exv10w6



 







Exhibit 10.6



 





SALE AND SERVICING AGREEMENT




among




OPTION ONE OWNER TRUST 2005-9

as Issuer




and




OPTION ONE LOAN WAREHOUSE CORPORATION

as Depositor




and




OPTION ONE MORTGAGE CORPORATION

as Loan Originator and Servicer




and




WELLS FARGO BANK, N.A.

as Indenture Trustee




Dated as of December 30, 2005




OPTION ONE OWNER TRUST 2005-9

MORTGAGE-BACKED NOTES



 





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE I	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	DEFINITIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 1.01
	 	Definitions.	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.02
	 	Other Definitional Provisions.	 	 	24	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE II	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	CONVEYANCE OF THE TRUST ESTATE; ADDITIONAL NOTE PRINCIPAL BALANCES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 2.01
	 	Conveyance of the Trust Estate; Additional Note Principal Balances.	 	 	24	 
	 
	 	 	 	 	 	 
	Section 2.02
	 	Ownership and Possession of Loan Files.	 	 	26	 
	 
	 	 	 	 	 	 
	Section 2.03
	 	Books and Records Intention of the Parties.	 	 	26	 
	 
	 	 	 	 	 	 
	Section 2.04
	 	Delivery of Loan Documents.	 	 	27	 
	 
	 	 	 	 	 	 
	Section 2.05
	 	Acceptance by the Indenture Trustee of the Loans; Certain Substitutions and Repurchases; Certification by the Custodian.	 	 	27	 
	 
	 	 	 	 	 	 
	Section 2.06
	 	Conditions Precedent to Transfer.	 	 	29	 
	 
	 	 	 	 	 	 
	Section 2.07
	 	Termination or Suspension of Revolving Period.	 	 	31	 
	 
	 	 	 	 	 	 
	Section 2.08
	 	Correction of Errors	 	 	31	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE III	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	Article III REPRESENTATIONS AND WARRANTIES	 	 	 	 
	 
	 	 	 	 	 	 
	Section 3.01
	 	Representations, Warranties and Covenants of the Depositor.	 	 	32	 
	 
	 	 	 	 	 	 
	Section 3.02
	 	Representations, Warranties and Covenants of the Loan Originator.	 	 	34	 
	 
	 	 	 	 	 	 
	Section 3.03
	 	Representations, Warranties and Covenants of the Servicer.	 	 	36	 
	 
	 	 	 	 	 	 
	Section 3.04
	 	Reserved.	 	 	38	 
	 
	 	 	 	 	 	 
	Section 3.05
	 	Representations and Warranties Regarding Loans	 	 	38	 
	 
	 	 	 	 	 	 
	Section 3.06
	 	Purchase and Substitution.	 	 	38	 
	 
	 	 	 	 	 	 
	Section 3.07
	 	Dispositions.	 	 	40	 
	 
	 	 	 	 	 	 
	Section 3.08
	 	Loan Originator Put; Servicer Call.	 	 	43	 
	 
	 	 	 	 	 	 
	Section 3.09
	 	Modification of Underwriting Guidelines.	 	 	43	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IV	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	ADMINISTRATION AND SERVICING OF THE LOANS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 4.01
	 	Servicer’s Servicing Obligations	 	 	44	 
	 
	 	 	 	 	 	 
	Section 4.02
	 	Financial Statements; Other Statements and Notices.	 	 	44	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE V	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION	 	 	 	 
	 
	 	 	 	 	 	 
	Section 5.01
	 	Collection Account and Distribution Account.	 	 	44	 
	 
	 	 	 	 	 	 
	Section 5.02
	 	Payments to Securityholders.	 	 	48	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 5.03
	 	Trust Accounts; Trust Account Property.	 	 	49	 
	 
	 	 	 	 	 	 
	Section 5.04
	 	Advance Account.	 	 	51	 
	 
	 	 	 	 	 	 
	Section 5.05
	 	Transfer Obligation Account.	 	 	51	 
	 
	 	 	 	 	 	 
	Section 5.06
	 	Transfer Obligation.	 	 	52	 






i









 






TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	ARTICLE VI	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 6.01
	 	Statements.	 	 	53	 
	 
	 	 	 	 	 	 
	Section 6.02
	 	Specification of Certain Tax Matters.	 	 	56	 
	 
	 	 	 	 	 	 
	Section 6.03
	 	Valuation of Loans; Hedge Value and Retained Securities Value, Market Value Agent.	 	 	56	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VII	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	HEDGING; FINANCIAL COVENANTS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 7.01
	 	Hedging Instruments.	 	 	57	 
	 
	 	 	 	 	 	 
	Section 7.02
	 	Financial Covenants	 	 	58	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE VIII	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	THE SERVICER	 	 	 	 
	 
	 	 	 	 	 	 
	Section 8.01
	 	Indemnification, Third Party Claims.	 	 	58	 
	 
	 	 	 	 	 	 
	Section 8.02
	 	Merger or Consolidation of the Servicer.	 	 	60	 
	 
	 	 	 	 	 	 
	Section 8.03
	 	Limitation on Liability of the Servicer and Others.	 	 	60	 
	 
	 	 	 	 	 	 
	Section 8.04
	 	Servicer Not to Resign; Assignment.	 	 	61	 
	 
	 	 	 	 	 	 
	Section 8.05
	 	Relationship of Servicer to Issuer and the Indenture Trustee.	 	 	61	 
	 
	 	 	 	 	 	 
	Section 8.06
	 	Servicer May Own Securities.	 	 	61	 
	 
	 	 	 	 	 	 
	Section 8.07
	 	Indemnification of the Indenture Trustee, Noteholders and Noteholder Agent.	 	 	62	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE IX	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	SERVICER EVENTS OF DEFAULT	 	 	 	 
	 
	 	 	 	 	 	 
	Section 9.01
	 	Servicer Events of Default.	 	 	62	 
	 
	 	 	 	 	 	 
	Section 9.02
	 	Appointment of Successor.	 	 	64	 
	 
	 	 	 	 	 	 
	Section 9.03
	 	Waiver of Defaults.	 	 	65	 
	 
	 	 	 	 	 	 
	Section 9.04
	 	Accounting Upon Termination of Servicer.	 	 	65	 
	 
	 	 	 	 	 	 
	 
	 	ARTICLE X	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	TERMINATION; PUT OPTION	 	 	 	 
	 
	 	 	 	 	 	 
	Section 10.01
	 	Termination.	 	 	65	 
	 
	 	 	 	 	 	 
	Section 10.02
	 	Optional Termination.	 	 	66	 
	 
	 	 	 	 	 	 
	Section 10.03
	 	Notice of Termination.	 	 	66	 
	 
	 	 	 	 	 	 
	Section 10.04
	 	Put Option.	 	 	66	 
	 
	 	ARTICLE XI	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	MISCELLANEOUS PROVISIONS	 	 	 	 
	 
	 	 	 	 	 	 
	Section 11.01
	 	Acts of Securityholders.	 	 	66	 
	 
	 	 	 	 	 	 
	Section 11.02
	 	Amendment.	 	 	67	 
	 
	 	 	 	 	 	 
	Section 11.03
	 	Recordation of Agreement.	 	 	67	 






 









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 11.04
	 	Duration of Agreement.	 	 	67	 
	 
	 	 	 	 	 	 
	Section 11.05
	 	Governing Law.	 	 	68	 
	 
	 	 	 	 	 	 
	Section 11.06
	 	Notices.	 	 	68	 
	 
	 	 	 	 	 	 
	Section 11.07
	 	Severability of Provisions.	 	 	68	 
	 
	 	 	 	 	 	 
	Section 11.08
	 	No Partnership.	 	 	69	 






ii









 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 11.09
	 	Counterparts.	 	 	69	 
	 
	 	 	 	 	 	 
	Section 11.10
	 	Successors and Assigns.	 	 	69	 
	 
	 	 	 	 	 	 
	Section 11.11
	 	Headings.	 	 	69	 
	 
	 	 	 	 	 	 
	Section 11.12
	 	Actions of Securityholders.	 	 	69	 
	 
	 	 	 	 	 	 
	Section 11.13
	 	Non-Petition Agreement.	 	 	70	 
	 
	 	 	 	 	 	 
	Section 11.14
	 	Holders of the Securities.	 	 	70	 
	 
	 	 	 	 	 	 
	Section 11.15
	 	Due Diligence Fees, Due Diligence.	 	 	70	 
	 
	 	 	 	 	 	 
	Section 11.16
	 	No Reliance.	 	 	71	 
	 
	 	 	 	 	 	 
	Section 11.17
	 	Confidential Information.	 	 	71	 
	 
	 	 	 	 	 	 
	Section 11.18
	 	Conflicts.	 	 	72	 
	 
	 	 	 	 	 	 
	Section 11.19
	 	Limitation on Liability.	 	 	72	 
	 
	 	 	 	 	 	 
	Section 11.20
	 	No Agency.	 	 	73	 
	 
	 	 	 	 	 	 
	SERVICING ADDENDUM	 	 	 	 
	 
	 	 	 	 	 	 
	SERVICING ADDENDUM	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBITS
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT A
	 	Form of Notice of Additional Note Principal Balance	 	 	 	 
	EXHIBIT B
	 	Form of Servicer’s Remittance Report to Trustee	 	 	 	 
	EXHIBIT C
	 	Form of S&SA Assignment	 	 	 	 
	EXHIBIT D
	 	Piggy-Backed Loan Underwriting Criteria	 	 	 	 
	EXHIBIT E
	 	Loan Schedule	 	 	 	 
	EXHIBIT F
	 	Representations and Warranties Regarding the Loans	 	 	 	 
	EXHIBIT G
	 	Servicing Addendum	 	 	 	 
	EXHIBIT H
	 	Capital Adequacy Test	 	 	 	 
	EXHIBIT I
	 	Quarterly Compliance Certificate Form	 	 	 	 






iii






 









 








SALE AND SERVICING AGREEMENT




          This Sale and Servicing Agreement is entered into effective as of December 30, 2005, among
OPTION ONE OWNER TRUST 2005-9, a Delaware statutory trust (the “Issuer” or the
“Trust”), OPTION ONE LOAN WAREHOUSE CORPORATION, a Delaware corporation, as Depositor (in
such capacity, the “Depositor”), OPTION ONE MORTGAGE CORPORATION, a California corporation
(“Option One”), as Loan Originator (in such capacity, the “Loan Originator”) and as
Servicer (in such capacity, the “Servicer”), and WELLS FARGO BANK, N.A., a national banking
association, as Indenture Trustee on behalf of the Noteholders (in such capacity, the
“Indenture Trustee”).




WITNESSETH:




          In consideration of the mutual agreements herein contained, the Issuer, the Depositor, the
Loan Originator, the Servicer and the Indenture Trustee hereby agree as follows for the benefit of
each of them and for the benefit of the holders of the Securities:




ARTICLE I




DEFINITIONS




          Section 1.01 Definitions.




          Whenever used in this Agreement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a 360-day year and the
actual number of days elapsed in each Accrual Period.




          Accepted Servicing Practices: The Servicer’s normal servicing practices in servicing
and administering similar mortgage loans for its own account, which in general will conform to the
mortgage servicing practices of prudent mortgage lending institutions which service for their own
account mortgage loans of the same type as the Loans in the jurisdictions in which the related
Mortgaged Properties are located and will give due consideration to the Noteholders’ reliance on
the Servicer.




          Accrual Period: With respect to the Notes, the period commencing on and including the
preceding Payment Date (or, in the case of the first Payment Date, the period commencing on and
including the first Transfer Date (which first Transfer Date is the first date on which the Note
Principal Balance is greater than zero)) and ending on the day preceding the related Payment Date.




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




          Additional Note Principal Balance: With respect to each Transfer Date, the aggregate
Sales Prices of all Loans conveyed on such date.




          Adjustment Date: With respect to each ARM, the date set forth in the related
Promissory Note on which the Loan Interest Rate on such ARM is adjusted in accordance with the
terms of the related Promissory Note.




          Administration Agreement: The Administration Agreement, dated as of December 30, 2005,
between the Issuer and the Administrator.







 









 








          Administrator: Option One Mortgage Corporation, in its capacity as Administrator
under the Administration Agreement.




          Advance Account: The account established and maintained pursuant to Section 5.04.




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




          Agreement: This Agreement, as the same may be amended and supplemented from time to
time.




          ALTA: The American Land Title Association and its successors in interest.




          Appraised Value: With respect to any Loan, and the related Mortgaged Property, the
lesser of:





     (i) the lesser of (a) the value thereof as determined by an appraisal made
for the originator of the Loan at the time of origination of the Loan by an appraiser who
met the minimum requirements of Fannie Mae or Freddie Mac, and (b) the value thereof as
determined by a review appraisal process which may include an automated appraisal process
consistent with the Underwriting Guidelines conducted by the Loan Originator in the event
any such review appraisal determines an appraised value more than 10% lower than the value
thereof, in the case of a Loan with a Loan-to-Value Ratio less than or equal to 80%, or
more than 5% lower than the value thereof, in the case of a Loan with a Loan-to-Value Ratio
greater than 80%, as determined by the appraisal referred to in clause (i)(a) above; and




     (ii) the purchase price paid for the related Mortgaged Property by the
Borrower with the proceeds of the Loan; provided, however, that in the case of a Refinanced
Loan or a Loan originated in connection with a “lease option purchase” if the “lease option
purchase price” was set 12 months or more prior to origination, such value of the Mortgaged
Property shall be based solely upon clause (i) above.



          ARM: Any Loan, the Loan Interest Rate with respect to which is subject to adjustment
during the life of such Loan.




          Assignment: An LPA Assignment or S&SA Assignment.




          Assignment of Mortgage: With respect to any Loan, an assignment of the related
Mortgage in blank or to Wells Fargo Bank, N.A., as custodian or trustee under the applicable
custodial agreement or trust agreement, and 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 assignment and pledge of such Mortgage.




          Balloon Loan: Any Loan for which the related monthly payments, other than the monthly
payment due on the maturity date stated in the Promissory Note, are computed on the basis of a
period to full amortization ending on a date that is later than such maturity date.





2









 








          Basic Documents: This Agreement, the Administration Agreement, the Custodial
Agreement, the Indenture, the Loan Purchase and Contribution Agreement, the Master Disposition
Confirmation Agreement, the Note Purchase Agreement, the Trust Agreement, the Pricing Letter, the
Blocked Account Agreements, each Hedging Instrument, if any, and, as and when required to be
executed and delivered, the Assignments.




          Blocked Account Agreements: The blocked account agreements entered into with respect
to the Collection Account/Deposit Account, the Advance Account and the Transfer Obligation Account,
each dated as of December 30, 2005, and by and among the Trust, the Servicer, the Indenture Trustee
and Mellon Bank, N.A.




          Borrower: The obligor or obligors on a Promissory Note.




          Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on which
banking institutions in New York City, California, Maryland, Minnesota, Pennsylvania, Delaware or
in the city in which the corporate trust office of the Indenture Trustee is located or the city in
which the Servicer’s servicing operations are located are authorized or obligated by law or
executive order to be closed.




          Certificateholder: A holder of a Trust Certificate.




          Change of Control: As defined in the Indenture.




          Clean-up Call Date: The first Payment Date occurring after the end of the Revolving
Period and the date on which the Note Principal Balance declines to 10% or less of the aggregate
Note Principal Balance as of the end of the Revolving Period.




          Closing Agent: As defined in the Custodial Agreement.




          Closing Date: December 30, 2005.




          Closing Protection Letter: A letter of indemnification with respect to a Wet Funded
Loan issued by the related title insurance company, naming the related Closing Agent and providing
for reimbursement to the Loan Originator for any loss incurred in connection with closing of such
Wet Funded Loan by such Closing Agent, which letter is effective on or before the closing of such
Wet Funded Loan.




          Code: The Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated by the United States Treasury thereunder.




          Collateral Value: As defined in the Pricing Letter.




          Collection Account: The account designated as such, established and maintained by the
Servicer in accordance with Section 5.01(a)(1) hereof.




          Combined LTV or CLTV: With respect to any Second Lien Loan, the ratio of (a) the
outstanding Principal Balance on the related date of origination of such Loan plus the loan
constituting the first lien, to (b) the lesser of (x) the Appraised Value of the Mortgaged Property
at origination or (y) if the Mortgaged Property was purchased within 12 months of the origination
of the Loan, the purchase price of the Mortgaged Property, expressed as a percentage.




3









 
















          Committed Note Principal Balance: With respect to the Notes, as of any date of
determination (a) the sum of the Additional Note Principal Balances purchased on or prior to such
date pursuant to the Note Purchase Agreement up to the Maximum Committed Note Principal Balance
less (b) all amounts previously distributed in respect of the Note Principal Balance on or prior to
such day.




          Committed Purchaser: DB Structured Products, Inc. and its permitted successors and
assigns or an Affiliate thereof identified in writing by DB Structured Products, Inc. to the
Indenture Trustee and the other parties hereto, subject to the consent of the Loan Originator,
which may not be unreasonably withheld or delayed.




          Conduit Purchaser: Gemini Securitization Corp., LLC, Aspen Funding Corp. and/or
Newport Funding Corp., as the case may be.




          Convertible Loan: A Loan that by its terms and subject to certain conditions contained
in the related Mortgage or Promissory Note allows the Borrower to convert the adjustable Loan
Interest Rate on such Loan to a fixed Loan Interest Rate.




          Custodial Agreement: The custodial agreement dated as of December 30, 2005, among the
Issuer, the Servicer, the Indenture Trustee, the Noteholder Agent and the Custodian, providing for
the retention of the Custodial Loan Files by the Custodian on behalf of the Indenture Trustee.




          Custodial Loan File: As defined in the Custodial Agreement.




          Custodian: The custodian named in the Custodial Agreement, which custodian shall not
be affiliated with the Servicer, the Loan Originator, the Depositor or any Subservicer. Wells Fargo
Bank, N.A., a national banking association, shall be the initial Custodian pursuant to the terms of
the Custodial Agreement.




          Custodian Fee: For any Payment Date, the fee payable to the Custodian on such Payment
Date as set forth in the Custodian Fee Notice for such Payment Date, which fee shall be calculated
in accordance with the separate fee letter between the Custodian and the Servicer.




          Custodian Fee Notice: For any Payment Date, the written notice provided by the
Custodian to the Servicer and the Indenture Trustee pursuant to Section 6.01, which notice shall
specify the amount of the Custodian Fee payable on such Payment Date.




          Daily Interest Accrual Amount: With respect to each day and the related Accrual
Period, the interest accrued at the Note Interest Rate with respect to such Accrual Period on the
Note Principal Balance as of the preceding Business Day after giving effect to all changes to the
Note Principal Balance on or prior to such preceding Business Day.




          Deemed Cured: With respect to the occurrence of a Rapid Amortization Trigger, when the
condition that originally gave rise to the occurrence of such trigger has not continued for 20
consecutive days, or if the occurrence of such Rapid Amortization Trigger has been waived in
writing by the Noteholder Agent.




          Default: Any occurrence that is, or with notice or the lapse of time or both would
become, an Event of Default.




          Defaulted Loan: With respect to any Determination Date, any Loan, including, without
limitation, any Liquidated Loan with respect to which any of the following has occurred as of the
end of





4









 







the related Remittance Period: (a) foreclosure or similar proceedings have been commenced; or
(b) the Servicer or any Subservicer has determined in good faith and in accordance with the
servicing standard set forth in Section 4.01 of the Servicing Addendum that such Loan is in default
or imminent default.




          Default LIBOR Margin: As defined in the Pricing Letter.




          Deleted Loan: A Loan replaced or to be replaced by one or more Qualified Substitute
Loans.




          Delinquent: A Loan is “Delinquent” if any Monthly Payment due thereon is not made by
the close of business on the day such Monthly Payment is required to be paid. A Loan is “30 days
Delinquent” if any Monthly Payment due thereon has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which such Monthly Payment
was required to be paid or, if there is no such corresponding day (e.g., as when a 30-day month
follows a 31-day month in which a payment was required to be paid on the 31st day of such month),
then on the last day of such immediately succeeding month. The determination of whether a Loan is
“60 days Delinquent,” “90 days Delinquent,” etc., shall be made in like manner.




          Delivery: When used with respect to Trust Account Property means:




          (a) with respect to bankers’ acceptances, commercial paper, negotiable certificates
of deposit and other obligations that constitute “instruments” within the meaning of Section
9-102(a)(47) of the UCC and are susceptible of physical delivery (except with respect to Trust
Account Property consisting of certificated securities (as defined in Section 8-102(a)(4) of the
UCC)), physical delivery to the Indenture Trustee or its custodian (or the related Securities
Intermediary) endorsed to the Indenture Trustee or its custodian (or the related Securities
Intermediary) or endorsed in blank (and if delivered and endorsed to the Securities Intermediary,
by continuous credit thereof by book-entry to the related Trust Account);




          (b) with respect to a certificated security (i) delivery of such certificated
security endorsed to, or registered in the name of, the Indenture Trustee or endorsed in blank to
its custodian or the related Securities Intermediary and the making by such Securities Intermediary
of appropriate entries in its records identifying such certificated securities as credited to the
related Trust Account, or (ii) by delivery thereof to a “clearing corporation” (as defined in
Section 8-102(a)(5) of the UCC) and the making by such clearing corporation of appropriate entries
in its records crediting the securities account of the related Securities Intermediary by the
amount of such certificated security and the making by such Securities Intermediary of appropriate
entries in its records identifying such certificated securities as credited to the related Trust
Account (all of the Trust Account Property described in Subsections (a) and (b), “Physical
Property”); and, in any event, any such Physical Property in registered form shall be in the name
of the Indenture Trustee or its nominee or custodian (or the related Securities Intermediary); and
such additional or alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;




          (c) with respect to any security issued by the U.S. Treasury, Fannie Mae or Freddie
Mac that is a book-entry security held through the Federal Reserve System pursuant to federal
book-entry regulations, the following procedures, all in accordance with applicable law, including
applicable federal
regulations and Articles 8 and 9 of the UCC: the making by a Federal Reserve Bank of an
appropriate entry crediting such Trust Account Property to an account of the related Securities
Intermediary or the securities intermediary that is (x) also a ‘participant” pursuant to applicable
federal regulations and (y) is acting as securities intermediary on behalf of the Securities
Intermediary with respect to such Trust





5









 







Account Property; the making by such Securities Intermediary or securities intermediary of
appropriate entries in its records crediting such book-entry security held through the Federal
Reserve System pursuant to federal book-entry regulations and Articles 8 and 9 of the UCC to the
related Trust Account; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and




          (d) with respect to any item of Trust Account Property that is an uncertificated
security (as defined in Section 8-102(a)(18) of the UCC) and that is not governed by clause (c)
above, registration in the records of the issuer thereof in the name of the related Securities
Intermediary, and the making by such Securities Intermediary of appropriate entries in its records
crediting such uncertificated security to the related Trust Account.




          Designated Depository Institution: With respect to an Eligible Account, an institution
whose deposits are insured by the Bank Insurance Fund or the Savings Association Insurance Fund of
the FDIC, the long-term deposits of which shall be rated A or better by S&P or A2 or better by
Moody’s and the short-term deposits of which shall be rated P-1 or better by Moody’s and A-1 or
better by S&P, unless otherwise approved in writing by the Noteholder Agent and which is any of the
following: (A) a federal savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (B) an institution duly organized, validly existing and in
good standing under the applicable banking laws of any state, (C) a national banking association
duly organized, validly existing and in good standing under the federal banking laws, (D) a
principal subsidiary of a bank holding company or (E) approved in writing by the Noteholder Agent
and, in each case acting or designated by the Servicer as the depository institution for the
Eligible Account; provided, however, that any such institution or association shall have combined
capital, surplus and undivided profits of at least $50,000,000.




          Depositor: Option One Loan Warehouse Corporation, a Delaware corporation, and any
successors thereto.




          Determination Date: With respect to any Payment Date occurring on the 10th day of a
month, the last calendar day of the month immediately preceding the month of such Payment Date, and
with respect to any other Payment Date, as mutually agreed by the Servicer and the Noteholders.




          Disposition: A Securitization, Whole Loan Sale transaction, or other disposition of
Loans.




          Disposition Agent: Deutsche Bank Structured Products, Inc. and its successors and
assigns acting at the direction, and as agent, of the Majority Noteholders.




          Disposition Participant: As applicable, with respect to a Disposition, any “depositor”
with respect to such Disposition, the Disposition Agent, the Majority Noteholders, the Issuer, the
Servicer, the related trustee and the related custodian, any nationally recognized credit rating
agency, the related underwriters, the related placement agent, the related credit enhancer, the
related whole-loan purchaser, the
related purchaser of securities and/or any other party necessary or, in the good faith belief
of any of the foregoing, desirable to effect a Disposition.




          Disposition Proceeds: With respect to a Disposition, (x) the proceeds of the
Disposition remitted to the Trust in respect of the Loans transferred on the date of and with
respect to such Disposition, including without limitation, any cash and Retained Securities created
in any related Securitization less all costs, fees and expenses incurred in connection with such
Disposition, including, without limitation, all amounts deposited into any reserve accounts upon
the closing thereof plus or minus





6









 







(y) the net positive or net negative value of all Hedging Instruments, if any, terminated in
connection with such Disposition minus (z) all other amounts agreed upon in writing by the
Noteholder Agent, the Trust and the Servicer.




          Distribution Account: The account established and maintained pursuant to Section
5.01(a)(2) hereof.




          Due Date: The day of the month on which the Monthly Payment is due from the Borrower
with respect to a Loan.




          Due Diligence Fees: Shall have the meaning provided in Section 11.15 hereof.




          Early Payment Default Loan: As defined in the Pricing Letter.




          Eligible Account: At any time, a deposit account or securities account which is: (1)
maintained with a Designated Depository Institution; (ii) fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a trust account (which
shall be a “segregated trust account”) maintained with the corporate trust department of a federal
or state chartered depository institution or trust company with trust powers and acting in its
fiduciary capacity for the benefit of the Indenture Trustee and the Issuer, which depository
institution or trust company shall have capital and surplus of not less than $50,000,000; or (iv)
with the prior written consent of the Noteholder Agent, any other deposit account or securities
account.




          Eligible Servicer: Option One or any other Person to which the Majority Noteholders
may consent in writing.




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




          Event of Default: An Event of Default under the Indenture.




          Exceptions: The meaning set forth in the Custodial Agreement.




          Exceptions Report: The meaning set forth in the Custodial Agreement.




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




          Fannie Mae: The Federal National Mortgage Association and any successor thereto.




          Fatal Exception: As defined in the Custodial Agreement.




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




          Fidelity Bond: As described in Section 4.10 of the Servicing Addendum.




          Final Put Date: The Put Date following the end of the Revolving Period on which the
Majority Noteholders (or the Market Value Agent on their behalf) exercise the Put Option with
respect to the entire outstanding Note Principal Balance.





7









 








          Final Recovery Determination: With respect to any defaulted Loan or any
Foreclosure Property, a determination made by the Servicer that all Mortgage Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Servicer, in its reasonable good
faith judgment, expects to be finally recoverable in respect thereof have been so recovered. The
Servicer shall maintain records, prepared by a servicing officer of the Servicer, of each Final
Recovery Determination.




          Financial Covenants: As defined in Section 7.02 hereof.




          First Lien Loan: A Loan secured by the lien on the related Mortgaged Property, subject
to no prior liens on such Mortgaged Property.




          Foreclosed Loan: As of any Determination Date, any Loan that as of the end of the
preceding Remittance Period has been discharged as a result of (i) the completion of foreclosure or
comparable proceedings by the Servicer, on behalf of the Issuer; (ii) the acceptance of the deed or
other evidence of title to the related Mortgaged Property in lieu of foreclosure or other
comparable proceeding; or (iii) the acquisition of title to the related Mortgaged Property by
operation of law.




          Foreclosure Property: Any real property securing a Foreclosed Loan that has been
acquired by the Servicer on behalf of the Issuer through foreclosure, deed in lieu of foreclosure
or similar proceedings in respect of the related Loan.




          40/30 Loan: A Loan with a 40 year amortization period that becomes due and payable in
full at the end of the 30th year.




          Freddie Mac: The Federal Home Loan Mortgage Corporation and any successor thereto.




          GAAP: Generally Accepted Accounting Principles as in effect in the United States.




          Gross Margin: With respect to each ARM, the fixed percentage spread to the Index, set
forth in the related Promissory Note.




          Hedge Funding Requirement: With respect to any day, all amounts required to be paid or
delivered by the Issuer under any Hedging Instrument, whether in respect of payments thereunder or
in order to meet margin, collateral or other requirements thereof. Such amounts shall be calculated
by the Market Value Agent and the Indenture Trustee shall be notified of such amount by the Market
Value Agent.




          Hedge Value: With respect to any Business Day and a specific Hedging Instrument, the
positive amount, if any, that is equal to the amount that would be paid to the Issuer in
consideration of an agreement between the Issuer and an unaffiliated third party, that would have
the effect of preserving for the Issuer the net economic equivalent, as of such Business Day, of
all payment and delivery requirements payable to and by the Issuer under such Hedging Instrument
until the termination thereof, as determined by the Market Value Agent in accordance with Section
6.03 hereof.




          Hedging Counterparty: A Person (i) (A) the long-term and commercial paper or
short-term deposit ratings of which are acceptable to the Majority Noteholders and (B) which shall
agree in writing that, in the event that any of its long-term or commercial paper or short-term
deposit ratings cease to be at or above the levels deemed acceptable by the Majority Noteholders,
it shall secure its obligations in accordance with the request of the Majority Noteholders, (ii)
that has entered into a Hedging Instrument and (iii) that is acceptable to the Majority
Noteholders.




8









 








          Hedging Instrument: Any interest rate cap agreement, interest rate floor
agreement, interest rate swap agreement or other interest rate hedging agreement that may be
entered into by the Issuer with a Hedging Counterparty, and which requires the Hedging Counterparty
to deposit all amounts payable thereby directly to the Collection Account. Each Hedging Instrument
shall meet the requirements set forth in Article VII hereof with respect thereto.




          High LTV Loans: First Lien Loans with an LTV and Second Lien Loans with a CLTV (that
are not Piggy Backed Loans) greater than or equal to 90% and less than or equal to 100%.




          Indenture: The Indenture dated as of December 30, 2005, between the Issuer and the
Indenture Trustee, as the same may be further amended or supplemented from time to time.




          Indenture Trustee: Wells Fargo Bank, N..A., a national banking association, as
Indenture Trustee under the Indenture, or any successor indenture trustee under the Indenture.




          Indenture Trustee Fee: An annual fee of $5,000 payable by the Servicer in accordance
with a separate fee agreement between the Indenture Trustee and the Servicer and Section 5.01
hereof.




          Independent: When used with respect to any specified Person, such Person (i) is in
fact independent of the Loan Originator, the Servicer, the Depositor or any of their respective
Affiliates, (ii) does not have any direct financial interest in, or any material indirect financial
interest in, the Loan Originator, the Servicer, the Depositor or any of their respective Affiliates
and (iii) is not connected with the Loan Originator, the Depositor, the Servicer or any of their
respective Affiliates, as an officer, employee, promoter, underwriter, trustee, partner, director
or Person performing similar functions; provided, however, that a Person shall not fail to be
Independent of the Loan Originator, the Depositor, the Servicer or any of their respective
Affiliates merely because such Person is the beneficial owner of 1% or less of any class of
securities issued by the Loan Originator, the Depositor, the Servicer or any of their respective
Affiliates, as the case may be.




          Index: With respect to each ARM, the index set forth in the related Promissory Note
for the purpose of calculating the Loan Interest Rate thereon.




          Interest Carry-Forward Amount: With respect to any Payment Date, the excess, if any,
of (A) the Interest Payment Amount for such Payment Date plus the unpaid portion of the Interest
Payment
Amount for the prior Payment Date over (B) the amount in respect of interest that is actually
paid from the Distribution Account on such Payment Date in respect of the interest for such Payment
Date.




          Interest Only Mortgage Loan: A Mortgage Loan for which an interest-only payment
feature is allowed during the period prior to the first Adjustment Date.




          Interest Payment Amount: With respect to any Payment Date, the sum of the Daily
Interest Accrual Amounts for all days in the related Accrual Period.




          LIBOR Determination Date: With respect to each Accrual Period, each day during such
Accrual Period.




          LIBOR Margin: As defined in the Pricing Letter.




          Lien: With respect to any asset, (a) any mortgage, lien, pledge, charge, security
interest, hypothecation, option or encumbrance of any kind in respect of such asset or (b) the
interest of a vendor or lessor under any conditional sale agreement, financing lease or other title
retention agreement relating





9









 







to such asset. When used with reference to the Indenture, all of the rights assigned to the
Indenture Trustee by virtue of the Granting Clause of the Indenture.




          Lifetime Cap: The provision in the Promissory Note for each ARM which limits the
maximum Loan Interest Rate over the life of such ARM.




          Lifetime Floor: The provision in the Promissory Note for each ARM which limits the
minimum Loan Interest Rate over the life of such ARM.




          Liquidated Loan: As defined in Section 4.03(c) of the Servicing Addendum.




          Liquidated Loan Losses: With respect to any Determination Date, the difference between
(i) the aggregate Principal Balances as of such date of all Loans that became Liquidated Loans and
(ii) all Liquidation Proceeds allocable to principal received on or prior to such date.




          Liquidation Proceeds: With respect to a Liquidated Loan, any cash amounts received in
connection with the liquidation of such Liquidated Loan, whether through trustee’s sale,
foreclosure sale or other disposition, any cash amounts received in connection with the management
of the Mortgaged Property from Defaulted Loans, any proceeds from Primary Insurance Policies and
any other amounts required to be deposited in the Collection Account pursuant to Section 5.01(b)
hereof, in each case other than Mortgage Insurance Proceeds and Released Mortgaged Property
Proceeds. Liquidation Proceeds shall also include any awards or settlements in respect of the
related Mortgage Property, whether permanent or temporary, partial or entire, by exercise of the
power of eminent domain or condemnation.




          Loan: Any loan sold to the Trust hereunder and pledged to the Indenture Trustee, which
loan includes, without limitation, (i) a Promissory Note or Lost Note Affidavit and related
Mortgage and (ii) all right, title and interest of the Loan Originator in and to the Mortgaged
Property covered by such Mortgage. The term Loan shall be deemed to include the related Promissory
Note or Lost Note Affidavit, related Mortgage, all other Loan Documents and related Foreclosure
Property, if any.




          Loan Documents: With respect to a Loan, the documents comprising the Loan File for
such Loan.




          Loan File: With respect to each Loan, the Custodial Loan File and the Servicer’s Loan
File.




          Loan Interest Rate: With respect to each Loan, the annual rate of interest borne by
the related Promissory Note, as shown on the Loan Schedule, and, in the case of an ARM, as the same
may be periodically adjusted in accordance with the terms of such Loan.




          Loan Originator: Option One and its permitted successors and assigns.




          Loan Originator Put: The mandatory repurchase by the Loan Originator, at the option of
the Majority Noteholders, of a Loan pursuant to Section 3.08(a) hereof.




          Loan Pool: As of any date of determination, the pool of all Loans conveyed to the
Issuer pursuant to this Agreement on all Transfer Dates up to and including such date of
determination, which Loans have not been released from the Lien of the Indenture pursuant to the
terms of the Basic Documents, together with the rights and obligations of a holder thereof, and the
payments thereon and proceeds therefrom received on and after the applicable Transfer Cut-off Date,
as identified from time to time on the Loan Schedule.




          
10









 









          Loan Purchase and Contribution Agreement: The Fourth Amended and Restated Loan
Purchase and Contribution Agreement, between Option One, as seller and the Depositor, as purchaser,
dated as of September 1, 2005, as heretofore supplemented, amended and restated, and as it may
hereafter be further supplemented, amended and restated.




          Loan Schedule: The schedule of Loans conveyed to the Issuer on the Closing Date and on
each Transfer Date and delivered to the Noteholder Agent and the Custodian in the form of a
computer-readable transmission specifying the information set forth in Exhibit E hereto and
with respect to Wet Funded Loans, Exhibit C to the Custodial Agreement.




          Loan-to-Value Ratio or LTV: With respect to any First Lien Loan, the ratio of the
original outstanding principal amount of such Loan to the Appraised Value of the Mortgaged Property
at origination.




