the Form of Endorsement set forth in Exhibit Two
to the Custodial Agreement, or with respect to any lost Mortgage Note, an
original lost note affidavit, in the form set forth in Exhibit Three to the
Custodial Agreement, stating that the original Mortgage Note was lost, misplaced
or destroyed, together with a copy of the related Mortgage Note;

(ii) except as provided below, the original Mortgage with evidence of recording
thereon (if the related Mortgage Loan is a MERS Mortgage Loan, the Mortgage
shall note the MIN and contain language that such Mortgage Loan is a MERS
Mortgage Loan). If in connection with any Mortgage Loan, the Servicer cannot
deliver or cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the Closing Date because of a delay caused by
the public recording office where such Mortgage has been delivered for
recordation or because such Mortgage has been lost or because such public
recording office retains the original recorded Mortgage, the Servicer shall
deliver or cause to be delivered to the Custodian a photocopy of such Mortgage
together with (i) in the case of a delay caused by the public recording office,
an Officer’s Certificate of the Servicer stating that such Mortgage has been
delivered to the appropriate public recording office for recordation and that
the original recorded Mortgage or a copy of such Mortgage certified by such
public recording office to be a true and complete copy of the original recorded
Mortgage will be promptly delivered to

 

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the Custodian upon receipt thereof by the Servicer; or (ii) in the case of a
Mortgage where a public recording office retains the original recorded Mortgage
or in the case where a Mortgage is lost after recordation in a public recording
office, a copy of such Mortgage with the recording information thereon certified
by such public recording office to be a true and complete copy of the original
recorded Mortgage;

(iii) with respect to each Non-MERS Mortgage Loan, an original Assignment of
Mortgage (which may be in the form of a blanket assignment if permitted in the
jurisdiction where the Mortgaged Property is located) with evidence of recording
thereon unless an Opinion of Counsel described in clause (c) below is delivered
to the Trustee and the Rating Agencies, in which case, the Assignment of
Mortgage shall be in form and substance acceptable for recording. The Mortgage
shall be assigned either (A) in blank, without recourse, or (B) to “U.S. Bank
National Association, as Trustee of the HomeBanc Mortgage Trust 2006-1 Mortgage
Pass-Through Certificates,” without recourse;

(iv) an original copy of any intervening assignment of Mortgage showing a
complete chain of assignments or, in the case of an intervening assignment that
has not been received by the Servicer from the public recording office, an
Officer’s Certificate of the Servicer stating that such intervening assignment
has been delivered to the appropriate public recording office for recordation
and that the original recorded intervening assignment or a copy of such
intervening assignment certified by such public recording office to be a true
and complete copy of the original recorded intervening assignment will be
promptly delivered to the Custodian upon receipt thereof by the Servicer, or in
the case of an intervening assignment where a public recording office retains
the original recorded intervening assignment, a copy of such intervening
assignment with the recording information thereon certified by such public
recording office to be a true and complete copy of the original recorded
intervening assignment; or in the case of an intervening assignment that has
been lost, a written Opinion of Counsel for the Seller that such original
intervening assignment is not required to enforce the Trustee’s interest in the
Mortgage Loans;

(v) the original or a certified copy of lender’s Title Insurance Policy (or, in
lieu thereof, a commitment to issue such Title Insurance Policy, with an
original or a certified copy of such Title Insurance Policy to follow as soon
after the Closing Date as reasonably practicable) or attorney’s opinion of title
and abstract of title;

(vi) the original or copy of the policy or certificate of primary mortgage
guaranty insurance, to the extent available, if any;

(vii) the original or copies of each assumption, modification, written assurance
or substitution agreement, if any, or as to any such agreement which cannot be
delivered prior to the Closing Date because of a delay caused by the public
recording office where such assumption, modification or substitution agreement
has been delivered for recordation, a photocopy of such assumption, modification
or substitution agreement, pending delivery of the original thereof, together
with an Officer’s Certificate of the

 

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Depositor certifying that the copy of such assumption, modification or
substitution agreement delivered to the Custodian is a true copy and that the
original of such agreement has been forwarded to the public recording office;
and

(viii) the original of any security agreement or equivalent instrument executed
in connection with the Mortgage or as to any security agreement or equivalent
instrument that cannot be delivered on or prior to the Closing Date because of a
delay caused by the public recording office where such document has been
delivered for recordation, a photocopy of such document, pending delivery of the
original thereof, together with an Officer’s Certificate of the Depositor
certifying that the copy of such security agreement, chattel mortgage or their
equivalent delivered to the Custodian is a true copy and that the original of
such document has been forwarded to the public recording office.

The Depositor and the Seller acknowledge and agree that the form of endorsement
attached to the Custodial Agreement as Exhibit Two to the Custodial Agreement is
intended to effect the transfer to the Trustee, for the benefit of the
Certificateholders, of the Mortgage Notes and the Mortgages.

(c) Assignments of Mortgage with respect to each Non-MERS Mortgage Loan shall be
recorded; provided, however, that such Assignments of Mortgage need not be
recorded if, on or prior to the Closing Date, the Seller delivers an Opinion of
Counsel (which must be Independent counsel) acceptable to the Rating Agencies,
to the effect that recording in such states is not required to protect the
Trustee’s interest in the related Non-MERS Mortgage Loans.

(d) In instances where a Title Insurance Policy is required to be delivered to
the Trustee or the Custodian on behalf of the Trustee under clause (b)(vi) above
and is not so delivered, the Seller will provide a copy of such Title Insurance
Policy to the Trustee, or to the Custodian on behalf of the Trustee no later
than ninety (90) days of the receipt by the Seller of the recorded documents
from the applicable public recording office.

(e) For Mortgage Loans (if any) that have been prepaid in full after the Cut-off
Date and prior to the Closing Date, the Depositor, in lieu of delivering the
above documents, herewith delivers to the Trustee, or to the Custodian on behalf
of the Trustee, an Officer’s Certificate which shall include a statement to the
effect that all amounts received in connection with such prepayment that are
required to be deposited in the Collection Account pursuant to Section 5.06 have
been so deposited. All original documents that are not delivered to the Trustee
or the Custodian on behalf of the Trustee shall be held by the Servicer in trust
for the benefit of the Trustee and the Certificateholders.

Section 2.02. Acceptance of Trust Estate; Review of Documentation.

(a) Subject to the provisions of Section 2.01, the Trustee acknowledges receipt
of the assets transferred by the Depositor of the assets included in the Trust
Estate and has directed that the documents referred to in Section 2.01 and all
other assets included in the definition of “Trust Estate” be delivered to the
Trustee (or the Custodian) on its behalf.

 

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The Trustee, by execution and delivery hereof, acknowledges receipt by it or by
the Custodian on its behalf of the Mortgage Files pertaining to the Mortgage
Loans listed on the Mortgage Loan Schedule, subject to review thereof by the
Trustee, or by the Custodian on behalf of the Trustee, under this Section 2.02.
The Trustee, or the Custodian on behalf of the Trustee, will execute and deliver
to the Depositor, the Master Servicer, the Servicer (and the Trustee if
delivered by the Custodian) on the Closing Date an Initial Certification,
subject to any exceptions listed on the exception report attached thereto, in
the form annexed to the Custodial Agreement as Exhibit Four (the “Initial
Certification”).

(b) Within 90 days after the Closing Date, the Trustee or the Custodian on
behalf of the Trustee, will, for the benefit of Certificateholders, review each
Mortgage File to ascertain that all required documents set forth in Section 2.01
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 Seller (and the Trustee if delivered by the Custodian) an Interim
Certification subject to any exceptions listed on the exception report attached
thereto in the form annexed to the Custodial Agreement as Exhibit Five 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(b) are in its possession and
(ii) such documents have been reviewed by it and appear to relate to such
Mortgage Loan (the “Interim Certification”). The Trustee, or the Custodian on
behalf of the 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. Neither the Trustee nor the Custodian
shall 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 or for the perfection or priority of any document.

(c) If in the course of the review described in paragraph (b) above the Trustee
or the Custodian 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 Trustee or the Custodian,
discovering such Material Defect shall identify the Mortgage Loan to which such
Material Defect relates in the Interim Certification delivered to the Depositor
and the Master Servicer. Within 90 days of its receipt of such notice, the
Seller shall cure such Material Defect (and, in such event, the Seller shall
provide the Trustee and the Custodian with an Officer’s Certificate confirming
that such cure has been effected). If the Seller does not so cure such Material
Defect, and if a loss has been incurred with respect to such Mortgage Loan that
would, if such Mortgage Loan were not purchased from the Trust, constitute a
Realized Loss, and such loss is attributable to the failure of the Seller to
cure such Material Defect, the Seller shall repurchase the related Mortgage Loan
from the Trust Estate at the Purchase Price. A loss shall be deemed to be
attributable to the failure of the Seller to cure a Material Defect if, as
determined by the Seller acting in good faith, absent such Material Defect, such
loss would not have been incurred. The Seller may, in lieu of

 

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repurchasing a Mortgage Loan pursuant to this Section 2.02, substitute for such
Mortgage Loan a Qualifying Substitute Mortgage Loan in accordance with the
provisions of Section 3.03. The failure of the Trustee or the Custodian to
deliver the Interim Certification within 90 days after the Closing Date shall
not affect or relieve the Seller of its obligation to repurchase any Mortgage
Loan pursuant to this Section 2.02 or any other Section of this Agreement
requiring the repurchase of Mortgage Loans from the Trust.

(d) Within 180 days following the Closing Date, the Trustee, or the Custodian,
shall deliver to the Depositor, the Master Servicer and the Servicer (and the
Trustee if delivered by the Custodian) a Final Certification subject to any
exceptions listed on the exception report attached thereto substantially in the
form attached to the Custodial Agreement as Exhibit Six evidencing the
completeness of the Mortgage Files in its possession or control, with any
exceptions noted thereto (the “Final Certification”).

(e) Nothing in this Agreement shall be construed to constitute an assumption by
the Trust, the Trustee, the Custodian or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.

(f) Notwithstanding anything to the contrary contained herein, each of the
parties hereto acknowledges that the Custodian shall perform the applicable
review of the Mortgage Loans and respective certifications thereof as provided
in the Custodial Agreement.

(g) Upon execution of this Agreement, the Depositor hereby delivers to the
Trustee and the Trustee acknowledges a receipt of the Mortgage Loan Purchase
Agreement.

(h) For purposes of the determinations required to be made by the Trustee or the
Custodian pursuant to paragraphs (a) through (d) of this Section 2.02, the
Trustee or the Custodian, as applicable, shall be entitled to conclusively rely
upon the diskette, tape or other electronic media provided by or on behalf of
the Seller with respect to the Mortgage Loans.

Section 2.03. Grant Clause.

(a) It is intended that the conveyance by the Depositor to the Trustee of the
Mortgage Loans, as provided for in Section 2.01 be construed as a sale by the
Depositor to the Trustee of the Mortgage Loans and other assets in the Trust
Estate for the benefit of the Certificateholders. Further, it is not intended
that any such conveyance be deemed to be a pledge of the Mortgage Loans by the
Depositor to the Trustee to secure a debt or other obligation of the Depositor.
However, in the event that the Mortgage Loans 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 other assets in the Trust Estate,
then it is intended that (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Delaware UCC
(or the Relevant UCC if not the Delaware UCC); (b) the conveyances provided for
in Section 2.01 shall be deemed to be (1) a grant by the Depositor to the
Trustee of a security interest in all of the Depositor’s right (including the
power to convey title thereto), title and interest, whether now owned or
hereafter acquired, in and to (A) the Mortgage Loans, including the Mortgage
Notes, the Mortgages, any related insurance policies and all other documents in
the related Mortgage Files, (B) all amounts payable pursuant to the Mortgage
Loans in accordance with the terms thereof and

 

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(C) any and all general intangibles consisting of, arising from or relating to
any of the foregoing, and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, instruments, securities or other
property, including without limitation all Liquidation Proceeds, all Insurance
Proceeds, all amounts from time to time held or invested in the Collection
Account, whether in the form of cash, instruments, securities or other property
and (2) an assignment by the Depositor to the Trustee of any security interest
in any and all of the Depositor’s right (including the power to convey title
thereto), title and interest, whether now owned or hereafter acquired, in and to
the property described in the foregoing clauses (1)(A) through (C); (c) the
possession by the Trustee or any other agent of the Trustee of Mortgage Notes,
and such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be “possession by the secured
party,” or possession by a purchaser or a person designated by such secured
party, for purposes of perfecting the security interest pursuant to the Delaware
UCC and any other Relevant UCC (including, without limitation, Section 9-313,
8-313 or 8-321 thereof); and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law.

(b) The Depositor and, at the Depositor’s direction, the Trustee on behalf of
the Certificateholders shall, to the extent consistent with this Agreement, take
such reasonable actions as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans and the other
property of the Trust Estate, 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 this Agreement. Without limiting the
generality of the foregoing, the Depositor shall prepare and file any UCC
financing statements that are necessary to perfect the Trustee’s security
interest in or lien on the Mortgage Loans, as evidenced by an Officer’s
Certificate of the Depositor, and furnish a copy of each such filed financing
statement to the Securities Administrator. The Trustee shall prepare and file,
at the expense of the Trust, all filings necessary to maintain the effectiveness
of any original filings necessary under the Relevant UCC to perfect the
Trustee’s security interest in or lien on the Mortgage Loans, including without
limitation (x) continuation statements, and (y) to the extent that a Responsible
Officer of the Trustee has received written notice of such change or transfer,
such other statements as may be occasioned by (1) any change of name of the
Seller, the Depositor or the Trustee, (2) any change of location of the place of
business or the chief executive office of the Seller or the Depositor or (3) any
transfer of any interest of the Seller or the Depositor in any Mortgage Loan.

The Depositor shall not organize under the law of any jurisdiction other than
the state under which each is organized as of the Closing Date (whether changing
its jurisdiction of organization or organizing under an additional jurisdiction)
without giving thirty (30) days prior written notice of such action to its
immediate and mediate transferee, including the Trustee. Before effecting such
change, the Depositor shall prepare and file in the appropriate filing office
any financing statements or other statements necessary to continue the
perfection of the interests of its immediate and mediate transferees, including
the Trustee, in the Mortgage Loans. In connection with the transactions
contemplated by this Agreement, the Depositor authorizes its immediate or
mediate transferee to file in any filing office any initial financing
statements, any amendments to financing statements, any continuation statements,
or any other statements or filings described in this Section 2.03(b).

 

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(c) The Depositor shall not take any action inconsistent with the sale by the
Depositor of all of its right, title and interest in and to the Trust Estate and
shall indicate or shall cause to be indicated in its records and records held on
its behalf that ownership of each Mortgage Loan and the other property of the
Trust Estate is held by the Trustee. In addition, the Depositor shall respond to
any inquiries from third parties with respect to ownership of a Mortgage Loan or
any other property of the Trust Estate by stating that it is not the owner of
such Mortgage Loan and that ownership of such Mortgage Loan or other property of
the Trust Estate is held by the Trustee on behalf of the Certificateholders.

Section 2.04. Covenant of Seller with Respect to Certificates. As of any date of
determination, none of the Seller, its Affiliates or its agents may, in the
aggregate, hold more than 90% of the aggregate Class Principal Amount or
Percentage Interests in the Certificates.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01. Representations and Warranties of the Depositor and the Seller.

(a) The Depositor hereby represents and warrants to the Trustee for the benefit
of Certificateholders, the Securities Administrator, the Master Servicer, the
Seller and the Servicer as of the Closing Date or such other date as is
specified, that:

(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 Seller) 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 Trustee on behalf of 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; and

 

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(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.

(b) The Seller hereby represents and warrants to the Trustee for the benefit of
Certificateholders, the Securities Administrator, the Master Servicer and the
Depositor as of the Closing Date or such other date as is specified, that:

(i) the Seller is a Georgia corporation, duly organized validly existing and in
good standing under the laws of the State of Georgia, and has the corporate
power to own its assets and to transact the business in which it is currently
engaged. The Seller is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction in which the character of the
business transacted by it or any properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the Seller;

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

(iii) the Seller is not 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 consent, license, approval or authorization, or registration or
declaration, 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 the Seller
will not violate any provision of any existing law or regulation or any order or
decree of any court applicable to the Seller or any provision of the articles of
incorporation or bylaws of the Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Seller is a party
or by which the Seller may be bound; and

(v) no litigation or administrative proceeding of or before any court, tribunal
or governmental body is currently pending, or to the knowledge of the Seller
threatened, against the Seller or any of its properties or with respect to this
Agreement which in the opinion of the Seller has a reasonable likelihood of
resulting in a material adverse effect on the transactions contemplated by this
Agreement.

 

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(c) The Seller hereby makes for the benefit of the Trustee for the benefit of
Certificateholders, the Securities Administrator, the Master Servicer and the
Depositor as of the Closing Date or such other date as is specified, with
respect to the Mortgage Loans, the representations and warranties set forth in
Exhibit A of the Mortgage Loan Purchase Agreement.

(d) To the extent that any fact, condition or event with respect to a Mortgage
Loan constitutes a breach of a representation or warranty of the Seller under
subsection (c) above or the Mortgage Loan Purchase Agreement, the only right or
remedy of the Trustee or any Certificateholder hereunder shall be their rights
to enforce the obligations of the Seller under any applicable representation or
warranty made by it. The Trustee on behalf of the Trust acknowledges that the
Depositor shall have no obligation or liability with respect to any breach of
any representation or warranty with respect to the Mortgage Loans (except as set
forth in Section 3.01(a)(ii)) under any circumstances.

Section 3.02. Discovery of Breach. It is understood and agreed that the
representations and warranties (i) of the Depositor set forth in
Section 3.01(a), (ii) of the Seller set forth in Section 3.01(b) and (c), and
(iii) of the Servicer pursuant to Section 4.05 of this Agreement, shall each
survive delivery of the Mortgage Files and the Assignment of Mortgage of each
Mortgage Loan to the Trustee and shall continue throughout the term of this
Agreement. With respect to the representations and warranties which are made to
the best of the Seller’s knowledge, if it is discovered by the Depositor, the
Seller, the Securities Administrator, the Trustee, the Master Servicer, the
Underwriters or the Servicer that the substance of such representation and
warranty is inaccurate and such inaccuracy materially and adversely affects the
value of the Mortgage Loans or the interests of the Certificateholders or the
Trustee therein, notwithstanding such Seller’s lack of knowledge with respect to
the substance of such representation or warranty, remedies for breach will apply
to such inaccuracy. Any breach of the representation and warranty set forth in
clauses (cc), (ee) and (ff) of Exhibit A of the Mortgage Loan Purchase Agreement
shall be deemed to materially and adversely affect the interest of the Trust in
that Mortgage Loan, notwithstanding the Seller’s lack of knowledge with respect
to the substance of such representation and warranty. Upon discovery by any of
the Depositor, the Master Servicer, the Securities Administrator or the Trustee
of a breach of any of such representations and warranties made by the Seller
that adversely and materially affects the value of the related Mortgage Loan or
the interests of the Certificateholders or the Trustee therein, the party
discovering such breach shall give prompt written notice to the other parties.
Within 90 days of the discovery by the Seller of a breach of any representation
or warranty given to the Trustee by the Seller or the Seller’s receipt of
written notice of such a breach, the Seller shall either (a) cure such breach in
all material respects, (b) repurchase such Mortgage Loan or any property
acquired in respect thereof from the Trustee at the Purchase Price or
(c) substitute a Qualifying Substitute Mortgage Loan for the affected Mortgage
Loan.

Section 3.03. Repurchase, Purchase or Substitution of Mortgage Loans.

(a) With respect to any Mortgage Loan repurchased by the Seller pursuant to
Section 3.02 of this Agreement, the principal portion of the funds in respect of
such repurchase of a Mortgage Loan will be considered a Principal Prepayment and
the Purchase Price shall be deposited in the Collection Account. Upon receipt by
the Securities Administrator of the full amount of the

 

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Purchase Price for a Deleted Mortgage Loan and the receipt by the Trustee of
notification thereof, or upon receipt of notification from the Custodian that it
had received the Mortgage File for a Qualifying Substitute Mortgage Loan
substituted for a Deleted Mortgage Loan (and any applicable Substitution
Amount), the Trustee shall release or cause to be released and reassign to the
Depositor or the Seller, as applicable, the related Mortgage File for the
Deleted Mortgage Loan and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, representation or warranty, as
shall be necessary to vest in such party or its designee or assignee title to
any Deleted Mortgage Loan released pursuant hereto, free and clear of all
security interests, liens and other encumbrances created by this Agreement,
which instruments shall be prepared by the Servicer and the Trustee shall have
no further responsibility with respect to the Mortgage File relating to such
Deleted Mortgage Loan. The Seller indemnifies and holds the Trust Estate, the
Master Servicer, the Securities Administrator, the Trustee, the Delaware
Trustee, the Depositor and each Certificateholder harmless against any and all
taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the Trust
Estate, the Trustee, the Master Servicer, the Securities Administrator, the
Delaware Trustee, the Depositor and any Certificateholder may sustain in
connection with any actions of such Seller relating to a repurchase of a
Mortgage Loan other than in compliance with the terms of this Section 3.03 and
the Mortgage Loan Sale Agreement, to the extent that any such action causes an
Adverse REMIC Event.

(b) With respect to each Qualifying Substitute Mortgage Loan to be delivered to
the Trustee (or the Custodian) in exchange for a Deleted Mortgage Loan: (i) the
Depositor or the Seller, as applicable, must deliver to the Trustee (or a
Custodian) the Mortgage File for the Qualifying Substitute Mortgage Loan
containing the documents set forth in Section 2.01(b) along with a written
certification certifying as to the delivery of such Mortgage File and containing
the granting language set forth in Section 2.01(a); and (ii) the Seller and the
Depositor will be deemed to have made, with respect to such Qualifying
Substitute Mortgage Loan, each of the representations and warranties made by it
with respect to the related Deleted Mortgage Loan. As soon as practicable after
the delivery of any Qualifying Substitute Mortgage Loan hereunder, the Trustee,
at the expense of the Depositor and at the direction and with the cooperation of
the Servicer shall (i) with respect to a Qualifying Substitute Mortgage Loan
that is a Non-MERS Mortgage Loan, cause the Assignment of Mortgage to be
recorded by the Servicer if required pursuant to Section 2.01(c), or (ii) with
respect to a Qualifying Substitute Mortgage Loan that is a MERS Mortgage Loan,
cause to be taken such actions as are necessary to cause the Trustee (on behalf
of the Trust) to be clearly identified as the owner of each such Mortgage Loan
on the records of MERS if required pursuant to Section 2.01(c). The Trustee or
its designee shall amend the Mortgage Loan Schedule to reflect the withdrawal of
any Mortgage Loan from the terms of this Agreement and the Mortgage Loan
Purchase Agreement and the addition, if any, of a Qualified Substitute Mortgage
Loan.

(c) Notwithstanding any other provision of this Agreement, the right to
substitute Mortgage Loans pursuant to this Article III shall be subject to the
additional limitations that no substitution of a Qualifying Substitute Mortgage
Loan for a Deleted Mortgage Loan shall be made unless the Trustee has received
an Opinion of Counsel addressed to the Trustee (at the expense of the party
seeking to make the substitution) that, under current law, such substitution
will not cause an Adverse REMIC Event.

 

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ARTICLE IV

ADMINISTRATION AND SERVICING OF THE

MORTGAGE LOANS BY THE SERVICER

Section 4.01. Servicer to Perform Servicing Responsibilities.

(a) Contract for Servicing; Possession of Servicing Files. The Trustee does
hereby contract with the Servicer for the servicing of the Mortgage Loans for
the benefit of the Trust and the Trustee. The Servicer shall maintain a
Servicing File with respect to each Mortgage Loan in order to service such
Mortgage Loans pursuant to this Agreement and each Servicing File delivered to
the Servicer shall be held in trust by the Servicer for the benefit of the Trust
and the Trustee. The Servicer’s possession of any portion of the Mortgage Loan
documents shall be at the will of the Trustee for the sole purpose of
facilitating servicing of the related Mortgage Loan pursuant to this Agreement,
and such retention and possession by the Servicer shall be in a custodial
capacity only. The ownership of each Mortgage Note, Mortgage, and the contents
of the Servicing File shall be vested in the Trustee and the ownership of all
records and documents with respect to the related Mortgage Loan prepared by or
which come into the possession of the Servicer shall immediately vest in the
Trustee and shall be retained and maintained, in trust, by the Servicer at the
will of the Trustee in such custodial capacity only. The Servicing File retained
by the Servicer pursuant to this Agreement shall be identified in accordance
with the Servicer’s file tracking system to reflect the ownership of the related
Mortgage Loan by the Trustee. The Servicer shall release from its custody the
contents of any Servicing File retained by it only in accordance with this
Agreement.

(b) Books and Records. All rights arising out of the Mortgage Loans shall be
vested in the Trustee, subject to the Servicer’s rights to service and
administer the Mortgage Loans hereunder in accordance with the terms of this
Agreement. All funds received on or in connection with a Mortgage Loan, other
than the Servicing Fee and other compensation and reimbursement to which the
Servicer and the Master Servicer are entitled as set forth herein, including but
not limited to Section 4.04(c), shall be received and held by them in trust for
the benefit of the Trustee pursuant to the terms of this Agreement.

The Servicer shall forward to the Custodian original documents evidencing an
assumption, modification, consolidation or extension of any Mortgage Loan
entered into in accordance with Section 4.02(a) within one week of their
execution; provided, however, that the Servicer shall provide the Custodian with
a Servicer certified true copy of any such document submitted for recordation
within one week of its execution, and shall provide the original of any document
submitted for recordation or a copy of such document certified by the
appropriate public recording office to be a true and complete copy of the
original within 180 days of its submission for recordation.

Section 4.02. Servicing of the Mortgage Loans.

(a) Servicer to Service. The Servicer, acting directly or through one or more
Subservicers as provided in Section 4.09, shall service and administer the
Mortgage Loans from and after the Closing Date and, except where prior consent
of the Master Servicer is required under this

 

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Agreement, in accordance with this Agreement and with Accepted Servicing
Practices, and shall have full power and authority, acting alone, to do or cause
to be done 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 and with Accepted Servicing Practices and
exercise the same care that it customarily employs for its own account. Except
as set forth in this Agreement, the Servicer shall service the Mortgage Loans in
strict compliance with the servicing provisions of the Fannie Mae Guides
(special servicing option), which include, but are not limited to, provisions
regarding the liquidation of Mortgage Loans, the collection of Mortgage Loan
payments, the payment of taxes, insurance and other charges, the maintenance of
hazard insurance with a Qualified Insurer, the maintenance of mortgage
impairment insurance, the maintenance of fidelity bond and errors and omissions
insurance, inspections, the restoration of Mortgaged Property, the maintenance
of Primary Mortgage Insurance Policies and Lender Primary Mortgage Insurance
Policies, insurance claims, the title, management and disposition of REO
Property, permitted withdrawals with respect to REO Property, liquidation
reports, and reports of foreclosures and abandonments of Mortgaged Property, the
transfer of Mortgaged Property, the release of Mortgage Files, annual
statements, and examination of records and facilities. In the event of any
conflict, inconsistency or discrepancy between any of the servicing provisions
of this Agreement and any of the servicing provisions of the Fannie Mae Guides,
the provisions of this Agreement shall control and be binding upon the Servicer
and the other parties hereto.

Consistent with the terms of this Agreement, the Servicer may not waive, modify
or vary any term of any Mortgage Loan or consent to the postponement of any such
term or in any manner grant indulgence to any Mortgagor unless (1) such Mortgage
Loan is in default or (2) if in the Servicer’s reasonable and prudent
determination such waiver, modification, postponement or indulgence (a) prevents
an event of default by the borrower from existing that would not be in the best
interest of the Trust, Trustee and Certificateholders and (b) is not materially
adverse to the Trust, Trustee and the Certificateholders, provided, however,
that unless the Servicer has obtained the prior written consent of the Master
Servicer, the Servicer shall not permit any modification with respect to any
Mortgage Loan that would change the Mortgage Rate, defer for more than ninety
(90) days or forgive any payment of principal or interest, reduce or increase
the Outstanding Principal Balance (except for actual payments of principal) or
change the final maturity date on such Mortgage Loan. In the event of any such
modification which has been agreed to in writing by the Master Servicer and
which permits the deferral of interest or principal payments on any Mortgage
Loan, the Servicer shall, on the Business Day immediately preceding the Servicer
Remittance Date in any month in which any such principal or interest payment has
been deferred, deposit in the Custodial Account from its own funds, in
accordance with Section 4.03(c), the difference between (a) such month’s
principal and one month’s interest at the Net Mortgage Rate on the unpaid
principal balance of such Mortgage Loan and (b) the amount paid by the
Mortgagor. The Servicer shall be entitled to reimbursement for such advances to
the same extent as for all other advances pursuant to Section 4.03. Without
limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered, to prepare, execute and deliver on behalf of
itself, the Trust and the Trustee, 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. Notwithstanding anything herein to the contrary, the
Servicer may not enter into a forbearance agreement or

 

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similar arrangement with respect to any Mortgage Loan which runs more than one
hundred eighty (180) days after the first delinquent Due Date. Any such
agreement shall be approved by the Master Servicer and, if required, by the
Primary Mortgage Insurance Policy insurer and Lender Primary Mortgage Insurance
Policy insurer. Notwithstanding anything to the contrary contained in this
Agreement, the Servicer shall not make or permit any modification, waiver or
amendment of any term of any Mortgage Loan that would cause any Adverse REMIC
Event.

In servicing and administering the Mortgage Loans, the Servicer shall employ
Accepted Servicing Practices, giving due consideration to the reliance by the
Trust, Trustee and Certificateholders on the Servicer. Notwithstanding the
appointment of any Subservicer pursuant to Section 4.09, the Servicer shall
remain liable for the performance of all of the servicing obligations and
responsibilities under this Agreement.

(b) Servicer not to Sell Mortgage Loans. The Servicer shall not sell any
Mortgage Loan that is included in the Trust Estate, whether for the purpose of
maximizing liquidation proceeds or otherwise.

(c) Collection and Liquidation of Mortgage Loans. Continuously from the date
hereof until the date each Mortgage Loan ceases to be subject to this Agreement,
the Servicer will proceed diligently to collect all payments due under each
Mortgage Loan when the same shall become due and payable and shall, to the
extent such procedures shall be consistent with this Agreement, Accepted
Servicing Practices, and the terms and provisions of any related Primary
Mortgage Insurance Policy and Lender Primary Mortgage Insurance Policy, follow
such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Further, the
Servicer shall take special care in ascertaining and estimating annual escrow
payments, and all other charges that, as provided in the Mortgage, will become
due and payable, so that the installments payable by the Mortgagors will be
sufficient to pay such charges as and when they become due and payable.

The Servicer shall use its best efforts, consistent with the procedures that the
Servicer would use in servicing loans for its own account, consistent with
Accepted Servicing Practices, any Primary Mortgage Insurance Policies and Lender
Primary Mortgage Insurance Policies and the best interest of the Trust, the
Trustee and the Certificateholders, to foreclose upon or otherwise comparably
convert the ownership of properties securing such of the Mortgage Loans as come
into and continue in default and as to which no satisfactory arrangements can be
made for collection of delinquent payments pursuant to Section 4.02(a).
Foreclosure or comparable proceedings shall be initiated within ninety (90) days
of default for Mortgaged Properties for which no satisfactory arrangements can
be made for collection of delinquent payments, subject to state and federal law
and regulation. The Servicer shall use its best efforts to realize upon
defaulted Mortgage Loans in such manner as will maximize the receipt of
principal and interest by the Trust, taking into account, among other things,
the timing of foreclosure proceedings. The foregoing is subject to the
provisions that, in any case in which a Mortgaged Property shall have suffered
damage, the Servicer shall not be required to expend its own funds toward the
restoration of such property unless it shall determine in its discretion
(i) that such restoration will increase the proceeds of liquidation of the
related Mortgage Loan to the Trust after reimbursement to itself for such
expenses, and (ii) that such expenses will be recoverable by the

 

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Servicer through Insurance Proceeds, Condemnation Proceeds or Liquidation
Proceeds from the related Mortgaged Property, as contemplated in
Section 4.02(e). Servicer shall obtain prior approval of the Master Servicer as
to repair or restoration expenses in excess of ten thousand dollars ($10,000).
The Servicer shall notify the Master Servicer in writing of the commencement of
foreclosure proceedings and not less than five (5) days prior to the acceptance
or rejection of any offer of reinstatement. The Servicer shall be responsible
for all costs and expenses incurred by it in any such proceedings or functions;
provided, however, that it shall be entitled to reimbursement thereof from the
related property, as contemplated in Section 4.02(e). Notwithstanding anything
to the contrary contained herein, in connection with a foreclosure or acceptance
of a deed in lieu of foreclosure, in the event the Servicer has reasonable cause
to believe that a Mortgaged Property is contaminated by hazardous or toxic
substances or wastes, or if the Master Servicer or the Trustee otherwise
requests an environmental inspection or review of such Mortgaged Property, such
an inspection or review is to be conducted by a qualified inspector at the
Master Servicer’s or Trustee’s expense, as applicable. Upon completion of the
inspection, the Servicer shall promptly provide the Master Servicer and the
Trustee with a written report of the environmental inspection. After reviewing
the environmental inspection report, the Master Servicer shall determine how the
Servicer shall proceed with respect to the Mortgaged Property.

Notwithstanding the generality of the preceding paragraph, the Servicer shall
take such actions generally in accordance with the Servicer’s established
default timeline and in accordance with Accepted Servicing Practices with
respect to each Mortgage Loan and Mortgagor for which there is a delinquency
until such time as the related Mortgagor is current with all payments due under
the Mortgage Loan.

(d) Establishment of and Deposits to Custodial Account.

(i) The Servicer shall segregate and hold all funds collected and received
pursuant to the Mortgage Loans separate and apart from any of its own funds and
general assets and shall initially establish and maintain one or more Custodial
Accounts, in the form of time deposit or demand accounts, each of which accounts
shall be titled “HomeBanc Mortgage Corporation. in trust for U.S. Bank National
Association, as Trustee, for the HomeBanc Mortgage Trust 2006-1 Mortgage
Pass-Through Certificates” and referred to herein as a “Custodial Account.” Each
Custodial Account shall be an Eligible Account. Any funds deposited in the
Custodial Account shall at all times be insured by the FDIC up to the FDIC
insurance limits, or must be invested in Eligible Investments subject to the
provisions of Section 4.02(i) hereof; provided, however that any such Eligible
Investment shall not be sold or disposed of prior to its maturity. Funds
deposited in the Custodial Account may be drawn on by the Servicer in accordance
with Section 4.02(e) hereof. The creation of any Custodial Account shall be
evidenced by a letter agreement in the form of Exhibit C hereto. A copy of such
certification or letter agreement shall be furnished to the Trustee, the Master
Servicer and, upon request, to any subsequent owner of the Mortgage Loans. The
Servicer shall deposit or cause to be deposited into the Custodial Account, no
later than 48 hours after receipt of funds, and retain therein the following
payments and collections received or made by it subsequent to the Cut-off Date,
or received by it prior to the Cut-off Date but allocable to a period subsequent
thereto, other than in respect of principal and interest on the Mortgage Loans
due on or before the Cut-off Date:

(1) all payments on account of principal, including Principal Prepayments and
related penalties, on the Mortgage Loans;

 

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(2) all payments on account of interest on the Mortgage Loans adjusted to the
Net Mortgage Rate;

(3) all Net Liquidation Proceeds;

(4) any amounts required to be deposited by the Servicer in connection with any
REO Property pursuant to Section 4.02(o) and in connection therewith, the
Servicer shall provide the Master Servicer with written detail itemizing all of
such amounts;

(5) all Insurance Proceeds including amounts required to be deposited pursuant
to Section 4.02(j), other than proceeds to be held in the Escrow Account and
applied to the restoration or repair of the Mortgaged Property or released to
the Mortgagor in accordance with Accepted Servicing Practices, the Mortgage Loan
Documents or applicable law;

(6) all Condemnation Proceeds affecting any Mortgaged Property which are not
released to the Mortgagor in accordance with Accepted Servicing Practices, the
loan documents or applicable law;

(7) any Monthly Advances;

(8) with respect to each full or partial Principal Prepayment, any Prepayment
Interest Shortfalls, to the extent of the Servicer’s aggregate Servicing Fee
received with respect to the related Prepayment Period;

(9) any amounts required to be deposited by the Servicer pursuant to
Section 4.02(j) in connection with the deductible clause in any blanket hazard
insurance policy, such deposit shall be made from the Servicer’s own funds,
without reimbursement therefor; and

(10) any other amounts required to be deposited in the Custodial Account
pursuant this Agreement.

The foregoing requirements for deposit in the Custodial Account shall be
exclusive, it being understood and agreed that, without limiting the generality
of the foregoing, payments in the nature of the Servicing Fee and Ancillary
Income, need not be deposited by the Servicer in the Custodial Account. Any
interest paid on funds deposited in the Custodial Account by the depository
institution and any income or appreciation on any investment of such funds shall
accrue to the benefit of the Servicer and the Servicer shall be entitled to
retain and withdraw such interest from the Custodial Account pursuant

 

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to Section 4.02(e). The amount of any losses incurred in respect of any such
investments shall be deposited in the Custodial Account by the Servicer out of
its own funds, without any right of reimbursement therefor, immediately as
realized.

(ii) The Servicer agrees that it shall not create, incur or subject any Mortgage
Loans, or any funds that are deposited in any Custodial Account or Escrow
Account, or any funds that otherwise are or may become due or payable to or for
the benefit of the Trustee, to any claim, lien, security interest, judgment,
levy, writ of attachment or other encumbrance, nor assert by legal action or
otherwise any claim or right of setoff against any Mortgage Loan or any funds
collected on, or in connection with, a Mortgage Loan.

(e) Permitted Withdrawals from Custodial Account.

The Servicer may, from time to time, withdraw from the Custodial Account for the
following purposes:

(i) to make payments to the Master Servicer in the amounts and in the manner
provided for in Section 4.03(a);

(ii) to reimburse itself for Monthly Advances, the Servicer’s right to reimburse
itself pursuant to this subclause (ii) being limited to amounts received on the
related Mortgage Loan which represent late collections (net of the related
Servicing Fees) of principal and/or interest respecting which any such advance
was made, it being understood that, in the case of such reimbursement, the
Servicer’s right thereto shall be prior to the rights of the Certificateholders,
except that, where the Servicer is required to repurchase a Mortgage Loan,
pursuant to Section 3.03, the Servicer’s right to such reimbursement shall be
subsequent to the payment to the Trust of the Purchase Price pursuant to such
Section and all other amounts required to be paid to the Trust with respect to
such Mortgage Loan;

(iii) to reimburse itself for unreimbursed Monthly Advances and Servicing
Advances and any unpaid Servicing Fees (or REO administration fees described in
Section 4.02(o)), the Servicer’s right to reimburse itself pursuant to this
subclause (3) with respect to any Mortgage Loan being limited to related
proceeds from Liquidation Proceeds, Condemnation Proceeds and Insurance Proceeds
in accordance with the relevant provisions of the Fannie Mae Guides, the
Termination Price or as otherwise set forth in this Agreement; any recovery
shall be made upon liquidation of the REO Property;

(iv) to pay to itself as part of its servicing compensation (a) any interest
income or appreciation earned on funds in the Custodial Account (all such
interest to be withdrawn monthly not later than each Servicer Remittance Date),
(b) the Servicing Fee from that portion of any payment or recovery as to
interest with respect to a particular Mortgage Loan;

 

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(v) to pay to itself with respect to each Mortgage Loan that has been
repurchased pursuant to Section 3.03 all amounts received thereon and not
distributed as of the date on which the related Purchase Price is determined;

(vi) to transfer funds to another Eligible Account in accordance with
Section 4.02(i) hereof;

(vii) to remove funds inadvertently placed in the Custodial Account by the
Servicer;

(viii) to clear and terminate the Custodial Account upon the termination of this
Agreement; and

(ix) to reimburse itself for any Nonrecoverable Advances and amounts
reimbursable pursuant to Section 4.05(b) and Section 4.06(b).

(f) Establishment of and Deposits to Escrow Account. The Servicer shall
segregate and hold all funds collected and received pursuant to a Mortgage Loan
constituting Escrow Payments separate and apart from any of its own funds and
general assets and shall establish and maintain one or more Escrow Accounts, in
the form of time deposit or demand accounts, titled “HomeBanc Mortgage
Corporation in trust for U.S. Bank National Association, as Trustee, for the
HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates.” The Escrow
Accounts shall be an Eligible Account. Nothing herein shall require the Servicer
to compel a Mortgagor to establish an Escrow Account in violation of applicable
law. Funds deposited in the Escrow Account may be drawn on by the Servicer in
accordance with Section 4.02(g). The creation of any Escrow Account shall be
evidenced by a letter agreement in the form of Exhibit D hereto. A copy of such
certification or letter agreement shall be furnished to the Master Servicer.

The Servicer shall deposit in the Escrow Account or Accounts on a daily basis,
and in the Escrow Account or Accounts no later than 48 hours after receipt of
funds, and retain therein:

(i) all Escrow Payments collected on account of the Mortgage Loans, if required,
for the purpose of effecting timely payment of any such items as required under
the terms of this Agreement to be paid by the related Mortgagor to the Servicer;

(ii) all Insurance Proceeds which are to be applied to the restoration or repair
of any Mortgaged Property; and

(iii) all Servicing Advances for Mortgagors whose Escrow Payments are
insufficient to cover escrow disbursements.

The Servicer shall make withdrawals from the Escrow Account only to effect such
payments as are required under this Agreement, as set forth in Section 4.02(g).
The Servicer shall be entitled to retain any interest earnings paid on funds
deposited in the Escrow Account by the depository institution, other than
interest on escrowed funds required by law to be paid to the Mortgagor. To the
extent required by law, the Servicer shall pay interest on escrowed funds to

 

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the Mortgagor notwithstanding that the Escrow Account may be non-interest
bearing or the interest earnings paid thereon are insufficient for such
purposes.

(g) Permitted Withdrawals from Escrow Account. Withdrawals from the Escrow
Account or Accounts may be made by the Servicer only:

(i) to effect timely payments of ground rents, taxes, assessments, water rates,
Primary Mortgage Insurance Policy premiums, if applicable, condominium charges,
fire and hazard insurance premiums or other items constituting Escrow Payments
for the related Mortgage;

(ii) to reimburse the Servicer for any Servicing Advance of an Escrow Payment
made by the Servicer with respect to a related Mortgage Loan, but only from
amounts received on the related Mortgage Loan which represent late collections
of Escrow Payments thereunder;

(iii) to refund to any Mortgagor any funds found to be in excess of the amounts
required to be escrowed under the terms of the related Mortgage Loan;

(iv) to the extent permitted by applicable law, for transfer to the Custodial
Account and application to reduce the principal balance of the Mortgage Loan in
accordance with the terms of the related Mortgage and Mortgage Note;

 

(v) for application to restoration or repair of the Mortgaged Property in
accordance with Section 4.02(n);

(vi) to pay to the Servicer, or any Mortgagor to the extent required by law, any
interest paid on the funds deposited in the Escrow Account;

(vii) to clear and terminate the Escrow Account on the termination of this
Agreement. As part of its servicing duties, the Servicer shall pay to the
Mortgagors interest on funds in Escrow Account, to the extent required by law,
and to the extent that interest earned on funds in the Escrow Account is
insufficient, shall pay such interest from its own funds, without any
reimbursement therefor; and

(viii) to pay to the Mortgagors or other parties Insurance Proceeds deposited in
accordance with Section 4.02(f).

(h) Payment of Taxes, Insurance and Other Charges; Maintenance of Primary
Mortgage Insurance Policies; Collections Thereunder.

(i) With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting the status of ground rents, taxes, assessments, water rates
and other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage insurance premiums and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges, including renewal premiums and shall effect payment thereof prior to
the applicable penalty or termination

 

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date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Mortgagor in the Escrow Account which
shall have been estimated and accumulated by the Servicer in amounts sufficient
for such purposes, as allowed under the terms of the Mortgage or applicable law.
To the extent that the Mortgage does not provide for Escrow Payments, the
Servicer shall determine that any such payments are made by the Mortgagor at the
time they first become due. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect timely payments of all such
bills irrespective of the Mortgagor’s faithful performance in the payment of
same or the making of the Escrow Payments and shall make advances from its own
funds to effect such payments (which will constitute a Servicing Advance).

