Back to Contents

**As filed with the Securities and Exchange Commission on June 27, 2006**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549 FORM 20-F**

|        | REGISTRATION        STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE        ACT OF 1934 |
|--------|----------------------------------------------------------------------------------------------------------------|
|   | OR                                                                                                             |
|        | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934                           |
|   | For the fiscal      year ended:**December 31, 2005**                                                           |
|   | OR                                                                                                             |
|        | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                       |
|   | For        the transition period from **N/A**to **N/A**                                                        |
|        | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                    |
|   | Date        of event requiring this shell company report . . . . . . . . . . . . .        . . . . . .          |

| Commission      file number: **333-99349** |                                                                 |                                    |
|--------------------------------------------|-----------------------------------------------------------------|------------------------------------|
| **Holmes        Financing (No. 6) PLC**    | **Holmes        Funding Limited**                               | **Holmes        Trustees Limited** |
|                                            | *(Exact        name of Registrant as Specified in its Charter)* |                                    |
| **United        Kingdom**                  | **United        Kingdom**                                       | **United        Kingdom**          |
|                                            | *(Jurisdiction        of Incorporation or Organization)*        |                                    |
| **Abbey        National House**            | **Abbey        National House**                                 | **Abbey        National House**    |
| **2        Triton Square**                 | **2        Triton Square**                                      | **2        Triton Square**         |
| **Regent’s        Place**             | **Regent’s        Place**                                  | **Regent’s        Place**     |
| **London        NW1 3AN**                  | **London        NW1 3AN**                                       | **London        NW1 3AN**          |
| **United        Kingdom**                  | **United        Kingdom**                                       | **United        Kingdom**          |
| **(011-44-20)        7756 6302/5**         | **(011-44-20)        7756 6302/5**                              | **(011-44-20)        7756 6302/5** |
|                                            | *(Address        of Principal Executive Offices)*               |                                    |

Securities  registered or to be registered pursuant to Section 12(b) of the Act: None****  Securities registered or to be registered pursuant to Section 12(g) of the Act:  None****  Securities for which there is a reporting obligation pursuant to Section 15(d)  of the Act.****

| Title        of each class                                                     | Name      of each exchange on which registered |
|--------------------------------------------------------------------------------|------------------------------------------------|
| **$1,000,000,000      Series 4 Class A1 Asset Backed Floating Rate Notes (1)** | **None**                                       |
| **$40,000,000      Series 4 Class B Asset Backed Floating Rate Notes (1)**     | **None**                                       |
| **$69,000,000      Series 4 Class C Asset Backed Floating Rate Notes (1)**     | **None**                                       |
| **£641,026,000      Series 4A1 Term AAA Advance (2)**                    | **None**                                       |
| **£25,642,000      Series 4 Term AA Advance (2)**                        | **None**                                       |
| **£44,231,000      Series 4 Term BBB Advance (2)**                       | **None**                                       |
| **Funding      Interest in the Mortgages Trust (3)**                           | **None**                                       |

| (1)    | Holmes      Financing (No. 6) PLC is the registrant for the Series 4 Issuer Notes.                                                                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)    | Holmes      Funding Limited is the registrant for the Term Advances, and has issued      those term advances to Holmes Financing (No. 6) PLC. The Term Advances are      the primary source of payments on the Series 4 Issuer Notes. |
| (3)    | Holmes      Trustees Limited is the registrant for the Funding Interest in the Mortgages      Trust and is holding the Funding Interest on behalf of Holmes                                                                           |
|   | Funding      Limited.                                                                                                                                                                                                                 |

     Indicate  by check mark if the registrant is a well-known seasoned issuer, as defined  in Rule 405 of the Securities Act. 

Yes    No 

     If  this report is an annual or transition report, indicate by check mark if the  registrant is not required to file reports pursuant to Section 13 or 15(d) of  the Securities Exchange Act of 1934. 

      Yes    No 

     Indicate  by check mark whether the registrant (1) has filed all reports required to be  filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the  preceding 12 months (or for such shorter period that the registrant was required  to file such reports), and (2) has been subject to such filing requirements  for the past 90 days. 

Yes   No  

     Indicate  by check mark whether the registrant is a large accelerated filer, an accelerated  filer, or a non-accelerated filer. See definition of “accelerated filer  and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check  one): 

Large  accelerated filer      Accelerated filer      Non-accelerated  filer 

----

Back to Contents

     Indicate  by check mark which financial statement item the registrant has elected to follow.  

Item  17      Item  18      Financial  statements attached as Exhibits 

     If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes       No  

----

Back to Contents

**TABLE OF CONTENTS**

|                                                 |                                                                        | **Page** |
|------------------------------------------------------|-----------------------------------------------------------------------------|----------|
| Presentation      of Information                     | 1                                                                           |
| Forward-looking      Statements                      | 2                                                                           |
| Incorporation      of Certain Documents by Reference | 2                                                                           |
|                                                 | **PART        I**                                                           |     |
| Item      1.                                         | Identity      of Directors, Senior Management and Advisors                  | 3        |
| Item      2.                                         | Offer      Statistics and Expected Timetable                                | 3        |
| Item      3.                                         | Key      Information                                                        | 3        |
| Item      4.                                         | Information      on the Company                                             | 33       |
| Item      5.                                         | Operating      and Financial Review and Prospects                           | 34       |
| Item      6.                                         | Directors,      Senior Management and Employees                             | 34       |
| Item      7.                                         | Major      Shareholders and Related Party Transactions                      | 36       |
| Item      8.                                         | Financial      Information                                                  | 36       |
| Item      9.                                         | The      Listing                                                            | 36       |
| Item      10.                                        | Additional      Information                                                 | 37       |
| Item      11.                                        | Quantitative      and Qualitative Disclosures About Market Risk             | 43       |
| Item      12.                                        | Description      of Securities Other Than Equity Securities                 | 43       |
|                                                 | **PART        II**                                                          |     |
| Item      13.                                        | Defaults,      Dividend Arrearages and Delinquencies                        | 43       |
| Item      14.                                        | Material      Modifications to the Rights of Security Holders               | 43       |
| Item      15.                                        | Controls      and Procedures                                                | 43       |
| Item      16A                                        | Audit      Committee Financial Expert                                       | 43       |
| Item      16B.                                       | Code      of Ethics                                                         | 43       |
| Item      16C.                                       | Principal      Accountant Fees and Services                                 | 43       |
| Item      16D.                                       | Exemptions      from the Listing Standards for Audit Committees             | 43       |
| Item      16E.                                       | Purchases      of Equity Securities by the Issuer and Affiliated Purchasers | 44       |
| Item      17.                                        | Financial      Statements                                                   | 44       |
| Item      18.                                        | Financial      Statements                                                   | 44       |
|                                                 | **PART        III**                                                         |     |
| Item      19.                                        | Exhibits                                                                    | 44       |

----

Back to Contents

**PRESENTATION  OF INFORMATION**

     This Annual Report on Form 20-F relates to Holmes Financing (No. 6) PLC (the “Issuer”) and the following securities (the “Issuer Notes”),which were issued pursuant to a trust deed dated November 7, 2002 (the “Issuer Trust Deed”), between the Issuer and The Chase Manhattan Bank, London Branch, as note trustee (the “Note Trustee”): 

| · | $1,000,000,000      Series 4 Class A1 Asset Backed Floating Rate Notes Due October 2009 |
|----------|-----------------------------------------------------------------------------------------|
| · | $40,000,000      Series 4 Class B Asset Backed Floating Rate Notes Due July 2040        |
| · | $69,000,000      Series 4 Class C Asset Backed Floating Rate Notes Due July 2040        |

     This Annual Report on Form 20-F also relates to the following advances made pursuant to the loan confirmation intercompany loan agreement dated November 7,2002 (the “Intercompany Loan Agreement”), between the Issuer, Holmes Funding Limited (“Funding”), and The Chase Manhattan Bank, London Branch, as security trustee and agent bank: 

| · | £641,026,000      Series 4A1 Term AAA Advance |
|----------|-----------------------------------------------------|
| · | £25,642,000      Series 4 Term AA Advance     |
| · | £44,231,000      Series 4 Term BBB Advance    |

     This Annual Report on Form 20-F further relates to the funding interest in the mortgage trust, the property of which includes the loans in the portfolio atthe closing date or which have subsequently been assigned to Holmes Trustees Limited (“Trustees”) thereafter (including any new drawings under flexible loans) and their related security and any income generated by the loans or theirrelated security. The composition of the trust property will fluctuate as drawings under flexible loans and new loans are added and as the loans that were previously part of the trust property are repaid, mature, default or are repurchased by AbbeyNational plc (the “seller”). The trust property also includes any money in the mortgages trustee guaranteed investment contract (or GIC) account and in any other bank account or bank accounts held by Trustees (as agreed by Trustees,Funding, the seller and the security trustee) from time to time, called the alternative accounts. The mortgages trustee GIC account is the bank account in which Trustees holds any cash that is part of the trust property until it is distributed tothe beneficiaries. The alternative accounts are accounts into which payments by some mortgage borrowers are paid initially.

     Capitalized terms used herein and not defined have the same meaning ascribed to such terms in the Registration Statement on Form S-11 relating to thesecurities (file number 333-99349). 

     The information required for some items in Form 20-F is not applicable to the Issuer, Funding or Trustees. As used in this Annual Report filed on Form 20-F,“not applicable” or “Not Applicable” means that the response to the referenced item is omitted in reliance on the procedures outlined in numerous no-action letters issued by the staff of the U.S. Securities and ExchangeCommission with respect to issuers of substantially similar asset-backed securities that file annual reports on Form 10-K, or that the referenced item is otherwise not applicable. 

1 

----

Back to Contents

**FORWARD-LOOKING  STATEMENTS**

     This annual report may contain forward-looking statements. All statements regarding our future financial condition, results of operations and businessstrategy, plans and objectives are forward-looking. Statements containing the words “believes”, “intends”, “expects” and words of similar meaning are also forward-looking. In particular, the following areforward-looking in nature: statements with regard to strategy and management objectives; product development efforts; the effects of changes or prospective changes in regulation; and trends in results, operations and overall market trends. 

     These forward-looking statements involve risks, uncertainties and other factors, some of which are beyond our control, that may cause our results,performance or achievements or conditions in the markets in which we operate to differ from those expressed or implied in these forward-looking statements. We caution you not to place undue reliance on these forward-looking statements, which reflectour management's view only as of the date of this annual report, and we do not undertake to update or revise any of them, whether as a result of new information, future events or otherwise. 

**INCORPORATION  OF CERTAIN DOCUMENTS BY REFERENCE**

     Each of the Issuer, Funding and Trustees incorporates by reference its periodic filings on Form 6-K, which contain all financial information relating to thesecurities relevant to the holders of the Issuer Notes. 

2 

----

Back to Contents

**PART I**

**Item  1. Identity of Directors, Senior Management and Advisers**

     Not  applicable to annual reports on Form 20-F. 

**Item  2. Offer Statistics and Expected Timetable**

     Not  applicable to annual reports on Form 20-F. 

**Item  3. Key Information**

***A. Selected Financial Information***

     Each of the Issuer, Funding and Trustees incorporates by reference and attaches hereto as exhibits the following reports, filed on Form 6-K, which includeall financial information relating to the securities that is relevant to holders of the Issuer Notes: 

| · | Periodic      Report for the period from December 9, 2004 to January 10, 2005. |
|----------|--------------------------------------------------------------------------------|
|     | ·                                                                       | Periodic      Report for the period from January 11, 2005 to February 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from February 9, 2005 to March 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from March 9, 2005 to April 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from April 9, 2005 to May 9, 2005. |
|     | ·                                                                       | Periodic      Report for the period from May 10, 2005 to June 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from June 9, 2005 to July 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from July 9, 2005 to August 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from August 9, 2005 to September 9, 2005. |
|     | ·                                                                       | Periodic      Report for the period from September 10, 2005 to October 10, 2005. |
|     | ·                                                                       | Periodic      Report for the period from October 11, 2005 to November 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from November 9, 2005 to December 8, 2005. |
|     | ·                                                                       | Periodic      Report for the period from December 9, 2005 to January 9, 2006. |
|     | ·                                                                       | Profit      and Loss Accounts and Balance Sheets for the period ended January 18, 2005. |
|     | ·                                                                       | Profit      and Loss Accounts and Balance Sheets for the period ended April 15, 2005. |
|     | ·                                                                       | Profit      and Loss Accounts and Balance Sheets for the period ended July 15, 2005. |
|     | ·                                                                       | Profit      and Loss Accounts and Balance Sheets for the period ended October 17, 2005. |

3 

----

Back to Contents

The following document is also incorporated by reference from reports filed on Form 6-K: 

| **·** | Certificate        Relating to Financial Information pursuant to the Issuer Trust Deed dated        April 30, 2006 |
|--------------|--------------------------------------------------------------------------------------------------------------------|

The following documents are filed as exhibits to this Annual Report on Form 20-F: 

| **·** | Report        and Accounts for Holmes Financing (No. 6) PLC for the year ended December        31, 2005. |
|--------------|----------------------------------------------------------------------------------------------------------|
| ·     | Report      and Accounts for Holmes Funding Limited for the year ended December 31,      2005.           |
| ·     | Report      and Accounts for Holmes Trustees Limited for the year ended December 31,      2005.          |

***B. Capitalization and Indebtedness***

     Not  applicable to annual reports on Form 20-F. 

***C. Reasons for the Offer and Use of Proceeds***

     Not  applicable to annual reports on Form 20-F. 

***D. Risk Factors***

**The Issuer Notes do not represent an obligation and are not the responsibility of any person other than the Issuer**

     The Issuer Notes do not represent an obligation and are not the responsibility of any of Abbey National plc or any of its affiliates, Barclays Bank PLC,Barclays Capital Inc., J.P. Morgan Securities Inc., J.P. Morgan Securities Ltd. or any of their respective affiliates, Citibank, N.A., the other issuers, Trustees, the Note Trustee or any other party to the transaction other than the Issuer. 

**The Issuer has a limited set of resources available to it to make payments on the Issuer Notes**

     The Issuer’s ability to make payments of principal and interest on the Issuer Notes and to pay its operating and administrative expenses will dependprimarily on the funds being received under the issuer intercompany loan. In addition, the Issuer will rely on the issuer dollar currency swaps and the issuer Swiss franc currency swaps to hedge the currency exposure with respect to the IssuerNotes. 

     If Funding is unable to pay in full on any interest payment date (a) the interest on any term advance, (b) the operating and administrative expenses and/or(c) the principal payments in respect of the Funding liquidity reserve fund term advances, and in the event that the seller suffers a certain ratings downgrade, Funding may draw money from the Funding liquidity reserve fund. 

     The Issuer does not have any other significant sources of funds available to meet its obligations under the Issuer Notes and/or any other payments ranking inpriority to the Issuer Notes.****

**Funding is not obliged to make payments on the issuer term advances if it does not have enough money to do so which could adversely affect payments on the Issuer Notes**

     Funding’s  ability to pay amounts due on the issuer term advances will depend upon: 

4 

----

Back to Contents

| **·** | Funding        receiving enough funds from the Funding share percentage of the revenue        and principal receipts on the loans included in the mortgages trust on        or before each interest payment date; |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·     | Funding      receiving the required funds from the Funding swap provider;                                                                                                                                         |
| ·     | the      amount of funds credited to the reserve funds; and                                                                                                                                                       |
| ·     | the      allocation of funds between the other term advances, the issuer term advances      and any new term advances.                                                                                            |

     According to the terms of the mortgages trust deed, Trustees is obliged to pay to Funding the Funding share percentage of revenue receipts on the loans bycrediting such amounts to the Funding GIC account on each distribution date. Trustees is obliged to pay Funding principal receipts on the loans by crediting such amounts to the Funding GIC account as and when required pursuant to the terms of themortgages trust deed. 

     Funding will be obliged to pay revenue receipts due to the Issuer under the issuer intercompany loan only to the extent that it has revenue receipts leftover after making payments ranking in priority to the Issuer, such as payments of certain fees and expenses of Funding and payments on certain higher ranking term advances under the other intercompany loans. 

     Funding will be obliged to pay principal receipts due to the Issuer under the issuer intercompany loan only to the extent that it has principal receiptsavailable for that purpose after repaying amounts ranking in priority to the Issuer (including repaying certain higher ranking term advances under the other intercompany loans). 

     If there is a shortfall between the amounts payable by Funding to the Issuer under the Intercompany Loan Agreement and the amounts payable by the Issuer onthe Issuer Notes, noteholders may, depending on what other sources of funds are available to the Issuer and to Funding, not receive the full amount of interest and/or principal which would otherwise be due and payable on the Issuer Notes. 

**Failure by Funding to meet its obligations under the Intercompany Loan Agreement would adversely affect payments on the Issuer Notes**

     If Funding does not make payments due and payable on the issuer intercompany loan, then the Issuer may not have enough money to make payments on the IssuerNotes. In addition the Issuer will have only limited recourse to the assets of Funding. If Funding does not pay amounts under the issuer intercompany loan because it does not have enough money available, such amounts will be deemed not to be due andpayable, so there will not be an event of default under the issuer intercompany loan, and the Issuer will not have recourse to the assets of Funding in that instance. 

**On the final repayment date of the issuer intercompany loan any outstanding amounts in respect of the term AA advances and the term BBB advances will be extinguished, which wouldcause a loss on the class B notes and the class C notes**

     The transaction has been structured in the expectation that on the final repayment date of the intercompany loan in 2040, the interest and principal due andpayable on the term AA advances and the term BBB advances should be an amount equal to the sum available to pay all outstanding interest and/or principal (including interest and/or principal deferred and unpaid) on the term AA advances and the termBBB advances (after paying amounts of a higher order of priority as required by the Funding priority of payments). 