          Lost Note Affidavit: With respect to any Loan as to which the original Promissory Note
has been permanently lost or destroyed and has not been replaced, an affidavit from the Loan
Originator certifying that the original Promissory Note has been lost, misplaced or destroyed
(together with a copy of the related Promissory Note and indemnifying the Issuer against any loss,
cost or liability resulting from the failure to deliver the original Promissory Note) in the form
of Exhibit L attached to the Custodial Agreement.




          LPA Assignment: The assignment of Loans from Option One to the Depositor under the
Loan Purchase and Contribution Agreement.




          Majority Certificateholders: As defined in the Trust Agreement.




          Majority Noteholders: The holder or holders of in excess of 50% of the Note Principal
Balance. In the event of the release of the Lien of the Indenture in accordance with the terms
thereof, the Majority Noteholders shall mean the Majority Certificateholders.




          Market Value: The market value of a Loan as of any Business Day as determined by the
Market Value Agent in accordance with Section 6.03 hereof.




          Market Value Agent: DB Structured Products, Inc. or an Affiliate thereof designated by
DB Structured Products, Inc. in writing to the parties hereto and, in either case, its successors
in interest.




          Master Disposition Confirmation Agreement: The Fourth Amended and Restated Master
Disposition Confirmation Agreement, dated as of June 1, 2005, by and among Option One, the
Depositor, the Delaware statutory trusts listed on Schedule I thereto and each of the Lenders
listed on Schedule II thereto, as amended and supplemented from time to time.




          Maturity Date: With respect to the Notes, as set forth in the Indenture or such later
date as may be agreed in writing by the Majority Noteholders.




          Maximum Committed Note Principal Balance: As defined in the Pricing Letter.




          Maximum Note Principal Balance: As defined in the Pricing Letter.




          Monthly Advance: The aggregate of the advances made by the Servicer on any Remittance
Date pursuant to Section 4.14 of the Servicing Addendum.




11









 








          Monthly Payment: The scheduled monthly payment of principal and/or interest
required to be made by a Borrower on the related Loan, as set forth in the related Promissory Note.




          Monthly Remittance Amount: With respect to each Remittance Date, the sum, without
duplication, of (i) the aggregate payments on the Loans collected by the Servicer pursuant to
Section 5.01(b)(i) during the immediately preceding Remittance Period and (ii) the aggregate of
amounts deposited into the Collection Account pursuant to Section 5.01(b)(ii) through
5.01(b)(x) during the immediately preceding Remittance Period.




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




          Mortgage: With respect to any Loan, the mortgage, deed of trust or other instrument
securing the related Promissory Note, which creates a first or second lien on the fee in real
property and/or a first or second lien on the leasehold estate in real property securing the
Promissory Note and the assignment of rents and leases related thereto.




          Mortgage Insurance Policies: With respect to any Mortgaged Property or Loan, the
insurance policies required pursuant to Section 4.08 of the Servicing Addendum.




          Mortgage Insurance Proceeds: With respect to any Mortgaged Property, all amounts
collected in respect of Mortgage Insurance Policies and not required either pursuant to applicable
law or the related Loan Documents to be applied to the restoration of the related Mortgaged
Property or paid to the related Borrower.




          Mortgaged Property: With respect to a Loan, the related Borrower’s fee and/or
leasehold interest in the real property (and/or all improvements, buildings, fixtures, building
equipment and personal property thereon (to the extent applicable) and all additions, alterations
and replacements made at any time with respect to the foregoing) and all other collateral securing
repayment of the debt evidenced by the related Promissory Note.




          Net Liquidation Proceeds: With respect to any Payment Date, Liquidation Proceeds
received during the prior Remittance Period, net of any reimbursements to the Servicer made from
such amounts for any unreimbursed Servicing Compensation and Servicing Advances (including
Nonrecoverable Servicing Advances) made and any other fees and expenses paid in connection with the
foreclosure, inspection, conservation and liquidation of the related Liquidated Loans or
Foreclosure Properties pursuant to Section 4.03 of the Servicing Addendum.




          Net Loan Losses: With respect to any Defaulted Loan that is subject to a modification
pursuant to Section 4.01 of the Servicing Addendum, an amount equal to the portion of the Principal
Balance, if any, released in connection with such modification.




          Net Worth: With respect to any Person, the excess of total assets of such Person, over
total liabilities of such Person, determined in accordance with GAAP.




          Non-Fatal Exception: As defined in Section 2.05(b)(i) hereof.




          Nonrecoverable Monthly Advance: Any Monthly Advance previously made or proposed to be
made with respect to a Loan or Foreclosure Property that, in the good faith business judgment of
the Servicer, as evidenced by an Officer’s Certificate of a Servicing Officer delivered to the
Noteholder Agent, will not, or, in the case of a proposed Monthly Advance, would not be, ultimately
recoverable




12









 







from the related late payments, Mortgage Insurance Proceeds, Liquidation Proceeds or
condemnation proceeds on such Loan or Foreclosure Property as provided herein.




          Nonrecoverable Servicing Advance: With respect to any Loan or any Foreclosure
Property, (a) any Servicing Advance previously made and not reimbursed from late collections,
condemnation proceeds, Liquidation Proceeds, Mortgage Insurance Proceeds or the Released Mortgaged
Property Proceeds on the related Loan or Foreclosure Property or (b) a Servicing Advance proposed
to be made in respect of a Loan or Foreclosure Property either of which, in the good faith business
judgment of the Servicer, as evidenced by an Officer’s Certificate of a Servicing Officer delivered
to the Noteholder Agent, would not be ultimately recoverable.




          Nonutilization Fee: As defined in the Pricing Letter.




          Note: As defined in the Indenture.




          Noteholder: As defined in the Indenture.




          Noteholder Agent: DB Structured Products, Inc. and its successors and assigns acting
at the direction, and as agent, of the Majority Noteholders.




          Note Interest Rate: As defined in the Pricing Letter.




          Note Principal Balance: With respect to the Notes, as of any date of determination (a)
the sum of the Additional Note Principal Balances purchased on or prior to such date pursuant to
the Note Purchase Agreement less (b) all amounts previously distributed in respect of principal of
the Notes on or prior to such day.




          Note Purchase Agreement: The Note Purchase Agreement among the Purchasers, the
Noteholder Agent, the Issuer and the Depositor, dated as of December 30, 2005 and any amendments
thereto.




          Note Redemption Amount: As of any Determination Date, an amount without duplication
equal to the sum of (i) the then outstanding Note Principal Balance of the Notes, plus the Interest
Payment Amount for the related Payment Date, (ii) any Trust Fees and Expenses due and unpaid on the
related Payment Date, (iii) any Servicing Advance Reimbursement Amount as of such Determination
Date, and (iv) all amounts due to Hedging Counterparties in respect of the termination of all
related Hedging Instruments.




          Officer’s Certificate: A certificate signed by a Responsible Officer of the Depositor,
the Loan Originator, the Servicer or the Issuer, in each case, as required by this Agreement.




          One-Month LIBOR: With respect to each Accrual Period, the rate determined by the
Noteholder Agent on the related LIBOR Determination Date on the basis of the offered rate for
one-month U.S. dollar deposits, as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such LIBOR Determination Date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the offered rates of the Reference
Banks for one-month U.S. dollar deposits, as of 11:00 a.m. (London time) on such LIBOR
Determination Date. In such event, the Noteholder Agent will request the principal London office of
each of the Reference Banks to provide a quotation of its rate. If on such LIBOR Determination
Date, two or more Reference Banks provide such offered quotations, One-Month LIBOR for the related
Accrual Period shall be the arithmetic mean of all such offered quotations (rounded to the nearest
whole multiple of 1/16%). If on such LIBOR




13









 







Determination Date, fewer than two Reference Banks provide such offered quotations, One-Month
LIBOR for the related Accrual Period shall be the higher of (i) LIBOR as determined on the previous
LIBOR Determination Date and (ii) the Reserve Interest Rate. Notwithstanding the foregoing, if,
under the priorities described above, One-Month LIBOR for a LIBOR Determination Date would be based
on One-Month LIBOR for the previous LIBOR Determination Date for the third consecutive LIBOR
Determination Date, the Noteholder Agent shall select an alternative comparable index (over which
the Noteholder Agent has no control), used for determining one-month Eurodollar lending rates that
is calculated and published (or otherwise made available) by an independent party.




          Opinion of Counsel: A written opinion of counsel who may be employed by the Servicer,
the Depositor, the Loan Originator or any of their respective Affiliates.




          Option One: Option One Mortgage Corporation, a California corporation.




          Overcollateralization Shortfall: With respect to any Business Day, a positive amount,
if any, equal to (a) the Note Principal Balance on such Business Day minus (b) the aggregate
Collateral Value of all Loans in the Loan Pool as of such Business Day; provided, however, that on
(A) the termination of the Revolving Period, (B) the occurrence of a Rapid Amortization Trigger,
(C) the Payment Date on which the Trust is to be terminated pursuant to Section 10.02
hereof or (D) the Final Put Date, the
Overcollateralization Shortfall shall be equal to the Note Principal Balance. Notwithstanding
anything to the contrary herein, in no event shall the Overcollateralization Shortfall, with
respect to any Business Day, exceed the Note Principal Balance as of such date. If, as of such
Business Day, no Rapid Amortization Trigger or Default under this Agreement or the Indenture shall
be in effect, the Overcollateralization Shortfall shall be reduced (but in no event to an amount
below zero) by all or any portion of the aggregate Hedge Value (if any) as of such Payment Date as
the Majority Noteholders may, in their sole discretion, designate in writing.




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




          Owner Trustee Fee: The annual fee of $4,400 payable in equal monthly installments to
the Servicer pursuant to Section 5.01(c)(3)(i), and the Servicer shall, in turn, pay such amount
annually to the Owner Trustee on the anniversary of the Closing Date occurring each year during the
term of this Agreement.




          Paying Agent: As defined in the Indenture.




          Payment Date: Each of, (i) the 10th day of each calendar month commencing
on the first such 10th day to occur after the first Transfer Date, or if any such day is
not a Business Day, the first Business Day immediately following such day, (ii) any day a Loan is
sold pursuant to the terms hereof, (iii) a Put Date as specified by the Majority Noteholders
pursuant to Section 10.05 of the Indenture and (iv) an additional Payment Date pursuant to Section
5.01(c)(4)(i) and 5.01(c)(4)(iii). From time to time, the Majority Noteholders and the Issuer may
agree, upon written notice to the Owner Trustee and the Indenture Trustee, to additional Payment
Dates in accordance with Section 5.01(c)(4)(ii).




          Payment Statement: As defined in Section 6.01(b) hereof.




          Percentage Interest: As defined in the Trust Agreement.




14









 








          Periodic Cap: With respect to each ARM Loan and any Rate Change Date therefor,
the annual percentage set forth in the related Promissory Note, which is the maximum annual
percentage by which the Loan Interest Rate for such Loan may increase or decrease (subject to the
Lifetime Cap or the Lifetime Floor) on such Rate Change Date from the Loan Interest Rate in effect
immediately prior to such Rate Change Date.




          Permitted Investments: Each of the following:




          (a) Direct general obligations of the United States or the obligations of any agency
or instrumentality of the United States fully and unconditionally guaranteed, the timely payment or
the guarantee of which constitutes a full faith and credit obligation of the United States.




          (b) Federal Housing Administration debentures rated Aa2 or higher by Moody’s and AA
or better by S&P.




          (c) Freddie Mac senior debt obligations rated Aa2 or higher by Moody’s and AA or
better by S&P.




          (d) Federal Home Loan Banks’ consolidated senior debt obligations rated Aa2 or
higher by Moody’s and AA or better by S&P.




          (e) Fannie Mae senior debt obligations rated Aa2 or higher by Moody’s.




          (f) Federal funds, certificates or deposit, time and demand deposits, and bankers’
acceptances (having original maturities of not more than 365 days) of any domestic bank, the
short-term debt obligations of which have been rated A-1 or better by S&P and P-1 or better by
Moody’s.




          (g) Investment agreements approved by the Noteholder Agent provided:




               (1) The agreement is with a bank or insurance company which has an unsecured,
uninsured and unguaranteed obligation (or claims-paying ability) rated Aa2 or better by Moody’s and
AA or better by S&P, and



               (2) Monies invested thereunder may be withdrawn without any penalty, premium or
charge upon not more than one day’s notice (provided such notice may be amended or canceled at any
time prior to the withdrawal date), and



               (3) The agreement is not subordinated to any other obligations of such insurance
company or bank, and



               (4) The same guaranteed interest rate will be paid on any future deposits made
pursuant to such agreement, and



               (5) The Indenture Trustee and the Noteholder Agent receive an opinion of counsel
that such agreement is an enforceable obligation of such insurance company or bank.



          (h) Commercial paper (having original maturities of not more than 365 days) rated
A-1 or better by S&P and P-1 or better by Moody’s.




          (i) Investments in money market funds rated AAAM or AAAM-G by S&P and Aaa or P-1 by
Moody’s.




15









 








          (j) Investments approved in writing by the Noteholder Agent;



provided, that no instrument described above is permitted to evidence either the right to receive
(a) only interest with respect to obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument and the interest and
principal payments with respect to such instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations; and provided, further, that no
instrument described above may be purchased at a price greater than par if such instrument may be
prepaid or called at a price less than its purchase price prior to stated maturity; and provided,
further, that, with respect to any instrument described above, such
instrument qualifies as a “permitted investment” within the meaning of Section 860G(a)(5) of the
Code and the regulations thereunder.




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




          Physical Property: As defined in clause (b) of the definition of “Delivery” above.




          Piggy-Backed Loan: A combined First Lien Loan, with an LTV less than or equal to 80%,
and Second Lien Loan, with a CLTV less than or equal to 100%, that satisfy the underwriting
criteria set forth in Exhibit D hereto and have a minimum FICO score of 580, with respect to a Loan
with full documentation, or 620, with respect to a Loan with stated income documentation




          Pool Principal Balance: With respect to any Determination Date, the aggregate
Principal Balances of the Loans as of such Determination Date.




          Prepaid Installment: With respect to any Loan, any installment of principal thereof
and interest thereon received prior to the scheduled Due Date for such installment, intended by the
Borrower as an early payment thereof and not as a Prepayment with respect to such Loan.




          Prepayment: Any payment of principal of a Loan which is received by the Servicer in
advance of the scheduled due date for the payment of such principal (other than the principal
portion of any Prepaid Installment), and the proceeds of any Mortgage Insurance Policy which are to
be applied as a payment of principal on the related Loan shall be deemed to be Prepayments for all
purposes of this Agreement.




          Preservation Expenses: Expenditures made by the Servicer in connection with a
foreclosed Loan prior to the liquidation thereof, including, without limitation, expenditures for
real estate property taxes, hazard insurance premiums, property restoration or preservation.




          Pricing Letter: The Pricing Letter among the Issuer, the Depositor, Option One and the
Indenture Trustee, dated December 30, 2005 and any amendments thereto.




          Primary Insurance Policy: A policy of primary mortgage guaranty insurance issued by a
Qualified Insurer pursuant to Section 4.06 of the Servicing Addendum.




          Principal Balance: With respect to any Loan or related Foreclosure Property, (i) at
the Transfer Cut-off Date, the Transfer Cut-off Date Principal Balance and (ii) with respect to any
other date of determination, the outstanding unpaid principal balance of the Loan as of the end of
the preceding Remittance Period (after giving effect to all payments received thereon and the
allocation of any Net Loan




16









 







Losses with respect thereto for a Defaulted Loan prior to the end of such Remittance Period);
provided, however, that any Liquidated Loan shall be deemed to have a Principal Balance of zero.




          Promissory Note: With respect to a Loan, the original executed promissory note or
other evidence of the indebtedness of the related Borrower or Borrowers.




          Purchasers: The Committed Purchaser and the Conduit Purchasers and their permitted
successors and assigns.




          Put/Call Loan: Any (i) Loan that has become 30 or more days (but less than 60 days)
Delinquent, (ii) Loan that has become 60 or more days (but less than 90 days) Delinquent, (iii)
Loan that has become 90 or more days Delinquent, (iv) Loan that is a Defaulted Loan, (v) Loan that
has been in default for a period of 30 days or more (other than a Loan referred to in clause (i),
(ii), (iii) or (iv) hereof), (vi) Loan that does not meet criteria established by independent
rating agencies or surety agency conditions for Dispositions which criteria have been established
at the related Transfer Date and may be modified only to match changed criteria of independent
rating agencies or surety agents, or (vii) Loan that is inconsistent with the intended tax status
of a Securitization.




          Put Date: Any date on which all or a portion of the Notes are to be purchased by the
Issuer as a result of the exercise of the Put Option.




          Put Option: The right of the Majority Noteholders to require the Issuer to repurchase
all or a portion of the Notes in accordance with Section 10.04 of the Indenture.




          QSPE Affiliate: Any of Option One Owner Trust 2001-1 A, Option One Owner Trust 2001-1
B, Option One Owner Trust 2002-3, Option One Owner Trust 2003-4, Option One Owner Trust 2003-5,
Option One Owner Trust 2005-6, Option One Owner Trust 2005-7, Option One Owner Trust 2005-8, or any
other Affiliate which is a “qualified special purpose entity” in accordance with Financial
Accounting Standards Board’s Statement No. 140 or 125.




          Qualified Insurer: An insurance company duly qualified as such under the laws of the
states in which the Mortgaged Property is located, duly authorized and licensed in such states to
transact the applicable insurance business and to write the insurance provided and that meets the
requirements of Fannie Mae and Freddie Mac.




          Qualified Substitute Loan: A Loan or Loans substituted for a Deleted Loan pursuant to
Section 3.06 hereof, which (i) has or have been approved in writing by the Majority Noteholders and
(ii) complies or comply as of the date of substitution with each representation and warranty set
forth in Exhibit F and is or are not 30 or more days Delinquent as of the date of substitution for
such Deleted Loan or Loans.




          Rapid Amortization Trigger: Shall exist as of any Determination Date, if the aggregate
Principal Balance of all Loans that are Delinquent greater than or equal to 30 days (including
Defaulted Loans and Foreclosed Loans) as of such Determination Date is greater than or equal to 15%
of the Pool Principal Balance as of such Determination Date; provided, however, that a Rapid
Amortization Trigger shall not occur if such percentage is reduced to less than 15% within one (1)
Business Day as of such Determination Date as a result of the exercise of a Servicer Call. A Rapid
Amortization Trigger shall continue to exist until it is Deemed Cured.




          Rate Change Date: The date on which the Loan Interest Rate of each ARM is subject to
adjustment in accordance with the related Promissory Note.







17









 








          Rating Agencies: S&P and Moody’s or such other nationally recognized credit
rating agencies as may from time to time be designated in writing by the Majority Noteholders in
their sole discretion.




          Record Date: With respect to each Payment Date, the close of business of the
immediately preceding Business Day.




          Reference Banks: Deutsche Bank AG, Barclay’s Bank PLC, The Tokyo Mitsubishi Bank and
National Westminster Bank PLC and their successors in interest; provided, however, that if the
Noteholder Agent determines that any of the foregoing banks are not suitable to serve as a
Reference Bank, then any leading banks selected by the Noteholder Agent with the approval of the
Issuer, which approval shall not be unreasonably withheld, which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an established place of
business in London and (ii) which have been designated as such by the Noteholder Agent with the
approval of the Issuer, which approval shall not be unreasonably withheld.




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




          Released Mortgaged Property Proceeds: With respect to any Loan, proceeds received by
the Servicer in connection with (i) a taking of an entire Mortgaged Property by exercise of the
power of eminent domain or condemnation or (ii) any release of part of the Mortgaged Property from
the lien of the related Mortgage, whether by partial condemnation, sale or otherwise; which
proceeds in either case are not released to the Borrower in accordance with applicable law and/or
Accepted Servicing Practices.




          Remittance Date: The Business Day immediately preceding each Payment Date.




          Remittance Period: With respect to any Payment Date, the period commencing immediately
following the Determination Date for the preceding Payment Date (or, in the case of the initial
Payment Date, commencing immediately following the initial Transfer Cut-off Date) and ending on and
including the related Determination Date.




          Repurchase Price: With respect to a Loan the sum of (i), the Principal Balance thereof
as of the date of purchase or repurchase, plus (ii) all accrued and unpaid interest on such Loan to
the date of purchase or repurchase computed at the applicable Loan Interest Rate, plus (iii) the
amount of any unreimbursed Servicing Advances made by the Servicer with respect to such Loan (after
deducting therefrom any amounts received in respect of such purchased or repurchased Loan and being
held in the Collection Account for future distribution to the extent such amounts represent
recoveries of principal not yet applied to reduce the related Principal Balance or interest (net of
the Servicing Fee) for the period from and after the date of repurchase). The Repurchase Price
shall be (i) increased by the net negative value or (ii) decreased by the net positive value of all
Hedging Instruments (if any) that are terminated with respect to the purchase of such Loan. To the
extent the Servicer does not reimburse itself for amounts, if any, in respect of the Servicing
Advance Reimbursement Amount pursuant to Section 5.01(c)(1) hereof, with respect to such Loan, the
Repurchase Price shall be reduced by such amounts.




          Reserve Interest Rate: With respect to any LIBOR Determination Date, the rate per
annum that the Noteholder Agent determines to be either (i) the arithmetic mean (rounded to the
nearest whole multiple of 1/16%) of the one-month U.S. dollar lending rates which New York City
banks selected by the Noteholder Agent are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or (ii) in the event that
the Noteholder Agent can determine no such arithmetic mean, the lowest one-month U.S. dollar
lending rate which New





18









 







York City banks selected by the Noteholder Agent are quoting on such LIBOR Determination Date
to leading European banks.




          Responsible Officer: When used with respect to the Indenture Trustee or Custodian, any
officer within the corporate trust office of such Person, including any Vice President, Assistant
Vice President, Secretary, Assistant Secretary or any other officer of such Person customarily
performing functions similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is referred because of
such officer’s knowledge of and familiarity with the particular subject. When used with respect to
the Issuer, any officer of the Owner Trustee who is authorized to act for the Owner Trustee in
matters relating to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the date hereof (as such list may be modified or
supplemented from time to time thereafter) and, so long as the Administration Agreement is in
effect, any Vice President or more senior officer of the Administrator who is authorized to act for
the Administrator in matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the list of Responsible Officers
delivered by the Administrator to the Owner Trustee on the date hereof (as such list may be
modified or supplemented from time to time thereafter). When used with respect to the Depositor,
the Loan Originator or the Servicer, the President, any Vice President, or the Treasurer.




          Retained Security or Retained Securities: With respect to a Securitization,
any subordinated securities issued or expected to be issued, or excess collateral value retained or
expected to be retained, in connection therewith to the extent the Depositor, the Loan Originator
or an Affiliate thereof retains, instead of sells, such securities.




          Retained Securities Value: With respect to any Business Day and a Retained Security,
the market value thereof as determined by the Market Value Agent in accordance with Section 6.03(d)
hereof.




          Revolving Period: With respect to the Notes, the period commencing on the Closing Date
and ending on the earlier of (i) the Maturity Date and (ii) the date on which the Revolving Period
is terminated pursuant to Section 2.07.




          Sales Price: For any Transfer Date, the sum of the Collateral Values with respect to
each Loan conveyed on such Transfer Date as of such Transfer Date.




          S&SA Assignment: An assignment, in the form of Exhibit C hereto, of Loans and
other property from the Depositor to the Issuer pursuant to this Agreement.




          Second Lien Loan: A Loan secured by the lien on the Mortgaged Property, subject to one
Senior Lien on such Mortgaged Property.




          Securities: The Notes and the Trust Certificates.




          Securities Intermediary: A “securities intermediary” as defined in Section
8-102(a)(14) of the UCC that is holding a Trust Account for the Indenture Trustee as the sole
“entitlement holder” as defined in Section 8-102(a)(7) of the UCC.




          Securitization: A sale or transfer of Loans by the Issuer at the direction of the
Majority Noteholders to any other Person in order to effect one or a series of structured-finance
securitization transactions, including but not limited to transactions involving the issuance of
securities which may be







19









 







treated for federal income tax purposes as indebtedness of Option One or one or more of its
wholly-owned subsidiaries.




          Securityholder: Any Noteholder or Certificateholder.




          Senior Lien: With respect to any Second Lien Loan, the mortgage loan having a senior
priority lien on the related Mortgaged Property.




          Servicer: Option One, in its capacity as the servicer hereunder, or any successor
appointed as herein provided.




          Servicer Call: The optional purchase by the Servicer of a Loan pursuant to Section
3.08(b) hereof.




          Servicer Event of Default: As described in Section 9.01 hereof.




          Servicer’s Fiscal Year: May 1st of each year through April 30th of the following year.




          Servicer’s Loan File: With respect to each Loan, the file held by the Servicer,
consisting of all documents (or electronic images thereof) relating to such Loan, including,
without limitation, copies of all of the Loan Documents included in the related Custodial Loan
File.




          Servicer’s Remittance Report: A report prepared and computed by the Servicer in
substantially the form of Exhibit B attached hereto.




          Servicing Addendum: The terms and provisions set forth in Exhibit G attached
hereto relating to the administration and servicing of the Loans.




          Servicing Advance Reimbursement Amount: With respect to any Determination Date, the
amount of any Servicing Advances that have not been reimbursed as of such date, including
Nonrecoverable Servicing Advances.




          Servicing Advances: As defined in Section 4.14(b) of the Servicing Addendum.




          Servicing Compensation: The Servicing Fee and other amounts to which the Servicer is
entitled pursuant to Section 4.15 of the Servicing Addendum.




          Servicing Fee: As to each Loan (including any Loan that has been foreclosed and for
which the related Mortgaged Property has become a Foreclosure Property, but excluding any
Liquidated Loan), the fee payable monthly to the Servicer, which shall be the product of 0.50% (50
basis points), or such other lower amount as shall be mutually agreed to in writing by the Majority
Noteholders and the Servicer, and the Principal Balance of such Loan as of the beginning of the
related Remittance Period, divided by 12. The Servicing Fee shall only be payable with respect to a
Loan to the extent interest is collected on such Loan.




          Servicing Officer: Any officer of the Servicer or Subservicer involved in, or
responsible for, the administration and servicing of the Loans whose name and specimen signature
appears on a list of servicing officers annexed to an Officer’s Certificate furnished by the
Servicer or the Subservicer, respectively, on the date hereof to the Issuer and the Indenture
Trustee, on behalf of the Noteholders, as such list may from time to time be amended.




20









 

















          S&P: Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies,
Inc.




          Subservicer: Any Person with which the Servicer has entered into a Subservicing
Agreement and which is an Eligible Servicer and satisfies any requirements set forth in Section
4.22 of the Servicing Addendum in respect of the qualifications of a Subservicer.




          Subservicing Account: An account established by a Subservicer pursuant to a
Subservicing Agreement, which account must be an Eligible Account.




          Subservicing Agreement: Any agreement between the Servicer and any Subservicer
relating to subservicing and/or administration of any or all Loans as provided in Section 4.22 in
the Servicing Addendum.




          Subsidiary: With respect to any Person, any corporation, partnership or other entity
of which at least a majority of the securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other class or classes of
such corporation, partnership or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly 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.




          Substitution Adjustment: With respect to Loans, as to any date on which a substitution
occurs pursuant to Section 2.05 or Section 3.06 hereof, the amount, if any, by
which (a) the aggregate principal balance of any Qualified Substitute Loans (after application of
principal payments received on or before the related Transfer Cut-off Date) is less than (b) the
aggregate of the Principal Balances of the related Deleted Loans as of the first day of the month
in which such substitution occurs.




          Tangible Net Worth: With respect to any Person, as of any date of determination, the
consolidated Net Worth of such Person and its Subsidiaries, less (i) the consolidated net book
value of all assets of such Person and its Subsidiaries (to the extent reflected as an asset in the
balance sheet of such Person or any Subsidiary at such date) which will be treated as intangibles
under GAAP, including, without limitation, such items as deferred financing expenses, net leasehold
improvements, goodwill, trademarks, trade names, service marks, copyrights, patents, licenses and
unamortized debt discount and expense; provided, that residual securities issued by such Person or
its Subsidiaries shall not be treated as intangibles for purposes of this definition; (ii) any
loans outstanding to any officer or director of Option One or its Affiliates, and (iii) any
receivables from H&R Block, Inc.




          Termination Price: As of any Determination Date, an amount without duplication equal
to the greater of (A) the Note Redemption Amount and (B) the sum of (i) the Principal Balance of
each Loan included in the Trust as of the end of the preceding Remittance Period; (ii) all unpaid
interest accrued on the Principal Balance of each such Loan at the related Loan Interest Rate to
the end of the preceding Remittance Period; and (iii) the aggregate fair market value of each
Foreclosure Property included in the Trust as of the end of the preceding Remittance Period, as
determined by an Independent appraiser acceptable to the Majority Noteholders as of a date not more
than 30 days prior to such Payment Date.




          Total Required Capital: The sum of total required capital for all assets set forth on
Exhibit H attached hereto.




21









 








          Transfer Cut-off Date: With respect to each Loan, (i) the first day of the month
in which the Transfer Date with respect to such Loan occurs or if originated in such month, the
date of origination or (ii) in the case of a purchase from a QSPE Affiliate, unless otherwise
specified in the confirmation delivered in accordance with the Master Disposition Confirmation
Agreement in connection with such purchase, the related Transfer Date.




          Transfer Cut-off Date Principal Balance: As to each Loan, its Principal Balance as of
the opening of business on the Transfer Cut-off Date (after giving effect to any payments received
on the Loan before the Transfer Cut-off Date).




          Transfer Date: With respect to each Loan, the day such Loan is either (i) sold and
conveyed to the Depositor by the Loan Originator pursuant to the Loan Purchase and Contribution
Agreement and to the Issuer by the Depositor pursuant to Section 2.01 hereof or (ii) sold to the
Issuer pursuant to the Master Disposition Confirmation Agreement, which results in an increase in
the Note Principal Balance by the related Additional Note Principal Balance. With respect to any
Qualified Substitute Loan, the Transfer Date shall be the day such Loan is conveyed to the Trust
pursuant to Section 2.05 or 3.06 hereof.




          Transfer Obligation: The obligation of the Loan Originator to make certain payments
under Section 5.06 hereof.




          Transfer Obligation Account: The account designated as such, established and
maintained pursuant to Section 5.05 hereof.




          Transfer Obligation Target Amount: With respect to any Payment Date, the cumulative
total of all withdrawals pursuant to Section 5.05(e), 5.05(f), 5.05(g), and
5.05(h) hereof from the Transfer Obligation Account to but not including such Payment Date
minus any amount withdrawn from the Transfer Obligation Account to return to the Loan Originator
pursuant to Section 5.05(i)(i).




          Trust: Option One Owner Trust 2005-9, the Delaware statutory trust created pursuant to
the Trust Agreement.




          Trust Account Property: The Trust Accounts, all amounts and investments held from time
to time in the Trust Accounts and all proceeds of the foregoing.




          Trust Accounts: The Distribution Account, the Collection Account, the Advance Account
and the Transfer Obligation Account.




          Trust Agreement: The Trust Agreement dated as of December 30, 2005 between the
Depositor and the Owner Trustee, as the same may be further amended or supplemented from time to
time.




          Trust Certificate: The meaning assigned thereto in the Trust Agreement.




          Trust Estate: Shall mean the assets subject to this Agreement, the Trust Agreement and
the Indenture and assigned to the Trust, which assets consist of (i) such Loans as from time to
time are
subject to this Agreement as listed in the Loan Schedule, as the same may be amended or
supplemented on each Transfer Date and by the removal of Deleted Loans and Unqualified Loans and by
the addition of Qualified Substitute Loans, together with the Servicer’s Loan Files and the
Custodial Loan Files relating thereto and all proceeds thereof, (ii) the Mortgages and security
interests in the Mortgaged Properties, (iii) all payments in respect of interest and principal with
respect to each Loan received on or after the related

22









 








Transfer Cut-off Date, (iv) such assets as from time to time are identified as Foreclosure
Property, (v) such assets and funds as are from time to time deposited in the Distribution Account,
Collection Account, Advance Account and the Transfer Obligation Account, including, without
limitation, amounts on deposit in such accounts that are invested in Permitted Investments, (vi)
lenders’ rights under all Mortgage Insurance Policies and to any Mortgage Insurance Proceeds, (vii)
Net Liquidation Proceeds and Released Mortgaged Property Proceeds, (viii) all right, title and
interest of the Trust (but none of the obligations) in and to the obligations of Hedging
Counterparties under Hedging Instruments (if any) and (ix) all right, title and interest of each of
the Depositor, the Loan Originator and the Trust in and under the Basic Documents including,
without limitation, the obligations of the Loan Originator under the Loan Purchase and Contribution
Agreement, the Master Disposition Confirmation Agreement, and all proceeds of any of the foregoing.




          Trust Fees and Expenses: As of each Payment Date, an amount equal to the Servicing,
Compensation, the Owner Trustee Fee, the Indenture Trustee Fee and the Custodian Fee, if any, and
any expenses of the Servicer, the Owner Trustee, the Indenture Trustee or the Custodian.




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




          UCC Assignment: A form “UCC-2” or “UCC-3” statement meeting the requirements of the
Uniform Commercial Code of the relevant jurisdiction to reflect an assignment of a secured party’s
interest in collateral.




          UCC-1 Financing Statement: A financing statement meeting the requirements of the
Uniform Commercial Code of the relevant jurisdiction.




          Underwriting Guidelines: The underwriting guidelines (including the loan origination
guidelines) of the Loan Originator, as the same may be amended from time to time with notice to the
Noteholder Agent.




          Unfunded Transfer Obligation: With respect to any date of determination, an amount
equal to the greater of:





     (A) the sum of (i) 10% of the aggregate Sales Prices of all Loans owned by
the Issuer at the close of business on the immediately preceding day minus all payments
actually made by the Loan Originator in respect of the Unfunded Transfer Obligation
pursuant to Section 5.06 hereof with respect to such Loans since the related Transfer Dates
plus (ii) 10% of the aggregate Sales Prices of all Loans purchased by the Issuer on such
date of determination; and




     (B) 10% of the average daily aggregate Sales Prices (as of the related
Transfer Date) of all Loans owned by the Issuer over the 90 day period immediately
preceding such date of determination minus all payments actually made by the Loan
Originator in respect of the Unfunded Transfer Obligation pursuant to Section 5.06 with
respect to such Loans.



          Unfunded Transfer Obligation Percentage: As of any date of determination, an amount
equal to (x) the Unfunded Transfer Obligation as of such date, divided by (y) 100% of the aggregate
Collateral Values as of the related Transfer Date of all Loans in the Loan Pool.




          Unqualified Loan: As defined in Section 3.06(a) hereof




          Wet Funded Custodial File Delivery Date: With respect to a Wet Funded Loan, the
fifteenth calendar day after the date the funds for such Wet Funded Loan were released to the
related




23









 







Borrower, provided that if a Default or Event of Default shall have occurred, the Wet Funded
Custodial File Delivery Date shall be the earlier of (x) such fifteenth calendar day and (y) the
second Business Day after the occurrence of such event.




          Wet Funded Loan: A Loan for which the Custodian has not received the related Custodial
Loan File as of the related Transfer Date and for which the Custodian has issued a Trust Receipt
with respect to the Wet Funded Loan, in substantially the form of Exhibit M attached to the
Custodial Agreement.




          Whole Loan Sale: A Disposition of Loans in a permanent and outright sale, either
servicing-released or servicing-retained.




          Section 1.02 Other Definitional Provisions.




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




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




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




          (d) The words “hereof,” “herein,” “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement; Article, Section, Schedule and Exhibit references contained in this Agreement are
references to Articles, Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term “including” shall mean “including without limitation.”




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




ARTICLE II




CONVEYANCE OF THE TRUST ESTATE;

ADDITIONAL NOTE PRINCIPAL BALANCES




          Section 2.01 Conveyance of the Trust Estate; Additional Note Principal Balances.




          (a) (i) On the terms and conditions of this Agreement, on each Transfer
Date during the Revolving Period, the Depositor agrees to offer for sale and to sell a portion of
each of the Loans, and contribute to the capital stock of the Issuer the balance of each of the
Loans and deliver the




24









 







related Loan Documents to or at the direction of the Issuer. To the extent the Issuer has or
is able to obtain sufficient funds under the Note Purchase Agreement and the Notes for the purchase
thereof, the Issuer agrees to purchase such Loans offered for sale by the Depositor. On the terms
and conditions of this Agreement and the Master Disposition Confirmation Agreement, on each
Transfer Date during the Revolving Period, the Issuer may acquire Loans from another QSPE Affiliate
of the Loan Originator to the extent the Issuer has or is able to obtain sufficient funds for the
purchase thereof.




