exv10w12













 




    Exhibit
    10.12



 




    Freddie
    Mac



 




    PC MASTER
    TRUST AGREEMENT



 



    THIS PC MASTER TRUST AGREEMENT is entered into as of
    September 25, 2009, by and among Freddie Mac in its corporate
    capacity as Depositor, Administrator and Guarantor, Freddie Mac
    in its capacity as Trustee, and the Holders of the PCs offered
    from time to time pursuant to Freddie Mac’s Offering
    Circular referred to herein.



 




    WHEREAS:



 



    (a) Freddie Mac is a corporation duly organized and
    existing under and by virtue of the Freddie Mac Act and has full
    corporate power and authority to enter into this Agreement and
    to undertake the obligations undertaken by it herein; and



 



    (b) Freddie Mac may from time to time (i) purchase
    Mortgages, in accordance with the applicable provisions of the
    Freddie Mac Act, (ii) as Depositor, transfer and deposit
    such Mortgages into various trust funds that are established
    pursuant to this Agreement and that are referred to herein as
    “PC Pools,” (iii) as Trustee, create and issue
    hereunder, on behalf of the related PC Pool, PCs representing
    undivided beneficial ownership interests in the assets of that
    PC Pool and otherwise act as trustee for each such PC Pool,
    (iv) as Guarantor, guarantee the payment of interest and
    principal for the benefit of the Holders of such PCs and
    (v) as Administrator, administer the affairs of each such
    PC Pool.



 



    NOW, THEREFORE, in consideration of the premises and
    mutual covenants contained in this Agreement, the parties to
    this Agreement, do hereby declare and establish this Agreement
    and do hereby undertake and otherwise agree as follows with
    respect to the transfer of the Mortgages to various PC Pools,
    the issuance of the PCs and the establishment of the rights and
    obligations of the parties.



 




    Definitions



 



    The following terms used in this Agreement have the respective
    meanings set forth below.



 



    Accrual Period:  As to any PC and any Payment
    Date, (i) the calendar month preceding the month of the
    Payment Date for Gold PCs or (ii) the second calendar month
    preceding the month of the Payment Date for ARM PCs.



 



    Administrator:  Freddie Mac, in its corporate
    capacity, as administrator of the PC Pools created under this
    Agreement.



 



    Agreement:  This PC Master
    Trust Agreement, dated as of September 25, 2009, by and
    among Freddie Mac in its corporate capacity as Depositor,
    Administrator and Guarantor, Freddie Mac in its capacity as
    Trustee, and the Holders of the various PCs, as originally
    executed, or as modified, amended or supplemented in accordance
    with the provisions set forth herein. Unless the context
    requires otherwise, the term “Agreement” shall be
    deemed to include any applicable Pool Supplement entered into
    pursuant to Section 1.01 of this Agreement.



 



    ARM:  An adjustable rate Mortgage.




    

    1








 






    ARM PC:  A PC with a Payment Delay of
    75 days and which is backed by ARMs. ARM PCs include
    Deferred Interest PCs.



 



    Book-Entry Rules:  The provisions from time to
    time in effect, currently contained in Title 24,
    Part 81, Subpart H of the Code of Federal Regulations,
    setting forth the terms and conditions under which Freddie Mac
    may issue securities on the book-entry system of the Federal
    Reserve Banks and authorizing a Federal Reserve Bank to act as
    its agent in connection with such securities.



 



    Business Day:  A day other than (i) a
    Saturday or Sunday and (ii) a day when the Federal Reserve
    Bank of New York (or other agent acting as Freddie Mac’s
    fiscal agent) is closed or, as to any Holder, a day when the
    Federal Reserve Bank that maintains the Holder’s account is
    closed.



 



    Conventional Mortgage:  A Mortgage that is not
    guaranteed or insured by the United States or any agency or
    instrumentality of the United States.



 



    Custodial Account:  As defined in
    Section 3.05(e) of this Agreement.



 



    Deferred Interest:  The amount by which the
    interest due on a Mortgage exceeds the borrower’s monthly
    payment, which amount is added to the unpaid principal balance
    of the Mortgage.



 



    Deferred Interest PC:  A PC representing an
    undivided beneficial ownership interest in a PC Pool that
    includes Mortgages providing for negative amortization.



 



    Depositor:  Freddie Mac, in its corporate
    capacity, as depositor of Mortgages into the PC Pools created
    under this Agreement.



 



    Eligible Investments:  Any one or more of the
    following obligations, securities or holdings maturing on or
    before the Payment Date applicable to the funds so invested:



 



    (i) obligations of, or obligations guaranteed as to the
    full and timely payment of principal and interest by, the United
    States;



 



    (ii) obligations of any agency or instrumentality of the
    United States (other than Freddie Mac) or taxable debt
    obligations of any state or local government (or political
    subdivision thereof) that have a long-term rating or a
    short-term rating, as applicable, from S&P, Moody’s or
    Fitch in any case in one of its two highest rating categories
    for long-term securities or in its highest ratings category for
    short-term securities;



 



    (iii) time deposits of any depository institution or trust
    company domiciled in the Cayman Islands or Nassau and affiliated
    with a financial institution that is a member of the Federal
    Reserve System, provided that the short-term securities of the
    depository institution or trust company are rated by S&P,
    Moody’s or Fitch in the highest applicable ratings category
    for short-term securities;



 



    (iv) federal funds, certificates of deposit, time deposits
    and bankers’ acceptances with a fixed maturity of no more
    than 365 days of any depository institution or trust
    company, provided that the short-term securities of the
    depository institution or trust company are rated by S&P,
    Moody’s or Fitch in the highest applicable ratings category
    for short-term securities;



 



    (v) commercial paper with a fixed maturity of no more than
    270 days, of any corporation that is rated by S&P,
    Moody’s or Fitch in its highest short-term ratings category;




    

    2








 






    (vi) debt securities that have a long-term rating or a
    short-term rating, as applicable, from S&P, Moody’s or
    Fitch, in any case in one of its two highest ratings categories
    for long-term securities or in its highest ratings category for
    short-term securities;



 



    (vii) money market funds that are registered under the
    Investment Company Act of 1940, as amended, are entitled,
    pursuant to
    Rule 2a-7
    of the Securities and Exchange Commission, or any successor to
    that rule, to hold themselves out to investors as money market
    funds, and are rated by S&P, Moody’s or Fitch in one
    of its two highest ratings categories for money market funds;



 



    (viii) asset-backed commercial paper that is rated by
    S&P, Moody’s or Fitch in its highest short-term
    ratings category;



 



    (ix) repurchase agreements on obligations that are either
    specified in any of clauses (i), (ii), (iv), (v), (vi) or
    (viii) above or are mortgage-backed securities insured or
    guaranteed by an entity that is an agency or instrumentality of
    the United States; provided that the counterparty to the
    repurchase agreement is an entity whose short-term debt
    securities are rated by S&P, Moody’s or Fitch in its
    highest ratings category for short-term securities; and



 



    (x) any other investment without options that is approved
    by Freddie Mac and is within the two highest ratings categories
    of the applicable rating agency for long-term securities or the
    highest ratings category of the applicable rating agency for
    short-term securities.



 



    The rating requirement will be satisfied if the relevant
    security, issue or fund at the time of purchase receives at
    least the minimum stated rating from at least one of S&P,
    Moody’s or Fitch. The rating requirement will not be
    satisfied by a rating that is the minimum rating followed by a
    minus sign or by a rating lower than Aa2 from Moody’s.



 



    Event of Default:  As defined in
    Section 5.01 of this Agreement.



 



    FHA/VA Mortgage:  A Mortgage insured by the
    Federal Housing Administration or by the Department of
    Agriculture Rural Development (formerly the Rural Housing
    Service) or guaranteed by the Department of Veterans Affairs or
    the Department of Housing and Urban Development.



 



    Final Payment Date:  As to any PC, the first
    day of the latest month in which the related Pool Factor will be
    reduced to zero. The Administrator publishes the Final Payment
    Date upon formation of the related PC Pool.



 



    Fitch:  Fitch, Inc., also known as Fitch
    Ratings, or any successor thereto.



 



    Freddie Mac:  The Federal Home Loan Mortgage
    Corporation, a corporation created pursuant to the Freddie Mac
    Act for the purpose of establishing and supporting a secondary
    market in residential mortgages. Unless the context requires
    otherwise, the term “Freddie Mac” shall be deemed to
    refer to Freddie Mac acting in one or more of its corporate
    capacities, as specified or as provided in context, and not in
    its capacity as Trustee.



 



    Freddie Mac Act:  Title III of the
    Emergency Home Finance Act of 1970, as amended, 12 U.S.C.
    §§ 1451-1459.



 



    Gold PC:  A PC with a Payment Delay of
    45 days and which is backed by fixed-rate Mortgages.



 



    Guarantor:  Freddie Mac, in its corporate
    capacity, as guarantor of the PCs issued by each PC Pool.




    

    3








 






    Guide:  Freddie Mac’s Single-Family
    Seller/Servicer Guide, as supplemented and amended from time to
    time, in which Freddie Mac sets forth its mortgage purchase
    standards, credit, appraisal and underwriting guidelines and
    servicing policies.



 



    Holder:  With respect to any PC Pool, any
    entity that appears on the records of a Federal Reserve Bank as
    a holder of the related PCs.



 



    Monthly Reporting Period:  The period during
    which servicers report Mortgage payments to the Administrator,
    generally consisting of the calendar month preceding the related
    Payment Date for Gold PCs and the second calendar month
    preceding the related Payment Date for ARM PCs, which period the
    Administrator has the right to change as provided in
    Section 3.05(d) of this Agreement; provided,
    however, that with respect to prepayments on PCs issued
    before September 1, 1995, the Monthly Reporting Period
    generally is from the
    16th of

    a month through the
    15th of

    the next month.



 



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



 



    Mortgage:  A mortgage loan or a participation
    interest in a mortgage loan that is secured by a first or second
    lien on a one-to-four family dwelling and that has been
    purchased by the Depositor and transferred by the Depositor to
    the Trustee for inclusion in the related PC Pool. With respect
    to each PC Pool, the Mortgages to be included therein shall be
    identified on the books and records of the Depositor and the
    Administrator.



 



    Mortgage Coupon:  The per annum fixed or
    adjustable interest rate of a Mortgage.



 



    MultiLender Swap Program:  A program under
    which Freddie Mac purchases Mortgages from one or more sellers
    in exchange for PCs representing undivided beneficial ownership
    interests in a PC Pool consisting of Mortgages that may or may
    not be those delivered by the seller(s).



 



    Negative Amortization Factor:  With respect to
    PCs backed by Mortgages providing for negative amortization, a
    truncated eight-digit decimal number that reflects the amount of
    Deferred Interest added to the principal balances of the related
    Mortgages in the preceding month.