     If there is a shortfall between the amount available to pay such interest and/or principal and the amount required to pay all outstanding interest and/orprincipal on the term AA advances and the term 

5 

----

Back to Contents

BBB advances, then the shortfall will be deemed to be not due and payable under the Intercompany Loan Agreement and the Issuer will not have any claim against Funding for the shortfall.

     If there is such a shortfall in interest and/or principal payments under the Intercompany Loan Agreement, noteholders may not receive the full amount ofinterest and/or principal which would otherwise be due and payable on the class B Issuer Notes or the class C Issuer Notes outstanding.****

**Although enforcement of the Issuer security will be possible following the occurrence of an event of default in the Issuer’s obligations, the proceeds of that enforcement maynot be enough to make all payments due on the Issuer Notes**

     The Issuer has no recourse to the assets of Funding unless Funding has also defaulted on its obligations under the issuer intercompany loan and the Fundingsecurity has been enforced. 

     If the security created as required by the Issuer deed of charge is enforced, the proceeds of enforcement may be insufficient to pay all principal andinterest due on the Issuer Notes. The noteholders may still have an unsecured claim against the Issuer for the shortfall, but there is no guarantee that the Issuer will have sufficient (or any) funds to pay that shortfall. 

**There is no assurance that the subordination rules will protect the holders of class A Issuer notes or the holders of class B Issuer Notes from all risk of loss**

     The transaction has been structured in the expectation that each lower numbered series of Issuer Notes will be redeemed before a higher numbered series ofIssuer Notes.

     However, there is no assurance that any lower numbered series of Issuer Notes will be redeemed before a higher numbered series of Issuer Notes. Redemption ofthe Issuer Notes is ultimately dependent on, among other things, repayment and redemptions on the loans and on the term advance rating of the issuer term advances. Further, if on any interest payment date, amounts are due and payable in respect ofan earlier alphabetised class of Issuer Notes of any series and amounts are payable in respect of one or more later alphabetised class of Issuer Notes of any series, then payments of principal will be made on the earlier alphabetised class of IssuerNotes in priority to payments of principal on the later alphabetised class or classes of Issuer Notes. See “Subordination of other note classes may not protect noteholders from all risk of loss.” 

**Holdings may establish another company, Funding 2, which may become an additional beneficiary under the mortgages trust**

     Holdings may establish a new entity, Funding 2, which may issue new notes from time to time and use the proceeds to make a payment to the seller to acquirean interest in the trust property rather than lending the proceeds to Funding, subject to the agreement of the seller and Funding, as existing beneficiaries of the mortgages trust. If Funding 2 becomes a beneficiary of the mortgages trust then thepercentage shares of Funding and the seller in the trust property may decrease. The introduction of Funding 2 will not cause a reduction in the principal amount of assets backing the Issuer Notes. The security trustee will only be entitled toconsent to any modifications to the transaction documents caused by the introduction of Funding 2, if it is satisfied that such modifications would not adversely affect the then current ratings of the notes. 

     If Funding 2 becomes a beneficiary of the mortgages trust then the seller, Funding and Funding 2 would each have a joint and undivided interest in the trustproperty but their entitlement to the proceeds from the trust property would be in proportion to their respective shares of the trust property. On each distribution date Trustees would distribute interest and principal receipts to one, two or allthree beneficiaries, depending on the terms of the mortgages trust.

6 

----

Back to Contents

     It is anticipated that Funding 2 would issue notes directly to investors from time to time backed by its share of the trust property. Current noteholderswould not have a direct or indirect interest in Funding 2's share of the trust property. 

     Amendments would be made to a number of the issuer transaction documents as a result of the inclusion of Funding 2 as a beneficiary of the mortgages trust.In particular (but without limitation), amendments would be made to: 

| **·** | the        mortgage sale agreement to enable the purchase by Funding 2 of interests        in the trust property;                                                                                                                                                                                                                             |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·     | the      mortgages trust deed (i) to establish Funding 2 as a beneficiary of the      trust, (ii) to enable changes in Funding 2's share of the trust property      from time to time and (iii) to regulate the distribution of interest and      principal receipts in the trust property to Funding 2 and the other beneficiaries;      and |
| ·     | the      cash management agreement to regulate the application of monies to Funding      2.                                                                                                                                                                                                                                                   |

     There may be conflicts of interest between Funding and Funding 2, in which case it is expected that Trustees would follow the directions given by therelevant beneficiary that has the largest share of the trust property at that time. The interests of Funding may not prevail, which may adversely affect current noteholders’ interests. 

**If Funding enters into new intercompany loan agreements, then the new term advances may rank ahead of issuer term advances as to payment, and accordingly new notes may rank aheadof Issuer Notes as to payment**

     It is likely that Holdings will establish new issuers to issue new notes to investors. The proceeds of each new issue will be used by the new issuer to makea new intercompany loan to Funding. Funding will use the proceeds of the new intercompany loan either to: 

| **·** | pay        the seller for new loans and their related security to be assigned to        Trustees;                                                                                                               |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **·** | pay        the seller for a part of the seller’s share of the trust property        to be assigned to Funding;                                                                                             |
| **·** | refinance        an intercompany loan or intercompany loans outstanding at that time (and        if the Issuer’s intercompany loan to Funding is refinanced, noteholders        could be repaid early); or |
| ·     | deposit      some of those proceeds in one or more of the reserve funds.                                                                                                                                        |

     The order in which Funding pays principal and interest to the Issuer on the issuer term advances and to any new issuer on the new term advances will dependprimarily on the designated ratings of those term advances. In general, the term advances with the highest term advance rating will be paid ahead of lower rated term advances, subject to their relative scheduled repayment dates. For example, Fundingwill pay interest due on the issuer term AAA advances proportionally and equally with the interest due on any new term AAA advances and ahead of payments of interest due on any term advance with a lower term advance rating than AAA (including, forthe avoidance of doubt, any issuer term AA advance and any issuer term BBB advance). Similarly, Funding will, in general, repay principal amounts due on the issuer term advances and any new term advances in accordance with their respective termadvance ratings, subject to their relative scheduled repayment dates. For example, principal repayments due on an issuer term AAA advance generally will be made before principal repayments due on a new term AA advance. This principle is subject to anumber of exceptions, however, which are designed primarily to provide some protection that scheduled repayments of principal on the issuer term advances will not materially affect payments of principal on the previous term advances and in turnwould not be materially affected by payments of principal on any new term advances.

7 

----

Back to Contents

     The term advance ratings designated to the issuer term advances on the closing date will not change even if the ratings assigned to the corresponding classesof Issuer Notes change. 

     The current payment and security priorities of the Issuer Notes relative to each other as set out in the Issuer deed of charge and the Issuer cash managementagreement will not change as a result of an issue of new notes by a new issuer, because that new issue will be separately documented. However, Funding may be required to repay new issuer amounts owing under a new term advance ahead of or in the sameorder of priority as amounts owing to the Issuer on the issuer term advances, depending on the term advance rating, the scheduled repayment date of that new term advance and certain other rules regarding the repayment of principal by Funding. Ifthis is the case, then the relevant new noteholders will be paid before the relevant current noteholders. 

**Funding has entered into other intercompany loan agreements with other issuers, and certain of the term advances in those other intercompany loans rank ahead of certain of theissuer term advances in the issuer intercompany loan as to payment, and accordingly some of the Issuer Notes issued by the other issuers rank ahead of certain of the Issuer Notes as to payment**

     The other issuers issued notes to investors, the proceeds of which were used by the other issuers to make other intercompany loans to Funding. Funding usedthe proceeds of the intercompany loan from the Issuer to pay the seller for loans and their related security assigned to Trustees which comprised its original share of the trust property. Funding used the proceeds of the other intercompany loansfrom certain other Holmes Financing issuers to pay the seller for the acquisition of additional parts of the seller’s share of the trust property (resulting in a corresponding decrease in the seller’s share of the trust property) and fromcertain other Holmes Financing issuers to pay the seller for loans and their related security assigned to Trustees which constituted an addition to Funding’s already existing share of the trust property. 

     The order in which Funding pays principal and interest to the Issuer on the issuer term advances and to the other issuers on the term advances dependsprimarily on the designated ratings of those term advances. In general, term advances with the highest term advance rating will be paid ahead of lower rated term advances subject to their relative scheduled repayment dates. For example, Funding willpay interest due on the issuer term AAA advances proportionally and equally with the interest due on any previous term AAA advances and ahead of payments of interest due on any term advance with a lower term advance rating than AAA (including, forthe avoidance of doubt, any term AA advance or term BBB advance). Similarly, Funding will, in general, repay principal amounts due on the issuer term advances and the term advances in accordance with their respective term advance ratings. Forexample, principal repayments due on an issuer term AAA advance generally will be made before principal repayments due on a previous term AA advance. This principle is subject to a number of exceptions, however, which are designed primarily toprovide some protection that scheduled repayments of principal on the issuer term advances will not materially affect payments of principal on the previous term advances and on new term advances and in turn would not be materially affected bypayments of principal on the previous term advances and any new term advances.

     The term advance ratings designated to the term advances on the previous closing dates will not change even if the ratings assigned to the correspondingclasses of other notes change. 

     The current payment and security priorities of the Issuer Notes relative to each other as set out in the Issuer deed of charge and the Issuer cash managementagreement are not affected as a result of the issues of previous notes by the other issuers, because the other issues were separately documented. However, Funding may be required to repay to the other issuers amounts which are owing under one ormore other term advances ahead of or in the same order of priority as amounts owing to the Issuer on the issuer term advances, depending on the term advance rating, the scheduled repayment date of that other term advance and other rules regardingthe repayment of principal by Funding. 

8 

----

Back to Contents

**New issuers and new start-up loan providers will share in the same security granted by Funding to the Issuer, and this may adversely affect payments on the Issuer Notes**

     If Funding enters into a new intercompany loan agreement, then if required it will also enter into a new start-up loan agreement with a new start-up loanprovider and the security trustee. If Funding is required by the rating agencies, Funding may use part of the proceeds of the new start-up loan to further fund one or more of the existing reserve funds. 

     Any new issuer and any new start-up loan provider will become party to the Funding deed of charge and will be entitled to share in the security granted byFunding for its benefit (and the benefit of the other Funding secured creditors) under the Funding deed of charge. In addition, the liabilities owed to the Funding liquidity facility provider and the Funding swap provider which are secured by theFunding deed of charge may increase each time that Funding enters into a new intercompany loan agreement. This could ultimately cause a reduction in the payments noteholders receive on their Issuer Notes. 

**The other issuers, the Funding swap provider and the other start-up loan providers already share in the security granted by Funding to the Issuer, which may adversely affectpayments on the Issuer Notes**

     Funding has entered into the other intercompany loan agreements and it also entered into eight startup loan agreements with the start-up loan provider andthe security trustee. Funding used part of the proceeds of these start-up loans to fund the first reserve fund. 

     The other issuers and the start-up loan provider are parties to the Funding deed of charge and are entitled to share in the security granted by Funding forthe benefit of the Funding secured creditors (including the Issuer). In addition, the liabilities owed to the Funding liquidity facility provider and the Funding swap provider which are secured by the Funding deed of charge may increase each timethat Funding enters into a new intercompany loan agreement. These factors could ultimately cause a reduction in the payments noteholders receive on their Issuer Notes. 

**There may be conflicts between the Issuer, the other issuers and any new issuers, and the Issuer’s interests may not prevail which may adversely affect payments on the IssuerNotes**

     The security trustee will exercise its rights under the Funding deed of charge only in accordance with directions given by the issuers (which could be one ormore of the Issuer, the other issuers and, if Funding enters into new intercompany loans, any new issuer) that have the highest-ranking outstanding term advances, provided that the security trustee is indemnified to its satisfaction. 

     If the security trustee receives conflicting directions, it will follow the directions given by the relevant issuers representing the largest principalamount outstanding of relevant term advances. If the Issuer is not in the group representing that largest principal amount, then its interests may not prevail. This could ultimately cause a reduction in the payments noteholders receive on theirIssuer Notes. For example, if the term advances with the highest designated term advance rating at the time of a direction are the term AAA advances, then, in the event of conflicting directions being given by issuers with outstanding term AAAadvances, the security trustee will follow the direction given by those issuers owed the largest principal amount outstanding of term AAA advances. 

**As new loans are assigned to Trustees, the characteristics of the trust property may change from those existing at the closing date, and those changes may adversely affectpayments on the Issuer Notes**

     There is no guarantee that any new loans assigned to Trustees will have the same characteristics as the loans in the portfolio as at the closing date. Inparticular, new loans may have different payment characteristics than the loans in the portfolio as at the closing date. The ultimate effect of this could be to 

9 

----

Back to Contents

delay or reduce the payments noteholders receive on the Issuer Notes. However, new loans will be required to meet certain criteria. These criteria may be modified after the closing dateand noteholders’ consent to such modifications will not be obtained provided that the security trustee is satisfied that the then current ratings of the Issuer Notes will not be adversely affected by the proposed modifications. 

**The yield to maturity of the Issuer Notes may be adversely affected by prepayments or redemptions on the loans**

     The yield to maturity of the Issuer Notes of each class will depend mostly on (a) the amount and timing of payment of principal on the loans and (b) theprice paid by the noteholders of each class of Issuer Notes. The yield to maturity of the Issuer Notes of each class may be adversely affected by a higher or lower than anticipated rate of prepayments on the loans.

     No assurance can be given that Funding will accumulate sufficient funds during the cash accumulation periods or receive sufficient funds from its share inTrustees on a single interest payment date relating to the issuer term AAA advances to enable it to repay such issuer term advances to the Issuer so that the corresponding classes of the Issuer Notes will be redeemed in their entirety on theirscheduled redemption dates.

     During any relevant cash accumulation period for any relevant term AAA advance, no repayments of principal will be made on the issuer term AA advances or theissuer term BBB advances. This means that there will be no corresponding repayments of principal on the class B Issuer Notes or the class C Issuer Notes.****

     The extent to which sufficient funds are saved by Funding during a cash accumulation period or a scheduled amortisation period or received by it from itsshare in the mortgages trust on a scheduled repayment date will depend on whether the actual principal prepayment rate of the loans is the same as the assumed principal prepayment rate. If Funding is not able to save enough money during a cashaccumulation period or a scheduled amortisation period, or does not receive enough money from its share in the mortgages trust on a scheduled repayment date, to repay the relevant issuer term AAA advance (and if it is unable to make a drawing on theFunding liquidity facility or the first reserve fund to make good the shortfall) so that the Issuer can redeem the class A Issuer Notes of the corresponding series on their respective scheduled redemption date(s), then Funding will be required topay to the Issuer on those scheduled redemption dates only the amount that it has actually saved or received. Any shortfall will be deferred and paid on subsequent interest payment dates when Funding has money available to make the payment. In thesecircumstances, unless the Issuer is able to make a drawing on the issuer liquidity facility, there will be a variation in the yield to maturity of the relevant class of Issuer Notes. 

**The Issuer’s ability to redeem the class A Issuer Notes in full on their scheduled redemption dates is affected by the rate of prepayment on the loans**

     The rate of prepayment of loans is influenced by a wide variety of economic, social and other factors, including prevailing mortgage market interest rates,the availability of alternative financing programs, local and regional economic conditions and homeowner mobility. For instance, prepayments on the loans may be due to borrowers refinancing their loans and sales of properties by borrowers (eithervoluntarily or as a result of enforcement action taken). In addition, if the seller is required to repurchase a loan or loans under a mortgage account and their related security because, for example, one of the loans does not comply with the loanwarranties in the mortgage sale agreement, then the payment received by Trustees will have the same effect as a prepayment of all of the loans under the mortgage account. Because these factors are not within its control or the control of Funding orTrustees, the Issuer cannot give any assurances as to the level of prepayments that the portfolio may experience. 

     Variation in the rate of prepayments of principal on the loans may affect each class of Issuer Notes differently depending upon amounts already repaid byFunding to the Issuer under the issuer 

10 

----

Back to Contents

intercompany loan and whether a trigger event has occurred, or a loan is subject to a product switch or a further advance or the security granted by the Issuer under the Issuer deed ofcharge has been enforced. If prepayments on the loans occur less frequently than anticipated, then there may not be sufficient funds available to redeem the class A Issuer Notes in full on their respective scheduled redemption dates. 

**The seller may change the lending criteria relating to loans which are subsequently assigned to Trustees which could affect the characteristics of the trust property and which mayadversely affect payments on the Issuer Notes**

     Each of the loans was originated in accordance with the seller’s lending criteria at the time of origination. These lending criteria consider a varietyof factors such as a potential borrower’s credit history, employment history and status and repayment ability, as well as the value of the property to be mortgaged. In the event of the assignment of any new loans and new related security toTrustees, the seller will warrant that those new loans and new related security were originated in accordance with the seller’s lending criteria at the time of their origination. However, the seller retains the right to revise its lendingcriteria as determined from time to time, and so the lending criteria applicable to any loan at the time of its origination may not be or have been the same as those when other loans were originated. If new loans that have been originated underrevised lending criteria are assigned to Trustees, the characteristics of the trust property could change. This could lead to a delay or a reduction in the payments received on the Issuer Notes. 

