EX-10.3






Exhibit 10.3




SCHEDULE I




TO THE




SECURITY AGREEMENT




DEFINITIONS LIST




“Acquisition Date Accrued Interest” means, with respect to any Mortgage Loan or
Additional Balance, the amount of interest, if any, accrued and unpaid on the date of acquisition
of such Mortgage Loan or Additional Balance by the Purchaser.



“Additional Balance” means, with respect to any HELOC, the outstanding principal
balance of any Draw or Draws after the Closing Date for such HELOC elected to be sold, upon the
Seller’s election, by the Seller to the Purchaser pursuant to Section 2.1(a) of the
Mortgage Loan Purchase and Servicing Agreement but excluding any Excluded Amounts.



“Administrator” means New Century Mortgage Corporation, a California corporation.



“Affiliate” means, with respect to a Person, any other Person which directly or
indirectly through one or more intermediaries controls, is controlled by or is under common control
with, such Person. The term “control” means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of the relevant Person.



“Agency” or “Agencies” means any of Fannie Mae, Freddie Mac, any FHLB or
Ginnie Mae, as applicable.



“Agency Custodial Agreement” means the custodial agreement entered into with Ginnie
Mae, Fannie Mae, any FHLB, or Freddie Mac, as applicable, pursuant to which a custodian will act as
document custodian for a pool or pools of Mortgage Loans to be formed to back Agency Securities.



“Agency Securities” means securities backed by a pool or pools of Mortgage Loans,
which are issued and guaranteed by the applicable Agency.



“Aggregate Extended Note Monthly Interest” means, with respect to all Classes of
Extended Notes, the sum of all Extended Note Monthly Interest.



“Allocated Expenses” means the Issuer’s expenses (other than Reimbursable Expenses),
including, without limitation, Rating Agencies fees and expenses, the Administrator fees and
expenses, the Owner Trustee fees and expenses, Depositary fees and expenses, Indenture Trustee fees
and expenses, Collateral Agent fees and expenses, Custodian fees and expenses, due diligence fees
(such due diligence fees not to exceed $15,000 in any quarter) and other anticipated costs and
fees; provided, however, that in no event may the cumulative amount of Allocated
Expenses in any calendar year exceed the Budget Expense Limit.



“Allocated Expenses Account” shall have the meaning specified in Section 6.06
of the Security Agreement.



“Annual Noteholders Tax Statement” is defined in Section 6.4(b) of the Base
Indenture.



“Appraised Value” means the lower of (x) the value set forth in an appraisal (or, with
respect to HELOCs, other documentation or evidence of value which is generally acceptable to
prudent lending institutions with respect to home equity lines of credit) made in connection with
the origination of the related Mortgage Loan as the value of the Mortgaged Property, and (y) the
Purchase Price of the related Mortgaged Property if the Mortgage Loan was made in connection with
the acquisition of the related Mortgaged Property.



“Approved Seller” means an approved seller under the applicable Guidelines.



“Approved Servicer” means an approved servicer under the applicable Guidelines.



“Assets” means any interest of any kind in any assets or property of any kind tangible
or intangible, real, personal or mixed, now owned or hereafter acquired by the Issuer or such other
Person as the context may require.



“Assigned Collateral” has the meaning specified in Section 5.01 of the
Security Agreement.



“Assignment of Mortgage” means an assignment of mortgage, notice of transfer or
equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the
related Mortgaged Property is located to reflect the sale of the Mortgage to the Purchaser.



“Authenticating Representative” shall have the meaning specified in
Section 3.03(b) of the Security Agreement.



“Authorized Officer” means as to the Issuer, any authorized employee or agent of the
Administrator.



“Available Amount” shall mean on any day, in relation to the Reserve Fund, as the case
may be, the aggregate amount on deposit in the Reserve Fund as of such day.



“Average Outstanding Purchase Price” means, with respect to any Remittance Period, (i)
the sum of the Outstanding Purchase Prices of such Mortgage Loan at the end of each day during such
Remittance Period, divided by (ii) the number of days in such Remittance Period. For the avoidance
of doubt, the Outstanding Purchase Price on any day of a Terminated Loan or any other Mortgage Loan
not owned by the Issuer or outstanding at the end of any day shall be zero.



“Bailee Letter” means a bailee letter in the form attached as Exhibit E to the
Custodial Agreement, as part of the Transmittal Letter.



“Bankruptcy Code” means The Bankruptcy Reform Act of 1978, as amended from time to
time, and as codified as 11 U.S.C. Section 101 et seq.



“Base Indenture” means the base indenture, dated as of the Initial Closing Date, by
and between the Issuer and the Indenture Trustee, as the same may be at any time further amended,
modified or supplemented, exclusive of any Indenture Supplements.



“Benefit Arrangement” means at any time an employee benefit plan within the meaning of
Section 3(3) of ERISA which is not a Benefit Plan or a Multiemployer Plan and which is maintained
or otherwise contributed to by any member of the ERISA Group.



“Benefit Plan” means (i) an “employee benefit plan” as defined in Section 3(3) of
ERISA and which is subject to Title I of ERISA, (ii) a “plan” as defined in Section 4975 of the
Code and which is subject to Section 4975 of the Code or (iii) an entity deemed to be investing the
“plan assets” (within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of
ERISA) of any such employee benefit plan or plan, including without limitation an insurance company
general account.



“Bid Price” has the meaning assigned to such term in Section 4.2(e) of the
Mortgage Loan Purchase and Servicing Agreement.



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



“Book-Entry Notes” means beneficial interests in the Notes, ownership and transfers of
which shall be evidenced or made through book entries by a Clearing Agency as described in
Section 2.19 of the Base Indenture; provided that after the occurrence of a
condition whereupon book-entry registration and transfer are no longer permitted and Definitive
Notes are issued to the Note Owners, such Definitive Notes shall replace Book-Entry Notes.



“Borrowing Base Test” means, as of any date of determination, the sum of (A) the
Credits Outstanding on such day and (B) the Principal Amount of all Series of Subordinated Notes
including the aggregate amount, if any, of Principal Amount Charge-Offs which have not been
reinstated as of such date, will not exceed the sum of (A) the excess of the aggregate Outstanding
Purchase Price of the Mortgage Loans over the aggregate Outstanding Purchase Price of any Defaulted
Loans owned by the Issuer on such day, (B) the Capitalized Interest Component on such day, and (C)
any cash and Eligible Investments in the Collateral Account held by the Issuer on such day (to the
extent not included in the definition of Credits Outstanding).



“Budget Expense Limit” shall mean $3,000,000 or such other amount as each Swap
Counterparty and the Issuer may agree to in writing from time to time with Rating Agency
Confirmation.



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



“Calculation Agent” means New Century Mortgage Corporation.



“Calculation Period” shall have the meaning specified in the Interest Rate Swaps.



“Capitalized Interest Component” means, as of any date of determination, the Principal
Component of Secured Liquidity Notes which represents payment of the Interest Component or
capitalized interest on matured Secured Liquidity Notes to the extent not previously deposited in
the Secured Liquidity Note Account pursuant to Section 6.03(b)(iii) of the Security
Agreement.



“Carry-Over Interest Shortfall” is defined in Section 2.6 of the Base
Indenture.



“Cash Equivalent Investment” means at any time, (a) securities with maturities of
ninety (90) days or less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and eurodollar time
deposits with maturities of ninety (90) days or less from the date of acquisition and overnight
bank deposits of any commercial bank having capital and surplus in excess of $500,000,000,
(c) repurchase obligations of any commercial bank satisfying the requirements of clause (b) of this
definition, having a term of not more than seven days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper of a domestic Company
rated at least “A-1+” or the equivalent thereof by S&P or “P-1” or the equivalent thereof by
Moody’s, and in either case maturing within ninety (90) days after the date of acquisition, (e)
securities with maturities of ninety (90) days or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least “A” by S&P or “A2” by
Moody’s, (f) securities with maturities of ninety (90) days or less from the date of acquisition
backed by standby letters of credit issued by any commercial bank satisfying the requirements of
clause (b) of this definition, or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition.



“Cede” means Cede & Co., a nominee of DTC, or any successor thereto.



“Certification” means a certification in the form as Exhibit A to the
Custodial Agreement delivered to the Collateral Agent by the Custodian covering the Mortgage Loans
included in a Transfer Supplement as set forth in Section 4 of the Custodial Agreement.



“Class” means (x) with respect to any Secured Liquidity Notes, any Secured Liquidity
Notes with the same issuance date and Expected Maturity or any Extended Notes with the same
issuance date and Final Maturity, and (y) with respect to any Subordinated Notes, has the meaning
given in the related Supplement.



“Clearing Agency” means an organization registered as a “clearing agency” pursuant to
Section 17A of the Exchange Act or any successor provision thereto or Euroclear and Clearstream.
The initial Clearing Agency shall be DTC, Euroclear and Clearstream.



“Clearing Agency Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects book-entry
transfers and pledges of securities deposited with the Clearing Agency.



“Clearstream” means Clearstream Banking, societe anonyme.



“Closing Date” means the closing date specified in any Transfer Supplement, which is
the date as to which the sale of any Portfolio is designated to occur.



“Code” or “Internal Revenue Code” means the Internal Revenue Code of 1986,
as amended, reformed or otherwise modified from time to time, and any successor statute of similar
import, in each case as in effect from time to time, and applicable U.S. Department of the Treasury
regulations issued pursuant thereto. References to sections of the Code also refer to any
successor sections.



“Collateral” shall mean the Assigned Collateral, the Collateral Account and the
Deposited Funds.



“Collateral Account” means the Eligible Account maintained by the Collateral Agent as
more fully described in Section 6.01 of the Security Agreement.



“Collateral Agent” means Deutsche Bank Trust Company Americas, not in its individual
capacity but solely as Collateral Agent under the Security Agreement, or any successor Collateral
Agent under the Security Agreement.