 



    Offering Circular:  Freddie Mac’s Mortgage
    Participation Certificates Offering Circular dated
    September 25, 2009, as amended and supplemented by any
    Supplements issued from time to time, or any successor thereto,
    as it may be amended and supplemented from time to time.



 



    Payment Date:  The 15th of each month or,
    if the 15th is not a Business Day, the next Business Day.



 



    Payment Delay:  The delay between the first day
    of the Accrual Period for a PC and the related Payment Date.



 



    PC:  With respect to each PC Pool, a Mortgage
    Participation Certificate issued pursuant to this Agreement,
    representing a beneficial ownership interest in such PC Pool.
    The term “PC” includes a Gold PC or an ARM PC unless
    the context requires otherwise.



 



    PC Coupon:  The per annum fixed or adjustable
    rate of a PC calculated as described in the Offering Circular or
    the applicable Pool Supplement, computed on the basis of a
    360-day year
    of twelve
    30-day
    months.



 



    PC Issue Date:  With respect to each PC Pool,
    the date specified in the related Pool Supplement or, if not
    specified therein, the date on which Freddie Mac issues a PC in
    exchange for the Mortgages delivered by a dealer or other
    customer.




    

    4








 






    PC Pool:  With respect to each PC, the corpus
    of the related trust fund created by this Agreement, consisting
    of (i) the related Mortgages and all proceeds thereof,
    (ii) amounts on deposit in the Custodial Account, to the
    extent allocable to such PC Pool, (iii) the right to
    receive payments under the related guarantee and (iv) any
    other assets specified in the related Pool Supplement, excluding
    any investment earnings on any of the assets of that PC Pool.
    With respect to each PC Pool, and unless expressly stated
    otherwise, the provisions of this Agreement will be interpreted
    as referring only to the Mortgages included in that PC Pool, the
    PCs issued by that PC Pool and the Holders of those PCs.



 



    Person:  Any legal person, including any
    individual, corporation, partnership, limited liability company,
    financial institution, joint venture, association, joint stock
    company, trust, unincorporated organization or governmental unit
    or political subdivision of any governmental unit.



 



    Pool Factor:  With respect to each PC Pool, a
    truncated eight-digit decimal calculated for each month by the
    Administrator which, when multiplied by the original principal
    balance of the related PCs, will equal their remaining principal
    amount. The Pool Factor for any month reflects the remaining
    principal amount after the payment to be made on the Payment
    Date in the same month for Gold PCs or in the following month
    for ARM PCs.



 



    Pool Supplement:  Any physical or electronic
    document or record (which may be a supplement to the Offering
    Circular or any other supplemental document prepared by Freddie
    Mac for the related PCs), which, together herewith, evidences
    the establishment of a PC Pool and modifies, amends or
    supplements the provisions hereof in any respect whatsoever. The
    Pool Supplement for a particular PC Pool shall be binding and
    effective upon formation of the related PC Pool and issuance of
    the related PCs, whether or not such Pool Supplement is
    executed, delivered or published by Freddie Mac.



 



    Purchase Documents:  The mortgage purchase
    agreements between Freddie Mac and its Mortgage sellers and
    servicers, which are the contracts that govern the purchase and
    servicing of Mortgages and which include, among other things,
    the Guide and any negotiated modifications, amendments or
    supplements to the Guide.



 



    Record Date:  As to any Payment Date, the close
    of business on the last day of (i) the preceding month for
    Gold PCs or (ii) the second preceding month for ARM PCs.



 



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



 



    Transferor:  For purposes of
    Section 7.06(a) of this Agreement with respect to each PC
    Pool created on or after the date hereof, (a) a Person,
    acting in its capacity as principal, that transfers Mortgages to
    the Depositor in exchange for cash or PCs, or a combination of
    cash and PCs, for conveyance to such PC Pool; or (b) if the
    Depositor transfers Mortgages that it has previously been
    holding in its own portfolio into such PC Pool, Freddie Mac, in
    its corporate capacity as the Depositor.



 



    Trustee:  Freddie Mac, in its capacity as
    trustee of each PC Pool formed under this Agreement, and its
    successors and assigns, which will have the trustee
    responsibilities specified in this Agreement, as amended or
    supplemented from time to time.



 



    Trustee Event of Default:  As defined in
    Section 6.06 of this Agreement.




    

    5








 







    ARTICLE I



 




    Conveyance
    of Mortgages; Creation of PC Pools



 



    Section 1.01. Declaration of Trust; Transfer of
    Mortgages.  The Depositor, by delivering any
    Mortgages pursuant to this Agreement, unconditionally,
    absolutely and irrevocably hereby transfers, assigns, sets over
    and otherwise conveys to the Trustee, on behalf of the related
    Holders, all of the Depositor’s right, title and interest
    in and to such Mortgages, including all payments of principal
    and interest thereon received after the month in which the PC
    Issue Date occurs. Once Mortgages have been identified as being
    part of a related PC Pool for which at least one PC has been
    issued, they shall remain in that PC Pool unless removed in a
    manner consistent with this Agreement. Concurrently with the
    Depositor’s transferring, assigning, setting over and
    otherwise conveying the Mortgages to the Trustee for a PC Pool,
    the Trustee hereby accepts the Mortgages so conveyed and
    acknowledges that it holds the entire corpus of each PC Pool in
    trust for the exclusive benefit of the related Holders and shall
    deliver to, or on the order of, the Depositor, the PCs issued by
    such PC Pool. The Administrator agrees to administer the related
    PC Pool and such PCs in accordance with the terms of this
    Agreement. On the related PC Issue Date and upon payment to the
    Depositor for any such PC by a Holder, such Holder shall, by
    virtue thereof, acknowledge, accept and agree to be bound by all
    of the terms and conditions of this Agreement.



 



    A Pool Supplement shall evidence the establishment of a
    particular PC Pool and shall relate to specific PCs representing
    the entire beneficial ownership interests in such PC Pool. If
    for any reason the creation of a Pool Supplement is delayed,
    Freddie Mac shall create one as soon as practicable, and such
    delay shall not affect the validity and existence of the PC Pool
    or the related PCs. With respect to each PC Pool, the collective
    terms hereof and of the related Pool Supplement shall govern the
    issuance and administration of the PCs related to such PC Pool,
    and all matters related thereto, and shall have no applicability
    to any other PC Pool or PCs. As applied to each PC Pool, the
    collective terms hereof and of the related Pool Supplement shall
    constitute an agreement as if the collective terms of those
    instruments were set forth in a single instrument. In the event
    of a conflict between the terms hereof and the terms of a Pool
    Supplement for a PC Pool, the terms of the Pool Supplement shall
    control with respect to that PC Pool. A Pool Supplement is not
    considered an amendment to this Agreement requiring approval
    pursuant to Section 7.05.



 



    Section 1.02. Identity of the Mortgages; Substitution
    and Repurchase.



 



    (a) In consideration for the transfer of the related
    Mortgages by the Depositor to a PC Pool, the Depositor
    (i) shall receive the PCs issued by such PC Pool and
    (ii) may retain such PCs or transfer them to the related
    Mortgage seller or otherwise, as the Depositor deems appropriate.



 



    (b) After the PC Issue Date but prior to the first Payment
    Date, the Depositor may, in accordance with its customary
    mortgage purchase and pooling procedures, adjust the amount and
    identity of the Mortgages to be transferred to a PC Pool, the PC
    Coupon
    and/or the
    original unpaid principal balance of the PCs and the Mortgages
    in the PC Pool, provided that any changes to the characteristics
    of the PCs shall be evidenced by an amendment or supplement to
    the related Pool Supplement.



 



    (c) Except as provided in this Section 1.02 or in
    Section 1.03, once the Depositor has transferred a Mortgage
    to a particular PC Pool, such Mortgage may not be transferred
    out of such PC Pool, except (x) if a mortgage insurer
    exercises an option under an insurance contract to purchase such
    Mortgage or (y) in the case of repurchase by the Guarantor,
    the Administrator or the related Mortgage seller or servicer,
    under the following circumstances:



 



    (i) The Guarantor may repurchase from the related PC Pool a
    Mortgage in connection with a guarantee payment under
    Section 3.09(a)(ii).




    

    6








 






    (ii) The Administrator may repurchase from the related PC
    Pool, or require or permit a Mortgage seller or servicer to
    repurchase, any Mortgage if a repurchase is necessary or
    advisable (A) to maintain servicing of the Mortgage in
    accordance with the provisions of the Guide, or (B) to
    maintain the status of the PC Pool as a grantor trust for
    federal income tax purposes.



 



    (iii) The Guarantor may repurchase from the related PC
    Pool, or require or permit a Mortgage seller or servicer to
    repurchase, any Mortgage if (A) such Mortgage is 120 or
    more days delinquent, or (B) the Guarantor determines, on
    the basis of information from the related borrower or servicer,
    that loss of ownership of the property securing a Mortgage is
    likely or default is imminent due to borrower incapacity, death
    or hardship or other extraordinary circumstances that make
    future payments on such Mortgage unlikely or impossible.



 



    (iv) The Guarantor may repurchase from the related PC Pool
    a Mortgage if a bankruptcy court approves a plan that materially
    affects the terms of the Mortgage or authorizes a transfer or
    substitution of the underlying property.



 



    (v) The Administrator may require or permit a Mortgage
    seller or servicer to repurchase from the related PC Pool any
    Mortgage or (within six months of the issuance of the related
    PCs) substitute for any Mortgage a Mortgage of comparable type,
    unpaid principal balance, remaining term and yield, if there is
    (A) a material breach of warranty by the Mortgage seller or
    servicer, (B) a material defect in documentation as to such
    Mortgage or (C) a failure by a seller or servicer to comply
    with any requirements or terms set forth in the Guide and, if
    applicable, other Purchase Documents.



 



    (vi) The Administrator shall repurchase from the related PC
    Pool any Mortgage or (within two years of the issuance of the
    related PCs) substitute for any Mortgage a Mortgage of
    comparable type, unpaid principal balance, remaining term and
    yield, if (A) a court of competent jurisdiction or a
    federal government agency duly authorized to oversee or regulate
    Freddie Mac’s mortgage purchase business determines that
    Freddie Mac’s purchase of such Mortgage was unauthorized
    and Freddie Mac determines that a cure is not practicable
    without unreasonable effort or expense or (B) such court or
    government agency requires repurchase of such Mortgage.



 



    (vii) To the extent a PC Pool includes convertible ARMs or
    Balloon/Reset Mortgages (each, as defined in the Offering
    Circular), the Administrator shall repurchase from the related
    PC Pool or require or allow the Mortgage seller or servicer to
    repurchase such Mortgages (a) when the borrower exercises
    its option to convert the related interest rate from an
    adjustable rate to a fixed rate, in the case of a convertible
    ARM; and (b) shortly before such Mortgage reaches its
    scheduled balloon repayment date, in the case of a Balloon/Reset
    Mortgage.