**The seller has introduced new procedures relating to investigations and searches for remortgages which could affect the characteristics of the trust property and which mayadversely affect payments on the Issuer Notes**

     The seller no longer requires a solicitor or licensed or qualified conveyancer to conduct a full investigation of the title to a property in all cases. Wherethe borrower is remortgaging there will be a more limited form of investigation of title for properties located in England, Wales and Scotland, in particular in the case of registered land in England and Wales (*e.g.*, confirming that the borrower is the registered proprietor of the property and the description of the propertycorresponds with the entries on the Land Registry’s register) and confirming such other matters as are required by a reasonable, prudent mortgage lender. Properties which have undergone such a limited investigation may be subject to matterswhich would have been revealed by a full investigation of title and which may have been remedied or, if incapable of remedy, may have resulted in the properties not being accepted as security for a loan had such matters been revealed. Theintroduction of loans secured by such properties into the trust property could result in a change of the characteristics of the trust property. This could lead to a delay or a reduction in the payments received on the Issuer Notes. 

**The timing and amount of payments on the loans could be affected by various factors which may adversely affect payments on the Issuer Notes**

     The loans are affected by credit, liquidity and interest rate risks. Various factors influence mortgage delinquency rates, prepayment rates, repossessionfrequency and the ultimate payment of interest and principal, such as changes in the national or international economic climate, regional economic or housing conditions, changes in tax laws, interest rates, inflation, the availability of financing,yields on alternative investments, political developments and government policies. Other factors in borrowers’ individual, personal or financial circumstances may affect the ability of borrowers to repay loans. Loss of earnings, illness,divorce and other similar factors may lead to an increase in delinquencies by and bankruptcies of borrowers, and could ultimately have an adverse impact on the ability of borrowers to repay loans. 

     If a borrower fails to repay its loan and the related property is repossessed, the likelihood of there being a net loss on disposition of the property isadversely affected by a higher loan-to-value ratio. In addition, the ability of a borrower to sell a property given as security for a loan at a price sufficient to 

11 

----

Back to Contents

repay the amounts outstanding under the loan will depend upon a number of factors, including the availability of buyers for that property, the value of that property and property valuesin general at the time. 

     The portfolio may also be subject to geographic concentration risks. To the extent that specific geographic regions within the United Kingdom haveexperienced or may experience in the future weaker regional economic conditions and housing markets than other regions, a concentration of the loans in such a region may be expected to exacerbate all risks relating to the loans described in thissection. The economy of each geographic region within the United Kingdom is dependent on different mixtures of industries. Any downturn in a local economy or particular industry may adversely affect the regional employment levels and consequentlythe repayment ability of the borrowers in that region or the region that relies most heavily on that industry. Any natural disasters in a particular region may reduce the value of affected mortgaged properties. This may result in a loss beingincurred upon sale of the mortgaged property. These circumstances could affect receipts on the loans and ultimately result in losses on the Issuer Notes. 

     The principal source of income for repayment of the Issuer Notes by the Issuer is the issuer intercompany loan. The principal source of income for repaymentby Funding of the issuer intercompany loan is its interest in the loans held on trust by Trustees for Funding and the seller. If the timing and payment of the loans is adversely affected by any of the risks described above, the payments on theIssuer Notes could be reduced or delayed. 

**The occurrence of trigger events and enforcement of the Issuer security may adversely affect the timing of the scheduled redemption of the class A Issuer Notes**

     If no trigger event has occurred and the Issuer security has not been enforced, then payments of principal will not occur on the class A Issuer Notes of eachseries before their respective scheduled redemption dates. 

     If a trigger event occurs or the Issuer security is enforced prior to the scheduled redemption dates for the class A Issuer Notes of each series, then therelevant classes of Issuer Notes outstanding will not be repaid on their scheduled redemption dates but will be repaid on each interest payment date from monies received from Funding on the issuer term AAA advances of the corresponding series asdescribed in the following three risk factors. 

**If an asset trigger event occurs, the class A notes will not be repaid on their scheduled redemption dates**

     When an asset trigger event has occurred, Trustees will distribute principal receipts on the loans to Funding and the seller proportionally and equally basedon their percentage shares of the trust property (that is, the Funding share percentage and the seller share percentage). When an asset trigger event has occurred, Funding will repay: 

*     first*,  the issuer term AAA advances and the other term AAA advances of each series  proportionally and equally, until all of those term AAA term advances are fully  repaid; 

*     then*,  the issuer term AA advances and the other term AA advances of each series proportionally  and equally, until all of those term AA term advances are fully repaid; 

*     then*,  the other term A advances of each series proportionally and equally, until all  of those term A term advances are fully repaid; and 

*     then*,  the issuer term BBB advances and the other term BBB advances of each series  proportionally and equally, until all of those term BBB term advances are fully  repaid. 

12 

----

Back to Contents

This order of priority of payments may change if Funding enters into new intercompany loan agreements. If an asset trigger event occurs, certain class AIssuer Notes then outstanding may not be repaid on their scheduled redemption dates, and there is also a risk that they will not be repaid by their final maturity dates.

**If a  non-asset trigger event occurs, the class A Issuer Notes then outstanding will  not be repaid on their scheduled redemption dates**

If a non-asset trigger event  has occurred, Trustees will distribute all principal receipts to Funding until  the Funding share percentage of the trust property is zero. When a non-asset  trigger event has occurred, Funding will repay:

|   | *first,*the      series 1 term AAA advance made by Holmes Financing (No. 9) PLC until that      series 1 term AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*the      series 2 term AAA advance made by Holmes Financing (No. 4) PLC until that      series 2 AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 3A1 term AAA advance made by Holmes Financing (No. 5) PLC until      that series 3A1      term AAA advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*in      no order of priority between them but in proportion to the respective amounts      due, the series 3      term AAA advance and the series 4 term AAA advances made by the Issuer and      the series 4 term AAA advance made by Holmes Financing (No. 4) PLC, until      all of those term AAA advances are fully repaid;                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 3 term AAA advances made by Holmes Financing (No. 1) PLC until      those series 3 term      AAA advances are fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 2 term AAA advance made by Holmes Financing (No. 8) PLC until      that series 2 term      AAA advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*in      no order of priority between them but in proportion to the respective amounts      due, the series 2      term AAA advance made by Holmes Financing (No. 9) PLC and the series 4 term      AAA advance made by Holmes Financing (No.1) PLC until all of those term      AAA advances are fully repaid*;*                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 4 term AAA advance made by Holmes Financing (No. 9) PLC until      that series 4 term AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*the      series 3 term AAA advance made by Holmes Financing (No. 8) PLC until that      series 3 term AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 3 term AAA advance made by Holmes Financing (No. 7) PLC until      that series 3 term AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 3 term AAA advances made by Holmes Financing (No. 9) PLC until      those series 3 term      AAA advances are fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the series 3 term AAA advance made by Holmes Financing (No. 2) PLC until      that series 3 term AAA      advance is fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*in      no order of priority between them but in proportion to the respective amounts      due, the series4 term      AAA advance made by Holmes Financing (No. 2) PLC, the series 3 term AAA      advance made by Holmes Financing (No. 3) PLC, the series 3 term AAA advances      made by Holmes Financing (No. 4) PLC, the series 3A2 term AAA advance made      by Holmes Financing (No. 5) PLC, the series 5 term AAA advance made by the      Issuer, the series 4 term AAA advances made by Holmes Financing (No. 7)      PLC and the series 4 term AAA advances made by Holmes Financing (No. 8)      PLC, until all of those term AAA advances are fully repaid; |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | *then,*      the issuer term AA advances and the other term AA advances, in no order      of priority between them      but in proportion to the respective amounts due, until all of those term      AA advances are fully repaid;                                                                                                                                                                                                                                                                                                                                                                                                                                               |

13 

----

Back to Contents

|   | *then,*the      other term A advances in no order of priority between them but in proportion      to the**respective      amounts due, until all of those term A advances are fully repaid; and                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                      |
|   | *finally,*the      issuer term BBB advances and the other term BBB advances, in no order of      priority**between      them but in proportion to the respective amounts due, until all of those      term BBB advances are fully repaid. |

This order  of priority of payments will change if Funding enters into new intercompany  loan agreements. If a non-asset trigger event occurs, the class A Issuer Notes  of each series will not be repaid on their scheduled redemption dates.

**If the  issuer security is enforced, the class A Issuer Notes then outstanding will  not be repaid on their scheduled redemption dates**

If  the Issuer security is enforced, then Trustees will distribute funds as required  under the terms of the transaction agreements. In these circumstances, any class  A Issuer Notes then outstanding will not be repaid on their scheduled redemption  dates and there is also a risk that those class A Issuer Notes may not be repaid  by their final maturity dates.

**Loans  subject to product switches and further advances will be repurchased by the  seller from Trustees, which will affect the prepayment rate of the loans, and  this may affect the yield to maturity of the Issuer Notes**

If  a loan is subject to a product switch or a further advance, then the seller  will be required to repurchase the loan or loans under the relevant mortgage  account and their related security from Trustees at a price equal to the outstanding  principal balance of those loans together with any arrears of interest and accrued  and unpaid interest and expenses to the date of purchase.

A  loan will be subject to a product switch if the borrower and the seller agree  on or the servicer issues an offer for, and the borrower accepts, a variation  in the financial terms and conditions applicable to the relevant borrower’s  loan, other than:

|   | **·** | any        variation agreed with a borrower to control or manage arrears on the loan;                                                                                                                                                                              |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |         |                                                                                                                                                                                                                                                               |
|   | **·** | any        variation in the maturity date of the loan unless, while the previous        intercompany load made by        Holmes Financing (No. 1) PLC is outstanding, it is extended beyond July        2038;                                                      |
|   | ·     | any variation      imposed by statute;                                                                                                                                                                                                                             |
|   |         |                                                                                                                                                                                                                                                               |
|   | ·     | any variation      of the rate of interest payable in respect of the loan where that rate is      offered to the borrowers of more than 10 per cent. by outstanding principal      amount of loans comprised in the trust property in any interest period;      or |
|   |              |                                                                                                                                                                                                                                                               |
|   | ·     | any variation      in the frequency with which the interest payable in respect of the loan      is charged.                                                                                                                                                        |

A loan will be subject to a further advance if an existing borrower requests a further amount to be lent to him or her under the mortgage in circumstanceswhere the seller has a discretion to, and does, grant that request. A drawing under a flexible loan will not constitute a further advance.

The yield to maturity of the Issuer Notes may be affected by the repurchase of loans subject to product switches and further advances.

**Ratings assigned to the Issuer Notes may be lowered or withdrawn after noteholders purchase the Issuer Notes, which may lower the market value of the Issuer Notes**

14 

     

----

Back to Contents

The ratings assigned to each class of Issuer Notes address the likelihood of full and timely payment to noteholders of all payments of interest on eachinterest payment date under those classes of Issuer Notes. The ratings also address the likelihood of (in the case of Standard & Poor’s and Fitch) ”timely”, or (in the case of Moody’s) “ultimate”, payment ofprincipal on the final maturity date of each class of Issuer Notes. Any rating agency may lower its rating or withdraw its rating if, in the sole judgment of the rating agency, the credit quality of the Issuer Notes has declined or is in question.If any rating assigned to the Issuer Notes is lowered or withdrawn, the market value of the Issuer Notes may be reduced.

A change to the ratings assigned to each class of Issuer Notes will not affect the term advance ratings assigned to each issuer term advance under the issuerintercompany loan.

**Subordination  of other note classes may not protect noteholders from all risk of loss**

The class B Issuer Notes and class C Issuer Notes are subordinated in right of payment of interest to the class A Issuer Notes. The class C Issuer Notes aresubordinated in right of payment of interest to the class B Issuer Notes.

There is no assurance that these subordination rules will protect the holders of class A Issuer Notes from all risk of loss or the holders of class B IssuerNotes from all risk of loss.

**Principal  payments on the class B Issuer Notes and the class C Issuer Notes will be deferred  in some circumstances**

Principal repayments on the issuer term AA advances and/or the issuer term BBB advances will be deferred in the following circumstances:

|   | **·** | if        a principal loss has been recorded on the principal deficiency ledger        in respect of any term AA advances, any term A advances or any term BBB        advances; or                                                                                                                                                                                                         |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ·     | if the first      reserve fund has been debited on or prior to the relevant interest payment      date for the      purposes of curing a principal deficiency in respect of any term AA advances,      any term A advances      or any term BBB advances and the first reserve fund has not been replenished      by a corresponding      amount on the relevant interest payment date; or |
|   |              |                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ·     | if, as at      the relevant interest payment date, the total outstanding principal balance      of loans in the      mortgages trust, in respect of which the aggregate amount in arrear is more      than three times      the monthly payment then due, is more than five per cent. of the total outstanding      principal      balance of loans in the mortgages trust.                |

In these circumstances, the issuer term BBB advances and, as applicable, the issuer term AA advances will not be entitled to principal repayments: (i) untilthe relevant circumstance as described in this risk factor has been remedied (if ever); or (ii) during such times that there are any term AAA advances outstanding.

This means that payments of principal on the class C Issuer Notes of all series and, as applicable, the class B Issuer Notes of all series, will be deferreduntil the earlier of the time when the relevant circumstance described in this risk factor has been remedied (if ever), the date on which the term AAA advances are repaid in full and the maturity date of the relevant Issuer Notes.

**Issuer Notes may be subject to risk if the trust property deteriorates**

If the loans comprising the trust property do not perform as expected, the Issuer Notes may not be

15 

----

Back to Contents

repaid in full; provided that, following the occurrence of a non-asset trigger event (but prior to enforcement), the Issuer Notes will be redeemed by reference to their final maturitydate; and provided further that both following the occurrence of an asset trigger event (but prior to enforcement) and following enforcement of the Issuer security, the Issuer Notes will be repaid pro rata within each class, following the occurrenceof a non-asset trigger event (but prior to enforcement), the Issuer Notes will be redeemed by reference to their final maturity date; and provided further that both following the occurrence of an asset trigger event (but prior to enforcement) andfollowing enforcement of the Issuer security, the Issuer Notes will be repaid according pro rata within each class.

**Noteholders may be subject to risks relating to exchange rates on the Issuer Notes**

Investors will pay for the series 4 Issuer Notes in US dollars, but the issuer term advances to be made by the Issuer to Funding and repayments of principaland payments of interest by Funding to the Issuer under the issuer intercompany loan will be in sterling.

To hedge its currency exchange rate exposure, including the interest rate exposure connected with that currency exposure, on the closing date the Issuer willenter into the issuer dollar currency swaps for the series 4 Issuer Notes with the issuer dollar currency swap providers.

If the Issuer fails to make timely payments of amounts due under an issuer dollar currency swap, then the Issuer will have defaulted under that issuercurrency swap. The issuer dollar currency swap providers are obliged only to make payments under the issuer dollar currency swaps as long as the Issuer make payments under them. If the issuer dollar currency swap providers are not obliged to makepayments, or if an issuer dollar currency swap provider defaults in its obligations to make payments, of amounts in US dollars equal to the full amount to be paid by that issuer dollar currency swap provider on the payment dates under the relevantissuer dollar currency swap (which are the same dates as the interest payment dates), the Issuer will be exposed to changes in US dollar/sterling currency exchange rates and in the associated interest rates on these currencies. Unless a replacementissuer dollar currency swap is entered into, the Issuer may have insufficient funds to make payments due on the Issuer Notes of any class and any series that are then outstanding.

**Termination payments on the issuer dollar currency swaps, the issuer Swiss franc currency swap or the issuer euro currency swap may adversely affect the funds available to makepayments on the Issuer Notes**

If any of the issuer dollar currency swaps, the issuer Swiss franc currency swap or the issuer euro currency swap terminates, the Issuer may as a result beobliged to pay a termination payment to the relevant issuer dollar currency swap provider, the issuer Swiss franc currency swap or the issuer euro currency swap provider, as the case may be. The amount of the termination payment will be based on thecost of entering into a replacement issuer dollar currency swap, the issuer Swiss franc currency swap or the issuer euro currency swap, as the case may be. Under the Intercompany Loan Agreement, Funding will be required to pay the Issuer an amountequal to any termination payment due from the Issuer to the relevant issuer dollar currency swap provider, the issuer Swiss franc currency swap provider or the issuer euro currency swap provider, as the case may be. Funding will also be obliged topay the Issuer any extra amounts which the Issuer may be required to pay to enter into a replacement swap.

The Issuer and Funding cannot give noteholders any assurance that Funding will have the funds available to make that payment or that the Issuer will havesufficient funds available to make any termination payment under any of its issuer currency swaps or to make payments to noteholders in respect of the relevant series and class of Issuer Notes. Nor can the Issuer give noteholders any assurance thatit will be able to enter into a replacement swap, or if one is entered into, that the credit rating of the replacement issuer dollar currency swap provider, the issuer Swiss franc currency swap provider or issuer

16 

----

Back to Contents

euro currency swap provider, as the case may be, will be sufficiently high to prevent a downgrading of the then current ratings of the Issuer Notes by the rating agencies.