(ii) The Servicer will maintain in full force and effect Primary Mortgage
Insurance Policies or Lender Primary Mortgage Insurance Policies issued by a
Qualified Insurer with respect to each Mortgage Loan for which such coverage is
herein required. Such coverage will be terminated only with the approval of the
Master Servicer, or as required by applicable law or regulation. The Servicer
will not cancel or refuse to renew any Primary Mortgage Insurance Policy or
Lender Primary Mortgage Insurance Policy in effect on the Closing Date that is
required to be kept in force under this Agreement unless a replacement Primary
Mortgage Insurance Policy or Lender Primary Mortgage Insurance Policy for such
canceled or nonrenewed policy is obtained from and maintained with a Qualified
Insurer. The Servicer shall not take any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy or Lender
Primary Mortgage Insurance Policy of any loss which, but for the actions of the
Servicer would have been covered thereunder. In connection with any assumption
or substitution agreement entered into or to be entered into pursuant to
Section 4.04(a), the Servicer shall promptly notify the insurer under the
related Primary Mortgage Insurance Policy or Lender Primary Mortgage Insurance
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of such policy and shall take all actions which may be required
by such insurer as a condition to the continuation of coverage under the Primary
Mortgage Insurance Policy or Lender Primary Mortgage Insurance Policy. If such
Primary Mortgage Insurance Policy or Lender Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Servicer shall obtain a replacement Primary Mortgage Insurance Policy or Lender
Primary Mortgage Insurance Policy as provided above.

In connection with its activities as servicer, the Servicer agrees to prepare
and present, on behalf of itself and the Trust, claims to the insurer under any
Primary Mortgage Insurance Policy in a timely fashion in accordance with the
terms of such Primary Mortgage Insurance Policy or Lender Primary Mortgage
Insurance Policy and, in this regard, to take such action as shall be necessary
to permit recovery under any Primary Mortgage Insurance Policy or Lender Primary
Mortgage Insurance Policy respecting a defaulted Mortgage Loan. Pursuant to
Section 4.02(d), any amounts collected by the Servicer under any Primary
Mortgage Insurance Policy or Lender Primary Mortgage Insurance Policy shall be
deposited in the Custodial Account, subject to withdrawal pursuant to
Section 4.02(e).

 

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(i) Protection of Accounts. The Servicer may transfer the Custodial Account or
the Escrow Account to a different Eligible Institution from time to time. Such
transfer shall be made only upon obtaining the consent of the Master Servicer,
which consent shall not be withheld unreasonably, and the Servicer shall give
notice to the Master Servicer and the Trustee of any change in the location of
the Custodial Account.

(j) Maintenance of Hazard Insurance. The Servicer shall cause to be maintained
for each Mortgage Loan fire and hazard insurance with extended coverage as is
acceptable to Fannie Mae or Freddie Mac and customary in the area where the
Mortgaged Property is located in an amount which is equal to the lesser of
(i) the maximum insurable value of the improvements securing such Mortgage Loan
or (ii) the greater of (a) the Outstanding Principal Balance of the Mortgage
Loan, and (b) an amount such that the proceeds thereof shall be sufficient to
prevent the Mortgagor and/or the mortgagee from becoming a co-insurer. If
required by the Flood Disaster Protection Act of 1973, as amended, each Mortgage
Loan shall be covered by a flood insurance policy meeting the requirements of
the current guidelines of the Federal Insurance Administration in effect with an
insurance carrier acceptable to Fannie Mae or Freddie Mac, in an amount
representing coverage not less than the least of (i) the Outstanding Principal
Balance of the Mortgage Loan, (ii) the maximum insurable value of the
improvements securing such Mortgage Loan or (iii) the maximum amount of
insurance which is available under the Flood Disaster Protection Act of 1973, as
amended. If at any time during the term of the Mortgage Loan, the Servicer
determines in accordance with applicable law and pursuant to the Fannie Mae
Guides that a Mortgaged Property is located in a special flood hazard area and
is not covered by flood insurance or is covered in an amount less than the
amount required by the Flood Disaster Protection Act of 1973, as amended, the
Servicer shall notify the related Mortgagor that the Mortgagor must obtain such
flood insurance coverage, and if said Mortgagor fails to obtain the required
flood insurance coverage within forty-five (45) days after such notification,
the Servicer shall immediately force place the required flood insurance on the
Mortgagor’s behalf. The Servicer shall also maintain on each REO Property, fire
and hazard insurance with extended coverage in an amount which is at least equal
to the maximum insurable value of the improvements which are a part of such
property, and, to the extent required and available under the Flood Disaster
Protection Act of 1973, as amended, flood insurance in an amount as provided
above. Any amounts collected by the Servicer under any such policies other than
amounts to be deposited in the Escrow Account and applied to the restoration or
repair of the Mortgaged Property or REO Property, or released to the Mortgagor
in accordance with Accepted Servicing Practices, shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 4.02(e). It is
understood and agreed that no other additional insurance need be required by the
Servicer of the Mortgagor or maintained on property acquired in respect of the
Mortgage Loan, other than pursuant to this Agreement, the Fannie Mae Guides or
such applicable state or federal laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such policies shall be
endorsed with standard mortgagee clauses with loss payable to the Servicer and
its successors and/or assigns and shall provide for at least thirty (30) days’
prior written notice of any cancellation, reduction in the amount or material
change in coverage to the Servicer. The Servicer shall not interfere with the
Mortgagor’s freedom of choice in selecting either his insurance carrier or
agent, provided, however, that the Servicer shall not accept any such insurance
policies from insurance companies unless such companies are Qualified Insurers.

 

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(k) Maintenance of Mortgage Impairment Insurance. In the event that the Servicer
shall obtain and maintain a blanket policy issued by an insurer acceptable to
Fannie Mae or Freddie Mac insuring against hazard losses on all of the Mortgage
Loans, then, to the extent such policy provides coverage in an amount equal to
the amount required pursuant to Section 4.02(j) and otherwise complies with all
other requirements of Section 4.02(j), it shall conclusively be deemed to have
satisfied its obligations as set forth in Section 4.02(j), it being understood
and agreed that such policy may contain a deductible clause, in which case the
Servicer shall, in the event that there shall not have been maintained on the
related Mortgaged Property or REO Property a policy complying with
Section 4.02(j), and there shall have been a loss which would have been covered
by such policy, deposit in the Custodial Account the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of the Master Servicer and the Trustee,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy. Upon request of the Master Servicer or Trustee, the
Servicer shall cause to be delivered to the Master Servicer or the Trustee, as
applicable, a certified true copy of such policy and shall use its best efforts
to obtain a statement from the insurer thereunder that such policy shall in no
event be terminated or materially modified without thirty (30) days’ prior
written notice to the Master Servicer and the Trustee.

(l) Maintenance of Fidelity Bond and Errors and Omissions Insurance. The
Servicer shall maintain, at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy, with broad coverage with responsible
companies on all officers, employees or other persons acting in any capacity
with regard to the Mortgage Loan to handle funds, money, documents and papers
relating to the Mortgage Loan. The Servicer Fidelity Bond 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 and fraud of such
persons. The Servicer Errors and Omissions Insurance Policy shall protect and
insure the Servicer against losses arising out of errors and omissions and
negligent acts of such persons. Such Servicer Errors and Omissions Insurance
Policy shall also protect and insure the Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 4.02(l) requiring the Servicer Fidelity Bond or the Servicer 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 in the Fannie Mae Guides. Upon
request of the Master Servicer or the Trustee, the Servicer shall deliver to the
Master Servicer and the Trustee a certificate from the surety and the insurer as
to the existence of the Servicer Fidelity Bond and the Servicer Errors and
Omissions Insurance Policy and shall obtain a statement from the surety and the
insurer that such Servicer Fidelity Bond or Servicer Errors and Omissions
Insurance Policy shall in no event be terminated or materially modified without
thirty (30) days prior written notice to the Master Servicer. The Servicer shall
notify the Master Servicer and the Trustee within five (5) business days of
receipt of notice that such Servicer Fidelity Bond or Servicer Errors and
Omissions Insurance Policy will be, or has been, materially modified or
terminated. The Trustee on behalf of the Trust must be named as a loss payee on
the Servicer Fidelity Bond and as an additional insured on the Servicer Errors
and Omissions Insurance Policy. Upon request by the Master Servicer, the
Servicer shall provide the

 

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Master Servicer with an insurance certificate certifying coverage under this
Section 4.02(l), and will provide an update to such certificate upon request, or
upon renewal or material modification of coverage.

(m) Inspections. The Servicer shall inspect the Mortgaged Property as often as
deemed necessary by the Servicer to assure itself that the value of the
Mortgaged Property is being preserved. In addition, the Servicer shall inspect
the Mortgaged Property and/or take such other actions as may be necessary or
appropriate in accordance with Accepted Servicing Practices or as may be
required by the primary mortgage guaranty insurer. The Servicer shall keep a
written report of each such inspection.

(n) Restoration of Mortgaged Property. The Servicer need not obtain the approval
of the Master Servicer prior to releasing any Insurance Proceeds or Condemnation
Proceeds to the Mortgagor to be applied to the restoration or repair of the
Mortgaged Property if such release is in accordance with Accepted Servicing
Practices. At a minimum, the Servicer shall comply with the following conditions
in connection with any such release of Insurance Proceeds or Condemnation
Proceeds:

(i) the Servicer shall receive satisfactory independent verification of
completion of repairs and issuance of any required approvals with respect
thereto;

(ii) the Servicer shall take all steps necessary to preserve the priority of the
lien of the Mortgage, including, but not limited to requiring waivers with
respect to mechanics’ and materialmen’s liens; and

(iii) pending repairs or restoration, the Servicer shall place the Insurance
Proceeds or Condemnation Proceeds in the Escrow Account.

(o) Title, Management and Disposition of REO Property. In the event that title
to the Mortgaged Property is acquired in foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be taken in the name of the
Trustee or its designee, or in the event the Trustee or its designee is not
authorized or permitted to hold title to real property in the state where the
REO Property is located, or would be adversely affected under the “doing
business” or tax laws of such state by so holding title, the deed or certificate
of sale shall be taken in the name of such Person or Persons as shall be
consistent with an Opinion of Counsel obtained by the Servicer from an attorney
duly licensed to practice law in the state where the REO Property is located.
Any Person or Persons holding such title other than the Trustee shall
acknowledge in writing that such title is being held as nominee for the benefit
of the Trustee on behalf of the Trust.

The Servicer shall notify the Master Servicer in accordance with the Fannie Mae
Guides of each acquisition of REO Property upon such acquisition (and, in any
event, shall provide notice of the consummation of any foreclosure sale within
three (3) Business Days from the date the Servicer receives notice of such
consummation), together with a copy of the drive by appraisal or brokers price
opinion of the Mortgaged Property obtained in connection with such acquisition,
and thereafter assume the responsibility for marketing such REO property in
accordance with Accepted Servicing Practices. Thereafter, the Servicer shall
continue to provide

 

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certain administrative services to the Master Servicer relating to such REO
Property as set forth in this Section 4.02(o). No Servicing Fee shall be
assessed or otherwise accrue on any REO Property from and after the date on
which it becomes an REO Property.

The Servicer shall, either itself or through an agent selected by the Servicer,
and in accordance with the Fannie Mae Guides manage, conserve, protect and
operate each REO Property in the same manner that it manages, conserves,
protects and operates other foreclosed property for its own account, and in the
same manner that similar property in the same locality as the REO Property is
managed. The Servicer shall cause each REO Property to be inspected promptly
upon the acquisition of title thereto and shall cause each REO Property to be
inspected at least monthly thereafter or more frequently as required by the
circumstances. The Servicer shall make or cause to be made a written report of
each such inspection. Such reports shall be retained in the Mortgage File and
copies thereof shall be forwarded by the Servicer to the Master Servicer.

The Servicer shall use its best efforts to dispose of the REO Property as soon
as possible and shall sell such REO Property in any event within one year after
title has been taken to such REO Property, unless the Servicer determines, and
gives an appropriate notice to the Master Servicer to such effect, that a longer
period is necessary for the orderly liquidation of such REO Property. If a
longer period than one (1) year is permitted under the foregoing sentence and is
necessary to sell any REO Property, the Servicer shall report monthly to the
Master Servicer as to the progress being made in selling such REO Property.
Notwithstanding the foregoing, the Servicer shall dispose of such Mortgaged
Property prior to the close of the third taxable year after its acquisition by
the Trust unless the Trustee and the Securities Administrator shall have been
supplied with an Opinion of Counsel (which shall not be at the expense of any
such recipient) to the effect that the holding by the Trust of such Mortgaged
Property subsequent to such three-year period will not result in an Adverse
REMIC Event, in which case the Trust may continue to hold such Mortgaged
Property (subject to any conditions contained in such Opinion of Counsel).
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) cause an Adverse REMIC Event, unless the
Servicer has agreed to indemnify and hold harmless the Trust with respect to the
imposition of any such taxes. The Servicer shall prepare for and deliver to the
Master Servicer a statement with respect to any REO Property that has been
rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Securities Administrator to comply with the
reporting requirements of the REMIC Provisions. The net monthly rental income,
if any, from such REO Property shall be deposited in the Collection Account no
later than the close of business on each Determination Date. No REO Property
shall be marketed for less than the Appraised Value, without the prior consent
of Master Servicer. No REO Property shall be sold for less than ninety five
percent (95%) of its Appraised Value, without the prior consent of Trustee. All
requests for reimbursement of Servicing Advances shall be in accordance with the
Fannie Mae Guides. The disposition of REO Property shall be carried out by the
Servicer at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interests of the

 

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Trust (subject to the above conditions) only with the prior written consent of
the Master Servicer. The Servicer shall provide monthly reports to the Master
Servicer in reference to the status of the marketing of the REO Properties.

(p) Compliance with Safeguarding Customer Information Requirements. The Servicer
has implemented and will maintain security measures designed to meet the
objectives of the Interagency Guidelines Establishing Standards for Safeguarding
Customer Information published in final form on February 1, 2001, 66 Fed. Reg.
8616, and the rules promulgated thereunder, as amended from time to time (the
“Guidelines”).

(q) Notification of Maturity Date. With respect to each Mortgage Loan, the
Servicer shall execute and deliver to the Mortgagor any and all necessary
notices required under applicable law and the terms of the related Mortgage Note
and Mortgage regarding the maturity date if required under applicable law.

 

Section 4.03. Payments to the Master Servicer.

(a) Remittances. On each Servicer Remittance Date, the Servicer shall remit by
wire transfer of immediately available funds to the Master Servicer (i) all
amounts credited to the Custodial Account as of the close of business on the
preceding Determination Date, net of charges against or withdrawals from the
Custodial Account pursuant to Section 4.02(e), plus (ii) all Monthly Advances,
if any, which the Servicer is obligated to remit pursuant to Section 4.03(c),
plus, (iii) Compensating Interest Payments, minus (iv) any amounts attributable
to Monthly Payments collected but due on a Due Date or dates subsequent to the
preceding Determination Date, which amounts shall be remitted on the Servicer
Remittance Date next succeeding the Collection Period for such amounts. It is
understood that, by operation of Section 4.02(d), the remittance on the first
Servicer Remittance Date with respect to the Mortgage Loans is to include
principal collected after the Cut-off Date through the preceding Determination
Date plus interest, adjusted to the Net Mortgage Rate collected through such
Determination Date exclusive of any portion thereof allocable to the period
prior to the Cut-off Date, with the adjustments specified in clauses (ii),
(iii) and (iv) above.

With respect to any remittance received by the Master Servicer after the
Servicer Remittance Date, the Servicer shall pay to the Master Servicer interest
on any such late payment at a per annum rate equal to the Prime Rate, adjusted
as of the date of each change plus two (2) percentage points, but in no event
greater than the maximum amount permitted by applicable law. Such interest shall
cover the period commencing with the day following the Business Day such payment
was due and ending with the Business Day on which such payment is made to the
Master Servicer, both inclusive. The payment by the Servicer of any such
interest shall not be deemed an extension of time for payment or a waiver of any
Event of Default by the Servicer. On each Servicer Remittance Date, the Servicer
shall provide a remittance report detailing all amounts being remitted pursuant
to this Section 4.03(a).

 

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All remittances required to be made to the Master Servicer shall be made to the
following wire account or to such other account as may be specified by the
Master Servicer from time to time:

Wells Fargo Bank, NA

San Francisco, CA

ABA#: 121-000-248

Account Name: Corporate Trust Clearing

Account Number: 3970771416

For further credit to: 50905800, HomeBanc 2006-1

(b) Statements to Master Servicer and Securities Administrator. The Servicer
shall furnish to Master Servicer an individual loan accounting report, as of the
last Business Day of each month, in the Servicer’s assigned loan number order to
document Mortgage Loan payment activity on an individual Mortgage Loan basis.
With respect to each month, the corresponding individual loan accounting report
shall be received by the Master Servicer no later than the fifth Business Day of
the following month on a disk or tape or other computer-readable format in such
format as may be mutually agreed upon by both Master Servicer and Servicer, and
no later than the fifth Business Day of the following month in hard copy, and
shall contain the following:

(i) With respect to each Monthly Payment, the amount of such remittance
allocable to principal (including a separate breakdown of any Principal
Prepayment, including the date of such prepayment, and any prepayment penalties
or premiums, along with a detailed report of interest on principal prepayment
amounts remitted in accordance with Section 4.02(d));

(ii) with respect to each Monthly Payment, the amount of such remittance
allocable to interest;

(iii) the amount of servicing compensation received by the Servicer during the
prior distribution period;

(iv) the aggregate Scheduled Principal Balance of the Mortgage Loans;

(v) the aggregate of any expenses reimbursed to the Servicer during the prior
distribution period pursuant to Section 4.02(e); and

(vi) The number and aggregate Outstanding Principal Balances of Mortgage Loans
(a) Delinquent (1) 30 to 59 days, (2) 60 to 89 days, (3) 90 days or more and
(4) 180 days or more and charged-off; (b) as to which foreclosure has commenced;
and (c) as to which REO Property has been acquired.

The Servicer shall provide a monthly remittance report to the Master Servicer in
a mutually agreeable format. The Servicer shall also provide a default report
containing the information specified in Exhibit E attached hereto with each such
report.

The Servicer shall prepare and file any and all information statements or other
filings required to be delivered to any governmental taxing authority or to the
Master Servicer and the Securities Administrator pursuant to any applicable law
with respect to the Mortgage Loans and the transactions contemplated hereby. In
addition, the Servicer shall provide the Master Servicer and the Securities
Administrator with such information as may be requested by it and required

 

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for the completion of any tax reporting responsibility of the Securities
Administrator within such reasonable time frame as shall enable the Securities
Administrator to timely file each Schedule Q (or other applicable tax report or
return) required to be filed by it.

(c) Monthly Advances by Servicer. Not later than the close of business on the
Business Day preceding each Servicer Remittance Date, the Servicer shall deposit
in the Custodial Account an amount equal to all payments not previously advanced
by the Servicer, whether or not deferred pursuant to Section 4.03(a), of
principal (due after the Cut-off Date) and interest not allocable to the period
prior to the Cut-off Date, adjusted to the Net Mortgage Rate, which were due on
a Mortgage Loan and delinquent at the close of business on the related
Determination Date; provided, however, that the Servicer may use the Amount Held
for Future Distribution (as defined below) then on deposit in the Custodial
Account to make such Monthly Advances. The Servicer shall deposit any portion of
the Amount Held for Future Distribution used to pay Monthly Advances into the
Custodial Account on any future Servicer Remittance Date to the extent that the
funds that are available in the Custodial Account for remittance to the Master
Servicer on such Servicer Remittance Date are less than the amount of payments
required to be made to the Master Servicer on such Servicer Remittance Date.

The “Amount Held for Future Distribution” as to any Servicer Remittance Date
shall be the total of the amounts held in the Custodial Account at the close of
business on the preceding Determination Date which were received after the
Cut-off Date on account of (i) Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds and Principal Prepayments received or made in the month of
such Servicer Remittance Date, and (ii) payments which represent early receipt
of Monthly Payments of principal and interest due on a date or dates subsequent
to the related Due Date.

The Servicer’s obligation to make such Monthly Advances as to any Mortgage Loan
will continue through the last Monthly Payment due prior to the payment in full
of the Mortgage Loan, or through the Servicer Remittance Date prior to the date
on which the Mortgaged Property liquidates (including Insurance Proceeds,
proceeds from the sale of REO Property or Condemnation Proceeds) with respect to
the Mortgage Loan unless the Servicer deems such advance to be a Nonrecoverable
Advance. In such event, the Servicer shall deliver to the Master Servicer an
Officer’s Certificate of the Servicer to the effect that an officer of the
Servicer has reviewed the related Mortgage File and has made the reasonable
determination that any additional advances are nonrecoverable.

(d) Liquidation Reports. Upon the foreclosure sale of any Mortgaged Property,
the acquisition thereof by the Trustee pursuant to a deed in lieu of foreclosure
or the charge off of a Mortgage Loan that is 180 days Delinquent, the Servicer
shall submit to the Trustee and the Master Servicer a monthly liquidation report
with respect to such Mortgaged Property. The Servicer shall also provide reports
on the status of REO Property containing such information as the Trustee may
reasonably request.

(e) Credit Reporting. For each Mortgage Loan, in accordance with its current
servicing practices, the Servicer will accurately and fully report its
underlying borrower credit files to each of the following credit repositories or
their successors: Equifax Credit Information Services, Inc., Trans Union, LLC
and Experian Information Solution, Inc., on a monthly basis in a timely manner.

 

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Section 4.04. General Servicing Procedures.

(a) Transfers of Mortgaged Property. The Servicer will, to the extent it has
actual knowledge of any conveyance or prospective conveyance by any Mortgagor of
the Mortgaged Property (whether by absolute conveyance or by contract of sale,
and whether or not the Mortgagor remains or is to remain liable under the
Mortgage Note and/or the Mortgage), exercise its rights to accelerate the
maturity of such Mortgage Loan under any “due-on-sale” clause to the extent
permitted by law; provided, however, that the Servicer shall not exercise any
such rights if prohibited by law or the terms of the Mortgage Note from doing so
or if the exercise of such rights would impair or threaten to impair any
recovery under the related Primary Mortgage Insurance Policy or Lender Primary
Mortgage Insurance Policy, if any. If the Servicer reasonably believes it is
unable under applicable law to enforce such “due-on- sale” clause, the Servicer
will enter into an assumption agreement with the person to whom the Mortgaged
Property has been conveyed or is proposed to be conveyed, pursuant to which such
person becomes liable under the Mortgage Note and, to the extent permitted by
applicable state law, the Mortgagor remains liable thereon. Where an assumption
is allowed pursuant to this Section 4.04(a), the Servicer, with the prior
consent of the Master Servicer, the Trustee and the primary mortgage insurer, if
any, is authorized to enter into a substitution of liability agreement with the
person to whom the Mortgaged Property has been conveyed or is proposed to be
conveyed pursuant to which the original mortgagor is released from liability and
such Person is substituted as mortgagor and becomes liable under the related
Mortgage Note. Any such substitution of liability agreement shall be in lieu of
an assumption agreement.

In connection with any such assumption or substitution of liability, the
Servicer shall follow the underwriting practices and procedures of the Servicer.
With respect to an assumption or substitution of liability, the Mortgage Rate
borne by the related Mortgage Note, the amount of the Monthly Payment and the
maturity date may not be changed (except pursuant to the terms of the Mortgage
Note). If the credit of the proposed transferee does not meet such underwriting
criteria, the Servicer diligently shall, to the extent permitted by the Mortgage
or the Mortgage Note and by applicable law, accelerate the maturity of the
Mortgage Loan. The Servicer shall notify the Master Servicer and the Trustee
that any such substitution of liability or assumption agreement has been
completed and shall forward to the Custodian the original of any such
substitution of liability or assumption agreement, which document shall be added
to the related Mortgage File and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. All fees collected by the Servicer for entering
into an assumption or substitution of liability agreement shall belong to the
Servicer.

Notwithstanding the foregoing paragraphs of this Section 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. For purposes of
this Section 4.04(a), the term “assumption” is deemed to also include a sale of
the Mortgaged Property subject to the Mortgage that is not accompanied by an
assumption or substitution of liability agreement.

 

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(b) Satisfaction of Mortgages and Release of Mortgage Files. Upon the payment in
full of any Mortgage Loan, or the receipt by the Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, the
Servicer shall immediately notify the Master Servicer by a certification of a
Servicing Officer, which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Custodial Account pursuant to
Section 4.02(d) have been or will be so deposited, and the Servicer shall
request delivery to it of the portion of the Mortgage File held by the Custodian
in accordance with the provisions of Section 5.12.

In the event the Servicer satisfies or releases a Mortgage without having
obtained payment in full of the indebtedness secured by the Mortgage or should
it otherwise prejudice any right the Trustee on behalf of the Trust may have
under the mortgage instruments, the Servicer, upon written demand, shall remit
within two (2) Business Days to the Trust the then Outstanding Principal Balance
of the related Mortgage Loan by deposit thereof in the Custodial Account. The
Servicer shall maintain the Servicer Fidelity Bond and the Servicer Errors and
Omissions Insurance Policy insuring the Servicer against any loss it may sustain
with respect to any Mortgage Loan not satisfied in accordance with the
procedures set forth herein.

(c) Servicing Compensation. As compensation for its services hereunder, the
Servicer shall be entitled to withdraw from the Custodial Account (to the extent
of interest payments collected on the Mortgage Loans) or to retain from interest
payments collected on the Mortgage Loans, the Servicing Fee, subject to
Compensating Interest Payments. Additional servicing compensation in the form of
assumption fees, as provided in Section 4.04(a), and late payment charges or
otherwise shall be retained by the Servicer to the extent not required to be
deposited in the Custodial Account. No Servicing Fee shall be payable in
connection with partial Monthly Payments. The Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for in this Agreement.

Section 4.05. Representations, Warranties and Agreements.

(a) Representations, Warranties and Agreements of the Servicer. The Servicer, as
a condition to the consummation of the transactions contemplated hereby, hereby
makes the following representations and warranties to the Master Servicer, the
Depositor, the Seller, the Trustee and the Securities Administrator, as of the
Closing Date:

(i) Due Organization and Authority. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia and has all licenses necessary to carry out its business as now being
conducted; the Servicer has the full power and authority and legal right to
execute, deliver and perform, and to enter into and consummate all transactions
contemplated by this Agreement and to conduct its business as presently
conducted, has duly authorized the execution, delivery and performance of this
Agreement and any agreements contemplated hereby, has duly executed and
delivered this Agreement and any agreements contemplated hereby, and

 

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this Agreement and any agreements contemplated hereby, constitutes a legal,
valid and binding obligation of the Servicer, enforceable against it in
accordance with its terms, and all requisite corporate action has been taken by
the Servicer to make this Agreement and all agreements contemplated hereby valid
and binding upon the Servicer in accordance with their terms;

(ii) Ordinary Course of Business. The consummation of the transactions
contemplated by this Agreement are in the ordinary course of business of the
Servicer;

(iii) No Conflicts. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, or the fulfillment of or
compliance with the terms and conditions of this Agreement will conflict with
any of the terms, conditions or provisions of the Servicer’s charter or by-laws
or materially conflict with or result in a material breach of any of the terms,
conditions or provisions of any legal restriction or any agreement or instrument
to which the Servicer is now a party or by which it is bound, or constitute a
default or result in an acceleration under any of the foregoing, or result in
the material violation of any law, rule, regulation, order, judgment or decree
to which the Servicer or their properties are subject;

(iv) Ability to Perform. The Servicer does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
contained in this Agreement;

(v) No Litigation Pending. There is no litigation, suit, proceeding or
investigation pending or, to the best of the Servicer’s knowledge, threatened,
or any order or decree outstanding, with respect to the Servicer which, either
in any one instance or in the aggregate, is reasonably likely to have a material
adverse effect on the sale of the Mortgage Loans, the execution, delivery,
performance or enforceability of this Agreement, or which is reasonably likely
to have a material adverse effect on the financial condition of the Servicer;

(vi) No Consent Required. No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution, delivery and
performance by the Servicer of or compliance by the Servicer with this
Agreement, or if required, such approval has been obtained prior to the Closing
Date;

(vii) Servicing Practices. The servicing practices used by the Servicer have
been legal and in accordance with applicable laws and regulations and the
mortgage loan documents, and in all material respects proper and prudent in the
mortgage servicing business. Each Mortgage Loan has been serviced in all
material respects with Accepted Servicing Practices. With respect to escrow
deposits and payments that the Servicer, on behalf of the Trust, is entitled to
collect, all such payments are in the possession of, or under the control of,
the Servicer, and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All escrow
payments have been collected in full compliance with state and federal law and
the provisions of the related Mortgage Note and Mortgage. As to any Mortgage
Loan that is the subject of an escrow, escrow of funds is not prohibited by
applicable law and

 

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has been established. No escrow deposits or other charges or payments due under
the Mortgage Note have been capitalized under any Mortgage or the related
Mortgage Note;

(viii) Ability to Service. The Servicer is equipped with such facilities,
procedures and personnel necessary for the sound servicing of such mortgage
loans. The Servicer is duly qualified, licensed, registered and otherwise
authorized under all applicable federal, state and local laws, and regulations,
if applicable, and is in good standing to sell mortgage loans to and service
mortgage loans for Fannie Mae and Freddie Mac and no event has occurred which
would make Servicer unable to comply with eligibility requirements or which
would require notification to either Fannie Mae or Freddie Mac;

(ix) Servicing Fee. The Servicer acknowledges and agrees that the Servicing Fee
represents reasonable compensation for performing such services and that the
entire Servicing Fee shall be treated by the Servicer, for accounting and tax
purposes, as compensation for the servicing and administration of the Mortgage
Loans pursuant to this Agreement; and

(x) No Commissions to Third Parties. The Servicer has not dealt with any broker
or agent or anyone else who might be entitled to a fee or commission in
connection with this transaction other than the Seller.

(b) Remedies for Breach of Representations and Warranties of the Servicer. It is
understood and agreed that the representations and warranties set forth in
Sections 4.05(a) shall survive the engagement of the Servicer to perform the
servicing responsibilities as of the Closing Date hereunder and the delivery of
the Servicing Files to the Servicer and shall inure to the benefit of the Master
Servicer and the Trustee. Upon discovery by either the Servicer, the Master
Servicer or the Trustee of a breach of any of the foregoing representations and
warranties which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property or the
interests of the Master Servicer or the Trustee, the party discovering such
breach shall give prompt written notice to the other parties.

Within sixty (60) days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in
Section 4.05(a) which materially and adversely affects the ability of the
Servicer to perform its duties and obligations under this Agreement or otherwise
materially and adversely affects the value of the Mortgage Loans, the Mortgaged
Property or the priority of the security interest on such Mortgaged Property,
the Servicer shall use its best efforts promptly to cure such breach in all
material respects and, if such breach cannot be cured, the Servicer shall, at
the Master Servicer’s option, assign its rights and obligations under this
Agreement (or respecting the affected Mortgage Loans) to a successor servicer.

In addition, the Servicer shall indemnify all other parties to this Agreement
and hold each of them harmless against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments,
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any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of the Servicer’s representations and warranties contained in
Section 4.05(a).

Any cause of action against the Servicer relating to or arising out of the
breach of any representations and warranties made in Section 4.05(a) shall
accrue upon (i) discovery of such breach by the Servicer or notice thereof by
the Master Servicer or the Trustee to the Servicer, (ii) failure by the Servicer
to cure such breach within the applicable cure period, and (iii) demand upon the
Servicer by the Master Servicer or the Trustee for compliance with this
Agreement.

(c) Additional Indemnification by the Servicer. The Servicer shall indemnify the
Master Servicer, the Trust, the Delaware Trustee, the Trustee, and the
Securities Administrator and hold each of them harmless against any and all
claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary
legal fees and related costs, judgments, and any other costs, fees and expenses
(collectively, the “Liabilities”) that the indemnified party may sustain in any
way related to the failure of the Servicer to perform its duties and service the
Mortgage Loans in accordance with the terms of this Agreement. The Servicer
shall immediately notify the Master Servicer, the Trustee and the Securities
Administrator if a claim is made by a third party with respect to this Agreement
or the Mortgage Loans that may result in such Liabilities, and the Servicer
shall assume (with the prior written consent of the indemnified party) the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or any indemnified party in respect of
such claim and follow any written instructions received from such indemnified
party in connection with such claim. The Servicer shall be reimbursed promptly
from the Custodial Account for all amounts advanced by it pursuant to the
preceding sentence except when the claim is in any way related to the Servicer’s
indemnification pursuant to this Section 4.05(c), the failure of the Servicer to
service and administer the Mortgage Loans in accordance with the terms of this
Agreement, the breach of a representation or warranty set forth in
Section 4.05(a) or the gross negligence, bad faith or willful misconduct of the
Servicer.

Section 4.06. The Servicer.

(a) Merger or Consolidation of the Servicer. The Servicer shall keep in full
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation except as permitted herein, and shall obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, or any of the Mortgage Loans and
to perform its duties under this Agreement.

Any Person into which the Servicer may be merged or consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer whether or not related to loan servicing, shall be the successor of the
Servicer 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 or surviving Person, or
the parent company of such successor or surviving Person, shall be an
institution (i) having a generally accepted accounting principles (“GAAP”) net
worth not less than $25,000,000, (ii) which is a

 

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HUD-approved mortgagee whose primary business is in origination and servicing of
residential mortgage loans, and (iii) who is a Fannie Mae or Freddie Mac
approved seller/servicer in good standing; provided, however, that if such
successor or surviving Person does not have a GAAP net worth of at least
$25,000,000, the parent company of such successor or surviving Person shall act
as guarantor with respect to such successor’s obligations under this Agreement.

(b) Limitation on Liability of the Servicer and Others. Neither the Servicer nor
any of the directors, officers, employees or agents of the Servicer shall be
under any liability to the Master Servicer, the Depositor, the Trustee or the
Securities Administrator for any action taken or for refraining from the taking
of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any breach of warranties or representations made
herein, or failure to perform its obligations in strict compliance with any
standard of care set forth in this Agreement, or any liability which would
otherwise be imposed by reason of any breach of the terms and conditions of this
Agreement (except to the extent otherwise covered by Section 4.05(c)). The
Servicer and any director, officer, employee or agent of 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 Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties to service the Mortgage Loans in
accordance with this Agreement and which in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may 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. In such event, the
Servicer shall be entitled to reimbursement from the Custodial Account for the
reasonable legal expenses and costs of such action.

The Servicer and any director, officer, employee or agent of the Servicer shall
be indemnified and held harmless by the Trust against any and all Liabilities
incurred in connection with any legal action relating to this Agreement or the
Certificates, except to the extent such Liabilities resulted from or arose out
of the negligence, bad faith or willful misfeasance in the performance of the
Servicer’s (or any director, officer, employee or agent of the Servicer) duties
hereunder or by reason of its reckless disregard of its obligations and duties
hereunder.

(c) Limitation on Resignation and Assignment by the Servicer. The Servicer shall
not assign this Agreement or resign from the obligations and duties hereby
imposed on it except by mutual consent of the Servicer and the Master Servicer
or upon the determination that its duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer. Any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Seller, the Master
Servicer and the Trustee, which Opinion of Counsel shall be in form and
substance acceptable to each of them. No such resignation shall become effective
until a successor shall have assumed the Servicer’s responsibilities and
obligations hereunder in the manner provided in Section 4.08.

With respect to the retention of the Servicer to service the Mortgage Loans
hereunder, the Servicer acknowledges that the Seller, Master Servicer and
Trustee have acted in reliance upon the Servicer’s independent status, the
adequacy of its servicing facilities, plan, personnel, records and procedures,
its integrity, reputation and financial standing and the continuance thereof.

 

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Without in any way limiting the generality of this Section, the Servicer shall
not either assign this Agreement or the servicing hereunder or delegate its
rights or duties hereunder or any portion thereof, or sell or otherwise dispose
of all or substantially all of its property or assets, other than in the normal
course of business, without the prior written approval of the Seller, the Master
Servicer and the Trustee, which consent shall not be unreasonably withheld;
provided that the Servicer may assign the Agreement and the servicing hereunder
without the consent of the Seller, the Master Servicer and the Trustee to an
affiliate of the Servicer to which all servicing of the Servicer is assigned so
long as (i) such affiliate is a Fannie Mae and Freddie Mac approved servicer and
(ii) if it is intended that such affiliate be spun off to the shareholders of
the Servicer, such affiliate has a GAAP net worth of at least $25,000,000 and
(iii) such affiliate shall deliver to the Seller, the Master Servicer and the
Trustee a certification pursuant to which such affiliate shall agree to be bound
by the terms and conditions of this Agreement and shall certify that such
affiliate is a Fannie Mae and Freddie Mac approved servicer in good standing.

Without in any way limiting the generality of this Section 4.06(c), in the event
that the Servicer shall assign this Agreement or the servicing responsibilities
hereunder or delegate its duties hereunder or any portion thereof without
(i) satisfying the requirements set forth herein or (ii) the prior written
consent of the then such parties shall have the right to terminate this
Agreement, without any payment of any penalty or damages and without any
liability whatsoever to the Servicer (other than with respect to accrued but
unpaid Servicing Fees and Servicing Advances remaining unpaid) or any third
party. Nothing in this Section shall restrict the right of the Servicer to cause
the Mortgage Loans to be subserviced as provided in this Agreement.

(d) Successor Servicers. The provisions of Sections 4.06(a), (b) and (c) shall
apply to any successor to the Servicer hereunder.

Section 4.07. Termination for Cause.

Any of the following occurrences shall constitute an event of default (each, a
“Servicer Event of Default”) on the part of the Servicer:

(i) any failure by the Servicer to remit to the Master Servicer any payment
required to be made under the terms of this Agreement which continues unremedied
for a period of one (1) Business Day; or

(ii) failure by the Servicer duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the Servicer set forth
in this Agreement (other than with respect to Section 8.01, Section 8.02,
Section 8.03 or Section 8.04(b)(ii)) which continues unremedied for a period of
thirty (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
Master Servicer and the remedial period provided for herein has expired; or

(iii) the Servicer ceases to be qualified to transact business in any
jurisdiction where it is currently so qualified, but only to the extent such
non-qualification materially and adversely affects the Servicer’s ability to
perform its obligations hereunder; or

 

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(iv) a decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, including bankruptcy, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and
such decree or order shall have remained in force undischarged or unstayed for a
period of sixty (60) days; or

(v) 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 or similar proceedings of or relating to the Servicer or of or
relating to all or substantially all of its property; or

(vi) the Servicer shall admit in writing its inability to pay its debts 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,
voluntarily suspend payment of its obligations; or

(vii) the Servicer ceases to be approved by either Fannie Mae or Freddie Mac as
a mortgage loan seller or servicer for more than thirty (30) days; or

(viii) the Servicer attempts to assign its right to servicing compensation
hereunder or the Servicer attempts, without the consent of the Master Servicer,
to sell or otherwise dispose of all or substantially all of its property or
assets or to assign this Agreement or the servicing responsibilities hereunder
or to delegate its duties hereunder or any portion thereof; or

(ix) the Servicer fails to meet the eligibility criteria set forth in the last
sentence of Section 4.06(a); or

(x) failure by the Servicer to duly perform its obligations under Section 8.01,
Section 8.02, Section 8.03 or Section 8.04(b)(ii) within the required time
period set forth in such Sections.

Then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Master Servicer, by notice in writing to the Servicer,
in addition to whatever rights the Master Servicer may have under Sections 3.03
and 4.05(c) and at law or equity or to damages, including injunctive relief and
specific performance, may, and shall, if so directed by the Majority
Certificateholders, 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. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Mortgage Loans or otherwise, shall
pass to and be vested in the successor appointed pursuant to Section 4.08. Upon
written request from the Master Servicer, the Servicer shall prepare, execute
and deliver, any and all documents and other instruments, place in such
successor’s possession all Mortgage Files, and 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, at the Servicer’s sole
expense. The

 

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Servicer agrees to cooperate with the Master Servicer and such successor in
effecting the termination of the Servicer’s responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited by
the Servicer to the Custodial Account or Escrow Account or thereafter received
with respect to the Mortgage Loans or any REO Property.

By a written notice, the Master Servicer may waive any default by the Servicer
in the performance of its obligations hereunder and its consequences. Upon any
waiver of a past default, such default shall cease to exist, and any Event of
Default 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 thereon except to the extent
expressly so waived.

Section 4.08. Successor to Servicer. Prior to termination of the Servicer’s
responsibilities and duties under this Agreement pursuant to Sections 4.06(c),
4.07 and 5.09, the Master Servicer shall (i) succeed to and assume all of the
Servicer’s responsibilities, rights, duties and obligations under this
Agreement, or (ii) appoint a successor having the characteristics set forth in
Section 4.06(a) hereof acceptable to the Rating Agencies, as evidenced by a
letter from each Rating Agency to the effect that such an appointment will not
result in a qualification, withdrawal or downgrade of the then current rating of
any of the Certificates, and which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Servicer under this
Agreement prior to the termination of the Servicer’s responsibilities, duties
and liabilities under this Agreement. In connection with such appointment and
assumption, the Master Servicer may make such arrangements for the compensation
of such successor out of payments on Mortgage Loans as the Master Servicer and
such successor shall agree. In the event that the Servicer’s duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to the aforementioned Sections, the Servicer shall discharge such
duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned Sections shall not become
effective until a successor shall be appointed pursuant to this Section and
shall in no event relieve the Servicer of the representations and warranties
made pursuant to Section 4.05(a) and the remedies available to the Master
Servicer and the Trustee under Sections 4.05(b) and 4.05(c), it being understood
and agreed that the provisions of such Sections 4.05(a), 4.05(b) and 4.05(c)
shall be applicable to the Servicer notwithstanding any such resignation or
termination of the Servicer, or the termination of this Agreement.

Any successor appointed as provided herein shall execute, acknowledge and
deliver to the Servicer and to the Master Servicer an instrument accepting such
appointment, whereupon such successor shall become fully vested with all the
rights, powers, duties, responsibilities, obligations and liabilities of the
Servicer, with like effect as if originally named as a party to this Agreement.
Any termination or resignation of the Servicer or this Agreement pursuant to
Section 4.06(c), 4.07 or 5.09 shall not affect any claims that the Master
Servicer may have against the Servicer arising prior to any such termination or
resignation.

 

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The Servicer shall promptly deliver to the successor the funds in the Custodial
Account and the Escrow Account and the Mortgage Files and related documents and
statements held by it hereunder and the Servicer shall account for all funds.
The Servicer shall execute and deliver such instruments and do such other things
all as may reasonably be required to more fully and definitely vest and confirm
in the successor all such rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer. Within ten (10) Business Days of the execution
and delivery of such instruments, the successor shall reimburse the Servicer for
unrecovered Servicing Advances which the successor retains hereunder and which
would otherwise have been recovered by the Servicer pursuant to this Agreement
but for the appointment of the successor servicer.

Upon a successor’s acceptance of appointment as such, the Servicer shall notify
by mail the Trustee, the Master Servicer, the Securities Administrator, the
Seller and the Depositor of such appointment.

Section 4.09. Subservicers and Subservicing Agreements.

(a) The Mortgage Loans may be subserviced by a Subservicer on behalf of the
Servicer provided that the Subservicer is an entity that engages in the business
of servicing loans, and in either case shall be authorized to transact business,
and licensed to service mortgage loans, in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Subservicer to perform its obligations
hereunder and under the related subservicing agreement, and in either case shall
be a Freddie Mac or Fannie Mae approved mortgage servicer in good standing, and
no event has occurred, including but not limited to a change in insurance
coverage, which would make it unable to comply with the eligibility requirements
for lenders imposed by Fannie Mae or for seller/servicers imposed by Fannie Mae
or Freddie Mac, or which would require notification to Fannie Mae or Freddie
Mac. In addition, each Subservicer will obtain and preserve its qualifications
to do business as a foreign corporation and its licenses to service mortgage
loans, in each jurisdiction in which such qualifications and/or licenses are or
shall be necessary to protect the validity and enforceability of this Agreement,
or any of the Mortgage Loans and to perform or cause to be performed its duties
under the related subservicing agreement. The Servicer may perform any of its
servicing responsibilities hereunder or may cause a Subservicer to perform any
such servicing responsibilities on its behalf, but the use by the Servicer of a
Subservicer shall not release the Servicer from any of its obligations hereunder
and the Servicer shall remain responsible hereunder for all acts and omissions
of the Subservicer as fully as if such acts and omissions were those of the
Servicer. The Servicer shall pay all fees and expenses of the Subservicer from
its own funds, and the Subservicer’s fee shall not exceed the Servicing Fee. The
Servicer shall notify the Master Servicer promptly in writing upon the
appointment of any Subservicer.

(b) At the cost and expense of the Servicer, without any right of reimbursement
from the Custodial Account, the Servicer shall be entitled to terminate the
rights and responsibilities of a Subservicer and arrange for any servicing
responsibilities to be performed by a successor Subservicer meeting the
requirements in the preceding paragraph, provided, however, that nothing
contained herein shall be deemed to prevent or prohibit the Servicer, at the
Servicer’s option, from electing to service the Mortgage Loans itself. In the
event that the Servicer’s responsibilities and

 

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duties under this Agreement are terminated and if requested to do so by the
Master Servicer, the Servicer shall at its own cost and expense terminate the
rights and responsibilities of any Subservicer effective as of the date of
termination of the Servicer. The Servicer shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of the
Subservicer from the Servicer’s own funds without reimbursement from the Trust.

