ex10-1.htm


    Exhibit
      10.1

    SIXTH
      AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT

     

    Dated
      as
      of October 29, 2007

     

    AMONG:

     

    BARCLAYS
      BANK PLC, as buyer on behalf of, and agent for, the Principals pursuant
      to and as provided for in Annex I (in such capacity,
“Agent”),

     

    Each
      of
      the Bank Principals and Conduit Principals listed on the signature pages hereto
      and from time to time party hereto, and

     

    PHH
      MORTGAGE CORPORATION, a New Jersey corporation, as Seller (in such
      capacity, the “Seller”).

     

    1.  APPLICABILITY.  Sheffield
      Receivables Corporation, as purchaser (the “Purchaser”), Seller and Agent
      have entered into that certain Fifth Amended and Restated Master Repurchase
      Agreement, dated as of October 30, 2006 (as amended, supplemented or
      otherwise modified prior to the date hereof, the “Original Repurchase
      Agreement”), which prescribes the manner of sale of eligible loans and the
      method and manner by which Seller will repurchase such loans.

     

    Purchaser,
      Seller and Agent desire to amend and restate the Original Repurchase Agreement
      in its entirety and contemporaneously therewith enter into the Transaction
      Documents (as such term is defined in this Agreement).  Upon the
      effectiveness of this Agreement, each reference to the Original Repurchase
      Agreement in any other document, instrument or agreement shall mean and be
      a
      reference to this Agreement.  Nothing contained herein, unless
      expressly herein stated to the contrary, is intended to amend, modify or
      otherwise affect any other instrument, document or agreement executed and/or
      delivered in connection with the Original Repurchase Agreement.

     

    Agent
      shall, from time to time, at the request of Seller, upon the terms and subject
      to the conditions set forth herein, enter into transactions in which Seller
      transfers Eligible Mortgage Loans to Agent against the transfer of funds by
      Agent, with a simultaneous agreement by Seller to repurchase such mortgage
      loans
      at a date certain or on demand.  Each such transaction shall be
      referred to herein as a “Transaction”, and, unless otherwise agreed in writing,
      shall be governed by this Agreement.

     

    2.  DEFINITIONS
      AND INTERPRETATION.

     

    (a)  Defined
      Terms.

     

    “Accepted
      Servicing Practices” means the Servicer’s customary servicing procedures and
      the servicing practices required by the Guidelines.

     

     
      
        

      

    

    [***]
      INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
      HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
      AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
      ACT
      OF 1934, AS AMENDED.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    “Additional
      Collateral” means with respect to any Additional Collateral Mortgage Loan,
      collateral that consists of either (i) marketable securities owned by the
      borrower and deposited in an account held by an Affiliate of an Approved
      Provider, subject to a security interest in favor of Seller pursuant to a
      security agreement or (ii) with respect to a loan to a borrower that is
      subject to a guaranty, (a) marketable securities owned by the guarantor and
      deposited in an account held by an Affiliate of an Approved Provider, subject
      to
      a security interest in favor of Seller pursuant to a security agreement or
      (b) a home equity line of credit to fund such guaranty that is secured by a
      lien on residential real estate owned by such guarantor subject to a security
      interest in favor of Seller pursuant to a security agreement; provided,
however, that the amount available to be drawn under the home equity
      line
      of credit supporting such guaranty must be at least equal to the Original
      Additional Collateral Requirement for such Additional Collateral Mortgage
      Loan.

     

    “Additional
      Collateral Mortgage Loan” has the meaning ascribed to “Additional Collateral
      Mortgage Loan,” as such term is defined in the Surety Bond.  The
      underwriting guidelines for such programs will not be materially altered without
      the prior written consent of Agent.

     

    “Additional
      Collateral Transfer Agreement” means each additional collateral transfer and
      servicing agreement or other similar agreement or agreements between an Approved
      Provider and Seller, which, in each case shall be in form, scope and substance
      reasonably satisfactory to Agent.

     

    “Additional
      Purchased Assets” shall have the meaning assigned thereto in Section 5
      hereof.

     

    “Adjusted
      LIBOR Rate” means with respect to any period during which the return to any
      APA Purchaser is to be calculated by reference to the London interbank offered
      rate, a rate which is 0.75% in excess of a rate per annum equal to the sum
      (rounded upwards, if necessary, to the nearest 1/16th of 1%) of (A) the
      rate obtained by dividing (i) the applicable LIBOR Rate by (ii) a
      percentage equal to 100% minus the sum of (A) the maximum reserve
      requirement as specified in Regulation D (including, without limitation, any
      marginal, emergency, supplemental, special or other reserves) that is applicable
      to Agent during such period in respect of eurocurrency or eurodollar funding,
      lending or liabilities (or, if more than one percentage shall be so applicable,
      the daily average of such percentage for those days in such period during which
      any such percentage shall be applicable) and (B) the then daily net annual
      assessment rate (rounded upwards, if necessary, to the nearest 1/16th of 1%)
      as
      estimated by Agent for determining the current annual assessment payable by
      Agent to the Federal Deposit Insurance Corporation in respect of eurocurrency
      or
      eurodollar funding, lending or liabilities.

     

    “Affected
      Person” shall have the meaning assigned thereto in Section 18
      hereof.

     

    “Affiliate”
      shall mean as to any Person any Person which, directly or indirectly, is in
      control of, is controlled by, or is under common control with, such
      Person.  For purposes of this definition, a Person shall be deemed to
      be “controlled by” another if such latter Person possesses, directly or
      indirectly, power either to (i) vote 10% or more of the securities having
      ordinary voting power for the election of directors of such controlled Person
      or
      (ii) direct or cause the direction of the management and policies of such
      controlled Person whether by contract or otherwise.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Agency
      or Agencies” means any of GNMA, FNMA or FHLMC, as
      applicable.

     

    “Agency
      Securities” means securities backed by a pool or pools of mortgage loans
      owned by Seller, which are issued and guaranteed by the applicable
      Agency.

     

    “Agent”
      has the meaning set forth in the preamble.

     

    “Aggregate
      Margin Value” means, at any time of determination, the sum of the Margin
      Values for each Eligible Mortgage Loan.

     

    “Aggregate
      Purchase Price” means, at any time of determination, the sum of the
      outstanding Purchase Prices.

     

    “Aggregate
      Unpaids” means, at any time, an amount equal to the sum of all amounts owed
      by Seller to Agent and each Principal under the Transaction Documents,
      including, without limitation, the Fees, unpaid Purchase Prices (and any accrued
      and to accrue Price Differential with respect thereto), and Breakage Costs,
      and
      any and all amounts in respect of indemnification.

     

    “Agreement”
      means this Sixth Amended and Restated Master Repurchase Agreement, as it may
      be
      amended, supplemented or otherwise modified from time to time.

     

    “APA
      Purchaser” means each party (or assignee thereof) who has executed a
      signature page of an Asset Purchase Agreement, which execution obligates
      such party to become a purchaser or an assignee of all or any part of the
      applicable Conduit Principal’s interest in the Eligible Mortgage Loans at any
      time, pursuant to the related Asset Purchase Agreement or an assignee of such
      purchaser’s obligations to purchase Eligible Mortgage Loans from
      Seller.

     

    “Appraised
      Value” means the value set forth in an appraisal made by an acceptable
      appraiser in connection with the origination of the related Eligible Mortgage
      Loan as the value of the Mortgaged Property.  For the avoidance of
      doubt, Seller and Agent agree that an automated valuation model report meeting
      guidelines that would be generally acceptable to prudent mortgage lenders that
      regularly originate or purchase mortgage loans comparable to the Eligible
      Mortgage Loans for sale to prudent investors in the secondary market that invest
      in mortgage loans such as the Eligible Mortgage Loans is an acceptable
      appraisal.

     

    “Approved
      Provider” means each of the mortgage loan originating institutions listed on
      Exhibit A attached hereto, as such Exhibit A is amended, amended and
      restated, supplemented or otherwise modified with the prior written consent
      of
      the Agent.

     

    “Approved
      Seller/Servicer” means an approved seller and servicer under the
      Guidelines.

     

    “Asset
      Purchase Agreement” means with respect to each Conduit Principal, a
      revolving asset purchase agreement, liquidity asset purchase agreement or other
      agreement pursuant to which certain liquidity providers agree to provide
      liquidity support to such Conduit Principal in connection with the Short-Term
      Notes issued to fund or maintain its purchases hereunder, together with each
      of
      the other commercial paper program documents related thereto, as each of the
      foregoing may be at any time amended, modified or supplemented.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Assignee
      Rate” with respect to any Principal for any Transaction, means an interest
      rate per annum equal to the Adjusted LIBOR Rate with respect to such Principal
      for such Transaction; provided, however, that in case of:

     

    (i)  any
      Transaction on or prior to the first day of which a Conduit Principal or Bank
      Principal shall have notified Agent that the introduction of or any change
      in,
      or in the interpretation of, any law or regulation makes it unlawful, or any
      central bank or other governmental authority asserts that it is unlawful, for
      such Conduit Principal or Bank Principal to fund such Transaction at the
      Assignee Rate set forth above (and such Conduit Principal or Bank Principal
      shall not have subsequently notified Agent that such circumstances no longer
      exist), or

     

    (ii)  any
      Transaction as to which Agent does not receive a Transaction Notice, together
      with the Daily Servicer Report as required in accordance with Section 3
      hereof,

     

    the
      Assignee Rate for such Transaction for the affected Conduit Principal or Bank
      Principal shall be an interest rate per annum equal to the Base Rate in
      effect from time to time during such Transaction; and provided,
further that at all times following the occurrence and during the
      continuation of an Event of Default, the Assignee Rate shall be an interest
      rate
per annum equal to the Default Rate.

     

    “Assignment
      of Mortgage” means 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
      the
      sale of the Mortgage to Agent (on behalf of the Principals).

     

    “Assignment
      and Acceptance” shall have the meaning assigned thereto in Section 22
      hereof.

     

    “Back-up
      Servicing Agreement” shall mean a back-up servicing agreement, dated as of a
      date reasonably acceptable to Agent and in form, scope and substance reasonably
      satisfactory to Agent, by and among, Servicer, Agent and a back-up servicer,
      who
      shall be satisfactory to Agent in its sole discretion, as the same may be
      amended, supplemented or otherwise modified from time to time pursuant to the
      terms thereof.

     

    “Bank
      Principal” shall mean each Person designated on the signature pages hereto
      as such or designated as such on any agreement or instrument pursuant to which
      it becomes a party hereto.

     

    “Bankruptcy
      Code” shall have the meaning assigned thereto in Section 28
      hereof.

     

    “Barclays”
      means Barclays Bank PLC and its successors and permitted assigns.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “Base
      Rate” means, for any day, the higher of (i) the prime rate in the
      United States announced from time to time by Barclays in effect on such day,
      and
      (ii) the sum of (x) the rate equal to the weighted average of the
      rates on overnight Federal funds transactions with members of the Federal
      Reserve System arranged by Federal funds brokers, as published for such day
      (or,
      if such day is not a Business Day, for the next preceding Business Day) by
      the
      Federal Reserve Bank of New York, or, if such rate is not so published for
      such
      day, the average of the quotations for such day for such transactions received
      by Barclays from three Federal funds brokers of recognized standing selected
      by
      it, and (y) one-half of one percent (1⁄2%).

     

    “Best’s”
      has the meaning specified in the Servicing Agreement.

     

    “BIF”
      means The Bank Insurance Fund or any successor thereto.

     

    “Blocked
      Account Control Agreement” shall mean each Blocked Account Control
      Agreement, dated as of October 30, 2006, by and between, inter alia, Agent
      and The Bank of New York, as depositary, as any such agreement may be amended,
      supplemented or otherwise modified in accordance with the respective terms
      thereof.

     

    “Board”
      shall mean the Board of Governors of the Federal Reserve System.

     

    “Borrower”
      means the obligor or obligors on a Mortgage Note, including any Person that
      has
      acquired the related collateral and assumed the obligations of the original
      obligor or obligors under the Mortgage Note.

     

    “Breakage
      Costs” shall mean any amounts any Affected Person sustains or incurs in
      connection with the final paragraph of Section 18 hereof.

     

    “Business
      Day” shall mean any day other than (i) a Saturday and Sunday, or
      (ii) a day on which  banking institutions or foreign exchange
      markets in New York City are authorized or required by law, regulation or
      executive order to be closed for business.

     

    “Closed
      End Second Mortgage Loan” shall mean any mortgage loan secured by a second
      lien on the related Mortgage Property which (i) does not permit subsequent
      advances, and (ii) has a maximum initial principal balance of not greater
      than the then current Agency maximum (which, on the Effective Date, is
      $208,500).

     

    “Change
      in Control” shall mean (i) the acquisition by any Person or group (within
      the meaning of the Securities Exchange Act of 1934, as amended, and the rules
      of
      the Securities and Exchange Commissions thereunder as in effect on the Effective
      Date), directly or indirectly, beneficially or of record, of ownership or
      control of in excess of 50% of the voting common stock of PHH Corporation on
      a
      fully diluted basis at any time or (ii) if at any time PHH Corporation shall
      cease to own, directly or through wholly-owned Subsidiaries, all of the
      outstanding voting stock of Seller, free and clear of any direct or indirect
      Liens.

     

    “Code”
      means the Internal Revenue Code of 1986, as amended.

     

    “Collateral”
      has the meaning assigned thereto in Section 7 hereof.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    “Collateral
      Value” means with respect to each mortgage loan, the lesser of (i) the
      Outstanding Principal Balance of such mortgage loan and (ii) the Market
      Value of such mortgage loan as determined by Seller or Agent, as
      applicable.

     

    “Collection
      Account” shall mean that certain account number [***], maintained at The
      Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a
      Blocked Account Agreement.

     

    “Collections”
      means, with respect to any Purchased Asset, all Income and collections and
      proceeds of such Purchased Asset, including, without limitation, all cash
      proceeds of Related Security with respect to such Purchased Asset, and
      (a) all payments on account of scheduled principal on the Eligible Mortgage
      Loans; (b) all payments on account of interest on the Eligible Mortgage
      Loans (including interest accrued and unpaid on the Eligible Mortgage Loans
      prior to the applicable Purchase Date); (c) any Principal Prepayments;
      (d) all Liquidation Proceeds; (e) all Insurance Proceeds including
      amounts required to be deposited pursuant to the Servicing Agreement (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 as further specified in the Servicing Agreement);
      (f) all Condemnation Proceeds which are not applied to the restoration or
      repair of the Mortgaged Property or released to the Mortgagor in accordance
      with
      the Servicing Agreement; (g) any amount required to be deposited in any
      account (including, without limitation, the Collection Account, the Funding
      Account, the Escrow Account and the Margin Call Account) pursuant to this
      Agreement or any other Transaction Document; (h) any amounts required to be
      deposited by Servicer pursuant to the Servicing Agreement in connection with
      the
      deductible clause in any blanket hazard insurance policy; (i) any amounts
      received with respect to or related to any REO Property and all REO Disposition
      Proceeds pursuant to the Servicing Agreement; (j) any other amounts
      received with respect to or related to the mortgage loan including but not
      limited to late payment charges and interest paid on funds deposited in the
      Collection Account, the Funding Account, the Margin Call Account or the Escrow
      Account, to the extent permitted by applicable law and (k) all proceeds of
      each of the forgoing.

     

    “Combined
      Loan-to-Value Ratio” means, with respect to any HELOC or any Closed End
      Second Mortgage Loan, the ratio expressed as a percentage equal to (i) if
      the loan transaction is a purchase money transaction (a) that includes an
      appraisal, the Credit Limit of the HELOC or Closed End Second Mortgage Loan,
      as
      applicable, plus the then outstanding principal amount of any related senior
      mortgage loans, divided by the lesser of the Appraised Value or the purchase
      price of the Mortgaged Property, or (b) if such transaction does not
      include an appraisal, the Credit Limit of the HELOC or Closed End Second
      Mortgage Loan, as applicable, plus the then outstanding principal amount of
      any
      related senior mortgage loans, divided by the purchase price of the Mortgaged
      Property; and (ii) if the loan transaction is a refinance (a) that
      includes an appraisal, the Credit Limit of the HELOC or Closed End Second
      Mortgage Loan, as applicable, plus the then outstanding principal amount of
      any
      related senior mortgage loans, divided by the appraised value of the Mortgaged
      Property, or (b) if such transaction does not include an appraisal, the
      Credit Limit of the HELOC or Closed End Second Mortgage Loan, as applicable,
      plus the then outstanding principal amount of any related senior mortgage loans,
      divided by the estimated value of the Mortgaged Property.

     

    
      
        

      

      [***]
        INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
        HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
        AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
        ACT
        OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

    “Commitment”
      of any Principal means, (a) with respect to a Principal party hereto on the
      date hereof, the amount set forth beneath its signature on the signature pages
      to this Agreement, as reduced or increased in accordance with the terms hereof
      and (b) with respect to any other Principal that becomes a party hereto in
      accordance with the terms hereof, the amount set forth in the agreement or
      instrument to which such Principal becomes a party hereto as such Principal’s
      Commitment, as such amount may be reduced or increased in accordance with the
      terms hereof.  Any reduction (or termination) of the Maximum Aggregate
      Purchase Price shall reduce ratably (or terminate) each Principal’s
      Commitment.

     

    “Condemnation
      Proceeds” means, as to any Eligible Mortgage Loan, all awards or 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 Loan Documents.

     

    “Conduit
      Principal” shall mean each Person designated on the signature pages hereto
      as such or designated as such on any agreement or instrument pursuant to which
      it becomes a party hereto.

     

    “Conforming
      Loan” shall mean any mortgage loan which conforms to the Guidelines of GNMA,
      FNMA or FHLMC, as amended.

     

    “Consolidated
      Net Income” means, for any period for which such amount is being determined,
      the net income (loss) of PHH Corporation and its Consolidated Subsidiaries
      during such period determined on a consolidated basis for such period taken
      as a
      single accounting period in accordance with GAAP, provided that there
      shall be excluded (i) income (or loss) of any Person (other than a
      Consolidated Subsidiary) in which PHH Corporation or any of its Consolidated
      Subsidiaries has an equity investment or comparable interest, except to the
      extent of the amount of dividends or other distributions actually paid to PHH
      Corporation or its Consolidated Subsidiaries by such Person during such period,
      (ii) the income (or loss) of any Person accrued prior to the date it
      becomes a Consolidated Subsidiary or is merged into or consolidated with PHH
      Corporation or any of its Consolidated Subsidiaries, (iii) the income of
      any Consolidated Subsidiary to the extent that the declaration or payment of
      dividends or similar distributions by that Consolidated Subsidiary of the income
      is not at the time permitted by operation of the terms of its charter or any
      agreement, instrument, judgment, decree, order, statute, rule or governmental
      regulation applicable to that Consolidated Subsidiary, (iv) any
      extraordinary after-tax gains and (v) any extraordinary pretax losses but
      only to the extent attributable to a write-down of financing costs relating
      to
      any existing and future indebtedness.

     

    “Consolidated
      Net Worth” shall mean, with respect to any Person, at any date of
      determination, all amounts which would be included on a balance sheet of such
      Person and its Consolidated Subsidiaries under stockholders’ equity as of such
      date in accordance with GAAP.

     

    “Consolidated
      Subsidiaries” shall mean, with respect to any Person, all Subsidiaries of
      such Person that are required to be consolidated with such Person for financial
      reporting purposes in accordance with GAAP.

     

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

     

    “Credit
      Limit” means the maximum amount a Borrower is permitted to draw down the
      credit line under a Home Equity Line Agreement.

     

    “Credit
      Policy” means those underwriting and credit policies of Seller with respect
      to mortgage loans as attached in Exhibit B hereto as amended, supplemented
      or otherwise modified from time to time in accordance with
      Section 11(u)(B).

     

    “Custodial
      Agreement” means the Second Amended and Restated Custodial Agreement, dated
      as of the date hereof, among Barclays, as agent, PHH Mortgage Corporation,
      as
      Seller and Servicer, and the Custodian, as such agreement may at any time be
      amended, supplemented or otherwise modified from time to time pursuant to the
      terms thereof.

     

    “Custodian”
      means The Bank of New York Trust Company N.A. or its successors and permitted
      assigns.

     

    “Daily
      Loan Inventory” means the schedule attached and made a part of the Daily
      Servicer Report.

     

    “Daily
      Servicer Report” means the report attached as Exhibit D to the
      Servicing Agreement.

     

    “Default
      Rate” means an annual rate of interest equal to the Base Rate plus
      2%.

     

    “Defaulted
      Loan” means any Eligible Mortgage Loan where (i) the Borrower thereon
      has failed to make a required payment for 90 days or more after the Due Date
      of
      such required payment or  (ii) any other event has occurred which
      gives the holder the right to accelerate payment and/or take steps to foreclose
      on the mortgage securing the Eligible Mortgage Loan under the Eligible Mortgage
      Loan documentation.

     

    “Delinquency
      Ratio” means, with respect to any date of determination, the ratio
      (expressed as a percentage) computed as of the last day of each calendar month
      by dividing (i) the aggregate Outstanding Principal Balance of all
      Delinquent Loans as of the last day of such calendar month by (ii) the
      Outstanding Principal Balance of the Eligible Mortgage Loans as of the last
      day
      of such calendar month.

     

    “Delinquent
      Loan” means any Eligible Mortgage Loan which has a payment which is 30 days
      or more past its Due Date.

     

    “Determination
      Date” means with respect to a Due Period, the 5th day (or if such day is not
      a Business Day, the Business Day immediately succeeding such day) of the
      calendar month following such Due Period.

     

    “Due
      Date” means the first day of the month in which the related Monthly Payment
      is due on an Eligible Mortgage Loan, exclusive of any days of
      grace.

     

    “Due
      Period” means (i) for the initial Monthly Interest Payment Date, the
      period commencing on the Effective Date and ending on the last day of the month
      immediately preceding the month in which such initial Monthly Interest Payment
      Date occurs and (ii) for each other Monthly Interest Payment Date, the
      period commencing on the first day of the month immediately preceding the month
      in which such Monthly Interest Payment Date occurs and ending on the last day
      of
      such month.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

     

    “Demand
      Date” shall have the meaning assigned thereto in Section 3(a)
      hereof.

     

    “Dollars”
      and “$” and “US$” shall mean lawful currency of the United
      States.

     

    “Effective
      Date” means October 29, 2007.