Except where the relevant issuer dollar currency swap provider, the issuer Swiss franc currency swap provider or the issuer euro currency swap provider, asthe case may be, has caused the relevant issuer dollar currency swap, the issuer Swiss franc currency swap or the relevant issuer euro currency swap, as applicable, to terminate by its own default or following a downgrade termination event, anytermination payment due from the Issuer will rank equally not only with payments due to the holders of the series and class of Issuer Notes to which the relevant swap relates but also with payments due to the holders of any other series and class ofIssuer Notes which rank equally with the series and class of Issuer Notes to which the relevant swap relates. Any additional amounts required to be paid by the Issuer following termination of the relevant issuer dollar currency swap, the issuerSwiss franc currency swap or the relevant issuer euro currency swap, as the case may be (including any extra costs incurred (for example, from entering into “spot” currency or interest rate swaps) if the Issuer cannot immediately enterinto a replacement swap) will also rank equally not only with payments due to the holders of the series and class of Issuer Notes to which the relevant issuer currency swap relates but also with payments due to the holder of any other series andclass of Issuer Notes which rank equally with the series and class of Issuer Notes to which the relevant issuer currency swap relates. Furthermore, any termination payment or additional payment or additional amounts required to be paid by the Issuerfollowing termination of an issuer currency swap will rank ahead of payments due to the holders of any series and class of Issuer Notes which ranks below the series and class of Issuer Notes to which the relevant issuer currency swap relates.Therefore, if the Issuer is obliged to make a termination payment to the relevant issuer dollar currency swap provider, the issuer Swiss franc currency swap provider and/or the issuer euro currency swap provider, as the case may be, or to pay anyother additional amount as a result of the termination of the relevant issuer currency swap, this may affect the funds which the Issuer has available to make payments on the Issuer Notes of any class and any series.

**Payments by Funding to third parties in relation to the other issuers may affect payments due to the Issuer and accordingly its ability to make payments on the Issuer Notes**

Under the other intercompany loan agreements, Funding is required to make payments to the other issuers in respect of the other issuers’ obligations tomake payments to their respective own security trustee, note trustee, agent bank, paying agents, liquidity facility provider, cash manager, corporate services provider and account bank and to other third parties to whom the other issuers owe money.These payments rank in priority to amounts due by Funding to the Issuer on the issuer term advances.

Funding’s obligations to make the payments described above to the other issuers may affect Funding’s ability to make payments to the Issuer underthe issuer intercompany loan. This in turn may affect its ability to make payments on the Issuer Notes.

**The Issuer relies on third parties to perform services in relation to the Issuer Notes, and noteholders may be adversely affected if they fail to perform their obligations**

The Issuer is a party to contracts with a number of other third parties that have agreed to perform services in relation to the Issuer Notes. For example,the issuer liquidity facility provider has agreed to provide it with the issuer liquidity facility and the issuer dollar currency swap providers, the issuer Swiss franc currency swap providers and the issuer euro currency swap provider have agreedto provide their swaps, the corporate services provider has agreed to provide corporate services and the paying agents and the agent bank have agreed to provide payment and calculation services in connection with the Issuer Notes. In the event thatany of these parties were to fail to perform their obligations under the respective agreements to which they are a party, noteholders may be adversely affected.

**The Issuer may be unable to pay, in full or at all, interest due on the Issuer Notes if there is an income or principal deficiency**

17 

----

Back to Contents

If, on any interest payment date, revenue receipts available to Funding (including the reserve funds) are insufficient to enable Funding to pay interest onany of the other term advances, issuer term advances and any new term advances and other expenses of Funding ranking higher in seniority to interest due on such term advances, then Funding may use principal receipts on the loans received by it inthe mortgages trust to make up the shortfall.

Funding will use principal receipts that would have been applied to repay the term advances with the lowest term advance rating to pay interest on thoseother term advances and senior expenses described in the preceding paragraph where there is a shortfall of monies to pay those amounts. At the closing date, the term advances with the lowest term advance rating include the issuer term BBB advances.As a result of using principal to repay interest and senior expenses in this manner, there will be less principal available to repay the issuer term BBB advances.

Funding will be obliged to keep a ledger that records any principal applied to pay interest and senior expenses. When the amount recorded on the ledger isequal to the principal amount outstanding of the term BBB advances, then Funding will use principal receipts that would have been applied to repay the term advance with the next lowest ranking term advance rating to pay interest on the term advancesand senior expenses where there is a shortfall of money to pay those amounts. At the closing date, the term advances with the next lowest term advance rating include the issuer term AA advances. When the amount recorded on the principal deficiencyledger exceeds the principal amount outstanding on the term AA advances, Funding will use principal receipts that would have been applied to repay the term AAA advances to pay those amounts.

During the term of the transaction, however, it is expected that any principal deficiencies will be recouped from subsequent excess revenue receipts andamounts standing to the credit of the first reserve fund. The revenue receipts and the first reserve fund monies will be applied first to cover any principal deficiency in respect of the term advances with the highest term advance rating (at theclosing date, these include the issuer term AAA advances), and then the term advances with the next highest ranking term advance rating (at the closing date, these include the issuer term AA advances), and so on down to the term advances with thelowest term advance rating.

If there are insufficient funds available because of such income or principal deficiencies, then one or more of the following consequences may occur:

|   | **·** | the        interest and other net income of Funding may not be sufficient, after        making the payments to be made in priority, to pay, in full or at all,        interest due on the issuer term BBB advances and the issuer term AA advances;                                                                                                                                                                                                                                                                |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | ·     | there may      be insufficient funds to repay any of the issuer term BBB advances and the      issuer term AA advances prior to their final repayment dates unless the      other net income of Funding is sufficient, after making other prior ranking      payments, to reduce any principal deficiency in respect of the term BBB      advances and term AA advances;                                                                                                                                           |
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | ·     | if the amount      of principal deficiencies exceeds the principal amount outstanding of any      of the term advances (and the principal deficiencies cannot be covered by      the other income of Funding), then the Issuer may not receive the full principal      amount of any or all of the issuer term advances and, accordingly, noteholders      may not receive the full face value of the class C Issuer Notes, the class      B Issuer Notes and the class A Issuer Notes, as the case may be; and/or |
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | ·     | the Issuer      may be unable to pay, in full or at all, interest or principal due on Issuer      Notes.                                                                                                                                                                                                                                                                                                                                                                                                           |

**The seller share of the trust property does not provide credit enhancement for the Issuer Notes**

18 

----

Back to Contents

Any  losses from loans included in the trust property will be allocated proportionately  between Funding and the seller on each distribution date depending on their  respective shares of the trust property. The seller’s share of the trust  property therefore does not provide credit enhancement for the Funding share  of the trust property or the Issuer Notes.

**The Issuer will only have recourse to the seller if there is a breach of warranty by the seller, but otherwise the seller’s assets will not be available to the Issuer as asource of funds to make payments on the Issuer Notes**

After an issuer intercompany loan enforcement notice under the issuer intercompany loan is given, the security trustee may sell the Funding share of thetrust property. There is no assurance that a buyer would be found or that such a sale would realize enough money to repay amounts due and payable under the Intercompany Loan Agreement.

The Issuer, Funding and Trustees will not have any recourse to the seller of the loans, other than in respect of a breach of warranty or other obligationunder the mortgage sale agreement. The Issuer, Trustees, Funding and the security trustee will not undertake any investigations, searches or other actions on any loan or its related security and the Issuer and each of them will rely instead on thewarranties given in the mortgage sale agreement by the seller.

If any of the warranties made by the seller (i) in the case of each loan in the portfolio, was materially untrue on the date such loan was assigned toTrustees or (ii) in the case of each new loan, is materially untrue on the date such new loan is assigned to Trustees, then the seller may be required by Trustees to remedy the breach within twenty days of the seller becoming aware of the same or ofreceipt by it of a notice from Trustees.

If the seller fails to remedy the breach within twenty days, then Trustees may require the seller to repurchase the loan or loans under the relevant mortgageaccount and their related security together with any arrears of interest and accrued and unpaid interest and expenses. There can be no assurance that the seller will have the financial resources to repurchase the loan or loans under the relevantmortgage account and their related security. However, if the seller does not repurchase those loans and their related security when required, then the seller’s share of the trust property will be deemed to be reduced by an amount equal to theprincipal amount outstanding of those loans together with any arrears of interest and accrued and unpaid interest and expenses.

Other than as described here, neither noteholders nor the Issuer will have any recourse to the assets of the seller.

**There can be no assurance that a borrower will repay principal at the end of the term on an interest only loan, which may adversely affect repayments on the Issuer Notes**

Each loan in the current portfolio is repayable either on a principal repayment basis or an interest only basis. Of the loans in the portfolio as at May 8,2006, approximately 36 per cent were interest-only loans. For interest-only loans, because the principal is repaid in a lump sum at the maturity of the loan, the borrower is recommended to have some repayment mechanism such as an investment plan inplace to ensure that funds will be available to repay the principal at the end of the term. However, the seller does not take security over such repayment mechanisms. The borrower is also recommended to take out a life insurance policy in relationto the loan but, as with repayment mechanisms, the seller does not take security over such life policies.

The ability of a borrower to repay the principal on an interest-only loan at maturity depends on such borrower’s responsibility to ensure thatsufficient funds are available from an investment plan or another source, such as ISAs, pension policies, personal equity plans or endowment policies, as well as the financial condition of the borrower, tax laws and general economic conditions atthe time. There can be

19 

----

Back to Contents

no assurance that the borrower will have the funds required to repay the principal at the end of the term. If a borrower cannot repay the loan and a loss occurs on the loan, then this mayaffect repayments of principal on the Issuer Notes if that loss cannot be cured by amounts standing to the credit of the first reserve fund or the application of excess Funding available revenue receipts.

**There may be risks associated with the fact that Trustees has no legal title to the mortgages which may adversely affect payments on the Issuer Notes**

The sale by the seller to Trustees of the mortgages has taken effect, and any such sale in the future will take effect, in equity only. The sale by theseller to the mortgages trustee of the Scottish mortgages has taken effect by declarations of trust by the seller (and any sale of Scottish mortgages in the future will be given effect by further declarations of trust) by which the beneficialinterest in the Scottish mortgages is transferred to the mortgages trustee. In each case, this means that legal title to the loans in the trust property remains with the seller, but Trustees has all the other rights and benefits relating toownership of each loan and its related security (which rights and benefits are subject to the trust in favour of the beneficiaries). Trustees has the right to demand the seller to give it legal title to the loans and the related security in certaincircumstances and until then Trustees will not apply to the Land Registry or the Central Land Charges Registry to register or record its equitable interest in the mortgages.

Because Trustees has not obtained legal title to the loans or their related security, there are risks, as follows:

|   | **·** | firstly,        if the seller wrongly sold a loan to another person which has already        been assigned to Trustees, and that person acted in good faith and did        not have notice of the interests of Trustees or the beneficiaries in the        loan, then she or he might obtain good title to the loan, free from the        interests of Trustees and the beneficiaries. If this occurred then Trustees        would not have good title to the affected loan and its related security        and it would not be entitled to payments by a borrower in respect of such        a loan. This may affect the ability of the Issuer to repay the Issuer        Notes; and |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | ·     | secondly,      the rights of Trustees and the beneficiaries may be subject to the rights      of the borrowers against the seller, such as the rights of set-off which      occur in relation to transactions or deposits made between certain borrowers      and the seller and the rights of borrowers to redeem their mortgages by      repaying the loan directly to the seller. If these rights were exercised,      Trustees may receive less money than anticipated from the loans, which may      affect the ability of the Issuer to repay the Issuer Notes.                                                                                                                |
|   |              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

However, if a borrower exercises any set-off rights then an amount equal to the amount set off will reduce the total amount of the seller share of the trustproperty only, and the minimum seller share has been sized in an amount expected to cover this risk (although there is no assurance that it will).

Once notice has been given to borrowers of the transfer of the loans and their related security to Trustees, independent set-off rights which a borrower hasagainst the seller will crystallize and further rights of independent set-off would cease to accrue from that date and no new rights of independent set-off could be asserted following such notice. Set-off rights arising under transaction set-off(which are set-off claims arising out of a transaction connected with the loan (for example, a savings account maintained by a borrower pursuant to the terms of a flexible plus loan)) will not be affected by such notice.

**Set-off risks in relation to flexible loans, delayed cashbacks and reward cashbacks may adversely affect the funds available to the Issuer to repay the Issuer Notes**

As described under “There may be risks associated with the fact that Trustees has no legal title to the mortgages which may adversely affect payments onthe Issuer Notes,” the seller has made, and in the future may make, an equitable assignment of the mortgages, or in the case of the Scottish mortgages

20 

----

Back to Contents

transfer of the beneficial interest in the Scottish mortgages, to Trustees, with legal title being retained by the seller. Therefore, the rights of Trustees may be subject to the directrights of the borrowers against the seller, including rights of set-off existing prior to notification to the borrowers of the assignment of the mortgages. Such set-off rights may occur if the seller fails to advance to a borrower a drawing under aflexible loan when the borrower is entitled to draw additional amounts under a flexible loan or if the seller fails to pay to a borrower any delayed cashback or reward cashback which the seller had agreed to pay to that borrower after completion ofthe relevant loan.

If the seller fails to advance the drawing or pay the delayed cashback or reward cashback, then the relevant borrower may set off any damages claim (oranalagous right in Scotland) arising from the seller’s breach of contract against the seller’s (and, as assignee of the mortgages, Trustees’s) claim for payment of principal and/or interest under the loan as and when it becomes due.Such set-off claims will constitute transaction set-off as described in the risk factor entitled “Independent set-off risks which a borrower has against the seller may adversely affect the funds available to the Issuer to repay the IssuerNotes”.

The amount of the claim in respect of a drawing will, in many cases, be the cost to the borrower of finding an alternative source of finance (although, inthe case of flexible loan drawing, a delayed cashback or reward cashback in respect of a Scottish loan, it is possible, though regarded as unlikely, that the borrower's right of set-off could extend to the whole amount of the additional drawing).The borrower may obtain a loan elsewhere in which case the damages would be equal to any difference in the borrowing costs together with any consequential losses, namely the associated costs of obtaining alternative funds (for example, legal feesand survey fees). If the borrower is unable to obtain an alternative loan, he or she may have a claim in respect of other losses arising from the seller’s breach of contract where there are special circumstances communicated by the borrower tothe seller at the time the mortgage was taken out.

In respect of a delayed cashback or reward cashback, the claim is likely to be in an amount equal to the amount due under the delayed cashback or rewardcashback together with interest and expenses and consequential losses (if any).

A borrower may also attempt to set off against his or her mortgage payments an amount greater than the amount of his or her damages claim (or analagous rightin Scotland). In that case, the servicer will be entitled to take enforcement proceedings against the borrower although the period of non-payment by the borrower is likely to continue until a judgment is obtained.

The exercise of set-off rights by borrowers would reduce the incoming cashflow to Trustees during such exercise. However, the amounts set off will be appliedto reduce the seller share of the trust property only. The minimum seller share has been sized in an amount expected to cover this risk, although there is no assurance that it will. If the minimum seller share is not sufficient in this respect thennoteholders may not receive all amounts due on the Issuer Notes.

**Independent set-off risks which a borrower has against the seller may adversely affect the funds available to the Issuer to repay the Issuer Notes**

Once notice has been given to borrowers of the transfer of the loans and their related security to the mortgages trustee, independent set-off rights which aborrower has against the seller will crystallise and further rights of independent set-off would cease to accrue from that date and no new rights of independent set-off could be asserted following that notice. Set-off rights arising undertransaction set-off (which are set-off claims arising out of a transaction connected with the loan (for example, a savings account maintained by a borrower pursuant to the terms of a flexible plus loan)) will not be affected by that notice.

21 

----

Back to Contents

**If the servicer is removed, there is no guarantee that a substitute servicer would be found, which could delay collection of payments on the loans and ultimately could adverselyaffect payments on the Issuer Notes**

The seller has been appointed by Trustees and the beneficiaries as servicer to service the loans. If the servicer breaches the terms of the servicingagreement, then Trustees and the beneficiaries will be entitled to terminate the appointment of the servicer and appoint a new servicer in its place.

There can be no assurance that a substitute servicer would be found who would be willing and able to service the loans on the terms of the servicingagreement. The ability of a substitute servicer fully to perform the required services would depend, among other things, on the information, software and records available at the time of the appointment. Any delay or inability to appoint asubstitute servicer may affect payments on the loans and hence its ability to make payments when due on the Issuer Notes.

The servicer has no obligation itself to advance payments that borrowers fail to make in a timely fashion.

Neither the security trustee nor the note trustee is obliged in any circumstances to act as a servicer or to monitor the performance by the servicer of itsobligations.

**Funding may not receive the benefit of any claims made on the buildings insurance which could adversely affect payments on the Issuer Notes**

No assurance can be given that Funding will always receive the benefit of any claims made under any applicable insurance contracts. This could reduce theprincipal receipts received by Funding according to the Funding share percentage and could adversely affect its ability to redeem the Issuer Notes. Buildings insurance is renewed annually.

**Possible regulatory changes by the Office of Fair Trading, the Financial Services Authority and any other regulatory authority may have an impact on the seller, the Issuer, theservicer, and/or the loans and may adversely affect our ability to make payments when due on the Issuer Notes**

*Mortgage  Regulation*

The U.K. Financial Services Authority (the “FSA”) regulates persons who carry on “regulated activities” in the United Kingdom under theFinancial Services and Markets Act 2000 (the “FSMA”). This includes institutions which accept deposits by way of business within the meaning of the FSMA and persons who carry on certain mortgage business. There are five principalmortgage-related regulated activities: (i) entering into; (ii) administering; (iii) arranging; (iv) advising on “regulated mortgage contracts”; and (v) agreeing to do any of these things (subject to certain exceptions) which are broadlyloans entered into or treated as entered into on or after 31 October 2004 that are secured by way of first legal mortgage over U.K. residential property at least 40% of which is used or intended to be used as, or in connection with, a dwelling bythe borrower or a related person.

All authorised persons (within the meaning of the FSMA) who are regulated by the FSA are subject to the FSA’s Handbook of rules and guidance whichregulate a range of matters including senior management arrangements, systems and controls, conduct of business and training and competence.