               (ii) In consideration of the payment of the Additional Note Principal Balance
pursuant to Section 2.06 hereof and as a contribution to the assets of the Issuer, the
Depositor as of the related Transfer Date and concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Issuer, without recourse,
but subject to the other terms and provisions of this Agreement, all of the right, title and
interest of the Depositor in and to the Trust Estate.



               (iii) During the Revolving Period, on each Transfer Date, subject to the conditions
precedent set forth in Section 2.06 hereof and in accordance with the procedures set forth
in Section 2.01(c), the Depositor, pursuant to an S&SA Assignment, will assign to the
Issuer without recourse all of its respective right, title and interest, in and to the Loans and
all proceeds thereof listed on the Loan Schedule attached to such S&SA Assignment, including all
interest and principal received by the Loan Originator, the Depositor or the Servicer on or with
respect to the Loans on or after the related Transfer Cut-off Date, together with all right, title
and interest in and to the proceeds of any related Mortgage Insurance Policies and all of the
Depositor’s rights, title and interest in and to (but none of its obligations under) the Loan
Purchase and Contribution Agreement and all proceeds of the foregoing.



               (iv) The foregoing sales, transfers, assignments, set overs and conveyances do not,
and are not intended to, result in a creation or an assumption by the Issuer of any of the
obligations of the Depositor, the Loan Originator or any other Person in connection with the Trust
Estate or under any agreement or instrument relating thereto except as specifically set forth
herein.



          (b) As of the Closing Date and as of each Transfer Date, the Issuer acknowledges (or
will acknowledge, pursuant to the S&SA Assignment) the conveyance to it of the Trust Estate,
including, as applicable, all rights, title and interest of the Depositor and any QSPE Affiliate in
and to the Trust Estate, receipt of which is hereby acknowledged by the Issuer. Concurrently with
such delivery, as of the Closing Date and as of each Transfer Date, pursuant to the Indenture, the
Issuer pledges the Trust Estate to the Indenture Trustee. In addition, concurrently with such
delivery and in exchange therefor, the Owner Trustee, pursuant to the instructions of the
Depositor, has executed (not in its individual capacity, but solely as Owner Trustee on behalf of
the Issuer) and caused the Trust Certificates to be authenticated and delivered to or at the
direction of the Depositor.




          (c) (i) Pursuant to and subject to the Note Purchase Agreement, the Issuer
may, at its sole option, from time to time request advances on any Transfer Date of Additional Note
Principal Balances.



               (ii) Notwithstanding anything to the contrary herein, in no event shall any Purchaser
be required to advance Additional Note Principal Balances on a Transfer Date if the conditions
precedent with respect to such Transfer Date under Section 2.06 and the conditions
precedent to the purchase of Additional Note Principal Balances set forth in Section 3.01 of the
Note Purchase Agreement have not been fulfilled.



               (iii) The Servicer shall appropriately note such Additional Note Principal Balance
(and the increased Note Principal Balance) in the next succeeding Payment Statement; provided,
however, that failure to make any such notation in such Payment Statement or any error in such
notation



25









 




shall not adversely affect any Noteholder’s rights with respect to its Note Principal Balance
and its right to receive interest and principal payments in respect of the Note Principal Balance
held by such Noteholder. Each Noteholder shall record on the schedule attached to such Noteholder’s
Note, the date and amount of any Additional Note Principal Balance advanced by it; provided, that
failure to make such recordation on such schedule or any error in such schedule shall not adversely
affect any Noteholder’s rights with respect to its Note Principal Balance and its right to receive
interest payments in respect of the Note Principal Balance held by such Noteholder.




               (iv) Absent manifest error, the Note Principal Balance of each Note as set forth in
the Noteholder’s records shall be binding upon the Noteholders and the Trust, notwithstanding any
notation made by the Servicer in its Payment Statement pursuant to the preceding paragraph.



          Section 2.02 Ownership and Possession of Loan Files.




          With respect to each Loan, as of the related Transfer Date the ownership of the related
Promissory Note, the related Mortgage and the contents of the related Servicer’s Loan File and
Custodial Loan File shall be vested in the Trust for the benefit of the Securityholders, although
possession of the Servicer’s Loan File on behalf of and for the benefit of the Securityholders
shall remain with the Servicer, and the Custodian shall take possession of the Custodial Loan Files
as contemplated in Section 2.05 hereof.




          Section 2.03 Books and Records Intention of the Parties.




          (a) As of each Transfer Date, the sale of each of the Loans conveyed by the
Depositor on such Transfer Date shall be reflected on the balance sheets and other financial
statements of the Depositor and the Loan Originator, as the case may be, as a sale of assets and a
contribution to capital by the Loan Originator and the Depositor, as applicable, under GAAP. Each
of the Servicer and the Custodian shall be responsible for maintaining, and shall maintain, a
complete set of books and records for each Loan which shall be clearly marked to reflect the
ownership of each Loan as of the related Transfer Date, by the Issuer and for the benefit of the
Securityholders.




          (b) It is the intention of the parties hereto that, other than for federal, state
and local income or franchise tax purposes (as to which no treatment is herein contemplated), the
transfers and assignments of the Trust Estate on the initial Closing Date, on each Transfer Date
and as otherwise contemplated by the Basic Documents and the Assignments shall constitute a sale of
the Trust Estate including, without limitation, the Loans and all other property comprising the
Trust Estate specified in
Section 2.01(a) hereof, from the Depositor to the Issuer and such property shall not
be property of the Depositor. The parties hereto shall treat the Notes as indebtedness for federal,
state and local income and franchise tax purposes.




          (c) Each transfer and assignment contemplated by this Agreement shall constitute a
sale in part, and a contribution to capital in part, of the Loans from the Depositor to the Issuer.
Upon the consummation of those transactions the Loans shall be owned by and be the property of the
Issuer, and not owned by or otherwise the property of, the Depositor for any purpose including
without limitation any bankruptcy, receivership, insolvency, liquidation, conservatorship or
similar proceeding relating to either the Depositor or the Issuer or any property of either. The
parties hereto hereby acknowledge that the Issuer and its creditors are relying, and its subsequent
transferees and their creditors will rely, on such sales and contributions being recognized as
such. If (A) any transfer and assignment contemplated hereby is subsequently determined for any
reason under any circumstances to constitute a transfer to secure a loan rather than a sale in
part, and a contribution in part, of the Loans or (B) any Loan is otherwise held to be property of
the Depositor, then this Agreement (i) is and shall be a security agreement within the




26









 







meaning of Articles 8 and 9 of the applicable Uniform Commercial Code and (ii) shall
constitute a grant by the Depositor to the Issuer of a first priority security interest in all of
the Depositor’s right, title and other interest in and to the Loans and the proceeds and other
distributions and payments and general intangibles and other rights and benefits in respect
thereof. For purposes of perfecting that security interest under any applicable Uniform Commercial
Code, the possession by, and notices and other communications with respect thereto to and from, the
Issuer or any agent thereof, of money, notes and other documents evidencing ownership of and other
rights with respect to the Loans shall be “possession” by the secured party or purchaser and
required notices and other communications to and from applicable financial intermediaries, bailees
and other agents.




          (d) The Depositor at its expense shall take such actions as may be necessary or
reasonably requested by the Issuer to ensure the perfection, and priority to all other security
interests, of the security interest described in the preceding paragraph including without
limitation the execution and delivery of such financing statements and amendments thereto,
continuation statements and other documents as the Issuer may reasonably request.




          Section 2.04 Delivery of Loan Documents.




          (a) With respect to each Loan, the Loan Originator shall, prior to the related
Transfer Date (or in the case of each Wet Funded Loan, on or before the related Wet Funded
Custodial File Delivery Date), in accordance with the terms and conditions set forth in the
Custodial Agreement, deliver or cause to be delivered to the Custodian, as the designated agent of
the Indenture Trustee, a Loan Schedule, and each of the documents constituting the related
Custodial Loan File. The Loan Originator shall ensure that (i) in the event that any Wet Funded
Loan is not closed and funded to the order of the appropriate Borrower on the day funds are
provided to the Loan Originator by the applicable Purchaser, on behalf of the Issuer, such funds
shall be promptly returned to such Purchaser, on behalf of the Issuer and (ii) in the event that
any Wet Funded Loan is subject to a rescission, all funds received in connection with such
rescission shall be promptly returned to such Purchaser, on behalf of the Issuer.




          (b) With respect to each Loan, the Loan Originator shall, on the related Transfer
Date (or in the case of each Wet Funded Loan, on or before the related Wet Funded Custodial File
Delivery Date), deliver or cause to be delivered to the Servicer the related Servicer’s Loan File
(i) for the benefit of, and as agent for, the Noteholders and (ii) for the benefit of the Indenture
Trustee, on behalf of the
Noteholders, for so long as the Notes are outstanding; after the Notes are not outstanding,
the Servicer’s Loan File shall be held in the custody of the Servicer for the benefit of, and as
agent for, the Certificateholders.




          (c) The Indenture Trustee shall cause the Custodian to take and maintain continuous
physical possession of the Custodial Loan Files in the State of California (or upon prior written
notice from the Custodian to the Loan Originator and the Noteholder Agent and delivery of an
Opinion of Counsel with respect to the continued perfection of the Indenture Trustee’s security
interest, in the State of Minnesota or Utah) and, in connection therewith, shall act solely as
agent for the Noteholders in accordance with the terms hereof and not as agent for the Loan
Originator, the Servicer or any other party.




          Section 2.05 Acceptance by the Indenture Trustee of the Loans; Certain Substitutions
and Repurchases; Certification by the Custodian.




          (a) The Indenture Trustee declares that it will cause the Custodian to hold the
Custodial Loan Files and any additions, amendments, replacements or supplements to the documents
contained therein, as well as any other assets included in the Trust Estate and delivered to the
Custodian, in trust, upon and subject to the conditions set forth herein. The Indenture Trustee
further agrees to cause





27









 







the Custodian to execute and deliver such certifications as are required under the Custodial
Agreement and to otherwise direct the Custodian to perform all of its obligations with respect to
the Custodial Loan Files in strict accordance with the terms of the Custodial Agreement.




          (b) (i) With respect to (1) any non-Wet Funded Loan which has a Fatal
Exception in the Exceptions Report, the Loan Originator shall cure such exceptions by delivering
such missing documents to the Custodian or otherwise curing the exceptions within one (1) Business
Day of the Transfer Date, (2) any non-Wet Funded Loans which are set forth as exceptions in the
Exceptions Report (other than Fatal Exceptions) (a “Non-Fatal Exception”), the Loan
Originator shall cure such exceptions by delivering such missing documents to the Custodian or
otherwise curing the defect within thirty (30) calendar days of the Transfer Date; or (3) any Wet
Funded Loans which are set forth as exceptions in the Exceptions Report, the Loan Originator shall
cure such exceptions by delivering such missing documents to the Custodian or otherwise curing the
defect no later than one (1) Business Day after the Wet Funded Custodial File Delivery Date, in
each case, following the receipt of the first Exceptions Report listing such exception with respect
to such Loan.




               (ii) In the event that, with respect to any Loan, the Loan Originator does not comply
with the document delivery requirements of this Section 2.05 (including the failure of Loan
Originator to cure any exceptions as provided in this Section 2.05), and such failure has a
material adverse effect on the value or enforceability of any Loan, or the interests of the
Securityholders in any Loan, the Loan Originator shall repurchase such Loan within one (1) Business
Day of notice thereof from the Indenture Trustee or the Noteholder Agent at the Repurchase Price
thereof with respect to such Loan by depositing such Repurchase Price in the Collection Account. In
lieu of such a repurchase, the Depositor and Loan Originator may comply with the substitution
provisions of Section 3.06 hereof. The Loan Originator shall provide the Servicer, the
Indenture Trustee, the Issuer and the Noteholder Agent with a certification of a Responsible
Officer on or prior to such repurchase or substitution indicating that the Loan Originator intends
to repurchase or substitute such Loan.



               (iii) It is understood and agreed that the obligation of the Loan Originator to
repurchase or substitute any such Loan pursuant to this Section 2.05(b) shall constitute
the sole remedy with respect to such failure to comply with the foregoing delivery requirements.



          (c) In performing its reviews of the Custodial Loan Files pursuant to the Custodial
Agreement, the Custodian shall have no responsibility to determine the genuineness of any document
contained therein and any signature thereon. The Custodian shall not have any responsibility for
determining whether any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form, whether any document has been recorded in accordance
with the requirements of any applicable jurisdiction, or whether a blanket assignment is permitted
in any applicable jurisdiction.




          (d) The Servicer’s Loan File shall be held in the custody of the Servicer (i) for
the benefit of, and as agent for, the Noteholders and (ii) for the benefit of the Indenture
Trustee, on behalf of the Noteholders, for so long as the Notes are outstanding; after the Notes
are not outstanding, the Servicer’s Loan File shall be held in the custody of the Servicer for the
benefit of, and as agent for, the Certificateholders. It is intended that, by the Servicer’s
agreement pursuant to this Section 2.05(d), the Indenture Trustee shall be deemed to have
possession of the Servicer’s Loan Files for purposes of Section 9-313 of the UCC of the state in
which such documents or instruments are located. The Servicer shall promptly report to the
Indenture Trustee any failure by it to hold the Servicer’s Loan File as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as custodian of such
documents and instruments, the Servicer agrees not to assert any legal or beneficial ownership
interest in the Loans or such documents or instruments. Subject to Section 8.01(d) hererof,
the Servicer




28









 







agrees to indemnify the Securityholders and the Indenture Trustee, their officers, directors,
employees, agents and “control persons” as such term is used under the Act and under the Securities
Exchange Act of 1934, as amended for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever which may be imposed on, incurred by or asserted
against the Securityholders or the Indenture Trustee as the result of the negligence or willful
misconduct by the Servicer relating to the maintenance and custody of such documents or instruments
which have been delivered to the Servicer; provided, however, that the Servicer will not be liable
for any portion of any such amount resulting from the negligence or willful misconduct of any
Securityholders or the Indenture Trustee; and provided, further, that the Servicer will not be
liable for any portion of any such amount resulting from the Servicer’s compliance with any
instructions or directions consistent with this Agreement issued to the Servicer by the Indenture
Trustee or the Majority Noteholders. The Indenture Trustee shall have no duty to monitor or
otherwise oversee the Servicer’s performance as custodian of the Servicer Loan File hereunder.




          Section 2.06 Conditions Precedent to Transfer.




          (a) In the case of Wet Funded Loans, by 4:00 p.m. (New York City time) one (1)
Business Day prior to the related Transfer Date, the Issuer shall give notice to the Noteholder
Agent of such upcoming Transfer Date and shall deliver or cause to be delivered to the Noteholder
Agent: an estimated funding request amount. By 4:00 p.m. (New York City time) on the related
Transfer Date, and up to two times on each such day, the Issuer shall deliver or cause to be
delivered to the Noteholder Agent a final funding request amount, and to the Noteholder Agent and
the Custodian (i) a Wet Funded Loan Schedule in computer-readable form with respect to the Loans
requested to be transferred on such Transfer Date, (ii) an LPA Assignment, and (iii) an S&SA
Assignment.




          (b) In the case of non-Wet Funded Loans, by 4:00 p.m. (New York City time) two (2)
Business Days prior to each Transfer Date, the Issuer shall give notice to the Noteholder Agent of
such upcoming Transfer Date and shall deliver or cause to be delivered to the Noteholder Agent a
preliminary Loan Schedule. By 8:00 a.m. (New York City time) on the related Transfer Date, the
Issuer shall deliver or cause to be delivered to the Noteholder Agent: (i) a final Loan Schedule in
computer-readable form with respect to the Loans requested to be transferred on such Transfer Date,
(ii) an LPA Assignment, and (iii) an S&SA Assignment.




          (c) On each Transfer Date, the Depositor or the applicable QSPE Affiliate shall
convey to the Issuer, the Loans and the other property and rights related thereto described in the
related S&SA Assignment, and the Issuer, only upon the satisfaction of each of the conditions set
forth below on or prior to such Transfer Date, shall deposit or cause to be deposited cash in the
amount of the Additional Note Principal Balance received from the applicable Purchaser in the
Advance Account in respect thereof, and the Paying Agent shall, promptly after such deposit,
withdraw the amount deposited in respect of applicable Additional Note Principal Balance from the
Advance Account, and distribute such amount to or at the direction of the Depositor or the
applicable QSPE Affiliate in payment of the Sales Price for the related Loans.




          (d) As of the Closing Date and each Transfer Date:





          (i) the Depositor, the QSPE Affiliate and the Servicer, as applicable,
shall have delivered to the Issuer and the Noteholder Agent duly executed Assignments,
which shall have attached thereto a Loan Schedule setting forth the appropriate information
with respect to all Loans conveyed on such Transfer Date and shall have delivered to the
Noteholder Agent a computer readable transmission of such Loan Schedule;



29









 





          (ii) the Depositor shall have deposited, or caused to be deposited, in
the Collection Account all collections received with respect to each of the Loans on and
after the applicable Transfer Cut-off Date or, in the case of purchases from a QSPE
Affiliate, such QSPE Affiliate shall have deposited, or caused to be deposited, in the
Collection Account all collections received with respect to each of the Loans and allocable
to the period after the related Transfer Date;




          (iii) as of such Transfer Date, none of the Loan Originator, the Depositor or
the QSPE Affiliate, as applicable, shall (A) be insolvent, (B) be made insolvent by its
respective sale of Loans or (C) have reason to believe that its insolvency is imminent;




          (iv) the Revolving Period shall not have terminated;




          (v) as of such Transfer Date (after giving effect to the sale of Loans on
such Transfer Date), there shall be no Overcollateralization Shortfall;




          (vi) in the case of non-Wet Funded Loans, the Issuer shall have delivered the
Custodial Loan File to the Custodian in accordance with the Custodial Agreement and the
Noteholder Agent shall have received a Trust Receipt by 12:00 noon New York City time on
the
Transfer Date reflecting such delivery, or, in the case of Wet Funded Loans, the
Issuer shall have delivered the Wet Funded Loan Schedule to the Custodian in accordance
with the Custodial Agreement and the Noteholder Agent shall have received a Trust Receipt
within one (1) hour of receipt by the Custodian of such Wet Funded Loan Schedule,
reflecting such delivery;




          (vii) each of the representations and warranties made by the Loan Originator
contained in Exhibit F with respect to the Loans shall be true and correct in all
material respects as of the related Transfer Date with the same effect as if then made and
the proviso set forth in Section 3.05 hereof with respect to Loans sold by a QSPE
Affiliate shall not be applicable to any Loans, and the Depositor or the QSPE Affiliate, as
applicable, shall have performed all obligations to be performed by it under the Basic
Documents on or prior to such Transfer Date;




          (viii) the Depositor or the QSPE Affiliate shall, at its own expense, within one
(1) Business Day following the Transfer Date, indicate in its computer files that the Loans
identified in each S&SA Assignment have been sold to the Issuer pursuant to this Agreement
and the S&SA Assignment;




          (ix) the Depositor or the QSPE Affiliate shall have taken any action requested
by the Indenture Trustee, the Issuer or the Noteholders required to maintain the ownership
interest of the Issuer in the Trust Estate;




          (x) no selection procedures believed by the Depositor or the QSPE Affiliate
to be adverse to the interests of the Noteholders shall have been utilized in selecting the
Loans to be conveyed on such Transfer Date;




          (xi) the Depositor shall have provided the Issuer, the Indenture Trustee and
the Noteholder Agent no later than two (2) Business Days prior to such date a notice of
Additional Note Principal Balance in the form of Exhibit A hereto;




          (xii) after giving effect to the Additional Note Principal Balance associated
therewith, the Note Principal Balance will not exceed the Maximum Note Principal Balance;




30









 









          (xiii) all conditions precedent to the Depositor’s purchase of Loans
pursuant to the Loan Purchase and Contribution Agreement shall have been fulfilled as of
such Transfer Date, and, in the case of purchases from a QSPE Affiliate, all conditions
precedent to the Issuer’s purchase of Loans pursuant to the Master Disposition Confirmation
Agreement shall have been fulfilled as of such Transfer Date;




          (xiv) all conditions precedent to the Noteholders’ purchase of Additional Note
Principal Balance pursuant to the Note Purchase Agreement shall have been fulfilled as of
such Transfer Date; and




          (xv) with respect to each Loan acquired from any QSPE Affiliate that has a
limited right of recourse to the Loan Originator under the terms of the applicable loan
purchase agreement, the Loan Originator has not been required to pay any amount to or on
behalf of such QSPE Affiliate that lowered the recourse to the Loan Originator available to
such QSPE Affiliate below the maximum recourse to the Loan Originator available to such
QSPE Affiliate under the
terms of the related loan purchase contract providing for recourse by that QSPE
Affiliate to the Loan Originator.



          Section 2.07 Termination or Suspension of Revolving Period.




          At the end of the Revolving Period or upon the occurrence of (i) an Event of Default or
Default, (ii) a Rapid Amortization Trigger, or (iii) the Unfunded Transfer Obligation Percentage
equals 4% or less, or (iv) Option One or any of its Affiliates shall default under, or shall
otherwise materially breach the terms of any repurchase agreement, loan and security agreement or
similar credit facility or agreement entered into by Option One or any of its Affiliates, including
without limitation, (1) the Sale and Servicing Agreement, dated as of April 1, 2001, among the
Option One Owner Trust 2001-1A, the Depositor, Option One and the Indenture Trustee, (2) the Sale
and Servicing Agreement, dated as of April 1, 2001, among the Option One Owner Trust 2001-1B, the
Depositor, Option One and the Indenture Trustee, (3) the Sale and Servicing Agreement, dated as of
July 2, 2002, among the Option One Owner Trust 2002-3, the Depositor, Option One and the Indenture
Trustee, (4) the Sale and Servicing Agreement, dated as of August 8, 2003, among the Option One
Owner Trust 2003-4, the Depositor, Option One and the Indenture Trustee, (5) the Sale and Servicing
Agreement, dated as of November 1, 2003, among the Option One Owner Trust 2003-5, the Depositor,
Option One and the Indenture Trustee, (6) the Sale and Servicing Agreement, dated as of June 1,
2005, among the Option One Owner Trust 2005-6, the Depositor, Option One and the Indenture Trustee,
(7) the Sale and Servicing Agreement, dated as of September 1, 2005, among the Option One Owner
Trust 2005-7, the Depositor, Option One and the Indenture Trustee, and (8) the Sale and Servicing
Agreement, dated as of October 1, 2005, among the Option One Owner Trust 2005-8, the Depositor,
Option One and the Indenture Trustee, and such default, failure or breach entitles any counterparty
to declare the Indebtedness thereunder to be due and payable prior to the maturity thereof, the
Noteholder Agent may, in any such case, in its sole discretion, terminate the Revolving Period.




          Section 2.08 Correction of Errors.




          The parties hereto who have relevant information shall cooperate to reconcile any errors in
calculating the Sales Price from and after the Closing Date. In the event that an error in the
Sales Price is discovered by either party, including without limitation, any error due to
miscalculations of Market Value where insufficient information has been provided with respect to a
Loan to make an accurate determination of Market Value as of any applicable Transfer Date, any
miscalculations of Principal Balance, accrued interest, Overcollateralization Shortfall or
aggregate unreimbursed Servicing Advances attributable to the applicable Loan, or any prepayments
not properly credited, such party shall give

31









 








prompt notice to the other parties hereto, and the party that shall have benefited from such
error shall promptly remit to the other, by wire transfer of immediately available funds the amount
of such error with no interest thereon.




ARTICLE III




REPRESENTATIONS AND WARRANTIES




          Section 3.01 Representations, Warranties and Covenants of the Depositor.




          The Depositor hereby represents, warrants and covenants to the other parties hereto and the
Securityholders that as of the Closing Date and as of each Transfer Date:




          (a) The Depositor is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has, and had at all relevant
times, full power to own its property, to carry on its business as currently conducted, to enter
into and perform its obligations under each Basic Document to which it is a party;




          (b) The execution and delivery by the Depositor of each Basic Document to which the
Depositor is a party and its performance of and compliance with all of the terms thereof will not
violate the Depositor’s organizational documents or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument to which the Depositor is a
party or which are applicable to the Depositor or any of its assets;




          (c) The Depositor has the full power and authority to enter into and consummate the
transactions contemplated by each Basic Document to which the Depositor is a party, has duly
authorized the execution, delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is a party; each Basic Document
to which it is a party, assuming due authorization, execution and delivery by the other party or
parties thereto, constitutes a valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms thereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws relating to
or affecting the rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);




          (d) The Depositor is not in violation of, and the execution and delivery by the
Depositor of each Basic Document to which the Depositor is a party and its performance and
compliance with the terms of each Basic Document to which the Depositor is a party will not
constitute a violation with respect to, any order or decree of any court or any order or regulation
of any federal, state, municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise) or operations of the
Depositor or any of its properties or materially and adversely affect the performance of any of its
duties hereunder;




          (e) There are no actions or proceedings against, or investigations of, the Depositor
currently pending with regard to which the Depositor has received service of process and no action
or proceeding against, or investigation of, the Depositor is, to the knowledge of the Depositor,
threatened or otherwise pending before any court, administrative agency or other tribunal (A) that
if determined adversely to the Depositor, would have a reasonable possibility of prohibiting or
preventing its entering into any of the Basic Documents to which it is a party or render the
Securities invalid, (B) that seeks to prevent the issuance of the Securities or the consummation of
any of the transactions contemplated by any





32









 







of the Basic Documents to which it is a party, (C) that if determined adversely to the
Depositor, would reasonably be expected to prohibit or materially and adversely affect (i) the sale
of the Loans to the Issuer, (ii) the performance by the Depositor of its obligations under, or the
validity or enforceability of, any of the Basic Documents to which it is a party, (iii) the
Securities, or (D) as to which there is a reasonable possibility of an adverse determination of
such action, proceeding or investigation that would affect the satisfaction by the Loan Originator
of the Financial Covenants;




          (f) No consent, approval, authorization or order of any court or governmental agency
or body is required for the execution, delivery and performance by the Depositor of, or compliance
by the Depositor with, any of the Basic Documents to which the Depositor is a party or the
Securities, or
for the consummation of the transactions contemplated by any of the Basic Documents to which
the Depositor is a party, except for such consents, approvals, authorizations and orders, if any,
that have been obtained prior to such date;




          (g) The Depositor is solvent, is able to pay its debts as they become due and has
capital sufficient to carry on its business and its obligations hereunder; it will not be rendered
insolvent by the execution and delivery of any of the Basic Documents to which it is a party or the
assumption of any of its obligations thereunder; no petition of bankruptcy (or similar insolvency
proceeding) has been filed by or against the Depositor;




          (h) The Depositor did not transfer the Loans sold thereon by the Depositor to the
Trust with any intent to hinder, delay or defraud any of its creditors; nor will the Depositor be
rendered insolvent as a result of such sale;




          (i) The Depositor had good title to, and was the sole owner of, each Loan sold
thereon by the Depositor free and clear of any lien other than any such lien released
simultaneously with the sale contemplated herein, and, immediately upon each transfer and
assignment herein contemplated, the Depositor will have delivered to the Trust good title to, and
the Trust will be the sole owner of, each Loan transferred by the Depositor thereon free and clear
of any lien;




          (j) The Depositor acquired title to each of the Loans sold thereon by the Depositor
in good faith, without notice of any adverse claim;




          (k) None of the Basic Documents to which the Depositor is a party, nor any Officer’s
Certificate, statement, report or other document prepared by the Depositor and furnished or to be
furnished by it pursuant to any of the Basic Documents to which it is a party or in connection with
the transactions contemplated thereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained herein or therein not misleading;




          (l) The Depositor is not required to be registered as an “investment company,”
under the Investment Company Act of 1940, as amended;




          (m) The transfer, assignment and conveyance of the Loans by the Depositor thereon
pursuant to this Agreement is not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction;




          (n) The Depositor’s principal place of business and chief executive offices are
located at Irvine, California or at such other address as shall be designated by such party in a
written notice to the other parties hereto;




33









 








          (o) The Depositor covenants that during the continuance of this Agreement it
will comply in all respects with the provisions of its organizational documents in effect from time
to time; and




          (p) The representations and warranties set forth in (h), (i), (j) and (m) above were
true and correct (with respect to the applicable QSPE Affiliate) with respect to each Loan
transferred to the Trust by any QSPE Affiliate at the time such Loan was transferred to a QSPE
Affiliate.




          Section 3.02 Representations, Warranties and Covenants of the Loan Originator.




          The Loan Originator hereby represents, warrants and covenants to the other parties hereto and
the Securityholders that as of the Closing Date and as of each Transfer Date:




          (a) The Loan Originator is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and (i) is duly qualified, in
good standing and licensed to carry on its business in each state where any Mortgaged Property
related to a Loan sold by it is located and (ii) is in compliance with the laws of any such
jurisdiction, in both cases, to the extent necessary to ensure the enforceability of such Loans in
accordance with the terms thereof and had at all relevant times, full corporate power to originate
such Loans, to own its property, to carry on its business as currently conducted and to enter into
and perform its’ obligations under each Basic Document to which it is a party;




          (b) The execution and delivery by the Loan Originator of each Basic Document to
which it is a party and its performance of and compliance with the terms thereof will not violate
the Loan Originator’s articles of organization or by-laws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under, or result in the
breach or acceleration of, any contract, agreement or other instrument to which the Loan Originator
is a party or which may be applicable to the Loan Originator or any of its assets;




          (c) The Loan Originator has the full power and authority to enter into and
consummate all transactions contemplated by the Basic Documents to be consummated by it, has duly
authorized the execution, delivery and performance of each Basic Document to which it is a party
and has duly executed and delivered each Basic Document to which it is a party; each Basic Document
to which it is a party, assuming due authorization, execution and delivery by each of the other
parties thereto, constitutes a valid, legal and binding obligation of the Loan Originator,
enforceable against it in accordance with the terms hereof, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other similar laws
relating to or affecting the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity or at law);




          (d) The Loan Originator is not in violation of, and the execution and delivery of
each Basic Document to which it is a party by the Loan Originator and its performance and
compliance with the terms of each Basic Document to which it is a party will not constitute a
violation with respect to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction, which violation would
materially and adversely affect the condition (financial or otherwise) or operations of the Loan
Originator or its properties or materially and adversely affect the performance of its duties under
any Basic Document to which it is a party;




          (e) There are no actions or proceedings against, or investigations of, the Loan
Originator currently pending with regard to which the Loan Originator has received service of
process and no action or proceeding against, or investigation of, the Loan Originator is, to the
knowledge of the Loan Originator, threatened or otherwise pending before any court, administrative
agency or other




34









 







tribunal (A) that if determined adversely to the Loan Originator, would have a reasonable
possibility of prohibiting or preventing its entering into any Basic Document to which it is a
party or render the Securities invalid, (B) that seeks to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by any Basic Document to which it is a
party, (C) that if determined adversely to
the Loan Originator, would reasonably be expected to prohibit or materially and adversely affect
the (i) the sale of the Loans to the Depositor, (ii) the performance by the Loan Originator of its
obligations under, or the validity or enforceability of, any of the Basic Documents to which it is
a party, (iii) the Securities, or (D) as to which there is a reasonable possibility of an adverse
determination of such action, proceeding or investigation that would affect the satisfaction by the
Loan Originator of the Financial Covenants;




          (f) No consent, approval, authorization or order of any court or governmental agency
or body is required for: (1) the execution, delivery and performance by the Loan Originator of, or
compliance by the Loan Originator with, any Basic Document to which it is a party, (2) the issuance
of the Securities, (3) the sale and contribution of the Loans, or (4) the consummation of the
transactions required of it by any Basic Document to which it is a party, except such as shall have
been obtained before such date;




          (g) Immediately prior to the sale of any Loan to the Depositor, the Loan Originator
had good title to such Loan sold by it on such date, without notice of any adverse claim;




          (h) The information, reports, financial statements, exhibits and schedules furnished
in writing by or on behalf of the Loan Originator to the Noteholder Agent in connection with the
negotiation, preparation or delivery of the Basic Documents to which it is a party or delivered
pursuant thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All written information furnished after
the date hereof by or on behalf of the Loan Originator to the Noteholder Agent or any Noteholder in
connection with the Basic Documents to which it is a party and the transactions contemplated
thereby will be true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such information is stated or
certified.




          (i) The Loan Originator is solvent, is able to pay its debts as they become due and
has capital sufficient to carry on its business and its obligations under each Basic Document to
which it is a party; it will not be rendered insolvent by the execution and delivery of this
Agreement or by the performance of its obligations under each Basic Document to which it is a
party; no petition of bankruptcy (or similar insolvency proceeding) has been filed by or against
the Loan Originator prior to the date hereof;




          (j) The Loan Originator has transferred the Loans transferred by it on or prior to
such Transfer Date without any intent to hinder, delay or defraud any of its creditors;




          (k) The Loan Originator has received fair consideration and reasonably equivalent
value in exchange for the Loans sold by it on such Transfer Date to the Depositor;




          (l) The Loan Originator has not dealt with any broker or agent or other Person who
might be entitled to a fee, commission or compensation in connection with the transaction
contemplated by this Agreement;





35









 







          (m) The Loan Originator has not engaged in any practice or activity with respect
to the Loans that is predatory, abusive, deceptive or otherwise wrongful under the statutes,
regulations and ordinances, if any, that are applicable to the Loans, or that is otherwise
actionable;




          (n) The Loan Originator is in compliance with each of the Financial Covenants; and




          (o) The Loan Originator’s principal place of business and chief executive offices
are located at Irvine, California or at such other address as shall be designated by such party in
a written notice to the other parties hereto.




          It is understood and agreed that the representations, warranties and covenants set forth in
this Section 3.02 shall survive delivery of the respective Custodial Loan Files to the
Indenture Trustee or the Custodian on its behalf and shall inure to the benefit of the
Securityholders, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee and the
Issuer. Upon discovery by the Loan Originator, the Depositor, the Servicer, the Indenture Trustee,
the Owner Trustee or the Issuer of a breach of any of the foregoing representations and warranties
that materially and adversely affects the value of any Loan or the interests of the Securityholders
in any Loan or in the Securities, the party discovering such breach shall give prompt written
notice (but in no event later than two (2) Business Days following such discovery) to the other
parties. The obligations of the Loan Originator set forth in Sections 2.05 and 3.06
hereof to cure any breach or to substitute for or repurchase an affected Loan shall constitute the
sole remedies available hereunder to the Securityholders, the Depositor, the Servicer, the
Indenture Trustee, the Owner Trustee or the Issuer respecting a breach of the representations and
warranties contained in this Section 3.02. The fact that the Noteholder Agent or any Noteholder has
conducted or has failed to conduct any partial or complete due diligence investigation of the Loan
Files shall not affect the Securityholders’ rights to demand repurchase or substitution as provided
under this Agreement.




          Section 3.03 Representations, Warranties and Covenants of the Servicer.