     

    “Eligible
      Investments” means investments which mature no later than the next
      following  Monthly Interest Payment Date in the
      following:  (i) obligations issued by, or the full and timely
      payment of principal of and interest on which is fully guaranteed by, the United
      States of America or any agency or instrumentality thereof (which agency or
      instrumentality is backed by the full faith and credit of the United States
      of
      America); (ii) commercial paper (other than the Short-Term Notes) rated (at
      the time of purchase) at least “A-1+” by S&P and “P-1” by Moody’s;
      (iii) certificates of deposit, other deposits or bankers’ acceptances
      issued by or established with commercial banks having short-term deposit ratings
      (at the time of purchase) of at least “A-1+” by S&P and “P-1” by Moody’s;
      (iv) repurchase agreements involving any of the Eligible Investments
      described in the foregoing clauses (i) through (iii) so long as the other
      party to the repurchase agreement has short-term unsecured debt obligations
      or
      short-term deposits rated (at the time of purchase) at least “A-1+” by S&P
      and “P-1” by Moody’s; and (v) if approved in writing by Moody’s, direct
      obligations of any money market fund or other similar investment company all
      of
      whose investments consist of obligations described in the foregoing clauses
      of
      this definition and that is rated “AAm” by S&P and “Aam” by Moody’s or
      higher.  In addition, the instrument should not have an ‘r’
highlighter affixed to its rating, and its terms should have a predetermined
      fixed dollar amount of principal due at maturity that cannot vary or
      change.  Interest on any Eligible Investment should be tied to a
      single interest rate index plus a single fixed spread, if any, and move
      proportionately with that index.

     

    “Eligible
      Mortgage Loan” means a Conforming Loan (provided that Seller is an Approved
      Seller/Servicer by the related Agency), a Jumbo Loan, a Super Jumbo Loan, an
      Additional Collateral Mortgage Loan, a Landscape Loan, an Uninsured Loan, a
      HELOC, a Non-Primary Residence Mortgage Loan, a Closed End Second Mortgage
      Loan,
      a Manufactured Home Mortgage Loan or an Interest-Only Loan, identified on a
      Daily Servicer Report that satisfies the Eligibility Criteria and the Portfolio
      Criteria and that is not a Terminated Loan.  An Eligible Mortgage Loan
      includes, without limitation, the Mortgage Loan File, the Related Security,
      the
      Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation
      Proceeds, Insurance Proceeds, VA Guaranty Proceeds, REO Disposition Proceeds
      and
      all other rights, benefits, proceeds and obligations arising from or in
      connection with such Eligible Mortgage Loan (other than the right to service
      such Eligible Mortgage Loans, which shall be retained by Servicer pursuant
      to
      the terms of this Agreement and the other Transaction Documents).  For
      the avoidance of doubt only mortgage loans which are of the types specifically
      enumerated in this definition shall be eligible for purchase by Agent (on behalf
      of the Principals) under this Agreement.

     

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

     

    “Eligibility
      Criteria” means, with respect to each mortgage loan, that such mortgage loan
      satisfies each of the following criteria:  (i) such mortgage loan
      must be an Eligible Mortgage Loan, (ii) such mortgage loan must have been
      originated or purchased by Seller in accordance with its then-current
      origination or acquisition underwriting practices within 120 days prior to
      the
      acquisition thereof by Agent, (iii) each mortgage loan may not be made to a
      Borrower that is a Sub-Prime Borrower and (iv) Seller and Servicer are in
      compliance with the laws of, and have valid, existing licenses in, the state
      in
      which the related Mortgage Property is located to the extent necessary to ensure
      the enforceability of such mortgage loan and the servicing of any such mortgage
      loan in accordance with the terms of this Agreement, each Transaction Document
      and any Daily Servicer Report.  In addition, the representations and
      warranties made by Seller in this Agreement must be true and correct in all
      material respects on such day.

     

    “Eligibility
      Representations” means each of the representations and warranties made by
      Seller with respect to each mortgage loan, set forth in Annex II attached
      hereto.

     

    “Environmental
      Laws” shall mean any and all federal, provincial, state, local or municipal
      laws, rules, orders, regulations, statutes, ordinances, codes, decrees or
      requirements of any Official Body regulating, relating to or imposing liability
      or standards of conduct concerning, any Hazardous Material or environmental
      protection or health and safety, as now or at any time hereafter in effect,
      including without limitation, the Clean Water Act also known as the Federal
      Water Pollution Control Act, 33 U.S.C. §§ 1251 etseq., the Clean
      Air Act, 42 U.S.C. §§ 7401 etseq., the Federal Insecticide,
      Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 etseq., the Surface
      Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 etseq., the
      Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
      §§ 9601 etseq., the Superfund Amendment and Reauthorization Act of
      1986, Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community
      Right to Know Act, 42 U.S.C. §§ 11001 etseq., the Resource
      Conservation and Recovery Act, 42 U.S.C. §§ 6901 etseq., the
      Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and § 657,
      together, in each case, with any amendment thereto, and the regulations adopted
      and publications promulgated thereunder and all substitutions
      thereof.

     

    “Environmental
      Liabilities” shall mean any liability, contingent or otherwise (including
      any liability for damages, costs of environmental remediation, fines, penalties
      or indemnities), of Seller or any Subsidiary directly or indirectly resulting
      from or based upon (a) violation of any Environmental Law, (b) the
      generation, use, handling, transportation, storage, treatment or disposal of
      any
      Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the
      release or threatened release of any Hazardous Materials into the environment
      or
      (e) any contract, agreement or other consensual arrangement pursuant to
      which liability is assumed or imposed with respect to any of the
      foregoing.

     

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

     

    “ERISA
      Affiliate” means any corporation or trade or business that is a member of
      any group of organizations (i) described in Section 414(b) or (c) of
      the Code of which Seller is a member and (ii) solely for purposes of
      potential liability under Section 302(c)(11) of ERISA and
      Section 412(c)(11) of the Code and the lien created under
      Section 302(f) of ERISA and Section 412(n) of the Code, described in
      Section 414(m) or (o) of the Code of which Seller is a member.

     

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     

    “Errors
      and Omissions Insurance Policy” shall have the meaning set forth in the
      Servicing Agreement.

     

    “Escrow
      Account” means as to the Eligible Mortgage Loans (other than HELOCs and
      Closed End Second Mortgage Loans), any account created and maintained pursuant
      to the Servicing Agreement.

     

    “Event
      of Default” shall have the meaning assigned thereto in Section 13
      hereof.

     

    “Excluded
      Taxes” shall have the meaning assigned thereto in Section 18
      hereof.

     

    “FASB”
      shall have the meaning assigned thereto in Section 18 hereof.

     

    “Federal
      Funds Rate” means, for any period, a fluctuating interest rate per annum
      equal for each day during such period to the weighted average of the rates
      on
      overnight Federal funds transactions with members of the Federal Reserve System
      arranged by Federal funds brokers, as published for such day (or, if such day
      is
      not a Business Day, for the next preceding Business Day) by the Federal Reserve
      Bank of New York, or, if such rate is not so published for any day which is
      a
      Business Day, the average of the quotations for such day on such transactions
      received by Agent from three Federal funds brokers of recognized standing
      selected by it.

     

    “Fee
      Letter” means, that certain Fee Letter, dated as of October 29, 2007,
      by Seller and each Principal, as such letter may be amended, supplemented or
      otherwise modified from time to time in accordance with the terms thereof and
      each other fee letter entered into after the date hereof by Seller and the
      Principals becoming parties hereto, dated as of the date each such Principal
      becomes a party hereto, as such other letter may be amended, supplemented or
      otherwise modified from time to time in accordance with the terms
      thereof.

     

    “Fees”
      means, the Program Fee and the Transfer Availability Fee.

     

    “FHA”
      means The Federal Housing Administration, an agency within 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.

     

    “FHA
      Approved Mortgagee” means a corporation or institution approved as a
      mortgagee by the FHA under the Act and applicable FHA Regulations, and eligible
      to own and service mortgage loans such as the FHA Loans.

     

    “FHA
      Loan” means an Eligible Mortgage Loan that is the subject of an FHA Mortgage
      Insurance Contract.

     

    “FHA
      Mortgage Insurance” means mortgage insurance authorized under
      Sections 203(b), 213, 221(d)(2), 222, and 235 of the Act and provided by
      the FHA.

     

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

     

    “FHA
      Mortgage Insurance Contract” means the contractual obligation of the FHA
      respecting the insurance of an Eligible Loan.

     

    “FHA
      Regulations” means regulations promulgated by HUD under the Federal Housing
      Administration 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.

     

    “FHLMC”
      shall mean Freddie Mac, formerly known as the Federal Home Loan Mortgage
      Corporation, or any successor thereto.

     

    “FHLMC
      Guides” shall mean the Freddie Mac’s Seller’s Guide and the Federal Home
      Loan Mortgage Corporation Servicers’ Guide and all amendments or additions
      thereto.

     

    “FICO
      Score” means a statistical credit score obtained by many mortgage lenders in
      connection with a loan application to help assess a borrower’s
      creditworthiness.  A FICO Score is generated by models developed by a
      third party and made available to lenders through three national credit
      bureaus.  The FICO Score is based on a borrower’s historical credit
      data, including, among other things, payment history, delinquencies on accounts,
      levels of outstanding indebtedness, length of credit history, types of credit
      and bankruptcy experience.

     

    “Fidelity
      Bond” shall have the meaning set forth in the Servicing
      Agreement.

     

    “Finance
      Charges” means, with respect to an Eligible Mortgage Loan, any finance,
      interest, late or similar charges owing by a Borrower pursuant to such Eligible
      Mortgage Loan.

     

    “FNMA”
      shall mean The Federal National Mortgage Association, or any successor
      thereto.

     

    “FNMA
      Guides” shall mean the Fannie Mae Selling and Servicing Guides and all
      amendments or additions thereto.

     

    “Funding
      Account” shall mean that certain account number [***], maintained at The
      Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a
      Blocked Account Control Agreement.

     

    “GAAP”
      shall mean generally accepted accounting principles set forth in the opinions
      and pronouncements of the Accounting Principles Board of the American Institute
      of Certified Public Accountants and statements and pronouncements of the
      Financial Accounting Standards Board or in such other statements by such
      accounting profession, as in effect from time to time.

     

    “GNMA”
      shall mean The Government National Mortgage Association, or any successor
      thereto.

     

    “GNMA
      Guides” shall mean the GNMA Handbooks 5500.3 and all amendments or additions
      thereto.

     

    
      
        

      

      [***]
        INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
        HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
        AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
        ACT
        OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    “Guidelines”
      shall mean the GNMA Guides, the FNMA Guides and the FHLMC Guides, as such Guides
      have been amended from time to time with respect to Seller.

     

    “Hazardous
      Materials” shall mean any flammable materials, explosives, radioactive
      materials, hazardous materials, hazardous wastes, hazardous or toxic substances,
      or similar materials defined as such in any Environmental Law.

     

    “Home
      Equity Line Agreement” means, with respect to HELOCs, the agreement between
      a Borrower and a lender pursuant to which a Borrower receives a line of credit
      secured by a Mortgage on the Mortgaged Property.

     

    “HELOC”
      shall mean an open-end, revolving, home equity line of credit underwritten
      in
      accordance with the Credit Policy.

     

    “HUD”
      means the Department of Housing and Urban Development, or any federal agency
      or
      official thereof which may from time to time succeed to the functions thereof
      with regard to FHA Mortgage Insurance.  The term “HUD,” for purposes
      of this Agreement, is also deemed to include subdivisions thereof such as the
      FHA and GNMA.

     

    “Income”
      means, with respect to any Purchased Asset at any time, any accrued and unpaid
      interest on any principal in respect of such Purchased Asset and other
      collections (other than escrowed amounts for insurance, taxes and other periodic
      payments customarily escrowed for mortgage loan borrowers) with respect
      thereto.

     

    “Indebtedness”
      shall mean (i) all indebtedness, obligations and other liabilities of
      Seller and its Subsidiaries which are, at the date as of which Indebtedness
      is
      to be determined, includable as liabilities in a consolidated balance sheet
      of
      such Person, other than (x) accounts payable and accrued expenses and, in
      each case, not overdue by its respective terms by more than 90 days, and
      (y) current and deferred income taxes and other similar liabilities, plus
      (ii) without duplicating any items included in Indebtedness pursuant to the
      foregoing clause (i), the maximum aggregate amount of all liabilities of Seller
      or any of its Subsidiaries under any Guarantee, indemnity or similar undertaking
      given or assumed of, or in respect of, the indebtedness, obligations or other
      liabilities, assets, revenues, income or dividends of any Person other than
      Seller or one of its Subsidiaries and (iii) all other obligations or
      liabilities of Seller or any of its Subsidiaries in relation to the discharge
      of
      the obligations of any Person other than such Person.

     

    “Indemnified
      Party” shall have the meaning assigned thereto in Section 16(b)
      hereof.

     

    “Insurance
      Proceeds” means, with respect to any Eligible Mortgage Loan, proceeds of
      insurance policies insuring the Eligible Mortgage Loan or the related Mortgaged
      Property.

     

    “Interest-Only
      Loan” shall mean any Conforming Loan or any Jumbo Loan which permits the
      related Borrower to pay only the accrued interest on such mortgage loan for
      a
      specified period of time.

     

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     

    “Investment
      Company Act” means the Investment Company Act of 1940, as amended, including
      all rules and regulations promulgated thereunder.

     

    “Jumbo
      Loan” shall mean any mortgage loan which substantially conforms to the
      Guidelines, except that the principal balance thereof exceeds the principal
      balance of a mortgage loan which conforms to the Guidelines but is less than
      or
      equal to $1,500,000, and the terms of which include other specified exceptions
      to the Guidelines, if any, which are consistent with Seller’s Jumbo Loan
      underwriting standards.  Jumbo Loans will not include mortgage loans
      made to Sub-Prime Borrowers.

     

    “Landscape
      Loan” means a mortgage loan that substantially conforms to the Guidelines,
      except (i) maintenance of a PMI Policy may not be required, (ii) the
      mortgage loan may not be an FHA Loan or VA Loan and (iii) there may not be
      an appraisal of the related Mortgage Property.

     

    “Law”
      means any law (including common law), constitution, statute, treaty, regulation,
      rule, ordinance, order, injunction, writ, decree or award of any Official
      Body.

     

    “LIBOR”
      means, with respect to any funding period, the rate per annum (rounded upwards,
      if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750
      (or any successor page) as the London interbank offered rate for deposits in
      U.S. dollars at approximately 11:00 a.m. (London time) two London Business
      Days prior to the first day of such funding period for a term of one
      month.  If for any reason such rate is not available, the term “LIBOR
      Rate” shall mean, for any funding period, the rate per annum (rounded upwards,
      if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR
      Page as the London interbank offered rate for deposits in dollars at
      approximately 11:00 a.m. (London time) two London Business Days prior to
      the first day of such funding period for a term of one month; provided,
however, if more than one rate is specified on the Reuters Screen
      LIBOR
      Page, the applicable rate shall be the arithmetic mean of all such
      rates.  In the event no such rate appears as described in the
      preceding sentences, the LIBOR Rate shall be, with respect to any funding
      period, the per annum rate of interest at which Dollar deposits in immediately
      available funds are offered to Agent by prime banks in the interbank eurodollar
      market at or about 10:00 a.m., London time, on the second Business Day
      before (and for value on) the first day of such funding period (or portion
      thereof) and in an amount of not less than $1,000,000 for such funding period
      (or portion thereof).

     

    “Lien”
      shall mean with respect to the property of any Person, any ownership interest
      of
      any other Person, any mortgage, deed of trust, hypothecation, pledge, lien,
      security interest, filing of any financing statement, charge or other
      encumbrance or security arrangement of any nature whatsoever, including, without
      limitation, any conditional sale or title retention arrangement, and any
      assignment, deposit arrangement, consignment or lease intended as, or having
      the
      effect of, security.

     

    “Liquidation
      Proceeds” means all amounts received and retained in connection with the
      liquidation of Defaulted Loans.

     

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

     

    “Loan-to-Value
      Ratio or LTV” means (x) with respect to any Eligible Mortgage Loan
      (except for HELOCs and Closed End Second Mortgage Loans), the ratio expressed
      as
      a percentage of (i) if the loan transaction is a purchase money transaction
      (a) that includes an appraisal, the initial principal amount (less for any
      Additional Collateral Mortgage Loan, the value of the Additional Collateral
      as
      of the date of determination), divided by the lesser of the Appraised Value
      or
      the purchase price of the Mortgaged Property, or (b) if such transaction
      does not include an appraisal, the initial principal amount (less for any
      Additional Collateral Mortgage Loan, the value of the Additional Collateral
      as
      of the date of determination), divided by the purchase price of the Mortgaged
      Property; and (ii) if the loan transaction is a refinance (a) that
      includes an appraisal, the initial principal amount (less for any Additional
      Collateral Mortgage Loan, the value of the Additional Collateral as of the
      date
      of determination), or (b) if such transaction does not include an
      appraisal, the initial principal amount (less for any Additional Collateral
      Mortgage Loan, the value of the Additional Collateral as of the date of
      determination), divided by the estimated value of the Mortgaged
      Property.

     

    “Loan
      Documents” has the meaning set forth in the definition of “Mortgage Loan
      File.”

     

    “Manufactured
      Home Mortgage Loan” shall mean any Conforming Loan for which the Mortgaged
      Property is a manufactured home unit that is permanently attached to its
      foundation and ready for occupancy, but is not a mobile home.

     

    “Margin
      Call” shall have the meaning assigned thereto in Section 5
      hereof.

     

    “Margin
      Call Account” shall mean that certain account number [***], maintained at
      The Bank of New York (ABA [***]), which is subject to the terms and conditions
      of a Blocked Account Control Agreement.

     

    “Margin
      Deficit” shall have the meaning assigned thereto in Section 5
      hereof.

     

    “Margin
      Value” means, at any time of determination with respect to each mortgage
      loan, an amount equal to the product of (i) the applicable Purchase Price
      Percentage for such mortgage loan multiplied by (ii) the Collateral Value
      of such mortgage loan at such time; provided, that the Collateral Value
      of any mortgage loan that is a Defaulted Loan or that is not an Eligible
      Mortgage Loan shall be zero.

     

    “Market
      Value” means, at any time of determination with respect to any mortgage
      loan, the value ascribed to such asset by Seller or Agent in its sole discretion
      (based on a methodology used in accordance with normal market
      practice).

     

    “Maximum
      Aggregate Purchase Price” means (a) during the period commencing on
      (and including) the Effective Date and ending on (but excluding) November 30,
      2007, Five Hundred Fifty-Million Dollars ($550,000,000) and (b) during the
      period commencing on (and including) November 30, 2007 and ending on (but
      excluding) the Termination Date, Two Hundred Seventy-Five Million Dollars
      ($275,000,000).

     

    
      
        

      

      [***]
        INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT
        HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES
        AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE
        ACT
        OF 1934, AS AMENDED.

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

     

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

     

    “MERS
      Designated Mortgage Loan” shall mean any mortgage loan as to which the
      related Mortgage or Assignment of Mortgage has been recorded in the name of
      MERS, as agent for the holder from time to time of the Mortgage Note and which
      is identified as a MERS Mortgage Loan on the related mortgage loan
      transmission.

     

    “Minimum
      Transfer Amount” means an amount equal to or greater than
      $250,000.

     

    “Minimum
      Transfer Condition” shall have the meaning assigned thereto in
      Section 5 hereof.

     

    “Monthly
      Interest Payment Date” means, the 10th day (or if such day is not a Business
      Day, the immediately succeeding Business Day) of any month, commencing
      November 12, 2007.

     

    “Monthly
      Payment” means the scheduled monthly payment of principal and/or interest on
      an Eligible Mortgage Loan.

     

    “Moody’s”
      shall mean Moody’s Investors Service Inc.

     

    “Mortgage”
      means, the mortgage, deed of trust or other instrument securing a Mortgage
      Note,
      which creates a lien on an estate in fee simple in real property securing the
      Mortgage Note.

     

    “Mortgage
      Banker’s Blanket Bond” shall have the meaning set forth in the Servicing
      Agreement.

     

    “Mortgage
      Impairment Insurance” shall have the meaning set forth in the Servicing
      Agreement.

     

    “Mortgage
      Interest Rate” means the annualized regular rate of interest borne on a
      Mortgage Note.

     

    “Mortgage
      Loan File” means each of the following documents (constituting,
      collectively, the “Loan Documents”), and such other documents as Agent
      may require from time to time:

     

    (1)  the
      original or an electronic or imaged copy of any guarantee executed in connection
      with the Mortgage Note (if any);

     

    (2)  the
      original or a copy or imaged copy of the Mortgage with evidence of recording
      thereon;

     

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

     

    (3)  the
      originals or copies or images of copies of all assumption, modification,
      consolidation or extension agreements, with evidence of recording
      thereon;

     

    (4)  except
      with respect to any MERS Designated Mortgage Loan, any original duly executed
      Assignment of Mortgage for each Eligible Mortgage Loan or image copy thereof,
      in
      form and substance acceptable for recording, and all interim assignments with
      evidence of recording thereon, if any; if the Eligible Mortgage Loan was
      acquired by Seller in a merger, any Assignment of Mortgage must be made by
      “[Seller], successor by merger to [name of predecessor].”  If the
      Eligible Mortgage Loan was acquired or originated by Seller while doing business
      under another name, any Assignment of Mortgage must be by “[Seller], formerly
      known as [previous name].”  If the Eligible Mortgage Loan was acquired
      by Seller as receiver for another entity, any Assignment of Mortgage must be
      by
“[Seller], receiver for [name of entity in receivership].”  Any
      Assignment of Mortgage must be duly recorded only if recordation is either
      necessary under applicable law to perfect or on direction of Agent as provided
      in this Agreement.  If any Assignment of Mortgage is not to be
      recorded, such Assignment of Mortgage shall be delivered in blank;

     

    (5)  if
      Seller
      did not originate the mortgage loan, the originals or image copies (for mortgage
      loans other than MERS Designated Mortgage Loans) of all intervening assignments
      of mortgage with evidence of recording thereon evidencing the chain of mortgage
      assignments from the originator of the mortgage loan to Seller, or in the case
      of a MERS Designated Mortgage Loan, to MERS, or if any such intervening
      assignment has not been returned from the applicable recording office or has
      been lost or if such public recording office retains the original recorded
      assignments of mortgage, Seller shall deliver or cause to be delivered to
      Servicer, a photocopy of such intervening assignment, together with (i) in
      the case of a delay caused by the public recording office, an Officer’s
      Certificate of Seller stating that such intervening assignment of mortgage
      has
      been dispatched to the appropriate public recording office for recordation
      and
      that such original recorded intervening assignment of mortgage or a copy of
      such
      intervening assignment of mortgage certified by the appropriate public recording
      office to be a true and complete copy of the original recorded intervening
      assignment of mortgage will be promptly delivered to Servicer upon receipt
      thereof by Seller; or (ii) in the case of an intervening assignment where a
      public recording office retains the original recorded intervening assignment
      or
      in a case where an intervening assignment is lost after recordation in a public
      recording office, a copy of such intervening assignment;

     

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

     

     

    (6)  if
      available, the original or a copy or an image copy of the original mortgagee
      title insurance policy or attorney’s opinion of title and abstract of title, or
      if the policy has not yet been issued, (a) the irrevocable written
      commitment, interim binder or marked up binder for a title insurance policy
      issued by the title insurance company dated and certified as of the date the
      Eligible Mortgage Loan was funded, or (b) a copy of the applicable escrow
      instructions indicating the name of the title company with, in either case,
      a
      statement by the title insurance company or closing attorney on such binder
      or
      commitment or escrow instructions that the priority of the lien on the related
      Mortgage during the period between the date of the funding of the related
      Eligible Mortgage Loan and the date of the related title policy is
      insured;

     

    (7)  the
      original or an image copy of any security agreement, chattel mortgage,
      securities account control agreement, guarantee, filings or equivalent document
      executed in connection with the Mortgage;

     

    (8)  the
      certification number for any primary mortgage insurance policy (if
      any);

     

    (9)  if
      the
      Eligible Mortgage Loans are sold to the Agencies, the originals or image copies
      of other documents, forms, releases, certifications and papers required by
      the
      applicable Agency Custodial Agreement; and

     

    (10)  and
      any
      additional documents or image copies thereof, required to be added to the
      Mortgage Loan File pursuant to this Agreement or any other Transaction
      Document.

