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LASALLE BANK NATIONAL ASSOCIATION
as Trustee for the
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB5

 
and

 
LITTON LOAN SERVICING LP,

 
as Servicer

 
and

 
THE BANK OF NEW YORK,

 
as Custodian

 
CUSTODIAL AGREEMENT

dated as of May 1, 2007

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TABLE OF CONTENTS

   
Page
     
Section 1. Definitions
 
1
Section 2. Delivery of Custodial Files
 
4
Section 3. Custodian as Bailee
 
5
Section 4. Acknowledgement of Receipt; Trust Receipts
 
6
Section 5. Obligations of the Custodian
 
6
Section 6. Initial and Final Certifications
 
6
Section 7. Representations and Warranties of the Custodian
 
7
Section 8. Future Defects
 
8
Section 9. Release for Servicing
 
8
Section 10. RESERVED
 
8
Section 11. Release for Payment
 
8
Section 12. Fees of Custodian
 
9
Section 13. Removal of Custodian
 
9
Section 14. Transfer of Custodial Files Upon Termination
 
9
Section 15. Examination of Custodial Files
 
9
Section 16. Insurance of Custodian
 
10
Section 17. Counterparts
 
10
Section 18. Periodic Statements
 
10
Section 19. GOVERNING LAW
 
10
Section 20. Copies of Mortgage Documents
 
10
Section 21. No Adverse Interest of Custodian
 
10
Section 22. Termination by Custodian
 
11
Section 23. Term of Agreement
 
11
Section 24. Notices
 
11
Section 25. Successors and Assigns
 
11
Section 26. Concerning the Custodian
 
11
Section 27. Reliance of Custodian
 
12
Section 28. Transmission of Custodial Files
 
12
Section 29. Authorized Representatives
 
13

 
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Section 30. Reproduction of Documents
 
13
Section 31. Limitations on the Responsibilities of the Custodian
 
13
Section 32. WAIVER OF JURY TRIAL
 
15
Section 33. Regulation AB
 
15
Section 34. Third-Party Beneficiary
 
17

EXHIBITS
 
EXHIBIT 1
FORM OF ACKNOWLEDGEMENT OF RECEIPT
EXHIBIT 2A
FORM OF TRUST RECEIPT AND INITIAL CERTIFICATION
EXHIBIT 2B
FORM OF TRUST RECEIPT AND FINAL CERTIFICATION
EXHIBIT 3
FORM OF REQUEST FOR RELEASE OF DOCUMENTS AND RECEIPT
EXHIBIT 4
AUTHORIZED REPRESENTATIVES OF SERVICER
EXHIBIT 5
AUTHORIZED REPRESENTATIVES OF TRUSTEE
EXHIBIT 6
MORTGAGE LOAN SCHEDULE
EXHIBIT 7
FORM OF ANNUAL CERTIFICATION

 
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THIS CUSTODIAL AGREEMENT (the “Custodial Agreement”), dated as of May 1, 2007,
by and among LaSalle Bank National Association, a national banking association
having an address at 135 South LaSalle Street, Suite 1511, Chicago, Illinois
60603, Attention: Global Securities and Trust Services—C-BASS 2007-CB5, not
individually, but solely as trustee for C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2007-CB5 (the “Trustee”), Litton Loan Servicing LP, a
Delaware limited partnership having an address at 4828 Loop Central Drive,
Houston, Texas 77081, as servicer (the “Servicer”), and The Bank of New York, a
New York banking corporation having an address at 101 Barclay Street, 4W, New
York, New York 10286, as custodian (the “Custodian”).
 
WITNESSETH:
 
WHEREAS, Asset Backed Funding Corporation (the “Depositor”) has agreed to
purchase certain one-to-four family, adjustable-rate and fixed-rate mortgage
loans secured by first and second liens on residential real properties
(together, the “Mortgage Loans”) from Credit-Based Asset Servicing and
Securitization LLC (the “Seller”), pursuant to the terms and conditions of a
Mortgage Loan Purchase Agreement, dated as of May 1, 2007 between the Depositor
and the Seller (the “Purchase Agreement”); and
 
WHEREAS, the Servicer is to service the Mortgage Loans pursuant to the terms and
conditions of a Pooling and Servicing Agreement, of even date herewith among the
Depositor, the Seller, the Servicer and the Trustee (the “Pooling and Servicing
Agreement”), and the Trustee will retain record title to the Mortgage Loans; and
 
WHEREAS, the Custodian is a New York banking corporation and is otherwise
authorized to act as Custodian pursuant to this Custodial Agreement; and
 
NOW THEREFORE, in consideration of the mutual undertakings herein expressed, the
parties hereto hereby agree as follows:
 
Section 1.   Definitions. 
 
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Pooling and Servicing Agreement.
 
Acknowledgment of Receipt: A trust receipt and acknowledgment as to each
Mortgage Loan, which Acknowledgment of Receipt is delivered to the Trustee by
the Custodian in the form annexed hereto as Exhibit 1.
 
Agreement: This Custodial Agreement and all amendments, attachments and
supplements hereto.
 
Assignment of Mortgage: An assignment of the Mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect, when
recorded, the sale of the Mortgage to the Trust, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering the Mortgage Loans secured by Mortgaged Properties located
in the same jurisdiction, if permitted by law and acceptable for recording in
the applicable recording office.
 
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Business Day: Any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York, the State of Illinois and the State of
Texas are authorized or obligated by law or executive order to be closed.
 