The FSA is broadly empowered to obtain information from and give directions to authorised persons and also sets out standards that serve as guidelines forauthorised persons under its supervision. These authorised persons are subject to various reporting obligations (including submitting regular reports to the FSA) to enable the FSA to perform its supervisory role. The approach adopted by the FSA insupervising banks is risk-based with the objectives of: (i) systematic assessment of whether a bank meets

22

----

Back to Contents

the FSMA authorisation criteria; (ii) understanding the quality of the management and the risks banks face; (iii) using appropriate supervisory tools such as skilled persons’ reportson internal controls to identify risks and (iv) allocating resources proportionate to risk by focusing on banks with a high risk profile.

If mortgage lenders and brokers are not authorised as required by the FSMA, a regulated mortgage contract is unenforceable against the borrower except withthe approval of a court. Generally, each qualifying credit promotion (in broad terms an advertisement or marketing activity) relating to a regulated mortgage contract (or any other credit agreement secured by a mortgage on land, where the lendercarries on a regulated mortgage contract lending business) has to be issued or approved by a person holding authorisation and permission from the FSA. If such requirements as to qualifying credit promotions are not complied with, the regulatedmortgage contract (or other credit agreement) is unenforceable against the borrower except with the approval of a court. In addition, a court order is in any event necessary to enforce a mortgage securing a regulated mortgage contract that would (ifit were not a regulated mortgage contract) be, or be treated as, regulated by the Consumer Credit Act 1974 (the “CCA”).

Under the terms of the regulatory regime under the UK Financial Services and Markets Act 2000, the Issuer and mortgages trustee will not carry on anyregulated activity in relation to regulated mortgage contracts that are administered pursuant to an administration agreement by an entity having the required authorisation and permission. If such administration agreement terminates, however, theIssuer and mortgages trustee will have a period of not more than one month in which to arrange for mortgage administration to be carried out by a replacement administrator having the required authorisation and permission.

In addition, from 31st October 2004 no variations have been or will be made to the loans and no further advances or product switches have been or will be made under the loans where it would result in Funding and/or the mortgages trustee arranging oradvising in respect of administering or entering into a regulated mortgage contract (or agreeing to do any of these things) if the Issuer, Funding and/or the mortgages trustee would be required to be authorised under FSMA to do so.

All authorised persons (within the meaning of the FSMA) who are regulated by the FSA are subject to the FSA’s Handbook of rules and guidance whichregulate a range of matters including senior management arrangements, systems and controls, conduct of business and training and competence. **The“*****FSA Handbook of Rules*****” means the rules promulgated by the FSAunder FSMA and set out in the FSA’s Handbook of Rules and Guidance, as updated, amended or replaced from time to time.**

A borrower who is a private person is entitled to claim damages for loss suffered as a result of any contravention by an authorised person of an FSA rule,and may set off the amount of the claim against the amount owing by the borrower under the loan or any other loan that the borrower has taken (or exercise analogous rights in Scotland). Any such set-off may adversely affect our ability to makepayments in full on the Issuer Notes when due.

*Consumer Credit Regulation and the UK Consumer Credit Act 2006*

In the United Kingdom, the Office of Fair Trading (the “OFT”) is responsible for the issue of licences under, and the superintendence of theworking and the enforcement of, the CCA, related consumer credit regulations and other consumer protection legislation. The OFT may review business and operations, provide guidelines to follow and take actions when necessary with regard to theconsumer credit and mortgage markets in the United Kingdom.

23

----

Back to Contents

Currently, a credit agreement is regulated by the CCA where: (i) the borrower is or includes an individual; (ii) the amount of “credit” as definedin the CCA does not exceed the financial limit, which is £25,000 for credit agreements made on or after 1 May 1998, or lower amounts for credit agreements made before that date; and (iii) the credit agreement is not an exempt agreement asdefined in the CCA (for example it is intended that a regulated mortgage contract under the FSMA is an exempt agreement under the CCA.

The CCA does not apply to loans and mortgages which are regulated mortgage contracts, as described above (although in certain circumstances it may benecessary to obtain a court order under section 126 CCA to enforce a regulated mortgage contract). The CCA does apply to loans and mortgages which are not regulated mortgage contracts, but which fall within the criteria for regulation by the CCA asdescribed above. Loans and mortgages which will not be regulated mortgage contracts and which therefore may be regulated by the CCA if they fall within such criteria include loans secured by second or subsequent charges and any buy-to-let mortgagewhich is secured on land which is not used or intended to be used as to at least 40% or in connection with a dwelling by the borrower or a related person.

Any credit agreement that is wholly or partly regulated by the CCA or is to be treated as such has to comply with the requirements under the CCA as tolicensing of lenders and brokers, documentation and procedures of credit agreements, and (in so far as will be applicable) pre-contract disclosure. If it does not comply with those requirements, then to the extent that the credit agreement isregulated by the CCA or to be treated as such, it is unenforceable against the borrower: (a) without an order of the OFT, if requirements as to licensing of lenders and brokers are not met; (b) totally, if the form to be signed by the borrower isnot signed by the borrower personally or omits or mis-states a “prescribed term”; or (c) without a court order in other cases and, in exercising its discretion whether to make the order, the court would take into account any prejudicesuffered by the borrower and any culpability by the lender.

Any credit agreement intended to be a regulated mortgage contract under the FSMA or unregulated under the FSMA might instead be wholly or partly regulated bythe CCA or to be treated as such because of technical rules on:

|   | (a)    | determining        whether any credit under the CCA arises, or whether the financial limit        of the CCA is exceeded;                                                                                                                                                                |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                     |
|   | (b)    | determining        whether the credit agreement is an exempt agreement under the CCA (for        example, certain types of credit agreement to finance the purchase of,        or alteration to, homes or business premises, or a regulated mortgage        contract under the FSMA); or |
|   |   |                                                                                                                                                                                                                                                                                     |
|   | (c)    | changes        to credit agreements.                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                     |

A court order under Section 126 of the CCA is necessary to enforce a mortgage securing a loan, further advance or credit agreement to the extent that it isregulated by the CCA or to be treated as such. In dealing with such application, the court has the power, if it appears to do so, to amend a loan, further advance or credit agreement or to impose conditions upon its performance or to make a timeorder (for example, giving extra time for arrears to be cleared).

The Consumer Credit Act 2006 (the ‘CCA 2006’) received the Royal Assent on 30th March 2006. Once implemented the new Act will update and augment the CCA.

It is currently expected that from April 2007 the extortionate credit regime will be replaced by the unfair relationship test. In applying the new unfairrelationship test the courts will be able to consider a wider range of circumstances surrounding the transaction including the creditor’s conduct before and after

24

----

Back to Contents

making the agreement. There is no statutory definition of the word “unfair” as the intention is for the test to be flexible and subject to judicial discretion. However the word“unfair” is not an unfamiliar term in UK law due to the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083). The courts may look to the above legislation for guidance. The FSAPrinciples are also relevant and apply to the way contract terms are used in practice and not just the way they are drafted. The test has retrospective application after a transitional period. Once the debtor alleges that an unfair relationshipexists, it is up to the creditor to prove the contrary, altering the burden of proof.

An alternative dispute resolution (ADR) scheme for consumer credit matters is to be run by the Financial Ombudsman Service (FOS). It is currently expectedthat from April 2007 the scheme will be mandatory for all businesses licensed under the CCA. The CCA 2006 also introduces an Independent Consumer Appeals Tribunal.

It is currently expected that from April 2008 the statutory upper financial limit of £25,000 for CCA regulation will be removed*.*

The OFT are to be given far broader powers under the CCA 2006 for instance they can apply intermediate sanctions, have far greater powers of investigationand can issue indefinite standard licences. The CCA 2006 obliges creditors to comply with more stringent information requirements. It is currently expected that from 2008 lenders will be obliged to give customers clearer and more regular informationon the state of their credit accounts for example by running account and fixed sum statements; OFT information sheets and arrears notices.

The seller has interpreted certain technical rules under the CCA in a way common with many other lenders in the mortgage market. If such interpretation wereheld to be incorrect by a court or the Ombudsman, then a credit agreement, to the extent that it is regulated by the CCA or treated as such, would be unenforceable as described above. If such interpretation were challenged by a significant number ofborrowers, then this could lead to significant disruption and shortfall in the income of the mortgages trustee. Court decisions have been made on technical rules under the CCA against certain mortgage lenders, but such decisions are very few and aregenerally county court decisions which are not binding on other courts.

The seller has given or, as applicable, will give warranties to the mortgages trustee in the mortgage sale agreement that, among other things, each loan andits related security is enforceable (subject to certain exceptions). If a loan or its related security does not comply with these warranties, and if the default cannot be or is not cured within 20 days, then the seller will be required to repurchasethe loans under the relevant mortgage account and their related security from the mortgages trustee.

No assurance can be given that additional regulations from the Office of Fair Trading, the Financial Services Authority or any other regulatory authoritywill not arise with regard to the mortgage market in the United Kingdom generally, the seller’s particular sector in that market or specifically in relation to the seller. Any such action or developments may have a material adverse effect onthe loans, the seller, the Issuer and/or the servicer and their respective businesses and operations. This may adversely affect our ability to make payments in full on the Issuer Notes when due.

*Distance Marketing*

In the United Kingdom, the Financial (Distance Marketing) Regulations 2004 apply to, *inter alia*, credit agreements entered into on or after 31 October 2004 by means of distance communication (i.e. without any substantive simultaneous physicalpresence of the originator and the borrower). A regulated mortgage contract under the FSMA, if originated by a UK lender from an establishment in the UK, will

25

----

Back to Contents

not be cancellable under these regulations. Any other credit agreement will be cancellable under these regulations, if the borrower does not receive prescribed information at theprescribed time, or in any event for certain unsecured lending. The borrower may send notice of cancellation under these regulations at any time before the end of the fourteenth day after the day on which the cancellable agreement is made or, iflater, the borrower receives the last of prescribed information.

If the borrower cancels the credit agreement under these regulations, then: (a) the borrower is liable to repay the principal and any other sums paid by theoriginator to the borrower under or in relation to the cancelled agreement, within 30 days beginning with the day of the borrower sending notice of cancellation or, if later, the originator receiving notice of cancellation; (b) the borrower isliable to pay interest, or any early repayment charge or other charge for credit under the cancelled agreement, only if the borrower received certain prescribed information at the prescribed time and if other conditions are met; and (c) any securityis to be treated as never having had effect for the cancelled agreement.

*Proposed EU Consumer Credit Directive*

In September 2002, the European Commission published a proposal for a directive of the European Parliament and of the Council on the harmonisation of thelaws, regulations and administrative provisions of the member states concerning credit for consumers and surety agreements entered into by consumers. Under the original proposed draft, the directive required specific requirements to be met inrespect of certain mortgage loan products (including new credit agreements for further drawings under certain flexible mortgages and for further advances and amortisation tables for repayment mortgages). Mortgage loans not complying with theserequirements were potentially unenforceable. Significantly, in its original form, the proposal provided that it does not apply retrospectively (subject to certain exceptions including in respect of new drawings made in respect of existingagreements) and does not apply to residential mortgage loans except those which include an equity release component.

There has been significant opposition from the European Parliament to the original form of the proposed directive. On 13 February 2004, the Committee ofLegal Affairs and the Internal Market published the European Parliament’s amendments to the proposed draft. These amendments included excluding any credit agreement secured by a mortgage on land. On 20 April 2004 the European parliament votedon its first reading on the proposed directive. The European Commission published on 28 October 2004 a revised proposal, which comprised a list of intended revisions to the draft directive based on the amendments that the European Commission felteither able or unable to accept rather than a full redraft. In this amended form die proposed directive will apply to any loan secured by a mortgage over land if the loan includes an equity release element and is not over €100,000, but it isunclear whether it will apply to further drawings and further advances made in relation to agreements existing before national implementing legislation conies into effect.

The DTI published in February 2005 a consultation paper on the European Commission’s amended form of the proposed Directive, and in June 2005 a summaryof responses to this consultation. In July 2005, the European Commission published a Green Paper on mortgage credit, in which it announced its intention that loans secured by a land mortgage will be excluded from the proposed Directive but will becovered by any initiatives resulting from the Green Paper process. In October 2005, the European Commission published a further amended form of the proposed Directive, which provides that (subject to certain exceptions) loans not exceeding€50,000 will be regulated, but that loans secured by a land mortgage will be excluded from the proposed Directive. The proposed Directive, which may be further substantially amended before it is brought into effect, is unlikely to come intoforce before mid-2006, and member states will then have a further two years in which to bring national implementing legislation into force. In March 2006 the DTI released a further consultation paper, the deadline for responses was 10 May 2006.

26 

----

Back to Contents

Until the final text of the Directive and of any initiatives resulting from the Green Paper process are decided and the details of the United Kingdomimplementing legislation are published, it is not certain what effect the adoption and implementation of the Directive or initiatives would have on our ability to make payments in full on the Issuer Notes when due. No assurance can be given thatadditional regulations from the OFT, the FSA or any other regulatory authority will not arise with regard to the mortgage market in the United Kingdom generally, the seller’s particular sector in that market or specifically in relation to theseller. Any such action or developments or compliance costs may have a material adverse effect on the loans, the seller, the Issuer and/or the servicer and their respective business and operations. This may adversely affect our ability to makepayments in full on the Issuer Notes when due.

**Regulations  in the United Kingdom could lead to some terms of the loans being unenforceable,  which may adversely affect payments on the Issuer Notes**

In  the United Kingdom, the Unfair Terms in Consumer Contracts Regulations 1999,  and (in so far as applicable) the Unfair Terms in Consumer Contracts Regulations  1994 (together, the “regulations”) apply to agreements entered into  on or after July 1, 1995 and affect all of the loans. The regulations provide  that:

|   | **·** | a        borrower may challenge a term in an agreement on the basis that it is        an “unfair” term within the regulations and therefore not binding        on the borrower; and                                            |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                     |
|   | ·     | the Office      of Fair Trading, the Financial Services Authority and any other “qualifying      body” (as defined in the regulations) may seek to prevent a business      from using or recommending the use of unfair terms. |
|   |              |                                                                                                                                                                                                                                     |

The regulations will not generally affect individually negotiated or “core terms” which set out the main subject-matter of the contract, such asthe borrower’s obligation to repay the principal. However, they may affect terms that are not considered to be core terms, such as the right of the lender to vary the interest rate.

For example, if a term permitting a lender to vary the interest rate (as the seller is permitted to do) is found to be unfair, the borrower will not beliable to pay the increased rate or, to the extent that she or he has paid it, will be able, as against the lender, or any assignee such as Trustees, to claim repayment of the extra interest amounts paid or to set-off the amount of the claim againstthe amount owing by the borrower under the loan or under any other loan that the borrower has taken. Any such non-recovery, claim or set-off ultimately may adversely affect our ability to make payments on the Issuer Notes.

The FSA has agreed with the OFT to take responsibility for the enforcement of the UTCCR in mortgage agreements. In May 2005, the FSA issued a statement ofgood practice on fairness of terms in consumer contracts, which is relevant to firms authorised and regulated by the FSA in relation to products and services within the FSA’s regulatory scope. This statement considers, among other things,borrowers who are locked in, for example, by an early repayment charge that is considered to be a penalty. This statement provides that, for locked-in borrowers, a firm may consider drafting the contract to permit a change in the contract to be madeonly where any lock-in clause is not exercised.

In August 2002, the Law Commission for England and Wales and the Scottish Law Commission issued a joint consultation LCCP No. 166/SLCDP 119 on proposals torationalise the Unfair Contract Terms Act 1977 and the regulations into a single piece of legislation and a final report (incorporating a proposed Bill on unfair terms), which was expected early in 2004 but at the date of this annual report, has notyet been published. The Law Commissions have a duty under section 3 of the Law Commissions Act

27 

----

Back to Contents

1965 to keep the law under review for a number of purposes, including its simplification. The proposals are primarily to simplify the legislation on unfair terms. It is not proposed thatthere should be any significant increase in the extent of controls over terms in consumer contracts. Some changes are proposed, however, such as that the legislation should not affect core terms in so far as they are not substantially different fromwhat the borrower should reasonably expect and are transparent. However, it is not obligatory for any of the Law Commission’s reports to be considered for enactment as legislation by the UK government. It is therefore too early to tell how theproposals, if enacted, would affect the loans. 

**Decisions  of the Ombudsman could lead to terms of the loans being considered unfair and  such terms being varied, which may adversely affect payments on the Issuer Notes**

     Under the UK Financial Services and Markets Act 2000, the Financial Ombudsman Service is empowered to make decisions on, among other things, complaintsrelating to the terms in agreements for the provision of financial services, including loans, on the basis of what, in the Ombudsman’s opinion, would be fair and reasonable in all circumstances of the case, taking into account, among otherthings, law and guidance. Such complaints are generally decided on a case by case basis by the Financial Ombudsman Service, with reference to the particular facts of any individual case. Each case is first adjudicated by an adjudicator. Either partyto the case may appeal against the adjudication. In the event of an appeal, the case proceeds to a final decision by the Ombudsman. 

     No Financial Ombudsman Service decision against the seller has had a material adverse effect on the Issuer’s ability to make payments on the IssuerNotes. However, given the Financial Ombudsman Service’s wide jurisdiction in respect of fairness in the provision of financial services, it cannot be said with certainty what effect, if any, any future decision of the Financial OmbudsmanService may have on the Issuer’s ability to make payments on the Issuer Notes. 