 



    (d) The purchase price of a Mortgage repurchased by a
    Mortgage seller or servicer shall be equal to the then unpaid
    principal balance of such Mortgage, less any principal on such
    Mortgage that the Mortgage seller or servicer advanced to the
    Depositor or the Administrator. The purchase price of a Mortgage
    repurchased by the Administrator or the Guarantor under this
    Agreement shall be equal to the then unpaid principal balance of
    such Mortgage, less any outstanding advances of principal on
    such Mortgage that the Administrator, on behalf of the Trustee,
    distributed to Holders. The Administrator, on behalf of the
    Trustee, agrees to release any Mortgage from the PC Pool upon
    payment of the applicable purchase price.



 



    (e) In determining whether a Mortgage shall be repurchased
    from the related PC Pool as described in this Section 1.02,
    the Guarantor and the Administrator may consider such factors as
    they deem appropriate, including the reduction of administrative
    costs (in the case of the Administrator) or possible exposure as
    Guarantor under its guarantee (in the case of the Guarantor).




    

    7








 






    Section 1.03. Post-Settlement Purchase Adjustments



 



    (a) The Administrator shall make any post-settlement
    purchase adjustments necessary to reflect the actual aggregate
    unpaid principal balance of the related Mortgages or other
    Mortgage characteristics as of the date of their purchase by the
    Depositor or their delivery to the Trustee in exchange for PCs,
    as the case may be.



 



    (b) Post-settlement adjustments may be made in such manner
    as the Administrator deems appropriate, but shall not adversely
    affect any Holder’s rights to monthly payments of interest
    at the PC Coupon, any Holder’s pro rata share of principal
    or any Holder’s rights under the Guarantor’s
    guarantees. Any reduction in the principal balance of the
    Mortgages held by a PC Pool shall be reflected by the
    Administrator as a corresponding reduction in the principal
    balance of the related PCs with a corresponding principal
    payment to the related Holders, on a pro rata basis.



 



    Section 1.04. Custody of Mortgage
    Documents.  With respect to each PC Pool, the
    Administrator, a custodian acting as its agent (which may be a
    third party or a trust or custody department of the related
    seller or servicer), or the originator or seller of the Mortgage
    may hold the related Mortgage documents, including Mortgage
    notes and participation certificates evidencing the
    Trustee’s legal ownership interest in the Mortgages. The
    Administrator may adopt and modify its policies and procedures
    for the custody of Mortgage documents at any time, provided such
    modifications are prudent and do not materially and adversely
    affect the Holders’ interests.



 



    Section 1.05. Interests Held or Acquired by Freddie
    Mac.  Freddie Mac shall have the right to purchase
    and hold for its own account any PCs. Subject to
    Section 7.06, PCs held or acquired by Freddie Mac from time
    to time and PCs held by other Holders shall have equal and
    proportionate benefits, without preference, priority or
    distinction. In the event that Freddie Mac retains any interest
    in a Mortgage, the remaining interest in which is part of a PC
    Pool, Freddie Mac’s interest in such Mortgage shall rank
    equally with that of the related PC Pool, without preference,
    priority or distinction. No Holder shall have any priority over
    any other Holder.



 



    Section 1.06. Intended
    Characterization.  It is intended that the
    conveyance, transfer, assignment and setting over of the
    Mortgages by the Depositor to the Trustee pursuant to this
    Agreement be a true, absolute and unconditional sale of the
    related Mortgages by the Depositor to the Trustee, and not a
    pledge of the Mortgages to secure a debt or other obligation of
    the Depositor, and that the Holders of the related PCs shall be
    the beneficial owners of such Mortgages. Notwithstanding this
    express intention, however, if the Mortgages are determined by a
    court of competent jurisdiction or other competent authority to
    be the property of the Depositor, then it is intended that:
    (a) this Agreement be deemed to be a security agreement
    within the meaning of Articles 8 and 9 of the Uniform
    Commercial Code; (b) the conveyances provided for in
    Section 1.01 shall be deemed to be (1) a grant by the
    Depositor to the Trustee on behalf of the related Holders of a
    security interest in all of the Depositor’s right
    (including the power to convey title thereto), title and
    interest, whether now owned or hereafter acquired, in and to the
    related Mortgages, any and all general intangibles consisting
    of, arising from or relating to any of the foregoing, and all
    proceeds of the conversion, voluntary or involuntary, of the
    foregoing into cash, instruments, securities or other property,
    including without limitation all amounts from time to time held
    or invested in the Custodial Account and allocable to such
    Mortgages, whether in the form of cash, instruments, securities
    or other property and (2) an assignment by the Depositor to
    the Trustee on behalf of the related Holders of any security
    interest in any and all of the Depositor’s right (including
    the power to convey title thereto), title and interest, whether
    now owned or hereafter acquired, in and to the property
    described in the foregoing clause (1); and
    (c) notifications to Persons holding such property, and
    acknowledgments, receipts or confirmations from Persons holding
    such property, shall be deemed notifications to, or
    acknowledgments, receipts or confirmations from, financial
    intermediaries, bailees or agents (as applicable) of the Trustee
    on behalf of the related Holders, for the purpose of perfecting
    such security interest under applicable law.




    

    8








 






    Section 1.07. Encumbrances.  Except as may
    otherwise be provided expressly in this Agreement, neither
    Freddie Mac nor the Trustee shall directly or indirectly,
    assign, sell, dispose of or transfer all or any portion of or
    interest in any PC Pool, or permit all or any portion of any PC
    Pool to be subject to any lien, claim, mortgage, security
    interest, pledge or other encumbrance of any other Person. This
    Section shall not be construed as a limitation on Freddie
    Mac’s rights with respect to PCs held by it in its
    corporate capacity.



 




    ARTICLE II



 




    Administration
    and Servicing of the Mortgages



 



    Section 2.01. The Administrator as Primary
    Servicer.  With respect to each PC Pool, the
    Administrator shall service or supervise servicing of the
    related Mortgages and administer, on behalf of the Trustee, in
    accordance with the provisions of the Guide and this Agreement,
    including management of any property acquired through
    foreclosure or otherwise, all for the benefit of the related
    Holders. The Administrator shall have full power and authority
    to do or cause to be done any and all things in connection with
    such servicing and administration that the Administrator deems
    necessary or desirable. The Administrator shall seek from the
    Trustee, as representative of the related Holders, any consents
    or approvals relating to the control, management and servicing
    of the Mortgages included in any PC Pool and that are required
    hereunder.



 



    Section 2.02. Servicing
    Responsibilities.  With respect to each PC Pool,
    the Administrator shall service or supervise servicing of the
    related Mortgages in a manner consistent with prudent servicing
    standards and in substantially the same manner as the
    Administrator services or supervises the servicing of unsold
    mortgages of the same type in its portfolio. In performing its
    servicing responsibilities hereunder, the Administrator may
    engage servicers, subservicers and other independent contractors
    or agents. The Administrator may discharge its responsibility to
    supervise servicing of the Mortgages by monitoring
    servicers’ performance on a reporting and exception basis.
    Except as provided in Articles V and VI and
    Sections 7.05 and 7.06 of this Agreement, Freddie Mac, as
    Administrator shall not be subject to the control of the Holders
    in the discharge of its responsibilities pursuant to this
    Article. Except with regard to its guarantee obligations
    pursuant to Section 3.09 with respect to a PC Pool, the
    Administrator shall have no liability to any related Holder for
    the Administrator’s actions or omissions in discharging its
    responsibilities under this Article II other than for any
    direct damage resulting from its failure to exercise that degree
    of ordinary care it exercises in the conduct and management of
    its own affairs. In no event shall the Administrator have any
    liability for consequential damages.



 



    Section 2.03. Realization Upon Defaulted
    Mortgages.  With respect to each PC Pool, unless
    the Administrator deems that another course of action (e.g.,
    charge-off) would be in the best economic interest of the
    Holders, the Administrator (or its authorized designee or
    representative) shall, as soon as practicable, foreclose upon
    (or otherwise comparably convert the ownership of) any real
    property securing a Mortgage which comes into and continues in
    default and as to which no satisfactory arrangements can be made
    for collection of delinquent payments. In connection with such
    foreclosure or conversion, the Administrator (or its authorized
    designee or representative) shall follow such practices or
    procedures as it deems necessary or advisable and consistent
    with general mortgage servicing standards.



 



    Section 2.04. Automatic Acceleration and Assumptions.



 



    (a) With respect to each PC Pool, to the extent provided in
    the Guide, the Administrator shall enforce the terms of each
    applicable Mortgage that gives the mortgagee the right to demand
    full payment of the unpaid principal balance of the Mortgage
    upon sale or transfer of the property securing the Mortgage
    regardless of the creditworthiness of the transferee (a right of
    “automatic acceleration”), subject to applicable state
    and federal law and the Administrator’s then-current
    servicing policies.




    

    9








 






    (b) With respect to each PC Pool, the Administrator shall
    permit the assumption by a new mortgagor of an FHA/VA Mortgage
    upon the sale or transfer of the underlying property, as
    required by applicable regulations. Any such assumption shall be
    in accordance with applicable regulations, policies, procedures
    and credit requirements and shall not result in loss or
    impairment of any insurance or guaranty.



 



    Section 2.05. Prepayment
    Penalties.  Unless otherwise provided in the Pool
    Supplement for a PC Pool, the related Holders shall not be
    entitled to receive any prepayment penalties, assumption fees or
    other fees charged on the Mortgages included in such PC Pool,
    and either the related servicer or the Administrator shall
    retain such amounts.



 



    Section 2.06. Mortgage Insurance and Guarantees.



 



    (a) With respect to each PC Pool, if a Conventional
    Mortgage is insured by a mortgage insurer and the mortgage
    insurance policy is an asset of such PC Pool, the related
    Holders acknowledge that the insurer shall have no obligation to
    recognize or deal with any Person other than the Administrator,
    the Trustee, or their respective authorized designees or
    representatives regarding the mortgagee’s rights, benefits
    and obligations under the related insurance contract.



 



    (b) With respect to each PC Pool, each FHA/VA Mortgage
    shall have in full force and effect a certificate or other
    satisfactory evidence of insurance or guaranty, as the case may
    be, as may be issued by the applicable government agency from
    time to time. None of these agencies has any obligation to
    recognize or deal with any Person other than the Administrator,
    the Trustee, or their respective authorized designees or
    representatives with regard to the rights, benefits and
    obligations of the mortgagee under the contract of insurance or
    guaranty relating to each FHA/VA Mortgage included in such PC
    Pool.