Closing Date: May 31, 2007.
 
Commission. The United States Securities and Exchange Commission.
 
Custodial File: As to each Mortgage Loan, any mortgage loan documents which are
delivered to the Custodian or which at any time come into the possession of the
Custodian as set forth in Section 2 of this Custodial Agreement.
 
Custodian: The Bank of New York, or its successor in interest or assigns, or any
successor to the Custodian under this Custodial Agreement as herein provided.
 
Cut-off Date: May 1, 2007.
 
Delivery Date: The date which occurs five (5) Business Days prior to the Closing
Date or such other date as mutually agreed upon by the Trustee, the Custodian
and the Servicer.
 
Eligible Substitute Mortgage Loans: As defined in the Pooling and Servicing
Agreement.
 
Fannie Mae: Formerly known as the Federal National Mortgage Association, or any
successor organization.
 
Freddie Mac: The Federal Home Loan Mortgage Corporation, or any successor
organization.
 
Mortgage: The mortgage, deed of trust or other instrument securing a Mortgage
Note, which creates a first or second lien on Mortgaged Property securing the
Mortgage Note.
 
Mortgage Interest Rate: With respect to each Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan from time to time in accordance
with the provisions of the related Mortgage Note, which rate, as of the Cut-off
Date, shall be the rate set forth in the related Mortgage Loan Schedule as the
Mortgage Interest Rate.
 
Mortgage Loan: Each mortgage loan sold, assigned or transferred pursuant to this
Custodial Agreement and identified on the Mortgage Loan Schedule attached hereto
as Exhibit 6.
 
Mortgage Loan Schedule: The schedule of Mortgage Loans identified in the Pooling
and Servicing Agreement to be delivered to the Custodian on the Delivery Date
and to be annexed hereto as Exhibit 6.
 
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Mortgage Note: The note or other evidence of the indebtedness of a Mortgagor
secured by a Mortgage.
 
Mortgaged Property: With respect to each Mortgage Loan, the Mortgagor’s real
property securing repayment of the debt evidenced by a Mortgage Note, consisting
of a fee simple interest in a single or contiguous parcel of real property.
 
Mortgagor: The obligor on a Mortgage Note, the owner of the Mortgaged Property
and the grantor or mortgagor named in the related Mortgage and such grantor’s or
mortgagor’s successors in title to the Mortgaged Property.
 
Officer’s Certificate: A certificate signed by the Chairman of the Board or Vice
Chairman of the Board, or the President, Senior Vice President, Vice President,
Assistant Vice President, Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary of the Person delivering such certificate.
 
Person: Any individual, corporation, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, limited liability
company, limited partnership, government or any agency or political subdivision
thereof.
 
Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17
C.F.R. §§229.1100-229.1123, as such may be amended from time to time, and
subject to such clarification and interpretation as have been provided by the
Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed. Reg. 1,506 (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.
 
Servicer: Litton Loan Servicing LP, or its successor in interest or assigns, or
any successor to the Servicer under the Pooling and Servicing Agreement as
therein provided.
 
Servicing Criteria: The “servicing criteria” set forth in Items 1122(d)(1)(ii),
1122(d)(4)(i) and 1122(d)(4)(ii) of Regulation AB, as such may be amended from
time to time.
 
Subcontractor: Any vendor, subcontractor or other Person that is not responsible
for the overall servicing (as “servicing” is commonly understood by participants
in the mortgage-backed securities market) 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 Custodian or a
Subservicer.
 
Subcustodian: The Bank of New York Trust Company, N.A. having an address at 5730
Katella Avenue, Cypress, California 90630.
 
Subservicer: Any Person that services Mortgage Loans on behalf of the Custodian
or any Subservicer and is responsible for the performance (whether directly or
through Subservicers or Subcontractors) of a substantial portion of the material
servicing functions required to be performed by the Custodian under this
Agreement or any Reconstitution Agreement that are identified in Item 1122(d) of
Regulation AB.
 
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Trust Receipt: Either an Acknowledgment of Receipt, Trust Receipt and Initial
Certification or a Trust Receipt and Final Certification.
 
Trust Receipt and Final Certification: A trust receipt and final certification
as to each Mortgage Loan, which Trust Receipt and Final Certification is
delivered to the Trustee by the Custodian in the form annexed hereto as Exhibit
2B.
 
Trust Receipt and Initial Certification: A trust receipt and initial
certification as to each Mortgage Loan, which Trust Receipt and Initial
Certification is delivered to the Trustee by the Custodian in the form annexed
hereto as Exhibit 2A.
 
Trustee: LaSalle Bank National Association, as Trustee for the C-BASS Mortgage
Loan Asset-Backed Certificates, Series 2007-CB5, or its successor in interest or
assigns.
 
Section 2.   Delivery of Custodial Files.
 