     

    “Mortgage
      Note” means the note, Home Equity Line Agreement or other evidence of the
      indebtedness of a Borrower secured by a Mortgage.

     

    “Mortgaged
      Property” means, with respect to a mortgage loan, the real property securing
      repayment of the debt evidenced by a Mortgage Note.

     

    “Multiemployer
      Plan” means a multiemployer plan defined as such in Section 3(37) of
      ERISA to which contributions have been or are required to be made by Seller
      or
      any ERISA Affiliate and that is covered by Title IV of ERISA.

     

    “Non-Primary
      Residence Mortgage Loan” means any mortgage loan for which the Mortgaged
      Property is not owner occupied on a full-time basis, and was purchased by the
      Borrower as an investment property or for second home purposes.

     

    “Officer’s
      Certificate” means a certificate signed by the Chairman of the Board and
      Chief Executive Officer, the President, or any Vice President of Seller or
      Servicer, as applicable, and delivered to Agent as required by this
      Agreement.

     

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

     

    “Official
      Body” means any government or political subdivision or any agency,
      authority, bureau, central bank, commission, department or instrumentality
      of
      any such government or political subdivision, or any court, tribunal, grand
      jury
      or arbitrator, in each case whether foreign or domestic.

     

    “Obligations”
      means all of Seller’s obligations to pay the Repurchase Price on each Repurchase
      Date and other obligations and liabilities of Seller to the Principals and
      Agent
      arising under this Agreement and the other Transaction Documents, whether now
      existing or hereafter arising.

     

    “Option
      Arm Loan” shall mean a mortgage loan that requires a loan repayment in
      accordance with the terms and conditions of the adjustable rate mortgage note
      which includes a repayment rate that may not occur on the same calendar date
      as
      the interest rate change date and which repayment terms may also include an
      interest-only period.

     

    “Original
      Additional Collateral Requirement” means with respect to any Additional
      Collateral Mortgage Loan, an amount equal to the Additional Collateral required
      at the time of origination of such mortgage loan in order to achieve an
      Loan-to-Value Ratio equal to a maximum of 70%.

     

    “Outstanding
      Principal Balance” means, with respect to any Eligible Mortgage Loan at any
      date, the then outstanding principal amount thereof as of such date excluding
      any accrued and outstanding Finance Charges related thereto.

     

    “PBGC”
      means the Pension Benefit Guaranty Corporation or any entity succeeding to
      any
      or all of its functions under ERISA.

     

    “Performance
      Guaranty” means the guaranty of certain obligations by Performance Guarantor
      in favor of Agent (for itself and each of the Principals), as more particularly
      set forth in the Servicing Agreement.

     

    “Performance
      Guarantor” shall mean PHH Corporation.

     

    “Person”
      shall mean any legal person, including any individual, corporation, partnership,
      association, joint-stock company, trust, limited liability company,
      unincorporated organization, governmental entity or other entity of similar
      nature.

     

    “PHH
      Corporation” means PHH Corporation, a Maryland corporation, together with
      its successors and permitted assigns.

     

    “PHH
      Home Loans” means PHH Home Loans, LLC, a Delaware limited liability company
      and its Subsidiaries, whether now existing or hereafter acquired.

     

    “Plan”
      shall mean an employee pension benefit plan described in Section 3(2) of
      ERISA, other than a Multiemployer Plan which is sponsored by Seller or one
      of
      its Subsidiaries.

     

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

     

    “PMI
      Policy” means a policy of primary mortgage guaranty insurance issued by a
      Qualified Insurer, as required by this Agreement with respect to certain
      Eligible Mortgage Loans.

     

    “Portfolio
      Aging Limitations” means with respect to the age of the Eligible Mortgage
      Loans owned by Agent on any day, the following limitations shall
      apply:  (i) the aggregate Repurchase Price of Eligible Mortgage
      Loans transferred to Agent more than three (3) months prior to such day may
      not
      exceed 50% of the Maximum Aggregate Purchase Price on such day; (ii) the
      aggregate Repurchase Price of Eligible Mortgage Loans acquired by Agent more
      than six (6) months prior to such day may not exceed 25% of the Maximum
      Aggregate Purchase Price on such day; and (iii) Seller must repurchase each
      Purchased Asset included in any Transaction (or series of Transactions) on
      or
      prior to the date that is 364 days from the date such Purchased Asset first
      became subject to a Transaction under this Agreement.

     

    “Portfolio
      Criteria” means, on any day, after giving effect to Agent’s purchase and
      sale of mortgage loans on such day, the Eligible Mortgage Loans owned by Agent
      in the aggregate must satisfy the following criteria:  (i) the
      aggregate Repurchase Price of all mortgage loans secured by property in
      California may not on such day exceed 35% of the Maximum Aggregate Purchase
      Price; (ii) the aggregate Repurchase Price of all mortgage loans secured by
      properties located in New York may not on such day exceed 25% of the Maximum
      Aggregate Purchase Price; (iii) the aggregate Repurchase Price of all
      mortgage loans secured by properties located in New Jersey may not on such
      day
      exceed 20% of the Maximum Aggregate Purchase Price; (iv) the aggregate
      Repurchase Price of all mortgage loans secured by properties located in Florida
      may not on such day exceed 20% of the Maximum Aggregate Purchase Price;
      (v) the aggregate Repurchase Price of all mortgage loans secured by
      property in any other single state may not on such day exceed 10% of the Maximum
      Aggregate Purchase Price; (vi) the aggregate Repurchase Price of all
      Uninsured Loans plus the aggregate Repurchase Price of all Non-Primary Residence
      Mortgage Loans owned by Agent must not on such day exceed 10% of the Maximum
      Aggregate Purchase Price; (vii) the mortgage loans (excluding FHA Loans and
      VA Loans) owned by Agent must have a weighted average FICO Score of at least
      710; (viii) the weighted average Loan-to-Value Ratio of the mortgage loans
      (excluding FHA Loans, VA Loans, HELOCs and Closed End Second Mortgage Loans)
      owned by Agent must not on such day exceed 85%; (ix) the aggregate
      Repurchase Price of all HELOCs plus the aggregate Repurchase Price of all Closed
      End Second Mortgage Loans must not on such day exceed 10% of the Maximum
      Aggregate Purchase Price; (x) the weighted average Combined Loan-to-Value
      Ratio of all HELOCs and all Closed End Second Mortgage Loans owned by Agent
      must
      not on such day exceed 85%; (xi) the aggregate Purchase Price of all
      Manufactured Home Mortgage Loans and acquired on such day may not exceed 1%
      of
      the Aggregate Purchase Price; (xii) the aggregate Purchase Price of all
      Interest-Only Loans must not on such day exceed 15% of the Maximum Aggregate
      Purchase Price; (xiii) the aggregate Purchase Price of all Jumbo Loans plus
      the aggregate Purchase Price of all Super Jumbo Loans owned by Agent must not
      on
      such day exceed 20% of the Aggregate Purchase Price; and (xiv) the aggregate
      Purchase Price of all Super Jumbo Loans owned by Agent must not on such day
      exceed 3% of the Aggregate Purchase Price.

     

    “Price
      Differential” means, with respect to each Transaction as of any date, the
      aggregate amount for all Conduit Principals and Bank Principals of the
      following:

     

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

     

    (i)  for
      each
      Transaction to the extent a Conduit Principal will be funding its portion of
      the
      Purchase Price for such Transaction through the issuance of Short-Term
      Notes,

     

    
      	
              (STNR
                x P x TP)

            	
              +
                F

            
	
              360

            	 


    

    


    (ii)  for
      each
      Transaction to the extent (x) a Conduit Principal will not be funding its
      portion of the Purchase Price for such Transaction through the issuance of
      Short-Term Notes, or (y) a Bank Principal will be funding such
      Transaction,

     

    
      	
              (AR
                x P x TP)

            	
              +
                F

            
	
              360

            	 


    

    


    
      	 	 	
              where:

            
	
              AR

            	
              =

            	
              the
                applicable Assignee Rate for such Transaction

            
	
              P

            	
              =

            	
              the
                related Principal’s Pro Rata Share of the related Purchase
                Price

            
	
              STNR

            	
              =

            	
              the
                applicable Short-Term Note Rate for such Transaction

            
	
              TP

            	
              =

            	
              the
                actual number of days during the period commencing on (and including)
                the
                Purchase Date and ending on (but excluding) the Repurchase
                Date

            
	
              F

            	
              =

            	
              the
                Fees, if any, for such Transaction

            


    

    


    “Principal”
      shall mean each Bank Principal and each Conduit Principal.

     

    “Principal
      Prepayment” means any payment or other recovery of principal made on an
      Eligible Mortgage Loan that is received in advance of its scheduled Due Date,
      including any prepayment penalty or premium thereon, which is not accompanied
      by
      an amount of interest representing scheduled interest due on any date or dates
      in any month or months subsequent to the month of prepayment.

     

    “Program
      Fee” shall have the meaning assigned thereto in the Fee Letter.

     

    “Pro
      Rata Share” means with respect to each Principal, a percentage obtained by
      dividing the related Principal’s Commitment by the Maximum Aggregate Purchase
      Price.

     

    “Purchase
      Date” means the date on which Purchased Assets are to be transferred by
      Seller to Agent, which shall be a Business Day.

     

    “Purchase
      Price” shall mean the price at which Purchased Assets are transferred by
      Seller to Agent in a Transaction, which shall be equal to the aggregate of
      the
      applicable Margin Values as of the related Purchase Date calculated for each
      mortgage loan subject to such Transaction.

     

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

     

    “Purchase
      Price Percentage” means, with respect to each Eligible Mortgage Loan, the
      following percentage, as applicable:

     

    (i)  98%
      with
      respect to Conforming Loans and Landscape Loans;

     

    (ii)  98%
      with
      respect to Jumbo Loans and Super Jumbo Loans;

     

    (iii)  90%
      with
      respect to Non-Primary Residence Mortgage Loans, Interest-Only Loans and
      Uninsured Loans;

     

    (iv)  85%
      with
      respect to HELOCs and Closed End Second Mortgage Loans; and

     

    (v)  80%
      with
      respect to Manufactured Home Mortgage Loans;

     

    provided
      that if more than one Purchase Price Percentage is applicable to an Eligible
      Mortgage Loan, the lowest of such percentages shall apply.

     

    “Purchased
      Assets” means, with respect to a Transaction, the related Eligible Mortgage
      Loans, together with the Related Security, related Records, Servicing Rights,
      and other collateral, and all instruments, chattel paper, and general
      intangibles comprising or relating to all of the foregoing.  The term
“Purchased Assets” with respect to any Transaction at any time also shall
      include Additional Purchased Assets delivered pursuant to Section 5
      hereof.

     

    “Qualified
      Depository” means any depository the accounts of which are insured by the
      FDIC through the BIF or the SAIF and the debt obligations of which are rated
      “A2” and “Aa” or better by Moody’s and S&P, respectively or such depository
      as shall be acceptable to Moody’s and S&P, as applicable.

     

    “Qualified
      Insurer” means a mortgage guaranty insurance company duly authorized and
      licensed where required by law to transact mortgage guaranty insurance business
      and approved as an insurer by FHLMC, FNMA or GNMA.

     

    “Records”
      means all documents, books, records and other information (including, without
      limitation, computer programs, tapes, discs, punch cards, data processing
      software and related property and rights) maintained with respect to Eligible
      Mortgage Loans and the related Borrowers.

     

    “Related
      Security” means with respect to any Eligible Mortgage Loan, all of Seller’s
      right, title and interest in, to and under:

     

    (i)  all
      security agreements, mortgages, deeds of trust, Home Equity Line Agreements
      or
      other agreements that relate to such Eligible Mortgage Loan;

     

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

     

    (ii)  all
      other
      security interests or liens and property subject thereto from time to time,
      if
      any, purporting to secure payment of such Eligible Mortgage Loan, whether
      pursuant to the Eligible Mortgage Loan related to such Eligible Mortgage Loan
      or
      otherwise, together with all financing statements signed by a Borrower
      describing any collateral securing such Eligible Mortgage Loan;

     

    (iii)  the
      assignment to Agent of all UCC financing statements covering any collateral
      securing payment of such Eligible Mortgage Loan;

     

    (iv)  all
      guarantees, indemnities, warranties, insurance (and proceeds and premium refunds
      thereof) or other agreements or arrangements of any kind from time to time
      supporting or securing payment of such Loan whether pursuant to the Eligible
      Mortgage Loan or otherwise;

     

    (v)  all
      Records related to such Eligible Mortgage Loan;

     

    (vi)  all
      rights and remedies of Seller under the Custodial Agreement, together with
      all
      financing statements filed by Seller against Seller in connection therewith;
      and

     

    (vii)  all
      proceeds of any of the foregoing.

     

    “REO
      Disposition” means the final sale by Servicer of any REO
      Property.

     

    “REO
      Disposition Proceeds” means all amounts received with respect to an REO
      Disposition (net of costs related thereto) pursuant to the Servicing
      Agreement.

     

    “REO
      Property” means a Mortgaged Property acquired by Servicer on behalf of Agent
      through foreclosure or by deed in lieu of foreclosure, as described in the
      Servicing Agreement.

     

    “Reportable
      Event” shall mean any reportable event as defined in Section 4043(c) of
      ERISA, other than a reportable event as to which provision for 30-day notice
      to
      the PBGC would be waived under applicable regulations had the regulations in
      effect on the date hereof been in effect on the date of occurrence of such
      reportable event.

     

    “Repurchase
      Date” shall have the meaning assigned thereto in Section 3(a) and shall
      also include the date determined by application of Section 13.

     

    “Repurchase
      Price” means the price at which Purchased Assets are to be transferred from
      Agent to Seller upon termination of a Transaction, which will be determined
      in
      each case (including Transactions terminable upon demand) as the sum of the
      Purchase Price and the Price Differential as of the date of such
      determination.

     

    “Required
      Principals” means (i) when Purchaser is the only Conduit Principal,
      Purchaser and (ii) otherwise, two or more Bank Principals which in the
      aggregate represent more than 50% of the Maximum Aggregate Purchase Price (or,
      if the Commitments have been terminated, have related Conduit Principals
      representing more than 50% of the aggregate outstanding Purchase Price of all
      Transactions).

     

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

     

    “SAIF”
      means the Savings Association Insurance Fund, or any successor
      thereto.

     

    “S&P”
      shall mean Standard & Poor’s Ratings Services, a division of The
      McGraw-Hill Companies.

     

    “Scheduled
      Repurchase Date” shall have the meaning assigned thereto in
      Section 3(a) hereof.

     

    “Securities
      or Securitization Securities” means any note, bond or pass-through
      certificate that is, directly or indirectly secured by, or represents an
      interest in, any Eligible Mortgage Loan or pool of Eligible Mortgage
      Loans.

     

    “Securitization
      or Securitized” means a transaction in which any Eligible Mortgage Loan or
      pool of Eligible Mortgage Loans designated by Servicer or Seller is financed
      through or sold to a Securitization Vehicle, which vehicle issues Securities
      in
      the capital markets.

     

    “Securitization
      Vehicle” means FHLMC, FNMA, GNMA or any trust, partnership, corporation,
      limited liability corporation, limited liability partnership or other state
      law
      entity that is created for the principal purpose of owning or holding an
      Eligible Mortgage Loan or Eligible Mortgage Loans which are the subject of
      a
      Securitization.

     

    “Securities
      Account” has the meaning ascribed to such term in the Additional Collateral
      Transfer Agreement.

     

    “Servicer”
      means (i) PHH Mortgage Corporation, in such capacity, or (ii) any
      other servicer approved by Agent and the Required Principals in their sole
      discretion.

     

    “Servicer
      Default” shall have the meaning assigned thereto in the Servicing
      Agreement.

     

    “Servicing
      Agreement” means that certain Amended and Restated Servicing Agreement,
      dated as of the date hereof, between Servicer, Seller, Performance Guarantor
      and
      Agent, as it may be amended, supplemented or otherwise modified from time to
      time.

     

    “Servicing
      Fee” means with respect to the services provided by Servicer pursuant to the
      Servicing Agreement, a monthly servicing fee of (i) 3/8 of 1% on the
      average monthly balance of Eligible Mortgage Loans (excluding HELOCs and Closed
      End Second Mortgage Loans), and (ii) 0.65% on the sum of (a) the
      average monthly balance of HELOCs plus (b) the average monthly balance of
      Closed End Second Mortgage Loans and, in each case, held by Agent during such
      month.

     

    “Servicing
      Rights” means contractual, possessory or others rights of Servicer, Seller
      or any other Person whether arising under the Servicing Agreement, the Custodial
      Agreement or otherwise, to administer or service a Purchased Asset or to possess
      related Records.

     

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

     

    “Short-Term
      Note Rate” with respect to any Conduit Principal for any interest period for
      any Transaction means (a) to the extent such Conduit Principal funds such
      Transaction by issuing Short-Term Notes, the per annum rate equivalent to
      the weighted average of the per annum rates paid or payable by such Conduit
      Principal from time to time as interest on or otherwise in respect of such
      Short-Term Notes issued by such Conduit Principal that are allocated, in whole
      or in part, by the applicable agent for such Conduit Principal (on behalf of
      such Conduit Principal) to fund the Transaction or maintenance of such
      Transaction during such interest period as determined by such agent (on behalf
      of such Conduit Principal) and reported to Agent, Sellers and Servicer, which
      rates shall include and give effect to the commissions of placement agents
      and
      dealers in respect of such Short-Term Notes, incremental carrying costs incurred
      with respect to such Short-Term Notes maturing on dates other than those on
      which corresponding funds are received by such Conduit Principal, and any other
      costs associated with the issuance of Short-Term Notes, in each case to the
      extent such commissions and other costs are allocated, in whole or in part,
      to
      such Short-Term Notes by such agent (on behalf of such Conduit Principal);
      provided, however, that if any component of such rate is a
      discount rate, in calculating the “Short-Term Note Rate” for such interest
      period such agent shall for such component use the rate resulting from
      converting such discount rate to an interest bearing equivalent rate per
      annum; provided, further, that notwithstanding anything in
      this Agreement or the other Transaction Documents to the contrary, Seller agrees
      that any amounts payable to the Principals in respect of interest for any
      interest period with respect to any Transaction funded by such Conduit Principal
      at the Short-Term Note Rate shall include an amount equal to the portion of
      the
      face amount of the outstanding Short-Term Notes issued to fund or maintain
      such
      Transaction that corresponds to the portion of the proceeds of such Short-Term
      Notes that was used to pay the interest component of maturing Short-Term Notes
      issued to fund or maintain such Transaction, to the extent that such Conduit
      Principal had not received payments of interest in respect of such interest
      component prior to the maturity date of such maturing Short-Term Notes (for
      purposes of the foregoing, the “interest component” of Short-Term Notes equals
      the excess of the face amount thereof over the net proceeds received by such
      Conduit Principal from the issuance of Short-Term Notes, except that if such
      Short-Term Notes are issued on an interest-bearing basis its “interest
      component” will equal the amount of interest accruing on such Short-Term Notes
      through maturity), or (b) any other rate designated as the “Short-Term Note
      Rate” for such Conduit Principal in an agreement or instrument pursuant to which
      such Person became or becomes a party hereto as a Conduit Principal, or any
      other writing or agreement provided by such Conduit Principal to Servicer and
      Agent from time to time.  The “Short-Term Note Rate” for any day while
      an Event of Default exists shall be the Default Rate.

     

    “Short-Term
      Notes” means the short-term commercial paper, secured liquidity, or extended
      maturity notes issued or to be issued by a Conduit Principal to fund or maintain
      the Transactions.

     

    “Sub-Prime
      Borrower” means a Borrower of nonprime credit quality or lower credit
      quality.

     

    “Subsidiary”
      shall mean with respect to any Person, any corporation, association, joint
      venture, partnership or other business entity (whether now existing or hereafter
      organized) of which at least a majority of the voting stock or other ownership
      interests having ordinary voting power for the election of directors (or the
      equivalent) is, at the time as of which any determination is being made, owned
      or controlled by such Person or one or more subsidiaries of such Person or
      by
      such Person and one or more subsidiaries of such Person.  Unless
      otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in
      this Agreement shall refer to a Subsidiary or Subsidiaries of
      Seller.

     

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

     

    “Super
      Jumbo Loan” shall mean any mortgage loan which substantially conforms to the
      Guidelines, except that the principal balance thereof exceeds the principal
      balance of a mortgage loan which conforms to the Guidelines and the principal
      balance thereof is greater than $1,500,000 but less than or equal to $3,000,000,
      and the terms of which include other specified exceptions to the Guidelines,
      if
      any, which are consistent with Seller’s Super Jumbo Loan underwriting
      standards.  Super Jumbo Loans will not include mortgage loans made to
      Sub-Prime Borrowers.

     

    “Supplemental
      Transaction Notice” shall have the meaning assigned thereto in
      Section 3(c) hereof.

     

    “Surety
      Bond” means any limited purpose surety bond identified by a policy number
      guaranteeing payment by the related insurer to the applicable Permitted
      Beneficiary of any shortfalls that occur with respect to any Additional
      Collateral Mortgage Loan that becomes a Defaulted Loan.

     

    “Tangible
      Net Worth” means with respect to any Person, at any date of determination,
      Consolidated Net Worth of such Person minus the aggregate book value of all
      intangible assets of such Person and its Consolidated Subsidiaries as of such
      date in accordance with GAAP.

     

    “Termination
      Date” means the earliest of (i) October 27, 2008 or such later day
      as mutually agreed to in writing by Seller, Agent and the Bank Principals in
      accordance with Section 21 hereof, (ii) the day the purchase
      commitment termination date under any Asset Purchase Agreement occurs (unless
      other APA Purchaser(s) or a replacement APA Purchaser accepts such terminating
      APA Purchaser’s commitment thereunder), (iii) the date determined pursuant
      to Section 13 and (iv) the date that the Commitments are permanently
      reduced to zero or terminated by Seller in accordance with Section 21
      hereof.

     

    “Terminated
      Loan” means each Eligible Mortgage Loan which is either (i) sold or
      Securitized or (ii) prepaid in full.

     

    “Transaction”
      has the meaning assigned thereto in Section 1 hereof.

     

    “Transaction
      Documents” means this Agreement, the Custodial Agreement, the Servicing
      Agreement, the Fee Letter, each Transaction Notice, each Daily Servicer Report,
      each Supplemental Transaction Notice, the Performance Guaranty, the Back-up
      Servicing Agreement and any other agreement entered into by Seller and/or
      Servicer or Performance Guarantor, on the one hand, and Agent or any Principal
      or any of their respective Affiliates (or Custodian on their behalf) on the
      other, in connection herewith or therewith.