“Collection Account” shall mean the collection account established pursuant to
Section 4.5 of the Mortgage Loan Purchase and Servicing Agreement and maintained by the
Servicer.



“Collections” means all payments on the Collateral.



“Combined LTV” or “CLTV” or “Combined Loan-to-Value Ratio” means
(a) with respect to any Mortgage Loan other than HELOCs, as of the date of origination, the ratio
(expressed as a percentage) on such date of (x) the outstanding principal amount of such Mortgage
Loan, plus the outstanding principal balance of any senior or junior lien mortgage loan which is
secured by a lien on the same Mortgaged Property, to (y) the lesser of (i) the most recently
obtained Appraised Value of the Mortgaged Property and (ii) if such Mortgage Loan was made to
finance the acquisition of the related Mortgaged Property, the purchase price of the Mortgaged
Property, and (b) with respect to any HELOC, the ratio (expressed as a percentage) as of any date
of (x) the Credit Limit for such HELOC, plus the outstanding principal balance of any first lien
mortgage loan which is secured by a lien on the same Mortgaged Property, to (y) the lesser of (i)
the most recently obtained Appraised Value of the Mortgaged Property and (ii) if such HELOC was
made in conjunction with the acquisition of the related Mortgaged Property, the purchase price of
the Mortgaged Property.



“Company” means New Century Mortgage Corporation.



“Condemnation Proceeds” as to each Mortgage Loan, means all awards or settlements in
respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of
the power of eminent domain or condemnation, to the extent not required to be released to the
Mortgagor pursuant to the terms of the related Loan Documents or, with respect to HELOCs, to any
holder of a mortgage senior to the lien of the related Mortgage (but excluding any Excluded Amounts
with respect to any HELOC).



“Conforming Loan” means a Mortgage Loan which conforms to the Guidelines of the
Agencies as such guidelines are modified by Freddie Mac, Fannie Mae, any FHLB, and Ginnie Mae from
time to time with respect to mortgage loans originated or purchased by the Sellers.



“Contingent Obligation”, as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of that Person (a) with respect to any indebtedness, lease,
dividend, letter of credit or other obligation of another if the primary purpose or intent thereof
by the Person incurring the Contingent Obligation is to provide assurance to the obligee of such
obligation of another that such obligation of another will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof or (b) under any letter of credit
issued for the account of that Person or for which that Person is otherwise liable for
reimbursement thereof. “Contingent Obligation” shall include (a) the direct or indirect guarantee,
endorsement (otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the obligation of
another and (b) any liability of such Person for the obligations of another through any agreement
(contingent or otherwise) (i) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of such obligation (whether in
the form of loans, advances, stock purchases, capital contributions or otherwise), (ii) to maintain
the solvency of any balance sheet item, level of income or financial condition of another or (iii)
to make take-or-pay or similar payments if required regardless of non-performance by any other
party or parties to an agreement, if in the case of any agreement described under sub-clause
(i) or (ii) of this sentence the primary purpose or intent thereof is as described in
the preceding sentence. The amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported.



“Contractual Obligation” as to any Person, means any material provision of any
agreement, instrument or other undertaking to which such Person is a party or by which it or any of
its property is bound or any material provision of any security issued by such Person.



“Corporate Trust Office” shall mean, with respect to the Collateral Agent, the
principal office of the Collateral Agent at which at any particular time its corporate trust
business shall be administered which office at the date of the execution of the Security Agreement
is located at 60 Wall Street, MS NYC 60-2606, New York, NY 10005, Attention: Commercial Paper
Group, or at any other time at such other address as the Collateral Agent may designate from time
to time by notice to the Noteholders and the Issuer.



“Credit Amount” means, on any day, an amount equal to the sum of (x) the Principal
Amount of the outstanding Subordinated Notes including any Principal Amount Charge-Offs not
reinstated as of such date; (y) the Available Amount in the Reserve Fund on such day; and (z) the
Overcollateralization Amount on such day.



“Credit Amount Percentage” means the percentage specified in the Side Letter.



“Credit Limit” means the maximum unpaid principal balance for each HELOC permitted
under the terms of the related Credit Line Agreement.



“Credit Line Agreement” means the related credit line account agreement for a HELOC
executed by the related Mortgagor and any amendment or modification thereof.



“Credits Outstanding” means, as of the close of business on any day (1) the Principal
Component of all outstanding Secured Liquidity Notes, plus (2) the aggregate principal amount of
all outstanding Extended Notes.



“Credit Repositories” means each of Equifax, Experian and Trans Union Credit
Information Company and their successors and assigns.



“Custodial Agreement” means the Custodial Agreement, dated as of the Initial Closing
Date, entered into among the Sellers, the Servicer, the Issuer, the Collateral Agent and the
Custodian, as the same may at any time be amended, modified or supplemented.



“Custodian” means Deutsche Bank National Trust Company, not in its individual capacity
but solely as Custodian under the Custodial Agreement, or any successor Custodian under the
Custodial Agreement.



“Customary Servicing Procedures” means procedures (including collection procedures)
that the Servicer customarily employs and exercises in servicing and administering mortgage loans
and home equity lines of credit for its own account which are in accordance with accepted mortgage
loan and home equity lines of credit servicing practices of prudent prime mortgage lenders in the
jurisdiction in which the Mortgaged Property is situated for properties of a similar type.



“Cut-Off Date” means (i) with respect to the repurchase of a Mortgage Loan by a Seller
or the Servicer pursuant to Sections 3.3, 6.2 or 7.1 of the Mortgage Loan
Purchase and Servicing Agreement, the date of such repurchase and (ii) with respect to any other
sale by the Purchaser of a Mortgage Loan, the time and date established by the Purchaser and the
Mortgage Loan Buyer as the time and date on and after which all principal and interest collected
and other benefits accruing on the Mortgage Loan shall belong to such Mortgage Loan Buyer.



“Default Investment” means a money market fund whose investments are limited to
obligations issued by, or the full and timely payment of principal of and interest on which is
fully guaranteed by, the United States of America or any agency or instrumentality thereof (which
agency or instrumentality is backed by the full faith and credit of the United States of America),
deposits into which are available on demand or no later than the next following Business Day.



“Defaulted Loan” means any Mortgage Loan (i) which has a Monthly Payment that is past
its Due Date for a period of time extending beyond the close of business on the corresponding day
of the third calendar month immediately succeeding the month in which such Due Date occurred, or,
if there is no such corresponding day (e.g., as when the third calendar month is a 30-day
month and such Due Date occurred on the 31st day of a month), then on the last day of
such third calendar month, without giving effect to any Monthly Advance, or (ii) which is a
Delinquent Loan for which the Servicer has not made a Monthly Advance and the Servicer has
delivered a certificate pursuant to Section 5.1 of the Mortgage Loan Purchase and Servicing
Agreement or (iii) where any other event has occurred which gives the holder the right to
accelerate payment of the Mortgage Loan and/or take steps to foreclose on the Mortgage securing the
Mortgage Loan under the related Mortgage Note or other Loan Documents, including without limitation
the bankruptcy of the Mortgagor.



“Definitions List” means this Definitions List, as amended or modified from time to
time.



“Definitive Notes” is defined in Section 2.19(e) of the Base Indenture.



“Delinquency Rate” means for any Remittance Period, the rate equal to 12 times a
fraction, the numerator of which is the aggregate amount of Non-Recoverable Advances for such
Remittance Period and the denominator of which is the Average Outstanding Purchase Price of the
Mortgage Loans owned by the Issuer during such Remittance Period.



“Delinquent Loan” means any Mortgage Loan which has a Monthly Payment that is past its
Due Date for a period of time extending beyond the close of business on the corresponding day of
the month immediately succeeding the month in which such Due Date occurred, or, if there is no such
corresponding day (e.g., as when a 30-day month follows a 31-day month in which such Due
Date occurred on the 31st day of such month), then on the last day of such immediately
succeeding month, up to but not including the corresponding day of the third calendar month
immediately succeeding the month in which such Due Date occurred, or, if there is no such
corresponding day (e.g., as when the third calendar month is a 30-day month and such Due
Date occurred on the 31st day of a month), then on the last day of such third calendar
month, without giving effect to any Monthly Advance.



“Depositary” means Deutsche Bank Trust Company Americas, not in its individual
capacity but solely as Depositary under the Depositary Agreement, or any successor Depositary under
the Depositary Agreement.



“Depositary Agreement” means the Depositary Agreement, dated as of the Initial Closing
Date, entered into by the Issuer and the Depositary, as the same may at any time be amended,
modified or supplemented.



“Depositary Incumbency Certificate” shall have the meaning specified in
Section 3.03(a) of the Security Agreement.



“Deposited Funds” has the meaning specified in Section 6.02 of the Security
Agreement.



“Depositor” means Home123 as the depositor under the Trust Agreement.



“Designated Excess Spread Amount” shall have the meaning specified in the Interest
Rate Swaps.



“Designated Representative” shall have the meaning specified in Section
3.03(b) of the Security Agreement.



“Determination Date” means the 24th day of each month, or if such day is
not a Business Day, the preceding Business Day.



“Disbursement Account Agreement” means the Disbursement Account Agreement, dated as of
December 19, 2006, between the Issuer and the Custodian.



“Distribution Account” means, with respect to any Series of Notes, an account
established as such pursuant to the related Supplement.



“Distribution Date” means (i) after the conversion of any Class of Secured Liquidity
Notes to a Class of Extended Notes and until such Extended Notes are paid in full, the
25th day of each calendar month (or if such day is not a Business Day, the next
following Business Day), (ii) each Final Maturity of each Class of Extended Notes outstanding, and
(iii) each date that Extended Notes are redeemed.



“Dollar” and the symbol “$” mean the lawful currency of the United States.



“Draw” means, with respect to any HELOC, a borrowing by the related Mortgagor under
the related Mortgage Note.