(a)  The Servicer will deliver and release to the Custodian or the Subcustodian
on the Delivery Date the following original documents pertaining to each of the
Mortgage Loans identified in the Mortgage Loan Schedule:
 
(i)  the original Mortgage Note including any riders thereto, endorsed either
(A) in blank or (B) in the following form: “Pay to the order of LaSalle Bank
National Association as Trustee for the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2007-CB5, without recourse”, or with respect to any lost
Mortgage Note, an original lost note affidavit stating that the original
mortgage note was lost, misplaced or destroyed, together with a copy of the
related Mortgage Note; 
 
(ii)  the original Mortgage including any riders thereto with evidence of
recording thereon, and the original recorded power of attorney, if the Mortgage
was executed pursuant to a power of attorney, with evidence of recording thereon
or, if such Mortgage or power of attorney has been submitted for recording but
has not been returned from the applicable public recording office, has been lost
or is not otherwise available, a copy of such Mortgage or power of attorney, as
the case may be, certified to be a true and complete copy of the original
submitted for recording;
 
(iii)  an original Assignment of Mortgage, in form and substance acceptable for
recording. The Mortgage shall be assigned either (A) in blank or (B) to “LaSalle
Bank National Association, as Trustee for the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2007-CB5, without recourse”;
 
(iv)  an original or a certified copy of any intervening assignment of Mortgage
showing a complete chain of assignments;
 
(v)  the original or a certified copy of the lender’s title insurance policy;
and
 
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(vi)  the original or copies of each assumption, modification, written assurance
or substitution agreement, if any.
 
(b)  In the event that any Mortgage Note is endorsed in blank as of the Closing
Date, promptly following the Closing Date, the Custodian or the Servicer shall
complete such endorsements in the following form: “Pay to the order of LaSalle
Bank National Association, as Trustee for the C-BASS Mortgage Loan Asset-Backed
Certificates, Series 2007-CB5, without recourse.”
 
(c)  From time to time, the Servicer shall forward to the Custodian additional
original documents, additional documents evidencing an assumption, modification,
consolidation or extension of a Mortgage Loan approved by the Servicer, in
accordance with the terms of the Pooling and Servicing Agreement. All such
mortgage documents held by the Custodian or the Subcustodian as to each Mortgage
Loan shall constitute the “Custodial File”.
 
(d)  The Servicer shall promptly but in no event later than thirty (30) days
after the Closing Date, submit for recording, in the appropriate public office
for real property records, each assignment referred to in Section 2(a)(iii) and
2(a)(iv) above. In the event that any such assignment is lost or returned
unrecorded because of a defect therein, the Servicer shall promptly prepare a
substitute assignment to cure such defect and thereafter cause each such
assignment to be duly executed and recorded. The Custodian shall maintain a copy
of each such assignment in the Custodial File.
 
(e)  At least twenty-four (24) hours prior to delivery of the Mortgage Loans,
the Servicer will provide or cause to be provided to the Custodian, via
electronic transmission, a list of all the Mortgage Loans and their related data
fields including loan ID, Mortgagor name, mortgaged property address, mortgage
rate, maturity date, and original principal balance of each such Mortgage Loan.
This data shall be delivered to the Custodian in an acceptable format that can
be easily uploaded to the Custodian’s system. A hard copy of the Mortgage Loan
Schedule will be delivered to the Custodian at the time of delivery to the
Custodian of such documents related to the Mortgage Loans identified in such
Mortgage Loan Schedule. 
 
(f)  Not later than ten (10) Business Days after the receipt by the Custodian
thereof, the Custodian shall review the related Mortgage File for each Eligible
Substitute Mortgage Loan and all documents related thereto, as specified in
Sections 2.01 and 2.02 of the Pooling and Servicing Agreement, and shall deliver
to the Servicer and the Trustee a certification, substantially in the form of
Exhibit F-2 to the Pooling and Servicing Agreement, with respect to such
Eligible Substitute Mortgage Loan, with any applicable exceptions noted thereon.
Within one (1) year of the date of substitution, the Custodian shall deliver to
the Servicer and the Trustee a certification, in the form of Exhibit F-2 to the
Pooling and Servicing Agreement, with respect to each Eligible Substitute
Mortgage Loan, with any applicable exceptions noted thereon.
 
Section 3.   Custodian as Bailee.
 
The Custodian hereby acknowledges that it is, and agrees to act as agent and
bailee for the Trustee and is holding each Custodial File delivered to it on
behalf of the Trustee.
 
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Section 4.   Acknowledgement of Receipt; Trust Receipts.
 
(a)  No later than 11:00 a.m. New York Time on the Closing Date, the Custodian
shall deliver to the Trustee an Acknowledgment of Receipt certifying, subject to
any exceptions noted thereon, as to each Mortgage Loan on the Mortgage Loan
Schedule, (i) receipt of the original Mortgage Note (with any exceptions noted)
and (ii) the Mortgage Note has been reviewed by the Custodian and appears
regular on its face and relates to such Mortgage Loan.
 
(b)  Upon the written directions of the Trustee, and upon the prior tender by
the Trustee of an applicable trust receipt or trust receipts (including any
related Trust Receipt and Final Certification that has been issued), the
Custodian shall deliver all or any portion of the related Custodial Files held
by it pursuant to such Trust Receipt to the Trustee, or to such other party
designated by the Trustee in such written direction, and to the place indicated
in any such written direction from the Trustee. If such delivery is for less
than all of the Custodial Files held by the Custodian with respect to such Trust
Receipt (and a Trust Receipt and Final Certification has been issued), the
Custodian shall deliver to the Trustee a new Trust Receipt and Final
Certification with respect to the related Custodial Files retained by the
Custodian. Each Trust Receipt (including any Trust Receipt and Final
Certification) surrendered shall be canceled by the Custodian.
 
Section 5.   Obligations of the Custodian.
 