**Tax payable by Funding or the Issuer may adversely affect the Issuer’s ability to make payments on the Issuer Notes**

     As explained in “Item 10.E. – Taxation – United Kingdom Taxation”, Funding and the Issuer will generally be subject to UK corporationtax, currently at a rate of 30 per cent., on the profit reflected in their respective profit and loss accounts as increased by the amount of any non-deductible expenses or losses. If the tax payable by Funding or the Issuer is greater than expectedbecause, for example, non-deductible expenses or losses are greater than expected, the funds available to make payments on the Issuer Notes will be reduced and this may adversely affect the Issuer’s ability to make payments on the Issuer Notes.

     The UK corporation tax position of the Issuer and Funding, however, also depends to a significant extent on the accounting treatment applicable to it. From1st January, 2005, the accounts of the Issuer are required to comply with International Financial Reporting Standards (“IFRS”) or with new UK Financial Reporting Standards reflecting IFRS (“new UK GAAP”). Funding has chosen tocomply with IFRS. There is a concern that companies such as the Issuer and Funding might, under either IFRS or new UK GAAP, suffer timing differences that could result in profits or losses for accounting purposes, and accordingly for tax purposes(unless tax legislation provides otherwise), which bear little or no relationship to the company’s cash position. However, the Finance Act 2005 (which received royal assent on 7th April, 2005) requires “securitisation companies” toprepare tax computations for accounting periods beginning on or after 1st January, 2005 and ending before 1st January, 2007 on the basis of UK GAAP as applicable up to 31st December, 2004, notwithstanding the requirement to prepare statutoryaccounts under IFRS or new UK GAAP. The Finance Bill 2006 provides that this temporary tax basis available to “securitisation companies” is to be extended for a further year (i.e. to periods of account 

28 

----

Back to Contents

ending on or before 31st December, 2007). On the basis of the definition of “securitisation company” as currently drafted for these purposes, the Issuer and Funding will eachqualify as such a company. 

     The stated policy of H.M. Revenue & Customs is that the tax neutrality of securitisation special purpose companies in general should not be disrupted asa result of the transition to IFRS or new UK GAAP and that they are working with participants in the securitisation industry to identify appropriate means of preventing any such disruption through a permanent regime. The Finance Act 2005 enablesregulations to be made to establish such a regime. It is not clear what the provisions of such a regime will entail, although current indications from H.M. Revenue & Customs are that a securitisation company will have to satisfy variousconditions in order to be able to benefit from the regime. If, however (for whatever reason), measures are not introduced to deal with the corporate tax position of such companies in respect of accounting periods ending on or after 1st January,2008, then profits or losses could arise in the Issuer and/or Funding as a result of the application of IFRS or new UK GAAP which could have tax effects not contemplated in the cashflows for the transaction and as such adversely affect the Issuerand/or Funding and consequently payments on the Issuer Notes. 

**European Directive 2003/48/EC on the Taxation of Savings Income may adversely affect noteholders’ interests**

     On 1 July 2005 a European Union Directive (2003/48/EC) regarding the taxation of savings income came into force. Under the Directive, member states arerequired to provide to the tax authorities of other member states details of payments of interest and other similar income paid by a person within a member state's jurisdiction to an individual in another member state, except that Austria, Belgiumand Luxembourg will instead impose a withholding system for a transitional period, unless during such period they elect otherwise (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating toinformation exchange with certain other countries). 

     Payments of interest on the Issuer Notes which are made or collected through a member state or any other relevant country may be subject to withholding taxwhich would prevent holders of the Issuer Notes from receiving interest on their Issuer Notes in full. 

**Noteholders’ interests may be adversely affected if the United Kingdom joins the European Monetary Union**

     It is possible that prior to the maturity of the Notes, the United Kingdom may become a participating member state in the European economic and monetaryunion and the euro may become the lawful currency of the United Kingdom. In that event (a) all amounts payable in respect of the Issuer Notes denominated in pounds sterling may become payable in euro, (b) applicable provisions of law may require orallow us to redenominate such Issuer Notes into euro and take additional measures in respect of such Issuer Notes and (c) the introduction of the euro as the lawful currency of the United Kingdom may result in the disappearance of published ordisplayed rates for deposits in sterling used to determine the rates of interest on such Issuer Notes or changes in the way those rates are calculated, quoted and published or displayed. The introduction of the euro could also be accompanied by avolatile interest rate environment which could adversely affect investors. It cannot be said with certainty what effect, if any, adoption of the euro by the United Kingdom will have on investors on the Issuer Notes. 

**Changes of law may adversely affect noteholders’ interests**

     The structure of the issue of the Issuer Notes and the ratings which are to be assigned to them are based on English law and Scottish law in relation toScottish loans in effect as at the date of this annual report. No assurance can be given as to the impact of any possible change to English or Scottish law or administrative practice in the United Kingdom after the date of this annual report.

*Insolvency Act 2000*

29 

----

Back to Contents

     Significant changes to the insolvency regime in England and Wales and Scotland have recently been enacted, including the Insolvency Act 2000. The InsolvencyAct 2000 allows certain “small” companies to seek protection from their creditors for a period of 28 days, for the purposes of putting together a company voluntary arrangement, with the option for creditors to extend the moratorium for afurther two months. A “small” company is defined as one which satisfies, in any financial year, two or more of the following criteria: (i) its turnover is not more than £5.6 million, (ii) its balance sheet total is not more than£2.8 million and (iii) the number of employees is not more than 50. Whether or not a company is a “small” company may change from period to period and consequently no assurance can be given that the Issuer, Trustees or Funding willnot, at any given time, be determined to be a “small” company. The Secretary of State for Trade and Industry may by regulation modify the eligibility requirements for “small” companies and has the power to make differentprovisions for different cases. No assurance can be given that any such modification or different provisions will not be detrimental to the interests of noteholders.

     Secondary legislation has now been enacted which excludes certain special purpose companies in relation to capital markets transactions from the optionalmoratorium provisions. Such exceptions include (amongst other matters): (i) a company which is a party to an agreement which is or forms part of a capital market arrangement (as defined in the secondary legislation) under which (a) a party hasincurred or when the agreement was entered into was expected to incur a debt of at least £10 million under the arrangement and (b) the arrangement involves the issue of a capital market investment (also defined, but generally, a rated, listedor traded bond) and (ii) a company which has incurred a liability (including a present, future or contingent liability) of at least £10 million. While the Issuer, Trustees and Funding should fall within the exceptions, there is no guidance asto how the legislation will be interpreted by a court and the Secretary of State for Trade and Industry may by regulation modify the exception. No assurance may be given that any modification of the eligibility requirements for “small”companies and/or the exceptions will not be detrimental to the interests of noteholders. 

     If the Issuer and/or Trustees and/or Funding is determined to be a “small” company and determined not to fall within one of the exceptions (byreason of modification of the exceptions or otherwise), then the enforcement of the Issuer security by the security trustee may, for a period, be prohibited by the imposition of a moratorium. 

*Enterprise Act 2002*

     On September 15, 2003, the corporate insolvency provisions of the Enterprise Act 2002 (the “Enterprise Act”) came into force, amending certainprovisions of the Insolvency Act 1986 as amended (the “Insolvency Act”). These provisions introduced significant reforms to corporate insolvency law. In particular the reforms restrict the right of the holder of a floating charge createdafter 15th September, 2003 to appoint an administrative receiver (unless an exception applies) and instead gives primacy to collective insolvency procedures (in particular, administration). 

     The holder of a floating charge created before September 15, 2003 over the whole or substantially the whole of the assets of a company (such as the securitytrustee under the Funding deed of charge) retains the ability to block the appointment of an administrator by appointing an administrative receiver, who has a duty to primarily act in the interests of the floating charge holder. 

     The Insolvency Act contains provisions which continue to allow for the appointment of an administrative receiver in relation to certain transactions in thecapital markets. The right to appoint an administrative receiver is retained for certain types of security (such as the Issuer security) that form part of a capital markets arrangement (as defined in the Insolvency Act) that involves (i)indebtedness of at least £50,000,000 (or, when the relevant security document was entered into (being in respect of the transactions described in this annual report, the Issuer deed of charge), a party to the relevant transaction (such as theIssuer) was expected to incur a debt of at least £50,000,000) and (ii) the issue of a capital markets investment (also defined but generally a rated, listed or traded bond). The Secretary of State for 

30 

----

Back to Contents

Trade and Industry may, by secondary legislation, modify this exception and/or provide that the exception shall cease to have effect. No assurance can be given that any such modificationor provision in respect of the capital market exception, or its ceasing to be applicable to the transactions described in this document will not adversely affect payments on the Issuer Notes. While the Issuer security should fall within the relevantexception, as the provisions of the Enterprise Act have never been considered judicially, no assurance can be given as to whether the Enterprise Act could have a detrimental effect on the transaction described in this annual report or on theinterests of noteholders. 

     The Insolvency Act also contains a new out-of-court route into administration for a qualifying floating charge holder, the directors or the company itself.The relevant provisions provide for a notice period during which the holder of the floating charge can either agree to the administrator proposed by the directors of the company or appoint an alternative administrator, although the moratorium willtake effect immediately after notice is given. If the qualifying floating charge holder does not respond to the directors' notice of intention to appoint, the directors', or as the case may be, the company's appointee will automatically take officeafter the notice period has elapsed. Where the holder of a qualifying floating charge within the context of a capital market transaction retains the power to appoint an administrative receiver, such holder may prevent the appointment of anadministrator (either by the new out-of-court route or by the court based procedure), by appointing an administrative receiver prior to the appointment of the administrator being completed.

     The new provisions of the Insolvency Act give primary emphasis to the rescue of the company as a going concern. The purpose of realising property to make adistribution to one or more secured creditors is subordinated to the primary purposes of rescuing the company as a going concern or achieving a better result for the creditors as a whole than would be likely if the company were wound up. Noassurance can be given that the primary purposes of the new provisions will not conflict with the interests of noteholders were the Issuer ever subject to administration. 

     In addition to the introduction of a prohibition on the appointment of an administrative receiver as set out above, section 176A of the Insolvency Actprovides that in relation to floating charges created after September 15, 2003 any receiver (including an administrative receiver), liquidator or administrator of a company is required to make a “prescribed part” of the company's “netproperty” available for the satisfaction of unsecured debts in priority to the claims of the floating charge holder. The company's “net property” is defined as the amount of the chargor's property which would be available forsatisfaction of debts due to the holder(s) of any debentures secured by a floating charge and so refers to any floating charge realisations less any amounts payable to the preferential creditors or in respect of the fees or expenses ofadministration. The “prescribed part” is defined in The Insolvency Act 1986 (Prescribed Part) Order 2003 (SI 2003/2097) to be an amount equal to 50 per cent. of the first £10,000 of floating charge realisations plus 20 per cent. ofthe floating charge realisations thereafter, provided that such amount may not exceed £600,000. 

     This obligation does not apply if the net property is less than a prescribed minimum and the relevant officeholder is of the view that the cost of making adistribution to unsecured creditors would be disproportionate to the benefits. The relevant officeholder may also apply to court for an order that the provisions of section 176A of the Insolvency Act should not apply on the basis that the cost ofmaking a distribution would be disproportionate to the benefits. 

     Floating charge realisations upon the enforcement of the Issuer security may be reduced by the operation of the “ring fencing” provisions describedabove. 

*Capital Adequacy*

      An  authorised person with permission from the FSA to accept deposits by way of  business (in other words, a bank) is subject to *inter alia*the  part of the Handbook known as the “Interim Prudential Sourcebook for Banks”.  The Interim Prudential Sourcebook for Banks will be replaced in stages 

31 

----

Back to Contents

between 2004  and (probably) 2007 as parts of the Integrated Prudential Sourcebook come into  force; the Integrated Prudential Sourcebook in relation to mortgage firms (other  than banks and building societies) is already in force.

     The development of the Integrated Prudential Sourcebook is to take into account the implementation of a range of European directives and internationalagreements, in particular the New Basel Capital Accord (Basel II) and the related European Capital Requirements Directive (which implements, and indeed goes further than, the New Basel Capital Accord). 

**Implementation of the New Basel Capital Accord and the risk-weighted asset framework may result in changes to the risk-weighting of the Issuer Notes**

     On November 14, 2005, the Basel Committee on Banking Supervision published an updated version of the text of new capital adequacy standards for internationalbanks, under the title “Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework.” This new framework (the “Basel II Framework”) substantially revises and expands the existing Basel ICapital Accord first issued in 1988, includes more sophisticated approaches to applying capital requirements based on risk, addresses more types of risk including operational risk, and places enhanced emphasis on market discipline and banks’internal systems and controls. The Basel II framework is not self-implementing, but rather forms the basis for national rule-making and approval processes in participating countries. The Basel Committee has released numerous discussion papers,impact studies and guidance for banking organisations in their preparations for implementing the revised capital standards. The Committee has also formed an Accord Implementation Group of bank supervisors to share information and to promoteconsistency as participating countries move forward with implementation of Basel II. 

     Within the European Union and the European Economic Area, the Basel II Framework will be implemented through the EU Capital Requirements Directive, whichmakes some modifications to the Framework. It is currently intended that the various approaches under the Basel II Framework and the EU Capital Requirements Directive will be implemented in stages, some from year-end 2006, the most advanced atyear-end 2007. 

     In the United States, the federal banking regulators have proposed to require about the 20 largest US banking organisations to use the most advancedapproaches of Basel II; other US banks with sophisticated systems may voluntarily elect to adopt Basel II advanced approaches subject to regulatory approval. Most US banks initially would not be subject to Basel II and would continue to followexisting US risk-based capital rules with certain modifications to be determined (a proposal known as “Basel I-A.”). The US is not adopting Basel II’s simpler approaches, as the existing US framework based on Basel I is not equivalentto Basel II. Implementation of Basel II in the United States is also targeted to begin on January 1, 2009, one year later than in Europe. This one year “gap” and other differences in the application or interpretation between the US, the EUand other jurisdictions in which the Abbey group has operations could represent challenges for the bank in implementing Basel II. 

     As and when implemented, the Basel II Framework could affect the risk-based capital treatment of the Financing notes for investors who are subject to bankcapital adequacy requirements that follow the Framework. Consequently, investors should consult their own advisers as to the consequences to and effect on them of the proposed implementation of the Basel II Framework. Proposals and guidelines forimplementing Basel II in participating jurisdictions are still in development, and no predictions can be made as to the precise effects of potential changes on the Abbey group, the Financing notes or any investor. 

**Fixed charges subsequently re-characterised as floating charges may adversely affect payments on the Issuer Notes**

32 

----

Back to Contents

     Fixed charges over bank accounts may take effect under English law as floating charges. Under the terms of the Issuer deed of charge and the Funding deed ofcharge respectively, the Issuer and Funding will purport to grant, among other things, fixed charges in favour of the security trustee over, in the case of the Issuer, the Issuer's interest in the Issuer transaction account and, in the case ofFunding, Funding's interest in the Funding transaction account. 

      The  law in England and Wales relating to the re-characterisation of fixed charges  is unsettled. The fixed charges purported to be granted by the Issuer and Funding  (other than by way of assignment in security) will take effect under English  law only as floating charges if it is determined that the security trustee does  not exert sufficient control over the relevant account, or the proceeds thereof,  for the security to be said to “fix” over those assets. As the Issuer  and Funding are signatories to the accounts, there is a risk that a court will  consider that the security trustee does not exert a sufficient degree of control  to ensure that the charges over those accounts are held to be fixed charges.  If the charges take effect as floating charges instead of fixed charges, then  certain matters, which are given priority over floating charges by law, will  be given priority over the claims of the floating chargeholder. 

     In addition, if assets in respect of which the Issuer or Funding has granted a fixed charge are paid into a bank account the charge over which issubsequently re-characterised as a floating charge, the original fixed charge in relation to the assets may also be re-characterised as a floating charge. 

**Item  4. Information on the Company**

***A.  History and Development of the Company***

     Not  applicable. 

***B.  Business Overview***

     Not  applicable. 

***C.  Organizational Structure***

     Not  applicable. 

***D.  Property, Plant and Equipment***

     The property of the Issuer consists solely of its right to receive payments of interest and principal from Funding on the various Term Advances made underthe Intercompany Loan Agreement. The property of Funding consists of its interest in the trust property held by Trustees together with amounts available under two reserve funds and its right to receive certain payments of principal and interest fromthe trust property controlled by Trustees. The trust property includes the loans in the portfolio at the closing date or which have subsequently been assigned to Trustees thereafter (including any new drawings under flexible loans) and their relatedsecurity and any income generated by the loans or their related security. The composition of the trust property will fluctuate as drawings under flexible loans and new loans are added and as the loans that were previously part of the trust propertyare repaid, mature, default or are repurchased by the seller. The trust property also includes any money in the mortgages trustee guaranteed investment contract (or GIC) account and in any other bank account or bank accounts held by Trustees (asagreed by Trustees, Funding, the seller and the security trustee) from time to time, called the alternative accounts. The mortgages trustee GIC account is the bank account in which Trustees holds any cash that is part of the trust property until itis distributed to the beneficiaries. The alternative accounts are accounts into which payments by some mortgage borrowers are paid initially. 

33 

----

Back to Contents

     The officers’ certificate of compliance of the Issuer, executed by two directors of the Issuer is filed as Exhibit 10.18 to this Annual Report on Form20-F. The certificate of compliance contains a statement that during the period from November 7, 2002 to April 30, 2006, to the best of the knowledge and belief of the signatories, the Issuer has complied with all its obligations contained in theIssuer Trust Deed and each of the Transaction Documents (as defined in the Issuer Trust Deed) to which it is a party. It also contains a statement that as at April 30, 2006, there did not exist and had not existed since November 7, 2002, any NoteEvent of Default (as defined in the Issuer Trust Deed). 