 




    ARTICLE III



 




    Distributions
    to Holders; Guarantees



 



    Section 3.01. Monthly Reporting
    Period.  For purposes of this Agreement with
    respect to any PC Pool, any payment or any event with respect to
    any Mortgage included in such PC Pool that is reported to the
    Administrator by the related servicer as having been made or
    having occurred within a Monthly Reporting Period shall be
    deemed to have been received by the Administrator or to have in
    fact occurred within such Monthly Reporting Period used by the
    Administrator for such purposes. Payments reported by servicers
    include all principal and interest payments made by a borrower,
    insurance proceeds, liquidation proceeds and repurchase
    proceeds. Events reported by servicers include foreclosure
    sales, payments of insurance claims and payments of guarantee
    claims.



 



    Section 3.02. Holder’s Undivided Beneficial
    Ownership Interest.  With respect to each PC Pool,
    the Holder of a PC on the Record Date shall be the owner of
    record of a pro rata undivided beneficial ownership interest in
    the remaining principal balance of the Mortgages in the related
    PC Pool as of such date and shall be entitled to interest at the
    PC Coupon on such pro rata undivided beneficial ownership
    interest, in each case on the related Payment Date. Such pro
    rata undivided beneficial ownership interest shall change
    accordingly if any Mortgage is added to or removed from such PC
    Pool in accordance with this Agreement. A Holder’s pro rata
    undivided beneficial ownership interest in the Mortgages
    included in a PC Pool is calculated by dividing the original
    unpaid principal balance of the Holder’s PC by the original
    unpaid principal balance of all the Mortgages in the related PC
    Pool.



 



    Section 3.03. Distributions of
    Principal.  With respect to each PC Pool, the
    Administrator, on behalf of the Trustee, shall withdraw from the
    Custodial Account and shall distribute to each related Holder
    its pro rata share of principal collections with respect to the
    Mortgages in such PC Pool, including, if applicable, each
    Holder’s pro rata share of the aggregate amount of any
    Deferred Interest that has been




    

    10








 






    added to the principal balance of the related Mortgages;
    provided, however, that with respect to guarantee
    payments, the Guarantor’s obligations herein shall be
    subject to its subrogation rights pursuant to Section 3.10.
    The Administrator may retain from any prepayment or delinquent
    principal payment on any Mortgage, for reimbursement to the
    Guarantor, any amount not previously received with respect to
    such Mortgage but paid by the Guarantor to the related Holders
    under its guarantee. For Mortgages purchased by the Depositor in
    exchange for PCs under its MultiLender Swap Program, the
    Depositor shall retain principal payments made on such Mortgages
    in the amount of any difference between the aggregate unpaid
    principal balance of the Mortgages as of delivery by the seller
    and the aggregate unpaid principal balance as of the PC Issue
    Date, and the Depositor shall purchase additional Mortgages with
    such principal payments; such additional Mortgages may or may
    not be included in the related PC Pool represented by the PCs
    received by the seller.



 



    Section 3.04. Distributions of
    Interest.  With respect to each PC Pool, the
    Administrator, on behalf of the Trustee, shall withdraw from the
    Custodial Account and shall distribute to each related Holder
    its pro rata share of interest collections with respect to the
    Mortgages included in such PC Pool, at a rate equal to the PC
    Coupon (excluding, if applicable, each Holder’s pro rata
    share of any Deferred Interest that has been added to the
    principal balance of the related Mortgages). Interest shall
    accrue during the applicable Accrual Periods. The Administrator
    may retain from any delinquent interest payment on any Mortgage,
    for reimbursement to the Guarantor, any amount not previously
    received with respect to such Mortgage but paid by the Guarantor
    to the related Holders under its guarantee. With respect to each
    PC Pool, a partial month’s interest retained by Freddie Mac
    or remitted to the related Holders with respect to prepayments
    shall constitute an adjustment to the fee payable to the
    Administrator and the Guarantor pursuant to Section 3.08(a)
    for such PC Pool.



 



    Section 3.05. Payments.



 



    (a) With respect to each PC Pool, distributions of
    principal and interest on the related PCs shall begin in the
    month after issuance for Gold PCs and in the second month after
    issuance for ARM PCs. The Administrator, on behalf of the
    Trustee, shall calculate, or cause to be calculated, for each PC
    the distribution amount for the current calendar month.



 



    (b) On or before each Payment Date, the Administrator, on
    behalf of the Trustee, shall instruct the Federal Reserve Banks
    to credit payments on PCs from the Custodial Account to the
    appropriate Holders’ accounts. The related PC Pool’s
    payment obligations shall be met upon transmittal of the
    Administrator’s payment order to the Federal Reserve Banks
    provided sufficient funds are then on deposit in the Custodial
    Account. A Holder shall receive the payment of principal, if
    applicable, and interest on each Payment Date on each PC held by
    such Holder as of the related Record Date.



 



    (c) The Administrator relies on servicers’ reports of
    mortgage activity to prepare the Pool Factors. There may be
    delays or errors in processing mortgage information, such as a
    servicer’s failure to file an accurate or timely report of
    its collections of principal or its having filed a report that
    cannot be processed. In these situations the
    Administrator’s calculation of scheduled principal to be
    made on Gold PCs may not reflect actual payments on the related
    Mortgages. The Administrator shall account for and reconcile any
    differences as soon as practicable.



 



    (d) The Administrator reserves the right to change the
    period during which a servicer may hold funds prior to payment
    to the Administrator, as well as the period for which servicers
    report payments to the Administrator, including adjustments to
    the Monthly Reporting Period. Either change may change the time
    at which prepayments are distributed to Holders. Any such
    change, however, shall not impair Holders’ rights to
    payments as otherwise provided in this Section.



 



    (e) The Administrator shall maintain one or more accounts
    (together, the “Custodial Account”), segregated from
    the general funds of Freddie Mac, in its corporate capacity, for
    the deposit of collections of




    

    11








 






    principal (including full and partial principal prepayments) and
    interest received from or advanced by the servicers in respect
    of the Mortgages. Mortgage collections in respect of the PC
    Pools established by Freddie Mac under this Agreement or trust
    funds established by Freddie Mac pursuant to any other trust
    agreements may be commingled in the Custodial Account, provided
    that the Administrator keeps, or causes to be kept, separate
    records of funds with respect to each such PC Pool and other
    trust fund. Collections due to Freddie Mac, in its corporate
    capacity as owner of mortgages held in its portfolio, may also
    be commingled in the Custodial Account, provided that the
    Administrator shall withdraw such amounts for remittance to
    Freddie Mac on a monthly basis. Funds on deposit in the
    Custodial Account may be invested by the Administrator in
    Eligible Investments. Investment earnings on deposits in the
    Custodial Account shall be for the benefit of the Administrator,
    and any losses on such investments shall be paid by the
    Administrator. On each Payment Date, amounts on deposit in the
    Custodial Account shall be withdrawn upon the order of the
    Administrator, on behalf of the Trustee, for the purpose of
    making distributions to the related Holders, in accordance with
    this Agreement.



 



    Section 3.06. Pool Factors.



 



    (a) The Administrator, on behalf of the Trustee, shall
    calculate and make payments to Holders on each Payment Date
    based on the monthly Pool Factors (including Negative
    Amortization Factors) until such time as the Administrator
    determines that a more accurate and practicable method for
    calculating such payments is available and implements that
    method. Pursuant to Section 7.05(e), the Administrator may
    modify the Pool Factor methodology from time to time, without
    the consent of Holders. With respect to each PC Pool, the
    Administrator, on behalf of the Trustee, shall do the following:



 



    (i) The Administrator shall publish or cause to be
    published for each month a Pool Factor with respect to each PC
    Pool. Beginning in the month after formation of a PC Pool, Pool
    Factors shall be published on or about the fifth Business Day of
    the month, which Pool Factors may reflect prepayments reported
    to the Administrator after the end of the related Monthly
    Reporting Period and before the publication of the applicable
    Pool Factors. However, the Administrator may, in its own
    discretion, publish Pool Factors on any other Business Day. The
    Pool Factor for the month in which the PC Pool is established is
    1.00000000 and need not be published.



 



    (ii) The Administrator shall distribute principal each
    month to a Holder of a Gold PC in an amount equal to such
    Holder’s pro rata share of such principal, calculated by
    multiplying the original principal balance of the Gold PC by the
    difference between its Pool Factors for the preceding and
    current months.



 



    (iii) The Administrator shall distribute principal each
    month to a Holder of an ARM PC in an amount equal to such
    Holder’s pro rata share of such principal, calculated by
    multiplying the original principal balance of the ARM PC by the
    difference between its Pool Factors for the two preceding months.



 



    (iv) The Administrator shall distribute interest each month
    in arrears to a Holder (assuming no Deferred Interest) in an
    amount equal to 1/12th of the applicable PC Coupon
    multiplied by such Holder’s pro rata share of principal,
    calculated by multiplying the original principal balance of such
    Holder’s PC by the preceding month’s Pool Factor for
    Gold PCs or by the second preceding month’s Pool Factor for
    ARM PCs.



 



    (v) For any month that Deferred Interest has accrued on a
    Deferred Interest PC, the Administrator shall distribute
    principal (if any is due) to a Holder in an amount equal to such
    Holder’s pro rata share of principal, calculated by
    (A) subtracting the preceding month’s Pool Factor from
    the second preceding month’s Pool Factor, (B) adding
    to the difference the Negative Amortization Factor for the
    preceding month and (C) multiplying the resulting sum by
    the original PC principal balance. The interest payment on the
    Deferred Interest PC in that month shall be
    (i) 1/12th of the PC Coupon




    

    12








 






    multiplied by (ii) the original principal balance of the
    Holder’s PC multiplied by (iii) the preceding
    month’s Pool Factor minus the preceding month’s
    Negative Amortization Factor.



 



    (b) With respect to each PC Pool, a Pool Factor shall
    reflect prepayments reported for the applicable Monthly
    Reporting Period. The Administrator, on behalf of the Trustee,
    may also, in its discretion, reflect in a Pool Factor any
    prepayments reported after the end of the applicable Monthly
    Reporting Period. To the extent a given Pool Factor (adjusted as
    necessary for payments made pursuant to the Guarantor’s
    guarantee of timely payment of scheduled principal on Gold PCs)
    does not reflect the actual unpaid principal balance of the
    related Mortgages, the Administrator shall account for any
    difference by adjusting subsequent Pool Factors as soon as
    practicable.



 



    (c) In the case of a PC Pool that is comprised of ARMs, a
    Pool Factor shall be based upon the unpaid principal balance of
    the related Mortgages that servicers report to the Administrator
    for the Monthly Reporting Period that ended in the second month
    preceding the month in which the Pool Factor is published. The
    Administrator, on behalf of the Trustee, may also, in its
    discretion, include as part of the aggregate principal payment
    in any month any prepayments received after the Monthly
    Reporting Period that ended in the second month preceding the
    month in which the Pool Factor is published. To the extent a
    given Pool Factor does not reflect the actual aggregate unpaid
    principal balance of the Mortgages, the Administrator shall
    account for any difference by adjusting subsequent Pool Factors
    as soon as practicable.