With respect to the Mortgage Note, the Mortgage and the Assignment of Mortgage
and other documents constituting each Custodial File which are delivered to the
Custodian or which come into the possession of the Custodian, the Custodian is
the custodian for the Trustee exclusively. The Custodian shall hold all mortgage
documents received by it constituting the Custodial File for the exclusive use
and benefit of the Trustee, and shall make disposition thereof only in
accordance with this Custodial Agreement and the instructions furnished by the
Trustee. The Custodian shall segregate and maintain continuous custody of all
mortgage documents constituting the Custodial File in secure and fire-resistant
facilities in accordance with customary standards for such custody. The
Custodian shall not be responsible to verify (i) the validity, legality,
enforceability, sufficiency, due authorization or genuineness of any document in
the Custodial File or of any Mortgage Loans or (ii) the collectability,
insurability, effectiveness including the authority or capacity of any Person to
execute or issue any document in the Custodial File, or suitability of any
Mortgage Loan unless specified otherwise in this Custodial Agreement. The
Custodian shall promptly report to the Trustee any failure on its part to hold
the Custodial Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy such failure.
 
Section 6.   Initial and Final Certifications.
 
(a)  Within sixty (60) days after the Closing Date, the Custodian shall
ascertain that all documents specified in Sections 2(a)(i)-(vi) of this
Custodial Agreement are in its possession, and shall deliver to the Trustee a
Trust Receipt and Initial Certification certifying, subject to any exceptions
noted thereon that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification): (i) all documents required to be delivered to it pursuant to
Sections 2(a)(i)-(vi) of this Custodial Agreement are in its possession; (ii)
such documents have been reviewed by it; and have not been mutilated, damaged or
torn and relate to such Mortgage Loan and (iii) based on its examination and
only as to the foregoing, the information set forth in the Mortgage Loan
Schedule relating to the Mortgage Loan identifying number, the city, state, and
zip code of the Mortgaged Property, the type of Residential Dwelling
constituting the Mortgaged Property or a designation that the Mortgaged Property
is a multi-family property, the original months to maturity, the Mortgage
Interest Rate of the Mortgage Loan as of the Cut-off Date, and whether the
Mortgage Loan has a prepayment penalty accurately reflects information set forth
in the Mortgage File; (iv) all Assignments of Mortgage or intervening
assignments of mortgage, as applicable, have been submitted for recording; and
(v) each Mortgage Note has been endorsed as provided in Section 2(a)(i) of this
Custodial Agreement and each Mortgage has been assigned in accordance with
Section 2(a)(iii) of this Custodial Agreement.
 
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(b)  Prior to the first anniversary date of this Custodial Agreement the
Custodian shall deliver to the Depositor, the Trustee and the Servicer a Trust
Receipt and Final Certification in the form annexed hereto as Exhibit 2B
evidencing the completeness of the Mortgage Files, with any applicable
exceptions noted thereon.
 
Section 7.   Representations and Warranties of the Custodian. 
 
The Custodian hereby represents and warrants to, and covenants that, as of the
date hereof:
 
(a)  Each of the Custodian and the Subcustodian is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and satisfies the requirements for acting as a Fannie Mae/Freddie
Mac custodian, and has full corporate power and authority to own its properties
and conduct its business as currently conducted.
 
(b)  The Custodian has all requisite corporate power and authority to enter into
and perform its obligations under this Custodial Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the Custodian of
this Custodial Agreement and the consummation by the Custodian of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Custodian. This Custodial
Agreement has been duly and validly executed and delivered by the Custodian and
constitutes a legal, valid and binding obligation of the Custodian, enforceable
against the Custodian, in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and similar laws of general applicability
relating to or affecting creditors rights and to general principles of equity.
 
(c)  Neither the execution and delivery by the Custodian of this Custodial
Agreement, nor the consummation by the Custodian of any of the transactions
contemplated hereby, nor the fulfillment by the Custodian of the terms hereof,
will conflict with, or violate, result in a material breach of or constitute a
material default (with or without notice or lapse of time, or both) under (i)
any term or provision of the Certificate of Incorporation or By-laws of the
Custodian or (ii) any term or provision of any indenture or other material
agreement or instrument, to which the Custodian is a party or by which the
Custodian is bound. The execution, delivery and performance of this Custodial
Agreement by the Custodian or the consummation by the Custodian of the
transactions contemplated hereby will not require the authorization, consent or
approval of any governmental authority or agency having jurisdiction over and
regulating the activities of the Custodian.
 
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(d)  The Custodian shall perform its obligations under this Custodial Agreement
in accordance with the standards incorporated by Fannie Mae or Freddie Mac; the
Custodian shall at all times maintain accurate and complete records in
connection with the performance of its obligations under this Custodial
Agreement.
 
(e)  The Custodian does not use any Subservicers or Subcontractors.
 
Section 8.   Future Defects.
 
During the term of this Custodial Agreement, if the Custodian discovers any
defect with respect to the Custodial File, the Custodian shall give written
specification of such defect to the Servicer and the Trustee.
 
Section 9.   Release for Servicing.
 