(c) Any subservicing agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and the Servicer alone and the Master Servicer and the Trustee shall
not be deemed parties thereto and shall have no claims, rights, obligations,
duties or liabilities with respect to any Subservicer, except that the Trustee
shall have such claims or rights that arise as a result of any funds held by a
Subservicer in trust for or on behalf of the Trust. Notwithstanding the
execution of any subservicing agreement, the Servicer shall not be relieved of
any liability hereunder and shall remain obligated and liable for the servicing
and administration of the Mortgage Loans.

(d) Any subservicing agreement and any other transactions or services relating
to the Mortgage Loans involving a Subservicer shall be deemed to be between the
Subservicer and Servicer alone, and none of the Master Servicer, the Delaware
Trustee, the Trustee, the Depositor or the Trust shall have any obligations,
duties or liabilities with respect to any Subservicer including any obligation,
duty or liability of such parties to pay the Subservicer’s fees and expenses.
For purposes of distributions and advances by the Servicer pursuant to this
Agreement, the Servicer shall be deemed to have received a payment on a Mortgage
Loan when the Subservicer has received such payment.

ARTICLE V

ADMINISTRATION AND MASTER SERVICING OF MORTGAGE LOANS

BY THE MASTER SERVICER AND THE SECURITIES ADMINISTRATOR

Section 5.01. Duties of the Master Servicer; Representations and Warranties.

(a) For and on behalf of the Trust, the Trustee and the Certificateholders, the
Master Servicer shall master service the Mortgage Loans from and after the
Closing Date in accordance with the provisions of this Article V. The Master
Servicer hereby represents and warrants to the Depositor, the Trust, the
Trustee, the Securities Administrator and the Servicer, as of the Closing Date,
that:

(i) it is validly existing and in good standing as a federally chartered
national banking association and as Master Servicer has full power and authority
to transact any and all business contemplated by this Agreement and to execute,
deliver and comply with its obligations under the terms of this Agreement, the
execution, delivery and performance of which have been duly authorized by all
necessary corporate action on the part of the Master Servicer. The Master
Servicer is duly qualified to do business as a foreign corporation 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 to so qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of the
Master Servicer or the validity or enforceability of this Agreement;

 

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(ii) the execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not (A) violate
the Master Servicer’s charter or bylaws, (B) violate any law or regulation or
any administrative decree or order to which it is subject or (C) constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or by
which it is bound or to which any of its assets are subject, which violation,
default or breach would materially and adversely affect the Master Servicer’s
ability to perform its obligations under this Agreement;

(iii) this Agreement constitutes, assuming due authorization, execution and
delivery hereof by the other respective parties hereto, a legal, valid and
binding obligation of the Master Servicer, enforceable against it in accordance
with the terms hereof, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement
of creditors’ rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);

(iv) the Master Servicer is not in default with respect to any order or decree
of any court or any order or regulation of any federal, state, municipal or
governmental agency to the extent that any such default would materially and
adversely affect its performance hereunder;

(v) the Master Servicer is not a party to or bound by any agreement or
instrument or subject to any charter provision, bylaw or any other corporate
restriction or any judgment, order, writ, injunction, decree, law or regulation
that may materially and adversely affect its ability as Master Servicer to
perform its obligations under this Agreement or that requires the consent of any
third person to the execution of this Agreement or the performance by the Master
Servicer of its obligations under this Agreement;

(vi) no litigation is pending or, to the best of the Master Servicer’s
knowledge, threatened against the Master Servicer which would prohibit its
entering into this Agreement or performing its obligations under this Agreement;

(vii) the Master Servicer, or an affiliate thereof the primary business of which
is the servicing of residential mortgage loans, is a Fannie Mae- or Freddie
Mac-approved seller/servicer of residential mortgage loans for Fannie Mae,
Freddie Mac and HUD;

(viii) no consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Master Servicer of or compliance by the Master Servicer with this Agreement or
the consummation of the transactions contemplated by this Agreement, except for
such consents, approvals, authorizations and orders (if any) as have been
obtained;

 

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(ix) the consummation of the transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer;

(x) the Master Servicer has obtained a Master Servicer Errors and Omissions
Insurance Policy and a Master Servicer Fidelity Bond in accordance with
Section 5.02 each of which is in full force and effect, and each of which
provides at least such coverage as is required hereunder; and

(xi) the information about the Master Servicer under the heading “The Master
Servicer” in the Offering Documents relating to the Master Servicer does not
include an untrue statement of a material fact and does not omit to state a
material fact, with respect to the statements made, necessary in order to make
the statements in light of the circumstances under which they were made not
misleading.

(b) It is understood and agreed that the representations and warranties set
forth in this Section 5.01 shall survive the execution and delivery of this
Agreement. The Master Servicer shall indemnify the Seller, the Depositor, the
Trust, the Delaware Trustee, the Trustee, the Securities Administrator and the
Servicer and hold them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, a breach of the Master Servicer’s
representations and warranties contained in this Section 5.01. It is understood
and agreed that the enforcement of the obligation of the Master Servicer set
forth in this Section to indemnify the foregoing parties as provided in this
Section constitutes the sole remedy (other than as set forth in Section 9.01) of
such parties respecting a breach of the foregoing representations and
warranties. Such indemnification shall survive any termination of the Master
Servicer as Master Servicer hereunder, and any termination of this Agreement.

Any cause of action against the Master Servicer relating to or arising out of
the breach of any representations and warranties made in this Section shall
accrue upon discovery of such breach by the Seller, the Depositor, the Trustee,
the Securities Administrator or the Servicer or notice thereof by any one of
such parties to the other parties. Notwithstanding anything in this Agreement to
the contrary, the Master Servicer shall not be liable for special, indirect or
consequential losses or damages of any kind whatsoever (including, but not
limited to, lost profits).

Section 5.02. Master Servicer Fidelity Bond and Master Servicer Errors and
Omissions Insurance Policy.

(a) The Master Servicer, at its expense, shall maintain in effect a Master
Servicer Fidelity Bond and a Master Servicer Errors and Omissions Insurance
Policy, affording coverage with respect to all directors, officers, employees
and other Persons acting on such Master Servicer’s behalf, and covering errors
and omissions in the performance of the Master Servicer’s obligations hereunder.
The Master Servicer Errors and Omissions Insurance Policy and the Master
Servicer Fidelity Bond shall be in such form and amount that would be consistent
with coverage customarily maintained by master servicers of mortgage loans
similar to the Mortgage Loans and shall by its terms not be cancelable without
thirty days’ prior written notice to the Trustee. The Master Servicer shall
provide the Depositor and the Trustee, upon request, with a copy of such

 

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policy and fidelity bond. The Master Servicer shall (i) require the Servicer to
maintain a Servicer Errors and Omissions Insurance Policy and a Servicer
Fidelity Bond in accordance with the provisions of Section 4.02(l) of this
Agreement, (ii) cause the Servicer to provide to the Master Servicer
certificates evidencing that such policy and bond is in effect and to furnish to
the Master Servicer any notice of cancellation, non-renewal or modification of
the policy or bond received by it, as and to the extent provided in
Section 4.02(l) of the Agreement, and (iii) furnish copies of such policies and
of the certificates and notices referred to in clause (ii) to the Trustee upon
request.

(b) The Master Servicer shall promptly report to the Trustee and the Securities
Administrator any material changes that may occur in the Master Servicer
Fidelity Bond or the Master Servicer Errors and Omissions Insurance Policy and
shall furnish either such party, on request, certificates evidencing that such
bond and insurance policy are in full force and effect. The Master Servicer
shall promptly report to the Trustee and the Securities Administrator all cases
of embezzlement or fraud, if such events involve funds relating to the Mortgage
Loans. The total losses, regardless of whether claims are filed with the
applicable insurer or surety, shall be disclosed in such reports together with
the amount of such losses covered by insurance. If a bond or insurance claim
report is filed with any of such bonding companies or insurers, the Master
Servicer shall promptly furnish a copy of such report to the Trustee and the
Securities Administrator. Any amounts relating to the Mortgage Loans collected
by the Master Servicer under any such bond or policy shall be promptly remitted
by the Master Servicer to the Securities Administrator for deposit into the
Collection Account. Any amounts relating to the Mortgage Loans collected by the
Servicer under any such bond or policy shall be remitted to the Master Servicer.

Section 5.03. Master Servicer’s Financial Statements and Related Information.
For each year this Agreement is in effect, the Master Servicer shall deliver to
the Securities Administrator, the Trustee, each Rating Agency and the Depositor
a copy of its annual unaudited financial statements on or prior to May 31 of
each year, beginning May 31, 2007. Such financial statements shall include a
balance sheet, income statement, statement of retained earnings, statement of
additional paid-in capital, statement of changes in financial position and all
related notes and schedules and shall be in comparative form, certified by a
nationally recognized firm of Independent Accountants to the effect that such
statements were examined and prepared in accordance with generally accepted
accounting principles applied on a basis consistent with that of the preceding
year.

Section 5.04. Power to Act; Procedures.

(a) The Master Servicer shall master service the Mortgage Loans and shall have
full power and authority, subject to the REMIC Provisions and the provisions of
Article XI; provided that the Master Servicer shall not take, or knowingly
permit the Servicer to take, any action that is inconsistent with or prejudices
the interests of the Trust, the Trustee or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor, the Trust, the
Trustee and the Certificateholders under this Agreement. The Master Servicer
shall represent and protect the interests of the Trust, the Trustee and the
Certificateholders in the same manner as it protects its own interests in
mortgage loans in its own portfolio in any claim, proceeding or litigation

 

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regarding a Mortgage Loan and shall not make or knowingly permit any Servicer to
make any modification, waiver or amendment of any term of any Mortgage Loan that
would cause an Adverse REMIC Event. Without limiting the generality of the
foregoing, the Master Servicer in its own name, and the Servicer, to the extent
such authority is delegated to such Servicer under this Agreement, is hereby
authorized and empowered by the Trustee when the Master Servicer or such
Servicer, as the case may be, believes it appropriate in its best judgment and
in accordance with Accepted Servicing Practices, to execute and deliver, on
behalf of itself and the Certificateholders, the Securities Administrator, the
Trustee or any of them, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Mortgage Loans and with respect to the Mortgaged Properties.
The Trustee shall furnish the Master Servicer, upon request, with any powers of
attorney (on the standard form used by the Trustee) empowering the Master
Servicer or the Servicer to execute and deliver instruments of satisfaction or
cancellation, or of partial or full release or discharge, and to foreclose upon
or otherwise liquidate Mortgaged Property, and to appeal, prosecute or defend in
any court action relating to the Mortgage Loans or the Mortgaged Property, in
accordance with this Agreement, and the Trustee shall execute and deliver such
other documents as the Master Servicer may request, necessary or appropriate to
enable the Master Servicer to master service the Mortgage Loans and carry out
its duties hereunder, and to allow the Servicer to service the Mortgage Loans in
each case in accordance with Accepted Servicing Practices (and the Trustee or
the Securities Administrator shall have no liability for misuse of any such
powers of attorney by the Master Servicer or the Servicer). If the Master
Servicer or the Trustee has been advised that it is likely that the laws of the
state in which action is to be taken prohibit such action if taken in the name
of the Trustee or that the Trustee would be adversely affected under the “doing
business” or tax laws of such state if such action is taken in its name, then
upon request of the Trustee, the Master Servicer shall join with the Trustee in
the appointment of a co-trustee pursuant to Section 7.10 of this Agreement. In
no event shall the Master Servicer, without the Trustee’s written consent:
(i) initiate any action, suit or proceeding solely under the Trustee’s name
without indicating the Master Servicer’s representative capacity or (ii) take
any action with the intent to cause, and which actually does cause, the Trustee
to be registered to do business in any state. The Master Servicer shall
indemnify the Trustee for any and all costs, liabilities and expenses incurred
by the Trustee in connection with the negligent or willful misuse of such powers
of attorney by the Master Servicer. In the performance of its duties hereunder,
the Master Servicer shall be an independent contractor and shall not, except in
those instances where it is taking action in the name of the Trustee, be deemed
to be the agent of the Trustee.

(b) In master servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures and exercise the same care that it customarily
employs and exercises in master servicing and administering loans for its own
account, giving due consideration to Accepted Servicing Practices where such
practices do not conflict with this Agreement.

Section 5.05. Enforcement of Servicer’s and Master Servicer’s Obligations.

(a) The Master Servicer shall not be required to (i) take any action with
respect to the servicing of any Mortgage Loan that the Servicer is not required
to take under this Agreement and (ii) cause the Servicer to take any action or
refrain from taking any action if this Agreement does not require the Servicer
to take such action or refrain from taking such action.

 

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(b) The Master Servicer, for the benefit of the Trust, the Trustee and the
Certificateholders, shall enforce the obligations of the Servicer hereunder, and
shall, in the event that the Servicer fails to perform its obligations in
accordance herewith, terminate the rights and obligations of the Servicer
hereunder and either act as servicer of the related Mortgage Loans or cause
other parties hereto to either assume the obligations of the Servicer under this
Agreement (or agree to execute and deliver a successor servicing or subservicing
agreement with a successor servicer). Such enforcement, including, without
limitation, the legal prosecution of claims, termination of servicing or
subservicing rights and the pursuit of other appropriate remedies, shall be in
such form and carried out to such an extent and at such time as the Master
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor initially
(i) from a general recovery resulting from such enforcement only to the extent,
if any, that such recovery exceeds all amounts due in respect of the related
Mortgage Loans, (ii) from a specific recovery of costs, expenses or attorneys’
fees against the party against whom such enforcement is directed, and then,
(iii) to the extent that such amounts are insufficient to reimburse the Master
Servicer for the costs of such enforcement, from the Collection Account.

Section 5.06. Collection Account.

(a) On the Closing Date, the Master Servicer shall open and shall thereafter
maintain a segregated account held in trust in the name of the Trustee (the
“Collection Account”), entitled “Collection Account, U.S. Bank National
Association, as Trustee, in trust for Holders of the HomeBanc Mortgage Trust
2006-1, Mortgage Pass-Through Certificates.” The Collection Account shall relate
solely to the Certificates issued pursuant to this Agreement, and funds
deposited in the Collection Account shall not be commingled with any other
monies.

(b) The Collection Account shall be an Eligible Account. If an existing
Collection Account ceases to be an Eligible Account, the Master Servicer shall
establish a new Collection Account that is an Eligible Account within ten
(10) days and transfer all funds and investment property on deposit in such
existing Collection Account into such new Collection Account.

(c) The Master Servicer shall give to the Securities Administrator and the
Trustee prior written notice of the name and address of the depository
institution at which the Collection Account is maintained and the account number
of such Collection Account. The Master Servicer shall take such actions as are
necessary to cause the depository institution holding the Collection Account to
hold such account in the name of the Trustee. On each Distribution Date, the
entire amount on deposit in the Collection Account relating to the Mortgage
Loans (subject to permitted withdrawals set forth in Section 5.07), other than
amounts not included in Interest Funds or Principal Funds to be paid to
Certificateholders for such Distribution Date, shall be applied to make the
requested payment of principal and/or interest on each Class of Certificates.

(d) The Master Servicer shall deposit or cause to be deposited in the Collection
Account on the earlier of the applicable Distribution Date and one Business Day
following receipt thereof, the following amounts received or payments made by
the Master Servicer (other than in respect of principal of and interest on the
Mortgage Loans due on or before the Cut-off Date):

(i) all remittances from the Custodial Account to the Master Servicer pursuant
to Section 4.03;

 

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(ii) all Monthly Advances made by the Servicer or the Master Servicer pursuant
to Section 6.11 hereof and any payment in respect of Prepayment Interest
Shortfalls paid by the Master Servicer pursuant to Section 5.16 hereof; and

(iii) the Purchase Price of any Mortgage Loan repurchased by the Depositor or
the Seller during the related Prepayment Period or any other Person and any
Substitution Amount related to any Qualifying Substitute Mortgage Loan.

(e) Funds in the Collection Account may be invested by the Master Servicer in
Eligible Investments selected by and at the written direction of the Master
Servicer, which shall mature not later than one Business Day prior to the next
Distribution Date (or on the Distribution Date with respect to any Eligible
Investment of the Master Servicer or any other fund managed or advised by it or
any Affiliate) and any such Eligible Investment shall not be sold or disposed of
prior to its maturity. All such Eligible Investments shall be made in the name
of the Master Servicer in trust for the benefit of the Trustee and the
Certificateholders. All income and gain net of the Trustee Fee, the Custodian
Fee and any losses realized from any such investment of funds on deposit in the
Collection Account shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal or order from time to time, subject to Section 5.07
and shall not be part of the Trust. The amount of any losses incurred in respect
of any such investments shall be deposited in such Collection Account by the
Master Servicer out of its own funds, without any right of reimbursement
therefor, immediately as realized. The foregoing requirements for deposit in the
Collection Account are exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments of interest on funds in the
Collection Account and payments in the nature of late payment charges,
assumption fees and other incidental fees and charges relating to the Mortgage
Loans need not be deposited by the Master Servicer in the Collection Account and
may be retained by the Master Servicer or the Servicer, as applicable, as
additional servicing compensation. If the Master Servicer deposits in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from such Collection Account.

Section 5.07. Application of Funds in the Collection Account. The Master
Servicer shall withdraw funds from the Collection Account for payments to the
Certificate Account pursuant to Section 6.07. In addition, the Master Servicer
may prior to making the payments pursuant to Section 6.07 from time to time make
withdrawals from the Collection Account for the following purposes:

(i) to pay to the Trustee, the Trustee Fee, to pay to the Custodian, the
Custodian Fee and to pay the Delaware Trustee, the Delaware Trustee Fee, in each
case on the Distribution Date each year in the month in which such Trustee Fee,
Delaware Trustee Fee and the Custodian Fee, as applicable, are due and payable
pursuant to the terms of the respective fee letter agreements with the Trustee,
the Custodian and the Delaware Trustee, but only to the extent of income earned
on the funds on deposit in the Collection Account;

 

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(ii) to reimburse the Master Servicer or the Servicer, as applicable, for any
previously unreimbursed Monthly Advances or Servicing Advances made by any such
party, such right to reimbursement pursuant to this subclause (ii) being limited
to amounts received on or in respect of a particular Mortgage Loan (including,
for this purpose, Liquidation Proceeds, Condemnation Proceeds and amounts
representing Insurance Proceeds with respect to the property subject to the
related Mortgage) which represent late recoveries (net of the applicable
Servicing Fee) of payments of principal or interest respecting which any such
Monthly Advance was made, it being understood, in the case of any such
reimbursement, that the Master Servicer’s or Servicer’s right thereto shall be
prior to the rights of the Certificateholders;

(iii) to reimburse the Master Servicer or the Servicer following a final
liquidation of a Mortgage Loan for any previously unreimbursed Monthly Advances
made by any such party (A) that such party determines in good faith will not be
recoverable from amounts representing late recoveries of payments of principal
or interest respecting the particular Mortgage Loan as to which such Monthly
Advance was made or from Liquidation Proceeds, Condemnation Proceeds or
Insurance Proceeds with respect to such Mortgage Loan and/or (B) to the extent
that such unreimbursed Monthly Advances exceed the related Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds, it being understood, in the case of
each such reimbursement, that the Master Servicer’s or Servicer’s right thereto
shall be prior to the rights of the Certificateholders;

(iv) to reimburse the Master Servicer or the Servicer from Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds for Liquidation Expenses and for
amounts expended by it pursuant to Section 4.02(n) in good faith in connection
with the restoration of damaged property and, to the extent that Liquidation
Proceeds, Condemnation Proceeds or Insurance Proceeds after such reimbursement
exceed the unpaid principal balance of the related Mortgage Loan, together with
accrued and unpaid interest thereon at the applicable Mortgage Rate less the
Servicing Fee Rate for such Mortgage Loan to the Due Date next succeeding the
date of its receipt of such Liquidation Proceeds, Condemnation Proceeds or
Insurance Proceeds, to pay to the Master Servicer or the Servicer out of such
excess the amount of any unpaid assumption fees, late payment charges or other
Mortgagor charges on the related Mortgage Loan and to retain any excess
remaining thereafter as additional servicing compensation, it being understood,
in the case of any such reimbursement or payment, that such Master Servicer’s or
Servicer’s right thereto shall be prior to the rights of the Certificateholders;

(v) to pay to the Depositor or the Seller or any other Person, as applicable,
with respect to each Mortgage Loan or REO Property acquired in respect thereof
that has been purchased pursuant to this Agreement, all amounts received thereon
and not paid on the date on which the related repurchase was effected, and to
pay to the applicable party any Monthly Advances and Servicing Advances to the
extent specified in the definition of Purchase Price;

 

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(vi) to the extent not paid by the Servicer, to pay any insurance premium with
respect to a Mortgage Loan;

(vii) to pay to the Master Servicer income earned on the investment of funds on
deposit in the Collection Account net of amounts paid to the Trustee, the
Custodian and the Delaware Trustee in accordance with subsection (i) above;

(viii) to make payment to the Master Servicer, the Securities Administrator, the
Servicer, the Delaware Trustee, the Trustee, the Custodian and others pursuant
to any provision of any Operative Agreement;

(ix) to withdraw funds deposited in error in the Collection Account;

(x) to clear and terminate the Collection Account pursuant to Article IX; and

(xi) to reimburse a successor master servicer (solely in its capacity as
successor master servicer), for any fee or advance occasioned by a termination
of the Master Servicer and the assumption of such duties by the Trustee as
successor master servicer or a successor master servicer appointed by the
Trustee pursuant to Section 9.01, in each case to the extent not reimbursed by
the terminated Master Servicer, it being understood, in the case of any such
reimbursement or payment, that the right of such successor master servicer or
the Trustee thereto shall be prior to the rights of the Certificateholders.

In connection with withdrawals pursuant to subclauses (ii) through (iv) above,
the Master Servicer’s or the Servicer’s or such other Person’s entitlement
thereto is limited to collections or other recoveries on the related Mortgage
Loan. The Master Servicer shall therefore keep and maintain a separate
accounting for each Mortgage Loan for the purpose of justifying any withdrawal
from the Collection Account it maintains pursuant to such subclauses.

Section 5.08. Reports to Trustee and Certificateholders.

(a) On each Distribution Date, the Securities Administrator shall make available
to the Trustee and each Certificateholder a report setting forth the following
information (on the basis of Mortgage Loan level information obtained from the
Servicer):

(i) the aggregate amount of the payment to be made on such Distribution Date to
the Holders of each Class of Certificates, to the extent applicable, allocable
to principal on the Mortgage Loans, including Liquidation Proceeds, Condemnation
Proceeds and Insurance Proceeds, stating separately the amount attributable to
scheduled principal payments and unscheduled payments in the nature of
principal;

(ii) the aggregate amount of the payment to be made on such Distribution Date to
the Holders of each Class of Certificates allocable to interest and the
calculation thereof;

 

  (iii) the amount, if any, of any payment to the Class R Certificate;

 

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(iv) (A) the aggregate amount of any Monthly Advances required to be made by or
on behalf of the Servicer (or the Master Servicer) with respect to such
Distribution Date, (B) the aggregate amount of such Monthly Advances actually
made, and (C) the amount, if any, by which (A) above exceeds (B) above;

(v) the aggregate amount of Servicing Advances required to be made by or on
behalf of the Servicer (or the Master Servicer) with respect to such
Distribution Date;

(vi) the aggregate amount of unreimbursed Monthly Advances outstanding, and
Servicing Advances outstanding with respect to such Distribution Date;

(vii) the aggregate amount of Nonrecoverable Advances with respect to such
Distribution Date;

(viii) the total number of Mortgage Loans in the Trust and by Mortgage Pool, the
aggregate Scheduled Principal Balance of all the Mortgage Loans as of the close
of business on the last day of the related Collection Period, after giving
effect to payments allocated to principal reported under clause (i) above;

(ix) the Class Principal Amount of each Class of Certificates, to the extent
applicable, as of such Distribution Date after giving effect to payments
allocated to principal reported under clause (i) above;

(x) the amount of any Realized Losses incurred with respect to the Mortgage
Loans in the Trust and by Mortgage Pool (x) in the applicable Prepayment Period
and (y) in the aggregate since the Cut-off Date;

(xi) the amount of the Servicing Fee paid during the Collection Period to which
such payment relates;

(xii) the number and aggregate Scheduled Principal Balance of Mortgage Loans in
the Trust and by Mortgage Pool, as reported to the Securities Administrator by
the Servicer, (a) remaining outstanding, (b) Delinquent 30 to 59 days on a
contractual basis, (c) Delinquent 60 to 89 days on a contractual basis,
(d) Delinquent 90 or more days on a contractual basis, (e) 180 days or more
Delinquent and charged off; (f) as to which foreclosure proceedings have been
commenced as of the close of business on the last Business Day of the calendar
month immediately preceding the month in which such Distribution Date occurs,
(g) in bankruptcy and (h) that are REO Properties;

(xiii) the aggregate Scheduled Principal Balance of any Mortgage Loans with
respect to which the related Mortgaged Property became an REO Property as of the
close of business on the last Business Day of the calendar month immediately
preceding the month in which such Distribution Date occurs;

(xiv) with respect to substitution of Mortgage Loans in the preceding calendar
month, the Scheduled Principal Balance of each Deleted Mortgage Loan and of each
Qualifying Substitute Mortgage Loan;

 

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(xv) the aggregate outstanding Prepayment Interest Shortfalls and Carryforward
Interest, if any, for each Class of Certificates, after giving effect to the
distributions made on such Distribution Date;

(xvi) the Certificate Interest Rate applicable to such Distribution Date with
respect to each Class of Certificates;

(xvii) the Interest Funds and the Principal Funds applicable to such
Distribution Date;

(xviii) if applicable, the amount of any shortfall (i.e., the difference between
the aggregate amounts of principal and interest which Certificateholders would
have received if there were sufficient available amounts in the Collection
Account and the amounts actually paid);

(xix) any Overcollateralization Deficiency after giving effect to the payments
made on such Distribution Date;

(xx) any applicable determination dates for calculating distributions and actual
Distribution Dates for the Collection Period;

(xxi) the amount of cashflows received and the sources thereof for
distributions, fees and expenses;

(xxii) the amount of fees and expenses accrued and paid, the purpose of such
fees and expenses and the identification of each payee, including the amount of
fees paid to the Trustee, the Custodian, the Master Servicer, the Securities
Administrator and the Servicer for such Distribution Date;

(xxiii) the amount of payments accrued and paid with respect to any credit
enhancement and support for the Trust, the purpose of such payments and the
identification of each payee;

(xxiv) the amount of excess cash flow or excess spread and the disposition of
such excess cash flow or excess spread;

(xxv) delinquency and loss information for the distribution period with respect
to the Mortgage Loans in the Trust and by Mortgage Pool;

(xxvi) the number of properties and the unpaid principal balance with respect to
each property relating to defaulted Mortgage Loans in the Trust Estate;

(xxvii) the beginning and ending balances of the Certificate Account, Collection
Account and any material account activity during the related period;

 

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(xxviii) any material modifications, extensions or waivers to Mortgage Loan
terms, fees, penalties or payments during the Collection Period or that have
cumulatively become material over time; and

(xxix) information on whether a Delinquency Event or a Cumulative Loss Trigger
Event has occurred.

In the case of information furnished pursuant to subclauses (i), (ii) and
(ix) above, the amounts shall (except in the case of the report delivered to the
holder of the Class R Certificate) be expressed as a dollar amount per $1,000 of
original principal amount of Certificates.

The Securities Administrator will make such report and additional loan level
information (and, at its option, any additional files containing the same
information in an alternative format) available each month to the Rating
Agencies and Certificateholders via the Securities Administrator’s website. The
Securities Administrator’s website can be accessed at www.ctslink.com.
Assistance in using the website can be obtained by calling the Securities
Administrator’s customer service desk at (301) 815-6600. Such parties that are
unable to use the website are entitled to have a paper copy mailed to them via
first class mail by notifying the Securities Administrator at Wells Fargo Bank,
N.A., P.O. Box 98, Columbia, Maryland 21046 (or for overnight deliveries at 9062
Old Annapolis Road, Columbia, Maryland 21045), and indicating such. The
Securities Administrator shall have the right to change the way such statements
are distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Securities Administrator shall provide
timely and adequate notification to all above parties regarding any such
changes.

The foregoing information and reports shall be prepared and determined by the
Securities Administrator based solely on Mortgage Loan data provided to the
Securities Administrator by the Master Servicer (in a format agreed to by the
Securities Administrator and the Master Servicer) no later than 12:00 p.m.
(noon) Eastern Standard Time four Business Days prior to the Distribution Date.
In preparing or furnishing the foregoing information, the Securities
Administrator and the Master Servicer shall be entitled to rely conclusively on
the accuracy of the information or data regarding the Mortgage Loans and the
related REO Property that has been provided to the Master Servicer by the
Servicer, and neither the Securities Administrator nor the Master Servicer shall
be obligated to verify, recompute, reconcile or recalculate any such information
or data. The Securities Administrator, the Trustee, the Custodian and the Master
Servicer shall be entitled to conclusively rely on the Mortgage Loan data
provided to the Master Servicer and shall have no liability for any errors in
such Mortgage Loan data.

(b) Upon the reasonable advance written request of any Certificateholder that is
a savings and loan, bank or insurance company, which request, if received by the
Trustee shall be forwarded promptly to the Securities Administrator, the
Securities Administrator shall provide, or cause to be provided (or, to the
extent that such information or documentation is not required to be provided by
the Servicer, shall use reasonable efforts to obtain such information and
documentation from the Servicer, and provide), to such Certificateholder such
reports and access to information and documentation regarding the Mortgage Loans
as such Certificateholder may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its

 

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successor or other regulatory authorities with respect to an investment in the
Certificates; provided, however, that the Securities Administrator shall be
entitled to be reimbursed by such Certificateholder for actual expenses incurred
in providing such reports and access.

(c) Within ninety (90) days, or such shorter period as may be required by
statute or regulation, after the end of each calendar year, the Securities
Administrator shall have prepared and shall make available to each Person who at
any time during the calendar year was a Certificateholder of record, and make
available to Certificate Owners (identified as such by the Clearing Agency) in
accordance with applicable regulations, a report summarizing the items provided
to the Certificateholders pursuant to Section 5.08(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 Certificates and information regarding the expenses of the Trust.
The Securities Administrator shall be deemed to have satisfied such requirement
if it forwards such information in any other format permitted by the Code. The
Master Servicer shall provide the Securities Administrator with such information
as is necessary for the Securities Administrator to prepare such reports.

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

Section 5.09. Termination of Servicer; Successor Servicers.

(a) The Master Servicer shall be entitled to terminate the rights and
obligations of the Servicer upon the occurrence of a Servicer Event of Default
as set forth in Section 4.07; provided, however, that in the event of
termination of the Servicer, the Master Servicer shall provide for the servicing
of the Mortgage Loans by a successor servicer as provided in Section 4.08.

The parties acknowledge that notwithstanding the preceding sentence, there may
be a transition period, not to exceed 90 days, in order to effect the transfer
of servicing to a successor servicer. The Master Servicer shall be entitled to
be reimbursed by the Servicer (or by the Trust, if the Servicer is unable to
fulfill its obligations hereunder) for all costs associated with the transfer of
servicing, 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 required by the Master Servicer
to correct any errors or insufficiencies in the servicing data or otherwise to
enable the Master Servicer to service the Mortgage Loans properly and
effectively.

(b) If the Master Servicer acts as a successor Servicer, it shall not assume
liability for the representations and warranties of the Servicer that it
replaces. The Master Servicer shall use reasonable efforts to have a successor
Servicer assume liability for the representations and warranties made by the
terminated Servicer and in the event of any such assumption by the successor
servicer, the Master Servicer may, in the exercise of its business judgment,
release the terminated Servicer from liability for such representations and
warranties.

 

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(c) If the Master Servicer acts as a successor Servicer, it will have no
obligation to make a Monthly Advance if it determines in its reasonable judgment
that such Monthly Advance would constitute a Nonrecoverable Advance.

Section 5.10. Master Servicer Liable for Enforcement. The Master Servicer shall
use commercially reasonable efforts to ensure that the Mortgage Loans are
serviced in accordance with the provisions of this Agreement and shall use
commercially reasonable efforts to enforce the provisions of Article IV for the
benefit of the Certificateholders. The Master Servicer shall be entitled to
enter into any agreement with any Servicer for indemnification of the Master
Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification. Except as expressly set forth herein, the Master
Servicer shall have no liability for the acts or omissions of the Servicer in
the performance by such Servicer of its obligations under Article IV.

Section 5.11. Assumption of Master Servicing by Trustee.

(a) In the event the Master Servicer shall for any reason no longer be the
Master Servicer (including by reason of any Master Servicer Event of Default
under Section 9.01 of this Agreement), the Trustee shall thereupon assume all of
the rights and obligations of such Master Servicer hereunder. The Trustee, its
designee or any successor master servicer appointed by the Trustee shall be
deemed to have assumed all of the Master Servicer’s interest herein, except that
the Master Servicer shall not thereby be relieved of any liability or
obligations of the Master Servicer accruing prior to its replacement as Master
Servicer, and shall be liable to the Trustee, and hereby agrees to indemnify and
hold harmless the Trustee from and against all costs, damages, expenses and
liabilities (including reasonable attorneys’ fees) incurred by the Trustee as a
result of such liability or obligations of the Master Servicer and in connection
with the Trustee’s assumption (but not its performance, except to the extent
that costs or liability of the Trustee are created or increased as a result of
negligent or wrongful acts or omissions of the Master Servicer prior to its
replacement as Master Servicer) of the Master Servicer’s obligations, duties or
responsibilities thereunder.

(b) The Master Servicer that has been terminated shall, upon request of the
Trustee but at the expense of such Master Servicer, deliver to the assuming
party all documents and records relating to the Mortgage Loans and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of master servicing to the assuming party.

Section 5.12. Release of Mortgage Files.

(a) Upon (i) becoming aware of the payment in full of any Mortgage Loan or
(ii) the receipt by the Servicer of a notification that payment in full has been
or will be escrowed in a manner customary for such purposes, the Servicer shall
promptly notify the Trustee (or the Custodian) by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment that are required to be deposited in the
Collection Account maintained by the Master Servicer pursuant to Section 5.06
have been or will be so deposited) of a Servicing Officer and shall deliver a
Request for Release in the form of Exhibit Seven to the Custodial Agreement to
the Trustee or the Custodian with respect to such

 

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Mortgage Loan. Upon receipt of such certification and Request for Release, the
Trustee or the Custodian (with the consent, and at the direction of the
Trustee), shall promptly release the related Mortgage File to the Servicer and
the Trustee shall have no further responsibility with regard to such Mortgage
File. Upon any such payment in full, the Servicer is authorized, to give, as
agent for the Trustee, as the mortgagee under the Mortgage that secured the
Mortgage Loan, an instrument of satisfaction (or assignment of mortgage without
recourse) regarding the Mortgaged Property subject to the Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of such
payment, it being understood and agreed that no expenses incurred in connection
with such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the Collection Account.

(b) From time to time and as appropriate for the servicing or foreclosure of any
Mortgage Loan, including, for this purpose, collection under any Primary
Insurance Policy, the Trustee shall execute such documents as shall be prepared
and furnished to the Trustee by the Servicer (in form reasonably acceptable to
the Trustee) and as are necessary to the prosecution of any such proceedings.
The Trustee or the Custodian, shall, upon request of the Master Servicer or of
the Servicer, as applicable, and delivery to the Trustee or the Custodian, of a
Request for Release signed by a Servicing Officer, release the related Mortgage
File held in its possession or control to the Master Servicer (or the Servicer,
as applicable). Such trust receipt shall obligate the Master Servicer or the
Servicer, as applicable, to return the Mortgage File to the Trustee or the
Custodian, as applicable, when the need therefor by the Master Servicer or the
Servicer, as applicable, no longer exists unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account or (ii) the Mortgage File or such document
has been delivered to an attorney, or to a public trustee or other public
official as required by law, for purposes of initiating or pursuing legal action
or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Custodian a
certificate of a Servicing Officer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery.

(c) At any time that the Servicer is required to deliver to the Custodian a
Request for Release, the Servicer shall deliver two copies of the Request for
Release if delivered in hard copy or the Servicer may furnish such Request for
Release electronically to the Custodian, in which event the Servicing Officer
transmitting the same shall be deemed to have signed the Request for Release. In
connection with any Request for Release of a Mortgage File because of a
repurchase of a Mortgage Loan, such Request for Release shall, if required, be
followed by an assignment of mortgage, without recourse, representation or
warranty from the Trustee to the Seller and the related Mortgage Note shall be
endorsed either in blank or without recourse by the Trustee and be returned to
the Seller. In connection with any Request for Release of a Mortgage File
because of the payment in full of a Mortgage Loan, such Request for Release
shall, if required, be accompanied by a certificate of satisfaction or other
similar instrument to be executed by or on behalf of the Trustee and returned to
the Servicer.

 

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Section 5.13. Documents, Records and Funds in Possession of Master Servicer to
be Held for Trustee.

(a) The Master Servicer shall transmit, or cause the Servicer to transmit, to
the Trustee such documents and instruments coming into the possession of the
Master Servicer or the Servicer from time to time as are required by the terms
hereof to be delivered to the Trustee or the Custodian. Any funds received by
the Master Servicer or by the Servicer in respect of any Mortgage Loan or which
otherwise are collected by the Master Servicer or the Servicer as Liquidation
Proceeds, Condemnation Proceeds or Insurance Proceeds in respect of any Mortgage
Loan shall be held for the benefit of the Trustee and the Certificateholders
subject to the Master Servicer’s right to retain or withdraw amounts provided in
this Agreement and to the right of the Servicer to retain its Servicing Fee and
other amounts as provided herein. The Master Servicer shall, and shall cause the
Servicer to, provide access to information and documentation regarding the
Mortgage Loans to the Trustee, their respective agents and accountants at any
time upon reasonable request and during normal business hours, and to
Certificateholders that are savings and loan associations, banks or insurance
companies, the Office of Thrift Supervision, the FDIC and the supervisory agents
and examiners of such office and corporation or examiners of any other federal
or state banking or insurance regulatory authority if so required by applicable
regulations of the Office of Thrift Supervision or other regulatory authority,
such access to be afforded without charge but only upon reasonable request in
writing and during normal business hours at the offices of the Master Servicer
designated by it. In fulfilling such a request the Master Servicer shall not be
responsible for determining the sufficiency of such information.

(b) All Mortgage Files and funds collected or held by, or under the control of,
the Master Servicer or the Servicer, in respect of any Mortgage Loans, whether
from the collection of principal and interest payments or from Liquidation
Proceeds, Condemnation Proceeds or Insurance Proceeds, shall be held by the
Master Servicer or by the Servicer for and on behalf of the Trustee as the
Trustee’s agent and bailee for purposes of perfecting the Trustee’s security
interest therein as provided by relevant Uniform Commercial Code or laws;
provided, however, that the Master Servicer and the Servicer shall be entitled
to setoff against, and deduct from, any such funds any amounts that are properly
due and payable to the Master Servicer or the Servicer under this Agreement and
shall be authorized to remit such funds to the Securities Administrator in
accordance with this Agreement.

(c) The Servicer and the Master Servicer each hereby acknowledges that
concurrently with the execution of this Agreement, the Trustee shall own or, to
the extent that a court of competent jurisdiction shall deem the conveyance of
the Mortgage Loans from the Seller to the Depositor not to constitute a sale,
the Trustee shall have a security interest in the Mortgage Loans and in all
Mortgage Files representing such Mortgage Loans and in all funds and investment
property now or hereafter held by, or under the control of, the Servicer or the
Master Servicer that are collected by the Servicer or the Master Servicer in
connection with the Mortgage Loans, whether as scheduled installments of
principal and interest or as full or partial prepayments of principal or
interest or as Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds
or otherwise, and in all proceeds of the foregoing and proceeds of proceeds (but
excluding any fee or other amounts to which the Servicer or the Master Servicer
is entitled to hereunder); and the Servicer and the Master Servicer each agrees
that so long as the Mortgage Loans are assigned to and held by the Trustee or
the Custodian, all documents or instruments constituting part of the Mortgage
Files, and such funds relating to the Mortgage Loans which come into the
possession or custody of, or which are subject to the control of, the Master
Servicer or the Servicer shall be held by the

 

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Master Servicer or the Servicer for and on behalf of the Trustee as the
Trustee’s agent and bailee for purposes of perfecting the Trustee’s security
interest therein as provided by the applicable Uniform Commercial Code or other
applicable laws.

(d) The Master Servicer agrees that it shall not, and shall not authorize the
Servicer to, create, incur or subject any Mortgage Loans, or any funds that are
deposited in any Custodial Account, Escrow Account or the Collection Account, or
any funds that otherwise are or may become due or payable to or for the benefit
of the Trustee, to any claim, lien, security interest, judgment, levy, writ of
attachment or other encumbrance, nor assert by legal action or otherwise any
claim or right of setoff against any Mortgage Loan or any funds collected on, or
in connection with, a Mortgage Loan.

Section 5.14. Opinion. On or before the Closing Date, the Master Servicer shall
cause to be delivered to the Depositor, the Seller, the Trustee, the Securities
Administrator and the Servicer one or more Opinions of Counsel, dated the
Closing Date, in form and substance reasonably satisfactory to the Depositor, as
to the due authorization, execution and delivery of this Agreement by the Master
Servicer and the enforceability thereof.

Section 5.15. Trustee To Retain Possession of Certain Insurance Policies and
Documents. The Trustee (or the Custodian on behalf of the Trustee) shall retain
possession and custody of the originals of the primary mortgage insurance
policies or certificate of insurance if applicable and any certificates of
renewal as to the foregoing as may be issued from time to time as contemplated
by this Agreement. Until all amounts payable in respect of the Certificates have
been paid in full and the Master Servicer otherwise has fulfilled its
obligations under this Agreement, the Trustee (or the Custodian) shall also
retain possession and custody of each Mortgage File in accordance with and
subject to the terms and conditions of this Agreement. The Master Servicer shall
promptly deliver or cause the Servicer to deliver to the Trustee (or the
Custodian), upon the execution or receipt thereof the originals of the primary
mortgage insurance policies and any certificates of renewal thereof, and such
other documents or instruments that constitute portions of the Mortgage File
that come into the possession of the Master Servicer or the Servicer from time
to time.

Section 5.16. Compensation to the Master Servicer. Pursuant to Sections 5.06(e)
and 6.07(f)(ii), all income and gain realized from any investment of funds in
the Collection Account and the Certificate Account shall be for the benefit of
the Master Servicer as compensation net of the sum of the Trustee Fee and the
Custodian Fee payable by the Master Servicer to the Trustee and the Custodian,
respectively, on behalf of the Trust, as provided in Section 5.07.
Notwithstanding the foregoing, the Master Servicer shall deposit in the
Collection Account, on or before the related Distribution Date, an amount equal
to the lesser of (i) its master servicing compensation with respect to such
Distribution Date and (ii) the amount of any Compensating Interest Payment
required to be paid by the Servicer with respect to such Distribution Date
pursuant to this Agreement, but which is not paid by the Servicer on its behalf.
The Master Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as provided in this Agreement.

 

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Section 5.17. Merger or Consolidation. Any Person into which the Master Servicer
may be merged or consolidated, or any Person resulting from any merger,
conversion, other change in form or consolidation to which the Master Servicer
shall be a party, or any Person succeeding to the business of the Master
Servicer, shall be the successor to the Master Servicer 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 or resulting Person to the Master Servicer shall be
a Person that shall be qualified and approved (or that have an Affiliate that is
qualified and approved) seller/servicer of residential mortgage loans for Fannie
Mae, Freddie Mac and HUD and shall have a net worth of not less than
$25,000,000.

Section 5.18. Resignation of Master Servicer. Except as otherwise provided in
Sections 5.17 and this Section 5.18 hereof, the Master Servicer shall not resign
from the obligations and duties hereby imposed on it unless it determines that
the Master Servicer’s 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 and cannot be cured. Any such determination
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel that shall be Independent to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee shall have
assumed, or a successor master servicer shall have been appointed by the Trustee
and until such successor shall have assumed, the Master Servicer’s
responsibilities and obligations under this Agreement. Notice of such
resignation shall be given promptly by the Master Servicer and the Depositor to
the Trustee.