          The Servicer hereby represents and warrants to and covenants with the other parties hereto and
the Securityholders that as of the Closing Date and as of each Transfer Date:




          (a) The Servicer is a corporation duly organized, validly existing and in good
standing under the laws of the State of California and (i) is duly qualified, in good standing and
licensed to carry on its business in each state where any Mortgaged Property is located, and (ii)
is in compliance with the laws of any such state, in both cases, to the extent necessary to ensure
the enforceability of the Loans in accordance with the terms thereof and to perform its duties
under each Basic Document to which it is a party and had at all relevant times, full corporate
power to own its property, to carry on its business as currently conducted, to service the Loans
and to enter into and perform its obligations under each Basic Document to which it is a party;




          (b) The execution and delivery by the Servicer of each Basic Document to which it is
a party and its performance of and compliance with the terms thereof will not violate the
Servicer’s articles of incorporation or by-laws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result in the breach or
acceleration of any material contract, agreement or other instrument to which the Servicer is a
party or which are applicable to the Servicer or any of its assets;




          (c) The Servicer has the full power and authority to enter into and consummate all
transactions contemplated by each Basic Document to which it is a party, has duly authorized the
execution, delivery and performance of each Basic Document to which it is a party and has duly
executed and delivered each Basic Document to which it is a party. Each Basic Document to which it
is a party,




36









 







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




          (d) The Servicer is not in violation of, and the execution and delivery of each
Basic Document to which it is a party by the Servicer and its performance and compliance with the
terms of each Basic Document to which it is a party will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction, which violation would materially and adversely affect the
condition (financial or otherwise) or operations of the Servicer or materially and adversely affect
the performance of its duties under any Basic Document to which it is a party;




          (e) There are no actions or proceedings against, or investigations of, the Servicer
currently pending with regard to which the Servicer has received service of process and no action
or proceeding against, or investigation of, the Servicer is, to the knowledge of the Servicer,
threatened or otherwise pending before any court, administrative agency or other tribunal (A) that
if determined adversely to the Servicer, would have a reasonable possibility of prohibiting or
preventing its entering into any Basic Document to which it is a party, (B) that seeks to prevent
the consummation of any of the transactions contemplated by any Basic Document to which it is a
party, (C) that if determined adversely to the Servicer, would reasonably be expected to prohibit
or materially and adversely affect (i) the performance by the Servicer of its obligations under, or
the validity or enforceability of, any Basic Document to which it is a party, or (ii) the
Securities, or (D) as to which there is a reasonable possibility of an adverse determination of
such action, proceeding or investigation that would affect the satisfaction by the Loan Originator
of the Financial Covenants;




          (f) No consent, approval, authorization or order of any court or governmental agency
or body is required for the execution, delivery and performance by the Servicer of, or compliance
by the Servicer with, any Basic Document to which it is a party or the Securities, or for the
consummation of the transactions contemplated by any Basic Document to which it is a party, except
for such consents, approvals, authorizations and orders, if any, that have been obtained prior to
such date;




          (g) The information, reports, financial statements, exhibits and schedules furnished
in writing by or on behalf of the Servicer to the Majority Noteholders in connection with the
negotiation, preparation or delivery of the Basic Documents to which it is a party or delivered
pursuant thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All written information furnished after
the date hereof by or on behalf of the Servicer to the Majority Noteholders in connection with the
Basic Documents to which it is a party and the transactions contemplated thereby will be true,
complete and accurate in every material respect, or (in the case of projections) based on
reasonable estimates, on the date as of which such information is stated or certified.




          (h) The Servicer is solvent and will not be rendered insolvent as a result of the
performance of its obligations pursuant to under the Basic Documents to which it is a party;




          (i) The Servicer acknowledges and agrees that the Servicing Compensation represents
reasonable compensation for the performance of its services hereunder and that the entire Servicing
Compensation shall be treated by the Servicer, for accounting purposes, as compensation for the
servicing and administration of the Loans pursuant to this Agreement;





37









 








          (j) The Servicer is in compliance with each of the Financial Covenants;




          (k) Each Subservicer is an Eligible Servicer and the Servicer covenants to cause
each Subservicer to be an Eligible Servicer; and




          (l) The Servicer has not engaged in any practice or activity with respect to the
Loans, or any other loans, that is predatory, abusive, deceptive or otherwise wrongful under the
statutes, regulations and ordinances, if any, that are applicable to the particular loans, or that
is otherwise actionable.




          It is understood and agreed that the representations, warranties and covenants set forth in
this Section 3.03 shall survive delivery of the respective Custodial Loan Files to the
Indenture Trustee or the Custodian on its behalf and shall inure to the benefit of the Depositor,
the Securityholders, the Indenture Trustee, the Owner Trustee and the Issuer. Upon discovery by the
Loan Originator, the Depositor, the Servicer, the Indenture Trustee, the Owner Trustee or the
Issuer of a breach of any of the foregoing representations, warranties and covenants that
materially and adversely affects the value of any Loan or the interests of the Securityholders in
any Loan or in the Securities, the party discovering such breach shall give prompt written notice
(but in no event later than two (2) Business Days following such discovery) to the other parties.
The fact that the Noteholder Agent or any Noteholder has conducted or has failed to conduct any
partial or complete due diligence investigation shall not affect the Securityholders’ rights to
exercise their remedies as provided under this Agreement.




          Section 3.04 Reserved.




          Section 3.05 Representations and Warranties Regarding Loans. The Loan Originator
makes each of the representations and warranties set forth on Exhibit F hereto with respect
to each Loan, provided, however, that with respect to each Loan proposed to be transferred to the
Issuer by a QSPE Affiliate, to the extent that the Loan Originator has at the time of such transfer
actual knowledge of any facts or circumstances that would render any of such representations or
warranties materially false, the Loan Originator shall notify the Noteholder Agent of such facts or
circumstances and, in such event, shall have no obligation to make such materially false
representation and warranty and the Issuer shall not purchase such Loan. In addition, the Loan
Originator represents and warrants with respect to each Loan sold by a QSPE Affiliate that the Loan
Originator has not been required to pay any amount to or on behalf of such QSPE Affiliate that
lowered the recourse to the Loan Originator available to such QSPE Affiliate below the maximum
recourse to the Loan Originator available to such QSPE Affiliate under the terms of any loan
purchase agreement providing for recourse by that QSPE Affiliate to the Loan Originator.




          Section 3.06 Purchase and Substitution.




          (a) It is understood and agreed that the representations and warranties set forth in
Exhibit F hereto shall survive the conveyance of the Loans to the Indenture Trustee on behalf of
the Issuer, and the delivery of the Securities to the Securityholders. Upon discovery by the
Depositor, the Servicer, the Loan Originator, the Custodian, the Issuer, the Indenture Trustee, the
Owner Trustee or any Securityholder of a breach of any of such representations and warranties or
the representations and warranties of the Depositor, Loan Originator or Servicer set forth in
Sections 3.01, 3.02 or 3.03, respectively, which materially and adversely
affects the value or enforceability of any Loan or the interests of the Securityholders in any Loan
(notwithstanding that such representation and warranty was made to the Depositor’s, Loan
Originator’s or Servicer’s best knowledge) or which, constitutes a breach of the representations
and warranties set forth in Exhibit F, the party discovering such breach shall give prompt
written notice (but in no event later than two (2) Business Days following such discovery) to the
others. The Depositor, Loan Originator or Servicer, as applicable, shall, within five (5) Business
Days of




38









 







the earlier of the Depositor’s, Loan Originator’s or Servicer’s discovery or the Depositor’s,
Loan Originator’s or Servicer’s receiving notice of any breach of a representation or warranty,
promptly cure such breach in all material respects. If within five (5) Business Days after the
earlier of the Depositor’s, Loan Originator’s or Servicer’s discovery of such breach or the
Depositor’s, Loan Originator’s or Servicer’s receiving notice thereof such breach has not been
remedied by the Depositor, Loan Originator or Servicer, as applicable, and such breach materially
and adversely affects the interests of the Securityholders in the related Loan (an “Unqualified
Loan”), the Loan Originator shall, promptly upon receipt of written instructions from the
Majority Noteholders, either (i) remove such Unqualified Loan (in which case it shall become a
Deleted Loan) from the Trust and substitute one or more Qualified Substitute Loans (in place of a
Deleted Loan) in the manner and subject to the conditions set forth in this Section 3.06 or
(ii) purchase such Unqualified Loan at a purchase price equal to the Repurchase Price with respect
to such Unqualified Loan by depositing or causing to be deposited such Repurchase Price in the
Collection Account.




          Any substitution of Loans pursuant to this Section 3.06(a) shall be accompanied by
payment by the Loan Originator of the Substitution Adjustment, if any, (x) if no
Overcollateralization Shortfall exists on the date of such substitution (after giving effect to
such substitution), remitted to the Noteholders in accordance with Section 5.01(c)(4)(i) or
(y) otherwise to be deposited in the Collection Account pursuant to Section 5.01(b) hereof.




          (b) As to any Deleted Loan for which the Loan Originator substitutes a Qualified
Substitute Loan or Loans, the Loan Originator shall effect such substitution by delivering to the
Indenture Trustee and the Noteholder Agent a certification executed by a Responsible Officer of the
Loan Originator to the effect that the Substitution Adjustment, if any, has been (x) if no
Overcollateralization Shortfall exists on the date of such substitution (after giving effect to
such substitution), remitted to the Noteholders in accordance with Section 5.01(c)(4)(i),
or (y) otherwise deposited in the Collection Account. As to any Deleted Loan for which the Loan
Originator substitutes a Qualified Substitute Loan or Loans, the Loan Originator shall effect such
substitution by delivering to the Custodian the documents constituting the Custodial Loan File for
such Qualified Substitute Loan or Loans.




          The Servicer shall deposit in the Collection Account all payments received in connection with
each Qualified Substitute Loan after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Loans on or before the date of substitution will be retained by the
Loan Originator. The Trust will be entitled to all payments received on the Deleted Loan on or
before the date of
substitution and the Loan Originator shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Loan. The Loan Originator shall give written
notice to the Issuer, the Servicer (if the Loan Originator is not then acting as such), the
Indenture Trustee and the Noteholder Agent that such substitution has taken place and the Servicer
shall amend the Loan Schedule to reflect (i) the removal of such Deleted Loan from the terms of
this Agreement and (ii) the substitution of the Qualified Substitute Loan. The Servicer shall
promptly deliver to the Issuer, the Loan Originator, the Indenture Trustee and the Noteholder Agent
a copy of the amended Loan Schedule. Upon such substitution, such Qualified Substitute Loan or
Loans shall be subject to the terms of this Agreement in all respects, and the Loan Originator
shall be deemed to have made with respect to such Qualified Substitute Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in Exhibit F
hereto. On the date of such substitution, the Loan Originator will (x) if no Overcollateralization
Shortfall exists as of the date of substitution (after giving effect to such substitution), remit
to the Noteholders as provided in Section 5.01(c)(4)(i) or (y) otherwise deposit into the
Collection Account, in each case an amount equal to the related Substitution Adjustment, if any. In
addition, on the date of such substitution, the Servicer shall cause the Indenture Trustee to
release the Deleted Loan from the Lien of the Indenture and the Servicer will cause each such
Qualified Substitute Loan to be pledged to the Indenture Trustee under the Indenture as part of the
Trust Estate.




39









 








          (c) With respect to all Unqualified Loans and other Loans repurchased by the
Loan Originator pursuant to this Agreement, upon the deposit of the Repurchase Price therefor into
the Collection Account or the conveyance of one or more Qualified Substitute Loans and payment of
any Substitution Adjustment, (i) the Issuer shall assign to the Loan Originator, without
representation or warranty, all of the Issuer’s right, title and interest in and to each such
Unqualified Loan or Loan, which right, title and interest were conveyed to the Issuer pursuant to
Section 2.01 hereof and (ii) the Indenture Trustee shall assign to the Loan Originator,
without recourse, representation or warranty, all the Indenture Trustee’s right, title and interest
in and to each such Unqualified Loan or Loan, which right, title and interest were conveyed to the
Indenture Trustee pursuant to Section 2.01 hereof and the Indenture. The Issuer and the
Indenture Trustee shall, at the expense of the Loan Originator, take any actions as shall be
reasonably requested by the Loan Originator to effect the repurchase of any such Loans and to have
the Custodian return the Custodial Loan File of the Deleted Loan to the Servicer.




          (d) It is understood and agreed that the obligations of the Loan Originator set
forth in this Section 3.06 to cure, purchase or substitute for an Unqualified Loan
constitute the sole remedies hereunder of the Depositor, the Issuer, the Indenture Trustee, the
Owner Trustee and the Securityholders respecting a breach of the representations and warranties
contained in Section 3.02 hereof and in Exhibit F hereto. Any cause of action
against the Loan Originator relating to or arising out of a defect in a Custodial Loan File or
against the Depositor, the Loan Originator or the Servicer relating to or arising out of a breach
of any representations and warranties made in Sections 3.01, 3.02 or 3.03
hereof, respectively, and in Exhibit F hereto shall accrue as to any Loan upon (i)
discovery of such defect or breach by any party and notice thereof to the Depositor, the Loan
Originator or the Servicer, as applicable, or notice thereof by the Depositor, the Loan Originator
or the Servicer, as applicable, to the Indenture Trustee, (ii) failure by the Depositor, the Loan
Originator or the Servicer, as applicable, to cure such defect or breach or failure by the Loan
Originator to purchase or substitute such Loan as specified above, and (iii) demand upon the Loan
Originator, as applicable, by the Issuer or the Majority Noteholders for all amounts payable in
respect of such Loan.




          (e) Neither the Issuer nor the Indenture Trustee shall have any duty to conduct any
affirmative investigation other than as specifically set forth in this
Agreement as to the occurrence of any condition requiring the repurchase or substitution of
any Loan pursuant to this Section or the eligibility of any Loan for purposes of this Agreement.




          Section 3.07 Dispositions.




          (a) The Majority Noteholders may at any time in their sole discretion, and from time
to time, require that the Issuer redeem all or any portion of the Note Principal Balance of the
Notes by paying the Note Redemption Amount with respect to the Note Principal Balance to be
redeemed in accordance with Section 10.04. In connection with any such redemption, the
Issuer shall effect Dispositions at the direction of the Majority Noteholders in accordance with
this Agreement, including in accordance with this Section 3.07.




          (b) (i) In consideration of the consideration received from the Depositor
under the Loan Purchase and Contribution Agreement, the Loan Originator hereby agrees and covenants
that in connection with each Disposition it shall effect the following:





          (A) make such representations and warranties concerning the Loans as of the
“cut-off date” of the related Disposition to the Disposition Participants as may be
necessary to effect the Disposition and such additional representations and warranties as
may be necessary, in the reasonable opinion of any of the Disposition Participants, to
effect such Disposition; provided, that, to the extent that the Loan Originator has at
the time of the Disposition actual knowledge of



40









 






any facts or circumstances that would render any of such representations and
warranties materially false, the Loan Originator shall notify the Disposition
Participants of such facts or circumstances and, in such event, shall have no obligation
to make such materially false representation and warranty;




     (B) supply such information, opinions of counsel, letters from law and/or
accounting firms and other documentation and certificates regarding the origination of
the Loans as any Disposition Participant shall reasonably request to effect a Disposition
and enter into such indemnification agreements customary for such transaction relating to
or in connection with the Disposition as the Disposition Participants may reasonably
require;




     (C) make itself available for and engage in good faith consultation with
the Disposition Participants concerning information to be contained in any document,
agreement, private placement memorandum, or filing with the Securities and Exchange
Commission relating to the Loan Originator or the Loans in connection with a Disposition
and shall use reasonable efforts to compile any information and prepare any reports and
certificates, into a form, whether written or electronic, suitable for inclusion in such
documentation;




     (D) to implement the foregoing and to otherwise effect a Disposition, enter
into, or arrange for its Affiliates to enter into insurance and indemnity agreements,
underwriting or placement agreements, servicing agreements, purchase agreements and any
other documentation which may reasonably be required of or reasonably deemed appropriate
by the Disposition Participants in order to effect a Disposition;




     (E) to deliver to the applicable Disposition Participants for inclusion in
any prospectus or other offering material any documentation or
information required in connection with Regulation AB, and to provide
indemnification in connection with such information; and




     (F) take such further actions as may be reasonably necessary to effect the
foregoing;


provided, that notwithstanding anything to the contrary, (a) the Loan Originator shall have no
liability for the Loans arising from or relating to the ongoing ability of the related Borrowers to
pay under the Loans; (b) none of the indemnities hereunder shall constitute an unconditional
guarantee by the Loan Originator of collectability of the Loans; (c) the Loan Originator shall have
no obligation with respect to the financial inability of any Borrower to pay principal, interest or
other amount owing by such Borrower under a Loan; and (d) the Loan Originator shall only be
required to enter into documentation in connection with Dispositions that is consistent with the
prior public securitizations of affiliates of the Loan Originator, provided that to the extent an
Affiliate of any Noteholder acts as “depositor” or performs a similar function in a Securitization,
additional indemnities and informational representations and warranties are provided which are
consistent with those in the Basic Documents and may upon request of the Loan Originator be set
forth in a separate agreement between such Affiliate of the Noteholder and the Loan Originator.





     (ii) In the event of any Disposition to the Loan Originator or any of its
Affiliates (except in connection with a Securitization or a Disposition to a QSPE
Affiliate), the purchase price paid by the Loan Originator or any such Affiliate shall be
the “fair market value” of the Loans subject to such Disposition (as determined by the
Market Value Agent based upon recent sales of comparable loans or such other objective
criteria as may be approved for determining “fair market value” by a “Big Four” national
accounting firm).



41









 






     (iii) As long as no Event of Default or Default shall have occurred and
be continuing under this Agreement or the Indenture, the Servicer may continue to service
the Loans included in any Disposition subject to any applicable “term-to-term” servicing
provisions in Section 9.01(b) and subject to any required amendments to the
related servicing provisions as may be necessary to effect the related Disposition
including but not limited to the obligation to make recoverable principal and interest
advances on the Loans.



          After the termination of the Revolving Period, the Issuer shall effect one or more
Dispositions at the direction of the Disposition Agent, and the Loan Originator, the Issuer and the
Depositor shall use commercially reasonable efforts to effect a Disposition at the direction of the
Disposition Agent.




          (c) The Issuer shall effect Dispositions at the direction of the Majority
Noteholders in accordance with the terms of this Agreement and the Basic Documents. In connection
therewith, the Trust agrees to assist the Loan Originator in such Dispositions and accordingly it
shall, at the request and direction of the Majority Noteholders:





          (i) transfer, deliver and sell all or a portion of the Loans as of the
“cut-off dates” of the related Dispositions, to such Disposition Participants as may be
necessary to effect the Dispositions; provided, that any such sale shall be for “fair
market value,” as determined by the Market Value Agent in its reasonable discretion;




          (ii) deposit the cash Disposition Proceeds into the Distribution Account
pursuant to Section 5.01(c)(2)(D);




          (iii) to the extent that a Securitization creates any Retained Securities,
to accept such Retained Securities as a part of the Disposition Proceeds in accordance
with the terms of this Agreement; and




          (iv) take such further actions, including executing and delivering
documents, certificates and agreements, as may be reasonably necessary to effect such
Dispositions.



          (d) The Servicer hereby covenants that (i) it will take such actions as may be
reasonably necessary to effect Dispositions as the Disposition Participants may request and direct,
including without limitation providing the Loan Originator such information as may be required to
make representations and warranties required hereunder, (ii) it will make such representations and
warranties regarding its servicing of the Loans hereunder as of the Cut-off Date of the related
Disposition as reasonably required by the Disposition Participants, and (iii) it will deliver to
the applicable Disposition Participants for inclusion in any prospectus or other offering material
any documentation or information required in connection with Regulation AB, and will provide
indemnification in connection with such information.




          (e) The Majority Noteholders may effect Whole Loan Sales upon written notice to the
Servicer of its intent to cause the Issuer to effect a Whole Loan Sale at least five (5) Business
Days in advance thereof. The Disposition Agent shall serve as agent for Whole Loan Sales and will
receive a reasonable fee for such services provided that no such fee shall be payable if (i) the
Loan Originator or its Affiliates purchase such Loans, and (ii) no Event of Default or Default
shall have occurred. The Loan Originator or its Affiliates may concurrently bid to purchase Loans
in a Whole Loan Sale; provided, however, that neither the Loan Originator nor any such Affiliates
shall pay a price in excess of the fair market value thereof (as determined by the Market Value
Agent based upon recent sales of comparable loans or such other objective criteria as may be
approved for determining “fair market value” by a “Big





42









 







Four” national accounting firm). In the event that the Loan Originator does not bid in any
such Whole Loan Sale, it shall have a right of first refusal to purchase the Loans offered for sale
at the price offered by the highest bidder. The Disposition Agent shall conduct any Whole Loan Sale
subject to the Loan Originator’s right of first refusal and shall promptly notify the Loan
Originator of the amount of the highest bid. The Loan Originator shall have five (5) Business Days
following its receipt of such notice to exercise its right of first refusal by notifying the
Disposition Agent in writing.




          (f) Except as otherwise expressly set forth under this Section 3.07, the
parties’ rights and obligations under this Section 3.07 shall continue notwithstanding the
occurrence of an Event of Default.




          (g) The Disposition Participants (and the Majority Noteholders to the extent
directing the Disposition Participants) shall be independent contractors to the Issuer and shall
have no fiduciary obligations to the Issuer or any of its Affiliates. In that connection, the
Disposition Participants shall not be liable for any error of judgment made in good faith and shall
not be liable with respect to any action they take or omit to take in good faith in the performance
of their duties.




          Section 3.08 Loan Originator Put; Servicer Call.




          (a) Loan Originator Put. The Loan Originator shall promptly purchase, upon the
written demand of the Majority Noteholders, any Put/Call Loan; provided that the Loan Originator
may (if it is at that time the Servicer), upon receipt of such demand, elect to repurchase such
Put/Call Loan pursuant to (b) below, in which case such repurchase shall be deemed a Servicer Call.




          (b) Servicer Call. The Servicer may repurchase any Put/Call Loan at any time. Such
Servicer Calls shall be solely at the option of the Servicer. Prior to exercising a Servicer Call,
the Servicer shall deliver written notice to the Majority Noteholders and the Indenture Trustee
which notice shall identify each Loan to be purchased and the Repurchase Price therefor; provided,
however, that the Servicer may irrevocably waive its right to repurchase any Put/Call Loan as soon
as reasonably practicable following its receipt of notice of the occurrence of any event or events
giving rise to such Loan being a Put/Call Loan.




          (c) In connection with each Loan Originator Put, the Loan Originator shall deposit
into the Collection Account the Repurchase Price for the Loans to be repurchased. In connection
with each Servicer Call, the Servicer shall deposit into the Collection Account the Repurchase
Price for the Loans to be purchased. The aggregate Repurchase Price of all Loans transferred
pursuant to Section 3.08(a) as of any date shall in no event exceed the Unfunded Transfer
Obligation at the time of any Loan Originator Put.




          Section 3.09 Modification of Underwriting Guidelines.




          The Loan Originator shall give the Noteholders prompt written notification of any modification
or change to the Underwriting Guidelines. If the Noteholder Agent objects in writing to any
modification or change to the Underwriting Guidelines within 15 days after receipt of such notice,
no Loans may be conveyed to the Issuer pursuant to this Agreement unless such Loans have been
originated pursuant to the Underwriting Guidelines without giving effect to such modification or
change. Notwithstanding anything contained in this Agreement to the contrary, any Loan conveyed to
the Issuer pursuant to this Agreement pursuant to a modification or change to the Underwriting
Guidelines that has been rejected by the Noteholders or which the Noteholders did not receive
notice of, such Loan shall be deemed an Unqualified Loan and be repurchased or substituted for in
accordance with Section 3.06.





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ARTICLE IV




ADMINISTRATION AND SERVICING OF THE LOANS




          Section 4.01 Servicer’s Servicing Obligations.




          The Servicer, as independent contract servicer, shall service and administer the Loans in
accordance with the terms and provisions set forth in the Servicing Addendum, which Servicing
Addendum is incorporated herein by reference.




          Section 4.02 Financial Statements; Other Statements and Notices.




          (a) So long as the Notes remain outstanding, the Servicer (or if the Servicer is not
Option One, the Loan Originator) shall furnish to the Noteholders:





          (i) annual consolidated audited financial statements of the Servicer (or
if the Servicer is not Option One, the Loan Originator) and its Affiliates and
Subsidiaries no later than ninety (90) days after the Servicer’s Fiscal Year;




          (ii) quarterly unaudited statements of the Servicer (or if the Servicer is
not Option One, the Loan Originator) no later than fifty (50) days after quarter-end;




          (iii) monthly unaudited statements of the Servicer (or if the Servicer is
not Option One, the Loan Originator) no later than thirty (30) days after month-end;




          (iv) on a timely basis, (i) quarterly and annual consolidating financial
statements reflecting material intercompany adjustments, (ii) all form 10-K, registration
statements and other “corporate finance” filings made with the SEC (other than 8-K
filings), provided, however, that the Servicer (or if the Servicer is not Option One, the
Loan Originator) shall provide the Noteholders a copy of the H&R Block, Inc.’s annual SEC
Form 10-K filing no later than ninety (90) days after year-end, and (iii) any other
financial information that the Noteholders may reasonably request; and




          (v) monthly portfolio performance data with respect to the mortgage loans
the Servicer services, including, without limitation, any outstanding delinquencies,
prepayments in whole or in part, and repurchases by the Servicer.



          (b) Any and all financial statements set forth in Section 4.02(a)(i)-(iv) above
shall be prepared in accordance with GAAP.




          (c) So long as the Notes remain outstanding, the Servicer (or if the Servicer is not
Option One, the Loan Originator) shall furnish to the Noteholders prompt written notice of the
occurrence of any Default, Event of Default or Term Event.




ARTICLE V




ESTABLISHMENT OF TRUST ACCOUNTS; TRANSFER OBLIGATION




          Section 5.01 Collection Account and Distribution Account.




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          (a) (1) Establishment of Collection Account. The Servicer, for the benefit of the
Noteholders, shall cause to be established and maintained one or more Collection Accounts
(collectively, the “Collection Account”), which shall be separate Eligible Accounts
entitled “Option One Owner Trust 2005-9 Collection Account, Wells Fargo Bank, N.A., as Indenture
Trustee, for the benefit of the Option One Owner Trust 2005-9 Mortgage-Backed Notes.” The
Collection Account shall be maintained with a depository institution and shall satisfy the
requirements set forth in the definition of Eligible Account. Funds in the Collection Account shall
be invested in accordance with Section 5.03 hereof. Net investment earnings shall not be considered
part of funds available in the Collection Account.




                 (2) Establishment of Distribution Account. The Servicer, for the benefit of the Noteholders,
shall cause to be established and maintained, one or more Distribution Accounts (collectively, the
“Distribution Account”), which shall be separate Eligible Accounts, entitled “Option One
Owner Trust 2005-9 Distribution Account, Wells Fargo Bank, N.A., as Indenture Trustee, for the
benefit of the Option One Owner Trust 2005-9 Mortgage-Backed Notes.” The Distribution Account shall
be maintained with a depository institution and shall satisfy the requirements set forth in the
definition of Eligible Account. Funds in the Distribution Account shall be invested in accordance
with Section 5.03 hereof. The Servicer may, at its option, maintain one account to serve as both
the Distribution Account and the Collection Account, in which case, the account shall be entitled
“Option One Owner Trust 2005-9 Collection/Distribution Account, Wells Fargo Bank, N.A., as
Indenture Trustee, for the benefit of the Option One Owner
Trust 2005-9 Mortgage-Backed Notes.” If the Servicer makes such an election, all references
herein or in any other Basic Document to either the Collection Account or the Distribution Account
shall mean the Collection/Distribution Account described in the preceding sentence.




                 (3) The Servicer will inform the Indenture Trustee of the location of any accounts held in
the Indenture Trustee’s name, including any location to which an account is transferred.




          (b) Deposits to Collection Account. The Servicer shall deposit or cause to be
deposited (without duplication):





          (i) all payments on or in respect of each Loan collected on or after the
related Transfer Cut-off Date (net, in each case, of any Servicing Compensation retained
therefrom) within two (2) Business Days after receipt thereof;




          (ii) all Net Liquidation Proceeds within two (2) Business Days after
receipt thereof;




          (iii) all Mortgage Insurance Proceeds within two (2) Business Days after
receipt thereof;




          (iv) all Released Mortgaged Property Proceeds within two (2) Business Days
after receipt thereof;




          (v) any amounts payable in connection with the repurchase of any Loan and
the amount of any Substitution Adjustment pursuant to Sections 2.05 and
3.05 hereof concurrently with payment thereof;




          (vi) any Repurchase Price payable in connection with a Servicer Call
pursuant to Section 3.08 hereof concurrently with payment thereof;




          (vii) the deposit of the Termination Price under Section 10.02 hereof
concurrently with payment thereof;



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          (viii) any Nonutilization Fees;




          (ix) any payments received under Hedging Instruments (if any) or the return
of amounts by the Hedging Counterparty pledged pursuant to prior Hedge Funding
Requirements in accordance with the last sentence of this Section 5.01(b); and




          (x) any Repurchase Price payable in connection with a Loan Originator Put
remitted by the Loan Originator pursuant to Section 3.08(c).



          Except as otherwise expressly provided in Section 5.01(c)(4)(i), the Servicer agrees
that it will cause the Loan Originator, Borrower or other appropriate Person paying such amounts,
as the case may be, to remit directly to the Servicer for deposit into the Collection Account all
amounts referenced in clauses (i) through (x) to the extent such amounts are in excess of a Monthly
Payment on the related Loan. To the extent the Servicer receives any such amounts, it will deposit
them into the Collection Account on the same Business Day as receipt thereof.




          (c) Withdrawals From Collection Account; Deposits to Distribution Account.




            (1) Withdrawals From Collection Account — Reimbursement Items. The Paying Agent shall
periodically but in any event on each Determination Date, make the following withdrawals from the
Collection Account prior to any other withdrawals, in no particular order of priority:





          (i) to withdraw any amount not required to be deposited in the Collection
Account or deposited therein in error, including Servicing Compensation;




          (ii) to withdraw the Servicing Advance Reimbursement Amount; and




          (iii) to clear and terminate the Collection Account in connection with the
termination of this Agreement.



            (2) Deposits to Distribution Account — Payment Dates.





          (i) On the Business Day prior to each Payment Date, the Paying Agent
shall deposit into the Distribution Account such amounts as are required from the
Transfer Obligation Account pursuant to Sections 5.05(e), 5.05(f),
5.05(g) and 5.05(h).




          (ii) After making all withdrawals specified in Section 5.01(c)(1)
above, on each Remittance Date, the Paying Agent (based on information provided by the
Servicer for such Payment Date), shall withdraw the Monthly Remittance Amount (or, with
respect to an additional Payment Date pursuant to Section 5.01(c)(4)(ii), all
amounts on deposit in the Collection Account on such date up to the amount necessary to
make the payments due on the related Payment Date in accordance with Section
5.01(c)(3)) from the Collection Account not later than 5:00 P.M., New York City time
and deposit such amount into the Distribution Account.




          (iii) The Servicer shall deposit or cause to be deposited in the
Distribution Account any cash Disposition Proceeds pursuant to Section 3.07. To
the extent the Servicer receives such amounts, it will deposit them into the Distribution
Account on the same Business Day as receipt thereof



            (3) Withdrawals From Distribution Account — Payment Dates. On each Payment Date, to the
extent funds are available in the Distribution Account, the Paying Agent (based on the




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information provided by the Servicer contained in the Servicer’s Remittance Report for such
Payment Date) shall make withdrawals therefrom for application in the following order of priority:





          (i) to distribute on such Payment Date the following amounts in the
following order: (a) to the Indenture Trustee, an amount equal to the Indenture Trustee
Fee and all unpaid Indenture Trustee Fees from prior Payment Dates and all amounts owing
to the Indenture Trustee pursuant to Section 6.07 of the Indenture and not paid by the
Servicer or the Depositor up to an amount not to exceed $25,000 per annum, (b) to the
Custodian, an amount equal to the Custodian Fee and all unpaid Custodian Fees from prior
Payment Dates, (c) to the Servicer, (x) an amount equal to the Servicing Compensation
and all unpaid Servicing Compensation from prior Payment Dates (to the extent not
retained from collections or remitted to the Servicer pursuant to Section
5.01(c)) and (y) all Nonrecoverable Servicing Advances not previously reimbursed and
(d) to the Servicer, in trust for the Owner Trustee, an amount equal to the Owner Trustee
Fee and all unpaid Owner Trustee Fees from prior Payment Dates;




          (ii) to distribute on such Payment Date the Hedge Funding Requirement (if
any) to the appropriate Hedging Counterparties;




          (iii) to the holders of the Notes pro rata, the sum of the Interest Payment
Amount for such Payment Date and the Interest Carry-Forward Amount for the preceding
Payment Date;




          (iv) to the holders of the Notes pro rata, the Overcollateralization
Shortfall for such Payment Date; provided, however, that if (a) a Rapid Amortization
Trigger shall have occurred and not been Deemed Cured or (b) an Event of Default under
the Indenture or Default shall have occurred, the holders of the Notes shall receive, in
respect of principal, all remaining amounts on deposit in the Distribution Account;




          (v) to the Committed Purchaser, the Nonutilization Fee for such Payment
Date, to the extent payable, together with any Nonutilization Fees unpaid from any prior
Payment Dates;




          (vi) to the appropriate Person, amounts in respect of Issuer/Depositor
Indemnities (as defined in the Trust Agreement) and Due Diligence Fees until such amounts
are paid in full;




          (vii) to the Transfer Obligation Account, all remaining amounts until the
balance therein equals the Transfer Obligation Target Amount;




          (viii) to the Indenture Trustee all amounts owing to the Indenture Trustee
pursuant to Section 6.07 of the Indenture and not paid pursuant to clause (i)(a) above,
including amounts required to be paid to the Indenture Trustee under Section 6.07 of the
Indenture that are in excess of the $25,000 limitation set forth in clause (i)(a) above;
and




          (ix) to the holders of the Trust Certificates, subject to Section 5.2(b) of
the Trust Agreement, all amounts remaining therein; provided, however, if the Owner
Trustee has notified the Paying Agent that any amounts are due and owing to it and remain
unpaid, then first to the Owner Trustee, such amounts.



            (4) (i) If the Loan Originator or the Servicer, as applicable, repurchases,
purchases or substitutes a Loan pursuant to Section 2.05, 3.06, 3.08(a),
3.08(b) or 3.08(c), then the




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Noteholders and the Issuer shall deem such date to be an additional Payment Date and the
Issuer shall provide written notice to the Indenture Trustee and the Paying Agent of such
additional Payment Date at least one (1) Business Day prior to such Payment Date. On such
additional Payment Date, the Loan Originator or the Servicer, in satisfaction of its obligations
under Section 2.05, 3.06, 3.08(a) 3.08(b) or 3.08(c) and in
satisfaction of the obligations of the Issuer and the Paying Agent to distribute such amounts to
the
Noteholders pursuant to Section 5.01(c), shall remit to the Noteholders, on behalf of the
Issuer and the Paying Agent, an amount equal to the Repurchase Prices and any Substitution
Adjustments (as applicable) to be paid by the Loan Originator or the Servicer by 12:00 noon New
York City time, as applicable, under such Section, on such Payment Date, and the Note Principal
Balance will be reduced accordingly. Such amounts shall be deemed deposited into the Collection
Account and the Distribution Account, as applicable, and such amounts will be deemed distributed
pursuant to the terms of Section 5.01(c). Upon notice of an additional Payment Date to the
Paying Agent and the Indenture Trustee as provided above, the Paying Agent shall provide the Loan
Originator or the Servicer (as applicable) information necessary so that remittances to the
Noteholders pursuant to this clause (4)(i) may be made by the Loan Originator or the
Servicer, as applicable, in compliance with Section 5.02(a) hereof.





          (ii) To the extent that there is deposited in the Collection Account or the
Distribution Account any amounts referenced in Section 5.01(b)(vii) and
5.01(c)(2)(iii), the Majority Noteholders and the Issuer may agree, upon
reasonable written notice to the Paying Agent and the Indenture Trustee, to additional
Payment Dates. The Issuer and the Majority Noteholders shall give the Paying Agent and
the Indenture Trustee at least one (1) Business Day’s written notice prior to such
additional Payment Date and such notice shall specify each amount in Section 5.01(c) to
be withdrawn from the Collection Account and Distribution Account on such day.




          (iii) To the extent that there is deposited in the Distribution Account any
amounts referenced in Section 5.05(f), the Majority Noteholders may, in their sole
discretion, establish an additional Payment Date by written notice delivered to the
Paying Agent and the Indenture Trustee at least one Business Day prior to such additional
Payment Date. On such additional Payment Date, the Paying Agent shall pay the sum of the
Overcollateralization Shortfall to the Noteholders in respect of principal on the Notes.



          Notwithstanding that the Notes have been paid in full, the Indenture Trustee, the Paying Agent
and the Servicer shall continue to maintain the Distribution Account hereunder until this Agreement
has been terminated.




          Section 5.02 Payments to Securityholders.