From time to time and as appropriate for the foreclosure or servicing of any of
the Mortgage Loans, the Custodian is hereby authorized, upon written receipt
from the Servicer of a request for release of documents and receipt in the form
annexed hereto as Exhibit 3, to release to the Servicer the related Custodial
File or the documents set forth in such request and receipt to the Servicer. All
documents so released to the Servicer shall be held by the Servicer in trust for
the benefit of the Trustee in accordance with the terms of the Pooling and
Servicing Agreement. The Servicer shall return to the Custodian the Custodial
File or other such documents when the Servicer’s need therefor in connection
with such foreclosure or servicing no longer exists, unless the Mortgage Loan
shall be liquidated in which case, upon receipt of an additional request for
release of documents and receipt certifying such liquidation from the Servicer
to the Custodian in the form annexed hereto as Exhibit 3, the Servicer’s request
and receipt submitted pursuant to the first sentence of this Section 9 shall be
released by the Custodian to the Servicer. The Servicer shall indemnify the
Trust Fund and the Trustee and each of their officers, directors and agents for
any and all liabilities, obligations, losses, compensatory damages, payments,
costs or expenses of any kind whatsoever that may be imposed on, incurred by or
asserted against the Trust Fund or the Trustee as a result of the release of any
Mortgage Loans or Custodial Files to the Servicer or the retention of the
Mortgage Loans and Custodial Files by the Servicer or any of its Affiliates;
provided, however, the Servicer shall not be liable to any of the foregoing
Persons for any amount and any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of such Person. The provisions of
this Section 9 shall survive the termination of this Custodial Agreement and the
termination or resignation of the Trustee.
 
Section 10.   RESERVED.
 
Section 11.   Release for Payment.
 
Upon receipt by the Custodian of the Servicer’s request for release of documents
and receipt in the form annexed hereto as Exhibit 3 (which certification shall
include a statement to the effect that all amounts received in connection with
such payment or repurchase have been credited to the Custodial Account as
provided in the Pooling and Servicing Agreement), the Custodian shall promptly
release the related Custodial File to the Servicer.
 
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Section 12.   Fees of Custodian.
 
The Custodian shall charge such fees for its services under this Custodial
Agreement as are set forth in a separate agreement between the Custodian and the
Servicer, the payment of which fees, together with the Custodian’s expenses in
connection herewith, shall be solely the obligation of the Servicer.
 
Section 13.   Removal of Custodian.
 
The Trustee, with or without cause (at the direction of the Servicer), may upon
at least sixty (60) days’ notice remove and discharge the Custodian from the
performance of its duties under this Custodial Agreement by written notice from
the Trustee to the Custodian, with a copy to the Servicer. Having given notice
of such removal, the Servicer, with the consent of the Trustee, promptly shall
appoint a successor Custodian (which may be the Trustee or an affiliate of the
Trustee) to act on behalf of the Trustee by written instrument, one original
counterpart of which instrument shall be delivered to the Trustee, with a copy
to the Servicer and an original to the successor Custodian. In the event of any
such removal, the Custodian shall promptly transfer to the successor Custodian,
as directed, all Custodial Files being administered under this Custodial
Agreement. In the event of any such appointments the Servicer shall be
responsible for the fees and expenses of the existing and successor Custodian.
If the Trustee (at the direction of the Servicer) removes the Custodian without
cause, the Servicer shall be responsible for payment of all expenses incurred in
the transmission of the Custodial Files to the successor Custodian and for all
applicable release fees of the Custodian. If the Servicer removes the Custodian,
the Servicer shall be responsible for payment of all expenses incurred in the
transmission of the Custodial Files to the successor Custodian and for all
applicable release fees of the Custodian.
 
Section 14.   Transfer of Custodial Files Upon Termination.
 
Upon written request of the Trustee, the Custodian shall release to such Persons
as the Trustee shall designate the Custodial Files relating to such Mortgage
Loans as the Trustee shall request.
 
Section 15.   Examination of Custodial Files.
 
Upon reasonable prior notice to the Custodian but not less than two (2) Business
Days notice, the Trustee and its agents, accountants, attorneys, auditors and
designees will be permitted during normal business hours to examine the
Custodial Files, documents, records and other papers in the possession of or
under the control of the Custodian relating to any or all of the Mortgage Loans.
The Custodial Files shall be maintained at the Subcustodian’s facility located
at The Bank of New York Trust Company, N.A., 5730 Katella Avenue, Cypress,
California  90630 or at such other location as the Custodian may designate in
writing to the Trustee and the Servicer.
 
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Section 16.   Insurance of Custodian.
 
At its own expense, the Custodian shall maintain at all times during the
existence of this Custodial Agreement and keep in full force and effect such
insurance in amounts, with standard coverage and subject to deductibles, all as
is customary for insurance typically maintained by banks which act as custodian.
The minimum coverage under any such bond and insurance policies shall be at
least equal to the corresponding amounts required by Fannie Mae in the Fannie
Mae Servicing Guide or by Freddie Mac in the Freddie Mac Seller/Servicer Guide.
Upon request, the Trustee shall be entitled to receive evidence satisfactory to
the Trustee that such insurance is in full force and effect.
 
Section 17.   Counterparts.
 
For the purpose of facilitating the execution of this Custodial Agreement as
herein provided and for other purposes, this Custodial Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute and be one
and the same instrument.
 
Section 18.   Periodic Statements.
 
Within ten (10) days of each anniversary of the date of this Custodial
Agreement, or upon the request of the Trustee at any other time, the Custodian
shall provide to the Trustee a list of all the Mortgage Loans for which the
Custodian holds a Custodial File pursuant to this Custodial Agreement. Such list
may be in the form of a copy of the Mortgage Loan Schedule with manual deletions
to specifically denote any Mortgage Loans paid off, repurchased or sold since
the date of this Custodial Agreement.
 
Section 19.   GOVERNING LAW.
 