 



    (d) The Pool Factor method for a PC Pool may affect the
    timing of receipt of payments by related Holders but shall not
    affect the Guarantor’s guarantee with respect to such PC
    Pool, as set forth in Section 3.09. The Guarantor’s
    guarantee shall not be affected by the implementation of any
    different method for calculating and paying principal and
    interest for any PC Pool, as permitted by this Section 3.06.



 



    Section 3.07. Servicing Fees; Retained Interest.



 



    (a) To the extent provided by contractual arrangement with
    the Administrator, with respect to each PC Pool, the related
    servicer of each Mortgage included in such PC Pool shall be
    entitled to retain each month, as a servicing fee, any interest
    payable by the borrower on a Mortgage that exceeds the
    servicer’s required remittance with respect to such
    Mortgage. Each servicer is required to pay all expenses incurred
    by it in connection with its servicing activities and shall not
    be entitled to reimbursement for those expenses, except as
    provided in Section 3.08(c). If a servicer advances any
    principal
    and/or
    interest on a Mortgage to the Administrator prior to the receipt
    of such funds from the borrower, the servicer may retain
    (i) from prepayments or collections of delinquent principal
    on such Mortgage any payments of principal so advanced, or
    (ii) from collections of delinquent interest on such
    Mortgage any payments of interest so advanced. To the extent
    permitted by its servicing agreement, the servicer is entitled
    to retain as additional compensation certain incidental fees
    related to Mortgages it services.



 



    (b) With respect to a PC Pool, pursuant to the related
    Purchase Documents, a seller may retain each month as extra
    compensation a fixed amount of interest on a Mortgage included
    in such PC Pool. In such event, the related servicer shall
    retain each month as a servicing fee the excess of any interest
    payable by the borrower on such Mortgage (less the seller’s
    retained interest amount) over the servicer’s required
    remittance with respect to such Mortgage.



 



    Section 3.08. Administration Fee; Guarantee Fee.



 



    (a) Subject to any adjustments required by
    Section 3.04, with respect to any PC Pool, the
    Administrator and the Guarantor shall be entitled to receive
    from monthly interest payments on each related Mortgage a fee
    (to be allocated between the Administrator and the Guarantor as
    they may agree) equal to the excess of any interest received by
    the Administrator from the servicer over the amount of interest
    payable to the related Holders; provided, however, that
    the aggregate fee amount shall be automatically adjusted with
    respect to each PC Pool to the extent a Pool Factor does not
    reflect the unpaid principal




    

    13








 






    balance of the Mortgages. Any such adjustment shall equal the
    difference between (i) interest at the applicable PC Coupon
    computed on the aggregate unpaid principal balance of the
    Mortgages for such month based on monthly principal payments
    actually received by the Administrator and (ii) interest at
    the applicable PC Coupon computed on the remaining balance of
    the Mortgages included in the PC Pool derived from the Pool
    Factor. The Administrator shall (i) withdraw the aggregate
    fee amount from the Custodial Account prior to distributions to
    the related Holders, (ii) retain its portion of the fee for
    the Administrator’s own account and (iii) remit the
    remaining portion of the fee to the Guarantor as the guarantee
    fee. In addition, the Administrator is entitled to retain as
    additional compensation certain incidental fees on the Mortgages
    as provided in Section 2.05 and certain investment earnings
    as provided in Section 3.05(e).



 



    (b) The Depositor shall pay all expenses incurred in
    connection with the transfer of the Mortgages, the establishment
    and administration of each PC Pool and the issuance of the PCs.
    Any amounts (including attorney’s fees) expended by the
    Trustee or the Administrator (or the servicers on the
    Administrator’s behalf) for the protection, preservation or
    maintenance of the Mortgages, or of the real property securing
    the Mortgages, or of property received in liquidation of or
    realization upon the Mortgages, shall be expenses to be borne
    pro rata by the Administrator and the Holders in accordance with
    their interests in each Mortgage. The Administrator, on behalf
    of the Trustee, may retain an amount sufficient to pay the
    portion of such expenses borne pro rata by the Depositor and the
    Holders from payments otherwise due to Holders, which may affect
    the timing of receipt of payments by Holders but shall not
    affect the Guarantor’s obligations under Section 3.09.



 



    (c) The Administrator shall reimburse a servicer for any
    amount (including attorney’s fees) it expends (on the
    Administrator’s behalf and with its approval) for the
    protection, preservation or maintenance of the Mortgages, or of
    the real property securing the Mortgages, or of property
    received in liquidation of or realization upon the Mortgages.
    Such expenses shall be reimbursable to the servicer from the
    assets of the related PC Pool, to the extent provided in the
    Guide.



 



    (d) Any fees and expenses described above shall not affect
    the Guarantor’s guarantee with respect to any PC Pool, as
    set forth in Section 3.09.



 



    Section 3.09. Guarantees.



 



    (a) With respect to each PC Pool, the Guarantor guarantees
    to the Trustee and to each Holder of a PC:



 



    (i) the timely payment of interest at the applicable PC
    Coupon;



 



    (ii) the full and final payment of principal on the
    underlying Mortgages on or before the Payment Date that falls
    (A) in the month of its Final Payment Date, for Gold PCs,
    or (B) in the month after its Final Payment Date, for ARM
    PCs; and



 



    (iii) for Gold PCs only, the timely payment of scheduled
    principal on the underlying Mortgages.



 



    In the case of Deferred Interest PCs, the Guarantor’s
    guarantee of principal includes, and its guarantee of interest
    excludes, any Deferred Interest added to the principal balances
    of the related Mortgages. The Guarantor shall make payments of
    any guaranteed amounts by transfer to the Custodial Account for
    distribution to the related Holders, in accordance with
    Sections 3.03 and 3.04. The guarantees pursuant to this
    Section will inure to the benefit of each PC Pool and its
    related Holders, and shall be enforceable by the Trustee of that
    PC Pool and by such Holders, as provided in Article V of
    this Agreement.



 



    (b) The Guarantor shall compute guaranteed scheduled
    monthly principal payments on any Gold PC, subject to any
    applicable adjustments, in accordance with procedures adopted by
    the Guarantor from time to time. With respect to each PC Pool,
    any payment the Guarantor makes to the Administrator, on behalf




    

    14








 






    of the Trustee, on account of the Guarantor’s guarantee of
    scheduled principal payments shall be considered to be a payment
    of principal for purposes of calculating the Pool Factor for
    such PC Pool and the Holder’s pro rata share of the
    remaining unpaid principal balance of the related Mortgages.



 



    (c) The Guarantor’s guarantees shall continue to be
    effective or shall be reinstated (i) in the event that any
    principal or interest payment made to a Holder is for any reason
    returned by the Holder pursuant to an order, decree or judgment
    of any court of competent jurisdiction that the Holder was not
    entitled to retain such payment pursuant to this Agreement and
    (ii) notwithstanding any provision hereof permitting fees,
    expenses, indemnities or other amounts to be paid from the
    assets of any PC Pool.



 



    Section 3.10. Subrogation.  With respect
    to each PC Pool, the Guarantor shall be subrogated to all the
    rights, interests, remedies, powers and privileges of each
    related Holder in respect of any Mortgage included in such PC
    Pool on which it has made guarantee payments of principal
    and/or
    interest to the extent of such payments. Nothing in this Section
    shall impair the Guarantor’s right to receive distributions
    in its capacity as Holder, if it is a Holder of any PCs.



 



    Section 3.11. Termination Upon Final
    Payment.  Each PC Pool is irrevocable and will
    terminate only in accordance with the terms of this Agreement.
    Except as provided in Sections 3.05(e), 6.06 and 7.01, with
    respect to each PC Pool, Freddie Mac’s and the
    Trustee’s obligations and responsibilities under this
    Agreement shall terminate as to a PC Pool and its Holders upon
    (i) the full payment to such Holders of all principal and
    interest due to the Holders based on the Pool Factors or by
    reason of the Guarantor’s guarantees or (ii) the
    payment to the Holder of all amounts held by Freddie Mac and the
    Trustee, respectively, and required to be paid hereunder;
    provided, however, that in no event shall any PC Pool
    created hereby continue beyond the expiration of 21 years
    from the death of the survivor of the descendants of Joseph P.
    Kennedy, the late ambassador of the United States to the Court
    of St. James’s, living on the date hereof.



 



    Section 3.12. Effect of Final Payment
    Date.  The actual final payment on a PC may occur
    prior to the Payment Date specified in
    Section 3.09(a)(ii)
    due to prepayments of principal, including prepayments made in
    connection with the repurchase of any Mortgage from the related
    PC Pool.



 



    Section 3.13. Payment Error
    Corrections.  In the event of a principal or
    interest payment error, the Administrator, in its sole
    discretion, may effect corrections by the adjustment of payments
    to be made on future Payment Dates or in such other manner as it
    deems appropriate.



 




    ARTICLE IV



 




    PCs



 



    Section 4.01. Form and
    Denominations.  With respect to each PC Pool, the
    principal balances, PC Coupons and other characteristics of the
    PCs to be issued shall be specified in the related Pool
    Supplement. Delivery of the PCs of a PC Pool shall constitute
    the issuance of the PCs for that PC Pool. PCs shall be issued,
    held and transferable only on the book-entry system of the
    Federal Reserve Banks in minimum original principal amounts of
    $1,000 and additional increments of $1. PCs shall at all times
    remain on deposit with a Federal Reserve Bank in accordance with
    the provisions of the Book-Entry Rules. A Federal Reserve Bank
    will maintain a book-entry recordkeeping system for all
    transactions in PCs with respect to Holders.



 



    Section 4.02. Transfer of PCs.  PCs may be
    transferred only in minimum original principal amounts of $1,000
    and additional increments of $1. PCs may not be transferred if,
    as a result of the transfer, the




    

    15








 






    transferor or the new Holder would have on deposit in its
    account PCs of the same issue with an original principal amount
    of less than $1,000.The transfer, exchange or pledge of PCs
    shall be governed by the fiscal agency agreement between Freddie
    Mac and a Federal Reserve Bank, the Book-Entry Rules and such
    other procedures as shall be agreed upon from time to time by
    Freddie Mac and a Federal Reserve Bank. A Federal Reserve Bank
    shall act only upon the instructions of the Holder in recording
    transfers of a PC. A charge may be made for any transfer of a PC
    and shall be made for any tax or other governmental charge
    imposed in connection with a transfer of a PC. Freddie Mac
    hereby assigns to the Trustee Freddie Mac’s rights under
    each fiscal agency agreement with respect to PCs issued by any
    PC Pool.