     

    “Transaction
      Notice” means a written request of Seller to enter into a Transaction, in
      form and substance satisfactory to Agent and each Bank Principal and
      substantially in the form attached and made a part of the Daily Servicer Report
      which is delivered to Agent and Custodian.

     

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    “Transfer
      Availability Fee” shall have the meaning assigned thereto in the Fee
      Letter.

     

    “Transferee”
      has the meaning assigned thereto in Section 30 hereof.

     

    “Uniform
      Commercial Code” or “UCC” means the Uniform Commercial Code as in
      effect on the date hereof in the State of New York or the Uniform Commercial
      Code as in effect in the applicable jurisdiction.

     

    “Uninsured
      Loan” means a mortgage loan that substantially conforms to the Guidelines,
      except (i) the principal balance of such Eligible Mortgage Loan may exceed
      the principal balance of a mortgage loan that conforms to the Guidelines,
      (ii) maintenance of a PMI Policy will not be required and (iii) the
      mortgage loan is not an FHA Loan, VA Loan, Landscape Loan, HELOC or Closed
      End
      Second Mortgage Loan.

     

    “Unmatured
      Event of Default” means any event, that, with the giving of notice or the
      passage of time or both, would constitute an Event of Default.

     

    “VA”
      means the U.S. Department of Veterans Affairs, an agency of the United States
      of
      America, or any successor thereto including the Secretary of Veterans
      Affairs.

     

    “VA
      Approved Lender” means those lenders which are approved by the VA to act as
      a lender in connection with the origination of VA Loans.

     

    “VA
      Guaranty Proceeds” means the proceeds of any payment of a VA Loan Guaranty
      Certificate.

     

    “VA
      Loan” means an Eligible Mortgage Loan which is the subject of a VA Loan
      Guaranty Certificate as evidenced by a VA Loan Guaranty Certificate, or an
      Eligible Mortgage Loan which is a vendee loan sold by the VA.

     

    “VA
      Loan Guaranty Certificate” means the obligation of the United States to pay
      a specific percentage of an Eligible Mortgage Loan (subject to a maximum amount)
      upon default of the Borrower pursuant to the Servicemen’s Readjustment Act, as
      amended.

     

    “VA
      Regulations” means regulations promulgated by the U.S. Department of
      Veterans Affairs pursuant to the Servicemen’s Readjustment Act, as amended,
      codified in 38 Code of Federal Regulations, and other VA issuances relating
      to
      VA Loans, including related handbooks, circulars and notices.

     

    “Wet
      Funded Loan” means a mortgage loan that is originated by Seller and
      purchased by Agent, prior to the delivery of the Mortgage Note to the
      Custodian.

     

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    “Wet
      Funded Loan Limitation” means at any time of determination, the aggregate
      Purchase Price of all Wet Funded Loans, other than Landscape Loans, as a
      percentage of Aggregate Purchase Price may not exceed 20%.

     

    (b)  Capitalized
      terms.  Capitalized terms used but not defined in this Agreement
      shall have the meanings assigned thereto in the Servicing Agreement or the
      Custodial Agreement, as applicable.

     

    (c)  Interpretation.  Headings
      are for convenience only and do not affect interpretation.  The
      following rules of this subsection (c) apply unless the context requires
      otherwise.  The singular includes the plural and
      conversely.  A gender includes all genders.  Where a word or
      phrase is defined, its other grammatical forms have a corresponding
      meaning.  A reference to a subsection, Section, Annex, Exhibit or
      Schedule is, unless otherwise specified, a reference to a Section of,
      or Annex, Exhibit or Schedule to, this Agreement.  A
      reference to a party to this Agreement or another agreement or document includes
      the party’s successors and permitted substitutes or assigns.  A
      reference to an agreement or document is to the agreement or document as
      amended, modified, novated, supplemented or replaced, except to the extent
      prohibited by any Transaction Document.  A reference to legislation or
      to a provision of legislation includes a modification or re-enactment of it,
      a
      legislative provision substituted for it and a regulation or statutory
      instrument issued under it.  A reference to writing includes a
      facsimile transmission and any means of reproducing words in a tangible and
      permanently visible form.  A reference to conduct includes, without
      limitation, an omission, statement or undertaking, whether or not in
      writing.  An Event of Default or a Servicer Default exists until it
      has been waived in writing by the appropriate Person or Persons or has been
      timely cured.  The words “hereof”, “herein”, “hereunder” and similar
      words refer to this Agreement as a whole and not to any particular provision
      of
      this Agreement.  The term “including” is not limiting and means
“including without limitation.”  In the computation of periods of time
      from a specified date to a later specified date, the word “from” means “from and
      including”, the words “to” and “until” each mean “to but excluding”, and the
      word “through” means “to and including.”  This Agreement may use
      several different limitations, tests or measurements to regulate the same or
      similar matters.  All such limitations, tests and measurements are
      cumulative and shall each be performed in accordance with their
      terms.  Unless the context otherwise clearly requires, all accounting
      terms not expressly defined herein shall be construed, and all financial
      computations required under this Agreement shall be made, in accordance with
      GAAP, consistently applied.  References herein to “fiscal year” and
“fiscal quarter” refer to such fiscal periods of Seller.  Except where
      otherwise provided in this Agreement, any determination, statement or
      certificate by Agent or Principal or an authorized officer of Agent or Principal
      or any of their Affiliates provided for in this Agreement that is made in good
      faith and in the manner provided for in this Agreement shall be conclusive
      and
      binds the parties in the absence of manifest error.  A reference to an
      agreement includes a security interest, guarantee, agreement or legally
      enforceable arrangement whether or not in writing.  A reference to a
      document includes an agreement (as so defined) in writing or a certificate,
      notice, instrument or document, or any information recorded in computer disk
      form.  Where Seller or Servicer is required to provide any document to
      any other Person under the terms of this Agreement, the relevant document shall
      be provided in writing or printed form unless such other Person requests
      otherwise.  At the request of Agent or any Bank Principal, the
      document shall be provided in computer disk form or both printed and computer
      disk form.  This Agreement is the result of negotiations among Agent,
      Principals, Servicer and Seller, and is the product of all
      parties.  In the interpretation of this Agreement, no rule of
      construction shall apply to disadvantage one party on the ground that such
      party
      proposed or was involved in the preparation of any particular provision of
      this
      Agreement or this Agreement itself.  Except where otherwise expressly
      stated, Agent and any Principal may give or withhold, or give conditionally,
      approvals and consents, may be satisfied or unsatisfied, and may form opinions
      and make determinations at its sole and absolute discretion.  Any
      requirement of good faith, discretion or judgment by Agent or any Principal
      shall not be construed to require Agent or any Principal to request or await
      receipt of information or documentation not immediately available from or with
      respect to Seller, Servicer, or any other Person or the Purchased Assets
      themselves.

     

     

    
      
        
        

      

      
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    3.  ENTERING
      INTO TRANSACTIONS, TRANSACTION NOTICES; CONFIRMATIONS.

     

    (a)  When
      Seller wishes to enter into a proposed Transaction it shall deliver a
      Transaction Notice of such proposed Transaction together with the Daily Servicer
      Report to Agent prior to 4:00 p.m. New York City time one Business Day
      prior to the proposed Purchase Date.  Such Daily Servicer Report shall
      include a Daily Loan Inventory for the Purchased Assets and such other
      information required to be set forth therein or attached thereto.  On
      the terms and subject to the conditions set forth herein, on such Purchase
      Date,
      Seller shall sell and transfer to Agent, against the payment of the Purchase
      Price therefor, and Agent shall purchase from Seller, all of Seller’s right,
      title and interest in the Purchased Assets with respect to such
      Transaction.  On any Business Day (the “Demand Date”), Seller
      may, on demand, repurchase any and all of the Purchased Assets subject to such
      Transaction; provided, however, that, subject to Section 3(c)
      below, Seller shall repurchase all such Purchased Assets from Agent on the
      10th
      day (or if such day is not a Business Day, the next Business Day) of each month
      following the related Purchase Date (such day so determined for each month,
      the
“Scheduled Repurchase Date”, and/or, if applicable, the Demand Date or
      such other date set forth in a “Supplemental Transaction Notice” pursuant
      to Section 3(c) below are referred to herein as the “Repurchase
      Date” for such Transaction).  In the case of a Transaction (or
      portion thereof) that Seller terminates upon demand, such demand shall be made
      by Seller, no later than 4:00 p.m. New York City time one Business Day
      prior to the Business Day on which such termination will be
      effective.  On each applicable Repurchase Date, the termination of
      such Transaction (or portion thereof) will be effected by transfer to Seller
      (or
      its agent) of the Purchased Assets against the payment of the Repurchase Price
      therefor to Agent; provided, however, that if such Repurchase Date
      is not a Scheduled Repurchase Date, the portion of such Repurchase Price equal
      to the Price Differential may be paid by Seller on the Scheduled Repurchase
      Date.

     

    (b)  Subject
      to the conditions in Section 8(b), each Transaction (or portion thereof)
      that has not been terminated by a repurchase by Seller on a Demand Date, shall
      become subject to a new Transaction unless Agent is notified by Seller no later
      than 4:00 p.m. New York City time one Business Day prior to the then
      Scheduled Repurchase Date.  Notwithstanding any other provision of
      this Agreement to the contrary, under  no circumstances may any
      Purchased Asset be included in any Transaction (or series of Transactions)
      if
      the current Repurchase Date for such Transaction occurs on a date that is
      greater than 364 days from the date such Purchased Asset first became subject
      to
      a Transaction under this Agreement.

     

     

    
      
        
        

      

      
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    (c)  In
      the
      event that Seller and Agent desire to enter into a Transaction on terms other
      than as set forth in this Agreement, Seller and Agent shall execute a
“Supplemental Transaction Notice” specifying such terms prior to entering
      into such Transaction.  Any such Supplemental Transaction Notice and
      the related Transaction Notice in the applicable Daily Servicer Report, together
      with this Agreement, shall constitute conclusive evidence of the terms agreed
      to
      between Agent and Seller with respect to the Transaction to which the
      Supplemental Transaction Notice relates.  In the event of any conflict
      between this Agreement and a Supplemental Transaction Notice, the terms of
      the
      Supplemental Transaction Notice shall control with respect to the related
      Transaction.

     

    (d)  Unless
      otherwise consented to in writing by Agent and the Required Principals, the
      number of Transactions with Seller in any calendar day shall not exceed
      one.

     

    4.  PAYMENT
      AND TRANSFER.  Unless otherwise agreed, all transfers of funds by
      any Principal to Seller hereunder shall be in immediately available funds and
      shall be remitted to the Funding Account (which shall be specified in each
      related Daily Servicer Report) and all Purchased Assets transferred shall be
      transferred to the Custodian pursuant to the Custodial Agreement.  All
      amounts remitted to the Funding Account by or on behalf of any Principal shall
      be distributed from the Funding Account in accordance with the provisions of
      Section 6 hereof. Any Repurchase Price or Price Differential received by
      Agent after 2:00 p.m. (New York City time) shall be applied on the next
      succeeding Business Day and Seller and Servicer, as applicable, shall be
      obligated to pay to Agent (in addition to, and together with, the amount of
      such
      Price Differential and any Breakage Costs) interest on the unpaid Repurchase
      Price at a rate per annum equal to the Default Rate until the Price Differential
      is received in full by Agent.  All per annum fees payable under this
      Agreement and the other Transaction Documents shall be calculated for the actual
      days elapsed on the basis of a 360-day year.  All amounts to be paid
      or deposited by Seller or Servicer under any Transaction Document shall be
      paid
      or deposited in accordance with the terms thereof in immediately available
      funds
      no later than 2:00 p.m. (New York City time) on the day when due; if such
      amounts are payable to Agent or any Principal or Principals they shall be paid
      to Agent or deposited into the Funding Account and the Agent shall remit such
      amounts as applicable.  Seller shall, to the extent permitted by Law,
      pay to Agent for the account of each Principal upon demand of Agent, interest
      on
      all amounts not paid or deposited when due to Agent for the account of each
      Principal hereunder at a rate equal to the Default Rate.  All
      computations of interest hereunder shall be made on the basis of a year of
      360
      days for the actual number of days (including the first but excluding the last
      day) elapsed other than computations of interest calculated by reference to
      the
      Base Rate which shall be calculated on the basis of a 365- or 366- day year,
      as
      applicable.

     

    5.  MARGIN
      MAINTENANCE.  If at any time the Aggregate Purchase Price of all
      Purchased Assets of Seller subject to all Transactions shall exceed the
      Aggregate Margin Value therefor (any such deficiency, a “Margin Deficit”)
      then Seller shall either transfer cash to the Funding Account, or at Agent’s
      option (and provided Seller has additional Eligible Mortgage Loans), transfer
      additional Eligible Mortgage Loans to the Custodian, together with the Related
      Security, Records, Servicing Rights and other collateral and all instruments,
      chattel paper, and general intangibles comprising or related to all of the
      foregoing (“Additional Purchased Assets”), so that after giving effect to
      the transfer of cash or the inclusion of any such Additional Purchased Assets,
      no Margin Deficit shall exist (such requirement, a “Margin Call”);
provided that if, as a result of Agent’s determination of the aggregate
      Collateral Value, the Aggregate Purchase Price of all Purchased Assets of Seller
      subject to all Transactions exceeds the Aggregate Margin Value by the Minimum
      Transfer Amount (such event, a “Minimum Transfer Condition”)
      (i) Seller shall be required to transfer cash to the Margin Call Account to
      cure such Margin Deficit and (ii) Seller’s obligation to make the Margin
      Call shall be subject to its receipt of notice from Agent (it being
      understood that if such notice is delivered to Seller by Agent on or prior
      to 11:00 a.m. on any Business Day on which a Minimum Transfer Condition
      exists, Seller shall pay to the Margin Call Account the Minimum Transfer Amount
      prior to 5:00 p.m. on such Business Day and if such notice is delivered
      after 11:00 a.m., such notice shall be deemed received on the next
      succeeding Business Day and Seller shall pay to the Margin Call Account the
      Minimum Transfer Amount prior to 5:00 p.m. on such Business
      Day).

     

     

    
      
        
        

      

      
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    All
      amounts paid by Seller to the Margin Call Account in respect of any Margin
      Deficit shall be held for the benefit of Agent and the Principals.

     

    On
      any
      day on which an Event of Default shall not have occurred and be continuing,
      and
      if no Margin Deficit exists, if the amount on deposit in the Margin Call Account
      exceeds the Aggregate Purchase Price of all Purchased Assets of Seller subject
      to all Transactions less the Aggregate Margin Value then, at the request of
      Seller, such excess shall be withdrawn from the Margin Call Account by the
      authorization of Agent and remitted to Seller.

     

    If
      an
      Event of Default shall have occurred and be continuing, all amounts on deposit
      in the Margin Call Account, if any, shall be withdrawn by Agent and applied
      by
      it in reduction of the Aggregate Purchase Price and Aggregate
      Unpaids.

     

    6.  INCOME
      PAYMENTS AND COLLECTIONS.  The Seller shall cause all Collections
      and other proceeds of the Collateral received by the Seller to be remitted
      to
      the Collection Account within two (2) Business Days after the Seller’s receipt
      thereof.

     

    The
      Seller shall, on a daily basis, remit all Collections (other than Income) then
      on deposit in the Collection Account to the Funding Account.

     

    The
      Seller shall, on each Monthly Interest Payment Date, remit all Income with
      respect to the related Due Period then on deposit in the Collection Account
      to
      the Funding Account.

     

    All
      amounts on deposit in the Funding Account, remitted by or on behalf of the
      Seller shall be applied in accordance with the provisions of Annex IV hereto,
      prior to giving effect to any amounts in respect of the aggregate Purchase
      Price
      for Transactions occurring on such day.

     

    7.  BACK-UP
      SECURITY INTEREST.  Seller, Agent and each Principal intend that
      the Transactions hereunder be sales to Agent of the Purchased Assets and not
      loans from Agent to Seller secured by such Purchased Assets.  However,
      in order to preserve Agent’s and each Principal’s rights under this Agreement in
      the event that a court or other forum recharacterizes the Transactions hereunder
      as other than sales, and as security for Seller’s performance of all of its
      respective Obligations, Seller hereby grants to Agent a fully perfected first
      priority security interest in the following property, whether now existing
      or
      hereafter acquired:  the Purchased Assets, the Related Security, the
      related Records, all mortgage guaranties and insurance relating to such
      Purchased Assets (issued by governmental agencies or otherwise) and any mortgage
      insurance certificate or other document evidencing such mortgage guaranties
      or
      insurance relating to such Purchased Assets and all claims and payments
      thereunder, any purchase agreements or other agreements or contracts relating
      to
      or constituting any or all of the foregoing, all “accounts” as defined in the
      Uniform Commercial Code relating to or constituting any or all of the foregoing,
      all other insurance policies and insurance proceeds relating to any Purchased
      Asset or the related Mortgaged Property, any security account and all rights
      to
      Income and the rights to enforce such payments arising from any of the Purchased
      Assets, the Servicing Rights, all guarantees or other support for the Purchased
      Assets, all returned or repossessed manufactured housing units relating to
      the
      mortgage loans, any assignment of a security interest in the related
      manufactured housing unit, and any and all replacements, substitutions,
      distributions on, or proceeds with respect to, any of the
      foregoing  (collectively the “Collateral”).  Seller
      agrees to execute, deliver and/or file such documents and perform such acts
      as
      may be reasonably necessary to fully perfect Agent’s security interest created
      hereby.  Furthermore, Seller hereby authorizes Agent to file financing
      statements relating to the Purchased Assets without any further authorization
      of
      Seller at its option, as it deems appropriate.  Servicer shall pay all
      costs for any financing statement or statements prepared pursuant to this
      Section 7.

     

     

     

    
      
        
        

      

      
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    8.  CONDITIONS
      PRECEDENT.

     

    (a)  As
      conditions precedent to the initial Transaction, (i) Agent shall have
      received on or before the day of such initial Transaction each of the following,
      in form and substance satisfactory to Agent in its sole and absolute discretion
      and (ii) the following shall be true the day of such initial
      Transaction:

     

    (1)  Transaction
      Documents.  Agent shall have received this Agreement and each of
      the other Transaction Documents (other than the Back-up Servicing Agreement),
      each executed and delivered by a duly authorized officer of each of the parties
      thereto.

     

    (2)  Organizational
      Documents.  Agent shall have received, with copies for each of the
      Principals, a certificate of the Secretary or Assistant Secretary of Seller,
      Servicer and Performance Guarantor, each dated the Effective Date, and
      certifying (A) that attached thereto is a true and complete copy of the
      organizational documents and applicable operating agreement of such Person
      as in
      effect on the date of such certification; (B) that attached thereto is a
      true and complete copy of resolutions adopted by the board of directors of
      such
      Person authorizing the transactions contemplated hereunder and under the other
      Transaction Documents and the execution, delivery and performance in accordance
      with their respective terms of this Agreement, any other Transaction Document
      to
      which such Person is a party and any other documents required or contemplated
      under any Transaction Document to which such Person is a party; and (C) as
      to the incumbency and specimen signature of each officer of such Person
      executing this Agreement, any other Transaction Document to which such Person
      is
      a party or any other document delivered by it in connection herewith or
      therewith (such certificate to contain a certification by another officer of
      such Person as to the incumbency and signature of the officer signing the
      certificate referred to in this paragraph (2)).

     

     

    
      
        
        

      

      
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    (3)  Financial
      Statements.  Agent and the Principals shall have received and be
      satisfied with the unaudited consolidated financial statements of Seller and
      the
      unaudited balance sheet of Seller and its Consolidated Subsidiaries for June
      30,
      2007.

     

    (4)  Opinions
      of Counsel.  Agent shall have received the favorable written
      opinions, dated as of the Effective Date, and addressed to Agent, the Principals
      and each Rating Agency, of internal counsel of Seller and of Thacher,
      Proffitt & Wood, LLP, in each case in form, scope, and substance
      satisfactory to Agent and each of the Principals.

     

    (5)  No
      Material Adverse Change.  Agent shall be satisfied that no
      material adverse change shall have occurred with respect to the business,
      assets, operations or condition, financial or otherwise, of Seller, Servicer,
      Performance Guarantor and their respective Consolidated Subsidiaries, taken
      as a
      whole, since June 30, 2007.

     

    (6)  Payment
      of Fees.  Agent shall be satisfied that all amounts payable to
      Agent and the Principals pursuant hereto or with regard to the transactions
      contemplated hereby have been or are simultaneously being paid.

     

    (7)  Litigation.  No
      litigation shall be pending or, to the knowledge of Seller, threatened which
      could reasonably be expected to have a material adverse effect on Seller or
      any
      of its properties, or which could reasonably be expected to materially adversely
      affect the ability of Seller to fulfill its obligations hereunder or under
      any
      other Transaction Document or to otherwise materially impair the interests
      of
      Agent or any of the Principals.

     

    (8)  Officer’s
      Certificate.  Agent shall have received a certificate of the chief
      executive officer or chief financial officer or chief accounting officer of
      Seller certifying, as of the Effective Date, compliance with the conditions
      set
      forth in Sections 8(b)(2), 8(b)(3) 8(b)(4) below.

     

    (9)  Historical
      Data.  Agent and the Principals shall have received such
      historical financial information of Seller, and pro-forma financial statements
      and other financial information, as Agent or any Principal may reasonably
      request.

     

    (10)  UCC
      Search Reports.  Agent shall have received written search reports
      provided to Agent by a search service acceptable to Agent, listing all effective
      financing statements that name Seller as debtor or assignor and that are filed
      in any applicable UCC jurisdiction and in such other jurisdictions that Agent
      shall reasonably request, together with copies of such financing statements
      (none of which shall cover any Purchased Assets or interests therein or proceeds
      of any thereof other than those in favor of Agent), and tax and judgment lien
      search reports from a Person satisfactory to Agent showing no evidence of such
      lien filed against Seller.

     

     

    
      
        
        

      

      
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    (11)  UCC
      Financing Statements.  Agent shall have received
      (i) acknowledgment copies of proper financing statements (Form UCC-1 or
      Form UCC-3), filed on or prior to the Effective Date or shortly thereafter,
      naming Seller, as debtor and Agent as the secured party as may be necessary
      or,
      in the opinion of Agent, desirable under the UCC to perfect Agent’s security
      interest in the Purchased Assets and (ii) evidence of properly filed
      Uniform Commercial Code Form UCC 3 financing statements necessary to release
      all
      liens and other adverse claims of any Person (other than Agent) in the Purchased
      Assets granted by any Person.

     

    (12)  Establishment
      of Accounts.  Agent shall have received evidence satisfactory to
      it that Seller has caused the Collection Account, the Funding Account, the
      Escrow Account and the Margin Call Account to be established.