“DTC” means The Depository Trust Company.



“Due Date” means, with respect to each Mortgage Loan, the day on which the related
Monthly Payment on such Mortgage Loan is due, exclusive of any grace period.



“Effective Date” has the meaning specified in Section 4.01 of the Security
Agreement.



“Eligibility Criteria” has the meaning given in the Side Letter.



“Eligibility Representations” means the representations and warranties made by each
Seller with respect to each Mortgage Loan, set forth in Section 3.2 of the Mortgage Loan
Purchase and Servicing Agreement.



“Eligible Account” shall mean either (i) a segregated, non-interest bearing trust
account or (ii) a demand trust account with a bank having short-term debt ratings of “A-1+” by S&P,
“P-1” by Moody’s and, if rated by Fitch, “F1+” by Fitch. In either case, the Collateral Agent on
behalf of the Secured Parties shall at all times be (x) the “entitlement holder” (within the
meaning of Section 8-102(a) of the New York UCC) to the extent that the Collateral Account is a
“securities account” (within the meaning of Section 8-501(a) of the New York UCC), or (ii) the
“customer” (within the meaning of Section 4-104 of the New York UCC), to the extent that the
Collateral Account shall be a “deposit account” (within the meaning of Section 9-102(a) of the New
York UCC).



“Eligible Institution” shall mean (i) Deutsche Bank National Trust Company (while it
shall satisfy any one of the requirements set forth in (ii), (iii), or the proviso below),
or (ii) any depositary institution, the deposits in which are insured by the Federal Deposit
Insurance Corporation and which at all times has a short-term unsecured debt rating of “A-1+” by
S&P, “P-1” by Moody’s and, if rated by Fitch, “F1+” by Fitch or (iii) a depositary institution in
respect of which the Issuer has received written confirmation from the Rating Agencies that the use
of such institution will not result in the reduction or withdrawal of the ratings on any of the
Notes; provided, however, that an institution which shall have corporate trust
powers and which maintains any account hereunder as a fully segregated trust account with the trust
department of such institution shall not be required to meet the foregoing rating requirements, and
need only at all times have a long-term unsecured debt rating of at least “Baa3” by Moody’s so long
as Moody’s is rating any of the Notes.



“Eligible Investments” means investments which mature no later than the Business Day
prior to the next following Payment Date in the following: (i) obligations issued by, or the full
and timely payment of principal of and interest on which is fully guaranteed by, the United States
of America or any agency or instrumentality thereof (which agency or instrumentality is backed by
the full faith and credit of the United States of America), (ii) commercial paper notes (other than
the Senior Notes) rated (at the time of purchase) at least “A-l+” by S&P, “P-1” by Moody’s and, if
rated by Fitch, “F1+” by Fitch, (iii) certificates of deposit, other deposits or bankers’
acceptances issued by or established with commercial banks having short-term deposit ratings (at
the time of purchase) of at least “A-l+” by S&P, “P-1” by Moody’s and, if rated by Fitch, “F1+” by
Fitch, (iv) repurchase agreements involving any of the Eligible Investments described in clauses
(i) through (iii) hereof so long as the other party to the repurchase agreement has short-term
unsecured debt obligations or short-term deposits rated (at the time of purchase) at least “A-l+”
by S&P, “P-1” by Moody’s and, if rated by Fitch, “F1+” by Fitch and (v) direct obligations of any
money market fund or other similar investment company all of whose investments consist of
obligations described in the foregoing clauses of this definition and that is rated “AAAm” by S&P
and “Aam” by Moody’s. In addition, any such Eligible Investment shall not have an “r” highlighter
affixed to its rating, and its term shall have a predetermined fixed dollar amount of principal due
at maturity that cannot vary or change. Interest on any Eligible Investment shall be tied to a
single interest rate index plus a single fixed spread, if any, and move proportionately with that
index. Without limitation of the foregoing, “Eligible Investments” may include investments for
which the Collateral Agent or its Affiliates serves as investment manager or advisor.



“Eligible Loan” means a Mortgage Loan (including a HELOC and any Additional Balances
related thereto) that satisfies the Eligibility Criteria, Eligibility Representations, Portfolio
Aging Limitations and which, taken together with the other Mortgage Loans owned or to be owned by
the Purchaser, does not cause a breach of the Portfolio Criteria. An Eligible Loan includes,
without limitation, the Mortgage Loan File, Monthly Payments, Principal Prepayments, Liquidation
Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights,
benefits, proceeds and obligations arising from or in connection with such Eligible Loan, but
excludes any Excluded Amounts with respect to HELOCs.



“Equivalent Security” means, with respect to a Mortgage Loan, a mortgage-backed
security issued by Fannie Mae, Freddie Mac, any FHLB or Ginnie Mae having a term to final maturity
equal to the original term to maturity of such mortgage loan and an interest or pass-through rate
equal to the interest rate on such mortgage loan.



“Equivalent Security Price” means, with respect to each Mortgage Loan, the price
(expressed as a percentage of the unpaid principal balance thereof) of the Equivalent Security for
such Mortgage Loan (net of standard servicing fees and agency fees). The price of an Equivalent
Security shall be determined on any date by the Reference Agent.



“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute of similar import, in each case as in effect from time to time. References to
sections of ERISA also refer to any successor sections.



“ERISA Group” means the Issuer and all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control which, together
with the Issuer, are treated as a single employer under Section 414 of the Internal Revenue Code.



“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear System.



“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if:




(a) such Person shall become insolvent or admit in writing its inability to pay its
debts as they come due, or the commencement by such Person of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other present or future
federal or state bankruptcy, insolvency or similar law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of such Person or of any substantial part of its
property or the making by such Person of an assignment for the benefit of creditors or the
failure by such Person generally to pay its debts as such debts become due or the taking of
action by such Person in furtherance of any of the foregoing; or




(b) an involuntary petition or an involuntary proceeding shall have been filed or
commenced against such Person under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bankruptcy laws, as now or hereafter
in effect, or any other present or future federal or state bankruptcy, insolvency or similar
law, or seeking the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of such Person or of any substantial part of its
property, or seeking the winding up or liquidation of the affairs of such Person and such
petition or proceeding shall not have been dismissed for a period of thirty (30) days (in
the case of the Issuer), or sixty (60) days (in any other case), or an order or decree for
relief against such Person shall be entered in any such proceeding; or




(c) the board of directors of such Person (if such Person is a corporation or similar
entity) shall vote to implement any of the actions set forth in clause (b) above.



“Event of Default” (i) with respect to the Secured Liquidity Notes and the Extended
Notes, has the meaning specified in Section 7.01 of the Security Agreement, and (ii) with
respect to the Subordinated Notes, has the meaning specified in Section 9.1 of the Base
Indenture.



“Excess Spread Rate” means an annual rate for each Remittance Period equal to the
difference between (A) and (B) where (A) equals the Loan Rate for such Remittance Period and where
(B) equals the sum of (i) the Funding Rate for such Remittance Period, (ii) the Expense Rate for
such Remittance Period, and (iii) the Delinquency Rate for such Remittance Period.



“Exchange Act” means the Securities Exchange Act of 1934, as amended.



“Exchange Date” shall have the meaning specified in Section 2.12(a)(ii) of the
Base Indenture.



“Excluded Amount” means, with respect to any HELOC, any Draws made by the related
Mortgagor under such Mortgage Loan after the Closing Date for such HELOC which have not been
purchased by the Purchaser as an Additional Balance with respect to such HELOC in accordance with
Section 2.1(a) of the Mortgage Loan Purchase and Servicing Agreement, and the portion of
any and all collections received by the Servicer with respect to such HELOC allocated to such Draws
based on the pro rata allocation set forth in Section 4.27 of the Mortgage Loan Purchase
and Servicing Agreement.



“Expected Maturity” means, with respect to each Class of Secured Liquidity Notes, the
expected maturity date of such Class, which date shall be between one (1) and one hundred and
eighty (180) days from the date of issuance of such Class, as set forth in the related instructions
from the Issuer Agent delivered in accordance with Section 4 of the Depositary Agreement.



“Expense Rate” means, for any Remittance Period, the rate equal to 12 times a
fraction, the numerator of which is the aggregate Allocated Expenses and Servicing Fee for such
Remittance Period and the denominator of which is the Average Outstanding Purchase Prices of the
Mortgage Loans owned by the Issuer during such Remittance Period.



“Extended Note Amortization Event” means any time at which an Extended Note remains
outstanding for thirty (30) days following the conversion of the related Secured Liquidity Note;
provided, however, that any Extended Note Amortization Event shall cease to exist
and shall no longer be deemed to be continuing from the date all Extended Notes are paid in full.



“Extended Note Calculation Agent” means the Collateral Agent or any successor
appointed pursuant to Section 4.06 of the Security Agreement.



“Extended Note Monthly Interest” means, with respect to each Class of Extended Notes
and each Distribution Date on which accrued interest on such Class is payable, interest
distributions with respect to such Class of Extended Notes equal to the product of (i) the
outstanding principal amount of such Class of Extended Notes on the preceding Distribution Date (or
in the case of the first Distribution Date occurring after the related Expected Maturity, such
Expected Maturity) (after giving effect to all distributions and allocations made on such preceding
Distribution Date), (ii) the Extended Note Rate for the related Interest Period and (iii) the
actual number of days in such Interest Period divided by three hundred and sixty (360).



“Extended Note Rate” means, for each Distribution Date, One-Month LIBOR plus 0.25% per
annum.



“Extended Note Shortfall” has the meaning specified in Section 4.07 of the
Security Agreement.



“Extended Notes” means any one of the Extended Notes, resulting from the conversion of
a Secured Liquidity Note to an Extended Note pursuant to Section 4.04 of the Security
Agreement.



“Extended Notes Distribution Account” has the meaning set forth in Section
2(d) of the Depositary Agreement.