**Item  5. Operating and Financial Review and Prospects**

***A.  Operating Results***

     Not  applicable. 

***B.  Liquidity and Capital Resources***

     Not  applicable. 

***C.  Research and Development, Patents and Licenses, etc.***

     Not  applicable. 

***D.  Trend Information***

     Not  applicable. 

***E.  Off-Balance Sheet Arrangements***

     Not  applicable. 

***F.  Tabular Disclosure of Contractual Obligations***

     Not  applicable. 

**Item  6. Directors, Senior Management and Employees**

***A.  Directors and Senior Management***

      The  following sets out the names, business addresses and business occupations of  the directors of the Issuer, Funding and Trustees. Because each of the Issuer,  Funding and Trustees is organized as a special purpose company and will be largely  passive, it is expected that the directors of each entity in that capacity will  manage its operations to the extent necessary. 

34 

----

Back to Contents

|                              | Issuer                            |                               |                              |
|-----------------------------------|-----------------------------------|------------------------------------|-----------------------------------|
|                              |                                   |                               |                              |
|                              |                              |                               |                              |
| **Name**                          |                              | **Business        Address**        | **Business        Occupation**    |
|                                   |                              |                                    |                                   |
|                              |                              |                               |                              |
| Martin      McDermott             | Wilmington      Trust SP Services | Executive      Director of         |
|                              |                              | (London)      Limited              | Wilmington      Trust SP Services |
|                              |                              | Tower 42                           | (London)      Limited             |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| Wilmington      Trust SP Services | Wilmington      Trust SP Services | Management      of special purpose |
| (London)      Limited             | (London)      Limited             | companies                          |
|                              |                              | Tower 42                           |                              |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| David      Green                  | Abbey National      House         | Finance      Director, Banking,    |
|                              |                              | 2 Triton      Square               | Abbey National      plc           |
|                              |                              | Regent’s      Place           |                              |
|                              |                              | London NW1      3AN                |                              |
|                              | Funding                           |                               |                              |
|                              |                                   |                               |                              |
| **Name**                          |                              | **Business        Address**        | **Business        Occupation**    |
|                                   |                              |                                    |                                   |
| Martin      McDermott             | Wilmington      Trust SP Services | Executive      Director of         |
|                              |                              | (London)      Limited              | Wilmington      Trust SP Services |
|                              |                              | Tower 42                           | (London)      Limited             |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| Wilmington      Trust SP Services | Wilmington      Trust SP Services | Management      of special purpose |
| (London)      Limited             | (London)      Limited             | companies                          |
|                              |                              | Tower 42                           |                              |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| David      Green                  | Abbey National      House         | Finance      Director, Banking,    |
|                              |                              | 2 Triton      Square               | Abbey National      plc           |
|                              |                              | Regent’s      Place           |                              |
|                              |                              | London NW1      3AN                |                              |
|                              | Trustees                          |                               |                              |
|                              |                                   |                               |                              |
| **Name**                          |                              | **Business        Address**        | **Business        Occupation**    |
|                                   |                              |                                    |                                   |
| Martin      McDermott             | Wilmington      Trust SP Services | Executive      Director of         |
|                              |                              | (London)      Limited              | Wilmington      Trust SP Services |
|                              |                              | Tower 42                           | (London)      Limited             |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| Wilmington      Trust SP Services | Wilmington      Trust SP Services | Management      of special purpose |
| (London)      Limited             | (London)      Limited             | companies                          |
|                              |                              | Tower 42                           |                              |
|                              |                              | 25 Old Broad      Street           |                              |
|                              |                              | London EC2N      1HQ               |                              |
| David      Green                  | Abbey National      House         | Finance      Director, Banking,    |
|                              |                              | 2 Triton      Square               | Abbey National      plc           |
|                              |                              | Regent’s      Place           |                              |

35 

----

Back to Contents

|   |   | London        NW1 3AN |   |
|--------|--------|-----------------------|--------|

David Green is  an employee of Abbey National plc, the seller. 

***B.  Compensation***

     None  of the Issuer, Funding or Trustees pays remuneration directly to any director.  

***C.  Board Practices***

     Not  applicable. 

***D.  Employees***

     Not  applicable. 

***E.  Share Ownership***

     Not  applicable. 

**Item  7. Major Shareholders and Related Party Transactions**

***A.  Major Shareholders***

     Each of the Issuer, Funding and Trustees is wholly owned by Holmes Holdings Limited, a private limited company incorporated under the laws of England andWales. Wilmington Trust SP Services (London) Limited holds all of the beneficial interest in the issued shares of Holmes Holdings Limited on a discretionary trust for persons employed as nurses in the United Kingdom and for charitable purposes.Wilmington Trust SP Services (London) Limited is not affiliated with Abbey National plc. 

***B.  Related Party Transactions***

     None, other than with respect to the making of payments in respect to the securities as described in the Registration Statement and “Item 3.D. –Risk Factors.” 

***C.  Interests of Experts and Counsel***

     Not  applicable to annual reports on Form 20-F. 

**Item  8. Financial Information**

     For a discussion of the available financial information, see “Item 3.A. – Selected Financial Information.” 

     *Litigation*. The Issuer knows of no material legal proceedings involvingthe Issuer. Funding knows of no material legal proceedings involving Funding. Trustees knows of no material legal proceedings involving Trustees or the trust. 

**Item  9. The Listing**

***A.  Listing Details***

36 

----

Back to Contents

     Not  applicable. 

***B.  Plan of Distribution***

     Not  applicable to annual reports on Form 20-F. 

***C.  Markets***

      The  principal trading market for each class of Issuer Notes is the London Stock  Exchange. The Issuer Notes have been listed on the London Stock Exchange since  November 8, 2001.

***D.  Selling Shareholders***

     Not  applicable to annual reports on Form 20-F. 

***E.  Dilution***

     Not  applicable to annual reports on Form 20-F. 

***F.  Expenses of the Issue***

     Not  applicable to annual reports on Form 20-F. 

**Item  10. Additional Information**

***A.  Share Capital***

     Not  applicable to annual reports on Form 20-F. 

***B.  Memorandum and Articles of Association***

     Not  applicable. 

***C.  Material Contracts***

     Not applicable other than with respect to contracts relating to the securities, which were described in the Registration Statement on Form S-11 relating tothe securities (file number 333-99349). 

***D.  Exchange Controls***

     None.  

***E.  Taxation***

**United Kingdom Taxation**

     The following section summarises the material UK tax consequences of the purchase, ownership and disposition of the Issuer Notes based on current law andpractice in the UK. The summary assumes that the representations made by the seller that the profit in Funding’s profit and loss account will not exceed 0.01 per cent. of the Funding available revenue receipts and that the profit in theIssuer’s profit and loss account will not exceed 0.02 per cent. of the interest on the Issuer term advances under the issuer intercompany loan (subject to the effect of compliance with International Financial Reporting Standards 

37 

----

Back to Contents

(or UK Financial Reporting Standards reflecting them)) are correct. It further assumes that all payments made pursuant to the final documentation are calculated on arm’s lengthterms. The summary does not purport to be a complete analysis of all tax considerations of the purchase, ownership and disposition of the Issuer Notes. It relates to the position of persons who are the absolute beneficial owners of Issuer Notes andmay not apply to certain classes of persons such as dealers or persons connected with the Issuer. Holders of Issuer Notes who are unsure as to their tax position should seek their own professional advice. 

**Taxation of US residents**

     As discussed in more detail under “**Withholding tax**” below, no UK withholding tax will be required in relation to interest payments on the Issuer Notes provided that the Issuer Notes are and remain at all times listed on a recognised stockexchange, which includes the London Stock Exchange. 

     As discussed in more detail under “**Direct assessment of non-UK residentholders of Issuer Notes to UK tax on interest**” below, a noteholder who is resident in the US for US tax purposes and who is not resident in the UK for UK tax purposes willnot be subject to UK tax by direct assessment unless such noteholder carries on a trade, profession or vocation through a branch or agency in the UK in connection with which payments on the Issuer Notes are received or to which the Issuer Notes areattributable and where that noteholder is a company, unless that noteholder carries on a trade in the UK through a permanent establishment in connection with which the payments on the Issuer Notes are received or to which the Issuer Notes areattributable. 

     Subject as set out in the rest of this paragraph, residents of the US who are not subject to UK tax by direct assessment are generally not subject to tax inthe UK on payments on the Issuer Notes under the terms of the double tax treaty between the US and the UK (the “Treaty”) provided that the amounts paid on the Issuer Notes do not exceed the return on comparable debt instruments. To theextent that the amounts paid do exceed such a return, the UK may tax the excess in accordance with UK domestic law. In order for such US residents to avoid being subject to tax in the UK on such payments, they must satisfy the requirements of theLimitation on Benefits article of the Treaty and the necessary administrative formalities must be completed. Treaty relief will not be available where a payment on the Issuer Notes is attributable to a permanent establishment of the noteholdersituated in the UK or if certain other exceptions apply. 

**Taxation of Funding, the Issuer and Trustees**

     As discussed in more detail below under “**UK taxation of Funding and theIssuer**”, Funding and the Issuer will generally be subject to UK corporation tax, currently at a rate of 30 per cent., on the profit reflected in their respective profitand loss accounts as increased by the amounts of any non-deductible expenses or losses. 

     As discussed in more detail below under “**UK taxation of theTrustees**”, Trustees will have no liability to UK tax in relation to amounts which it receives on behalf of Funding or the seller under the mortgages trust. 

     Except as described in the preceding paragraphs (and as further developed in the corresponding sections below), no views are expressed as regards UK taxationin relation to the Issuer Notes, the parties to the transaction, or any aspects of the transaction. 

**Withholding tax**

     There will be no UK withholding tax in relation to interest payments on the Issuer Notes provided that, so far as concerns deduction by the Issuer or itspaying agents, the Issuer Notes are listed (and remain so listed) on a “**recognised stock exchange**”, as defined in Section 841 of the Income and 

38 

----

Back to Contents

Corporation Taxes Act 1988 (“**ICTA**”). On the basis of H.M. Revenue & Customs’ published interpretation of the relevant legislation, securities which are to be listed on a stock exchange in the UK will satisfy this requirement if they are listed by acompetent authority in the UK and are admitted to trading on a recognised stock exchange in the UK. The London Stock Exchange is currently a recognised stock exchange for this purpose. Noteholders should be aware that H.M. Revenue & Customs isable to obtain information about individual holders of the Issuer Notes to whom or, in certain circumstances, for whose benefit interest is paid. Information so obtained may, in certain circumstances, be exchanged by H.M. Revenue & Customs withthe tax authorities of the jurisdiction in which the relevant noteholder is resident for tax purposes. 

     If the Issuer Notes cease to be listed on a recognised stock exchange, an amount must be withheld on account of UK income tax at the lower rate (currently 20per cent.) from interest paid on them, subject to any direction to the contrary from H.M. Revenue & Customs in respect of such relief as may be available pursuant to the provisions of an applicable double taxation treaty or to the interest beingpaid to the persons (including companies within the charge to UK corporation tax) and in the circumstances specified in sections 349A to 349D of ICTA. 

     Under European Union Directive (2003/48/EC) regarding the taxation of savings income, member states are required, from July 1, 2005, to provide to the taxauthorities of other member states details of payments of interest and other similar income paid by a person within its jurisdiction to an individual resident in another member state. However, for a transitional period, Austria, Belgium andLuxembourg will instead impose a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries).A number of non-EU countries and territories including Switzerland have agreed to adopt similar measures (a withholding system in the case of Switzerland) with effect from the same date. 

**Direct assessment of non-UK resident holders of Issuer Notes to UK tax on interest**

     The interest on the Issuer Notes has a UK source. Accordingly, payments on the Issuer Notes will in principle be within the charge to UK tax even if paidwithout withholding or deduction. However, such payments will not be chargeable to UK tax in the hands of a noteholder who is not resident for tax purposes in the UK unless such holder carries on a trade, profession or vocation in the UK through aUK branch or agency in connection with which the payments are received or to which the Issuer Notes are attributable (and where that noteholder is a company, unless that noteholder carries on a trade in the UK through a permanent establishment inconnection with which the payments are received or to which the Issuer Notes are attributable), in which case (subject to exemptions for interest received by certain categories of agent such as some brokers and investment managers) tax may be leviedon the UK branch, agency or permanent establishment as the case may be (unless the provisions of an applicable double tax treaty apply to allow relief from such tax). 

**Taxation of returns: companies within the charge to UK corporation tax**

     Noteholders who are within the charge to UK corporation tax (other than authorised unit trusts) will normally be subject to tax on all profits and gains(whether attributable to currency fluctuations or otherwise), including interest arising on or in connection with the Issuer Notes under the loan relationship rules contained in the Finance Act 1996. Any such profits and gains will generally fall tobe calculated in accordance with the statutory accounting treatment of the Issuer Notes in the hands of the relevant noteholder, and will generally be charged to tax as income in respect of each accounting period to which they are allocated, inaccordance with that accounting treatment. Relief may be available in respect of losses (including any foreign exchange losses) or for related expenses on a similar basis.

**Taxation of returns: other noteholders**

39 

----

Back to Contents

     Noteholders who are not within the charge to UK corporation tax and who are resident or ordinarily resident in the UK for UK tax purposes or who carry on atrade, profession or vocation in the UK through a branch or agency in connection with which interest on the Issuer Notes is received or to which the Issuer Notes are attributable will generally be liable to UK tax on the amount of any interestreceived in respect of the Issuer Notes. The series 4 Issuer Notes will not be qualifying corporate bonds within the meaning of Section 117 of the Taxation of Chargeable Gains Act 1992, and therefore a disposal of such an Issuer Note by such anoteholder may give rise to a chargeable gain or an allowable loss for the purposes of UK capital gains tax.

     A disposal of Issuer Notes by a noteholder who is resident or ordinarily resident in the UK for UK tax purposes or who carries on a trade in the UK through abranch or agency to which the Issuer Notes are attributable may also give rise to a charge to tax on income in respect of an amount representing interest accrued on the Issuer Notes since the preceding payment date. For Issuer Notes which constitutevariable rate securities, taxation in respect of such a disposal will be computed on the basis that such amount as H.M. Revenue & Customs considers to be just and reasonable will be treated as accrued income.However, the transferee of a variable rate security will not be entitled to any relief on such amount. All of the Issuer Notes will constitute variable rate Issuer Notes for this purpose. 

**Stamp duty and stamp duty reserve tax**

     No UK stamp duty or stamp duty reserve tax is payable on the issue or transfer of the offered global Issuer Notes or on the issue or transfer of an IssuerNote in definitive form. 

**UK taxation of Funding and the Issuer**

     Funding and the Issuer will generally be subject to UK corporation tax, currently at a rate of 30 per cent., on the profit reflected in their respectiveapplicable profit and loss accounts as increased by the amounts of any non-deductible expenses or losses. In respect of Funding, the seller has confirmed that the profit in the profit and loss account drawn in accordance with UK GAAP as applicableon December 31, 2004 will not exceed 0.01 per cent. of the Funding available revenue receipts. In respect of the Issuer, the seller has confirmed that the profit in the profit and loss account drawn in accordance with UK GAAP as applicable onDecember 31, 2004 will not exceed 0.02 per cent. of the interest on the issuer term advances under the issuer intercompany loan. The comments made in this paragraph are subject to those set out in the risk factor “**Tax payable by Funding or the Issuer may adversely affect the Issuer’s ability to make payments on the Issuer Notes**”, in particular the section dealing with the interim and new regimes that H.M. Revenue & Customs are proposing to establish for securitisation companies as a consequence of their compliance with International FinancialReporting Standards (“IFRS”) (or new UK Financial Reporting Standards which reflect IFRS).

**UK taxation of Trustees**

     Trustees will have no liability to UK tax in respect of any income, profit or gain arising under these arrangements, apart from a liability to UK corporationtax on amounts, such as trustee fees and expenses, which are paid to Trustees for its own benefit. Accordingly, Trustees will have no liability to UK tax in relation to amounts which it receives on behalf of Funding or the seller under the mortgagestrust. 

**United States Taxation**

**General**

     The following section summarizes the material federal income tax consequences of the purchase, ownership and disposition of the series 4 class A1 IssuerNotes, series 4 class B Issuer Notes and series 4 class C Issuer Notes (the “**US Issuer Notes**”) that may be relevant to a noteholder that is a “**US holder**”

40 

----

Back to Contents

(as defined later in this section). In general, the summary assumes that a holder acquires a US Issuer Note at original issuance and holds such Note as a capital asset. It does notpurport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase the US Issuer Notes. In particular, it does not discuss special tax considerations that may apply to certain types of taxpayers,including dealers in stocks, securities or notional principal contracts; traders in securities electing to mark to market; banks, savings and loan associations and similar financial institutions; taxpayers whose functional currency is other than theUS dollar; and taxpayers that hold a US Issuer Note as part of a hedge or straddle or a conversion transaction, within the meaning of section 1258 of the US Internal Revenue Code of 1986, as amended (the “**Code**”). In addition, this summary does not describe any tax consequences arising under the laws of any taxingjurisdiction other than the US federal government. 

     This summary is based on the US tax laws, regulations, rulings and decisions in effect or available on the effective date of the registration statement. Allof the foregoing are subject to change, and any change may apply retroactively and could affect the continued validity of this summary. 