     

    (b)  The
      obligation of Agent to enter into each Transaction pursuant to this Agreement
      is
      subject to the following conditions precedent:

     

    (1)  Agent
      or
      its designee shall have received on or before the day of a Transaction with
      respect to such Purchased Assets (x) evidence satisfactory to Agent that
      each Principal’s Pro Rata Share of the related Purchase Price for such
      Transaction has been remitted to the Funding Account and (y) a Daily
      Servicer Report, which includes a Transaction Notice and Daily Loan
      Inventory.

     

    (2)  The
      representations and warranties set forth in this Agreement and in the other
      Transaction Documents shall be true and correct on and as of such date with
      the
      same effect as if made on and as of such date.

     

    (3)  (i) Seller,
      Servicer and Performance Guarantor shall be in compliance with each of the
      terms
      and provisions set forth in the Transaction Documents to be observed or
      performed and no Unmatured Event of Default, Event of Default or Servicer
      Default shall have occurred and be continuing on such date or after giving
      effect to the Transaction to be made on such date and (ii) no unmatured
      event of default shall have occurred under the Five Year Competitive Advance
      and
      Revolving Credit Agreement, dated as of January 6, 2006, among PHH
      Corporation, as Borrower, the Lenders referred to therein, Citicorp USA, Inc.,
      as Syndication Agent, and Bank of America, N.A., The Bank of Nova Scotia and
      Calyon New York Branch, as Documentation Agents, and JPMorgan Chase Bank, N.A.,
      as administrative agent, as such agreement exists on the date hereof and as
      the
      same may be further amended, modified, waived or supplemented, solely to the
      extent that the Agent and the Required Principals have given their prior written
      consent to such amendment, modification, wavier or supplement; provided
      that the condition in clause (ii) above alone shall not prevent
      Transactions which, after giving effect thereto, do not, during the continuation
      of an unmatured event of default, increase the Aggregate Purchase Price beyond
      the Aggregate Purchase Price as of the close of Seller’s business, on the
      Business Day immediately prior to the date such unmatured event of default
      occurred.

     

     

    
      
        
        

      

      
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    (4)  As
      evidenced by a certificate of Seller in form and substance satisfactory to
      Agent, the then aggregate outstanding Purchase Price for all Purchased Assets,
      when added to the Purchase Price for the requested Transaction, shall not exceed
      the Maximum Aggregate Purchase Price.

     

    (5)  The
      aggregate Purchase Price for the requested Transaction shall not be less than
      $1,000,000 and only in multiples of $100,000 in excess thereof, unless otherwise
      agreed between Seller and Agent.

     

    (6)  The
      Termination Date shall not have occurred.

     

    (7)  Agent
      shall have completed to its satisfaction any due diligence with respect to
      Seller and the Eligible Mortgage Loans which are the subject of such Transaction
      and the Principals and Agent shall have received such approvals, opinions or
      other documents as any such Person shall have reasonably requested prior to
      any
      such Transaction.

     

    (8)  The
      following representation and warranty of Seller, Servicer and Performance
      Guarantor shall be true and correct:  (A) no event, circumstance
      or condition that has resulted, or could reasonably be expected to result in,
      a
      material adverse change with respect to the business, assets, operations or
      condition, financial or otherwise, of such Person and (B) no material
      adverse effect shall have occurred with respect to such Person.

     

    9.  RELEASE
      OF PURCHASED ASSETS.  Upon timely payment in full of the
      Repurchase Price and all other Obligations owing with respect to a Purchased
      Asset, if no Unmatured Event of Default which is capable of cure or Event of
      Default has occurred and is continuing, Agent (or Custodian on its behalf)
      shall
      release such Purchased Asset to Seller (or its designee) unless such release
      would give rise to or perpetuate a Margin Deficit.

     

    10.  REPRESENTATIONS
      AND WARRANTIES.  Seller hereby represents and warrants for the
      benefit of Agent and each Principal, and shall on and as of the Purchase Date
      for any Transaction and on and as of each date thereafter through and including
      the related Repurchase Date be deemed to represent and warrant,
      that:

     

     

    
      
        
        

      

      
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    (a)  Due
      Organization and Authority.  It is duly organized, validly
      existing and in good standing under the laws of New Jersey and has all licenses
      necessary to carry on its business as now being conducted and is licensed,
      qualified and in good standing in each state where a Mortgaged Property is
      located if required to conduct business of the type conducted by it and where
      the failure to be licensed, qualified or in good standing could reasonably
      be
      expected to have a material adverse effect, and in any event it is in compliance
      with the laws of any such state to the extent necessary to ensure the
      enforceability of any Eligible Mortgage Loan sold hereunder and the servicing
      of
      any such Eligible Mortgage Loan in accordance with the terms of this Agreement,
      each Transaction Document and any Transaction Notice.

     

    (b)  Power
      and Authority.  It has the full power and authority to execute and
      deliver this Agreement, each other Transaction Document and any Transaction
      Notice and to perform its obligations thereunder in accordance with the terms
      thereof and to consummate the Transactions and to conduct its business as
      currently conducted.

     

    (c)  Due
      Authorization.  The execution, delivery and performance of this
      Agreement, each other Transaction Document and any Transaction Notice by it
      and
      the consummation of the transactions contemplated hereby and thereby have been
      duly and validly authorized by it and all requisite corporate action has been
      taken by it to make this Agreement, each other Transaction Document and any
      Transaction Notice valid and binding upon Seller in accordance with its
      terms.

     

    (d)  Noncontravention.  Neither
      the execution and delivery of this Agreement, any other Transaction Document
      or
      any Transaction Notice, the acquisition of Eligible Mortgage Loans by it, the
      sale of Eligible Mortgage Loans to Agent or the transactions contemplated hereby
      or thereby, nor the fulfillment of or compliance with the terms and conditions
      of this Agreement, any other Transaction Document or any Transaction Notice,
      will conflict with or result in a breach of any of the terms, conditions or
      provisions of Seller’s charter or by-laws or any material agreement or
      instrument to which Seller 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 violation in any material respect of any applicable law, rule, regulation,
      order, judgment or decree to which Seller or its property is subject, or impair
      the ability of Agent to realize on the Eligible Mortgage Loans in any material
      respect, or impair the value of the Eligible Mortgage Loans in any material
      respect, or impair in any material respect the ability of Agent to realize
      the
      full mortgage insurance benefits (i) of the FHA Mortgage Insurance Contract
      with respect to FHA Loans; (ii) of the VA Loan Guaranty Certificate with
      respect to VA Loans; or (iii) other insurance benefits accruing pursuant to
      this Agreement and the other Transaction Documents, including but not limited
      to
      any PMI Policy.

     

    (e)  Legal
      Proceeding.  There is no action, suit, proceeding or investigation
      pending or to its knowledge threatened against it which, either in any one
      instance or in the aggregate, may result in any material adverse change in
      the
      business, operations, financial condition, properties or assets of Seller,
      or
      result in any material impairment of the right or ability of Seller to carry
      on
      its business substantially as now conducted, or in any material liability on
      the
      part of Seller, or which would draw into question the validity of this
      Agreement, any other Transaction Document or any Transaction Notice or the
      Eligible Mortgage Loans or the validity of any action taken or to be taken
      in
      connection with the obligations of Seller contemplated herein, or which would
      be
      likely to impair materially the ability of Seller to perform under the terms
      of
      this Agreement, any other Transaction Document or any Transaction
      Notice.

     

     

    
      
        
        

      

      
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    (f)  Valid
      and Binding Obligations.  This Agreement, each other Transaction
      Document and any Transaction Notice evidences the valid, binding and enforceable
      obligation of Seller, except that (i) the enforceability thereof may be
      limited by bankruptcy, insolvency, moratorium, receivership and other similar
      laws relating to creditors’ rights generally and (ii) the remedy of
      specific performance and injunctive and other forms of equitable relief may
      be
      subject to equitable defenses and to the discretion of the court before which
      any proceeding therefore may be brought.

     

    (g)  Financial
      Statements.  Seller has delivered to Agent consolidated financial
      statements of PHH Corporation as to its last three complete fiscal years and
      any
      later quarter ended more than 60 days prior to the execution of this
      Agreement.  All such financial statements  fairly present
      the pertinent results of operations and changes in financial position at the
      end
      of each such period of PHH Corporation and its subsidiaries and have been
      prepared in accordance with GAAP consistently applied throughout the periods
      involved, except as set forth in the notes thereto.  There has been no
      change in the business, operations, financial condition, properties or assets
      of
      Seller since the date of PHH Corporation’s most recently provided financial
      statements that would have a material adverse effect on its ability to perform
      its obligations under this Agreement.

     

    (h)  Accuracy
      of Information.  Neither this Agreement, any other Transaction
      Document, any Transaction Notice nor any statement, report or other document
      prepared by Seller or to be prepared by Seller pursuant hereto or thereto or
      in
      connection with the transactions contemplated hereby or thereby contains any
      untrue statement of a material fact relating to Seller or the Eligible Mortgage
      Loans or omits to state a fact necessary to make the statements herein or
      therein not materially misleading.

     

    (i)  No
      Consents.  No consent, approval, authorization or order of any
      court or governmental agency or body including, without limitation, HUD, FHA
      or
      VA, is required for the execution, delivery and performance by it of or
      compliance by it with this Agreement, any other Transaction Document or any
      Transaction Notice or the sale of the Eligible Mortgage Loans, or if required,
      such consent, approval or authorization has been obtained.

     

    (j)  Compliance
      With Law, Etc.  Seller and each of its Subsidiaries are in
      compliance with the requirements of all applicable laws, rules, regulations,
      and
      orders of all governmental authorities (including, without limitation, the
      Real
      Estate Settlement Procedures Act, as amended, the Federal Consumer Credit
      Protection Act, as amended, Regulation Z of the Board of Governors of the
      Federal Reserve System, as amended, laws, rules and regulations relating to
      usury, truth in lending, fair credit billing, fair credit reporting, equal
      credit opportunity, fair debt collection practices and privacy and all other
      consumer laws, rules and regulations applicable to the mortgage loans), except
      where failure to so comply could not reasonably be expected to have a material
      adverse effect, and (ii) neither Seller nor any of its Subsidiaries has
      failed to obtain any licenses, permits, franchises or other governmental
      authorizations necessary to the ownership of its properties or to the conduct
      of
      its business (including, without limitation, as may be necessary in any
      applicable jurisdiction in connection with the ownership of the mortgage loans),
      which violation or failure to obtain could reasonably be expected to have a
      material adverse effect.

     

     

    
      
        
        

      

      
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    (k)  Solvency;
      Fraudulent Conveyance.  Seller is solvent and will not be rendered
      insolvent by the Transaction and, after giving effect to such Transaction,
      Seller will not be left with an unreasonably small amount of capital with which
      to engage in its business.  Seller does not intend to incur, nor
      believes that it has incurred, debts beyond its ability to pay such debts as
      they mature.  Seller is not contemplating the commencement of
      insolvency, bankruptcy, liquidation or consolidation proceedings or the
      appointment of a receiver, liquidator, conservator, trustee or similar official
      in respect of Seller or any of its assets.  The amount of
      consideration being received by Seller upon the sale of the Purchased Assets
      to
      Agent constitutes reasonably equivalent value and fair consideration for such
      Purchased Assets.  Seller is not transferring any Purchased Assets
      with any intent to hinder, delay or defraud any of its creditors.

     

    (l)  Investment
      Company Compliance.  Seller and none of its Subsidiaries is not,
      and no such Person will during the term of this Agreement be an “investment
      company”, within the meaning of the Investment Company Act.

     

    (m)  Taxes.  Seller
      and each of its Subsidiaries have filed or caused to be filed all federal,
      provincial, state and local tax returns which are required to be filed, and
      have
      paid or have caused to be paid all taxes as shown on said returns or on any
      assessment received by them in writing, to the extent that such taxes have
      become due, except to the extent that the failure to do so could not reasonably
      be expected to result in a material adverse effect.  Any taxes, fees
      and other governmental charges payable by Seller in connection with a
      Transaction and the execution and delivery of the Transaction Documents have
      been paid.

     

    (n)  Additional
      Representations.  With respect to each mortgage loan, Seller
      hereby makes all of the applicable representations and warranties set forth
      in
      this Agreement as of the Purchase Date and the date the Mortgage Note is
      delivered to the Custodian.  Further, as of each Purchase Date, Seller
      shall be deemed to have represented and warranted in like manner that Seller
      has
      no knowledge that any such representation or warranty may have ceased to be
      true
      in a material respect as of such date, except as otherwise stated in a
      Transaction Notice, any such exception to identify the applicable representation
      or warranty and specify in reasonable detail the related knowledge of
      Seller.

     

    (o)  No
      Broker.  Seller has not dealt with any broker, investment banker,
      agent or other Person that may be entitled to any commission or compensation
      in
      connection with the sale of any Eligible Mortgage Loans to Agent.

     

    (p)  No
      Event of Default; No Servicer Default.  There exists no Event of
      Default under this Agreement or any other Transaction Document, which default
      gives rise to a right to accelerate indebtedness as referenced in this
      Agreement, under any mortgage, borrowing agreement or other instrument or
      agreement pertaining to indebtedness for borrowed money or to the repurchase
      of
      mortgage loans or securities and there exists no Servicer Default.

     

     

    
      
        
        

      

      
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    (q)  Guidelines.  The
      Guidelines provided to Agent and Principals are the true and correct
      Guidelines.

     

    (r)  Chief
      Executive Office; Jurisdiction of Organization.  Seller’s
      organizational information as set forth on Schedule I hereto is true and
      correct.

     

    (s)  Location
      of Books and Records.  The location where Seller keep its books
      and records, including all computer tapes and records relating to the Purchased
      Assets is as set forth on Schedule I.

     

    (t)  ERISA.  Seller
      and each of its Subsidiaries is in compliance with the provisions of ERISA
      and
      the Code applicable to Plans, and the regulations and published interpretations
      thereunder, if any, which are applicable to it and the applicable laws, rules
      and regulations of any jurisdiction applicable to Plans.  Neither
      Seller nor any of its Subsidiaries has, with respect to any Plan, engaged in
      a
      prohibited transaction which would subject it to a tax or penalty on prohibited
      transactions imposed by ERISA or Section 4975 of the Code.  No
      liability to the PBGC exists, or to the best knowledge of Seller is reasonably
      expected to be, incurred with respect to the Plans and there has been no
      Reportable Event and no other event or condition that presents a risk of
      termination of a Plan by the PBGC.  Neither Seller nor any of its
      Subsidiaries has engaged in a transaction which could reasonably be expected
      to
      result in the incurrence of liability under Section 4069 of
      ERISA.  As of the Effective Date, neither Seller nor any of its
      Subsidiaries contributes to a Multiemployer Plan, and no such Person has
      incurred any liability that could reasonably be expected to result in a partial
      or complete withdrawal (as defined in Sections 4203 and 4205 of ERISA,
      respectively) with respect to any Multiemployer Plan.

     

    (u)  No
      Material Adverse Change.  Since June 30, 2007, there has been no
      material adverse change in the business, assets, operations or condition,
      financial or otherwise, of Seller together with any of its Consolidated
      Subsidiaries taken as a whole; provided that the foregoing representation
      is made solely as of the Effective Date.

     

    (v)  Copyrights,
      Patents and Other Rights.  Seller and each of its Subsidiaries
      owns, or is licensed to use, all trademarks, tradenames, service marks,
      copyrights, patents and other intellectual property material to its business,
      and the use thereof by such Person does not infringe upon the rights of any
      other Person, except for any such infringements that, individually or in the
      aggregate, could not reasonably be expected to result in a material adverse
      effect.

     

    (w)  Federal
      Reserve Regulations.  Neither Seller nor any of its Subsidiaries
      is engaged principally, or as one of its important activities, in the business
      of extending credit for the purpose of purchasing or carrying any margin
      stock.  No part of the proceeds of any Purchase Price hereunder will
      be used by Seller, whether immediately, incidentally or ultimately, for any
      purpose violative of or inconsistent with any of the provisions of
      Regulation T, U or X of the Board.

     

     

    
      
        
        

      

      
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    (x)  Disclosure.  As
      of the Effective Date, there is no fact known to Seller which, individually
      or
      in the aggregate, could reasonably be expected to have a material adverse effect
      on it or any of its Subsidiaries.

     

    (y)  Environmental
      Liabilities.  Except with respect to any matters, that,
      individually or in the aggregate, could not reasonably be expected to result
      in
      a material adverse effect, neither Seller nor any of its Subsidiaries
      (i) has failed to comply with any Environmental Law or to obtain, maintain
      or comply with any permit, license or other approval required under any
      Environmental Law, (ii) has become subject to any Environmental Liability,
      (iii) has received notice of any claim with respect to any Environmental
      Liability or (iv) knows of any basis for any Environmental
      Liability.

     

    (z)  Adverse
      Selection.  Each mortgage loan sold pursuant to a Transaction
      Notice was selected from mortgage loans originated by Seller or purchased by
      Seller from third parties and are Eligible Mortgage Loans which satisfy the
      Eligibility Representations and any selection process employed by it was not
      made in a manner so as to materially adversely affect the interests of Agent
      or
      any Principal.

     

    (aa)  Agreements.  Neither
      Seller nor any of its Subsidiaries is a party to any agreement, instrument,
      or
      indenture or subject to any restriction materially and adversely affecting
      its
      business, operations, assets or financial condition, except, to the extent
      disclosure is required by GAAP, as disclosed in the financial statements
      described in this Agreement.  Neither Seller nor any of its
      Subsidiaries is in default in the performance, observance or fulfillment of
      any
      of the obligations, covenants or conditions contained in any agreement,
      instrument, or indenture which default could have a material adverse effect
      on
      the business, operations, properties, or financial condition of such Person
      as a
      whole.  No holder of any indebtedness of Seller or of any of its
      Subsidiaries has given notice of any asserted monetary or material default
      thereunder.

     

    (bb)  Fair
      Consideration.  The consideration received by Seller in connection
      with each Transaction under this Agreement constitutes fair consideration and
      reasonably equivalent value for the Eligible Mortgage Loans.

     

    (cc)  Ability
      to Perform.  Seller 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 in all material respects.  Seller is solvent and the
      sale of the Eligible Mortgage Loans is not undertaken to hinder, delay or
      defraud any of Seller’s creditors.

     

    (dd)  Financing
      Treatment.  Seller has determined that the transfer of the
      Eligible Mortgage Loans pursuant to this Agreement will be afforded financing
      treatment for accounting and tax purposes.

     

    (ee)  The
      Surety Bond.  The Surety Bond is in full force and effect and is a
      legal, valid and binding obligation of the Surety, enforceable in accordance
      with its terms, except that enforceability thereof may be limited by bankruptcy,
      insolvency, moratorium, receivership and other similar laws relating to
      creditors’ rights generally and the remedy of specific performance and
      injunctive and other forms of equitable relief may be subject to equitable
      defenses and to the discretion of the court before which any proceeding therefor
      may be brought.

     

     

    
      
        
        

      

      
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    (ff)  Premium
      Payments.  Seller agrees to make each premium required under the
      Surety Bond on or prior to the date on which such premium payment is
      due.  No premium payments are past due on the Surety
      Bond.

     

    (gg)  Permitted
      Beneficiaries.  Each Additional Collateral Mortgage Loan is an
“Additional Collateral Mortgage Loan,” as such term is defined in the related
      Surety Bond, and each of Seller, Agent and each Principal is a “Permitted
      Beneficiary” of the rights of the related Approved Provider.

     

    (hh)  The
      Additional Collateral Transfer Agreement.  The Additional
      Collateral Transfer Agreement is a legal, valid and binding obligation of the
      related Approved Provider, enforceable in accordance with its terms, except
      that
      enforceability thereof may be limited by bankruptcy, insolvency, moratorium,
      receivership and other similar laws relating to creditors’ rights generally and
      the remedy of specific performance and injunctive and other forms of equitable
      relief may be subject to equitable defenses and to the discretion of the court
      before which any proceeding therefor may be brought.

     

    (ii)  Security
      Interest of Seller.  Pursuant to the Additional Collateral
      Transfer Agreement, with respect to each Additional Collateral Mortgage Loan,
      Seller has a first-priority perfected security interest in each Securities
      Account, or, if necessary to perfect a first-priority security interest in
      each
      asset contained in such Securities Account, a perfected first-priority security
      interest in each such asset contained in each Securities Account.

     

    (jj)  Security
      Interest of Agent.  Upon the purchase of each Additional
      Collateral Mortgage Loan, Agent will acquire a first-priority perfect security
      interest in the related Securities Account.

     

    (kk)  Representations
      and Warranties Regarding Individual Mortgage Loans; Eligibility
      Representations.  As to each Eligible Mortgage Loan, Seller shall
      on and as of the Purchase Date for any Transaction and on and as of each date
      thereafter through and including the related Repurchase Date be deemed to make
      each of the representations and warranties set forth on Annex II
      hereto.

     

    The
      representations and warranties set forth in this Agreement shall survive
      transfer of the Purchased Assets to Agent and shall continue for so long as
      the
      Purchased Assets are subject to this Agreement.  It is understood and
      agreed that the representations and warranties set forth in this Agreement
      (including Annex II) shall survive the sale of the Eligible Mortgage Loans
      to Agent and the delivery of the Loan Documents to Servicer and delivery of
      the
      Mortgage Notes to the Custodian and shall inure to the benefit of Agent and
      each
      Principal notwithstanding any restrictive or qualified endorsement on any
      Mortgage Note or Assignment of Mortgage or the examination or failure to examine
      any Mortgage Note.

     

    11.  COVENANTS
      OF SELLER.  Seller hereby covenants with Agent and each Principal
      as follows:

     

     

    
      
        
        

      

      
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    (a)  Defense
      of Title.  Seller warrants and will defend the right, title and
      interest of Agent and each Principal in and to all Purchased Assets against
      all
      adverse claims and demands.

     

    (b)  No
      Amendment or Compromise.  Without Agent’s prior written consent
      and the prior written consent of the Required Principals, neither Seller nor
      any
      Person acting on Seller’s behalf shall amend, supplement or modify, or waive any
      term or condition of, or settle or compromise any claim in respect of, any
      item
      of the Purchased Assets, any related rights or any of the Transaction Documents;
      provided that any such party may amend, supplement or modify a mortgage
      loan if such amendment, supplement or modification does not affect the amount
      or
      timing of any payment of principal or interest, extend its scheduled maturity
      date, modify its interest rate, or constitute a cancellation or discharge of
      its
      outstanding principal balance and does not materially and adversely affect
      the
      security afforded by the real property, finishings, fixtures, or equipment
      securing the mortgage loan and any such party may amend, supplement or modify
      a
      mortgage loan in the ordinary course of business to correct errors;
provided, further, that, any such amendments shall be done
      in accordance with all applicable law and shall not result in a material adverse
      effect.

     

    (c)  No
      Assignment.  Except as permitted herein and in the other
      Transaction Documents, neither Seller nor any Person acting on its behalf shall
      sell, assign, transfer or otherwise dispose of, or grant any option with respect
      to, or pledge, hypothecate or grant a security interest in or lien on or
      otherwise encumber (except pursuant to the Transaction Documents), any of the
      Purchased Assets or any interest therein.