          (a) All distributions made on the Notes on each Payment Date or pursuant to Section
5.04(b) of the Indenture will be made on a pro rata basis among the Noteholders of record of the
Notes on the next preceding Record Date based on the Percentage Interest represented by their
respective Notes, without preference or priority of any kind, and, except as otherwise provided in
the next succeeding sentence, shall be made by wire transfer of immediately available funds to the
account of such Noteholder, if such Noteholder shall own of record Notes having a Percentage
Interest (as defined in the Indenture) of at least 20% and shall have so notified the Paying Agent
and the Indenture Trustee 5 Business Days prior to the related Record Date and otherwise by check
mailed to the address of such Noteholder appearing in the Notes Register. The final distribution on
each Note will be made in like manner, but only upon presentment and surrender of such Note at the
location specified in the notice to Noteholders of such final distribution.





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          (b) All distributions made on the Trust Certificates on each Payment Date or
pursuant to Section 5.04(b) of the Indenture will be made in accordance with the Percentage
Interest among the holders of the Trust Certificates of record on the next preceding Record Date
based on their Percentage Interests (as defined in the Trust
Agreement) on the date of distribution, without preference or priority of any kind, and,
except as otherwise provided in the next succeeding sentence, shall be made by wire transfer of
immediately available funds to the account of each such holder, if such holder shall own of record
a Trust Certificate in an original denomination aggregating at least 25% of the Percentage
Interests and shall have so notified the Paying Agent and the Indenture Trustee five (5) Business
Days prior to the related Record Date, and otherwise by check mailed to the address of such
Certificateholder appearing in the Certificate Register. The final distribution on each Trust
Certificate will be made in like manner, but only upon presentment and surrender of such Trust
Certificate at the location specified in the notice to holders of the Trust Certificates of such
final distribution. Any amount distributed to the holders of the Trust Certificates on any Payment
Date shall not be subject to any claim or interest of the Noteholders. In the event that at any
time there shall be more than one Certificateholder, the Indenture Trustee shall be entitled to
reasonable additional compensation from the Servicer for any increases in its obligations
hereunder.




          Section 5.03 Trust Accounts; Trust Account Property.




          (a) Control of Trust Accounts. Each of the Trust Accounts established hereunder has
been pledged by the Issuer to the Indenture Trustee under the Indenture and shall be subject to the
Lien of the Indenture. Amounts distributed from each Trust Account in accordance with the terms of
this Agreement shall be released for the benefit of the Securityholders from the Trust Estate upon
such distribution thereunder or hereunder. The Indenture Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in the Trust Accounts and in all proceeds
thereof (including all income thereon) and all such funds, investments, proceeds and income shall
be part of the Trust Account Property and the Trust Estate. If, at any time, any Trust Account
ceases to be an Eligible Account, the Indenture Trustee shall, within ten (10) Business Days (or
such longer period, not to exceed thirty (30) calendar days, with the prior written consent of the
Majority Noteholders) (i) establish a new Trust Account as an Eligible Account, (ii) terminate the
ineligible Trust Account, and (iii) transfer any cash and investments from such ineligible Trust
Account to such new Trust Account.




          With respect to the Trust Accounts, the Issuer and the Indenture Trustee agree, that each such
Trust Account shall be subject to the “control” (in accordance with Section 9-104 of the UCC) of
the Indenture Trustee for the benefit of the Noteholders, and, except as may be consented to in
writing by the Majority Noteholders, or provided in the related Blocked Account Agreement, the
Indenture Trustee shall have sole signature and withdrawal authority with respect thereto.




          The Servicer (unless it is also the Paying Agent) shall not be entitled to make any
withdrawals or payments from the Trust Accounts.




          (b) (1) Investment of Funds. Funds held in the Collection Account and the
Distribution Account and the Transfer Obligation Account may be invested (to the extent practicable
and consistent with any requirements of the Code) in Permitted Investments, as directed by the
Servicer prior to the occurrence of an Event of Default and by the Majority Noteholders thereafter,
in writing or facsimile transmission confirmed in writing by the Servicer or Majority Noteholders,
as applicable. In the event the Indenture Trustee has not received such written direction, such
Funds shall be invested in any Permitted Investment described in clause (i) of the definition of
Permitted Investments. In any case, funds in the Collection Account, the Distribution Account and
the Transfer Obligation Account must be available for withdrawal without penalty, and any Permitted
Investments must mature or otherwise be available for withdrawal, one (1) Business Day prior to the
next Payment Date and shall not be sold or





49









 







disposed of prior to its maturity subject to Subsection (b)(2) of this Section. All interest
and any other investment earnings on amounts or investments held in the Collection Account and the
Distribution Account and the Transfer Obligation Account shall be paid to the Servicer immediately
upon receipt by the Indenture Trustee. All Permitted Investments in which funds in the Collection
Account or the Distribution Account or the Transfer Obligation Account are invested must be held by
or registered in the name of “Wells Fargo Bank, N.A., as Indenture Trustee, in trust for the Option
One Owner Trust 2005-9 Mortgage-Backed Notes.”




            (2) Insufficiency and Losses in Trust Accounts. If any amounts are needed for
disbursement from the Collection Account, the Distribution Account or the Transfer Obligation
Account held by or on behalf of the Indenture Trustee and sufficient uninvested funds are not
available to make such disbursement, the Indenture Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in the Collection Account or the
Distribution Account or the Transfer Obligation Account, as the case may be. The Indenture Trustee
shall not be liable for any investment loss or other charge resulting therefrom, unless such loss
or charge is caused by the failure of the Indenture Trustee to perform in accordance with written
directions provided pursuant to this Section 5.03.




          If any losses are realized in connection with any investment in the Collection Account or the
Distribution Account or the Transfer Obligation Account pursuant to this Agreement during a period
in which the Servicer has the right to direct investments pursuant to Section 5.03(b), then
the Servicer shall deposit the amount of such losses (to the extent not offset by income from other
investments in the Collection Account or the Distribution Account or the Transfer Obligation
Account, as the case may be) into the Collection Account or the Distribution Account or the
Transfer Obligation Account, as the case may be, immediately upon the realization of such loss. All
interest and any other investment earnings on amounts held in the Collection Account and the
Distribution Account and the Transfer Obligation Account shall be taxed to the Issuer and for
federal and state income tax purposes the Issuer shall be deemed to be the owner of the Collection
Account or the Distribution Account or the Transfer Obligation Account, as the case may be.




          (c) Subject to Section 6.01 of the Indenture, the Indenture Trustee shall not in any
way be held liable by reason of any insufficiency in any Trust Account held by the Indenture
Trustee resulting from any investment loss on any Permitted Investment included therein.




          (d) With respect to the Trust Account Property, the Indenture Trustee acknowledges
and agrees that:





     (1) any Trust Account Property that is held in deposit accounts
or securities accounts shall be held solely in the Eligible Accounts, subject
to the last sentence of Subsection (a) of this Section 5.03; and each
such Eligible Account shall be subject to the “control” (in accordance with
Section 9-104 of the UCC) of the Indenture Trustee; and, without limitation on
the foregoing, the Indenture Trustee shall have sole signature authority with
respect thereto;




     (2) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance with
paragraphs (a) and (b) of the definition of “Delivery” in Section 1.01
hereof and shall be held, pending maturity or disposition, solely by the
Indenture Trustee or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the UCC) acting solely for the Indenture Trustee;



50









 






     (3) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (c) of the
definition of “Delivery” in Section 1.01 hereof and shall be maintained
by the Indenture Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in such
paragraph; and




     (4) any Trust Account Property that is an “uncertificated
security” under Article 8 of the UCC and that is not governed by clause (3)
above shall be delivered to the Indenture Trustee in accordance with paragraph
(d) of the definition of “Delivery” in Section 1.01 hereof and shall be
maintained by the Indenture Trustee, pending maturity or disposition, through
continued registration of the Indenture Trustee’s (or its nominee’s) ownership
of such security.



          Section 5.04 Advance Account.




          (a) The Servicer shall cause to be established and maintained an Advance Account
(the “Advance Account”), with respect to which a Blocked Account Agreement acceptable to
the Purchasers shall be duly executed. The Advance Account shall be a separate Eligible Account.
The Advance Account shall be maintained with a financial institution acceptable to the Purchasers
and shall be maintained for and on behalf of the Purchasers, entitled “Option One Owner Trust
2005-9 Advance Account, Wells Fargo Bank, N.A., as Indenture Trustee, for the benefit of the Option
One Owner Trust 2005-9 Mortgage-Backed Notes.” The Indenture Trustee shall have no monitoring or
calculation obligation with respect to withdrawals from the Advance Account. Amounts in the Advance
Account shall not be invested.




          (b) Deposits and Withdrawals. Amounts in respect of the transfer of Additional Note
Principal Balances and Loans shall be deposited into and withdrawn from the Advance Account as
provided in Sections 2.01(c) and 2.06 hereof and Section 3.01 of the Note Purchase
Agreement. Any amounts on deposit in the Advance Account but not applied on any Transfer Date shall
remain in the Advance Account and may be applied to any subsequent transfer of Additional Note
Principal Balances and Loans, subject to the conditions set forth in Section 2.01(c) and
2.06 hereof and Section 3.01(b) of the Note Purchase Agreement. Notwithstanding the
foregoing, in the event that any amounts on deposit in the Advance Account are not applied to a
transfer of Additional Note Principal Balances and Loans on the day in which such amounts were
deposited therein, such amounts shall be returned to the Purchasers by the close of business on
such day.




          Section 5.05 Transfer Obligation Account.




          (a) The Servicer, for the benefit of the Noteholders, shall cause to be established
and maintained in the name of the Indenture Trustee a Transfer Obligation Account (the
“Transfer Obligation Account”), which shall be a separate Eligible Account and may be
interest-bearing, entitled “Option One Owner Trust 2005-9 Transfer Obligation Account, Wells Fargo
Bank, N.A., as Indenture Trustee, in trust for the Option One Owner Trust 2005-9 Mortgage-Backed
Notes.” The Indenture Trustee shall have no monitoring or calculation obligation with respect to
withdrawals from the Transfer Obligation Account. Amounts in the Transfer Obligation Account shall
be invested in accordance with Section 5.03 hereof.




          (b) In accordance with Section 5.06 hereof, the Loan Originator shall
deposit into the Transfer Obligation Account any amounts as may be required thereby.





51









 








          (c) On each Payment Date, the Paying Agent will deposit in the Transfer
Obligation Account any amounts required to be deposited therein pursuant to Section
5.01(c)(3)(vii).




          (d) On the date of each Disposition, the Paying Agent shall withdraw from the
Transfer Obligation Account such amount on deposit therein in respect of the payment of Transfer
Obligations as may be requested by the Disposition Agent in writing to effect such Disposition.




          (e) On each Payment Date, the Paying Agent shall withdraw from the Transfer
Obligation Account and deposit into the Distribution Account on such Payment Date the lesser of (x)
the amount then on deposit in the Transfer Obligation Account and (y) the Interest Carry-Forward
Amount as of such date.




          (f) If with respect to any Business Day there exists an Overcollateralization
Shortfall, the Paying Agent, upon the written direction of the Majority Noteholders, shall withdraw
from the Transfer Obligation Account and deposit into the Distribution Account on such Business Day
the lesser of (x) the amount then on deposit in the Transfer Obligation Account and (y) the amount
of such Overcollateralization Shortfall as of such date.




          (g) If with respect to any Payment Date there shall exist a Hedge Funding
Requirement, the Paying Agent, upon the written direction of the Servicer or the Majority
Noteholders, shall withdraw from the Transfer Obligation Account and deposit into the Distribution
Account on the Business Day prior to such Payment Date the lesser of (x) the amount then on deposit
in the Transfer Obligation Account (after making all other required withdrawals therefrom with
respect to such Payment Date) and (y) the amount of such Hedge Funding Requirement as of such date.




          (h) In the event of the occurrence of an Event of Default under the Indenture, the
Paying Agent shall withdraw all remaining funds from the Transfer Obligation Account and apply such
funds in satisfaction of the Notes as provided in Section 5.04(b) of the Indenture.




          (i) The Paying Agent shall return to the Loan Originator all amounts on deposit in
the Transfer Obligation Account (after making all other withdrawals pursuant to this Section
5.05) until the Majority Noteholders provide written notice to the Indenture Trustee (with a
copy to the Loan Originator and the Servicer) of the occurrence of a default or event of default
(however defined) under any Basic Document with respect to the Issuer, the Depositor, the Loan
Originator or any of their Affiliates and (ii) upon the date of the termination of this Agreement
pursuant to Article X, the Paying Agent shall withdraw any remaining amounts from the Transfer
Obligation Account and remit all such amounts to the Loan Originator.




          Section 5.06 Transfer Obligation.




          (a) In consideration of the transactions contemplated by the Basic Documents, the
Loan Originator agrees and covenants with the Depositor that:





          (i) In connection with each Disposition it shall fund, or cause to be
funded, reserve funds, pay credit enhancer fees, pay, or cause to be
paid, underwriting fees, fund any negative difference between the cash Disposition
Proceeds and the aggregate Note Principal Balance at the time of such Disposition, and
make, or cause to be made, such other payments as may be, in the reasonable opinion of
the Disposition Agent, commercially reasonably necessary to effect Dispositions, in each
case to the extent that Disposition Proceeds are insufficient to pay such amounts;



52









 






          (ii) In connection with Hedging Instruments (if any), on the Business
Day prior to each Payment Date, it shall deliver to the Servicer for deposit into the
Transfer Obligation Account any Hedge Funding Requirement (to the extent amounts
available on the related Payment Date pursuant to Section 5.01 hereof are
insufficient to make such payment), when, as and if due to any Hedging Counterparty;




          (iii) If any Interest Carry-Forward Amount shall occur, it shall deposit
into the Transfer Obligation Account any such Interest Carry-Forward Amount on or before
the Business Day preceding such related Payment Date;




          (iv) If on any Business Day, there exists an Overcollateralization
Shortfall, upon the written direction of the Majority Noteholders, it shall, on such
Business Day remit to the Paying Agent for deposit into the Transfer Obligation Account
the full amount of the Overcollateralization Shortfall as of such date, provided, that in
the event that notice of such Overcollateralization Shortfall is provided to the Loan
Originator after 4:30 p.m. New York City time, the Loan Originator shall make such
deposit on the following Business Day;




          (v) If on any applicable Payment Date, the amount available in the
Distribution Account to pay the Nonutilization Fee is insufficient, the Loan Originator
shall deposit into the Transfer Obligation Account the amount of such shortfall on the
Business Day prior to such Payment Date;




          (vi) If the amount available to pay the Indemnified Party against any Losses
(as such terms are defined in the Note Purchase Agreement) is insufficient, the Loan
Originator shall promptly deposit the amount of such shortfall; and




          (vii) Notwithstanding anything to the contrary herein, in the event of the
occurrence of an Event of Default under the Indenture, the Loan Originator shall promptly
deposit into the Transfer Obligation Account the entire amount of the Unfunded Transfer
Obligation;


provided, that notwithstanding anything to the contrary contained herein, the Loan Originator’s
cumulative payments under or in respect of the Transfer Obligations (after subtracting therefrom
any amounts returned to the Loan Originator pursuant to Section 5.05(i)(i)), together with
the Loan Originator’s payments in respect of any Loan Originator Puts, shall not in the aggregate
exceed the Unfunded Transfer Obligation.




          (b) The Loan Originator agrees that the Noteholders, as ultimate assignee of the
rights of the Depositor under this Agreement and the other Basic Documents, may enforce the rights
of the Depositor directly against the Loan Originator.




ARTICLE VI

STATEMENTS AND REPORTS; SPECIFICATION OF TAX MATTERS




          Section 6.01 Statements.




          (a) No later than 12:00 noon (New York City time) on each Remittance Date, the
Servicer shall deliver to the Indenture Trustee and the Noteholders by electronic transmission, the
receipt and legibility of which shall be confirmed by telephone, and with hard copy thereof to be
delivered no later than one (1) Business Day after such Remittance Date, the Servicer’s Remittance
Report, setting forth the date of such Report (day, month and year), the name of the Issuer (i.e.,
“Option One Owner




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Trust 2005-9”), and the date of this Agreement, all in substantially the form set out in
Exhibit B hereto. Furthermore, on each Remittance Date, the Servicer shall deliver to the
Indenture Trustee and the Noteholders a data file providing, with respect to each Loan in the Loan
Pool as of the last day of the related Remittance Period (i) if such Loan is an ARM, the current
Loan Interest Rate; (ii) the Principal Balance with respect to such Loan; (iii) the date of the
last Monthly Payment paid in full; and (iv) such other information as may be reasonably requested
by the Noteholder Agent and the Indenture Trustee. In addition, no later than 12:00 noon (New York
City time) on the fifteenth (15th) day of each calendar month (or if such day is not a
Business Day, the preceding Business Day), the Custodian shall prepare and provide to the Servicer
and the Indenture Trustee by facsimile, the Custodian Fee Notice for the Payment Date falling in
such calendar month.




          (b) No later than 12:00 noon (New York City time) on each Remittance Date, the
Servicer shall prepare (or cause to be prepared) and provide to the Indenture Trustee
electronically, receipt confirmed by telephone, and each Noteholder, a statement (the “Payment
Statement”), stating each date and amount of a purchase of Additional Note Principal Balance
(day, month and year), the name of the Issuer (i.e., “Option One Owner Trust 2005-9”), the date of
this Agreement, restating all of the information set forth in the Loan Schedule for all Loans as of
such Remittance Date and the following information:





          (1) the aggregate amount of collections in respect of principal of the
Loans received by the Servicer during the preceding Remittance Period;




          (2) the aggregate amount of collections in respect of interest on the
Loans received by the Servicer during the preceding Remittance Period;




          (3) all Mortgage Insurance Proceeds received by the Servicer during the
preceding Remittance Period and not required to be applied to restoration or repair of
the related Mortgaged Property or returned to the Borrower under applicable law or
pursuant to the terms of the applicable Mortgage Insurance Policy;




          (4) all Net Liquidation Proceeds deposited by the Servicer into the
Collection Account during the preceding Remittance Period;




          (5) all Released Mortgaged Property Proceeds deposited by the Servicer
into the Collection Account during the preceding Remittance Period;




          (6) the aggregate amount of all Servicing Advances made by the Servicer
during the preceding Remittance Period;




          (7) the aggregate of all amounts deposited into the Distribution Account
in respect of the repurchase of Unqualified Loans and the repurchase of Loans pursuant to
Section 2.05 hereof during the preceding Remittance Period;




          (8) the aggregate Principal Balance of all Loans for which a Servicer Call
was exercised during the preceding Remittance Period;




          (9) the aggregate Principal Balance of all Loans for which a Loan
Originator Put was exercised during the preceding Remittance Period;




          (10) the aggregate amount of all payments received under Hedging Instruments
(if any) during the preceding Remittance Period



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          (11) the aggregate amount of all withdrawals from the Distribution
Account pursuant to Section 5.01(c)(1)(i) hereof during the preceding Remittance
Period;




          (12) the aggregate amount of cash Disposition Proceeds received during the
preceding Remittance Period;




          (13) withdrawals from the Collection Account in respect of the Servicing
Advance Reimbursement Amount with respect to the related Payment Date;




          (14) the number and aggregate Principal Balance of all Loans that are (i)
30-59 days Delinquent, (ii) 60-89 days Delinquent, (iii) 90 or more days Delinquent as of
the end of the related Remittance Period;




          (15) the aggregate amount of Liquidated Loan Losses incurred (i) during the
preceding Remittance Period, and (ii) during the preceding three Remittance Periods;




          (16) the aggregate of the Principal Balances of all Loans in the Loan Pool as
of the end of the related Remittance Period;




          (17) the aggregate amount of all deposits into the Distribution Account from
the Transfer Obligation Account pursuant to Sections 5.05(e), 5.05(f),
5.05(g), and 5.05(h) on the related Payment Date;




          (18) the aggregate amount of distributions in respect of Servicing
Compensation to the Servicer, and unpaid Servicing Compensation from prior Payment Dates
for the related Payment Date;




          (19) the aggregate amount of distributions in respect of Indenture Trustee
Fees and unpaid Indenture Trustee Fees from prior Payment Dates for the related Payment
Date;




          (20) the aggregate amount of distributions in respect of the Custodian Fee
and unpaid Custodian Fees from prior Payment Dates for the related Payment Date;




          (21) the aggregate amount of distributions in respect of the Owner Trustee
Fees and unpaid Owner Trustee Fees from prior Payment Dates and for the related Payment
Date;




          (22) the Unfunded Transfer Obligation and Overcollateralization Shortfall on
such Payment Date for the related Payment Date;




          (23) the aggregate amount of distributions in respect of Trust/Depositor
Indemnities for the related Payment Date;




          (24) the aggregate amount of distributions to the Transfer Obligation Account
for the related Payment Date;




          (25) the aggregate amount of distributions to the holders of the Trust
Certificates for the related Payment Date;




          (26) the Note Principal Balance of the Notes as of the last day of the
related Remittance Period (without taking into account any Additional Note Principal
Balance between



55









 






the last day of such Remittance Period and the related Payment Date) before and
after giving effect to distributions made to the holders of the Notes for such Payment
Date;




          (27) the Pool Principal Balance as of the end of the preceding Remittance
Period; and




          (28) whether a Rapid Amortization Trigger exists with respect to such Payment
Date.



          Such Payment Statement shall also be provided on the Remittance Date to the Noteholders and
Indenture Trustee in the form of a data file mutually agreed to by and between the Noteholders, the
Indenture Trustee and the Servicer. The Indenture Trustee shall have no duty to monitor the
occurrence of a Rapid Amortization Trigger or any events resulting in withdrawals from the Transfer
Obligation Account.




          (c) Within fifty (50) days of the end of each financial quarter, each of the Loan
Originator and the Servicer shall prepare and deliver to the Noteholder Agent a quarterly
compliance certificate and report in the form of Exhibit I attached hereto.




          Section 6.02 Specification of Certain Tax Matters.




          The Paying Agent shall comply with all requirements of the Code and applicable state and local
law with respect to the withholding from any distributions made to any Securityholder of any
applicable withholding taxes imposed thereon and with respect to any applicable reporting
requirements in connection therewith, giving due effect to any applicable exemptions from such
withholding and effective certifications or forms provided by the recipient. Any amounts withheld
pursuant to this Section 6.02 shall be deemed to have been distributed to the Securityholders, as
the case may be, for all purposes of this Agreement. The Indenture Trustee shall have no
responsibility for preparing or filing any tax returns.




          Section 6.03 Valuation of Loans; Hedge Value and Retained Securities Value, Market
Value Agent.




          (a) The Noteholders hereby irrevocably appoint, and the Issuer hereby consents to
the appointment of, the Market Value Agent as agent on behalf of the Noteholders to determine the
Market Value of each Loan, the Hedge Value of each Hedging Instrument (if any) and the Retained
Securities Value of all Retained Securities.




          (b) Except as otherwise set forth in Section 3.07 hereof, on each Business
Day, the Market Value Agent shall determine the Market Value of each Loan, for purposes of the
Basic Documents, in its sole discretion, exercised in good faith. In determining the Market Value
of each Loan, the Market Value Agent may consider any information that it may deem relevant,
including, without limitation, the expected proceeds of the sale of such Loan following the
occurrence and continuation of an Event of Default. The Market Value Agent’s determination, in its
sole discretion exercised in good faith, of Market Value shall be conclusive and binding upon the
parties hereto, absent manifest error (including without limitation, any error contemplated in
Section 2.08).




          (c) On each Business Day, the Market Value Agent shall determine in its sole
judgment the Hedge Value of each Hedging Instrument as of such Business Day. In making such
determination the Market Value Agent may rely exclusively on quotations provided by the Hedging
Counterparty, by leading dealers in instruments similar to such Hedging Instrument, which leading




56









 







dealers may include the Market Value Agent and its Affiliates and such other sources of
information as the Market Value Agent may deem appropriate.




          (d) On each Business Day, the Market Value Agent shall determine in its sole
judgment the Retained Securities Value of the Retained Securities, if any, expected to be issued
pursuant to such Securitization as of the closing date of such Securitization. In making such
determination the Market Value Agent may rely exclusively on quotations provided by leading dealers
in instruments similar to such Retained Securities, which leading dealers may include the Market
Value Agent and its Affiliates and such other sources of information as the Market Value Agent may
deem appropriate.




ARTICLE VII




HEDGING; FINANCIAL COVENANTS




          Section 7.01 Hedging Instruments.




          (a) From time to time, the Trust shall enter into such Hedging Instruments as the
Market Value Agent, on behalf of the Noteholders, may determine are necessary in order to hedge the
interest rate risk with respect to the Collateral; provided that each such Hedging Instrument shall
conform to the requirements of Section 7.01(b), (c), and (d), as determined
by the Market Value Agent in its sole discretion, exercised in good faith.




          (b) Each Hedging Instrument shall expressly provide that in the event of a
Disposition or other removal of the Loan from the Trust, such portion of the Hedging Instrument
shall terminate as the Disposition Agent deems appropriate to facilitate the hedging of the risks
specified in Section 7.01(a). In the event that the Hedging Instrument is not otherwise
terminated, it shall contain provisions that allow the position of the Trust to be assumed by an
Affiliate of the Trust upon the liquidation of the Trust. The terms of the assignment documentation
and the credit quality of the successor to the Trust shall be subject to the Hedging Counterparty’s
approval.




          (c) Any Hedging Instrument that provides for any payment obligation on the part of
the Issuer must (i) be without recourse to the assets of the Issuer, (ii) contain a non-petition
covenant provision in the form of Section 11.13, (iii) limit payment dates thereunder to
Payment Dates and (iv) contain a provision limiting any cash payments due on any day under such
Hedging Instrument solely to funds available therefor in the Collection Account on such day
pursuant to Section 5.01(c)(3)(ii) hereof and funds available therefor in the Transfer
Obligation Account.




          (d) Each Hedging Instrument must (i) provide for the direct payment of any amounts
thereunder to the Collection Account pursuant to Section 5.01(b)(ix), (ii) contain an
assignment of all of the Issuer’s rights (but none of its obligations) under such Hedging
Instrument to the Indenture Trustee and shall include an express consent to the Hedging
Counterparty to such assignment, (iii) provide that in the event of the occurrence of an Event of
Default, such Hedging Instrument shall terminate upon the direction of the Majority Noteholders,
(iv) prohibit the Hedging Counterparty from “setting-off” or “netting” other obligations of the
Issuer or its Affiliates against such Hedging Counterparty’s payment obligations thereunder, (v)
provide that the appropriate portion of the Hedging Instrument will terminate upon the removal of
the related Loans from the Trust Estate and (vi) have economic terms that are fixed and not subject
to alteration after the date of assumption or execution.




          (e) If agreed to by the Majority Noteholders, the Issuer may pledge its assets in
order to secure its obligations in respect of Hedge Funding Requirements (if any), provided that
such right shall




57









 







be limited solely to Hedging Instruments for which an Affiliate of the Noteholder Agent is a
Hedging Counterparty.




          (f) The aggregate notional amount of all Hedging Instruments shall not exceed the
Note Principal Balance as of the date on which each Hedging Instrument is entered into by the
Issuer and a Hedging Counterparty.




          Section 7.02 Financial Covenants. For so long as the Notes are outstanding, each
of the Loan Originator and the Servicer shall comply with the following financial covenants
(collectively, the “Financial Covenants”):




          (a) Each of the Loan Originator and the Servicer shall maintain a minimum Tangible
Net Worth of $425 million as of any day;




          (b) Each of the Loan Originator and the Servicer shall maintain a ratio of Tangible
Net Worth to Total Required Capital of 1:1 or greater at any time;




          (c) Neither the Loan Originator nor the Servicer shall exceed a maximum
non-warehouse leverage ratio (the ratio of (i) the sum of (A) all funded debt (excluding debt from
H&R Block, Inc. or any of its Affiliates and all non-recourse debt) less (B) 91% of its mortgage
loan inventory held for sale less (C) 90% of servicing advance receivables (determined and valued
in accordance with GAAP) to (ii) Tangible Net Worth) of 1:2 at any time;




          (d) Each of the Loan Originator and the Servicer shall maintain a minimum liquidity
facility (defined as a committed, unsecured, non-amortizing liquidity facility from H&R Block not
to mature (scheduled or accelerated) prior to the Maturity Date) in an amount no less than $150
million. Such facility from H&R Block cannot contain covenants or termination events more
restrictive than the covenants or termination events contained in the Basic Documents; and




          (e) Each of the Loan Originator and the Servicer shall not permit “Net Income”
(defined and determined in accordance with GAAP), for any quarter, together with the three
preceding, consecutive fiscal quarters commencing with the quarter ending October 31, 2005, to be
less than $1.




ARTICLE VIII




THE SERVICER




          Section 8.01 Indemnification, Third Party Claims.




          (a) The Servicer shall indemnify the Loan Originator, the Owner Trustee, the Trust,
the Depositor, the Indenture Trustee and the Noteholders, their respective officers, directors,
employees, agents and “control persons,” as such term is used under the Act and under the
Securities Exchange Act of 1934 as amended (each a “Servicer Indemnified Party”) and hold
harmless each of them against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable 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 any
of the Servicer’s representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and service the Loans in
compliance with the terms of this Agreement except to the extent such loss arises out of such
Servicer Indemnified Party’s gross negligence or willful misconduct; provided, however, that if the
Servicer is not liable pursuant to the provisions of Section 8.01(b) hereof for its failure
to perform its duties and service the Loans in compliance with the terms of this Agreement, then





58









 







the provisions of this Section 8.01 shall have no force and effect with respect to
such failure. The provisions of this indemnity shall run directly to and be enforceable by a
Servicer Indemnified Party subject to the limitations hereof.




          (b) None of the Loan Originator, the Depositor or the Servicer or any of their
respective Affiliates, directors, officers, employees or agents shall be under any liability to the
Owner Trustee, the Issuer, the Indenture Trustee or the Securityholders for any action taken, or
for refraining from the taking of any action, in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the Loan Originator,
the Depositor, the Servicer or any of their respective Affiliates, directors, officers, employees,
agents against the remedies provided herein for the breach of any warranties, representations or
covenants made herein, or against any expense or liability specifically required to be borne by
such party without right of reimbursement pursuant to the terms hereof, or against any expense or
liability which would otherwise be imposed by reason of misfeasance, bad faith or negligence in the
performance of the respective duties of the Servicer, the Depositor or the Loan Originator, as the
case may be. The Loan Originator, the Depositor, the Servicer and any of their respective
Affiliates, directors, officers, employees, agents may rely in good faith on any document of any
kind which, prima facie, is properly executed and submitted by any Person respecting any matters
arising hereunder.




          (c) The Loan Originator agrees to indemnify and hold harmless the Depositor and the
Noteholders, as the ultimate assignees from the Depositor (each an “Originator Indemnified
Party,” together with the Servicer Indemnified Parties, the “Indemnified Parties”),
from and against any loss, liability, expense, damage, claim or injury arising out of or based on
(i) any breach of any representation, warranty or covenant of the Loan Originator, the Servicer or
their Affiliates, in any Basic Document, including, without limitation, the origination or prior
servicing of the Loans by reason of any acts, omissions, or alleged acts or omissions arising out
of activities of the Loan
Originator, the Servicer or their Affiliates, and (ii) any untrue statement by the Loan
Originator, the Servicer or its Affiliates of any material fact or any such Person’s failure to
state a material fact necessary to make such statements not misleading with respect to any such
Person’s statements contained in any Basic Document, including, without limitation, any Officer’s
Certificate, statement, report or other document or information prepared by any such Person and
furnished or to be furnished by it pursuant to or in connection with the transactions contemplated
thereby and not corrected prior to completion of the relevant transaction including, without
limitation, such written information as may have been and may be furnished in connection with any
due diligence investigation with respect to the Loans or any such Person’s business, operations or
financial condition, including reasonable attorneys’ fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or claim; provided that
the Loan Originator shall not indemnify an Originator Indemnified Party to the extent such loss,
liability, expense, damage or injury is due to either an Originator Indemnified Party’s willful
misconduct, bad faith or gross negligence or by reason of an Originator Indemnified Party’s
reckless disregard of its obligations hereunder; provided, further, that the Loan Originator shall
not be so required to indemnify an Originator Indemnified Party or to otherwise be liable hereunder
or under any provision of the Basic Documents to an Originator Indemnified Party for any losses in
respect of the performance of the Loans, the insolvency, bankruptcy, delinquency, creditworthiness
and similar characteristics of the Borrowers under the Loans, the uncollectability of any
principal, interest, and any other charges (including late fees) under such loans, changes in the
market value of the Loans or other similar investment risks associated with the Loans arising from
a breach of any representation or warranty set forth in Exhibit F hereto, the sole remedy
for the breach of which is provided in Section 3.06 hereof. The provisions of this
indemnity shall run directly to and be enforceable by an Originator Indemnified Party subject to
the limitations hereof.




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          (d) With respect to a claim subject to indemnity hereunder made by any Person
against an Indemnified Party (a “Third Party Claim”), such Indemnified Party shall notify
the related indemnifying parties (each an “Indemnifying Party”) in writing of the Third
Party Claim within a reasonable time after receipt by such Indemnified Party of written notice of
the Third Party Claim unless the Indemnifying Parties shall have previously obtained actual
knowledge thereof. Thereafter, the Indemnified Party shall deliver to the Indemnifying Parties,
within a reasonable time after the Indemnified Party’s receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnified Party relating to the Third Party
Claim. No failure to give such notice or deliver such documents shall effect the rights to
indemnity hereunder. Each Indemnifying Party shall promptly notify the Indenture Trustee and the
Indemnified Party (if other than the Indenture Trustee) of any claim of which it has been notified
and shall promptly notify the Indenture Trustee and the Indemnified Party (if applicable) of its
intended course of action with respect to any claim.




          (e) If a Third Party Claim is made against an Indemnified Party, while maintaining
control over its own defense, the Indemnified Party shall cooperate and consult fully with the
Indemnifying Party in preparing such defense, and the Indemnified Party may defend the same in such
manner as it may deem appropriate, including settling such claim or litigation after giving notice
to the Indemnifying Party of such terms and the Indemnifying Party will promptly reimburse the
Indemnified Party upon written request; provided, however, that the Indemnified Party may not
settle any claim or litigation without the consent of the Indemnifying Party; provided, further,
that the Indemnifying Party shall have the right to reject the selection of counsel by the
Indemnified Party if the Indemnifying Party reasonably determines that such counsel is
inappropriate in light of the nature of the claim or litigation and shall have the right to
assume the defense of such claim or litigation if the Indemnifying Party determines that the
manner of defense of such claim or litigation is unreasonable.




          Section 8.02 Merger or Consolidation of the Servicer.




          The Servicer shall keep in full effect its existence, rights and franchises as a corporation,
and will obtain and preserve its qualification to do business as a foreign corporation and maintain
such other licenses and permits in each jurisdiction necessary to protect the validity and
enforceability of each Basic Document to which it is a party and each of the Loans and to perform
its duties under each Basic Document to which it is a party; provided, however, that the Servicer
may merge or consolidate with any other corporation upon the satisfaction of the conditions set
forth in the following paragraph.




          Subject to the prior written consent of the Majority Noteholders, any Person into which the
Servicer may be merged or consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an Eligible Servicer and shall be the successor of the Servicer, as
applicable hereunder, without the execution or filing of any paper or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding. The Servicer shall
send notice of any such merger, conversion, consolidation or succession to the Indenture Trustee
and the Issuer.




          Section 8.03 Limitation on Liability of the Servicer and Others.




          The Servicer and any director, officer, employee or agent of the Servicer may rely on any
document of any kind which it in good faith reasonably believes to be genuine and to have been
adopted or signed by the proper authorities respecting any matters arising hereunder. Subject to
the terms of Section 8.01 hereof, the Servicer shall have no obligation to appear with respect to,
prosecute or defend any legal action which is not incidental to the Servicer’s duty to service the
Loans in accordance with this Agreement.





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          Section 8.04 Servicer Not to Resign; Assignment.




          The Servicer shall not resign from the obligations and duties hereby imposed on it except (a)
with the consent of the Majority Noteholders or (b) upon determination that its duties hereunder
are no longer permissible under applicable law. Any such determination pursuant to clause (b) of
the preceding sentence permitting the resignation of the Servicer shall be evidenced by an
Independent opinion of counsel to such effect delivered (at the expense of the Servicer) to the
Indenture Trustee and the Majority Noteholders. No resignation of the Servicer shall become
effective until a successor servicer, appointed pursuant to the provisions of Section 9.02
hereof shall have assumed the Servicer’s responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and obligations under this
Agreement.