“Facility Size” means an amount equal to the Program Size plus the
Overcollateralization Amount. On the Initial Closing Date, the Facility Size shall be equal to the
Program Size.



“Fannie Mae” means Fannie Mae, formerly known as the Federal National Mortgage
Association, or any successor thereto.



“Fannie Mae Guides” mean the Fannie Mae Sellers’ Guide and the Fannie Mae Servicers’
Guide and all amendments and additions thereto.



“FDIC” means the Federal Deposit Insurance Corporation, or any successor thereto.



“FHA” means the Federal Housing Administration, an agency within the United States
Department of Housing and Urban Development, or any successor thereto and including the Federal
Housing Commissioner and the Secretary of Housing and Urban Development where appropriate under the
FHA Regulations.



“FHA Loan” means a Mortgage Loan which qualifies for the issuance of a FHA Mortgage
Insurance Certificate.



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



“FHA Mortgage Insurance Certificate” means the contractual obligation of the FHA
respecting the insurance of a Mortgage Loan.



“FHA Regulations” means regulations promulgated by HUD under the Federal Housing
Administration Act, codified in 24 Code of Federal Regulations, and other HUD issuances relating to
FHA Loans, including the related handbooks, circulars, notices and mortgagee letters.



“FHLB” means any Federal Home Loan Bank, or any successor thereto.



“FHLB Guides” means the guidelines published by any FHLB and all amendments or
additions thereto.



“FICO Score” means a statistical credit score obtained by many mortgage lenders in
connection with a loan application to help assess a borrower’s creditworthiness. A FICO Score is
generated by models developed by a third party and made available to lenders through three (3)
national credit bureaus. The FICO Score is based on a borrower’s historical credit data,
including, among other things, payment history, delinquencies on accounts, levels of outstanding
indebtedness, length of credit history, types of credit and bankruptcy experience.



“Final Maturity” means, with respect to each Class of Extended Notes, the date which
is one hundred and twenty (120) days following the Expected Maturity of such Class.



“Financial Covenants” means:




(i) the Performance Guarantor maintains, as of the last day of each of its
fiscal quarters, a Tangible Net Worth not less than the sum of (1) $750,000,000,
and (2) fifty percent (50%) of all increases in shareholders’ equity after November
1, 2004.




(ii) the Performance Guarantor shall maintain its (1) status as a real estate
investment trust for purposes of U.S. federal income tax, and (2) a ratio of Total
Indebtedness to Tangible Net Worth not greater than 15:1 measured on the last day
of each of its fiscal quarters.




(iii) the Performance Guarantor shall have, on a consolidated basis,
Liquidity in an amount equal to not less than $60,000,000.




(iv) the Performance Guarantor shall not permit, for any period of two
consecutive fiscal quarters (each such period, a “Test Period”), Net Income for
such Test Period to be less than $1.00.



“Financing” means (i) securitizing prime mortgage loans, or (ii) funding prime
mortgage loans through a commercial paper program, repurchase facility, or loan facility.



“First Lien Mortgage Loan” means a Mortgage Loan secured by a first lien Mortgage on
the related Mortgaged Property.



“First Pay Default Loan” means a Mortgage Loan for which the initial Monthly Payment
due thereon after origination is not made by the related Mortgagor within forty-five (45) days
after the Due Date therefor.



“Fitch” means Fitch, Inc. and any successor thereto.



“Form” has the meaning given in Section 9.8(b) of the Base Indenture.



“Freddie Mac” means Freddie Mac, formerly known as the Federal Home Loan Mortgage
Corporation, or any successors thereto.



“Freddie Mac Guides” means the Freddie Mac Sellers’ Guide and the Freddie Mac
Servicers’ Guide and all amendments and additions thereto.



“Funding Rate” means, for any Remittance Period, the rate equal to the weighted
average interest rate of the outstanding Secured Liquidity Notes, Extended Notes, if any, and
Subordinated Notes on each day of such Remittance Period.



“GAAP” means generally accepted accounting principles set forth in the statements and
pronouncements of the Financial Accounting Standards Board and opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants or in such
other statements by such other entity as may be approved by a significant segment of the accounting
industry.



“Ginnie Mae” means the Government National Mortgage Association, or any successors
thereto.



“Ginnie Mae Guides” means the Ginnie Mae Handbooks 5500.3 and all amendments or
additions thereto.



“Governmental Authority” means any Federal, state, local or foreign court or
governmental department, commission, board, bureau, agency, authority, instrumentality or
regulatory body.



“Guidelines” means the Freddie Mac Guides, Fannie Mae Guides, FHLB Guides or Ginnie
Mae Guides, as such guides have been amended from time to time with respect to each Seller.



“HELOC” means an open-end, revolving, home equity line of credit underwritten in
accordance with the Sellers’ underwriting standards applicable to such products.



“High Cost Loan” means a mortgage loan classified as (a) a “high cost” loan under the
Home Ownership and Equity Protection Act of 1994, or (b) a “high cost”, “threshold”, “covered”,
“predatory” or similar loan under any applicable federal, state or local law.



“Holder” means the holder of a Note.



“Home123” means Home123 Corporation, a California Corporation.



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



“Indebtedness” means, with respect to any Person at any time, without duplication, all
obligations of such Person which, in accordance with GAAP, consistently applied, should be
classified as liabilities on a consolidated balance sheet of such Person, but in any event
including: (a) all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid or accrued, (d) all obligations of
such Person under conditional sale or other title retention agreements relating to property
purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred
purchase price of property or services, but excluding accrued expenses and trade payables incurred
and paid in the ordinary course of business, (f) all obligations of others secured by any lien on
property owned or acquired by such Person, whether or not the obligations secured thereby have been
assumed, (g) all capitalized lease obligations of such Person, (h) all obligations of such Person
in respect of interest rate protection agreements, (i) all obligations of such Person, actual or
contingent, in respect of letters of credit or banker’s acceptances, (j) all obligations of any
partnership or joint venture as to which such Person is or may become personally liable, and (k)
all guarantees by such Person of Indebtedness of others, less (l) the aggregate amount of any
indebtedness that is reflected on the balance sheet of such Person in respect of obligations
incurred pursuant to a securitization transaction, solely to the extent such obligations are
secured by the assets securitized thereby and are non-recourse to such Person.



“Indemnified Party” shall have the meanings set forth in Sections 16 and
17 of the Custodial Agreement.



“Indenture” means the Base Indenture, together with all Indenture Supplements, as the
same may at any time be amended, modified or supplemented.



“Indenture Event of Default” means an event of default as set forth in the Indenture.



“Indenture Supplement” or “Supplement” means an indenture supplement to the
Base Indenture with respect to any Series of Subordinated Notes.



“Indenture Trustee” means Deutsche Bank Trust Company Americas, not in its individual
capacity but solely as indenture trustee under the Indenture, or any successor indenture trustee
under the Indenture.



“Initial Closing Date” means December 19, 2006.



“Initial Principal Amount” means the original principal amount of any Subordinated
Notes.



“Initial Purchase Price” has the meaning given in the Side Letter.



“Initial Purchaser” means Goldman Sachs Securities Inc. as initial purchaser of the
Subordinated Notes under the Subordinated Note Purchase Agreement.



“Insurance Proceeds” means, with respect to each Mortgage Loan, proceeds of insurance
policies insuring the related Mortgaged Property to the extent not required to be released to a
senior lienholder or the Mortgagor pursuant to the terms of the related Loan Documents (but
excluding, with respect to any HELOC, any Excluded Amounts with respect thereto).



“Insured Amount” has the meaning given in Section 4.10 of the Mortgage Loan
Purchase and Servicing Agreement.



“Interest Component” means, with respect to Secured Liquidity Notes outstanding at any
time, the sum of (a) the portion of the face amount of outstanding Secured Liquidity Notes issued
on a discount basis representing the discount incurred in respect thereof and (b) the amount of
interest that would accrue from the date of issuance to the Expected Maturity in respect of
outstanding Secured Liquidity Notes issued on an interest-bearing basis.



“Interest Only Loan” means a Mortgage Loan for which the Monthly Payment does not
include an amount in reduction of the principal balance of such Mortgage Loan, provided that at the
end of the applicable Interest Only Period, such Mortgage Loan shall automatically be deemed no
longer to be an Interest Only Loan.



“Interest Only Period” means for any Mortgage Loan, the period, if any, during which
the Monthly Payments due with respect to such Mortgage Loan do not include an amount in reduction
of the principal balance of such Mortgage Loan.



“Interest Period” means with respect to each Class of Extended Notes (i) initially,
the period from and including the Expected Maturity to but excluding the second Distribution Date
following such Expected Maturity and (ii) thereafter, the period from and including the immediately
preceding Distribution Date to and including the day immediately preceding such Distribution Date;
provided, however, in the case of the final payment of an Extended Note, the
Interest Period shall end on and include the day immediately preceding the date on which such
Extended Note is paid in full.



“Interest Rate Swap Event of Default” means an event of default under any Interest
Rate Swap.



“Interest Rate Swap Termination Event” means a termination event under any Interest
Rate Swap.



“Interest Rate Swaps” means the interest rate swap agreements, each dated as of the
date hereof, and any other interest rate swap agreement entered into between the Purchaser and a
Swap Counterparty separately, or any substitute interest rate swaps entered into pursuant to the
provisions of the Interest Rate Swaps, in each case as the same may be at any time amended,
modified or supplemented.



“Interim Payment Date” shall have the meaning set forth in each Interest Rate Swap.



“Investment Company Act” means the Investment Company Act of 1940, as amended.



“Issuer” or “Purchaser” means St. Andrew Funding Trust, a Delaware statutory
trust, as issuer of the Notes.



“Issuer Agent” has the meaning set forth in Section 3.03(a) of the Security
Agreement.



“Issuer Incumbency Certificate” shall have the meaning specified in
Section 3.03(a) of the Security Agreement.