Section 5.19. Assignment or Delegation of Duties by the Master Servicer. Except
as expressly provided herein, the Master Servicer shall not assign or transfer
any of its rights, benefits or privileges hereunder to any other Person, or
delegate to or subcontract with, or authorize or appoint any other Person to
perform any of the duties, covenants or obligations to be performed by the
Master Servicer hereunder, unless the Trustee and the Depositor shall have
consented to such action; provided, however, that the Master Servicer shall have
the right without the prior written consent of the Trustee or the Depositor to
delegate or assign to or subcontract with or authorize or appoint an Affiliate
of the Master Servicer to perform and carry out any duties, covenants or
obligations to be performed and carried out by the Master Servicer hereunder. In
no case, however, shall any such delegation, subcontracting or assignment to an
Affiliate of the Master Servicer relieve the Master Servicer of any liability
hereunder. Notice of such permitted assignment shall be given promptly by the
Master Servicer to the Depositor and the Trustee. If, pursuant to any provision
hereof, the duties of the Master Servicer are transferred to a successor master
servicer, the entire amount of compensation payable to the Master Servicer
pursuant hereto, including amounts payable to or permitted to be retained or
withdrawn by the Master Servicer pursuant to Section 5.16 hereof, shall
thereafter be payable to such successor master servicer.

Section 5.20. Limitation on Liability of the Master Servicer and Others.

(a) The Master Servicer undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement.

 

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(b) No provision of this Agreement shall be construed to relieve the Master
Servicer from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that the duties and
obligations of the Master Servicer shall be determined solely by the express
provisions of this Agreement, the Master Servicer shall not be liable except for
the performance of such duties and obligations as are specifically set forth in
this Agreement; no implied covenants or obligations shall be read into this
Agreement against the Master Servicer and, in absence of bad faith on the part
of the Master Servicer, the Master Servicer may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Master Servicer and
conforming to the requirements of this Agreement.

(c) Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Master Servicer or
any such person against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in its performance of its duties
or by reason of reckless disregard for its obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer shall be entitled to indemnification by the Trust and will
be held harmless against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement, the Certificates or any other
Operative Agreement other than any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or negligence in the performance of his or its
duties hereunder or by reason of reckless disregard of his or its obligations
and duties hereunder. The Master Servicer and any director, officer, employee or
agent of the Master 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 Master Servicer shall be under no obligation to appear
in, prosecute or defend any legal action that is not incidental to its duties to
master service the Mortgage Loans in accordance with this Agreement and that in
its opinion may involve it in any expenses or liability; provided, however, that
the Master Servicer may in its sole discretion undertake any such action that it
may deem necessary or desirable in respect to this Agreement and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust and the Master Servicer shall be entitled to be reimbursed therefor out of
the Collection Account it maintains as provided by Section 5.07.

Section 5.21. Indemnification; Third Party Claims. The Master Servicer agrees to
indemnify the Depositor, the Trust, the Delaware Trustee, the Trustee and the
Servicer and hold them harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, liabilities, fees and expenses that the Depositor, the Trust, the
Delaware Trustee, the Trustee or the Servicer may sustain as a result of the
failure of the Master Servicer to perform its duties and master service the
Mortgage Loans in compliance with the terms of this Agreement. The Depositor,
the Trust, the Delaware Trustee, the Trustee and the Servicer shall immediately
notify the Master Servicer if a claim is made by a third party with respect to
this Agreement, the Mortgage Loans entitling the Depositor, the Trust, the
Delaware Trustee, the Trustee or the Servicer to indemnification under this
Section 5.21,

 

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whereupon the Master Servicer shall assume the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
them in respect of such claim. The failure to provide such immediate notice
shall not affect the Master Servicer’s obligation pursuant to this Section 5.21
to indemnify the Depositor, the Trust, the Delaware Trustee, the Trustee and the
Servicer, except to the extent that the Master Servicer is materially prejudiced
by such failure to notify.

Section 5.22. Alternative Index. In the event that the Index for any Mortgage
Loan, as specified in the related Mortgage Note, becomes unavailable for any
reason, the Servicer shall select an alternative index, which in all cases shall
be an index that constitutes a qualified rate on a regular interest under the
REMIC Provisions, in accordance with the terms of such Mortgage Note or, if such
Mortgage Note does not make provision for the selection of an alternative index
in such event, the Servicer shall, subject to applicable law, select an
alternative index based on information comparable to that used in connection
with the original Index and, in either case, such alternative index shall
thereafter be the Index for such Mortgage Loan.

Section 5.23. Transfer of Servicing. The Servicer agrees that it shall provide
written notice to the Master Servicer and the Trustee thirty days prior to any
proposed transfer or assignment by the Servicer of the servicing of the Mortgage
Loans. In addition, the ability of the Servicer to transfer or assign the
servicing hereunder to a successor servicer shall be subject to the following
conditions:

(i) Receipt of written consent of the Master Servicer to such transfer, which
consent shall not be unreasonably withheld;

(ii) Such successor servicer must satisfy the servicer eligibility standards set
forth in Section 4.06(a);

(iii) Such successor servicer must execute and deliver to the Master Servicer
and the Trustee an agreement, in form and substance reasonably satisfactory to
the Master Servicer and the Trustee, that contains an assumption by such
successor servicer of the due and punctual performance and observance of each
covenant and condition to be performed and observed by the Servicer;

(iv) At the time of the transfer, there must be delivered to the Trustee a
letter from each Rating Agency to the effect that such transfer of servicing
will not result in a qualification, withdrawal or downgrade of the then-current
rating of any of the Certificates; and

(v) The Seller shall, at its cost and expense, take such steps, or cause the
terminated Servicer to take such steps, as may be necessary or appropriate to
effectuate and evidence the transfer of the servicing of the Mortgage Loans to
such successor servicer, including, but not limited to, the following: (A) to
the extent required by the terms of the Mortgage Loans and by applicable federal
and state laws and regulations, the Seller shall cause the prior Servicer to
timely mail to each obligor under a Mortgage Loan any required notices or
disclosures describing the transfer of servicing of the Mortgage

 

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Loans to the successor servicer; (B) prior to the effective date of such
transfer of servicing, the Seller shall cause the prior Servicer to transmit to
any related insurer notification of such transfer of servicing; (C) on or prior
to the effective date of such transfer of servicing, the Seller shall cause the
prior Servicer to deliver to the successor servicer all Mortgage Loan Documents
and any related records or materials; (D) on or prior to the effective date of
such transfer of servicing, the Seller shall cause the prior Servicer to
transfer to the successor servicer, or, if such transfer occurs after a Servicer
Remittance Date but before the next succeeding Distribution Date, to the
Securities Administrator, all funds held by the prior Servicer in respect of the
Mortgage Loans; (E) on or prior to the effective date of such transfer of
servicing, the Seller shall cause the prior Servicer to, after the effective
date of the transfer of servicing to the successor servicer, continue to forward
to such successor servicer, within one Business Day of receipt, the amount of
any payments or other recoveries received by the prior Servicer, and to notify
the successor servicer of the source and proper application of each such payment
or recovery; and (F) the Seller shall cause the prior Servicer to, after the
effective date of transfer of servicing to the successor servicer, continue to
cooperate with the successor servicer to facilitate such transfer in such manner
and to such extent as the successor servicer may reasonably request.

Section 5.24. Compliance with Safeguarding Customer Information Requirements.
The Master Servicer has implemented and will maintain security measures designed
to meet the objectives of the Guidelines.

Section 5.25. REO Property.

(a) Notwithstanding any other provision of this Agreement, the Master Servicer,
acting on behalf of the Trustee hereunder, shall not permit the Servicer to,
rent, lease, or otherwise earn income on behalf of any REMIC with respect to any
REO Property which might cause such REO Property to fail to qualify as
“foreclosure” property within the meaning of section 860G(a)(8) of the Code or
result in the receipt by any REMIC of any “income from non-permitted assets”
within the meaning of section 860F(a)(2) of the Code or any “net income from
foreclosure property” which is subject to tax under the REMIC Provisions unless
the Master Servicer has advised, or has caused the Servicer to advise, the
Trustee in writing to the effect that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC as a REMIC and any income
generated for any REMIC by the REO Property would not result in the imposition
of a tax upon such REMIC.

(b) The Master Servicer shall make, or shall cause the applicable Servicer to
make, reasonable efforts to sell any REO Property for its fair market value. In
any event, however, the Master Servicer shall, or shall cause the Servicer to,
dispose of any REO Property within three years from the end of the calendar year
of its acquisition by the Trust unless the Trustee has received a grant of
extension from the Internal Revenue Service to the effect that, under the REMIC
Provisions and any relevant proposed legislation and under applicable state law,
the REMIC may hold REO Property for a longer period without adversely affecting
the REMIC status of such REMIC or causing the imposition of a federal or state
tax upon such REMIC. If the Trustee has received such an extension, then (a) the
Trustee shall provide a copy of such extension

 

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to the Master Servicer and (b) the Trustee, or the Master Servicer, acting on
its behalf hereunder, shall, or shall cause the Servicer to, continue to attempt
to sell the REO Property for its fair market value for such period longer than
three years as such extension permits (the “Extended Period”). If the Trustee
has not received such an extension and the Trustee, or the Master Servicer
acting on behalf of the Trustee hereunder, or the Servicer is unable to sell the
REO Property within 33 months after its acquisition by the Trust or if the
Trustee has received such an extension, and the Trustee, or the Master Servicer
acting on behalf of the Trustee hereunder, is unable to sell the REO Property
within the period ending three months before the close of the Extended Period,
the Master Servicer shall, or shall cause the Servicer to, before the end of the
three year period or the Extended Period, as applicable, (i) purchase such REO
Property at a price equal to the REO Property’s fair market value or
(ii) auction the REO Property to the highest bidder (which may be the Master
Servicer) in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.

ARTICLE VI

THE CERTIFICATES; DEPOSITS AND

DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

Section 6.01. The Certificates.

The Certificates shall be substantially in the forms attached as Exhibit A
hereto. The Certificates shall be issuable in registered form, in the minimum
denominations per Class set forth in the Preliminary Statement and, to the
extent applicable, in integral multiples of $1 in excess thereof.

Subject to Section 10.03 hereof respecting the final distribution on the
Certificates, on each Distribution Date the Securities Administrator shall make
distributions to each Certificateholder of record on the preceding Record Date
either (x) by wire transfer in immediately available funds to the account of
such Holder at a bank or other entity having appropriate facilities therefor, if
(i) such Holder has so notified the Securities Administrator not later than the
applicable Record Date and (ii) such Holder shall hold (A) 100% of the Class
Principal Amount of any Class of Certificates or (B) Certificates of any Class
with aggregate principal denominations of not less than $1,000,000 or (y) by
check mailed by first class mail to such Certificateholder at the address of
such Holder appearing in the Certificate Register.

The Certificates shall be executed by manual or facsimile signature on behalf of
the Securities Administrator by an authorized signatory of the Securities
Administrator. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Securities Administrator shall bind the Securities
Administrator, notwithstanding that such individuals or any of them have ceased
to be so authorized prior to the countersignature and delivery of such
Certificates or did not hold such offices at the date of such Certificate. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless countersigned by the Securities Administrator by manual
signature, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly executed
and

 

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delivered hereunder. All Certificates shall be dated the date of their
countersignature. On the Closing Date, the Securities Administrator shall
countersign the Certificates to be issued at the direction of the Depositor, or
any Affiliate thereof.

The Depositor shall provide, or cause to be provided, to the Securities
Administrator on a continuous basis, an adequate inventory of specimen
Certificates to facilitate transfers.

Section 6.02. Certificate Register; Registration of Transfer and Exchange of
Certificates.

(a) The Securities Administrator shall maintain, or cause to be maintained, a
Certificate Register for the Trust in which, subject to the provisions of
subsections (b) and (c) below and to such reasonable regulations as it may
prescribe, the Securities Administrator shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate, the Securities
Administrator shall execute and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same Class and
aggregate Percentage Interest.

At the option of a Certificateholder, Certificates may be exchanged for other
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Securities Administrator. Whenever any
Certificates are so surrendered for exchange, the Securities Administrator shall
execute, authenticate and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive. Every Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Securities
Administrator duly executed by the Holder thereof or his attorney duly
authorized in writing.

No service charge to the Certificateholders shall be made for any registration
of transfer or exchange of Certificates, but payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates may be required.

All Certificates surrendered for registration of transfer or exchange shall be
cancelled and subsequently destroyed by the Securities Administrator in
accordance with the Securities Administrator’s customary procedures.

(b) No Person shall transfer a Restricted Certificate unless such transfer
(i) is made pursuant to an effective registration statement under the Securities
Act and any applicable state securities laws, (ii) is exempt from the
registration requirements under said Act and such state securities laws and
(iii) is made in compliance with the provisions of this Section. In the event
that a transfer is to be made in reliance upon an exemption from the Securities
Act and such laws, in order to assure compliance with the Securities Act and
such laws, the Certificateholder desiring to effect such transfer and such
Certificateholder’s prospective transferee shall each certify to the Securities
Administrator in writing the facts surrounding the transfer in substantially the
forms set forth in Exhibit B-1 (the “Transferor Certificate”) and deliver a
letter in substantially the form of either Exhibit B-2 (the “Investment Letter”)
or Exhibit B-3 (the

 

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“Rule 144A Letter”). The Depositor shall provide to any Holder of a Restricted
Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Securities Administrator shall cooperate
with the Depositor in providing the Rule 144A information referenced in the
preceding sentence, including providing to the Depositor such information
regarding the Certificates, the Mortgage Loans and other matters regarding the
Trust as the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Restricted Certificate desiring to effect
such transfer shall, and does hereby agree to, indemnify the Securities
Administrator, the Trustee, the Depositor, the Seller, the Servicer and the
Master Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.

No transfer of an ERISA-Restricted Certificate shall be made unless the
Securities Administrator shall have received either (A) a representation from
the transferee of such Certificate acceptable to and in form and substance
satisfactory to the Securities Administrator (substantially in the form of
Exhibit B-4, or in the event such ERISA-Restricted Certificate is a Residual
Certificate substantially in the form of Exhibit B-6), to the effect that
(i) such transferee is neither a Plan nor a person acting for, on behalf of, or
with the assets of, any such Plan to effect such transfer, (ii) in the case of
the Class M-2 or Class B-1 Certificates, a representation that such Certificates
have become the subject of an ERISA-Qualifying Underwriting and are rated at
least “BBB-” or “Ba3” at the time of their acquisition or (iii) if the
ERISA-Restricted Certificate has been the subject of an ERISA-Qualifying
Underwriting, the purchaser is an insurance company which is purchasing such
Certificates with funds contained in an “insurance company general account” (as
such term is defined in Section (V)(e) of prohibited transaction class exemption
95-60 (“PTCE 95-60”)) and the purchase and holding of ERISA-Restricted
Certificates are covered under Sections I and III of PTCE 95-60; or (B) in the
case of any such ERISA-Restricted Certificate presented for registration in the
name of a Plan or a person acting for, on behalf of, or with the assets of, a
Plan, an Opinion of Counsel satisfactory to the Securities Administrator, which
Opinion of Counsel shall not be an expense of any of the Trustee, the Securities
Administrator, the Depositor, the Master Servicer, the Servicer, the Seller or
the Trust, addressed to the Securities Administrator to the effect that the
purchase and holding of such ERISA-Restricted Certificate will not result in a
non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code and will not subject the Trustee, the Securities Administrator, the
Depositor, the Master Servicer, the Servicer or the Seller to any obligation in
addition to those expressly undertaken in this Agreement. For purposes of the
preceding sentence, with respect to an ERISA-Restricted Certificate that is not
a Residual Certificate, in the event the representation letter referred to in
the preceding sentence is not so furnished, such representation shall be deemed
to have been made to the Securities Administrator by the transferee’s (including
an initial acquirer’s) acceptance of the ERISA-Restricted Certificates.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA-Restricted Certificate to or on behalf of a Plan without the delivery
to the Securities Administrator of an Opinion of Counsel or representation
letter satisfactory to the Securities Administrator as described above shall be
void and of no effect.

 

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To the extent permitted under applicable law (including, but not limited to,
ERISA), the Securities Administrator shall be under no liability to any Person
for any registration of transfer of any ERISA-Restricted Certificate that is in
fact not permitted by this Section 6.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Securities Administrator in accordance with the foregoing
requirements.

(c) Each Person who has or who acquires any ownership interest in a Residual
Certificate shall be deemed by the acceptance or acquisition of such ownership
interest to have agreed to be bound by the following provisions, and the rights
of each Person acquiring any ownership interest in a Residual Certificate are
expressly subject to the following provisions:

(i) Each Person holding or acquiring any ownership interest in a Residual
Certificate shall be a Permitted Transferee.

(ii) No ownership interest in a Residual Certificate may be registered on the
Closing Date or thereafter transferred (except for an initial registration on
the Closing Date of the transfer to the Depositor (or an Affiliate thereof), the
Trustee or the Securities Administrator), and the Securities Administrator shall
not register the transfer of any Residual Certificate (except for an initial
registration on the Closing Date of the transfer to the Depositor (or an
Affiliate thereof), the Trustee or the Securities Administrator) unless, in
addition to the certificates required to be delivered to the Securities
Administrator under subparagraph (b) above, the Securities Administrator shall
have been furnished with an affidavit of the Holder desiring to effect such
transfer (a “Transferor Affidavit”) in the form attached hereto as Exhibit B-5
and an affidavit of the proposed transferee (a “Transferee Affidavit”) in the
form attached hereto as Exhibit B-6.

(iii) Each Person holding or acquiring any ownership interest in a Residual
Certificate shall agree (A) to obtain a Transferee Affidavit from any other
Person to whom such Person attempts to Transfer its ownership interest in a
Residual Certificate, (B) to obtain a Transferee Affidavit from any Person for
whom such Person is acting as nominee, trustee or agent in connection with any
transfer of a Residual Certificate and (C) not to transfer its ownership
interest in a Residual Certificate or to cause the transfer of an ownership
interest in a Residual Certificate to any other Person if it has actual
knowledge that such Person is not a Permitted Transferee.

(iv) Any attempted or purported transfer of any ownership interest in a Residual
Certificate in violation of the provisions of this Section 6.02(c) shall be
absolutely null and void and shall vest no rights in the purported Transferee.
If any purported transferee shall become a Holder of a Residual Certificate in
violation of the provisions of this Section 6.02(c), then the last preceding
Permitted Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of transfer of such Residual
Certificate. The Securities Administrator shall be under no liability to any
Person for any registration of transfer of a Residual Certificate that is in
fact not permitted by Section 6.02(b) and this Section 6.02(c) or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such

 

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Holder under the provisions of this Agreement so long as the transfer was
registered after receipt of the related Transferee Affidavit, Transferor
Affidavit and either the Rule 144A Letter or the Investment Letter. The
Securities Administrator shall be entitled but not obligated to recover from any
Holder of a Residual Certificate that was in fact not a Permitted Transferee at
the time it became a Holder or, at such subsequent time as it became other than
a Permitted Transferee, all payments made on such Residual Certificate at and
after either such time. Any such payments so recovered by the Securities
Administrator shall be paid and delivered by the Securities Administrator to the
last preceding Permitted Transferee of such Certificate.

(v) The Depositor shall promptly make available, upon receipt of written request
from the Securities Administrator, all information necessary to compute any tax
imposed under Section 860E(e) of the Code as a result of a transfer of an
ownership interest in a Residual Certificate to any Holder who is not a
Permitted Transferee.

The restrictions on transfers of a Residual Certificate set forth in this
Section 6.02(c) shall cease to apply (and the applicable portions of the legend
on a Residual Certificate may be deleted) with respect to transfers occurring
after delivery to the Securities Administrator of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trust, the Securities
Administrator or the Depositor, to the effect that the elimination of such
restrictions will not cause an Adverse REMIC Event. Each Person holding or
acquiring any ownership interest in a Residual Certificate hereby consents to
any amendment of this Agreement which, based on an Opinion of Counsel furnished
to the Securities Administrator is reasonably necessary (a) to ensure that the
record ownership of, or any beneficial interest in, a Residual Certificate is
not transferred, directly or indirectly, to a Person that is not a Permitted
Transferee and (b) to provide for a means to compel the transfer of a Residual
Certificate which is held by a Person that is not a Permitted Transferee to a
Holder that is a Permitted Transferee.

(d) The preparation and delivery of all certificates and opinions referred to
above in this Section 6.02(d) in connection with transfer shall be at the
expense of the parties to such transfers.

(e) Except as provided below, the Book-Entry Certificates shall at all times
remain registered in the name of the Depository or its nominee and at all times:
(i) registration of the Certificates may not be transferred by the Securities
Administrator except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Book-Entry Certificates; (iii) ownership and
transfers of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Securities Administrator
shall deal with the Depository, Depository Participants and indirect
participating firms as representatives of the Certificate Owners of the
Book-Entry Certificates for purposes of exercising the rights of Holders under
this Agreement, and requests and directions for and votes of such
representatives shall not be deemed to be inconsistent if they are made with
respect to different Certificate Owners; and (vi) the Securities Administrator
may rely and shall be fully protected in relying upon information furnished by
the Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and Persons
shown on the books of such indirect participating firms as direct or indirect
Certificate Owners.

 

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All transfers by Certificate Owners of Book-Entry Certificates shall be made in
accordance with the procedures established by the Depository Participant or
brokerage firm representing such Certificate Owner. Each Depository Participant
shall only transfer Book-Entry Certificates of Certificate Owners it represents
or of brokerage firms for which it acts as agent in accordance with the
Depository’s normal procedures.

If (x) (i) the Depository or the Depositor advises the Securities Administrator
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (ii) the Securities
Administrator or the Depositor is unable to locate a qualified successor, or
(y) after the occurrence of an Event of Default, Certificate Owners representing
at least 51% of the Certificate Principal Amount of the Book-Entry Certificates
together advise the Securities Administrator and the Depository through the
Depository Participants in writing that the continuation of a book-entry system
through the Depository is no longer in the best interests of the Certificate
Owners, the Securities Administrator shall notify all Certificate Owners,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Securities Administrator of the related Class of
Certificates by the Depository, accompanied by the instructions from the
Depository for registration, the Securities Administrator shall issue the
Definitive Certificates. Neither the Depositor nor the Securities Administrator
shall be liable for any delay in delivery of such instruction and each may
conclusively rely on, and shall be protected in relying on, such instructions.
The Depositor shall provide the Securities Administrator with an adequate
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Securities Administrator, to the extent
applicable with respect to such Definitive Certificates and the Securities
Administrator shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder; provided that the Securities Administrator shall
not by virtue of its assumption of such obligations become liable to any party
for any act or failure to act of the Depository.

Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.

If (a) any mutilated Certificate is surrendered to the Securities Administrator,
or the Securities Administrator receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Depositor and the Securities Administrator such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Securities Administrator that such Certificate has been acquired by a
bona fide purchaser, the Securities Administrator shall execute, countersign and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest. In connection with the issuance of any new Certificate under this
Section 6.03, the Securities Administrator may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Securities Administrator)

 

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connected therewith. Any replacement Certificate issued pursuant to this
Section 6.03 shall constitute complete and indefeasible evidence of ownership,
as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.

Section 6.04. Persons Deemed Owners.

The Securities Administrator and any agent of the Trustee and the Securities
Administrator may treat the Person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving distributions as
provided in this Agreement and for all other purposes whatsoever, and neither
the Securities Administrator nor any agent of the Securities Administrator shall
be affected by any notice to the contrary.

Section 6.05. Access to List of Certificateholders’ Names and Addresses.

If three or more Certificateholders (a) request such information in writing from
the Securities Administrator, (b) state that such Certificateholders desire to
communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication which such Certificateholders propose to transmit, or if the
Depositor shall request such information in writing from the Securities
Administrator, then the Securities Administrator shall, within ten Business Days
after the receipt of such request, provide the Depositor or such
Certificateholders at such recipients’ expense the most recent list of the
Certificateholders of such Trust held by the Securities Administrator, if any.
The Depositor and every Certificateholder, by receiving and holding a
Certificate, agree that the Securities Administrator shall not be held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.

Section 6.06. Maintenance of Office or Agency.

Certificates may be surrendered for registration of transfer or exchange at the
Corporate Trust Office of the Securities Administrator. The Securities
Administrator will give prompt written notice to the Certificateholders of any
change in such location of any such office or agency.

Section 6.07. The Certificate Account.

(a) The Paying Agent shall establish and maintain on behalf of the
Certificateholders, the Certificate Account entitled “Certificate Account, U.S.
Bank National Association, as Trustee, in trust for Holders of the HomeBanc
Mortgage Trust 2006-1, Mortgage Pass-Through Certificates.”

(b) The Certificate Account shall be an Eligible Account. If the Certificate
Account ceases to be an Eligible Account, the Paying Agent shall establish a new
Certificate Account that is an Eligible Account within 10 days and transfer all
funds and investment property on deposit in such existing Certificate Account
into such new Certificate Account.

 

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(c) On each Master Servicer Remittance Date, the Master Servicer shall remit to
the Paying Agent the entire amount on deposit in the Collection Account (subject
to permitted withdrawals set forth in Section 5.07).

(d) Upon receipt, the Paying Agent shall deposit the amount received from the
Master Servicer pursuant to subsection (c) of this Section 6.07 into the
Certificate Account.

(e) Funds in the Certificate Account may be invested by the Paying Agent in
Eligible Investments selected by and at the written direction of the Master
Servicer, which shall mature not later than the related Distribution Date and
any such Eligible Investment shall not be sold or disposed of prior to its
maturity. All such Eligible Investments shall be made in the name of the Trustee
in trust for the benefit of the Certificateholders. All income and gain net of
the Trustee Fee, the Custodian Fee, the Delaware Trustee Fee and any losses
realized from any such investment of funds on deposit in the Certificate Account
shall be for the benefit of the Master Servicer and shall be subject to
withdrawal by the Paying Agent for payment to the Master Servicer from time to
time in accordance with subsection (f) below and shall not be part of the Trust.
The amount of any losses incurred in respect of any such investments shall be
deposited in the Certificate Account by the Master Servicer out of its own
funds, without any right of reimbursement therefor, immediately as realized.

(f) The Paying Agent shall withdraw funds from the Certificate Account for
payments to Certificateholders in the manner specified in this Agreement. In
addition, the Paying Agent may prior to making the payment pursuant to
Section 6.08 from time to time make withdrawals from the Certificate Account for
the following purposes:

(i) to the extent not reimbursed by the Master Servicer, to make payments to the
Master Servicer pursuant to any provision of the Operative Agreements;

(ii) to pay to the Master Servicer income earned on the investment of funds on
deposit in the Certificate Account;

(iii) to pay to the Delaware Trustee, the Trustee and the Custodian, amounts
required to be reimbursed to them in accordance with the provisions of the
Operative Agreements;

(iv) to withdraw funds deposited in error in the Certificate Account; and

(v) to clear and terminate the Certificate Account pursuant to Article IX.

Section 6.08. Distributions from the Certificate Account.

(a) On each Distribution Date, the Paying Agent shall pay the Interest Funds for
each Mortgage Pool for such date, from funds in the Certificate Account,
concurrently as follows in accordance with the report of the Securities
Administrator:

(i) On each Distribution Date, Interest Funds for Pool 1 shall be distributed
concurrently, in proportion to the amount of Current Interest and Carryforward
Interest

 

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for each such Class, to the Class 1-A-1 and Class 1-A-2 Certificates, in an
amount equal to Current Interest and any Carryforward Interest for each such
Class for such Distribution Date;

(ii) On each Distribution Date, Interest Funds for Pool 2 shall be distributed
concurrently, in proportion to the amount of Current Interest and Carryforward
Interest for each such Class, to the Class 2-A-1 and Class 2-A-2 Certificates,
in an amount equal to Current Interest and any Carryforward Interest for each
such Class for such Distribution Date;

(iii) On each Distribution Date, Interest Funds for Pool 3 shall be distributed
concurrently, in proportion to the amount of Current Interest and Carryforward
Interest for each such Class, to the Class 3-A-1, Class 3-A-2 and Class 3-A-3
Certificates, in an amount equal to Current Interest and any Carryforward
Interest for each such Class for such Distribution Date;

(iv) On each Distribution Date, Interest Funds for Pool 4 shall be distributed
concurrently, in proportion to the amount of Current Interest and Carryforward
Interest for each such Class, to the Class 4-A-1 and Class 4-A-2 Certificates,
in an amount equal to Current Interest and any Carryforward Interest for each
such Class for such Distribution Date;

(v) On each Distribution Date, any Interest Funds remaining for Pool 1, Pool 2,
Pool 3 or Pool 4, after giving effect to distributions pursuant to clauses
(i) through (iv) above, shall be distributed in the following order of priority:

(1) concurrently, in proportion to the amount of Current Interest and
Carryforward Interest for each such Class remaining unpaid, to the Class 1-A-1,
Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class 3-A-2, Class 3-A-3,
Class 4-A-1 and Class 4-A-2 Certificates, any Current Interest and any
Carryforward Interest for each such Class remaining unpaid for such Distribution
Date;

(2) to the Class M-1 Certificates, Current Interest and any Carryforward
Interest for such class for such Distribution Date;

(3) to the Class M-2 Certificates, Current Interest and any Carryforward
Interest for such class for such Distribution Date;

(4) to the Class B-1 Certificates, Current Interest and any Carryforward
Interest for such class for such Distribution Date; and

(5) for application as part of Monthly Excess Interest for such Distribution
Date, as described under Section 6.08(c) below, any Interest Funds remaining
after application pursuant to clauses (i) through (iv) and clauses (v)(1)
through (4) above.

 

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(b) On each Distribution Date, the Paying Agent shall pay the Principal
Distribution Amount for each Mortgage Pool for such Distribution Date from funds
in the Certificate Account as follows:

(i) On each Distribution Date (a) prior to the Stepdown Date or (b) with respect
to which a Trigger Event is in effect, concurrently as follows:

(1) The Principal Distribution Amount for Pool 1 shall be distributed pro rata,
to the Class 1-A-1 and Class 1-A-2 Certificates, based on their respective Class
Principal Amounts, until their respective Class Principal Amounts have been
reduced to zero;

(2) The Principal Distribution Amount for Pool 2 shall be distributed pro rata,
to the Class 2-A-1 and Class 2-A-2 Certificates, based on their respective Class
Principal Amounts, until their respective Class Principal Amounts have been
reduced to zero;

(3) The Principal Distribution Amount for Pool 3 shall be distributed
concurrently, to (a) the Class 3-A-1 and Class 3-A-2 Certificates, sequentially,
in that order, and (b) the Class 3-A-3 Certificates, in proportion to, in the
case of subclause (a), the aggregate Class Principal Amount of the Class 3-A-1
and Class 3-A-2 Certificates, and in the case of subclause (b), the Class
Principal Amount of the Class 3-A-3 Certificates, until their respective Class
Principal Amounts have been reduced to zero;

(4) The Principal Distribution Amount for Pool 4 shall be distributed pro rata,
to the Class 4-A-1 and Class 4-A-2 Certificates, based on their respective Class
Principal Amounts, until their respective Class Principal Amounts have been
reduced to zero;

(5) Any Principal Distribution Amount remaining for Pool 1, Pool 2, Pool 3 or
Pool 4, after giving effect to distributions pursuant to clauses (1) through
(4) above, shall be distributed in the following order of priority:

(A) concurrently, to the Group 2, Group 3 and Group 4 Certificates (in each case
in proportion to the aggregate Class Principal Amount of the Certificates in the
related group after giving effect to distributions pursuant to clauses (1), (2),
(3) and (4) above, respectively), in each case in accordance with the Related
Senior Priority, until the Class Principal Amount of each such class has been
reduced to zero;

(B) to the Class M-1 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

 

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(C) to the Class M-2 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

(D) to the Class B-1 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero; and

(E) for application as part of Monthly Excess Cashflow for such Distribution
Date, as described under Section 6.08(c) below, any Principal Distribution
Amount remaining after application pursuant to clauses (i)(1) through (4) and
clauses (i)(5)(A) through (D) above.

(ii) On each Distribution Date (a) on or after the Stepdown Date and (b) with
respect to which a Trigger Event is not in effect, in the following order of
priority:

(1) to the Group 1 Certificates, in accordance with the Related Senior Priority
for Pool 1 (from amounts for Pool 1 except as provided below), to the Group 2
Certificates, in accordance with the Related Senior Priority for Pool 2 (from
amounts for Pool 2 except as provided below), to the Group 3 Certificates, in
accordance with the Related Senior Priority for Pool 3 (from amounts for Pool 3
except as provided below) and to the Group 4 Certificates, in accordance with
the Related Senior Priority for Pool 4 (from amounts for Pool 4 except as
provided below), in reduction of their respective Class Principal Amounts, in
each case, an amount equal to the lesser of (x) the Principal Distribution
Amount for the related Mortgage Pool for such Distribution Date and (y) the
Related Class A Principal Distribution Amount for such Mortgage Pool for such
Distribution Date, in each case until the Class Principal Amount of each such
class has been reduced to zero; provided, however, to the extent that the
Principal Distribution Amount for a Mortgage Pool exceeds the Related Class A
Principal Distribution Amount for such Mortgage Pool, such excess shall be
applied concurrently to the Senior Certificates related to the other Mortgage
Pools (in each case in proportion to the aggregate Class Principal Amount of the
Certificates in the related Mortgage Pool after giving effect to distributions
above) in each case in accordance with the Related Senior Priority for the
Certificates of such Mortgage Pool., but in an amount not to exceed the Class A
Principal Distribution Amount for such Distribution Date (as reduced by any
distributions pursuant to subclauses (x) or (y) of this clause (1) on such
Distribution Date);

(2) to the Class M-1 Certificates, an amount equal to the Class M-1 Principal
Distribution Amount, in reduction of their Class Principal Amount, until the
Class Principal Amount of such class has been reduced to zero;

(3) to the Class M-2 Certificates, an amount equal to the Class M-2 Principal
Distribution Amount, in reduction of their Class Principal Amount, until the
Class Principal Amount of such class has been reduced to zero;

 

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(4) to the Class B-1 Certificates, an amount equal to the Class B-1 Principal
Distribution Amount, in reduction of their Class Principal Amount, until the
Class Principal Amount of such class has been reduced to zero; and

(5) for application as part of Monthly Excess Cashflow for such Distribution
Date, as described under Section 6.08(c) below, any Principal Distribution
Amount remaining after application pursuant to clauses (1) through (4) above.

(c) On each Distribution Date, the Paying Agent shall distribute the Monthly
Excess Cashflow for such date from funds in the Certificate Account in
accordance with the report of the Securities Administrator, in the following
order of priority:

(i) concurrently, in proportion to the Deferred Amount for each such class, to
the Senior Certificates, any Deferred Amount for each such class and such
Distribution Date;

(ii) to the Class M-1 Certificates, any Deferred Amount for such class and such
Distribution Date;

(iii) to the Class M-2 Certificates, any Deferred Amount for such class and such
Distribution Date;

(iv) to the Class B-1 Certificates, any Deferred Amount for such class and such
Distribution Date;

(v) on each Distribution Date occurring (a) before the Stepdown Date or (b) on
or after the Stepdown Date but for which a Trigger Event is in effect, in each
case until the aggregate Class Principal Amount of the Senior and Subordinate
Certificates equals the Aggregate Pool Balance for such Distribution Date minus
the Overcollateralization Target Amount for such Distribution Date, in the
following order of priority:

(1) concurrently, in proportion to the Senior Proportionate Percentage for each
Mortgage Pool for such Distribution Date, to the Group 1, Group 2, Group 3 and
Group 4 Certificates, in each case in accordance with the Related Senior
Priority, in reduction of their respective Class Principal Amounts, until the
Class Principal Amount of each such class has been reduced to zero;

(2) to the Class M-1 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero;

(3) to the Class M-2 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero; and

 

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(4) to the Class B-1 Certificates, in reduction of their Class Principal Amount,
until the Class Principal Amount of such class has been reduced to zero.

(vi) on each Distribution Date occurring (a) on or after the Stepdown Date and
(b) for which a Trigger Event is not in effect, in the following order of
priority:

(1) concurrently, in proportion to the Senior Proportionate Percentage for each
Mortgage Pool for such Distribution Date, to the Group 1, Group 2, Group 3 and
Group 4 Certificates, in each case in accordance with the Related Senior
Priority, in reduction of their respective Class Principal Amounts, until the
aggregate Class Principal Amount of the Senior Certificates, after giving effect
to distributions on such Distribution Date, equals the Class A Target Amount;

(2) to the Class M-1 Certificates, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Certificates and the
Class M-1 Certificates, after giving effect to distributions on such
Distribution Date, equals the M-1 Target Amount;

(3) to the Class M-2 Certificates, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Certificates and the
Class M-1 and Class M-2 Certificates, after giving effect to distributions on
such Distribution Date, equals the M-2 Target Amount; and

(4) to the Class B-1 Certificates, in reduction of their Class Principal Amount,
until the aggregate Class Principal Amount of the Senior Certificates and the
Class M-1, Class M-2 and Class B-1 Certificates, after giving effect to
distributions on such Distribution Date, equals the B-1 Target Amount.

(vii) concurrently, in proportion to the amount of Current Interest and
Carryforward Interest for each such class, to the Senior Certificates, any
Current Interest and Carryforward Interest for each such class and such
Distribution Date remaining unpaid after distribution of the Interest Funds for
each Mortgage Pool;

(viii) to the Class M-1 Certificates, any Current Interest and Carryforward
Interest for such class and such Distribution Date remaining unpaid after
distribution of the Interest Funds for each Mortgage Pool;

(ix) to the Class M-2 Certificates, any Current Interest and Carryforward
Interest for such class and such Distribution Date remaining unpaid after
distribution of the Interest Funds for each Mortgage Pool; and

(x) to the Class B-1 Certificates, any Current Interest and Carryforward
Interest for such class and such Distribution Date remaining unpaid after
distribution of the Interest Funds for each Mortgage Pool;

(xi) to the Group 1 Certificates, the Group 2 Certificates, the Group 3
Certificates or the Group 4 Certificates, as applicable, in each case in
accordance with the Related Senior Priority, any Related Senior Clean-up Amount
for such Distribution Date, until the Class Principal Amount of each such class
has been reduced to zero; and

 

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(xii) to the Class X Certificates, the Class X Distributable Amount;

(xiii) to the Class R Certificate, any remaining amount.

Section 6.09. Allocation of Losses.

On each Distribution Date, the Class Principal Amounts of the Subordinate
Certificates shall be reduced by the amount of any Applied Loss Amount for such
date, in the following order of priority:

(i) to the Class B-1 Certificates, until the Class Principal Amount thereof has
been reduced to zero;

(ii) to the Class M-2 Certificates, until the Class Principal Amount thereof has
been reduced to zero;

(iii) to the Class M-1 Certificates, until the Class Principal Amount thereof
has been reduced to zero; and

(iv) to the Classes of Senior Certificates, pro rata, in accordance with their
respective Class Principal Amounts; provided, however, that (i) any Realized
Loss that would otherwise be allocable to the Class 1-A-1 Certificates will
instead be allocated to the Class 1-A-2 Certificates, until the Class Principal
Amount thereof has been reduced to zero, (ii) any Realized Loss that would
otherwise be allocable to the Class 2-A-1 Certificates will instead be allocated
to the Class 2-A-2 Certificates, until the Class Principal Amount thereof has
been reduced to zero, (iii) any Realized Loss that would otherwise be allocable
to the Class 3-A-1 and Class 3-A-2 Certificates will instead be allocated, pro
rata, to the Class 3-A-3 Certificates until the Class Principal Amount thereof
has been reduced to zero, and (ii) any Realized Loss that would otherwise be
allocable to the Class 4-A-1 Certificates will instead be allocated to the Class
4-A-2 Certificates, until the Class Principal Amount thereof has been reduced to
zero.

Section 6.10. Control of the Trust Accounts.

(a) The Depositor and the Trustee hereby appoint the Securities Administrator as
Securities Intermediary with respect to the Trust Accounts, and the Trustee
shall hold, for the benefit of the Certificateholders, a security interest to
secure all amounts due Certificateholders hereunder in and to the Trust Accounts
and the Security Entitlements to all Financial Assets credited to the Trust
Accounts, including without limitation all amounts, securities, investments,
Financial Assets, investment property and other property from time to time
deposited in or credited to the Trust Accounts and all proceeds thereof. Amounts
held from time to time in the Trust Accounts will continue to be held by the
Securities Intermediary for the benefit of the Trustee for the benefit of the
Certificateholders. Upon the termination of the Trust, the Trustee shall inform
the Securities Intermediary of such termination. By acceptance of their
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or interests therein, the Certificateholders shall be deemed to have appointed
the Securities Administrator as Securities Intermediary. The Securities
Administrator hereby accepts such appointment as Securities Intermediary.

(b) With respect to the Trust Account Property credited to the Trust Accounts,
the Securities Intermediary agrees that:

(i) with respect to any Trust Account Property that is held in deposit accounts,
each such deposit account shall be subject to the exclusive custody and control
of the Securities Intermediary, and the Securities Intermediary shall have sole
signature authority with respect thereto;

(ii) the sole assets permitted in each Trust Account shall be those as the
Securities Intermediary agrees to treat as Financial Assets; and

(iii) any such Trust Account Property that is, or is treated as, a Financial
Asset shall be physically delivered (accompanied by any required endorsements)
to, or credited to an account in the name of, the Securities Intermediary or
other eligible institution maintaining each Trust Account in accordance with the
Securities Intermediary’s customary procedures such that the Securities
Intermediary or such other institution establishes a Security Entitlement in
favor of the Trustee with respect thereto over which the Securities Intermediary
or such other institution has Control;

(c) The Securities Intermediary hereby confirms that (A) each Trust Account is
an account to which Financial Assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the Trustee as
entitled to exercise the rights that comprise any Financial Asset credited to
each Trust Account, (B) all Trust Account Property in respect of each Trust
Account will be promptly credited by the Securities Intermediary to such
account, and (C) all securities or other property underlying any Financial
Assets credited to each Trust Account shall be registered in the name of the
Securities Intermediary, endorsed to the Securities Intermediary or in blank or
credited to another securities account maintained in the name of the Securities
Intermediary and in no case will any Financial Asset credited to any Trust
Account be registered in the name of the Depositor or the Trust, payable to the
order of the Depositor or the Trust or specially endorsed to the Depositor or
the Trust, except to the extent the foregoing have been specially endorsed to
the Securities Intermediary or in blank;

(d) The Securities Intermediary hereby agrees that each item of property
(whether investment property, Financial Asset, security, instrument or cash)
credited to each Trust Account shall be treated as a Financial Asset;

(e) If at any time the Securities Intermediary shall receive an Entitlement
Order from the Trustee (or the Securities Administrator on its behalf) directing
transfer or redemption of any Financial Asset relating to any Trust Account, the
Securities Intermediary shall comply with such Entitlement Order without further
consent by the Depositor, the Trust or any other Person. If at any time the
Trustee or the Securities Administrator notifies the Securities Intermediary in
writing that the Trust has been terminated in accordance herewith, then
thereafter if the Securities Intermediary shall receive any order from the
Depositor or the Trust directing transfer or redemption of any Financial Asset
relating to any Trust Account, the Securities Intermediary shall comply with
such Entitlement Order without further consent by the Trustee or any other
Person;

 

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(f) In the event that the Securities Intermediary has or subsequently obtains by
agreement, operation of law or otherwise a security interest in a Trust Account
or any Financial Asset credited thereto, the Securities Intermediary hereby
agrees that such security interest shall be subordinate to the security interest
of the Trustee. The Financial Assets credited to each Trust Account will not be
subject to deduction, set-off, banker’s lien, or any other right in favor of any
Person other than the Trustee (except that the Securities Intermediary may
set-off (i) all amounts due to it in respect of its customary fees and expenses
for the routine maintenance and operation of a Trust Account and (ii) the face
amount of any checks which have been credited to a Trust Account but are
subsequently returned unpaid because of uncollected or insufficient funds);

(g) There are no other agreements entered into between the Securities
Intermediary in such capacity and the Depositor or the Trust with respect to the
Trust Accounts. In the event of any conflict between this Agreement (or any
provision of this Agreement) and any other agreement now existing or hereafter
entered into, the terms of this Agreement shall prevail;

(h) The rights and powers granted herein to the Trustee have been granted in
order to perfect its security interest in each Trust Account and the Security
Entitlements to the Financial Assets credited thereto, and are powers coupled
with an interest and will neither be affected by the bankruptcy of the Depositor
or the Trust nor by the lapse of time. The obligations of the Securities
Intermediary hereunder shall continue in effect until the security interest of
the Trustee in the Trust Accounts, and in such Security Entitlements, has been
terminated pursuant to the terms of this Agreement and the Trustee has notified
the Securities Intermediary of such termination in writing; and

(i) Notwithstanding anything else contained herein, the Depositor and the
Trustee agree that each Trust Account will be established only with the
Securities Intermediary or another institution meeting the requirements of this
Section, which by acceptance of its appointment as Securities Intermediary
agrees substantially as follows: (1) it will comply with Entitlement Orders
related to each Trust Account issued by the Trustee without further consent by
the Depositor; (2) until termination of the Trust, it will not enter into any
other agreement related to such accounts pursuant to which it agrees to comply
with Entitlement Orders of any Person other than the Trustee, as collateral
agent, or the Securities Administrator on its behalf; and (3) all assets
delivered or credited to it in connection with such account and all investments
thereof will be promptly credited to the applicable account.