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
 
Section 20.   Copies of Mortgage Documents.
 
Upon the request of the Trustee and at the cost and expense of the Trust, the
Custodian shall provide the Trustee with copies of the Mortgage Notes,
Mortgages, Assignments of Mortgage and other documents relating to one or more
of the Mortgage Loans.
 
Section 21.   No Adverse Interest of Custodian.
 
By execution of this Custodial Agreement, the Custodian represents and warrants
that it currently holds, and during the existence of this Custodial Agreement
shall hold, no interest adverse to the Trustee, by way of security or otherwise,
in any Mortgage Loan, and hereby waives and releases any such interest which it
may have in any Mortgage Loan as of the date hereof.
 
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Section 22.   Termination by Custodian.
 
The Custodian may terminate its obligations under this Custodial Agreement upon
at least sixty (60) days’ prior written notice to the Servicer and the Trustee.
In the event of such termination, the Servicer shall appoint a successor
Custodian. The payment of such successor Custodian’s fees and expenses shall be
solely the responsibility of the Servicer. Upon such appointment, the Custodian
shall promptly transfer to the successor Custodian, as directed, all Custodial
Files being administered under this Custodial Agreement.
 
Section 23.   Term of Agreement.
 
Unless terminated pursuant to Section 13 or Section 22 hereof, this Custodial
Agreement shall terminate upon the final payment or other liquidation (or
advance with respect thereto) of the last Mortgage Loan or the disposition of
all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, and the final remittance of all funds due under the Pooling and
Servicing Agreement. In such event all documents remaining in the Custodial
Files shall be released in accordance with the written instructions of the
Trustee.
 
Section 24.   Notices.
 
All demands, notices and communications hereunder shall be in writing and shall
be deemed to have been duly given when received by the recipient party at the
addresses shown on the first page hereof, and in the case of the Trustee, to
LaSalle Bank National Association, 135 South LaSalle Street, Suite 1511,
Chicago, Illinois 60603, Attention: Global Securities and Trust Services -C-BASS
2007-CB5, in the case of the Servicer, to Litton Loan Servicing LP, 4828 Loop
Central Drive, Houston, Texas 77081, Attention: Janice McClure and in the case
of the Custodian, The Bank of New York, 101 Barclay Street, 4W, New York, New
York 10286, Attention: Paul Catania, or at such other addresses as may hereafter
be furnished to the other parties by like notice. Any such demand, notice or
communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee (as evidenced, in the
case of registered or certified mail, by the date noted on the return receipt).
 
Section 25.   Successors and Assigns.
 
This Custodial Agreement shall inure to the benefit of the successors and
assigns of the parties hereto. Any person into which the Custodian may be merged
or converted or with which the Custodian may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Custodian
shall be a party, or any Person succeeding to the business of the Custodian,
shall be the successor of the Custodian hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything to the contrary herein notwithstanding. Any assignee shall forward a
list of authorized representatives to each party to this Custodial Agreement
pursuant to Section 29 of this Custodial Agreement.
 
Section 26.   Concerning the Custodian.
 
Neither the Custodian nor any of its directors, affiliates, officers, agents, or
employees, shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith in good faith and believed by it or
them to be within the purview of this Custodial Agreement, except for its or
their own gross negligence, bad faith or willful misconduct. In no event shall
the Custodian or its directors, affiliates, officers, agents, or employees be
held liable for any special, indirect or consequential damages resulting from
any action taken or omitted to be taken by it or them hereunder or in connection
herewith, even if advised of the possibility of such damages.
 
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The Servicer agrees to indemnify, from the Servicer’s own funds, and hold the
Custodian and its directors, affiliates, officers, agents, and employees
harmless against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, or disbursements of any
kind or nature whatsoever, including reasonable attorneys’ fees, that may be
imposed on, incurred by or asserted against it or them in any way relating to or
arising out of liabilities, obligations, judgments, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements other than those
which were imposed on, incurred by or asserted against the Custodian, because of
the breach by the Custodian of its obligations hereunder, which breach was
caused by negligence, bad faith, or willful misconduct on the part of the
Custodian or any of its directors, affiliates, officers, agents, or employees.
The indemnification set forth in this section shall survive any termination of
this Custodial Agreement and the termination and removal of the Custodian.
 
Notwithstanding anything to the contrary herein or in the Pooling and Servicing
Agreement, it is hereby understood that the Trustee shall not be liable for the
acts, omissions, duties, obligations or liabilities of the Custodian.
 
Section 27.   Reliance of Custodian.
 
In the absence of negligence or bad faith on the part of the Custodian, the
Custodian may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any data communications,
magnetic tape, request, instructions, certificate, opinion or other document
furnished to the Custodian, reasonably believed by the Custodian to be genuine
and to have been signed or presented by the proper party or parties and
conforming to the requirements of this Custodial Agreement; but in the case of
any loan document or other request, instruction, document or certificate which
by any provision hereof is specifically required to be furnished to the
Custodian, the Custodian shall be under a duty to examine the same in accordance
with the requirements of this Custodial Agreement.
 
Section 28.   Transmission of Custodial Files.
 
Written instructions as to the method of shipment and shipper(s) the Custodian
is directed to utilize in connection with transmission of mortgage files and
loan documents in the performance of the Custodian’s duties hereunder shall be
delivered by the Servicer to the Custodian prior to any shipment of any mortgage
files and loan documents hereunder. The Servicer will arrange for the provision
of such services at its sole cost and expense (or, at the Custodian’s option,
reimburse the Custodian for all costs and expenses incurred by the Custodian
consistent with such instructions) and will maintain such insurance against loss
or damage to mortgage files and loan documents as the Servicer deems
appropriate.
 