“Issuer Order” and “Issuer Request” means a written order or request signed in
the name of the Issuer by any one of its Authorized Officers and delivered to the Indenture
Trustee.



“Junior Loan” means a HELOC or a Second Lien Mortgage Loan.



“Junior Loan Exposure Trigger Event” shall have the meaning set forth in the Side
Letter.



“Junior Loan Exposure Trigger Event Auction” has the meaning assigned to such term in
Section 2.8 of the Mortgage Loan Purchase and Servicing Agreement.



“Land Home Loan” means a mortgage loan secured by housing attached to real property.



“LIBOR” has the meaning specified in Section 4.06 of the Security Agreement.



“LIBOR Business Day” shall mean any day on which dealings in deposits in U.S. dollars
are transacted in the London interbank market.



“LIBOR Determination Date” has the meaning specified in Section 4.06 of the
Security Agreement.



“Lien” means, when used with respect to any Person, any interest in any real or
personal property, asset or other right held, owned or being purchased or acquired by such Person
which secures payment or performance of any obligation, and shall include any mortgage, lien,
pledge, encumbrance, charge, retained security title of a conditional vendor or lessor, or other
security interest of any kind, whether arising under a security agreement, mortgage, lease, deed of
trust, chattel mortgage, assignment, pledge, retention or security title, financing or similar
statement, or notice or arising as a matter of law, judicial process or otherwise.



“Liquidation Proceeds” means all amounts received and retained in connection with the
liquidation of Defaulted Loans, but excluding, with respect to any HELOCs, any Excluded Amounts
related thereto.



“Liquidity” means, for any Person, the aggregate of all cash, Cash Equivalent
Investments, and Overcollateralization, less the amount of Restricted Cash owned by such Person.



“List of Loans” shall have the meaning set forth in Section 8 of the Custodial
Agreement.



“Loan Documents” has the meaning assigned to such term in Section 2.1(b) of
the Mortgage Loan Purchase and Servicing Agreement.



“Loan Rate” means, for any Remittance Period, the rate equal to the average of the
rates calculated for each day of such Remittance Period, which rate for each such day shall equal
(A) the sum, for each Mortgage Loan owned by the Issuer at the end of such day, of the product of
(i) the Mortgage Interest Rate of such Mortgage Loan and (ii) the Outstanding Purchase Price of
such Mortgage Loan divided by (B) the sum of the Outstanding Purchase Price of the Mortgage Loans
owned by the Issuer at the end of each day of such Remittance Period.



“Loan Tape” means a data file (which may be delivered in any format agreed from time
to time by the Issuer and each Swap Counterparty) containing, with respect to each Mortgage Loan
the subject of such Loan Tape, the fields of information set forth on Exhibit G to the Mortgage
Loan Purchase and Servicing Agreement.



“Loan Termination Date” means each day on which a deposit is made into the Collateral
Account in respect of Terminated Loans.



“Loan-to-Value Ratio” or “LTV” means, with respect to each Mortgage Loan, the
ratio expressed as a percentage of the outstanding principal balance of the Mortgage Loan as of the
date of origination of the Mortgage Loan, to the lesser of (i) the most recently obtained Appraised
Value of the Mortgaged Property and (ii) if the Mortgage Loan was made to finance the acquisition
of the related Mortgaged Property, the purchase price of the Mortgaged Property.



“Manufactured Housing” means a unit of manufactured housing treated as real estate
under applicable state law.



“Manufactured Housing Loan” means any Mortgage Loan secured in whole or in part by
Manufactured Housing.



“Market Value” means, (i) for a Conforming Loan, the Equivalent Security Price
multiplied by the unpaid principal balance of such Conforming Loan, (ii) for a Non-Conforming Loan,
means the Equivalent Security Price reduced by the Non-Conforming Loan Price Spread multiplied by
the unpaid principal balance of such Non-Conforming Loan, and (iii) for any Mortgage Loan other
than a Conforming Loan or a Non-Conforming Loan, the price thereof determined by the Reference
Agent in accordance with its customary practices.



“Material Adverse Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Purchaser or (b) the ability of
the Purchaser, the Sellers, the Servicer or the Performance Guarantor to perform any of their
obligations under the Mortgage Loan Purchase and Servicing Agreement or any of the other Program
Documents.



“Maximum Indemnity Amount” for any calendar year shall mean the product of the Program
Size and 20 basis points.



“MERS” means Mortgage Electronic Registration Systems, Inc.



“MERS Mortgage” means any Mortgage that is recorded in the name of MERS, as nominee
for the Company (or in such substantially similar language as the Company deems appropriate).



“Monthly Advance” means amounts advanced by the Servicer in respect of Delinquent
Loans and Defaulted Loans pursuant to Section 5.1 of the Mortgage Loan Purchase and
Servicing Agreement.



“Monthly Certificate” is defined in Section 4.1(a) of the Base Indenture.



“Monthly Noteholders Statement” means a statement substantially in the form of
Exhibit E to the Indenture.



“Monthly Payment” means the scheduled monthly payment of principal and interest on a
Mortgage Loan.



“Monthly Portfolio Report” means a report substantially in the form of Exhibit F of
the Mortgage Loan Purchase and Servicing Agreement.



“Monthly Remittance Date” means the 24th day of each month, or if such day
is not a Business Day, the preceding Business Day.



“Moody’s” means Moody’s Investors Service, Inc., and any successor thereto.



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



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



“Mortgage Loan” means each prime mortgage loan (including HELOCs and any Additional
Balances related thereto sold, upon a Seller’s election, by such Seller to the Purchaser pursuant
to Section 2.1(a) of the Mortgage Loan Purchase and Servicing Agreement on any Closing Date
following the Closing Date for such HELOC, but excluding any Excluded Amounts) identified in each
Transfer Supplement, including any servicing rights with respect thereto.



“Mortgage Loan Buyer” means a Securitization Vehicle or other Person that is
purchasing a Portfolio from the Purchaser (other than a Seller, the Servicer or the Performance
Guarantor in the case of a repurchase of a Mortgage Loan pursuant to Sections 3.3, 6.2 or
7.1 of the Mortgage Loan Purchase and Servicing Agreement).



“Mortgage Loan Buyer Account” has the meaning assigned to such term in Section
4.6(f) of the Mortgage Loan Purchase and Servicing Agreement.



“Mortgage Loan File” means the items pertaining to each Mortgage Loan referred to in
Section 2.1(b) of the Mortgage Loan Purchase and Servicing Agreement, and any additional
documents required to be added to the Mortgage Loan File pursuant to the Mortgage Loan Purchase and
Servicing Agreement.



“Mortgage Loan Purchase and Servicing Agreement” means the Mortgage Loan Purchase and
Servicing Agreement, dated as of the Initial Closing Date, among the Issuer, the Sellers, the
Servicer, and the Performance Guarantor, as the same may at any time be amended, modified or
supplemented.



“Mortgage Loan Schedule” has the meaning assigned to such term in the Custodial
Agreement.



“Mortgage Note” means the note or other evidence of the indebtedness of a Mortgagor
secured by a Mortgage, relating to a Mortgage Loan, other than HELOCs, and with respect to any
HELOC, the Credit Line Agreement.



“Mortgaged Property” means the real property securing repayment of the debt evidenced
by a Mortgage Note.



“Mortgage Transfer Agent” means the Servicer in such capacity pursuant to Section
7.2 of the Mortgage Loan Purchase and Servicing Agreement.



“Mortgagee” means the lender on a Mortgage Note.



“Mortgagor” means the obligor on a Mortgage Note.



“Mortgagor’s Statement of Value” means a certification as to the fair market value of
the related Mortgaged Property made by a Mortgagor who meets the financial and credit requirements
of the Agencies to permit a mortgage loan originator’s reliance upon such certification in lieu of
an appraisal.



“Multiemployer Plan” means at any time an employee pension benefit plan within the
meaning of Section 4001(a)(3) of ERISA to which any member of the ERISA Group is then making or
accruing an obligation to make contributions or has within the preceding five plan years made
contributions, including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.



“NCMC Effective Date” has the meaning set forth in Section 12.17 of the
Mortgage Loan Purchase and Servicing Agreement.



“Negative Amortization Loan” means any Senior Loan with a feature permitting one or
more amounts owing to be capitalized, or which otherwise permits negative amortization of the
principal balance, including without limitation, option ARM mortgage loans and reverse mortgage
loans.



“Net Worth” with respect to any Person, shall mean the excess of total assets of such
Person over total liabilities of such Person, determined in accordance with GAAP.



“No Documentation Loan” means any Mortgage Loan that has been underwritten by a Seller
with limited documentation and/or verification requirements based upon the Mortgagor’s credit and
other qualifying factors, including Mortgage Loans in which (i) the Mortgagor’s source of income is
verified, but the income amount is neither disclosed nor verified; (ii) the Mortgagor’s employment,
income or assets are not disclosed or verified, or (iii) the Mortgagor’s employment is stated and
verified but the Mortgagor’s income and assets are stated but not verified.



“Non-Conforming Loan” means a Mortgage Loan which substantially conforms to the
Guidelines except (i) the principal amount thereof may exceed the principal amount of loans which
conform to the Guidelines or (ii) for other specified exceptions to the Guidelines that are
consistent with a Seller’s underwriting criteria, and which is originated in all material respects
pursuant to such Seller’s “Jumbo” loan program.



“Non-Conforming Price Spread” means, with respect to each Non-Conforming Loan, the
reduction in Equivalent Security Price, as determined by the Reference Agent (generally understood
to be a fixed rate or adjustable rate spread based on then current spreads for the applicable
payment and coupon).



“Non-Owner Occupied Loan” means any Mortgage Loan in respect of which the related
Mortgaged Property is not the primary residence of the related Mortgagor.