(j) Notwithstanding the foregoing, the Depositor shall have the power, revocable
by the Trustee, to instruct the Trustee, the Securities Administrator and the
Master Servicer to make withdrawals and payments from each Trust Account for the
purpose of permitting the Master Servicer, the Securities Administrator to carry
out its respective duties hereunder or permitting the Trustee to carry out its
duties under this Agreement.

(k) Each of the Depositor and the Trustee agrees to take or cause to be taken
such further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments (including, without
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Relevant UCC or this Agreement) as may be necessary to perfect the interests
created by this Section in favor of the Trustee on behalf of the
Certificateholders and otherwise fully to effectuate the purposes, terms and
conditions of this Section. The Depositor shall:

(i) promptly execute, deliver and file any financing statements, amendments,
continuation statements, assignments, certificates and other documents with
respect to such interests and perform all such other acts as may be necessary in
order to perfect or to maintain the perfection of the Trust’s and the Trustee’s
security interest in the Trust Account Property; and

(ii) make the necessary filings of financing statements or amendments thereto
within five days after the occurrence of any of the following: (1) any change in
its corporate name or any trade name or its jurisdiction of organization;
(2) any change in the location of its chief executive office or principal place
of business; and (3) any merger or consolidation or other change in its identity
or corporate structure and promptly notify the Trust and the Trustee of any such
filings.

(iii) Neither the Depositor nor the Trust shall organize under the law of any
jurisdiction other than the state under which each is organized as of the
Closing Date (whether changing its jurisdiction of organization or organizing
under an additional jurisdiction) without giving thirty (30) days prior written
notice of such action to its immediate and mediate transferee, including the
Trustee. Before effecting such change, each of the Depositor or the Trust
proposing to change its jurisdiction of organization shall prepare and file in
the appropriate filing office any financing statements or other statements
necessary to continue the perfection of the interests of its immediate and
mediate transferees, including the Trustee, in the Trust Account Property. In
connection with the transactions contemplated by the Operative Agreements
relating to the Trust Account Property, each of the Depositor and the Trust
authorizes its immediate or mediate transferee to file in any filing office any
initial financing statements, any amendments to financing statements, any
continuation statements, or any other statements or filings described in this
Section 6.10.

None of the Securities Intermediary or any director, officer, employee or agent
of the Securities Intermediary shall be under any liability to the Trustee or
the Certificateholders for any action taken, or not taken, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Securities Intermediary against any
liability to the Trustee or the Certificateholders which would otherwise be
imposed by reason of the Securities Intermediary’s willful misconduct, bad faith
or negligence in the performance of its obligations or duties hereunder. The
Securities Intermediary and any director, officer, employee or agent of the
Securities Intermediary may rely in good faith on any document of any kind
which, prima facie, is properly executed and submitted by any Person respecting
any matters arising hereunder. The Securities Intermediary shall be under no
duty to inquire into or investigate the validity, accuracy or content of such
document. The Trust shall indemnify the Securities Intermediary for and hold it
harmless against any loss, liability or expense arising out of or in connection
with this Agreement and carrying out its duties hereunder, including the costs
and expenses of defending itself against any claim of liability, except in those
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Securities Intermediary has been guilty of bad faith, negligence or willful
misconduct. The foregoing indemnification shall survive any termination of this
Agreement or the resignation or removal of the Securities Intermediary.

Section 6.11. Monthly Advances by Master Servicer and Servicer.

(a) Subject to Section 4.03(c), Monthly Advances shall be made in respect of
each Servicer Remittance Date as provided herein. If, on any Determination Date,
the Servicer determines that any Monthly Payments due during the related
Collection Period have not been received, such Servicer shall advance such
amount to the extent provided in Section 4.03(c) hereof. If any Servicer fails
to remit Monthly Advances required to be made under Section 4.03(c) hereof, the
Master Servicer shall itself make, or shall cause the successor Servicer to
make, such Monthly Advance on the Servicer Remittance Date immediately following
such Determination Date. If the Master Servicer determines that a Monthly
Advance is required, it shall on the Business Day immediately prior to the
related Distribution Date deposit in the Collection Account (from its own funds
or funds advanced by the Servicer) immediately available funds in an amount
equal to such Monthly Advance. The Master Servicer and the Servicer shall be
entitled to be reimbursed from the Collection Account, and the Servicer shall be
entitled to be reimbursed from the Custodial Account, for all Monthly Advances
made by it as provided in Section 4.02(e). Notwithstanding anything to the
contrary herein, in the event the Master Servicer determines in its reasonable
judgment that a Monthly Advance is a Nonrecoverable Advance, the Master Servicer
shall be under no obligation to make such Monthly Advance.

(b) In the event that the Master Servicer or Servicer fails for any reason to
make a Monthly Advance required to be made pursuant to this Section 6.11, the
Trustee, as successor Master Servicer, shall, on or before the related
Distribution Date, deposit in the Collection Account an amount equal to the
excess of (a) Monthly Advances required to be made by the Master Servicer or the
Servicer that would have been deposited in such Collection Account over (b) the
amount of any Monthly Advance made by the Master Servicer or the Servicer with
respect to such Distribution Date; provided, however, that the Trustee as
successor Master Servicer shall be required to make such Monthly Advance only if
it is not prohibited by law from doing so and it has determined that such
Monthly Advance would be recoverable from amounts to be received with respect to
such Mortgage Loan, including late payments, Liquidation Proceeds, Condemnation
Proceeds, Insurance Proceeds, or otherwise. The Trustee shall be entitled to be
reimbursed from the Collection Account for Monthly Advances made by it pursuant
to this Section 6.11 as if it were the Master Servicer and shall be entitled to
receive all compensation and fees of the Master Servicer in accordance with
Section 9.01(b).

ARTICLE VII

THE TRUSTEE AND THE SECURITIES ADMINISTRATOR

Section 7.01. Duties of Trustee and the Securities Administrator.

The Trustee, prior to the occurrence of a Master Servicer Event of Default of
which a Responsible Officer of the Trustee has actual knowledge and after the
curing of all Master Servicer Events of Default that may have occurred, and the
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undertake to perform such duties and only such duties as are specifically set
forth in this Agreement. In case a Master Servicer Event of Default of which a
Responsible Officer of the Trustee has actual knowledge has occurred and remains
uncured, the Trustee shall exercise such of the rights and powers vested in it
by this Agreement, and use the same degree of care and skill in their exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person’s own affairs.

Each of the Trustee and the Securities Administrator, upon receipt of all
resolutions, certificates, statements, opinions, reports, documents, orders or
other instruments furnished to it that are specifically required to be furnished
pursuant to any provision of this Agreement shall examine them to determine
whether they are in the form required by this Agreement; provided, however, that
the Trustee and the Securities Administrator shall not be responsible for the
accuracy or content of any such resolution, certificate, statement, opinion,
report, document, order or other instrument. If any such instrument is found not
to conform in any material respect to the requirements of this Agreement, the
Trustee or the Securities Administrator shall notify the Certificateholders of
such instrument in the event that the Trustee or the Securities Administrator,
after so requesting, does not receive a satisfactorily corrected instrument.

No provision of this Agreement shall be construed to relieve the Trustee or the
Securities Administrator from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:

(i) except, in the case of the Trustee, if a Master Servicer Event of Default of
which a Responsible Officer of the Trustee has actual knowledge shall have
occurred and be continuing, the duties and obligations of the Trustee and the
Securities Administrator shall be determined solely by the express provisions of
this Agreement, neither the Trustee nor the Securities Administrator shall be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or obligations
shall be read into this Agreement against the Trustee or the Securities
Administrator and in the absence of bad faith on the part of the Trustee or the
Securities Administrator, respectively, the Trustee or the Securities
Administrator, respectively, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee or the Securities
Administrator, respectively, and conforming to the requirements of this
Agreement which it believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising hereunder;

(ii) neither the Trustee nor the Securities Administrator shall be liable for an
error of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, or an officer or officers of the Securities
Administrator, respectively, unless it shall be finally proven by a court having
jurisdiction that the Trustee or the Securities Administrator was negligent in
ascertaining the pertinent facts;

(iii) neither the Trustee nor the Securities Administrator shall be liable with
respect to any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of Holders of Certificates evidencing not less
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the Voting Interests of Certificates relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee or the
Securities Administrator, or exercising any trust or power conferred upon the
Trustee or the Securities Administrator under this Agreement;

(iv) neither the Trustee nor the Securities Administrator shall be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or the exercise of any of its rights
or powers if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee or the Securities Administrator to perform, or be
responsible for the manner of performance of, any of the obligations of the
Master Servicer or the Servicer under this Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Master Servicer; and

(v) without limiting the generality of this Section 7.01, neither the Trustee
nor the Securities Administrator shall have any duty (A) to cause any recording,
filing, or depositing of this Agreement or any agreement referred to herein or
any financing statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such recording or filing or
deposit or to any rerecording, refiling or redepositing of any thereof, (B) to
cause the provision of any insurance, (C) to cause the payment or discharge of
any tax, assessment, or other governmental charge or any lien or encumbrance of
any kind owing with respect to, assessed or levied against, any part of the
Trust Estate other than from funds available in the Certificate Account (D) to
confirm or verify the contents of any reports or certificates of the Master
Servicer or the Servicer delivered to the Trustee or the Securities
Administrator pursuant to this Agreement believed by the Trustee or the
Securities Administrator to be genuine and to have been signed or presented by
the proper party or parties.

Section 7.02. Certain Matters Affecting the Trustee and the Securities
Administrator.

Except as otherwise provided in Section 7.01:

(i) the Trustee and the Securities Administrator may request and rely upon and
shall be protected in acting or refraining from acting upon any resolution,
Officers’ Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties and the Trustee and
the Securities Administrator shall have no responsibility to ascertain or
confirm the genuineness of any signature of any such party or parties;

(ii) the Trustee and the Securities Administrator may consult with counsel,
financial advisers or accountants and the advice of any such counsel, financial
advisers or accountants and any advice of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such opinion of
counsel;

 

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(iii) neither the Trustee nor the Securities Administrator shall be liable for
any action taken, suffered or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred upon it by
this Agreement;

(iv) neither the Trustee nor the Securities Administrator shall be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Holders of Certificates evidencing not less than 25% of the Voting
Interests allocated to each Class of Certificates; provided, however, that if
the payment within a reasonable time to the Trustee or the Securities
Administrator of the costs, expenses or liabilities likely to be incurred by it
in the making of such investigation is, in the opinion of the Trustee or the
Securities Administrator, as applicable, not reasonably assured to the Trustee
or the Securities Administrator by the security afforded to it by the terms of
this Agreement, the Trustee or the Securities Administrator, as applicable, may
require indemnity satisfactory to it against such cost, expense or liability as
a condition to taking any such action.

(v) the Trustee may execute any of the trusts or powers hereunder or perform any
duties hereunder either directly or by or through agents, accountants or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of such agent, accountant or attorney appointed by the
Trustee with due care;

(vi) neither the Trustee nor the Securities Administrator shall be required to
risk or expend its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers hereunder if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not assured to it;

(vii) neither the Trustee nor the Securities Administrator shall be liable for
any loss on any investment of funds pursuant to this Agreement (other than as
issuer of the investment security);

(viii) the Trustee shall not be deemed to have knowledge of any default, Master
Servicer Event of Default or Servicer Event of Default until a Responsible
Officer of the Trustee shall have received written notice thereof and in the
absence of such notice, the Trustee may conclusively assume that there is no
Event of Default;

(ix) the Trustee shall be under no obligation to exercise any of the trusts,
rights or powers vested in it by this Agreement or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred therein or thereby;

(x) the right of the Trustee and the Securities Administrator to perform any
discretionary act enumerated in this Agreement shall not be construed as a duty,
and neither the Trustee nor the Securities Administrator shall be answerable for
other than its negligence or willful misconduct in the performance of such act;
and

 

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(xi) neither the Trustee nor the Securities Administrator shall be required to
give any bond or surety in respect of the execution of the Trust Estate or the
powers granted hereunder.

Section 7.03. Neither Trustee nor Securities Administrator Liable for
Certificates or Mortgage Loans.

The recitals contained herein and in the Certificates shall be taken as the
statements of the Depositor, the Seller or Servicer, as the case may be, and
neither the Trustee nor the Securities Administrator assumes any responsibility
for their correctness. Neither the Trustee nor the Securities Administrator
makes any representations as to the validity or sufficiency of this Agreement or
of the Certificates or of any Mortgage Loan or related document other than with
respect to the Trustee’s execution and counter-signature of the Certificates.
Neither the Trustee nor the Securities Administrator shall be accountable for
the use or application by the Depositor, the Master Servicer or the Servicer of
any funds paid to the Depositor, the Master Servicer or the Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Depositor, the Master Servicer or the Servicer.

Section 7.04. Trustee and Securities Administrator May Own Certificates.

Each of the Trustee and the Securities Administrator in its individual or any
other capacity may become the owner or pledgee of Certificates with the same
rights as it would have if it were not the Trustee or the Securities
Administrator.

Section 7.05. Fees and Expenses of the Trustee, the Securities Administrator and
Others.

The Trustee, as compensation for its activities hereunder, shall be paid the
Trustee Fee by the Master Servicer on behalf of the Trust. The Securities
Administrator’s compensation shall be paid by the Master Servicer.

The Trustee and the Securities Administrator shall also be entitled to
reimbursement from the Certificate Account for reasonable expenses, except for
expenses, disbursements and advances incurred by the Trustee and/or the
Securities Administrator in the routine administration of their respective
duties in accordance with this Agreement and any such expenses, disbursements or
advances arising from their respective negligence, bad faith or willful
misconduct. The Trust shall indemnify and hold harmless the Trustee, the
Securities Administrator, the Custodian or the Paying Agent and any director,
officer, employee or agent thereof against any loss, liability and expense,
including reasonable attorney’s fees, incurred in connection with or arising out
of this Agreement, any custodial agreement or the Certificates, including, but
not limited to, any such loss, liability or expense incurred in connection with
any legal action against the Trust or the Trustee, the Securities Administrator,
the Paying Agent or the Custodian or any director, officer, employee or agent
thereof, or the performance of any of the duties of the Trustee, the Securities
Administrator, the Custodian or the Paying Agent under this Agreement or the
duties of the Custodian under any custodial agreement (including, but not

 

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limited to, the execution and delivery of documents in connection with a
foreclosure sale, trustee’s sale, or deed in lieu of foreclosure of a Mortgage
Loan, including, but not, limited to, any deed of reconveyance, any substitution
of trustee documents or any other documents to release, satisfy, cancel or
discharge any Mortgage Loan), other than, in each case, any loss, liability or
expense incurred by the Trustee, the Securities Administrator, the Paying Agent
or the Custodian by reason of the willful misfeasance, bad faith or negligence
of such party in the performance of its duties under this Agreement or by reason
of the willful misfeasance, bad faith or gross negligence of the Custodian under
any custodial agreement (including specifically any loss, liability or expense
incurred by the Custodian by reason of simple negligence). The provisions of
this Section 7.05 shall survive the resignation or removal of the Trustee, the
Securities Administrator, the Custodian or the Paying Agent and the termination
of this Agreement and the resignation or removal of the Custodian under any
custodial agreement.

The Trustee may receive an additional indemnity from a party acceptable to the
Trustee.

Section 7.06. Eligibility Requirements for the Trustee and the Securities
Administrator.

The Trustee and the Securities Administrator hereunder shall at all times (i) be
a corporation or an association organized and doing business under the laws of a
state or the United States of America, (ii) be authorized under such laws to
exercise corporate trust powers, (iii) have a combined capital and surplus of at
least $50,000,000, (iv) be subject to supervision or examination by federal or
state authority, (v) have a credit rating which would not cause either of the
Rating Agencies to reduce its respective then-current ratings of the
Certificates (or have provided such security from time to time as is sufficient
to avoid such reduction) and (vi) not be an affiliate of the Servicer or any
successor Servicer. If such corporation or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 7.06 the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee or the
Securities Administrator shall cease to be eligible in accordance with the
provisions of this Section 7.06, the Trustee or the Securities Administrator, as
the case may be, shall resign immediately in the manner and with the effect
specified in Section 7.07 hereof. The entity serving as Trustee or Securities
Administrator may have normal banking and trust relationships with the Depositor
and its Affiliates.

Section 7.07. Resignation and Removal of Trustee or Securities Administrator.

The Trustee and the Securities Administrator may at any time resign and be
discharged from the trust hereby created by giving written notice of resignation
to the Depositor, the Master Servicer, the Servicer, each Rating Agency not less
than 60 days before the date specified in such notice when, subject to
Section 7.08, such resignation is to take effect, and acceptance by a successor
trustee or securities administrator, as applicable, in accordance with
Section 7.08 meeting the qualifications set forth in Section 7.06. If no
successor trustee meeting such qualifications shall have been so appointed and
have accepted appointment within 30 days after the giving of such notice or
resignation, the resigning Trustee or the Securities Administrator, as the case
may be, may petition any court of competent jurisdiction for the appointment of
a successor trustee or successor securities administrator, as applicable.

 

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If at any time the Trustee or the Securities Administrator shall cease to be
eligible in accordance with the provisions of Section 7.06 hereof and shall fail
to resign after written request thereto by the Depositor, or if at any time the
Trustee or the Securities Administrator shall become incapable of acting, or
shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or the
Securities Administrator or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or the Securities
Administrator or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or a tax is imposed with respect to the Trust by
any state in which the Trustee or any part of the Trust is located and the
imposition of such tax would be avoided by the appointment of a different
trustee, then the Depositor may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to each of the Trustee, the Servicer and the successor trustee.

If the Securities Administrator shall fail to deliver the information or reports
required pursuant to Section 8.01, Section 8.02, Section 8.03 or
Section 8.04(b)(ii), as applicable, within the required time period set forth in
such Sections, then the Depositor shall remove the Securities Administrator and
appoint a successor securities administrator by written instrument, one copy of
which instrument shall be delivered to the Securities Administrator so removed,
one copy to the successor securities administrator and one copy to the Master
Servicer.

The Holders of Certificates entitled to at least 51% of the Voting Interests
each may at any time remove the Trustee or the Securities Administrator and
appoint a successor trustee or securities administrator by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered by the
successor trustee to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor so appointed. Notice of any removal of the
Trustee shall be given to each Rating Agency by the successor trustee.

Any resignation or removal of the Trustee and appointment of a successor trustee
pursuant to any of the provisions of this Section 7.07 shall become effective
upon acceptance by the successor trustee of appointment as provided in
Section 7.08 hereof.

Section 7.08. Successor Trustee or Securities Administrator.

Any successor trustee or successor securities administrator appointed as
provided in Section 7.07 hereof shall execute, acknowledge and deliver to the
Depositor, the Seller, its predecessor trustee and the Servicer an instrument
accepting such appointment hereunder and thereupon the resignation or removal of
the predecessor trustee or predecessor securities administrator shall become
effective and such successor trustee or successor securities administrator,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee or securities administrator
herein. The Depositor, the Servicer, the Seller and the predecessor trustee or
predecessor securities administrator shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee or successor
securities administrator all such rights, powers, duties, and obligations.

 

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No successor trustee or successor securities administrator shall accept
appointment as provided in this Section 7.08 unless at the time of such
acceptance such successor trustee or successor securities administrator shall be
eligible under the provisions of Section 7.06 hereof, and such appointment shall
not adversely affect the then current rating of the Certificates.

Upon acceptance of appointment by a successor trustee or successor securities
administrator as provided in this Section 7.08, the Depositor shall mail notice
of the succession of such trustee or securities administrator hereunder to all
Holders of Certificates. If the Depositor fails to mail such notice within [10]
days after acceptance of appointment by the successor trustee or successor
securities administrator, the successor trustee or successor securities
administrator shall cause such notice to be mailed at the expense of the
Depositor.

Section 7.09. Merger or Consolidation of Trustee or Securities Administrator.

Any corporation into which the Trustee or the Securities Administrator may be
merged or converted or with which it may be consolidated or any corporation
resulting from any merger, conversion or consolidation to which the Trustee or
the Securities Administrator shall be a party, or any corporation succeeding to
the business of the Trustee or the Securities Administrator, shall be the
successor of the Trustee or the Securities Administrator hereunder, provided
that such corporation shall be eligible under the provisions of Section 7.06
hereof, without the execution or filing of any paper or further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.

Section 7.10. Appointment of Co-Trustee or Separate Trustee.

Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or property securing any Mortgage Note may at the time be located,
the Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust, and to
vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders such title to the Trust Estate or any part thereof, whichever
is applicable, and, subject to the other provisions of this Section 7.10, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request to do so,
or in the case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 7.06 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 7.08.

 

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Every separate trustee and co-trustee shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:

(i) To the extent necessary to effectuate the purposes of this Section 7.10, all
rights, powers, duties and obligations conferred or imposed upon the Trustee
shall be conferred or imposed upon and exercised or performed by the Trustee and
each such separate trustee or co-trustee jointly (it being understood that each
such separate trustee or co-trustee is not authorized to act separately without
the Trustee joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
applicable Trust Estate or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;

(ii) No trustee hereunder shall be held personally liable by reason of any act
or omission of any other trustee hereunder and such appointment shall not, and
shall not be deemed to, constitute any such separate trustee or co-trustee as
agent of the Trustee;

(iii) The Trustee may at any time accept the resignation of or remove any
separate trustee or co-trustee; and

(iv) The Trust, and not the Trustee, shall be liable for the payment of
reasonable compensation, reimbursement and indemnification to any such separate
trustee or co-trustee.

Any notice, request or other writing given to the Trustee shall be deemed to
have been given to each of the separate trustees and co-trustees at the same
time, as effectively as if given to each of them. Every instrument appointing
any separate trustee or co-trustee shall refer to this Agreement and the
conditions of this Article VII. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Depositor.

Any separate trustee or co-trustee may, at any time, constitute the Trustee its
agent or attorney-in-fact, with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.

Section 7.11. Tax Matters.

It is intended that the assets with respect to which the REMIC elections are to
be made, as set forth in the Preliminary Statement, shall constitute, and that
the conduct of matters relating to such assets shall be such as to qualify such
assets as, REMICs as defined in and in accordance

 

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with the REMIC Provisions. In furtherance of such intention, the Securities
Administrator covenants and agrees that it shall act as agent on behalf of each
such REMIC and that it shall: (i) pay, or cause to be paid, the amount of any
federal, state or local tax, including prohibited transaction taxes, imposed on
any such REMIC prior to its termination when and as the same shall be due and
payable (but such obligation shall not prevent the Securities Administrator or
any other appropriate Person from contesting any such tax in appropriate
proceedings and shall not prevent the Securities Administrator, on behalf of the
Trustee, from withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings); (ii) maintain, or cause to be maintained, records
relating to any such REMIC, including but not limited to the income, expenses,
assets and liabilities thereof and the fair market value and adjusted basis of
the assets determined at such intervals as may be required by the Code, as may
be necessary to prepare the foregoing returns, schedules, statements or
information; and (iii) as and when necessary and appropriate, represent, or
arrange for the representation of, any such REMIC in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to any taxable year of
any such REMIC, enter into settlement agreements with any governmental taxing
agency, apply for an extension of any statute of limitations relating to any tax
item of any such REMIC, and otherwise act on behalf of any such REMIC in
relation to any tax matter or controversy involving it.

To enable the Securities Administrator to perform its duties as set forth
herein, the Depositor shall provide, or cause to be provided, to the Securities
Administrator within 10 days after the Closing Date all information or data that
the Securities Administrator requests in writing and determines to be relevant
for tax purposes to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the
Depositor shall provide to the Securities Administrator promptly upon written
request therefor, any such additional information or data that the Securities
Administrator may, from time to time, reasonably request in order to enable the
Securities Administrator to perform its duties as set forth herein. The
Depositor hereby indemnifies the Securities Administrator for any losses,
liabilities, damages, claims or expenses of the Securities Administrator arising
from any errors or miscalculations of the Securities Administrator that result
from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Securities Administrator on a timely basis.
The indemnification of this subsection shall survive the termination of this
Agreement and the resignation or removal of the Securities Administrator.

 

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ARTICLE VIII

ANNUAL COMPLIANCE MATTERS

Section 8.01. Assessments of Compliance and Attestation Reports.

(a) Assessments of Compliance.

(i) By March 10 (with a 5 calendar day cure period) of each year (subject to the
later date referred to in Section 8.01(a)(iii)), commencing in March 2007, the
Servicer, the Master Servicer and the Securities Administrator, each at its own
expense, shall furnish, and each such party shall cause any Servicing Function
Participant engaged by it to furnish, each at its own expense, to the Securities
Administrator and the Depositor, a report on an assessment of compliance with
the Relevant Servicing Criteria that contains (A) a statement by such party of
its responsibility for assessing compliance with the Relevant Servicing
Criteria, (B) a statement that such party used the Servicing Criteria to assess
compliance with the Relevant Servicing Criteria, (C) such party’s assessment of
compliance with the Relevant Servicing Criteria as of and for the fiscal year
covered by the Form 10-K required to be filed pursuant to Section 8.04(b) and
for each fiscal year thereafter, whether or not a Form 10-K is required to be
filed, including, if there has been any material instance of noncompliance with
the Relevant Servicing Criteria, a discussion of each such failure and the
nature and status thereof, and (D) a statement that a registered public
accounting firm has issued an attestation report on such party’s assessment of
compliance with the Relevant Servicing Criteria as of and for such period.

(ii) No later than the end of each fiscal year for the Trust for which a 10-K is
required to be filed, the Servicer and the Master Servicer, shall each forward
to the Securities Administrator the name of each Servicing Function Participant
engaged by it and what Relevant Servicing Criteria will be addressed in the
report on assessment of compliance prepared by such Servicing Function
Participant. When the Servicer, the Master Servicer and the Securities
Administrator submit their assessments to the Securities Administrator, such
parties will also at such time include the assessment (and attestation pursuant
to subsection (b) of this Section 8.01) of each Servicing Function Participant
engaged by it.

(iii) Promptly after receipt of each such report on assessment of compliance,
(i) the Depositor shall review each such report and, if applicable, consult with
the Servicer, the Master Servicer, the Securities Administrator and any
Servicing Function Participant engaged by such parties as to the nature of any
material instance of noncompliance with the Relevant Servicing Criteria by each
such party, and (ii) the Securities Administrator shall confirm that the
assessments, taken as a whole, address all of the Servicing Criteria

 

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and taken individually address the Relevant Servicing Criteria for each party as
set forth on Exhibit F and notify the Depositor of any exceptions. None of such
parties shall be required to deliver any such assessments until April 15 in any
given year so long as it has received written confirmation from the Depositor
that a Form 10-K is not required to be filed in respect of the Trust for the
preceding calendar year.

(b) Attestation Reports.

(i) By March 10 (with a 5 calendar day cure period) of each year (subject to the
later date referred to in Section 8.01(b)(ii)), commencing in March 2007, the
Servicer, the Master Servicer and the Securities Administrator, each at its own
expense, shall cause, and each such party shall cause any Servicing Function
Participant engaged by it to cause, each at its own expense, a registered public
accounting firm (which may also render other services to the Servicer, the
Master Servicer, the Securities Administrator, or such other Servicing Function
Participants, as the case may be) and that is a member of the American Institute
of Certified Public Accountants to furnish a report to the Securities
Administrator and the Depositor, to the effect that (i) it has obtained a
representation regarding certain matters from the management of such party,
which includes an assertion that such party has complied with the Relevant
Servicing Criteria, and (ii) on the basis of an examination conducted by such
firm in accordance with standards for attestation engagements issued or adopted
by the PCAOB, it is expressing an opinion as to whether such party’s compliance
with the Relevant Servicing Criteria was fairly stated in all material respects,
or it cannot express an overall opinion regarding such party’s assessment of
compliance with the Relevant Servicing Criteria. In the event that an overall
opinion cannot be expressed, such registered public accounting firm shall state
in such report why it was unable to express such an opinion. Such report must be
available for general use and not contain restricted use language.

(ii) Promptly after receipt of such report from the Servicer, the Master
Servicer, the Securities Administrator or any Servicing Function Participant
engaged by such parties, (i) the Depositor shall review the report and, if
applicable, consult with such parties as to the nature of any defaults by such
parties, in the fulfillment of any of each such party’s obligations hereunder or
under any other applicable agreement, and (ii) the Securities Administrator
shall confirm that each assessment submitted pursuant to subsection (a) of this
Section 8.01 is coupled with an attestation meeting the requirements of this
subsection and notify the Depositor of any exceptions. None of the Servicer, the
Master Servicer, the Securities Administrator, or any Servicing Function
Participant engaged by such parties shall be required to deliver or cause the
delivery of such reports until April 15 in any given year so long as it has
received written confirmation from the Depositor that a 10-K is not required to
be filed in respect of the Trust for the preceding fiscal year.

Section 8.02. Annual Compliance Statement.

The Servicer, the Master Servicer and the Securities Administrator shall deliver
(and the Servicer, the Subservicer, the Master Servicer and Securities
Administrator shall cause any

 

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Additional Servicer or Servicing Function Participant engaged by it to deliver)
to the Depositor and the Securities Administrator on or before March 10 (with a
5 calendar day cure period) of each year, commencing in March 2007, an Officer’s
Certificate stating, as to the signer thereof, that (A) a review of such party’s
activities during the preceding calendar year or portion thereof and of such
party’s performance under this Agreement, or such other applicable agreement in
the case of an Additional Servicer, has been made under such officer’s
supervision and (B) to the best of such officer’s knowledge, based on such
review, such party has fulfilled all its obligations under this Agreement, or
such other applicable agreement in the case of an Additional Servicer, in all
material respects throughout such year or portion thereof, or, if there has been
a failure to fulfill any such obligation in any material respect, specifying
each such failure known to such officer and the nature and status thereof.
Promptly after receipt of each such Officer’s Certificate, the Depositor shall
review such Officer’s Certificate and, if applicable, consult with each such
party, as applicable, as to the nature of any failures by such party, in the
fulfillment of any of such party’s obligations hereunder or, in the case of an
Additional Servicer, under such other applicable agreement.

Section 8.03. Sarbanes-Oxley Certification.

Each Form 10-K shall include the Sarbanes-Oxley Certification, which shall be
signed by the senior officer of the Master Servicer in charge of the master
servicing function on behalf of the Trust. The Servicer, the Securities
Administrator and the Master Servicer shall provide, and each of them shall
cause any Servicing Function Participant engaged by it to provide, to the Person
who signs the Sarbanes-Oxley Certification (the “Certifying Person”), by
March 10 (with a 5 calendar day cure period) of each year in which the Trust is
subject to the reporting requirements of the Exchange Act and otherwise within a
reasonable period of time upon request, a certification (each, a “Back-Up
Certification”), in the form attached hereto as Exhibit G, upon which the
Certifying Person, the entity for which the Certifying Person acts as an
officer, and such entity’s officers, directors and Affiliates (collectively with
the Certifying Person, “Certification Parties”) can reasonably rely. In the
event the Servicer, the Master Servicer, the Securities Administrator or any
Servicing Function Participant engaged by such parties is terminated or resigns
pursuant to the terms of this Agreement or any applicable sub-servicing
agreement, as the case may be, such party shall provide a Back-Up Certification
to the Certifying Person pursuant to this Section 8.03 with respect to the
period of time it was subject to this Agreement or any applicable sub-servicing
agreement, as the case may be.

Section 8.04. Reports Filed with Securities and Exchange Commission.

(a) Reports Filed on Form 10-D.

(i) Within 15 days after each Distribution Date (subject to permitted extensions
under the Exchange Act), the Securities Administrator shall prepare and file on
behalf of the Trust any Form 10-D required by the Exchange Act, in form and
substance as required by the Exchange Act. The Securities Administrator shall
file each Form 10-D with a copy of the related distribution date statement
attached thereto. Any disclosure in addition to the distribution date statement
that is required to be included on Form 10-D (“Additional Form 10-D Disclosure”)
shall be determined and prepared by

 

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and at the direction of the Depositor pursuant to the following paragraph and
the Securities Administrator will have no duty or liability for any failure
hereunder to determine or prepare any Additional Form 10-D Disclosure, except as
set forth in the next two paragraphs.

(ii) As set forth on Exhibit H hereto, within 5 calendar days after the related
Distribution Date, (i) the parties to the HomeBanc Mortgage Trust 2006-1
Mortgage Pass-Through Certificates transaction shall be required to provide to
the Securities Administrator and the Depositor, to the extent known by a
responsible officer thereof, in EDGAR-compatible form (which may be Word or
Excel documents easily convertible to EDGAR format), or in such other form as
otherwise agreed upon by the Securities Administrator and such party, the form
and substance of any Additional Form 10-D Disclosure, if applicable, together
with an Additional Disclosure Notification in the form of Exhibit K hereto (an
“Additional Disclosure Notification”) and (ii) the Depositor will approve, as to
form and substance, or disapprove, as the case may be, the inclusion of the
Additional Form 10-D Disclosure on Form 10-D. The Seller will be responsible for
any reasonable fees and expenses assessed or incurred by the Securities
Administrator in connection with including any Additional Form 10-D Disclosure
in Form 10-D pursuant to this paragraph.

(iii) After preparing the Form 10-D, the Securities Administrator shall forward
electronically a draft copy of the Form 10-D to the Depositor (provided that
such Form 10-D includes Additional Form 10-D Disclosure) and the Master Servicer
for review. No later than the Business Day prior to the date specified in the
next sentence, the Depositor and the Master Servicer shall notify the Securities
Administrator of any changes to or approval of such Form 10-D. No later than 2
Business Days prior to the 15th calendar day after the related Distribution
Date, a duly authorized officer of the Master Servicer in charge of the master
servicing function shall sign the Form 10-D and return an electronic or fax copy
of such signed Form 10-D (with an original executed hard copy to follow by
overnight mail) to the Securities Administrator. If a Form 10-D cannot be filed
on time or if a previously filed Form 10-D needs to be amended, the Securities
Administrator will follow the procedures set forth in subsection (d)(ii) of this
Section 8.04. Promptly (but no later than 1 Business Day) after filing with the
Commission, the Securities Administrator will make available on its internet
website a final executed copy of each Form 10-D. Each party to this Agreement
acknowledges that the performance by the Master Servicer and the Securities
Administrator of their respective duties under this Section 8.04(a) related to
the timely preparation, execution and filing of Form 10-D is contingent upon
such parties strictly observing all applicable deadlines in the performance of
their duties under this Section 8.04(a). Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage
or claim arising out of or with respect to any failure to properly prepare,
execute and/or timely file such Form 10-D, where such failure results from the
Securities Administrator’s inability or failure to obtain or receive, on a
timely basis, any information from any other party hereto needed to prepare,
arrange for execution or file such Form 10-D, not resulting from its own
negligence, bad faith or willful misconduct.

 

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(b) Reports Filed on Form 10-K.

(i) Within 90 days (including the 90th day) after the end of each fiscal year of
the Trust in which a Form 10-K is required to be filed or such earlier date as
may be required by the Exchange Act (the “10-K Filing Deadline”) (it being
understood that the fiscal year for the Trust ends on December 31st of each
year), commencing in March 2007, the Securities Administrator shall prepare and
file on behalf of the Trust a Form 10-K, in form and substance as required by
the Exchange Act. Each such Form 10-K shall include the following items, in each
case to the extent they have been delivered to the Securities Administrator
within the applicable time frames set forth in this Agreement, (i) an annual
compliance statement for the Servicer, each Additional Servicer, the Master
Servicer and the Securities Administrator and any Servicing Function Participant
engaged by such parties (each, a “Reporting Servicer”) as described under
Section 8.02, (ii)(A) the annual reports on assessment of compliance with
servicing criteria for each Reporting Servicer, as described under
Section 8.01(a), and (B) if each Reporting Servicer’s report on assessment of
compliance with servicing criteria described under Section 8.01(a) identifies
any material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if each Reporting Servicer’s report on assessment of
compliance with servicing criteria described under Section 8.01(a) is not
included as an exhibit to such Form 10-K, disclosure that such report is not
included and an explanation why such report is not included, (iii)(A) the
registered public accounting firm attestation report for each Reporting
Servicer, as described under Section 8.01(b), and (B) if any registered public
accounting firm attestation report described under Section 8.01(b) identifies
any material instance of noncompliance, disclosure identifying such instance of
noncompliance, or if any such registered public accounting firm attestation
report is not included as an exhibit to such Form 10-K, disclosure that such
report is not included and an explanation why such report is not included, and
(iv) a Sarbanes-Oxley Certification as described in Section 8.03. Any disclosure
or information in addition to (i) through (iv) above that is required to be
included on Form 10-K (“Additional Form 10-K Disclosure”) shall be determined
and prepared by and at the direction of the Depositor pursuant to the following
paragraph and the Securities Administrator will have no duty or liability for
any failure hereunder to determine or prepare any Additional Form 10-K
Disclosure, except as set forth in the next two paragraphs.

(ii) As set forth on Exhibit I hereto, no later than March 10 (with a 5 calendar
day cure period) of each year that the Trust is subject to the Exchange Act
reporting requirements, commencing in 2007, (i) the parties to the HomeBanc
Mortgage Trust 2006-1 Mortgage Pass-Through Certificates transaction shall be
required to provide to the Securities Administrator and the Depositor, to the
extent known by a responsible officer thereof, in EDGAR-compatible form (which
may be Word or Excel documents easily convertible to EDGAR format), or in such
other form as otherwise agreed upon by the Securities Administrator and such
party, the form and substance of any Additional Form 10-K Disclosure, if
applicable, together with an Additional Disclosure Notification and (ii) the
Depositor will approve, as to form and substance, or disapprove, as the case may
be, the inclusion of the Additional Form 10-K Disclosure on Form 10-K. The
Seller will be responsible for any reasonable fees and expenses assessed or
incurred by the Securities Administrator in connection with including any
Additional Form 10-K Disclosure in Form 10-K pursuant to this paragraph.

 

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(iii) After preparing the Form 10-K, the Securities Administrator shall forward
electronically a draft copy of the Form 10-K to the Master Servicer and
(provided that such Form 10-K includes Additional Form 10-K Disclosure) the
Depositor for review. No later than the Business Day prior to the date specified
in the next sentence, the Depositor and the Master Servicer shall notify the
Securities Administrator of any changes to or approval of such Form 10-K. .No
later than noon New York City time on the 4th Business Day prior to the 10-K
Filing Deadline, a senior officer of the Master Servicer in charge of the master
servicing function shall sign the Form 10-K and return an electronic or fax copy
of such signed Form 10-K (with an original executed hard copy to follow by
overnight mail) to the Securities Administrator. If a Form 10-K cannot be filed
on time or if a previously filed Form 10-K needs to be amended, the Securities
Administrator will follow the procedures set forth in subsection (d) of this
Section 8.04. Promptly (but no later than 1 Business Day) after filing with the
Commission, the Securities Administrator will make available on its internet
website a final executed copy of each Form 10-K. The parties to this Agreement
acknowledge that the performance by the Master Servicer and the Securities
Administrator of its duties under this Section 8.04(b) related to the timely
preparation, execution and filing of Form 10-K is contingent upon such parties
(and any Additional Servicer or Servicing Function Participant) strictly
observing all applicable deadlines in the performance of their duties under this
Section 8.04(b), Section 8.03, Section 8.02, Section 8.01(a) and
Section 8.01(b). Neither the Master Servicer nor the Securities Administrator
shall have any liability for any loss, expense, damage or claim arising out of
or with respect to any failure to properly prepare, execute and/or timely file
such Form 10-K, where such failure results from the Securities Administrator’s
inability or failure to obtain or receive, on a timely basis, any information
from any other party hereto needed to prepare, arrange for execution or file
such Form 10-K, not resulting from its own negligence, bad faith or willful
misconduct.

(c) Reports Filed on Form 8-K.

(i) Within four (4) Business Days after the occurrence of an event requiring
disclosure on Form 8-K (each such event, a “Reportable Event”), and if requested
by the Depositor, the Securities Administrator shall prepare and file on behalf
of the Trust a Form 8-K, as required by the Exchange Act, provided that the
Depositor shall file the initial Form 8-K in connection with the issuance of the
Certificates. Any disclosure or information related to a Reportable Event or
that is otherwise required to be included in Form 8-K (“Form 8-K Disclosure
Information”) shall be determined and prepared by and at the direction of the
Depositor pursuant to the following paragraph and the Securities Administrator
will have no duty or liability for any failure hereunder to determine or prepare
any Form 8-K Disclosure Information or any Form 8-K, except as set forth in the
next two paragraphs.

(ii) As set forth on Exhibit J hereto, for so long as the Trust is subject to
the Exchange Act reporting requirements, no later than noon on the 2nd Business
Day after

 

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the occurrence of a Reportable Event (i) the parties to the HomeBanc Mortgage
Trust 2006-1 Mortgage Pass-Through Certificates transaction shall be required to
provide to the Securities Administrator and the Depositor, to the extent known
by a responsible officer thereof, in EDGAR-compatible form (which may be Word or
Excel documents easily convertible to EDGAR format), or in such other form as
otherwise agreed upon by the Securities Administrator and such party, the form
and substance of any Form 8-K Disclosure Information, if applicable, together
with an Additional Disclosure Notification and (ii) the Depositor will approve,
as to form and substance, or disapprove, as the case may be, the inclusion of
the Form 8-K Disclosure Information. The Seller will be responsible for any
reasonable fees and expenses assessed or incurred by the Securities
Administrator in connection with including any Form 8-K Disclosure Information
in Form 8-K pursuant to this paragraph.

(iii) After preparing the Form 8-K, the Securities Administrator shall forward
electronically a draft copy of the Form 8-K to the Master Servicer and Depositor
for review. No later than the Business Day prior to the date specified in the
next sentence, the Depositor and the Master Servicer shall notify the Securities
Administrator of any changes to or approval of such Form 8-K. No later than Noon
New York City time on the 4th Business Day after the Reportable Event, a duly
authorized officer of the Master Servicer in charge of the master servicing
function shall sign the Form 8-K and return an electronic or fax copy of such
signed Form 8-K (with an original executed hard copy to follow by overnight
mail) to the Securities Administrator. If a Form 8-K cannot be filed on time or
if a previously filed Form 8-K needs to be amended, the Securities Administrator
will follow the procedures set forth in subsection (d) of this Section 8.04.
Promptly (but no later than 1 Business Day) after filing with the Commission,
the Securities Administrator will, make available on its internet website a
final executed copy of each Form 8-K. The parties to this Agreement acknowledge
that the performance by the Master Servicer and the Securities Administrator of
their respective duties under this Section 8.04(c) related to the timely
preparation, execution and filing of Form 8-K is contingent upon such parties
strictly observing all applicable deadlines in the performance of their duties
under this Section 8.04(c). Neither the Securities Administrator nor the Master
Servicer shall have any liability for any loss, expense, damage or claim arising
out of or with respect to any failure to properly prepare, execute and/or timely
file such Form 8-K, where such failure results from the Securities
Administrator’s inability or failure to obtain or receive, on a timely basis,
any information from any other party hereto needed to prepare, arrange for
execution or file such Form 8-K, not resulting from its own negligence, bad
faith or willful misconduct.

(d) Suspension of Reporting; Amendments; Late Filings.

(i) Prior to January 30 of the first year in which the Securities Administrator
is able to do so under applicable law, unless otherwise directed by the
Depositor, the Securities Administrator shall prepare and file a Form 15
relating to the automatic suspension of reporting in respect of the Trust under
the Exchange Act.

 

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(ii) In the event that the Securities Administrator becomes aware that it will
be unable to timely file with the Commission all or any required portion of any
Form 8-K, 10-D or 10-K required to be filed by this Agreement because required
disclosure information was either not delivered to it or delivered to it after
the delivery deadlines set forth in this Agreement or for any other reason, the
Securities Administrator will promptly notify the Depositor. In the case of Form
10-D and 10-K, the parties to this Agreement and each Servicer will cooperate to
prepare and file a Form 12b-25 and a 10-D/A and 10-K/A, as applicable, pursuant
to Rule 12b-25 of the Exchange Act. In the case of Form 8-K, the Securities
Administrator will, upon receipt of all required Form 8-K Disclosure Information
and upon the approval and direction of the Depositor, include such disclosure
information on the next Form 10-D. In the event that any previously filed Form
8-K, 10-D or 10-K needs to be amended, and such amendment includes any
Additional Form 10-D Disclosure, any Additional Form 10-K Disclosure or any Form
8-K Disclosure Information or any amendment to such disclosure, the Securities
Administrator will notify the Depositor and the Master Servicer and such parties
will cooperate to prepare any necessary 8-KA, 10-D/A or 10-K/A. Any Form 15,
Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K signed by the senior
officer shall be signed by a duly authorized officer of the Master Servicer in
charge of the master servicing function. The parties to this Agreement
acknowledge that the performance by the Master Servicer and the Securities
Administrator of their respective duties under this Section 8.04(d) related to
the timely preparation, execution and filing of Form 15, a Form 12b-25 or any
amendment to Form 8-K, 10-D or 10-K is contingent upon each such party
performing its duties under this Section. Neither the Master Servicer nor the
Securities Administrator shall have any liability for any loss, expense, damage,
claim arising out of or with respect to any failure to properly prepare, execute
and/or timely file any such Form 15, Form 12b-25 or any amendments to Forms 8-K,
10-D or 10-K, where such failure results from the Securities Administrator’s
inability or failure to obtain or receive, on a timely basis, any information
from any other party hereto needed to prepare, arrange for execution or file
such Form 15, Form 12b-25 or any amendments to Forms 8-K, 10-D or 10-K, not
resulting from its own negligence, bad faith or willful misconduct.