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Section 29.   Authorized Representatives.
 
Each individual designated as an authorized representative of the Servicer and
the Trustee, respectively (an “Authorized Representative”), is authorized to
give and receive notices, requests and instructions and to deliver certificates
and documents in connection with this Custodial Agreement on behalf of the
Servicer or the Trustee, as the case may be, and the specimen signature for each
such Authorized Representative of the Servicer and each such Authorized
Representative of the Trustee initially authorized hereunder, is set forth on
Exhibits 4 and 5 hereof, respectively. From time to time, the Servicer and the
Trustee may, by delivering to each other and to the Custodian a revised exhibit,
change the information previously given pursuant to this Section 29, but each of
the parties hereto shall be entitled to rely conclusively on the then current
exhibit until receipt of a superseding exhibit.
 
Section 30.   Reproduction of Documents.
 
This Custodial Agreement and all documents relating thereto except with respect
to the Custodial File, including, without limitation, (a) consents, waivers and
modifications which may hereafter be executed, and (b) certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
 
Section 31.   Limitations on the Responsibilities of the Custodian.
 
(a)  The Custodian shall not be liable for any action or omission to act
hereunder except for its own gross negligence, bad faith or willful misconduct.
The obligations of the Custodian shall be determined solely by the express
provisions of this Custodial Agreement. No representation, warranty, covenant,
agreement, obligation or duty of the Custodian shall be implied with respect to
this Custodial Agreement or the Custodian’s services.
 
(b)  The Custodian shall not be responsible for preparing or filing any reports
or returns relating to federal, state or local income taxes with respect to this
Custodial Agreement other than for the Custodian’s compensation or for
reimbursement of expenses hereunder.
 
(c)  The Custodian shall not be responsible or liable for, and makes no
representation or warranty with respect to, the validity, recordation, adequacy
or perfection of any lien upon or security interest in any Custodial File.
 
(d)  Any other provision of this Custodial Agreement to the contrary
notwithstanding, the Custodian shall have no notice of and shall not be bound by
any of the terms and conditions of any other document or agreement executed or
delivered in connection with, or intended to control any part of, the
transactions anticipated by or referred to in this Custodial Agreement unless
the Custodian is a signatory party to that document or agreement.
Notwithstanding the foregoing sentence, the Custodian shall be deemed to have
notice of the terms and conditions (including without limitation definitions not
otherwise set forth in full in this Custodial Agreement) of other documents and
agreements executed or delivered in connection with, or intended to control any
part of, the transactions anticipated by or referred to in this Custodial
Agreement to the extent such terms and provisions are referenced or incorporated
by reference into this Custodial Agreement, only as long as the Custodian shall
have been provided a copy of any such document or agreement.
 
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(e)  The duties and obligations of the Custodian shall only be as much as are
expressly set forth in this Custodial Agreement or as set forth in a written
amendment to this Custodial Agreement executed by the parties hereto or their
successors and assigns. In the event that any provision of this Custodial
Agreement implies or requires that action or forbearance from action be taken by
a party but is silent as to which party has the duty to act or refrain from
acting, the parties hereto agree that the Custodian shall not be the party
required to take the action or refrain from acting. In no event shall the
Custodian have any responsibility to ascertain or take action except as
expressly provided herein.
 
(f)  Nothing in this Custodial Agreement shall be deemed to impose on the
Custodian any duty to qualify to do business in any jurisdiction other than (i)
any jurisdiction where any Custodial File is or may be held by the Custodian
from time to time hereunder, and (ii) any jurisdiction where its ownership of
property or conduct of business requires such qualification and where failure to
qualify could have a material adverse effect on the Custodian or its property or
business or on the ability of the Custodian to perform its duties hereunder.
 
(g)  Custodian may consult with counsel selected by the Custodian and the advice
or the opinion of such counsel shall be full and complete authorization and
protection in respect of any action reasonably taken, omitted or suffered by the
Custodian in good faith and in accordance herewith.
 
(h)  No provision of this Custodial Agreement shall require the Custodian to
expend or risk its own funds or otherwise incur any financial liability in the
performance of its duties hereunder or in the exercise of any of its rights and
powers (other than with respect to any expense incurred by the Custodian in
accordance with its regular duties as custodian hereunder), if, in its sole
judgment, it believes that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it.
 
(i)  The Custodian shall have no duty to ascertain whether or not any amount or
payment required to be received by the Trustee, the Servicer or any third person
has been received by the Trustee, the Servicer or any third person.
 
(j)  The Custodian may perform its duties hereunder by or through agents,
attorneys, subcustodians or independent contractors and shall have no liability
for the acts or omissions of such agents, attorneys, subcustodians or
independent contractors appointed by the Custodian with due care; provided,
however, that such appointment of a subcustodian shall not limit the liability
of the Custodian with respect to its obligations under this Custodial Agreement.
The Trustee and the Servicer hereby consent to the appointment of the
Subcustodian to act as subcustodian hereunder.
 
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Section 32.   WAIVER OF JURY TRIAL.
 