     The Issuer suggests that US holders consult their own tax advisors as to the US federal income tax consequences of the purchase, ownership and disposition ofthe US Issuer Notes, including the possible application of state, local, non-US or other tax laws, and other US tax issues affecting the transaction. 

     As used in this section, the term “**US holder**” means a person who is a citizen or resident of the United States, a US domestic corporation or partnership, or any other person subject to US federal income tax on a net income basis in respectof a US Issuer Note. 

**Characterization of the US Issuer Notes**

     Although there is no authority regarding the treatment of instruments that are substantially similar to the US Issuer Notes, the Issuer believes that the USIssuer Notes will be treated as debt for US federal income tax purposes (either of the Issuer or of Funding). The Issuer intends to treat the US Issuer Notes as indebtedness of the Issuer for all purposes, including US tax purposes. The discussionin the next section assumes this result. 

     The US Issuer Notes will not be qualifying assets in the hands of domestic savings and loan associations, real estate investment trusts, or REMICs undersections 7701(a)(19)(C), 856(c)(5)(B) or 860G(a)(3) of the Code, respectively. 

**Taxation of US holders of the US Issuer Notes**

     ***Qualified Stated Interest.***A US holder of a US Issuer Note willtreat stated interest on such US Note as ordinary interest income when paid or accrued, in accordance with its tax method of accounting. 

     ***Sales and Retirement.*** In general, a US holder of a US IssuerNote will have a basis in such Note equal to the cost of the US Issuer Note to such holder, and reduced by any payments thereon other than payments of stated interest. Upon a sale or exchange of the US Issuer Note, a US holder will generallyrecognize gain or loss equal to the difference between the amount realized (less any accrued interest, which would be taxable as such) and the holder’s tax basis in the US Issuer Note. Such gain or loss will be long-term capital gain or loss ifthe US holder has held the US Issuer Note for more than one year at the time of disposition. In certain circumstances, US holders that are individuals may be entitled to preferential treatment for net long-term capital gains. The ability of USholders to offset capital losses against ordinary income is limited. 

     ***Market Discout and Bond Premium.***If a US holder purchased USIssuer Notes for a price greater or less than their stated principal amount, such notes may be subject to special US tax rules 

41 

----

Back to Contents

relating to market discount or bond premium. US holders should consult their own advisors regarding the tax consequences of these rules. 

**US Issuer Notes as debt of Funding**

     The U.S. Internal Revenue Service could possibly seek to characterize, series 4 class A1 Issuer Notes, series 4 class B Issuer Notes and series 4 class CIssuer Notes as ownership interests in the issuer series 4A1 term AAA advance, the issuer series 4 term AA advance and the issuer series 4 term BBB advance respectively, rather than as debt of the Issuer. If the US Internal Revenue Service weresuccessful in such a characterization, a US holder of a US Issuer Note would be treated as owning (i) a pro rata share of the related issuer term advance between Funding and the Issuer (“**related advance**”), which will be treated as debt for US federal income tax purposes and (ii) an interest in the related issuer currency swap. Treasuryregulations permit taxpayers meeting certain requirements to integrate a debt instrument and a related currency hedge and to treat them for most tax purposes as if they were a synthetic debt instrument having the terms of the debt instrument andhedge combined. Integrating the related advance and issuer currency swap would create a synthetic debt instrument having the characteristics of the US Issuer Notes and hence would produce largely the same result as if the US Issuer Notes were notrecharacterized as debt of Funding. 

     The integration regulations apply only if a taxpayer creates a record identifying the debt instrument and hedge on or before the close of the date the hedgeis entered into. The Issuer will create a record that is intended to provide such identification effective for each US holder as of the date of acquisition of a US Issuer Note. By its acquisition of a US Issuer Note, each US holder will be treatedas having appointed the Issuer as its agent for this purpose. The US Internal Revenue Service could challenge the effectiveness of such an identification made on behalf of a group of taxpayers. The integration rules would not apply to a US holderthat is related to the Issuer swap provider to the issuer currency swap. 

     If the issuer currency swap terminated before the US Issuer Notes were retired, and the integration regulations applied, then a US holder may be consideredto recognize gain or loss as if the holder had sold for fair market value his interest in the related advance. Moreover, for periods following such termination, the integration rules would no longer apply to the related advance except in thediscretion of the US Internal Revenue Service. 

     If the issuer currency swap were not integrated with the related advance, then a US holder would calculate separately income and deductions from the issuercurrency swap and income from the related advance. For most holders, the tax consequences of treating the issuer currency swap and related advances separately would be similar to the treatment if they were combined, but there could be differences.For example, income from the issuer currency swap may be sourced differently from income from the related advance. Individual taxpayers may be allowed deductions for payments made under the issuer currency swap only as a miscellaneous itemizeddeduction (which is allowed for regular tax purposes only subject to limitations and is not allowed for alternative minimum tax purposes). US holders may wish to consult their own tax advisors regarding the possible treatment of US Issuer Notes asdebt of Funding, application of the integration rules, and the consequences of an inability to integrate the issuer currency swap and the related advance. 

***F.  Dividends and Paying Agents***

     Not  applicable to annual reports on Form 20-F. 

***G.  Statement by Experts***

     Not  applicable to annual reports on Form 20-F. 

42 

----

Back to Contents

***H. Documents on Display*****

The Issuer, Funding and Trustees are subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended, and are thereforerequired to file reports, including annual reports on Form 20–F, and other information with the U.S. Securities and Exchange Commission. These materials, including this annual report and the exhibits thereto, may be inspected and copied at theCommission’s public reference rooms in Washington, DC, New York, NY and Chicago, IL. Please call the Commission at +1–800–732–0330 for further information on the public reference rooms. Any filings we make electronically will be made availableto the public over the Internet at the Commission’s web site at http://www.sec.gov.

***I. Subsidiary Information*****

Not applicable to annual reports on Form 20–F.

**Item  11. Quantitative and Qualitative Disclosures About Market Risk**

See the Periodic Reports referred to in “Item 3.A. – Selected Financial Information.”

**Item  12. Description of Securities Other than Equity Securities**

Not applicable to annual reports on Form 20–F.

**PART II**

**Item  13. Defaults, Dividend Arrearages and Delinquencies**

None.

**Item  14. Material Modifications to the Rights of Security Holders**

None.

**Item  15. Controls and Procedures**

Not applicable.

**Item  16A. Audit Committee Financial Expert**

Not applicable.

**Item  16B. Code of Ethics**

Not applicable.

**Item  16C. Principal Accountant Fees and Services**

Not applicable.

**Item  16D. Exemptions from the Listing Standards for Audit Committees**

Not applicable.

43 

----

Back to Contents

**Item  16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

Not applicable.

**PART III**

**Item  17. Financial Statements**

Not applicable.

**Item  18. Financial Statements**

Not applicable.

**Item  19. Exhibits**

The following documents are filed as part of the Annual Report on Form 20–F:

|   | 1.  | Exhibit      1: a copy of the Memorandum and Articles of Association of each of the Issuer,      Funding and Trustees is incorporated by reference from the previously filed      Registration Statement on Form S–11 relating to the securities (file number      333–99349). |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 2.  | Exhibit      2: instruments defining the rights of the security holders are incorporated      by reference from the previously filed Registration Statement on Form S–11      relating to the securities (file number 333–99349).                                              |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 3.  | Exhibit      10.1: Periodic Report for the period from December 9, 2004 to January 10,      2005 (incorporated by reference from the Form 6–K previously filed on January      31, 2005).                                                                                           |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 4.  | Exhibit      10.2: Periodic Report for the period from January 11, 2005 to February 8,      2005 (incorporated by reference from the Form 6–K previously filed on March      1, 2005).                                                                                              |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 5.  | Exhibit      10.3: Periodic Report for the period from February 9, 2005 to March 8, 2005      (incorporated by reference from the Form 6–K previously filed on March 18,      2005).                                                                                                |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 6.  | Exhibit      10.4: Periodic Report for the period from March 9, 2005 to April 8, 2005      (incorporated by reference from the Form 6–K previously filed on April 28,      2005).                                                                                                   |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 7.  | Exhibit      10.5: Periodic Report for the period from April 9, 2005 to May 9, 2005 (incorporated      by reference from the Form 6–K previously filed on May 31, 2001).                                                                                                            |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 8.  | Exhibit      10.6: Periodic Report for the period from May 10, 2005 to June 8, 2005 (incorporated      by reference from the Form 6–K previously filed on June 24, 2005).                                                                                                           |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 9.  | Exhibit      10.7: Periodic Report for the period from June 9, 2005 to July 8, 2005 (incorporated      by reference from the Form 6–K previously filed on August 25, 2005).                                                                                                         |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 10. | Exhibit      10.8: Periodic Report for the period from July 9, 2005 to August 8, 2005      (incorporated by reference from the Form 6–K previously filed on September      8, 2005).                                                                                                |
|   |     |                                                                                                                                                                                                                                                                                     |
|   | 11. | Exhibit      10.9: Periodic Report for the period from August 9, 2005 to September 8,      2005 (incorporated by reference from the Form 6–K previously filed on October      4, 2005).                                                                                             |
|   |     |                                                                                                                                                                                                                                                                                     |

44

----

Back to Contents

|   | 12.    | Exhibit      10.10:      Periodic Report for the period from September 9, 2005 to October 10, 2005      (incorporated      by reference from the Form 6–K previously filed on November 2, 2005).                                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                    |
|   | 13.    | Exhibit      10.11: Periodic      Report for the period from October 11, 2005 to November 8, 2005 (incorporated      by reference from the Form 6–K previously filed on November 23, 2005).                                        |
|   |   |                                                                                                                                                                                                                                    |
|   | 14.    | Exhibit      10.12:      Periodic Report for the period from November 9, 2005 to December 8, 2005      (incorporated      by reference from the Form 6–K previously filed on December 22, 2005).                                   |
|   |   |                                                                                                                                                                                                                                    |
|   | 15.    | Exhibit      10.13: Periodic      Report for the period from December 9, 2005 to January 9, 2006 (incorporated      by reference from the Form 6–K previously filed on January 17, 2006).                                          |
|   |   |                                                                                                                                                                                                                                    |
|   | 16.    | Exhibit      10.14:      Profit and Loss Accounts and Balance Sheets for the period ended January      18, 2005      (incorporated by reference from the Form 6–K previously filed on February      28, 2005).                     |
|   |   |                                                                                                                                                                                                                                    |
|   | 17.    | Exhibit      10.15:      Profit and Loss Accounts and Balance Sheets for the period ended April 15,      2005      (incorporated by reference from the Form 6–K previously filed on May      31, 2005).                            |
|   |   |                                                                                                                                                                                                                                    |
|   | 18.    | Exhibit      10.16:      Profit and Loss Accounts and Balance Sheets for the period ended July 15,      2005 (incorporated      by reference from the Form 6–K previously filed on August 25, 2005).                               |
|   |   |                                                                                                                                                                                                                                    |
|   | 19.    | Exhibit      10.17: Profit      and Loss Accounts and Balance Sheets for the period ended October 17,      2005 (incorporated by reference from the Form 6–K previously filed      on November 11, 2005).                          |
|   |   |                                                                                                                                                                                                                                    |
|   | 20.    | Exhibit      10.18:      Certificate Relating to Financial Information pursuant to the Issuer Trust      Deed dated      April 30, 2006 (incorporated by reference from the Form 6–K previously      filed on June 20, 2006). |
|   |   |                                                                                                                                                                                                                                    |
|        | 21.    | Exhibit      10.19: Report and Accounts for Holmes Financing (No. 6) PLC for the year      ended December 31, 2005                                                                                                                      |
|   |   |                                                                                                                                                                                                                                    |
|        | 22.    | Exhibit      10.20: Report and Accounts for Holmes Funding Limited for the year ended      December31,      2005.                                                                                                                       |
|   |   |                                                                                                                                                                                                                                    |
|        | 23.    | Exhibit 10.21: Report and Accounts for Holmes Trustees Limited for the year      ended December31,      2005                                                                                                                            |
|   |   |                                                                                                                                                                                                                                    |
|        | 24.    | Exhibit 12.1: Certificate pursuant to section 302 of the Sarbanes–Oxley      Act 2002.                                                                                                                                             |
|   |   |                                                                                                                                                                                                                                    |
|        | 25.    | Exhibit      13.1: Certificate pursuant to section 906 of the Sarbanes–Oxley Act      2002.                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                    |

45 

----

Back to Contents

**SIGNATURE**

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, each of the registrant certifies that it meets all the requirements for filing on Form 20–F and has dulycaused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

HOLMES TRUSTEES LIMITED

| By:    | /s/        Martin McDermott |
|--------|-----------------------------|
|   |                             |
|   | Name: Martin McDermott      |
|   | Title: Director             |

HOLMES FUNDING LIMITED

| By:    | /s/        Martin McDermott |
|--------|-----------------------------|
|   |                             |
|   | Name: Martin McDermott      |
|   | Title: Director             |

HOLMES FINANCING (NO. 6) PLC

| By:    | /s/        Martin McDermott |
|--------|-----------------------------|
|   |                             |
|   | Name: Martin McDermott      |
|   | Title: Director             |

Dated: June 27, 2006

----

Back to Contents

**EXHIBIT INDEX**

|   | **·** | Exhibit        1: a copy of the Memorandum and Articles of Association of each of the        Issuer, Funding and Trustees is incorporated by reference from the previously        filed Registration Statement on Form S–11 relating to the securities (file        number 333–99349). |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      2: instruments defining the rights of the security holders are incorporated      by reference from the previously filed Registration Statement on Form S–11      relating to the securities (file number 333–99349).                                                      |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.1: Periodic Report for the period from December 9, 2004 to January 10,      2005 (incorporated by reference from the Form 6–K previously filed on January      31, 2005).                                                                                                   |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.2: Periodic Report for the period from January 11, 2005 to February 8,      2005 (incorporated by reference from the Form 6–K previously filed on March      1, 2005).                                                                                                      |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.3: Periodic Report for the period from February 9, 2005 to March 8, 2005      (incorporated by reference from the Form 6–K previously filed on March 18,      2005).                                                                                                        |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.4: Periodic Report for the period from March 9, 2005 to April 8, 2005      (incorporated by reference from the Form 6–K previously filed on April 28,      2005).                                                                                                           |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.5: Periodic Report for the period from April 9, 2005 to May 9, 2005 (incorporated      by reference from the Form 6–K previously filed on May 31, 2001).                                                                                                                    |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.6: Periodic Report for the period from May 10, 2005 to June 8, 2005 (incorporated      by reference from the Form 6–K previously filed on June 24, 2005).                                                                                                                   |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.7: Periodic Report for the period from June 9, 2005 to July 8, 2005 (incorporated      by reference from the Form 6–K previously filed on August 25, 2005).                                                                                                                 |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.8: Periodic Report for the period from July 9, 2005 to August 8, 2005      (incorporated by reference from the Form 6–K previously filed on September      8, 2005).                                                                                                        |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.9: Periodic Report for the period from August 9, 2005 to September 8,      2005 (incorporated by reference from the Form 6–K previously filed on October      4, 2005).                                                                                                     |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.10: Periodic Report for the period from September 9, 2005 to October      10, 2005 (incorporated by reference from the Form 6–K previously filed on      November 2, 2005).                                                                                                 |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.11: Periodic Report for the period from October 11, 2005 to November      8, 2005 (incorporated by reference from the Form 6–K previously filed on      November 23, 2005).                                                                                                 |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.12: Periodic Report for the period from November 9, 2005 to December      8, 2005 (incorporated by reference from the Form 6–K previously filed on      December 22, 2005).                                                                                                 |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.13: Periodic Report for the period from December 9, 2005 to January 9,      2006 (incorporated by reference from the Form 6–K previously filed on January      17, 2006).                                                                                                   |
|   |              |                                                                                                                                                                                                                                                                                             |
|   | ·     | Exhibit      10.14: Profit and Loss Accounts and Balance Sheets for the period ended      January 18, 2005 (incorporated by reference from the Form 6–K previously      filed on February 28, 2005).                                                                                        |
|   |              |                                                                                                                                                                                                                                                                                             |

----

Back to Contents

|   | **·** | Exhibit        10.15: Profit and Loss Accounts and Balance Sheets for the period ended        April 15, 2005 (incorporated by reference from the Form 6–K previously        filed on May 31, 2005).                      |
|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.16: Profit      and Loss Accounts and Balance Sheets for the period ended July 15, 2005      (incorporated by reference from the Form 6–K previously filed on August      25, 2005).                     |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.17: Profit      and Loss Accounts and Balance Sheets for the period ended October 17, 2005      (incorporated by reference from the Form 6–K previously filed on November      11, 2005).                |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.18: Certificate      Relating to Financial Information pursuant to the Issuer Trust Deed dated      April 30, 2006 (incorporated by reference from the Form 6–K previously filed      on June 20, 2006). |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.19: Report      and Accounts for Holmes Financing (No. 6) PLC for the year ended December      31, 2005.                                                                                                      |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.20: Report      and Accounts for Holmes Funding Limited for the year ended December 31,      2005.                                                                                                            |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      10.21: Report      and Accounts for Holmes Trustees Limited for the year ended December 31,      2005.                                                                                                           |
|   |              |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      12.1: Certificate      pursuant to section 302 of the Sarbanes–Oxley Act 2002.                                                                                                                              |
|   |         |                                                                                                                                                                                                                          |
|   | ·     | Exhibit      13.1: Certificate      pursuant to section 906 of the Sarbanes–Oxley Act 2002.                                                                                                                              |

----