“Non-Recoverable Advances” means, for any Remittance Period, the amount of Monthly
Advances that the Servicer was not required to make pursuant to Section 5.1 of the Mortgage
Loan Purchase and Servicing Agreement, because such Monthly Advances were deemed not to be
recoverable in the Servicer’s reasonable judgment.



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



“Note Rate” means, with respect to any Series of Notes, the rate at which interest
accrues on the Notes of such Series of Notes (or formula on the basis of which such rate shall be
determined) as stated in the applicable Supplement.



“Note Register” means the register maintained pursuant to Section 2.9(a) of
the Base Indenture, providing for the registration of the Notes and transfers and exchanges
thereof.



“Noteholder” means the holder of a Note.



“Notes” means, collectively, the Senior Notes and the Subordinated Notes.



“Obligations” has the meaning specified in Section 2.01 of the Security
Agreement.



“Officer’s Certificate” means a certificate signed by an Authorized Officer of the
Issuer.



“One-Month LIBOR” means the rate derived using the method set forth in Section
4.06(b) of the Security Agreement.



“One Payment Delinquent Loan” means any Delinquent Loan for which the Monthly Payment
that is most past due is a Monthly Payment that is more than one month but less than two months
past its Due Date (or, if the Due Date in any month does not correspond to a day in such month
(e.g, when a Due Date occurs on the 31st day of a 30 day calendar month) then on the
last day of such month) without giving effect to any Monthly Servicer Advance.



“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to
the Collateral Agent. The counsel may be an employee of or counsel to the Issuer, unless the
Required Senior Noteholders or each Swap Counterparty shall notify the Collateral Agent in writing
of objection thereto.



“Outstanding Program Amount” means, as of any day, the aggregate of the Outstanding
Purchase Price of all Mortgage Loans owned by the Purchaser on that day.



“Outstanding Purchase Price” means, with respect to any Mortgage Loan and any date of
determination, (i) the Initial Purchase Price of such Mortgage Loan (including, without limitation,
with respect to any HELOC, the Initial Purchase Price of any Additional Balance related thereto
sold, upon a Seller’s election, by such Seller to the Purchaser pursuant to Section 2.1(a)
of the Mortgage Loan Purchase and Servicing Agreement on any Closing Date subsequent to the Closing
Date for such HELOC), less (ii) the amounts of any payments received by the Purchaser in respect of
Acquisition Date Accrued Interest, less (iii) all previous principal payments made on such Mortgage
Loan after acquisition by the Purchaser and deposited into the Collateral Account prior to such
date of determination (excluding with respect to any HELOC, any Excluded Amounts related thereto);
provided, however, that after any Loan Termination Date or any date on which a
Mortgage Loan is repurchased by a Seller or the Servicer pursuant to Sections 3.3,
3.5(c), 6.2 or 7.1 of the Mortgage Loan Purchase and Servicing Agreement,
the Outstanding Purchase Price of such Terminated Loan or such repurchased Mortgage Loan shall be
zero.



“Overcollateralization” means, as of any date of determination for any Person, the
excess of (i) the collateral value of assets pledged by that Person to a lender under a committed
warehouse or repurchase facility (after taking into account required haircuts) over (ii) the
aggregate amount of the advances or loans made by the lender to the borrower under any such
committed warehouse or repurchase facility.



“Overcollateralization Amount” means as of any date of determination, an amount equal
to (A) the Unapplied Principal Collections on such date, plus (B) the excess of (i) the aggregate
Outstanding Purchase Price of the Mortgage Loans owned by the Issuer over (ii) the aggregate
Outstanding Purchase Price of any Defaulted Loans owned by the Issuer on such date, plus (C) the
Capitalized Interest Component on such date, plus (D) any cash and Eligible Investments in the
Collateral Account held by the Issuer on such date, minus (E) the sum of (i) the Credits
Outstanding on such date and (ii) the Principal Amount of the Subordinated Notes, including any
Principal Amount Charge-Offs not reinstated as of such date.



“Owner Trustee” means Christiana Bank & Trust Company, acting not in its individual
capacity but solely as Owner Trustee under the Trust Agreement.



“Partial Termination” means the termination of a portion of each Interest Rate Swap in
accordance with Section 5 thereof.



“Paying Agent” shall have the meaning specified in Section 2.9(a) of the Base
Indenture.



“Payment Date” means the 25th day of each calendar month (or if any such
day is not a Business Day, the next following Business Day), commencing [     ], 2007.



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



“Performance Guarantor” means New Century Financial Corporation, a Maryland
corporation, as performance guarantor pursuant to Section 13.1 of the Mortgage Loan
Purchase and Servicing Agreement.



“Permanent Global Note” has the meaning specified in Section 2.8(b) of the
Base Indenture.



“Permitted Liens” means (i) Liens for current taxes not delinquent or for taxes being
contested in good faith and by appropriate proceedings, and with respect to which adequate reserves
have been established, and are being maintained, in accordance with GAAP, (ii) mechanics’,
materialmen’s, landlords’, warehousemen’s and carrier’s Liens, and other Liens imposed by law,
securing obligations arising in the ordinary course of business that are not more than thirty days
past due or are being contested in good faith and by appropriate proceedings and with respect to
which adequate reserves have been established, and are being maintained, in accordance with GAAP
and (iii) the Liens in favor of the Collateral Agent pursuant to the Security Agreement.



“Person” means and includes an individual, a partnership, a corporation, a statutory
trust, a joint stock company, a limited liability company, an unincorporated association, a joint
venture or other entity or a government or an agency or political subdivision or instrumentality
thereof.



“PMI Policy” means a policy of primary mortgage guaranty insurance issued by a
Qualified Insurer.



“Pool” is defined in Section 7.03 of the Security Agreement.



“Portfolio” means a Mortgage Loan and/or Additional Balance or pool of Mortgage Loans
and/or Additional Balances sold to the Purchaser on a Closing Date pursuant to the terms of the
Mortgage Loan Purchase and Servicing Agreement and the applicable Transfer Supplement.



“Portfolio Aging Limitations” is defined in the Side Letter.



“Portfolio Criteria” is defined in the Side Letter.



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



“Principal Amount” means, with respect to any Series of Subordinated Notes and any
date of determination, the Initial Principal Amount of such Series of Subordinated Notes on the
date of issuance thereof, less the aggregate amount of any Principal Amount Charge-Offs allocated
to such Series of Subordinated Notes, plus the aggregate amount of any Principal Amount
Reinstatements allocated to such Series of Subordinated Notes, less any amounts paid to the holders
of such Series of Subordinated Notes in respect of the Principal Amount thereof.



“Principal Amount Charge-Off” is defined in Section 2.6 of the Base Indenture.



“Principal Amount Reinstatement” is defined in Section 2.6 of the Base
Indenture.



“Principal Component” means (a) the issue price of Secured Liquidity Notes issued on a
discount basis and (b) the principal amount of Secured Liquidity Notes issued on an
interest-bearing basis.



“Principal Paydown Auction” means an auction conducted in accordance with Section
4.1(a) of the Mortgage Loan Purchase and Servicing Agreement.



“Principal Prepayment” means any payment or other recovery of principal made on a
Mortgage Loan which is received in advance of its scheduled Due Date, including any prepayment
penalty or premium thereon, which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to the month of
prepayment (but excluding any Excluded Amounts with respect to any HELOC).



“Principal Terms” is defined in Section 2.3 of the Base Indenture.



“Priority of Payments” means the priority of payments set forth in Section
2.01 or Section 6.03, as applicable, of the Security Agreement.



“Proceeds Account” as to each Mortgage Loan, means any separate account or accounts
created and maintained pursuant to Section 4.7 of the Mortgage Loan Purchase and Servicing
Agreement.



“Program” means the mortgage loan funding, sale and purchase program contemplated by
the Program Documents.



“Program Documents” means and includes the Security Agreement, the Indenture, the
Custodial Agreement, the Disbursement Account Agreement, the Mortgage Loan Purchase and Servicing
Agreement, the Trust Agreement, the Depositary Agreement, the Interest Rate Swaps, the Rated Bidder
Letter, the Subordinated Note Purchase Agreement and the SLN Placement Agent Agreement.



“Program Notional Amount” with respect to each Interest Rate Swap, means the amount
set forth in such Interest Rate Swap as the Program Notional Amount.



“Program Size” means the sum of the Series Program Sizes (as such limit may be
increased or decreased in accordance with the Program Documents).



“Purchase Agreement” means the Mortgage Loan Purchase and Servicing Agreement.



“Purchase Price” has the meaning assigned to such term in Section 11.2 of the
Mortgage Loan Purchase and Servicing Agreement.



“Purchaser” means the Issuer.



“Qualified Bidder” means a nationally or regionally recognized prominent participant
in the mortgage loan finance market segment in which the Company does business, including any Swap
Counterparty if such Swap Counterparty submits a bid in the related sale or auction.



“Qualified Depository” means any depository the accounts of which are insured by the
FDIC through the BIF or the SAIF and the debt obligations of which are rated “Aa2,” “AA” and “AA”
or better by Moody’s, S&P and, if rated by Fitch, Fitch, respectively, or such depository as shall
be acceptable to Moody’s, S&P and Fitch, as applicable.



“Qualified Insurer” means a mortgage guaranty insurance company duly authorized and
licensed where required by law to transact mortgage guaranty insurance business and approved as an
insurer by any of the Agencies.



“Qualified Institution” means a depositary institution or trust company (which may
include the Collateral Agent) organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia; provided, however, that at all
times such depositary institution or trust company is a member of the FDIC and has (i) from S&P a
long-term indebtedness rating not lower than “AA-” and a short-term indebtedness rating of “A-l+”,
from Moody’s a long-term indebtedness rating not lower than “A2” and a short-term indebtedness
rating of “P-1”, and from Fitch a long-term indebtedness rating not lower than “AA-” and a
short-term indebtedness rating of “F1+”, or (ii) such other rating which satisfies the Rating
Agency Confirmation Condition.