          Except as expressly provided herein, the Servicer shall not assign or transfer any of its
rights, benefits or privileges hereunder to any other Person, or delegate to or subcontract with,
or authorize or appoint any other Person to perform any of the duties, covenants or obligations to
be performed by the Servicer hereunder and any agreement, instrument or act purporting to effect
any such assignment, transfer, delegation or appointment shall be void.




          The Servicer agrees to cooperate with any successor Servicer in effecting the transfer of the
Servicer’s servicing responsibilities and rights hereunder pursuant to the first paragraph of this
Section 8.04, including, without limitation, the transfer to such successor of all relevant
records and documents (including any Loan Files in the possession of the Servicer) and all amounts
received with respect to the Loans and not otherwise permitted to be retained by the Servicer
pursuant to this Agreement. In addition, the Servicer, at its sole cost and expense, shall prepare,
execute and deliver any and all documents and instruments to the successor Servicer including all
Loan Files in its possession and do or accomplish all other acts necessary or appropriate to effect
such termination and transfer of servicing responsibilities.




          Section 8.05 Relationship of Servicer to Issuer and the Indenture Trustee.




          The relationship of the Servicer (and of any successor to the Servicer as servicer under this
Agreement) to the Issuer, the Owner Trustee and the Indenture Trustee under this Agreement is
intended by the parties hereto to be that of an independent contractor and not of a joint venturer,
agent or partner of the Issuer, the Owner Trustee or the Indenture Trustee.




          Section 8.06 Servicer May Own Securities.




          Each of the Servicer and any Affiliate of the Servicer may in its individual or any other
capacity become the owner or pledgee of Securities with the same rights as it would have if it were
not the Servicer or an Affiliate thereof except as otherwise specifically provided herein;
provided, however, that at any time that Option One or any of its Affiliates is the Servicer,
neither the Servicer nor any of its Affiliates (other than an Affiliate which is a corporation
whose purpose is limited to holding securities and related activities and which cannot incur
recourse debt) may be a Noteholder. Securities so owned by or pledged to the Servicer or such
Affiliate shall have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority, or distinction as among all of the Securities; provided, however,
that any Securities owned by the Servicer or any Affiliate thereof, during the time such Securities
are owned by them, shall be without voting rights for any purpose set forth in this Agreement
unless the Servicer or such Affiliate owns all outstanding Securities of the related class. The
Servicer shall notify the Indenture Trustee promptly after it or any of its Affiliates becomes the
owner or pledgee of a Security.




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          Section 8.07 Indemnification of the Indenture Trustee, Noteholders and Noteholder
Agent.




          The Servicer agrees to indemnify the Indenture Trustee and its employees, officers, directors
and agents, and reimburse its reasonable out-of-pocket expenses in accordance with Section
6.07 of the Indenture as if it was a signatory thereto. The Servicer agrees to indemnify the
Noteholders and the Noteholder Agent in accordance with Section 9.01 of the Note Purchase
Agreement as if it were signatory thereto.




ARTICLE IX




SERVICER EVENTS OF DEFAULT




          Section 9.01 Servicer Events of Default.




          (a) In case one or more of the following Servicer Events of Default by the Servicer
shall occur and be continuing, that is to say:





          (1) any failure by the Servicer to deposit into the Collection Account or
the Distribution Account any amounts required to be deposited therein or any failure by
the Servicer to make any of the required payments therefrom in accordance with
Section 5.01 hereof; or




          (2) any failure on the part of the Servicer duly to observe or perform in
any material respect any other of the material covenants or agreements on the part of the
Servicer, contained in any Basic Document to which it is a party, which continues
unremedied for a period of thirty (30) days (or, in the case of payment of insurance
premiums, for a period of fifteen (15) days) after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the Servicer by
any other party hereto or to the Servicer (with copy to each other party hereto), by
Holders of 25% of the Percentage Interests of the Notes or the Trust Certificates; or




          (3) any breach on the part of the Servicer of any representation or
warranty contained in any Basic Document to which it is a party that materially and
adversely affects the interests of any of the parties hereto or any Securityholder and
which continues unremedied for a period of thirty (30) days after the date on which
notice of such breach, requiring the same to be remedied, shall have been given to the
Servicer by any other party hereto or to the Servicer (with copy to each other party
hereto), by the Noteholder Agent or Holders of 25% of the Percentage Interests (as
defined in the Indenture) of the Notes; or




          (4) there shall have been commenced before a court or agency or
supervisory authority having jurisdiction in the premises an involuntary proceeding
against the Servicer under any present or future federal or state bankruptcy, insolvency
or similar law for the appointment of a conservator, receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings, or for the winding-up or liquidation of
its affairs, which action shall not have been dismissed for a period of sixty (60) days;
or




          (5) the Servicer shall consent to the appointment of a conservator,
receiver, liquidator, trustee or similar official in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its property; or



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          (6) the Servicer (or the Loan Originator if the Servicer is not
Option One) fails to comply with the Financial Covenants; or




          (7) a Change in Control of the Servicer without prior written consent of
the Noteholders or the Servicer otherwise ceases to be a 100% direct or indirect
wholly-owned subsidiary of H&R Block Inc.; or




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



Then, and in each and every such case, so long as a Servicer Event of Default shall not have been
remedied, the Indenture Trustee or the Majority Noteholders, by notice in
writing to the Servicer may, in addition to whatever rights such Person may have at law or in
equity to damages, including injunctive relief and specific performance, may terminate all the
rights and obligations of the Servicer under this Agreement and in and to the Loans and the
proceeds thereof, as servicer under this Agreement. Upon receipt by the Servicer of such written
notice, all authority and power of the Servicer under this Agreement, whether with respect to the
Loans or otherwise, shall, subject to Section 9.02 hereof, pass to and be vested in a
successor servicer, and the successor servicer is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments and do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited to, the transfer and
endorsement or assignment of the Loans and related documents. The Servicer agrees to cooperate with
the successor servicer in effecting the termination of the Servicer’s responsibilities and rights
hereunder, including, without limitation, the transfer to the successor servicer for administration
by it of all amounts which shall at the time be credited by the Servicer to each Collection Account
or thereafter received with respect to the Loans.




          (b) Upon the occurrence of (i) an Event of Default or Default under any of the Basic
Documents, (ii) a Servicer Event of Default under this Agreement, (iii) a Rapid Amortization
Trigger, or (iv) an event that shall have a reasonable possibility of materially impairing the
ability of the Servicer to service and administer the Loans in accordance with the terms and
provisions set forth in the Basic Documents (each, a “Term Event”), the Servicer’s right to
service the Loans pursuant to the terms of this Agreement shall be in effect for an initial period
commencing on the date on which such Term Event occurred and shall automatically terminate at 5:00
p.m., New York City time, on the last Business Day of the calendar month in which such Term Event
occurred (the “Initial Term”). Thereafter, the Initial Term shall be extendible in the sole
discretion of the Majority Noteholders by written notice (each, a “Servicer Extension
Notice”) of the Majority Noteholders for successive one-month terms (each such term ending at
5:00 p.m., New York City time, on the last business day of the related month). Following a Term
Event, the Servicer hereby agrees that the Servicer shall be bound for the duration of the Initial
Term and the term covered by any such Servicer Extension Notice to act as the Servicer pursuant to
this Agreement. Following a Term Event, the Servicer agrees that if, as of 3:00 p.m. (New York City
time) on the last Business Day of any month, the Servicer shall not have received a Servicer
Extension Notice from the Majority Noteholders, the Servicer shall give written notice of such
non-receipt to the Noteholders by 4:00 p.m. (New York City time). Following a Term Event, the
failure of the Majority Noteholders to deliver a Servicer Extension Notice by 5:00 p.m. (New York
City time) shall result in the automatic and immediate termination of the Servicer (the
“Termination Date”). Notwithstanding these time frames, the Servicer and the Noteholders
shall comply with all applicable laws in connection with such transfer and the Servicer shall
continue to service the Loans until completion of such transfer.




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          Section 9.02 Appointment of Successor.




          On and after the date the Servicer receives a notice of termination pursuant to Section 9.01
hereof or is automatically terminated pursuant to Section 9.01(b) hereof, or the Owner Trustee
receives the resignation of the Servicer evidenced by an Opinion of Counsel or accompanied by the
consents required by Section 8.04 hereof, or the Servicer is removed as servicer pursuant
to this Article IX or Section 4.01 of the Servicing Addendum, then, the Majority Noteholders shall
appoint a successor servicer to be the successor in all respects to the Servicer in its capacity as
Servicer under this Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof, provided, however, that the successor servicer shall not be
liable for any actions of any servicer prior to it.




          The successor servicer shall be obligated to make Servicing Advances hereunder. As
compensation therefor, the successor servicer appointed pursuant to the following paragraph, shall
be entitled to all funds relating to the Loans which the Servicer would have been entitled to
receive from the Collection Account pursuant to Section 5.01 hereof as if the Servicer had
continued to act as servicer hereunder, together with other Servicing Compensation in the form of
assumption fees, late payment charges or otherwise as provided in Section 4.15 of the Servicing
Addendum. The Servicer shall not be entitled to any termination fee if it is terminated pursuant to
Section 9.01 hereof but shall be entitled to any accrued and unpaid Servicing Compensation
to the date of termination.




          Any collections received by the Servicer after removal or resignation shall be endorsed by it
to the Indenture Trustee and remitted directly to the successor servicer. The compensation of any
successor servicer appointed shall be the Servicing Fee, together with other Servicing Compensation
provided for herein. The Indenture Trustee, the Issuer, any Custodian, the Servicer and any such
successor servicer shall take such action, consistent with this Agreement, as shall be reasonably
necessary to effect any such succession. Any costs or expenses incurred by the Indenture Trustee in
connection with the termination of the Servicer and the succession of a successor servicer shall be
an expense of the outgoing Servicer and, to the extent not paid thereby, an expense of such
successor servicer. The Servicer agrees to cooperate with the Indenture Trustee and any successor
servicer in effecting the termination of the Servicer’s servicing responsibilities and rights
hereunder and shall promptly provide the successor servicer all documents and records reasonably
requested by it to enable it to assume the Servicer’s functions hereunder and shall promptly also
transfer to the successor servicer all amounts which then have been or should have been deposited
in any Trust Account maintained by the Servicer or which are thereafter received with respect to
the Loans. Upon the occurrence of an Event of Default, the Majority Noteholders shall have the
right to order the Servicer’s Loan Files and all other files of the Servicer relating to the Loans
and all other records of the Servicer and all documents relating to the Loans which are then or may
thereafter come into the possession of the Servicer or any third party acting for the Servicer to
be delivered to such custodian or servicer as it selects and the Servicer shall deliver to such
custodian or servicer such assignments as the Majority Noteholders shall request. No successor
servicer shall be held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the Servicer to deliver,
or any delay in delivering, cash, documents or records to it or (ii) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer hereunder. No appointment of a successor
to the Servicer hereunder shall be effective until written notice of such proposed appointment
shall have been provided to the Noteholders, the Indenture Trustee, the Issuer and the Depositor,
and the Majority Noteholders and the Issuer shall have consented in writing thereto.




          In connection with such appointment and assumption, the Majority Noteholders may make such
arrangements for the compensation of such successor servicer out of payments on the Loans as they
and such successor servicer shall agree.




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          Section 9.03 Waiver of Defaults.




          The Majority Noteholders may waive any events permitting removal of the Servicer as servicer
pursuant to this Article IX. Upon any waiver of a past default, such default shall cease to exist
and any Servicer Event of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair
any right consequent thereto except to the extent expressly so waived.




          Section 9.04 Accounting Upon Termination of Servicer.




          Upon termination of the Servicer under this Article IX, the Servicer shall, at its own
expense:




          (a) deliver to its successor or, if none shall yet have been appointed, to the
Indenture Trustee the funds in any Trust Account maintained by the Servicer;




          (b) deliver to its successor or, if none shall yet have been appointed, to the
Custodian all Loan Files and related documents and statements held by it hereunder and a Loan
portfolio by computer transmission or disk;




          (c) deliver to its successor or, if none shall yet have been appointed, to the
Indenture Trustee and to the Issuer and the Securityholders a full accounting of all funds,
including a statement showing the Monthly Payments collected by it and a statement of monies held
in trust by it for payments or charges with respect to the Loans; and




          (d) execute and deliver such instruments and perform all acts reasonably requested
in order to effect the orderly and efficient transfer of servicing of the Loans to its successor
and to more fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer under this Agreement.




ARTICLE X




TERMINATION; PUT OPTION




          Section 10.01 Termination.




          (a) This Agreement shall terminate upon either: (A) the later of (i) the
satisfaction and discharge of the Indenture and the provisions thereof, including payment to the
Noteholders of all amounts due and owing in accordance with the provisions hereof or (ii) the
disposition of all funds with respect to the last Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable, including, without limitation,
indemnification payments payable pursuant to any Basic Document to the Indenture Trustee, the Owner
Trustee, the Issuer, the Servicer and the Custodian, written notice of the occurrence of either of
which shall be provided to the Indenture Trustee by the Servicer; or (B) the mutual consent of the
Servicer, the Depositor and all Securityholders in writing and delivered to the Indenture Trustee
by the Servicer.




          (b) The Securities shall be subject to an early redemption or termination at the
option of the Servicer and the Majority Noteholders in the manner and subject to the provisions of
Section 10.02 and 10.04 of this Agreement.




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          (c) Except as provided in this Article X, none of the Depositor, the Servicer
nor any Certificateholder or Noteholder shall be entitled to revoke or terminate the Trust.




          Section 10.02 Optional Termination.




          The Servicer may, at its option, effect an early termination of the Trust on any Payment Date
on or after the Clean-up Call Date. The Servicer shall effect such early termination by providing
notice thereof to the Indenture Trustee and Owner Trustee and by purchasing all of the Loans at a
purchase price, payable in cash, equal to or
greater than the Termination Price. The expense of any Independent appraiser required in
connection with the calculation and payment of the Termination Price under this Section
10.02 shall be a nonreimbursable expense of the Servicer.




          Any such early termination by the Servicer shall be accomplished by depositing into the
Collection Account on the third Business Day prior to the Payment Date on which the purchase is to
occur the amount of the Termination Price to be paid. The Termination Price and any amounts then on
deposit in the Collection Account (other than any amounts withdrawable pursuant to Section
5.01(c)(1) hereof) shall be deposited in the Distribution Account and distributed by the
Indenture Trustee pursuant to Section 5.01(c)(3) of this Agreement and Section 9.1
of the Trust Agreement on the next succeeding Payment Date; and any amounts received with respect
to the Loans and Foreclosure Properties subsequent to the final Payment Date shall belong to the
purchaser thereof.




          Section 10.03 Notice of Termination.




          Notice of termination of this Agreement or of early redemption and termination of the Issuer
pursuant to Section 10.01 shall be sent by the Indenture Trustee to the Noteholders in
accordance with Section 10.02 of the Indenture.




          Section 10.04 Put Option.




          The Majority Noteholders may, at their option, effect a put of the entire outstanding Note
Principal Balance, or any portion thereof, to the Trust on any date by exercise of the Put Option.
The Majority Noteholders shall effect such put by providing notice thereof in accordance with
Section 10.05 of the Indenture.




          Unless otherwise agreed by the Majority Noteholders, on the third Business Day prior to the
Put Date the Issuer shall deposit the Note Redemption Amount into the Distribution Account and, if
the Put Date occurs after the termination of the Revolving Period and constitutes a put of the
entire outstanding Note Principal Balance, any amounts then on deposit in the Collection Account
(other than any amounts withdrawable pursuant to Section 5.01(c)(1) hereof) shall be
deposited in the Distribution Account and distributed by the Paying Agent pursuant to Section
5.01(c)(3) of this Agreement on the Put Date; and any amounts received with respect to the
Loans and Foreclosure Properties subsequent to the Put Date shall belong to the Issuer.




ARTICLE XI




MISCELLANEOUS PROVISIONS




          Section 11.01 Acts of Securityholders.




          Except as otherwise specifically provided herein and except with respect to Section
11.02(b), whenever action, consent or approval of the Securityholders is required under this
Agreement,




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such action, consent or approval shall be deemed to have been taken or given on behalf of, and
shall be binding upon, all Securityholders if the Majority Noteholders agree to take such, action
or give such consent or approval.




          Section 11.02 Amendment.




          (a) This Agreement may be amended from time to time by the Depositor, the Servicer,
the Loan Originator, the Indenture Trustee and the Issuer by written agreement with notice thereof
to the Securityholders, without the consent of any of the Securityholders, to cure any error or
ambiguity, to correct or supplement any
provisions hereof which may be defective or inconsistent with any other provisions hereof or
to add any other provisions with respect to matters or questions arising under this Agreement;
provided, however, that such action will not adversely affect in any material respect the interests
of the Securityholders, as evidenced by an Opinion of Counsel to such effect provided at the
expense of the party requesting such Amendment.




          (b) This Agreement may also be amended from time to time by the Depositor, the
Servicer, the Loan Originator, the Indenture Trustee and the Issuer by written agreement, with the
prior written consent of the Majority Noteholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in
any manner the rights of the Securityholders; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, collections of payments on Loans or
distributions which are required to be made on any Security, without the consent of the holders of
100% of the Securities, (ii) adversely affect in any material respect the interests of any of the
holders of the Securities in any manner other than as described in clause (i), without the consent
of the holders of 100% of the Securities, or (iii) reduce the percentage of the Securities, the
consent of which is required for any such amendment, without the consent of the holders of 100% of
the Securities.




          (c) It shall not be necessary for the consent of Securityholders under this Section
to approve the particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof.




          Prior to the execution of any amendment to this Agreement, the Issuer and the Indenture
Trustee shall be entitled to receive and rely upon an Opinion of Counsel provided at the expense of
the party requesting such amendment stating that the execution of such amendment is authorized or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Issuer’s own rights, duties or immunities of
the Issuer or the Indenture Trustee, as the case may be, under this Agreement.




          Section 11.03 Recordation of Agreement.




          To the extent permitted by applicable law, this Agreement, or a memorandum thereof if
permitted under applicable law, is subject to recordation in all appropriate public offices for
real property records in all of the counties or other comparable jurisdictions in which any or all
of the Mortgaged Property is situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the Securityholders’ expense on
direction of the Majority Noteholders but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests of the
Securityholders or is necessary for the administration or servicing of the Loans.





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          Section 11.04 Duration of Agreement.







          This Agreement shall continue in existence and effect until terminated as herein
provided.




          Section 11.05 Governing Law.




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




          Section 11.06 Notices.




          All demands, notices and communications hereunder shall be in writing and shall be deemed to
have been duly given if (i) delivered personally, mailed by overnight mail, certified mail or
registered mail, postage prepaid, or (ii) transmitted by telecopy, upon telephone confirmation of
receipt thereof, as follows:





     (1) in the case of the Depositor, to Option One Loan Warehouse
Corporation, 3 Ada, Irvine, California 92618, or such other addresses or
telecopy or telephone numbers as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Depositor;




     (2) in the case of the Trust, to Option One Owner Trust 2005-9,
c/o Wilmington Trust Company, One Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration,
telephone number: (302) 651-1000, telecopy number: (302) 636-4144, or such
other address or telecopy or telephone numbers as may hereafter be furnished to
the Noteholders and the other parties hereto in writing by the Trust;




     (3) in the case of the Loan Originator, to Option One Mortgage
Corporation, 3 Ada, Irvine, California 92618, Attention: William O’Neill,
telecopy number: (949) 790-7540, telephone number: (949) 790-7504 or such other
addresses or telecopy or telephone numbers as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Loan Originator,




     (4) in the case of the Servicer, to Option One Mortgage
Corporation 3 Ada, Irvine, California 92618, Attention: William O’Neill,
telecopy number: (949) 790-7540, telephone number: (949) 790-7504 or such other
addresses or telecopy or telephone numbers as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Servicer; and




     (5) in the case of the Indenture Trustee, at P.O. Box 98,
Columbia, Maryland 21046, Attention: Option One Owner Trust 2005-9, with a copy
to the Corporate Trust Office, as defined in the Indenture, any such notices
shall be deemed to be effective with respect to any party hereto upon the
receipt of such notice or telephone confirmation thereof by such party, except;
provided, that notices to the Securityholders shall be effective upon mailing
or personal delivery.





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          Section 11.07 Severability of Provisions.






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




          Section 11.08 No Partnership.




          Nothing herein contained shall be deemed or construed to create any partnership or joint
venture between the parties hereto and the services of the Servicer shall be rendered as an
independent contractor.




          Section 11.09 Counterparts.




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




          Section 11.10 Successors and Assigns.




          This Agreement shall inure to the benefit of and be binding upon the Servicer, the Loan
Originator, the Depositor, the Indenture Trustee, the Issuer and the Securityholders and their
respective successors and permitted assigns.




          Section 11.11 Headings.




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




          Section 11.12 Actions of Securityholders.




          (a) Any request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Agreement to be given or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Securityholders
in person or by an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments are delivered to
the Depositor, the Loan Originator, the Servicer or the Issuer. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Depositor, the Loan Originator, the Servicer and the
Issuer if made in the manner provided in this Section 11.12.




          (b) The fact and date of the execution by any Securityholder of any such instrument
or writing may be proved in any reasonable manner which the Depositor, the Loan Originator, the
Servicer or the Issuer may deem sufficient.




          (c) Any request, demand, authorization, direction, notice, consent, waiver or other
act by a Securityholder shall bind every holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, or
omitted to be done, by the Depositor, the Loan Originator, the Servicer or the Issuer in reliance
thereon, whether or not notation of such action is made upon such Security.




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          (d) The Depositor, the Loan Originator, the Servicer or the Issuer may require
additional proof of any matter referred to in this Section 11.12 as it shall deem
necessary.




          Section 11.13 Non-Petition Agreement.




          Notwithstanding any prior termination of any Basic Document, the Loan Originator, the
Servicer, the Depositor and the Indenture Trustee each severally and not jointly covenants that it
shall not, prior to the date which is one year and one day after the payment in full of the all of
the Notes, acquiesce, petition or otherwise, directly
or indirectly, invoke or cause the Trust or the Depositor to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case against the Issuer or
Depositor under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or Depositor or any substantial part of their respective property or ordering the winding up
or liquidation of the affairs of the Issuer or the Depositor.




          Section 11.14 Holders of the Securities.




          (a) Any sums to be distributed or otherwise paid hereunder or under this Agreement
to the holders of the Securities shall be paid to such holders pro rata based on their Percentage
Interests;




          (b) Where any act or event hereunder is expressed to be subject to the consent or
approval of the holders of the Securities, such consent or approval shall be capable of being given
by the holder or holders evidencing in the aggregate not less than 51% of the Percentage Interests.




          Section 11.15 Due Diligence Fees, Due Diligence.




          The Loan Originator acknowledges that the Noteholder Agent shall have the right to perform
continuing due diligence reviews with respect to the Loans, for purposes of verifying compliance
with the representations, warranties and specifications made hereunder, or otherwise, and the Loan
Originator agrees that upon reasonable prior notice (with no notice being required upon the
occurrence of an Event of Default) to the Loan Originator, the Noteholder Agent, the Indenture
Trustee and Custodian or their respective authorized representatives will be permitted during
normal business hours to examine, inspect, and make copies and extracts of, the Loan Files and any
and all documents, records, agreements, instruments or information relating to such Loans in the
possession or under the control of the Servicer and the Indenture Trustee. The Loan Originator also
shall make available to the Noteholder Agent a knowledgeable financial or accounting officer for
the purpose of answering questions respecting the Loan Files and the Loans and the financial
condition of the Loan Originator. Without limiting the generality of the foregoing, the Loan
Originator acknowledges that the Noteholders may purchase Notes based solely upon the information
provided by the Loan Originator to the Noteholders in the Loan Schedule and the representations,
warranties and covenants contained herein, and that the Noteholder Agent, at its option, has the
right at any time to conduct a partial or complete due diligence review on some or all of the Loans
securing such purchase, including without limitation ordering new credit reports and new appraisals
on the related Mortgaged Properties and otherwise re-generating the information used to originate
such Loan. The Noteholder Agent may underwrite such Loans itself or engage a mutually agreed upon
third party underwriter to perform such underwriting. The Loan Originator agrees to cooperate with
the Noteholder Agent and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Noteholder Agent and any third party underwriter with
access to any and all documents, records, agreements, instruments or information relating to such
Loans in the possession, or under the control, of the Servicer. The Loan Originator further agrees
that the Loan Originator shall reimburse the Noteholder Agent for any and all reasonable
out-of-pocket costs and expenses incurred by the Noteholder Agent in connection with the Noteholder
Agent’s activities pursuant to this Section 11.15 hereof (the




70









 







“Due Diligence Fees”), provided that, unless an Event of Default shall occur, the
aggregate reimbursement obligation of the Loan Originator with respect to Due Diligence Fees shall
be limited to $50,000 per annum. In addition to the obligations set forth in Section 11.17
of this Agreement, Noteholders agree (on behalf of themselves and
their Affiliates, directors, officers, employees and representatives) to use reasonable precaution
to keep confidential, in accordance with its customary procedures for handling confidential
information and in accordance with safe and sound practices, and not to disclose to any third
party, any non-public information supplied to it or otherwise obtained by it hereunder with respect
to the Loan Originator or any of its Affiliates (including, but not limited to, the Loan File);
provided, however, that nothing herein shall prohibit the disclosure of any such information to the
extent required by statute, rule, regulation or judicial process; provided, further that, unless
specifically prohibited by applicable law or court order, the Noteholders shall, prior to
disclosure thereof, notify the Loan Originator of any request for disclosure of any such non-public
information. The Noteholders further agree not to use any such non-public information for any
purpose unrelated to this Agreement and that the Noteholders shall not disclose such non-public
information to any third party underwriter in connection with a potential Disposition without
obtaining a written agreement from such third party underwriter to comply with the confidentiality
provisions of this Section 11.15. Without limiting the foregoing, non-public information
shall not include information which (i) is or becomes generally available to the public other than
as a result of a disclosure; (ii) was available to the Noteholders on a non-confidential basis
prior to its disclosure to such Noteholders by the Servicer or the Loan Originator; (iii) is
required to be disclosed by a governmental authority or related governmental agencies or as
otherwise required by law; or (iv) becomes available to the Noteholders on a non-confidential basis
from a Person other than the Servicer or the Loan Originator who, to the best knowledge of such
Noteholders, is not otherwise bound by a confidentiality agreement with the Servicer or the Loan
Originator and is not otherwise prohibited from transmitting the information to such Noteholders.




          Section 11.16 No Reliance.




          Each of the Loan Originator, the Depositor, the Servicer and the Issuer hereby acknowledges
that it has not relied on any of the Noteholder Agent, the Noteholders or any of their officers,
directors, employees, agents and “control persons” as such term is used under the Act and under the
Securities Exchange Act of 1934, as amended, for any tax, accounting, legal or other professional
advice in connection with the transactions contemplated by the Basic Documents, that each of the
Loan Originator, the Depositor, the Servicer and the Issuer has retained and been advised by such
tax, accounting, legal and other professionals as it has deemed necessary in connection with the
transactions contemplated by the Basic Documents and that neither the Noteholder Agent nor any of
the Noteholders makes any representation or warranty, and shall have no liability with respect to,
the tax, accounting or legal treatment or implications relating to the transactions contemplated by
the Basic Documents.




          Section 11.17 Confidential Information.




          In addition to the confidentiality requirements set forth in Section 11.15 of the
Agreement, each Noteholder, as well as the Indenture Trustee and the Disposition Agent (each of
said parties singularly referred to herein as a “Receiving Party” and collectively referred to
herein as the “Receiving Parties”), agrees to hold and treat all Confidential Information
(as defined below) in confidence and in accordance with this Section. Such Confidential Information
will not, without the prior written consent of the Servicer and the Loan Originator, be disclosed
or used by such Receiving Parties or their subsidiaries, Affiliates, directors, officers, members,
employees, agents or controlling persons (collectively, the “Information Recipients”) other
than for the purpose of making a decision to purchase or sell Notes or taking any other permitted
action under this Agreement or any other Basic Document. Each Receiving Party agrees to disclose
Confidential Information only to its Information Recipients who need to know it for the purpose of
making a decision to purchase or sell Notes or taking any other permitted





71









 







action under this Agreement or any other Basic Document (including in connection with the
servicing of the Loans and in connection with any servicing transfers) and who are informed by such
Receiving Party of its confidential nature and who agree to be bound by the terms of this
Section 11.17. Disclosure that is not in violation of the Right to Financial Privacy Act,
the Gramm-Leach-Bliley Act or other applicable law by such Receiving Party of any Confidential
Information at the request of its outside auditors or governmental regulatory authorities in
connection with an examination of a Receiving Party by any such authority shall not constitute a
breach of its obligations under this Section 11.17 and shall not require the prior consent
of the Servicer and the Loan Originator.




          Each Receiving Party shall be responsible for any breach of this Section 11.17 by its
Information Recipients. The Noteholders may use Confidential Information for internal due diligence
purposes in connection with their analysis of the transactions contemplated by the Basic Documents.
The Disposition Agent may disclose Confidential Information to the Disposition Participants as
required to effect Dispositions. This Section 11.17 shall terminate upon the occurrence of
an Event of Default; provided, however, that such termination shall not relieve the Receiving
Parties or their respective Information Recipients from the obligation to comply with the
Gramm-Leach-Bliley Act or other applicable law with respect to their use or disclosure of
Confidential Information following the occurrence of an Event of Default.




          As used herein, “Confidential Information” means non-public personal information (as defined
in the Gramm-Leach-Bliley Act and its enabling regulations issued by the Federal Trade Commission)
regarding Borrowers. Confidential Information shall not include information which (i) is or becomes
generally available to the public other than as a result of a disclosure by a Receiving Party or
any Information Recipients; (ii) was available to a Receiving Party on a non-confidential basis
prior to its disclosure to such Receiving Party by the Servicer or the Loan Originator; (iii) is
required to be disclosed by a governmental authority or related governmental agencies or as
otherwise required by law; (iv) becomes available to a Receiving Party on a non-confidential basis
from a Person other than the Servicer or the Loan Originator who, to the best knowledge of such
Receiving Party, is not otherwise bound by a confidentiality agreement with the Servicer or the
Loan Originator and is not otherwise prohibited from transmitting the information to such Receiving
Party. Without limiting the generality of the foregoing, the parties acknowledge and agree that
this Agreement and other Basic Documents will be filed with the Securities and Exchange Commission
as exhibits to filings of the Loan Originator’s parent corporation under the Securities Exchange
Act of 1934.




          Section 11.18 Conflicts.




          Notwithstanding anything contained in the Basic Documents to the contrary, in the event of the
conflict between the terms of this Agreement and any other Basic Document, the terms of this
Agreement shall control.




          Section 11.19 Limitation on Liability.




          It is expressly understood and agreed by the parties hereto that (a) this Agreement is
executed and delivered by Wilmington Trust Company, not individually or personally, but solely as
Owner Trustee of Option One Owner Trust 2005-9, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and agreements herein
made on the part of the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any liability on
Wilmington Trust Company, individually or personally, to perform any covenant either expressed or
implied contained herein, all such. liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or




72









 







under the parties hereto and (d) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for
the breach or failure of any obligation, representation, warranty or covenant made or undertaken by
the Issuer under this Agreement or any other related documents.




          Section 11.20 No Agency.




          Nothing contained herein or in the Basic Documents shall be construed to create an agency or
fiduciary relationship between the Noteholder Agent, any Noteholder or the Majority Noteholders or
any of their Affiliates and the Issuer, the Depositor, the Loan Originator or the Servicer. None of
the Noteholder Agent, any Noteholder, the Majority Noteholders or any of their Affiliates shall be
liable for any acts or actions affected in connection with a disposition of Loans, including
without limitation, any Securitization pursuant to Section 3.07, any Loan Originator Put or
Servicer Call pursuant to Section 3.08 hereof nor any Whole Loan Sale pursuant to
Section 3.07 hereof.




(SIGNATURE PAGE FOLLOWS)




73









 








          IN WITNESS WHEREOF, the Issuer, the Depositor, the Servicer, the Indenture Trustee and
the Loan Originator have caused their names to be signed by their respective officers thereunto
duly authorized, as of the day and year first above written, to this Sale and Servicing Agreement.




	 	 	 	 	 
	 	 	OPTION ONE OWNER TRUST 2005-9,
	 
	 	 	BY: Wilmington Trust Company not in its individual capacity but solely as Owner Trustee
	 
	 

	 	BY:
	 	/s/
	 

	 	 	 	 
	 	 	Name: Joann A. Rozell
	 	 	Title: Assistant Vice President
	 
	 	 	OPTION ONE LOAN WAREHOUSE CORPORATION, as Depositor
	 
	 

	 	BY:
	 	/s/
	 

	 	 	 	 
	 	 	Name: Charles R. Fulton
	 	 	Title: Assistant Secretary
	 
	 	 	OPTION ONE MORTGAGE CORPORATION, as Loan Originator and Servicer
	 
	 

	 	BY:
	 	/s/
	 

	 	 	 	 
	 	 	Name: Charles R. Fulton
	 	 	Title: Vice President
	 
	 	 	WELLS FARGO BANK, N.A., as Indenture Trustee
	 
	 

	 	BY:
	 	/s/
	 

	 	 	 	 
	 	 	Name: Darron C. Woodus
	 	 	Title: Assistant Vice President

















 







EXHIBIT A




FORM OF NOTICE OF ADDITIONAL NOTE PRINCIPAL BALANCE




[LETTERHEAD OF OPTION ONE LOAN WAREHOUSE CORPORATION]




[Date]




Option One Owner Trust 2005-9

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, Delaware 19890

Attention: Corporate Trust Administration




Wells Fargo Bank, N.A.

9062 Old Annapolis Road

Columbia, Maryland 21045

Attention: Option One Owner Trust 2005-9




DB Structured Products, Inc.

Gemini Securitization Corp., LLC

Aspen Funding Corp.

Newport Funding Corp.

60 Wall Street

New York, New York 10005

Attention: Frank Grausso

Email: frank.grausso@db.com and abs-conduits@db.com

Telephone: (212) 250-7311

Facsimile: (212) 797-5150




     Re:       Option One Owner Trust 2005-9 Mortgage-Backed Notes



     Reference is made to the Sale and Servicing Agreement, dated as of December 30, 2005 (the
“Sale and Servicing Agreement”), among Option One Owner Trust 2005-9, as Issuer, Option One Loan
Warehouse Corporation, as Depositor, Option One Mortgage Corporation, as Loan Originator and
Servicer, and Wells Fargo Bank, N.A., as Indenture Trustee. Capitalized terms not defined herein
shall have the meanings assigned to such terms in the Sale and Servicing Agreement.



     The undersigned                     , a duly appointed                     
of Option One Loan Warehouse Corporation, acting in such capacity, hereby requests an
advance of Additional Note Principal Balance in an amount of $                    , such
amount to be advanced on                     , 200_, a Business Day at least two Business
Days from the date hereof.



	 	 	 	 	 
	 

	 	Very truly yours,	 
	 
	 	 	 	 
	 

	 	OPTION ONE LOAN WAREHOUSE CORPORATION	 
	 
	 

	 	By:	 	 
	 

	 	 	 	 






A-1









 






	 	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





A-2




 









 








EXHIBIT B




FORM OF SERVICER’S REMITTANCE REPORT TO INDENTURE TRUSTEE




Trial Balance Information Report P139




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Next	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Investor	 	 	Borrower	 	 	Pymt	 	 	Interest	 	 	P&I	 	 	Principal	 
	Investor #	 	Category	 	 	Loan #	 	 	Loan #	 	 	Name	 	 	Date	 	 	Rate	 	 	Pymt	 	 	Balance	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Collection Activity Information Report S215




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Pymt	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investor	 	 	 	 	 	 	 	 	 	Investor	 	 	Transaction	 	 	Paymt	 	 	Due	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Service	 	 	Net	 	 	Total	 	 	Principal	 	 	Late	 
	#	 	Category	 	 	Loan #	 	 	Loan #	 	 	Date	 	 	#	 	 	Date	 	 	Escrow	 	 	Principal	 	 	Interest	 	 	Fees	 	 	Interest	 	 	Deposit	 	 	Balance	 	 	Charges	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Payoff Activity Information Report S214




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Next	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Investor	 	 	 	 	 	 	 	 	 	Investor	 	 	Date	 	 	P&I	 	 	Interest	 	 	Service	 	 	Pymt	 	 	 	 	 	 	 	 	 	 	Service	 	 	Net	 	 	Prepay	 	 	Total	 
	#	 	Category	 	 	Loan #	 	 	Loan #	 	 	Paid	 	 	Pymt	 	 	Rate	 	 	Fee Rate	 	 	Date	 	 	Principal	 	 	Interest	 	 	Fees	 	 	Interest	 	 	Premium	 	 	Collected	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





B-1









 








EXHIBIT C




FORM OF S&SA ASSIGNMENT




     ASSIGNMENT NO. ___OF LOANS (“S&SA Assignment”), dated                     ,
(the “Transfer Date”), by OPTION ONE LOAN WAREHOUSE CORPORATION, (the “Depositor”) to OPTION ONE
OWNER TRUST 2005-9 (the “Issuer”) pursuant to the Sale and Servicing Agreement referred to below.