     

    (d)  Preservation
      of Purchased Assets:  Value.  Seller shall (and shall
      cause Servicer to) do all things necessary to preserve the Purchased Assets
      so
      that each Purchased Asset remains subject to a first priority perfected security
      interest hereunder.  Without limiting the foregoing, Seller will
      comply with all rules, regulations and other laws of any Official Body
      applicable to Seller relating to the Purchased Assets and cause the Purchased
      Assets to comply with all applicable rules, regulations and other laws of any
      such Official Body.  Seller will not allow any default for which
      Seller is responsible to occur under any Purchased Assets or any Transaction
      Documents.

     

    (e)  Financial
      Statements; Accountants’ Reports; Other Information.  Seller shall
      keep or cause to be kept in reasonable detail books and records of account
      of
      its assets and business and shall clearly reflect Agent’s interest in the
      Purchased Assets.

     

    (f)  Notice
      of Material Events.  Seller shall promptly, upon the earlier of
      its knowledge or notice thereof, inform Agent and each Principal in writing
      of
      any of the following:

     

    i.           any
      Unmatured Event of Default or Event of Default under any Transaction Document
      or
      any Servicer Default;

     

    ii.           any
      material change in the insurance coverage required of Seller or any other Person
      pursuant to any Transaction Document, with copy of evidence of same
      attached;

     

     

    
      
        
        

      

      
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    iii.           any
      material dispute, litigation, investigation (which shall not include request
      for
      information), proceeding or suspension between Seller, on the one hand, and
      any
      Official Body or any other Person as to which there is a reasonable likelihood
      of an adverse determination that would result in a material adverse
      effect;

     

    iv.           any
      material change in accounting policies or financial reporting practices of
      Seller; and

     

    v.           the
      occurrence of any material employment dispute that is reasonably likely to
      result in a material adverse effect and a description of the strategy for
      resolving it.

     

    (g)  Licenses.  Seller
      shall maintain its qualifications to do business and all licenses necessary
      to
      perform its obligations hereunder.

     

    (h)  No
      Withholdings for Taxes.  Any payments made by Seller to Agent or
      any Principal shall be free and clear of, and without deduction or withholding
      for, any taxes; provided, however, that if Seller shall be required by law
      to
      deduct or withhold any taxes from any sums payable to Agent or any Principal
      then Seller shall (A) make such deductions or withholdings and pay such
      amounts to the relevant authority in accordance with Law, (B) pay to Agent
      or any Principal the sum that would have been payable had such deduction or
      withholding not been made, and (C) at the time the Price Differential is
      paid, pay to Agent or any Principal all additional amounts as specified by
      Agent
      or any Principal to preserve the after-tax yield Agent or any Principal would
      have received if such tax had not been imposed.  This provision does
      not apply to income taxes payable by Agent or any Principal on its taxable
      income.

     

    (i)  Nature
      of Business.  Seller shall not make any material change in the
      nature of its business as conducted on the date hereof.  Seller shall
      manage its business substantially in accordance with current industry
      practices.

     

    (j)  Fees.  Seller
      agrees to pay to Agent for its own account and for the account of the Principals
      on or prior to the Effective Date and on any other date as provided therein,
      all
      of the Fees set forth in the Fee Letter, in accordance with the terms
      thereof.

     

    (k)  Other
      Fees and Expenses.  Seller shall pay all reasonable out-of-pocket
      expenses incurred by Agent and any Principal to consummate the transactions
      contemplated by this Agreement and the other Transaction Documents, including
      any necessary due diligence expenses and reasonable attorney’s
      fees.  Seller shall pay any reasonable legal fees for any subsequent
      amendments or waivers to this Agreement, the Transaction Documents or related
      documents.  Seller shall pay ongoing custodial and bank fees and
      expenses and any other ongoing fees and expenses under any Transaction
      Document.

     

    (l)  No
      Adverse Claims.  There are no adverse claims with respect to the
      Purchased Assets.

     

     

    
      
        
        

      

      
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    (m)  Further
      Assurances; Change in Name or Jurisdiction of Origination,
      etc.  Seller hereby authorizes and hereby agrees from time to
      time, at its own expense, promptly to execute (if necessary) and deliver all
      further instruments and documents, and to take all further actions, that may
      be
      necessary or desirable, or that Agent or any Principal may reasonably request,
      to perfect, protect or more fully evidence the purchases made under this
      Agreement and/or security interest granted pursuant to this Agreement, or to
      enable Agent or the Principals to exercise and enforce their respective rights
      and remedies under this Agreement.  Without limiting the foregoing,
      Seller hereby authorizes, and will, upon the request of Agent, at its own
      expense, execute (if necessary) and file such financing or continuation
      statements (including fixture filings), or amendments thereto, and such other
      instruments and documents, that may be necessary or desirable, or that Agent
      or
      any Principal may reasonably request, to perfect, protect or evidence such
      purchases.  Seller authorizes Agent to file financing or continuation
      statements, and amendments thereto and assignments thereof, relating to any
      of
      the Purchased Assets without the signature of such Person.  A
      photocopy or other reproduction of this Agreement shall be sufficient as a
      financing statement where permitted by law.  Seller shall at all times
      be organized under the laws of the State of its organization at the date hereof
      and shall not take any action to change its jurisdiction of
      organization.  Seller will not change its name, location, identity or
      corporate structure unless (x) Agent shall have received at least thirty
      (30) days’ advance written notice of such change, (y) Seller, at its own
      expense, shall have taken all action necessary or appropriate to perfect or
      maintain the perfection of the purchases (including, without limitation, the
      filing of all financing statements and the taking of such other action as Agent
      or any Principal may request in connection with such change or relocation),
      and
      (z) if requested by Agent or any Principal, Seller shall cause to be
      delivered to Agent and each Principal, an opinion, in form and substance
      satisfactory to Agent and each Principal as to such UCC matters a such Person
      may request at such time.

     

    (n)  Taxes.  Seller
      shall duly pay and discharge, or cause to be paid and discharged, before the
      same shall become delinquent, all federal, state or local taxes, assessments,
      levies and other governmental charges, imposed upon it or any of its
      Subsidiaries or their respective properties, sales and activities, or any part
      thereof, or upon the income or profits therefrom, as well as all claims for
      labor, materials, or supplies which if unpaid could reasonably be expected
      to
      result in a material adverse effect; provided that any such tax,
      assessment, charge, levy or claim need not be paid if the validity or amount
      thereof shall currently be contested in good faith by appropriate proceedings
      and if such Person shall have set aside on its books reserves (the presentation
      of which is segregated to the extent required by GAAP) adequate with respect
      thereto if reserves shall be deemed necessary by such Person in accordance
      with
      GAAP; and provided, further, that such Person will pay all such
      taxes, assessments, levies or other governmental charges forthwith upon the
      commencement of proceedings to foreclose any Lien which may have attached as
      security therefor (unless the same is fully bonded or otherwise effectively
      stayed).

     

    (o)  Corporate
      Existence; Compliance with Statutes.  Seller shall do or cause to
      be done all things necessary to remain duly organized and validly existing
      in
      good standing under the laws of its jurisdictions of incorporation and in good
      standing to operate as a foreign corporation with power and authority to own
      its
      properties and to conduct its business, in all jurisdictions where the nature
      of
      its business so requires it and where a failure to be in good standing as a
      foreign corporation could reasonably be expected to have a material adverse
      effect and to preserve, renew and keep in full force and effect its corporate
      existence, rights, licenses, permits and franchises and comply, except where
      failure to comply, either individually or in the aggregate, could not reasonably
      be expected to result in a material adverse effect, with all provisions of
      Law,
      and all applicable restrictions imposed by any Official Body, and all state
      and
      provincial laws and regulations of similar import.

     

     

    
      
        
        

      

      
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    (p)  Insurance.  Seller
      shall maintain with good and reputable insurers insurance in such amounts and
      against such risks as are customarily insured against by companies in similar
      businesses; providedhowever, that (a) workmen’s compensation
      insurance or similar coverage may be effected with respect to its operations
      in
      any particular state or other jurisdiction through an insurance fund operated
      by
      such state or jurisdiction and (b) such insurance may contain
      self-insurance retention and deductible levels consistent as such insurance
      is
      usually carried by companies of established reputation and comparable
      size.

     

    (q)  ERISA
      Compliance and Reports.  Seller shall furnish to Agent and each
      Principal (a) as soon as possible, and in any event within 30 days after
      any of its executive officers (as defined in Regulation C under the Securities
      Act of 1933, as amended) knows that (i) any Reportable Event with respect
      to any Plan has occurred, a statement of the chief financial officer of such
      Person, setting forth details as to such Reportable Event and the action which
      it proposes to take with respect thereto, together with a copy of the notice,
      if
      any, required to be filed by such Person or any of its Subsidiaries of such
      Reportable Event with the PBGC or (ii) an accumulated funding deficiency
      has been incurred or an application has been made to the Secretary of the
      Treasury for a waiver or modification of the minimum funding standard or an
      extension of any amortization period under Section 412 of the Code with
      respect to a Plan, a Plan has been or is proposed to be terminated in a
“distress termination” (as defined in Section 4041(c) of ERISA),
      proceedings have been instituted to terminate a Plan or a Multiemployer Plan,
      a
      proceeding has been instituted to collect a delinquent contribution to a Plan
      or
      a Multiemployer Plan, or either such Person or any of its Subsidiaries will
      incur any liability (including any contingent or secondary liability) to or
      on
      account of the termination of or withdrawal from a Plan under Section 4062,
      4063 or 4064 of ERISA or the withdrawal or partial withdrawal from a
      Multiemployer Plan under Section 4201 or 4204 of ERISA, a statement of the
      chief financial officer of such Person, setting forth details as to such event
      and the action it proposes to take with respect thereto, (b) promptly upon
      the reasonable request of Agent, copies of each annual and other report with
      respect to each Plan and (c) promptly after receipt thereof, a copy of any
      notice such Person or any of its Subsidiaries may receive from the PBGC relating
      to the PBGC’s intention to terminate any Plan or to appoint a trustee to
      administer any Plan.

     

    (r)  Maintenance
      of Properties; Title to Properties.  Seller shall (i) keep
      its properties which are material to its business in good repair, working order
      and condition consistent with companies of established reputation and comparable
      size and (ii) maintain good title or valid leasehold interests to each of
      the properties and assets reflected on its balance sheets, except for minor
      defects in title that do not interfere with its ability to conduct its business
      as currently conducted or to utilize such properties for their intended
      purposes, and all such properties and assets will be free and clear of
      Liens.

     

    (s)  Compliance
      with Laws, and Credit Policy, Etc.  Seller shall comply in all
      material respects with all applicable laws, rules, regulations and orders of
      all
      governmental authorities (including those which relate to the mortgage loans)
      and all Guidelines, applicable rules, regulations and orders of each Agency
      and
      shall comply in all material respects with the Credit Policy in regard to each
      mortgage loan.

     

     

    
      
        
        

      

      
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    (t)  Compliance
      with Regulations.  All required financial statements, information
      and reports delivered by Seller pursuant to this Agreement shall be prepared
      in
      accordance with GAAP, or, if applicable, to SEC filings, the appropriate SEC
      accounting regulations.

     

    (u)  Negative
      Covenants.  Seller, for so long as this Agreement shall be in
      effect or any amount shall remain outstanding or unpaid under this Agreement
      or
      any other Transaction Document, unless Agent and the Required Principals shall
      otherwise consent in writing, agrees that it will not directly or
      indirectly,

     

    (v)  Limitations
      on Liens.  Create, incur, assume, or suffer to exist, or permit
      any Subsidiary to create, incur, assume or suffer to exist, any Lien on any
      Purchased Asset.

     

    (w)  No
      Amendments to Credit Policy; Transaction Documents, Etc.  Make or
      permit any Subsidiary to make any change to the Credit Policy which change
      could
      reasonably be expected to have a material adverse effect, or otherwise
      materially and adversely affect the collectibility of and/or amount collected
      on
      the mortgage loans; amend, modify, supplement or waive or permit any Subsidiary
      to amend modify, supplement or waive any provision of any Transaction Document
      or any other Contractual Obligation or enter into any new Contractual Obligation
      or make any prepayment in respect of any subordinated Indebtedness.

     

    (x)  No
      Change in Account Banks; Deposits.  (a) Add or terminate (or
      permit any other Person to add or terminate) any bank maintaining the Collection
      Account, the Funding Account or the Margin Call Account as of the Effective
      Date
      or make any change in its instructions regarding payments to be made any such
      bank, unless (A) Agent shall have received duly executed counterparts of a
      Blocked Account Control Agreement, with each new account bank, and copies of
      such instructions (which shall be in form and substance acceptable to Agent)
      and
      (B) Agent previously shall have consented in writing to such addition or
      termination, which consent shall not be unreasonably withheld, delayed or
      conditioned.  (b) Deposit or otherwise credit, or cause or permit
      to be so deposited or credited by any other Person, to the Collection Account,
      the Funding Account or the Margin Call Account, cash or cash proceeds other
      than
      Income with respect to the related Purchased Assets, Collections with respect
      to
      the mortgage loans or other proceeds of the Collateral.

     

    (y)  Delivery
      of Mortgage Note.  Seller shall deliver each Mortgage Note,
      including Mortgage Notes on Wet Funded Loans, to the Custodian as soon as
      practicable, but in any event within 10 calendar days of the purchase (or if
      such 10th calendar day is not a Business Day, then on the immediately succeeding
      Business Day) and, if any Mortgage Note is not delivered within 10 calendar
      days
      of the purchase (or if such 10th calendar day is not a Business Day, then on
      the
      immediately succeeding Business Day), it shall be repurchased on such 10th
      calendar day (or if such 10th calendar day is not a Business Day, then on the
      immediately succeeding Business Day) by Seller at the Repurchase
      Price.

     

     

    
      
        
        

      

      
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    (z)  Assignment.  Seller
      shall assign to Agent all right, title and interest of Seller under the
      Additional Collateral Transfer Agreement with respect to Additional Collateral
      Mortgage Loans transferred.

     

    (aa)  Changes
      in Origination and Underwriting Criteria.  Seller shall inform
      Agent, each Bank Principal and each rating agency rating any outstanding
      Short-Term Notes of any material changes (as determined by Seller) in its
      origination and underwriting practices and guidelines with respect to the
      mortgage loans.

     

    (bb)  Funding
      Future Advances.  Seller will be obligated to, and will fulfill
      its obligation to, make any future advance for any HELOC pursuant to the related
      Home Equity Line Agreement.

     

    (cc)  Eligibility
      Criteria, the Portfolio Criteria and Limitations.  As of any date
      of determination, the Eligible Mortgage Loans in the aggregate shall satisfy
      the
      Eligibility Criteria, the Portfolio Criteria, the Portfolio Aging Limitations
      and the Wet Funded Loan Limitation.

     

    12.  REPURCHASE
      TRANSACTIONS.  A Principal may, in its sole and absolute
      discretion, engage in repurchase transactions with the Purchased Assets or
      otherwise pledge, hypothecate, assign, transfer or otherwise convey the
      Purchased Assets with a counterparty of such Principal’s choice, in all cases
      subject to the obligation to reconvey the Purchased Assets (and not substitutes
      therefor) on the Repurchase Date.  In the event a Principal engages in
      a repurchase transaction with any of the Purchased Assets or otherwise pledges,
      hypothecates, assigns, transfers or otherwise conveys any of the Purchased
      Assets, such Principal shall have the right to assign to the applicable
      counterparty any of the applicable representations or warranties set forth
      herein and the remedies for breach thereof, as they relate to the Purchased
      Assets that are subject to such repurchase transaction.

     

    13.  EVENTS
      OF DEFAULT.  Upon the occurrence and continuance of any of the
      following conditions, Agent (on behalf of the Principals) shall have the right
      subject to the consent of the Required Principals to notify Seller that Agent
      has determined to sell the Purchased Assets (on behalf of the Principals) (each,
      an “Event of Default”):

     

    (a)  (i) Seller
      fails to transfer the Purchased Assets to Agent on the applicable Purchase
      Date
      (provided Agent has tendered the related Purchase Price), (ii) Seller fails
      to make any payment (whether in respect of principal, interest, fees or other
      amounts) payable by it hereunder or under any other Transaction Document, when
      and as the same shall become due and payable, whether at the due date thereof
      or
      at a date fixed for prepayment thereof or by acceleration thereof or otherwise,
      and such default shall continue unremedied for 2 Business Days after the earlier
      of such Person’s knowledge or receipt of notice thereof, (iii) Seller fails
      to repurchase the Purchased Assets on the applicable Repurchase Date or fails
      to
      perform any of its obligations under Section 5 and such failure continues
      unremedied for 2 Business Days after the earlier of its knowledge or receipt
      of
      notice thereof, (iv) any of the Portfolio Criteria shall not be satisfied,
      and Seller fails to repurchase Purchased Assets such that such failure continues
      unremedied for 2 Business Days after the earlier of Seller’s knowledge or
      receipt of notice thereof, (v) any Eligible Mortgage Loan that ceases to
      satisfy the Eligibility Criteria shall fail to be repurchased by Seller within
      two (2) Business Days after the earlier of Seller’s knowledge or notice of such
      failure, (vi) any noncompliance with the Portfolio Aging Limitations, and
      Seller fails to repurchase Purchased Assets such that such non-compliance
      continues unremedied for two (2) Business Days after the earlier of Seller’s
      knowledge or notice thereof, or (vii) a Margin Deficit shall continue
      unremedied for 2 Business Days after the earlier of the Seller’s knowledge or
      receipt of notice thereof (it being understood that solely for the purposes
      of
      this clause (vii), notice or knowledge of a report actually received by the
      Seller pursuant to Section 2 of the Custodial Agreement shall be deemed to
      have occurred at 9.a.m. Eastern time on the Business Day immediately following
      the actual day such report way received);

     

     

    
      
        
        

      

      
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    (b)  Seller
      shall fail to (i) observe or perform any covenant, condition or agreement
      contained in Section 11(f)(i), 11(o), 11(s) of this Agreement and such
      failure shall continue unremedied for 2 Business Days after the earlier of
      such
      Person’s knowledge or notice thereof, (ii) observe or perform any covenant
      contained in Section 11(u) or (iii) observe or perform any other
      covenant, condition or agreement to be observed or performed pursuant to the
      terms of this Agreement or any other Transaction Document and such default
      shall
      continue unremedied for thirty (30) days after the earlier of such Person’s
      knowledge or receipt of notice thereof;

     

    (c)  any
      representation or warranty made or deemed made by Seller or Performance
      Guarantor in this Agreement or any other Transaction Document or in connection
      herewith or therewith or with the purchases hereunder, or any statement or
      representation made in any report, financial statement, certificate or other
      document furnished by or on behalf of Seller, Performance Guarantor or any
      of
      their respective Subsidiaries to Agent, any Principal or the Custodian under
      or
      in connection with this Agreement or any other Transaction Document, shall
      prove
      to have been false or misleading in any material respect when made or delivered
      and, solely to the extent capable of cure, such inaccuracy continues unremedied
      for 2 Business Days after the earlier of such Person’s knowledge or receipt of
      notice thereof;

     

    (d)  (i) Seller,
      Performance Guarantor or any of their respective Subsidiaries shall fail to
      (x) pay any Indebtedness or Interest Rate Protection Agreements where the
      amount or amounts of such Indebtedness or Interest Rate Protection Agreement
      exceeds $50,000,000 (or its equivalent thereof in any other currency) in the
      aggregate; or (y) perform any other term, provision or condition with
      respect to any Indebtedness or Interest Rate Protection Agreements of greater
      than $50,000,000 (or its equivalent thereof in any other currency), which
      failure results in such Indebtedness becoming due prior to the scheduled date
      of
      maturity thereof or enables or permits the holder or holders of such
      Indebtedness or any trustee or agent on its or their behalf to cause such
      Indebtedness to become due, or to require the prepayment (other than by a
      regularly scheduled payment), repurchase, redemption or defeasance thereof,
      prior to the scheduled date of maturity thereof; or (ii) any other
      circumstance shall arise (other than the mere passage of time) by reason of
      which Seller, Performance Guarantor or any of their respective Subsidiaries
      is
      required to redeem or repurchase, or offer to holders the opportunity to have
      redeemed or repurchased, any such Indebtedness or Interest Rate Protection
      Agreement where the amount or amounts of such Indebtedness or Interest Rate
      Protection Agreement exceeds $50,000,000 (or its equivalent thereof in any
      other
      currency) in the aggregate;

     

     

    
      
        
        

      

      
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    (e)  any
      involuntary case, proceeding or other action against Seller, Performance
      Guarantor or any of their respective Subsidiaries shall be commenced seeking
      to
      have an order for relief entered against it as debtor or to adjudicate it a
      bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
      liquidation, dissolution or composition of it or its debts under any law
      relating to bankruptcy, insolvency, reorganization or relief of debtors, or
      seeking appointment of a receiver, trustee, custodian or other similar official
      for it or for all or any substantial part of its property and such case,
      proceeding or other action shall continue undismissed, or unstayed and in
      effect, for a period of 60 days; or an order for relief in respect of such
      Person shall be entered in an involuntary case or proceeding under any law
      relating to bankruptcy, insolvency, reorganization or relief of creditors or
      other similar laws now or hereafter in effect;

     

    (f)  Seller,
      Performance Guarantor or any of their respective Subsidiaries shall generally
      not pay its debts as they become due or shall admit in writing its inability
      to
      pay its debts, or shall make a general assignment for the benefit of creditors;
      or Seller, Performance Guarantor or any of their respective Subsidiaries shall
      commence any case, proceeding or other action seeking to have an order for
      relief entered on its behalf as debtor or to adjudicate it a bankrupt or
      insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
      dissolution or composition of it or its debts under any law relating to
      bankruptcy, insolvency, reorganization or relief of debtors or seeking
      appointment of a receiver, trustee, custodian or other similar official for
      it
      or for all or any substantial part of its property or shall file an answer
      or
      other pleading in any such case, proceeding or other action admitting the
      material allegations of any petition, complaint or similar pleading filed
      against it or consenting to the relief sought therein; or Seller, Performance
      Guarantor or any of their respective Subsidiaries shall take any action to
      authorize any of the foregoing; or a senior officer of Seller or Performance
      Guarantor shall admit in writing its inability to, or intention not to, perform
      any of its respective Obligations;

     

    (g)  Seller,
      Performance Guarantor or any of their respective Subsidiaries shall fail to
      satisfy the terms of any final, non-appealable judgment(s) for the payment
      of
      money in excess of $25,000,000 (or its equivalent thereof in any other currency)
      rendered against Seller, Performance Guarantor or any of their respective
      Subsidiaries;

     

    (h)  any
      Official Body or any person, agency or entity acting or reasonably purporting
      to
      act under governmental authority shall have taken any action reasonably likely
      to result in a condemnation, seizure or appropriation, or assumption of custody
      or control of, all or any substantial part of the property of Seller,
      Performance Guarantor or any of their respective Subsidiaries, or shall have
      taken any action reasonably likely to displace the management of Seller,
      Performance Guarantor or any their respective Subsidiaries or reasonably likely
      to curtail its authority in the conduct of a material portion of the business
      of
      Seller, Performance Guarantor or any of their respective Subsidiaries, or takes
      any action in the nature of enforcement reasonably likely to remove, limit
      or
      restrict the approval of Seller, Performance Guarantor or any of their
      respective Subsidiaries as an issuer, buyer or a seller of mortgage loans or
      securities backed thereby;