Section 8.05. Additional Information.

Each of the parties agrees to provide to the Securities Administrator such
additional information related to such party as the Securities Administrator may
reasonably request, including evidence of the authorization of the person
signing any certification or statement, financial information and reports, and
such other information related to such party or its performance hereunder.

Section 8.06. Intention of the Parties and Interpretation.

Each of the parties acknowledges and agrees that the purpose of Section 8.01
through Section 8.06 of this Agreement is to facilitate compliance by the
Securities Administrator and the Depositor with the provisions of Regulation AB
promulgated by the Commission under the Exchange Act (17 C.F.R. §§ 229.1100 -
229.1123), as such may be amended from time to time and subject to such
clarification and interpretive advice as may be issued by the staff of the

 

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Commission from time to time. Therefore, each of the parties agrees 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, convention or consensus among
active participants in the asset-backed securities markets, advice of counsel,
or otherwise in respect of the requirements of Regulation AB, (c) the parties
shall comply with the reasonable requests made by the Securities Administrator
or the Depositor for delivery of such additional or different information as the
Securities Administrator or the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB, which information is
available to such party without unreasonable effort or expense and within such
timeframe as may be reasonably requested, 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.

Section 8.07. Indemnification.

Each party required to deliver an assessment of compliance and attestation
report pursuant to Section 8.01 (each, an “Item 1122 Responsible Party”) shall
indemnify and hold harmless the Securities Administrator, the Master Servicer,
the Depositor and the Seller and each of their directors, officers, employees,
agents, and affiliates from and against any and all claims, losses, damages,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and other costs and expenses arising out of or based upon (a) any
breach by such Item 1122 Responsible Party of any of its obligations hereunder
relating to its obligations as an Item 1122 Responsible Party, including
particularly its obligations to provide any assessment of compliance,
attestation report or compliance statement required under Section 8.01(a),
8.01(b) or 8.02, respectively, or any information, data or materials required to
be included in any Exchange Act report, (b) any material misstatement or
material omission in any information, data or materials provided by such
Item 1122 Responsible Party (or, in the case of the Securities Administrator or
Master Servicer, any material misstatement or material omission in (x) any
compliance certificate delivered by it, or by any Servicing Function Participant
engaged by it, pursuant to this Agreement, (y) any assessment or attestation
delivered by or on behalf of it, or by any Servicing Function Participant
engaged by it, pursuant to this Agreement, or (z) any Additional Form 10-D
Disclosure, Additional Form 10-K Disclosure or Form 8-K Disclosure Information
concerning the Securities Administrator or the Master Servicer and provided by
either of them), or (c) the negligence, bad faith or willful misconduct of such
Item 1122 Responsible Party in connection with its performance hereunder
relating to its obligations as an Item 1122 Responsible Party. If the
indemnification provided for herein is unavailable or insufficient to hold
harmless the Securities Administrator, the Depositor, the Master Servicer or the
Seller, then each Item 1122 Responsible Party agrees that it shall contribute to
the amount paid or payable by the Securities Administrator, the Master Servicer,
the Depositor and the Seller as a result of any claims, losses, damages or
liabilities incurred by the Securities Administrator, the Master Servicer, the
Depositor or the Seller in such proportion as is appropriate to reflect the
relative fault of the Securities Administrator, the Master Servicer, the
Depositor or the Seller on the one hand and such Item 1122 Responsible Party on
the other. This indemnification shall survive the termination of this Agreement
or the termination of any party to this Agreement.

 

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ARTICLE IX

MASTER SERVICER EVENTS OF DEFAULT

Section 9.01. Master Servicer Events of Default; Trustee To Act; Appointment of
Successor.

(a) The occurrence of any one or more of the following events shall constitute a
“Master Servicer Event of Default”:

(i) Any failure by the Master Servicer to cause to be deposited in the
Collection Account any amount so required to be deposited pursuant to this
Agreement (other than a Monthly Advance), and such failure continues unremedied
for a period of three Business Days after the date upon which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer; or

(ii) Any failure on the part of the Master Servicer duly to observe or perform
in any material respect any other of the covenants or agreements on the part of
the Master Servicer contained in this Agreement (other than with respect to
Section 8.01, Section 8.02, Section 8.03 or Section 8.04(b)(ii)) which continues
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee or the Securities Administrator or to the Master
Servicer and the Trustee by the Majority Certificateholders; or

(iii) A decree or order of a court or agency or supervisory authority having
jurisdiction for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer, and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days or any
Rating Agency reduces or withdraws or threatens to reduce or withdraw the rating
of the Certificates because of the financial condition or loan servicing
capability of such Master Servicer; or

(iv) The Master 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 Master Servicer or of or relating to all or substantially all of
its property; or

(v) The Master 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

(vi) The Master Servicer shall be dissolved, or shall dispose of all or
substantially all of its assets, or consolidate with or merge into another
entity or shall permit another entity to consolidate or merge into it, such that
the resulting entity does not meet the criteria for a successor servicer as
specified in Section 5.17 hereof; or

 

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(vii) If a representation or warranty set forth in Section 5.01 hereof shall
prove to be incorrect as of the time made in any respect that materially and
adversely affects the interests of the Certificateholders, 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 Master Servicer by the Trustee or the Securities Administrator, or
to the Master Servicer and the Trustee by the Majority Certificateholders; or

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

(ix) The Master Servicer has notice or actual knowledge that the Servicer at any
time is not either a Fannie Mae- or Freddie Mac-approved Seller/Servicer, and
the Master Servicer has not terminated the rights and obligations of such
Servicer under this Agreement and replaced the Servicer with an Fannie Mae- or
Freddie Mac-approved servicer within 60 days of the date the Master Servicer
receives such notice or acquires such actual knowledge; or

(x) failure by the Master Servicer to duly perform its obligations under
Section 8.01, Section 8.02, Section 8.03 or Section 8.04(b)(ii) within the
required time period set forth in such Sections; or

(xi) Any failure of the Master Servicer to remit to the Securities Administrator
any Monthly Advance required to be made to the Securities Administrator for the
benefit of Certificateholders under the terms of this Agreement, which failure
continues unremedied as of the close of business on the Business Day prior to a
Distribution Date.

If a Master Servicer Event of Default described in clauses (i) through (x) of
this Section 9.01 shall occur, then, in each and every case, subject to
applicable law, so long as any such Master Servicer Event of Default shall not
have been remedied within any period of time prescribed by this Section 9.01,
the Trustee, upon obtaining actual knowledge thereof, by notice in writing to
the Master Servicer may, and shall, if so directed by the Majority
Certificateholders, terminate all of the rights and obligations of the Master
Servicer hereunder and in and to the Mortgage Loans and the proceeds thereof. If
a Master Servicer Event of Default described in clause (xi) of this Section 9.01
shall occur, then, in each and every case, subject to applicable law, so long as
such Master Servicer Event of Default shall not have been remedied within the
time period prescribed by clause (xi) of this Section 9.01, the Trustee, by
notice in writing to the Master Servicer, shall promptly terminate all of the
rights and obligations of the Master Servicer hereunder and in and to the
Mortgage Loans and the proceeds thereof. On or after the receipt by the Master
Servicer of such written notice, all authority and power of the Master Servicer,
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only in its capacity as Master Servicer under this Agreement, whether with
respect to the Mortgage Loans or otherwise, shall pass to and be vested in the
Trustee pursuant to and under the terms of this Agreement; and the Trustee is
hereby authorized and empowered to execute and deliver, on behalf of the
defaulting Master 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 Master
Servicer agrees to cooperate with the Trustee in effecting the termination of
the defaulting Master Servicer’s responsibilities and rights hereunder as Master
Servicer including, without limitation, notifying the Servicer of the assignment
of the master servicing function and providing the Trustee or its designee all
documents and records in electronic or other form reasonably requested by it to
enable the Trustee or its designee to assume the defaulting Master Servicer’s
functions hereunder and the transfer to the Trustee for administration by it of
all amounts which shall at the time be or should have been deposited by the
defaulting Master Servicer in the Collection Account maintained by such
defaulting Master Servicer and any other account or fund maintained with respect
to the Certificates or thereafter received with respect to the Mortgage Loans.
The Master Servicer being terminated shall bear all reasonable out-of-pocket
costs of a master servicing transfer, including but not limited to those of the
Trustee, legal fees and expenses, accounting and financial consulting fees and
expenses, and costs of amending the Agreement, if necessary.

The Trustee shall be entitled to be reimbursed from the Master Servicer (or by
the Trust, if the Master Servicer is unable to fulfill its obligations
hereunder) for all costs associated with the transfer of servicing from the
predecessor Master 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 required
by the Trustee to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee to master service the Mortgage Loans properly
and effectively. If the terminated Master 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 Trust and the Trustee shall be
entitled to withdraw such reimbursement from amounts on deposit in the
Collection Account pursuant to Section 5.07(viii); provided that the terminated
Master Servicer shall reimburse the Trust for any such expense incurred by the
Trust; and provided, further, that the Trustee shall take such action, if any,
as provided in this Agreement and as directed by the Certificateholders pursuant
thereto with respect to pursuing any remedy against any party obligated to make
such reimbursement.

Notwithstanding the termination of its activities as Master Servicer, each
terminated Master Servicer shall continue to be entitled to reimbursement to the
extent provided in Section 5.07 to the extent such reimbursement relates to the
period prior to such Master Servicer’s termination.

If any Master Servicer Event of Default shall occur, of which a Responsible
Officer of the Trustee has actual knowledge, the Trustee shall promptly notify
each Rating Agency of the nature and extent of such Master Servicer Event of
Default. The Securities Administrator or the Master Servicer shall immediately
give written notice by facsimile to the Trustee upon the Master Servicer’s
failure to remit Monthly Advances on the date specified herein.

 

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(b) On and after the time the Master Servicer receives a notice of termination
from the Trustee pursuant to Section 9.01(a) or the Trustee receives the
resignation of the Master Servicer evidenced by an Opinion of Counsel pursuant
to Section 5.18, the Trustee, unless another master servicer shall have been
appointed, shall be the successor in all respects to the Master Servicer in its
capacity as such under this Agreement and the transactions set forth or provided
for herein and shall have all the rights and powers and be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Master Servicer hereunder, including the obligation to make
Monthly Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer’s failure to provide information
required by this Agreement shall not be considered a default by the Trustee
hereunder. In addition, the Trustee shall have no responsibility for any act or
omission of the Master Servicer prior to the issuance of any notice of
termination and shall have no liability relating to the representations and
warranties of the Master Servicer set forth in Section 5.01. In the Trustee’s
capacity as such successor, the Trustee shall have the same limitations on
liability herein granted to the Master Servicer. As compensation therefor, the
Trustee shall be entitled to receive all compensation payable to the Master
Servicer under this Agreement.

(c) Notwithstanding the above, the Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, appoint, or petition a
court of competent jurisdiction to appoint, any established housing and home
finance institution servicer, master servicer, servicing or mortgage servicing
institution having a net worth of not less than $15,000,000 and meeting such
other standards for a successor master servicer as are set forth in this
Agreement, as the successor to such Master Servicer in the assumption of all of
the responsibilities, duties or liabilities of a master servicer, like the
Master Servicer. Such successor Master Servicer may be an Affiliate of the
Trustee; provided, however, that, unless such Affiliate meets the net worth
requirements and other standards set forth herein for a successor master
servicer, the Trustee, in its individual capacity shall agree, at the time of
such designation, to be and remain liable to the Trust and the Trustee for such
Affiliate’s actions and omissions in performing its duties hereunder. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on the
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted to the Master Servicer
hereunder. The Trustee and such successor shall take such actions, consistent
with this Agreement, as shall be necessary to effectuate any such succession and
may make other arrangements with respect to the servicing to be conducted
hereunder which are not inconsistent herewith. The Master Servicer shall
cooperate with the Trustee and any successor master servicer in effecting the
termination of the Master Servicer’s responsibilities and rights hereunder
including, without limitation, notifying the Servicer of the assignment of the
master servicing functions and providing the Trustee and successor master
servicer, as applicable, all documents and records in electronic or other form
reasonably requested by it to enable it to assume the Master Servicer’s
functions hereunder and the transfer to the Trustee or such successor master
servicer, as applicable, all amounts or investment property which shall at the
time be or should have been deposited by the Master Servicer in the Collection
Account and any other account or fund maintained with respect to the
Certificates or thereafter be received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor master servicer shall be deemed to
be in default hereunder by reason of any failure to make, or any delay in
making, any payment hereunder or any portion thereof caused by (i) the failure
of the Master

 

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Servicer to deliver, or any delay in delivering, cash, documents or records to
it, (ii) the failure of the Master Servicer to cooperate as required by this
Agreement, (iii) the failure of the Master Servicer to deliver the Mortgage Loan
data to the Trustee as required by this Agreement or (iv) restrictions imposed
by any regulatory authority having jurisdiction over the Master Servicer.

Section 9.02. Additional Remedies of Trustee Upon Event of Default. During the
continuance of any Master Servicer Event of Default, so long as such Master
Servicer Event of Default shall not have been remedied, the Trustee, in addition
to the rights specified in Section 9.01, shall have the right, in its own name
and as trustee of an express trust, to take all actions now or hereafter
existing at law, in equity or by statute to enforce its rights and remedies and
to protect the interests, and enforce the rights and remedies, of the
Certificateholders (including the institution and prosecution of all judicial,
administrative and other proceedings and the filings of proofs of claim and debt
in connection therewith). Except as otherwise expressly provided in this
Agreement, no remedy provided for by this Agreement shall be exclusive of any
other remedy, and each and every remedy shall be cumulative and in addition to
any other remedy, and no delay or omission to exercise any right or remedy shall
impair any such right or remedy or shall be deemed to be a waiver of any Event
of Default.

Section 9.03. Waiver of Defaults. The Majority Certificateholders may, on behalf
of all Certificateholders, waive any default or Master Servicer Event of Default
by the Master Servicer in the performance of its obligations hereunder, except
that a default in the making of any required deposit to the Collection Account
that would result in a failure of the Securities Administrator to make any
required payment of principal of or interest on the Certificates may only be
waived with the consent of 100% of the affected Certificateholders. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Default 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 thereon except to the extent
expressly so waived.

Section 9.04. Notification to Holders. Upon termination of the Master Servicer
or appointment of a successor to the Master Servicer, in each case as provided
herein, the Trustee shall promptly mail notice thereof by first class mail to
the Certificateholders at their respective addresses appearing on the applicable
Register. The Trustee shall also, within 45 days after the occurrence of any
Master Servicer Event of Default known to the Trustee, give written notice
thereof to Certificateholders, unless such Event of Default shall have been
cured or waived prior to the issuance of such notice and within such 45-day
period.

Section 9.05. Directions by Certificateholders and Duties of Trustee During
Master Servicer Event of Default. During the continuance of any Master Servicer
Event of Default, the Majority Certificateholders may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Agreement; provided, however, that the Trustee shall be under no obligation to
pursue any such remedy, or to exercise any of the trusts or powers vested in it
by this Agreement (including, without limitation, (i) the conducting or
defending of any administrative action or litigation hereunder or in relation
hereto and (ii) the terminating of the Master Servicer or any successor master
servicer from its rights and duties as master servicer hereunder) at the

 

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request, order or direction of any of the Certificateholders, unless such
Certificateholders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the cost, expenses and liabilities which
may be incurred therein or thereby; and, provided further, that, the Trustee
shall have the right to decline to follow any such direction if the Trustee, in
accordance with an Opinion of Counsel, determines that the action or proceeding
so directed may not lawfully be taken or if the Trustee in good faith determines
that the action or proceeding so directed would involve it in personal liability
for which it is not indemnified to its satisfaction or be unjustly prejudicial
to the non-assenting Certificateholders.

Section 9.06. Action Upon Certain Failures of the Master Servicer and Upon
Master Servicer Event of Default. In the event that a Responsible Officer of the
Trustee or the Securities Administrator shall have actual knowledge of any
action or inaction of the Master Servicer that would become a Master Servicer
Event of Default upon the Master Servicer’s failure to remedy the same after
notice, the Trustee or Securities Administrator, as applicable, shall give
notice thereof to the Master Servicer.

ARTICLE X

TERMINATION

Section 10.01. Termination. The respective obligations and responsibilities of
the Master Servicer, the Securities Administrator, the Depositor, the Servicer
and the Trustee created hereby (other than obligations expressly stated to
survive the termination of the Trust) shall terminate upon notice to the Trustee
and the Securities Administrator upon the earliest of (i) the Distribution Date
on which the Class Principal Amount of each Class of Senior Certificates and
Subordinate Certificates has been reduced to zero, (ii) the final payment or
other liquidation of the last Mortgage Loan, (iii) the optional purchase of the
Mortgage Loans as described in Section 10.02 and (iv) the Latest Possible
Maturity Date (the “Termination Date”). Upon the termination of the Trust
Estate, each REMIC shall be terminated in a manner that shall qualify as a
“qualified liquidation” under the REMIC Provisions.

Section 10.02. Termination Prior to Maturity Date; Optional Redemption.

(a) On any Distribution Date occurring on or after the Initial Purchase Date,
the Servicer shall have the option to purchase the Mortgage Loans, any REO
Property and any other property remaining in the Trust Estate for a price equal
to the Termination Price. The Master Servicer and the Servicer will be
reimbursed from the Termination Price for any outstanding Monthly Advances,
Servicing Advances and unpaid Servicing Fees and other amounts not previously
reimbursed pursuant to the provisions of this Agreement, as applicable, and the
Securities Administrator, the Trustee and the Custodian shall be reimbursed for
any previously unreimbursed amounts for which they are entitled to be reimbursed
pursuant to this Agreement or the Custodial Agreement, as applicable. If such
option is exercised, the Trust Estate will be terminated resulting in a
mandatory redemption of the Certificates. The Servicer shall deliver written
notice of its intention to exercise such option to the Securities Administrator,
the Trustee and the Master Servicer not less than 30 days prior to the
applicable Distribution Date. If the Servicer fails to exercise such option on
the Initial Purchase Date, the Certificate Interest Rate for each Class of
Certificates will be increased as set forth in the table in the Preliminary
Statement herein beginning on the Step-up Date and for each Distribution Date
thereafter.

 

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In connection with such purchase, the Servicer shall remit to the Master
Servicer all amounts then on deposit in the Custodial Account (other than
amounts permitted to be withdrawn by it pursuant to Section 4.02(e)) for deposit
to the Collection Account.

(b) Promptly following any such purchase pursuant to paragraph (a) of this
Section and receipt of an Officer’s Certificate of the Servicer that the
purchase price has been deposited in the Collection Account, the Trustee or the
Custodian shall release the Mortgage Files to the purchaser of such Mortgage
Loans pursuant to this Section 10.02, or otherwise upon its order.

Section 10.03. Certain Notices upon Final Distribution. The Master Servicer or
the Securities Administrator, as applicable, shall give the Trustee, each Rating
Agency, each Certificateholder and the Depositor at least thirty (30) days’
prior written notice of the date on which the Trust Estate is expected to
terminate in accordance with Section 10.01, or the date on which the
Certificates will be redeemed in accordance with Section 10.02. Not later than
the fifth Business Day in the Collection Period in which the final payment in
respect to the Certificates is payable to the Certificateholders, the Securities
Administrator shall mail to the Certificateholders a notice specifying the
procedures with respect to such final payment. The Securities Administrator on
behalf of the Trustee shall give a copy of such notice to each Rating Agency at
the time such notice is given to Certificateholders. Following the final
distribution, such Certificates shall become void, no longer outstanding and no
longer evidence any right or interest in the Mortgage Loans, the Mortgage Files
or any proceeds of the foregoing. Notwithstanding such final payment of
principal of any of the Certificates, each Residual Certificate will remain
outstanding until the termination of each REMIC and the payment in full of all
other amounts due with respect to the Residual Certificates and at such time
such final payment in retirement of any Residual Certificate will be made only
upon presentation and surrender of such Certificate at the Corporate Trust
Office.

Section 10.04. Additional Termination Requirements.

(a) In the event the Servicer exercises its purchase option, as provided in
Section 10.02, the Trust Estate shall be terminated in accordance with the
following additional requirements, unless the Securities Administrator have been
supplied with an Opinion of Counsel, at the expense of the Servicer, to the
effect that the failure to comply with the requirements of this Section 10.04
will not result in an Adverse REMIC Event:

(i) The Trustee shall sell all of the assets that constitute the Trust Estate
for cash as provided in Section 10.02, and, within 90 days of such sale (such
period the “90-day liquidation period”), shall distribute to (or credit to the
account of) the Holders of the Certificates the proceeds of such sale together
with other cash on hand (less amounts retained to meet claims) in complete
liquidation of the Trust Estate and each REMIC created hereunder; and

(ii) The Securities Administrator shall attach (or cause to be attached) a
statement to the final federal income tax return for each REMIC created
hereunder stating

 

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that pursuant to Treasury Regulation § 1.860F-1, the first day of the 90-day
liquidation period for each such REMIC was the date on which the Trustee sold
the assets of the Trust Estate pursuant to Section 10.02(a).

(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Tax Matters Person, the Trustee and the Securities Administrator
to undertake the above-described actions.

ARTICLE XI

REMIC ADMINISTRATION

Section 11.01. REMIC Administration.

REMIC elections as set forth in the Preliminary Statement shall be made on Forms
1066 or other appropriate federal tax or information return for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued. The regular interests and residual interest in each REMIC shall be as
designated in the Preliminary Statement. For purposes of such designations, the
interest rate of any regular interest that is computed by taking into account
the weighted average of the Net Mortgage Rates of the Mortgage Loans shall be
reduced by the amount of any expense paid by the Trust to the extent that
(i) such expense was not taken into account in computing the Net Mortgage Rate
of any Mortgage Loan, (ii) such expense does not constitute an “unanticipated
expense” of a REMIC within the meaning of Treasury Regulation
Section 1.860G-1(b)(3)(ii) and (iii) the amount of such expense was not taken
into account in computing the interest rate of a more junior Class of regular
interests.

The Closing Date is hereby designated as the “Startup Day” of each REMIC within
the meaning of section 860G(a)(9) of the Code. The latest possible maturity date
for purposes of Treasury Regulation 1.860G-1(a)(4) will be the Latest Possible
Maturity Date.

The Securities Administrator shall pay any and all tax related expenses (not
including taxes) of each REMIC, including but not limited to any professional
fees or expenses related to audits or any administrative or judicial proceedings
with respect to such REMIC that involve the Internal Revenue Service or state
tax authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Securities Administrator in fulfilling its duties hereunder
(including its duties as tax return preparer). The Securities Administrator
shall be entitled to reimbursement of expenses to the extent provided in clause
(i) above from the Securities Administration Account, provided, however, the
Securities Administrator shall not be entitled to reimbursement for expenses
incurred in connection with the preparation of tax returns and other reports as
required by this Agreement.

The Securities Administrator shall prepare, the Trustee shall sign and the
Securities Administrator shall file, all of each REMIC’s federal and appropriate
state tax and information returns as such REMIC’s direct representative. The
expenses of preparing and filing such returns shall be borne by the Securities
Administrator.

 

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The Securities Administrator or its designee shall perform on behalf of each
REMIC all reporting and other tax compliance duties that are the responsibility
of such REMIC under the Code, the REMIC Provisions, or other compliance guidance
issued by the Internal Revenue Service or any state or local taxing authority.
Among its other duties, if required by the Code, the REMIC Provisions, or other
such guidance, the Securities Administrator shall provide (i) to the Treasury or
other governmental authority such information as is necessary for the
application of any tax relating to the transfer of a Residual Certificate to any
disqualified person or organization pursuant to Treasury Regulation
1.860E-2(a)(5) and any person designated in Section 860E(e)(3) of the Code and
(ii) to the Trustee such information as is necessary for the Trustee to provide
to the Certificateholders such information or reports as are required by the
Code or REMIC Provisions.

The Trustee, the Securities Administrator, the Master Servicer and the Holders
of Certificates shall take any action or cause any REMIC to take any action
necessary to create or maintain the status of any REMIC as a REMIC under the
REMIC Provisions and shall assist each other as necessary to create or maintain
such status. None of the Trustee, the Securities Administrator, the Master
Servicer and the Holder of any Residual Certificate shall knowingly take any
action, cause any REMIC to take any action or fail to take (or fail to cause to
be taken) any action that, under the REMIC Provisions, if taken or not taken, as
the case may be, could result in an Adverse REMIC Event unless the Trustee, the
Securities Administrator and the Master Servicer have received an Opinion of
Counsel addressed to the Trustee (at the expense of the party seeking to take
such action) to the effect that the contemplated action will not result in an
Adverse REMIC Event. In addition, prior to taking any action with respect to any
REMIC or the assets therein, or causing any REMIC to take any action, which is
not expressly permitted under the terms of this Agreement, any Holder of a
Residual Certificate will consult with the Trustee, the Securities
Administrator, the Master Servicer or their respective designees, in writing,
with respect to whether such action could cause an Adverse REMIC Event to occur
with respect to any REMIC, and no such Person shall take any such action or
cause any REMIC to take any such action as to which the Trustee, the Securities
Administrator or the Master Servicer has advised it in writing that an Adverse
REMIC Event could occur.

Each Holder of a Residual Certificate shall pay when due any and all taxes
imposed on the related REMIC by federal or state governmental authorities. To
the extent that such taxes are not paid by a Residual Certificateholder, the
Trustee shall pay any remaining REMIC taxes out of current or future amounts
otherwise distributable to the Holder of the Residual Certificate in any such
REMIC or, if no such amounts are available, out of other amounts held in the
Collection Account, and shall reduce amounts otherwise payable to holders of
regular interests in any such REMIC, as the case may be.

The Securities Administrator shall, for federal income tax purposes, maintain
books and records with respect to each REMIC on a calendar year and on an
accrual basis.

No additional contributions of assets after the Startup Day shall be made to any
REMIC, except as expressly provided in this Agreement.

 

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Neither the Securities Administrator nor the Master Servicer shall enter into
any arrangement by which any REMIC will receive a fee or other compensation for
services.

On or before October 15 of each calendar year beginning in 2006, the Securities
Administrator shall deliver to the Trustee an Officer’s Certificate stating,
without regard to any actions taken by any party other than the Securities
Administrator, the Securities Administrator’s compliance with provisions of this
Section 11.01.

Notwithstanding the priority and sources of payments set forth in Article VI
hereof or otherwise, the Securities Administrator shall account for all
distributions on the Certificates as set forth in this Section 11.01.

Section 11.02. Prohibited Transactions and Activities.

Neither the Depositor, the Master Servicer nor the Trustee shall sell, dispose
of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Estate (iii) the termination of each REMIC pursuant to Article X of this
Agreement, (iv) a substitution pursuant to Article III of this Agreement or
(v) a repurchase of Mortgage Loans pursuant to Article III of this Agreement,
nor acquire any assets for any REMIC, nor sell or dispose of any investments in
the Certificate Account for gain, nor accept any contributions to any REMIC
after the Closing Date, unless the Trustee has received an Opinion of Counsel
addressed to the Trustee (at the expense of the party causing such sale,
disposition, or substitution) that such disposition, acquisition, substitution,
or acceptance will not (a) result in an Adverse REMIC Event, (b) affect the
distribution of interest or principal on the Certificates or (c) result in the
encumbrance of the assets transferred or assigned to the Trust Estate (except
pursuant to the provisions of this Agreement).

Section 11.03. Indemnification with Respect to Certain Taxes and Loss of REMIC
Status.

Upon the occurrence of an Adverse REMIC Event due to the negligent performance
by the Trustee or the Securities Administrator, as applicable, of its duties and
obligations set forth herein, the Trustee or the Securities Administrator, as
applicable, shall indemnify the Holder of the Residual Certificate or the Trust
Estate, as applicable, against any and all losses, claims, damages, liabilities
or expenses (“Losses”) resulting from such negligence; provided, however, that
neither the Trustee nor the Securities Administrator shall be liable for any
such Losses attributable to the action or inaction of the Master Servicer, the
Depositor, the Class X Certificateholders, the Holder of such Residual
Certificate or the Securities Administrator (with regard to the Trustee), as
applicable, nor for any such Losses resulting from misinformation provided by
the Holder of such Residual Certificate on which the Securities Administrator
has relied. The foregoing shall not be deemed to limit or restrict the rights
and remedies of the Holder of such Residual Certificate now or hereafter
existing at law or in equity. Notwithstanding the foregoing, however, in no
event shall the Trustee or the Securities Administrator, as applicable, have any
liability (1) for any action or omission that is taken in accordance with and in
compliance with the express terms of, or which is expressly permitted by the
terms of, this Agreement or any Servicing Agreement, (2) for any Losses other
than arising out of a negligent performance by the Trustee or the Securities
Administrator, as applicable, of its duties and obligations set forth herein,
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Certificateholders (in addition to payment of principal and interest on the
Certificates); provided, however, that this sentence shall not apply in
connection with any failure by the Securities Administrator to comply with the
provisions of Subsections 8.01(a) or (b) hereof. In addition, neither the
Trustee nor the Securities Administrator shall have any liability for the
actions or failure to act of the other.

ARTICLE XII

MISCELLANEOUS PROVISIONS

Section 12.01. Binding Nature of Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

Section 12.02. Entire Agreement. This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.

Section 12.03. Amendment.

(a) This Agreement may be amended from time to time by the parties hereto,
without notice to or the consent of any of the Holders of the Certificates,
(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
Certificates, the Trust or this Agreement in any Offering Document, or to
correct or supplement any provision herein which may be inconsistent with any
other provisions herein or in any other Operative Agreement, to make any other
provisions with respect to matters or questions arising under this Agreement,
(iii) to make any other provision with respect to matters or questions arising
under this Agreement (iv) to add, delete, or amend any provisions to the extent
necessary or desirable relating to any Class of Certificates issued pursuant to
this Agreement that is subordinate in rights of payment of interest and
principal to each Class of Certificates issued pursuant to this Agreement on the
Closing Date, or (v) to add, delete, or amend any provisions to the extent
necessary or desirable to comply with any requirements imposed by the Code or
ERISA and applicable 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 or the Trustee), (1) affect the status of the Certificates as REMIC
regular interests or residual interests (as specified in the Preliminary
Statement) for federal income tax purposes or cause an Adverse REMIC Event and
(2) nor shall such amendment effected pursuant to clauses (iii) or (iv) of such
sentence adversely affect in any material respect the interests of any Holder.
Prior to entering into any amendment without the consent of Holders pursuant to
this paragraph, the Trustee may require an Opinion of Counsel (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, if the 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
Certificates.

 

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(b) This Agreement may also be amended from time to time by the parties hereto
with the consent of the Certificateholders representing 66-2/3% Voting Interests
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 may
(i) reduce in any manner the amount of, or delay the timing of, payments which
are required to be paid on any Class of Certificates, without the consent of the
Certificateholders of such Class, (ii) reduce the aforesaid percentages of Class
Principal Amount of Certificates, the Holders of which are required to consent
to any such amendment without the consent of the Holders of 100% of the Class
Principal Amount of the Certificates or (iii) take effect if it would result in
an Adverse REMIC Event. For purposes of this paragraph, references to “Holder”
or “Holders” shall be deemed to include, in the case of Book-Entry Certificates,
the related Certificate Owners.

(c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor and to each Rating Agency.

(d) It shall not be necessary for the consent of Holders under this
Section 12.03 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 Trustee may prescribe.

Section 12.04. Acts of Certificateholders. Except as otherwise specifically
provided herein, whenever Certificateholder action, consent or approval is
required under this Agreement, such action, consent or approval shall be deemed
to have been taken or given on behalf of, and shall be binding upon, all
Certificateholders if the Majority Certificateholders agree to take such action
or give such consent or approval.

Section 12.05. 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 properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Depositor on direction and at the expense of Holders of not less
than 66-2/3% of the Certificate Principal Amount of the Certificates requesting
such recordation, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders, or is necessary for the administration or servicing
of the Mortgage Loans.

Section 12.06. Governing Law; Submission to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to principles of conflict of laws. The parties hereto
hereby declare that it is their intention that this Agreement shall be regarded
as made under the laws of the State of Delaware and that the

 

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laws of said State shall be applied in interpreting its provisions in all cases
where legal interpretation shall be required. Each of the parties hereto agrees
(a) that this Agreement involves at least $100,000.00, and (b) that this
Agreement has been entered into by the parties hereto in express reliance upon 6
Del. C. § 2708. Each of the parties hereto hereby irrevocably and
unconditionally agrees (a) to be subject to the jurisdiction of the courts of
the State of Delaware and of the federal courts sitting in the State of
Delaware, and (b) (1) to the extent such party is not otherwise subject to
service of process in the State of Delaware, to appoint and maintain an agent in
the State of Delaware as such party’s agent for acceptance of legal process, and
(2) that, to the fullest extent permitted by applicable law, service of process
may also be made on such party by prepaid certified mail with a proof of mailing
receipt validated by the United States Postal Service constituting evidence of
valid service, and that service made pursuant to (b) (1) or (2) above shall, to
the fullest extent permitted by applicable law, have the same legal force and
effect as if served upon such party personally within the State of Delaware.

Section 12.07. Notices. All demands, notices and communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed by overnight
courier, addressed as follows or delivered by facsimile (or such other address
as may hereafter be furnished to the other party by like notice):

 

  (i) if to the Seller:

HomeBanc Mortgage Corporation

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: Debra F. Watkins, EVP Capital Markets

Facsimile: (404) 705-2301

with a copy to:

HomeBanc Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: General Counsel

Facsimile: (404) 303-4069

 

  (ii) if to the Servicer:

HomeBanc Mortgage Corporation

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: Debra F. Watkins, EVP Capital Markets

Facsimile: (404) 705-2301

 

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with a copy to:

HomeBanc Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: General Counsel

Facsimile: (404) 303-4069

 

  (iii) if to the Master Servicer:

Wells Fargo Bank, N.A.

P.O. Box 98

Columbia, Maryland 21046

Attention: HomeBanc Mortgage Trust 2006-1

(or in the case of overnight deliveries,

9062 Old Annapolis Road

Columbia, Maryland 21045)

Telephone: (410) 884-2000

Facsimile: (410) 715-2380

 

  (iv) if to the Securities Administrator:

Wells Fargo Bank, N.A.

P.O. Box 98

Columbia, Maryland 21046

Attention: HomeBanc Mortgage Trust 2006-1

(or in the case of overnight deliveries,

9062 Old Annapolis Road

Columbia, Maryland 21045)

Telephone: (410) 884-2000

Facsimile: (410) 715-2380

 

  (v) if to the Trustee:

U.S. Bank National Association

One Federal Street, Third Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services/HomeBanc 2006-1

 

  (vi) if to the Delaware Trustee

Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Attention: Corporate Trust Administration/ HomeBanc 2006-1

 

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  (vii) if to the Depositor:

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: Debra F. Watkins, EVP Capital Markets

Facsimile: (404) 705-2301

with a copy to:

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Attention: General Counsel

Facsimile: (404) 303-4069

All demands, notices and communications to a party hereunder shall be in writing
and shall be deemed to have been duly given when delivered to such party at the
relevant address, facsimile number or electronic mail address set forth above or
at such other address, facsimile number or electronic mail address as such party
may designate from time to time by written notice in accordance with this
Section 12.07.

Section 12.08. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, 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 provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.

Section 12.09. Indulgences; No Waivers. Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

Section 12.10. Headings Not To Affect Interpretation. The headings contained in
this Agreement are for convenience of reference only, and they shall not be used
in the interpretation hereof. When a reference is made in this Agreement to
Sections, Schedules or Exhibits, such reference shall be to a Section, Schedule
or Exhibit of this Agreement, respectively, unless otherwise indicated. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.

 

151

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Section 12.11. Benefits of Agreement. Nothing in this Agreement or in the
Certificates, express or implied, shall give to any Person, other than the
parties to this Agreement and their successors hereunder and the Holders of the
Certificates, any benefit or any legal or equitable right, power, remedy or
claim under this Agreement.

Section 12.12. Special Notices to the Rating Agencies.

(a) The Servicer shall give prompt notice to each Rating Agency of the
occurrence of any of the following events of which it has notice:

 

  (viii) any amendment to this Agreement pursuant to Section 12.03; and

 

  (ix) the making of a final payment hereunder.

(b) All notices to the Rating Agencies provided for by this Section shall be in
writing and sent by first class mail, telecopy or overnight courier, as follows:

if to Moody’s:

Moody’s Investors Service, Inc.

99 Church Street

New York, New York 10004

Fax no.: (212) 553-4392

if to S&P:

Standard & Poor’s Ratings Services, a division

of The McGraw-Hill Companies, Inc.

55 Water Street

New York, New York 10041

Fax no.: (212) 438-2661

(c) The Securities Administrator shall make available to the Rating Agencies
each report prepared pursuant to Section 5.08.

Section 12.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.

 

152

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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers hereunto duly authorized as of the day and
year first above written.

 

HMB ACCEPTANCE CORP., as Depositor By:  

/s/ Debra F. Watkins

Name:   Debra F. Watkins Title:   Executive Vice President

U.S. BANK NATIONAL ASSOCIATION, not in

its individual capacity but solely as Trustee

By:  

/s/ Karen R. Beard

Name:   Karen R. Beard Title:   Vice President

WELLS FARGO BANK, N.A.,

as Securities Administrator and Master Servicer

By:  

/s/ Stacey Taylor

Name:   Stacey Taylor Title:   Vice President

WILMINGTON TRUST COMPANY,

not in its individual capacity, but solely as Delaware

Trustee

By:  

/s/ Janel R. Havrilla

Name:   Janel R. Havrilla Title:   Senior Financial Services Officer

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

HOMEBANC MORTGAGE CORPORATION, as Seller and Servicer By:  

/s/ Debra F. Watkins

Name:   Debra F. Watkins Title:   Executive Vice President

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

COMMONWEALTH OF MASSACHUSETTS        )        )ss.: COUNTY OF SUFFOLK        )

On the 31 day of March 2006 before me, a notary public in and for said State,
personally appeared Karen R. Beard known to me to be a Vice President of U.S.
Bank National Association, a national banking association that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation and acknowledged to me that such corporation executed
the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

/s/ Larry D. Snell

Notary Public

[Notarial Seal]

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

STATE OF GEORGIA    )    )ss.: COUNTY OF FULTON    )

On the 31 day of March 2006 before me, a notary public in and for said State,
personally appeared Debra F. Watkins known to me to be an Executive Vice
President of HMB Acceptance Corp., one of the corporations that executed the
within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

/s/ Kristi O. Crawford

Notary Public

[Notarial Seal]

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

STATE OF MARYLAND    )    )ss.: COUNTY OF BALTIMORE    )

On the 31 day of March 2006 before me, a notary public in and for said State,
personally appeared Stacey Taylor, known to me to be a Vice President of Wells
Fargo Bank, N.A., one of the entities that executed the within instrument and
also known to me to be the person who executed it on behalf of said entity, and
she acknowledged to me that such entity executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

/s/ Darron C. Woods

Notary Public

[Notarial Seal]

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

STATE OF DELAWARE    )    )ss.: COUNTY OF NEW CASTLE    )

On the 31 day of March 2006 before me, a notary public in and for said State,
personally appeared Janel R. Havrilla, known to me to be a Sr. Financial
Services Officer of Wilmington Trust Company, not in its individual capacity,
but solely as Delaware Trustee, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

/s/ Bethany J. Taylor

Notary Public

[Notarial Seal]

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

STATE OF GEORGIA    )    )ss.: COUNTY OF FULTON    )

On the 31 day of March 2006 before me, a notary public in and for said State,
personally appeared Debra F. Watkins, known to me to be a Executive Vice
President of HomeBanc Mortgage Corporation, one of the corporations that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.

 

/s/ Kristi O. Crawford

Notary Public

[Notarial Seal]

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

EXHIBIT A

FORMS OF CERTIFICATES

 

A-1

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

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT
CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), AND A RIGHT TO
RECEIVE PAYMENTS FROM THE BASIS RISK RESERVE FUND.

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS
NOT GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, THE SECURITIES ADMINISTRATOR OR
ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR PRIVATE INSURER.

DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL AMOUNT OF THIS
CERTIFICATE MAY BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE
CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN
THE INITIAL CERTIFICATE PRINCIPAL AMOUNT OF THIS CERTIFICATE AS SET FORTH
HEREIN.

[THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.] [For Class M-1, Class M-2 and Class
B-1 Certificates only]

[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS CERTIFICATE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.] [For Class M-2 and Class B-1 Certificates only]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

[NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED IF ITS RATING IS BELOW
INVESTMENT GRADE UPON ACQUISITION UNLESS THE PROSPECTIVE TRANSFEREE PROVIDES THE
SECURITIES ADMINISTRATOR WITH (A) A CERTIFICATION TO THE EFFECT THAT SUCH
TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS

 

A-2

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

AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), NOR A PERSON ACTING ON BEHALF OF
ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN OR (2) IF SUCH
TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS PURCHASING SUCH
CERTIFICATES WITH FUNDS CONTAINED IN AN “INSURANCE COMPANY GENERAL ACCOUNT” (AS
SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 (“PTCE 95-60”)) AND THE PURCHASE AND HOLDING OF SUCH
CERTIFICATES ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60; OR (B) AN
OPINION OF COUNSEL SATISFACTORY TO THE SECURITIES ADMINISTRATOR, AND UPON WHICH
THE TRUSTEE, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER,
THE DEPOSITOR AND THE DELAWARE TRUSTEE SHALL BE ENTITLED TO RELY, TO THE EFFECT
THAT THE PURCHASE OR HOLDING OF SUCH CERTIFICATE BY THE PROSPECTIVE TRANSFEREE
WILL NOT RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTIONS UNDER TITLE I OF ERISA
OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE SECURITIES
ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER, THE DEPOSITOR OR THE DELAWARE
TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN
THE POOLING AND SERVICING AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN
EXPENSE OF THE TRUST, THE TRUSTEE, THE SECURITIES ADMINISTRATOR, THE MASTER
SERVICER, THE SERVICER, THE DEPOSITOR OR THE DELAWARE TRUSTEE. A TRANSFEREE OF A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO HAVE MADE A REPRESENTATION AS REQUIRED
HEREIN.] [For the Senior Certificates and the Class M-1 Certificates only]

[NO TRANSFER OF THIS CERTIFICATE OR ANY BENEFICIAL INTEREST HEREIN SHALL BE MADE
TO ANY PERSON UNLESS THE SECURITIES ADMINISTRATOR HAS RECEIVED EITHER (A) A
CERTIFICATE FROM THE TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT (1) SUCH
TRANSFEREE IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT
SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE “CODE”) (COLLECTIVELY, A “PLAN”), NOR A PERSON ACTING ON BEHALF OF
ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY SUCH PLAN, (2) SUCH
TRANSFEREE IS ACQUIRING THIS CERTIFICATE THROUGH AN ERISA-QUALIFYING
UNDERWRITING (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT) AND THE
CERTIFICATE IS RATED AT LEAST INVESTMENT GRADE AT THE TIME OF ITS ACQUISITION OR
(3) IF THIS CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT), SUCH TRANSFEREE IS AN
INSURANCE COMPANY PURCHASING THIS CERTIFICATE WITH FUNDS CONTAINED IN AN
“INSURANCE COMPANY GENERAL ACCOUNT” (AS SUCH TERM IS DEFINED IN SECTION V(e) OF
THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 (“PTCE 95-60”)) AND THE
PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF
PTCE 95-60; OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE SECURITIES

 

A-3

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

ADMINISTRATOR, AND UPON WHICH THE SECURITIES ADMINISTRATOR AND THE DEPOSITOR
SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT RESULT IN ANY NON-EXEMPT
PROHIBITED TRANSACTIONS UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND
WILL NOT SUBJECT THE TRUSTEE, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER,
THE SERVICER, THE DEPOSITOR OR THE DELAWARE TRUSTEE TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST OR ANY
OF SUCH ENTITIES.] [For Class M-2 and Class B-1 Certificates only]

 

A-4

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

HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

CLASS [    ] CERTIFICATE

 

Initial Class Principal

Amount of the Class [    ]

Certificates: $[    ]

 

Initial Certificate

Principal Amount of this

Certificate: $[    ]

Certificate

Interest Rate: Variable

  Cut-off Date: March 1, 2006, or with respect to any Mortgage Loan originated
after March 1, 2006, the date of origination of that Mortgage Loan. Number: 1  
CUSIP No.: [    ]

THIS CERTIFIES THAT CEDE & CO. is the registered owner of the Percentage
Interest evidenced by this Certificate (obtained by dividing the Initial
Certificate Principal Amount of this Certificate by the Initial Class Principal
Amount of the Class [    ] Certificates, both as specified above) evidencing
beneficial ownership in the assets of the Trust (as defined on the reverse
hereof), consisting primarily of (i) certain conventional, adjustable rate,
first lien residential mortgage loans acquired by the Trust on the Closing Date
(the “Mortgage Loans”), together with all collections therefrom and proceeds
thereof (excluding all scheduled payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date), (ii) such assets as from time to
time are deposited in respect of the Mortgage Loans in the Servicing Account,
Collection Account and the Certificate Account maintained by the Servicer, the
Master Servicer and the Securities Administrator, respectively, on behalf of the
Trustee; (iii) property acquired by foreclosure of Mortgage Loans or deed in
lieu of foreclosure; (iv) the rights of the Depositor under the Mortgage Loan
Purchase Agreement; and (v) all proceeds of the foregoing.