WITNESSETH:




     WHEREAS, the Depositor and the Issuer are parties to the Sale and Servicing Agreement
dated as of December 30, 2005 (the “Sale and Servicing Agreement”) among the Depositor, the Issuer,
the Servicer, the Loan Originator and the Indenture Trustee on behalf of the Noteholders,
hereinafter as such agreement may have been, or may from time to time be, amended, supplemented or
otherwise modified;



     WHEREAS, pursuant to the Sale and Servicing Agreement, the Depositor wishes to sell, convey,
transfer and assign Loans to the Issuer in exchange for cash consideration, the Trust Certificates
and other good and valid consideration the receipt and sufficiency of which is hereby acknowledged;
and



     WHEREAS, the Issuer is willing to acquire such Loans subject to the terms and conditions
hereof and of the Sale and Servicing Agreement;



     NOW THEREFORE, the Depositor and the Issuer hereby agree as follows:



     1. Defined Terms. All capitalized terms defined in the Sale and Servicing
Agreement and used herein shall have such defined meanings when used herein, unless otherwise
defined herein.



     2. Designation of Loans. The Depositor does hereby deliver herewith a Loan
Schedule containing a true and complete list of each Loan to be conveyed on the Transfer Date. Such
list is marked as Schedule A to this S&SA Assignment and is hereby incorporated into and made a
part of this S&SA Assignment.



     3. Conveyance of Loans. The Depositor hereby sells, transfers, assigns and
conveys to the Issuer, without recourse, all of the right, title and interest of the Depositor in
and to the Loans and all proceeds thereof listed on the Loan Schedule attached hereto, including
all interest and principal received by the Depositor or the Servicer on or with respect to the
Loans on or after the related Transfer Cut-off Date, together with all right, title and interest in
and to the proceeds of any related Mortgage Insurance Policies.



     4. Issuer Acknowledges Assignment. As of the Transfer Date, pursuant to
this S&SA Assignment and Section 2.01(a) of the Sale and Servicing Agreement, the Issuer
acknowledges its receipt of the Loans listed on the attached Loan Schedule and all other related
property in the Trust Estate.



     5. Acceptance of Rights But Not Obligations. The foregoing sale, transfer,
assignment, set over and conveyance does not, and is not intended to, result in a creation or an
assumption by the Issuer of any obligation of the Depositor, the Loan Originator or any other
Person in connection



C-1









 






with this S&SA Assignment or under any agreement or instrument relating thereto except as
specifically set forth herein.




     6. Depositor Acknowledges Receipt of Sales Price. The Depositor hereby
acknowledges receipt of the Sales Price or that is otherwise distributed at its direction.



     7. Conditions Precedent. The conditions precedent in Section 2.06(a) of the
Sale and Servicing Agreement have been satisfied.



     8. Limitation of Liability. Section 11.19 of the Sale and Servicing
Agreement is incorporated by reference.



     9. Counterparts. This S&SA Assignment may be executed in any number of
counterparts all of which taken together shall constitute one and the same instrument.



C-2




 









 








     IN WITNESS WHEREOF, the undersigned have caused this S&SA Assignment to be duly executed and
delivered by their respective duly authorized officers on the day and year first above written.



	 	 	 	 	 	 	 
	 	 	OPTION ONE LOAN WAREHOUSE CORPORATION,	 	 
	 

	 	as Depositor
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	OPTION ONE OWNER TRUST 2005-9,

as Issuer	 	 
	 
	 	 	 	 	 	 
	 	 	By: Wilmington Trust Company not in its individual capacity but solely as Owner Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:	 	 	 	 






C-3




 









 








EXHIBIT D




PIGGY BACKED LOAN UNDERWRITING CRITERIA




D-1




 









 








EXHIBIT E




LOAN SCHEDULE




     The Loan Schedule shall set forth the following information with respect to each Loan
(other than Wet Funded Loans):



	 	 	 
	(1)

	 	the Loan Originator’s Loan identifying number;
	(2)

	 	the Mortgagor’s name and social security number;
	(3)

	 	the street address of the Mortgaged Property, including the state and zip code;
	(4)

	 	the Promissory Note date;
	(5)

	 	the loan purpose (whether purchase, cash-out refinance or rate/term refinance);
	(6)

	 	a code indicating whether the Mortgaged Property was represented by the Mortgagor as being owner-occupied on
the date of origination;
	(7)

	 	the type of Residential Dwelling constituting the Mortgaged Property;
	(8)

	 	the origination date;
	(9)

	 	the months to maturity at origination, based on the original amortization schedule;
	(10)

	 	the loan-to-value ratio or, if applicable, the combined loan-to-value ratio, at origination;
	(11)

	 	the rate of interest in effect on the Transfer Cut-off Date;
	(12)

	 	the date on which the first monthly payment was due, and, if different, the date on which monthly payments are
due as of the Transfer Cut-off Date;
	(13)

	 	the paid-through date and the next payment date;
	(14)

	 	the stated maturity date;
	(15)

	 	the amount of the monthly payment due at origination;
	(16)

	 	the amount of the principal and interest payment due on the first due date after the Transfer Cut-off Date;
	(17)

	 	the interest paid-through date;
	(18)

	 	the last monthly payment date on which any portion of the monthly payment was applied to the reduction of
principal;
	(19)

	 	the original principal balance;
	(20)

	 	the unpaid principal balance as of the close of business on the Transfer Cut-off Date;
	(21)

	 	the unpaid principal balance as of the last day of the immediately preceding month;
	(22)

	 	a code indicating whether the interest rate on the Loan is fixed or adjustable;
	(23)

	 	if the Loan is an adjustable-rate loan, the initial adjustment date thereunder, including the look-back period;
	(24)

	 	if the Loan is an adjustable-rate loan, the gross margin over the applicable interest rate index;
	(25)

	 	a code indicating the purpose of the Loan, as indicated by the Mortgagor (i.e., purchase financing, rate/term
refinancing or cash-out refinancing);
	(26)

	 	(if the Loan is an adjustable-rate loan, the maximum interest rate;
	(27)

	 	if the Loan is an adjustable-rate loan, the minimum interest rate;
	(28)

	 	if the Loan is an adjustable-rate loan, the index, ARM code, adjustment frequency, spread and caps;
	(29)

	 	the interest rate at origination;






E-1




 









 








	 	 	 
	(30)

	 	if the Loan is an adjustable-rate loan, the periodic rate cap and the maximum adjustment in the interest rate
that may be made on the first adjustment date immediately following the Transfer Cut-off Date;
	(31)

	 	a code indicating the documentation program (i.e., full documentation, limited documentation or stated income);
	(32)

	 	if the Loan is an adjustable-rate loan, the applicable interest rate index to which the gross margin is added,
including the source of such index;
	(33)

	 	if the Loan is an adjustable-rate loan, the first adjustment date thereunder to occur after the Transfer
Cut-off Date;
	(34)

	 	if the Loan is a 40/30 Loan;
	(35)

	 	the risk grade;
	(36)

	 	any risk upgrade;
	(37)

	 	the appraised value of the Mortgaged Property at origination;
	(38)

	 	if different from the appraised value, the dollar value of the review appraisal of the Mortgaged Property at
origination;
	(39)

	 	the sale price of the Mortgaged Property, if applicable;
	(40)

	 	the product type code (e.g., 3/27, 2/28, balloon, etc.);
	(41)

	 	a code indicating whether the Loan is a first-lien loan or a second-lien loan;
	(42)

	 	if the Loan is a second-lien loan, the outstanding principal balance of the first lien on the date of
origination of such Loan and the monthly payment and maturity date of the first-lien loan;
	(43)

	 	if the Loan is a second-lien loan, the combined loan-to-value ratio of such Loan and the first lien to which
it is subject, as of the origination date of such Loan;
	(44)

	 	whether such Loan is 30 days or more Delinquent;
	(45)

	 	the prepayment penalty code;
	(46)

	 	the prepayment penalty term;
	(47)

	 	the late charge;
	(48)

	 	the rounding code (next highest or nearest 0.125%);
	(49)

	 	the applicable loan grade and the Mortgagor’s FICO score, if any; and
	(50)

	 	the Mortgagor’s debt-to-income ratio.






     The Loan Schedule to be delivered with respect to Wet Funded Loans shall set forth the



     following information:



     MBMS Long Format ‘97 w\ Mersflag



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Start	 	length/	 	End	 	 	 	 
	Field	 	Pos	 	width	 	Pos	 	Dec	 	Definition
	Loanidp

	 	 	1	 	 	 	13	 	 	 	13	 	 	 	0	 	 	Previous loan number/(Old loan number or Investor loan number)
	Lname

	 	 	14	 	 	 	35	 	 	 	48	 	 	 	0	 	 	Primary borrower’s name/ (Last, First Middle)
	Casenum

	 	 	49	 	 	 	13	 	 	 	61	 	 	 	0	 	 	FHA or VA case number
	Closed

	 	 	62	 	 	 	6	 	 	 	67	 	 	 	0	 	 	Date the loan closed/ (mmddyy)
	Firstdue

	 	 	68	 	 	 	6	 	 	 	73	 	 	 	0	 	 	Date first pymt on loan was due/ (mmddyy)

	Issuer

	 	 	74	 	 	 	4	 	 	 	77	 	 	 	0	 	 	User defined issuer code/ (leave blank —pad with spaces)
	Loanid

	 	 	78	 	 	 	13	 	 	 	90	 	 	 	0	 	 	Loan number/ (Servicer loan number)






E-2




 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Start	 	length/	 	End	 	 	 	 
	Field	 	Pos	 	width	 	Pos	 	Dec	 	Definition
	Maturity

	 	 	91	 	 	 	6	 	 	 	96	 	 	 	0	 	 	Maturity date of the loan/ (mmddyy)
	Rate

	 	 	97	 	 	 	9	 	 	 	105	 	 	 	0	 	 	Interest rate on note/ (X 1000 to remove decimal
(7.125% is 7125)
	Lnamount

	 	 	10611	 	 	 	 	 	 	 	116	 	 	 	0	 	 	Original loan amount/ (X 100 to remove decimal
(100000.00 is 1000000)
	PI

	 	 	11710	 	 	 	 	 	 	 	126	 	 	 	0	 	 	Orig principal plus interest/ (X 100 to remove
decimal (1000.00 is 100000)
	Poolnum

	 	 	12710	 	 	 	 	 	 	 	136	 	 	 	0	 	 	Pool number/ (Agency pool number or private
investor code — CPI)
	State

	 	 	1372	 	 	 	 	 	 	 	138	 	 	 	0	 	 	Property State abbreviation/ (e.g., NY)
	City

	 	 	13915	 	 	 	 	 	 	 	153	 	 	 	0	 	 	Property City
	Zip

	 	 	1545	 	 	 	 	 	 	 	158	 	 	 	0	 	 	Property Zip code
	Address

	 	 	15935	 	 	 	 	 	 	 	193	 	 	 	0	 	 	Property address/ (Number and street name)
	Sid

	 	 	19423	 	 	 	 	 	 	 	216	 	 	 	0	 	 	Barcode ID (leave blank —pad with spaces)
	Armadj

	 	 	2176	 	 	 	 	 	 	 	222	 	 	 	0	 	 	1st Adjustment Date (mmddyy)
	Armconv

	 	 	2231	 	 	 	 	 	 	 	223	 	 	 	0	 	 	Convertible Account (Y/N)
	Armround

	 	 	2246	 	 	 	 	 	 	 	229	 	 	 	0	 	 	Percent Rounded (X 100000 to remove decimal
(7.12500% is 712500)
	Armacap

	 	 	2305	 	 	 	 	 	 	 	234	 	 	 	0	 	 	Annual Cap (X 1000 to remove decimal (10.125% is
10125)
	Armlcap

	 	 	2355	 	 	 	 	 	 	 	239	 	 	 	0	 	 	Lifetime Cap (X 1000 to remove decimal (10.125%
is 10125)
	Armmargin

	 	 	2404	 	 	 	 	 	 	 	243	 	 	 	0	 	 	Margin (X 1000 to remove decimal (7.125% is 7125)
	Armfloor

	 	 	2445	 	 	 	 	 	 	 	248	 	 	 	0	 	 	Floor (X 1000 to remove decimal (10.125% is 10125)
	Mersmin

	 	 	24918	 	 	 	 	 	 	 	266	 	 	 	0	 	 	Mers Min
	Mersflag

	 	 	2671	 	 	 	 	 	 	 	267	 	 	 	0	 	 	Mersflag
	Filler

	 	 	268	 	 	 	33	 	 	 	300	 	 	 	0	 	 	Filler field/ (Pad with spaces)






     If the Loan is a Wet Funded Loan, the Loan Schedule shall also include the name of the Closing
Agent.



E-3




 









 








EXHIBIT F




REPRESENTATIONS AND WARRANTIES REGARDING THE LOANS




     The Loan Originator hereby represents and warrants to the other parties to the Sale and
Servicing Agreement and the Securityholders, with respect to each such Loan as of the related
Transfer Date (except as otherwise expressly agreed in writing by the Majority Noteholders):



     (i) The information set forth in the related Loan Schedule and the
information contained on the electronic data file delivered to the Noteholder Agent is complete,
true and correct;



     (ii) All payments required to be made up to the close of business on the
Transfer Date for such Loan under the terms of the Promissory Note have been made; the Loan
Originator has not advanced funds, or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the related Mortgaged Property, directly or indirectly, for
the payment of any amount required by the Promissory Note or Mortgage; and there has been no
delinquency, exclusive of any period of grace, in any payment by the Borrower thereunder during the
last twelve months;



     (iii) There are no delinquent taxes, ground rents, water charges, sewer rents,
assessments, insurance premiums, leasehold payments, including assessments payable in future
installments or other outstanding charges affecting the related Mortgaged Property;



     (iv) The terms of the Promissory Note and the Mortgage have not been impaired,
waived, altered or modified in any respect and the Promissory Note and the Mortgage have not been
satisfied, canceled, rescinded or subordinated in whole or in part. No instrument of waiver,
alteration, modification, release, cancellation, rescission or satisfaction has been executed, and
no Borrower has been released, in whole or in part;



     (v) The Promissory Note and the Mortgage are not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury, nor will the
operation of any of the terms of the Promissory Note or the Mortgage, or the exercise of any right
thereunder, render either the Promissory Note or the Mortgage unenforceable, in whole or in part,
or subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury and no such right of
rescission, set-off, counterclaim or defense has been asserted with respect thereto;



     (vi) All buildings upon the Mortgaged Property are insured by an insurer
acceptable to Fannie Mae or Freddie Mac against loss by fire, hazards of extended coverage and such
other hazards as are customary in the area where the Mortgaged Property is located, pursuant to
insurance policies conforming to the requirements of the Servicing Addendum, in an amount
sufficient to avoid the application of any “co-insurance provisions”. All such insurance policies
contain a standard mortgagee clause naming the Loan Originator, its successors and assigns as
mortgagee and all premiums thereon have been paid. If the Mortgaged Property is in an area
identified on a Flood Hazard Map or Flood Insurance Rate Map issued by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance has been made
available) a flood insurance policy meeting the requirements of the current guidelines of the
Federal Insurance Administration is in effect which policy conforms to the requirements of Fannie
Mae and Freddie Mac. The Mortgage obligates the Borrower thereunder to maintain all such insurance
at the Borrower’s cost and expense, and on the Borrower’s failure to do so, authorizes the holder
of the Mortgage to maintain such insurance at Borrower’s cost and expense and to seek reimbursement
therefor from the Borrower;



F-1




 









 








     (vii) Any and all requirements of any federal, state or local law including,
without limitation, usury, truth in lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity, fair housing or disclosure laws applicable to the origination
and servicing of the Loans have been complied with;



     (viii) The Mortgage has not been satisfied, canceled, subordinated or rescinded,
in whole or in part, and the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that would effect any such
satisfaction, cancellation, subordination, rescission or release;



     (ix) The Mortgage is a valid, existing and enforceable first lien (or, with
respect to Loans identified as Second Lien Loans on the Loan Schedule, second lien) on the
Mortgaged Property, including all improvements on the Mortgaged Property subject only to (a) the
lien of current real property taxes and assessments not yet due and payable, (b) covenants,
conditions and restrictions, rights of way, easements and other matters of the public record as of
the date of recording being acceptable to mortgage lending institutions generally and specifically
referred to in the lender’s title insurance policy delivered to the originator of the Loan and
which do not adversely affect the Appraised Value of the Mortgaged Property, (c) other matters to
which like properties are commonly subject which do not materially interfere with the benefits of
the security intended to be provided by the Mortgage or the use, enjoyment, value or marketability
of the related Mortgaged Property and (d) the first lien on the Mortgaged Property, in the case of
the Second Lien Loans. Any security agreement, chattel mortgage or equivalent document related to
and delivered in connection with the Loan establishes and creates a valid, existing and enforceable
first or second lien and first or second priority security interest on the property described
therein and the Loan Originator has full right to sell and assign the same to the Depositor and the
Issuer. The Mortgaged Property was not, as of the date of origination of the Loan, subject to a
mortgage, deed of trust, deed to secure debt or other security instrument creating a lien
subordinate to the lien of the Mortgage;



     (x) The Promissory Note and the related Mortgage are genuine and each is the
legal, valid and binding obligation of the maker thereof, enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency or reorganization;



     (xi) All parties to the Promissory Note and the Mortgage had legal capacity to
enter into the Loan and to execute and deliver the Promissory Note and the Mortgage, and the
Promissory Note and the Mortgage have been duly and properly executed by such parties. The Borrower
is a natural person;



     (xii) The proceeds of the Loan have been fully disbursed to or for the account
of the Borrower and there is no obligation for the mortgagee to advance additional funds thereunder
and any and all requirements as to completion of any on-site or off-site improvement and as to
disbursements of any escrow funds therefor have been complied with. All costs, fees and expenses
incurred in making or closing the Loan and the recording of the Mortgage have been paid, and the
Borrower is not entitled to any refund of any amounts paid or due to the Loan Originator pursuant
to the Promissory Note or Mortgage;



     (xiii) The Loan Originator has good title to and is the sole legal, beneficial
and equitable owner of the Promissory Note and the Mortgage and has full right to transfer and sell
the Loan to the Depositor and the Issuer free and clear of any encumbrance, equity, lien, pledge,
charge, claim or security interest;



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     (xiv) All parties which have had any interest in the Loan, whether as mortgagee,
assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such
interest, were) in compliance with any and all applicable “doing business” and licensing
requirements of the laws of the state wherein the Mortgaged Property is located;



     (xv) The Loan is covered by either (i) a lender’s title insurance policy
(which, in the case of an ARM has an adjustable rate mortgage endorsement) commercially acceptable
to prudent mortgage lending institutions, issued by a title insurer licensed and qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring (subject to the
exceptions contained in (ix)(a) and (b) above) the Loan Originator, its successors and assigns as
to the first or second priority lien of the Mortgage in the original principal amount of the Loan
and, with respect to any ARM, against any loss by reason of the invalidity or unenforceability of
the lien resulting from the provisions of the Mortgage providing for adjustment in the Loan
Interest Rate and Monthly Payment or (ii) if generally acceptable in the jurisdiction where the
Mortgaged Property is located, an attorney’s opinion of title given by an attorney licensed to
practice law in the jurisdiction where the Mortgaged Property is located. Additionally, such
lender’s title insurance policy affirmatively insures ingress and egress to and from the Mortgaged
Property, and against encroachments by or upon the Mortgaged Property or any interest therein. The
Loan Originator is the sole insured of such lender’s title insurance policy, and such lender’s
title insurance policy is in full force and effect and will be in full force and effect, and the
issuer will be insured thereunder, upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such lender’s title insurance policy, and no prior holder
of the related Mortgage, including the Loan Originator, has done, by act or omission, anything
which would impair the coverage or enforceability of such lender’s title insurance policy or the
accuracy of such attorney’s opinion of title;



     (xvi) There is no default, breach, violation or event of acceleration existing
under the Mortgage or the Promissory Note and no event which, with the passage of time or with
notice and the expiration of any grace or cure period, would constitute a default, breach,
violation or event of acceleration and neither the Loan Originator nor any affiliate has not waived
any default, breach, violation or event of acceleration;



     (xvii) There are no mechanics’ or similar liens or claims which have been filed
for work, labor or material (and no rights are outstanding that under law could give rise to such
lien) affecting the related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;



     (xviii) All improvements which were considered in determining the Appraised Value
of the related Mortgaged Property lay wholly within the boundaries and building restriction lines
of the Mortgaged Property, and no improvements on adjoining properties encroach upon the Mortgaged
Property;



     (xix) The Loan was originated by the Loan Originator or by a savings and loan
association, a savings bank, a commercial bank or similar banking institution which is supervised
and examined by a federal or state authority, or by a mortgagee approved as such by the Secretary
of HUD;



     (xx) Payments on the Loan commenced no more than two months after the proceeds
of the Loan were disbursed. The Loan bears interest at the Loan Interest Rate. With respect to each
Loan unless otherwise stated on the Loan Schedule, the Promissory Note is payable on the first day
of each month in Monthly Payments, which, in the case of each fixed-rate Loan except for Balloon
Loans (to the extent permitted under the Pricing Side Letter), are sufficient to fully amortize the
original principal balance over the original term thereof and to pay interest at the related Loan
Interest Rate, and,



F-3




 









 







in the case of each ARM, are changed on each Adjustment Date in accordance with the terms of the
related Promissory Note or subsequent modifications, if any, and in any case, are sufficient to
fully amortize the original principal balance over the original term thereof and to pay interest at
the related Loan Interest Rate. The Promissory Note does not permit negative amortization. No Loan
is a Convertible Loan;




     (xxi) The origination and collection practices used by the Loan Originator with
respect to each Promissory Note and Mortgage have been in all respects legal, proper, prudent and
customary in the mortgage origination and servicing industry. The Loan has been serviced by the
Loan Originator and any predecessor servicer in accordance with the terms of the Promissory Note.
With respect to escrow deposits and Escrow Payments, if any, all such payments are in the
possession of, or under the control of, the Loan Originator and there exist no deficiencies in
connection therewith for which customary arrangements for repayment thereof have not been made. No
escrow deposits or Escrow Payments or other charges or payments due the Loan Originator have been
capitalized under any Mortgage or the related Promissory Note and no such escrow deposits or Escrow
Payments are being held by the Loan Originator for any work on a Mortgaged Property which has not
been completed;



     (xxii) The Mortgaged Property is free of material damage and waste and there is no
proceeding pending for the total or partial condemnation thereof;



     (xxiii) The Mortgage contains an enforceable provision for the acceleration of the
payment of the unpaid principal balance of the Loan in the event that the Mortgaged Property is
sold or transferred without the prior written consent of the mortgagee thereunder. The Mortgage and
related Promissory Note contain customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (a) in the case of a Mortgage designated
as a deed of trust, by trustee’s sale, and (b) otherwise by judicial foreclosure. The Mortgaged
Property has not been subject to any bankruptcy proceeding or foreclosure proceeding and the
Borrower has not filed for protection under applicable bankruptcy laws. No material litigation or
lawsuit relating to the Loan is pending. There is no homestead or other exemption available to the
Borrower which would interfere with the right to sell the Mortgaged Property at a trustee’s sale or
the right to foreclose the Mortgage. The Borrower has not notified the Loan Originator and the Loan
Originator has no knowledge of any relief requested or allowed to the Borrower under the
Servicemembers’ Relief Act of 1940;



     (xxiv) The Loan was underwritten in accordance with the Underwriting Guidelines in
effect at the time the Loan was originated; and the Promissory Note and Mortgage are on forms
acceptable to prudent mortgage lending institutions in the secondary market;



     (xxv) The Promissory Note is not and has not been secured by any collateral except
the lien of the corresponding Mortgage on the Mortgaged Property and the security interest of any
applicable security agreement or chattel mortgage referred to in (ix) above;



     (xxvi) The Loan File contains an appraisal of the related Mortgaged Property which
satisfied the standards of Fannie Mae or Freddie Mac and was made and signed, prior to the approval
of the Loan application, by a qualified appraiser, duly appointed by the Loan Originator, who had
no interest, direct or indirect in the Mortgaged Property or in any loan made on the security
thereof, whose compensation is not affected by the approval or disapproval of the Loan and who met
the minimum qualifications of Fannie Mae or Freddie Mac. Each appraisal of the Loan was made in
accordance with the relevant provisions of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989;



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     (xxvii) In the event the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated and currently so
serves and is named in the Mortgage, and no fees or expenses are or will become payable by the
Issuer to the trustee under the deed of trust, except in connection with a trustee’s sale after
default by the Borrower;



     (xxviii) No Loan contains provisions pursuant to which Monthly Payments are (a) paid
or partially paid with funds deposited in any separate account established by the Loan Originator,
the Borrower, or anyone on behalf of the Borrower, (b) paid by any source other than the Borrower
or (c) contains any other similar provisions which may constitute a “buydown” provision. The Loan
is not a graduated payment mortgage loan and the Loan does not have a shared appreciation or other
contingent interest feature;



     (xxix) The Borrower has executed a statement to the effect that the Borrower has
received all disclosure materials required by applicable law with respect to the making of fixed
rate mortgage loans in the case of fixed-rate Loans, and adjustable rate mortgage loans in the case
of ARMs and rescission materials with respect to Refinanced Loans, and such statement is and will
remain in the Loan File;



     (xxx) No Loan was made in connection with (a) the construction or rehabilitation
of a Mortgaged Property or (b) facilitating the trade-in or exchange of a Mortgaged Property;



     (xxxi) The Loan Originator has no knowledge of any circumstances or condition with
respect to the Mortgage, the Mortgaged Property, the Borrower or the Borrower’s credit standing
that can reasonably be expected to cause the Loan to be an unacceptable investment, cause the Loan
to become delinquent, or adversely affect the value of the Loan;



     (xxxii) Each Loan listed on the Loan Schedule as being subject to a Primary Mortgage
Insurance Policy is and will be subject to a Primary Mortgage Insurance Policy, issued by a
Qualified Insurer, which insures that portion of the Loan in excess of the portion of the Appraised
Value of the Mortgaged Property required by Fannie Mae. All provisions of such Primary Insurance
Policy have been and are being complied with, such policy is in full force and effect, and all
premiums due thereunder have been paid. Any Mortgage subject to any such Primary Insurance Policy
obligates the Borrower thereunder to maintain such insurance and to pay all premiums and charges in
connection therewith. The Loan Interest Rate for the Loan does not include any such insurance
premium;



     (xxxiii) The Mortgaged Property is lawfully occupied under applicable law; all
inspections, licenses and certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and occupancy of the same,
including but not limited to certificates of occupancy, have been made or obtained from the
appropriate authorities;



     (xxxiv) No error, omission, misrepresentation, negligence, fraud or similar
occurrence with respect to a Loan has taken place on the part of any person, including without
limitation the Borrower, any appraiser, any builder or developer, or any other party involved in
the origination of the Loan or in the application of any insurance in relation to such Loan;



     (xxxv) The Assignment of Mortgage is in recordable form and is acceptable for
recording under the laws of the jurisdiction in which the Mortgaged Property is located;



     (xxxvi) Any principal advances made to the Borrower prior to the Transfer Cut-off
Date have been consolidated with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest rate and single repayment term.
The lien



F-5









 







of the Mortgage securing the consolidated principal amount is expressly insured as having first or
second lien priority by a title insurance policy, an endorsement to the policy insuring the
mortgagee’s consolidated interest or by other title evidence acceptable to Fannie Mae and Freddie
Mac. The consolidated principal amount does not exceed the original principal amount of the Loan;




     (xxxvii) Except as set forth on the Loan Schedule, no Loan is a Balloon Loan;



     (xxxviii) If the residential dwelling on the Mortgaged Property is a condominium unit
or a unit in a planned unit development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the eligibility requirements of Fannie Mae
and Freddie Mac;



     (xxxix) Interest on each Loan is calculated on the basis of a 360-day year consisting
of twelve 30-day months;



     (xl) The Mortgaged Property is in material compliance with all applicable
environmental laws pertaining to environmental hazards including, without limitation, asbestos, and
neither the Loan Originator nor, to the Loan Orginator’s knowledge, the related Borrower has
received any notice of any violation or potential violation of such law;



     (xli) A Trust Receipt reflecting that no Fatal Exceptions exist with respect to
the related Custodial Loan File shall be certified by the Custodian on or before the 15th day
following the related Transfer;



     (xlii) The Loan constitutes a “qualified mortgage” within the meaning of Section
860G(a)(3) of the Code;



     (xliii) The Loan was not intentionally selected by the Loan Originator in a manner
intended to adversely affect the Noteholders or the Trust;



     (xliv) With respect to Second Lien Loans, either (a) no consent for the Loan is
required by the holder of the related first lien or (b) such consent has been obtained and is
contained in the Mortgage File;



     (xlv) No Loan is a “High Cost Home Loan” as defined in the Georgia Fair Lending
Act, as amended. No Loan secured by owner occupied real property or an owner occupied manufactured
home located in the State of Georgia was originated (or modified) on or after October 1, 2002
through and including March 6, 2003;



     (xlvi) The Loan has been acquired, serviced, collected and otherwise dealt with by
the Loan Originator and any affiliate of the Loan Originator in compliance with all applicable
federal, state and local laws and regulations, including, but not limited to, all applicable
predatory and abusive lending laws and the terms of the related Promissory Note and Mortgage. No
Loan is subject to any federal, state or local law or ordinance that would result in such Loan
being ineligible for inclusion in a rated securitization transaction under the criteria of any
rating agency as in effect as of the application date;



     (xlvii) Any and all requirements of any federal, state or local law including,
without limitation, usury, truth in lending, real estate settlement procedures, predatory and
abusive lending, consumer credit protection, equal credit opportunity, fair housing or disclosure
laws applicable to the



F-6









 







origination and servicing of mortgage loans of a type similar to the Loans have been complied with
in all material respects;




     (xlviii) No Loan is (a) subject to the provisions of the Homeownership and Equity
Protection Act of 1994 as amended (“HOEPA”), (b) a “high cost” mortgage loan, “covered” mortgage
loan or “predatory” mortgage loan or any similarly classified loan using different terminology, no
matter how defined under any federal, state or local law imposing heightened regulatory scrutiny or
assignee liability to holders of such mortgage loans, or (c) a High Cost Loan or Covered Loan, as
applicable (as such terms are defined in the current Standard & Poor’s LEVELS® Glossary Revised,
Appendix E);



     (xlix) No predatory, abusive, or deceptive lending practices, including but not
limited to, the extension of credit to a mortgagor without regard for the mortgagor’s ability to
repay the Loan and the extension of credit to a mortgagor which has no apparent benefit to the
mortgagor, were employed by the Loan Originator in connection with the origination of the Loan.
Except with respect to escrow deposits, each Points and Fees Loan is in compliance with the
anti-predatory lending eligibility for purchase requirements of the Fannie Mae selling guide;



     (l) Points, fees and charges related to each Loan (whether or not financed,
assessed, collected or to be collected in connection with the origination and servicing of each
Loan) were disclosed in writing to the mortgagor in accordance with applicable state and federal
law and regulation. Unless otherwise disclosed on the related Loan Schedule, no mortgagor was
charged “points and fees” (whether or not financed) in an amount greater than 5% of the principal
amount of the related Loan, such 5% limitation is calculated in accordance with Fannie Mae’s
anti-predatory lending requirements as set forth in the Fannie Mae selling guide;



     (li) Each Wet Funded Loan was funded under a Closing Protection Letter, to
the extent required by the Loan Originator’s on-line guidelines with respect to Closing Protection
Letters. The Loan Originator will provide a copy of such Closing Protection Letter to Noteholder
Agent upon request.



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EXHIBIT G




SERVICING ADDENDUM




     Section 4.01 Duties of the Servicer.



     The Servicer, as independent contract servicer, shall service and administer the Loans in
accordance with this Agreement and shall have full power and authority, acting alone, to do or
cause to be done any and all things in connection with such servicing and administration which the
Servicer may deem necessary or desirable and consistent with the terms of this Agreement.



     The duties of the Servicer shall include collecting and posting of all payments, responding to
inquiries of Borrowers or by federal, state or local government authorities with respect to the
Loans, investigating delinquencies, reporting tax information to Borrowers in accordance with its
customary practices and accounting for collections and furnishing monthly and annual statements to
the Indenture Trustee and the Noteholder Agent, with respect to distributions, making Servicing
Advances and Monthly Advances pursuant hereto. The Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. The Servicer shall cooperate with the
Indenture Trustee and furnish to the Indenture Trustee with reasonable promptness information in
its possession as may be necessary or appropriate to enable the Indenture Trustee to perform its
tax reporting duties hereunder, if any.



     The Servicer shall give prompt notice to the Indenture Trustee and the Noteholder Agent of any
Proceeding, of which the Servicer has actual knowledge, to (i) assert a claim against the Trust or
(ii) assert jurisdiction over the Trust.



     In the event of a Disposition or other removal of a Loan from the Trust Estate, the Servicer’s
obligations under this Agreement shall be terminated with respect to such Loan.



     The Servicer agrees that in the event that any Notes are outstanding after the applicable
Maturity Date, the Majority Noteholders may appoint a successor servicer in accordance with the
provisions of Section 9.02. The Majority Noteholders may, by written notice to the Servicer and the
Indenture Trustee, elect to have the Servicer continue its duties hereunder after such Maturity
Date.



     Consistent with the terms of this Agreement, the Servicer may waive, modify or vary any term
of any Loan or consent to the postponement of strict compliance with any such term or in any manner
grant indulgence to any Borrower if in the Servicer’s reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse to the Issuer or the
Noteholders; provided, however, that the Servicer shall not permit any modification with respect to
any Loan that would change the Loan Interest Rate, defer or forgive the payment thereof or of any
principal or interest payments, reduce the outstanding principal amount (except for actual payments
of principal), make additional advances of additional principal or extend the final maturity date
on such Loan. Without limiting the generality of the foregoing, the Servicer shall continue, and is
hereby authorized and empowered, to execute and deliver on behalf of itself, and the Issuer, all
instruments of satisfaction or cancellation, or of partial or full release, discharge and all other
comparable instruments, with respect to the Loans and with respect to the Mortgaged Property. If
reasonably required by the Servicer, the Issuer shall furnish the Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.



     The Servicer shall service and administer the Loans in accordance with Accepted Servicing
Practices.



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     Section 4.02 Collection of Loan Payments.



     Continuously from the date hereof until the principal and interest on all Loans are paid in
full, the Servicer shall proceed diligently to collect all payments due under each Loan when the
same shall become due and payable and shall, to the extent such procedures shall be consistent with
this Agreement and the terms and provisions of any related Primary Insurance Policy, follow such
collection procedures as it follows with respect to mortgage loans comparable to the Loans and held
for its own account. Further, the Servicer shall take special care in ascertaining and estimating
annual ground rents, taxes, assessments, water rates, fire and hazard insurance premiums, mortgage
insurance premiums, and all other charges that, as provided in the Mortgage, will become due and
payable to the end that the installments payable by the Borrowers will be sufficient to pay such
charges as and when they become due and payable.



     Section 4.03  Realization Upon Defaulted Loans.