 



    Section 4.03. Record Date.  The Record
    Date for each Payment Date shall be the close of business on the
    last day of the preceding month for Gold PCs and the second
    preceding month for ARM PCs. A Holder of a PC on the books and
    records of a Federal Reserve Bank on the Record Date shall be
    entitled to payment of principal and interest on the related
    Payment Date. A transfer of a PC made on or before the Record
    Date in a month shall be recognized as effective as of the first
    day of such month.



 




    ARTICLE V



 




    Remedies



 



    Section 5.01. Events of Default.  With
    respect to each PC Pool, an “Event of Default” means
    any one of the following events:



 



    (a) Default by the Guarantor or the Administrator in the
    payment of interest or principal to the related Holders as and
    when the same shall become due and payable as provided in this
    Agreement, and the continuance of such default for a period of
    30 days.



 



    (b) Failure by the Guarantor or the Administrator to
    observe or perform any other covenants of this Agreement
    relating to their respective obligations, and the continuance of
    such failure for a period of 60 days after the date of
    receipt by such party of written notice of such failure and a
    demand for remedy by the affected Holders representing not less
    than 65 percent of the remaining principal balance of any
    affected PC Pool.



 



    (c) The entry by any court having jurisdiction over the
    Guarantor or the Administrator of a decree or order for relief
    in an involuntary case under any applicable bankruptcy,
    insolvency or other similar law now or hereafter in effect, or
    for the appointment of a receiver, liquidator, assignee,
    custodian or sequestrator (or other similar official) of the
    Guarantor or the Administrator or for any substantial part of
    its property, or for the winding up or liquidation of its
    affairs, if such decree or order remains unstayed and in effect
    for a period of 60 consecutive days.



 



    (d) Commencement by the Guarantor or the Administrator of a
    voluntary case under any applicable bankruptcy, insolvency or
    other similar law now or hereafter in effect, or consent by the
    Guarantor or the Administrator to the entry of an order for
    relief in an involuntary case under any such law, or its consent
    to the appointment of or taking possession by a receiver,
    liquidator, assignee, trustee, custodian or sequestrator (or
    other similar official) of the Guarantor or the Administrator or
    for any substantial part of their respective properties, or any
    general assignment made by the Guarantor or the Administrator
    for the benefit of creditors, or failure by the Guarantor or the
    Administrator generally to pay their debts as they become due.



 



    The appointment of a conservator (or other similar official) by
    a regulator having jurisdiction over the Guarantor or the
    Administrator, whether or not such party consents to such
    appointment, shall not constitute an Event of Default.




    

    16








 






    Section 5.02. Remedies.



 



    (a) If an Event of Default occurs and is continuing with
    respect to a PC Pool, the Holders of PCs representing a majority
    of the remaining principal balance of such PC Pool may, by
    written notice to Freddie Mac, remove Freddie Mac as
    Administrator and nominate its successor under this Agreement
    with respect to such PC Pool. The nominee shall be deemed
    appointed as Freddie Mac’s successor as Administrator
    unless Freddie Mac objects within 10 days after such
    nomination. Upon such objection:



 



    (i) The Administrator may petition any court of competent
    jurisdiction for the appointment of its successor; or



 



    (ii) Any bona fide Holder that has been a Holder for at
    least six months may, on behalf of such Holder and all others
    similarly situated, petition any such court for appointment of
    the Administrator’s successor.



 



    (b) If a successor Administrator is appointed, the
    Administrator shall submit to its successor a complete written
    report and accounting of the Mortgages in the affected PC Pool
    and shall take all other steps necessary or desirable to
    transfer its interest in and administration of such PC Pool to
    its successor.



 



    (c) Subject to the Freddie Mac Act, a successor may take
    any action with respect to the Mortgages as may be reasonable
    and appropriate in the circumstances. Prior to the designation
    of a successor, the Holders of PCs representing a majority of
    the remaining principal balance of any affected PC Pool may
    waive any past or current Event of Default.



 



    (d) Appointment of a successor shall not relieve Freddie
    Mac, in its capacity as Guarantor, of its guarantee obligations
    as set forth in this Agreement.



 



    Section 5.03. Limitation on Suits by Holders.



 



    (a) With respect to any PC Pool, except as provided in
    Section 5.02, no Holder shall have any right to institute
    any action or proceeding at law or in equity or in bankruptcy or
    otherwise or seek any other remedy whatsoever against Freddie
    Mac or the Trustee with respect to this Agreement or the related
    PCs or Mortgages, unless:



 



    (i) Such Holder previously has given the Trustee written
    notice of an Event of Default and the continuance thereof;



 



    (ii) The Holders of PCs representing a majority of the
    remaining principal balance of any affected PC Pool have made a
    written request to the Trustee to institute an action or
    proceeding in its own name and have offered the Trustee
    reasonable indemnity against the costs, expenses and liabilities
    to be incurred;



 



    (iii) The Trustee has failed to institute any such action
    or proceeding for 60 days after its receipt of the written
    notice, request and offer of indemnity described above; and



 



    (iv) The Trustee has not received from such Holders any
    direction inconsistent with the written request described above
    during the
    60-day
    period.



 



    (b) No Holder shall have any right under this Agreement to
    prejudice the rights of any other Holder, to obtain or seek
    preference or priority over any other Holder or to enforce any
    right under this Agreement, except for the ratable and common
    benefit of all Holders of PCs representing interests in any
    affected PC Pool.




    

    17








 






    (c) For the protection and enforcement of the provisions of
    this Section, Freddie Mac, the Trustee and each and every Holder
    shall be entitled to such relief as can be given either at law
    or in equity. Notwithstanding the foregoing, no Holder’s
    right to receive payment (or to institute suit to enforce
    payment) of principal and interest as provided herein on or
    after the due date of such payment shall be impaired or affected
    without the consent of the Holder.



 




    ARTICLE VI



 




    Trustee



 



    Section 6.01. Duties of Trustee.



 



    (a) If an Event of Default has occurred and is continuing
    with respect to a PC Pool, the Trustee shall exercise the rights
    and powers vested in it by this Agreement and use the same
    degree of care and skill in its exercise as a prudent person
    would exercise or use under the circumstances in the conduct of
    such person’s own affairs.



 



    (b) Except during the continuance of an Event of Default,
    the Trustee undertakes to perform such duties and only such
    duties as are specifically set forth in this Agreement and shall
    not be liable except for the performance of such duties and
    obligations as are specifically set forth in this Agreement and
    no implied covenants or obligations shall be read into this
    Agreement against the Trustee.



 



    (c) The Trustee and its directors, officers, employees and
    agents may not be protected from liability which would otherwise
    be imposed by reason of willful misfeasance, bad faith or gross
    negligence in the performance of their respective duties or by
    reason of reckless disregard of obligations and duties under
    this Agreement, except that:



 



    (i) this paragraph does not limit the effect of paragraph
    (b) of this Section;



 



    (ii) the Trustee shall not be liable for any action taken,
    or not taken, by the Trustee in good faith pursuant to this
    Agreement or for errors in judgment; and



 



    (iii) the Trustee shall not be required to take notice or
    be deemed to have notice or knowledge of any default or Event of
    Default, unless the Trustee obtains actual knowledge or written
    notice of such default or Event of Default. In the absence of
    such actual knowledge or notice, the Trustee may conclusively
    assume that there is no default or Event of Default.



 



    (d) Every provision of this Agreement shall be subject to
    the provisions of this Section and Section 6.02.



 



    (e) The Trustee shall not be liable for indebtedness
    evidenced by or arising under this Agreement, including
    principal of or interest on the PCs, or interest on any money
    received by it except as the Trustee may agree in writing.



 



    (f) Money held in trust by the Trustee need not be
    segregated from other funds except to the extent required by law
    or the terms of this Agreement.



 



    (g) No provision of this Agreement shall require the
    Trustee to expend, advance or risk its own funds or otherwise
    incur financial liability in the performance of any of its
    duties hereunder or in the exercise of any of its rights or
    powers, if it shall have reasonable grounds to believe that
    repayment of such funds or adequate indemnity against such risk
    or liability is not reasonably assured to it.




    

    18








 






    (h) The Trustee may, but shall not be obligated to,
    undertake any legal action that it deems necessary or desirable
    in the interest of Holders. The Trustee may be reimbursed for
    the legal expenses and costs of such action from the assets of
    the related PC Pool.



 



    Section 6.02. Certain Matters Affecting the Trustee.



 



    (a) The Trustee, and any director, officer, employee or
    agent of the Trustee may rely in good faith on any certificate,
    opinion or other document of any kind which, prima facie, is
    properly executed and submitted by any appropriate Person
    respecting any matters arising hereunder. The Trustee may rely
    on any such documents believed by it to be genuine and to have
    been signed or presented by the proper Person and on their face
    conforming to the requirements of this Agreement. The Trustee
    need not investigate any fact or matter stated in such documents.



 



    (b) Before the Trustee acts or refrains from acting, it may
    require an officer’s certificate or an opinion of counsel,
    which shall not be at the expense of the Trustee. The Trustee
    shall not be liable for any action it takes or omits to take in
    good faith in reliance on an officer’s certificate or
    opinion of counsel. The right of the Trustee to perform any
    discretionary act enumerated in this Agreement shall not be
    construed as a duty and the Trustee shall not be answerable for
    other than its willful misfeasance, bad faith or gross
    negligence in the performance of such act.



 



    (c) The Trustee may execute any of the trusts or powers
    hereunder or perform any duties hereunder either directly or by
    or through agents or attorneys or a custodian or nominee.



 



    (d) The Trustee shall not be liable for any action it takes
    or omits to take in good faith which it believes to be
    authorized or within its rights or powers; provided, that the
    Trustee’s conduct does not constitute willful misfeasance,
    bad faith or gross negligence. In no event shall the Trustee
    have any liability for consequential damages.



 



    (e) The Trustee may consult with and rely on the advice of
    counsel, accountants and other advisors and shall not be liable
    for errors in judgment or for anything it does or does not do in
    good faith if it so relies. Any opinion of counsel with respect
    to legal matters relating to this Agreement and the PCs shall be
    full and complete authorization and protection from liability in
    respect to any action taken, omitted or suffered by it hereunder
    in good faith and in accordance with any opinion of such counsel.



 



    (f) Any fees, expenses and indemnities payable from the
    assets of any PC Pool to Freddie Mac, in its capacity as
    Trustee, in the performance of its duties and obligations
    hereunder shall not affect Freddie Mac’s guarantee with
    respect to that PC Pool, as set forth in Section 3.09.



 



    Section 6.03. Trustee’s
    Disclaimer.  The Trustee shall not be responsible
    for and makes no representation as to the validity or adequacy
    of this Agreement, the assets of the PC Pool or the PCs.



 



    Section 6.04. Trustee May Own
    PCs.  Subject to Section 7.06, the Trustee in
    its individual or any other capacity may become the owner or
    pledgee of PCs with the same rights as it would have if it were
    not the Trustee.