     

    (i)  an
      event
      of default (as defined in the credit agreement referred to in this clause)
      shall
      have occurred under the Five Year Competitive Advance and Revolving Credit
      Agreement, dated as of January 6, 2006, among PHH Corporation, as Borrower,
      the Lenders referred to therein, Citicorp USA, Inc., as Syndication Agent,
      and
      Bank of America, N.A., The Bank of Nova Scotia and Calyon New York Branch,
      as
      Documentation Agents, and JPMorgan Chase Bank, N.A., as administrative agent,
      as
      such agreement exists on the date hereof and as the same may be further amended,
      modified, waived or supplemented, solely to the extent that the Agent and the
      Required Principals have given their prior written consent to such amendment,
      modification, waiver or supplement;

     

     

    
      
        
        

      

      
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    (j)  failure
      of Seller or Servicer to remit to the Funding Account for the benefit of the
      Principals not later than 2 Business Days after the sale or Securitization
      of
      any Eligible Mortgage Loans the proceeds of any such sale or
      Securitization;

     

    (k)  failure
      of Servicer to remit (within the applicable grace period, if any) to the
      Collection Account, the Funding Account or the Margin Call Account any amounts
      when such amounts are required to be so remitted;

     

    (l)  the
      occurrence of a Change in Control;

     

    (m)  failure
      of Seller to make any required Margin Call or pay any Minimum Transfer Amount
      as
      required by Section 5 hereof or failure of Seller or Servicer to apply
      Collections in accordance with Section 5 or Section 6
      hereof;

     

    (n)  the
      audited annual financial statements or the notes thereto or other opinions
      or
      conclusions stated therein shall be qualified or limited by reference to the
      status of Seller or Performance Guarantor as a “going concern” or a reference of
      similar import;

     

    (o)  Seller
      shall become subject to regulation under the Investment Company
      Act;

     

    (p)  a
      Servicer Default shall have occurred and be continuing;

     

    (q)  a
      Daily
      Servicer Report shall fail to be delivered as and when required, and such
      failure shall continue unremedied for 1 Business Day;

     

    (r)  [Reserved];

     

    (s)  (x) any
      Transaction Document, any Purchased Asset, or any lien or security interest
      granted hereunder or thereunder, shall (except in accordance with its terms),
      in
      whole or in part, terminate, cease to be effective or cease to be the legally
      valid, binding and enforceable obligation of Seller or Seller shall, directly
      or
      indirectly, contest in any manner such effectiveness, validity, binding nature
      or enforceability or (y) any security interest securing the Purchased
      Assets shall, in whole or in part, cease to be a perfected first priority
      security interest in favor of Agent and, in the case of this clause (y) such
      failure shall continue unremedied for 2 Business Days after the earlier of
      Seller’s knowledge or receipt of notice thereof;

     

    (t)  [Reserved];

     

    (u)  [Reserved];
      or

     

     

    
      
        
        

      

      
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    (v)  if
      Seller
      assigns or attempts to assign this Agreement or any other Transaction Document
      or any rights or obligations hereunder or thereunder without first obtaining
      the
      specific written consent of Agent or the granting by Seller of any security
      interest, lien or other encumbrances on any Purchased Assets or on the
      Collection Account, the Funding Account, the Margin Call Account or any of
      the
      other collateral referred to in Section 7 to any person other than
      Agent.

     

    Upon
      the
      occurrence of an Event of Default, Seller will no longer be permitted to sell
      and Agent (on behalf of the Principals) will no longer be permitted to purchase
      additional Eligible Mortgage Loans and principal and interest payments on
      Eligible Mortgage Loans and principal proceeds of sales and Securitizations
      of
      Eligible Mortgage Loans will be remitted to the Funding Account for application
      in accordance with Section 6 hereof.

     

    Additionally,
      Agent, at its option (which option shall be deemed to have been exercised
      immediately upon the occurrence of an Event of Default pursuant to
      Section 13(e) or (f) hereof), shall have any or all of the following rights
      and remedies, which may (or at the direction of the Required Principals, shall)
      be exercised by Agent:

     

    (a)  The
      Termination Date and the Repurchase Date for each Transaction hereunder shall
      be
      deemed immediately to occur.

     

    (b)  Seller’s
      obligations hereunder to repurchase all Purchased Assets subject to a
      Transaction with Seller at the Repurchase Price therefor on the Repurchase
      Date
      in such Transactions shall thereupon become immediately due and payable; Seller
      shall immediately deliver to Agent or its designee any and all original papers,
      records and files relating to the Purchased Assets subject to such Transaction
      then in Seller’s possession and/or control; and all right, title and interest in
      and entitlement to such Purchased Assets and Servicing Rights thereon shall
      be
      deemed transferred to Agent or its designee.

     

    In
      addition to its repurchase obligation, Seller shall indemnify Agent and each
      Principal and hold them harmless against any losses, damages, penalties, fines,
      forfeitures, reasonable and necessary 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
      representations and warranties contained in this Agreement.  It is
      understood and agreed that the obligations of Seller to cure or repurchase
      an
      Eligible Mortgage Loan and to indemnify Agent and each Principal constitute
      the
      sole remedies of Agent and each Principal respecting a breach of the foregoing
      representations and warranties.

     

    Agent
      may
      sell, on or following the Business Day following the date on which the
      Repurchase Price became due and payable pursuant to Section 13(b) without
      notice or demand of any kind, at a public or private sale and at such price
      or
      prices as Agent may reasonably deem satisfactory any or all Purchased
      Assets.  The proceeds of any disposition of Purchased Assets shall be
      applied first to the reasonable costs and expenses incurred by Agent in
      connection with or as a result of an Event of Default; second to the
      aggregate Repurchase Prices; and third to all other
      Obligations.

     

     

    
      
        
        

      

      
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    The
      parties recognize that it may not be possible to purchase or sell all of the
      Purchased Assets on a particular Business Day, or in a transaction with the
      same
      purchaser, or in the same manner because the market for such Purchased Assets
      may not be liquid.  In view of the nature of the Purchased Assets, the
      parties agree that liquidation of a Transaction or the underlying Purchased
      Assets does not require a public purchase or sale and that a good faith private
      purchase or sale shall be deemed to have been made in a commercially reasonable
      manner.  Accordingly, Agent may elect the time and manner of
      liquidating any Purchased Asset and nothing contained herein shall obligate
      Agent to liquidate any Purchased Asset on the occurrence of an Event of Default
      or to liquidate all Purchased Assets in the same manner or on the same Business
      Day or constitute a waiver of any right or remedy of
      Agent.  Notwithstanding the foregoing, the parties to this Agreement
      agree that the Transactions have been entered into in consideration of and
      in
      reliance upon the fact that all Transactions hereunder constitute a single
      business and contractual obligation and that each Transaction has been entered
      into in consideration of the other Transactions.

     

    In
      addition to its rights hereunder, upon the occurrence and during the
      continuation of an Event of Default, Agent shall have the right to proceed
      against Seller’s assets which may be in the possession of Agent, any Principal,
      any Principal’s Affiliate or designee (including, without limitation, the
      Custodian), including the right to liquidate such assets and to set-off the
      proceeds against monies owed by Seller to Agent pursuant to this
      Agreement.  Agent may set off cash, the proceeds of the liquidation of
      the Purchased Assets, any other collateral or its proceeds and all other sums
      or
      obligations owed by Agent to Seller against all of Seller’s Obligations to
      Agent, whether under this Agreement, under a Transaction, or under any other
      agreement between the parties, or otherwise, whether or not such Obligations
      are
      then due, without prejudice to Agent’s right to recover any
      deficiency.

     

    Upon
      the
      occurrence and during the continuation of an Event of Default, Agent shall
      have
      the right to obtain physical possession of the Records and all other files
      of
      Seller relating to the Purchased Assets and all documents relating to the
      Purchased Assets which are then or may thereafter come into the possession
      of
      Seller or any third party acting for Seller and Seller shall deliver (or cause
      to be delivered) to Agent such assignments as Agent shall request.

     

    Upon
      the
      occurrence and during the continuation of an Event of Default, Agent may direct
      Servicer to take such action consistent with the Transaction Documents with
      respect to the Purchased Assets as Agent determines appropriate.

     

    Seller
      shall be liable to Agent for the amount of all expenses (plus interest thereon
      at a rate equal to the Default Rate), and Breakage Costs and all costs and
      expenses incurred in connection with hedging or covering transactions related
      to
      the Purchased Assets.

     

    Seller
      shall, within 2 Business Days of receipt thereof, cause all sums received by
      it
      with respect to the Purchased Assets to be remitted to the Collection
      Account.

     

    Agent
      shall without regard to the adequacy of the security for the Obligations, be
      entitled to the appointment of a receiver by any court having jurisdiction,
      without notice, to take possession of and protect, collect, manage, liquidate,
      and sell the Purchased Assets and any other collateral or any portion thereof,
      collect the payments due with respect to the Purchased Assets and any other
      collateral or any portion thereof, and do anything that Agent is authorized
      hereunder to do.  Seller shall pay all costs and expenses incurred by
      Agent in connection with the appointment and activities of such
      receiver.

     

     

    
      
        
        

      

      
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    Agent
      may
      enforce its rights and remedies hereunder without prior judicial process or
      hearing, and Seller hereby expressly waives, to the extent permitted by law,
      any
      right such Person might otherwise have to require Agent to enforce its rights
      by
      judicial process.  Seller also waives, to the extent permitted by law,
      any defense such Person might otherwise have to the Obligations, arising from
      use of nonjudicial process, enforcement and sale of all or any portion of the
      Purchased Assets and any other collateral or from any other election of
      remedies.  Seller recognizes that nonjudicial remedies are consistent
      with the usages of the trade, are responsive to commercial necessity and are
      the
      result of a bargain at arm’s length.

     

    In
      addition to all the rights and remedies specifically provided herein, Agent
      shall have all other rights and remedies provided by applicable federal, state,
      foreign, and local laws, whether existing at law, in equity or by statute,
      including without limitation, all rights and remedies available to a
      purchaser/secured party under the Uniform Commercial Code.

     

    Upon
      the
      occurrence of an Event of Default, Agent shall have, except as otherwise
      expressly provided in this Agreement, the right to exercise any of its rights
      and/or remedies without presentment, demand, protest or further notice of any
      kind other than as expressly set forth herein, all of which are hereby expressly
      waived by Seller.

     

    14.  DELAY
      NOT WAIVER; REMEDIES ARE CUMULATIVE.  No failure on the part of
      Agent or any Principal to exercise, and no delay in exercising, any right,
      power
      or remedy hereunder shall operate as a waiver thereof, nor shall any single
      or
      partial exercise by Agent or any Principal of any right, power or remedy
      hereunder preclude any other or further exercise thereof or the exercise of
      any
      other right, power or remedy.  All rights and remedies of Agent and
      Principals provided for herein are cumulative and in addition to any and all
      other rights and remedies provided by law, the Transaction Documents and the
      other instruments and agreements contemplated hereby and thereby, and are not
      conditional or contingent on any attempt by Agent or any Principal to exercise
      any of its rights under any other related document.  Agent may
      exercise at any time after the occurrence and during the continuation of an
      Event of Default one or more remedies, as it so desires, and may thereafter
      at
      any time and from time to time exercise any other remedy or
      remedies.

     

    15.  USE
      OF
      EMPLOYEE PLAN ASSETS.  No assets of an employee benefit plan
      subject to any provision of ERISA shall be used by any party hereto in a
      Transaction.

     

    16.  EXPENSES;
      INDEMNITY.

     

    (a)  Seller
      agrees, upon receipt of a written invoice, to pay or cause to be paid, and
      to
      save each Principal and Agent harmless against liability for the payment of,
      all
      reasonable out-of-pocket expenses (including, without limitation, attorneys’,
      accountant’s and other third parties’ fees and expenses, any rating agency fees,
      any filing fees and expenses incurred by officers or employees of each Principal
      and Agent, but excluding salaries and similar overhead costs of each Principal
      and Agent which are incurred notwithstanding the execution and performance
      of
      this Agreement) incurred by or on behalf of any Principal and Agent (i) in
      connection with the negotiation, execution, delivery and preparation of the
      Transaction Documents and the transactions contemplated by or undertaken
      pursuant to or in connection herewith or therewith (including, without
      limitation, the perfection or protection of the Eligible Mortgage Loans) and
      (ii) from time to time (a) relating to any requested amendments,
      waivers or consents under the Transaction Documents requested by Seller,
      (b) arising in connection with the Principals’ or Agent’s or their
      enforcement or preservation of their respective rights (including, without
      limitation, the perfection and protection of the Eligible Mortgage Loans) under
      the Transaction Documents, or (c) arising in connection with any audit,
      dispute, disagreement, litigation or preparation for litigation involving the
      Transaction Documents, which audit, dispute, disagreement, litigation or
      preparation for litigation directly results from Seller’s failure to comply with
      Seller’s obligations (as Seller or Servicer) under the Transaction Documents
      (collectively, the “Transaction Costs”).

     

     

    
      
        
        

      

      
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    (b)  Without
      limiting any other rights which Agent or the Principals may have hereunder
      or
      under applicable law, Seller hereby agrees to indemnify each Principal, Agent
      and the APA Purchasers and any successors and permitted assigns and their
      respective officers, directors and employees (collectively, “Indemnified
      Parties”), from and against any and all damages, losses, claims,
      liabilities, costs and expenses, including, without limitation, reasonable
      attorneys’ fees (which such attorneys may be employees of the APA Purchasers or
      Agent, as applicable) and disbursements (all of the foregoing being collectively
      referred to as “Indemnified Amounts”), arising out of  or in
      connection with:

     

    (i)  any
      dispute, action, suit, litigation or proceeding arising out of or as a result
      of
      (x) this Agreement, the other Transaction Documents, the ownership or
      maintenance by Agent, any Principal or any APA Purchaser of the Eligible
      Mortgage Loans, (y) the use of proceeds of Transactions by Seller, or
      (z) any Eligible Mortgage Loan; provided that no Indemnified Party
      shall have the right to be indemnified under this paragraph (i) in respect
      of any litigation instituted by (x) any person (a “Participant”)
      participating in the interest of any APA Purchaser under the Asset Purchase
      Agreement against any APA Purchaser or Agent, (y) any APA Purchaser against
      any Participant, any APA Purchaser or Agent, or (z) any holder of any
      security of any APA Purchaser (in its capacity as such) against any APA
      Purchaser, to the extent any such litigation does not arise out of any
      misconduct (alleged in good faith by such APA Purchaser) by or on behalf of
      Seller.

     

    (ii)  any
      representation or warranty (other than a representation or warranty in
      Annex II hereof) made by Seller (including, in its capacity as Servicer) or
      any officers of Seller (including, in its capacity as Servicer) under or in
      connection with this Agreement, any of the other Transaction Documents, any
      Servicer Report or any other information or report delivered by Seller or
      Servicer pursuant hereto, which shall have been false or incorrect in any
      material respect when made or deemed made;

     

    (iii)  the
      failure by Seller (including, in its capacity as Servicer) to comply with any
      applicable law, rule or regulation with respect to any Eligible Mortgage Loan
      or
      the nonconformity of any Eligible Mortgage Loan with any such applicable law,
      rule or regulation;

     

     

    
      
        
        

      

      
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    (iv)  any
      claim
      resulting from the sale of merchandise or services by Seller, any Affiliate
      of
      Seller or any designee of Seller to the related Borrower with respect to
      any  Eligible Mortgage Loan or the furnishing or failure to furnish
      such merchandise or services by Seller, any Affiliate of Seller or any designee
      of Seller;

     

    (v)  the
      transfer of an ownership interest in any mortgage loan other than an Eligible
      Mortgage Loan;

     

    (vi)  the
      failure by Seller (individually or as Servicer) to comply with any term,
      provision or covenant contained in this Agreement or any of the other
      Transaction Documents to which it is a party or to perform any of its respective
      duties under any Eligible Mortgage Loan;

     

    (vii)  the
      Aggregate Purchase Price exceeds the Maximum Aggregate Purchase Price at any
      time;

     

    (viii)  the
      failure of Seller to pay when due any taxes, including without limitation,
      sales, excise or personal property taxes payable by Seller in connection with
      any of the Eligible Mortgage Loans;

     

    (ix)  any
      repayment by any Indemnified Party of any amount previously distributed in
      reduction of Aggregate Purchase Price which such Indemnified Party believes
      in
      good faith is required to be made;

     

    (x)  any
      inability to obtain any judgment in or utilize the court or other adjudication
      system of, any state in which a Borrower may be located as a result of the
      failure of Seller to qualify to do business or file any notice of business
      activity report or any similar report; or

     

    (xi)  any
      action taken by Seller, or Servicer (if Seller or any Affiliate or designee
      of
      Seller) in the enforcement or collection of any Eligible Mortgage
      Loan;

     

    provided
      that no Indemnified Party shall have the right to be indemnified hereunder
      (x) for its own gross negligence or willful misconduct as determined by a
      court of competent jurisdiction, (y) for any lost profits of such
      Indemnified Party, or (z) any claim for punitive damages claimed by such
      Indemnified Party against Seller.

     

    (c)  Without
      limitation on the provisions of Section 3, if any payment of the Repurchase
      Price of any Transaction is made by Seller other than on the then Scheduled
      Repurchase Date thereto as a result of an acceleration of the Repurchase Date
      pursuant to Section 13 or for any other reason, Seller shall, upon demand
      by Agent, pay to Agent for the benefit of the applicable Principals any Breakage
      Costs incurred by such Principals as of a result of such payment.

     

     

    
      
        
        

      

      
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    (d)  Without
      prejudice to the survival of any other agreement of Seller hereunder, the
      covenants and obligations of Seller contained in this Section shall survive
      the payment in full of the Repurchase Price and all other amounts payable
      hereunder or any other Transaction Document and delivery of the Purchased Assets
      by Agent against full payment therefor.

     

    17.  WAIVER
      OF REDEMPTION AND DEFICIENCY RIGHTS.  Seller hereby expressly
      waives, to the fullest extent permitted by law, every statute of limitation
      on a
      deficiency judgment, any reduction in the proceeds of any Purchased Assets
      as a
      result of restrictions upon Agent or Custodian contained in the Transaction
      Documents or any other instrument delivered in connection therewith, and any
      right that it may have to direct the order in which any of the Purchased Assets
      shall be disposed of in the event of any disposition pursuant hereto or pursuant
      to the terms of any other Transaction Document.

     

    18.  INCREASED
      COSTS; TAXES; ETC.

     

    (A)           (i)           If
      after the date hereof, the adoption of any law or bank regulatory guideline
      or
      any amendment or change in the interpretation of any existing or future Law
      or
      bank regulatory guideline by any Official Body charged with the administration,
      interpretation or application thereof, or the compliance with any directive
      of
      any Official Body (in the case of any bank regulatory guideline, whether or
      not
      having the force of Law):

     

    (1)  shall
      subject Agent, any Principal or any other Person (including any bank or other
      financial institution providing liquidity and/or credit support to any Conduit
      Principal in connection with its securitization program (each, an “Affected
      Person”) to any tax, duty or other charge (other than Excluded Taxes) with
      respect to this Agreement, the other Transaction Documents, the ownership,
      maintenance or financing of the Eligible Mortgage Loans or payments of amounts
      due hereunder, or shall change the basis of taxation of payments to any Affected
      Person of amounts payable in respect of this Agreement, the other Transaction
      Documents, the ownership, maintenance or financing of the Eligible Mortgage
      Loans or payments of amounts due hereunder or its obligation to advance funds
      hereunder, under the Asset Purchase Agreement or the credit support furnished
      by
      the Affected Person or otherwise in respect of this Agreement, the other
      Transaction Documents, the ownership, maintenance or financing of the Eligible
      Mortgage Loans (except for changes in the rate of general corporate, franchise,
      net income or other income tax imposed on such Affected Person by the
      jurisdiction in which such Affected Person’s principal executive office is
      located);

     

    (2)  shall
      impose, modify or deem applicable any reserve, special deposit or similar
      requirement (including, without limitation, any such requirement imposed by
      the
      Board of Governors of the Federal Reserve System) against assets of, deposits
      with or for the account of, or credit extended by, any Affected Person or shall
      impose on any Affected Person or on the United States market for certificates
      of
      deposit or the London interbank market any other condition affecting this
      Agreement, the other Transaction Documents, the ownership, maintenance or
      financing of the Eligible Mortgage Loans or payments of amounts due hereunder
      or
      its obligation to advance funds hereunder under the Asset Purchase Agreement
      or
      the credit support provided by such Affected Person or otherwise in respect
      of
      this Agreement, the other Transaction Documents, or the ownership, maintenance
      or financing of the Eligible Mortgage Loans; or

     

     

    
      
        
        

      

      
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    (3)  imposes
      upon any Affected Person any other expense (including, without limitation,
      reasonable attorneys’ fees and expenses, and expenses of litigation or
      preparation therefor in contesting any of the foregoing) with respect to this
      Agreement, the other Transaction Documents, the ownership, maintenance or
      financing of the Eligible Mortgage Loans or payments of amounts due hereunder
      or
      its obligation to advance funds hereunder, under the Asset Purchase Agreement
      or
      the credit support furnished by the Program Bank or otherwise in respect of
      this
      Agreement, the other Transaction Documents, or the ownership, maintenance or
      financing of the Eligible Mortgage Loans, and the result of any of the foregoing
      is to increase the cost to such Affected Person with respect to this Agreement,
      the other Transaction Documents, the ownership, maintenance or financing of
      the
      Eligible Mortgage Loans, the obligations hereunder, the funding of any purchases
      hereunder or the Asset Purchase Agreement, by an amount deemed by such Affected
      Person to be material, then, within ten (10) days after demand by such Affected
      Person through Agent, Seller shall pay to Agent, for the benefit of such
      Affected Person, such additional amount or amounts as will compensate such
      Affected Person for such increased cost or reduction.

     

    (ii)  If
      any
      Affected Person shall have determined that after the date hereof, the adoption
      of any applicable law or bank regulatory guideline regarding capital adequacy,
      or any change therein, or any change in the interpretation thereof by any
      Official Body, or any directive regarding capital adequacy (in the case of
      any
      bank regulatory guideline, whether or not having the force of law) of any such
      Official Body, has or would have the effect of reducing the rate of return
      on
      capital of such Affected Person (or its parent) as a consequence of such
      Affected Person’s obligations hereunder or with respect hereto to a level below
      that which such Affected Person (or its parent) could have achieved but for
      such
      adoption, change, request or directive (taking into consideration its policies
      with respect to capital adequacy) by an amount deemed by such Affected Person
      to
      be material, then from time to time, within ten (10) days after demand by such
      Affected Person through Agent, Seller shall pay to Agent, for the benefit of
      such Affected Person, such additional amount or amounts as will compensate
      such
      Affected Person (or its parent) for such reduction.  For the avoidance
      of doubt, any interpretation of Accounting Research Bulletin No. 51 by the
      Financial Accounting Standards Board (“FASB”) (including, without
      limitation, FASB Interpretation No. 46), shall constitute an adoption,
      change, request or directive subject to this Section.