“Qualified Purchaser” means a regular purchaser in the market for mortgage loans.



“Quarterly Compliance Certificate” means a certificate substantially in the form of
Exhibit H of the Mortgage Loan Purchase and Servicing Agreement.



“Rated Bidder” means a Person with a “P-1” rating from Moody’s, which, pursuant to the
Rated Bidder Letter, shall be obligated to make a bid on non-Delinquent Loans and non-Defaulted
Loans in any Termination Event Auction, Principal Paydown Auction, or Junior Loan Exposure Trigger
Event Auction.



“Rated Bidder Letter” means a letter in the form annexed as Exhibit B to the
Mortgage Loan Purchase and Servicing Agreement.



“Rating Agency” or “Rating Agencies” with respect to the Company or the Notes,
shall refer to S&P and Moody’s; and with respect to Eligible Investments, a Qualified Depositary,
or any Swap Counterparty, shall refer to S&P, Moody’s and, if applicable, Fitch.



“Rating Agency Confirmation” and “Rating Agency Confirmation Condition” mean, with
respect to any action, that each Rating Agency shall have notified the Issuer, the Collateral Agent
and the Depositary in writing that such action will not result in a reduction or withdrawal of the
rating (in effect immediately before the taking of such action) of any outstanding Notes with
respect to which it is a Rating Agency and, with respect to the issuance of Notes, “Rating Agency
Confirmation” and “Rating Agency Confirmation Condition” also mean, in addition to the above, that
each Rating Agency that is referred to in the Security Agreement as being required to deliver its
rating with respect to such Notes shall have notified the Issuer, the Collateral Agent and the
Depositary in writing that such rating has been issued by such Rating Agency.



“Reference Banks” has the meaning specified in Section 4.06 of the Security
Agreement.



“Reference Agent” means New Century Mortgage Corporation, or such other Person as may
be appointed as Reference Agent pursuant to the Reference Agent Agreement.



“Reference Agent Agreement” means the Reference Agent Agreement between the Issuer and
the Reference Agent, dated as of the Initial Closing Date.



“Registrar” shall have the meaning specified in Section 2.9(a) of the Base
Indenture.



“Regulation S” shall have the meaning specified in Section 2.8(a)(ii) of the
Base Indenture.



“Reimbursable Expenses” shall mean an amount equal to any costs and expenses related
to indemnities, tax gross ups or other similar items, Initial Purchaser indemnity, SLN Placement
Agent indemnity, Collateral Agent indemnity, Custodian indemnity, Depositary indemnity, Indenture
Trustee indemnity, Owner Trustee indemnity, and any extraordinary expenses; provided,
however, that, on an annualized basis, Reimbursable Expenses may not exceed the Maximum
Indemnity Amount.



“Remittance Period” with respect to each Monthly Remittance Date, means the calendar
month immediately preceding such Monthly Remittance Date.



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



“REO Disposition Proceeds” means all amounts received with respect to a REO
Disposition pursuant to Section 4.17 of the Mortgage Loan Purchase and Servicing Agreement,
net of (i) costs related thereto (including unreimbursed Servicing Advances) and (ii) unreimbursed
Monthly Advances relating to the related Mortgage Loan (but excluding any Excluded Amounts with
respect to any HELOC).



“REO Property” means a Mortgaged Property acquired by the Servicer on behalf of the
Purchaser through foreclosure or by deed in lieu of foreclosure, as described in
Section 4.17 of the Mortgage Loan Purchase and Servicing Agreement.



“Repurchase Price” means, with respect to each Mortgage Loan that is repurchased by a
Seller or the Servicer pursuant to Sections 3.3, 3.5(c), 6.2 or 7.1 of the Mortgage
Loan Purchase and Servicing Agreement, the Outstanding Purchase Price of such loan plus accrued and
unpaid interest to (but not including) the date of repurchase, as certified to the Collateral Agent
by the Servicer.



“Repurchase Trigger” means, with respect to the repurchase and sale obligations of the
Sellers or the Servicer pursuant to Sections 3.3, 4.3 or 6.2 respectively,
any Mortgage Loan due for repurchase or sale pursuant to Sections 3.3, 4.3 or
6.2 may remain unsold or not repurchased (as the case may be) for thirty (30) days
following the date on which such Mortgage Loan was due for repurchase or within which such sale was
to be sought pursuant to Sections 3.3, 4.3 or 6.2, provided, that
the aggregate Outstanding Purchase Price of all Mortgage Loans unsold or not repurchased pursuant
to the foregoing shall not be greater than $3,000,000.



“Request for Release” means that certain request for release of documents in the form
of Exhibit B to the Custodial Agreement.



“Required Draw Amount” shall have the meaning specified in Section 6.05(c)
or Section 6.05(d) of the Security Agreement.



“Required Enhancement Amount” means on any day an amount equal to the sum of (A), the
product of (x) the Credit Amount Percentage, and (y) the Program Size, plus (B) the Required
Reserve Fund Amount.



“Required Noteholders” means the Required Senior Noteholders and the Required
Subordinated Noteholders.



“Required Report” means each of the Servicer Report, the Monthly Portfolio Report, the
Weekly Loan Tape and the Quarterly Compliance Certificate.



“Required Reserve Fund Amount” means, on any day, an amount equal to the product of
(x) the Required Reserve Fund Percentage, and (y) the Program Size.



“Required Reserve Fund Percentage” is defined in the Side Letter.



“Required Senior Noteholders” means Senior Noteholders holding in excess of fifty
percent (50%) of the aggregate principal amount of all Senior Notes voting as a single class
(excluding, for the purposes of making the foregoing calculations, any Senior Notes held by the
Sellers or the Servicer or any Affiliate of the Sellers or the Servicer).



“Required Subordinated Noteholders” means Subordinated Noteholders holding in excess
of fifty percent (50%) of the aggregate principal amount of all Subordinated Notes voting as a
single class (excluding, for the purposes of making the foregoing calculations, any Subordinated
Notes held by the Sellers or the Servicer or any Affiliate of the Sellers or the Servicer).



“Required Swap Counterparties” means Swap Counterparties with Sharing Percentages
aggregating at least 66 2/3%.



“Requirements of Law” means, with respect to any Person or any of its property, the
certificate of incorporation or articles of association and by-laws or other organizational or
governing documents of such Person or any of its property, and any law, treaty, rule or regulation,
or determination of any arbitrator or Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its property is subject,
whether Federal, state or local (including, without limitation, usury laws, the Federal Truth in
Lending Act and retail installment sales acts).



“Reserve Fund” means the fund established by the Issuer pursuant to Section 6.05 of
the Security Agreement.



“Responsible Officer” means, with respect to the Custodian, any Principal, Vice
President, any Assistant Vice President, any Managing Director, any Assistant Secretary, any
Assistant Treasurer, any Senior Trust Officer, any Assistant Trust Officer, any Trust Officer or
any other officer associated with the corporate trust department of the Custodian customarily
performing functions similar to those performed by any of the above designated officers and also
means, with respect to a particular matter, any other officer to whom such matter is referred
because of that officer’s actual knowledge of and familiarity with the particular subject.



“Restricted Cash” means all cash and Cash Equivalent Investments that are subject to a
Lien in favor of any Person other than the Collateral Agent on behalf of the Secured Parties, that
are required to be maintained by the Purchaser pursuant to a Contractual Obligation or as a result
of the operation of law.



“Restricted Global Note” shall have the meaning specified in Section 2.8(a) of the
Base Indenture.



“Review Procedure” means the document review procedure set forth on Exhibit D
to the Custodial Agreement.



“Rule 144A” shall have the meaning specified in Section 2.8(a)(ii) of the Base
Indenture.



“S&P” means Standard & Poor’s Ratings Service, a division of The McGraw-Hill
Companies, Inc.



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



“Sale Price” has the meaning assigned to such term in Section 4.2(e) of the
Mortgage Loan Purchase and Servicing Agreement.



“Scheduled Payment Date” means, with respect to any Series of Subordinated Notes, the
payment date set forth in the Indenture Supplement for such Series as the scheduled payment date
for the payment of the principal amount of such Subordinated Notes to each Subordinated Noteholder.



“Second Lien Mortgage Loan” means a Mortgage Loan, other than a HELOC, secured by a
second lien Mortgage on the related Mortgaged Property.



“Secured Liquidity Note Account” has the meaning set forth in Section 2 of the
Depositary Agreement.



“Secured Liquidity Notes” means any one of the Secured Liquidity Notes, executed from
time to time by the Issuer and authenticated by or on behalf of the Depositary, substantially in
the form of Exhibit A or Exhibit B to the Depositary Agreement.



“Secured Parties” and “Secured Party” are defined in the recitals to the
Security Agreement.



“Securities Act” means the Securities Act of 1933, as amended.



“Securitization” or “Securitized” means a transaction in which each Mortgage
Loan or pool of Mortgage Loans (or any Additional Balances) designated by the Issuer is financed
through or sold to a Securitization Vehicle.



“Securitization Vehicle” means Ginnie Mae, Fannie Mae, FHLB, or Freddie Mac or any
trust, partnership, corporation, limited liability company, limited liability partnership, other
state law entity or Person that is created for the principal purpose of owning or holding a
Mortgage Loan or Mortgage Loans (or any Additional Balances) which are the subject of a
Securitization.



“Security Agreement” means the Security Agreement, dated as of the Initial Closing
Date, between the Issuer and the Collateral Agent, as the same may at any time be amended, modified
or supplemented.



“Security Agreement Event of Default” means an event of default set forth in the
Security Agreement.



“Seller” means each of Home123 Corporation and New Century Mortgage Corporation.



“Seller Documents” means the Mortgage Loan Purchase and Servicing Agreement and the
Custodial Agreement.



“Senior Noteholder” means the holder of a Senior Note.