 



    Section 6.05. Indemnity.  Each PC Pool
    shall indemnify the Trustee and the Trustee’s employees,
    directors, officers and agents, as provided in this Agreement,
    against any and all claims, losses, liabilities or expenses
    (including attorneys’ fees) incurred by it in connection
    with the administration of this trust and the performance of its
    duties under this Agreement (to the extent not previously
    reimbursed above), including, without limitation, the execution
    and filing of any federal or state tax returns and information
    returns and being the mortgagee of record with respect to the
    related Mortgages. The Trustee shall notify the Administrator
    promptly of any claim for which it may seek indemnity. Failure
    by the Trustee to so




    

    19








 






    notify the Administrator shall not relieve the related PC Pool
    of its obligations hereunder. A PC Pool shall not be required to
    reimburse any expense or indemnify against any loss, liability
    or expense incurred by the Trustee through the Trustee’s
    own willful misfeasance, bad faith or gross negligence.



 



    The Trustee’s rights pursuant to this Section shall survive
    the discharge of this Agreement.



 



    Section 6.06. Replacement of Trustee.  The
    Trustee may resign at any time. Any successor Trustee shall
    resign if it ceases to be eligible in accordance with the
    provisions of Section 6.09. In either case, the resignation
    of the Trustee shall become effective, and the resigning Trustee
    shall be discharged from its obligations with respect to the PC
    Pools created under this Agreement by giving 90 days’
    written notice of the resignation to the Depositor, the
    Guarantor and the Administrator and upon the effectiveness of an
    appointment of a successor Trustee, which may be as of a date
    prior to the end of the
    90-day
    period. Upon receiving such notice of resignation, the Depositor
    shall promptly appoint one or more successor Trustees by written
    instrument, one copy of which is delivered to the resigning
    Trustee and one copy of which is delivered to the successor
    Trustee. The successor Trustee need not be the same Person for
    all PC Pools. If no successor Trustee has been appointed for a
    PC Pool, or one that has been appointed has not accepted the
    appointment within 90 days after giving such notice of
    resignation, the resigning Trustee may petition any court of
    competent jurisdiction for the appointment of a successor
    Trustee.



 



    Prior to an Event of Default, or if an Event of Default has
    occurred and has been cured with respect to a PC Pool, Freddie
    Mac cannot be removed as Trustee with respect to that PC Pool.
    If an Event of Default has occurred and is continuing while
    Freddie Mac is the Trustee, at the direction of Holders of PCs
    representing a majority of the remaining principal balance of
    such PC Pool, Freddie Mac shall resign or be removed as Trustee,
    and to the extent permitted by law, all of the rights and
    obligations of the Trustee with respect to the related PC Pool
    only, will be terminated by notifying the Trustee in writing.
    Holders of PCs representing a majority of the remaining
    principal balance of the PC Pool will then be authorized to name
    and appoint one or more successor Trustees. Notwithstanding the
    termination of the Trustee, its liability under this Agreement
    and arising prior to such termination shall survive such
    termination.



 



    If a successor Trustee is serving as the Trustee, the following
    events are “Trustee Events of Default” with respect to
    a PC Pool:



 



    (i) the Trustee fails to comply with Section 6.09;



 



    (ii) the Trustee is adjudged bankrupt or insolvent;



 



    (iii) a receiver or other public officer takes charge of
    the Trustee or its property; or



 



    (iv) the Trustee otherwise becomes incapable of acting.



 



    If at any time a Trustee Event of Default has occurred and is
    continuing, the Guarantor (or if an Event of Default has
    occurred and is continuing, the Depositor) may, and if directed
    by Holders of PCs representing a majority of the remaining
    principal balance of such PC Pool, shall, remove the Trustee as
    to such PC pool and appoint a successor Trustee by written
    instrument, one copy of which shall be delivered to the Trustee
    so removed and one copy of which shall be delivered to the
    successor Trustee, and the Guarantor (or if an Event of Default
    has occurred and is continuing, the Depositor) shall give
    written notice of the successor Trustee to the Holders affected
    by the succession. Notwithstanding the termination of the
    Trustee, its liability under this Agreement arising prior to
    such termination will survive such termination.



 



    If the Trustee resigns or is removed or if a vacancy exists in
    the office of the Trustee for any reason (the Trustee in such
    event being referred to herein as the retiring Trustee), the
    Depositor shall promptly appoint a successor Trustee that
    satisfies the eligibility requirements of Section 6.09.




    

    20








 






    The retiring Trustee agrees to cooperate with the Depositor and
    any successor Trustee in effecting the termination of the
    retiring Trustee’s responsibilities and rights hereunder
    and shall promptly provide such successor Trustee all documents
    and records reasonably requested by it to enable it to assume
    the Trustee’s functions hereunder.



 



    A successor Trustee shall deliver a written acceptance of its
    appointment to the retiring Trustee and to the Depositor, the
    Guarantor and the Administrator. Thereupon the resignation or
    removal of the retiring Trustee shall become effective, and the
    successor Trustee shall have all the rights, powers and duties
    of the Trustee under this Agreement with respect to such PC
    Pool. The successor Trustee shall mail a notice of its
    succession to the related Holders. The retiring Trustee shall
    promptly transfer all property held by it as Trustee to the
    successor Trustee.



 



    If a successor Trustee does not take office within 30 days
    after the retiring Trustee resigns or is removed, the retiring
    Trustee or the Depositor may petition any court of competent
    jurisdiction for the appointment of a successor Trustee.



 



    Section 6.07. Successor Trustee By
    Merger.  If a successor Trustee consolidates with,
    merges or converts into, or transfers all or substantially all
    its corporate trust business or assets to, another corporation
    or banking association, the resulting, surviving or transferee
    corporation without any further act shall be the successor
    Trustee; provided, that such corporation or banking association
    shall be otherwise qualified and eligible under
    Section 6.09.



 



    Section 6.08. Appointment of Co-Trustee or Separate
    Trustee.



 



    (a) Notwithstanding any other provisions of this Agreement,
    at any time, for the purpose of meeting any legal requirement of
    any jurisdiction in which any part of a PC Pool may at the time
    be located, the Trustee shall have the power and may execute and
    deliver all instruments to appoint one or more Persons to act as
    a co-trustee or co-trustees, or separate trustee or separate
    trustees, of all or any part of such PC Pool and to vest in such
    Person or Persons, in such capacity and for the benefit of the
    related Holders, such title to such PC Pool, or any part
    thereof, and, subject to the other provisions of this Section,
    such powers, duties, obligations, rights and trusts as the
    Trustee may consider necessary or desirable. No co-trustee or
    separate trustee hereunder shall be required to meet the terms
    of eligibility as a successor trustee under Section 6.09
    and no notice to the related Holders of the appointment of any
    co-trustee or separate trustee shall be required under
    Section 6.06 hereof.



 



    (b) With respect to each PC Pool, every separate trustee
    and co-trustee shall, to the extent permitted by law, be
    appointed and act subject to the following provisions and
    conditions:



 



    (i) all rights, powers, duties and obligations conferred or
    imposed upon the Trustee shall be conferred or imposed upon and
    exercised or performed by the Trustee and such separate trustee
    or co-trustee jointly (it being understood that such separate
    trustee or co-trustee is not authorized to act separately
    without the Trustee joining in such act), except to the extent
    that under any law of any jurisdiction in which any particular
    act or acts are to be performed the Trustee shall be incompetent
    or unqualified to perform such act or acts, in which event such
    rights, powers, duties and obligations (including the holding of
    title to the related PC Pool or any portion thereof in any such
    jurisdiction) shall be exercised and performed singly by such
    separate trustee or co-trustee, but solely at the direction of
    the Trustee;



 



    (ii) no trustee hereunder shall be personally liable by
    reason of any act or omission of any other trustee
    hereunder; and




    

    21








 






    (iii) the Trustee may at any time accept the resignation of
    or remove any separate trustee or co-trustee.



 



    (c) Any notice, request or other writing given to the
    Trustee shall be deemed to have been given to each of the then
    separate trustees and co-trustees, as effectively as if given to
    each of them. Every instrument appointing any separate trustee
    or co-trustee shall refer to this Agreement and the conditions
    of this Article VI. Each separate trustee and co-trustee,
    upon its acceptance of the trusts conferred, shall be vested
    with the estates or property specified in its instrument of
    appointment, either jointly with the Trustee or separately, as
    may be provided therein, subject to all the provisions of this
    Agreement, specifically including every provision of this
    Agreement relating to the conduct of, affecting the liability
    of, or affording protection to, the Trustee. Every such
    instrument shall be filed with the Trustee.



 



    (d) Any separate trustee or co-trustee may at any time
    constitute the Trustee, its agent or attorney-in-fact with full
    power and authority, to the extent not prohibited by law, to do
    any lawful act under or in respect of this Agreement on its
    behalf and in its name. If any separate trustee or co-trustee
    shall die, become incapable of acting, resign or be removed, all
    of its estates, properties, rights, remedies and trusts shall
    vest in and be exercised by the Trustee, to the extent permitted
    by law, without the appointment of a new or successor trustee.



 



    Section 6.09. Eligibility;
    Disqualification.  Freddie Mac is eligible to act
    as the Trustee and is initially the Trustee for the PC Pools
    created under this Agreement. Any successor to Freddie Mac
    (i) at the time of its appointment as Trustee, must be
    reasonably acceptable to Freddie Mac and (ii) must be
    organized as a corporation or association doing business under
    the laws of the United States or any State thereof, be
    authorized under such laws to exercise corporate trust powers,
    have combined capital and surplus of at least $50,000,000 and be
    subject to supervision or examination by federal or state
    financial regulatory authorities. If any successor Trustee shall
    cease to satisfy the eligibility requirements set forth in
    (ii) above, that successor Trustee shall resign immediately
    in the manner and with the effect specified in Section 6.06.



 




    ARTICLE VII



 




    Miscellaneous
    Provisions



 



    Section 7.01. Annual Statements.  Within a
    reasonable time after the end of each calendar year, the
    Administrator (or its agent) shall furnish to each Holder on any
    Record Date during such year information that the Administrator
    deems necessary or desirable to enable Holders and beneficial
    owners of PCs to prepare their United States federal income tax
    returns, if applicable.