     

     

    
      
        
        

      

      
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    Agent
      will promptly notify Seller of any event of which it has knowledge, occurring
      after the date hereof, which will entitle an Affected Person to compensation
      pursuant to this Section.  A notice by Agent or the applicable
      Affected Person claiming compensation under this Section and setting forth
      the additional amount or amounts to be paid to it hereunder shall be conclusive
      in the absence of manifest error.  In determining such amount, Agent
      or any applicable Affected Person may use any reasonable averaging and
      attributing methods.

     

    (B)           All
      payments made hereunder by Seller or Servicer (each, a “payor”) to any
      Affected Person (each, a “recipient”) shall be made free and clear of and
      without deduction for any present or future income, excise, stamp or franchise
      taxes and any other taxes, fees, duties, withholdings or other charges of any
      nature whatsoever imposed by any taxing authority on any recipient (or any
      assignee of such parties) (such  nonexcluded items being called
“Taxes”), but excluding franchise taxes and taxes imposed on or measured
      by the recipient’s net income or gross receipts (“Excluded
      Taxes”).  In the event that any withholding or deduction from any
      payment made by the payor hereunder is required in respect of any Taxes (other
      than Excluded Taxes), then such payor shall:

     

    (i)  pay
      directly to the relevant authority the full amount required to be so withheld
      or
      deducted;

     

    (ii)  promptly
      forward to Agent an official receipt or other documentation satisfactory to
      Agent evidencing such payment to such authority; and

     

    (iii)  pay
      to
      the recipient such additional amount or amounts as is necessary to ensure that
      the net amount actually received by the recipient will equal the full amount
      such recipient would have received had no such withholding or deduction been
      required.

     

    Moreover,
      if any Taxes (other than Excluded Taxes) are directly asserted against any
      recipient with respect to any payment received by such recipient hereunder,
      the
      recipient may pay such Taxes and the payor will promptly pay such additional
      amounts (including any penalties, interest or expenses) as shall be necessary
      in
      order that the net amount received by the recipient after the payment of such
      Taxes (including any Taxes on such additional amount) shall equal the amount
      such recipient would have received had such Taxes not been
      asserted.

     

    If
      the
      payor fails to pay any Taxes when due to the appropriate taxing authority or
      fails to remit to the recipient the required receipts or other required
      documentary evidence, the payor shall indemnify the recipient for any
      incremental Taxes, interest, or penalties that may become payable by any
      recipient as a result of any such failure.

     

    Seller
      shall pay to each Affected Person, as applicable, upon the request of such
      Affected Person or Agent on its behalf, such amount or amounts as shall
      compensate such Affected Person for any actual loss (including loss of profit),
      cost or expense incurred by such Affected Person (as reasonably determined
      by
      such Affected Person) as a result of (x) any payment or repayment of any
      Purchase Price related to a Transaction (or portion thereof) other than on
      the
      maturity date of the source of funds obtained or utilized by such Affected
      Person to fund or maintain such Purchase Price or (y) any failure by Seller
      to commence a Transaction (including the continued maintenance of, or any
      increase with respect to any Purchase Prince related thereto, or portion
      thereof), requested by Seller hereunder, in either case, such compensation
      to
      include, without limitation, an amount equal to any loss or expense suffered
      by
      such Affected Person during the period from the date of receipt of such
      repayment or failure to commence a Transaction, as the case may be, to (but
      excluding) the maturity date of such source of funds, if the rate of interest
      obtained by such Affected Person upon the redeployment of an amount of funds
      equal to the amount of such repayment or failure to commence a Transaction,
      as
      the case may be, is less than the interest rate that would have been applicable
      thereon, hereunder through the applicable maturity thereof.  The
      determination by any Affected Person of the amount of any such loss or expense
      shall be set forth in a written notice to Seller in reasonable detail and shall
      be conclusive and binding for all purposes, absent manifest error.

     

     

    
      
        
        

      

      
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    19.  FURTHER
      ASSURANCES.  Seller agrees to do such further acts and things and
      to execute and deliver to Agent such additional assignments, acknowledgments,
      agreements, powers and instruments as are reasonably required by Agent or any
      Principal to carry into effect the intent and purposes of this Agreement and
      the
      other Transaction Documents, to perfect the interests of Agent in the Purchased
      Assets or to better assure and confirm unto Agent its rights, powers and
      remedies hereunder.

     

    20.  ENTIRE
      AGREEMENT; PRODUCT OF NEGOTIATION.  This Agreement supersedes and
      integrates all previous negotiations, contracts, agreements and understandings
      between the parties relating to a sale and repurchase of Purchased Assets,
      and
      it, together with the other Transaction Documents, and the other documents
      delivered pursuant hereto or thereto, contains the entire final agreement of
      the
      parties.  No prior negotiation, agreement, understanding or prior
      contract shall have any validity.

     

    21.  TERMINATION;
      COMMITMENT REDUCTION.

     

    (a)  This
      Agreement shall remain in effect until the Termination Date.  However,
      no such termination shall affect Seller’s outstanding obligations to Agent, any
      Principal, any Affected Person or any Indemnified Party at the time of such
      termination.  Seller’s obligations to indemnify Agent, each Principal,
      each Affected Person and each Indemnified Party pursuant to this Agreement
      and
      the other Transaction Documents shall survive the termination hereof and
      thereof.

     

    (b)  Upon
      at
      least 10 Business Days’ prior irrevocable written notice or telecopy notice to
      Agent and each Bank Principal, Seller may at any time in whole permanently
      terminate, or from time to time in part permanently reduce, the Commitments;
      provided that (i) each partial reduction shall be made in an
      integral multiple of $1,000,000 and in a minimum principal amount of $10,000,000
      and (ii) Seller shall not be entitled to make any such permanent
      termination or reduction that would reduce (x) the aggregate amount of the
      Commitments to any amount less than the Aggregate Purchase Price at such time
      or
      (y) the Commitment of any Principal to an amount less than such Principal’s
      Pro Rata Share of the Aggregate Purchase Price at such time, unless, with
      respect to this subclause (y), a replacement for such Principal acceptable
      to
      Agent and Seller assumes such Principal’s rights and obligations under this
      Agreement.

     

     

    
      
        
        

      

      
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    (c)  Each
      reduction in the Maximum Aggregate Purchase Price shall be made ratably among
      the Principals in accordance with their respective
      Commitments.  Seller shall pay on the effective date of a termination
      or a reduction in the Commitments, to Agent for the account of the Principals,
      the Fees accrued to such effective date, based on the amount of the Commitments
      prior to giving effect to such termination or reduction, together with any
      Breakage Costs incurred in connection therewith.

     

    (d)  Seller
      may advise Agent and each Bank Principal in writing of its desire to extend
      the
      Termination Date with respect to each Principal for an additional period of
      up
      to 364 days; provided such request is made not more than sixty (60) days
      prior to, and not less than thirty (30) days prior to, the then current
      Termination Date.  Each Bank Principal shall promptly notify Agent of
      its decision to extend the then Termination Date.  In the event that
      all of the Principals are agreeable to such extension, Agent shall so notify
      Seller in writing (it being understood that each of the Principals may
      accept or decline such a request in its sole discretion and on such terms as
      it
      may elect) not less than fifteen (15) days prior to the then current Termination
      Date and Seller, Agent and the Principals shall enter into such documents as
      the
      Principals may deem necessary or appropriate to reflect such extension, and
      all
      reasonable costs and expenses for services delivered by outside professionals
      incurred by the Principals and Agent in connection therewith (including
      reasonable attorneys’ costs) shall be paid by Seller.  In the event
      any Principal declines the request for such extension, such Principal (or the
      applicable Bank Principal on its behalf) shall so notify Seller and Agent of
      such determination.

     

    22.  ASSIGNMENT
      BY PRINCIPALS.  A Principal may assign any of its rights and
      obligations hereunder and under the other Transaction Documents, to any other
      Person with the prior written consent of Seller (such consent not to be
      unreasonably withheld, conditioned or delayed); provided, that Agent
      shall maintain, for review by Seller upon written request, a register of
      assignees and a copy of an executed assignment and acceptance (in form and
      substance satisfactory to Agent) by Agent, each such assigning Principal and
      each assignee (“Assignment and Acceptance”), specifying a constant, and
      not a varying, percentage or portion of such rights and obligations assigned
      and
      the amount being assigned pursuant to each such assignment (determined as of
      the
      date of the Assignment and Acceptance Agreement with respect to such
      assignment), which shall in no event be less than the lesser of
      (x) $5,000,000 and (y) all of the assigning Principal’s
      Commitment.  Upon such assignment, (a) such assignee shall be a
      party hereto and to each Transaction Document to the extent of the percentage
      or
      portion set forth in the Assignment and Acceptance, and shall succeed to the
      applicable rights and obligations of a Principal hereunder, and (b) such
      Principal shall, to the extent that such rights and obligations have been so
      assigned by it to another Person which assumes the obligations of such
      Principal, be released from its obligations hereunder and under the other
      Transaction Documents accruing thereafter.  Unless otherwise stated in
      the Assignment and Acceptance, Seller shall continue to take directions solely
      from Agent unless otherwise notified by Agent in writing.  Agent may
      distribute to any prospective assignee any document or other information
      delivered to Agent by Seller; provided, further that on and after
      the occurrence and continuation of any Event of Default, a Principal may,
      without the consent of Seller or any other Person, as assign any of its rights
      hereunder and under any other Transaction Document, to any
      Person.  The entries in the register referred to above shall be
      conclusive and binding for all purposes, absent manifest error, and Seller,
      Servicer, Agent and the Principals may treat each Person whose name is recorded
      in such register as a Principal under this Agreement for all purposes of this
      Agreement and the other Transaction Documents.

     

     

    
      
        
        

      

      
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    A
      Conduit
      Principal may, without notice to, or the consent of, Seller or any of its
      Affiliates, assign and grant a security interest in all of its right, title
      and
      interest in, to and under this Agreement and the other Transaction Documents
      to
      any liquidity bank, program support provider or any the collateral trustee
      acting for the benefit of such parties and the holders of such Conduit
      Principal’s Short-Term Notes, and any successor in such capacity, to secure such
      Conduit Principal’s obligations under or in connection with the Short-Term
      Notes, any related Asset Purchase Agreement, any credit agreement provided
      to
      such Conduit Principal by any applicable program support provider, and certain
      other obligations of such Conduit Principal incurred in connection with the
      funding and maintenance of the Transactions hereunder.

     

    23.  AMENDMENTS,
      ETC.  No amendment, modification or waiver of any provision of
      this Agreement or any other Transaction Document nor any consent to any failure
      to comply herewith or therewith shall in any event be effective unless the
      same
      shall be in writing and signed by Seller, Agent and the Required Principals,
      and
      then such amendment, modification, waiver or consent shall be effective only
      in
      the specific instance and for the specific purpose for which given;
provided, however, that no material amendment to this Agreement
      shall be effective unless (solely to the extent required by the documents
      governing the securitization program of any applicable Conduit Principal),
      the
      Bank Principal (or its agent) for such Conduit Principal shall have received
      written confirmation from each Rating Agency then rating such Conduit
      Principal’s Short-Term Notes, that such action, event or condition will not
      cause the then current rating of such notes to be suspended, downgraded or
      withdrawn; and provided, further, that no amendment, waiver or
      consent shall, unless in writing and signed by each
      Principal:  (a) change (directly or indirectly) the definitions
      of “Eligible Mortgage Loan”, “Portfolio Criteria”, “Purchase Price Percentage”
or “Required Principals”, (b) reduce fees payable by Seller to any
      Principal, or delay the dates on which such fees are payable, (c) change
      any Event of Default or Servicer Default or (d) change any of the
      provisions of this Section and provided, further, that
      (i) no amendment, waiver or consent shall increase the Commitment of any
      Principal unless in writing and signed by such Principal and (ii) no
      amendment of any definition or any provision contained in this Agreement that
      specifically relates to the rights or obligations of the Custodian under this
      Agreement, if the effect of such amendment would materially and adversely affect
      the Custodian, without the Custodian’s prior written consent.

     

    Seller
      shall provide each rating agency then rating any Short-Term Notes with written
      notice of each amendment.  The costs and expenses associated with any
      such amendment shall be borne by the party requesting the
      amendment.

     

    24.  SEVERABILITY.  If
      any provision of any Transaction Document is declared invalid by any court
      of
      competent jurisdiction, such invalidity shall not affect any other provision
      of
      the Transaction Documents, and each Transaction Document shall be enforced
      to
      the fullest extent permitted by law.

     

     

    
      
        
        

      

      
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    25.  BINDING
      EFFECT:  GOVERNING LAW.  This Agreement shall be binding
      and inure to the benefit of the parties hereto and their respective successors
      and assigns, except that Seller may not assign or transfer any of its respective
      rights or obligations under this Agreement or any other Transaction Document
      without the prior written consent of Agent.  THIS AGREEMENT SHALL BE
      CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW
      YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT
      FOR SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
      LAW).

     

    26.  CONSENT
      TO JURISDICTION.  SELLER HEREBY WAIVES TRIAL BY
      JURY.  SELLER HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE
      JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
      DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
      TO THE TRANSACTION DOCUMENTS IN ANY ACTION OR PROCEEDING.  SELLER
      HEREBY SUBMITS TO, AND WAIVES ANY OBJECTION IT MAY HAVE TO, NON-EXCLUSIVE
      PERSONAL JURISDICTION AND VENUE IN THE COURTS OF THE STATE OF NEW YORK AND
      THE
      UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
      TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE TRANSACTION
      DOCUMENTS.

     

    27.  SINGLE
      AGREEMENT.  Seller, Agent and each Principal acknowledge that, and
      have entered hereinto and will enter into each Transaction hereunder and under
      the other Transaction Documents in consideration of and in reliance upon the
      fact that, all Transactions hereunder constitute a single business and
      contractual relationship and have been made in consideration of each
      other.  Accordingly, Seller, Agent and each Principal each agree
      (i) to perform all of its respective obligations in respect of each
      Transaction hereunder, and that a default in the performance of any such
      obligations shall constitute a default by it in respect of all Transactions
      hereunder, and (ii) that payments, deliveries and other transfers made by
      any of them in respect of any Transaction shall be deemed to have been made
      in
      consideration of payments, deliveries and other transfers in respect of any
      other Transaction hereunder, and the obligations to make any such payments,
      deliveries and other transfers may be applied against each other and
      netted.

     

    28.  INTENT.  Seller,
      each Principal and Agent recognize that each Transaction is a “repurchase
      agreement” as that term is defined in Section 101 of Title 11 of the United
      States Code, as amended (“Bankruptcy Code”).  It is understood
      that Agent’s right to liquidate the Purchased Assets delivered to it in
      connection with the Transactions hereunder or to exercise any other remedies
      pursuant to Section 13 hereof is a contractual right to liquidate such
      Transaction as described in Section 559 of Title 11 of the Bankruptcy
      Code.

     

    29.  NOTICES
      AND OTHER COMMUNICATIONS.  Notices and other communications
      provided for in this Agreement or in any other Transaction Document shall be
      in
      writing and shall be delivered or mailed (or in the case of telegraphic
      communication, if by telegram, delivered to the telegraph company and, if by
      telex, telecopy, graphic scanning or other telegraphic communications equipment
      of the sending party hereto, delivered by such equipment) addressed, if to
      Agent, to it at Barclays Bank PLC, 200 Park Avenue, 5th Floor, New York, New
      York 10166, Attention:  Pierre Duleyrie,
      Telephone:  (212) 412-2932,
      Telecopy:  (212) 412-6846, if to Seller, to it at 3000 Leadenhall
      Road, Mail Stop PCLG, Mt. Laurel, NJ 08054, Attention:  Mark Johnson,
      Telephone:  (856) 917-0813,
      Telecopy:  (856) 917-0107, with a copy to William F. Brown,
      General Counsel, or if to a Principal, to it at its address set forth beneath
      its signature to this Agreement (or in the agreement pursuant to which it became
      a party hereunder), or such other address as such party may from time to time
      designate by giving written notice to the other parties
      hereunder.  All notices and other communications given to any party
      hereto in accordance with the provisions of this Agreement shall be deemed
      to
      have been given on the fifth Business Day after the date when sent by registered
      or certified mail, postage prepaid, return receipt requested, if by mail, or
      when delivered to the telegraph company, charges prepaid, if by telegram, or
      when receipt is acknowledged, if by any telecopier or telegraphic communications
      equipment of the sender, in each case addressed to such party as provided in
      this Section or in accordance with the latest unrevoked written direction
      from such party.  Information required to be delivered hereunder may
      also be delivered by electronic communication pursuant to procedures approved
      by
      Agent.

     

     

    
      
        
        

      

      
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    30.  CONFIDENTIALITY.  Each
      of Agent and the Principals agrees to keep confidential all non-public
      information provided to it by Seller pursuant to this Agreement or any other
      Transaction Document that is designated by such Person as confidential;
provided that nothing herein shall prevent Agent or any Principal from
      disclosing any such information (a) to Agent, any other Principal or any
      affiliate of any Principal, (b) to any participant or assignee (each, a
“Transferee”) of a Principal or prospective Transferee which agrees to
      comply with the provisions of this Section 30, (c) to any of its
      employees, directors, agents, attorneys, accountants and other professional
      advisors, (d) upon the request or demand of any governmental or regulatory
      authority having jurisdiction over it, (e) in response to any order of any
      court or other governmental authority or as may otherwise be required pursuant
      to any requirement of law, (f) if requested or required to do so in
      connection with any litigation or similar proceeding, (g) which has been
      publicly disclosed other than in breach of this Section 30, (h) to the
      National Association of Insurance Commissioners or any similar organization
      or
      any nationally recognized rating agency that requires access to information
      about a Principal’s investment portfolio in connection with ratings issued with
      respect to such Principal’s commercial paper or (i) in connection with the
      exercise of any remedy hereunder or under any other Transaction
      Document.

     

    31.  NO
      PROCEEDINGS; LIMITATION ON PAYMENTS.  Seller agrees not to cause
      the filing of a petition in bankruptcy or other similar proceeding against
      any
      Conduit Principal so long as any Short-Term Notes or other senior indebtedness
      issued by such Conduit Principal shall be outstanding or there shall not have
      elapsed one year plus one day since the last day on which any such commercial
      paper, promissory notes or other senior indebtedness shall have been
      outstanding.

     

    Notwithstanding
      any provisions contained in this Agreement to the contrary, a Conduit Principal
      shall not, and shall be under no obligation to, pay any amount, if any, payable
      by it pursuant to this Agreement or any other Transaction Document unless
      (i) such Conduit Principal has received funds which may be used to make
      such payment and which funds are not required to repay such Conduit Principal’s
      Short-Term Notes when due and (ii) after giving effect to such payment,
      either (x) such Conduit Principal could issue Short-Term Notes to refinance
      all of its outstanding Short-Term Notes (assuming such outstanding Short-Term
      Notes matured at such time) in accordance with the program documents governing
      such Conduit Principal’s securitization program or (y) all of such Conduit
      Principal’s Short-Term Notes are paid in full.  Any amount which any
      Conduit Principal does not pay pursuant to the operation of the preceding
      sentence shall not constitute a claim (as defined in Section 101 of the
      Bankruptcy Code) against or company obligation of such Conduit Principal for
      any
      such insufficiency unless and until such Conduit Principal satisfies the
      provisions of clauses (i) and (ii) above.  The
      provisions of this Section 31 shall survive any termination of this
      Agreement.

     

     

    
      
        
        

      

      
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    32.  POWER
      OF ATTORNEY.  Seller hereby authorizes Agent to file such
      financing statement or statements relating to the Purchased Assets without
      their
      respective signatures thereon as Agent, at its option, may deem
      appropriate.  Seller hereby appoints Agent as its agent and
      attorney-in-fact to execute any such financing statement or statements in its
      name and to perform all other acts which Agent deems appropriate to perfect
      and
      continue its ownership interest in and/or the security interest granted hereby,
      if applicable, and to protect, preserve and realize upon the Purchased Assets,
      including, but not limited to, the right to endorse notes, complete blanks
      in
      documents, transfer servicing, and sign assignments on behalf of Seller as
      its
      agent and attorney-in-fact.  This agency and power of attorney is
      coupled with an interest and is irrevocable without Agent’s
      consent.  Seller shall pay the filing costs for any financing
      statement or statements prepared pursuant to this Section.

     

    33.  RECORDING
      OF COMMUNICATIONS.  Agent, each Principal and Seller shall have
      the right (but not the obligation) from time to time to make or cause to be
      made
      tape recordings of communications between its employees and those of the other
      party with respect to Transactions.  Agent, each Principal and Seller
      consent to the admissibility of such tape recordings in any court, arbitration,
      or other proceedings.  The parties agree that a duly authenticated
      transcript of such a tape recording shall be deemed to be a writing conclusively
      evidencing the parties’ agreement.

     

    [Signature
      Page Follows]

     

     

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, Seller, Agent and each Principal have caused their
      names to be signed to this Agreement by their respective officers thereunto
      duly
      authorized as of the date first above written.

     

    
      	 	
              PHH
                MORTGAGE CORPORATION, as Seller

              By: /s/
                Mark E. Johnson

              Name:
                Mark E. Johnson

              Title:
                Vice President and Treasurer

               

              Taxpayer
                ID:

               

            


    

     

     

     

    
      
        
        

      

      
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              BARCLAYS
                BANK PLC, as Agent

              By: /s/
                Pierre Duleyrie

              Name:  Pierre
                Duleyrie

              Title:  Director                                                          

               

            
	 	
              BARCLAYS
                BANK PLC, as a Bank Principal

              By: /s/
                Pierre Duleyrie

              Name:  Pierre
                Duleyrie

              Title:  Director

               

            
	 	
              200
                Park Avenue, 5th Floor

              New
                York, New York  10166

              Attention:  Ms. Mary
                Logan

              Telephone:  212-412-3266

              Fax:  212-412-6846

            


    

     

     

     

    
      
        
        

      

      
        S-2

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              SHEFFIELD
                RECEIVABLES CORPORATION, as a Conduit Principal

               

              By
                BARCLAYS BANK PLC, as attorney-in-fact

               

              By: /s/
                Janette Lieu

              Name:
                Janette Lieu

              Title:
                Director

               

            
	 	
              Sheffield
                Receivables Corporation

              c/o
                Barclays Bank PLC

              200
                Park Avenue, 5th Floor

              New
                York, New York 10166

              Attention:  Ms. Mary
                Logan

              Telephone:  212-412-3266

              Fax:  212-412-6846

               

              Commitment:  (a) during
                the period commencing on (and including) the Effective Date and ending
                on
                (but excluding) November 30, 2007, Five Hundred Fifty-Million Dollars
                ($550,000,000) and (b) during the period commencing on (and
                including) November 30, 2007 and ending on (but excluding) the Termination
                Date, Two Hundred Seventy-Five Million Dollars
                ($275,000,000)

            


    

    


    


     S-3