“Senior Loan” means a Mortgage Loan other than a Junior Loan.



“Senior Notes” means, collectively, the Secured Liquidity Notes and the Extended
Notes.



“Series” means (x) the Secured Liquidity Notes and Extended Notes (such Secured
Liquidity Notes and Extended Notes taken together as one series) or (y) any series of Subordinated
Notes, as the context may require.



“Series 2007-A Supplement” means the Supplement establishing the Series 2007-A
Subordinated Notes, dated as of the Series Closing Date for such Series of Subordinated Notes.



“Series Closing Date” means, with respect to any Series of Subordinated Notes or
Senior Notes, the date of issuance of such Series of Subordinated Notes or Senior Notes,
as specified in the related Indenture Supplement or the Security Agreement.



“Series Program Size” means, with respect to the Secured Liquidity Notes and Extended
Notes, collectively, the amount set forth in Section 4.09 of the Security Agreement,
as increased or decreased in accordance with the Program Documents (including, without limitation,
the principal amount of Subordinated Notes required to be issued in connection therewith).



“Servicer” means New Century Mortgage Corporation, as Servicer under the Mortgage Loan
Purchase and Servicing Agreement, or any successor Servicer appointed under the Mortgage Loan
Purchase and Servicing Agreement.



“Servicer Documents” means the Mortgage Loan Purchase and Servicing Agreement and any
written certificates, statements or instruments delivered by the Servicer to the Issuer pursuant
thereto.



“Servicer Event of Default” means a “Servicer Event of Default” as defined in
Section 10.1 of the Mortgage Loan Purchase and Servicing Agreement.



“Servicer Report” has the meaning assigned to such term in Section 4.18 of the
Mortgage Loan Purchase and Servicing Agreement.



“Servicing Advances” means all customary, reasonable and necessary “out of pocket”
costs and expenses other than Monthly Advances (including reasonable attorneys’ fees and
disbursements) incurred in the performance by the Servicer in connection with a default or other
unanticipated occurrence with respect to each Mortgage Loan owned by the Purchaser (and not
including the performance of its ordinary and customary activities as Servicer), including, but not
limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged Property,
(b) any enforcement or judicial proceedings, including foreclosures, (c) the management and
liquidation of any REO Property and (d) any advances of taxes, insurance premiums and other charges
made pursuant to Section 4.9 of the Mortgage Loan Purchase and Servicing Agreement as a
consequence of the default by the Mortgagor on its obligation to pay such amounts.



“Servicing Fee” with respect to the services provided by the Servicer pursuant to the
Mortgage Loan Purchase and Servicing Agreement, a monthly servicing fee of one half of one percent
(0.50%) per annum on the Outstanding Purchase Price of Mortgage Loans held by the Purchaser as of
the first day of such month.



“Servicing File” has the meaning assigned to such term in Section 2.1(b) of
the Mortgage Loan Purchase and Servicing Agreement.



“Sharing Percentage” means, with respect to each Interest Rate Swap, the percentage
expressed as a fraction, the numerator of which is the Program Notional Amount for such Interest
Rate Swap and the denominator of which is the Program Size.



“Side Letter” means the Side Letter, dated as of the date hereof, among the Sellers,
the Servicer, the Purchaser and the Collateral Agent.



“SLN Extension Event” means with respect to any Secured Liquidity Note, such Secured
Liquidity Note is not paid in full on its Expected Maturity and, as a result, such Secured
Liquidity Note is converted to an Extended Note pursuant to Section 4.04 of the Security Agreement.



“SLN Placement Agent” means Goldman Sachs & Co., Lehman Brothers Inc., and such others
as may be appointed by the Issuer from time to time, each as a SLN Placement Agent pursuant to the
SLN Placement Agent Agreement.



“SLN Placement Agent Agreement” means the private placement agreement, dated as of
[     ], 2007, among the SLN Placement Agents, the Servicer and the Issuer, as the same may
at any time be amended, modified or supplemented.



“Subordinated Note Paying Agent” is defined in Section 2.9 of the Indenture.



“Subordinated Note Purchase Agreement” means each subordinated note purchase
agreement, if any, entered into by the Issuer, the Sellers and the Initial Purchasers in connection
with the issuance of any Series of Subordinated Notes.



“Subordinated Note Registrar” is defined in Section 2.9 of the Indenture.



“Subordinated Noteholder” means a holder of a Subordinated Note.



“Subordinated Noteholder Representative” shall have the meaning set forth in the
related Supplement.



“Subordinated Notes” means the Series 2007-A Subordinated Notes and each additional
series of subordinated notes that may be issued from time to time pursuant to the Indenture.



“Subsidiary” means, with respect to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the time directly or
indirectly owned by such Person.



“Swap Counterparty” means ABN AMRO Bank, N.V., and each Person which is a commercial
bank or financial institution having a short-term credit rating of “A-1+”, “P-1” and “F1+” from
S&P, Moody’s and, if rated by Fitch, Fitch, respectively, and a long-term credit rating of at least
“AA-”, “Aa3” and “AA-” from S&P, Moody’s and, if rated by Fitch, Fitch, respectively, and which
becomes a swap counterparty under an Interest Rate Swap, provided, however, that no
such other Person may become a Swap Counterparty after the date hereof without having first
obtained Rating Agency Confirmation.



“Swap Default” means the occurrence of an event described in Section 11.2(e)(ii) of
the Mortgage Loan Purchase and Servicing Agreement, without giving effect to the Swap Trigger.



“Swap Failure” means the occurrence of an event described in Section 11.2(e)(ii) of
the Mortgage Loan Purchase and Servicing Agreement.



“Swap Trigger” means, with respect to the Interest Rate Swap the subject of such
trigger, the failure to pay or post an amount in excess of $200,000 that is due for payment or
posting pursuant to the terms of such Interest Rate Swap.



“Tangible Net Worth” means, with respect to any Person, as of any date of
determination, the consolidated Net Worth of such Person and its subsidiaries, less the
consolidated net book value of all assets of such Person and its subsidiaries (to the extent
reflected as an asset on the balance sheet of such Person or any subsidiary of such Person at such
date) which will be treated as intangibles under GAAP, including, without limitation, such items as
deferred financing expenses, net leasehold improvements, goodwill, trademarks, trade names, service
marks, copyrights, patents, licenses and unamortized debt discount and expense; provided,
that, residual securities owned by such Person shall not be treated as intangibles for purposes of
this definition.



“Temporary Global Note” has the meaning specified in Section 2.16 of the Base
Indenture.



“Terminated Loan” has the meaning given in each Interest Rate Swap.



“Termination Event” shall have the meaning assigned to such term in
Section 11.2 of the Mortgage Loan Purchase and Servicing Agreement.



“Termination Event Auction” shall have the meaning assigned to such term in
Section 11.2 of the Mortgage Loan Purchase and Servicing Agreement.



“Three Payment Delinquent Loan” means any Delinquent Loan for which the Monthly
Payment that is most past due is a Monthly Payment that is three months or more past its Due Date
(or, if the Due Date in any month does not correspond to a day in such month (e.g, when a Due Date
occurs on the 31st day of a 30 day calendar month), then on the last day of such month)
without giving effect to any Monthly Servicer Advance.



“Total Indebtedness” means, at any time, the aggregate Indebtedness of any Person and
its subsidiaries.



“Transfer Agent” has the meaning specified in Section 2.12(a)(iii) of the Base
Indenture.



“Transfer Supplement” means the document pursuant to which a Portfolio is sold by a
Seller to the Purchaser, a form of which is attached as Exhibit A (or any electronic medium
containing substantially equivalent information) to the Mortgage Loan Purchase and Servicing
Agreement.



“Transmittal Letter” means a transmittal letter in the form attached to the Custodial
Agreement as Exhibit E, including the form of Bailee Letter annexed thereto.



“Trust Agreement” means the trust agreement of St. Andrew Funding Trust, dated as of
the Initial Closing Date, among the Depositor, the Administrator and the Owner Trustee, as the same
may at any time be amended, modified or supplemented.



“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.



“Trust Officer” means, in relation to the Collateral Agent, any trust officer,
Director, Managing Director, Associate, Vice President or Assistant Vice President, or any other
officer customarily performing functions similar to those performed by the person who at the time
shall be such officer and is assigned to its Corporate Trust office, or to whom any corporate trust
matter is referred because of his or her knowledge of and familiarity with a particular subject, or
any successor thereto responsible for the administration of the Security Agreement.



“Two Payment Delinquent Loan” means any Delinquent Loan for which the Monthly Payment
that is most past due is a Monthly Payment that is more than two months but less than three months
past its Due Date (or, if the Due Date in any month does not correspond to a day in such month
(e.g., when a Due Date occurs on the 31st day of a 30 day calendar month), then on the
last day of such month) without giving effect to any Monthly Servicer Advance.



“UCC” means the Uniform Commercial Code as in effect from time to time in the
specified jurisdiction.



“United States” or “U.S.” means the United States of America, its fifty States
and the District of Columbia.



“Unapplied Principal Collections” means, as of the close of business on any day, the
sum of all amounts on deposit in the Collection Account, if any, constituting principal payments or
principal collections to be deposited in the Collateral Account pursuant to Section 4.6(d)
of the Mortgage Loan Purchase and Servicing Agreement.



“U.S. Government Obligations” means direct obligations of the United States of
America, or any agency or instrumentality thereof for the payment of which the full faith and
credit of the United States of America is pledged as to full and timely payment of such
obligations.



“U.S. Person” shall have the meaning under Regulation S under the Securities Act.



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



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



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



“Weekly Loan Tape” means a Loan Tape to be delivered to each Swap Counterparty
pursuant to Section 4.29 of the Mortgage Loan Purchase and Servicing Agreement.



“written” or “in writing” means any form of written communication, including,
without limitation, by means of telex, telecopier device, computer, telegraph or cable.