Distributions on this Certificate will be made on the 25th day of each month or,
if such a day is not a Business Day, then on the next succeeding Business Day,
commencing in April 2006 (each, a “Distribution Date”), to the Person in whose
name this Certificate is registered at the close of business on the last
Business Day of the month preceding such Distribution Date (the “Record Date”),
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.

 

A-1

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

Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Certificate.

Unless the certificate of authentication hereon has been executed by or on
behalf of the Securities Administrator, whose name appears below by manual
signature, this Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement (as defined on the reverse hereof) or be valid
for any purpose.

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

HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

This Certificate is one of a duly authorized issue of certificates designated as
HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates (the
“Certificates”), representing all or part of a beneficial ownership interest in
the assets of HomeBanc Mortgage Trust 2006-1 (the “Trust”), a Delaware statutory
trust established pursuant to a certain trust agreement dated March 24, 2006,
among HMB Acceptance Corp. (the “Depositor”), Wilmington Trust Company (the
“Delaware Trustee”) and U.S. Bank National Association (the “Trustee”) and
issued pursuant to the pooling and servicing agreement dated as of March 1, 2006
(the “Pooling and Servicing Agreement”), among the Depositor, as depositor,
HomeBanc Mortgage Corporation, as seller (in such capacity, the “Seller”) and
servicer (in such capacity, the “Servicer”), Wells Fargo Bank, N.A., as master
servicer (in such capacity, the “Master Servicer”) and as securities
administrator (in such capacity, the “Securities Administrator”), the Delaware
Trustee and the Trustee, to which terms, provisions and conditions thereof the
Holder of this Certificate by virtue of the acceptance hereof assents, and by
which such Holder is bound. The Certificates consist of the following Classes:
the Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2, Class B-1,
Class X and Class R Certificates. To the extent not otherwise defined herein,
capitalized terms used herein have the meanings assigned to them in the Pooling
and Servicing Agreement.

On each Distribution Date, Interest Funds and the Principal Distribution Amount
for each Mortgage Pool and such date and Monthly Excess Cashflow for such date
will be distributed from the Certificate Account to Holders of the Certificates
according to the terms of the Pooling and Servicing Agreement. All distributions
or allocations made with respect to each Class of Certificates on each
Distribution Date shall be allocated among the outstanding Certificates of such
Class based on the Certificate Principal Amount (or Percentage Interest) of each
such Certificate.

Distributions on this Certificate will be made on each Distribution Date by the
Securities Administrator to each Certificateholder of record on the preceding
Record Date either (x) by wire transfer in immediately available funds to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if (i) such Holder has so notified the Securities Administrator not
later than the applicable Record Date and (ii) such Holder shall hold (A) 100%
of the Class Principal Amount of any Class of Certificates or (B) Certificates
of any Class with aggregate principal Denominations of not less than $1,000,000
or (y) by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register. The final
distribution on this Certificate will be made, after due notice to the Holder of
the pendency of such distribution, only upon presentation and surrender of this
Certificate at the Corporate Trust Office (as defined below).

The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Securities Administrator at Wells Fargo Bank, N.A., Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479, and for all other purposes
is located at P.O. Box 98, Columbia, Maryland 21046 (or for overnight
deliveries, at

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

9062 Old Annapolis Road, Columbia, Maryland 21045), Attention: Client Manager
(HomeBanc 2006-1). The Trustee may designate another address from time to time
by notice to the Holders of the Certificates and the Depositor.

The Pooling and Servicing Agreement permits the amendment thereof from time to
time by the Depositor, the Master Servicer, the Securities Administrator, the
Seller, the Servicer, the Delaware Trustee and the Trustee with the consent of
the Holders of not less than 66 2/3% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates affected thereby, for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder, as provided in the Pooling and Servicing Agreement. Any consent by
the Holder of this Certificate will be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Pooling and
Servicing Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial Certificate
Principal Amount (or Percentage Interest) as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

The Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2 and Class B-1
Certificates are issuable only in registered form, in denominations of $100,000
and in integral multiples of $1 in excess thereof registered in the name of the
nominee of the Clearing Agency, which shall maintain such Certificates through
its book-entry facilities. The Class X Certificates are issuable in minimum
denominations of 10% Percentage Interest and will be maintained in physical
form. The Class R Certificates will each be issued as a single Certificate and
maintained in physical form. The Class R Certificates shall remain outstanding
until the latest final Distribution Date for the Certificates.

The Certificates are subject to optional prepayment in full in accordance with
the Pooling and Servicing Agreement on any Distribution Date after the date on
which the Aggregate Pool Balance is less than 10% of the sum of the Cut-off Date
Balance, for an amount as specified in the Pooling and Servicing Agreement.

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

The Depositor, the Trustee, the Securities Administrator and the Certificate
Registrar and any agent of any of them may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Securities Administrator, the Trustee, or the Certificate
Registrar or any such agent shall be affected by any notice to the contrary.

As provided in the Pooling and Servicing Agreement, this Certificate and the
Pooling and Servicing Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware. In the event of any conflict
between the provisions of this Certificate and the Pooling and Servicing
Agreement, the Trust Agreement shall be controlling.

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

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be duly executed under its official seal.

Dated:                     , 2006

 

WELLS FARGO BANK, N.A.

Not in its individual capacity, but solely as Securities

Administrator

BY:  

 

  Authorized Signatory

CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE CERTIFICATES REFERRED TO IN THE WITHIN-MENTIONED POOLING AND
SERVICING AGREEMENT.

 

Dated:                     , 2006   WELLS FARGO BANK, N.A.  

Not in its individual capacity, but solely as Securities

Administrator

  BY:  

 

    Authorized Signatory

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

FORM OF TRANSFER

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto                                                                  

___________________________________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________________________

(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

I (We) further direct the Securities Administrator to issue a new Certificate of
a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:

_______________________________________________________________________________________________________.

Dated:                     

 

 

Signature by or on behalf of assignor

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

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for the information of the Certificate
Registrar. Distributions shall be made by wire transfer in immediately available
funds to

___________________________________________________________________________________________________________________________________________________

for the account of                                         
                                        
                                        
                                                                 

account number                              or, if mailed by check, to
                                        
                                                                             

___________________________________________________________________________________________________________________________________________________

Applicable reports and statements should be mailed to
                                        
                                        
                                             

___________________________________________________________________________________________________________________________________________________

This information is provided by                                         
                                        
                                                                         

the assignee named above, or                                         
                                                  as its agent.

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

SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS
OWNERSHIP OF A “REGULAR INTEREST” IN A “REAL ESTATE MORTGAGE INVESTMENT
CONDUIT,” AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”).

THIS CERTIFICATE DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS
NOT GUARANTEED BY, THE DEPOSITOR, THE TRUSTEE, THE SECURITIES ADMINISTRATOR OR
ANY AFFILIATE OF ANY OF THEM AND IS NOT INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR PRIVATE INSURER.

THIS CERTIFICATE IS NOT ENTITLED TO SCHEDULED DISTRIBUTIONS OF PRINCIPAL AND
WILL NOT ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED TO
CERTAIN DISTRIBUTIONS AS PROVIDED IN THE TRUST AGREEMENT.

THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE “1933 ACT”) OR ANY STATE SECURITIES LAWS. NEITHER THIS CERTIFICATE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) TO A PERSON
IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (C) TO AN INSTITUTIONAL “ACCREDITED
INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE 1933 ACT THAT IS ACQUIRING THE CERTIFICATE FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL “ACCREDITED INVESTOR,” FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE 1933 ACT, SUBJECT TO THE SECURITIES
ADMINISTRATOR’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE POOLING AND
SERVICING AGREEMENT.

NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE SECURITIES ADMINISTRATOR WITH

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

(A) A CERTIFICATION TO THE EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”),
(COLLECTIVELY, A “PLAN”) NOR A PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A
PERSON USING THE ASSETS OF ANY SUCH PLAN OR (2) IF THE CERTIFICATE HAS BEEN THE
SUBJECT OF AN ERISA-QUALIFYING UNDERWRITING AND THE TRANSFEREE IS AN INSURANCE
COMPANY, SUCH TRANSFEREE IS PURCHASING SUCH CERTIFICATE WITH FUNDS CONTAINED IN
AN “INSURANCE COMPANY GENERAL ACCOUNT” (AS SUCH TERM IS DEFINED IN SECTION V(e)
OF THE PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 (“PTCE 95-60”)) AND THE
PURCHASE AND HOLDING OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF
PTCE 95-60; OR (B) AN OPINION OF COUNSEL SATISFACTORY TO THE SECURITIES
ADMINISTRATOR, AND UPON WHICH THE SECURITIES ADMINISTRATOR AND THE DEPOSITOR
SHALL BE ENTITLED TO RELY, TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE BY THE PROSPECTIVE TRANSFEREE WILL NOT RESULT IN ANY NON-EXEMPT
PROHIBITED TRANSACTIONS UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND
WILL NOT SUBJECT THE TRUSTEE, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER,
THE SERVICER, THE DEPOSITOR OR THE DELAWARE TRUSTEE TO ANY OBLIGATION IN
ADDITION TO THOSE UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING
AGREEMENT, WHICH OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST OR ANY
OF SUCH ENTITIES.

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HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

CLASS X CERTIFICATE

 

Percentage Interest: 100%   Cut-off Date: March 1, 2006, or with respect to any
Mortgage Loan originated after March 1, 2006, the date of origination of that
Mortgage Loan. Number: 1  

THIS CERTIFIES THAT HOMEBANC MORTGAGE CORPORATION is the registered owner of the
Percentage Interest evidenced by this Certificate evidencing beneficial
ownership in the assets of the Trust (as defined on the reverse hereof),
consisting primarily of (i) certain conventional, adjustable rate, first lien
residential mortgage loans acquired by the Trust on the Closing Date (the
“Mortgage Loans”), together with all collections therefrom and proceeds thereof
(excluding all scheduled payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date), (ii) such assets as from time to time are
deposited in respect of the Mortgage Loans in the Servicing Account, Collection
Account and the Certificate Account maintained by the Servicer, the Master
Servicer and the Securities Administrator, respectively, on behalf of the
Trustee; (iii) property acquired by foreclosure of Mortgage Loans or deed in
lieu of foreclosure; (iv) the rights of the Depositor under the Mortgage Loan
Purchase Agreement; and (v) all proceeds of the foregoing.

Distributions on this Certificate will be made on the 25th day of each month or,
if such a day is not a Business Day, then on the next succeeding Business Day,
commencing in April 2006 (each, a “Distribution Date”), to the Person in whose
name this Certificate is registered at the close of business on the last
Business Day of the month preceding such Distribution Date (the “Record Date”),
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.

Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Certificate.

Unless the certificate of authentication hereon has been executed by or on
behalf of the Securities Administrator, whose name appears below by manual
signature, this Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement (as defined on the reverse hereof) or be valid
for any purpose.

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HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

This Certificate is one of a duly authorized issue of certificates designated as
HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates (the
“Certificates”), representing all or part of a beneficial ownership interest in
the assets of HomeBanc Mortgage Trust 2006-1 (the “Trust”), a Delaware statutory
trust established pursuant to a certain trust agreement dated March 24, 2006,
among HMB Acceptance Corp. (the “Depositor”), Wilmington Trust Company (the
“Delaware Trustee”) and U.S. Bank National Association (the “Trustee”) and
issued pursuant to the pooling and servicing agreement dated as of March 1, 2006
(the “Pooling and Servicing Agreement”), among the Depositor, as depositor,
HomeBanc Mortgage Corporation, as seller (in such capacity, the “Seller”) and
servicer (in such capacity, the “Servicer”), Wells Fargo Bank, N.A., as master
servicer (in such capacity, the “Master Servicer”) and as securities
administrator (in such capacity, the “Securities Administrator”), the Delaware
Trustee and the Trustee, to which terms, provisions and conditions thereof the
Holder of this Certificate by virtue of the acceptance hereof assents, and by
which such Holder is bound. The Certificates consist of the following Classes:
the Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2, Class B-1,
Class X and Class R Certificates. To the extent not otherwise defined herein,
capitalized terms used herein have the meanings assigned to them in the Pooling
and Servicing Agreement.

On each Distribution Date, Interest Funds and the Principal Distribution Amount
for each Mortgage Pool and such date and Monthly Excess Cashflow for such date
will be distributed from the Certificate Account to Holders of the Certificates
according to the terms of the Pooling and Servicing Agreement. All distributions
or allocations made with respect to each Class of Certificates on each
Distribution Date shall be allocated among the outstanding Certificates of such
Class based on the Certificate Principal Amount (or Percentage Interest) of each
such Certificate.

Distributions on this Certificate will be made on each Distribution Date by the
Securities Administrator to each Certificateholder of record on the preceding
Record Date either (x) by wire transfer in immediately available funds to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if (i) such Holder has so notified the Securities Administrator not
later than the applicable Record Date and (ii) such Holder shall hold (A) 100%
of the Class Principal Amount of any Class of Certificates or (B) Certificates
of any Class with aggregate principal Denominations of not less than $1,000,000
or (y) by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register. The final
distribution on this Certificate will be made, after due notice to the Holder of
the pendency of such distribution, only upon presentation and surrender of this
Certificate at the Corporate Trust Office (as defined below).

The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Securities Administrator at Wells Fargo Bank, N.A., Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479, and for all other purposes
is located at P.O. Box 98, Columbia, Maryland 21046 (or for overnight
deliveries, at

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

9062 Old Annapolis Road, Columbia, Maryland 21045), Attention: Client Manager
(HomeBanc 2006-1). The Trustee may designate another address from time to time
by notice to the Holders of the Certificates and the Depositor.

The Pooling and Servicing Agreement permits the amendment thereof from time to
time by the Depositor, the Master Servicer, the Securities Administrator, the
Seller, the Servicer, the Delaware Trustee and the Trustee with the consent of
the Holders of not less than 66 2/3% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates affected thereby, for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder, as provided in the Pooling and Servicing Agreement. Any consent by
the Holder of this Certificate will be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Pooling and
Servicing Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial Certificate
Principal Amount (or Percentage Interest) as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

The Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2 and Class B-1
Certificates are issuable only in registered form, in denominations of $100,000
and in integral multiples of $1 in excess thereof registered in the name of the
nominee of the Clearing Agency, which shall maintain such Certificates through
its book-entry facilities. The Class X Certificates are issuable in minimum
denominations of 10% Percentage Interest and will be maintained in physical
form. The Class R Certificates will each be issued as a single Certificate and
maintained in physical form. The Class R Certificates shall remain outstanding
until the latest final Distribution Date for the Certificates.

The Certificates are subject to optional prepayment in full in accordance with
the Pooling and Servicing Agreement on any Distribution Date after the date on
which the Aggregate Pool Balance is less than 10% of the sum of the Cut-off Date
Balance, for an amount as specified in the Pooling and Servicing Agreement.

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

The Depositor, the Trustee, the Securities Administrator and the Certificate
Registrar and any agent of any of them may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Securities Administrator, the Trustee, or the Certificate
Registrar or any such agent shall be affected by any notice to the contrary.

As provided in the Pooling and Servicing Agreement, this Certificate and the
Pooling and Servicing Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware. In the event of any conflict
between the provisions of this Certificate and the Pooling and Servicing
Agreement, the Trust Agreement shall be controlling.

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

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be duly executed under its official seal.

Dated:                     , 2006

 

WELLS FARGO BANK, N.A.

Not in its individual capacity, but solely as Securities

Administrator

BY:  

 

  Authorized Signatory

CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE CERTIFICATES REFERRED TO IN THE WITHIN-MENTIONED POOLING AND
SERVICING AGREEMENT.

 

Dated:                     , 2006     WELLS FARGO BANK, N.A.     Not in its
individual capacity, but solely as Securities Administrator     BY:  

 

      Authorized Signatory

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

FORM OF TRANSFER

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

________________________________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________________________________

(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

I (We) further direct the Securities Administrator to issue a new Certificate of
a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:

_______________________________________________________________________________________________________.

Dated:                     

 

 

Signature by or on behalf of assignor

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

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for the information of the Certificate
Registrar. Distributions shall be made by wire transfer in immediately available
funds to

___________________________________________________________________________________________________________________________________________________

for the account of                                         
                                        
                                        
                                                                 

account number                              or, if mailed by check, to
                                        
                                                                             

___________________________________________________________________________________________________________________________________________________

Applicable reports and statements should be mailed to
                                        
                                        
                                             

___________________________________________________________________________________________________________________________________________________

This information is provided by                                         
                                        
                                                                         

the assignee named above, or                                         
                                                  as its agent.

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

THIS CERTIFICATE IS A REMIC RESIDUAL INTEREST CERTIFICATE. THIS CERTIFICATE DOES
NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT GUARANTEED BY, THE
DEPOSITOR, THE TRUSTEE, THE SECURITIES ADMINISTRATOR OR ANY AFFILIATE OF ANY OF
THEM AND IS NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.

THIS CERTIFICATE IS NOT ENTITLED TO DISTRIBUTIONS OF PRINCIPAL AND WILL NOT
ACCRUE INTEREST. THE HOLDER OF THIS CERTIFICATE WILL BE ENTITLED ONLY TO CERTAIN
LIMITED DISTRIBUTIONS AS PROVIDED IN THE POOLING AND SERVICING AGREEMENT.

THIS CERTIFICATE IS SUBORDINATE IN RIGHT OF PAYMENT AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), OR ANY STATE SECURITIES LAWS. NEITHER THIS CERTIFICATE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION, UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.

THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH CERTIFICATE ONLY (A) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE 1933 ACT, (B) TO A PERSON
IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE
144A UNDER THE 1933 ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (C) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, SUBJECT TO THE
TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING IN THE TRUST
AGREEMENT.

NEITHER THIS CERTIFICATE, NOR ANY BENEFICIAL INTEREST IN THIS CERTIFICATE, MAY
BE TRANSFERRED, SOLD, PLEDGED, OR OTHERWISE DISPOSED OF UNLESS PRIOR TO SUCH
DISPOSITION, THE PROPOSED TRANSFEREE DELIVERS TO THE SECURITIES ADMINISTRATOR
(I) AN AFFIDAVIT STATING (A) THAT THE PROPOSED TRANSFEREE IS NOT A “DISQUALIFIED
ORGANIZATION” WITHIN THE MEANING OF SECTION 860E(E)(5) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED (THE “CODE”) AND IS NOT PURCHASING THE CERTIFICATE ON
BEHALF OF A DISQUALIFIED ORGANIZATION, (B) THAT NO PURPOSE OF SUCH TRANSFER IS
TO AVOID OR IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, (C) IN THE CASE OF A
NON-U.S. PERSON, THAT THE PROPOSED TRANSFEREE IS A NON-U.S. PERSON THAT HOLDS A
RESIDUAL CERTIFICATE IN CONNECTION WITH THE CONDUCT OF A TRADE OR BUSINESS
WITHIN THE UNITED STATES AND HAS FURNISHED THE TRANSFEROR AND THE TRUSTEE WITH
AN EFFECTIVE INTERNAL REVENUE SERVICE FORM 4224 OR SUCCESSOR FORM AT THE TIME
AND IN THE MANNER REQUIRED BY THE CODE.

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

NO TRANSFER OF THIS CERTIFICATE SHALL BE REGISTERED UNLESS THE PROSPECTIVE
TRANSFEREE PROVIDES THE SECURITIES ADMINISTRATOR WITH (A) A CERTIFICATION TO THE
EFFECT THAT SUCH TRANSFEREE (1) IS NEITHER AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), (COLLECTIVELY, A “PLAN”) NOR A
PERSON ACTING ON BEHALF OF ANY SUCH PLAN NOR A PERSON USING THE ASSETS OF ANY
SUCH PLAN OR (2) IF THE CERTIFICATE HAS BEEN THE SUBJECT OF AN ERISA-QUALIFYING
UNDERWRITING AND THE TRANSFEREE IS AN INSURANCE COMPANY, SUCH TRANSFEREE IS
PURCHASING SUCH CERTIFICATE WITH FUNDS CONTAINED IN AN “INSURANCE COMPANY
GENERAL ACCOUNT” (AS SUCH TERM IS DEFINED IN SECTION V(e) OF THE PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 (“PTCE 95-60”)) AND THE PURCHASE AND HOLDING
OF THIS CERTIFICATE ARE COVERED UNDER SECTIONS I AND III OF PTCE 95-60; OR
(B) AN OPINION OF COUNSEL SATISFACTORY TO THE SECURITIES ADMINISTRATOR, AND UPON
WHICH THE SECURITIES ADMINISTRATOR AND THE DEPOSITOR SHALL BE ENTITLED TO RELY,
TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE BY THE
PROSPECTIVE TRANSFEREE WILL NOT RESULT IN ANY NON-EXEMPT PROHIBITED TRANSACTIONS
UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE SECURITIES ADMINISTRATOR, THE MASTER SERVICER, THE SERVICER, THE
DEPOSITOR OR THE DELAWARE TRUSTEE TO ANY OBLIGATION IN ADDITION TO THOSE
UNDERTAKEN BY SUCH ENTITIES IN THE POOLING AND SERVICING AGREEMENT, WHICH
OPINION OF COUNSEL SHALL NOT BE AN EXPENSE OF THE TRUST OR ANY OF SUCH ENTITIES.

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

HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

CLASS R CERTIFICATE

 

Percentage Interest: 100%   Cut-off Date: March 1, 2006, or with respect to any
Mortgage Loan originated after March 1, 2006, the date of origination of that
Mortgage Loan. Number: 1   CUSIP No.: 43739E CY 1

THIS CERTIFIES THAT JPMORGAN CHASE BANK, N.A. is the registered owner of the
Percentage Interest evidenced by this Certificate evidencing beneficial
ownership in the assets of the Trust (as defined on the reverse hereof),
consisting primarily of (i) certain conventional, adjustable rate, first lien
residential mortgage loans acquired by the Trust on the Closing Date (the
“Mortgage Loans”), together with all collections therefrom and proceeds thereof
(excluding all scheduled payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date), (ii) such assets as from time to time are
deposited in respect of the Mortgage Loans in the Servicing Account, Collection
Account and the Certificate Account maintained by the Servicer, the Master
Servicer and the Securities Administrator, respectively, on behalf of the
Trustee; (iii) property acquired by foreclosure of Mortgage Loans or deed in
lieu of foreclosure; (iv) the rights of the Depositor under the Mortgage Loan
Purchase Agreement; and (v) all proceeds of the foregoing.

Distributions on this Certificate will be made on the 25th day of each month or,
if such a day is not a Business Day, then on the next succeeding Business Day,
commencing in April 2006 (each, a “Distribution Date”), to the Person in whose
name this Certificate is registered at the close of business on the last
Business Day of the month preceding such Distribution Date (the “Record Date”),
in an amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount, if any, required to be distributed to all the
Certificates of the Class represented by this Certificate. All sums
distributable on this Certificate are payable in the coin or currency of the
United States of America which at the time of payment is legal tender for the
payment of public and private debts.

Reference is hereby made to the further provisions of this Certificate set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Certificate.

Unless the certificate of authentication hereon has been executed by or on
behalf of the Securities Administrator, whose name appears below by manual
signature, this Certificate shall not be entitled to any benefit under the
Pooling and Servicing Agreement (as defined on the reverse hereof) or be valid
for any purpose.

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

HOMEBANC MORTGAGE TRUST 2006-1

MORTGAGE PASS-THROUGH CERTIFICATES

This Certificate is one of a duly authorized issue of certificates designated as
HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates (the
“Certificates”), representing all or part of a beneficial ownership interest in
the assets of HomeBanc Mortgage Trust 2006-1 (the “Trust”), a Delaware statutory
trust established pursuant to a certain trust agreement dated March 24, 2006,
among HMB Acceptance Corp. (the “Depositor”), Wilmington Trust Company (the
“Delaware Trustee”) and U.S. Bank National Association (the “Trustee”) and
issued pursuant to the pooling and servicing agreement dated as of March 1, 2006
(the “Pooling and Servicing Agreement”), among the Depositor, as depositor,
HomeBanc Mortgage Corporation, as seller (in such capacity, the “Seller”) and
servicer (in such capacity, the “Servicer”), Wells Fargo Bank, N.A., as master
servicer (in such capacity, the “Master Servicer”) and as securities
administrator (in such capacity, the “Securities Administrator”), the Delaware
Trustee and the Trustee, to which terms, provisions and conditions thereof the
Holder of this Certificate by virtue of the acceptance hereof assents, and by
which such Holder is bound. The Certificates consist of the following Classes:
the Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2, Class B-1,
Class X and Class R Certificates. To the extent not otherwise defined herein,
capitalized terms used herein have the meanings assigned to them in the Pooling
and Servicing Agreement.

On each Distribution Date, Interest Funds and the Principal Distribution Amount
for each Mortgage Pool and such date and Monthly Excess Cashflow for such date
will be distributed from the Certificate Account to Holders of the Certificates
according to the terms of the Pooling and Servicing Agreement. All distributions
or allocations made with respect to each Class of Certificates on each
Distribution Date shall be allocated among the outstanding Certificates of such
Class based on the Certificate Principal Amount (or Percentage Interest) of each
such Certificate.

Distributions on this Certificate will be made on each Distribution Date by the
Securities Administrator to each Certificateholder of record on the preceding
Record Date either (x) by wire transfer in immediately available funds to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if (i) such Holder has so notified the Securities Administrator not
later than the applicable Record Date and (ii) such Holder shall hold (A) 100%
of the Class Principal Amount of any Class of Certificates or (B) Certificates
of any Class with aggregate principal Denominations of not less than $1,000,000
or (y) by check mailed by first class mail to such Certificateholder at the
address of such Holder appearing in the Certificate Register. The final
distribution on this Certificate will be made, after due notice to the Holder of
the pendency of such distribution, only upon presentation and surrender of this
Certificate at the Corporate Trust Office (as defined below).

The Corporate Trust Office with respect to the presentment and surrender of
Certificates for the final distribution thereon and the presentment and
surrender of the Certificates for any other purpose is the corporate trust
office of the Securities Administrator at Wells Fargo Bank, N.A., Sixth Street
and Marquette Avenue, Minneapolis, Minnesota 55479, and for all other purposes
is located at P.O. Box 98, Columbia, Maryland 21046 (or for overnight
deliveries, at

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

9062 Old Annapolis Road, Columbia, Maryland 21045), Attention: Client Manager
(HomeBanc 2006-1). The Trustee may designate another address from time to time
by notice to the Holders of the Certificates and the Depositor.

The Pooling and Servicing Agreement permits the amendment thereof from time to
time by the Depositor, the Master Servicer, the Securities Administrator, the
Seller, the Servicer, the Delaware Trustee and the Trustee with the consent of
the Holders of not less than 66 2/3% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates affected thereby, for the
purpose of adding, changing or eliminating any provisions of the Pooling and
Servicing Agreement or modifying the rights of the Holders of the Certificates
thereunder, as provided in the Pooling and Servicing Agreement. Any consent by
the Holder of this Certificate will be conclusive and binding on such Holder and
upon all future Holders of this Certificate and of any Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Certificate. The Pooling and
Servicing Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the Certificates.

As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registerable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the Corporate Trust Office, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Certificate
Registrar, duly executed by the Holder hereof or such Holder’s attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class of authorized denominations evidencing the same initial Certificate
Principal Amount (or Percentage Interest) will be issued to the designated
transferee or transferees. As provided in the Trust Agreement and subject to
certain limitations therein set forth, this Certificate is exchangeable for new
Certificates of the same Class evidencing the same aggregate initial Certificate
Principal Amount (or Percentage Interest) as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

The Class 1-A-1, Class 1-A-2, Class 2-A-1, Class 2-A-2, Class 3-A-1, Class
3-A-2, Class 3-A-3, Class 4-A-1, Class 4-A-2, Class M-1, Class M-2 and Class B-1
Certificates are issuable only in registered form, in denominations of $100,000
and in integral multiples of $1 in excess thereof registered in the name of the
nominee of the Clearing Agency, which shall maintain such Certificates through
its book-entry facilities. The Class X Certificates are issuable in minimum
denominations of 10% Percentage Interest and will be maintained in physical
form. The Class R Certificates will each be issued as a single Certificate and
maintained in physical form. The Class R Certificates shall remain outstanding
until the latest final Distribution Date for the Certificates.

The Certificates are subject to optional prepayment in full in accordance with
the Pooling and Servicing Agreement on any Distribution Date after the date on
which the Aggregate Pool Balance is less than 10% of the sum of the Cut-off Date
Balance, for an amount as specified in the Pooling and Servicing Agreement.

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

The Depositor, the Trustee, the Securities Administrator and the Certificate
Registrar and any agent of any of them may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Securities Administrator, the Trustee, or the Certificate
Registrar or any such agent shall be affected by any notice to the contrary.

As provided in the Pooling and Servicing Agreement, this Certificate and the
Pooling and Servicing Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware. In the event of any conflict
between the provisions of this Certificate and the Pooling and Servicing
Agreement, the Trust Agreement shall be controlling.

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

IN WITNESS WHEREOF, the Securities Administrator has caused this Certificate to
be duly executed under its official seal.

Dated:                     , 2006

 

WELLS FARGO BANK, N.A.

Not in its individual capacity, but solely as Securities Administrator

BY:  

 

  Authorized Signatory

CERTIFICATE OF AUTHENTICATION

THIS IS ONE OF THE CERTIFICATES REFERRED TO IN THE WITHIN-MENTIONED POOLING AND
SERVICING AGREEMENT.

 

Dated:                     , 2006     WELLS FARGO BANK, N.A.    

Not in its individual capacity, but solely as

Securities Administrator

    BY:  

 

      Authorized Signatory

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

FORM OF TRANSFER

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto

___________________________________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________________________

(Please print or typewrite name and address including postal zip code of
assignee)

the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.

I (We) further direct the Securities Administrator to issue a new Certificate of
a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:             .

_______________________________________________________________________________________________________.

Dated:                     

 

 

Signature by or on behalf of assignor

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

DISTRIBUTION INSTRUCTIONS

The assignee should include the following for the information of the Certificate
Registrar. Distributions shall be made by wire transfer in immediately available
funds to

___________________________________________________________________________________________________________________________________________________

for the account of                                         
                                        
                                        
                                                                 

account number                              or, if mailed by check, to
                                        
                                                                             

___________________________________________________________________________________________________________________________________________________

Applicable reports and statements should be mailed to
                                        
                                        
                                             

___________________________________________________________________________________________________________________________________________________

This information is provided by                                         
                                        
                                                                         

the assignee named above, or                                         
                                                  as its agent.

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

EXHIBIT B-1

FORM OF TRANSFEROR CERTIFICATE

[date]

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: HomeBanc Mortgage Trust 2006-1, Mortgage

Pass-Through Certificates, Class [    ]

Ladies and Gentlemen:

In connection with our proposed transfer of Class [    ] Certificates, we hereby
certify that (a) we have no knowledge that the proposed Transferee is not a
Permitted Transferee acquiring such Class [    ] Certificate for its own account
and not in a capacity as trustee, nominee, or agent for another Person, (b) we
have not offered or sold any Class [    ] Certificates to, or solicited offers
to buy any Class [    ] Certificates from, any person, or otherwise approached
or negotiated with any person with respect thereto, in a manner that would be
deemed, or taken any other action which would result in, a violation of
Section 5 of the Securities Act of 1933, as amended, and (c) we have not
undertaken the proposed transfer in whole or in part to impede the assessment or
collection of tax.

 

Very truly yours,

[                                         ]

By:

 

 

 

B-1-1

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

EXHIBIT B-2

FORM OF INVESTMENT LETTER

[date]

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: HomeBanc Mortgage Trust 2006-1,

Mortgage Pass-Through Certificates, Class [    ]

Ladies and Gentlemen:

In connection with our acquisition of the above-referenced certificates (the
“Certificates”) we certify that: (1) we understand that the Certificates have
not been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or any state securities laws and are being transferred to us
in a transaction that is exempt from the registration requirements of the
Securities Act and any such laws; (2) we are an institutional “accredited
investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act that is not a QIB (as defined below) (an “Institutional
Accredited Investor”) and have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of an
investment in the Certificates; (3) we have had the opportunity to ask questions
of and receive answers from the Depositor concerning the purchase of the
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates; (4) we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (7) below); (5) we are aware that any seller of the
Certificates may be relying on the exemption from the registration requirements
of the Securities Act provided by Section 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act and is acquiring such Certificate for its
own account or for the account of one or more Institutional Accredited Investors
for whom it is authorized to act; (6) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action that would result in a violation of Section 5 of the
Securities Act or any state securities law; and (7) we will not sell, transfer
or otherwise dispose of any Certificates (A) in

 

B-2-1

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

the United States or to a U.S. person (within the meaning of Regulation S)
unless such person (i) is a QIB as defined in Rule 144A of the Securities Act (a
“QIB”) that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the sale, pledge or transfer is
hereby made in reliance on Rule 144A of the Securities Act, (ii) is an
Institutional Accredited Investor that purchases for its own account or for the
account of an Institutional Accredited Investor to whom notice is given that the
sale, pledge or transfer is hereby made in reliance on Regulation D of the
Securities Act, (iii) has executed and delivered to you a certificate to
substantially the same effect as this certificate and (iv) has otherwise
complied with any conditions for transfer set forth in the Pooling and Servicing
Agreement dated as of March 1, 2006 among HMB Acceptance Corp., as Depositor,
HomeBanc Mortgage Corporation, as Seller and Servicer, Wells Fargo Bank, N.A.,
as Master Servicer and Securities Administrator, Wilmington Trust Company, as
Delaware Trustee, and U.S. Bank National Association, as Trustee, or (B) to a
non-U.S. person in an offshore transaction pursuant to Regulation S and, if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this certificate that such sale, transfer or other disposition
may be made pursuant to an exemption from the Securities Act.

 

Very truly yours, [NAME OF TRANSFEREE] By:  

 

  Authorized Officer

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

EXHIBIT B-3

FORM OF RULE 144A LETTER

[date]

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: HomeBanc Mortgage Trust 2006-1,

Mortgage Pass-Through Certificates, Class [    ]

Ladies and Gentlemen:

In connection with our acquisition of the above-referenced certificates (the
“Certificates”) we certify that (a) we understand that the Certificates have not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”), or any state securities laws and are being transferred to us in a
transaction that is exempt from the registration requirements of the Securities
Act and any such laws, (b) we have such knowledge and experience in financial
and business matters that we are capable of evaluating the merits and risks of
investments in the Certificates, (c) we have had the opportunity to ask
questions of and receive answers from the Depositor concerning the purchase of
the Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Certificates, (d) we have not,
nor has anyone acting on our behalf, offered, transferred, pledged, sold or
otherwise disposed of the Certificates or any interest in the Certificates, or
solicited any offer to buy, transfer, pledge or otherwise dispose of the
Certificates or any interest in the Certificates from any person in any manner,
or made any general solicitation by means of general advertising or in any other
manner, or taken any other action that would constitute a distribution of the
Certificates under the Securities Act or that would render the disposition of
the Certificates a violation of Section 5 of the Securities Act or any state
securities laws or require registration pursuant thereto, and we will not act,
or authorize any person to act, in such manner with respect to the Certificates
and (e) we are a “Qualified Institutional Buyer” or “QIB” as that term is
defined in Rule 144A under the Securities Act (“Rule 144A”). We are aware that
the sale to us is being made in reliance on Rule 144A.

 

B-4-1

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

We are acquiring the Certificates for our own account or for resale pursuant to
Rule 144A and understand that such Certificates may be resold, pledged or
transferred (i) in the United States or to any U.S. person (within the meaning
of Regulation S) only to a Qualified Institutional Buyer that purchases for its
own account or for the account of a Qualified Institutional Buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on Rule
144A or (ii) to a non-U.S. person in an offshore transaction pursuant to
Regulation S.

 

Very truly yours, [NAME OF TRANSFEREE] By:  

 

  Authorized Officer

 

B-4-2

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

EXHIBIT B-4

ERISA AFFIDAVIT

[date]

HMB Acceptance Corp.

2002 Summit Boulevard, Suite 100

Atlanta, Georgia 30319

Wells Fargo Bank, N.A.

Sixth Street and Marquette Avenue

Minneapolis, Minnesota 55479

 

  Re: HomeBanc Mortgage Trust 2006-1,

Mortgage Pass-Through Certificates, Class [    ]

Ladies and Gentlemen:

1. The undersigned is the                                         
                     of                                         
                     (the “Transferee”), a [corporation duly organized] and
existing under the laws of                                         
                    , on behalf of which she makes this affidavit.

2. The Transferee either (a) is not an employee benefit plan subject to
Section 406 or Section 407 of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”), or a plan or arrangement subject to Section 4975 of
the Internal Revenue Code of 1986, as amended (the “Code”), the Trustee of any
such plan or arrangement or a person acting on behalf of any such plan or
arrangement or using the assets of any such plan or arrangement to effect such
transfer; (b) is acquiring a Class M-2 or Class B-1 Certificate that has been
the subject of an ERISA-Qualifying Underwriting and is rated at least investment
grade at the time of its acquisition; (c) if the ERISA-Restricted Certificate
has been the subject of an ERISA-Qualifying Underwriting, is an insurance
company which is purchasing such Certificates with funds contained in an
“insurance company general account” (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 (“PTCE 95-60”) and that the
purchase and holding of such Certificates are covered under Section I and III of
PTCE 95-60; or (d) shall deliver to the Securities Administrator and the
Depositor an opinion of counsel (a “Benefit Plan Opinion”) satisfactory to the
Securities Administrator, and upon which the Securities Administrator and the
Depositor shall be entitled to rely, to the effect that the purchase or holding
of such Certificate by the Transferee will not constitute or result in a
non-exempt

 

B-4-3

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

prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
and will not subject the Trustee, the Delaware Trustee, the Master Servicer, the
Servicer, the Securities Administrator or the Depositor to any obligation in
addition to those undertaken by such entities in the Pooling and Servicing
Agreement or to any liability, which opinion of counsel shall not be an expense
of the Securities Administrator or the Depositor.

3. The Transferee hereby acknowledges that under the terms of the Pooling and
Servicing Agreement dated as of March 1, 2006 among HMB Acceptance Corp., as
Depositor, HomeBanc Mortgage Corporation, as Seller and Servicer, Wells Fargo
Bank, N.A., as Master Servicer and Securities Administrator, Wilmington Trust
Company, as Delaware Trustee, and U.S. Bank National Association, as Trustee, no
transfer of the ERISA-Restricted Certificates shall be permitted to be made to
any person unless the Depositor and Securities Administrator have received a
certificate from such transferee in the form hereof.

IN WITNESS WHEREOF, the Transferee has executed this certificate.

 

 

[Transferee]

By:

 

 

Name:

 

Title:

 

 

B-4-4

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

EXHIBIT B-5

RESIDUAL TRANSFER AFFIDAVIT

 

 

Date            

 

  Re: HomeBanc Mortgage Trust 2006-1,

Mortgage Pass-Through Certificates

This letter is delivered to you in connection with the sale
by                                 (the “Seller”) to
                                 (the “Purchaser”) of             % Percentage
Interest of HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates,
Class R (the “Certificate”), pursuant to Section 6.02(c)(ii) of the Pooling and
Servicing Agreement (the “Pooling and Servicing Agreement”) dated as of March 1,
2006, among HMB Acceptance Corp., as depositor (the “Depositor”), HomeBanc
Mortgage Corporation (“HBMC”), as seller and as servicer, Wells Fargo Bank,
N.A., as master servicer (in such capacity, the “Master Servicer”) and as
securities administrator (in such capacity, the “Securities Administrator”),
Wilmington Trust Company, as Delaware trustee (the “Delaware Trustee”), and U.S.
Bank National Association, as trustee (the “Trustee”). All terms used herein and
not otherwise defined shall have the meanings set forth in the Pooling and
Servicing Agreement. The Seller hereby certifies, represents and warrants to,
and covenants with the Depositor, HBMC, the Master Servicer, the Securities
Administrator, the Trustee and the Delaware Trustee that:

1. No purpose of the Seller relating to the sale of the Certificate by the
Seller to the Purchaser is or will be to enable the Seller to impede the
assessment or collection of tax.

2. The Seller understands that the Purchaser has delivered to the Trustee, the
Master Servicer, the Master Servicer and the Depositor a transferee affidavit
and agreement in the form attached to the Pooling and Servicing Agreement as
Exhibit B-6. The Seller does not know or believe that any representation
contained therein is false.

3. The Seller has no actual knowledge that the Purchaser is not a Permitted
Transferee.

4. The Seller has no actual knowledge that the Purchaser would be unwilling or
unable to pay taxes due on its share of the taxable income attributable to the
Certificates.

5. At the time of this transfer (I) the Seller has conducted a reasonable
investigation of the financial condition of the Purchaser and, as a result of
the investigation, found that the Purchaser has historically paid its debts as
they came due, and found no significant evidence to indicate that the Purchaser
will

 

B-5-1

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

not continue to pay its debts as they come due in the future, (II) the Purchaser
represents that it will not cause income from the Certificates to be
attributable to a foreign permanent establishment or fixed base (within the
meaning of an applicable income tax treaty) of the Purchaser or another U.S.
Person and (III) either (A) the Seller both (1) has determined all of the
following: (i) at the time of the transfer, and at the close of each of the
Purchaser’s two fiscal years preceding the year of transfer, the Purchaser’s
gross assets for financial reporting purposes exceed $100 million and its net
assets for such purposes exceed $10 million (disregarding, for purposes of
determining gross or net assets, the obligation of any person related to the
Purchaser within the meaning of section 860L(g) of the Code or any other asset
if a principal purpose for holding or acquiring that asset is to permit the
Purchaser to satisfy this minimum gross asset or net asset requirement),
(ii) the Purchaser is a domestic C corporation for United States federal income
tax purposes that is not for such purposes an exempt corporation, a regulated
investment company, a real estate investment trust, a REMIC, or a cooperative
organization to which part I of subchapter T of the Code applies, (iii) there
are no facts or circumstances on or before the date of transfer (or anticipated)
which would reasonably indicate that the taxes associated with the Certificates
will not be paid, (iv) the Purchaser is not a foreign branch of a domestic
corporation, and (v) the transfer does not involve a transfer or assignment to a
foreign branch of a domestic corporation (or any other arrangement by which any
Certificate is at any time subject to net tax by a foreign country or U.S.
possession) and the Purchaser will not hereafter engage in any such transfer or
assignment (or any such arrangement), and (2) does not know or have reason to
know that the Purchaser will not honor the restrictions on subsequent transfers
of any Class R Certificate described in paragraph 12 of the Transferee’s
Transfer Affidavit, or (B) the Seller has determined that the present value of
the anticipated tax liabilities associated with the holding of the Certificates
does not exceed the sum of (1) the present value of any consideration given to
the Purchaser to acquire the Certificates, (2) the present value of the expected
future distributions on the Certificates, and (3) the present value of the
anticipated tax savings associated with holding the Certificates as the REMIC
generates losses (having made such determination by (I) assuming that the
Purchaser pays tax at a rate equal to the highest rate of tax specified in
Section 11(b)(1) of the Code (provided that, if the Purchaser has been subject
to the alternative minimum tax under Section 55 of the Code in the preceding two
years and will compute its taxable income in the current taxable year using the
alternative minimum tax rate, then the Purchaser may use the tax rate specified
in Section 55(b)(1)(B) of the Code), and (II) utilizing a discount rate for
present valuation purposes equal to the Federal short-term rate prescribed by
Section 1274(d) of the Code.

6. The Purchaser has represented to the Seller that, if the Certificates
constitute a noneconomic residual interest, it (i) understands that as holder of
a

 

B-5-2

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

noneconomic residual interest it may incur tax liabilities in excess of any cash
flows generated by the interest, and (ii) intends to pay taxes associated with
its holding of the Certificates as they become due.