EACH OF THE TRUSTEE, THE SERVICER, AND THE CUSTODIAN WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, BETWEEN
OR AMONG ANY OF THE TRUSTEE, THE SERVICER OR THE CUSTODIAN ARISING OUT OF OR
RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS CUSTODIAL AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. ANY OF THE TRUSTEE, THE SERVICER, OR THE CUSTODIAN MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS CUSTODIAL AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
 
Section 33.   Regulation AB.
 
Subsection 33.01. Report on Assessment of Compliance and Attestation.
 
Not later than March 15 of each calendar year, commencing in 2008, the Custodian
shall:
 
(i) deliver to the Servicer, the Trustee and the Depositor a report regarding
the Custodian’s assessment of compliance with the applicable Servicing Criteria
(as more fully discussed below), during the immediately preceding calendar year,
as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of
Regulation AB. Such report shall be addressed to the Servicer, the Trustee and
the Depositor and signed by an authorized officer of the Custodian, and shall
address each of the applicable Servicing Criteria;
 
(ii) deliver to the Servicer, the Trustee and the Depositor a report of a
registered public accounting firm reasonably acceptable to the Servicer, the
Trustee and the Depositor that attests to, and reports on, the assessment of
compliance made by the Custodian and delivered pursuant to the preceding
paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and
2-02(g) of Regulation S-X under the Securities Act and the Exchange Act; and
 
(iii) not later than February 1 of the calendar year in which such certification
is to be delivered, deliver to the Servicer, the Depositor and any other Person
that will be responsible for signing the certification (a “Sarbanes
Certification”) required by Rules 13a-14(d) and 15d-14(d) under the Exchange Act
(pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) a certification
substantially in the form attached hereto as Exhibit 7 (or as otherwise mutually
agreed upon).
 
The Custodian acknowledges that the parties identified in clause (a)(iii) above
may rely on the certification provided by the Custodian pursuant to such clause
in signing a Sarbanes Certification and filing such with the Commission. Neither
the Servicer nor the Depositor will request delivery of a certification under
clause (a)(iii) above unless a Depositor is required under the Exchange Act to
file an annual report on Form 10-K with respect to an issuing entity whose asset
pool includes the Mortgage Loans.
 
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Subsection 33.02. Additional Information to Be Provided by the Custodian.
 
For so long as the Certificates are outstanding, for the purpose of satisfying
the Depositor’s reporting obligation under the Exchange Act with respect to any
class of Certificates, the Custodian shall (a) notify the Depositor in writing
of any material litigation or governmental proceedings pending against the
Custodian that would be material to Certificateholders, and (b) provide to the
Servicer a written description of such proceedings. Any notices and descriptions
required under this Subsection 33.02 shall be given no later than five (5)
Business Days prior to the Determination Date following the month in which the
Custodian has knowledge of the occurrence of the relevant event. As of the date
the Depositor or Servicer files each Report on Form 10-D or Form 10-K, as
applicable, with respect to the Certificates, the Custodian will be deemed to
represent that any information previously provided under this Subsection 33.02,
if any, is materially correct and does not have any material omissions unless
the Custodian has provided an update to such information.
 
Subsection 33.03. Indemnification; Remedies.
 
(a) The Custodian shall indemnify the Servicer, each affiliate of the Servicer,
and each of the following parties: Credit-Based Asset Servicing and
Securitization LLC, as the sponsor, the issuing entity, the Depositor, the
Trustee, and each Person who controls any of such parties (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act); and the
respective present and former directors, officers, employees and agents of each
of the foregoing, and shall hold each of them harmless from and against any
losses, damages, penalties, fines, forfeitures, legal fees and expenses and
related costs, judgments, and any other costs, fees and expenses (other than
punitive, special or consequential damages) that any of them may sustain arising
out of or based upon any negligent failure by the Custodian to deliver any
information, report, certification, accountants’ letter or other material when
and as required under this Section 33.
 
(b) In the case of any negligent failure of performance described in clause (a)
of this Subsection, the Custodian shall promptly reimburse the Servicer, the
Trustee the Depositor, as applicable, and each Person responsible for the
preparation, execution or filing of any report required to be filed with the
Commission with respect to the C-BASS Mortgage Loan Asset-Backed Certificates,
Series 2007-CB5 transaction, or for execution of a certification pursuant to
Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to the
C-BASS Mortgage Loan Asset-Backed Certificates, Series 2007-CB5 transaction, for
all costs reasonably incurred by each such party in order to obtain the
information, report, certification, accountants’ letter or other material not
delivered as required by the Custodian.
 
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Section 34.   Third-Party Beneficiary
 
The parties hereto agree that the Depositor shall be a third-party beneficiary
to this Agreement.
 
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IN WITNESS WHEREOF, the Servicer, the Trustee and the Custodian have caused
their names to be duly signed hereto by their respective officers thereunto duly
authorized, all as of the date first above written.

        LASALLE BANK NATIONAL ASSOCIATION, not in its individual capacity but
solely as Trustee for the C-BASS Mortgage Loan Asset-Backed Certificates, Series
2007-CB5  
   
   
  By:   /s/ Susan L. Feld  

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Name: Susan L. Feld   Title: Vice President

 

        LITTON LOAN SERVICING LP, as Servicer  
   
   
  By:   /s/ Janice McClure  

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Name: Janice McClure   Title: Senior Vice President

 

        THE BANK OF NEW YORK, as Custodian  
   
   
  By:   /s/ Paul Catania  

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Name: Paul Catania  
Title: Assistant Vice President

 
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