     (a) The Servicer shall use its best efforts, consistent with the procedures that the
Servicer would use in servicing loans for its own account, to foreclose upon or otherwise
comparably convert the ownership of such Mortgaged Properties as come into and continue in default
and as to which no satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 4.01. The Servicer shall use its best efforts to realize upon Defaulted Loans
in such a manner as will maximize the receipt of principal and interest by the Issuer, taking into
account, among other things, the timing of foreclosure proceedings; provided, however, that the
Servicer shall not sell any Defaulted Loan unless it has been directed to do so by the Majority
Noteholder. The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage, the Servicer shall not be required to expend its own funds
toward the restoration of such property in excess of $2,000 unless it shall determine in its
discretion (i) that such restoration will increase the proceeds of liquidation of the related Loan
to the Issuer after reimbursement to itself for such expenses, and (ii) that such expenses will be
recoverable by the Servicer through Mortgage Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property. In the event that any payment due under any Loan is not paid when the
same becomes due and payable, or in the event the Borrower fails to perform any other covenant or
obligation under the Loan and such failure continues beyond any applicable grace period, the
Servicer shall take such action as it shall deem to be in the best interest of the Issuer and the
Noteholders. The Servicer shall notify the Issuer and the Noteholders in writing of the
commencement of foreclosure proceedings. In such connection, the Servicer shall be responsible for
all costs and expenses incurred by it in any such proceedings; provided, however, that it shall be
entitled to reimbursement thereof from the related Mortgaged Property.



     (b) Notwithstanding the foregoing provisions of this Section 4.03, with respect to
any Loan as to which the Servicer has received actual notice of, or has actual knowledge of, the
presence of any toxic or hazardous substance on the related Mortgaged Property the Servicer shall
not either (i) obtain title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action, with respect to, such
Mortgaged Property if, as a result of any such action, the Issuer would be considered to hold title
to, to be a mortgagee-in-possession of, or to be an owner or operator of such Mortgaged Property
within the meaning of the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a prudent report prepared by a Person who
regularly conducts environmental audits using customary industry standards, that:




(1) such Mortgaged Property is in compliance with applicable environmental
laws or, if not, that it would be in the best economic interest of the Issuer and the
Noteholders to take such actions as are necessary to bring the Mortgaged Property into
compliance therewith; and



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(2) there are no circumstances present at such Mortgaged Property relating to
the use, management or disposal of any hazardous substances, hazardous materials,
hazardous wastes, or petroleum-based materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required under any federal,
state or local law or regulation, or that if any such materials are present for which
such action could be required, that it would be in the best economic interest of the
Issuer and the Noteholders to take such actions with respect to the affected Mortgaged
Property.



     The cost of the environmental audit report contemplated by this Section 4.03 shall be advanced
by the Servicer, subject to the Servicer’s right to be reimbursed therefor from the Collection
Account as provided in Section 5.01(c).



     If the Servicer determines, as described above, that it is in the best economic interest of
the Issuer and the Noteholders to take such actions as are necessary to bring any such Mortgaged
Property into compliance with applicable environmental laws, or to take such action with respect to
the containment, clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then the Servicer shall
take such action as it deems to be in the best economic interest of the Issuer and the Noteholders.
The cost of any such compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer’s right to be reimbursed therefor from the Collection Account as
provided in Section 5.01(c).



     (c) The Servicer shall determine, with respect to each Defaulted Loan, when it has
recovered, whether through trustee’s sale, foreclosure sale or otherwise, all amounts it expects to
recover from or on account of such Defaulted Loan, whereupon such Loan shall become a “Liquidated
Loan” and shall promptly deliver to the Noteholder Agent a related liquidation report with respect
to such Liquidated Loan.



     Section 4.04 Establishment of Escrow Accounts; Deposits in Escrow Accounts.



     The Servicer shall segregate and hold all funds collected and received pursuant to each Loan
which constitute Escrow Payments separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Escrow Accounts, in accordance with the related
Mortgage and applicable law.



     The Servicer shall deposit in the Escrow Account or Accounts within two (2) Business Days
after receipt, and retain therein, (i) all Escrow Payments collected on account of the Loans, for
the purpose of effecting timely payment of any such items as required under the terms of this
Agreement, and (ii) all Mortgage Insurance Proceeds which are to be applied to the restoration or
repair of any Mortgaged Property. The Servicer shall make withdrawals therefrom only to effect such
payments as are required under this Agreement, and for such other purposes as shall be as set forth
or in accordance with Section 4.06. The Servicer shall be entitled to retain any interest paid on
funds deposited in the Escrow Account by the depository institution other than interest on escrowed
funds required by law to be paid to the Borrower and, to the extent required by law, the Servicer
shall pay interest on escrowed funds to the Borrower notwithstanding that the Escrow Account is
non-interest bearing or that interest paid thereon is insufficient for such purposes.



     Section 4.05  Permitted Withdrawals From Escrow Account.



     Withdrawals from the Escrow Account may be made by the Servicer (i) to effect timely payments
of ground rents, taxes, assessments, water rates, hazard insurance premiums, Primary Insurance
Policy premiums, if applicable, and comparable items, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer with respect to a related Loan but only from amounts
received on the related Loan



G-3




 









 







which represent late payments or collections of Escrow Payments thereunder, (iii) to refund to the
Borrower any funds as may be determined to be overages, (iv) for transfer to the Collection Account
in accordance with the terms of this Agreement, (v) for application to restoration or repair of the
Mortgaged Property, (vi) to pay to the Servicer, or to the Borrower to the extent required by law,
any interest paid on the funds deposited in the Escrow Account, or (vii) to clear and terminate the
Escrow Account on the termination of this Agreement.




     Section 4.06 Payment of Taxes, Insurance and Other
Charges; Maintenance of Primary Insurance
Policies; Collections Thereunder.



     With respect to each Loan, the Servicer shall maintain accurate records reflecting the status
of ground rents, taxes, assessments, water rates and other charges which are or may become a lien
upon the Mortgaged Property and the status of Primary Insurance Policy premiums and fire and hazard
insurance coverage and shall obtain, from time to time, all bills for the payment of such charges,
including insurance renewal premiums and shall effect payment thereof prior to the applicable
penalty or termination date and at a time appropriate for securing maximum discounts allowable,
employing for such purpose deposits of the Borrower in the Escrow Account which shall have been
estimated and accumulated by the Servicer in amounts sufficient for such purposes, as allowed under
the terms of the Mortgage and applicable law. To the extent that the Mortgage does not provide for
Escrow Payments, the Servicer shall determine that any such insurance premium payments are made by
the Borrower at the time they first become due and any such tax payments are made in time to avoid
loss of the Mortgaged Property in a tax sale. The Servicer assumes full responsibility for the
timely payment of all such bills and shall effect payments of all such bills prior to the
termination of any such insurance coverage or loss of any such Mortgaged Property in a tax sale
irrespective of the Borrower’s faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such payments.



     The Servicer shall maintain in full force and effect, a Primary Insurance Policy, issued by a
Qualified Insurer, with respect to each Loan for which such coverage is required. Such coverage
shall be maintained until the Loan-to-Value Ratio of the related Loan is reduced to that amount for
which Fannie Mae no longer requires such insurance to be maintained. The Servicer will not cancel
or refuse to renew any Primary Insurance Policy, if any, in effect on the Closing Date that is
required to be kept in force under this Agreement unless a replacement Primary Insurance Policy, if
any, for such canceled or non-renewed policy is obtained from and maintained with a Qualified
Insurer. The Servicer shall not take any action which would result in non-coverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of the Servicer, would
have been covered thereunder. In connection with any assumption or substitution agreement entered
into or to be entered into pursuant to Section 4.12, the Servicer shall promptly notify the insurer
under the related Primary Insurance Policy, if any, of such assumption or substitution of liability
in accordance with the terms of such policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under the Primary Insurance Policy, if
any. If such Primary Insurance Policy is terminated as a result of such assumption or substitution
of liability, the Servicer shall obtain a replacement Primary Insurance Policy as provided above.



     In connection with its activities as servicer, the Servicer agrees to prepare and present, on
behalf of itself, the Issuer and the Noteholders, claims to the insurer under any Primary Insurance
Policy in a timely fashion in accordance with the terms of such policies and, in this regard, to
take such action as shall be necessary to permit recovery under any Primary Insurance Policy
respecting a defaulted Loan. Pursuant to Section 5.01, any amounts collected by the Servicer under
any Primary Insurance Policy shall be deposited in the Collection Account.



G-4




 









 








     Section 4.07 Transfer of Accounts.



     The Servicer may transfer the Collection Account or the Escrow Account to a different
depository institution from time to time. Such transfer shall be made only upon obtaining the
consent of the Noteholder Agent, which consent shall not be unreasonably withheld or delayed. In
any case, the Collection Account and the Escrow Account shall be an Eligible Account.



     Section 4.08  Maintenance of Hazard Insurance.




     The Servicer shall cause to be maintained for each Loan fire and hazard insurance with
extended coverage as is customary in the area where the Mortgaged Property is located in an amount
which is at least equal to the lesser of (i) 100% of the maximum insurable value of the
improvements securing the Loan or (ii) the outstanding principal balance of the Loan, in each
case in an amount not less than such amount as is necessary to prevent the Borrower and/or the
Issuer from becoming a co- insurer. If the Mortgaged Property is in an area identified on a Flood
Hazard Boundary Map or Flood Insurance Rate Map issued by the Flood Emergency Management Agency as
having special flood hazards and such flood insurance has been made available, the Servicer will
cause to be maintained a flood insurance policy meeting the requirements of the current guidelines
of the Federal Insurance Administration with a generally acceptable insurance carrier, in an amount
representing coverage not less than the lesser of (i) the outstanding principal balance of the Loan
or (ii) the maximum amount of insurance which is available under the National Flood Insurance Act
of 1968 or the Flood Disaster Protection Act of 1973, as amended. The Servicer also shall maintain
on any Foreclosure Property, fire and hazard insurance with extended coverage in an amount which is
at least equal to the lesser of (i) 100% of the maximum insurable value of the improvements which
are a part of such property and (ii) the outstanding principal balance of the related Loan at the
time it became a Foreclosure Property, liability insurance and, to the extent required and
available under the National Flood Insurance Act of 1968 or the Flood Disaster Protection Act of
1973, as amended, flood insurance in an amount as provided above. Pursuant to Section 5.01, any
amounts collected by the Servicer under any such policies other than amounts to be deposited in the
Escrow Account and applied to the restoration or repair of the Mortgaged Property or Foreclosure
Property, or released to the Borrower in accordance with the Servicer’s normal servicing
procedures, shall be deposited in the Collection Account, subject to withdrawal pursuant to Section
5.01. Any cost incurred by the Servicer in maintaining any such insurance shall not, for the
purpose of calculating distributions to the Issuer or the Noteholders, be added to the unpaid
principal balance of the related Loan, notwithstanding that the terms of such Loan so permit. It is
understood and agreed that no earthquake or other additional insurance need be required by the
Servicer or the Borrower or maintained on property acquired in respect of the Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. All such policies shall be endorsed with standard mortgagee
clauses with loss payable to the Servicer, or upon the direction of the Noteholder Agent to the
Indenture Trustee, and shall provide for at least thirty days prior written notice of any
cancellation, reduction in the amount of, or material change in, coverage to the Servicer. The
Servicer shall not interfere with the Borrower’s freedom of choice in selecting either his
insurance carrier or agent, provided, however, that the Servicer shall not accept any such
insurance policies from insurance companies unless such companies currently reflect a General
Policy Rating of B:III or better in Best’s Key Rating Guide and are licensed to do business in the
state wherein the property subject to the policy is located.



     Section 4.09 Maintenance of Mortgage Impairment Insurance Policy.



     In the event that the Servicer shall obtain and maintain a mortgage impairment or blanket
policy issued by an issuer that has a Best rating of B:III insuring against hazard losses on all of
Mortgaged Properties securing the Loans, then, to the extent such policy provides coverage in an
amount equal to the



G-5




 









 







amount required pursuant to Section 4.08 and otherwise complies with all other requirements of
Section 4.08, the Servicer shall conclusively be deemed to have satisfied its obligations as set
forth in Section 4.08, it being understood and agreed that such policy may contain a deductible
clause, in which case the Servicer shall, in the event that there shall not have been maintained on
the related Mortgaged Property or Foreclosure Property a policy complying with Section 4.08, and
there shall have been one or more losses which would have been covered by such policy, deposit in
the Collection Account the amount not otherwise payable under the blanket policy because of such
deductible clause. In connection with its activities as servicer of the Loans, the Servicer agrees
to prepare and present, on behalf of the Issuer and the Noteholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy. Upon request of the
Noteholder Agent, the Servicer shall cause to be delivered to the Noteholders a certified true copy
of such policy and a statement from the insurer thereunder that such policy shall in no event be
terminated or materially modified without thirty days prior written notice to the Issuer and the
Noteholders.




     Section 4.10  Fidelity Bond, Errors and Omissions Insurance.



     The Servicer shall maintain, at its own expense, a blanket fidelity bond and an errors and
omissions insurance policy, with broad coverage with financially responsible companies on all
officers, employees or other persons acting in any capacity with regard to the Loans to handle
funds, money, documents and papers relating to the Loans. The fidelity bond and errors and
omissions insurance shall be in the form of the Mortgage Banker’s Blanket Bond and shall protect
and insure the Servicer against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons. Such fidelity bond shall also protect and insure the
Servicer against losses in
connection with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Loan without having obtained payment in full of the
indebtedness secured thereby. No provision of this Section 4.10 requiring the fidelity bond and
errors and omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by Fannie Mae in the Fannie
Mae Servicing Guide or by Freddie Mac in the Freddie Mac Sellers’ and Servicers’ Guide. Upon
request of the Noteholder Agent, the Servicer shall cause to be delivered to the Noteholders a
certified true copy of the fidelity bond and insurance policy and a statement from the surety and
the insurer that such fidelity bond or insurance policy shall in no event be terminated or
materially modified without thirty days’ prior written notice to the Noteholder Agent.



     Section 4.11 Title, Management and Disposition of Foreclosure Property.



     In the event that title to the Mortgaged Property is acquired in foreclosure or by deed in
lieu of foreclosure, the deed or certificate of sale shall be taken in the name of the person
designated by the Issuer, or in the event such person is not authorized or permitted to hold title
to real property in the state where the Foreclosure Property is located, or would be adversely
affected under the “doing business” or tax laws of such state by so holding title, the deed or
certificate of sale shall be taken in the name of such Person or Persons as shall be consistent
with an opinion of counsel obtained by the Servicer from an attorney duly licensed to practice law
in the state where the Foreclosure Property is located. Any Person or Persons holding such title
other than the Issuer shall acknowledge in writing that such title is being held as nominee for the
benefit of the Issuer and the Noteholders.



     The Servicer shall either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate each Foreclosure Property (and may temporarily rent the same) in the
same manner that it manages, conserves, protects and operates other foreclosed property for its own
account, and in the same manner that similar property in the same locality as the Foreclosure
Property is managed. If a REMIC election is or is to be made with respect to the arrangement under
which the Mortgage Loans and



G-6




 









 







any Foreclosure Property are held, the Servicer shall manage, conserve, protect and operate each
Foreclosure Property in a manner which does not cause such Foreclosure Property to fail to qualify
as “foreclosure property” within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by such REMIC of any “income from non-permitted assets” within the meaning of Section
860F(a)(2)(B) of the Code or any “net income from foreclosure property” within the meaning of
Section 860G(c)(2) of the Code. The Servicer shall cause each Foreclosure Property to be inspected
promptly upon the acquisition of title thereto and shall cause each Foreclosure Property to be
inspected at least annually thereafter. The Servicer shall make or cause to be made a written
report of each such inspection. Such reports shall be retained in the Loan File and copies thereof
shall be forwarded by the Servicer to the Issuer. The Servicer shall use its best efforts to
dispose of the Foreclosure Property as soon as possible. The Servicer shall report monthly to the
Issuer and the Noteholders as to the progress being made in selling such Foreclosure Property, and
if, with the written consent of the Noteholder Agent, a purchase money mortgage is taken in
connection with such sale, such purchase money mortgage shall name the Servicer as mortgagee, and a
separate servicing agreement between the Servicer and the Issuer shall be entered into with respect
to such purchase money mortgage. Notwithstanding the foregoing, if a REMIC election is made with
respect to the arrangement under which the Loans and the Foreclosure Property are held, such
Foreclosure Property shall be disposed of within three years after the end of the tax year in which
such property becomes Foreclosure Property or such other period as may be permitted under Section
860G(a)(8) of the Code.




     The final sale by the Servicer of any Foreclosure Property (“REO Disposition”) shall be
carried out by the Servicer at such price and upon such terms and conditions as the Servicer deems
to be in the best interest of the Issuer and the Noteholders only with the prior written consent of
the Noteholder Agent. If as of the date title to any Foreclosure Property was acquired by the
Issuer there were outstanding unreimbursed Servicing Advances with respect to the Foreclosure
Property, the Servicer, upon an REO Disposition of such Foreclosure Property, shall be entitled to
reimbursement for any related unreimbursed Servicing Advances from Liquidation Proceeds received in
connection with such REO Disposition. The Net Liquidation Proceeds from the REO Disposition shall
be deposited in the Collection Account promptly following receipt thereof for distribution on the
succeeding Payment Date in accordance with Section 5.01.



     Section 4.12 Assumption Agreements.



     The Servicer shall, to the extent it has knowledge of any conveyance or prospective conveyance
by any Borrower of the Mortgaged Property (whether by absolute conveyance or by contract of sale,
and whether or not the Borrower remains or is to remain liable under the Promissory Note and/or the
Mortgage), exercise its rights to accelerate the maturity of such Loan under any “due-on-sale”
clause applicable thereto; provided, however, that the Servicer shall not exercise any such rights
if prohibited by law from doing so or if the exercise of such rights would impair or threaten to
impair any recovery under the related Primary Insurance Policy, if any, and shall not be required
to exercise such rights if the transferee of the Mortgaged Property would qualify for an assumption
or substitution under the Servicer’s underwriting guidelines. If the Servicer reasonably believes
it is unable under applicable law to enforce such “due-on-sale” clause, the Servicer shall enter
into an assumption agreement with the person to whom the Mortgaged Property has been conveyed or is
proposed to be conveyed, pursuant to which such person becomes liable under the Promissory Note
and, to the extent permitted by applicable state law, the Borrower remains liable thereon. Where an
assumption is allowed pursuant to this Section 4.12, the Servicer, with the prior written consent
of the insurer under the Primary Insurance Policy, if any, is authorized to enter into a
substitution of liability agreement with the person to whom the Mortgaged Property has been
conveyed or is proposed to be conveyed pursuant to which the original Borrower is released from
liability and such Person is substituted as Borrower and becomes liable under the related



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Promissory Note. Any such substitution of liability agreement shall be in lieu of an assumption
agreement.




     In connection with any such assumption or substitution of liability, the Servicer shall follow
the underwriting practices and procedures of prudent mortgage lenders in the state in which the
related Mortgaged Property is located. With respect to an assumption or substitution of liability,
Loan Interest Rate, the amount of the Monthly Payment, and the final maturity date of such
Promissory Note may not be changed. The Servicer shall notify the Issuer and the Noteholders that
any such substitution of liability or assumption agreement has been completed and shall forward to
the Custodian the original of any such substitution of liability or assumption agreement, which
document shall be added to the related Loan File and shall, for all purposes, be considered a part
of such Loan File to the same extent as all other documents and instruments constituting a part
thereof. Any fee collected by the Servicer for entering into an assumption or substitution of
liability agreement shall be deemed additional Servicing Compensation.



     Notwithstanding the foregoing paragraphs of this Section or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any other violation of its
obligations hereunder by reason of any assumption of a Loan by operation of law or any assumption
which the Servicer may be restricted by law from preventing, for any reason whatsoever. For
purposes of this Section 4.12, the term “assumption” is deemed to also include a sale of the
Mortgaged Property subject to the Mortgage that is not accompanied by an assumption or substitution
of liability agreement.



     Section 4.13 Satisfaction of Mortgages and Release of Loan Files.




     Upon the payment in full of any Loan, or the receipt by the Servicer of a notification that
payment in full will be escrowed in a manner customary for such purposes, the Servicer will
immediately notify the Issuer and the Noteholder Agent by a certification of a servicing officer of
the Servicer (a “Servicing Officer”), which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.01 have been or will be so deposited,
and shall request execution of any document necessary to satisfy the Loan and delivery to it of the
portion of the Loan File held by Custodian. Upon receipt of a Request for Release and Receipt (as
defined in the Custodial Agreement), the Custodian shall promptly release the related mortgage
documents to the Servicer in accordance with the Custodial Agreement and the Servicer shall prepare
and process any satisfaction or release. No expense incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Collection Account or the Issuer.



     In the event the Servicer satisfies or releases a Mortgage without having obtained payment in
full of the indebtedness secured by the Mortgage or should it otherwise prejudice any right the
Issuer or the Noteholders may have under the mortgage instruments, the Servicer, upon
written demand, shall remit to the Issuer the then outstanding principal balance of the
related Loan by deposit thereof in the Collection Account. The Servicer shall maintain the fidelity
bond insuring the Servicer against any loss it may sustain with respect to any Loan not satisfied
in accordance with the procedures set forth herein.



     From time to time and as appropriate for the servicing or foreclosure of the Loan, including
for this purpose collection under any Primary Insurance Policy, the Custodian shall, upon request
of the Servicer and delivery to the Custodian of a servicing receipt signed by a Servicing Officer,
release the requested portion of the Loan File held by the Custodian to the Servicer. Such
servicing receipt shall obligate the Servicer to return the related Mortgage documents to the
Custodian when the need therefor by the Servicer no longer exists, unless the Loan has been
liquidated and the Liquidation Proceeds relating to the Loan have been deposited in the Collection
Account or the Loan File or such document has been delivered to an attorney, or to a public trustee
or other public official as required by law, for



G-8




 









 







purposes of initiating or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non judicially, and the Servicer has delivered to the
Custodian a certificate of a Servicing Officer certifying as to the name and address of the Person
to which such Loan File or such document was delivered and the purpose or purposes of such
delivery. Upon receipt of a certificate of a Servicing Officer stating that such Loan was
liquidated, the servicing receipt shall be released by the Custodian to the Servicer.




     Section 4.14 Advances by the Servicer.



     (a) Not later than the close of business on the Business Day preceding each
Remittance Date, the Servicer shall deposit in the Collection Account an amount equal to all
payments not previously advanced by the Servicer, whether or not deferred pursuant to Section 4.01,
of principal (due after the Transfer Cut-off Date) and interest not allocable to the period prior
to the Transfer Cut-off Date, at the Loan Interest Rate net of the Servicing Fee, which were due on
a Loan and delinquent at the close of business on the related Remittance Date; provided, however,
that the Servicer shall not be required to deposit such amount if the amount on deposit in the
Collection Account on that Remittance Date (exclusive of any Monthly Advance required to be
effected pursuant to this Section 4.14) is at least sufficient to fund in full the items described
in Sections 5.01(c)(3)(i) through 5.01(c)(3)(vi) hereof on the related Payment Date, and, if the
amount on deposit in the Collection Account is less than the sum of such items, the Servicer shall
only be required to deposit an amount equal to the shortfall. The obligation of the Servicer to
make such Monthly Advances is mandatory, notwithstanding any other provision of this Agreement,
and, with respect to any Loan or Foreclosure Property, shall continue until a Final Recovery
Determination in connection therewith; provided that, notwithstanding anything herein to the
contrary, no Monthly Advance shall be required to be made hereunder by the Servicer if such Monthly
Advance would, if made, constitute a Nonrecoverable Monthly Advance. The determination by the
Servicer that it has made a Nonrecoverable Monthly Advance or that any proposed Monthly Advance, if
made, would constitute a Nonrecoverable Monthly Advance, shall be evidenced by an Officers’
Certificate delivered to the Issuer and the Indenture Trustee.



     (b) The Servicer will pay all out-of-pocket costs and expenses incurred in the
performance of its servicing obligations including, but not limited to, the cost of (i)
Preservation Expenses, (ii) any enforcement or judicial proceedings, including foreclosures, (iii)
inspection fees and expenses and (iv) the management and liquidation of Foreclosure Property but is
only required to pay such costs and expenses to the extent the Servicer reasonably believes such
costs and expenses will increase Net Liquidation Proceeds on the related Loan. Each such amount so
paid will constitute a “Servicing Advance.” The Servicer may recover Servicing Advances (x) from
the Borrowers to the extent permitted by the Loans, from Liquidation Proceeds realized upon the
liquidation of the related Loan and (y) as provided in Sections 5.01(c)(1)(ii) or 5.01(c)(3)(i)
hereof. In no case may the Servicer recover Servicing Advances from principal and interest payments
on any Loan or from any amounts relating to any other Loan except as provided pursuant to Sections
5.01(c)(1)(ii) or 5.01(c)(3)(i) hereof.



     Section 4.15 Servicing Compensation.



     As compensation for its services hereunder, the Servicer shall, subject to Section 5.01(c), be
entitled to withdraw from the Collection Account or to retain from interest payments on the Loans
the amounts provided for as the Servicer’s Servicing Fee. Additional servicing compensation in the
form of assumption fees, non-sufficient fund fees, modification fees, substitution fees and other
ancillary income, as
provided in Section 4.12, and late payment charges or otherwise shall be retained by the
Servicer to the extent not required to be deposited in the Collection Account. The Servicer shall
be required to pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as specifically provided for.



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     Section 4.16  Notification of Adjustments.



     On each Adjustment Date, the Servicer shall make interest rate adjustments for each ARM in
compliance with the requirements of the related Mortgage and Promissory Note. The Servicer shall
execute and deliver the notices required by each Mortgage and Promissory Note regarding interest
rate adjustments. The Servicer also shall provide timely notification to the Noteholders of all
applicable data and information regarding such interest rate adjustments and the Servicer’s methods
of implementing such interest rate adjustments. Upon the discovery by the Servicer or the any
Noteholder that the Servicer has failed to adjust a Loan Interest Rate or a Monthly Payment
pursuant to the terms of the related Promissory Note and Mortgage, the Servicer shall immediately
deposit in the Collection Account from its own funds the amount of any interest loss caused thereby
without reimbursement therefor.



     Section 4.17 Statement as to Compliance.



     The Servicer will deliver to the Issuer, the Indenture Trustee and the Noteholder Agent not
later than 90 days following the end of each fiscal year of the Servicer, which as of the Closing
Date ends on April 30, an Officers’ Certificate stating, as to each signatory thereof, that (i) a
review of the activities of the Servicer during the preceding year and of performance under this
Agreement has been made under such officers’ supervision and (ii) to the best of such officers’
knowledge, based on such review, the Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature and status thereof.



     Section 4.18 Independent Public Accountants’ Servicing Report.



     Not later than 90 days following the end of each fiscal year of the Servicer, the Servicer at
its expense shall cause a firm of independent public accountants (which may also render other
services to the Servicer) which is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Issuer, the Indenture Trustee and the Noteholder Agent to
the effect that such firm has examined certain documents and records relating to the servicing of
the Loans under this Agreement and that, on the basis of such examination conducted substantially
in compliance with the Uniform Single Attestation Program for Mortgage Bankers, such firm confirms
that such servicing has been conducted in compliance with such pooling and servicing agreements
except for such significant exceptions or errors in records that, in the opinion of such firm, the
Uniform Single Attestation Program for Mortgage Bankers requires it to report.



     Section 4.19 Access to Certain Documentation 



     The Servicer shall provide to the Office of Thrift Supervision, the FDIC and any other federal
or state banking or insurance regulatory authority that may exercise authority over the Issuer or
any Noteholder access to the documentation regarding the Loans serviced by the Servicer required by
applicable laws and regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the Servicer. In addition,
access to the documentation will be provided to the Issuer or any Noteholder and any Person
identified to the Servicer by the Issuer or any Noteholder without charge, upon reasonable request
during normal business hours at the offices of the Servicer.



     Section 4.20 Reports and Returns to be Filed by the Servicer.



     The Servicer shall file information reports with respect to the receipt of mortgage interest
received in a trade or business, reports of foreclosures and abandonments of any Mortgaged Property
and



G-10




 









 







information returns relating to cancellation of indebtedness income with respect to any Mortgaged
Property as required by Sections 6050H, 6050J and 6050P of the Code. Such reports shall be in form
and substance sufficient to meet the reporting requirements imposed by such Sections 6050H, 6050J
and 6050P of the Code.




     Section 4.21 Compliance with REMIC Provisions.



     If a REMIC election has been made with respect to the arrangement under which the Loans and
Foreclosure Property are held, the Servicer shall not take any action, cause the REMIC to take any
action or fail to take (or fail to cause to be taken) any action that, under the REMIC Provisions,
if taken or not taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC or
(ii) result in the imposition of a tax upon the REMIC (including but not limited to the tax on
“prohibited transactions” as defined in Section 860F(a)(2) of the Code and the tax on
“contributions” to a REMIC set forth in Section 860G(d) of the Code) unless the Servicer has
received an Opinion of Counsel (at the expense of the party seeking to take such action) to the
effect that the contemplated action will not endanger such REMIC status or result in the imposition
of any such tax.



     Section 4.22 Subservicing Agreements Between Servicer and Subservicers.



     The Servicer may enter into Subservicing Agreements for any servicing and administration of
Loans with any institution which is in compliance with the laws of each state necessary to enable
it to perform its obligations under such Subservicing Agreement and is an Eligible Servicer. The
Servicer shall give notice to the Indenture Trustee and the Noteholder Agent of the appointment of
any Subservicer which is not an Affiliate of the Servicer and shall furnish to the Indenture
Trustee and the Noteholder Agent a copy of the Subservicing Agreement (along with any modifications
thereto) between the Servicer and any Subservicer that is not an Affiliate of the Servicer. For
purposes of this Agreement, the Servicer shall be deemed to have received payments on Loans when
any Subservicer has received such payments. Any such Subservicing Agreement shall be consistent
with and not violate the provisions of this Agreement.



     Section 4.23 Successor Subservicers.



     Upon notice to the Indenture Trustee and the Noteholder Agent (except if the Subservicer is an
Affiliate of the Servicer), the Servicer shall be entitled to terminate any Subservicing Agreement
in accordance with the terms and conditions of such Subservicing Agreement and to either itself
directly service the related Loans or enter into a Subservicing Agreement with a successor
Subservicer which qualifies under Section 4.22.



     Section 4.24 Liability of Servicer.



     The Servicer shall not be relieved of its obligations under this Agreement notwithstanding any
Subservicing Agreement or any of the provisions of this Agreement relating to agreements or
arrangements between the Servicer and a Subservicer or otherwise, and the Servicer shall be
obligated to the same extent and under the same terms and conditions as if it alone were servicing
and administering the Loans. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer and nothing contained in such
Subservicing Agreement shall be deemed to limit or modify this Agreement. The Trust shall not
indemnify the Servicer for any losses due to the Servicer’s negligence.




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     Section 4.25 No Contractual Relationship Between Subservicer and Indenture Trustee
or the Securityholders.





     Any Subservicing Agreement and any other transactions or services relating to the Loans
involving a Subservicer shall be deemed to be between the Subservicer and the Servicer alone and no
party hereto nor the Securityholders shall be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Subservicer except as set forth in
Section 4.26.



     Section 4.26 Assumption or Termination of Subservicing Agreement by Successor
Servicer.



     In connection with the assumption of the responsibilities, duties and liabilities and of the
authority, power and rights of the Servicer hereunder by a successor Servicer pursuant to Section
9.02, it is understood and agreed that the Servicer’s rights and obligations under any Subservicing
Agreement then in force between the servicer and a Subservicer may be assumed or terminated by the
successor Servicer at its option without the payment of any fee (notwithstanding any contrary
provision in any Subservicing Agreement).



     The Servicer shall, upon request of the successor Servicer, but at the expense of the
Servicer, deliver to the assuming party documents and records relating to each Subservicing
Agreement and an accounting of amounts collected and held by it and otherwise use its best
reasonable efforts to effect the orderly and efficient transfer of the Subservicing Agreements to
the assuming party, without the payment of any fee by the successor Servicer, notwithstanding any
contrary provision in any Subservicing Agreement.



     Section 4.27 No Predatory Practices 



     The Servicer shall not engage in any practices or activity, with respect to any of the Loans,
that is predatory, abusive, deceptive or otherwise wrongful under an applicable statute, regulation
or ordinance or that is otherwise actionable.



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EXHIBIT H




CAPITAL ADEQUACY TEST



*To calculate the Total Required Capital for each of the Loan Originator and the Servicer, for each
line item asset below, multiply the HRB% set forth opposite such asset by the applicable Balance
Sheet Amount (set forth as a line item for such asset on the most recent consolidated balance sheet
for the Loan Originator and the Servicer) to determine Required Capital, and the sum of all
Required Capital results shall equal the Total Required Capital (HRB% x Balance Sheet Amount =
Required Capital).




	 	 	 	 	 	 	 	 	 
	Asset	 	HRB%	 	Balance Sheet Amount	 	Required Capital
	Unrestricted Cash and Equivalents

	 	 	0	%	 	 	 	 
	Restricted Cash

	 	 	0	%	 	 	 	 
	Loans Held for Sale

	 	 	9	%	 	 	 	 
	Servicing Advances

	 	 	10	%	 	 	 	 
	Beneficial Interests in trusts

	 	 	10	%	 	 	 	 
	Subprime Mortgage NIM Residual Interest

	 	 	60	%	 	 	 	 
	Real Estate Held for Sale

	 	 	10	%	 	 	 	 
	Furniture and Equipment

	 	 	0	%	 	 	 	 
	Mortgage Servicing Rights

	 	 	25	%	 	 	 	 
	Prepaid Expenses and Other Assets

	 	 	10	%	 	 	 	 
	Accrued interest receivable

	 	 	10	%	 	 	 	 
	Receivable from H&R Block

	 	 	0	%	 	 	 	 
	Intangibles and goodwill

	 	 	100	%	 	 	 	 
	Deferred Tax Assets

	 	 	10	%	 	 	 	 
	Derivative Assets

	 	 	10	%	 	 	 	 
	Total Required Capital
	 	 	 	 	 	 	 	 






H-1




 









 








EXHIBIT I




QUARTERLY COMPLIANCE CERTIFICATE




     I,                                         ,                                          of [OPTION ONE MORTGAGE CORPORATION (the
“Loan Originator”)] [OPTION ONE MORTGAGE CORPORATION (the “Servicer”)], in
accordance with that certain Sale and Servicing Agreement (“Sale and Servicing Agreement”),
dated as of December 30, 2005 by and among Option One Loan Warehouse Corporation, as the Depositor,
Option One Owner Trust 2005-9, as the Issuer, Option One Mortgage Corporation, as the Servicer and
the Loan Originator and Wells Fargo Bank, N.A., as the Indenture Trustee on behalf of the
Noteholders, do hereby certify that:




	 	i.	 	Each of the Loan Originator, Depositor and Servicer
is in compliance with all provisions and terms of
the Sale and Servicing Agreement and all other Loan
Documents to which each is a party;
	 
	 	ii.	 	[The Loan Originator] [The Servicer], at all times
during the preceding calendar quarter, has
maintained a ratio of Tangible Net Worth to Total
Required Capital (calculated in accordance with
Exhibit H to the Sale and Servicing Agreement) of
greater than or equal to 1:1;
	 
	 	iii.	 	[The Loan Originator] [The Servicer], at all times
during the preceding calendar quarter, has
maintained a maximum non-warehouse leverage ratio
(calculated pursuant to Section 7.02(c) of the Sale
and Servicing Agreement) of less than or equal to
1:2;
	 
	 	iv.	 	[The Loan Originator] [The Servicer], at all times
during the preceding calendar quarter, has
maintained a “minimum liquidity facility” (as
defined in Section 7.02(d) of the Sale and Servicing
Agreement) of not less than $150 million.
	 
	 	v.	 	[The Loan Originator] [The Servicer] has not
permitted “Net Income” (defined and determined in
accordance with GAAP), for the current quarter,
together with the preceding, consecutive three
fiscal quarters, to be less than $1.





     Capitalized terms used but not defined herein shall have the meanings assigned thereto in the
Sale and Servicing Agreement.



     IN WITNESS WHEREOF, I have signed this certificate.



Date:                , 20__




	 	 	 	 	 	 	 
	 	 	OPTION ONE MORTGAGE CORPORATION,
 as [Loan Originator] [Servicer]	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 






[SEAL]



I,                                        ,                                          of the [Loan Originator] [Servicer], do hereby
certify that                                          is the duly elected or appointed, qualified and acting
                                        of the [Loan Originator] [Servicer], and the signature set forth above is the
genuine signature of such officer on the date hereof.




I-1