The Seller understands that the transfer of the Certificates may not be
respected for United States income tax purposes (and the Seller may continue to
be liable for United States income taxes associated therewith) unless there is
compliance with the standards of paragraph 5 above as to any transfer.

We agree to indemnify the Depositor, HBMC, the Securities Administrator, the
Master Servicer, the Trustee and the Delaware Trustee against any liability that
may result if we sell or transfer a Residual Certificate to a purchaser or
transferee who does not comply with any conditions for transfer set forth in the
Pooling and Servicing Agreement.

 

Very truly yours,

 

Name:

 

Title:

 

 

B-5-3

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

EXHIBIT B-6

RESIDUAL TRANSFEREE AFFIDAVIT

 

STATE OF                )                  )   ss.: COUNTY OF                )  

[NAME OF OFFICER],                                          being first duly
sworn, deposes and says:

 

  1. That he [she] is [title of officer]
                                              of [name of Purchaser]
                                              (the “Purchaser”), a             
[description of type of entity] duly organized and existing under the laws of
the [State of                                              ] [United States], on
behalf of which he [she] makes this affidavit.

 

  2. That the Purchaser’s Taxpayer Identification Number is
[                                             ].

 

  3. That the Purchaser is not a “disqualified organization” within the meaning
of Section 860E(e)(5) of the Internal Revenue Code of 1986, as amended (the
“Code”) and will not be a “disqualified organization” as of [date of transfer],
and that the Purchaser is not acquiring a Residual Certificate (as defined in
the Agreement) for the account of, or as agent (including a broker, nominee, or
other middleman) for, any person or entity from which it has not received an
affidavit substantially in the form of this affidavit. For these purposes, a
“disqualified organization” means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than an instrumentality
if all of its activities are subject to tax and a majority of its board of
directors is not selected by such governmental entity), any cooperative
organization furnishing electric energy or providing telephone service to
persons in rural areas as described in Code Section 1381(a)(2)(C), any “electing
large partnership” within the meaning of Section 775 of the Code, or any
organization (other than a farmers’ cooperative described in Code Section 521)
that is exempt from federal income tax unless such organization is subject to
the tax on unrelated business income imposed by Code Section 511.

 

  4. The Purchaser either (a) is not, and on
                                         [date of transfer] will not be, an
employee benefit plan or other retirement arrangement subject to Section 406 of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”),
(collectively, a “Plan”) or a person acting on behalf of any such Plan or
investing the assets of any such Plan to acquire a Residual Certificate; (b) if
a Residual Certificate has been the subject of an ERISA-Qualifying Underwriting,
is an insurance company that is purchasing the Certificate with funds contained
in an “insurance company general account” as defined in Section V(e)

 

B-6-1

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

of Prohibited Transaction Class Exemption (“PTCE”) 95-60 and the purchase and
holding of a Residual Certificate are covered under Sections I and III of PTCE
95-60; or (c) herewith delivers to the Trustee an opinion of counsel
satisfactory to the Trustee, to the effect that the purchase or holding of such
Residual Certificate by the Investor will not constitute or result in any
non-exempt prohibited transactions under Section 406 of ERISA or Section 4975 of
the Code and will not subject the Trustee, the Delaware Trustee, the Master
Servicer, the Securities Administrator, HBMC or the Depositor to any obligation
in addition to those undertaken by such entities in the Pooling and Servicing
Agreement, which opinion of counsel shall not be an expense of the Trust Fund or
the above parties.

 

  5. That the Purchaser hereby acknowledges that under the terms of the Pooling
and Servicing Agreement dated as of March 1, 2006 (the “Pooling and Servicing
Agreement”), by and among HMB Acceptance Corp., as Depositor, HomeBanc Mortgage
Corporation, as seller and as servicer, Wells Fargo Bank, N.A., as Master
Servicer and as Securities Administrator, Wilmington Trust Company, as Delaware
Trustee, and U.S. Bank National Association, as Trustee, with respect to
HomeBanc Mortgage Trust 2006-1 Mortgage Pass-Through Certificates, no transfer
of the Residual Certificates shall be permitted to be made to any person unless
the Securities Administrator has received a certificate from such transferee
containing the representations in paragraphs 3 and 4 hereof.

 

  6. That the Purchaser does not hold REMIC residual securities as nominee to
facilitate the clearance and settlement of such securities through electronic
book-entry changes in accounts of participating organizations (such entity, a
“Book-Entry Nominee”).

 

  7. That the Purchaser does not have the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to such Residual Certificate.

 

  8. That the Purchaser will not transfer a Residual Certificate to any person
or entity (i) as to which the Purchaser has actual knowledge that the
requirements set forth in paragraph 3, paragraph 6 or paragraph 10 hereof are
not satisfied or that the Purchaser has reason to believe does not satisfy the
requirements set forth in paragraph 7 hereof, and (ii) without obtaining from
the prospective Purchaser an affidavit substantially in this form and providing
to the Trustee a written statement substantially in the form of Exhibit B-6 to
the Agreement.

 

  9. That the Purchaser understands that, as the holder of a Residual
Certificate, the Purchaser may incur tax liabilities in excess of any cash flows
generated by the interest and that it intends to pay taxes associated with
holding such Residual Certificate as they become due.

 

  10. That (I) the Purchaser (i) is not a Non-U.S. Person, (ii) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Securities

 

B-6-2

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

Administrator with an effective Internal Revenue Service Form W-8ECI
(Certificate of Foreign Person’s Claim for Exemption From Withholding on Income
Effectively Connected With the Conduct of a Trade or Business in the United
States) or successor form at the time and in the manner required by the Code or
(iii) is a Non-U.S. Person that has delivered to the transferor, the Securities
Administrator an opinion of a nationally recognized tax counsel to the effect
that the transfer of such Residual Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of a Residual Certificate will not be disregarded for federal
income tax purposes and (II) if Purchaser is a partnership for U.S. federal
income tax purposes, each person or entity that holds an interest (directly, or
indirectly through a pass-through entity) is a person or entity described in
(I). “Non-U.S. Person” means any person other than a “United States person”
within the meaning of Section 7701(a)(30) of the Code.

 

  11. The Purchaser will not cause income from the Residual Certificate to be
attributable to a foreign permanent establishment or fixed base of the Purchaser
or another U.S. taxpayer.

 

  12. The Purchaser will, in connection with any transfer that it makes of the
Class R Certificates, deliver to the Certificate Registrar a representation
letter substantially in the form of Exhibit B-5 to the Pooling and Servicing
Agreement. [The Purchaser hereby agrees that it will not make any transfer of
any Class R Certificate unless (i) the transfer is to an entity which is a
domestic C corporation (other than an exempt corporation, a regulated investment
company, a real estate investment trust, a REMIC, or a cooperative organization
to which part I of Subchapter T of the Code applies) for federal income tax
purposes, and (ii) the transfer is in compliance with the conditions set forth
in paragraph 5 of Exhibit B-6 of the Pooling and Servicing Agreement.]*

 

  13. The Purchaser hereby represents to and for the benefit of the transferor
that (i) at the time of the transfer, and at the close of each of the
Purchaser’s two fiscal years preceding the year of transfer, the Purchaser’s
gross assets for financial reporting purposes exceed $100 million and its net
assets for such purposes exceed $10 million (disregarding, for purposes of
determining gross or net assets, the obligation of any person related to the
Purchaser within the meaning of section 860L(g) of the Code or any other asset
if a principal purpose for holding or acquiring that asset is to permit the
Purchaser to satisfy this minimum gross asset or net asset requirement),
(ii) the Purchaser is a domestic C corporation for United States federal income
tax purposes that is not for such purposes an exempt corporation, a regulated
investment company, a real estate investment trust, a REMIC, or a cooperative
organization to which part I of subchapter T of the Code applies, (iii) there
are no facts or circumstances on or before the date of transfer

 

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

* Bracketed text to be included if the Purchaser is relying on the transferee’s
compliance with the “Asset Test Safe Harbor” rather than the “Formula Test Safe
Harbor.”

 

B-6-3

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

(or anticipated) which would reasonably indicate that the taxes associated with
the Class R Certificate will not be paid, and (iv) the Purchaser is not a
foreign branch of a domestic corporation, the transfer does not involve a
transfer or assignment to a foreign branch of a domestic corporation (or any
other arrangement by which any Class R Certificate is at any time subject to net
tax by a foreign country or U.S. possession), and the Purchaser will not
hereafter engage in any such transfer or assignment (or any such arrangement).]*

 

  14. That the Purchaser agrees to such amendments of the Pooling and Servicing
Agreement as may be required to further effectuate the restrictions on transfer
of any Residual Certificate to such a “disqualified organization,” an agent
thereof, a Book-Entry Nominee, or a person that does not satisfy the
requirements of paragraph 7 and paragraph 10 hereof.

 

  15. That the Purchaser consents to the designation of the Securities
Administrator to act as agent for the “tax matters person” of each REMIC created
by the Trust Fund pursuant to the Pooling and Servicing Agreement.

We agree to indemnify the Depositor, HBMC, the Securities Administrator, the
Master Servicer, the Trustee and the Delaware Trustee against any liability that
may result if we sell or transfer a Residual Certificate to a purchaser or
transferee who does not comply with any conditions for transfer set forth in the
Pooling and Servicing Agreement.

 

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

* Bracketed text to be included if the Purchaser is relying on the transferee’s
compliance with the “Asset Test Safe Harbor” rather than the “Formula Test Safe
Harbor.”

 

B-6-4

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

IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed on
its behalf, pursuant to authority of its Board of Directors, by its [title of
officer] this      day of                      20    .

 

 

[name of Purchaser]

By:  

 

Name:   Title:  

Personally appeared before me the above-named [name of officer]
                    , known or proved to me to be the same person who executed
the foregoing instrument and to be the [title of officer]                     
of the Purchaser, and acknowledged to me that he [she] executed the same as his
[her] free act and deed and the free act and deed of the Purchaser.

Subscribed and sworn before me this      day of                      20    .

NOTARY PUBLIC

__________________________________________

COUNTY OF                                 

STATE OF                                     

My commission expires the      day of                      20    .

 

B-6-5

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

EXHIBIT C

CUSTODIAL ACCOUNT LETTER AGREEMENT

______________ __, ____

 

To:  

 

 

 

 

 

  (the “Depository”)

As Servicer under the Pooling and Servicing Agreement dated as of March 1, 2006,
by and among HMB Acceptance Corporation, as Depositor, U.S. Bank National
Association, as Trustee, Wells Fargo Bank, N.A., as Securities Administrator and
Master Servicer, HomeBanc Mortgage Corporation, as Seller and Servicer, and
Wilmington Trust Company, as Delaware Trustee (the “Pooling and Servicing
Agreement”), we hereby authorize and request you to establish an account, as a
Custodial Account pursuant to Section 4.02(d) of the Pooling and Servicing
Agreement, designated as “HomeBanc Mortgage Corporation in trust for U.S. Bank
National Association, as Trustee for the HomeBanc Mortgage Trust 2006-1.” All
deposits in the account shall be subject to withdrawal therefrom by order signed
by the Servicer. This letter is submitted to you in duplicate. Please execute
and return one original to us.

 

HOMEBANC MORTGAGE CORPORATION     Servicer By:  

 

Name:  

 

Title:  

 

Date:  

 

 

C-1

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

The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number                     , at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.

 

 

Depository

By:  

 

Name:  

 

Title:  

 

Date:  

 

 

C-2

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

EXHIBIT D

ESCROW ACCOUNT LETTER AGREEMENT

______________ __, ____

 

To:  

 

 

 

 

 

  (the “Depository”)

As Servicer under the Pooling and Servicing Agreement dated as of March 1, 2006,
by and among HMB Acceptance Corp., as Depositor, U.S. Bank National Association,
as Trustee, Wells Fargo Bank, N.A., as Securities Administrator and Master
Servicer, HomeBanc Mortgage Corporation, as Seller and Servicer, and Wilmington
Trust Company, as Delaware Trustee (the “Pooling and Servicing Agreement”), we
hereby authorize and request you to establish an account, as an Escrow Account
pursuant to Section 4.02(f) of the Pooling and Servicing Agreement, designated
as “HomeBanc Mortgage Corporation in trust for U.S. Bank National Association,
as Trustee for the HomeBanc Mortgage Trust 2006-1.” All deposits in the account
shall be subject to withdrawal therefrom by order signed by the Servicer. This
letter is submitted to you in duplicate. Please execute and return one original
to us.

 

HOMEBANC MORTGAGE CORPORATION

    Servicer

By:

 

 

Name:

 

 

 

D-1

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

The undersigned, as Depository, hereby certifies that the above described
account has been established under Account Number                     , at the
office of the Depository indicated above, and agrees to honor withdrawals on
such account as provided above.

 

Depository

By:  

 

Name:  

 

 

D-2

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

EXHIBIT E

PART I: Standard File Layout – Delinquency Reporting

 

Column/Header Name

  

Description

  

Decimal

  

Format Comment

SERVICER_LOAN_NBR    A unique number assigned to a loan by the Servicer. This
may be different than the LOAN_NBR       LOAN_NBR    A unique identifier
assigned to each loan by the originator.       CLIENT_NBR    Servicer Client
Number       SERV_INVESTOR_NBR    Contains a unique number as assigned by an
external servicer to identify a group of loans in their system.      
BORROWER_FIRST_NAME    First Name of the Borrower.       BORROWER_LAST_NAME   
Last name of the borrower.       PROP_ADDRESS    Street Name and Number of
Property       PROP_STATE    The state where the property located.      
PROP_ZIP    Zip code where the property is located.       BORR_NEXT_PAY_DUE_DATE
   The date that the borrower’s next payment is due to the servicer at the end
of processing cycle, as reported by Servicer.      

MM/DD/YYYY

LOAN_TYPE    Loan Type (i.e. FHA, VA, Conv)       BANKRUPTCY_FILED_DATE    The
date a particular bankruptcy claim was filed.      

MM/DD/YYYY

BANKRUPTCY_CHAPTER_CODE    The chapter under which the bankruptcy was filed.   
   BANKRUPTCY_CASE_NBR    The case number assigned by the court to the
bankruptcy filing.       POST_PETITION_DUE_DATE    The payment due date once the
bankruptcy has been approved by the courts      

MM/DD/YYYY

BANKRUPTCY_DCHRG_DISM_DATE    The Date The Loan Is Removed From Bankruptcy.
Either by Dismissal, Discharged and/or a Motion For Relief Was Granted.      

MM/DD/YYYY

LOSS_MIT_APPR_DATE    The Date The Loss Mitigation Was Approved By The Servicer
     

MM/DD/YYYY

LOSS_MIT_TYPE    The Type Of Loss Mitigation Approved For A Loan Such As;      
LOSS_MIT_EST_COMP_DATE    The Date The Loss Mitigation /Plan Is Scheduled To
End/Close      

MM/DD/YYYY

LOSS_MIT_ACT_COMP_DATE    The Date The Loss Mitigation Is Actually Completed   
  

MM/DD/YYYY

FRCLSR_APPROVED_DATE    The date DA Admin sends a letter to the servicer with
instructions to begin foreclosure proceedings.      

MM/DD/YYYY

ATTORNEY_REFERRAL_DATE    Date File Was Referred To Attorney to Pursue
Foreclosure      

MM/DD/YYYY

FIRST_LEGAL_DATE    Notice of 1st legal filed by an Attorney in a Foreclosure
Action      

MM/DD/YYYY

FRCLSR_SALE_EXPECTED_DATE    The date by which a foreclosure sale is expected to
occur.      

MM/DD/YYYY

FRCLSR_SALE_DATE    The actual date of the foreclosure sale.      

MM/DD/YYYY

FRCLSR_SALE_AMT    The amount a property sold for at the foreclosure sale.   

2

   No commas(,) or dollar signs ($) EVICTION_START_DATE    The date the servicer
initiates eviction of the borrower.      

MM/DD/YYYY

EVICTION_COMPLETED_DATE    The date the court revokes legal possession of the
property from the borrower.      

MM/DD/YYYY

LIST_PRICE    The price at which an REO property is marketed.   

2

   No commas(,) or dollar signs ($) LIST_DATE    The date an REO property is
listed at a particular price.      

MM/DD/YYYY

OFFER_AMT    The dollar value of an offer for an REO property.   

2

   No commas(,) or dollar signs ($) OFFER_DATE_TIME    The date an offer is
received by DA Admin or by the Servicer.      

MM/DD/YYYY

 

E-1

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

REO_CLOSING_DATE    The date the REO sale of the property is scheduled to close.
      MM/DD/YYYY REO_ACTUAL_CLOSING_DATE    Actual Date Of REO Sale      
MM/DD/YYYY OCCUPANT_CODE    Classification of how the property is occupied.   
   PROP_CONDITION_CODE    A code that indicates the condition of the property.
      PROP_INSPECTION_DATE    The date a property inspection is performed.      
MM/DD/YYYY APPRAISAL_DATE    The date the appraisal was done.       MM/DD/YYYY
CURR_PROP_VAL    The current “as is” value of the property based on brokers
price opinion or appraisal.    2    REPAIRED_PROP_VAL    The amount the property
would be worth if repairs are completed pursuant to a broker’s price opinion or
appraisal.    2    If applicable:          DELINQ_STATUS_CODE    FNMA Code
Describing Status of Loan       DELINQ_REASON_CODE    The circumstances which
caused a borrower to stop paying on a loan. Code indicates the reason why the
loan is in default for this cycle.       MI_CLAIM_FILED_DATE    Date Mortgage
Insurance Claim Was Filed With Mortgage Insurance Company.       MM/DD/YYYY
MI_CLAIM_AMT    Amount of Mortgage Insurance Claim Filed       No commas(,) or
dollar signs ($) MI_CLAIM_PAID_DATE    Date Mortgage Insurance Company Disbursed
Claim Payment       MM/DD/YYYY MI_CLAIM_AMT_PAID    Amount Mortgage Insurance
Company Paid On Claim    2    No commas(,) or dollar signs ($)
POOL_CLAIM_FILED_DATE    Date Claim Was Filed With Pool Insurance Company      
MM/DD/YYYY POOL_CLAIM_AMT    Amount of Claim Filed With Pool Insurance Company
   2    No commas(,) or dollar signs ($) POOL_CLAIM_PAID_DATE    Date Claim Was
Settled and The Check Was Issued By The Pool Insurer       MM/DD/YYYY
POOL_CLAIM_AMT_PAID    Amount Paid On Claim By Pool Insurance Company    2    No
commas(,) or dollar signs ($) FHA_PART_A_CLAIM_FILED_DATE    Date FHA Part A
Claim Was Filed With HUD       MM/DD/YYYY FHA_PART_A_CLAIM_AMT    Amount of FHA
Part A Claim Filed    2    No commas(,) or dollar signs ($)
FHA_PART_A_CLAIM_PAID_DATE    Date HUD Disbursed Part A Claim Payment      
MM/DD/YYYY FHA_PART_A_CLAIM_PAID_AMT    Amount HUD Paid on Part A Claim    2   
No commas(,) or dollar signs ($) FHA_PART_B_CLAIM_FILED_DATE    Date FHA Part B
Claim Was Filed With HUD       MM/DD/YYYY FHA_PART_B_CLAIM_AMT    Amount of FHA
Part B Claim Filed    2    No commas(,) or dollar signs ($)
FHA_PART_B_CLAIM_PAID_DATE    Date HUD Disbursed Part B Claim Payment      
MM/DD/YYYY FHA_PART_B_CLAIM_PAID_AMT    Amount HUD Paid on Part B Claim    2   
No commas(,) or dollar signs ($) VA_CLAIM_FILED_DATE    Date VA Claim Was Filed
With the Veterans Admin       MM/DD/YYYY VA_CLAIM_PAID_DATE    Date Veterans
Admin. Disbursed VA Claim Payment       MM/DD/YYYY VA_CLAIM_PAID_AMT    Amount
Veterans Admin. Paid on VA Claim    2    No commas(,) or dollar signs ($)

 

E-2

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

PART II: Standard File Codes – Delinquency Reporting

The Loss Mit Type field should show the approved Loss Mitigation Code as
follows:

 

  •   ASUM- Approved Assumption

 

  •   BAP- Borrower Assistance Program

 

  •   CO- Charge Off

 

  •   DIL- Deed-in-Lieu

 

  •   FFA- Formal Forbearance Agreement

 

  •   MOD- Loan Modification

 

  •   PRE- Pre-Sale

 

  •   SS- Short Sale

 

  •   MISC- Anything else approved by the PMI or Pool Insurer

NOTE: Wells Fargo Bank will accept alternative Loss Mitigation Types to those
above, provided that they are consistent with industry standards. If Loss
Mitigation Types other than those above are used, the Servicer must supply Wells
Fargo Bank with a description of each of the Loss Mitigation Types prior to
sending the file.

The Occupant Code field should show the current status of the property code as
follows:

 

  •   Mortgagor

 

  •   Tenant

 

  •   Unknown

 

  •   Vacant

The Property Condition field should show the last reported condition of the
property as follows:

 

•   Damaged

 

•   Excellent

 

•   Fair

 

•   Gone

 

•   Good

 

•   Poor

 

•   Special Hazard

 

•   Unknown

 

E-3

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

PART II: Standard File Codes – Delinquency Reporting, Continued

The FNMA Delinquent Reason Code field should show the Reason for Delinquency as
follows:

 

Delinquency Code

  

Delinquency Description

001    FNMA-Death of principal mortgagor 002    FNMA-Illness of principal
mortgagor 003    FNMA-Illness of mortgagor’s family member 004    FNMA-Death of
mortgagor’s family member 005    FNMA-Marital difficulties 006   
FNMA-Curtailment of income 007    FNMA-Excessive Obligation 008   
FNMA-Abandonment of property 009    FNMA-Distant employee transfer 011   
FNMA-Property problem 012    FNMA-Inability to sell property 013   
FNMA-Inability to rent property 014    FNMA-Military Service 015    FNMA-Other
016    FNMA-Unemployment 017    FNMA-Business failure 019    FNMA-Casualty loss
022    FNMA-Energy environment costs 023    FNMA-Servicing problems 026   
FNMA-Payment adjustment 027    FNMA-Payment dispute 029    FNMA-Transfer of
ownership pending 030    FNMA-Fraud 031    FNMA-Unable to contact borrower INC
   FNMA-Incarceration

 

E-4

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

PART II: Standard File Codes – Delinquency Reporting, Continued

The FNMA Delinquent Status Code field should show the Status of Default as
follows:

 

Status Code

  

Status Description

09    Forbearance 17    Pre-foreclosure Sale Closing Plan Accepted 24   
Government Seizure 26    Refinance 27    Assumption 28    Modification 29   
Charge-Off 30    Third Party Sale 31    Probate 32    Military Indulgence 43   
Foreclosure Started 44    Deed-in-Lieu Started 49    Assignment Completed 61   
Second Lien Considerations 62    Veteran’s Affairs-No Bid 63    Veteran’s
Affairs-Refund 64    Veteran’s Affairs-Buydown 65    Chapter 7 Bankruptcy 66   
Chapter 11 Bankruptcy 67    Chapter 13 Bankruptcy

 

E-5

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

PART III: Calculation of Realized Loss/Gain Form 332– Instruction Sheet

 

(a) The numbers on the form correspond with the numbers listed below.

Liquidation and Acquisition Expenses:

 

1. The Actual Unpaid Principal Balance of the Mortgage Loan. For documentation,
an Amortization Schedule from date of default through liquidation breaking out
the net interest and servicing fees advanced is required.

 

2. The Total Interest Due less the aggregate amount of servicing fee that would
have been earned if all delinquent payments had been made as agreed. For
documentation, an Amortization Schedule from date of default through liquidation
breaking out the net interest and servicing fees advanced is required.

 

3. Accrued Servicing Fees based upon the Scheduled Principal Balance of the
Mortgage Loan as calculated on a monthly basis. For documentation, an
Amortization Schedule from date of default through liquidation breaking out the
net interest and servicing fees advanced is required.

 

4-12. Complete as applicable. All line entries must be supported by copies of
appropriate statements, vouchers, receipts, bills, canceled checks, etc., to
document the expense. Entries not properly documented will not be reimbursed to
the Servicer.

 

13. The total of lines 1 through 12.

 

(b) Credits:

 

14-21. Complete as applicable. All line entries must be supported by copies of
the appropriate claims forms, EOBs, HUD-1 and/or other proceeds verification,
statements, payment checks, etc. to document the credit. If the Mortgage Loan is
subject to a Bankruptcy Deficiency, the difference between the Unpaid Principal
Balance of the Note prior to the Bankruptcy Deficiency and the Unpaid Principal
Balance as reduced by the Bankruptcy Deficiency should be input on line 20.

 

22. The total of lines 14 through 21.

Please note: For HUD/VA loans, use line (15) for Part A/Initial proceeds and
line (16) for Part B/Supplemental proceeds.

 

(c) Total Realized Loss (or Amount of Any Gain)

 

23. The total derived from subtracting line 22 from 13. If the amount represents
a realized gain, show the amount in parenthesis (    ).

 

E-6

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PART IIIA: Calculation of Realized Loss/Gain Form 332

WELLS FARGO BANK, N.A.

CALCULATION OF REALIZED LOSS/GAIN

 

Prepared by:   

 

     Date:  

 

Phone:   

 

     Email Address:  

 

 

  Servicer Loan No.    Servicer Name    Servicer Address   

WELLS FARGO BANK, N.A. Loan No.                                         
                    

Borrower’s Name:                                         
                                                         

Property Address:                                         
                                                           

Liquidation and Acquisition Expenses:

(1) Actual Unpaid Principal Balance of Mortgage Loan $                     (1)

(2) Interest accrued at Net Rate                      (2)

(3) Accrued Servicing Fees                      (3)

(4) Attorney’s Fees                      (4)

(5) Taxes                      (5)

(6) Property Maintenance                      (6)

(7) MI/Hazard Insurance Premiums                      (7)

(8) Utility Expenses                      (8)

(9) Appraisal/BPO                      (9)

(10) Property Inspections                      (10)

(11) FC Costs/Other Legal Expenses                      (11)

(12) Other (itemize) $                     (12)

 

Cash for Keys                                                      

  _______________

HOA/Condo Fees                                                

  _______________

_________________________________________

  _______________

_________________________________________

  _______________

Total Expenses $                     (13)

Credits:

(14) Escrow Balance $                     (14)

(15) HIP Refund                      (15)

(16) Rental Receipts                      (16)

(17) Hazard Loss Proceeds                      (17)

(18) Primary Mortgage Insurance Proceeds                      (18)

(19) Pool Insurance Proceeds                      (19)

(20) Proceeds from Sale of Acquired Property                      (20)

(21) Other (itemize)                      (21)

 

_________________________________________

  _______________

_________________________________________

  _______________

Total Credits $                     (22)

Total Realized Loss (or Amount of Gain) $                     (23)

 

E-7

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EXHIBIT F

RELEVANT SERVICING CRITERIA

The assessment of compliance to be delivered by Wells Fargo Bank, N.A. (“Wells
Fargo”), in its capacities as Master Servicer and Securities Administrator, and
HomeBanc Mortgage Corporation (“Home Banc”), in its capacity as Servicer, shall
address, at a minimum, the criteria identified as below as “Applicable Servicing
Criteria”:

 

Servicing Criteria

  

Applicable

Servicing

Criteria for
Wells Fargo

  

Applicable

Servicing

Criteria for
HomeBanc

Reference

  

Criteria

             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.   
X    X

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.    X    X

1122(d)(1)(iii)

   Any requirements in the transaction agreements to maintain a back-up servicer
for the mortgage loans are maintained.    N/A    N/A

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.    X    X    Cash Collection and Administration      

1122(d)(2)(i)

   Payments on mortgage loans 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.    X    X

1122(d)(2)(ii)

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

1122(d)(2)(iii)

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

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.    X    X

 

F-1

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

Servicing Criteria

  

Applicable

Servicing

Criteria for
Wells Fargo

  

Applicable

Servicing

Criteria for
HomeBanc

Reference

  

Criteria

         

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.    X    X

1122(d)(2)(vi)

   Unissued checks are safeguarded so as to prevent unauthorized access.    X   
X

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.    X    X    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
mortgage loans serviced by the Servicer.    X    X

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.    X    X

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.    X    X

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.    X    X   
Pool Asset Administration      

1122(d)(4)(i)

   Collateral or security on mortgage loans is maintained as required by the
transaction agreements or related mortgage loan documents.      

 

F-2

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

Servicing Criteria

  

Applicable

Servicing

Criteria for
Wells Fargo

  

Applicable

Servicing

Criteria for
HomeBanc

Reference

  

Criteria

         

1122(d)(4)(ii)

   Mortgage loan and related documents are safeguarded as required by the
transaction agreements.      

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.       X

1122(d)(4)(iv)

   Payments on mortgage loans, including any payoffs, made in accordance with
the related mortgage loan 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 mortgage
loan documents.       X

1122(d)(4)(v)

   The Servicer’s records regarding the mortgage loans agree with the Servicer’s
records with respect to an obligor’s unpaid principal balance.       X

1122(d)(4)(vi)

   Changes with respect to the terms or status of an obligor’s mortgage loans
(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.       X

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.       X

1122(d)(4)(viii)

   Records documenting collection efforts are maintained during the period a
mortgage loan 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 mortgage loans including, for example, phone calls,
letters and payment rescheduling plans in cases where delinquency is deemed
temporary (e.g., illness or unemployment).       X

1122(d)(4)(ix)

   Adjustments to interest rates or rates of return for mortgage loans with
variable rates are computed based on the related mortgage loan documents.      
X

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 mortgage loan
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 mortgage loan documents and state laws;
and (C) such funds are returned to the obligor within 30 calendar days of full
repayment of the related mortgage loans, or such other number of days specified
in the transaction agreements.       X

 

F-3

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

Servicing Criteria

  

Applicable

Servicing

Criteria for
Wells Fargo

  

Applicable

Servicing

Criteria for
HomeBanc

Reference

  

Criteria

         

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.       X

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.   
   X

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.       X

1122(d)(4)(xiv)

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

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.    N/A    N/A

 

F-4

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

EXHIBIT G

FORM OF BACK-UP CERTIFICATION

 

  Re: The pooling and servicing agreement dated as of March 1, 2006 (the
“Agreement”), among HMB Acceptance Corp., as depositor (the “Depositor”),
HomeBanc Mortgage Corporation, as seller and as servicer, Wells Fargo Bank,
N.A., as master servicer (in such capacity, the “Master Servicer”), and as
securities administrator, U.S. Bank National Association, as trustee, and
Wilmington Trust Company, as Delaware trustee.

I,                                         
                                                         , the
                                                                      of [NAME
OF COMPANY] (the “Company”), certify to the Master Servicer, and its officers,
with the knowledge and intent that it will rely upon this certification, that:

(1) I have reviewed the servicer compliance statement of the Company provided in
accordance with Item 1123 of Regulation AB (the “Compliance Statement”), the
report on assessment of the Company’s compliance with the servicing criteria set
forth in Item 1122(d) of Regulation AB (the “Servicing Criteria”), provided in
accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934,
as amended (the “Exchange Act”) and Item 1122 of Regulation AB (the “Servicing
Assessment”), the registered public accounting firm’s attestation report
provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and
Section 1122(b) of Regulation AB (the “Attestation Report”), and all servicing
reports, officer’s certificates and other information relating to the servicing
of the Mortgage Loans by the Company during 200[ ] that were delivered by the
Company to the Master Servicer pursuant to the Agreement (collectively, the
“Company Servicing Information”);

(2) Based on my knowledge, the Company Servicing 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 the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Company Servicing Information;

(3) Based on my knowledge, all of the Company Servicing Information required to
be provided by the Company under the Agreement has been provided to the Master
Servicer;

(4) I am responsible for reviewing the activities performed by the Company as
servicer under the Agreement, and based on my knowledge and the compliance
review conducted in preparing the Compliance Statement and except as disclosed
in the Compliance Statement, the Servicing Assessment or the Attestation Report,
the Company has fulfilled its obligations under the Agreement in all material
respects; and

 

G-1

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(5) The Compliance Statement required to be delivered by the Company pursuant to
the Agreement, and the Servicing Assessment and Attestation Report required to
be provided by the Company and by any Subservicer or Subcontractor pursuant to
the Agreement, have been provided to the Master Servicer. Any material instances
of noncompliance described in such reports have been disclosed to the Master
Servicer. Any material instance of noncompliance with the Servicing Criteria has
been disclosed in such reports.

 

Date:  

 

By:  

 

Name:   Title:  

 

G-2

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EXHIBIT H

ADDITIONAL FORM 10-D DISCLOSURE

 

ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 1: Distribution and Pool Performance Information    Information included in
the distribution date statement   

Servicer

Master Servicer

Securities Administrator

Any information required by 1121 which is NOT included on the distribution date
statement    Depositor Item 2: Legal Proceedings    Any legal proceeding pending
against the following entities or their respective property, that is material to
Certificateholders, including any proceeding known to be contemplated by
governmental authorities:   

•     Issuing Entity (Trust)

  

Master Servicer, Securities Administrator

and Depositor

•     Sponsor (Seller)

   Seller

•     Depositor

   Depositor

•     Trustee

   Trustee

•     Delaware Trustee

   Delaware Trustee

•     Securities Administrator

   Securities Administrator

•     Master Servicer

   Master Servicer

•     Custodian

   Custodian

•     1110(b) Originator

   Depositor

•     Any 1108(a)(2) Servicer (other than the Master Servicer or Securities
Administrator)

   Servicer

•     Any other party contemplated by 1100(d)(1)

   Depositor Item 3: Sale of Securities and Use of Proceeds    Depositor

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.

  

 

H-1

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ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 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)

  

Securities Administrator

Item 5: Submission of Matters to a Vote of Security Holders

 

Information from Item 4 of Part II of Form 10-Q

   Securities Administrator

Item 6: Significant Obligors of Pool Assets

 

Item 1112(b) – Significant Obligor Financial Information*

   Not Applicable

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

*  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.

  

Item 7: Significant Enhancement Provider Information

 

Item 1114(b)(2) – Credit Enhancement Provider Financial Information*

  

•     Determining applicable disclosure threshold

   Not Applicable

•     Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Not Applicable Item 1115(b) – Derivative Counterparty Financial Information*
  

•     Determining current maximum probable exposure

   Not Applicable

•     Determining current significance percentage

   Not Applicable

•     Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Not Applicable

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

*  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.

  

 

H-2

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ADDITIONAL FORM 10-D DISCLOSURE

Item on Form 10-D

  

Party Responsible

Item 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

  

Any party responsible for the applicable

Form 8-K Disclosure item

Item 9: Exhibits    Monthly Statement to Certificateholders    Securities
Administrator

Exhibits required by Item 601 of Regulation S-K,

such as material agreements

   Depositor

 

H-3

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EXHIBIT I

ADDITIONAL FORM 10-K DISCLOSURE

 

ADDITIONAL FORM 10-K DISCLOSURE

Item on Form 10-K

  

Party Responsible

Item 1B: Unresolved Staff Comments    Depositor

Item 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

   Any party responsible for disclosure items on Form 8-K

Item 15: Exhibits, Financial Statement

Schedules

  

Securities Administrator

Depositor

Reg AB Item 1112(b): Significant

Obligors of Pool Assets

  

Significant Obligor Financial Information*

   Not Applicable

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

*  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.

  

Reg AB Item 1114(b)(2): Credit

Enhancement Provider Financial

Information

  

•      Determining applicable disclosure threshold

   Not Applicable

•      Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Not Applicable

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

*  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.

  

Reg AB Item 1115(b): Derivative

Counterparty Financial Information

  

•      Determining current maximum probable exposure

   Not Applicable

•      Determining current significance percentage

   Not Applicable

•      Requesting required financial information (including any required
accountants’ consent to the use thereof) or effecting incorporation by reference

   Not Applicable

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

*  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.

  

 

I-1

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

ADDITIONAL FORM 10-K DISCLOSURE

Item on Form 10-K

  

Party Responsible

Reg AB Item 1117: Legal Proceedings

 

Any legal proceeding pending against the following entities or their respective
property, that is material to Certificateholders, including any proceeding known
to be contemplated by governmental authorities:

  

•     Issuing Entity (Trust)

  

Delaware Trustee, Master Servicer,

Securities Administrator and Depositor

•     Sponsor (Seller)

   Seller

•     Depositor

   Depositor

•     Trustee

   Trustee

•     Delaware Trustee

   Delaware Trustee

•     Securities Administrator

   Securities Administrator

•     Master Servicer

   Master Servicer

•     Custodian

   Custodian

•     1110(b) Originator

   Depositor

•     Any 1108(a)(2) Servicer (other than the Master Servicer or Securities
Administrator)

   Servicer

•     Any other party contemplated by 1100(d)(1)

   Depositor

Reg AB Item 1119: Affiliations and

Relationships

   Whether (a) the Seller, Depositor or Issuing Entity is an affiliate of the
following parties, and (b) to the extent known and material, any of the
following parties are affiliated with one another:   

Depositor as to (a)

Seller as to (a)

•     Master Servicer

   Master Servicer

•     Securities Administrator

   Securities Administrator

•     Trustee

   Trustee

•     Delaware Trustee

   Delaware Trustee

•     Any other 1108(a)(3) servicer

   Servicer

•     Any 1110 Originator

   Depositor/Seller

•     Any 1112(b) Significant Obligor

   Depositor/Seller

•     Any 1114 Credit Enhancement Provider

   Depositor/Seller

•     Any 1115 Derivate Counterparty Provider

   Depositor/Seller

•     Any other 1101(d)(1) material party

   Depositor/Seller Whether there are any “outside the ordinary course business
arrangements” other than would be obtained in an arm’s length transaction
between (a) the Sponsor (Seller), Depositor or Issuing Entity on the one hand,
and (b) any of the following parties (or their affiliates) on the other hand,
that exist currently or within the past two   

Depositor as to (a)

Seller as to (a)

 

I-2

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

ADDITIONAL FORM 10-K DISCLOSURE

Item on Form 10-K

  

Party Responsible

years and that are material to a Certificateholder’s understanding of the
Certificates:   

•      Master Servicer

   Master Servicer

•      Securities Administrator

   Securities Administrator

•      Trustee

   Trustee

•      Delaware Trustee

   Delaware Trustee

•      Any other 1108(a)(3) servicer

   Servicer

•      Any 1110 Originator

   Depositor/Seller

•      Any 1112(b) Significant Obligor

   Not Applicable

•      Any 1114 Credit Enhancement Provider

   Not Applicable

•      Any 1115 Derivate Counterparty Provider

   Not Applicable

•      Any other 1101(d)(1) material party

   Depositor/Seller Whether there are any specific relationships involving the
transaction or the pool assets between (a) the Sponsor (Seller), Depositor or
Issuing Entity on the one hand, and (b) any of the following parties (or their
affiliates) on the other hand, that exist currently or within the past two years
and that are material:   

Depositor as to (a)

Seller as to (a)

•      Master Servicer

   Master Servicer

•      Securities Administrator

   Securities Administrator

•      Trustee

   Trustee

•      Delaware Trustee

   Delaware Trustee

•      Any other 1108(a)(3) servicer

   Servicer

•      Any 1110 Originator

   Depositor/Seller

•      Any 1112(b) Significant Obligor

   Not Applicable

•      Any 1114 Credit Enhancement Provider

   Not Applicable

•      Any 1115 Derivate Counterparty Provider

   Not Applicable

•      Any other 1101(d)(1) material party

   Depositor/ Seller

 

I-3

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

EXHIBIT J

FORM 8-K DISCLOSURE

 

FORM 8-K DISCLOSURE INFORMATION

Item on Form 8-K

  

Party Responsible

Item 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

   Depositor

Item 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.

   Depositor

Item 1.03- Bankruptcy or Receivership

 

Disclosure is required regarding the bankruptcy or receivership, with respect to
any of the following:

   Depositor

•     Sponsor (Seller)

   Depositor/Seller

•     Depositor

   Depositor

•     Master Servicer

   Master Servicer

•     Affiliated Servicer

   Servicer

•     Other Servicer servicing 20% or more of the pool assets at the time of the
report

   Servicer

•     Other material servicers

   Servicer

•     Trustee

   Trustee

•     Delaware Trustee

   Delaware Trustee

 

J-1

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

FORM 8-K DISCLOSURE INFORMATION

Item on Form 8-K

  

Party Responsible

•     Securities Administrator

   Securities Administrator

•     Significant Obligor

   Not Applicable

•     Credit Enhancer (10% or more)

   Not Applicable

•     Derivative Counterparty

   Not Applicable

•     Custodian

   Custodian

Item 2.04- Triggering Events that

Accelerate or Increase a Direct Financial

Obligation or an Obligation under an

Off-Balance Sheet Arrangement

 

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 monthly statements to the certificateholders.

  

Depositor

Master Servicer

Securities Administrator

Item 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.

  

Securities Administrator

Depositor

Item 5.03- Amendments of Articles of

Incorporation or Bylaws; Change of Fiscal

Year

 

Disclosure is required of any amendment “to the governing documents of the
issuing entity”.

   Depositor

Item 6.01- ABS Informational and

Computational Material

   Depositor

Item 6.02- Change of Servicer or

Securities Administrator

 

Requires disclosure of any removal, replacement, substitution or addition of any
master servicer, affiliated servicer, other servicer servicing 10% or more of
pool assets at time of report, other material servicers or trustee.

  

Master Servicer/Securities Administrator/Depositor/

Servicer/Trustee

Reg AB disclosure about any new servicer or master servicer is also required.   
Servicer/Master Servicer/Depositor Reg AB disclosure about any new Trustee is
also required.   

Trustee (to the extent

required by successor trustee)

 

J-2

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

FORM 8-K DISCLOSURE INFORMATION

Item on Form 8-K

  

Party Responsible

Item 6.03- Change in Credit Enhancement

or 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.

   Not Applicable Reg AB disclosure about any new enhancement provider is also
required.    Not Applicable Item 6.04- Failure to Make a Required Distribution
   Securities Administrator

Item 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
Item 7.01- Reg FD Disclosure    Depositor

Item 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 certificateholders.

   Depositor Item 9.01- Financial Statements and Exhibits    Depositor

 

J-3

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

EXHIBIT K

FORM OF ADDITIONAL DISCLOSURE NOTIFICATION

Wells Fargo Bank, N.A. as Securities Administrator

Old Annapolis Road

Columbia, Maryland 21045

Fax: (410) 715-2380

E-mail: cts.sec.notifications@wellsfargo.com

Attn: Corporate Trust Services – HOMEBANC MORTGAGE TRUST 2006-2-SEC REPORT
PROCESSING

 

RE: **Additional Form [ ] Disclosure**Required

Ladies and Gentlemen:

In accordance with Section 3.19(a)(ii) of the Pooling and Servicing Agreement
dated as of March 1, 2006 among HMB Acceptance Corp., as Depositor, HomeBanc
Mortgage Corporation, as Seller and Servicer, Wells Fargo Bank, N.A., as Master
Servicer and Securities Administrator, Wilmington Trust Company, as Delaware
Trustee and U.S. Bank National Association, as Trustee, the undersigned, as
[    ], hereby notifies you that certain events have come to our attention that
[will][may] need to be disclosed on Form [    ].

Description of Additional Form [    ] Disclosure:

List of Any Attachments hereto to be included in the Additional Form [    ]
Disclosure:

Any inquiries related to this notification should be directed to [    ], phone
number: [    ]; email address: [    ].

 

[NAME OF PARTY] as [role] By:  

 

Name:   Title:  

 

K-1

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

EXHIBIT L

SERVICING FEE SCHEDULE

[To be retained in a separate file entitled “HomeBanc Mortgage Trust 2006-1
Servicing Fee

Schedule” at the offices of the Servicer and the Master Servicer]

 

L-1

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

EXHIBIT M

FORM OF CERTIFICATE OF TRUST

This Certificate of Trust of HomeBanc Mortgage Trust 2006-1 (the “Trust”) is
being duly executed and filed on behalf of the Trust by the undersigned, as
trustees, to form a statutory trust under the Delaware Statutory Trust Act (12
Del. C. § 3801 et seq.) (the “Act”).

1. Name. The name of the statutory trust formed by this Certificate of Trust is
HomeBanc Mortgage Trust 2006-1.

2. Delaware Trustee. The name and business address of the trustee of the Trust
in the State of Delaware are Wilmington Trust Company, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attn: Corporate Trust Administration

3. Effective Date. This Certificate of Trust shall be effective upon filing.

IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of Trust
in accordance with Section 3811(a)(1) of the Act.

 

WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Delaware
trustee By:  

 

Name:   Title:  

U.S. BANK NATIONAL ASSOCIATION, not in

its individual capacity but solely as trustee

By:  

 

Name:   Title:  

 

M-1

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SCHEDULE A

MORTGAGE LOAN SCHEDULE

[To be retained in a separate closing binder entitled “HomeBanc Mortgage Trust
2006-1”

At McKee Nelson LLP]

 

SCH-A-1