 



    Section 7.02. Limitations on
    Liability.  Neither Freddie Mac, in its corporate
    capacity, nor any of its directors, officers, employees,
    authorized designees, representatives or agents (“related
    persons”) shall be liable to Holders for any action taken,
    or not taken, by them or by a servicer in good faith pursuant to
    this Agreement or for errors in judgment. This provision shall
    not protect Freddie Mac or any related person against any
    liability which would otherwise be imposed by reason of willful
    misfeasance, bad faith or gross negligence in the performance of
    duties or by reason of reckless disregard of obligations and
    duties under this Agreement. In no event shall Freddie Mac or
    any related person be liable for any consequential damages.
    Freddie Mac and any related person may rely in good faith on any
    document or other communication of any kind properly executed
    and submitted by any Person with respect to any matter arising
    under this Agreement. Freddie Mac has no obligation to appear
    in, prosecute or defend any legal action which is not incidental
    to its duties to service or supervise the servicing of the
    Mortgages in accordance with this Agreement and which in its
    opinion may involve any expense or liability for Freddie Mac.
    Freddie Mac may, in its discretion, undertake or participate in
    any action it deems necessary or




    

    22








 






    desirable with respect to any Mortgage, this Agreement, the PCs
    or the rights and duties of the parties hereto and the interests
    of the Holders hereunder. In such event, the legal expenses and
    costs of such action and any resulting liability shall be
    expenses for the protection, preservation and maintenance of the
    Mortgages borne pro rata by Freddie Mac and Holders as provided
    in Section 3.08(b).



 



    Section 7.03. Limitation on Rights of
    Holders.  The death or incapacity of any Person
    having an interest in a PC shall not terminate this Agreement or
    any PC Pool. Such death or incapacity shall not entitle the
    legal representatives or heirs of such Person, or any Holder for
    such Person, to claim an accounting, take any action or bring
    any proceeding in any court for a partition or winding up of the
    related PC Pool, nor otherwise affect the rights, obligations
    and liabilities of the parties hereto or any of them.



 



    Section 7.04. Control by Holders.  With
    respect to any PC Pool, except as otherwise provided in
    Articles V and VI and Sections 7.05 and 7.06, no
    Holder shall have any right to vote or to otherwise control in
    any manner the operation and management of the Mortgages
    included in such PC Pool, or the obligations of the parties
    hereto. This Agreement shall not be construed so as to make the
    Holders from time to time partners or members of an association.
    Holders shall not be liable to any third person by reason of any
    action taken by the parties to this Agreement pursuant to any
    provision hereof.



 



    Section 7.05. Amendment.



 



    (a) Freddie Mac and the Trustee may amend this Agreement
    (including any related Pool Supplement) from time to time
    without the consent of any Holders to (i) cure any
    ambiguity or correct or supplement any provision in this
    Agreement, provided, however, that any such amendment
    shall not have a material adverse effect on any Holder;
    (ii) maintain the classification of any PC Pool as a
    grantor trust for federal income tax purposes; or
    (iii) avoid the imposition of any state or federal tax on a
    PC Pool; it being understood that any amendment permitting the
    repurchase of a Mortgage by Freddie Mac due to a delinquency of
    less than 120 days, other than in the circumstances
    described in Section 1.02(c)(iii), may not be adopted under
    this clause (a).



 



    (b) Except as provided in Section 7.05(c), Freddie Mac
    and the Trustee may amend this Agreement as to any PC Pool, with
    the consent of Holders representing not less than a majority of
    the remaining principal balance of the affected PC Pool.



 



    (c) Freddie Mac and the Trustee may not amend this
    Agreement, without the consent of a Holder, if such amendment
    would impair or affect the right of such Holder to receive
    payment of principal and interest on or after the due date of
    such payment or to institute suit for the enforcement of any
    such payment on or after such date.



 



    (d) To the extent that any provisions of this Agreement
    differ from the provisions of any Freddie Mac Mortgage
    Participation Certificates Agreement or PC Master
    Trust Agreement dated prior to the date of this Agreement,
    this Agreement shall be deemed to amend such provisions of the
    prior agreement, but only to the extent that Freddie Mac, under
    the terms of such prior agreement, could have effected such
    change as an amendment of such prior agreement without the
    consent of Holders of PCs thereunder; provided, however,
    that the trust declarations and related provisions set forth
    in Section 7.05(d) of the PC Master Trust Agreement
    dated as of December 31, 2007 are hereby reaffirmed with
    respect to each PC Pool created before December 31, 2007.



 



    (e) Notwithstanding any other provision of this Section,
    (i) the Administrator (in its own discretion and in its own
    interest) and the Trustee (at the Administrator’s
    direction) may amend this Agreement to reflect any modification
    in the Administrator’s methodology of calculating payments
    to Holders, including any modifications described in
    Section 3.05(d) and Section 3.06(a) and the manner in
    which it distributes prepayments to Holders, (ii) the
    Administrator (in its own discretion and in its own interest)
    and the Trustee (at the Administrator’s direction) may
    amend this Agreement to cure any inconsistency between this




    

    23








 






    Agreement and the provisions of the Guide and (iii) the
    Depositor (in its own discretion and in its own interest) and
    the Trustee (at the Administrator’s direction) may amend
    any Pool Supplement to make the adjustments described in
    Section 1.02(b) to the characteristics of the Mortgages to
    be transferred to a PC Pool or to the related PCs.



 



    Section 7.06. Voting Rights.



 



    (a) Except as otherwise provided in Section 7.06(b),
    in determining whether Holders of the requisite amount of PCs of
    a PC Pool have given any request, demand, authorization,
    direction, notice, consent or waiver requested or permitted
    under this Agreement, any PCs beneficially held by a Transferor
    of Mortgages in such PC Pool, or the affiliates or agents of a
    Transferor, will be disregarded and deemed not to be
    outstanding. In addition, if Freddie Mac is acting as
    Administrator or Trustee and an Event of Default has occurred
    and is continuing, any PCs held by Freddie Mac shall be
    disregarded and deemed not to be outstanding for purposes of
    exercising the remedies set forth in Section 5.02 and the
    second paragraph of Section 6.06.



 



    (b) The first sentence of Subsection 7.06(a) shall not
    apply when determining whether Holders of the requisite amount
    of PCs of a PC Pool have given any request, demand,
    authorization, direction, notice, consent or waiver under this
    Agreement (i) in respect of any matter regarding an Event
    of Default or a Trustee Event of Default or succession upon such
    Event of Default or Trustee Event of Default, (ii) in
    accordance with Section 7.05(c) of this Agreement or
    (iii) in respect of any matter the outcome of which would
    not affect the classification of the transfer of Mortgages by
    the Depositor to the related PC Pool as a sale under accounting
    principles generally accepted in the United States.



 



    Section 7.07. Persons Deemed Owners.  With
    respect to each PC Pool, Freddie Mac, the Trustee, the
    Administrator and a Federal Reserve Bank (or any agent of any of
    them) may deem and treat the related Holder(s) as the absolute
    owner(s) of a PC and the undivided beneficial ownership
    interests in the Mortgages included in the related PC Pool for
    the purpose of receiving payments and for all other purposes,
    and none of Freddie Mac, the Trustee, the Administrator or a
    Federal Reserve Bank (nor any agent of any of them) shall be
    affected by any notice to the contrary. All payments made to a
    Holder, or upon such Holder’s order, shall be valid, and,
    to the extent of the payment, shall satisfy and discharge the
    related PC Pool’s payment obligations with respect to the
    Holder’s PC. None of Freddie Mac, the Trustee, the
    Administrator or any Federal Reserve Bank shall have any direct
    obligation to any beneficial owner unless it is also the Holder
    of a PC.



 



    Section 7.08. Governing Law.  THIS
    AGREEMENT AND THE PARTIES’ RIGHTS AND OBLIGATIONS WITH
    RESPECT TO PCs, SHALL BE GOVERNED BY THE LAWS OF THE UNITED
    STATES. INSOFAR AS THERE MAY BE NO APPLICABLE PRECEDENT, AND
    INSOFAR AS TO DO SO WOULD NOT FRUSTRATE THE PURPOSES OF THE
    FREDDIE MAC ACT OR ANY PROVISION OF THIS AGREEMENT OR THE
    TRANSACTIONS GOVERNED HEREBY, THE LOCAL LAWS OF THE STATE OF NEW
    YORK SHALL BE DEEMED REFLECTIVE OF THE LAWS OF THE UNITED STATES.



 



    Section 7.09. Grantor
    Trust Status.  No provision in this Agreement
    shall be construed to grant Freddie Mac, the Trustee or any
    other Person authority to act in any manner which would cause a
    PC Pool not to be treated as a grantor trust for federal income
    tax purposes.



 



    Section 7.10. Payments Due on Non-Business
    Days.  If the date fixed for any payment on any PC
    is a day that is not a Business Day, then such payment shall be
    made on the next succeeding Business Day, with the same force
    and effect as though made on the date fixed for such payment,
    and no interest shall accrue for the period after such date.




    

    24








 






    Section 7.11. Successors.  This Agreement
    shall be binding upon and inure to the benefit of the parties
    and their respective successors, including any successor by
    operation of law, and permitted assigns.



 



    Section 7.12. Headings.  The headings in
    this Agreement are for convenience only and shall not affect the
    construction of this Agreement.



 



    Section 7.13. Notice and Demand.



 



    (a) Any notice, demand or other communication required or
    permitted under this Agreement to be given to or served upon any
    Holder may be given or served (i) in writing by deposit in
    the United States mail, postage prepaid, and addressed to such
    Holder as such Holder’s name and address may appear on the
    books and records of a Federal Reserve Bank or (ii) by
    transmission to such Holder through the communication system of
    the Federal Reserve Banks. Any notice, demand or other
    communication to or upon a Holder shall be deemed to have been
    sufficiently given or made, for all purposes, upon mailing or
    transmission.



 



    (b) Any notice, demand or other communication which is
    required or permitted to be given to or served under this
    Agreement may be given in writing addressed as follows
    (i) in the case of Freddie Mac in its corporate capacity,
    to Freddie Mac, 8200 Jones Branch Drive, McLean, Virginia 22102,
    Attention: Executive Vice President — General Counsel
    and Secretary and (ii) in the case of the Trustee, to:
    Freddie Mac (as Trustee), 8200 Jones Branch Drive, McLean,
    Virginia 22102, Attention: Executive Vice President —
    General Counsel and Secretary.



 



    (c) Any notice, demand or other communication to or upon
    Freddie Mac or the Trustee shall be deemed to have been
    sufficiently given or made only upon its actual receipt of the
    writing.




    

    25








 






    THE SALE OF A PC AND RECEIPT AND ACCEPTANCE OF A PC BY OR ON
    BEHALF OF A HOLDER, WITHOUT ANY SIGNATURE OR FURTHER
    MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
    ACCEPTANCE BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL
    INTEREST IN SUCH PC OF ALL THE TERMS AND PROVISIONS OF THIS
    AGREEMENT (INCLUDING THE RELATED POOL SUPPLEMENT) AND THE
    AGREEMENT OF FREDDIE MAC, SUCH HOLDER AND SUCH OTHERS THAT THOSE
    TERMS AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE.



 



    FEDERAL HOME LOAN MORTGAGE CORPORATION,




         in its corporate capacity and as
    Trustee



 



    /s/  Mark
    D. Hanson





    Authorized
    Signatory